2024 ANNUAL REPORT
FINANCIAL HIGHLIGHTS (UNAUDITED)
Amounts in billions, except per share amounts
2024
2023
2022
2021
2020
Net Sales
$84.0
$82.0
$80.2
$76.1
$71.0
Operating Income
$18.5
$18.1
$17.8
$18.0
$15.7
Net Earnings
Attributable to P&G
$14.9
$14.7
$14.7
$14.3
$13.0
Net Earnings Margin
17.8%
18.0%
18.4%
18.9%
18.5%
Diluted Net Earnings
per Common Share 1
$6.02
$5.90
$5.81
$5.50
$4.96
Core Earnings
per Share 2
$6.59
$5.90
$5.81
$5.66
$5.12
Operating Cash Flow
$19.8
$16.8
$16.7
$18.4
$17.4
Dividends per
Common Share
$3.83
$3.68
$3.52
$3.24
$3.03
2024 NET SALES BY BUSINESS SEGMENT 3
Fabric & Home Care
36%
Baby, Feminine
& Family Care
24%
Beauty
18%
Health Care
14%
Grooming
8%
2024 NET SALES BY GEOGRAPHIC REGION
North America 4
52%
Europe
22%
Latin America
7%
Greater China
7%
Asia Pacific
7%
India, Middle East
& Africa (IMEA)
5%
FISCAL YEAR 2024 BY THE NUMBERS
Net Sales
(up 2%)
$84.0
BILLION
Organic Sales
Growth
+4%
+12%
$19.8
BILLION
Core EPS
Growth
Operating
Cash Flow
Adjusted Free Cash
Flow Productivity
105%
(1) Diluted net earnings per common share are calculated based on net earnings attributable to Procter & Gamble.
(2) Core EPS is a measure of the Company’s diluted net earnings per common share adjusted for certain items not viewed as part of our sustainable results.
Please see page 74 of the Annual Report for detail on the reconciling items.
(3) These results exclude net sales in Corporate.
(4) North America includes the United States, Canada and Puerto Rico.
VARIOUS STATEMENTS IN THIS ANNUAL REPORT, including estimates, projections, objectives and expected results, are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 and are generally identified by the words “believe,” “expect,” “anticipate,” “intend,” “opportunity,” “plan,” “project,” “will,” “should,” “could,” “would,” “likely”
and similar expressions. Forward-looking statements are based on current assumptions that are subject to risks and uncertainties that may cause actual results
to differ materially from the forward-looking statements, including the risks and uncertainties discussed in Item 1A – Risk Factors of the Form 10-K included
in this Annual Report. Such forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise publicly
any forward-looking statements, except as required by law.
Certain brand names referenced in this Annual Report are trademarks of The Procter & Gamble Company or one of its subsidiaries. All other brand names are
trademarks of their respective owners.
Dear
Shareowners,
Fiscal year 2024 was another strong year for P&G.
Execution of our integrated strategy enabled the
Company to meet or exceed our going-in guidance
ranges for organic sales growth, core EPS growth,
cash generation and cash return to shareowners. We
accomplished all this despite the significant market-
level headwinds we experienced, which were largely
unknown when we gave our initial outlook for the year.
For the fiscal year, organic sales grew 4%. Core
earnings per share grew 12%. On a currency-neutral
basis, core earnings per share were up 16%. Adjusted
free cash flow productivity was 105%.
This was our sixth consecutive year of 4% or better
organic sales growth. It is worth noting that 4%
organic sales growth was against a strong comparison
of 7% the prior fiscal year and in more challenging
market conditions.
Growth was broad-based across business units, with
eight of 10 product categories growing organic sales.
Home Care, Hair Care and Grooming were up high
single digits. Oral Care and Feminine Care were up
mid-single digits. Fabric Care, Family Care and Personal
Health Care grew low single digits. Skin & Personal
Care and Baby Care were down low single digits.
Focus markets grew 4% for the year, with North
America up 5% and Europe Focus markets up 8%.
Enterprise markets were up 6%, led by Latin America
with 15% organic sales growth.
E-commerce sales increased 9%, now representing
18% of the Company total.
Thirty of our top 50 category/country combinations
held or grew share for the year. Importantly, this
share growth was broad-based with six of 10 product
categories growing share globally over the past year.
On the bottom line, we continued to deliver consistent
earnings growth, with core earnings per share up 12%
this year — recovering from a very high inflationary
period the past two fiscal years.
We continued our strong track record of cash return
to shareowners — returning over $14 billion of value to
shareowners through just over $9 billion in dividends
and $5 billion in share repurchase.
In April, we announced a 7% dividend increase,
again reinforcing our commitment to return cash to
shareowners — the 68th consecutive annual dividend
increase, and the 134th consecutive year P&G has paid
a dividend. Only seven U.S. publicly traded companies
have paid a dividend more consecutive years than
P&G, and only three U.S. companies have raised their
dividend more consecutive years.
In summary, last year was another strong year for your
company in a very volatile environment. To be clear,
there is still more work to do to continue improving
the areas in our control needed to offset the headwinds
that are largely not in our control. However, we are
confident that strong execution of our strategy will
continue to deliver the level of balanced growth and
value creation results you, and we, expect of P&G.
P&G’s Integrated Strategy
P&G people are focused on executing each element
of our integrated strategy with excellence: a portfolio
of daily-use products where performance drives
brand choice; superiority across product, package,
brand communication, retail execution, and value;
productivity; constructive disruption; all enabled by
an empowered, agile and accountable organization.
These strategic choices reinforce and build on each
other. When executed well, they grow markets and
create new business which, in turn, grows our share,
sales, household penetration and profit.
JON R. MOELLER
Chairman of the Board,
President and Chief Executive Officer
ii • The Procter & Gamble Company
Importantly, this strategy is inherently dynamic.
It adapts to the changing needs of consumers,
customers and society. It demands that we not sit still.
While we should expect the volatile consumer
and macro dynamics we have been experiencing
to continue, our job every day is to get up, put both
feet on the floor, examine what is going on around
us, and then work to delight consumers, customers,
employees, society and shareowners in that context.
Our best path forward remains to double down
on our dynamic, market-constructive strategy
to deliver balanced top- and bottom-line growth
and value creation.
A Portfolio of Daily-Use
Categories Where Performance
Drives Brand Choice
P&G operates in 10 categories: Fabric Care, Home Care,
Baby Care, Feminine Care, Family Care, Hair Care,
Skin & Personal Care, Oral Care, Personal Health Care,
and Grooming.
In each of these daily-use categories, where
performance drives brand choice, we continue
to increase the superiority of our offerings.
Superiority to Win with
Consumers and Grow Markets
We focus on delighting consumers through irresistible
superiority — across product, package, brand
communication, retail execution and value. Superior
performing products in superior quality packages
provide noticeably better benefits to consumers, which
they become aware of and learn about through superior
brand communications. This comes to life in stores and
online with superior retail execution and delivers superior
consumer value at a price that is considered worth it
across each price tier where the brand is offered.
We are focused on driving irresistible superiority
across each of our categories to attract users and help
them more effectively tackle their jobs to be done.
When done well across all five vectors, superiority
grows markets and our share in them, jointly creating
value with our retail partners.
INTEGRATED GROWTH STRATEGY
Our strategic choices are the
foundation for balanced top-
and bottom-line growth
PORTFOLIO
performance drives
brand choice
SUPERIORITY
to win with
consumers
PRODUCTIVITY
to fuel
investments
ORGANIZATION
empowered, agile,
accountable
CONSTRUCTIVE
DISRUPTION
across our business
The Procter & Gamble Company • iii
PRODUCTIVITY INTEGRATED INTO OUR STRATEGY
Delivering the same or better output measures with lower spending or resource investment
Overhead
Ad Spend &
Promotion
Materials
Manufacturing
Working
Capital
Superiority is a never-ending challenge and
opportunity. We constantly assess the superiority
of our brands across each of the five vectors through
a mix of tests, data, reviews, and measurements,
and we invest — raising the bar on our superiority
standards — in response to consumer needs and
changes in our industry.
Fueled by Productivity
This ongoing need to invest to strengthen our offerings
across every aspect of superiority, the need to mitigate
cost and currency challenges, and the need to expand
margins and generate cash requires a commitment
to productivity in everything we do.
Productivity is more than cost cutting. It is a more
efficient way of operating — in service to consumers
and customers — every day.
We are reaccelerating productivity back to pre-
pandemic levels, with an objective for gross savings
in cost of goods sold of up to $1.5 billion before tax.
Our visibility to more savings opportunities is increasing,
enabled by platform programs with global application
across categories, like Supply Chain 3.0.
With our Supply Chain 3.0 efforts, we are becoming
more efficient in managing the delivery of our products
to our retail partners, enabled by automation, data
synchronization between P&G and customers, and
digitization, which allows the retailer to check in the
entire shipment at once. With this capability, what
used to take two people two and a half days to do,
now can take as little as 10 minutes — a more than
99% savings in effort — improving truck use, labor
savings and cash productivity.
In brand building, we are increasingly more effective
and efficient in consumer targeting, ad placement,
and advertising quality — reinvesting savings and
driving a higher return on investment along the way.
In North America, for example, over the past five
years we have improved productivity of media and
advertising as a driver for growth — accelerating value
creation. We have increased the number of consumers
reached through media by 14 points. Advertising return
on investment has improved nearly 40%. We have
delivered over $1 billion in productivity through rate
improvements, operational efficiencies and applied
analytics. We are applying this approach globally.
Overall, we take a disciplined approach to productivity
and cost management. We are investing in new
capabilities and using more digital tools to increase
speed and lower costs. We continue to invest to drive
demand in our categories and our brands, while
simultaneously and sustainably improving structural
profitability to deliver balanced top- and bottom-line
growth and strong cash generation.
Leading Constructive Disruption
P&G operates in a highly competitive industry
and in an increasingly volatile and dynamic
world. Success requires a mindset of constructive
disruption — a willingness to change, adapt and
create new trends and technologies that will shape
P&G and our industry for the future.
For example, our Fabric Care team is leveraging
P&G’s unique in-house perfumery and formulation
expertise, disrupting the industry by replacing large
volumes of bulk ingredients with materials created to
deliver the same impact with less weight. The result
is a nearly identical scent experience in a smaller dose
that reduces water and plastic. This science-based
approach is serving as a role model for the industry.
Global Fabric Care has grown organic sales over 6%
on average over the last three years.
We are focused on leading disruption in a constructive
way that delivers better outcomes and creates
value for consumers, customers, employees, society
and shareowners.
Superiority
to Win with
Consumers and
Grow Markets
PRODUCT
Products so good, consumers
recognize the difference. Superior
products raise expectations for
performance in the category.
PACKAGING
Packaging that attracts
consumers, conveys brand equity,
helps consumers select the best
product for their needs and
delights consumers during use.
BRAND COMMUNICATION
Advertising that reaches consumers
and communicates the superiority of
the brand’s product and packaging
benefits — attracting consumers to
the brand and driving brand and
category growth.
RETAIL EXECUTION
In-store: with the right store
coverage, product forms, sizes, price
points, shelving and merchandising.
Online: with the right content,
assortment, ratings, reviews,
search and subscription offerings.
CONSUMER &
CUSTOMER VALUE
For consumers: all these elements
presented in a clear and shoppable
way at a compelling price. For
customers: margin, penny profit,
trip generation, basket size and
category growth.
Read more about
superiority at pg.com/
annualreport2024
The Procter & Gamble Company • v
Nearly 70% of women worry about their feminine protection leaking.
We leverage consumer insights like this to delight consumers with superior
products — such as Always FlexFoam, providing incredible protection and
comfort. And importantly, superior products grow markets. In fiscal 2024,
Always FlexFoam grew organic sales mid-teens, contributing more than its
fair share to the mid-single-digit growth of the global menstrual care category.
The GilletteLabs with Exfoliating Bar Razor helps remove dirt and debris before
the blades, for effortless shaving in one efficient stroke. With a striking design
and color, the superior packaging delivers both high visibility on shelf and an
improved opening experience for the consumer with cardboard packaging.
In fiscal 2024, Gillette globally delivered high single-digit organic sales growth
and value share improvement. The global Grooming market grew mid-single
digits, adding an incremental $1 billion of retail sales, with Gillette driving
two-thirds of the increase.
Oral-B iO power toothbrushes deliver superior cleaning and a delightful
user experience. Superior communication includes the insight that manual
brushes leave 50% of plaque bacteria behind, but with its round head, Oral-B iO
removes 100% more plaque in hard-to-reach places. This superior proposition
is accelerating power brush trial and adoption, bringing new users into the
category. Oral-B iO contributed to the high single-digit market growth of the
power brush category, double-digit sales growth for Oral-B power, and two
points of Oral-B value share growth over the past 12 months.
Native, our premium personal care brand, is delivering superiority across
multiple product forms, including deodorants, body wash, shampoo and
conditioners. Superior performance with fewer ingredients and irresistible
scents combined with superior retail execution and strong retailer partnerships
showcasing the full range of forms and scents have helped Native drive a
step change in market value growth for the U.S. deodorant and personal care
categories from low single digits to low teens. Native sales have grown nearly
10 times over the last five years to over $700 million in fiscal 2024.
Cascade Platinum Plus Action Pacs are growing sales and the auto-
dishwashing category by delivering superior cleaning and superior value
for consumers. It provides the highest standard of clean in the dishwasher,
which means consumers can skip the pre-rinse and get time back to
experience moments that matter. Plus, running an ENERGY STAR® certified
dishwasher* with Cascade Platinum Plus instead of washing dishes by hand
at the sink saves water, providing more value for the consumer. Cascade
grew organic sales high single digits in fiscal 2024, delivering about 75%
of category growth (2.5 times our fair share).
* ENERGY STAR® certified dishwashers use <4 gallons per cycle. Running the tap for 11 minutes while
handwashing uses up to 24 gallons of water.
Employee Value
Equation
Digital
Acumen
Environmental
Sustainability
vi • The Procter & Gamble Company
An Organization that is
Empowered, Agile and
Accountable
We have designed, and continue to refine and
strengthen, P&G’s organization structure so that
it enables P&G people to focus on our biggest
opportunities for growth — fully empowered,
agile and accountable.
Five industry-based sector business units manage
our 10 product categories, with full end-to-end
decision rights and responsibility to create and
deliver balanced top- and bottom-line growth in our
largest and most profitable markets, which we call
Focus markets. Enterprise markets — Latin America,
Africa, the Middle East, and parts of Europe and
Asia — are a separate business unit managed with
the freedom to quickly react to the fast-changing
dynamics of these markets and with the intent to
accelerate their growth and value creation.
Strengthening the Execution
of Our Strategy
There are four areas where we are putting additional
focus to strengthen the execution of our strategy —
supply, environmental sustainability, digital acumen
and our employee value equation.
First, we are strengthening our supply chain,
which has been ranked number one for the past
nine years by customers in the Advantage Survey.
We are building on this strong foundation by driving
improved capacity planning, greater supply agility,
flexibility, data transparency, scale, and resilience
all the way up and down the supply chain, inclusive
of our retail partners.
We are working with retailers on the totality of
the supply chain, end to end, versus simply trying
to optimize each piece — extending our combined
focus beyond the customer door to what the
shopper sees on shelf and online. We are seeking
to drive improvements in service, cost and cash by
optimizing not only P&G’s cost of goods sold, but
by jointly identifying with customers and distributors
additional ways to drive losses out of our collective
supply chains, as well as new ways to create value.
All of this is driving increased supply assurance, higher
on-shelf availability of our products, and a more cost-
efficient supply chain. These programs improve the
superiority of our offerings for consumers and further
strengthen the relationship with our customers.
Second, we are improving the environmental
sustainability profile of our brands without
compromising performance. Sacrificing performance
for environmental sustainability does not delight
consumers and does nothing to create a more
sustainable business or planet. We are developing
offerings that are both superior and sustainable.
Lenor Unstoppables is a good example. The plastic
bottle was converted to a cardboard pack that can
be recycled through local paper waste streams,
OUR FOUR
FOCUS AREAS
These are further
strengthening
the execution of
our integrated
growth strategy.
Supply
Chain
The Procter & Gamble Company • vii
delighting consumers with an easy open cap, easy
dosing and pouring, and allowing them to experience
the scent even when the package is closed. This
package contributed to a 40% increase in sales, while
driving category growth, reducing costs and helping
avoid the equivalent of 2,800 metric tons of plastic
in Europe. The team then took superiority to the next
level by combining a malodor product upgrade and
product aeration with a new cap — further driving
irresistible superiority and contributing to more
sales and reduced costs.
The third focus area is digital acumen. We are
leveraging relevant data and digitization to delight
consumers and customers, strengthen innovation
processes, streamline the supply chain, increase quality,
improve decision making and drive productivity.
For example, in India we are leveraging seamless data,
analytics and automation to optimize our supply chain,
resulting in 60% fewer touchpoints than a few years
ago. We have also moved to an artificial intelligence,
machine learning ordering system for our distributors,
which is helping us better predict distributor shipments
and replenishment. Sales in India have grown over 8%
on average over the past three years.
Examples like this have obvious cost benefits, but
they are also driving product and package superiority,
superior brand communication to consumers, superior
retail execution in stores and online, and jobs that
enable people to focus on higher-order tasks with
greater business impact.
Our fourth focus area is a superior employee value
equation for all employees — inclusive of all genders,
races, ethnicities, sexual orientations, ages and abilities
for all roles to ensure we continue to attract, develop,
and retain the broadest pool of talent available to
best serve an increasingly diverse set of consumers.
Our Employee Value Equation has four interdependent
elements — making an impact, feeling valued and
rewarded, growing skills and capabilities and being
inspired to serve consumers better than competition —
with all four necessary. It is a superior employee value
equation for superior employees serving consumers
with superior brands.
Balancing the Needs of
All Stakeholders
We see success in environmental, social and
governance areas, what we call Citizenship, as an
opportunity to create competitive advantage that
can drive shareowner value creation. We have
integrated our Citizenship work into the business
and the innovation process because that is the best
way to ensure consumer delight with P&G offerings.
Citizenship approached this way — integrated into
every aspect of our operations with all initiatives
around good governance, social responsibility and
environmental sustainability ultimately aimed at
supporting sustainable growth — will enable us to
delight all stakeholders: consumers, customers,
employees, society and our shareowners.
We look at our sustainability work through three
lenses: first, reducing P&G’s environmental impact
from our own operations; second, enabling consumers
to reduce their footprint through superior products
that are more sustainable; and third, innovating
to create cross-industry solutions to help solve
significant challenges.
We are committed to an equal, diverse and inclusive
organization, culture and workplace. We support
equality and inclusion efforts with our business
partners and in our communities. It is not only the
BALANCING THE NEEDS OF ALL STAKEHOLDERS
To learn more about our work, visit us at pginvestor.com/esg
Shareowner
Society
Employee
Customer
Consumer
right thing to do; it has everything to do with serving
and delighting consumers, which is the foundation
of winning in our business as we increasingly serve
a more diverse group of consumers.
The foundation of everything we do is good
governance, and P&G is committed to doing
what is right and to being a good corporate citizen.
Our corporate governance practices are designed
to promote strong board and management
accountability, transparency and protection
of shareowner interests.
Belief in P&G’s People
and Strategy
Our team continues to execute our strategy with
excellence, enabling strong results over each of
the past six fiscal years — pre-COVID, during COVID,
through a historic inflationary and pricing cycle
and through geopolitical tensions.
During these six years, we delivered organic sales
growth of 5%, 6%, 6%, 7%, 7% and 4%. We delivered
strong earnings growth and gross and operating
margin expansion, very strong cash generation,
and returned over $96 billion of cash to shareowners.
All of this achieved in the face of significant
challenges and volatility.
All credit goes to P&G people, who continually
prove they are capable of incredible things and
whose efforts have put us in the best possible
place as we start this new fiscal year.
While our eyes are wide open to the challenges
and volatility ahead, I see opportunity everywhere.
Opportunity to drive market growth, to further raise
the superiority bar across all five vectors, to increase
the sustainability of our offerings, to further improve
both innovation and execution, to increase reach
and household penetration, to transform the whole
of our supply chain, to become faster and more agile,
more digitally enabled, more productive and more
effective in everything we do.
We believe in our integrated strategy and our ability
to execute it with excellence — a portfolio focused
on daily-use products where performance matters;
superiority across product, package, communication,
retail execution and value; productivity in everything
we do; a willingness to lead disruption constructively;
a lean, agile and accountable organization; and
strengthening the execution of this strategy through
increased focus on supply, sustainability, digital
acumen and a superior employee value equation.
Each component necessary. Each component
integrated with the others. Combined, a strategy
that can perform in any environment.
We remain focused squarely on consumers —
our North Star — and understanding and serving
them, an undertaking fully embraced by P&G’s
highly committed, creative and determined people.
When we do this well, consumers are delighted,
and we create value for customers, employees,
society and shareowners alike.
JON R. MOELLER
Chairman of the Board, President
and Chief Executive Officer
viii • The Procter & Gamble Company
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
[x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2024
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 False
For the transition period from to
Commission File No. 1-434
THE PROCTER & GAMBLE COMPANY
One Procter & Gamble Plaza, Cincinnati, Ohio 45202
Telephone (513) 983-1100
IRS Employer Identification No. 31-0411980
State of Incorporation: Ohio
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, without Par Value
PG
New York Stock Exchange
0.500% Notes due 2024
PG24A
New York Stock Exchange
0.625% Notes due 2024
PG24B
New York Stock Exchange
1.375% Notes due 2025
PG25
New York Stock Exchange
0.110% Notes due 2026
PG26D
New York Stock Exchange
3.250% EUR Notes due 2026
PG26F
New York Stock Exchange
4.875% EUR Notes due May 2027
PG27A
New York Stock Exchange
1.200% Notes due 2028
PG28
New York Stock Exchange
3.150% EUR Notes due 2028
PG28B
New York Stock Exchange
1.250% Notes due 2029
PG29B
New York Stock Exchange
1.800% Notes due 2029
PG29A
New York Stock Exchange
6.250% GBP Notes due January 2030
PG30
New York Stock Exchange
0.350% Notes due 2030
PG30C
New York Stock Exchange
0.230% Notes due 2031
PG31A
New York Stock Exchange
3.250% EUR Notes due 2031
PG31B
New York Stock Exchange
5.250% GBP Notes due January 2033
PG33
New York Stock Exchange
3.200% EUR Notes due 2034
PG34C
New York Stock Exchange
1.875% Notes due 2038
PG38
New York Stock Exchange
0.900% Notes due 2041
PG41
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
Accelerated filer
Emerging growth company
Non-accelerated filer
Smaller reporting company
FALSE
FALS
E
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Yes No TRUE
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No False
The aggregate market value of the voting stock held by non-affiliates amounted to $345 billion on December 31, 2023.
There were 2,354,050,987 shares of Common Stock outstanding as of July 31, 2024.
Documents Incorporated by Reference
Portions of the Proxy Statement for the 2024 Annual Meeting of Shareholders, which will be filed within one hundred and twenty days of the fiscal year ended June 30,
2024 (2024 Proxy Statement), are incorporated by reference into Part III of this report to the extent described herein.
FORM 10-K TABLE OF CONTENTS
Page
PART I
Item 1.
Business
1
Item 1A. Risk Factors
3
Item 1B. Unresolved Staff Comments
9
Item 1C. Cybersecurity
9
Item 2.
Properties
10
Item 3.
Legal Proceedings
10
Item 4.
Mine Safety Disclosure
10
Information about our Executive Officers
11
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
12
Item 6.
Intentionally Omitted
13
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
13
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
31
Item 8.
Financial Statements and Supplementary Data
32
Management's Report and Reports of Independent Registered Public Accounting Firm
32
Consolidated Statements of Earnings
36
Consolidated Statements of Comprehensive Income
36
Consolidated Balance Sheets
37
Consolidated Statements of Shareholders' Equity
38
Consolidated Statements of Cash Flows
39
Notes to Consolidated Financial Statements
40
Note 1: Summary of Significant Accounting Policies
40
Note 2: Segment Information
42
Note 3: Supplemental Financial Information
44
Note 4: Goodwill and Intangible Assets
47
Note 5: Income Taxes
48
Note 6: Earnings Per Share
50
Note 7: Share-based Compensation
51
Note 8: Postretirement Benefits and Employee Stock Ownership Plan
53
Note 9: Risk Management Activities and Fair Value Measurements
58
Note 10: Short-term and Long-term Debt
61
Note 11: Accumulated Other Comprehensive Income/(Loss)
62
Note 12: Leases
62
Note 13: Commitments and Contingencies
63
Note 14: Supplier Finance Programs
64
Note 15: Subsequent Event
64
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
64
Item 9A. Controls and Procedures
64
Item 9B. Other Information
65
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
65
PART III Item 10.
Directors, Executive Officers and Corporate Governance
65
Item 11.
Executive Compensation
65
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
65
Item 13.
Certain Relationships and Related Transactions and Director Independence
66
Item 14.
Principal Accountant Fees and Services
66
PART IV Item 15.
Exhibits and Financial Statement Schedules
66
Item 16.
Form 10-K Summary
69
Signatures
70
PART I
Item 1. Business.
The Procter & Gamble Company (the Company) is a world-leading multinational consumer goods company focused on
providing trusted, branded products of superior quality, performance and value to improve the lives of consumers around the
world - now and for generations to come. Our products are sold in about 180 countries and territories throughout the world. The
Company was incorporated in Ohio in 1905, having first been established as a New Jersey corporation in 1890, and was built
from a business founded in Cincinnati in 1837 by William Procter and James Gamble.
Additional information required by this item is incorporated herein by reference to Management's Discussion and Analysis
(MD&A); and Notes 1 and 2 to our Consolidated Financial Statements. Unless the context indicates otherwise, the terms
"Company," "P&G," "we," "our" or "us" as used herein refer to The Procter & Gamble Company (the registrant) and its
subsidiaries. Throughout this Form 10-K, we incorporate by reference information from other documents filed with the
Securities and Exchange Commission (SEC).
The Company's Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and
amendments thereto, are filed electronically with the SEC. The SEC maintains an internet site that contains these reports at:
www.sec.gov. Reports can also be accessed and downloaded through links from our website at: www.pginvestor.com. P&G
includes the website link solely as a textual reference and the information on our website is not incorporated by reference into
this report. Copies of these reports are also available, without charge, by contacting EQ Shareowner Services, 1100 Centre
Pointe Curve, Suite 101, Mendota, MN 55120-4100.
Financial Information about Segments
Information about our reportable segments can be found in the MD&A and Note 2 to our Consolidated Financial Statements.
Narrative Description of Business
Business Model. Our business model is focused on delivering sustainable value creation by driving balanced top- and bottom-
line growth. We create, manufacture, market and distribute a diversified portfolio of daily-use products to delight consumers
with irresistible superiority across five key vectors - product performance, packaging, brand communication, retail execution
and value. We invest in research and development and consumer insights to invent new categories or products and innovate our
existing products, ensuring they meet evolving consumer needs and preferences. We leverage marketing strategies including
advertising, promotions and endorsements to drive brand awareness and loyalty among consumers. The Company utilizes
various distribution channels, including retail stores, e-commerce platforms and direct-to-consumer platforms to deliver our
products. Our business model relies on continued productivity improvements to fuel investments in R&D and marketing and
deliver value creation. Our objective is to deliver sustainable and balanced top- and bottom-line growth while serving the needs
of all stakeholders — consumers, customers, employees, society and shareowners.
Key Product Categories. Information on key product categories can be found in the MD&A and Note 2 to our Consolidated
Financial Statements.
Key Customers. Our customers include mass merchandisers, e-commerce (including social commerce) channels, grocery
stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including
airport duty-free stores), high-frequency stores, pharmacies, electronics stores and professional channels. We also sell direct to
consumers. Sales to Walmart Inc. and its affiliates represent approximately 16% of our total sales in 2024 and 15% in 2023 and
2022. No other customer represents more than 10% of our total sales. Our top ten customers accounted for 42% of our total net
sales in 2024, 40% in 2023 and 39% in 2022.
Sources and Availability of Materials. Almost all of the raw and packaging materials used by the Company are purchased
from third parties, some of whom are single-source suppliers. We produce certain raw materials, primarily chemicals, for
further use in the manufacturing process. In addition, fuel, natural gas and derivative products are important commodities
consumed in our manufacturing processes and in the transportation of input materials and finished products. The prices we pay
for materials and other commodities are subject to fluctuation. When prices for these items change, we may or may not pass the
change to our customers. The Company purchases a substantial variety of other raw and packaging materials, none of which are
material to our business taken as a whole.
Trademarks and Patents. We own or have rights to patents and trademarks, which are used in connection with our activity in
all businesses. Our patents cover a range of product features, including significant product formulation and processes used to
manufacture our products. The trademarks are important to the overall marketing and branding of our products. In part, our
success can be attributed to the existence and continued protection of these trademarks and patents.
Competitive Condition. The markets in which our products are sold are highly competitive. Our products compete against
similar products from a broad range of companies, both large and small, both established and new, including well-known global
competitors. In many of the markets and industry segments, we compete against other branded products as well as retailers'
private-label brands. In this highly competitive setting, we are well positioned in the industry segments and markets in which
we operate, often holding a leadership or significant market share position. Our integrated strategy and our focus on driving
superiority across product, packaging, brand communication, retail execution and value are key differentiators in the
marketplace.
The Procter & Gamble Company 1
Government Regulation. Our Company is subject to a wide variety of laws and regulations across the countries in which we
do business. In the United States, many of our products and manufacturing operations are subject to one or more federal or state
regulatory agencies, including the U.S. Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), the
Occupational Safety and Health Administration (OSHA), the Federal Trade Commission (FTC) and the Consumer Product
Safety Commission (CPSC). We are also subject to anti-corruption laws and regulations, such as the U.S. Foreign Corrupt
Practices Act, and antitrust and competition laws and regulations that govern our dealings with suppliers, customers,
competitors and government officials.
In addition, many foreign jurisdictions in which we do business have regulations and regulatory bodies that govern similar
aspects of our operations and products, in some cases to an even more significant degree. We are also subject to expanding laws
and regulations related to environmental protection and other sustainability-related matters, non-financial reporting and
diligence, labor and employment, trade, taxation and privacy and data protection, including the European Union’s General Data
Protection Regulation and similar regulations in states within the United States and in countries around the world.
The Company has in place compliance programs and internal and external experts to help guide our business in complying with
these and other existing laws and regulations that apply to us around the globe; and we have made, and plan to continue
making, necessary expenditures for compliance with these laws and regulations. We also expect that our many suppliers,
consultants and other third parties working on our behalf share our commitment to compliance, and we have policies and
procedures in place to manage these relationships, though they inherently involve a lesser degree of control over operations and
governance. We do not expect that the Company’s expenditures for compliance with current government regulations, including
current environmental regulations, will have a material effect on our total capital expenditures, earnings or competitive position
in fiscal year 2025 as compared to prior periods.
Human Capital. Our employees are a key source of competitive advantage. Their actions, guided by our Purpose, Values and
Principles (PVPs), are critical to the long-term success of our business. We aim to retain our talented employees by offering
competitive compensation and benefits, strong career development and a respectful and inclusive culture that provides equal
opportunity for all.
Our Board of Directors, through the Compensation and Leadership Development Committee (C&LD Committee), provides
oversight of the Company’s policies and strategy relating to talent, including equality and inclusion, as well as the Company’s
compensation principles and practices. The C&LD Committee also evaluates and approves the Company’s compensation plans,
policies and programs applicable to our senior executives.
Employees
As of June 30, 2024, the Company had approximately 108,000 employees, unchanged versus the prior year. The total number
of employees is an estimate of total Company employees excluding interns, co-ops, contractors and employees of joint
ventures. 48% of our employees are in manufacturing roles and 28% of our employees are located in the United States. 42% of
our global employees are women and 32% of our U.S. employees identify as multicultural.
Training and Development
We focus on attracting, developing and retaining the widest pool of talent available, both from universities and the broader
market. We recruit from universities across markets in which we compete and are generally able to select from the top talent.
We focus on developing our employees by providing a variety of job experiences, training programs and skill development
opportunities. Given our develop-from-within model for staffing most of our senior leadership positions, it is particularly
important for us to ensure holistic growth and full engagement of our employees.
Diversity, Equality and Inclusion
As a consumer products company, we believe that it is important for our workforce to reflect the diversity of our consumers
worldwide. We also seek to foster an inclusive work environment where each individual can bring their authentic self, which
helps drive innovation and enables us to better serve our consumers. We aspire to achieve equal gender representation globally
and at key management and leadership levels. Within the U.S. workforce, our aspiration is to achieve 40% multicultural
representation overall as well as at management and leadership levels.
Compensation and Benefits
Market-competitive compensation and reward programs are critical elements of our employee value equation to attract and
retain the best talent. Our total rewards programs are based on the principles of paying for performance, paying competitively
versus peer companies that we compete with for talent in the marketplace and focusing on long-term success through a
combination of short-term and long-term incentive programs. We also offer competitive benefit programs, including retirement
plans and health insurance, in line with local country practices, with flexibility to accommodate the needs of a diverse
workforce.
Sustainability. Environmental sustainability is integrated into our business strategy. We are focused on designing and
manufacturing irresistibly superior products that are more sustainable. We aim to reduce our own environmental footprint and
enable our consumers to reduce their footprint without compromising on the performance of the products they use. We develop
and license technologies that can be used across industries to improve environmental sustainability at a broader scale.
2 The Procter & Gamble Company
Combined, this approach intends to positively impact the total environmental impact of the Company while driving market
growth and value creation.
In 2021, the Company announced a 2040 net zero ambition. Our Climate Transition Action Plan outlines the Company’s
ongoing efforts toward reducing greenhouse gas emissions across scopes 1 and 2 and elements of scope 3. The Company has
also declared objectives towards purchasing renewable electricity for our operations, reducing use of virgin petroleum-based
plastic in packaging, increasing the recyclability or reusability of packaging, responsible sourcing of key forest-based
commodities, improving efficiency of water usage in our operations and driving a global portfolio of water restoration projects
that help address water scarcity in key water basins. Our progress towards these objectives may be influenced and impacted by
various stakeholders and developments beyond our control.
Sustainability related disclosures included in this Annual Report, our Proxy Statement and our sustainability reports are
informed by standards and guidelines such as the Global Reporting Initiative (GRI) and the Task Force on Climate-related
Financial Disclosures (TCFD). The “materiality” thresholds in those standards and guidelines may differ from the concept of
“materiality” for purposes of the federal securities laws and disclosures required by the Commission’s rules in this Annual
Report. References to our sustainability reports and website are for informational purposes only and neither the sustainability
reports nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K. Additional
detailed information on our sustainability efforts can be found on our website at https://pginvestor.com/esg.
Item 1A. Risk Factors.
We discuss our expectations regarding future performance, events and outcomes, such as our business outlook and objectives in
this Form 10-K, as well as in our quarterly and annual reports, current reports on Form 8-K, press releases and other written and
oral communications. All statements, except for historical and present factual information, are “forward-looking statements”
and are based on financial data and business plans available only as of the time the statements are made, which may become
outdated or incomplete. We assume no obligation to update any forward-looking statements as a result of new information,
future events or other factors, except to the extent required by law. Forward-looking statements are inherently uncertain, and
investors must recognize that events could significantly differ from our expectations.
The following discussion of “risk factors” identifies significant factors that may adversely affect our business, operations,
financial position or future financial performance. This information should be read in conjunction with Management's
Discussion and Analysis and the Consolidated Financial Statements and related Notes incorporated in this report. The following
discussion of risks is not all inclusive but is designed to highlight what we believe are important factors to consider when
evaluating our expectations. These and other factors could cause our future results to differ from those in the forward-looking
statements and from historical trends, perhaps materially.
MACROECONOMIC CONDITIONS AND RELATED FINANCIAL RISKS
Our business is subject to numerous risks as a result of having significant operations and sales in international markets,
including foreign currency fluctuations, currency exchange or pricing controls.
We are a global company, with operations in about 70 countries and products sold in about 180 countries and territories around
the world. We hold assets, incur liabilities, generate sales and pay expenses in a variety of currencies other than the U.S. dollar,
and our operations outside the U.S. generate more than 50% of our annual net sales. Fluctuations in exchange rates for foreign
currencies have and could continue to reduce the U.S. dollar value of sales, earnings and cash flows we receive from non-U.S.
markets, increase our supply costs (as measured in U.S. dollars) in those markets, negatively impact our competitiveness in
those markets or otherwise adversely impact our business results or financial condition.
Further, we have a significant amount of foreign currency debt and derivatives as part of our capital markets activities. The
maturity cash outflows of these instruments could be adversely impacted by significant appreciation of foreign currency
exchange rates (particularly the Euro), which could adversely impact our overall cash flows. Moreover, discriminatory or
conflicting fiscal or trade policies in different countries, including changes to tariffs and existing trade policies and agreements,
could adversely affect our results. See also the Results of Operations and Cash Flow, Financial Condition and Liquidity sections
of the MD&A and the Consolidated Financial Statements and related Notes.
We also have businesses and maintain local currency cash balances in a number of countries with currency exchange, import
authorization, pricing or other controls or restrictions. Our results of operations, financial condition and cash flows could be
adversely impacted if we are unable to successfully manage such controls and restrictions, continue existing business operations
and repatriate earnings from overseas, or if new or increased tariffs, quotas, exchange or price controls, trade barriers or similar
restrictions are imposed on our business.
Uncertain economic or social conditions may adversely impact demand for our products or cause our customers and
other business partners to suffer financial hardship, which could adversely impact our business.
Our business could be negatively impacted by reduced demand for our products related to one or more significant local,
regional or global economic or social disruptions. These disruptions have included and may in the future include: a slow-down,
recession or inflationary pressures in the general economy; reduced market growth rates; tighter credit markets for our
suppliers, vendors or customers; a significant shift in government policies; significant social unrest; the deterioration of
economic relations between countries or regions; potential negative consumer sentiment toward non-local products or sources;
The Procter & Gamble Company 3
or the inability to conduct day-to-day transactions through our financial intermediaries to pay funds to or collect funds from our
customers, vendors and suppliers. Additionally, these and other economic conditions may cause our suppliers, distributors,
contractors or other third-party partners to suffer financial or operational difficulties that they cannot overcome, resulting in
their inability to provide us with the materials and services we need, in which case our business and results of operations could
be adversely affected. Customers may also suffer financial hardships due to economic conditions such that their accounts
become uncollectible or are subject to longer collection cycles. In addition, if we are unable to generate sufficient sales, income
and cash flow, it could affect the Company’s ability to achieve expected share repurchase and dividend payments.
Changing political and geopolitical conditions could adversely impact our business and financial results.
Changes in the political conditions in markets in which we manufacture, sell or distribute our products, as well as changing
geopolitical conditions, may be difficult to predict and may adversely affect our business and financial results. Results of
elections, referendums, sanctions or other political processes and pressures in certain markets in which our products are
manufactured, sold or distributed could create uncertainty regarding how existing governmental policies, laws and regulations
may change, including with respect to sanctions, taxes, tariffs, import and export controls and the general movement of goods,
materials, services, capital, data and people between countries. The potential implications of such uncertainty, which include,
among others, exchange rate fluctuations, new or increased tariffs, trade barriers and market contraction, could adversely affect
the Company’s results of operations and cash flows.
The Company operates a global business with sales, manufacturing, distribution and research and development organizations
globally that contribute to our overall growth. If geopolitical tensions and trade controls were to increase or disrupt our business
in markets where we have significant sales or operations, including disruptions due to governmental responses to such conflicts
(such as the imposition of sanctions, export controls, retaliatory tariffs, increased business licensing requirements or limitations
on profits), such disruptions could adversely impact our business, financial condition, results of operations and cash flows.
Our business, operations or employees have been and could continue to be adversely affected (including by the need to de-
consolidate or even exit certain businesses in particular countries) by geopolitical conflicts, political volatility, trade controls,
labor market disruptions or other crises or vulnerabilities in individual countries or regions. This could include political
instability, upheaval or acts of war and the related responses of governments or other entities (including, but not limited to,
boycotts in certain regions), broad economic instability or sovereign risk related to a default by or deterioration in the
creditworthiness of local governments, particularly in emerging markets.
For example, the ongoing war between Russia and Ukraine has negatively impacted, and the situation it generates may continue
to negatively impact, our operations. Beginning in March 2022, the Company reduced its product portfolio, discontinued new
capital investments and suspended media, advertising and promotional activity in Russia. Future impacts to the Company are
difficult to predict due to the high level of uncertainty as to how the overall situation will evolve. We may reduce further or
discontinue our operations in Russia due to sanctions and export controls and counter-sanctions, monetary, currency or payment
controls, restrictions on access to financial institutions, supply and transportation challenges or other circumstances and
considerations. Ultimately, these could result in loss of assets or impairments of our manufacturing plants and fixed assets or
write-downs of other operating assets and working capital.
More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation worsen,
including, among other potential impacts, economic recessions in certain neighboring countries or globally due to inflationary
pressures, energy and supply chain cost increases or the geographic proximity of the war relative to the rest of Europe.
Changes in geopolitical conditions could also amplify or affect the other risk factors set forth in this Part I, Item 1A, including,
but not limited to, foreign exchange volatility, disruptions to the financial and credit markets, energy supply and supply chain
disruptions, increased risks of an information security or operational technology incident, cost fluctuations and commodity cost
increases and increased costs to ensure compliance with global and local laws and regulations.
Disruptions in credit markets or to our banking partners or changes to our credit ratings may reduce our access to
credit or overall liquidity.
A disruption in the credit markets or a downgrade of our current credit rating could increase our future borrowing costs and
impair our ability to access capital and credit markets on terms commercially acceptable to us, which could adversely affect our
liquidity and capital resources or significantly increase our cost of capital. In addition, we rely on top-tier banking partners in
key markets around the world, who themselves face economic, societal, political and other risks, for access to credit and to
facilitate collection, payment and supply chain finance programs. A disruption to one or more of these top-tier partners could
impact our ability to draw on existing credit facilities or otherwise adversely affect our cash flows or the cash flows of our
customers and vendors.
BUSINESS OPERATIONS RISKS
Our business results depend on our ability to manage disruptions in our global supply chain.
Our ability to meet our customers’ needs and achieve cost targets depends on our ability to maintain key manufacturing and
supply arrangements, including execution of supply chain optimizations and certain sole supplier or sole manufacturing plant
arrangements. The loss or disruption of such manufacturing and supply arrangements, including for issues such as labor
disputes or controversies, loss or impairment of key manufacturing sites, discontinuity or disruptions in our internal information
4 The Procter & Gamble Company
and data systems or those of our suppliers, cybersecurity incidents including but not limited to ransomware attacks, misuse of
artificial intelligence and machine learning technologies, inability to procure sufficient raw or input materials (including water,
recycled materials and materials that meet our labor standards), significant changes in trade policy, natural disasters, increasing
severity or frequency of extreme weather events due to climate change or otherwise, acts of war or terrorism, disease outbreaks
or other external factors over which we have no control, have at times interrupted and could, in the future, interrupt product
supply and, if not effectively managed and remedied, could have an adverse impact on our business, financial condition, results
of operations or cash flows.
Our businesses face cost fluctuations and pressures that could affect our business results.
Our costs are subject to fluctuations, particularly due to changes in the prices of commodities (including certain petroleum-
derived materials like resins and paper-based materials like pulp) and raw and packaging materials and the costs of labor,
transportation (including trucks and containers), energy, pension and healthcare. Inflation pressures sometimes result in
increases in these input costs. Therefore, our business results depend, in part, on our continued ability to manage these
fluctuations through pricing actions, cost saving projects and sourcing decisions, while maintaining and improving margins and
market share. Failure to manage these fluctuations and to anticipate consumer reaction to our management of these fluctuations
could adversely impact our results of operations or cash flows.
The ability to achieve our business objectives depends on how well we can compete with our local and global
competitors in new and existing markets and channels.
The consumer products industry is highly competitive. Across all of our categories, we compete against a wide variety of global
and local competitors. As a result, we experience ongoing competitive pressures in the environments in which we operate,
which may result in challenges in maintaining sales and profit margins. To address these challenges, we must be able to
successfully respond to competitive factors and emerging retail trends, including pricing, promotional incentives, product
delivery windows and trade terms. In addition, evolving sales channels and business models may affect customer and consumer
preferences as well as market dynamics, which, for example, may be seen in the growing consumer preference for shopping
online, ease of competitive entry into certain categories and growth in hard discounter channels. Failure to successfully respond
to competitive factors and emerging retail trends and effectively compete in growing sales channels and business models,
particularly e-commerce and mobile or social commerce applications, could negatively impact our results of operations or cash
flows.
A significant change in customer relationships or in customer demand for our products could have a significant impact
on our business.
We sell most of our products via retail customers, which include mass merchandisers, e-commerce (including social commerce)
channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty
stores (including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and professional channels. Our
success depends on our ability to successfully manage relationships with our retail trade customers, which includes our ability
to offer trade terms that are mutually acceptable and are aligned with our pricing and profitability targets. Continued
concentration among our retail customers could create significant cost and margin pressure on our business, and our business
performance could suffer if we cannot reach agreement with a key customer on trade terms and principles. Our business could
also be negatively impacted if a key customer were to significantly reduce the inventory level of or shelf space allocated to our
products as a result of increased offerings of other branded manufacturers, private label brands and generic non-branded
products or for other reasons, significantly tighten product delivery windows or experience a significant business disruption.
If the reputation of the Company or one or more of our brands erodes significantly, it could have a material impact on
our financial results.
The Company's reputation, and the reputation of our brands, form the foundation of our relationships with key stakeholders and
other constituencies, including consumers, customers and suppliers. The quality and safety of our products are critical to our
business. Many of our brands have worldwide recognition and our financial success directly depends on the success of our
brands. The success of our brands can suffer if our marketing plans or product initiatives do not have the desired impact on a
brand's image or its ability to attract consumers. Our results of operations or cash flows could also be negatively impacted if the
Company or one of our brands suffers substantial harm to its reputation due to a significant product recall, product-related
litigation, defects or impurities in our products, product misuse, changing consumer perceptions of certain ingredients, negative
perceptions of packaging (such as plastic and other petroleum-based materials), lack of recyclability or other environmental
attributes, concerns about actual or alleged labor or equality and inclusion practices, privacy failures or data breaches,
allegations of product tampering or the distribution and sale of counterfeit products. Additionally, negative or inaccurate
postings or comments on social media or networking websites about the Company or one of its brands could generate adverse
publicity that could damage the reputation of our brands or the Company. If we are unable to effectively manage real or
perceived issues, including concerns about safety, quality, ingredients, efficacy, environmental or social impacts or similar
matters, sentiments toward the Company or our products could be negatively impacted, and our results of operations or cash
flows could suffer. Our Company also devotes time and resources to citizenship efforts that are consistent with our corporate
values and are designed to strengthen our business and protect and preserve our reputation, including programs driving ethics
and corporate responsibility, strong communities, equality and inclusion and environmental sustainability. While the Company
The Procter & Gamble Company 5
has many programs and initiatives to further these citizenship efforts, we are impacted in part by the actions and efforts of third
parties including local and other governmental authorities, suppliers, vendors and customers. Consumer or broader stakeholder
perceptions of these programs and initiatives widely vary and could adversely affect our business. If these programs are not
executed as planned or suffer negative publicity, the Company's reputation and results of operations or cash flows could be
adversely impacted.
We rely on third parties in many aspects of our business, which creates additional risk.
Due to the scale and scope of our business, we must rely on relationships with third parties, including our suppliers, contract
manufacturers, distributors, contractors, commercial banks, joint venture partners and external business partners, for certain
functions. If we are unable to effectively manage our third-party relationships and the agreements under which our third-party
partners operate, our results of operations and cash flows could be adversely impacted. Further, failure of these third parties to
meet their obligations to the Company, including the transparency and accuracy of the disclosures of ingredients in materials or
processes, and the proper security of Company data and personal data, or substantial disruptions in the relationships between
the Company and these third parties could adversely impact our operations and financial results. Additionally, while we have
policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business
operations, governance and compliance, thereby potentially increasing our financial, legal, reputational and operational risk.
A significant information security or operational technology incident, including a cybersecurity breach, or the failure of
one or more key information or operations technology systems, networks, hardware, processes and/or associated sites
involving the Company or one of its service providers could have a material adverse impact on our business or
reputation.
We rely extensively on information and operational technology (IT/OT) systems, networks and services, including internet and
intranet sites, data hosting and processing facilities and technologies, physical security systems and other hardware, software
and technical applications and platforms. Many of these are managed, hosted, provided and/or used by third parties or their
vendors. The various uses of these IT/OT systems, networks and services include, but are not limited to, ordering and managing
materials from suppliers; converting materials to finished products; shipping, marketing and selling products; collecting,
transferring, storing and/or processing customer, consumer, employee, vendor, investor and other stakeholder information and
personal data, summarizing and reporting results of operations, including financial reporting; managing our banking and other
cash liquidity systems and platforms; hosting, processing and sharing, as appropriate, confidential and proprietary research,
business plans and financial information; collaborating via an online and efficient means of global business communications;
complying with regulatory, legal and tax requirements; providing data security; and handling other processes necessary to
manage our business.
Numerous and evolving information security threats, including advanced persistent cybersecurity threats, pose a risk to the
security of our services, systems, networks and supply chain, as well as the confidentiality, availability and integrity of our data
and of our critical business operations. In addition, because the techniques, tools and tactics used in cyber-attacks frequently
change and may be difficult to detect for periods of time, we may face difficulties in anticipating and implementing adequate
preventative measures or fully mitigating harms after such an attack, including acquired and divested businesses.
Our IT/OT databases and systems and our third-party providers’ databases and systems have been, and will likely continue to
be, subject to advanced computer viruses or other malicious codes, ransomware, unauthorized access attempts, denial of service
attacks, phishing, social engineering, hacking and other cyber-attacks. Such attacks may originate from outside parties, hackers,
criminal organizations or other threat actors, including nation states. In addition, insider actors - malicious or otherwise - could
cause technical disruptions and/or confidential data leakage. We cannot guarantee that our security efforts or the security efforts
of our third-party providers will prevent material breaches, operational incidents or other breakdowns to our or our third-party
providers’ IT/OT databases or systems.
A breach of our data security systems or failure of our IT/OT databases and systems and those of our third-parties may have a
material adverse impact on our business operations and financial results. If the IT/OT systems, networks or service providers
we rely upon fail to function properly or cause operational outages or aberrations, or if we or one of our third-party providers
suffer significant unavailability of key operations, or inadvertent disclosure of, lack of integrity of, or loss of our sensitive
business or stakeholder information, including personal information, due to any number of causes, including catastrophic
events, natural disasters, power outages, computer and telecommunications failures, improper data handling, viruses, phishing
attempts, cyber-attacks, malware and ransomware attacks, security breaches, misuse or malicious use of artificial intelligence,
security incidents or employee error or malfeasance, and our business continuity plans do not effectively address these failures
on a timely basis, we may suffer interruptions in our ability to manage operations and be exposed to reputational, competitive,
operational, financial and business harm as well as litigation and regulatory action. If our critical IT systems or back-up systems
or those of our third-party vendors are damaged or cease to function properly, we may have to make a significant investment to
repair or replace them.
In addition, if a ransomware attack or other cybersecurity incident occurs, either internally or at our third-party providers, we
could be prevented from accessing our data or systems, which may cause interruptions or delays in our business operations,
cause us to incur remediation costs, subject us to demands to pay a ransom or damage our reputation. In addition, such events
could result in unauthorized disclosure or loss of confidential information or stakeholder information, including personal data
6 The Procter & Gamble Company
from customers, consumers, employees, vendors, investors and other stakeholders, and we may suffer financial and reputational
damage as a result. Additionally, we could be exposed to potential liability, litigation, governmental inquiries, reporting
requirements, investigations or regulatory enforcement actions; and we could be subject to payment of fines or other penalties,
legal claims by our suppliers, customers or employees and significant remediation costs.
Periodically, we and/or our suppliers also upgrade IT/OT systems or adopt new technologies, including those enabled by
machine learning or artificial intelligence. If such a new system or technology does not function properly, provides flawed or
inaccurate outputs or exposes us to increased cybersecurity breaches and failures, it could affect our ability to order materials,
make and ship orders and process payments in addition to other operational and information integrity and loss issues. The costs
and operational consequences of responding to the above items and implementing remediation measures could be significant
and could adversely impact our results of operations and cash flows and generate negative publicity affecting Company
reputation and relationships among consumers, customers and other business partners.
We must successfully manage the demand, supply and operational challenges associated with the effects of any future
disease outbreak, including epidemics, pandemics or similar widespread public health concerns.
Our business may be negatively impacted by the fear of exposure to or actual effects of a disease outbreak, epidemic, pandemic
or similar widespread public health concern. These impacts may include, but are not limited to:
•
Significant reductions in demand or significant volatility in demand for one or more of our products, which may be caused
by, among other things: the temporary inability of consumers to purchase our products due to illness, quarantine or other
travel restrictions or financial hardship, shifts in demand away from one or more of our more discretionary or higher priced
products to lower priced products or stockpiling or similar pantry-loading activity. If prolonged, such impacts can further
increase the difficulty of business or operations planning and may adversely impact our results of operations and cash
flows; or
•
Significant changes in the political conditions in markets in which we manufacture, sell or distribute our products,
including quarantines, import/export restrictions, price controls, or governmental or regulatory actions, closures or other
restrictions that limit or close our operating and manufacturing facilities, restrict our employees’ ability to travel or perform
necessary business functions or otherwise prevent our third-party partners, suppliers or customers from sufficiently staffing
operations.
Despite efforts to manage and remedy these impacts, their ultimate impact also depends on factors beyond our knowledge or
control, including the duration and severity of any such outbreak as well as third-party actions taken to contain its spread and
mitigate its public health effects.
BUSINESS STRATEGY & ORGANIZATIONAL RISKS
Our ability to meet our growth targets depends on successful product, marketing and operations innovation and
successful responses to competitive innovation, evolving digital marketing and selling platforms and changing consumer
habits.
We are a consumer products company that relies on continued global demand for our brands and products. Achieving our
business results depends, in part, on successfully developing, introducing and marketing new products and on making
significant improvements to our equipment and manufacturing processes. The success of such innovation depends on our ability
to correctly anticipate customer and consumer acceptance and trends, to obtain, maintain and enforce necessary intellectual
property protections and to avoid infringing upon the intellectual property rights of others and to continue to deliver efficient
and effective marketing across evolving media and mobile platforms with dynamic and increasingly more restrictive privacy
requirements. We must also successfully respond to technological advances made by, and intellectual property rights granted to,
competitors, customers and vendors. Failure to continually innovate, improve and respond to competitive moves, changing
consumer habits and platform evolution, including the timely and effective adoption of emerging technologies, could
compromise our competitive position and adversely impact our financial condition, results of operations or cash flows.
We must successfully manage ongoing acquisition, joint venture and divestiture activities.
As a company that manages a portfolio of consumer brands, our ongoing business model includes a certain level of acquisition,
joint venture and divestiture activities. We must be able to successfully manage the impacts of these activities, while at the
same time delivering against our business objectives. Specifically, our financial results have been, and in the future could be,
adversely impacted by the dilutive impacts from the loss of earnings associated with divested brands or dissolution of joint
ventures. Our results of operations and cash flows have been, and in the future could also be, impacted by acquisitions or joint
venture activities, if: 1) changes in the cash flows or other market-based assumptions cause the value of acquired assets to fall
below book value, or 2) we are not able to deliver the expected cost and growth synergies associated with such acquisitions and
joint ventures, including as a result of integration and collaboration challenges, which could also result in an impairment of
goodwill and intangible assets.
Our business results depend on our ability to successfully manage productivity improvements and ongoing
organizational change, including attracting and retaining key talent as part of our overall succession planning.
Our financial projections assume certain ongoing productivity improvements and cost savings, including staffing adjustments
and employee departures. Failure to deliver these planned productivity improvements and cost savings, while continuing to
The Procter & Gamble Company 7
invest in business growth, could adversely impact our results of operations and cash flows. Additionally, successfully executing
organizational change, management transitions at leadership levels of the Company and motivation and retention of key
employees is critical to our business success. Factors that may affect our ability to attract and retain sufficient numbers of
qualified employees include employee morale, our reputation, competition from other employers and availability of qualified
individuals. Our success depends on identifying, developing and retaining key employees to provide uninterrupted leadership
and direction for our business. This includes developing and retaining organizational capabilities in key growth markets where
the depth of skilled or experienced employees may be limited and competition for these resources is intense as well as
continuing the development and execution of robust leadership succession plans.
LEGAL & REGULATORY RISKS
We must successfully manage compliance with current and expanding laws and regulations, as well as manage new and
pending legal and regulatory matters in the U.S. and abroad.
Our business is subject to a wide variety of laws and regulations across the countries in which we do business, including those
laws and regulations involving intellectual property, product liability, product composition or formulation, manufacturing
processes, packaging content or corporate responsibility for packaging and product disposal, marketing, antitrust and
competition, privacy, cybersecurity and data protection, artificial intelligence, environmental (including increasing focus on the
climate, nature, water and waste impacts of consumer packaged goods companies' operations and products), employment,
healthcare, anti-bribery and anti-corruption (including interactions with health care professionals and government officials as
well as corresponding internal controls and record-keeping requirements), trade (including tariffs, sanctions and export
controls), tax, accounting and financial reporting or other matters. In addition, increasing governmental and societal attention to
environmental, social and governance (ESG) matters, including expanding mandatory and voluntary reporting, diligence and
disclosure on topics such as climate change, waste production, water usage, nature impacts, human capital, labor and risk
oversight, could expand the nature, scope and complexity of matters that we are required to control, assess and report. These
and other rapidly changing laws, regulations, policies and related interpretations as well as increased enforcement actions by
various governmental and regulatory agencies, create challenges for the Company, may alter the environment in which we do
business, may increase the ongoing costs and complexities of compliance including by requiring investments in technology or
other compliance systems and may ultimately result in the need to cease manufacturing, sales or other business activities in
certain jurisdictions, which could adversely impact our results of operations and cash flows. If we are unable to continue to
meet these challenges and comply with all laws, regulations, policies and related interpretations, it could negatively impact our
reputation and our business results. Additionally, we are currently, and in the future may be, subject to a number of inquiries,
investigations, claims, proceedings and requests for information from governmental agencies or private parties, the adverse
outcomes of which could harm our business. Failure to successfully manage these new or pending regulatory and legal matters
and resolve such matters without significant liability or damage to our reputation may materially adversely impact our financial
condition, results of operations and cash flows. Furthermore, if new or pending legal or regulatory matters result in fines or
costs in excess of the amounts accrued to date, that may also materially impact our results of operations and financial position.
Changes in applicable tax laws and regulations and resolutions of tax disputes could negatively affect our financial
results.
The Company is subject to taxation in the U.S. and numerous foreign jurisdictions. Changes in the various tax laws can and do
occur. For example, in December 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as
the Tax Cuts and Jobs Act (the U.S. Tax Act). The changes included in the U.S. Tax Act were broad and complex. Under the
current U.S. presidential administration, comprehensive federal income tax reform has been proposed, including an increase in
the U.S. Federal corporate income tax rate, elimination of certain investment incentives and an increase in U.S. taxation of non-
U.S. earnings. While these proposals are controversial, likely to change during the legislative process and may prove difficult to
enact as proposed in the current closely divided U.S. Congress, their impact could nonetheless be significant.
Additionally, longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international
trade are subject to potential evolution. An outgrowth of the original Base Erosion and Profit Shifting (BEPS) project is a
project undertaken by the approximately 140 member countries of the expanded Organisation for Economic Co-operation and
Development (OECD) Inclusive Framework focused on "Addressing the Challenges of the Digitalization of the Economy." The
breadth of this project extends beyond pure digital businesses and, as proposed, would likely impact a large portion of
multinational businesses by potentially redefining jurisdictional taxation rights in market countries and establishing a global
minimum tax. In December 2022, the European Union (EU) approved a directive requiring member states to incorporate a 15%
global minimum tax into their respective domestic laws effective for fiscal years beginning on or after December 31, 2023.
Most member states complied with the directive while some were permitted a delayed implementation. In addition, several non-
EU countries have proposed and/or adopted legislation consistent with the global minimum tax framework. Important details of
these minimum tax developments are still to be determined and, in some cases, enactment and timing remain uncertain.
Based on current legislation and available guidance, we do not anticipate the Pillar Two global minimum tax to have a material
impact to our financial condition, results of operations, cash flows or effective tax rate in the fiscal year ending June 30, 2025.
The Company continues to assess the overall impact of potential changes as developments occur, consistent with our practice to
monitor all changes in tax laws. As the Pillar Two global minimum tax and other tax laws and related regulations are revised,
8 The Procter & Gamble Company
enacted and implemented, a material impact to our financial condition, results of operations, cash flows or effective tax rate
may occur.
Furthermore, we are subject to regular review and audit by both foreign and domestic tax authorities. While we believe our tax
positions will be sustained, the final outcome of tax audits and related litigation, including maintaining our intended tax
treatment of divestiture transactions such as the fiscal 2017 Beauty Brands transaction with Coty, may differ materially from the
tax amounts recorded in our Consolidated Financial Statements, which could adversely impact our results of operations and
cash flows.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Risk Management and Strategy
The Company employs multiple tools and processes for assessing, identifying, and managing material risks from cybersecurity
threats. A multi-functional enterprise security team reviews and assesses top cybersecurity risks. This assessment is shared with
members of senior management, including the Chief Information Officer (CIO) and Chief Information Security Officer (CISO),
and helps guide the Company's cybersecurity operational priorities and strategy. In addition, cybersecurity risks are integrated
into the Company’s broader Enterprise Risk Management program and, when identified, are reported to relevant business and
governance leaders within the Company for appropriate action.
To support the ongoing identification and management of cybersecurity issues, the Company provides information security
employee training, conducts global and targeted phishing simulation campaigns and conducts tabletop exercises. The Company
also deploys a large library of security tools and experts to help prevent, detect, contain, eradicate and recover from potential
cybersecurity issues and cyber-attacks. Further, the Company engages third-party consultants and services for cyber
intelligence, insights and assessments of its cybersecurity risk posture and governance.
Cybersecurity reviews are embedded into the Company’s Third-Party Risk Management program. Generally under this
program, third parties that process personal data or high-risk business data on behalf of the Company complete privacy and
cybersecurity assessments on a risk basis, which may require such third parties to sign data processing agreements, comply with
particular security controls or complete an additional security and privacy assessment.
As a global company, we manage a variety of cybersecurity threats and cannot wholly eliminate the risk of adverse impacts
from such incidents. However, as of the date of this Form 10-K, we have not identified any cybersecurity threats that have
materially affected or are reasonably likely to materially affect our business strategy, results of our operations or financial
condition. For additional information on the risks from cybersecurity threats that we have faced in the past and expect to
continue to face in the future, please refer to the “Risk Factors” in Part I, Item 1A of this Form 10-K.
Governance
The Company’s Board of Directors oversees cybersecurity risks consistent with its general risk oversight responsibility. The
Audit Committee of the Board has specific responsibility for reviewing the status of the security of the Company’s electronic
data processing information systems and the general security, including cybersecurity, of the Company’s people, assets and
information systems. In support of this general oversight, the full Board reviews at least annually the most significant enterprise
risks facing the Company, including cybersecurity risks, as identified in the Company’s Enterprise Risk Management program.
This review, which includes key members of senior management, covers any key risks from information security that have been
identified and corresponding action plans. The Audit Committee also receives regular updates from the Company’s CIO and
CISO about the Company’s information security and systems security programs and plans, including emerging trends and
progress on overall enterprise cybersecurity programs and priorities. These updates occur at least three times a year, with
interim updates as needed.
The Company’s management is responsible for implementing its strategic plans, including identifying, evaluating, managing
and mitigating the risks inherent in them, such as cybersecurity risks. Within management, the Company’s CISO has specific
responsibility for cybersecurity risk management, reporting to the CIO.
The Company’s CISO has over 15 years of experience in cybersecurity, information security and information risk management,
including several years each in security engineering and in operations, as well as running incident response organizations. The
CISO's organization includes a dedicated team of centralized information security experts and a network of security
professionals embedded in each business unit and function.
The CISO also leads the design and development of the Company’s cybersecurity program, relying on functional experts within
the central Information Security organization as well as on information security experts within each of the Company’s
Organizational Units. These embedded experts are responsible for the execution of the Company’s overall information security
strategy and report security risks in their area of responsibility to their Organization Unit leader and to the CISO. Experts within
the Company’s central Information Security organization help develop the Company’s cybersecurity strategies, policies and
standards and similarly report security risks within the central enterprise to the CISO.
The Procter & Gamble Company 9
A central team within the Company leads enterprise-wide incident investigations and response, assisting and consulting on
cyber security incidents impacting individual Organizational Units. Alerts of potential incidents can arise from security tool
alerts, employee reports, threat intelligence sources, threat hunting activities or external entities, among other sources. The
Company's Security Operations Center initially responds to incident alerts and notifies central experts to any potentially
significant cybersecurity incidents. Members of the Security Operations Center and relevant response teams work to contain
and eradicate potential and identified threats and support the system’s recovery efforts, advised as needed by the Legal
department and other Company experts. Incidents are communicated to the CISO and other members of management, including
the Company’s Ethics & Compliance Committee, as well as the Audit Committee of the Board, based on documented
escalation criteria. The central enterprise team also regularly reviews incident reports to update the CISO.
As described above, both the CIO and CISO report information about the Company’s identification and management of
cybersecurity risks to the Audit Committee.
Item 2. Properties.
In the U.S., we own and operate 24 manufacturing sites located in 18 different states. In addition, we own and operate 78
manufacturing sites in 33 other countries. Many of the domestic and international sites manufacture products for multiple
businesses. Beauty products are manufactured at 22 of these locations; Grooming products at 17; Health Care products at 20;
Fabric & Home Care products at 35; and Baby, Feminine & Family Care products at 37. We own our Corporate headquarters in
Cincinnati, Ohio. We own or lease our principal regional general offices in Switzerland, Panama, Singapore, China and the
United Arab Emirates. We own or lease our principal regional shared service centers in Costa Rica, the United Kingdom and
the Philippines. Management believes that the Company's sites are adequate to support the business and that the properties and
equipment have been well maintained.
Item 3. Legal Proceedings.
The Company is subject, from time to time, to certain legal proceedings and claims arising out of our business, which cover a
wide range of matters, including antitrust and trade regulation, product liability, advertising, contracts, environmental issues,
patent and trademark matters, labor and employment matters and tax. In addition, SEC regulations require that we disclose
certain environmental proceedings arising under Federal, State or local law when a governmental authority is a party and such
proceeding involves potential monetary sanctions that the Company reasonably believes will exceed a certain threshold ($1
million or more).
On November 22, 2023, Procter & Gamble UK (“P&G UK”), a United Kingdom based wholly owned subsidiary of the
Company, received notification from the U.K. Environment Agency of its intent to assess an unspecified civil penalty for P&G
UK’s prior inadvertent failure to secure a required permit for its London-based manufacturing site under the European Union’s
and United Kingdom’s Emission Trading Systems. Among other requirements, these Emissions Trading Systems require
registration of the site and accounting of and payment for certain past greenhouse gas emissions. The site has been properly
registered since March 2021, and P&G UK proactively notified the U.K. Environment Agency after learning of the prior issue.
There are no other relevant matters to disclose under this Item for this period. See Note 13 to our Consolidated Financial
Statements for information on certain legal proceedings for which there are contingencies.
This item should be read in conjunction with the Company's Risk Factors in Part I, Item 1A for additional information.
Item 4. Mine Safety Disclosure.
Not applicable.
10 The Procter & Gamble Company
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The names, ages and positions held by the Executive Officers of the Company on August 5, 2024, are:
Name
Position
Age
First Elected to
Officer Position
Jon R. Moeller
Chairman of the Board, President and Chief Executive
Officer
60
2009 (1)
Shailesh Jejurikar
Chief Operating Officer
57
2018 (2)
Andre Schulten
Chief Financial Officer
53
2021 (3)
Gary A. Coombe
Chief Executive Officer - Grooming
60
2014 (( )
Jennifer L. Davis
Chief Executive Officer - Health Care
53
2022 (4)
Ma. Fatima D. Francisco
Chief Executive Officer - Baby, Feminine and Family Care
56
2018 (5)
R. Alexandra Keith
Chief Executive Officer - Beauty and Executive Sponsor for
Corporate Sustainability
56
2017 (6)
Sundar Raman
Chief Executive Officer - Fabric and Home Care
49
2021 (7)
Victor Aguilar
Chief Research, Development and Innovation Officer
57
2020 (8)
Marc S. Pritchard
Chief Brand Officer
64
2008 (( )
Balaji Purushothaman
Chief Human Resources Officer
55
2023 (9)
Susan Street Whaley
Chief Legal Officer and Secretary
50
2022 (10)
All the Executive Officers named above have been employed by the Company for more than the past five years.
(1)
Mr. Moeller previously served as President and Chief Executive Officer (2021 - 2022), Vice Chairman, Chief Operating Officer and Chief Financial
Officer (2019 - 2021), Vice Chairman and Chief Financial Officer (2017 - 2019) and as Chief Financial Officer (2009 - 2017).
(2)
Mr. Jejurikar previously served as Chief Executive Officer - Fabric and Home Care (2019 - 2021) and President - Global Fabric, Home Care and P&G
Professional (2018 - 2019).
(3)
Mr. Schulten previously served as Senior Vice President - Baby Care, North America (2018 - 2021).
(4)
Ms. Davis previously served as President - Feminine Care (2019 - 2022) and President - Global Feminine Care (2018 - 2019).
(5)
Ms. Francisco previously served as Chief Executive Officer - Baby and Feminine Care (2019 - 2021) and President - Global Baby Care and Baby &
Feminine Care Sector (2018 - 2019).
(6)
Ms. Keith previously served as Chief Executive Officer - Beauty (2017 - 2022).
(7)
Mr. Raman previously served as President - Home Care and P&G Professional (2020 - 2021), President - Fabric Care, North America and P&G
Professional (2019 - 2020), and Vice President - Fabric Care, North America (2015 - 2019).
(8)
Mr. Aguilar previously served as Senior Vice President - Research & Development, Corporate Function Research & Development (2020), Senior Vice
President - Research & Development, Corporate Function Research & Development and Global Fabric Care (2019), and Senior Vice President - Research
& Development Global Fabric Care; and Sector Leader, Research & Development Global Fabric and Home Care (2014 - 2019).
(9)
Mr. Purushothaman previously served as Senior Vice President - Human Resources, Global Total Rewards, Employee and Labor Relations and Corporate
Services (2020 - 2022) and as Senior Vice President - Human Resources, Beauty, Grooming, and Family Care (2015 - 2020).
(10)
Ms. Whaley previously served as Senior Vice President and General Counsel - North America, Practice Groups and Sector Business Units (2019 - 2022),
and Vice President and General Counsel - North America, Global Go-To-Market and Practice Groups, and Global Business Units (2016 - 2019).
The Procter & Gamble Company 11
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total Number of
Shares Purchased (1)
Average Price Paid
per Share (2)
Total Number of
Shares Purchased as
Part of Publicly Announced
Plans or Programs (3)
Approximate Dollar Value of
Shares that May Yet Be
Purchased Under Our Share
Repurchase Program
4/1/2024 - 4/30/2024
—
—
—
(3)
5/1/2024 - 5/31/2024
4,518,335
$165.99
4,518,335
(3)
6/1/2024 - 6/30/2024
4,491,564
166.96
4,491,564
(3)
Total
9,009,899
$166.48
9,009,899
(3)
(1)
All transactions are reported on a trade date basis and were made in the open market with large financial institutions. This table excludes
shares withheld from employees to satisfy tax withholding requirements on option exercises and other equity-based transactions. The
Company administers cashless exercises through an independent third party and does not repurchase stock in connection with cashless
exercises.
(2)
Average price paid per share for open market transactions excludes commission.
(3)
In accordance with the repurchase program announced on July 28, 2023, the Company reaffirmed in its earnings release on April 19,
2024, that it expected to reduce outstanding shares through direct share repurchases at a value of $5 to $6 billion in fiscal year 2024,
notwithstanding any purchases under the Company's compensation and benefit plans. The share repurchases were authorized pursuant to
a resolution issued by the Company's Board of Directors and were financed through a combination of operating cash flows and issuance
of debt. The total value of the shares purchased under the share repurchase plan was $5 billion. The share repurchase plan ended on
June 30, 2024.
Additional information required by this item can be found in Part III, Item 12 of this Form 10-K.
SHAREHOLDER RETURN PERFORMANCE GRAPHS
Market and Dividend Information
P&G has been paying a dividend for 134 consecutive years since its incorporation in 1890 and has increased its dividend for 68
consecutive years since 1956. Over the past ten years, the dividend has increased at an annual compound average rate of 5%.
Nevertheless, as in the past, further dividends will be considered after reviewing dividend yields, profitability and cash flow
expectations and financing needs and will be declared at the discretion of the Company's Board of Directors.
(in dollars; split-adjusted)
1956
1964
1974
1984
1994
2004
2014
2024
Dividends per share
$
0.01
$
0.03
$
0.06
$
0.15
$
0.31
$
0.93
$
2.45
$
3.83
12 The Procter & Gamble Company
Common Stock Information
P&G trades on the New York Stock Exchange under the stock symbol PG. As of June 30, 2024, there were approximately 6
million common stock shareowners, including shareowners of record, participants in P&G stock ownership plans and beneficial
owners with accounts at banks and brokerage firms.
Shareholder Return
The following graph compares the cumulative total return of P&G’s common stock for the five-year period ended June 30,
2024, against the cumulative total return of the S&P 500 Stock Index (broad market comparison) and the S&P 500 Consumer
Staples Index (line of business comparison). The graph and table assume $100 was invested on June 30, 2019, and that all
dividends were reinvested.
Cumulative Value of $100 Investment, through June 30
Company Name/Index
2019
2020
2021
2022
2023
2024
P&G
$
100 $
112 $
129 $
141 $
153 $
170
S&P 500
100
108
151
135
162
202
S&P 500 Consumer Staples
100
104
128
136
145
157
Item 6. Intentionally Omitted.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to
our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear
throughout this report, including without limitation, the following sections: “Management's Discussion and Analysis,” “Risk
Factors” and "Notes 4, 8 and 13 to the Consolidated Financial Statements." These forward-looking statements generally are
identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,”
“plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Forward-
looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may
cause results to differ materially from those expressed or implied in the forward-looking statements. We undertake no
The Procter & Gamble Company 13
obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or
otherwise, except to the extent required by law.
Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to
successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls; (2)
the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to
generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend
payments; (3) the ability to successfully manage uncertainties related to changing political and geopolitical conditions and
potential implications such as exchange rate fluctuations, market contraction, boycotts, sanctions or other trade controls; (4) the
ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (5) the ability to
maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and
sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of
our control, such as natural disasters, acts of war or terrorism or disease outbreaks; (6) the ability to successfully manage cost
fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy,
pension and healthcare; (7) the ability to compete with our local and global competitors in new and existing sales channels,
including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products;
(8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by
successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging
content, supply chain practices or similar matters that may arise; (10) the ability to successfully manage the financial, legal,
reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers,
distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third-party
information and operational technology systems, networks and services and maintain the security and functionality of such
systems, networks and services and the data contained therein; (12) the ability to successfully manage the demand, supply and
operational challenges, as well as governmental responses or mandates, associated with a disease outbreak, including
epidemics, pandemics or similar widespread public health concerns; (13) the ability to stay on the leading edge of innovation,
obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving digital
marketing and selling platform requirements and technological advances attained by, and patents granted to, competitors; (14)
the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the
Company’s overall business strategy and financial objectives, without impacting the delivery of base business objectives; (15)
the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes
while successfully identifying, developing and retaining key employees, including in key growth markets where the availability
of skilled or experienced employees may be limited; (16) the ability to successfully manage current and expanding regulatory
and legal requirements and matters (including, without limitation, those laws and regulations involving product liability,
product and packaging composition, manufacturing processes, intellectual property, labor and employment, antitrust, privacy,
cybersecurity and data protection, artificial intelligence, tax, the environment, due diligence, risk oversight, accounting and
financial reporting) and to resolve new and pending matters within current estimates; (17) the ability to manage changes in
applicable tax laws and regulations; and (18) the ability to successfully achieve our ambition of reducing our greenhouse gas
emissions and delivering progress towards our environmental sustainability priorities. A detailed discussion of risks and
uncertainties that could cause actual results and events to differ materially from those projected herein is included in the section
titled "Economic Conditions and Uncertainties" and the section titled "Risk Factors" (Part I, Item 1A) of this Form 10-K.
Purpose, Approach and Non-GAAP Measures
The purpose of Management's Discussion and Analysis (MD&A) is to provide an understanding of Procter & Gamble's
financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. The
MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and
accompanying Notes. The MD&A is organized in the following sections:
•
Overview
•
Summary of 2024 Results
•
Economic Conditions and Uncertainties
•
Results of Operations
•
Segment Results
•
Cash Flow, Financial Condition and Liquidity
•
Critical Accounting Policies and Estimates
•
Other Information
Throughout the MD&A we refer to measures used by management to evaluate performance, including unit volume growth, net
sales, net earnings, diluted net earnings per common share (diluted EPS) and operating cash flow. We also refer to a number of
financial measures that are not defined under U.S. GAAP, including organic sales growth, Core earnings per share (Core EPS),
adjusted free cash flow and adjusted free cash flow productivity. The explanation at the end of the MD&A provides the
14 The Procter & Gamble Company
definition of these non-GAAP measures, details on the use and the derivation of these measures, as well as reconciliations to the
most directly comparable U.S. GAAP measure.
Management also uses certain market share and market consumption estimates to evaluate performance relative to competition
despite some limitations on the availability and comparability of share and consumption information. References to market
share and consumption in the MD&A are based on a combination of vendor-purchased traditional brick-and-mortar and online
data in key markets as well as internal estimates. All market share references represent the percentage of sales of our products
in dollar terms on a constant currency basis relative to all product sales in the category. The Company measures quarter and
fiscal year-to-date market shares through the most recent period for which market share data is available, which typically
reflects a lag time of one or two months as compared to the end of the reporting period. Management also uses unit volume
growth to evaluate drivers of changes in net sales. Organic volume growth reflects year-over-year changes in unit volume
excluding the impacts of acquisitions and divestitures and certain one-time items, if applicable, and is used to explain changes
in organic sales. In our presentation of data in tables or other charts, certain columns and rows may not add due to rounding.
OVERVIEW
P&G is a global leader in the fast-moving consumer goods industry, focused on providing branded consumer packaged goods
of superior quality and value to our consumers around the world. Our products are sold in about 180 countries and territories
primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club
stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including airport duty-free stores),
high-frequency stores, pharmacies, electronics stores and professional channels. We also sell direct to individual consumers.
We have on-the-ground operations in about 70 countries.
Our market environment is highly competitive with global, regional and local competitors. In many of the markets and industry
segments in which we sell our products, we compete against other branded products as well as retailers' private-label brands.
Additionally, many of the product segments in which we compete are differentiated by price tiers (referred to as super-
premium, premium, mid-tier and value-tier products). We believe we are well positioned in the industry segments and markets
in which we operate, often holding a leadership or significant market share position.
Organizational Structure
Our organizational structure is comprised of Sector Business Units (SBUs), Enterprise Markets (EMs), Corporate Functions
(CF) and Global Business Services (GBS).
Sector Business Units
The Company's product categories are organized into five SBUs and five reportable segments (under U.S. GAAP): Beauty;
Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The SBUs are responsible for global brand
strategy, product upgrades and innovation, marketing plans and supply chain. They have direct profit responsibility for markets
(referred to as Focus Markets) representing the large majority of the Company's sales and earnings and are also responsible for
innovation plans, supply plans and operating frameworks to drive growth and value creation in the remaining markets (referred
to as Enterprise Markets). Throughout the MD&A, we reference business results by region, which are comprised of North
America, Europe, Greater China, Latin America, Asia Pacific and India, Middle East and Africa (IMEA).
The Procter & Gamble Company 15
The following provides additional detail on our reportable segments and the product categories and brand composition within
each segment.
Reportable Segments
% of
Net Sales (1)
% of Net
Earnings (1)
Product Categories (Sub-Categories)
Major Brands
Beauty
18%
18%
Hair Care (Conditioners, Shampoos, Styling Aids,
Treatments)
Head & Shoulders, Herbal
Essences, Pantene, Rejoice
Skin and Personal Care (Antiperspirants and
Deodorants, Personal Cleansing, Skin Care)
Olay, Old Spice, Safeguard,
Secret, SK-II, Native
Grooming
8%
9%
Grooming (Appliances, Female Blades & Razors,
Male Blades & Razors, Pre- and Post-Shave
Products, Other Grooming)
Braun, Gillette, Venus
Health Care
14%
14%
Oral Care (Toothbrushes, Toothpastes, Other Oral
Care)
Crest, Oral-B
Personal Health Care (Gastrointestinal, Pain Relief,
Rapid Diagnostics, Respiratory, Vitamins/Minerals/
Supplements, Other Personal Health Care)
Metamucil, Neurobion,
Pepto-Bismol, Vicks
Fabric & Home
Care
36%
34%
Fabric Care (Fabric Enhancers, Laundry Additives,
Laundry Detergents)
Ariel, Downy, Gain, Tide
Home Care (Air Care, Dish Care, P&G Professional,
Surface Care)
Cascade, Dawn, Fairy,
Febreze, Mr. Clean, Swiffer
Baby, Feminine
& Family Care
24%
25%
Baby Care (Baby Wipes, Taped Diapers and Pants)
Luvs, Pampers
Feminine Care (Adult Incontinence, Menstrual Care) Always, Always Discreet,
Tampax
Family Care (Paper Towels, Tissues, Toilet Paper)
Bounty, Charmin, Puffs
(1)
Percent of Net sales and Net earnings for the fiscal year ended June 30, 2024 (excluding results held in Corporate).
Organization Design:
Sector Business Units
Beauty: We are a global market leader amongst the beauty categories in which we compete, including hair care and skin and
personal care. We are a global market leader in the retail hair care market with about 20% global market share primarily behind
our Head & Shoulders and Pantene brands. In skin and personal care, we offer a wide variety of products, ranging from
deodorants to personal cleansing to skin care, such as our Olay brand, which is one of the top facial skin care brands in the
world with about 5% global market share.
Grooming: We are the global market leader in the grooming market, where we hold more than 45% share. Our global blades
and razors market share is more than 60%, primarily behind our Gillette and Venus brands. Our appliances, such as electric
shavers and intense pulse light devices, are sold primarily under the Braun brand. We hold over 25% of the male electric
shavers market.
Health Care: We compete in oral care and personal health care. In oral care, there are several global competitors in the market,
and we have the number two market share position with about 20% global market share behind our Crest and Oral-B brands. In
personal health care, we are a global market leader among the categories in which we compete, including respiratory treatments,
digestive wellness, sleep aids, vitamins and analgesics behind our Vicks, Metamucil, Pepto-Bismol and Neurobion brands.
Fabric & Home Care: This segment is comprised of a variety of fabric care products, including laundry detergents, additives
and fabric enhancers; and home care products, including dishwashing liquids and detergents, surface cleaners and air
fresheners. In fabric care, we generally have the number one or number two market share position and are the global market
leader with over 35% market share in the markets in which we compete, primarily behind our Tide, Ariel and Downy brands.
Our global home care market share is about 25% across the categories in which we compete, primarily behind our Cascade,
Dawn, Febreze and Swiffer brands.
Baby, Feminine & Family Care: In baby care, we are a global market leader and compete mainly in taped diapers, pants and
baby wipes, with more than 20% global market share. We generally have the number one or number two market share position
in the markets in which we compete, primarily behind our Pampers brand. We are a global market leader in the feminine care
category with over 20% global market share. We compete in the menstrual care sub-category primarily behind our Always and
Tampax brands with over 25% global market share. We also compete in the adult incontinence sub-category behind Always
Discreet, with about 15% market share in the markets in which we compete. Our family care business is predominantly a North
American business comprised primarily of the Bounty paper towel and Charmin toilet paper brands. North America market
shares are over 40% for Bounty and over 25% for Charmin.
16 The Procter & Gamble Company
Enterprise Markets
Enterprise Markets are responsible for sales and profit delivery in specific countries, supported by SBU-agreed innovation and
supply chain plans, along with scaled services like planning, distribution and customer management.
Corporate Functions
Corporate Functions provides company-level strategy and portfolio analysis, corporate accounting, treasury, tax, external
relations, governance, human resources, information technology and legal services.
Global Business Services
Global Business Services provides scaled services in technology, process and data tools to enable the SBUs, the EMs and CF to
better serve consumers and customers. The GBS organization is responsible for providing world-class services and solutions
that drive value for P&G.
Strategic Focus
Procter & Gamble aspires to serve the world’s consumers better than our best competitors in every category and in every
country in which we compete and, as a result, deliver total shareholder return in the top one-third of our peer group. Delivering
and sustaining leadership levels of shareholder value creation requires balanced top- and bottom-line growth and strong cash
generation.
Our strategy is to deliver and sustain value creation through five integrated choices: a portfolio of daily-use products where
performance drives brand choice; superiority across product, package, brand communication, retail execution and value;
productivity; constructive disruption of the entire value chain; and a highly efficient and effective organization structure.
The Company competes in daily-use product categories where performance plays a significant role in the consumer's choice of
brands, and therefore, plays to P&G's strengths. Our focused portfolio of businesses consists of product categories where P&G
has strong brands and consumer-meaningful product technologies with typically leadership market positions.
Within these categories, our strategic choices are focused on delighting and winning with consumers. Our consumers are at the
center of everything we do. We win with consumers by delivering irresistible superiority across five key vectors - product
performance, packaging, brand communication, retail execution and value. Winning with consumers around the world and
against our best competitors requires superior innovation. Innovation has always been, and continues to be, P&G’s lifeblood.
Superior products delivered with superior execution drive market growth, value creation for retailers and build share growth for
P&G.
Ongoing productivity improvement is strategic and crucial to delivering our balanced top- and bottom-line growth, cash
generation and value creation objectives. Productivity improvement enables investments to strengthen the superiority of our
brands via product and packaging innovation, more efficient and effective supply chains, equity and awareness-building brand
advertising and other programs and expansion of sales coverage and R&D programs. Productivity improvements also enable us
to mitigate and manage through periods of challenging cost environments (including periods of increasing commodity, inflation
and negative foreign exchange impacts). Our objective is to drive productivity improvements across all elements of the
statement of earnings and balance sheet, including cost of goods sold, marketing and promotional spending, overhead costs and
capital spending.
We act with agility and are constructively disrupting our highly competitive industry and the way we do business, including
how we innovate, communicate and leverage new technologies, to create more value.
We are improving operational effectiveness and organizational culture through enhanced clarity of roles and responsibilities,
accountability and incentive compensation programs.
Additionally, to further strengthen our integrated strategy, we have declared four focus areas. These are 1) leveraging
environmental sustainability as an additional driver of superior performing products and packaging innovations, 2) increasing
digital acumen to drive consumer and customer preference, reduce cost and enable rapid and efficient decision making, 3)
developing next-level supply chain capabilities to enable flexibility, agility, resilience and a new level of productivity and 4)
delivering a superior employee value equation for all employees inclusive of all genders, races, ethnicities, sexual orientations,
ages and abilities - for all roles - to ensure we continue to attract, retain and develop the best talent to better serve our diverse
consumer base.
We believe this strategy is right for the long-term health of the Company and our objective of delivering total shareholder return
in the top one-third of our peer group.
The Company expects the delivery of the following long-term growth algorithm will result in total shareholder returns in the
top third of the competitive, fast-moving consumer goods peer group:
•
Organic sales growth above market growth rates in the categories and geographies in which we compete;
•
Core EPS growth of mid-to-high single digits; and
•
Adjusted free cash flow productivity of 90% or greater.
While periods of significant macroeconomic pressures may cause short-term results to deviate from the long-term growth
algorithm, we intend to maintain a disciplined approach to investing in our business.
The Procter & Gamble Company 17
RECENT DEVELOPMENTS
Limited Market Portfolio Restructuring
In December 2023, the Company announced a limited market portfolio restructuring of its business operations, primarily in
certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. In
connection with this announcement, the Company announced that it expected to record incremental restructuring charges of
$1.0 to $1.5 billion after tax, consisting primarily of foreign currency translation losses to be recognized as non-cash charges
upon the substantial liquidation of operations in the affected markets.
As of June 30, 2024, the Company has substantially liquidated its operations in certain Enterprise Markets, including Nigeria,
and recorded a non-cash charge of $216 million after tax for accumulated currency translation losses previously included in
Accumulated other comprehensive income/(loss). On July 1, 2024, the Company completed the divestiture of its business in
Argentina. The Company expects to record a non-cash charge of approximately $750 million for accumulated currency
translation losses in the first quarter of the fiscal year ending June 30, 2025. Consistent with our historical policies for ongoing
restructuring-type activities, resulting charges were funded by and included within Corporate for segment reporting.
Restructuring charges above the normal ongoing level of restructuring costs were reported as non-core charges. For more
details on the restructuring program, refer to Note 3 to the Consolidated Financial Statements.
Intangible Asset Impairment
During the fiscal year ended June 30, 2024, the Company recorded a $1.3 billion before tax ($1.0 billion after tax) non-cash
impairment charge on an indefinite-lived intangible asset acquired as part of the Company’s 2005 acquisition of The Gillette
Company. The impairment charge arose from a reduction in the estimated fair value of the Gillette indefinite-lived intangible
asset due to a higher discount rate, weakening of several currencies relative to the U.S. dollar and the impact of the non-core
restructuring program described above. This impairment charge adjusted the carrying value of the Gillette indefinite-lived
intangible asset to fair value. For a more detailed discussion of the Gillette impairment, refer to Note 4 to the Consolidated
Financial Statements.
SUMMARY OF 2024 RESULTS
Amounts in millions, except per share amounts
2024
2023
Change vs. Prior
Year
Net sales
$
84,039 $
82,006
2 %
Operating income
18,545
18,134
2 %
Net earnings
14,974
14,738
2 %
Net earnings attributable to Procter & Gamble
14,879
14,653
2 %
Diluted net earnings per common share
6.02
5.90
2 %
Core earnings per share
6.59
5.90
12 %
Cash flow from operating activities
19,846
16,848
18 %
•
Net sales increased 2% to $84.0 billion versus the prior year. The net sales growth was driven by mid-single-digit increases
in Health Care, Fabric & Home Care and Grooming and a low single-digit increase in Beauty. Net Sales were unchanged in
Baby, Feminine & Family Care. Organic sales, which exclude the impact of acquisitions and divestitures and foreign
exchange, increased 4%. Organic sales increased high single digits in Grooming, mid-single digits in Fabric & Home Care
and Health Care and low single digits in Beauty and Baby, Feminine & Family Care.
•
Operating income increased $411 million, or 2%, to $18.5 billion due to the increase in net sales, partially offset by the
non-cash impairment charge of $1.3 billion related to the Gillette intangible asset.
•
Net earnings increased $236 million, or 2%, to $15.0 billion due to the increase in operating income, partially offset by a
higher effective tax rate. Foreign exchange impacts reduced net earnings by approximately $589 million.
•
Net earnings attributable to Procter & Gamble increased $226 million, or 2%, to $14.9 billion.
•
Diluted EPS increased 2% to $6.02 due to the increase in net earnings. Core EPS, which excludes the charge for the
Gillette intangible asset impairment and incremental restructuring charges, increased 12% to $6.59.
•
Cash flow from operating activities was $19.8 billion.
◦
Adjusted free cash flow, which is operating cash flow less capital expenditures and certain other impacts, was $16.9
billion.
◦
Adjusted free cash flow productivity, which is the ratio of adjusted free cash flow to net earnings excluding the Gillette
intangible asset impairment charge and a non-cash charge for accumulated foreign currency translation losses due to
the substantial liquidation of operations in certain Enterprise Markets, including Nigeria, was 105%.
18 The Procter & Gamble Company
ECONOMIC CONDITIONS AND UNCERTAINTIES
Global Economic Conditions. Our products are sold in numerous countries worldwide, with more than half our sales
generated outside the United States. Our largest international markets are Greater China, the United Kingdom, Canada, Japan
and Germany and collectively comprised approximately 20% of our net sales in fiscal 2024. As a result, we are exposed to
global macroeconomic factors, geopolitical tensions and government policies. We are exposed to market risks from operating in
challenging environments due to economic, political and social instabilities, natural disasters, debt and credit issues, currency
controls, foreign exchange and interest rate changes. These risks can negatively impact our net sales, net earnings and cash
flows. For example, we are exposed to risks due to the ongoing war between Russia and Ukraine. Our Russia business
accounted for less than 2% of consolidated net sales, net earnings and net assets as of June 30, 2024.
Foreign Exchange. We have significant exposure to exchange rate fluctuations, both due to translation and transaction
exposures. Translation exposures arise from measuring income statements of foreign subsidiaries with functional currencies
other than the U.S. dollar. Transaction exposures involve impacts from 1) input costs that are denominated in currencies other
than the local reporting currency and 2) revaluation of working capital balances denominated in currencies other than the
functional currency. We have experienced significant foreign exchange impacts in the past due to the weakening of certain
foreign currencies versus the US dollar, which have negatively impacted net sales, net earnings and cash flows. In response to
the devaluation of foreign currencies (including those deemed highly inflationary), any lags or inability (due to government
restrictions) to implement price increases or the negative impacts of such actions on product consumption may lead to a decline
in our net sales, net earnings and cash flows.
Commodities and Supply Chain. Our costs are subject to fluctuations due to changes in commodity and input material prices,
transportation costs, inflationary impacts and productivity efforts. We have significant exposures to certain commodities and
input materials, in particular certain oil-derived materials like resins and paper-based materials like pulp. Volatility in the
market price of commodities and input materials directly affects our costs. Disruptions in manufacturing, supply and
distribution operations can lead to increased costs. Legal or regulatory requirements and sustainability initiatives may result in
increased costs. We strive to implement, achieve and sustain cost improvement plans, including supply chain optimization and
general overhead and workforce optimization. Increased pricing in response to certain inflationary or cost increases may also
offset portions of the cost impacts; however, such price increases may negatively impact product consumption. If we are unable
to manage cost impacts through pricing actions and consistent productivity improvements, it may negatively impact our net
sales, net earnings and cash flows.
Government Policies. We are exposed to changes in U.S. and foreign government legislative, regulatory or enforcement
policies that can have a negative impact on net sales, net earnings and cash flows. These include tax policy changes (both U.S.
and foreign), including those resulting from the current work being led by the OECD/G20 Inclusive Framework focused on
"Addressing the Challenges of the Digitalization of the Economy”. Government controls such as currency exchanges, pricing
and import authorizations as well as government policies related to environmental and climate change matters and changes to
international trade agreements can also impact our financial performance.
For additional information on risk factors that could impact our business results, please refer to Risk Factors in Part I, Item 1A
of the Company's Form 10-K for the fiscal year ended June 30, 2024.
RESULTS OF OPERATIONS
The key metrics included in the discussion of our consolidated results of operations include net sales, gross margin, selling,
general and administrative costs (SG&A), operating margin, other non-operating items, income taxes and net earnings. The
primary factors driving year-over-year changes in net sales include overall market growth in the categories in which we
compete, product initiatives, competitive activities (the level of initiatives, pricing and other activities by competitors),
marketing spending, retail executions (both in-store and online) and acquisition and divestiture activity, all of which drive
changes in our underlying unit volume, as well as our pricing actions (which can also impact volume), changes in product and
geographic mix and foreign exchange impacts on sales outside the U.S.
For most of our categories, our cost of products sold and SG&A are variable in nature to some extent. Accordingly, our
discussion of these operating costs focuses primarily on relative margins rather than the absolute year-over-year changes in total
costs. The primary drivers of changes in gross margin are input costs (energy and other commodities), pricing impacts,
geographic mix (for example, gross margins in North America are generally higher than the Company average for similar
products), product mix (for example, the Beauty segment has higher gross margins than the Company average), foreign
exchange rate fluctuations (in situations where certain input costs may be tied to a different functional currency than the
underlying sales), the impacts of manufacturing savings projects and reinvestments (for example, product or package
improvements) and, to a lesser extent, scale impacts (for costs that are fixed or less variable in nature). The primary components
of SG&A are marketing-related costs and non-manufacturing overhead costs. Marketing-related costs are primarily variable in
nature, although we may achieve some level of scale benefit over time due to overall growth and other marketing efficiencies.
While overhead costs are variable to some extent, we generally experience more scale-related impacts for these costs due to our
ability to leverage our organization and systems' infrastructures to support business growth. The main drivers of changes in
SG&A as a percentage of net sales are overhead and marketing cost savings, reinvestments (for example, increased
advertising), inflation, foreign exchange fluctuations and scale impacts.
The Procter & Gamble Company 19
For a detailed discussion of the fiscal 2023 year-over-year changes, please refer to the MD&A in Part II, Item 7 of the
Company's Form 10-K for the fiscal year ended June 30, 2023.
Net Sales
Net sales increased 2% to $84.0 billion in fiscal 2024. The increase in net sales was driven by higher pricing of 4%, partially
offset by unfavorable foreign exchange of 2%. Volume and mix were unchanged versus the prior year.
Net sales increased mid-single digits in Health Care, Fabric & Home Care and Grooming and increased low single digits in
Beauty. Net sales were unchanged in Baby, Feminine & Family Care. Organic sales, which exclude the impacts of acquisitions
and divestitures and foreign exchange, increased 4%. Organic sales increased high single digits in Grooming, mid-single digits
in Fabric & Home Care and Health Care and low single digits in Beauty and Baby, Feminine & Family Care.
Operating Costs
Comparisons as a percentage of net sales; fiscal years ended June 30
2024
2023
Basis Point Change
Gross margin
51.4 %
47.9 %
350 bps
Selling, general and administrative expense
27.7 %
25.7 %
200 bps
Operating margin
22.1 %
22.1 %
0 bps
Earnings before income taxes
22.3 %
22.4 %
(10) bps
Net earnings
17.8 %
18.0 %
(20) bps
Net earnings attributable to Procter & Gamble
17.7 %
17.9 %
(20) bps
Gross margin increased 350 basis points to 51.4% of net sales. The increase in gross margin was due to:
•
a 220 basis-point increase from manufacturing productivity savings,
•
160 basis points of lower commodity costs and
•
a 170 basis-point increase from higher pricing.
These increases were partially offset by:
•
an 80 basis-point decline from unfavorable product mix including the decline of the super-premium SK-II brand,
•
a 60 basis-point decline from unfavorable foreign exchange impacts,
•
30 basis points of product and packaging investments and
•
30 basis points of one-time manufacturing related costs including capacity startup costs.
Total SG&A increased 10% to $23.3 billion due to increased marketing spending and overhead costs. SG&A as a percentage of
net sales increased 200 basis points to 27.7% due primarily to the increase in marketing spending as a percentage of net sales.
•
Marketing spending as a percentage of net sales increased 170 basis points as the increase in marketing spending was
partially offset by the positive scale impacts of the net sales increase and productivity savings.
•
Overhead costs as a percentage of net sales increased 20 basis points due to wage inflation and other cost increases,
partially offset by the positive scale impacts of the net sales increase and productivity savings.
Productivity-driven cost savings delivered 60 basis points of benefit to SG&A as a percentage of net sales.
In the fiscal year ended June 30, 2024, the Company recorded a non-cash impairment charge of $1.3 billion ($1.0 billion after
tax) on the Gillette intangible asset. The impairment charge arose from a reduction in the estimated fair value of the Gillette
indefinite-lived intangible asset due to a higher discount rate, weakening of several currencies relative to the U.S. dollar and the
impact of the limited market portfolio restructuring program. For further discussion of the Gillette impairment charge, refer to
Note 4 to the Consolidated Financial Statements.
Operating margin was unchanged at 22.1% as the increase in gross margin was more than fully offset by the increase in SG&A
as a percentage of net sales and the non-cash impairment charge, as discussed above.
Operating income increased $411 million, or 2%, to $18.5 billion due to the increase in net sales, as discussed above.
Non-Operating Items
•
Interest expense was $925 million, an increase of $169 million versus the prior year due primarily to higher interest rates.
•
Interest income was $473 million, an increase of $166 million versus the prior year due primarily to higher interest rates.
•
Other non-operating income was unchanged at $668 million as gains from the sale of minor brands and an increase in net
non-operating benefits on postretirement plans were fully offset by a non-cash charge for accumulated foreign currency
translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria.
20 The Procter & Gamble Company
Income Taxes
The effective income tax rate for fiscal year ended June 30, 2024, was 20.2%, compared to 19.7% for the fiscal year ended June
30, 2023. The increase in the effective tax rate was primarily driven by unfavorable geographic mix impacts, partially offset by
decreases due to higher excess tax benefits of share-based compensation.
Net Earnings
Earnings before income taxes increased $408 million, or 2%, to $18.8 billion due to the increase in operating income discussed
above. Net earnings increased $236 million, or 2%, to $15.0 billion due to the increase in earnings before income taxes,
partially offset by the increase in the effective income tax rate discussed above.
Foreign exchange impacts reduced net earnings by approximately $589 million due to a weakening of certain currencies against
the U.S. dollar. This impact includes both transactional charges and translational impacts from converting earnings from foreign
subsidiaries to U.S. dollars.
Net earnings attributable to Procter & Gamble increased $226 million, or 2%, to $14.9 billion.
Diluted EPS increased $0.12, or 2%, to $6.02 due primarily to the increase in net earnings.
SEGMENT RESULTS
Segment results reflect information on the same basis we use for internal management reporting and performance evaluation.
The results of these reportable segments do not include certain non-business unit specific costs which are reported in our
Corporate segment and are included as part of our Corporate segment discussion. Additionally, we apply blended statutory tax
rates in the segments. Eliminations to adjust segment results to arrive at our consolidated effective tax rate are included in
Corporate. See Note 2 to the Consolidated Financial Statements for additional information on items included in the Corporate
segment.
Net Sales Change Drivers 2024 vs. 2023 (1)
Volume with
Acquisitions &
Divestitures
Volume
Excluding
Acquisitions &
Divestitures
Foreign
Exchange
Price
Mix
Other (2)
Net Sales
Growth
Beauty
— %
— %
(2) %
4 %
(1) %
— %
1 %
Grooming
1 %
1 %
(5) %
8 %
— %
— %
4 %
Health Care
(1) %
(1) %
— %
4 %
2 %
— %
5 %
Fabric & Home Care
1 %
1 %
(1) %
3 %
1 %
— %
4 %
Baby, Feminine & Family Care
(2) %
(2) %
(2) %
3 %
1 %
— %
— %
TOTAL COMPANY
— %
— %
(2)%
4 %
— %
— %
2 %
(1)
Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.
(2)
Other includes the sales mix impact from acquisitions and divestitures and rounding impacts necessary to reconcile volume to net sales.
BEAUTY
($ millions)
2024
2023
Change vs. 2023
Volume
N/A
N/A
—%
Net sales
$15,220
$15,008
1%
Net earnings
$2,963
$3,178
(7)%
% of net sales
19.5%
21.2%
(170) bps
Beauty net sales increased 1% to $15.2 billion as the positive impact of higher pricing of 4% was partially offset by unfavorable
foreign exchange of 2% and an unfavorable mix of 1% (due primarily to the decline of the super-premium SK-II brand, which
has higher than segment-average selling prices). Unit volume was unchanged. Excluding the impact of acquisitions and
divestitures and foreign exchange, organic sales increased 3%. Global market share of the Beauty segment increased 0.1 points.
•
Hair Care net sales increased mid-single digits. Positive impacts of higher pricing (driven by Latin America, Europe and
North America), a net benefit from acquisitions and divestitures and favorable brand mix (due to growth of the premium
Native brand) were partially offset by negative impacts of unfavorable foreign exchange. Unit volume was unchanged as
growth in Latin America (due to market growth), North America and Asia Pacific (both due to innovation) was offset by a
decline in Greater China (due to market contraction and distribution footprint changes). Organic sales increased high single
digits due to an approximately 30% growth in Latin America, double-digit increases in North America and Europe,
partially offset by a mid-single-digit decline in Greater China. Global market share of the hair care category decreased 0.2
points.
•
Skin and Personal Care net sales decreased low single digits. Negative impacts of unfavorable mix (due to the decline of
the super-premium SK-II brand, which has higher than category-average selling prices) and unfavorable foreign exchange
The Procter & Gamble Company 21
were partially offset by the positive impacts of higher pricing (across all regions) and an increase in unit volume. The unit
volume increase was driven by growth in North America and Europe (both due to innovation in Personal Care), partially
offset by a decline in Greater China (due to the decline of the super-premium SK-II brand and market contraction). Organic
sales decreased low single digits due to mid-teen declines in Asia Pacific and Greater China, partially offset by a double-
digit increase in North America. Global market share of the skin and personal care category increased 0.3 points.
Net earnings decreased 7% to $3.0 billion as the increase in net sales was more than offset by a 170 basis-point decline in net
earnings margin. Net earnings margin decreased as an increase in gross margin was more than fully offset by an increase in
SG&A as a percentage of net sales and a higher effective tax rate. The gross margin improvement was driven by productivity
savings and increased pricing, partially offset by negative product mix (due primarily to the decline of the super-premium SK-II
brand). SG&A as a percentage of net sales increased due to an increase in marketing and overhead spending, partially offset by
the positive scale effects of the net sales increase. The higher effective tax rate was driven by unfavorable geographic mix.
GROOMING
($ millions)
2024
2023
Change vs. 2023
Volume
N/A
N/A
1%
Net sales
$6,654
$6,419
4%
Net earnings
$1,477
$1,461
1%
% of net sales
22.2%
22.8%
(60) bps
Grooming net sales increased 4% to $6.7 billion driven by higher pricing of 8% (driven primarily by Latin America and
Europe) and a 1% increase in unit volume, partially offset by unfavorable foreign exchange of 5%. Mix had a neutral impact on
net sales growth. The increase in unit volume was due to growth in IMEA and Latin America (both due to innovation), partially
offset by decline in Europe (due to increased pricing). Excluding the impact of acquisitions and divestitures and foreign
exchange, organic sales increased 9% driven by an approximately 40% growth in Latin America and high single-digit growth in
Europe, partially offset by a low single-digit decline in North America. Global market share of the Grooming segment increased
0.5 points.
Net earnings increased 1% to $1.5 billion due to the increase in net sales, partially offset by a 60 basis-point decrease in net
earnings margin. Net earnings margin declined as an increase in gross margin was more than fully offset by an increase in
SG&A as a percentage of net sales. The gross margin increase was driven by higher pricing and productivity savings, partially
offset by unfavorable foreign exchange and unfavorable mix due to the growth of premium innovation that has lower than
segment-average gross margins. SG&A as a percentage of net sales increased due to an increase in marketing spending,
partially offset by the positive scale effects of the net sales increase.
HEALTH CARE
($ millions)
2024
2023
Change vs. 2023
Volume
N/A
N/A
(1)%
Net sales
$11,793
$11,226
5%
Net earnings
$2,258
$2,125
6%
% of net sales
19.1%
18.9%
20 bps
Health Care net sales increased 5% to $11.8 billion driven by higher pricing of 4% and favorable mix of 2% (due to growth in
North America and Europe, both of which have higher than segment-average selling prices), partially offset by a 1% decrease
in unit volume. Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales also increased 5%.
Global market share of the Health Care segment increased 0.6 points.
•
Oral Care net sales increased mid-single digits due to the positive impacts of favorable product mix (due to growth of
premium paste and power brushes, which have higher than category-average selling prices) and higher pricing (driven by
Latin America, Europe and North America), partially offset by a decrease in unit volume. The unit volume decrease was
due to a decline in Latin America and Greater China (both due to share losses) partially offset by growth in North America
and Europe (both due to market growth). Organic sales also increased mid-single digits due to a double-digit increase in
Europe and a mid-single-digit increase in North America partially offset by a low single-digit decline in Greater China.
Global market share of the oral care category increased 0.1 points.
•
Personal Health Care net sales increased mid-single digits due to the positive impacts of higher pricing (driven by North
America, Latin America and Europe) and favorable foreign exchange, partially offset by unfavorable mix (due to the
decline of respiratory products that have higher than category-average selling prices) and a decrease in unit volume. The
unit volume decrease was due to declines in Latin America and IMEA (both due to market contraction including lower
cough and cold incidence), partially offset by growth in North America (due to innovation). Organic sales increased low
single digits due to mid-single-digit growth in Europe and North America, partially offset by a low single-digit decline in
Asia Pacific. Global market share of the personal health care category increased 0.7 points.
22 The Procter & Gamble Company
Net earnings increased 6% to $2.3 billion due to the increase in net sales and a 20 basis-point increase in net earnings margin.
Net earnings margin increased due to an increase in gross margin, partially offset by an increase in SG&A as a percentage of
net sales. The gross margin increase was driven by higher pricing and productivity savings, partially offset by unfavorable
product mix (due to a decline in respiratory products, which have higher than segment-average gross margins). SG&A as a
percentage of net sales increased due to increased marketing spending, partially offset by the positive scale impacts of the net
sales increase.
FABRIC & HOME CARE
($ millions)
2024
2023
Change vs. 2023
Volume
N/A
N/A
1%
Net sales
$29,495
$28,371
4%
Net earnings
$5,687
$4,828
18%
% of net sales
19.3%
17.0%
230 bps
Fabric & Home Care net sales increased 4% to $29.5 billion driven by higher pricing of 3%, favorable mix of 1% and a 1%
increase in unit volume, partially offset by unfavorable foreign exchange of 1%. Excluding the impact of foreign exchange and
acquisitions and divestitures, organic sales increased 5%. Global market share of the Fabric & Home Care segment was
unchanged.
•
Fabric Care net sales increased low single digits driven by the positive impacts of higher pricing (driven by Europe, Asia
Pacific and Latin America, partially offset by increased trade spending in North America) and favorable geographic mix
(due to disproportionate growth in North America, which has higher than category-average selling prices). Unit volume
was unchanged as growth in North America (due to increased marketing support and market growth) and Europe (due to
innovation and increased marketing support) was offset by declines primarily in Asia Pacific (due to increased pricing) and
Greater China (due to market contraction and portfolio rationalization). Organic sales also increased low single digits
driven by a high single-digit increase in Europe and a low single-digit increase in North America, partially offset by a mid-
teens decline in Greater China. Global market share of the fabric care category decreased 0.5 points.
•
Home Care net sales increased high single digits. Positive impacts of higher pricing (driven primarily by Europe and North
America), a unit volume increase and favorable premium product mix were partially offset by unfavorable foreign
exchange. The unit volume increase was due to growth in North America and Europe (both due to innovation), partially
offset by decline in Latin America (due to increased pricing). Organic sales increased high single digits driven by mid-
teens growth in Europe and a high single-digit growth in North America. Global market share of the home care category
increased 0.8 points.
Net earnings increased 18% to $5.7 billion due to the increase in net sales and a 230 basis-point improvement in net earnings
margin. Net earnings margin increased due to an increase in gross margin, partially offset by an increase in SG&A as a
percentage of net sales. The gross margin increase was driven by productivity savings, lower commodity costs and higher
pricing. SG&A as a percentage of net sales increased due primarily to an increase in marketing spending, partially offset by the
positive scale effects of the net sales increase.
BABY, FEMININE & FAMILY CARE
($ millions)
2024
2023
Change vs. 2023
Volume
N/A
N/A
(2)%
Net sales
$20,277
$20,217
—%
Net earnings
$4,020
$3,545
13%
% of net sales
19.8%
17.5%
230 bps
Baby, Feminine & Family Care net sales were unchanged at $20.3 billion as the positive impacts of higher pricing of 3% and
favorable mix of 1% (due to a higher proportion of sales in North America, which has higher than segment-average selling
prices) were offset by a 2% decrease in unit volume and unfavorable foreign exchange of 2%. Excluding the impact of foreign
exchange and acquisitions and divestitures, organic sales increased 2%. Global market share of the Baby, Feminine & Family
Care segment decreased 0.2 points.
•
Baby Care net sales decreased low single digits. Negative impacts of a decrease in unit volume and unfavorable foreign
exchange were partially offset by higher pricing (driven primarily by Latin America and Europe) and favorable product
mix (due to a higher proportion of premium-priced diapers). Volumes decreased in all regions led by Europe, IMEA and
North America, due to increased pricing and competitive activity. Organic sales decreased low single digits driven by a
mid-single-digit decline in Europe partially offset by mid-teens growth in Latin America. Global market share of the baby
care category decreased 0.3 points.
•
Feminine Care net sales increased low single digits. Positive impacts of higher pricing (driven primarily by Europe, Latin
America and IMEA) and favorable mix (due to a higher proportion of premium products) were partially offset by a
decrease in unit volume and unfavorable foreign exchange. The volume decrease was driven primarily by declines in
The Procter & Gamble Company 23
Europe (due to increased pricing), Latin America (due to increased competitive activity) and IMEA (due to increased
pricing), partially offset by growth in North America (due to increased marketing support and distribution gains). Organic
sales increased mid-single digits driven by mid-single-digit increases in Europe and IMEA and a low single-digit increase
in North America. Market share of the feminine care category increased 0.2 points.
•
Net sales in Family Care, which is predominantly a North American business, increased low single digits driven by a unit
volume increase (due to market growth and increased marketing support) and higher pricing, partially offset by unfavorable
product mix (due to growth of larger pack sizes with lower than category-average selling prices). Organic sales also
increased low single digits. North America's share of the family care category decreased 0.4 points.
Net earnings increased 13% to $4.0 billion due to a 230 basis-point increase in net earnings margin. Net earnings margin
increased primarily due to an increase in gross margin, partially offset by an increase in SG&A as a percentage of net sales.
Gross margin increased primarily due to lower commodity costs, productivity savings and increased pricing, partially offset by
unfavorable foreign exchange. SG&A as a percentage of net sales increased due to an increase in marketing and overhead
spending.
CORPORATE
($ millions)
2024
2023
Change vs. 2023
Net sales
$601
$765
(21)%
Net earnings/(loss)
$(1,430)
$(399)
N/A
Corporate includes certain operating and non-operating activities not allocated to specific business segments. These include but
are not limited to incidental businesses managed at the corporate level, gains and losses related to certain divested brands or
businesses, impacts from various financing and investing activities, impacts related to employee benefits, asset impairments and
restructuring activities including manufacturing and workforce optimization. Corporate also includes reconciling items to adjust
the accounting policies used within the reportable segments to U.S. GAAP. The most notable ongoing reconciling item is
income taxes, which adjusts the blended statutory rates that are reflected in the reportable segments to the overall Company
effective tax rate.
Corporate net sales decreased $164 million to $601 million due to a decrease in net sales of incidental businesses managed at
the corporate level. Corporate net earnings decreased $1.0 billion due to a loss of $1.4 billion due primarily to the impairment
charge of the Gillette intangible asset and incremental restructuring charges.
Restructuring Program to Deliver Productivity and Cost Savings
The Company has historically had an ongoing restructuring program with annual spending in the range of $250 to $500 million
before tax. On December 5, 2023, the Company announced an incremental limited market portfolio restructuring of its business
operations, primarily in certain Enterprise Markets, including Argentina and Nigeria.
In fiscal 2024, the Company incurred before tax restructuring costs of $659 million, which include foreign currency translation
losses recognized as a non-cash charge of approximately $216 million due to the substantial liquidation of operations in certain
Enterprise Markets, including Nigeria. Restructuring accruals of $166 million as of June 30, 2024, are classified as current
liabilities. Excluding the non-cash charges of foreign currency translation losses for certain Enterprise Markets, including
Nigeria, approximately 64% of the restructuring charges incurred in fiscal 2024 either have been or will be settled with cash.
Consistent with our policies for restructuring-type activities, the resulting charges are funded by and included within Corporate
for segment reporting.
Savings generated from the Company's restructuring program are difficult to estimate, given the nature of the activities, the
timing of the execution and the degree of reinvestment. In addition to our restructuring programs, we have additional ongoing
savings efforts in our supply chain, marketing and overhead areas that yield additional benefits to our operating margins. Refer
to Note 3 to the Consolidated Financial Statements for more details on the restructuring program.
CASH FLOW, FINANCIAL CONDITION AND LIQUIDITY
We believe our financial condition continues to be of high quality, as evidenced by our ability to generate substantial cash from
operations and to readily access capital markets at competitive rates.
Operating cash flow provides the primary source of cash to fund operating needs and capital expenditures. Excess operating
cash is used first to fund shareholder dividends. Other discretionary uses include share repurchases and acquisitions to
complement our portfolio of businesses, brands and geographies. As necessary, we may supplement operating cash flow with
debt to fund these activities. The overall cash position of the Company reflects our strong business results and a global cash
management strategy that takes into account liquidity management, economic factors and tax considerations.
24 The Procter & Gamble Company
Cash Flow Analysis
($ millions)
2024
2023
Net cash provided by operating activities
$
19,846
$
16,848
Net cash used in investing activities
(3,504)
(3,500)
Net cash used in financing activities
(14,855)
(12,146)
Adjusted Free Cash Flow
16,946
14,011
Adjusted Free Cash Flow Productivity
105 %
95 %
Operating Cash Flow
Operating cash flow was $19.8 billion in 2024, an 18% increase versus the prior year. Net earnings, adjusted for certain non-
cash items (depreciation and amortization, intangible asset impairment, share-based compensation expense, deferred income
taxes and gain on sale of assets) generated approximately $19.3 billion of operating cash flow. Working capital and other
impacts generated $533 million of cash in the period primarily driven by an increase in trade payables and other non-cash add-
backs, partially offset by an increase in accounts receivable and a decrease in post-retirement benefit accruals. The increase in
trade payables is primarily from increased marketing support activities and extended payment terms with suppliers, partially
offset by lower supply chain payables due to a decrease in commodity costs. Other non-cash add-backs include the non-cash
charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise
Markets, including Nigeria. The increase in Accounts Receivable is primarily from sales growth. The decrease in post-
retirement benefit accruals is due to payments and the net periodic credit from other retiree benefits. Days sales outstanding
increased by two days. Days inventory on hand increased by two days.
Adjusted Free Cash Flow. We view adjusted free cash flow as an important non-GAAP measure because it is a factor
impacting the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments. It is
defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the U.S.
Tax Act. Adjusted free cash flow is one of the measures used to evaluate senior management and determine their at-risk
compensation.
Adjusted free cash flow was $16.9 billion in 2024, an increase of 21% versus the prior year. The increase was primarily driven
by the increase in operating cash flows as discussed above. Adjusted free cash flow productivity, defined as the ratio of adjusted
free cash flow to net earnings excluding the Gillette intangible asset impairment charge and non-cash charge for accumulated
foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including
Nigeria, was 105% in 2024.
Investing Cash Flow
Net investing activities used $3.5 billion of cash in 2024, primarily due to capital expenditures and the settlement of net
investment hedges.
Financing Cash Flow
Net financing activities used $14.9 billion of cash in 2024, mainly due to dividends to shareholders, treasury stock purchases
and a net debt decrease, partially offset by the impact of stock options and other.
Liquidity
At June 30, 2024, our current liabilities exceeded current assets by $8.9 billion, largely due to accounts payable, short-term
borrowings and debt due within one year. We anticipate being able to support our short-term liquidity and operating needs
largely through cash generated from operations. The Company regularly assesses its cash needs and the available sources to
fund these needs. As of June 30, 2024, the Company had $6.1 billion of cash and cash equivalents related to foreign
subsidiaries, primarily in various European and Asian countries. We did not have material cash and cash equivalents related to
any country subject to exchange controls that significantly restrict our ability to access or repatriate the funds. Under current
law, we do not expect restrictions or taxes on repatriation of cash held outside of the U.S. to have a material effect on our
overall liquidity, financial condition or the results of operations for the foreseeable future.
We utilize short- and long-term debt to fund discretionary items, such as acquisitions and share repurchases. We have strong
short- and long-term debt ratings, which have enabled and should continue to enable us to refinance our debt as it becomes due
in commercial paper and bond markets. In addition, we have agreements with a diverse group of financial institutions that, if
needed, should provide sufficient funding to meet short-term financing requirements.
On June 30, 2024, our short-term credit ratings were P-1 (Moody's) and A-1+ (Standard & Poor's), while our long-term credit
ratings were Aa3 (Moody's) and AA- (Standard & Poor's), all with a stable outlook.
We maintain bank credit facilities to support our ongoing commercial paper program. The current facility is an $8.0 billion
facility split between a $3.2 billion five-year facility and a $4.8 billion 364-day facility, which expire in November 2028 and
October 2024, respectively. Both facilities can be extended for certain periods of time as specified in the terms of the credit
agreement. These facilities are currently undrawn and we anticipate that they will remain undrawn. These credit facilities do not
The Procter & Gamble Company 25
have cross-default or ratings triggers, nor do they have material adverse events clauses, except at the time of signing. In addition
to these credit facilities, we have an automatically effective registration statement on Form S-3 filed with the SEC that is
available for registered offerings of short- or long-term debt securities. For additional details on debt, see Note 10 to the
Consolidated Financial Statements.
Guarantees and Other Off-Balance Sheet Arrangements
We do not have guarantees or other off-balance sheet financing arrangements, including variable interest entities, which we
believe could have a material impact on our financial condition or liquidity.
Contractual Commitments
The following table provides information on the amount and payable date of our contractual commitments as of June 30, 2024.
($ millions)
Total
Less Than 1 Year
1-3 Years
3-5 Years
After 5 Years
RECORDED LIABILITIES
Total debt
$
32,922 $
7,220 $
7,821 $
4,048 $
13,833
Leases
1,031
244
370
227
190
U.S. Tax Act transitional charge (1)
1,154
562
592
—
—
OTHER
Interest payments relating to long-term debt
5,815
796
1,363
972
2,684
Minimum pension funding (2)
506
164
342
—
—
Purchase obligations (3)
2,610
1,092
910
376
232
TOTAL CONTRACTUAL COMMITMENTS
$
44,038 $
10,078 $
11,398 $
5,623 $
16,939
(1)
Represents the U.S. federal tax liability associated with the repatriation provisions of the U.S. Tax Act.
(2)
Represents future pension payments to comply with local funding requirements. These future pension payments assume the Company
continues to meet its future statutory funding requirements. Considering the current economic environment in which the Company
operates, the Company believes its cash flows are adequate to meet the future statutory funding requirements. The projected payments
beyond fiscal year 2027 are not currently determinable.
(3)
Primarily reflects future contractual payments under various take-or-pay arrangements entered into as part of the normal course of
business. Commitments made under take-or-pay obligations represent minimum commitments with suppliers and are in line with
expected usage. This includes service contracts for information technology, human resources management and facilities management
activities that have been outsourced. While the amounts listed represent contractual obligations, we do not believe it is likely that the full
contractual amount would be paid if the underlying contracts were canceled prior to maturity. In such cases, we generally are able to
negotiate new contracts or cancellation penalties, resulting in a reduced payment. The amounts do not include other contractual purchase
obligations that are not take-or-pay arrangements. Such contractual purchase obligations are primarily purchase orders at fair value that
are part of normal operations and are reflected in historical operating cash flow trends. We do not believe such purchase obligations will
adversely affect our liquidity position.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
In preparing our financial statements in accordance with U.S. GAAP, there are certain accounting policies that may require a
choice between acceptable accounting methods or may require substantial judgment or estimation in their application. These
include revenue recognition, income taxes, certain employee benefits and goodwill and intangible assets. We believe these
accounting policies, and others set forth in Note 1 to the Consolidated Financial Statements, should be reviewed as they are
integral to understanding the results of operations and financial condition of the Company.
The Company has discussed the selection of critical accounting policies and the effect of estimates with the Audit Committee of
the Company's Board of Directors.
Revenue Recognition
Our revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single
performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer, which
can be on the date of shipment or the date of receipt by the customer. Trade promotions, consisting primarily of customer
pricing allowances, in-store merchandising funds, advertising and other promotional activities and consumer coupons, are
offered through various programs to customers and consumers. Sales are recorded net of trade promotion spending, which is
recognized as incurred at the time of the sale. Amounts accrued for trade promotions at the end of a period require estimation,
based on contractual terms, sales volumes and historical utilization and redemption rates. The actual amounts paid may be
different from such estimates. These differences, which have historically not been significant, are recognized as a change in
management estimate in a subsequent period.
Income Taxes
Our annual tax rate is determined based on our income, statutory tax rates and the tax impacts of items treated differently for tax
purposes than for financial reporting purposes. Also inherent in determining our annual tax rate are judgments and assumptions
26 The Procter & Gamble Company
regarding the recoverability of certain deferred tax balances, primarily net operating loss and other carryforwards, and our
ability to uphold certain tax positions.
Realization of net operating losses and other carryforwards is dependent upon generating sufficient taxable income in the
appropriate jurisdiction prior to the expiration of the carryforward periods, which involves business plans, planning
opportunities and expectations about future outcomes. Although realization is not assured, management believes it is more
likely than not that our deferred tax assets, net of valuation allowances, will be realized.
We operate in multiple jurisdictions with complex tax policy and regulatory environments. In certain of these jurisdictions, we
may take tax positions that management believes are supportable but are potentially subject to successful challenge by the
applicable taxing authority. These interpretational differences with the respective governmental taxing authorities can be
impacted by the local economic and fiscal environment.
A core operating principle is that our tax structure is based on our business operating model, such that profits are earned in line
with the business substance and functions of the various legal entities in the jurisdictions where those functions are performed.
However, because of the complexity of transfer pricing concepts, we may have income tax uncertainty related to the
determination of intercompany transfer prices for our various cross-border transactions. We have obtained and continue to
prioritize the strategy of seeking advance rulings with tax authorities to reduce this uncertainty. We estimate that our current
portfolio of advance rulings reduces this uncertainty with respect to over 70% of our global earnings. We evaluate our tax
positions and establish liabilities in accordance with the applicable accounting guidance on uncertainty in income taxes. We
review these tax uncertainties considering changing facts and circumstances, such as the progress of tax audits, and adjust them
accordingly. We have several audits in process in various jurisdictions. Although the resolution of these tax positions is
uncertain, based on currently available information, we believe that the ultimate outcomes will not have a material adverse
effect on our financial position, results of operations or cash flows.
Because there are several estimates and assumptions inherent in calculating the various components of our tax provision, certain
future events such as changes in tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation
plans could have an impact on those estimates and our effective tax rate. See Note 5 to the Consolidated Financial Statements
for additional details on the Company's income taxes.
Employee Benefits
We sponsor various postretirement benefits throughout the world. These include pension plans, both defined contribution plans
and defined benefit plans, and other postretirement benefit (OPRB) plans consisting primarily of health care and life insurance
for retirees. For accounting purposes, the defined benefit pension and OPRB plans require assumptions to estimate the net
projected and accumulated benefit obligations, including the following variables: discount rate; expected salary increases;
certain employee-related factors, such as turnover, retirement age and mortality; expected return on assets; and health care cost
trend rates. These and other assumptions affect the annual expense and net obligations recognized for the underlying plans. Our
assumptions reflect our historical experiences and management's best judgment regarding future expectations. As permitted by
U.S. GAAP, the net amount by which actual results differ from our assumptions is deferred. If this net deferred amount exceeds
10% of the greater of plan assets or liabilities, a portion of the deferred amount is included in expense for the following year.
The cost or benefit of plan changes, such as increasing or decreasing benefits for prior employee service (prior service cost), is
deferred and included in expense on a straight-line basis over the average remaining service period of the employees expected
to receive benefits.
The expected return on plan assets assumption impacts our defined benefit expense since many of our defined benefit pension
plans and our primary OPRB plan are partially funded. The process for setting the expected rates of return is described in Note
8 to the Consolidated Financial Statements. For 2024, the average return on assets assumptions for pension plan assets and
OPRB assets was 6.0% and 8.5%, respectively. A change in the rate of return of 100 basis points for both pension and OPRB
assets would impact annual after-tax benefit/expense by approximately $145 million.
Since pension and OPRB liabilities are measured on a discounted basis, the discount rate impacts our plan obligations and
expenses. Discount rates used for our U.S. defined benefit pension and OPRB plans are based on a yield curve constructed from
a portfolio of high-quality bonds for which the timing and amount of cash outflows approximate the estimated payouts of the
plan. For our international plans, the discount rates are set by benchmarking against investment grade corporate bonds rated AA
or better. The average discount rate on the defined benefit pension plans of 4.2% represents a weighted average of local rates in
countries where such plans exist. A 100 basis-point change in the discount rate would impact annual after-tax benefit expense
by approximately $85 million. The average discount rate on the OPRB plan of 5.8% reflects the higher interest rates generally
applicable in the U.S., which is where most of the plan participants receive benefits. A 100 basis-point change in the discount
rate would impact annual after-tax OPRB expense by approximately $30 million. See Note 8 to the Consolidated Financial
Statements for additional details on our defined benefit pension and OPRB plans.
Goodwill and Intangible Assets
Significant judgment is required to estimate the fair value of our goodwill reporting units and intangible assets. Accordingly, we
typically obtain the assistance of third-party valuation specialists for significant goodwill reporting units and intangible assets.
Determining the useful life of an intangible asset also requires judgment. Certain brand intangible assets are expected to have
The Procter & Gamble Company 27
indefinite lives based on their history and our plans to continue to support and build the acquired brands. Other acquired
intangible assets (e.g., certain brands, customer relationships, patents and technologies) are expected to have determinable
useful lives. Our assessment as to brands that have an indefinite life and those that have a determinable life is based on a
number of factors including competitive environment, market share, brand history, underlying product life cycles, operating
plans and the macroeconomic environment of the countries in which the brands are sold. Determinable-lived intangible assets
are amortized to expense over their estimated lives. An impairment assessment for determinable-lived intangibles is only
required when an event or change in circumstances indicates that the carrying amount of the asset may not be recoverable.
Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually for impairment. We use the
income method to estimate the fair value of these assets, which is based on forecasts of the expected future cash flows
attributable to the respective assets. When appropriate, the market approach, which leverages comparable company revenue and
earnings multiples, is weighted with the income approach to estimate fair value. If the resulting fair value is less than the asset's
carrying value, that difference represents an impairment. Our annual impairment testing for goodwill and indefinite-lived
intangible assets occurs during the three months ended December 31. Other than our Gillette indefinite-lived intangible asset,
our goodwill reporting units and our indefinite-lived intangible assets have fair values that significantly exceed their underlying
carrying values.
During the fiscal year ended June 30, 2024, we determined the fair value of the Gillette indefinite-lived intangible asset was less
than its carrying value. As a result, we recorded a non-cash impairment charge of $1.3 billion ($1.0 billion after tax) to reduce
the carrying amount to be equivalent to the estimated fair value. As of June 30, 2024, the carrying value of the Gillette
indefinite-lived intangible asset was $12.8 billion. The impairment charge arose due to a higher discount rate, weakening of
several currencies relative to the U.S. dollar and the impact of a new restructuring program focused primarily in certain
Enterprise Markets, including Argentina and Nigeria.
While we have concluded that no triggering event has occurred during the quarter ended June 30, 2024, the Gillette indefinite-
lived intangible asset is susceptible to future impairment risk. Adverse changes in the business or in the macroeconomic
environment including foreign currency devaluation, increasing global inflation, or market contraction from an economic
recession, could reduce the underlying cash flows used to estimate the fair value of the Gillette indefinite-lived intangible asset
and trigger a future impairment charge.
The most significant assumptions utilized in the determination of the estimated fair value of the Gillette indefinite-lived
intangible asset are the net sales growth rates (including residual growth rates), discount rate and royalty rates.
Net sales growth rates could be negatively impacted by reductions or changes in demand for our Gillette products, which may
be caused by, among other things: changes in the use and frequency of grooming products, shifts in demand away from one or
more of our higher priced products to lower priced products or potential supply chain constraints. In addition, relative global
and country/regional macroeconomic factors could result in additional and prolonged devaluation of other countries’ currencies
relative to the U.S. dollar. The residual growth rates represent the expected rate at which the Gillette brand is expected to grow
beyond the shorter-term business planning period. The residual growth rates utilized in our fair value estimates are consistent
with the brand operating plans and approximates expected long-term category market growth rates. The residual growth rates
depend on overall market growth rates, the competitive environment, inflation, relative currency exchange rates and business
activities that impact market share. As a result, the residual growth rates could be adversely impacted by a sustained
deceleration in category growth, grooming habit changes, devaluation of currencies against the U.S. dollar or an increased
competitive environment.
The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market
participant, is based upon industry required rates of return, including consideration of both debt and equity components of the
capital structure. Our discount rate may be impacted by adverse changes in the macroeconomic environment, volatility in the
equity and debt markets or other country specific factors, such as further devaluation of currencies against the U.S. dollar. Spot
rates as of the fair value measurement date are utilized in our fair value estimates for cash flows outside the U.S.
The royalty rate used to determine the estimated fair value for the Gillette indefinite-lived intangible asset is driven by historical
and estimated future profitability of the underlying Gillette business. The royalty rate may be impacted by significant adverse
changes in long-term operating margins.
We performed a sensitivity analysis for the Gillette indefinite-lived intangible asset as part of our annual impairment testing
during the three months ended December 31, 2023, utilizing reasonably possible changes in the assumptions for the discount
rate, the short-term and residual growth rates and the royalty rates to demonstrate the potential impacts to the estimated fair
values. The table below provides, in isolation, the estimated fair value impacts related to a 25 basis-point increase in the
discount rate, a 25 basis-point decrease in our shorter-term and residual growth rates, or a 50 basis-point decrease in our royalty
rates, which may result in an additional impairment of the Gillette indefinite-lived intangible asset.
28 The Procter & Gamble Company
Approximate Percent Change in Estimated Fair Value
+25 bps
Discount Rate
-25 bps
Growth Rate
-50 bps
Royalty Rate
Gillette indefinite-lived intangible asset
(5)%
(5)%
(4)%
See Note 4 to the Consolidated Financial Statements for additional discussion on goodwill and intangible assets.
New Accounting Pronouncements
Refer to Note 1 to the Consolidated Financial Statements for recently adopted accounting pronouncements and recently issued
accounting pronouncements not yet adopted as of June 30, 2024.
OTHER INFORMATION
Hedging and Derivative Financial Instruments
As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates,
currency exchange rates and commodity prices. We evaluate exposures on a centralized basis to take advantage of natural
exposure correlation and netting. We leverage the Company's diversified portfolio of exposures as a natural hedge and prioritize
operational hedging activities over financial market instruments. To the extent we choose to further manage volatility within
our financing operations, as discussed below, we enter into various financial transactions which we account for using the
applicable accounting guidance for derivative instruments and hedging activities. These financial transactions are governed by
our policies covering acceptable counterparty exposure, instrument types and other hedging practices. See Note 9 to the
Consolidated Financial Statements for a discussion of our accounting policies for derivative instruments.
Derivative positions are monitored using techniques including market valuation, sensitivity analysis and value-at-risk modeling.
The tests for interest rate, currency rate and commodity derivative positions discussed below are based on the RiskManager™
value-at-risk model using a one-year horizon and a 95% confidence level. The model incorporates the impact of correlation (the
degree to which exposures move together over time) and diversification (from holding multiple currency, commodity and
interest rate instruments) and assumes that financial returns are normally distributed. Estimates of volatility and correlations of
market factors are drawn from the RiskMetrics™ dataset as of June 30, 2024. In cases where data is unavailable in
RiskMetrics™, a reasonable proxy is included.
Our market risk exposures relative to interest rates, currency rates and commodity prices, as discussed below, have not changed
materially versus the previous reporting period. In addition, we are not aware of any facts or circumstances that would
significantly impact such exposures in the near term.
Interest Rate Exposure. We are exposed to interest rate movements due to our long and short-term borrowing program. Interest
rate swaps are used to manage exposures to interest rates on underlying debt obligations. Certain interest rate swaps
denominated in foreign currencies are designated to hedge exposures to currency exchange rate movements on our investments
in foreign operations. These currency interest rate swaps are designated as hedges of the Company's foreign net investments.
Based on our interest rate exposure as of and during the fiscal year ended June 30, 2024, including derivative and other
instruments sensitive to interest rates, we believe a near-term change in interest rates, at a 95% confidence level based on
historical interest rate movements, would not materially affect our financial statements.
Currency Rate Exposure. Because we manufacture and sell products and finance operations in a number of countries
throughout the world, we are exposed to movements in currency exchange rates. We leverage the Company’s diversified
portfolio of exposures as a natural hedge. Corporate policy prescribes the range of allowable hedging activity. To manage the
exchange rate risk associated with the financing of our operations, we primarily use forward contracts and currency swaps with
maturities of less than 18 months.
Based on our currency rate exposure on derivative and other instruments as of and during the fiscal year ended June 30, 2024,
we believe, at a 95% confidence level based on historical currency rate movements, the impact on such instruments of a near-
term change in currency rates would not materially affect our financial statements.
Commodity Price Exposure. We use raw materials that are subject to price volatility caused by weather, supply conditions,
political and economic variables and other unpredictable factors. We may use futures, options and swap contracts to manage the
volatility related to the above exposures. During the fiscal years ended June 30, 2024 and 2023, we did not have any financial
commodity hedging activity.
Measures Not Defined By U.S. GAAP
In accordance with the SEC's Regulation S-K Item 10(e), the following provides definitions of non-GAAP measures and a
reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective on
underlying business trends (i.e., trends excluding non-recurring or unusual items) and results and provide a supplemental
measure of year-on-year results. The non-GAAP measures described below are used by management in making operating
decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors, as they
provide supplemental information about business performance and provide investors with a view of our business results through
the eyes of management. These measures are also used to evaluate senior management and are a factor in determining their at-
The Procter & Gamble Company 29
risk compensation. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP
measures but rather as supplemental information to our business results. These non-GAAP measures may not be the same as
similar measures used by other companies due to possible differences in method and in the items or events being adjusted.
Organic Sales Growth. Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions,
divestitures and foreign exchange from year-over-year comparisons. We believe this measure provides investors with a
supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. This measure is used in
assessing the achievement of management goals for at-risk compensation.
The following tables provide a numerical reconciliation of organic sales growth to reported net sales growth:
Fiscal year ended June 30, 2024
Net Sales Growth
Foreign Exchange
Impact
Acquisition &
Divestiture
Impact/Other (1)
Organic Sales
Growth
Beauty
1 %
2 %
— %
3 %
Grooming
4 %
5 %
— %
9 %
Health Care
5 %
— %
— %
5 %
Fabric & Home Care
4 %
1 %
— %
5 %
Baby, Feminine & Family Care
— %
2 %
— %
2 %
TOTAL COMPANY
2 %
2 %
— %
4 %
(1)
Acquisition & Divestiture Impact/Other includes the volume and mix impact of acquisitions and divestitures and rounding impacts
necessary to reconcile net sales to organic sales.
Adjusted Free Cash Flow. Adjusted free cash flow is defined as operating cash flow less capital spending and excluding
payments for the transitional tax resulting from the U.S. Tax Act. Adjusted free cash flow represents the cash that the Company
is able to generate after taking into account planned maintenance and asset expansion. We view adjusted free cash flow as an
important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases,
acquisitions and other discretionary investments.
The following table provides a numerical reconciliation of adjusted free cash flow ($ millions):
Operating Cash Flow
Capital Spending
U.S. Tax Act Payments
Adjusted Free
Cash Flow
2024
$
19,846 $
(3,322) $
422 $
16,946
2023
$
16,848 $
(3,062) $
225 $
14,011
Adjusted Free Cash Flow Productivity. Adjusted free cash flow productivity is defined as the ratio of adjusted free cash flow
to net earnings excluding the Gillette intangible asset impairment charge and non-cash charge for accumulated foreign currency
translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria. We view
adjusted free cash flow productivity as a useful measure to help investors understand P&G’s ability to generate cash. Adjusted
free cash flow productivity is used by management in making operating decisions, in allocating financial resources and for
budget planning purposes. This measure is used in assessing the achievement of management goals for at-risk compensation.
The following table provides a numerical reconciliation of adjusted free cash flow productivity ($ millions):
Adjusted Free
Cash Flow
Net Earnings
Adjustments to Net
Earnings (1)
Net Earnings as Adjusted
Adjusted Free
Cash Flow Productivity
2024
$
16,946 $
14,974 $
1,242 $
16,216
105 %
2023
$
14,011 $
14,738 $
— $
14,738
95 %
(1)
Adjustments to Net Earnings relate to the after-tax Gillette intangible asset impairment charge ($1.0 billion) and non-cash charge for
accumulated foreign currency translation losses ($216) due to the substantial liquidation of operations in certain Enterprise Markets,
including Nigeria.
Core EPS. Core EPS is a measure of the Company's diluted EPS excluding items that are not judged by management to be part
of the Company's sustainable results or trends. Management views this non-GAAP measure as a useful supplemental measure
of Company performance over time. This measure is also used in assessing the achievement of management goals for at-risk
compensation. The Core earnings measures included in the following reconciliation tables refer to the equivalent GAAP
measures adjusted as applicable for the following items:
•
Incremental restructuring: The Company has historically had an ongoing level of restructuring activities of
approximately $250 - $500 million before tax. On December 5, 2023, the Company announced a limited market
portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and
Nigeria. The adjustment to Core earnings includes the restructuring charges that exceed the normal, recurring level of
restructuring charges.
30 The Procter & Gamble Company
•
Intangible asset impairment: As discussed in Note 4 to the Consolidated Financial Statements, in the fiscal year ended
June 30, 2024, the Company recognized a non-cash, after-tax impairment charge of $1.0 billion ($1.3 billion before
tax) to adjust the carrying value of the Gillette intangible asset acquired as part of the Company's 2005 acquisition of
The Gillette Company.
We do not view the above items to be part of our sustainable results, and their exclusion from core earnings measures provides
a more comparable measure of year-on-year results. These items are also excluded when evaluating senior management in
determining their at-risk compensation.
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
Fiscal Year Ended June 30, 2024
Fiscal Year Ended
June 30, 2023
Amounts in millions except per share amounts
As Reported
(GAAP)
Incremental
Restructuring
Intangible
Impairment
Core
(Non-GAAP)
As Reported
(GAAP) (1)
Cost of products sold
$ 40,848
$(70) $
— $
40,778 $
42,760
Selling, general and administrative expense
23,305
(33)
—
23,273
21,112
Operating income
18,545
103
1,341
19,988
18,134
Non-operating income, net
668
248
—
916
668
Income taxes
3,787
(25)
315
4,077
3,615
Net earnings attributable to P&G
14,879
376
1,026
16,281
14,653
Core EPS
Diluted net earnings per common share (2)
$
6.02
$
0.15 $
0.42 $
6.59 $
5.90
(1)
For the fiscal year ended June 30, 2023, there were no adjustments to or reconciling items for Core EPS.
(2)
Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.
CHANGE VERSUS YEAR AGO
Net earnings attributable to P&G
2 %
Core net earnings attributable to P&G
11 %
Diluted net earnings per common share
2 %
Core EPS
12 %
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is incorporated by reference to the section entitled Other Information in the MD&A and
Note 9 to the Consolidated Financial Statements.
The Procter & Gamble Company 31
Item 8. Financial Statements and Supplementary Data.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting of The Procter &
Gamble Company (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the
United States of America.
Strong internal controls is an objective that is reinforced through our Worldwide Business Conduct Manual, which sets forth our
commitment to conduct business with integrity, and within both the letter and the spirit of the law. Our people are deeply
committed to our Purpose, Values and Principles, which unite us in doing what’s right. Our system of internal controls includes
written policies and procedures, segregation of duties and the careful selection and development of employees. Additional key
elements of our internal control structure include our Global Leadership Council, which is actively involved in oversight of the
business strategies, initiatives, results and controls, our Disclosure Committee, which is responsible for evaluating disclosure
implications of significant business activities and events, our Board of Directors, which provides strong and effective corporate
governance, and our Audit Committee, which reviews critical accounting policies and estimates, financial reporting and internal
control matters.
Global Internal Audit performs audits of internal controls over financial reporting as well as broader financial, operational and
compliance audits around the world, provides training and continually improves our internal control processes. The Company’s
internal control over financial reporting also includes a robust Control Self-Assessment Program that is conducted annually on
critical financial reporting areas of the Company. Management takes the appropriate action to correct any identified control
deficiencies.
Because of its inherent limitations, any system of internal control over financial reporting, no matter how well designed, may
not prevent or detect misstatements due to the possibility that a control can be circumvented or overridden or that misstatements
due to error or fraud may occur that are not detected. Also, because of changes in conditions, internal control effectiveness may
vary over time.
Management assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2024, using
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) and concluded that the Company maintained effective internal control over financial
reporting as of June 30, 2024, based on these criteria.
Deloitte & Touche LLP, an independent registered public accounting firm, has audited the effectiveness of the Company's
internal control over financial reporting as of June 30, 2024, as stated in their report which is included herein.
/s/ Jon R. Moeller
(Jon R. Moeller)
Chairman of the Board, President and Chief Executive Officer
/s/ Andre Schulten
(Andre Schulten)
Chief Financial Officer
August 5, 2024
32 The Procter & Gamble Company
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of The Procter & Gamble Company
Opinion on the Financial Statements
We have audited the accompanying Consolidated Balance Sheets of The Procter & Gamble Company and subsidiaries (the
"Company") as of June 30, 2024 and 2023, the related Consolidated Statements of Earnings, Comprehensive Income,
Shareholders’ Equity and Cash Flows, for each of the three years in the period ended June 30, 2024, and the related notes
(collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows
for each of the three years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the
United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of June 30, 2024, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated August 5, 2024, expressed an unqualified opinion on the Company's internal control over financial
reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Intangible Assets — Gillette Indefinite-Lived Intangible Asset — Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
The Company’s evaluation of the Gillette indefinite-lived intangible asset (the “Gillette Brand”) for impairment involves the
comparison of the fair value to its carrying value. The Company estimates fair value using the income method, which is based
on the present value of estimated future cash flows attributable to the respective asset. This requires management to make
significant estimates and assumptions related to forecasts of future net sales and earnings, including growth rates beyond a 10-
year time period, royalty rate and discount rate. Changes in the assumptions could have a significant impact on either the fair
value, the amount of any impairment charge, or both. The Company performed their annual impairment assessment of the
Gillette Brand as of October 1, 2023. During the fiscal year ended June 30, 2024, the Company determined that the fair value of
the Gillette indefinite-lived intangible asset was less than its carrying amount. As a result, the Company recorded an impairment
charge of $1.3 billion ($1.0 billion after tax) to reduce the carrying amount to be equivalent to the estimated fair value as of
December 31, 2023. As of June 30, 2024, the carrying value of the Gillette Brand was $12.8 billion.
We identified the Company’s impairment evaluation of the Gillette Brand as a critical audit matter because of the significant
judgments made by management to estimate the fair value of the indefinite-lived intangible asset. A high degree of auditor
judgment and an increased extent of effort was required when performing audit procedures to evaluate the reasonableness of
management’s estimates and assumptions related to the forecasts of future net sales and earnings as well as the selection of
royalty rate and discount rate, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasts of future net sales and earnings and the selection of the royalty rate and discount rate
for the Gillette Brand included the following, among others:
The Procter & Gamble Company 33
• We tested the effectiveness of controls over the Gillette Brand, including those over the determination of fair value, such as
controls related to management’s development of forecasts of future net sales and earnings, and the selection of royalty rate
and discount rate.
• We evaluated management’s ability to accurately forecast net sales and earnings by comparing actual results to
management’s historical forecasts.
• We evaluated the reasonableness of management’s forecast of net sales and earnings by comparing the forecasts to:
•
Historical net sales and earnings.
•
Underlying analysis detailing business strategies and growth plans.
•
Internal communications to management and the Board of Directors.
•
Forecasted information included in analyst and industry reports for the Company and certain of its peer companies.
• With the assistance of our fair value specialists, we evaluated the net sales and earnings growth rates, royalty rate, and
discount rate by:
•
Testing the source information underlying the determination of net sales and earnings growth rates, royalty rate, and
discount rate and the mathematical accuracy of the calculations.
•
Developing a range of independent estimates for the discount rate and comparing the discount rate selected by
management to that range.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 5, 2024
We have served as the Company’s auditor since 1890.
34 The Procter & Gamble Company
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of The Procter & Gamble Company
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of The Procter & Gamble Company and subsidiaries (the
"Company") as of June 30, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of June 30, 2024, based on criteria established in Internal
Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended June 30, 2024, of the Company and our report
dated August 5, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 5, 2024
The Procter & Gamble Company 35
Consolidated Statements of Earnings
Amounts in millions except per share amounts; fiscal years ended June 30
2024
2023
2022
NET SALES
$
84,039
$
82,006
$
80,187
Cost of products sold
40,848
42,760
42,157
Selling, general and administrative expense
23,305
21,112
20,217
Indefinite-lived intangible asset impairment charge
1,341
—
—
OPERATING INCOME
18,545
18,134
17,813
Interest expense
(925)
(756)
(439)
Interest income
473
307
51
Other non-operating income, net
668
668
570
EARNINGS BEFORE INCOME TAXES
18,761
18,353
17,995
Income taxes
3,787
3,615
3,202
NET EARNINGS
14,974
14,738
14,793
Less: Net earnings attributable to noncontrolling interests
95
85
51
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE
$
14,879
$
14,653
$
14,742
NET EARNINGS PER COMMON SHARE (1)
Basic
$
6.18
$
6.07
$
6.00
Diluted
$
6.02
$
5.90
$
5.81
(1)
Basic net earnings per common share and Diluted net earnings per common share are calculated on Net earnings attributable to Procter &
Gamble.
Consolidated Statements of Comprehensive Income
Amounts in millions; fiscal years ended June 30
2024
2023
2022
NET EARNINGS
$
14,974 $
14,738
$
14,793
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
Foreign currency translation (net of tax (benefit)/expense of $66, $(197) and
$515, respectively)
(226)
(71)
(1,450)
Unrealized gains/(losses) on investment securities
(net of tax (benefit)/expense of $(1), $(2) and $1, respectively)
(3)
(7)
5
Unrealized gains on defined benefit postretirement plans
(net of tax expense of $230, $9 and $1,022, respectively)
546
40
2,992
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
317
(38)
1,547
TOTAL COMPREHENSIVE INCOME
15,291
14,700
16,340
Less: Comprehensive income attributable to noncontrolling interests
92
78
43
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO
PROCTER & GAMBLE
$
15,199 $
14,622
$
16,297
36 The Procter & Gamble Company
See accompanying Notes to Consolidated Financial Statements.
Consolidated Balance Sheets
Amounts in millions except stated values; as of June 30
2024
2023
Assets
CURRENT ASSETS
Cash and cash equivalents
$
9,482
$
8,246
Accounts receivable
6,118
5,471
INVENTORIES
Materials and supplies
1,617
1,863
Work in process
929
956
Finished goods
4,470
4,254
Total inventories
7,016
7,073
Prepaid expenses and other current assets
2,095
1,858
TOTAL CURRENT ASSETS
24,709
22,648
PROPERTY, PLANT AND EQUIPMENT, NET
22,152
21,909
GOODWILL
40,303
40,659
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET
22,047
23,783
OTHER NONCURRENT ASSETS
13,158
11,830
TOTAL ASSETS
$
122,370
$
120,829
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable
$
15,364
$
14,598
Accrued and other liabilities
11,073
10,929
Debt due within one year
7,191
10,229
TOTAL CURRENT LIABILITIES
33,627
35,756
LONG-TERM DEBT
25,269
24,378
DEFERRED INCOME TAXES
6,516
6,478
OTHER NONCURRENT LIABILITIES
6,398
7,152
TOTAL LIABILITIES
71,811
73,764
SHAREHOLDERS' EQUITY
Convertible Class A preferred stock, stated value $1 per share (600 shares authorized)
798
819
Non-Voting Class B preferred stock, stated value $1 per share (200 shares authorized)
—
—
Common stock, stated value $1 per share (10,000 shares authorized; shares issued:
2024 - 4,009.2, 2023 - 4,009.2)
4,009
4,009
Additional paid-in capital
67,684
66,556
Reserve for ESOP debt retirement
(737)
(821)
Accumulated other comprehensive loss
(11,900)
(12,220)
Treasury stock (shares held: 2024 - 1,652.2; 2023 - 1,647.1)
(133,379)
(129,736)
Retained earnings
123,811
118,170
Noncontrolling interest
272
288
TOTAL SHAREHOLDERS' EQUITY
50,559
47,065
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
122,370
$
120,829
The Procter & Gamble Company 37
See accompanying Notes to Consolidated Financial Statements.
Consolidated Statements of Shareholders' Equity
Dollars in millions except per
share amounts;
shares in thousands
Common Stock
Preferred
Stock
Additional
Paid-In
Capital
Reserve
for ESOP
Debt
Retirement
Accumulated
Other
Comprehens
ive
Income/
(Loss)
Treasury
Stock
Retained
Earnings
Noncont
rolling
Interest
Total
Sharehol
ders'
Equity
Shares
Amount
BALANCE JUNE 30, 2021 2,429,706 $4,009
$870
$64,848
($1,006)
($13,744) ($114,973) $106,374
$276 $46,654
Net earnings
14,742
51 14,793
Other comprehensive
income/(loss)
1,555
(8)
1,547
Dividends and dividend
equivalents ($3.5227 per
share):
Common
(8,514)
(8,514)
Preferred
(281)
(281)
Treasury stock purchases
(67,088)
(10,003)
(10,003)
Employee stock plans
28,042
945
1,571
2,516
Preferred stock conversions
3,217
(27)
4
23
—
ESOP debt impacts
90
108
198
Noncontrolling interest, net
(2)
(54)
(56)
BALANCE JUNE 30, 2022 2,393,877 $4,009
$843
$65,795
($916)
($12,189) ($123,382) $112,429
$265 $46,854
Net earnings
14,653
85 14,738
Other comprehensive
income/(loss)
(31)
(7)
(38)
Dividends and dividend
equivalents ($3.6806 per
share):
Common
(8,742)
(8,742)
Preferred
(282)
(282)
Treasury stock purchases
(52,021)
(7,353)
(7,353)
Employee stock plans
17,424
758
978
1,736
Preferred stock conversions
2,840
(24)
3
21
—
ESOP debt impacts
95
112
207
Noncontrolling interest, net
—
(55)
(55)
BALANCE JUNE 30, 2023 2,362,120 $4,009
$819
$66,556
($821)
($12,220) ($129,736) $118,170
$288 $47,065
Net earnings
14,879
95 14,974
Other comprehensive
income/(loss)
320
(3)
317
Dividends and dividend
equivalents ($3.8286 per
share):
Common
(9,053)
(9,053)
Preferred
(284)
(284)
Treasury stock purchases
(31,877)
(5,014)
(5,014)
Employee stock plans
24,095
1,125
1,353
2,478
Preferred stock conversions
2,713
(21)
3
18
—
ESOP debt impacts
85
99
184
Noncontrolling interest, net
—
(108)
(108)
BALANCE JUNE 30, 2024 2,357,051 $4,009
$798 $67,684
($737) ($11,900) ($133,379) $123,811
$272 $50,559
38 The Procter & Gamble Company
See accompanying Notes to Consolidated Financial Statements.
Consolidated Statements of Cash Flows
Amounts in millions; fiscal years ended June 30
2024
2023
2022
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR
$
8,246
$
7,214
$ 10,288
OPERATING ACTIVITIES
Net earnings
14,974
14,738
14,793
Depreciation and amortization
2,896
2,714
2,807
Share-based compensation expense
562
545
528
Deferred income taxes
(244)
(453)
(402)
Loss/(gain) on sale of assets
(215)
(40)
(85)
Indefinite-lived intangible asset impairment charge
1,341
—
—
Change in accounts receivable
(766)
(307)
(694)
Change in inventories
(70)
(119)
(1,247)
Change in accounts payable and accrued and other liabilities
1,814
313
1,429
Change in other operating assets and liabilities
(1,414)
(1,107)
(635)
Other
969
564
229
TOTAL OPERATING ACTIVITIES
19,846
16,848
16,723
INVESTING ACTIVITIES
Capital expenditures
(3,322)
(3,062)
(3,156)
Proceeds from asset sales
346
46
110
Acquisitions, net of cash acquired
(21)
(765)
(1,381)
Other investing activity
(507)
281
3
TOTAL INVESTING ACTIVITIES
(3,504)
(3,500)
(4,424)
FINANCING ACTIVITIES
Dividends to shareholders
(9,312)
(8,999)
(8,770)
Additions to short-term debt with original maturities of more than three months
3,528
17,168
10,411
Reductions in short-term debt with original maturities of more than three months
(7,689)
(13,031)
(11,478)
Net additions/(reductions) to other short-term debt
857
(3,319)
917
Additions to long-term debt
3,197
3,997
4,385
Reductions in long-term debt
(2,335)
(1,878)
(2,343)
Treasury stock purchases
(5,006)
(7,353)
(10,003)
Impact of stock options and other
1,905
1,269
2,005
TOTAL FINANCING ACTIVITIES
(14,855)
(12,146)
(14,876)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
(251)
(170)
(497)
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
1,235
1,032
(3,074)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR
$
9,482
$
8,246
$
7,214
SUPPLEMENTAL DISCLOSURE
Cash payments for interest
$
878
$
721
$
451
Cash payments for income taxes
4,363
4,278
3,818
The Procter & Gamble Company 39
See accompanying Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Procter & Gamble Company's (the "Company," "Procter & Gamble," "we" or "us") business is focused on providing
branded consumer packaged goods of superior quality and value. Our products are sold in about 180 countries and territories
primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club
stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including airport duty-free stores),
high-frequency stores, pharmacies, electronics stores and professional channels. We also sell direct to consumers. We have on-
the-ground operations in about 70 countries.
Basis of Presentation
The Consolidated Financial Statements include the Company and its controlled subsidiaries. Intercompany transactions are
eliminated.
Use of Estimates
Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
(U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated
Financial Statements and accompanying disclosures. These estimates are based on management's best knowledge of current
events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items,
consumer and trade promotion accruals, restructuring reserves, pensions, postretirement benefits, stock options, valuation of
acquired intangible assets, useful lives for depreciation and amortization of long-lived assets, future cash flows associated with
impairment testing for goodwill, indefinite-lived intangible assets and other long-lived assets, deferred tax assets and liabilities,
uncertain income tax positions and contingencies. Actual results may ultimately differ from estimates, although management
does not generally believe such differences would materially affect the financial statements in any individual year. However,
regarding ongoing impairment testing of goodwill and indefinite-lived intangible assets, significant deterioration in future cash
flow projections or other assumptions used in estimating fair values versus those anticipated at the time of the initial valuations,
could result in impairment charges that materially affect the financial statements in a given year.
Revenue Recognition
Our revenue is primarily generated from the sale of finished product to customers. Those sales predominantly contain a single
performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer, which
can be on the date of shipment or the date of receipt by the customer. A provision for payment discounts and product return
allowances is recorded as a reduction of sales in the same period the revenue is recognized. The revenue recorded is presented
net of sales and other taxes we collect on behalf of governmental authorities. The revenue includes shipping and handling costs,
which generally are included in the list price to the customer.
Trade promotions, consisting primarily of customer pricing allowances, merchandising funds and consumer coupons, are
offered through various programs to customers and consumers. Sales are recorded net of trade promotion spending, which is
recognized as incurred at the time of the sale. Most of these arrangements have terms of approximately one year. Accruals for
expected payouts under these programs are included as accrued marketing and promotion in the Accrued and other liabilities
line item in the Consolidated Balance Sheets.
Cost of Products Sold
Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacturing of product, as well
as manufacturing labor, depreciation expense and direct overhead expenses necessary to acquire and convert the purchased
materials and supplies into finished products. Cost of products sold also includes the cost to distribute products to customers,
inbound freight costs, internal transfer costs, warehousing costs and other shipping and handling activity.
Selling, General and Administrative Expense
Selling, general and administrative expense (SG&A) is primarily comprised of marketing expenses, selling expenses, research
and development costs, administrative and other indirect overhead costs, depreciation and amortization expense on non-
manufacturing assets and other miscellaneous operating items. Research and development costs are charged to expense as
incurred and were $2.0 billion in 2024, 2023 and 2022. Advertising costs, charged to expense as incurred, include television,
print, radio, digital and in-store advertising expenses and were $9.6 billion in 2024, $8.0 billion in 2023 and $7.9 billion in
2022. Non-advertising related components of the Company's total marketing spending reported in SG&A include costs
associated with consumer promotions, product sampling and sales aids.
Other Non-Operating Income, Net
Other non-operating income, net primarily includes divestiture gains, net non-service impacts related to postretirement benefit
plans, investment income, accumulated foreign currency translation losses and other non-operating items.
40 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Currency Translation
Financial statements of operating subsidiaries outside the U.S. generally are measured using the local currency as the functional
currency. Adjustments to translate those statements into U.S. dollars are recorded in Other comprehensive income (OCI). For
subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Re-measurement adjustments
for financial statements in highly inflationary economies and other transactional exchange gains and losses are reflected in
earnings.
Cash Flow Presentation
The Consolidated Statements of Cash Flows are prepared using the indirect method, which reconciles net earnings to cash flows
from operating activities. Cash flows from foreign currency transactions and operations are translated at monthly exchange rates
for each period. Cash flows from hedging activities are included in the same category as the items being hedged. Cash flows
from derivative instruments designated as net investment hedges are classified as investing activities. Realized gains and losses
from non-qualifying derivative instruments used to hedge currency exposures resulting from intercompany financing
transactions are classified as financing activities. Cash flows from other derivative instruments used to manage interest rates,
commodity or other currency exposures are classified as operating activities. Cash payments related to income taxes are
classified as operating activities.
Investments
The Company holds minor equity investments in certain companies over which we exert significant influence, but do not
control the financial and operating decisions. These are accounted for as equity method investments. Other equity investments
that are not controlled, and over which we do not have the ability to exercise significant influence, and for which there is a
readily determinable market value, are recorded at fair value, with gains and losses recorded through net earnings. Equity
investments without readily determinable fair values are measured at cost, less impairments, plus or minus observable price
changes. Equity investments are included as Other noncurrent assets in the Consolidated Balance Sheets.
The Company also holds highly liquid investments, primarily money market funds and time deposits. Such investments are
considered cash equivalents and are included within Cash and cash equivalents in the Consolidated Balance Sheets.
Inventory Valuation
Inventories are valued at the lower of cost or net realizable value. Product-related inventories are maintained on the first-in,
first-out method. The cost of spare part inventories is maintained using the average-cost method.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized
over the assets' estimated useful lives using the straight-line method. Machinery and equipment includes office furniture and
fixtures (15-year life), computer equipment and capitalized software (3- to 5-year lives) and manufacturing equipment (3- to 20-
year lives). Buildings are depreciated over an estimated useful life of 40 years. Estimated useful lives are periodically reviewed
and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset
lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.
Goodwill and Other Intangible Assets
Goodwill and indefinite-lived intangible assets are not amortized but are evaluated for impairment annually or more often if
indicators of a potential impairment are present. Our annual impairment testing of goodwill is performed separately from our
impairment testing of indefinite-lived intangible assets.
We have acquired brands that have been determined to have indefinite lives. We evaluate several factors to determine whether
an indefinite life is appropriate, including the competitive environment, market share, brand history, underlying product life
cycles, operating plans and the macroeconomic environment of the countries in which the brands are sold. In addition, when
certain events or changes in operating conditions occur, an additional impairment assessment is performed and indefinite-lived
assets may be adjusted to a determinable life.
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed,
either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology and other intangible assets
with contractual terms are generally amortized over their respective legal or contractual lives. Customer relationships, brands
and other non-contractual intangible assets with determinable lives are amortized over periods generally ranging from 5 to 30
years. When certain events or changes in operating conditions occur, an impairment assessment is performed and remaining
lives of intangible assets with determinable lives may be adjusted.
For additional details on goodwill and intangible assets see Note 4.
Fair Values of Financial Instruments
Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could
affect the fair value estimates; however, we do not believe any such changes would have a material impact on our financial
condition, results of operations or cash flows. Other financial instruments, including cash equivalents, certain investments and
certain short-term debt, are recorded at cost, which approximates fair value. The fair values of long-term debt and financial
instruments are disclosed in Note 9.
The Procter & Gamble Company 41
Amounts in millions of dollars except per share amounts or as otherwise specified.
New Accounting Pronouncements and Policies
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures.” This guidance requires disclosure of
incremental segment information on an annual and interim basis. This amendment is effective for our fiscal year ending June
30, 2025, and our interim periods within the fiscal year ending June 30, 2026. We are currently assessing the impact of this
guidance on our disclosures.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes: Improvements to Income Tax Disclosures.” This
guidance requires consistent categories and greater disaggregation of information in the rate reconciliation and disclosures of
income taxes paid by jurisdiction. This amendment is effective for our fiscal year ending June 30, 2026. We are currently
assessing the impact of this guidance on our disclosures.
No other new accounting pronouncement issued or effective during the fiscal year had, or is expected to have, a material impact
on our Consolidated Financial Statements.
NOTE 2
SEGMENT INFORMATION
Under U.S. GAAP, our operating segments are aggregated into five reportable segments: 1) Beauty, 2) Grooming, 3) Health
Care, 4) Fabric & Home Care and 5) Baby, Feminine & Family Care. Our five reportable segments are comprised of:
•
Beauty: Hair Care (Conditioners, Shampoos, Styling Aids, Treatments); Skin and Personal Care (Antiperspirants and
Deodorants, Personal Cleansing, Skin Care);
•
Grooming: Grooming (Appliances, Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other
Grooming);
•
Health Care: Oral Care (Toothbrushes, Toothpaste, Other Oral Care); Personal Health Care (Gastrointestinal, Pain Relief,
Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care);
•
Fabric & Home Care: Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents); Home Care (Air Care,
Dish Care, P&G Professional, Surface Care); and
•
Baby, Feminine & Family Care: Baby Care (Baby Wipes, Taped Diapers and Pants); Feminine Care (Adult Incontinence,
Menstrual Care); Family Care (Paper Towels, Tissues, Toilet Paper).
While none of our reportable segments are highly seasonal, components within certain reportable segments, such as Appliances
(Grooming) and Personal Health Care (Health), are seasonal.
The accounting policies of the segments are generally the same as those described in Note 1. Differences between these policies
and U.S. GAAP primarily reflect income taxes, which are reflected in the segments using applicable blended statutory rates.
Adjustments to arrive at our effective tax rate are included in Corporate. In addition, capital expenditures in the segments are on
an accrual basis consistent with the balance sheet. Adjustments to move from an accrual to cash basis, for purposes of the cash
flow statement, are reflected in Corporate.
Corporate includes certain operating and non-operating activities that are not reflected in the operating results used internally to
measure and evaluate the businesses, as well as items to adjust management reporting principles to U.S. GAAP. Operating
activities in Corporate include the results of incidental businesses managed at the corporate level. Operating elements also
include certain employee benefit costs, the costs of certain restructuring-type activities to maintain a competitive cost structure,
including manufacturing and workforce optimization, asset impairment charges and other general Corporate items. The non-
operating elements in Corporate primarily include interest expense, certain pension and other postretirement benefit costs,
certain acquisition and divestiture gains, interest and investing income and other financing costs.
Total assets for the reportable segments include those assets managed by the reportable segment, primarily inventory, fixed
assets and intangible assets. Other assets, primarily cash, accounts receivable, investment securities and goodwill, are included
in Corporate.
42 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Our operating segments are comprised of similar product categories. Operating segments that individually accounted for 5% or
more of consolidated net sales are as follows:
% of Net sales by operating segment (1)
Fiscal years ended June 30
2024
2023
2022
Fabric Care
24%
23%
23%
Home Care
12%
12%
12%
Baby Care
9%
10%
10%
Family Care
9%
8%
9%
Hair Care
9%
9%
9%
Skin and Personal Care
9%
9%
9%
Grooming (2)
8%
8%
6%
Oral Care
8%
8%
8%
Feminine Care
6%
7%
6%
Personal Health Care
6%
6%
6%
Other (2)
—%
—%
2%
TOTAL
100%
100%
100%
(1)
% of Net sales by operating segment excludes sales recorded in Corporate.
(2)
Effective July 1, 2022, the Grooming Sector Business Unit completed the full integration of its Shave Care and Appliances categories to
cohesively serve consumers' grooming needs. This transition included the integration of the management team, strategic decision-
making, innovation plans, financial targets, budgets and internal management reporting. For the fiscal year ended June 30, 2022,
Appliances was presented in Other.
Net sales and long-lived assets in the United States and internationally were as follows (in billions):
Fiscal years ended June 30
2024
2023
2022
NET SALES
United States
$
40.5 $
38.7 $
36.5
International
$
43.5 $
43.3 $
43.7
LONG-LIVED ASSETS (1)
United States
$
12.0 $
11.4 $
10.7
International
$
10.2 $
10.5 $
10.5
(1)
Long-lived assets consists of property, plant and equipment.
No country, other than the United States, exceeds 10% of the Company's consolidated net sales or long-lived assets.
Our largest customer, Walmart Inc. and its affiliates, accounted for consolidated net sales of approximately 16% in 2024 and
15% in 2023 and 2022. No other customer represents more than 10% of our consolidated net sales.
The Procter & Gamble Company 43
Amounts in millions of dollars except per share amounts or as otherwise specified.
Global Segment Results
Net Sales
Earnings/(Loss)
Before
Income Taxes
Net Earnings
/(Loss)
Depreciation
and
Amortization
Total
Assets
Capital
Expenditures
BEAUTY
2024 $ 15,220 $
3,805 $
2,963 $
399 $ 6,103 $
280
2023 15,008
4,009
3,178
376
6,196
287
2022 14,740
3,946
3,160
348
6,055
331
GROOMING
2024
6,654
1,845
1,477
335 19,082
337
2023
6,419
1,806
1,461
335 20,601
300
2022
6,587
1,835
1,490
361 20,482
260
HEALTH CARE
2024 11,793
2,941
2,258
381
8,416
524
2023 11,226
2,759
2,125
352
8,480
466
2022 10,824
2,618
2,006
376
7,888
410
FABRIC & HOME CARE
2024 29,495
7,339
5,687
710
8,907
1,076
2023 28,371
6,303
4,828
675
8,669
979
2022 27,556
5,729
4,386
672
8,567
988
BABY, FEMININE &
FAMILY CARE
2024 20,277
5,253
4,020
824
8,497
979
2023 20,217
4,623
3,545
804
8,517
994
2022 19,736
4,267
3,266
826
8,443
932
CORPORATE
2024
601
(2,422)
(1,430)
247 71,365
126
2023
765
(1,147)
(399)
172 68,366
36
2022
744
(400)
485
224 65,773
235
TOTAL COMPANY
2024 $ 84,039 $
18,761 $
14,974 $
2,896 $122,370 $
3,322
2023 82,006
18,353
14,738
2,714 120,829
3,062
2022 80,187
17,995
14,793
2,807 117,208
3,156
44 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
NOTE 3
SUPPLEMENTAL FINANCIAL INFORMATION
The components of property, plant and equipment were as follows:
As of June 30
2024
2023
PROPERTY, PLANT AND EQUIPMENT
Machinery and equipment
$
37,507 $
36,521
Buildings
8,534
8,277
Construction in progress
3,126
2,980
Land
895
867
TOTAL PROPERTY, PLANT AND EQUIPMENT
50,063
48,645
Accumulated depreciation
(27,911)
(26,736)
PROPERTY, PLANT AND EQUIPMENT, NET
$
22,152 $
21,909
Selected components of current and noncurrent liabilities were as follows:
As of June 30
2024
2023
ACCRUED AND OTHER LIABILITIES - CURRENT
Accrued marketing and promotion
$
4,172 $
3,894
Accrued compensation
2,161
2,030
Taxes payable
1,042
828
Accrued interest
282
235
Lease liabilities
243
222
Restructuring reserves
166
174
Derivative liabilities
54
631
Other
2,953
2,915
TOTAL
$
11,073 $
10,929
OTHER NONCURRENT LIABILITIES
Pension benefit obligations
$
2,884 $
3,116
Uncertain tax positions
723
622
Lease liabilities
666
595
Other retiree benefit obligations
653
690
U.S. Tax Act transitional tax payable
592
1,154
Derivative liabilities
325
445
Other
555
530
TOTAL
$
6,398 $
7,152
RESTRUCTURING PROGRAM
The Company has historically incurred an ongoing annual level of restructuring-type activities to maintain a competitive cost
structure, including manufacturing and workforce optimization. Before tax costs incurred under ongoing programs have
generally ranged from $250 to $500 annually.
In December 2023, the Company announced a limited market portfolio restructuring of its business operations, primarily in
certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. In
connection with this announcement, the Company expects to record incremental restructuring charges of $1.0 to $1.5 billion
after tax, consisting primarily of foreign currency translation losses to be recognized as non-cash charges upon the substantial
liquidation of operations in the affected markets.
The Company incurred total restructuring charges of $659 and $329 for the fiscal years ended June 30, 2024 and 2023. Of the
charges incurred for fiscal year 2024, $248 were recorded in Costs of products sold, $155 in SG&A and $255 in Other non-
operating income, net. Of the charges incurred in fiscal year 2023, $160 were recorded in Costs of products sold, $160 in
SG&A and $9 in Other non-operating income, net.
The Procter & Gamble Company 45
Amounts in millions of dollars except per share amounts or as otherwise specified.
The following table presents restructuring activity for the fiscal years ended June 30, 2024 and 2023:
Separation
Costs
Asset-Related
Costs
Other Costs
Total
RESERVE JUNE 30, 2022
$
121 $
— $
26 $
147
Cost incurred
175
43
111
329
Cost paid/settled
(141)
(43)
(118)
(302)
RESERVE JUNE 30, 2023
155
—
19
174
Cost incurred
202
101
355
659
Cost paid/settled
(224)
(101)
(342)
(667)
RESERVE JUNE 30, 2024
$
133 $
— $
32 $
166
Separation Costs
Employee separation costs relate to severance packages that are primarily voluntary and the amounts calculated are based on
salary levels and past service periods.
Asset-Related Costs
Asset-related costs consist of both asset write-downs and accelerated depreciation for manufacturing and facilities
consolidations. Asset write-downs relate to the establishment of a new fair value basis for assets held-for-sale or for disposal.
These assets are written down to the lower of their current carrying basis or amounts expected to be realized upon disposal, less
minor disposal costs. Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the
end of their normal service period.
Other Costs
Other restructuring-type charges are incurred as a direct result of the restructuring plan. Such charges include accumulated
foreign currency translation losses, asset removal and termination of contracts related to Enterprise Market portfolio
restructuring. As of June 30, 2024, the Company has substantially liquidated its operations in certain Enterprise Markets,
including Nigeria, and recorded a non-cash charge of $216 for accumulated foreign currency translation losses previously
included in Accumulated other comprehensive income/(loss).
Consistent with our historical policies for ongoing restructuring-type activities, the restructuring charges are funded by and
included within Corporate for management and segment reporting. However, for information purposes, the following table
summarizes the total restructuring costs related to our reportable segments:
Fiscal years ended June 30
2024
2023
2022
Beauty
$
43 $
15 $
11
Grooming
76
17
14
Health Care
33
28
32
Fabric & Home Care
84
87
42
Baby, Feminine & Family Care
50
21
83
Corporate (1)
371
161
71
TOTAL
$
659 $
329 $
253
(1)
Corporate includes costs related to allocated overheads, including charges related to our Enterprise Markets, Global Business Services
and Corporate Functions activities.
46 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
NOTE 4
GOODWILL AND INTANGIBLE ASSETS
The change in the net carrying amount of goodwill by reportable segment was as follows:
Beauty
Grooming
Health Care
Fabric &
Home Care
Baby,
Feminine &
Family Care
TOTAL
BALANCE AT JUNE 30, 2022 - NET (1)
$ 13,296 $ 12,571 $
7,589 $
1,808 $
4,436 $ 39,700
Acquisitions and divestitures
405
—
—
—
33
438
Translation and other
187
132
129
13
60
521
BALANCE AT JUNE 30, 2023 - NET (1)
13,888
12,703
7,718
1,821
4,529
40,659
Acquisitions and divestitures
(61)
—
—
—
—
(61)
Translation and other
(104)
(71)
(80)
(10)
(30)
(295)
BALANCE AT JUNE 30, 2024 - NET (1)
$ 13,723 $ 12,633 $
7,638 $
1,810 $
4,499 $ 40,303
(1)
Grooming goodwill balance is net of $7.9 billion accumulated impairment losses.
Goodwill decreased during fiscal 2024 primarily due to currency translation across all reportable segments and a brand
divestiture in the Beauty reportable segment. Goodwill increased during fiscal 2023 primarily due to an acquisition in the
Beauty segment, other minor brand acquisitions in the Baby, Feminine & Family Care segment and currency translation across
all reportable segments.
Goodwill and indefinite-lived intangibles are tested for impairment at least annually by comparing the estimated fair values of
our reporting units and indefinite-lived intangible assets to their respective carrying values. We use the income method to
estimate the fair value of these assets, which is based on forecasts of the expected future cash flows attributable to the
respective assets. When appropriate, the market approach, which leverages comparable company revenue and earnings
multiples, is weighted with the income approach to estimate fair value. Significant estimates and assumptions inherent in the
valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows
(including expected growth rates and profitability). Significant judgment by management is required to estimate the impact of
macroeconomic and other factors on future cash flows. Estimates utilized in the projected cash flows include consideration of
macroeconomic conditions, overall category growth rates, competitive activities, cost containment and margin expansion,
Company business plans, the underlying product or technology life cycles, economic barriers to entry, a brand's relative market
position and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may
occur, which could affect the accuracy or validity of the estimates and assumptions.
We believe the estimates and assumptions utilized in our impairment testing are reasonable and are comparable to those that
would be used by other marketplace participants. However, actual events and results could differ substantially from those used
in our valuations. To the extent such factors result in a failure to achieve the level of projected cash flows initially used to
estimate fair value for purposes of establishing or subsequently impairing the carrying amount of goodwill and related
intangible assets, we may need to record additional non-cash impairment charges in the future.
During the fiscal year ended June 30, 2024, we determined that the fair value of the Gillette indefinite-lived intangible asset was
less than its carrying amount. As a result, we recorded a non-cash impairment charge of $1.3 billion ($1.0 billion after tax) to
reduce the carrying amount to be equivalent to the estimated fair value as of December 31, 2023. Following the impairment
charge, the carrying value of the Gillette indefinite-lived intangible asset is $12.8 billion. The impairment charge arose due to a
higher discount rate, weakening of several currencies relative to the U.S. dollar and the impact of a new restructuring program
focused primarily in certain Enterprise Markets, including Argentina and Nigeria.
The Procter & Gamble Company 47
Amounts in millions of dollars except per share amounts or as otherwise specified.
Identifiable intangible assets were comprised of:
2024
2023
As of June 30
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
INTANGIBLE ASSETS WITH DETERMINABLE LIVES
Brands
$
4,318 $
(2,725) $
4,352 $
(2,540)
Patents and technology
2,794
(2,683)
2,775
(2,649)
Customer relationships
1,834
(1,121)
1,847
(1,039)
Other
72
(29)
73
(28)
TOTAL
$
9,019 $
(6,558) $
9,047 $
(6,256)
INTANGIBLE ASSETS WITH INDEFINITE LIVES
Brands
19,587
—
20,992
—
TOTAL INTANGIBLE ASSETS
$
28,605 $
(6,558) $
30,039 $
(6,256)
Amortization expense of intangible assets was as follows:
Fiscal years ended June 30
2024
2023
2022
Intangible asset amortization
$
338 $
327 $
312
Estimated amortization expense over the next five fiscal years is as follows:
Fiscal years ending June 30
2025
2026
2027
2028
2029
Estimated amortization expense
$
318 $
297 $
287 $
248 $
200
NOTE 5
INCOME TAXES
Income taxes are recognized for the amount of taxes payable for the current year and for the impact of deferred tax assets and
liabilities, which represent future tax consequences of events that have been recognized differently in the financial statements
than for tax purposes. Deferred tax assets and liabilities are established using the enacted statutory tax rates and are adjusted for
any changes in such rates in the period of change.
We have elected to account for the tax effects of Global Intangible Low-Taxed Income (GILTI) as a current period expense
when incurred.
Earnings before income taxes consisted of the following:
Fiscal years ended June 30
2024
2023
2022
United States
$
12,246 $
12,107 $
11,698
International
6,515
6,246
6,297
TOTAL
$
18,761 $
18,353 $
17,995
48 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Income taxes consisted of the following:
Fiscal years ended June 30
2024
2023
2022
CURRENT TAX EXPENSE
U.S. federal
$
1,954 $
2,303 $
1,916
International
1,708
1,412
1,333
U.S. state and local
368
353
355
TOTAL
4,031
4,068
3,604
DEFERRED TAX EXPENSE/(BENEFIT)
U.S. federal
(133)
(224)
(320)
International and other
(111)
(229)
(82)
TOTAL
(244)
(453)
(402)
TOTAL TAX EXPENSE
$
3,787 $
3,615 $
3,202
A reconciliation of the U.S. federal statutory income tax rate to our actual effective income tax rate is provided below:
Fiscal years ended June 30
2024
2023
2022
U.S. federal statutory income tax rate
21.0 %
21.0 %
21.0 %
Country mix impacts of foreign operations
0.1 %
(0.5)%
(0.3)%
State income taxes, net of federal benefit
1.8 %
1.6 %
1.5 %
Excess tax benefits from the exercise of stock options
(1.5)%
(1.0)%
(2.0)%
Foreign derived intangible income deduction (FDII)
(1.1)%
(0.8)%
(1.1)%
Changes in uncertain tax positions
0.1 %
0.1 %
(0.4)%
Other
(0.2)%
(0.7)%
(0.9)%
EFFECTIVE INCOME TAX RATE
20.2 %
19.7 %
17.8 %
Country mix impacts of foreign operations includes the effects of foreign subsidiaries' earnings taxed at rates other than the
U.S. statutory rate, the U.S. tax impacts of non-U.S. earnings repatriation and any net impacts of intercompany transactions.
Excess tax benefits from the exercise of stock options reflect the excess of actual tax benefits received on employee exercises of
stock options and other share-based payments (which generally equals the income taxable to the employee) over the amount of
tax benefits that were calculated and recognized based on the grant date fair values of such instruments. Changes in uncertain
tax positions represent changes in our net liability related to prior year tax positions.
Prior to the passage of the U.S. Tax Act, the Company asserted that substantially all of the undistributed earnings of its foreign
subsidiaries were considered indefinitely invested and, accordingly, no deferred taxes were provided. Pursuant to the provisions
of the U.S. Tax Act, these earnings were subjected to a one-time transition tax. This charge included taxes for all U.S. income
taxes and for the related foreign withholding taxes for the portion of those earnings which are no longer considered indefinitely
invested. We have not provided deferred taxes on approximately $22 billion of earnings that are considered indefinitely
invested.
A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:
Fiscal years ended June 30
2024
2023
2022
BEGINNING OF YEAR
$
515 $
583 $
627
Increases in tax positions for prior years
157
113
102
Decreases in tax positions for prior years
(133)
(119)
(118)
Increases in tax positions for current year
160
60
53
Settlements with taxing authorities
(100)
(108)
(42)
Lapse in statute of limitations
(9)
(7)
(17)
Currency translation
(8)
(7)
(22)
END OF YEAR
$
582 $
515 $
583
Included in the total liability for uncertain tax positions at June 30, 2024, is $488 that, depending on the ultimate resolution,
could impact the effective tax rate in future periods.
The Company is present in about 70 countries and over 150 taxable jurisdictions and, at any point in time, has 30-40
jurisdictional audits underway at various stages of completion. We evaluate our tax positions and establish liabilities for
The Procter & Gamble Company 49
Amounts in millions of dollars except per share amounts or as otherwise specified.
uncertain tax positions that may be challenged by local authorities and may not be fully sustained, despite our belief that the
underlying tax positions are fully supportable. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in
light of changing facts and circumstances, including progress of tax audits, developments in case law and the closing of statutes
of limitation. Such adjustments are reflected in the tax provision as appropriate. We have tax years open ranging from 2010 and
forward. We are generally not able to reliably estimate the timing and ultimate settlement amounts until the close of an audit.
Based on information currently available, we do not anticipate over the next 12-month period any significant audit activity
concluding related to uncertain tax positions for which we have existing accrued liabilities.
We recognize the additional accrual of any possible related interest and penalties relating to the underlying uncertain tax
position in income tax expense. As of June 30, 2024 and 2023, we had accrued interest of $111 and $143 and accrued penalties
of $15 and $12, respectively, which are not included in the above table. During the fiscal years ended June 30, 2024, 2023 and
2022, we recognized $18, $23 and $21 in interest expense and $4, $1 and $2 in penalties expense, respectively.
Deferred income tax assets and liabilities were comprised of the following:
As of June 30
2024
2023
DEFERRED TAX ASSETS
Capitalized research & development
$
1,140 $
930
Loss and other carryforwards
892
1,014
Pension and other retiree benefits
592
737
Accrued marketing and promotion
460
421
Stock-based compensation
433
412
Fixed assets
206
223
Lease liabilities
199
197
Unrealized loss on financial and foreign exchange transactions
107
282
Other
843
874
Valuation allowances
(290)
(403)
TOTAL
$
4,582 $
4,687
DEFERRED TAX LIABILITIES
Goodwill and other intangible assets
$
5,459 $
5,811
Fixed assets
1,573
1,556
Other retiree benefits
1,319
1,101
Unrealized gain on financial and foreign exchange transactions
263
198
Lease right-of-use assets
196
191
Foreign withholding tax on earnings to be repatriated
104
96
Other
441
381
TOTAL
$
9,355 $
9,334
Net operating loss carryforwards were $2.3 billion at June 30, 2024, and $2.9 billion at June 30, 2023. If unused, approximately
$100 will expire between 2024 and 2043. The remainder, totaling $2.2 billion at June 30, 2024, may be carried forward
indefinitely.
NOTE 6
EARNINGS PER SHARE
Basic net earnings per common share are calculated by dividing Net earnings attributable to Procter & Gamble less preferred
dividends by the weighted average number of common shares outstanding during the period. Diluted net earnings per common
share are calculated by dividing Net earnings attributable to Procter & Gamble by the diluted weighted average number of
common shares outstanding during the period. The diluted shares include the dilutive effect of stock options and other share-
based awards based on the treasury stock method (see Note 7) and the assumed conversion of preferred stock (see Note 8).
50 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Net earnings per common share were calculated as follows:
Fiscal years ended June 30
2024
2023
2022
CONSOLIDATED AMOUNTS
Net earnings
$
14,974 $
14,738 $
14,793
Less: Net earnings attributable to noncontrolling interests
95
85
51
Net earnings attributable to P&G
14,879
14,653
14,742
Less: Preferred dividends
284
282
281
Net earnings attributable to P&G available to common shareholders
(Basic)
$
14,595 $
14,371 $
14,461
Net earnings attributable to P&G available to common shareholders
(Diluted)
$
14,879 $
14,653 $
14,742
SHARES IN MILLIONS
Basic weighted average common shares outstanding
2,360.1
2,368.2
2,410.3
Add effect of dilutive securities:
Stock options and other unvested equity awards (1)
38.3
39.4
49.5
Convertible preferred shares (2)
73.6
76.3
79.3
Diluted weighted average common shares outstanding
2,471.9
2,483.9
2,539.1
NET EARNINGS PER COMMON SHARE
Basic
$
6.18 $
6.07 $
6.00
Diluted
$
6.02 $
5.90 $
5.81
(1)
Excludes 4 million, 19 million and 11 million in 2024, 2023 and 2022, respectively, of weighted average stock options outstanding
because the exercise price of these options was greater than the average market value of the Company's stock or their effect was
antidilutive.
(2)
An overview of preferred shares can be found in Note 8
NOTE 7
SHARE-BASED COMPENSATION
The Company has two primary share-based compensation programs under which we annually grant stock option, restricted
stock unit (RSU) and performance stock unit (PSU) awards to certain managers and directors.
In our main long-term incentive program, managers can elect to receive stock options or RSUs. All options vest after three
years and have a 10-year life. Exercise prices on options are set equal to the market price of the underlying shares on the date of
the grant. RSUs vest and settle in shares of common stock three years from the grant date.
Senior-level executives participate in an additional long-term incentive program that awards PSUs, which are paid in shares
after the end of a three-year performance period subject to pre-established performance goals. The program includes a Relative
Total Shareholder Return (R-TSR) modifier under which the number of shares ultimately granted is also impacted by the
Company's actual shareholder return relative to our consumer products competitive peer set.
In addition to these long-term incentive programs, we award RSUs to the Company's non-employee directors and make other
minor stock option and RSU grants to employees for which the terms are not substantially different from our long-term
incentive awards.
The Company's share-based compensation plan was approved by shareholders in 2019. Under the 2019 plan, a maximum of
150 million shares of common stock was authorized for issuance and a total of 77 million shares remain available for grant.
The Company recognizes share-based compensation expense based on the fair value of the awards at the date of grant. The
expense is recognized on a straight-line basis over the requisite service period. Awards to employees eligible for retirement
prior to the award becoming fully vested are recognized as compensation expense ratably from the grant date through the date
the employee first becomes eligible to retire and/or is no longer required to provide services to earn the award. Share-based
compensation expense is included as part of Cost of products sold and SG&A in the Consolidated Statements of Earnings and
includes an estimate of forfeitures, which is based on historical data.
The Procter & Gamble Company 51
Amounts in millions of dollars except per share amounts or as otherwise specified.
Total expense and related recognized tax benefit were as follows:
Fiscal years ended June 30
2024
2023
2022
Stock options
$
270 $
303 $
271
RSUs and PSUs
292
242
257
Total share-based expense
$
562 $
545 $
528
Income tax benefit
$
103 $
103 $
88
We utilize an industry standard lattice-based valuation model to calculate the fair value for stock options granted. Assumptions
utilized in the model, which are evaluated and revised to reflect market conditions and experience, were as follows:
Fiscal years ended June 30
2024
2023
2022
Interest rate
4.6
- 5.5 %
3.7
- 4.1 %
0.1
- 1.6 %
Weighted average interest rate
4.6 %
3.7 %
1.5 %
Dividend yield
2.5 %
2.6 %
2.4 %
Expected volatility
18 %
21 %
19 %
Expected life in years
8.8
8.8
9.1
Lattice-based option valuation models incorporate ranges of assumptions for inputs and those ranges are disclosed in the
preceding table. Expected volatilities are based on a combination of historical volatility of our stock and implied volatilities of
call options on our stock. We use historical data to estimate option exercise and employee termination patterns within the
valuation model. The expected life of options granted is derived from the output of the option valuation model and represents
the average period of time that options granted are expected to be outstanding. The interest rate for periods within the
contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
We utilize a Monte-Carlo simulation model to estimate the fair value of performance stock units granted. Assumptions utilized
in the model are not substantially different from those used for stock options.
A summary of options outstanding under the plans as of June 30, 2024, and activity during the year then ended is presented
below:
Options
Options
(in thousands)
Weighted
Average
Exercise Price
Weighted Average
Contractual Life
in Years
Aggregate
Intrinsic Value
OUTSTANDING AT JULY 1, 2023
121,205 $
104.18
Granted
8,737
147.76
Exercised
(22,190)
85.08
Forfeited/expired
(391)
134.69
OUTSTANDING AT JUNE 30, 2024
107,362 $
111.59
5.1 $
5,732
Exercisable
75,692 $
99.51
3.9 $
4,951
The following table provides additional information on stock options:
Fiscal years ended June 30
2024
2023
2022
Weighted average grant-date fair value of options granted
$
34.25 $
29.58 $
21.55
Intrinsic value of options exercised
1,621
979
1,886
Grant-date fair value of options that vested
244
219
177
Cash received from options exercised
1,888
1,189
1,930
Actual tax benefit from options exercised
330
207
399
At June 30, 2024, $171 of compensation cost had not yet been recognized related to stock option grants. That cost is expected
to be recognized over a remaining weighted average period of 1.6 years.
52 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
A summary of non-vested RSUs and PSUs outstanding under the plans as of June 30, 2024, and activity during the year then
ended is presented below:
RSUs
PSUs
RSU and PSU awards
Units (in
thousands)
Weighted
Average Grant
Date Fair Value
Units (in
thousands)
Weighted
Average Grant
Date Fair Value
Non-vested at July 1, 2023
3,172 $
134.94
1,011 $
142.40
Granted
1,519
147.15
524
155.86
Vested
(1,299)
136.73
(506)
152.73
Forfeited
(71)
143.02
(13)
155.36
Non-vested at June 30, 2024
3,321 $
139.65
1,016 $
144.06
At June 30, 2024, $243 of compensation cost had not yet been recognized related to RSUs and PSUs. That cost is expected to
be recognized over a remaining weighted average period of 1.6 years. The total grant date fair value of shares vested was $256,
$220 and $248 in 2024, 2023 and 2022, respectively.
The Company settles equity issuances with treasury shares. We have no specific policy to repurchase common shares to
mitigate the dilutive impact of options, RSUs and PSUs. However, we have historically made adequate discretionary purchases,
based on cash availability, market trends and other factors, to offset the impacts of such activity.
NOTE 8
POSTRETIREMENT BENEFITS AND EMPLOYEE STOCK OWNERSHIP PLAN
We offer various postretirement benefits to our employees.
Defined Contribution Retirement Plans
We have defined contribution plans, which cover the majority of our U.S. employees, as well as employees in certain other
countries. These plans are fully funded. We generally make contributions to participants' accounts based on individual base
salaries and years of service. Total global defined contribution expense was $425, $392 and $366 in 2024, 2023 and 2022,
respectively.
The primary U.S. defined contribution plan (the U.S. DC plan) comprises the majority of the expense for the Company's
defined contribution plans. For the U.S. DC plan, the contribution rate is set annually. Total contributions for this plan
approximated 13% of total participants' annual wages and salaries in 2024 and 2023 and 14% in 2022.
We maintain The Procter & Gamble Profit Sharing Trust (Trust) and Employee Stock Ownership Plan (ESOP) to provide a
portion of the funding for the U.S. DC plan and other retiree benefits (described below). Operating details of the ESOP are
provided at the end of this Note. The fair value of the ESOP Series A shares allocated to participants reduces our cash
contribution required to fund the U.S. DC plan.
Defined Benefit Retirement Plans and Other Retiree Benefits
We offer defined benefit retirement pension plans to certain employees. These benefits relate primarily to plans outside the U.S.
and, to a lesser extent, plans assumed in previous acquisitions covering U.S. employees.
We also provide certain other retiree benefits, primarily health care benefits for the majority of our U.S. employees who
become eligible for these benefits when they meet minimum age and service requirements. The plans require cost sharing with
retirees and the benefits are funded by ESOP Series B shares and certain other assets contributed by the Company.
The Procter & Gamble Company 53
Amounts in millions of dollars except per share amounts or as otherwise specified.
Obligation and Funded Status. The following provides a reconciliation of benefit obligations, plan assets and funded status of
these defined benefit plans:
Pension Benefits (1)
Other Retiree Benefits (2)
Fiscal years ended June 30
2024
2023
2024
2023
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year (3)
$
12,499 $
12,608 $
2,933 $
3,070
Service cost
164
173
68
71
Interest cost
527
430
157
142
Participants' contributions
14
13
56
50
Amendments
21
8
2
—
Net actuarial loss/(gain)
(11)
(550)
(268)
(208)
Special termination benefits
4
5
3
4
Currency translation and other
(155)
363
(22)
31
Benefit payments
(707)
(551)
(242)
(227)
BENEFIT OBLIGATION AT END OF YEAR (3)
$
12,355 $
12,499 $
2,687 $
2,933
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year
$
10,374 $
10,173 $
7,324 $
6,889
Actual return on plan assets
1,058
37
784
482
Employer contributions
239
392
44
42
Participants' contributions
14
13
56
50
Currency translation and other
(119)
310
—
1
ESOP debt impacts (4)
—
—
77
87
Benefit payments
(707)
(551)
(242)
(227)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
$
10,857 $
10,374 $
8,043 $
7,324
FUNDED STATUS
$
(1,498) $
(2,125) $
5,356 $
4,391
(1)
Primarily non-U.S.-based defined benefit retirement plans.
(2)
Primarily U.S.-based other postretirement benefit plans.
(3)
For the pension benefit plans, the benefit obligation is the projected benefit obligation. For other retiree benefit plans, the benefit
obligation is the accumulated postretirement benefit obligation.
(4)
Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.
The actuarial gain for pension benefits in 2024 was primarily related to updating of various assumptions in the plan, offset by
updates in work experience and decreases in discount rates. The actuarial gain for other retiree benefits in 2024 was primarily
related to updating various assumptions in the plan based work experience and an increase in discount rates. The actuarial gain
for pension plans in 2023 was primarily related to increases in discount rates, offset by inflation-related pension benefit
increases. The actuarial gain for other retiree benefits in 2023 was primarily related to increases in discount rates and a decrease
in assumptions for medical claims costs.
The underfunding of pension benefits is primarily a function of the different funding incentives that exist outside of the U.S. In
certain countries, there are no legal requirements or financial incentives provided to companies to pre-fund pension obligations
prior to their due date. In these instances, benefit payments are typically paid directly from the Company's cash as they become
due.
Pension Benefits
Other Retiree Benefits
As of June 30
2024
2023
2024
2023
CLASSIFICATION OF NET AMOUNT RECOGNIZED
Noncurrent assets
$
1,458 $
1,085 $
6,047 $
5,119
Current liabilities
(73)
(94)
(38)
(38)
Noncurrent liabilities
(2,884)
(3,116)
(653)
(690)
NET AMOUNT RECOGNIZED
$
(1,498) $
(2,125) $
5,356 $
4,391
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE (INCOME)/LOSS (AOCI)
Net actuarial loss/(gain)
$
1,258 $
1,818 $
(1,493) $
(1,160)
Prior service cost/(credit)
140
156
(655)
(787)
NET AMOUNTS RECOGNIZED IN AOCI
$
1,398 $
1,974 $
(2,148) $
(1,947)
54 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
The accumulated benefit obligation for all defined benefit pension plans, which differs from the projected obligation in that it
excludes the assumption of future salary increases, was $11.6 billion and $11.8 billion as of June 30, 2024 and 2023,
respectively. Information related to the funded status of selected pension and other retiree benefits at June 30 is as follows:
As of June 30
2024
2023
PENSION PLANS WITH A PROJECTED BENEFIT OBLIGATION IN EXCESS OF PLAN ASSETS
Projected benefit obligation
$
7,613 $
7,967
Fair value of plan assets
4,656
4,758
PENSION PLANS WITH AN ACCUMULATED BENEFIT OBLIGATION IN EXCESS OF PLAN ASSETS
Accumulated benefit obligation
$
7,103 $
7,442
Fair value of plan assets
4,624
4,677
OTHER RETIREE BENEFIT PLANS WITH AN ACCUMULATED BENEFIT OBLIGATION IN EXCESS OF
PLAN ASSETS
Accumulated benefit obligation
$
770 $
818
Fair value of plan assets
79
89
Net Periodic Benefit Cost. Components of the net periodic benefit cost were as follows:
Pension Benefits
Other Retiree Benefits
Fiscal years ended June 30
2024
2023
2022
2024
2023
2022
AMOUNTS RECOGNIZED IN NET PERIODIC BENEFIT COST/(CREDIT)
Service cost
$
164 $
173 $
253 $
68 $
71 $
86
Interest cost
527
430
253
157
142
99
Expected return on plan assets
(610)
(591)
(684)
(687)
(611)
(564)
Amortization of net actuarial loss/(gain)
95
133
337
(38)
(7)
11
Amortization of prior service cost/(credit)
37
26
28
(127)
(125)
(107)
Amortization of net actuarial loss/(gain) due to settlements
(13)
—
(5)
—
—
—
Special termination benefits
4
5
4
3
4
1
NET PERIODIC BENEFIT COST/(CREDIT)
$
203 $
176 $
186 $ (623) $ (526) $ (474)
CHANGE IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN AOCI
Net actuarial loss/(gain) - current year
$ (458) $
4
$ (366) $
(79)
Prior service cost/(credit) - current year
21
8
2
—
Amortization of net actuarial (loss)/gain
(95)
(133)
38
7
Amortization of prior service (cost)/credit
(37)
(26)
127
125
Amortization of net actuarial (loss)/gain due to settlements
13
—
—
—
Currency translation and other
(21)
45
(2)
—
TOTAL CHANGE IN AOCI
(576)
(102)
(201)
53
NET AMOUNTS RECOGNIZED IN PERIODIC
BENEFIT COST/(CREDIT) AND AOCI
$ (373) $
74
$ (824) $ (473)
The service cost component of the net periodic benefit cost is included in the Consolidated Statements of Earnings in Cost of
products sold and SG&A. All other components are included in the Consolidated Statements of Earnings in Other non-
operating income, net, unless otherwise noted.
The Procter & Gamble Company 55
Amounts in millions of dollars except per share amounts or as otherwise specified.
Assumptions. We determine our actuarial assumptions on an annual basis. These assumptions are weighted to reflect each
country that may have an impact on the cost of providing retirement benefits. The weighted average assumptions used to
determine benefit obligations recorded on the Consolidated Balance Sheets as of June 30, 2024 and 2023, were as follows: (1)
Pension Benefits
Other Retiree Benefits
As of June 30
2024
2023
2024
2023
Discount rate
4.2 %
4.2 %
5.8 %
5.6 %
Rate of compensation increase
2.8 %
2.9 %
N/A
N/A
Interest crediting rate for cash balance plans
4.7 %
4.3 %
N/A
N/A
Health care cost trend rates assumed for next year
N/A
N/A
6.3 %
6.1 %
Rate to which the health care cost trend rate is assumed to
decline (ultimate trend rate)
N/A
N/A
4.9 %
4.5 %
Year that the rate reaches the ultimate trend rate
N/A
N/A
2029
2028
(1)
Determined as of end of fiscal year.
The weighted average assumptions used to determine net benefit cost recorded on the Consolidated Statements of Earnings for
the fiscal years ended June 30 were as follows: (1)
Pension Benefits
Other Retiree Benefits
Fiscal years ended June 30
2024
2023
2022
2024
2023
2022
Discount rate
4.2 %
3.7 %
1.7 %
5.6 %
5.0 %
3.2 %
Expected return on plan assets
6.0 %
5.9 %
5.5 %
8.5 %
8.4 %
8.4 %
Rate of compensation increase
2.9 %
2.8 %
2.7 %
N/A
N/A
N/A
Interest crediting rate for cash balance plans
4.3 %
4.3 %
4.4 %
N/A
N/A
N/A
(1)
Determined as of beginning of fiscal year.
For plans that make up the majority of our obligation, the Company calculates the benefit obligation and the related impacts on
service and interest costs using specific spot rates along the corporate bond yield curve. For the remaining plans, the Company
determines these amounts utilizing a single weighted average discount rate derived from the corporate bond yield curve used to
measure the plan obligations.
Several factors are considered in developing the estimate for the long-term expected rate of return on plan assets. For the
defined benefit retirement plans, these factors include historical rates of return of broad equity and bond indices and projected
long-term rates of return obtained from pension investment consultants. The expected long-term rates of return for plan assets
are 8 - 9% for equities and 3 - 5% for bonds. For other retiree benefit plans, the expected long-term rate of return reflects that the
assets are comprised primarily of Company stock. The expected rate of return on Company stock is based on the long-term
projected return of 8.5% and reflects the historical pattern of returns.
Plan Assets. Our investment objective for defined benefit retirement plan assets is to meet the plans' benefit obligations and to
improve plan self-sufficiency for future benefit obligations. The investment strategies focus on asset class diversification,
liquidity to meet benefit payments and an appropriate balance of long-term investment return and risk. Target ranges for asset
allocations are determined by assessing different investment risks and matching the actuarial projections of the plans' future
liabilities and benefit payments with current as well as expected long-term rates of return on the assets, taking into account
investment return volatility and correlations across asset classes. Plan assets are diversified across several investment managers
and are generally invested in liquid funds that are selected to track broad market equity and bond indices. Investment risk is
carefully controlled with plan assets rebalanced to target allocations on a periodic basis and with continual monitoring of
investment managers' performance relative to the investment guidelines established with each investment manager.
Our target asset allocation for the fiscal year ended June 30, 2024, and actual asset allocation by asset category as of June 30,
2024 and 2023, were as follows:
Target Asset Allocation
Actual Asset Allocation at June 30
Pension Benefits
Other Retiree
Benefits
Pension Benefits
Other Retiree Benefits
Asset Category
2024
2023
2024
2023
Cash
1 %
2 %
2 %
1 %
2 %
2 %
Debt securities
61 %
1 %
61 %
60 %
1 %
1 %
Equity securities
38 %
97 %
37 %
39 %
97 %
97 %
TOTAL
100 %
100 %
100 %
100 %
100 %
100 %
56 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
The following table sets forth the fair value of the Company's plan assets as of June 30, 2024 and 2023, segregated by level
within the fair value hierarchy (refer to Note 9 for further discussion on the fair value hierarchy and fair value principles).
Investments valued using net asset value as a practical expedient are not valued using the fair value hierarchy, but rather valued
using the net asset value reported by the managers of the funds and as supported by the unit prices of actual purchase and sale
transactions.
Pension Benefits
Other Retiree Benefits
As of June 30
Fair Value
Hierarchy Level
2024
2023
Fair Value
Hierarchy Level
2024
2023
ASSETS AT FAIR VALUE
Cash and cash equivalents
1
$
267 $
54
1
$
135 $
148
Company common stock
—
—
1
451
368
Company preferred stock (1)
—
—
2
7,380
6,721
Fixed income securities (2)
2
1,076
1,190
—
—
Insurance contracts (3)
3
165
93
—
—
TOTAL ASSETS IN THE FAIR
VALUE HIERARCHY
1,508
1,337
7,966
7,237
Investments valued at net asset value (4)
9,349
9,037
77
87
TOTAL ASSETS AT FAIR VALUE
$ 10,857 $ 10,374
$
8,043 $
7,324
(1)
Company preferred stock is valued based on the value of Company common stock and is presented net of ESOP debt discussed below.
(2)
Fixed income securities are estimated by using pricing models or quoted prices of securities with similar characteristics.
(3)
Fair values of insurance contracts are valued based on either their cash equivalent value or models that project future cash flows and
discount the future amounts to a present value using market-based observable inputs, including credit risk and interest rate curves. The
activity for Level 3 assets is not significant for all years presented.
(4)
Investments valued using net asset value as a practical expedient are primarily equity and fixed income collective funds.
Cash Flows. Management's best estimate of cash requirements and discretionary contributions for the defined benefit
retirement plans and other retiree benefit plans for the fiscal year ending June 30, 2025, is $180 and $53, respectively. Expected
contributions are dependent on many variables, including the variability of the market value of the plan assets as compared to
the benefit obligation and other market or regulatory conditions. In addition, we take into consideration our business investment
opportunities and resulting cash requirements. Accordingly, actual funding may differ significantly from current estimates.
Total benefit payments expected to be paid to participants, which include payments funded from the Company's assets and
payments from the plans are as follows:
Fiscal years ending June 30
Pension Benefits Other Retiree Benefits
EXPECTED BENEFIT PAYMENTS
2025
$
635 $
166
2026
595
179
2027
615
176
2028
666
181
2029
684
187
2030 - 2034
3,747
1,032
Employee Stock Ownership Plan
We maintain the ESOP to provide funding for certain employee benefits discussed in the preceding paragraphs.
The ESOP borrowed $1.0 billion in 1989, and the proceeds were used to purchase Series A ESOP Convertible Class A
Preferred Stock to fund a portion of the U.S. DC plan. Principal and interest requirements of the borrowing were paid by the
Trust from dividends on the preferred shares and from advances provided by the Company. The original borrowing of $1.0
billion has been repaid in full. No advances from the Company remain outstanding at June 30, 2024. Each share is convertible
at the option of the holder into one share of the Company's common stock. The dividend for the current year was equal to the
common stock dividend of $3.83 per share. The liquidation value is $6.82 per share.
In 1991, the ESOP borrowed an additional $1.0 billion. The proceeds were used to purchase Series B ESOP Convertible
Class A Preferred Stock to fund a portion of retiree health care benefits. These shares, net of the ESOP's debt, are considered
plan assets of the other retiree benefits plan discussed above. The original borrowings of $1.0 billion were repaid in 2021. Debt
service requirements were funded by preferred stock dividends, cash contributions and advances provided by the Company, of
The Procter & Gamble Company 57
Amounts in millions of dollars except per share amounts or as otherwise specified.
which $737 are outstanding at June 30, 2024. Each share is convertible at the option of the holder into one share of the
Company's common stock. The dividend for the current year was equal to the common stock dividend of $3.83 per share. The
liquidation value is $12.96 per share.
Our ESOP accounting practices are consistent with current ESOP accounting guidance, including the permissible continuation
of certain provisions from prior accounting guidance. ESOP debt, which was guaranteed by the Company, was recorded as debt
with an offset to the Reserve for ESOP debt retirement, which is presented within Shareholders' equity. Advances to the ESOP
by the Company are recorded as an increase in the Reserve for ESOP debt retirement. Interest incurred on the ESOP debt was
recorded as Interest expense. Dividends on all preferred shares are charged to Retained earnings.
The series A and B preferred shares of the ESOP are allocated to employees based on debt service requirements. The number of
preferred shares outstanding at June 30 was as follows:
Shares in thousands
2024
2023
2022
Allocated
22,724
24,449
25,901
Unallocated
—
535
1,123
TOTAL SERIES A
22,724
24,984
27,024
Allocated
33,723
32,172
30,719
Unallocated
15,864
17,867
20,120
TOTAL SERIES B
49,587
50,039
50,839
For purposes of calculating diluted net earnings per common share, the preferred shares held by the ESOP are considered
converted from inception.
NOTE 9
RISK MANAGEMENT ACTIVITIES AND FAIR VALUE MEASUREMENTS
As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates,
currency exchange rates and commodity prices. We evaluate exposures on a centralized basis to take advantage of natural
exposure correlation and netting. To the extent we choose to manage volatility associated with the net exposures, we enter into
various financial transactions that we account for using the applicable accounting guidance for derivative instruments and
hedging activities. These financial transactions are governed by our policies covering acceptable counterparty exposure,
instrument types and other hedging practices.
If the Company elects to do so and if the instrument meets certain specified accounting criteria, management designates
derivative instruments as cash flow hedges, fair value hedges or net investment hedges. We record derivative instruments at fair
value and the accounting for changes in the fair value depends on the intended use of the derivative, the resulting designation
and the effectiveness of the instrument in offsetting the risk exposure it is designed to hedge. We generally have a high degree
of effectiveness between the exposure being hedged and the hedging instrument.
Credit Risk Management
We have counterparty credit guidelines and normally enter into transactions with investment grade financial institutions, to the
extent commercially viable. Counterparty exposures are monitored daily and downgrades in counterparty credit ratings are
reviewed on a timely basis. We have not incurred, and do not expect to incur, material credit losses on our risk management or
other financial instruments.
Substantially all of the Company's financial instruments used in hedging transactions are governed by industry standard netting
and collateral agreements with counterparties. If the Company's credit rating were to fall below the levels stipulated in the
agreements, the counterparties could demand either collateralization or termination of the arrangements. The aggregate fair
value of the instruments covered by these contractual features that are in a net liability position was $307 and $1,088 as of
June 30, 2024 and 2023, respectively. The Company has not been required to post collateral as a result of these contractual
features.
Interest Rate Risk Management
Our policy is to manage interest cost using a mixture of fixed-rate and variable-rate debt. To manage this risk in a cost-efficient
manner, we enter into interest rate swaps whereby we agree to exchange with the counterparty, at specified intervals, the
difference between fixed and variable interest amounts calculated by reference to a notional amount.
We designate certain interest rate swaps on fixed rate debt that meet specific accounting criteria as fair value hedges. For fair
value hedges, the changes in the fair value of both the hedging instruments and the underlying debt obligations are immediately
recognized in earnings.
58 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Foreign Currency Risk Management
We manufacture and sell our products and finance our operations in a number of countries throughout the world. As a result, we
are exposed to movements in foreign currency exchange rates. We leverage the Company’s diversified portfolio of exposures as
a natural hedge. In certain cases, we enter into non-qualifying foreign currency contracts to hedge certain balance sheet items
subject to revaluation. The change in fair value of these instruments and the underlying exposure are both immediately
recognized in earnings.
To manage exchange rate risk related to our intercompany financing, we primarily use forward contracts and currency swaps.
The change in fair value of these non-qualifying instruments is immediately recognized in earnings, substantially offsetting the
foreign currency mark-to-market impact of the related exposure.
Net Investment Hedging
We hedge certain net investment positions in foreign subsidiaries. To accomplish this, we either borrow directly in foreign
currencies and designate all or a portion of the foreign currency debt as a hedge of the applicable net investment position or we
enter into foreign currency swaps that are designated as hedges of net investments. The time value component of the net
investment hedge currency swaps is excluded from the assessment of hedge effectiveness. Changes in the fair value of the
swap, including changes in the fair value of the excluded time value component, are recognized in OCI and offset the value of
the net investment being hedged. The time value component is subsequently reported in income on a systematic basis.
Commodity Risk Management
Certain raw materials used in our products or production processes are subject to price volatility caused by weather, supply
conditions, political and economic variables and other unpredictable factors. As of and during the fiscal years ended June 30,
2024 and 2023, we did not have any financial commodity hedging activity.
Insurance
We self-insure for most insurable risks. However, we purchase insurance for Directors and Officers Liability and certain other
coverage where it is required by law or by contract.
Fair Value Hierarchy
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that financial assets and
liabilities carried at fair value be classified and disclosed in one of the following categories:
•
Level 1: Quoted market prices in active markets for identical assets or liabilities.
•
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
•
Level 3: Unobservable inputs reflecting the reporting entity's own assumptions or external inputs from inactive markets.
The Company had no significant activity with Level 3 assets and liabilities during the periods presented. Except for the
impairment of the Gillette indefinite-lived intangible asset discussed in Note 4, there were no significant assets or liabilities that
were re-measured at fair value on a non-recurring basis for the periods presented. When applying fair value principles in the
valuation of assets and liabilities, we are required to maximize the use of quoted market prices and minimize the use of
unobservable inputs. The Company has not changed its valuation techniques used in measuring the fair value of any financial
assets or liabilities during the year.
When active market quotes are not available for financial assets and liabilities, we use industry standard valuation models.
Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based
observable inputs including credit risk, interest rate curves and forward and spot prices for currencies. In circumstances where
market-based observable inputs are not available, management judgment is used to develop assumptions to estimate fair value.
Assets and Liabilities Measured at Fair Value
Cash equivalents were $8.0 billion and $6.8 billion as of June 30, 2024 and 2023, respectively, and are classified as Level 1
within the fair value hierarchy. The Company had no other material investments in debt or equity securities during the periods
presented.
The fair value of long-term debt was $27.7 billion and $26.9 billion as of June 30, 2024 and 2023, respectively. This includes
the current portion of long-term debt instruments ($3.8 billion as of June 30, 2024, and $3.9 billion as of June 30, 2023).
Certain long-term debt (debt designated as a fair value hedge) is recorded at fair value. All other long-term debt is recorded at
amortized cost but is measured at fair value for disclosure purposes. We consider our debt to be Level 2 in the fair value
hierarchy. Fair values are generally estimated based on quoted market prices for identical or similar instruments.
The Procter & Gamble Company 59
Amounts in millions of dollars except per share amounts or as otherwise specified.
Disclosures about Financial Instruments
The notional amounts and fair values of financial instruments used in hedging transactions as of June 30, 2024 and 2023, are as
follows:
Notional Amount
Fair Value Asset
Fair Value (Liability)
As of June 30
2024
2023
2024
2023
2024
2023
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts
$
2,993 $
4,044
$
— $
—
$
(325) $
(445)
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Foreign currency interest rate contracts
$ 10,140 $ 11,005
$
119 $
26
$
(31) $
(631)
TOTAL DERIVATIVES DESIGNATED AS
HEDGING INSTRUMENTS
$ 13,133 $ 15,049
$
119 $
26
$
(356) $ (1,076)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts
$
3,192 $
3,489
$
1 $
7
$
(23) $
(42)
TOTAL DERIVATIVES AT FAIR VALUE
$ 16,325 $ 18,538
$
120 $
33
$
(379) $ (1,118)
The fair value of the interest rate derivative asset/(liability) directly offsets the cumulative amount of the fair value hedging
adjustment included in the carrying amount of the underlying debt obligation. The carrying amount of the underlying debt
obligation, which includes the unamortized discount or premium and the fair value adjustment, was $2.7 billion and $3.6 billion
as of June 30, 2024 and 2023, respectively. In addition to the foreign currency derivative contracts designated as net investment
hedges, certain of our foreign currency denominated debt instruments are designated as net investment hedges. The carrying
value of those debt instruments designated as net investment hedges, which includes the adjustment for the foreign currency
transaction gain or loss on those instruments, was $11.9 billion and $11.8 billion as of June 30, 2024 and 2023, respectively.
Derivative assets are presented in Prepaid expenses and other current assets or Other noncurrent assets. Derivative liabilities are
presented in Accrued and other liabilities or Other noncurrent liabilities. Changes in the fair value of net investment hedges are
recognized in the Foreign currency translation component of Other comprehensive income (OCI). All of the Company's
derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy.
Before tax gains/(losses) on our financial instruments in hedging relationships are categorized as follows:
Amount of Gain/(Loss)
Recognized in OCI on Derivatives
Fiscal years ended June 30
2024
2023
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS (1) (2)
Foreign currency interest rate contracts
$
163 $
(544)
(1)
For the derivatives in net investment hedging relationships, the amount of gain excluded from effectiveness testing, which was
recognized in earnings, was $229 and $238 for the fiscal years ended June 30, 2024 and 2023, respectively.
(2)
In addition to the foreign currency derivative contracts designated as net investment hedges, certain of our foreign currency denominated
debt instruments are designated as net investment hedges. The amount of gain/(loss) recognized in AOCI for such instruments was $255
and $(315), for the fiscal years ended June 30, 2024 and 2023, respectively.
Amount of Gain/(Loss)
Recognized in Earnings
Fiscal years ended June 30
2024
2023
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts
$
120 $
(141)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts
$
(91) $
(97)
The gains/(losses) on the derivatives in fair value hedging relationships are fully offset by the mark-to-market impact of the
related exposure. These are both recognized in Interest expense. The losses on derivatives not designated as hedging
instruments are substantially offset by the currency mark-to-market of the related exposure. These are both recognized in
Selling, general and administrative expense (SG&A).
60 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
NOTE 10
SHORT-TERM AND LONG-TERM DEBT
As of June 30
2024
2023
DEBT DUE WITHIN ONE YEAR
Current portion of long-term debt
$
3,838
$
3,951
Commercial paper
3,327
6,236
Other
26
42
TOTAL
$
7,191
$
10,229
Weighted average interest rate of debt due within one year (1)
3.7 %
4.2 %
(1)
Weighted average interest rate of debt due within one year includes the effects of interest rate swaps discussed in Note 9.
As of June 30
2024
2023
LONG-TERM DEBT
3.10% USD note due August 2023
$
—
$
1,000
1.13% EUR note due November 2023
—
1,359
0.50% EUR note due October 2024
534
544
0.63% EUR note due October 2024
855
870
0.55% USD note due October 2025
1,000
1,000
4.10% USD note due January 2026
650
650
2.70% USD note due February 2026
600
600
1.00% USD note due April 2026
1,000
1,000
3.25% EUR note due August 2026
695
707
2.45% USD note due November 2026
875
875
1.90% USD note due February 2027
1,000
1,000
2.80% USD note due March 2027
500
500
4.88% EUR note due May 2027
1,069
1,087
2.85% USD note due August 2027
750
750
3.95% USD note due January 2028
600
600
3.15% EUR note due April 2028
695
—
1.20% EUR note due October 2028
855
870
4.35% USD note due January 2029
600
—
1.25% EUR note due October 2029
534
544
3.00% USD note due March 2030
1,500
1,500
0.35% EUR note due May 2030
534
544
1.20% USD note due October 2030
1,250
1,250
1.95% USD note due April 2031
1,000
1,000
3.25% EUR note due August 2031
695
707
2.30% USD note due February 2032
850
850
4.05% USD note due January 2033
850
850
4.55% USD note due January 2034
750
—
3.20% EUR note due April 2034
909
—
5.55% USD note due March 2037
716
716
1.88% EUR note due October 2038
534
544
3.55% USD note due March 2040
516
516
0.90% EUR note due November 2041
641
652
All other long-term debt
5,550
5,244
Current portion of long-term debt
(3,838)
(3,951)
TOTAL
$
25,269
$
24,378
Weighted average interest rate of long-term debt (1)
3.2 %
2.9 %
(1)
Weighted average interest rate of long-term debt includes the effects of interest rate swaps discussed in Note 9.
The Procter & Gamble Company 61
Amounts in millions of dollars except per share amounts or as otherwise specified.
Long-term debt maturities during the next five fiscal years are as follows:
Fiscal years ending June 30
2025
2026
2027
2028
2029
Debt maturities
$3,838
$3,367
$4,350
$2,074
$1,867
Credit Facilities
We maintain bank credit facilities to support our ongoing commercial paper program. The current facility is an $8.0 billion
facility split between a $3.2 billion five-year facility and a $4.8 billion 364-day facility, which expire in November 2028 and
October 2024, respectively. Both facilities can be extended for certain periods of time as specified in the terms of the credit
agreement. These facilities are currently undrawn and we anticipate that they will remain undrawn. These credit facilities do not
have cross-default or ratings triggers, nor do they have material adverse event clauses, except at the time of signing.
NOTE 11
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The table below presents the changes in Accumulated other comprehensive income/(loss) attributable to Procter & Gamble
(AOCI), including the reclassifications out of AOCI by component:
Changes in Accumulated Other Comprehensive Income/(Loss) by Component
Investment
Securities
Post-
retirement
Benefit Plans
Foreign
Currency
Translation Total AOCI
BALANCE AT JUNE 30, 2022, NET OF TAX
$
20 $
27 $ (12,236) $ (12,189)
Other comprehensive income/(loss), before tax:
OCI before reclassifications
(9)
22
(268)
(255)
Amounts reclassified to the Consolidated Statement of Earnings
—
27
—
27
Total other comprehensive income/(loss), before tax
(9)
49
(268)
(228)
Tax effect
2
(9)
197
190
Total other comprehensive income/(loss), net of tax
(7)
40
(71)
(38)
Less: OCI attributable to non-controlling interests, net of tax
—
—
(7)
(7)
BALANCE AT JUNE 30, 2023, NET OF TAX
13
67
(12,300) (12,220)
Other comprehensive income/(loss), before tax:
OCI before reclassifications
(4)
823
(376)
443
Amounts reclassified to the Consolidated Statement of Earnings
—
(47)
216
169
Total other comprehensive income/(loss), before tax
(4)
776
(160)
612
Tax effect
1
(230)
(66)
(295)
Total other comprehensive income/(loss), net of tax
(3)
546
(226)
317
Less: OCI attributable to non-controlling interests, net of tax
—
—
(3)
(3)
BALANCE AT JUNE 30, 2024, NET OF TAX
$
10 $
613 $ (12,522) $ (11,900)
The below provides additional details on amounts reclassified from AOCI into the Consolidated Statement of Earnings:
•
Postretirement benefit plan amounts are reclassified from AOCI into Other non-operating income, net and included in
the computation of net periodic postretirement costs (see Note 8).
•
Foreign currency translation amounts are reclassified from AOCI into Other non-operating income, net. These
amounts relate to accumulated foreign currency translation losses recognized due to the substantial liquidation of
operations in certain Enterprise Markets, including Nigeria (see Note 3).
NOTE 12
LEASES
The Company determines whether a contract contains a lease at the inception of a contract by determining if the contract
conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.
We lease certain real estate, machinery, equipment, vehicles and office equipment for varying periods. Many of these leases
include an option to either renew or terminate the lease. For purposes of calculating lease liabilities, these options are included
within the lease term when it has become reasonably certain that the Company will exercise such options. The incremental
borrowing rate utilized to calculate our lease liabilities is based on the information available at commencement date, as most of
the leases do not provide an implicit borrowing rate. Our operating lease agreements do not contain any material guarantees or
restrictive covenants. The Company does not have any material finance leases or sublease activities. Short-term leases, defined
62 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
as leases with initial terms of 12 months or less, are not reflected on the Consolidated Balance Sheets. Lease expense for such
short-term leases is not material. The most significant assets in our leasing portfolio relate to real estate and vehicles. For
purposes of calculating lease liabilities for such leases, we have combined lease and non-lease components.
The components of the Company’s total operating lease cost for the fiscal years ended June 30, 2024, 2023 and 2022, were as
follows:
Fiscal years ended June 30
2024
2023
2022
Operating lease cost
$
252
$
229
$
220
Variable lease cost (1)
91
79
89
Total lease cost
$
343
$
308
$
309
(1)
Includes primarily costs for utilities, common area maintenance, property taxes and other operating costs associated with operating leases
that are not included in the lease liability and are recognized in the period in which they are incurred.
Supplemental balance sheet and other information related to leases is as follows:
As of June 30
2024
2023
Operating leases:
Right-of-use assets (Other noncurrent assets)
$
875
$
781
Current lease liabilities (Accrued and other liabilities)
243
222
Noncurrent lease liabilities (Other noncurrent liabilities)
666
595
Total operating lease liabilities
$
909
$
817
Weighted average remaining lease term:
Operating leases
6.0 years
6.2 years
Weighted average discount rate:
Operating leases
4.5 %
3.5 %
At June 30, 2024, future payments of operating lease liabilities were as follows:
Operating Leases
June 30, 2024
1 year
$
244
2 years
206
3 years
164
4 years
122
5 years
105
Over 5 years
190
Total lease payments
1,031
Less: Interest
(122)
Present value of lease liabilities
$
909
Total cash paid for amounts included in the measurement of lease liabilities was $255 and $233 for the fiscal years ended
June 30, 2024 and 2023, respectively.
The right-of-use assets obtained in exchange for lease liabilities were $357 and $213 for the fiscal years ended June 30, 2024
and 2023, respectively.
NOTE 13
COMMITMENTS AND CONTINGENCIES
Guarantees
In conjunction with certain transactions, primarily divestitures, we may provide routine indemnifications (e.g., indemnification
for representations and warranties and retention of previously existing environmental, tax and employee liabilities) for which
terms range in duration and, in some circumstances, are not explicitly defined. The maximum obligation under some
The Procter & Gamble Company 63
Amounts in millions of dollars except per share amounts or as otherwise specified.
indemnifications is also not explicitly stated and, as a result, the overall amount of these obligations cannot be reasonably
estimated. We have not made significant payments for these indemnifications. We believe that if we were to incur a loss on any
of these matters, the loss would not have a material effect on our financial position, results of operations or cash flows.
In certain situations, we guarantee loans for suppliers and customers. The total amount of guarantees issued under such
arrangements is not material.
Off-Balance Sheet Arrangements
We do not have off-balance sheet financing arrangements, including variable interest entities, that have a material impact on our
financial statements.
Purchase Commitments
We have purchase commitments for materials, supplies, services and property, plant and equipment as part of the normal course
of business. Commitments made under take-or-pay obligations are as follows:
Fiscal years ending June 30
2025
2026
2027
2028
2029
Thereafter
Purchase obligations
$
1,092 $
596 $
314 $
214 $
162 $
232
Such amounts represent minimum commitments under take-or-pay agreements with suppliers and are in line with expected
usage. These amounts include purchase commitments related to service contracts for information technology, human resources
management and facilities management activities that have been outsourced to third-party suppliers. Due to the proprietary
nature of many of our materials and processes, certain supply contracts contain penalty provisions for early termination. We do
not expect to incur penalty payments under these provisions that would materially affect our financial position, results of
operations or cash flows.
Litigation
We are subject, from time to time, to certain legal proceedings and claims arising out of our business, which cover a wide range
of matters, including antitrust and trade regulation, product liability, advertising, contracts, environmental, patent and trademark
matters, labor and employment matters and tax. While considerable uncertainty exists, in the opinion of management and our
counsel, the ultimate resolution of the various lawsuits and claims will not materially affect our financial position, results of
operations or cash flows.
We are also subject to contingencies pursuant to environmental laws and regulations that in the future may require us to take
action to correct the effects on the environment of prior manufacturing and waste disposal practices. Based on currently
available information, we do not believe the ultimate resolution of environmental remediation will materially affect our
financial position, results of operations or cash flows.
NOTE 14
SUPPLIER FINANCE PROGRAMS
The Company has an ongoing program to negotiate extended payment terms with its suppliers consistent with market practices.
The Company also supports a Supply Chain Finance program (“SCF”) with several global financial institutions. Under SCF, the
Company maintains an accounts payable system to facilitate participating suppliers' ability to sell receivables from the
Company to a SCF bank. These participating suppliers negotiate their sales of receivables arrangements directly with the
respective SCF bank. The Company is not party to those agreements, but the SCF banks allow the suppliers to utilize the
Company’s creditworthiness in establishing credit spreads and associated costs. Under this model, this arrangement generally
provides the suppliers with more favorable terms than they would be able to secure on their own. The Company has no
economic interest in a supplier’s decision to sell a receivable. Once a qualifying supplier chooses to participate in SCF, the
supplier selects which individual Company invoices to sell to the SCF bank. The Company’s obligations to its suppliers,
including the amounts due and scheduled payment dates, are not impacted by the supplier’s decisions to finance amounts under
these arrangements. The Company does not provide any form of guarantee under these financing arrangements. Our payment
terms for suppliers under this program generally range from 60 to 180 days. All outstanding amounts related to suppliers
participating in SCF are recorded within Accounts payable in our Consolidated Balance Sheets, and the associated payments are
included in operating activities within our Consolidated Statements of Cash Flows. The amount due to suppliers participating in
SCF and included in Accounts payable was approximately $5.6 billion as of June 30, 2024 and $5.7 billion as of June 30, 2023.
NOTE 15
SUBSEQUENT EVENT
On July 1, 2024, the Company completed the divestiture of its business in Argentina. The Company expects to record a non-
cash charge of approximately $750 for accumulated foreign currency translation losses in the first quarter of the fiscal year
ended June 30, 2025.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
64 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
The Company’s Chairman of the Board, President and Chief Executive Officer, Jon R. Moeller, and the Company’s Chief
Financial Officer, Andre Schulten, performed an evaluation of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act)) as of the end of the period covered by
this report.
Messrs. Moeller and Schulten have concluded that the Company’s disclosure controls and procedures were effective to ensure
that information required to be disclosed in reports we file or submit under the Exchange Act is (1) recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to
our management, including Messrs. Moeller and Schulten, to allow their timely decisions regarding required disclosure.
Reports on Internal Control over Financial Reporting.
The information required by this item is incorporated by reference to "Management's Report on Internal Control over Financial
Reporting" and "Report of Independent Registered Public Accounting Firm" included in Item 8 of this Form 10-K.
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting that occurred during the Company's fourth fiscal quarter
that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial
reporting.
Item 9B. Other Information.
During the fiscal year ended June 30, 2024, none of our directors or officers adopted or terminated a "Rule 10b5-1 trading
arrangement" or "non-Rule 10b5-1 trading arrangement" as defined in Item 408 of Regulation S-K.
Insider Trading Arrangements and Policies
The Company has insider trading policies and procedures that govern the purchase, sale and other dispositions of its securities
by directors, officers and employees, as well as by the Company itself. We believe these policies and procedures are reasonably
designed to promote compliance with insider trading laws, rules and regulations and applicable listing standards.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The Board of Directors has determined that the following members of the Audit Committee are independent and are Audit
Committee financial experts as defined by SEC rules: Mr. Brett Biggs, Ms. Christine McCarthy (Chair) and Ms. Patricia
Woertz.
The information required by this item is incorporated by reference to the following sections of the 2024 Proxy Statement filed
pursuant to Regulation 14A, which will be filed no later than 120 days after June 30, 2024: the section entitled Election of
Directors; the subsection of the Corporate Governance section entitled Board Meetings and Committees of the Board; the
subsection of the Corporate Governance section entitled Code of Ethics; and the subsection of the Other Matters section entitled
Shareholder Recommendations or Nominations of Director Candidates. Pursuant to the Instruction to Item 401 of Regulation S-
K, Executive Officers of the Registrant are reported in Part I of this report.
Item 11. Executive Compensation.
The information required by this item is incorporated by reference to the following sections of the 2024 Proxy Statement filed
pursuant to Regulation 14A, which will be filed no later than 120 days after June 30, 2024: the subsections of the Corporate
Governance section entitled Board Meetings and Committees of the Board, Compensation Committee Interlocks and Insider
Participation, and Risk Oversight - Compensation-Related Risk; and the portion beginning with the section entitled Director
Compensation up to but not including the section entitled Pay Versus Performance.
The Procter & Gamble Company 65
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table gives information about the Company's common stock that may be issued upon the exercise of options,
warrants and rights under all of the Company's equity compensation plans as of June 30, 2024. The table includes the following
plans: The Procter & Gamble 1992 Stock Plan; The Procter & Gamble 2001 Stock and Incentive Compensation Plan; The
Procter & Gamble 2003 Non-Employee Directors' Stock Plan; The Procter & Gamble 2009 Stock and Incentive Compensation
Plan; The Procter & Gamble 2014 Stock and Incentive Compensation Plan; and The Procter & Gamble 2019 Stock and
Incentive Compensation Plan.
Plan Category
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(b)
Weighted
average exercise
price of outstanding
options, warrants and
rights
(c)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
Equity compensation plans approved by
security holders
Stock Options/Stock Appreciation Rights
107,379,563
$111.5700
(1)
Restricted Stock Units (RSUs)/Performance
Stock Units (PSUs)
6,696,628
N/A
(1)
TOTAL
114,076,191
$111.5700 (2)
(1)
Of the plans listed above, only The Procter & Gamble 2019 Stock and Incentive Compensation Plan (the “2019 Plan”) allows for future
grants of securities. The maximum number of shares that may be granted under this plan is 187 million shares. Stock options and stock
appreciation rights are counted on a one-for-one basis while full value awards (such as RSUs and PSUs) are counted as five shares for
each share awarded. Total shares available for future issuance under this plan is 77 million.
(2)
Weighted average exercise price of outstanding options only.
Additional information required by this item is incorporated by reference to the following section of the 2024 Proxy Statement
filed pursuant to Regulation 14A, which will be filed no later than 120 days after June 30, 2024: the subsection of the Beneficial
Ownership section entitled Security Ownership of Management and Certain Beneficial Owners.
Item 13. Certain Relationships and Related Transactions and Director Independence.
The information required by this item is incorporated by reference to the following sections of the 2024 Proxy Statement filed
pursuant to Regulation 14A, which will be filed no later than 120 days after June 30, 2024: the subsections of the Corporate
Governance section entitled Director Independence and Review and Approval of Transactions with Related Persons.
Item 14. Principal Accountant Fees and Services.
The information required by this item is incorporated by reference to the following section of the 2024 Proxy Statement filed
pursuant to Regulation 14A, which will be filed no later than 120 days after June 30, 2024: Report of the Audit Committee,
which ends with the subsection entitled Services Provided by Deloitte.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
1.
Financial Statements:
The following Consolidated Financial Statements of The Procter & Gamble Company and subsidiaries, management's report
and the reports of the independent registered public accounting firm are incorporated by reference in Part II, Item 8 of this Form
10-K.
•
Management's Report on Internal Control over Financial Reporting
•
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting (PCAOB Firm ID
is 34)
•
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
•
Consolidated Statements of Earnings - for fiscal years ended June 30, 2024, 2023 and 2022
•
Consolidated Statements of Comprehensive Income - for fiscal years ended June 30, 2024, 2023 and 2022
•
Consolidated Balance Sheets - as of June 30, 2024 and 2023
•
Consolidated Statements of Shareholders' Equity - for fiscal years ended June 30, 2024, 2023 and 2022
•
Consolidated Statements of Cash Flows - for fiscal years ended June 30, 2024, 2023 and 2022
•
Notes to Consolidated Financial Statements
2.
Financial Statement Schedules:
These schedules are omitted because of the absence of the conditions under which they are required or because the information
is set forth in the Consolidated Financial Statements or Notes thereto.
66 The Procter & Gamble Company
EXHIBITS
Exhibit (3-1) -
Amended Articles of Incorporation (as amended by shareholders at the annual meeting on October 11, 2011 and
consolidated by the Board of Directors on April 8, 2016) (Incorporated by reference to Exhibit (3-1) of the Company's
Annual Report on Form 10-K for the year ended June 30, 2016).
(3-2) -
Regulations (as approved by the Board of Directors on December 13, 2022, pursuant to authority granted by
shareholders at the annual meeting on October 13, 2009) (Incorporated by reference to Exhibit (3-2) of the Company's
Current Report on Form 8-K filed December 13, 2022).
Exhibit (4-1) -
Indenture, dated as of September 3, 2009, between the Company and Deutsche Bank Trust Company Americas, as
Trustee (Incorporated by reference to Exhibit (4-1) of the Company's Annual Report on Form 10-K for the year ended
June 30, 2015).
(4-2) -
The Company agrees to furnish to the Securities and Exchange Commission, upon request, a copy of any other
instrument defining the rights of holders of the Company’s long-term debt.
(4-3) -
Description of the Company’s Common Stock (Incorporated by reference to Exhibit (4-3) of the Company’s Annual
report on Form 10-K for the year ended June 30, 2019).
(4-4) -
Description of the Company’s 0.625% Notes due 2024, 1.200% Notes due 2028, and 1.875% Notes due 2038
(Incorporated by reference to Exhibit (4-4) of the Company’s Annual report on Form 10-K for the year ended June 30,
2019).
(4-5) -
Description of the Company’s 4.875% EUR notes due May 2027, 6.250% GBP notes due January 2030, and 5.250%
GBP notes due January 2033 (Incorporated by reference to Exhibit (4-5) of the Company’s Annual report on Form 10-
K for the year ended June 30, 2021).
(4-6) -
Description of the Company’s 0.500% Notes due 2024 and 1.250% Notes due 2029 (Incorporated by reference to
Exhibit (4-6) of the Company’s Annual report on Form 10-K for the year ended June 30, 2019).
(4-7) -
Description of the Company’s 1.375% Notes due 2025 and 1.800% Notes due 2029 (Incorporated by reference to
Exhibit (4-7) of the Company’s Annual report on Form 10-K for the year ended June 30, 2019).
(4-9) -
Description of the Company's 0.350% EUR Notes due 2030 and 0.900% EUR Notes due 2041 (Incorporated by
reference to Exhibit (4-10) of the Company's Annual Report on Form 10-K for the year ended June 30, 2022).
(4-10) -
Description of the Company's 0.110% Yen Notes due 2026 and 0.230% Yen Notes due 2031 (Incorporated by reference
to Exhibit (4-11) of the Company's Annual Report on Form 10-K for the year ended June 30, 2022).
(4-11) -
Description of the Company's 3.250% Notes due 2026 and 3.250% Notes due 2031 (Incorporated by reference to
Exhibit (4-11) of the Company's Annual Report on Form 10-K for the year ended June 30, 2023).
(4-12) -
Description of the Company's 3.150% Notes due 2028 and 3.200% Notes due 2034. +
Exhibit (10-1) -
The Procter & Gamble 2001 Stock and Incentive Compensation Plan (as amended), which was originally adopted by
shareholders at the annual meeting on October 9, 2001 (Incorporated by reference to Exhibit (10-1) of the Company’s
Annual Report on Form 10-K for the year ended June 30, 2018).*
(10-2) -
The Procter & Gamble 2001 Stock and Incentive Compensation Plan related correspondence and terms and conditions
(Incorporated by reference to Exhibit (10-1) of the Company's Form 10-Q for the quarter ended December 31, 2013).*
(10-3) -
The Procter & Gamble 1992 Stock Plan (as amended December 11, 2001), which was originally adopted by the
shareholders at the annual meeting on October 12, 1992 (Incorporated by reference to Exhibit (10-2) of the Company’s
Annual Report on Form 10-K for the year ended June 30, 2018).*
(10-4) -
The Procter & Gamble Executive Group Life Insurance Policy (Incorporated by reference to Exhibit (10-3) of the
Company’s Annual Report on Form 10-K for the year ended June 30, 2018).*
(10-5) -
Summary of the Company’s Retirement Plan Restoration Program.* +
(10-6) -
Retirement Plan Restoration Program - Related Correspondence and Terms and Conditions. * +
(10-7) -
Summary of the Company’s Long-Term Incentive Program (Incorporated by reference to Exhibit (10-3) of the
Company's Form 10-Q for the quarter ended September 30, 2020).*
(10-8) -
Long-Term Incentive Program related correspondence and terms and conditions (Incorporated by reference to Exhibit
(10-5) of the Company's Form 10-Q for the quarter ended September 30, 2023).*
(10-9) -
The Procter & Gamble Company Executive Deferred Compensation Plan (Incorporated by reference to Exhibit (10-2)
of the Company's Form 10-Q for the quarter ended March 31, 2020).*
(10-10) -
Summary of the Company's Short Term Achievement Reward Program (Incorporated by reference to Exhibit (10-1) of
the Company's Form 10-Q for the quarter ended September 30, 2023).*
The Procter & Gamble Company 67
(10-11) -
Short Term Achievement Reward Program – related correspondence and terms and conditions (Incorporated by
reference to Exhibit (10-2) of the Company's Form 10-Q for the quarter ended September 30, 2023).*
(10-12) -
Company's Form of Separation Agreement & Release.* +
(10-13) -
Company's Form of Separation Letter and Release (Incorporated by reference to Exhibit (10-1) of the Company's Form
10-Q for the quarter ended March 31, 2023).*
(10-14) -
Summary of personal benefits available to certain officers and non-employee directors (Incorporated by reference to
Exhibit (10-1) of the Company's Form 10-Q for the quarter ended March 31, 2024).*
(10-15) -
The Gillette Company Deferred Compensation Plan (Incorporated by reference to Exhibit (10-18) of the Company’s
Annual Report on Form 10-K for the year ended June 30, 2017).*
(10-16) -
Senior Executive Officer Recoupment Policy.*+
(10-17) -
The Gillette Company Deferred Compensation Plan (for salary deferrals prior to January 1, 2005) as amended through
August 21, 2006 (Incorporated by reference to Exhibit (10-20) of the Company's Annual Report on Form 10-K for the
year ended June 30, 2017).*
(10-18) -
The Procter & Gamble 2009 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at
the annual meeting on October 13, 2009 (Incorporated by reference to Exhibit (10-21) of the Company's Annual Report
on Form 10-K for the year ended June 30, 2017).*
(10-19) -
Regulations of the Compensation and Leadership Development Committee for The Procter & Gamble 2009 Stock and
Incentive Compensation Plan, The Procter & Gamble 2001 Stock and Incentive Compensation Plan, The Procter &
Gamble 1992 Stock Plan, The Procter & Gamble 1992 Stock Plan (Belgium Version), The Gillette Company 2004
Long-Term Incentive Plan and the Gillette Company 1971 Stock Option Plan (Incorporated by reference to Exhibit
(10-21) of the Company’s Annual Report on Form 10-K for the year ended June 30, 2018).*
(10-20) -
The Procter & Gamble 2009 Stock and Incentive Compensation Plan - Additional terms and conditions and related
correspondence (Incorporated by reference to Exhibit (10-2) of the Company Form 10-Q for the quarter ended
December 31, 2013).*
(10-21) -
The Procter & Gamble Performance Stock Program Summary (Incorporated by reference to Exhibit (10-3) of the
Company's Form 10-Q for the quarter ended September 30, 2023).*
(10-22) -
Performance Stock Program related correspondence and terms and conditions (Incorporated by reference to Exhibit
(10-4) of the Company’s Form 10-Q for the quarter ended September 30, 2023).*
(10-23) -
The Procter & Gamble 2013 Non-Employee Directors' Stock Plan (Incorporated by reference to Exhibit (10-3) of the
Company's Form 10-Q for the quarter ended December 31, 2013). *
(10-24) -
The Procter & Gamble 2014 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at
the annual meeting on October 14, 2014 (Incorporated by reference to Exhibit (10-25) of the Company's Annual Report
on Form 10-K for the year ended June 30, 2016).*
(10-25) -
Regulations of the Compensation and Leadership Development Committee for The Procter & Gamble 2019 Stock and
Incentive Compensation Plan and The Procter & Gamble 2014 Stock and Incentive Compensation Plan.* +
(10-26) -
The Procter & Gamble 2014 Stock and Incentive Compensation Plan - Additional terms and conditions (Incorporated
by reference to Exhibit (10-26) of the Company's Annual Report on Form 10-K for the year ended June 30, 2017).*
(10-27) -
The Procter & Gamble 2019 Stock and Incentive Compensation Plan, which was originally adopted by shareholders at
the annual meeting on October 8, 2019 (Incorporated by reference to Exhibit (10-1) of the Company’s Current Report
on Form 8-K filed October 11, 2019).*
(10-28) -
The Procter & Gamble 2019 Stock and Incentive Compensation Plan - Additional terms and conditions.* +
Exhibit (19-1) -
P&G Global Insider Trading Policy. +
(19-2) - P&G Share Repurchase Policy. +
Exhibit (21) -
Subsidiaries of the Registrant. +
Exhibit (23) -
Consent of Independent Registered Public Accounting Firm. +
Exhibit (31) -
Rule 13a-14(a)/15d-14(a) Certifications. +
Exhibit (32) -
Section 1350 Certifications. +
Exhibit (97) -
P&G Dodd-Frank Recoupment Policy. +
Exhibit (99-1) -
Summary of Directors and Officers Insurance Program. +
101.INS (1)
Inline XBRL Instance Document
68 The Procter & Gamble Company
101.SCH (1) Inline XBRL Taxonomy Extension Schema Document
101.CAL (1) Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF (1) Inline XBRL Taxonomy Definition Linkbase Document
101.LAB (1) Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE (1) Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
(1)
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration
statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities
Exchange Act of 1934 and otherwise are not subject to liability.
*
Compensatory plan or arrangement.
+
Filed herewith.
Item 16. Form 10-K Summary.
Not applicable.
The Procter & Gamble Company 69
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Cincinnati, State of Ohio.
THE PROCTER & GAMBLE COMPANY
By /s/ JON R. MOELLER
(Jon R. Moeller)
Chairman of the Board, President and Chief Executive Officer
August 05, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ JON R. MOELLER
(Jon R. Moeller)
Chairman of the Board, President and Chief
Executive Officer (Principal Executive Officer)
August 05, 2024
/s/ ANDRE SCHULTEN
(Andre Schulten)
Chief Financial Officer
(Principal Financial Officer)
August 05, 2024
/s/ MATTHEW W. JANZARUK
(Matthew W. Janzaruk)
Senior Vice President - Chief Accounting Officer
(Principal Accounting Officer)
August 05, 2024
/s/ B. MARC ALLEN
(B. Marc Allen)
Director
August 05, 2024
/s/ BRETT BIGGS
(Brett Biggs)
Director
August 05, 2024
/s/ SHEILA BONINI
(Sheila Bonini)
Director
August 05, 2024
/s/ AMY L. CHANG
(Amy L. Chang)
Director
August 05, 2024
/s/ JOSEPH JIMENEZ
(Joseph Jimenez)
Director
August 05, 2024
/s/ CHRISTOPHER J. KEMPCZINSKI
(Christopher J. Kempczinski)
Director
August 05, 2024
/s/ DEBRA L. LEE
(Debra L. Lee)
Director
August 05, 2024
/s/ TERRY J. LUNDGREN
(Terry J. Lundgren)
Director
August 05, 2024
/s/ CHRISTINE M. MCCARTHY
(Christine M. McCarthy)
Director
August 05, 2024
/s/ ASHLEY MCEVOY
(Ashley McEvoy)
Director
August 05, 2024
/s/ ROBERT J. PORTMAN
(Robert J. Portman)
Director
August 05, 2024
/s/ RAJESH SUBRAMANIAM
(Rajesh Subramaniam)
Director
August 05, 2024
/s/ PATRICIA A. WOERTZ
(Patricia A. Woertz)
Director
August 05, 2024
70 The Procter & Gamble Company
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74 • The Procter & Gamble Company
Measures Not Defined by U.S. GAAP
The following provides definitions of the non-GAAP measures used in Procter & Gamble’s 2024 Annual
Report and the reconciliation to the most closely related GAAP measure. We believe that these measures
provide useful perspective on underlying business trends (i.e., trends excluding non-recurring or unusual
items) and results and provide a supplemental measure of year-on-year results. The non-GAAP measures
described below are used by management in making operating decisions, allocating financial resources and
for business strategy purposes. These measures may be useful to investors, as they provide supplemental
information about business performance and provide investors a view of our business results through the
eyes of management. These measures are also used to evaluate senior management and are a factor in
determining their at-risk compensation. These non-GAAP measures are not intended to be considered
by the user in place of the related GAAP measure, but rather as supplemental information to our business
results. These non-GAAP measures may not be the same as similar measures used by other companies
due to possible differences in method and in the items or events being adjusted.
Organic sales growth. Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions
and divestitures and foreign exchange from year-over-year comparisons. We believe this measure provides investors with
a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. This measure is
used in assessing the achievement of management goals for at-risk compensation.
The following tables provide a numerical reconciliation of organic sales growth to reported net sales growth:
Fiscal Year
Net Sales Growth
Foreign Exchange Impact
Acquisition & Divestiture
Impact/Other1
Organic Sales Growth
2024
2%
2%
–%
4%
2023
2%
5%
–%
7%
2022
5%
2%
–%
7%
2021
7%
(1)%
–%
6%
2020
5%
2%
(1)%
6%
2019
1%
4%
–%
5%
(1) Acquisitions & Divestitures Impact/Other includes the volume and mix impact of acquisitions and divestitures and rounding impacts necessary to reconcile net
sales to organic sales.
Adjusted free cash flow. Adjusted free cash flow is defined as operating cash flow less capital spending and excluding
payments for the transitional tax resulting from the U.S. Tax Act. Adjusted free cash flow represents the cash that the
Company is able to generate after taking into account planned maintenance and asset expansion. We view adjusted
free cash flow as an important measure because it is one factor used in determining the amount of cash available for
dividends, share repurchases, acquisitions and other discretionary investments.
($ millions)
Operating Cash Flow
Capital Spending
Adjustments2
Adjusted Free Cash Flow
FY 2024
$19,846
$(3,322)
$422
$16,946
(2) Adjustments relate to tax payments for the transitional tax resulting from the U.S. Tax Act.
The Procter & Gamble Company • 75
Adjusted free cash flow productivity. Adjusted free cash flow productivity is defined as the ratio of adjusted free cash
flow to net earnings excluding the Gillette intangible asset impairment charge and non-cash charge for accumulated
foreign currency translation losses related to the substantial liquidation of operations in certain Enterprise Markets,
including Nigeria. We view adjusted free cash flow productivity as a useful measure to help investors understand P&G’s
ability to generate cash. Adjusted free cash flow productivity is used by management in making operating decisions,
in allocating financial resources and for budget planning purposes. This measure is used in assessing the achievement
of management goals for at-risk compensation.
($ millions)
Adjusted Free
Cash Flow
Net Earnings
Adjustments to
Net Earnings3
Net Earnings
as Adjusted
Adjusted Free Cash
Flow Productivity
FY 2024
$16,946
$14,974
$1,242
$16,216
105%
(3) Adjustments to Net Earnings relate to the Gillette intangible asset impairment charge ($1 billion) and non-cash charge for accumulated foreign currency
translation losses ($216 million) due to the exit of operations in certain Enterprise Markets, including Nigeria.
Core EPS and currency-neutral Core EPS. Core net earnings per share, or Core EPS, is a measure of the Company’s
diluted net earnings per common share excluding items that are not judged by management to be part of the Company’s
sustainable results or trends. Currency-neutral EPS is a measure of the Company’s Core EPS excluding the incremental
current year impact of foreign exchange. Management views these non-GAAP measures as useful supplemental measures
of Company performance over time. The table below provides a reconciliation of diluted net earnings per share to Core EPS
and currency-neutral Core EPS, including the following reconciling items.
Charges for early debt extinguishment: During fiscal 2021, the Company recorded after-tax charges due to the early
extinguishment of certain long-term debt. These charges represent the difference between the reacquisition price
and the par value of the debt extinguished.
Incremental Restructuring: The Company has historically had an ongoing restructuring program with annual spending in
the range of $250 to $500 million before tax. Starting in 2012 through fiscal 2020, the Company had a strategic productivity
and cost savings initiative that resulted in incremental restructuring charges. During fiscal 2024, the Company announced
a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including
Argentina and Nigeria. The adjustment to Core earnings includes only the restructuring costs above the normal recurring
level of restructuring costs.
Intangible asset impairment: During fiscal 2024, the Company recognized a non-cash, after-tax impairment charge of $1.0
billion ($1.3 billion before tax) to adjust the carrying value of the Gillette indefinite-lived intangible asset acquired as part
of the Company’s 2005 acquisition of The Gillette Company.
We do not view these items to be part of our sustainable results and their exclusion from Core earnings per share provides
a more comparable measure of year-on-year results.
Years ended June 30
2024
2023
2022
2021
2020
Diluted net earnings per common share
$6.02
$5.90
$5.81
$5.50
$4.96
Early debt extinguishment charge
–
–
–
$0.16
–
Incremental restructuring charges
$0.15
–
–
–
$0.16
Intangible asset impairment
$0.42
–
–
–
–
Core EPS
$6.59
$5.90
$5.81
$5.66
$5.12
Core EPS growth vs. prior year
12%
N/A
N/A
N/A
N/A
Currency Impact to Earnings
$0.23
N/A
N/A
N/A
N/A
Currency-neutral Core EPS
$6.82
N/A
N/A
N/A
N/A
Currency neutral Core EPS growth
16%
N/A
N/A
N/A
N/A
76 • The Procter & Gamble Company
Board of Directors
B. Marc Allen
Former President, Boeing International and Chief
Strategy Officer and Senior Vice President of Strategy
and Corporate Development of The Boeing Company
(aerospace, commercial jetliners, and military defense
systems). Director since 2021. Age 51.
Brett Biggs
Former Executive Vice President and Chief Financial
Officer of Walmart, Inc. (global retailer). Director since
2023. Also a Director of Adobe Inc. and YUM! Brands, Inc.
Age 56.
Sheila Bonini
Senior Vice President of Private Sector Engagement at
the World Wildlife Fund (nonprofit wildlife conservation
organization). Director since 2023. Age 60.
Amy L. Chang
Former Executive Vice President of Cisco Systems, Inc.
(networking technology). Founder and former Chief
Executive Officer of Accompany, Inc. (relationship
intelligence). Director since 2017. Also a Director of
The Walt Disney Company. Age 47.
Joseph Jimenez
Co-Founder and Managing Director at Aditum Bio
(a biotech venture fund). Former Chief Executive
Officer of Novartis AG (global healthcare). Director since
2018. Also a Director of General Motors and Century
Therapeutics, Inc. Age 64. Independent Lead Director.
Christopher Kempczinski
Chairman, President and Chief Executive Officer at
McDonald’s Corporation (restaurant operator and
franchisor). Director since 2021. Also a Director of
McDonald’s. Age 55.
Debra L. Lee
Chair of Leading Women Defined Foundation (nonprofit
education and advocacy organization). Former Chairman
and Chief Executive Officer of BET Networks (media
and entertainment). Director since 2020. Also a Director
of Marriott International, Inc. and Warner Bros. Discovery.
Age 70.
Terry J. Lundgren
Former Executive Chairman, Chairman of the Board and
Chief Executive Officer of Macy’s, Inc. (national retailer).
Director since 2013. Age 72.
Christine M. McCarthy
Former Senior Executive Vice President and Chief
Financial Officer of The Walt Disney Company (global
entertainment). Director since 2019. Also a Director
of Flutter Entertainment. Age 69.
Ashley McEvoy
Former Executive Vice President, Worldwide Chairman
of MedTech at Johnson & Johnson (healthcare). Director
since 2023. Age 53.
Jon R. Moeller
Chairman of the Board, President and Chief Executive
Officer of the Company. Director since 2021. Age 60.
Robert J. Portman
Former United States Senator, Director of the U.S. Office
of Management and Budget, and United States Trade
Representative. Director since 2023. Age 68.
Rajesh Subramaniam
President and Chief Executive Officer at FedEx
Corporation (transportation and business services).
Director since 2022. Also a Director of FedEx. Age 58.
Patricia A. Woertz
Former Chairman of the Board and Chief Executive
Officer of Archer Daniels Midland Company (agricultural
origination and processing). Director since 2008. Age 71.
The Board of Directors Has Four
Committees:
• Audit
• Compensation & Leadership Development
• Governance & Public Responsibility
• Innovation & Technology
The Procter & Gamble Company • 77
Company Leadership
Jon R. Moeller
Chairman of the Board, President and Chief Executive Officer
Shailesh G. Jejurikar
Chief Operating Officer
Gary Coombe
Chief Executive Officer – Grooming
Executive Sponsor,
Corporate Wellbeing
Jennifer Davis
Chief Executive Officer –
Health Care
Ma. Fatima D. Francisco
Chief Executive Officer – Baby,
Feminine and Family Care
R. Alexandra Keith
Chief Executive Officer – Beauty
Executive Sponsor,
Corporate Sustainability
Sundar G. Raman
Chief Executive Officer –
Fabric and Home Care
Andre Schulten
Chief Financial Officer
Hesham Tohamy Abd El Hak
President – Feminine Care
Victor Aguilar
Chief Research, Development
and Innovation Officer
Juliana Azevedo
President – Home Care
and P&G Professional
Executive Sponsor – Gender Equality
Freddy Bharucha
President – Personal Care
Eric Breissinger
President – Family Care
April Cielica
President – Global Business Services
Seth Cohen
Chief Information Officer
Kristine Decker
Chief Equality and Inclusion Officer
Philip J. Duncan
Chief Design Officer
Christophe Duron
President – Go-To-Market,
Greater China
Paul Gama
President – Personal Health Care
Franco Giannicchi
President – Latin America
Virginie Helias
Chief Sustainability Officer
Damon Jones
Chief Communications Officer
Sue Kyung Lee
President – Skin Care
Ken Patel
Chief Ethics and Compliance Officer
and Chief Patent Counsel
Guy Persaud
President – New Business
Matthew S. Price
President – Home Care
and P&G Professional
(Retiring August 31)
Marc S. Pritchard
Chief Brand Officer
Bala Purushothaman
Chief Human Resources Officer
Luc Reynaert
Chief Product Supply Officer
Mindy Sherwood
President – Global Walmart
and Chief Sales Officer
Kirti Singh
Chief Analytics, Insights
and Media Officer
Loïc Tassel
President – Europe
Monica Turner
President – North America
Stanislav Vecera
President – Asia Pacific,
Middle East and Africa
Susan Street Whaley
Chief Legal Officer and Secretary
Jasmine Xu
President – Greater China
As of August 5, 2024
Visit us at us.pg.com/leadership-team to learn more about P&G’s global leaders.
78 • The Procter & Gamble Company
Recognitions and Awards
We’re proud to be consistently recognized as a leading global company, earning a variety
of awards and recognition in several key areas.
Brands
& Innovation
Community
Impact
Equality
& Inclusion
Environmental
Sustainability
Ethics & Corporate
Responsibility
BEST PLACE TO WORK FOR
DISABILITY INCLUSION
3BL 100 Best Corporate
Citizens 2023
Seramount 2023
Inclusion Index
Fortune 2024 World’s Most
Admired Companies
Newsweek Most Trustworthy
Companies in America 2024
The paper utilized in the printing of this annual report is certified to the
FSC® Standards, which promotes environmentally appropriate, socially
beneficial and economically viable management of the world’s forests.
Logos are property of their respective
owners; used with permission.
Design: Madison Design
2023 Circana New Product Pacesetters:
5 of the Top 25 non-food product launches
and 3 Rising Stars
P&G’s Portfolio
Ten Categories Organized in
Five Operating Sectors
P&G has a focused portfolio of daily-use products
in categories where performance drives brand
choice. Our focus is on delivering irresistibly superior
products with the best performance and value, to
delight consumers at a price that is considered worth
it across each price tier where the brand is offered.
HEALTH CARE
Oral Care
Personal Health Care
FABRIC AND HOME CARE
Fabric Care
Home Care
GROOMING
Grooming
BEAUTY
Skin & Personal Care
Hair Care
BABY, FEMININE AND FAMILY CARE
Baby Care
Feminine Care
Family Care
Explore the digital version of
the P&G 2024 Annual Report
at pg.com/annualreport2024
© 2024 Procter & Gamble
00387140