P&G's strategy is centered on delivering value creation through five integrated choices, including superiority across product, packaging, brand communication, retail execution, and value, alongside ongoing productivity improvements. This approach aims to fuel investments in R&D and marketing to strengthen brand superiority and achieve balanced top- and bottom-line growth.

The Company completed a limited market portfolio restructuring in fiscal year 2024, involving the substantial liquidation of operations in Argentina, incurring $801 million in after-tax charges. Additionally, P&G expects to receive approximately $500 million in cash proceeds and record an after-tax gain of $250 million to $300 million in Q3 FY26 from the non-renewal of the Glad joint venture agreement.

Despite overall net sales increasing only 0.3%, organic sales, which exclude the impact of acquisitions, divestitures, and foreign exchange, grew by 2% in fiscal year 2025. This organic growth was observed as low single digits across all Sector Business Units, indicating underlying business strength.

Management's focus on productivity yielded substantial benefits, with manufacturing productivity savings contributing 180 basis points to gross margin and productivity-driven cost savings delivering 140 basis points of benefit to SG&A as a percentage of net sales. These efforts were key drivers behind the 220 basis point increase in operating margin to 24.3%.

In June 2025, the Company announced a new portfolio and productivity plan, aiming to streamline its cost structure and organization. This plan includes a significant reduction of up to 7,000 non-manufacturing overhead personnel by the end of fiscal year 2027, with expected restructuring costs of $1.5 billion to $2.0 billion over two years.

In response to the ongoing war between Russia and Ukraine, management proactively reduced its product portfolio, discontinued new capital investments, and suspended media, advertising, and promotional activity in Russia starting March 2022. This demonstrates management's decisive action to mitigate risks in volatile geopolitical environments.

The Company highlights ongoing risks from uncertain economic and social conditions, including slowdowns, recessions, and inflationary pressures, which may reduce demand for products or cause financial hardship for suppliers and customers. Such conditions could adversely impact sales, earnings, and cash flows.

Changing political and geopolitical conditions, including the ongoing war between Russia and Ukraine and potential new tariffs or trade barriers, are identified as difficult-to-predict risks. These factors could lead to market contraction, disruptions in operations, and negative impacts on financial results and cash flows.

The Company continues to face risks from fluctuations in commodity prices (e.g., petroleum-derived materials, pulp), raw and packaging material costs, and transportation expenses. These cost pressures, if not effectively managed through pricing actions and productivity, could adversely impact results of operations and cash flows.

P&G operates in highly competitive markets against a broad range of global and local competitors, including private-label brands. Despite this, the Company states it is 'well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position,' leveraging its integrated strategy and focus on superiority.

While the Health Care segment saw a 0.2 point increase in global market share and Fabric & Home Care increased by 0.1 points, the Beauty segment's global market share decreased by 0.3 points, Grooming by 0.1 points, and Baby, Feminine & Family Care by 0.2 points. This indicates varied competitive dynamics across P&G's diverse portfolio.

Net sales in fiscal year 2025 were driven by a 1% increase due to pricing actions, demonstrating some ability to pass on costs. This was crucial in offsetting negative impacts from unfavorable product mix, higher commodity costs, and foreign exchange, which pressured gross margins.

The Company achieved substantial operational efficiencies, with productivity-driven cost savings contributing 140 basis points of benefit to SG&A as a percentage of net sales. This helped reduce total SG&A by 80 basis points to 26.9% of net sales, despite wage inflation headwinds.

Gross margin declined by 20 basis points to 51.2% of net sales, primarily due to unfavorable product mix, higher commodity costs, and foreign exchange impacts. However, this was partially offset by 180 basis points of manufacturing productivity savings, highlighting ongoing efforts to manage cost structure.

A new portfolio and productivity plan, announced in June 2025, aims to further streamline the Company's cost structure, including a planned reduction of up to 7,000 non-manufacturing overhead personnel by the end of fiscal year 2027. This indicates a continued strategic focus on operational efficiency and workforce optimization.

Research and Development (R&D) costs increased to $2.1 billion in fiscal year 2025 from $2.0 billion in 2024, reflecting the Company's commitment to inventing new categories or products and innovating existing ones. This investment is crucial for meeting evolving consumer needs and preferences.

P&G's strategic focus includes 'constructive disruption' by leveraging new technologies, such as artificial intelligence, to create more value. This indicates an ongoing effort to adopt emerging technologies to enhance competitive position and operational effectiveness.

The Company has declared increasing digital acumen as a key focus area to drive consumer and customer preference, reduce costs, and enable rapid and efficient decision-making. This highlights efforts in digital transformation, including leveraging e-commerce and social commerce channels.

P&G has maintained a strong commitment to shareholder returns, paying dividends for 135 consecutive years and increasing them for 69 consecutive years, with a 5% annual compound average rate over the past decade. In fiscal year 2025, the Company purchased $6.5 billion in shares under its repurchase program, demonstrating confidence in its financial position.

Net investing activities used $3.818 billion of cash in fiscal year 2025, primarily due to capital expenditures, which increased to $3.773 billion from $3.322 billion in the prior year. This reflects ongoing investment in property, plant, and equipment to support business operations and growth.

The Company's financial condition is described as high quality, with substantial cash generation from operations and ready access to capital markets. It maintains strong short- and long-term debt ratings (P-1/Aa3 from Moody's, A-1+/AA- from S&P) and undrawn credit facilities, indicating robust liquidity to fund operations and discretionary investments.

Environmental sustainability is a core part of P&G's business strategy, focusing on designing and manufacturing more sustainable products and reducing its environmental footprint. The Company announced a 2040 net zero ambition and has a Climate Transition Action Plan to reduce greenhouse gas emissions across scopes 1, 2, and 3.

P&G's environmental ambitions include purchasing renewable electricity for operations, reducing virgin petroleum-based plastic in packaging, and designing more recyclable or reusable consumer packaging. While progress has been made, scalable infrastructure and cost-effective solutions are still needed to fully achieve some stated goals.

The Board of Directors oversees cybersecurity risks, and the Compensation and Leadership Development Committee provides oversight on talent strategy, including equality and inclusion. P&G views its employees as a key competitive advantage and aims to foster an inclusive work environment, reflecting a commitment to social responsibility and governance practices.

With over half of its sales generated outside the United States and operations in about 70 countries, P&G is significantly exposed to global macroeconomic factors, geopolitical tensions, and government policies. These risks include economic slowdowns, inflation, social unrest, and trade policy changes, which can negatively impact financial results.

The Company experienced significant foreign exchange impacts in fiscal year 2025, with unfavorable foreign exchange reducing overall net sales by 1% and impacting net earnings by approximately $45 million. The weakening of certain foreign currencies against the U.S. dollar continues to pose a risk to sales, earnings, and cash flows.

The consumer products industry faces ongoing competitive pressures and emerging retail trends, including growing consumer preference for online shopping and the rise of hard discounter channels. P&G's strategy emphasizes increasing digital acumen and developing next-level supply chain capabilities to adapt to these changing market dynamics.