P&G's Q1 2025 Earnings: Navigating Headwinds in China and Beyond

Procter & Gamble (P&G) reported its fiscal first-quarter 2025 earnings on October 18, 2024, revealing a mixed performance marked by organic sales growth and a dip in revenue. The consumer goods giant's results were impacted by a weak performance in China, its second-largest market, where organic sales fell 15% due to declining demand and economic uncertainty.


P&G's outlook for China remains cautious, with CFO Andre Schulten expecting demand to remain weak for several more quarters. The company's confidence in the long-term potential of the Chinese market remains unchanged, but the near-term challenges are weighing on its overall performance.

The company's organic sales in the U.S. grew in eight of its 10 categories, with no signs of trade-down to private-label products. However, Greater China's organic sales worsened compared to the prior quarter, with volume declines in hair care and oral care segments. Despite accounting for less than 10% of P&G's revenue, the challenges in China cannot be overlooked.


P&G's beauty business, including brands like Pantene and Olay, saw a 2% volume decline in the quarter, with the skin care segment struggling due to lower volume and decreased sales of the SK-II brand. The company's baby, feminine, and family care divisions reported a 1% decline in volume, while the grooming division saw 4% volume growth.

P&G's fiscal first-quarter net income attributable to the company was $3.96 billion, or $1.61 per share, down from $4.52 billion, or $1.83 per share, a year earlier. Excluding restructuring charges and other items, the company earned $1.93 per share.

Despite the challenges in China, P&G reiterated its fiscal 2025 forecast, anticipating core net earnings per share in a range of $6.91 to $7.05 and revenue growth of 2% to 4%. The company's confidence in its integrated growth strategy remains unwavering, focusing on a focused product portfolio, productivity improvements, constructive disruption, and an agile and accountable organization.

As P&G navigates the headwinds in China and other markets, investors should keep a close eye on the company's ability to adapt to changing consumer preferences and economic conditions. The long-term prospects for the consumer goods giant remain promising, but the near-term challenges in China and other markets may impact its performance in the coming quarters.