Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to Procter & Gamble's Quarter End Conference Call. Today's event is being recorded for replay. This discussion will include a number of forward-looking statements.

If you will refer to P&G's most recent 10-K, 10-Q and 8-K reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections.

As required by Regulation G, Procter & Gamble needs to make you aware that during the discussion, the company will make a number of references to non-GAAP and other financial measures. reconciliation these trends investors its and website, a believes on useful Investor Gamble measures. www.pginvestor.com, business financial underlying has full & measures with provide perspective Relations Procter non-GAAP of posted on

Now I to Financial Andre Officer, call P&G's Chief Schulten. turn will the over

Andre Schulten

morning. Good

turn Board, Chevalier, to Joining me then Senior brief Investor We're going the Vice our questions. today Chief prepared Executive and Moeller, Chairman are President, to on and Jon Officer; keep remarks the of call your President straight and John Relations.

package, our our integrated the supply communication, XX improving share, benefits of in and growing to strategies Execution investment pay market and P&G good turn, continued savings, continue consumers go-to-market superiority of results efficiency, October brands sustained across product, organic and to in categories, value nine quarter, for partners aggregate our shareholders. for productivity yield holding global to December of continued and retail in all vectors: five sales

us guidance productivity and plan to ranges growth, flow fiscal cash Progress growth organic free shareowners. for core increase maintain range to year-to-date cash against and sales for EPS our enables the return

X sales to and pricing at trade inventory to grew reduction Russia. second mix portfolio quarter in X%, by Moving XX X points was of numbers. sales a points declined market contraction, the Organic point. up driven combination Volume growth a reductions and

units Fabric digits. sales. Skin each across Baby Care was year. each line Hair our categories Care of Family digits. digits. and up business Grooming up Care broad-based Care, Care with in and with Care teens, Care Home prior were single Health Personal Personal high was were Care, organic low Growth grew single Feminine or and mid-single was Oral holding up XX product high growing Care,

up Focus and by as X% with to versus down were the consumer market X% markets confidence. U.S. the weaker Greater impacted COVID prior the lockdowns year, for organic X%. China continued sales quarter, grew be

as growth recovery quarters. expect the a consumer underlying coming mobility we increases expect to Long to rates. slow term, strong continue We China to over return

XX% up U.S., share with XX versus or point share regions were in holding prior year seven or XX share. categories was country category the quarter, value from three combinations X.X share. markets outlet year up U.S. each market year XX all with prior line In line or share aggregate with more. top with growing prior with of the improvement was in of our one. XX% delivering holding is of quarter sequential Enterprise up volume growing Global the

are fabric in Downy and like also in and a growth. and Innovation as and share their Powerwash innovations Rinse segments. in hand forms Dawn advantages brands enhancers driving Refresh category across pricing and our serves other for Recent dishwashing extending value catalyst superiority volume

$X.XX, margin basis On share margin gross basis decreased down earnings core to points. Currency-neutral and were bottom currency-neutral operating pressure exchange. X%. core from On increased EPS per a XXX versus margin points, commodities due foreign core year. decreased prior the basis, line, X% Core XX operating primarily

was productivity help $X and Productivity in quarter. returned temporary in in We Adjusted billion to reduction improvements repurchase. approximately billion cash to shareowners, of share payables. basis dividends flow billion cash primarily XX%, were the points to XXX due $X.X free a $X.X

for top fiscal a continued of the considering very the line year. of first In across results bottom and line, summary, the the backdrop environment, cash cost operating solid half challenging and

strategy. to on Moving

providing foundation categories that role benefits cleaning, hygiene brand operate significant are integrated four excellence, the years, in and have Our products, executing for the and team and health performance strategies strong with daily to choice. value creation. that use plays growth portfolio in balanced over results A where continues enabled of past the many a

retail the execution five and Ongoing in to brand superiority across communication, and investment of value. package, irresistible commitment vectors product,

our during nature Day of renewing in Investor strategy. this the reflect standards we dynamic November, discussed superiority As our to are

investments An cost new to to adapt in disruption, operations of especially in of in superiority trends our a for strong that offset the cash volatile shape generation. approach Productivity create and change, areas margins constructive future, environment. and and currency all willingness will our this improvement fund technologies and challenges, deliver important industry expand

Finally, our overlap reporting seamlessly deliver an with flowing priorities organization agile and little around to redundancy, new that is the increasingly other against demands, accountable more empowered, each world. or to

execution are environmental we driving acumen, the X.X, forward, are value Supply creation. there and Going the strategies, integrated of to four digital areas improve sustainability Chain employee

in value necessary of creation We each priority, these build or enable Day Investor new to and cost November. elements our These separate They not the further to strategies. expanded on reduce at to are in strengthen organization. continuing and are investment our

If or you review listen in I to you our weren't remotely, IR to encourage attend on materials the events website. able

portfolio, executed well, profit. productivity, on on reinforce share, choices constructive disruption interdependent other. each grow When superiority, turn in markets, grow sales strategic they are Our which and build strategies. and and organization They

We down integrated propositions to sustainable deliver these continue growth irresistible to and consumers strategies to retail best path double on bottom is that with forward starting believe deliver line superior and to partners. the to top commitment

Now moving to guidance.

the costs continue fiscal year. and move more expect second in to consumer half of dynamics We as volatility currencies through we the

volatility us we've the through have positioned chosen, the focus well However, manage time. we've the and strategies investments on executional made this over to excellence we think

after-tax and improvement. $X.X versus seen and material Raw though fiscal prices costs supplier have estimate and year, still pack headwind latest we inclusive on last current sequential we a in headwind modest fiscal inflation spot commodities contracts, some Based a 'XX. significant are billion of now

we've a year-on-year billion modest and $X.X forecast fiscal on exchange seen headwind. is improvement. for Based impact current a materials, exchange rates, the we like But now pack significant directional after-tax raw Foreign year. also

prior headwinds a at in year. point XX higher the expect are these Combined after remain costs 'XX. headwind billion million tax, after-tax to per for share, $X.XX $XXX approximately growth Freight items headwind and percentage now the to versus continue fiscal we from year, estimated $X.X EPS

began and expecting of cost year that $X.XX approximately perspective, headwinds. we the For FX recall

So quarter, despite current our since some ingoing relief $X.XX our is modest still position. worse last outlook than

productivity headwinds cost price these savings. of increases and portion a with offsetting are We

We are continuing we resilience our and supply to improve irresistible superiority, invest to and are flexibility. capacity, in investing

said business this in As believe with continued underlying line investment strategies. is and the through patch before, bottom grow a we rough to we've

I As our noted half our results enable at the outset, confirm sales raise and and on solid to EPS guidance us outlook ranges first cash. organic our

X% for our and many to this takes. increasing are from company-wide range puts of guidance to there range, We to X% a X%. are of X% -- growth range a we sales organic Within

China, inflation affects consumer we have The softened remain high to but to As some I U.S. see as markets expect most improvement mentioned, European relatively and strong spending. markets remains resilient. enterprise modest in date,

end core earnings foreign share range line, the line the plus On growth in from investments year. our the outlook strategy lower our available. this input guidance we're bottom to costs reflects keep of opportunities as towards current headwinds This expectations drive per significant of exchange versus X% also our to and invested intent superiority of and in our range. are increase maintaining The fully prior to remain

productivity cash forecast We of free adjusted XX%. flow continue to

billion cash or prices a foreign pay to within increases, $X plan dividends to cost $X is billion currency closures stoppages additional $XX of This shareowners and of and combined exchange repurchase to weakness, fiscal geopolitical billion $X to rates. outlook We commodity stock, major this billion to common of expect return year. Significant on are guidance $XX ranges. based to estimates, billion rate production not current disruptions, these commodity store market growth around anticipated

foreign our inflation transportation face we our historically confidence year-over-year continue to and unique won't cost impact. consumer are be realistic geopolitical and budgets. We exchange, immune we're disruptions To in to high to our and These about P&G, in guidance headwinds COVID these transparent macroeconomic commodity level challenges impacting we chain from and impacting to in high and commentary. operations, and market attempt inflation issues, conclude, upstream supply consumer impacts the be consumer facing own not in the

the to before, we've reduce strategy a the believe on patch a to working is health doubling through, down strong and has reason that is business. As of not results. in the investment we long-term well delivering grow We're been said rough this

we We continue our remain to invested forward our opportunities, and business. fully step towards in

mitigate driving growth. deliver balanced to line and investments, to challenges committed bottom cost and productivity, top improvements to are fund growth We input

happy your we're take that, questions. to With

Operator

Instructions] from Your of Morgan first Dara comes Mohsenian question [Operator Stanley.

Dara Mohsenian

it that saw us Just there we the some QX? the just change more than negative didn't So you each commodities Is understand a you in earnings the Obviously, sequential in making Or couple is up guidance. back less assuming that of of the despite on help full there. year back half? half? thought. in something guidance and a Is sort of little FX reinvestment more questions else reasoning moves the you being for originally the

on get a the of a question, there's basically, of bunch don't into And XX-part want I same line. and back question to sort but forth here. top

of full implies quarter. deceleration low the year in the but in the the sales and You a weaker theory raised org versus QX bit half volumes decelerated a a were back little QX, end range,

of how terms in taking the thoughts retail of half about in back, a takeaway on looking just maybe year? back business step So feel you do the at fiscal the and QX

Andre Schulten

try, I'll Dara. right. it a give All

is immediately short to significant the we continue of us would all our communicating. to our results look the that So we that year, the the and see guidance in we in on for do we assume on we desire the that are vectors. every EPS to track, on as to year reinvest, we and I given year the upside us, in, and if the midterm. very to rates forecast, We are and through we will we're exchange. exchange that And commodities bottom flows have current one superiority that five across dollar deliver always balance track commodities foreign total upside think in the delivery for spot you to on And line. well assuming, foreign term at ranges invest do, not available see When

assumptions. We in the above have we remarks, -- still also, are ingoing we prepared as said

had the time when we So $X.XX guidance. than worse at the initial provided we

lower the increasing probably to pointed of slightly or continue that range. So that towards leads as better. to EPS say, you coming, range end with hopefully core is to that deliver more us But confidence be help the our

-- look deliver initial higher line, of we one when the higher about the top top here end very standing our good our to line a we at the half feel again, On guidance. results,

we to sales low we quarter in current more fact So growth. raised And X% to understand important is see the to really in X% organic that the that's volumes why depth.

So or about you of consumption-driven. quarter, volume negative X.X% not dissected really the that half when on X% the is

in versus essentials the to on we cut full the portfolio our point we focus X Russia, operating XX% where we choice to portfolio related before. So portfolio have were by

saw China in especially saw X points impacted offline the reduced about We and consumption. with the Oral have in strong temporary inventory late retailer orders we have reductions, we cash. side kept in O&D. some We we with consumption to Appliances retail see where And on lockdowns market, power the that and Care Europe. And December, COVID market reserve inventory up quite in seen related the heavily which haven't very reduction in inventories U.S., by of

So our is that which quarter, decline with actual out, holding amount elasticities volume is seen and the is us globally, we've the about if market. consumption-related the of expectation with that you the What is that is raise our quarter the is we pricing our in what given in one, expected, guidance strip are are have line which line to in in X% value on that volume line to holding globally. shares top shares encouraging would

over when Again, to quarters, want penetration in volume our household we reinvigorate volume see top flexibility gives to of to the continue months of points in growth. invest category. job and while the acceleration XX line us past by one overall the look basis at drive here the over priority that's all to actually the sustainable the continue the going even next to drive XX guidance to growth share more And few that our the to U.S., be to raise honestly, over three biggest markets, preserve And important we most points month. an confidence we basis past and

Jon Moeller

Dara, seems an though. an this I example. as us, understand the going really going what None remains. of understands policies amount is a of of couple of and I in as to really is context. be want There's recovery rate practices to China in nobody are globally mean perspective that new the add consumer better world not be pieces everything I. at Jon. to That's a think, confidence level. really do that The of And incredible would to in terms what reality uncertainty just macro

the You have war Europe. Eastern in

in years. have rates XX You inflation the highest

for currency that difficult which on markets that, cross our both pound not cross continued for currency of volatility importantly, I But dollar significant commodity a impact the a markets. exposure. within And and rate exposures is rate in have simple lot exposure realize and between the example, the There's You the the to bottom a makes euro line. it British penetrate. has us

extremely while that confident I'm we to the organization time continue extremely So range happy us the top with progress to the all easy to an of is up that possibility. just together, making not taking strategy the serve I'm have going right one guidance that's be to put that well. It's is the

Operator

Barclays. The next Lauren question Lieberman comes from of

Lauren Lieberman

that lot a in covered answer. You

investments. to going a I'm switch maybe little capacity So bit about and talk gears

some capacity was big areas I big Fem focus. like know been drag Care, gross Oral of have margin quarter this this one investments. is there think a I particular to the

So Care, also that dynamic? bit two. the little maybe in what to a the about year where Fem Care next beyond profitability volume relevant longer-term putting drag quarters? healthy speak to you couple next some I remain beyond little -- incremental degree it a bit as to pretty Or that could over you think that's Because trends. to a capacity of And would around talk expectations Fem you're look anything or a quarter multiple if we is also particularly expect

Andre Schulten

Lauren. Yes,

portfolio, related. very indeed that the We We describing are the end effect Fem are growth. top -- of short-term here the strong on see we Care is

pads installing full to seen well is have the catch catch top in the we capacity overall on back still are up growth in tampons, the business. to you both And to new install very our businesses over or to just strong the the And two past is need investments up -- know, not Radiant capacity ratio, business in increase we which of years. up terms business, very We demand as we're underway. of to half. levels are Infinity in of terms demand end The which on the significant will process across of size

drag capacity significant I have to be investments expect a across on we it bottom wouldn't So businesses. the most line.

that growth investing the the we more will of In than fact, the anticipate plan, that's capacity, in outweigh and cost obviously.

these capacity potential So and that's we what's have our in really high growth confidence investments. triggering

in $XX first the the billion the for up from last years just U.S., four was in Just sales example, quarter in sales, quarter we've ago. billion $XX reached

our rate are -- and So look again, to better our growth and the to up continues very shares market, positive. year-over-year. positive are trending than volumes numbers Volume

need So all we positive. it to with of The that. is keep net up

Jon Moeller

Yes.

billion annualized Just is rate clarification a to there. one quick $XX run that is Andre referring number. The

capacity Andre too bring this that so we're the So the quarter, number demand upside enough. as protection in translates full of get we in some meeting online. segments. point $XX which it was just Fair to X, billion billion, here the the people don't of We point made and not Lauren, a carried made, lot $XX away. indicated there's you

opportunity, as you board. said, We the have across

pretty So significantly. we're investing

think ability I a top impact accelerate you've said line significant drag. the said bigger should and will not to our as be the be line. It he in bottom

Operator

The comes Bryan from of of next question Spillane America. Bank

Bryan Spillane

from volume I hit you response I -- one just question, I shipping behind cited X-point question. The and Dara's basically the one and in just to consumption. clarification think clarification, had Russia

be back, just we organic it? would a thinking to sales X way that, sure to So versus was if the we make that add that about closer X. been want have an I should

Andre Schulten

correct. That's

Bryan Spillane

get expect than expecting? half? first anything in that would if half just environment setup? guess, And And of view in under the look year, or of we things. shipment also, as back just back of that were two is, or we same, we of any the what comment second then changed One as half, worse to you could second some inventory, the your then terms So you macro Okay. the in on would just the has I the occurred the the the of better rebuild maybe operating the into quarter

Andre Schulten

be the half. say operating in environment continues it second difficult would and we the to be expect I to difficult,

holding is the I well. well. While very up are very up think U.S. holding Enterprise markets

said China probably not predict a and John straight recovery be earlier, As to will line. hard very in

a season energy was that the to as February half a in think, But change of winter in we I be of it markets via we've March. the little the first help we expect very That European We consequences I China entering eating has difficult doesn't numbers as consumers have in and think anything are still second helped and inflation many pressures Europe inflationary to half. the are terms seen The see work bit continue to is prices. to of through through, warmer builds will not do. high

through is I continue to the which to for good think best and to way driving is these with which and excellence, the get organization the is doing to all invest us results. execute business continue to in of this

carefully Our and inflationary pricing, is pressures ability careful with combining pricing and our is offset critical. to brands Within pricing superiority investment drive of critical. to balance the innovation execution and to productivity sufficient

flexibility want that's the as do some we second those to to half. we get So level why through of investments preserve

Jon Moeller

couple volatility, little has of of inventory to and on volatility it supply the is a there When been demand there's build accurately color occurring. it the piece, levels. When here. dynamic that's bit uncertainty, fairly inventory times is higher a retailers just described And which same. causes does This a simple

volatility demand is been through little inventories higher some is Supply normal retail our in where have decreasing. period a of we've bit increasing, So than been assurance a channels.

So brought those down. inventories are understandably being

here expect don't a there's I significant Bryan, quarter-to-quarter. so swing that And

itself. system normalizing I think the this is

Andre Schulten

Yes.

is I right. exactly Jon think

XX% progress. sequential availability make up is now from availability, We getting XX%. Our to up better. on-shelf on-shelf We're

supply So is those of as on wouldn't hand. days return I expect the chain immediate stabilizing,

period I think but of will will of back, time. it it a longer some come take

Operator

comes The from Deutsche Stephen Bank. of Powers next question

Stephen Powers

I through a go your outlook enabled commentary just last prior big wanted your minute. you back quarter, and topic actually at to then convinced productivity. topic pretty think invested that I and by reinvestment for to in of Investor were fully was It the a Day you us

So we greater realists? as just outlook. should kind -- Or and that you're as necessary that reinvestment returns? in be you incrementally you given term you is the also concerning of think I'm in frame new about -- more more enterprise then opportunistic reinvestment how would resilience. it helpful. that And near is Just that in implying medium-term consumer interpret for you'd your the -- if elective the the just markets, about could strength competitive talked

there great. be that areas particular more And be you watchful, you're out, any helpful? are if Just strength pockets where would would of call that could also any

Andre Schulten

characterize a each would as not is support reach, media spending our John sufficient, of I case. which the that defined the paying pays lot a as each we lot current sufficient It's defined our spending is of ensure sufficient frequency. And businesses. to for attention businesses attention of the are brands and sufficiency with of dollars with spent. as

we've again, sufficiently is term, their quarter-over-quarter, that or in return and increased top-of-mind that When brands, in want we the can growing total positive brands and and core strengthen that, their the view a reinvest by also equity. timing. specific to In fully advertising $XXX back there. a funded the funded, short we merchandising come our function a retailer order to support So as out our business is spend awareness quarter, innovation to continue of with yes, there the we fact It's because I current ad our million. for that And timing support. further recent innovation is function of example, most

see continue to will of supporting opportunities So we you create our to short-term to fully double adhere brands that down. are -- us if there principle ROI,

Jon Moeller

to one support this online, opportunity are little to supply business increase that that And other comes take the bit often about additional capacity. for we've talked additional there as of advantage opportunities a morning,

those, for looking opportunities as said, be the Andre we'll drive ROI business. to positive So

But to a XX%. three at XX% When asked all get it's of growth the You over country markets. line, enterprise course, you on top down level, very growing regions about variable.

So the there. strength broad pretty is

Andre Schulten

And be Yes. if example, for look end that will growth here. top the growth, the you at of consistent and XX% fairly so L.A.,

results. So enterprise continue to strong markets very deliver

and Last media on a not create point maybe we're able The synergies the investment. insignificant. to are real

increased if you increased for Baby XX% completely XX%. look shifted run by year. has XX%, their that They've business at the example, They grown awareness media. top-of-mind last have way So Care, they reach by

they that spend. saved their of All of while XX% media

lower here the really So at allows sufficiency equation cost. for

Jon Moeller

that, that again, is has growth. dynamic clarity, And Andre it a just for there. the described, XX% just I'll And U.S. leave

Operator

question Raymond next of James. Olivia The Tong comes from

Olivia Tong

year right, March to If much pricing from Great. will last serves me the lap of actions memory the start in quarter.

the December that average elasticity the versus the your view? end has quarter. where historical if between of in talk And So and stand about spread volume? the X quarter the price tracked plus -- minus XX and could price relative for view, is one your you the volume how quarter And versus the biggest at to and

Andre Schulten

Hey, Olivia. has -- The overall not with me start changed. view elasticities. let The

benign a reduction aggregate X% We flowing focused us see more much share would XX% seeing than favorable you we with markets. when and but continue a hold expected effect, volume And that historical share can data and volume through. out strip elasticities non-consumption-related have in value through. see very you flows the volume, pricing in allows to on is pricing Europe that as pretty elasticity And the we're everywhere, to

one So pressure diligent on price to again, execution we is the what of returned seeing where we expected the bit we driven consumer. a of the in more data, historical the that little have here. do lag what and strategy, also elasticities doing feel have each would to We're increased by on markets. place very the good about, and the wanted being Europe is

didn't the So the Nothing slower increases part and Europe, plan for explains on, private but temporarily is pricing that example, that higher we label, of label. price gap elasticities. in private versus

increases right, fiscal you're many of pricing that left not that putting mean market. this peak more in pricing, But the doesn't price year. of we're terms the get large In

increases into effect February. a So for example, go price in we of have number that

last So the lapping increases there's world. incremental via year, two passing cost the of we're still executed price also but components pricing here. through around were some One where pressures

Operator

question Carey Securities. Fargo next Chris comes Wells from The of

Chris Carey

margin priorities. I I outlook, fiscal But come back I clearly investment to in your through gross just on just take wanted year you're better bridge half margin half year If to to of back does seem sense, expansion to walk year. what potentially SG&A makes implying on Steve's the if you'll the sales perhaps leverage notable the question margins need see a the imply of leverage drive it back despite line in of decelerating. SG&A the to

think you next investments you your So and frame XX XX expect if Jon maybe months progressively overall year levels of the with capacity for you'll Or SG&A to said. improve, be just you to as, if me could to appropriate again, continues grow just as whether spending? the ending over help example,

Andre Schulten

structural a spend. SG&A shift expect wouldn't in I

need and order in that the as expansion to flow you're think seeing ramp we gross up to gross -- the in from margin about rate I through be gross will run come sufficiently is productivity, most pricing continues builds we of the period-over-period. and margin margin and to what what expect margin expansion funded

looking to what want the we what at actually reductions any that SG&A sufficiency deliver. we will current in reinvest the we're still can bigger us not beyond deliver be So range at that on allows major very again, to carefully deliver And within levels, and counting and we productivity are contributor.

Operator

next question Kaumil The of Suisse. from comes Gajrawala Credit

Kaumil Gajrawala

morning. Good

I But in it little seemed series about just taking the easier now guess, curious ago, pricing, commentary, changing some maybe talk have of given in maybe that's obviously still all if pricing that changing just is it's and through. a to Your way. that can you Not on we further way? are bit costs was retailers it just coming from I'm a response And any that long through. across CPG, of any appropriate get

Andre Schulten

combining traffic, on do pricing by conversations. that the leader Kaumil. innovation, environment we And markets virtual choose retailer retail a much that constructive. different majority physical this can possible in shelf, appropriately Yes, we the grow help cetera. of Those foot category them category the focused I the quarter different pricing. executing really different about quarters, take from that we et shelves play value We It's don't of or we do can change as when need should we must how be quarter play the in where in to to characterize any time than this, The best at how the not tiers. really conversations next and do best previous see It's way as best consumers points, grow or in pricing are role their out the a both how execute. is plays to we many would price it's with so way, continues

productivity. after we as much with I we think everybody recovering recover still understands are can costs as that we

Jon Moeller

forget, retail the more our of of the partners label the are. innovation talking that's their private exactly of on nature combination very we defined. for that's and improving don't all the said, when And conversation, facing Also consumer transactional of that concerned in what that a value we much brands different are about owners the takes dynamics Andre it compete pricing. terms when more cost on They're was discussion. constructive of same as holistically a many And conversation, in focus the than inputs terms And against. we Andre

in discussion partners in to been the in retail inflection our it's an reconfirm causes just don't that near interactions what I said, see anything a my with generally Andre term. discussion. that constructive So

Operator

comes The ISI. from Evercore Robert next of question Ottenstein

Robert Ottenstein

Just first a main quick follow-up and then my question.

this I linger market a very And data my Is is on the one-offs? gave that of the that you volume that the terms sort be terms was quarter impressive, issues follow-up, U.S., supply to us of quarters? and some think, just lingering given the is from share going are the primary focus in headwind one, following particularly that soon. the to then of So issue? in resolved in Russia of Or is quarter going

goes the year improvement maybe supply we were the give for share a the what more expect drivers in U.S.? us little market the So perhaps of comes the sense as can on and encouraging accelerating in market bit share momentum

Andre Schulten

on believe we a the is significant adjustment. us will operate inventory. expect days we Russia one we back the come on in with the terms good our said example, side, effect for to reliably inventory the to wouldn't partners. annualize. about as immediately. And retailer Robert, I we we at Yes. side, in further a the look believe wouldn't expect we U.S., I When be hand, was more that data this onetime we've on levels, I level proven volume have for before think we this at before, which with reduction of pre-COVID retail where are quarter

would with help next back the some So be quarters. that one-timer expect coming few I over in a potentially to

The U.S. supply. dynamic largely is Fabric Care into driven back in volume the coming by share

we We and year had on have fiscal the address. first fiscal last talked also to supply we in the fourth quarter that quarter business some that had in of year, of this Fabric constraints Care our

media share the support playing is We the out on accelerating Fabric reinstated business. volume U.S. We've merchandising support that and in reinstated also in Care

to less year. when where very sequentially dynamic private in have we share is annualized. period being merchandising other and label a seen in a supply July high didn't care calendar of standpoint improving was have the family volume base is from The last That December

those it's tailwind as the hard many, the are U.S. upside share two there forward. more to predict those that our in said, the businesses explain but control, have will to corner and John be to strength around hopefully, don't continue, and variables we many here, two should look position hopefully, going a But So

Jon Moeller

issue bit supply opportunity. one just changing semantics to a little supply of attempt the at from And maybe some

supply done terrific organization Our job. has a

and a meet really pace If organic sales trying And just so, organic And job tremendous -- of XX the with sales look about, last there's done is that of our fully good which talked of additional is to the as at thing. quarters beginning to satisfy amount of upside we the a demand. that. to keep period XX%, you they've or end period XX%, up

Operator

comes Grom UBS. question next The from of Peter

Peter Grom

you're doing Thanks, operator, everyone. I good and hope well. morning,

that that? commodity of inputs moved you which help the has the are more where first to you're outlook, inflation ask understand substantially? lower there see starting moderate for about pieces, there's to what's particular actually time outlook wanted the a quite us I can driving broad-based? understanding sequentially, in change in it So Is but moving some just the lot Or time,

Andre Schulten

it There's a reopening little varies the we're the month, warehousing. pulp week. grades. know guarantee little supply that's and situation really It don't dynamic, what China really this period-over-period, as broad on easing argue. bit, the That's at that, variable and to on commodities will market. you based different it's transportation steady. -- is would known, little have obviously no over nobody down do as both point, will seeing on a come general, that and a or We now I market what down well helping understands continue. is seen changing commodity that month-over-month. would really bit. relatively significant come But as has it's We've month Propylene, In a Peter, was polyethylene bit holding week has

we're today, is watching to spot this which we closely, know based continue what on forecast we prices. So and

cost dynamic the their through we their other inflation, still can't their energy forget are is think inflation, inflation. that I suppliers our labor input cost working

two forces that as to are term. roll is easing of one One over there So And other to in the desire our costs opposing suppliers is the input contracts the through short pass here. us.

So we pass take account into cost about we when to have our to both helps. think through ability

Operator

Teixeira from next comes The question Andrea JPMorgan. of

Andrea Teixeira

the question. response in And seeing the a next China? Andre, China port clarification And over obviously, you that I with applicable about for destocking reopening? also and are as the and is rebounding consumption the in be how your squeeze quarter you and have can now exit can you be your should quarter, -- energy a up I the as you're comment kicking how preparing on in your question, your As for potential portfolio you may -- may third called bills out, we fiscal. things if enter up Europe recession? that bills

Andre Schulten

will largely China depend to think, Hey, and the that's Andrea. on destocking, predict. reopening hard very Yes, China I the

a retail consumer estate the with every And major think that issue retailer quickly, really that the returns will I be is real off-line normal tailwind if facing. mobility to levels on that's for ground.

no will have no destocking levels, if required. be and that to good obviously, that a help, returns traffic because of further it So knowing I big leave at anybody I'll as else. normal way not

mid-single hard what that's in and midterm, But it reaccelerate over consumption important China to an where continues digits China period our in is expect predict. investment be to to market see We for the we to us. market

capable we ready and marketing the our that. they our We are for get possible innovation, best partners spending very on ground. ensure and organization programs, Fine-tune retail with to ground, the have and both digitally on a their the have nights days

we our portfolio play like the on in. And prepared, recession. a back the comes basic European portfolio, it strategies categories for on think we have the to everywhere I else,

that categories easily. in nondiscretionary a are their wash to deselect degree laundry, continue to wash to large their they continue won't hair. They people We

in number critical, be communication. for is last the deliver, proving price that's as of So invest model. part other Step value them in consumers brands as clear the brands or in irresistible and value brands to well see our tiering, one also of terms that's discounters number two communicate to across so retailers. can is the that both clearly just value premium brand the having continue When and recession but the channels, business ability and our accessibility different then will to And superiority. portfolio, points both benefit investment why be we our that is the performance

the environment to and been has results proofing a strength in the think done, that portfolio the it's think of difficult think very I strategy. So we I showing speak

Operator

The next Kevin Grundy Jefferies. question comes of from

Kevin Grundy

with connect the growth market I the out, to want organic the lot covered Andre sales X% exclude that on a dots to called if the contraction. in try around release comments press We've here ground. items we of

market Fabric closer as So Care, on actually comp, in sales at we portfolio. about, X%. an Grooming, was it org Family of talked in much to contractions acceleration basis. you look the But Andre release, Care, quarter in if Hair the the the mentioned was Baby And Care, across Care, the a stack two-year

modeled. you're on really how we've and is I you're how growth, of I a make what So even quarter. of had elasticities is sound on consumer the ground on better seeing covered Because me just to I'm seeing to you call, sure a it seems that know just quarter do like-for-like And than of pretty out want category this to The clear kind actually dynamics. lot -- China, behavior Street aside coming constructive setting basis, possibly the on demand

I good investors. for want make pretty to sure sound unchanged. on the And messaging of You relatively that's sort elasticity just

Andre Schulten

with Russia would real. element Yes. be the that's characterize, And and us, I will obviously,

midterm to the the think X% has to market component a we that growth continue volume still the by that very X% strong pricing to volume component and growth a I with X% X% positive component. I negative negative have been expect overall to in around market. to moderate price with and flow a would offset through

market year. of pretty look it you has line fiscal balance where model overall at to forward. how over If months, the And expect we the size the balance much that that's the we going the three case, been and be past with in that's of

I to investing ahead know that be down priority investments of you if job why to Our everywhere. we have don't that. is that's Jon, add. anything the here continue double on And will to we're

Jon Moeller

we on ahead of Andre highlight But repeat, several said fray, we get repeating. ourselves, Yes. the It's of so China drop a rain bit just that is. uncertain, it don't to It's but don't Kevin. example, how worth a it's want visibility. a times, have I for

that the within infection innovation in traveling the plants, before New should comes we true. we true. have we all who up operations, forward, government time, how the a all just centers, uncertain Certainly, tire. a go are. week and to rate Year China, very have, hope you estimate our when we our hard to that's a It's here XX%. we're wants sitting But get Chinese China like At current understand hope desperately just And the better. own need occurs. as things back really for to is say, I that's same offices, assume populist of things to We hey,

Operator

comes The Stifel. Mark of next Astrachan question from

Mark Astrachan

question you said, what's Andre, guidance sort all but from resilience I what about of rain move wanted U.S. a a drop I global question of just to more bit the ask category, embedded basis. about think, and the here? funny surprised in to was, I has that consumer on from whether that the you know

there U.S. expectations, what from And how things portfolio, U.S. a do And portfolio watching better generally that here of from any have relative trends you meaning expected? kind all you historical the been about surprises here? within standpoint, the are have So the think from have to of context within business? performed than you would

Andre Schulten

the I fundamentally wouldn't expect change. Mark, U.S. to

But which XX%, look if label, share, at and back watching share, shares in the we're label steady. private seen shares past hover basis is a We've have been metric look over XX relatively closely. If increase label points basis sequential months. six to private around even months, six you XX to points it you private U.S. past in the continues XX of of absolute three,

hasn't down. So terms a consumer in significant been trade of there in shift behavior

our that of has pricing terms was way in great marketing think and I support spend executed in the with great support innovation helped.

see the significantly. shifting. market isn't shifting don't strategy I Our

are six next I think knows indication, the with behavior in But which Fabric All past of volume months continue any here if over the nine It's months, U.S., momentum. steady relatively expanding a that who going is what Care us market. caveat six biggest consumer months said, the gain is last that as upside the bring. and confidence. have Family share, great more and a I gives We as our hopefully to do well, Care to bit

Jon Moeller

have priced continues the And innovation performance, improves introduced price. be Powerwash responsive to and is And in that has brand a category situation. both Down many examples, be The market as that would way third grown at very has package. during standalone that premium XX% in of times the the premium to at and U.S. since difficult largely as item introduced category. that a of the growth was Dawn brand Dawn the XX% example, driven that brand we largest positive for this a an market, a again, a economic Powerwash, product introduction

innovation of a U.S. lot the innovation, and got coming. we've as to So for an continued positive I just used responsiveness consumers that example of

Operator

The Bernstein. comes from Callum question next of Elliott

Callum Elliott

to Great. Baby come back, you to dynamic. example Andre, And is the to Care quite brand think powerful. I please, I wanted the gave spend

up better meaningfully My over increase spend. are we you these some down or ROIs some competitors up with your back see can come probably are as pricing targeting that's there so driven to ad I media. do versus digital sustainable cutting benefits the longer question of simultaneously not you traditional your likely by term, catch while and goes guess If capabilities and digital dollar is, there? of start these to think digital

Andre Schulten

just by believe productivity of we're the at things. curve. actually I that And believe driven two our it's we beginning that

the Care obvious the one U.S. was right? and Care the of for and more one with Baby about narrow, diapering when -- You're ones of ones age. more of aggressive the target, think households one was Baby looking think consumer it's very babies I you

But obvious where have in that X% TV the Care, lot mass to to of target, provided also think which drive we've you about opposite other most laundry. businesses, is everybody from opportunity synergies going learned to Fabric the ways hitting doing X% here. So works. you of is the a When population, about

and Care need reach. example, algorithms the of brought allowed has developing Fabric in buying that their while has planning itself to TV frequency. and in-house, you media million So of wide year, U.S. the increasing And better a team target $XX one very savings to in the for proprietary you've in ads place got and that programming, during

not both work are both and still models So models everywhere.

U.S. got own in is on of U.S. we've There are the are to and still these world still the developing. So outside the synergies their building whole U.S., categories we building there's are that two the examples which the in that drive many capabilities approach

of years in a for of terms investment productivity own a drive come. great ability area capabilities with as this to to our see we So continued

Operator

Chris of next Redburn. Pitcher The comes question from

Chris Pitcher

But them a showed obviously Do business. for color for years capital normalization. in the mentioned sort couple think your grew share part form then position sustained inventories could in But Day, next the there of relationship even fast supply consumer of shelf. were the carrying inventories helping as of at lower working Jon, the the and significant the of you U.S. your retailers improvement Apologies India Investor efficiency. is recovering there with well? conversation over you operate like that on is looking thank you Indian you you recovery the and double-digit period in a Could a the chain business you improving in question. you're the your you how on it looks with share them with you're whether have where international at because seeing in And

Jon Moeller

levels beginning Thanks it And is operate for differently? the conversations do dependability the question. are opportunities I at we do yes. almost supply there's about opportunity this across addition for one supply discussion at system resident inventory. significant. of within to would there chain supply as are to we enablers our think chain lower was chain we're in answer supply entire the And customer increasingly have historically chain, as the supply that that significant And a looking things one the at is of supply looked to and that our the

retail and conversation ultimately the on-shelf our have continue that to a about progress Andre, do partners then So I will we talk and availability. try in higher ourselves to think India? make ahead, want that consumer way to with you benefits both And and go

Andre Schulten

a effective. is actually being those business saw XX%. just good continues accelerate. sales; that about The rolling India QX, were of out to Yes, India and sure. XX% we We very organic QX talking growing capabilities And example

digital quite ability and from standpoint. growth So drive standpoint to been from contributing capability and that's our sales both infrastructure the in is has a a disproportionate to able impressive India to there, team create been -- we've media capability the able

Operator

comes question of English Jason next from Goldman Sachs. The

Jason English

a milestone few I've got that going and to share one. I'm on progression like market Congrats sales this and the quarter. cheat -- jam many, into questions

product, it reflect in? you've you? than do improves, pricing substantially a and you're I I advertising volume promo, expect to what et this on into share more share made the signaling the prioritization Does take, lastly, shift read should as quarter. but reinvestment for what if shape you first, rather this, in i.e., don't geographies And are much majority incremental focus supply com you value of to this know more So references cetera? taking the Second,

Andre Schulten

Thanks, Jason.

On I or other. would the tilt geographies, not any disproportionate towards see one the

structure, Category the regions. across look at you implications, different shift. might the the Timing shifting. are pretty obviously, cost similar is, they If

Jon Moeller

There's Yes. of that, devaluating to to I are commodities. exception totally to agree relates pricing currencies markets, some course, one there But related where as are it massively.

Andre Schulten

Right.

Jon Moeller

highest our take where see Turkey, the suspects. is you And of amount Argentina, pricing, there usual

Andre Schulten

Correct.

take market, look at in generally the in line you enterprise inflation if pricing market. we where higher with overall the So that’s

to case. will GX Jon's will continue think where are other about the -- markets to in Japan, more There be that So to that difficult general. point, about notoriously the pricing be think is

not that's what you would seen that's past over few where So we from less quarters. impact. different see have But the pricing

Look, our desire vectors reinvest superiority. to of all is across

product is innovation. It's it's package in it So communication, execution. go-to-market in

those we're of it are relevant. that share penetration of opportunity volume continue to region, by on and we our believe all by our So more differ drive They is reason to category, The obviously. is why brands. focusing job

developed think about the our most We you have drive runway huge continue to and a consumption even categories. ability when to

the jobs driven is focus be all on is to done, not consumption to So by household to create of we sustainable. drive growth continue to pricing driving -- which world to penetration, A continue our drive opportunities. team market obviously continue want in

talk balance, in here that's why come elements see share. back elements and and so value us need And volume to both both you between

Jon Moeller

I volume share clarity a interested am value share. not way the value deliver this at Just to share. in of share for is though, Volume on expense point,

we that emphasis a in shift important, at not So are be the or not other. both least clear, one it's between

a that that volume concern reason about is share your volume pricing little bit make volume to holding how how and we're your it's -- other how up. talked as is up that taking The when holding I this a natural is we particularly sure to wanted

very transparent so which far. So we how attractive be is wanted on to just it, we're seeing

Operator

Feeney The Edge. final question Consumer comes from from Jonathan

Jonathan Feeney

Like guidance ask your composite the U.S.-based is, 'XX, XXX basis to like year-over-year gave the down look you numbers X% question question fiscal for for push commodity when I you this quarter. see that's are since then. want peak? quarter their the to really I year And costs Simple -- gross at for freight margin costs and complicated. you rough lowered for can last initial your something us energy you spot XXX commodity your inflation. a you cost -- have experience expectation talk for company, time simple was the you're -- When points headwind of below versus

be can a -- expect headwind Would you the June no sequential you does quarter? there's in a be in spot. a quarter, I there's would So like September secondly, like unpack step that confirm just cross-currency the it know exposure be to the been is there's all costs a that don't in base? from down? your And -- what to I could we quarter their to peak. that say? lot are impossible seem with longer Or things see down U.S.-based and But costs

Andre Schulten

answer. just very simple It's a know. don't I question, second the on Well,

still films, first the sequential We through I We as yes, buy progress the commodities. But buy understand we forces. On We our super opposing see process mentioned in side. suppliers on to material. We et important buy two are And of the pack question, own earlier, cetera. it's passing cost the inflation. their absorbers. buy don't

while structure their commodity certainly via also the they helps experienced that hits haven't they to quarters. cost input over have is past few caught costs up their So easing, fully

when So But that balance going to occur, with work continue to here. exactly right solution is we'll to hard to find the them predict.

Jon Moeller

sufficient. going to additional time to of in are know time. the not we I that's to said such and new contract. acknowledge cases, a direction this, It's contracts a things look U.S. period at, slow. Andre period not cover, as at as of future, Yes. piece happen what's cover foreseeable that difficult of on -- into And detail forever. you the it's spot that's that. to enter But And continue of why a not prices that then It's prices that's of holistic And one for it's indicator the look just earlier, not have And many that fixed they're time. for as

Jon Moeller

incredible volume our of sales in inflation able about in the Eastern U.S. and job continue quarter all that; against joining across unpacking will patience on thankful continue for the the the years. our to of Okay. commodities, the all has I this. all today, want proud integrated momentum the to My to our be This share team to foreign team John, of X% and China, the very day all for guidance thank for to is to rates in and deceleration organically going categories your impact similarly, do transportation. backdrop build an of to Andre team share, thank you us that. the Europe, -- unpack, done with situation I continue market own of of bottom and on executing to and helping significant the increase be in and John strategy of rest line. We hold talked of the be to through exchange highest available efforts the am very, it XX grow the you to

profit The If the forecasting a of the talking the the team; plus grew It headwinds important. and to those areas. of I things, you the think, that share two, current continued very We're this year, strategy. share per look two year. is year. at team last for grow as did. eliminated are year, result relevance, XX% the relevance earnings last One you're in about three forecast very, modestly quality is the speaks of fiscal to being of our We earnings per

call Thanks worth, for to it's if to time. happy you so. And So on do want discuss I'm and unpack. that's my for your further, what that

Operator

Thank now and That great day. participation, a concludes disconnect. may you for your today's you conference. Have

The Procter & Gamble Company (PG) 19 Jan 232023 Q2 Earnings call transcript