PG Q2 Deep Dive: Restructuring and Consumer Shifts Define Outlook

August 12, 2025 at 23:13 PM EDT

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Consumer products behemoth Proctor & Gamble (NYSE: PG) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 1.7% year on year to $20.89 billion. Its non-GAAP profit of $1.48 per share was 4.1% above analysts’ consensus estimates.

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Procter & Gamble (PG) Q2 CY2025 Highlights:

Revenue: $20.89 billion vs analyst estimates of $20.84 billion (1.7% year-on-year growth, in line)
Adjusted EPS: $1.48 vs analyst estimates of $1.42 (4.1% beat)
Adjusted EBITDA: $5.32 billion vs analyst estimates of $5.10 billion (25.5% margin, 4.2% beat)
Adjusted EPS guidance for the upcoming financial year 2026 is $6.96 at the midpoint, missing analyst estimates by 0.5%
Operating Margin: 20.8%, up from 19.3% in the same quarter last year
Organic Revenue rose 2% year on year
Sales Volumes were flat year on year (1% in the same quarter last year)
Market Capitalization: $363.3 billion

StockStory’s Take

Procter & Gamble’s second quarter results met Wall Street’s revenue expectations, but the market responded negatively, reflecting uncertainty around the company’s growth trajectory. Management attributed the flat sales volumes to cautious consumer behavior and a slower category growth environment, particularly in North America and Europe. CEO Jon Moeller specifically highlighted ongoing inventory reductions at retailers and pockets of lost brand superiority in select categories as key challenges. CFO Andre Schulten noted, “Where we have superiority in the Olay lineup like Super Serum, we bring in 65% of business via new users,” emphasizing the need for ongoing innovation to regain momentum.

Looking ahead, Procter & Gamble’s guidance reflects a cautious outlook as management expects continued volatility in consumer demand, tariffs, and overall category growth. The company’s two-year restructuring program aims to streamline the portfolio, enhance supply chain efficiency, and redesign the organization for greater agility. Schulten cautioned that the wide guidance range was necessary due to unpredictable macroeconomic and geopolitical factors, saying, “There’s a level of baseline uncertainty that we reflect in the guidance range.” Management remains focused on creating internal growth drivers through innovation and operational improvements.

Key Insights from Management’s Remarks

Management pointed to broad-based category performance, ongoing innovation, and the launch of a significant restructuring program as central themes in the quarter.

Leadership transition announced: Jon Moeller will transition to Executive Chairman in January 2026, with Shailesh Jejurikar named as the incoming CEO. Jejurikar’s deep operational experience and prior leadership of key business units were emphasized as strengths for the next growth phase.
Restructuring program launched: Procter & Gamble outlined a two-year restructuring initiative targeting up to 7,000 non-manufacturing job reductions, portfolio simplification, and supply chain optimization. The program is designed to generate financial headroom for reinvestment in innovation and marketing.
Category innovation highlighted: Management discussed new launches such as Tide evo, Pampers Platinum Protection, and Swiffer Sweep and Mop Deluxe, each tailored to capture new consumer segments and address category dissatisfaction. Early results in test markets, including strong incrementality for Tide evo, were noted as promising.
Consumer behavior shifts: Executives described heightened consumer caution and a trend toward value-seeking, including increased trade-down to lower-priced brands and pack sizes. Retailer inventory reductions and channel shifts toward e-commerce and club stores further impacted sell-in and category growth rates.
Geopolitical and cost headwinds: Tariffs, volatile commodity costs, and fluctuating foreign exchange rates were flagged as ongoing challenges. Management expects tariffs alone to be a significant drag on upcoming earnings, with mitigation efforts including pricing and supply chain adjustments.

Drivers of Future Performance

Procter & Gamble expects macroeconomic volatility, tariff impacts, and consumer demand uncertainty to shape its near-term guidance and strategic focus.

Category growth remains uncertain: Management noted that category growth rates have decelerated, especially in North America and Europe, and the guidance assumes a possible further slowdown. The company aims to grow slightly ahead of underlying market rates by targeting underserved consumer segments.
Tariffs and pricing actions: The company anticipates approximately $1 billion in tariff-related cost headwinds, with about a quarter of U.S. SKUs affected. Management plans targeted mid-single-digit price increases on impacted products, combined with innovation, but recognizes that pricing may need to adjust as trade policies evolve.
Restructuring to drive efficiency: The ongoing restructuring is expected to deliver cost savings, enabling reinvestment in product innovation and marketing. Key elements include portfolio rationalization, supply chain rightsizing, and a more agile organizational structure, with most of the savings anticipated in the second half of the year.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will monitor (1) progress on restructuring execution and realization of cost savings, (2) the pace of recovery in category growth rates, especially in North America and China, and (3) the consumer response to new product innovations like Tide evo and Pampers Platinum Protection. We will also track the company’s ability to offset tariff and input cost headwinds through pricing and supply chain initiatives.

Procter & Gamble currently trades at $155.08, down from $157.03 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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