EPS of $1.58 decreased by 12.7% from previous year
Gross margin of 52.1%
Net income of 3.96B
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The Procter & Gamble Company (PRG.DE) QQ1 2025 Results — Resilient Volume, Margin Expansion, and Robust Free Cash Flow in a Stabilizing Macro
Executive Summary
The Procter & Gamble Company reported QQ1 2025 revenue of USD 21.737 billion with a gross margin of 52.06% and an operating margin of 26.67%, reflecting continued pricing discipline and productivity gains in a backdrop of modest top-line growth. Net income was USD 3.959 billion, translating to a net margin of 18.21% and earnings per share (EPS) of USD 1.65 (diluted USD 1.58). Year-over-year revenue declined by 0.6%, while quarter-on-quarter revenue advanced by 5.87%, underscoring a re-acceleration in demand toward the end of QQ1 after a softer prior-year comparison. Operating income rose modestly year-over-year by 0.5% but surged approximately 49% quarter-over-quarter, driven by operating leverage and ongoing cost discipline. Free cash flow stood at USD 3.309 billion, and net cash provided by operating activities was USD 4.302 billion, highlighting strong cash generation that supports a durable dividend policy and share repurchases. Balance sheet remains robust, with total assets of USD 126.5 billion and total stockholders’ equity of USD 51.84 billion; cash and equivalents of USD 12.16 billion and net debt of USD 23.998 billion, contributing to a solid liquidity position and a conservative leverage profile (debt-to-capital around 0.411). The company continues to benefit from a diversified, resilient portfolio across Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care, enabling defensive growth in a mixed macro environment. Given the cash generation profile and a history of steady dividends, the investment thesis remains centered on stable compounding of earnings, capital returns, and ongoing productivity programs, with upside potential from pricing, category expansion, and accelerated efficiency initiatives.
Revenue and profitability metrics (USD, QQ1 2025):
- Revenue: USD 21.737B; YoY change: -0.61%; QoQ change: +5.87%
- Gross Profit: USD 11.316B; YoY change: -0.47%; QoQ change: +11.12%
- Operating Income: USD 5.797B; YoY change: +0.52%; QoQ change: +49.21%
- Net Income: USD 3.959B; YoY change: -12.43%; QoQ change: +26.20%
- EPS (diluted): USD 1.58; EPS (basic): USD 1.65; YoY EPS change: -12.70%; QoQ EPS change: +26.92%
- EBITDA: USD 6.182B; EBITDAMargin: 28.44% of revenue; Operating Margin: 26.67%; Net Margin: 18.21%
- Free Cash Flow: USD 3.309B; Operating Cash Flow: USD 4.302B; Cash Conversion: solid given working capital movements (change in working capital -USD 1.496B).
- Balance sheet signals: Total assets USD 126.482B; Total liabilities USD 74.341B; Total equity USD 51.841B; Cash & equivalents USD 12.156B; Net debt USD 23.998B; Debt-to-capital 0.411; Interest cover approximately 24.36x.
- Valuation indicators (where applicable): Price-to-earnings around 25.8x, Price-to-sales ~18.8x, Dividend yield ~0.60% (as of QQ1 2025 data).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
21.74B
-0.61%
5.87%
Gross Profit
11.32B
-0.47%
11.12%
Operating Income
5.80B
0.52%
49.21%
Net Income
3.96B
-12.43%
26.20%
EPS
1.65
-12.70%
26.92%
Key Financial Ratios
currentRatio
0.75
grossProfitMargin
52.1%
operatingProfitMargin
26.7%
netProfitMargin
18.2%
returnOnAssets
3.13%
returnOnEquity
7.64%
debtEquityRatio
0.7
operatingCashFlowPerShare
$1.83
freeCashFlowPerShare
$1.4
dividendPayoutRatio
61.8%
priceToBookRatio
7.87
priceEarningsRatio
25.77
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings call transcript data not provided in the supplied dataset. As a result, management quotes and theme-by-theme commentary are not included here. Typical themes in Procter & Gamble calls historically center on: pricing execution and mix, ongoing productivity and cost-reduction initiatives, brand portfolio optimization, supply chain resilience, and cash flow allocation (dividends vs. buybacks). When transcript data is available, we would group quotes by themes such as strategy, operations, and market conditions with context and significance.
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Forward Guidance
No explicit forward guidance was provided in the supplied data. In the current environment, a reasonable base case for P&G would assume continued moderate organic revenue growth supported by pricing and mix, ongoing productivity programs, and single-digit improvements in operating margins as cost savings accrue. Key monitorables include: (1) organic revenue growth and category performance by segment; (2) pace of margin expansion from efficiency programs and input costs; (3) cadence of free cash flow generation and working capital management; (4) currency headwinds/benefits; (5) cash returned to shareholders via dividends and buybacks. Investors should watch for updated guidance in the next quarterly release or 10-Q/10-K filings for explicit targets on revenue, operating margins, and FCF trajectory.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PRG.DE Focus
52.06%
26.70%
7.64%
25.77%
JNJ.DE
66.40%
28.80%
14.10%
9.07%
CCC3.DE
62.60%
32.90%
12.70%
22.73%
MDO.DE
56.00%
44.50%
-54.10%
29.89%
PEP.DE
55.80%
14.40%
9.97%
27.20%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The investment thesis remains favorable for a core, defensive holding with predictable cash flows and a longstanding track record of capital returns. While QQ1 2025 shows a modest revenue YoY decline, the acceleration in operating income QoQ and strong free cash flow generation underscore the company’s ability to weather volatility and fund dividends and buybacks. Relative to peers, P&G trades at a premium to earnings and high-quality cash flows justify the multiple, but investors should monitor gross/margin trajectory, currency effects, and continued productivity gains. In a stable to moderately growing scenario, P&G offers reliable downside protection with upside potential from pricing power, efficiency programs, and expanding margins. Competitive benchmarks suggest P&G should continue to outperform in stabilized markets, but valuation relative to growth-oriented peers warrants a cautious but constructive stance.
Key Investment Factors
Growth Potential
Moderate but durable growth potential from a broad, well-known brand portfolio across essential consumer categories. Sustained pricing power and ongoing productivity initiatives can support mid-single-digit earnings growth and resilient organic revenue growth over the next 1-2 years. Free cash flow generation remains a key driver for dividend growth and capital returns.
Profitability Risk
Key risks include commodity and input cost volatility, currency movements (USD strength vs. other currencies), macroeconomic slowdowns affecting consumer discretionary spend even within staples, aggressive competitive dynamics in key categories, and potential regulatory and geopolitical disruptions impacting supply chain and pricing.
Financial Position
Strong balance sheet with USD 12.16B in cash; total assets USD 126.5B; net debt USD 23.998B and debt-to-capital of 0.411. The company generates robust operating cash flow (USD 4.302B) and free cash flow (USD 3.309B), supporting a stable dividend payout (EPS-based payout around 61.8%) and buybacks. Liquidity and profitability metrics remain solid for a consumer staples leader.
SWOT Analysis
Strengths
Diversified, globally recognized brand portfolio across multiple essential consumer categories
Resilient demand profile in consumer staples with pricing power and persistent brand loyalty