The Procter & Gamble Company Q2 FY2026 earnings call

• Strong innovation supported by sharper consumer communication and retail execution, with examples like Greater China Baby Care's Pampers Prestige leveraging silk for superior baby care, and Mexico's Downey Intense with high-intensity perfume. - Long-term reinvention focused on leveraging data, technology, and retail integration to create a CPG company of the future, including building consumer connectivity, innovation capabilities, and integrating with retail partners. - Emphasis on executing strategies across all activity systems, with a focus on consumer-relevant brand building and superiority.

Organic sales were in line with the prior year. Volume was down one point, pricing up a point, and mix was flat for the quarter. Seven of 10 product categories held or grew organic sales. Hair Care grew mid-single digits, Skin and personal care, personal health care, home care, and oral care were each up low single digits. Grooming and Fabric Care were each in line with a year ago, Baby care and feminine care were each down low singles, and family care was down approximately 10%, primarily due to base period dynamics. Organic sales excluding Family Care were up 1% for the quarter. Seven of 10 regions grew organic sales, Focus markets were down 1%. Organic sales in North America were down 2%. Volume was down three points, including a roughly two-point headwind from base period trade inventory impacts. Pricemix added a point of growth. European focused market organic sales were up 1%, Strong growth in France, Spain, and Italy largely offset by a softer period in Germany. Greater China organic sales grew 3% another quarter of growth in what remains a challenging consumer environment, Pampers and SK-II led the growth, each up mid-teens or more. Enterprise markets grew mid-single digits for the quarter, Latin America organic sales were up 8%, with solid growth across Mexico, Brazil, and the balance of smaller markets. In the region. Organic sales in the Europe enterprise market region were up 6% versus prior year, and the Asia Pacific, Middle East, Africa enterprise region grew 2%. Global Exhibit market share was down 20 basis points. 25 of our top 50 category country combinations held or grew share for the quarter.

For fiscal '26, expects organic sales growth of in line to plus 4%, core EPS growth of in line to plus 4%, adjusted free cash flow productivity in the range of 85% to 90%, and to return roughly $15 billion of cash to shareholders. Maintains guidance ranges despite softer consumer markets and other challenges, with expectations of stronger growth in the second half.

Factors such as softer consumer markets, aggressive competition, dynamic geopolitical landscape, potential supply chain disruptions, and store closures could materially impact actual results differing from projections.

Q: Peter Galbo asks about returning to lower half of algorithm?

A: Andre says US structurally could grow 2-3%, but need to recover share, with family care, laundry showing progress.

Q: Kevin Grundy asks about portfolio strategy?

A: Shailesh says play in daily use categories where performance matters, disciplined review of segments, look at higher growth segments and right price points, build strength in health and beauty.

Q: Peter Grom asks about US category growth and inventory?

A: Andre says back half expects 2% category growth, no significant inventory build expected, slight headwind from inventory efficiency.

Q: Filippo Falorni asks about margins and intervention sizing?

A: Andre says won't give margin guidance, investment in product, media, in-store visibility, mix varies by category.

Q: Bonnie Herzog asks about Grooming segment?

A: Andre says margin impact from volume slowdown, phasing of initiatives, second half expects modest acceleration. Shailesh says opportunity in Venus, appliances, and improving shopping experience in US.

Q: Kaumil Gajrawala asks about usage and volumes?

A: Andre says usage volume growth slow, focus on improving value proposition for more households, 2% value growth in US half two assumes slow volume.

Q: Andrea Teixeira asks about share and productivity reinvestment?

A: Andre says objective to leave year with share growth, balance between top line and bottom line depends on assessment of innovation and programs. Shailesh says strengthening propositions improves promotion elasticities.

Q: Olivia Tong asks about margins and investment levels?

A: Andre says confident in productivity, depends on top-line growth and investment conviction. Shailesh says productivity as fuel for growth, growth for EPS.

Q: Robert Moskow asks about promotion data?

A: Andre says promotion volume increasing, objective to grow categories, focus on generating trial. Shailesh says strengthening propositions less dependent on promotions but balance competitiveness.

Q: Edward Lewis asks about regional mix?

A: Shailesh says focus on US growth, but big opportunities outside US like Latin America, India, China, with deliberate portfolio choices to play to future growth. Andre says enterprise markets margin structure funds expansion.

Q: Michael Lavery asks about share and value?

A: Shailesh says combination of portfolio building, strengthening propositions like Luvs and Tide Simply, addressing growth through value by improving propositions without price changes.