10-Q 1 pg-20240331.htm FY2324 Q3 JFM 10-Q pg-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
xTrueQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2024

OR
oFalseTRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     

pglogoa21.jpg
THE PROCTER & GAMBLE COMPANY
(Exact name of registrant as specified in its charter)
 
OhioOH1-43431-0411980
(State of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)
One Procter & Gamble PlazaCincinnatiOH
One Procter & Gamble Plaza, Cincinnati, Ohio45202
(Address of principal executive offices)(Zip Code)
(513) 983-1100
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, without Par ValuePGNYSE
0.500% Notes due 2024PG24ANYSE
0.625% Notes due 2024PG24BNYSE
1.375% Notes due 2025PG25NYSE
0.110% Notes due 2026PG26DNYSE
3.250% EUR Notes due 2026PG26ENYSE
4.875% EUR Notes due May 2027PG27ANYSE
1.200% Notes due 2028PG28NYSE
1.250% Notes due 2029PG29BNYSE
1.800% Notes due 2029PG29ANYSE
6.250% GBP Notes due January 2030PG30NYSE
0.350% Notes due 2030PG30CNYSE
0.230% Notes due 2031PG31ANYSE
3.250% EUR Notes due 2031PG31BNYSE
5.250% GBP Notes due January 2033PG33NYSE
1.875% Notes due 2038PG38NYSE
0.900% Notes due 2041PG41NYSE
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 þ No o
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 such files).
Yes þ No o
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
 þ
Accelerated filer
 ¨
Non-accelerated filer
 ¨
Smaller reporting company
 ¨
False
Emerging growth company
 ¨
False
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ False
There were 2,360,135,282 shares of Common Stock outstanding as of March 31, 2024.



FORM 10-Q TABLE OF CONTENTSPage
PART IItem 1.
Item 2.
Item 3.
Item 4.
PART IIItem 1.
Item 1A.
Item 2.
Item 5.
Item 6.


The Procter & Gamble Company 1
PART I. FINANCIAL INFORMATION 
Item 1.Financial Statements
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended March 31Nine Months Ended March 31
Amounts in millions except per share amounts2024 20232024 2023
NET SALES$20,195 $20,068 $63,507 $61,453 
Cost of products sold9,855 10,404 30,500 32,147 
Selling, general and administrative expense5,880 5,416 17,006 15,334 
Indefinite-lived intangible asset impairment charge  1,341  
OPERATING INCOME4,460 4,248 14,660 13,972 
Interest expense(233)(222)(705)(516)
Interest income104 83 366 191 
Other non-operating income, net260 179 570 473 
EARNINGS BEFORE INCOME TAXES4,592 4,288 14,891 14,120 
Income taxes812 864 3,061 2,774 
NET EARNINGS3,781 3,424 11,830 11,346 
Less: Net earnings attributable to noncontrolling interests27 27 88 77 
NET EARNINGS ATTRIBUTABLE TO PROCTER & GAMBLE$3,754 $3,397 $11,742 $11,269 
NET EARNINGS PER COMMON SHARE (1)
Basic$1.56 $1.41 $4.89 $4.67 
Diluted$1.52 $1.37 $4.75 $4.53 
(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
Three Months Ended March 31Nine Months Ended March 31
Amounts in millions2024202320242023
NET EARNINGS$3,781 $3,424 $11,830 $11,346 
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
Foreign currency translation(211)259 (128)(74)
Unrealized gains/(losses) on investment securities 1 (2)(2)
Unrealized gains/(losses) on defined benefit postretirement plans7 (19)(23)(8)
TOTAL OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX(204)241 (153)(84)
TOTAL COMPREHENSIVE INCOME3,577 3,665 11,677 11,262 
Less: Total comprehensive income attributable to noncontrolling interests26 28 85 70 
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO PROCTER & GAMBLE$3,551 $3,637 $11,592 $11,192 

See accompanying Notes to Consolidated Financial Statements.

2 The Procter & Gamble Company
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Amounts in millionsMarch 31, 2024June 30, 2023
Assets
CURRENT ASSETS
Cash and cash equivalents$6,828 $8,246 
Accounts receivable6,124 5,471 
INVENTORIES
Materials and supplies1,676 1,863 
Work in process971 956 
Finished goods4,431 4,254 
Total inventories7,077 7,073 
Prepaid expenses and other current assets2,428 1,858 
TOTAL CURRENT ASSETS22,458 22,648 
PROPERTY, PLANT AND EQUIPMENT, NET22,027 21,909 
GOODWILL40,567 40,659 
TRADEMARKS AND OTHER INTANGIBLE ASSETS, NET22,193 23,783 
OTHER NONCURRENT ASSETS12,353 11,830 
TOTAL ASSETS$119,598 $120,829 
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable$13,691 $14,598 
Accrued and other liabilities10,921 10,929 
Debt due within one year7,729 10,229 
TOTAL CURRENT LIABILITIES32,340 35,756 
LONG-TERM DEBT24,253 24,378 
DEFERRED INCOME TAXES6,284 6,478 
OTHER NONCURRENT LIABILITIES6,386 7,152 
TOTAL LIABILITIES69,264 73,764 
SHAREHOLDERS’ EQUITY
Preferred stock801 819 
Common stock – shares issued –March 20244,009.2 
June 20234,009.2 4,009 4,009 
Additional paid-in capital67,395 66,556 
Reserve for ESOP debt retirement(737)(821)
Accumulated other comprehensive loss(12,370)(12,220)
Treasury stock(132,172)(129,736)
Retained earnings123,132 118,170 
Noncontrolling interest275 288 
TOTAL SHAREHOLDERS’ EQUITY50,333 47,065 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$119,598 $120,829 

See accompanying Notes to Consolidated Financial Statements.

The Procter & Gamble Company 3
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Months Ended March 31, 2024
Dollars in millions;
shares in thousands
Common StockPreferred StockAdditional Paid-In CapitalReserve for ESOP Debt RetirementAccumulated Other Comprehensive Income/(Loss)Treasury StockRetained EarningsNoncontrolling InterestTotal Shareholders' Equity
SharesAmount
BALANCE DECEMBER 31, 20232,353,021 $4,009 $809 $66,935 ($782)($12,167)($131,887)$121,617 $294 $48,829 
Net earnings3,754 27 3,781 
Other comprehensive income/(loss)(203)(1)(204)
Dividends and dividend equivalents
($0.9407 per share):
Common(2,221)(2,221)
Preferred(69)(69)
Treasury stock purchases(6,046)(977)(977)
Employee stock plans12,201 459 685 1,144 
Preferred stock conversions959 (8)1 7  
ESOP debt impacts45 51 97 
Noncontrolling interest, net (46)(46)
BALANCE MARCH 31, 20242,360,135 $4,009 $801 $67,395 ($737)($12,370)($132,172)$123,132 $275 $50,333 
Nine Months Ended March 31, 2024
Dollars in millions;
shares in thousands
Common StockPreferred StockAdditional Paid-In CapitalReserve for ESOP Debt RetirementAccumulated Other Comprehensive Income/(Loss)Treasury StockRetained EarningsNoncontrolling InterestTotal Shareholders' Equity
SharesAmount
BALANCE JUNE 30, 20232,362,120 $4,009 $819 $66,556 ($821)($12,220)($129,736)$118,170 $288 $47,065 
Net earnings11,742 88 11,830 
Other comprehensive income/(loss)(150)(3)(153)
Dividends and dividend equivalents
($2.8221 per share):
Common(6,671)(6,671)
Preferred(209)(209)
Treasury stock purchases(22,768)(3,493)(3,493)
Employee stock plans18,552 836 1,041 1,878 
Preferred stock conversions2,232 (18)3 15  
ESOP debt impacts85 99 184 
Noncontrolling interest, net (98)(98)
BALANCE MARCH 31, 20242,360,135 $4,009 $801 $67,395 ($737)($12,370)($132,172)$123,132 $275 $50,333 
See accompanying Notes to Consolidated Financial Statements.

4 The Procter & Gamble Company
Three Months Ended March 31, 2023
Dollars in millions;
shares in thousands
Common StockPreferred StockAdditional Paid-In CapitalReserve for ESOP Debt RetirementAccumulated Other Comprehensive Income/(Loss)Treasury StockRetained EarningsNoncontrolling InterestTotal Shareholders' Equity
SharesAmount
BALANCE DECEMBER 31, 20222,359,144 $4,009 $831 $66,145 ($870)($12,506)($129,012)$115,858 $270 $44,725 
Net earnings3,397 27 3,424 
Other comprehensive income/(loss)240 1 241 
Dividends and dividend equivalents
($0.9133 per share):
Common(2,160)(2,160)
Preferred(69)(69)
Treasury stock purchases(9,406)(1,351)(1,351)
Employee stock plans6,290 170 353 523 
Preferred stock conversions941 (9)1 8  
ESOP debt impacts49 56 105 
Noncontrolling interest, net (17)(17)
BALANCE MARCH 31, 20232,356,969 $4,009 $822 $66,316 ($821)($12,266)($130,002)$117,082 $281 $45,421 

Nine Months Ended March 31, 2023
Dollars in millions;
shares in thousands
Common StockPreferred StockAdditional Paid-In CapitalReserve for ESOP Debt RetirementAccumulated Other Comprehensive Income/(Loss)Treasury StockRetained EarningsNoncontrolling InterestTotal Shareholders' Equity
SharesAmount
BALANCE JUNE 30, 20222,393,877 $4,009 $843 $65,795 ($916)($12,189)($123,382)$112,429 $265 $46,854 
Net earnings11,269 77 11,346 
Other comprehensive income/(loss)(77)(7)(84)
Dividends and dividend equivalents
($2.7399 per share):
Common(6,517)(6,517)
Preferred(210)(210)
Treasury stock purchases(52,021)(7,353)(7,353)
Employee stock plans12,742 518 715 1,233 
Preferred stock conversions2,371 (21)3 18  
ESOP debt impacts95 111 206 
Noncontrolling interest, net (54)(54)
BALANCE MARCH 31, 20232,356,969 $4,009 $822 $66,316 ($821)($12,266)($130,002)$117,082 $281 $45,421 
See accompanying Notes to Consolidated Financial Statements.

The Procter & Gamble Company 5
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31
Amounts in millions20242023
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD$8,246 $7,214 
OPERATING ACTIVITIES
Net earnings11,830 11,346 
Depreciation and amortization2,135 2,008 
Share-based compensation expense433 406 
Deferred income taxes(206)(360)
Gain on sale of assets(51)(4)
Indefinite-lived intangible asset impairment charge1,341  
Changes in:
Accounts receivable(692)(301)
Inventories(47)(503)
Accounts payable and accrued and other liabilities56 (609)
Other operating assets and liabilities(1,196)(839)
Other490 363 
TOTAL OPERATING ACTIVITIES14,092 11,507 
INVESTING ACTIVITIES
Capital expenditures(2,539)(2,328)
Proceeds from asset sales77 9 
Acquisitions, net of cash acquired(21)(714)
Other investing activity(503)331 
TOTAL INVESTING ACTIVITIES(2,986)(2,702)
FINANCING ACTIVITIES
Dividends to shareholders(6,863)(6,710)
Additions to short-term debt with original maturities of more than three months2,961 13,778 
Reductions in short-term debt with original maturities of more than three months(7,523)(9,134)
Net additions/(reductions) to other short-term debt2,331 (387)
Additions to long-term debt1,598 2,569 
Reductions in long-term debt(2,335)(1,877)
Treasury stock purchases(3,490)(7,353)
Impact of stock options and other965 861 
TOTAL FINANCING ACTIVITIES(12,356)(8,253)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH(168)(170)
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(1,418)382 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD$6,828 $7,596 
See accompanying Notes to Consolidated Financial Statements.

6 The Procter & Gamble Company
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited Consolidated Financial Statements of The Procter & Gamble Company and subsidiaries ("the Company," "Procter & Gamble," "P&G," "we" or "our") should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023. We have prepared these statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial information. Note that certain columns and rows may not add due to rounding. In the opinion of management, the accompanying Consolidated Financial Statements contain all normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods reported. However, the results of operations included in such financial statements may not necessarily be indicative of annual results.
2. 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.
3. 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, Feminine Care); Family Care (Paper Towels, Tissues, Toilet Paper).
Amounts in millions of dollars except per share amounts or as otherwise specified.

The Procter & Gamble Company 7
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)
Three Months Ended March 31Nine Months Ended March 31
2024202320242023
Fabric Care23 %23 %23 %23 %
Home Care13 %12 %12 %12 %
Baby Care9 %10 %9 %10 %
Family Care9 %9 %9 %8 %
Hair Care9 %9 %9 %9 %
Skin and Personal Care9 %9 %9 %10 %
Grooming8 %8 %8 %8 %
Oral Care8 %8 %8 %8 %
Personal Health Care6 %6 %7 %6 %
Feminine Care6 %6 %6 %6 %
Total100 %100 %100 %100 %
(1)% of Net sales by operating segment excludes sales recorded in Corporate.
The following is a summary of reportable segment results:
Three Months Ended March 31Nine Months Ended March 31
Net SalesEarnings/(Loss) Before Income TaxesNet Earnings/(Loss)Net SalesEarnings/(Loss) Before Income TaxesNet Earnings/(Loss)
Beauty2024$3,550 $753 $587 $11,496 $3,114 $2,426 
20233,494 763 608 11,262 3,179 2,530 
Grooming20241,539 379 303 4,997 1,450 1,165 
20231,495 382 308 4,763 1,381 1,116 
Health Care20242,873 687 525 9,119 2,508 1,933 
20232,828 667 523 8,636 2,354 1,826 
Fabric & Home Care20247,169 1,692 1,301 22,230 5,741 4,446 
20237,016 1,538 1,174 21,130 4,619 3,517 
Baby, Feminine & Family Care20244,936 1,299 997 15,268 4,144 3,174 
20235,062 1,206 925 15,061 3,373 2,578 
Corporate2024128 (218)68 398 (2,066)(1,314)
2023173 (268)(114)601 (786)(221)
Total Company2024$20,195 $4,592 $3,781 $63,507 $14,891 $11,830 
202320,068 4,288 3,424 61,453 14,120 11,346 
4. Goodwill and Intangible Assets
Goodwill is allocated by reportable segment as follows:
BeautyGroomingHealth CareFabric & Home CareBaby, Feminine & Family CareTotal Company
Goodwill at June 30, 2023$13,888 $12,703 $7,718 $1,821 $4,529 $40,659 
Acquisitions and divestitures      
Translation and other(32)(19)(24)(6)(11)(92)
Goodwill at March 31, 2024$13,856 $12,685 $7,695 $1,815 $4,518 $40,567 
Goodwill decreased from June 30, 2023, due to currency translation.

Amounts in millions of dollars except per share amounts or as otherwise specified.

8 The Procter & Gamble Company
Identifiable intangible assets at March 31, 2024, were comprised of:
Gross Carrying AmountAccumulated Amortization
Intangible assets with determinable lives$9,046 $(6,499)
Intangible assets with indefinite lives19,645  
Total identifiable intangible assets$28,691 $(6,499)
Intangible assets with determinable lives consist of brands, patents, technology and customer relationships. The intangible assets with indefinite lives primarily consist of brands. The amortization expense of determinable-lived intangible assets for the three months ended March 31, 2024 and 2023, was $83 and $82, respectively. For the nine months ended March 31, 2024 and 2023, amortization expense was $255 and $241, respectively.
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. Most of our goodwill reporting units have fair value cushions that significantly exceed their underlying carrying values.
During the three months ended December 31, 2023, 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.
While we have concluded that no triggering event has occurred during the quarter ended March 31, 2024, the Gillette indefinite-lived intangible asset is susceptible to further impairment risk. Adverse changes in the business or in the macroeconomic environment, including foreign currency devaluation, increasing global inflation, market contraction from an economic recession and the Russia-Ukraine War, could reduce the underlying cash flows used to estimate the fair value of the Gillette indefinite-lived intangible asset and trigger a further impairment charge. Further reduction of the Gillette business activities in Russia could reduce the estimated fair value. The Russia business accounted for approximately 4% of Gillette net sales in the fiscal year ended June 30, 2023.
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, including the Russia-Ukraine War, 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 approximate expected long-term category market growth rates. The residual growth rate depends 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 rate 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.
Amounts in millions of dollars except per share amounts or as otherwise specified.

The Procter & Gamble Company 9
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 rate to demonstrate the potential impacts to 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 short-term and residual growth rates or a 50 basis-point decrease in our royalty rate, which may result in an additional impairment of the Gillette indefinite-lived intangible asset.
Approximate Percent Change in Estimated Fair Value
+25 bps Discount Rate-25 bps Growth Rates-50 bps Royalty Rate
Gillette indefinite-lived intangible asset(5)%(5)%(4)%
5. 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 and the assumed conversion of preferred stock.
Net earnings per common share were calculated as follows:
CONSOLIDATED AMOUNTSThree Months Ended March 31Nine Months Ended March 31
2024202320242023
Net earnings$3,781 $3,424 $11,830 $11,346 
Less: Net earnings attributable to noncontrolling interests27 27 88 77 
Net earnings attributable to P&G (Diluted)3,754 3,397 11,742 11,269 
Less: Preferred dividends69 69 209 210 
Net earnings attributable to P&G available to common shareholders (Basic)$3,685 $3,328 $11,533 $11,059 
SHARES IN MILLIONS
Basic weighted average common shares outstanding2,360.5 2,359.1 2,359.5 2,370.2 
Add: Effect of dilutive securities
Convertible preferred shares (1)
73.3 76.0 73.9 76.7 
Stock options and other unvested equity awards (2)
38.1 38.1 38.4 39.1 
Diluted weighted average common shares outstanding2,472.0 2,473.2 2,471.8 2,486.0 
NET EARNINGS PER COMMON SHARE
Basic$1.56 $1.41 $4.89 $4.67 
Diluted$1.52 $1.37 $4.75 $4.53 
(1)An overview of preferred shares can be found in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
(2)Excludes approximately 6 million and 21 million for the three months ended March 31, 2024 and 2023, respectively, and 6 million and 20 million for the nine months ended March 31, 2024 and 2023, respectively, of weighted average stock options outstanding because the exercise price of these options was greater than their average market value or their effect was antidilutive.
6. Share-Based Compensation and Postretirement Benefits
The following table provides a summary of our share-based compensation expense and postretirement benefit impacts:
Three Months Ended March 31Nine Months Ended March 31
2024202320242023
Share-based compensation expense$158 $156 $433 $406 
Net periodic benefit cost for pension benefits52 45 160 132 
Net periodic benefit credit for other retiree benefits(156)(131)(467)(395)
Amounts in millions of dollars except per share amounts or as otherwise specified.

10 The Procter & Gamble Company
7. 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. There have been no significant changes in our risk management policies or activities during the nine months ended March 31, 2024.
The Company has not changed its valuation techniques used in measuring the fair value of any financial assets and liabilities during the period. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no transfers between levels during the periods presented. Also, there was no significant activity within the 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 during the nine months ended March 31, 2024 and 2023.
Cash equivalents were $5.4 billion and $6.8 billion as of March 31, 2024 and June 30, 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 $26.4 billion and $26.9 billion as of March 31, 2024 and June 30, 2023, respectively. This includes the current portion of long-term debt instruments ($3.4 billion and $3.9 billion as of March 31, 2024 and June 30, 2023, respectively). 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.
Disclosures about Financial Instruments
The notional amounts and fair values of financial instruments used in hedging transactions as of March 31, 2024 and June 30, 2023, are as follows:
Notional AmountFair Value AssetFair Value (Liability)
March 31, 2024June 30, 2023March 31, 2024June 30, 2023March 31, 2024June 30, 2023
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$3,030 $4,044 $ $ $(323)$(445)
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Foreign currency interest rate contracts$10,926 $11,005 $79 $26 $(108)$(631)
TOTAL DERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS$13,956 $15,049 $79 $26 $(432)$(1,076)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts$3,956 $3,489 $12 $7 $(23)$(42)
TOTAL DERIVATIVES AT FAIR VALUE$17,912 $18,538 $91 $33 $(455)$(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 March 31, 2024 and June 30, 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 $10.5 billion and $11.8 billion as of March 31, 2024 and June 30, 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.
Certain 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 $363 and $1,088 as of March 31, 2024 and June 30, 2023, respectively. The Company has not been required to post collateral as a result of these contractual features.
Amounts in millions of dollars except per share amounts or as otherwise specified.

The Procter & Gamble Company 11
Before tax gains on our financial instruments in hedging relationships are categorized as follows:
Amount of Gain/(Loss) Recognized in OCI on Derivatives
Three Months Ended March 31Nine Months Ended March 31
2024202320242023
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS (1) (2)
Foreign exchange contracts$269 $(266)$67 $(571)
(1)    For the derivatives in net investment hedging relationships, the amount of gain excluded from effectiveness testing, which was recognized in earnings, was $53 and $64 for the three months ended March 31, 2024 and 2023, respectively. The amount of gain excluded from effectiveness testing was $182 and $179 for the nine months ended March 31, 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 Accumulated other comprehensive income (AOCI) for such instruments was $262 and $(242) for the three months ended March 31, 2024 and 2023, respectively. The amount of gain/(loss) recognized in Accumulated other comprehensive income (AOCI) for such instruments was $102 and $(406) for the nine months ended March 31, 2024 and 2023, respectively.
Amount of Gain/(Loss) Recognized in Earnings
Three Months Ended March 31Nine Months Ended March 31
2024202320242023
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$(7)$39 $122 $(141)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts$(84)$38 $(27)$(13)
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 gains/(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).
8. 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:
Investment SecuritiesPostretirement Benefit PlansForeign Currency TranslationTotal AOCI
Balance at June 30, 2023$13 $67 $(12,300)$(12,220)
OCI before reclassifications (1)
(2)(3)(128)(133)
Amounts reclassified to the Consolidated Statement of Earnings (2)
(19)(19)
Net current period OCI(2)(23)(128)(153)
Less: OCI attributable to noncontrolling interests (3)(3)
Balance at March 31, 2024$11 $44 $(12,425)$(12,370)
(1)Net of tax (benefit)/expense of $0, $(3) and $40 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively. Income tax effects within foreign currency translation include impacts from items such as net investment hedge transactions.
(2)Net of tax (benefit)/expense of $0, $(3) and $0 for gains/losses on investment securities, postretirement benefit plans and foreign currency translation, respectively.
Postretirement benefit plan amounts are reclassified from AOCI into Other non-operating income, net and included in the computation of net periodic postretirement costs.
9. Commitments and Contingencies
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.
Amounts in millions of dollars except per share amounts or as otherwise specified.

12 The Procter & Gamble Company
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.
Income Tax Uncertainties
The Company is present in approximately 70 countries and over 150 taxable jurisdictions and, at any point in time, has 3040 jurisdictional audits underway at various stages of completion. We evaluate our tax positions and establish liabilities for 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 closing of statutes of limitations. 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 anticipate that over the next 12-month period, audit activity could be completed related to uncertain tax positions in multiple jurisdictions for which we have accrued existing liabilities of approximately $90, including interest and penalties.
Additional information on the Commitments and Contingencies of the Company can be found in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
10. 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 $5.2 billion as of March 31, 2024, $5.7 billion as of June 30, 2023, and $5.8 billion as of June 30, 2022.
11. 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 the ongoing program have generally ranged from $250 to $500 annually. Consistent with our historical policies for restructuring-type activities, the restructuring program charges will be funded by and included within Corporate for management and segment reporting.
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.
For the three months ended March 31, 2024, the Company incurred charges of $70 including $44 in Costs of products sold, $25 in SG&A and $1 in Other non-operating income. For the nine months ended March 31, 2024, the Company incurred charges of $252 including $154 in Costs of products sold, $93 in SG&A and $5 in Other non-operating income.
Amounts in millions of dollars except per share amounts or as otherwise specified.

The Procter & Gamble Company 13
The following table presents restructuring activity for the nine months ended March 31, 2024:
Separation CostsAsset-Related CostsOther CostsTotal
RESERVE JUNE 30, 2023$155 $ $19 $174 
Costs incurred for the six months ended December 31, 2023109 42 30 181 
Costs incurred for the three months ended March 31, 202437 11 22 70 
Costs incurred for the nine months ended March 31, 2024146 52 53 252 
Costs paid/settled for the nine months ended March 31, 2024(190)(52)(52)(294)
RESERVE MARCH 31, 2024$112 $ $19 $131 
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 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 asset removal and termination of contracts related to supply chain and overhead optimization.
Item 2.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 and 9 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 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 and localized volatility; (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 manage disruptions in credit markets or to our banking partners or changes to our credit rating; (4) 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 (including the Russia-Ukraine War) or terrorism or disease outbreaks; (5) 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; (6) 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; (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,
Amounts in millions of dollars except per share amounts or as otherwise specified.

14 The Procter & Gamble Company
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 uncertainties related to changing political and geopolitical conditions and potential implications such as exchange rate fluctuations and market contraction; (13) 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, intellectual property, labor and employment, antitrust, privacy and data protection, tax, the environment, due diligence, risk oversight, accounting and financial reporting) and to resolve new and pending matters within current estimates; (14) the ability to manage changes in applicable tax laws and regulations; (15) 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; (16) 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; (17) 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; (18) the ability to manage the uncertainties, sanctions and economic effects from the war between Russia and Ukraine; and (19) 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 II, Item 1A) of this Form 10-Q.
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 Results – Nine Months Ended March 31, 2024
Economic Conditions and Uncertainties
Results of Operations – Three and Nine Months Ended March 31, 2024
Segment Results – Three and Nine Months Ended March 31, 2024
Liquidity and Capital Resources
Measures Not Defined by U.S. GAAP
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, consisting of 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 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. 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 approximately 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

The Procter & Gamble Company 15
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 approximately 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.
The table below lists our reportable segments, including the product categories and brand composition within each segment.
Reportable SegmentsProduct Categories (Sub-Categories)Major Brands
Beauty
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
Grooming
Grooming (Appliances, Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Grooming)
Braun, Gillette, Venus
Health Care
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
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
Baby Care (Baby Wipes, Taped Diapers and Pants)
Luvs, Pampers
Feminine Care (Adult Incontinence, Feminine Care)
Always, Always Discreet, Tampax
Family Care (Paper Towels, Tissues, Toilet Paper)
Bounty, Charmin, Puffs
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 following table provides the percentage of net sales and net earnings by reportable business segment (excluding Corporate) for the three and nine months ended March 31, 2024:
Three Months Ended March 31, 2024Nine Months Ended March 31, 2024
Net SalesNet EarningsNet SalesNet Earnings
Beauty18 %16 %18 %18 %
Grooming%%%%
Health Care14 %14 %15 %15 %
Fabric & Home Care36 %35 %35 %34 %
Baby, Feminine & Family Care24 %27 %24 %24 %
Total Company100 %100 %100 %100 %
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 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.
Although the timing of the completion of this restructuring program has yet to be determined, the Company currently anticipates that these restructuring charges will be recognized in the fiscal years ending June 30, 2024 and 2025. Consistent with our historical policies for ongoing restructuring-type activities, resulting charges will be funded by and included within Corporate for segment reporting. Restructuring charges above the normal ongoing level of restructuring costs will be reported as non-core charges. For more details on the restructuring program, refer to Note 11 to the Consolidated Financial Statements.


16 The Procter & Gamble Company
Intangible Asset Impairment
During the three months ended December 31, 2023, the Company recorded a $1.3 billion before tax ($1.0 billion after tax) non-cash impairment charge, on intangible assets 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 RESULTS – Nine Months Ended March 31, 2024
The following are highlights of results for the nine months ended March 31, 2024, versus the nine months ended March 31, 2023:
Net sales increased 3% to $63.5 billion versus the prior year period. Net sales increased mid-single digits in Health Care, Fabric & Home Care and Grooming and low single digits in Beauty and 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 Baby, Feminine & Family Care and Beauty.
Net earnings were $11.8 billion, an increase of $484 million, or 4%, versus the prior year period due to the increase in net sales, partially offset by the non-cash impairment charge of $1.0 billion after taxes related to the Gillette intangible asset.
Net earnings attributable to Procter & Gamble were $11.7 billion, an increase of $473 million, or 4%, versus the prior year period.
Diluted EPS increased 5% to $4.75 due to the increase in net earnings. Core EPS, which excludes the charge for the Gillette intangible asset impairment and incremental restructuring, increased 15% to $5.19.
Operating cash flow was $14.1 billion. Adjusted free cash flow, which is defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the U.S. Tax Act, was $12.0 billion. Adjusted free cash flow productivity, which is defined as adjusted free cash flow as a percentage of net earnings excluding the Gillette intangible asset impairment charge, was 93%.
ECONOMIC CONDITIONS AND UNCERTAINTIES
Global Economic Conditions. Our products are sold in numerous countries across North America, Europe, Latin America, Asia, Australia and Africa, 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 more than 20% of our net sales in the fiscal year 2023. As such, we are exposed to and impacted by global macroeconomic factors, geopolitical tensions, U.S. and foreign government policies and foreign exchange fluctuations. We are also exposed to market risks from operating in challenging environments including unstable economic, political and social conditions, civil unrest, military conflicts, natural disasters, debt and credit issues and currency controls or fluctuations. These risks can reduce our net sales or erode our operating margins and consequently reduce our net earnings and cash flows.
Changes in Costs. Our costs are subject to fluctuations, particularly due to changes in commodity and input material prices, transportation costs, other broader inflationary impacts and our own 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 these commodities and input materials has a direct impact on our costs. Disruptions in our manufacturing, supply and distribution operations due to energy shortages, natural disasters, labor or freight constraints could also lead to increased costs. New or increased legal or regulatory requirements, along with initiatives to meet our sustainability goals, could also result in increased costs due to higher material costs and investments in facilities and equipment. 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 impact product consumption. If we are unable to manage cost impacts through pricing actions and consistent productivity improvements, it may adversely impact our net sales, gross margin, operating margin, net earnings and cash flows.
Foreign Exchange. We have significant translation and transaction exposure to the fluctuation of exchange rates. Translation exposures relate to exchange rate impacts of measuring income statements of foreign subsidiaries that do not use the U.S. dollar as their functional currency. Transaction exposures relate to 1) the impact from input costs that are denominated in a currency other than the local reporting currency and 2) the revaluation of transaction-related working capital balances denominated in currencies other than the functional currency. In the past three years, weakening of certain foreign currencies versus the U.S. dollar has resulted in significant foreign exchange impacts leading to lower net sales, net earnings and cash flows. These fluctuations have significantly impacted our historical net sales, net earnings and cash flows and could do so in the future. Certain countries that are currently experiencing significant exchange rate fluctuations include Argentina, Russia and Turkey. Increased pricing in response to certain fluctuations in foreign currency exchange rates may offset portions of the currency


The Procter & Gamble Company 17
impacts but could also have a negative impact on the consumption of our products, which would negatively affect our net sales, gross margin, operating margin, net earnings and cash flows.
Government Policies. Our net sales, gross margin, operating margin, net earnings and cash flows could be affected by changes in U.S. or foreign government legislative, regulatory or enforcement policies. For example, our net earnings and cash flows could be affected by any future legislative or regulatory changes in U.S. or non-U.S. tax policy, including changes resulting from the current work being led by the OECD/G20 Inclusive Framework focused on "Addressing the Challenges of the Digitalization of the Economy." The breadth of the OECD project extends beyond pure digital businesses and is likely to impact most large multinational businesses by both redefining jurisdictional taxation rights and establishing a 15% global minimum tax. Our net sales, gross margin, operating margin, net earnings and cash flows may also be impacted by changes in U.S. and foreign government policies related to environmental and climate change matters. Additionally, we attempt to carefully manage our debt, currency and other exposures in certain countries with currency exchange, import authorization and pricing controls, such as Argentina, Egypt and Pakistan. Further, our net sales, gross margin, operating margin, net earnings and cash flows could be affected by changes to international trade agreements in North America and elsewhere. Changes in government policies in the above areas might cause an increase or decrease in our net sales, gross margin, operating margin, net earnings and cash flows.
Russia-Ukraine War. The war between Russia and Ukraine has negatively impacted our operations. Our Ukraine business includes two manufacturing sites and accounted for less than 1% of consolidated net sales and consolidated net earnings in the fiscal year ended June 30, 2023. Net assets of our Ukraine business accounted for less than 1% of consolidated net assets as of March 31, 2024. Our Russia business includes two manufacturing sites. Beginning in March 2022, the Company reduced its product portfolio, discontinued new capital investments and suspended media, advertising and promotional activity in Russia. The Russia business accounted for approximately 2% of consolidated net sales and consolidated net earnings in the fiscal year ended June 30, 2023. Net assets of our Russia business accounted for less than 2% of consolidated net assets as of March 31, 2024.
Future impacts to the Company are difficult to predict due to the high level of uncertainty related to the war’s duration, evolution and ultimate resolution. Within Ukraine, there is a possibility of physical damage and destruction of our two manufacturing facilities. We may not be able to operate our manufacturing sites and source raw materials from our suppliers or ship finished products to our customers.
Within Russia, we may not be able to continue our reduced operations at current levels due to sanctions and counter-sanctions, monetary, currency or payment controls, legislative restrictions or policies, restrictions on access to financial institutions and supply and transportation challenges. Our suppliers, distributors and retail customers are also impacted by the war and their ability to successfully maintain their operations could also impact our operations or negatively impact the sales of our products.
More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation escalate beyond its current scope, including, among other potential impacts, economic recessions in certain neighboring countries or globally due to inflationary pressures and supply chain cost increases or the geographic proximity of the war relative to the rest of Europe.
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, 2023.


18 The Procter & Gamble Company
RESULTS OF OPERATIONS – Three Months Ended March 31, 2024
The following discussion provides a review of results for the three months ended March 31, 2024, versus the three months ended March 31, 2023.
Three Months Ended March 31
Amounts in millions, except per share amounts20242023% Chg
Net sales$20,195$20,0681%
Operating income4,4604,2485%
Earnings before income taxes4,5924,2887%
Net earnings3,7813,42410%
Net earnings attributable to Procter & Gamble3,7543,39711%
Diluted net earnings per common share1.521.3711%
Core net earnings per common share1.521.3711%
Three Months Ended March 31
COMPARISONS AS A PERCENTAGE OF NET SALES20242023Basis Pt Chg
Gross margin51.2 %48.2 %300 
Selling, general & administrative expense29.1 %27.0 %210 
Operating income22.1 %21.2 %90 
Earnings before income taxes22.7 %21.4 %130 
Net earnings18.7 %17.1 %160 
Net earnings attributable to Procter & Gamble18.6 %16.9 %170 
Net Sales
Net sales for the quarter increased 1% to $20.2 billion. The increase in net sales was due to increased pricing of 3%, partially offset by unfavorable foreign exchange of 2%. Unit volume and mix had a neutral impact on net sales growth. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 3%.
The following table summarizes key drivers of the change in net sales by reportable segment:
Net Sales Change Drivers 2024 vs. 2023 (Three Months Ended March 31) (1)
Volume with Acquisitions & DivestituresVolume Excluding Acquisitions & DivestituresForeign ExchangePriceMix
Other (2)
Net Sales Growth
Beauty%%(3)%%(1)%%%
Grooming%%(7)%10 %(1)%(1)%%
Health Care(4)%(4)%(1)%%%— %%
Fabric & Home Care%%(1)%%— %— %%
Baby, Feminine & Family Care(3)%(3)%(2)%%%— %(2)%
Total Company % %(2)%3 %