Procter & Gamble Company (The)

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. Procter & Gamble believes these measures provide investors with useful perspective on underlying business trends and has posted on its investor relations website www.pginvestor.com a full reconciliation of non-GAAP financial measures. Now I will turn the call over to P&G's Chief Financial Officer,

Today are John Moeller, Chairman of the Board, President and Chief Executive Officer, and John Chevalier, Senior Vice President, Investor Relations. I'll start with an overview of results for fiscal year 23 and the fourth quarter. John will add perspective on our strategic focus areas and capabilities and will close with guidance for fiscal 24 and then take your questions. fiscal 23 was another very strong year execution of our integrated strategy continues to yield broad-based strong sales growth across categories and regions strong earnings in the face of significant cost headwinds and continued strong return of cash to png shareholders organic sales for the fiscal year grew seven percent our second consecutive year of seven percent organic sales growth and fifth consecutive year of 5% or better organic growth. Starting fiscal 2019, 5%, 6%, 6%, 7, and 7. Growth was broad-based across business units with all 10 of all product categories growing organic sales. Personal health care grew mid-teens. Feminine care grew double digits. Fabric care, home care, and hair care up high single digits. Skin and personal care baby care, family care, and grooming, each grew mid-singles. Oral care grew low single digits. Focus markets were up 5% for the year, and we delivered strong results in our largest and most profitable market, the United States, with organic sales growing 6% on top of a strong 8% growth comp in the base period. Greater China organic sales were down low single digits versus the prior year, with trends improving in the back half as the market continues to slowly recover. Enterprise markets were up 15%, led by Latin America with 24% organic sales growth. E-commerce sales increased 7%, now representing 17% of total company. Our strategy, focused on driving market growth, is in turn driving share growth for P&G, All channel market value sales in the US categories in which we compete grew approximately 7% in fiscal 23. P&G consumption grew ahead of fair share of category growth, driving modest value share growth and volume share up 50 basis points for the year. We held global aggregate market share. 29 of our top 50 category country combinations held or grew share for the year. Importantly, this share growth is broad-based. Seven of 10 product categories grew share globally over the past year. Core earnings per share were $5.90, up 2% for the year, despite a 24 percentage point earnings growth headwind, or $1.38 per share from higher material costs and foreign exchange. On a currency-neutral basis, core EPS were up 11%. Adjusted free cash flow productivity was 95%. We increased our dividends by 3% and returned over $16 billion of value to share owners, $9 billion in dividends, and $7.4 billion in share repurchase. Moving to the April to June quarters. Organic sales grew 8%. We've now delivered seven consecutive quarters with 5% or better organic sales growth. Pricing contributed seven points to organic sales growth. Mix was up two points. Volume declined one point, improving sequentially versus the March quarter as expected. These strong company results are grounded in broad-based category and geographic strengths. Each of our 10 product categories grew organic sales in the quarter. Skin and personal care, personal health care, home care, feminine care, and family care Five of our 10 categories each grew double digits. Baby care, hair care, and grooming grew high singles. Fabric care grew mid-singles, and oral care was up low single digits. Each of our seven regions grew organic sales, with focus markets up 7% and enterprise markets up 13% for the quarter. Organic sales in the US grew 6%, Importantly, this includes three points of volume growth, a return to positive volume in our largest market for the first time in five quarters. Greater China organic sales grew 4%. We continue to see sequential market recovery, but as expected, at a slow pace. European focus market organic sales were up 12%, despite volume pressure from wider pricing gaps. In enterprise markets, Latin America led the growth with organic sales up 22%. Global aggregate market share increased 10 basis points. 29 of our top 50 category country combinations held or grew share for the quarter. On the bottom line, core earnings per share were $1.37, up 13% versus the prior year. On a currency neutral basis, core EPS increased 22%. Co-operating margin increased 190 basis points as benefits from strong sales growth and productivity improvements more than offset higher material costs, foreign exchange headwinds, wage and benefits inflation, and reinvestment in higher media reach and frequency. Currency neutral operating margin increased 310 basis points. Adjusted free cash flow productivity was 136%. We returned approximately $2.3 billion of cash to share owners in the quarter. In summary, we met or exceeded each of our going and target ranges for the year, organic sales growth, core EPS growth, free cash flow productivity, and cash return to share owners. Strong performance again this year in a very difficult operating environment. Now I'll pass it over to John.

Thanks, Andre. I want to talk briefly about this company, its strategy, and our organization, both as a step-back reflection on what's been accomplished and as a glimpse forward into what's possible. Three quick reflections looking back. First, pre-COVID, during COVID, and since COVID, preinflation and since inflation, consistent, strong, top-line growth. across categories and geographies. Core earnings per share growth each of the last five fiscal years. Consistent cash return to shareholders. Our strategy has sustained us through all of this. Second look back in the past two years, nearly half of our earnings wiped out by commodities, transportation and foreign exchange headwinds. Yet we still grew earnings per share in each of those years. while delivering 7% organic sales growth each year, increasing investment in innovation, brand building, and growing markets, and growing market share in aggregate in the process. As I said last quarter, if you'd told me four years ago that we would grow top line, bottom line, and deliver strong cash return to shareholders through a global pandemic with employees challenged to get to the workplace in the context of a war in Europe Major disruption in global supply chains, rapidly escalating costs, the highest consumer inflation in 40 years, and fundamental shifts in consumer behavior and channel relevance, it would have been hard to agree. But that's exactly what this team has done. Over the last five years, they've added over $15 billion in incremental sales, grown our share of the global market, grown core earnings per share by 40%, and returned over $80 billion of cash to shareholders. Two more granular examples testing both strategy and execution in some of the harshest conditions. Latin America, significant devaluation across all major currencies. Inflation in Brazil peaking above 12%, 9% in Mexico, over 70% in Argentina. Despite this, our team has delivered three consecutive years of U.S. dollar sales growth, mid-teens in fiscal 22 and mid-20s this year. Market share growth on both a volume and value basis, nearly 30% profit growth this year in dollars, over 50% on a local currency basis. One more test, Turkey. Over the past two years, Allura has devalued more than 300%. We've had to take multiple waves of significant pricing. Still, the strength of our strategy and its execution by the organization has enabled us to grow dollar sales, grow volume, sequentially improve market share, and maintain dollar profitability in the market. As you well know, past performance is no guarantee of future results, and certainly no excuse to stand still. Quite the opposite. There will be bumps in the road ahead. We're still navigating through plenty of challenges right now. Each of these look backs, though, gives us confidence in the effectiveness of the strategy, grounded in and focused on consumers, and an appreciation for the capability of our talented, creative, agile, and committed organization. Our integrated strategy, a focused portfolio of products and daily use categories where performance drives brand choice. Superiority through innovation. across the five vectors of product package brand communication retail execution and value holistically defined leveraging that superiority to grow markets and our share in them to jointly create value with our retail partners productivity to offset cost challenges while funding investments in innovation brand building and market growth where we accelerated productivity back to pre-covered levels with an objective for gross savings and cost of goods sold of up to $1.5 billion before tax. We have line of sight to savings from improved marketing productivity, more efficiency and greater effectiveness, avoiding excess frequency and reducing waste. Constructive disruption of ourselves and our industry to adapt and create new trends, technologies and capabilities that often extend our competitive advantage. and an organization structure that's increasingly more empowered, agile, and accountable. An increasingly diverse organization, now with 50% female representation in manager roles across the world. We're strengthening the execution of our strategy in four focus areas. First, with Supply Chain 3.0, we're driving improved capacity, greater agility, flexibility, scalability, transparency and resilience, along with greater productivity. We recently launched a platform of supply chain services to enable best in class service and streamline the end to end supply chain. These initiatives have been very well received by retailers. Our next step to drive joint value creation with retailers is to simplify our SKU portfolio to improve the shopping experience, increase on shelf availability, and further streamline supply for the entire ecosystem. higher quality, more transparency, increased supply assurance, and higher on-shelf availability of our product. Each improves superiority with consumers and improves what is already the top-ranked supply chain by our retail partners and third-party industry surveys. All of this is a huge value creation opportunity for P&G and our retail partners. Next focus area, environmental sustainability. to create superior propositions for consumers, customers, and shareholders while improving our environmental impact, reducing the footprint of our operations, enabling consumers to reduce their footprint, and innovating to deliver cross-industry solutions for some of our most pressing challenges. A third digital acumen, leveraging data and digitization to delight consumers, streamline the supply chain, increase quality, drive productivity, all driving shareholder value. And fourth, a superior employee value equation for all genders, identities, races, ethnicities, sexual orientations, ages, and abilities for all roles to ensure we continue to attract, retain, and develop the best talent. At the end of the day, P&G serves people with a strong desire to improve their lives and the lives of their families. We stand by people and support them in small but meaningful ways every day. with superior performing products at a superior value. We strive to do this in the most responsible way, consistent with P&G's values and principles. This approach with consumers at the center and an organization built to serve them has served us and our many stakeholders well. It will guide our actions as we move forward. If we do this effectively, consumers will benefit, customers will grow their businesses, employees will develop and thrive. society will benefit, and shareholders will continue to be rewarded for their investment, not measured by a quarter or even a year, but over time. I believe in this company, in our organization, its capabilities, and in the commitment of P&G people to serve consumers. I'm excited about what lays ahead. Of course, I have my worries and concerns and will continue to face challenges and some dark days and nights. but the future in general holds great promise. We'll continue to be guided by our purpose, values, and principles and relentless execution of our strategy to move forward to an ever brighter dawn. P&G celebrates its 186th anniversary this year. I believe we have an even stronger hand to play today than we've had historically. With that, I'll hand it back to Andre to outline our guidance for the new year. Thank you, John.