The Procter & Gamble Company (PG) Earnings Call Transcript & Summary

P&G would like to remind you that today's discussion will include a number of forward-looking statements. If you will refer to P&G's most recent 10-K, 10-Q and 8-K reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections. Additionally, the company has posted on its Investor Relations website, www.pginvestor.com, a full reconciliation of non-GAAP and other financial measures.

Hello. Welcome to our 2024 Investor Day and to Cincinnati. I don't think we've ever done one of these where it hasn't snowed, so at least that didn't disappoint us today. I also want to welcome all of you who are joining on the webcast. We're happy you can join for this presentation, and we're looking forward to talking with many of you at the reception this evening. I'm going to be your emcee for the afternoon. This is our agenda for this afternoon and evening. I'll spend some time talking through our strategy and our focus areas. Andre will take us through recent results and opportunities ahead. I'll come back to kick off our section on superiority in our Supply Chain 3.0 efforts. After a short break, we'll hear from each one of our sector business unit leaders on the progress they are making on their respective businesses, and we'll close with your questions. Later this evening, you'll have an opportunity to talk with nearly all of our leadership team and see some compelling -- hopefully, compelling product innovations and demos at the booth event. I'm going to begin with a reminder of who P&G, our company, your company is. P&G just celebrated 187 years of being in business. From our humble beginnings, not far from this very spot, today, we serve about 5 billion people around the world every year. Our products are sold in about 180 countries. We have operations, headquarters, manufacturing plants, our sales offices in about 70 countries with about 108,000 employees. Last fiscal year, we generated $84 billion in sales, $14.9 billion in net earnings and $19.8 billion in operating cash flow. Everything we do at P&G begins with the consumer and delighting them at every touch point. While this sounds fairly straightforward, it's actually difficult in practice because it requires that we genuinely know the people we serve and want to serve, that we understand their lives and how we can help improve them, that we penetrate their articulated and unarticulated needs, that were in their homes, listening and understanding and that we have empathy for them. With this deep consumer understanding in mind, our strategy is fundamentally about service to consumers and to customers. Our strategy, as most of you know, is built on 5 integrated choices: portfolio, superiority, productivity, constructive disruption and an empowered, agile and accountable organization. These strategic choices reinforce and build on each other. When executed well, they grow markets, creating business, which, in turn, grows our share, sales, household penetration and profit. Importantly, this strategy is inherently dynamic that adapts to the changing needs of consumers, customers and society that demands that we not sit still. While we should expect the volatile consumer and macro dynamics we've been experiencing to continue, our job every day is to get up, put both feet on the floor, examine what's going on around us and then work to delight consumers, customers, employees, society and shareowners in that context. We believe our best path forward remains to double down on this dynamic strategy, operating with a focus on driving market growth, creating versus taking business to deliver balanced top and bottom line growth and value creation. We call this an integrated growth strategy for a reason. Each part of the strategy needs to be delivered. It's not a menu to pick and choose from. There's nothing on this slide that isn't incredibly important. The real advantage comes in being able to do all these things at the same time. You have a team of leaders you'll be meeting today who are doing exactly that not in every instance or every day, but more often than not. This is very hard to replicate. Let's step through this integrated strategy. P&G operates in 10 daily use categories where performance drives brand choice. If you're going to compete in categories where performance drives brand choice, you need to be superior to any and all other options. We're driving superiority across 5 vectors: product, package, brand communication, retail execution and value. No one vector of superiority can carry the day by itself. It's all 5 working together. Superior performing products and superior packages provide noticeably better benefits to consumers. They become aware of and learn about these products through superior brand communication. This comes to life in stores and online with superior retail execution and delivers superior consumer value at a price that is considered worth it across each price tier where we compete. We're focused on driving Irresistible Superiority in each of our categories to attract users and help them more effectively tackle consumer jobs to be done. When done well again across all 5 vectors, superiority grows markets and our share in them, jointly creating value with our retail partners. We look at superiority as a never-ending challenge and a never-ending opportunity. And we invest raising the bar in our superiority standards in response to consumer needs and changes in our industry. This ongoing need to invest to strengthen our offerings across every aspect of superiority, the need to mitigate cost and currency challenges and the need to expand margins to generate cash requires a commitment to productivity in everything we do. Productivity is more than cost cutting. It's a more efficient way of operating in service to consumers and customers every day. P&G operates in a highly competitive industry in an increasingly volatile and dynamic world. Success requires a mindset of constructive disruption, a willingness to change, adapt and create new trends and technologies that will shape P&G and our industry for the future. We've designed and continue to refine and strengthen P&G's organization structure so that it enables P&G people to be fully empowered, agile, accountable, focused on business outcomes designed to deliver the greatest value. Now there are 4 areas where we're putting additional focus to strengthen the execution of this strategy. First, we're strengthening our supply chain by driving improved capacity planning, greater supply agility, flexibility, data transparency, scale and resilience, all the way up and down the supply chain, inclusive of our retail partners. Second, we're improving the environmental sustainability profile of our brands without compromising performance. Sacrificing performance for environmental sustainability does not delight consumers and does nothing to create a more sustainable business or planet. We're developing offerings that are both superior and sustainable. The third focus area is digital acumen. We're leveraging relevant data and digitization to delight consumers and customers, strengthen innovation processes, streamline the supply chain, increase quality, improve decision-making and drive productivity. The fourth focus area is a superior employee value equation for all employees, inclusive of all genders, races, ethnicities, sexual orientations, ages and abilities for all roles to ensure we continue to attract, develop and retain the best and broadest pool of talent available to best serve an increasingly diverse set of consumers. So that's our integrated strategy in our 4 focus areas. Here's where people sometimes ask me something to the effect of, "Jon, you've said the world is changing very quickly. Shouldn't you be changing your strategy?" The simple answer, in my view is, no. And let me explain. As I said earlier, our strategy is not static. It's dynamic because it's all relative to competition. It's relevant in a rapidly changing retail landscape. It's relevant in a changing and different and difficult political context. It does not imply stasis. It implies dynamism. It's been 6 years since we've had each element of our strategy in place. Those 6 years are characterized by 4 very different time periods with very different dynamics from a macro standpoint and from a company and consumer standpoint: pre-COVID, during COVID, the significant inflation and pricing period and recently a period that's been characterized by significant geopolitical tensions and post-COVID, post-inflation economic pressures. Here are our results over those 6 years during 4 very different time periods. Organic sales growth, plus 5, plus 6, plus 6, plus 7, plus 7, plus 4. That's a $17 billion increase in annual sales all-in, including FX headwinds. That $17 billion puts us at the 87th percentile of the S&P 500 in terms of absolute dollar growth so not just within our industry, but across all industries. It represents 40% sales growth over that period. Profit growth of $5 billion over that period of time. That puts us in the 93rd percentile of the S&P 500 and represents growth of 60% on the bottom line, again, including FX headwinds. Growth won't always come in a straight line. We measure progress in fiscal years, not quarters. Our results show this is a strategy that will serve us well in good times and bad. Another way to answer if the strategy should change is to look forward. If we knew we were heading into a very strong economic environment, will we want products that were superior across product, package, communication, go-to-market and value? I think so. And if we knew instead that we are headed into a very difficult time, wouldn't we want products that provide superior delight to consumers? Yes. So if you just look at that element, there's absolutely no need to change that. The need is to execute. Would we want productivity to fuel investment in that? In good times, yes, and in bad times, even more so. Would you want an efficient, agile, accountable organization in good times? I think so. Bad times, again, even more so. Our job is to ensure our strategy is being executed effectively in a fast-changing world, meeting the evolving needs of consumers and customers and other constituents. But we're not going to change the core principles. They've been battle tested. This strategy closely resembles the strategy the company utilized as it created and nurtured this business for 187 years. It's how this company has succeeded and thrived for generations, focused squarely on consumers, our North Star, and understanding and serving them. It's our purpose to provide superior branded products that delight the world's consumers and deliver leadership levels of value creation. When we do this well, consumers are delighted, we create value for our customers, employees, society and importantly, shareowners alike. With that, I'm going to turn it over to Andre.

Thank you, Jon. Good afternoon, everyone. As Jon said, our integrated strategy and the choices that we make to execute are aimed at delivering consistent, sustainable and balanced growth and value creation over the mid and over the long term. That's how we define winning. As the market leader in most of our categories, our job is to grow and drive market growth and thereby growing our business ahead of the underlying market as we frequently talk about. This is the foundation of our long-term growth algorithm. And that should deliver organic sales growth modestly ahead of the underlying growth of the markets in which we compete. We are targeting long-term core earnings growth per share in the mid- to high single digits, which will require annual margin expansion of 50 to 70 basis points each year to drive top line results and to enable sufficient investment. This range reflects our intention to maintain strong investment in the business to support that long-term top and bottom line growth momentum. We expect to turn these earnings into strong free cash flow generation. And our free cash flow productivity target's 90% or higher. And our priorities for cash utilization, I think, are well understood: first, fully fund the business; secondly, maintain our long track record of dividend payment and increases; third, fund any strategic acquisitions if we can create value that way; and finally, we will return remaining cash to shareowners via share repurchase. Consistent, sustainable, balanced growth and value creation. Of course, given everything that's going on, volatility in currencies, commodities, economies, geopolitical tensions, not every year will look like that growth algorithm. But if you look over a period of 3 to 5 years, we expect the growth rates across each of these metrics to resemble algorithm. Organic sales growth and bottom line. As Jon shared, we've delivered strong results over the past 6 years pre-COVID, through COVID, through the inflationary cycle that we've seen and during a period of heightened geopolitical unrest. Organic sales growth, averaging 6%. Core EPS growth over that period has been averaging at 8%. We've delivered 12% core EPS on a constant currency basis. And the strong top and bottom line performance places us among the top in our industry with a core operating profit margin approaching 24% last year. We borrow at some of the most favorable rates in our industry, and we have a tax rate that is among the lowest in the industry. You put all that together, this is yielding a core net earnings margin among the highest in our industry at 19.4% last fiscal year. We've averaged 103% adjusted free cash flow productivity over the last 6 years. The high cash flow productivity has enabled us to continue our strong track record of returning cash to shareowners. And we've increased the dividend for now 68 consecutive years. And we've paid a dividend for 134 consecutive years since the company incorporation in [ 1890 ]. In the last 6 years, we've returned $96 billion to shareowners through dividends and through share repurchase. We share these longer-term results to demonstrate our commitment to long-term balanced growth, to creating value for our shareowners and to a strategy just as relevant now as it was when we first outlined it here in 2018. More recently, we've met or exceeded each of our initial guidance metrics last fiscal year, organic sales growth, core EPS growth, cash, despite a number of unforeseen headwinds that hit us since the beginning of the fiscal year. Over the last 4 quarters, top line growth has been slower as we reported against a stronger base period. Inflation-driven pricing is annualizing in the market and as market and brand dynamics in a few regions created headwinds. Well if you step back, 85% of the business made up of North America, Europe-focused markets, Asia Pacific-focused markets, Europe enterprise and Latin America have been performing well. Combined, these 5 regions have averaged 4.8% organic sales growth, including 3.7% growth in our most recent quarter. In the remaining 15% of the business comprised of Greater China and Asia, Middle East, Africa region, it has been more difficult. Organic sales growth were down on average about 7.5% over the last 4 quarters. The challenges in these regions are well documented, and we've talked about them frequently: a very soft consumer market in China with some brand-specific challenges on SK-II, the ripple effects of the conflict in the Middle East combined with cumulative impact of inflation affecting markets across Asia, Middle East and Africa. A portion of these challenges are market-driven, and most of these market-level dynamics will be largely in our base period starting next calendar year. But regardless of this, our job is to take action and improve the performance in that 15% of the business now. So we're improving trade programs with distributor partners in China or we're strengthening superiority messages in our advertising on brands like Fairy dishwashing liquid in markets like Saudi Arabia. We're communicating superior and holistic value of Gillette Guard in India. These are just a few examples how the organization is strengthening the business despite those headwinds. We expect the 85%, so the vast majority of the business, will continue to be a strong foundation as we make progress on improving the remaining 15%. Current absolute volume and sales run rates across the business enable us to confirm the ingoing guidance range of 3% to 5% organic sales growth. If the volatility in China and the Middle East improves and consequently, run rates improve, we are at the more positive end of the guidance. If these markets continue to decelerate, we continue to see more volatility, we will be pointing towards the lower end of the guidance range, but the guidance range is intact. To be clear, we know you are investing for the future, future sales, future earnings, future cash flow, not in what we've already delivered. But we have good news on that front as well. We do see significant opportunities for sales and earnings growth ahead. North America, for example, our largest and most profitable region, has grown at a higher than 4% rate over the past 4 quarters. Importantly, nearly all of that growth has been volume-driven, 3.5% points over the period in a market growing roughly about 2%. Aggregate value share and volume share are up. And the growth has been broad-based. 7 out of the 10 categories we operate in holding our growing value share and volume share as well over the past 12 months. P&G brands, as they are supposed to, have been a driver of both dollar and unit growth in most of our categories. But still huge opportunities remain. We estimate there to be up to a $5 billion opportunity of market potential in our categories by simply growing household penetration of our brands among currently unserved or underserved consumers. So for perspective, when you look at Tide, our largest brand in the U.S., it's only present in about 40% of U.S. households. Bounty is only present in about 1/3 of U.S. households, and Cascade in less than 1/3. There is additional big potential from expanding the new segments and forms we've already entered. Downy scent beads, Dawn Powerwash, Old Spice, Secret and Native whole body deodorants, Nervive Nerve Care or ZzzQuil sleep aids are good examples of new forms that have enormous growth potential. There is further potential in step-changing performance with superior innovation in new or in existing categories. Think Tide evo in laundry. Sundar is going to talk more about that or Zevo insecticides innovation in a new to P&G category where we see significant growth. Europe-focused markets also have been strong also primarily driven by volume growth. Europe-focused markets have grown at a 4.7% rate for the last 4 quarters, with volume up 3.7% over the same period and aggregate value share up 40 basis points. Europe Enterprise Markets have contributed strong organic sales growth at nearly 6% rate over the last 4 quarters and despite everything that's going on geopolitically in the region. And again, Europe has huge potential to grow beyond that. Driving consumption, growing markets across the region to best-in-class levels in each of the categories at current share levels, not growing share -- at current share levels, is more than a $10 billion opportunity in existing categories. So just growing the existing categories to their full potential $10 billion. Enterprise Markets, despite the inherent challenges and volatility, offer significant potential. Driving per capita consumption in our Enterprise Markets in aggregate to levels we currently have in Mexico is a $10 billion to $15 billion sales opportunity. And we are pursuing the opportunity with strong innovation and execution across the balance of Latin America, across Asia and the Middle East and Europe enterprise regions. Enterprise Markets importantly offer not only a top line opportunity, but a big profit growth potential opportunity as we have significantly improved margins in these markets. Over the last 6 years under Jon's leadership and then Shailesh, we have improved enterprise market operating margins by 800 basis points. This includes a significant foreign exchange rate headwinds that we were facing during that time. So with margins at that level, with that strong levels of profitability, we are able to deliver strong returns and value creation with every dollar we invest in Enterprise Markets. Every part of the business categories and geographies has potential to grow by executing our integrated strategy, focused markets and Enterprise Markets. Driving consumption with current consumers, adding new households, better superior solutions to everyday problems, and we're making the investments necessary to capture these opportunities. Last fiscal year, we invested more than $2 billion in research and development for the first time in company history. And that investment was made even though the spending itself has become more and more efficient with the use of new digital modeling and testing tools, which you'll hear more about later from Victor. We have consistently invested in the supply chain with average capital spending of more than $3.1 billion a year over the last 6 years. Advertising investments have grown at an average rate of 5% for the past 6 years, an increase of more than $2.4 billion in absolute spend. Again, increasing investment while getting increasingly more efficient in consumer targeting and ad placement. Over this period, we've improved gross margin by nearly 300 basis points and operating margin by more than 200 basis points. We've done this with a commitment to driving productivity in every part of the cost structure, trade programs, cost of goods sold, marketing spend, overhead. Last fiscal year, we've delivered $2.3 billion before tax and productivity improvement, over $1.7 billion in cost of goods sold and over $0.5 billion in SG&A. While we may not reach this high level every year, we're very confident in our ability to generate up to $1.5 billion in cost of goods productivity every year and about $0.5 billion in SG&A combined. That's one of the strongest productivity programs in our industry. We've extended the visibility to productivity improvements with each business unit now building 3-year savings master plans, mirroring what we've been doing for years in our innovation master planning. So the planning allows us to build confidence in our ability to make multiyear investments in growth and innovation while delivering certainty that we can deliver short-term results. We've made productivity a part of P&G's DNA, and you'll hear how we're capturing many of these opportunities in the balance of the talks you'll hear this afternoon. So to summarize, we have a strong track record of results. We have a highly efficient P&L. We've got a very strong balance sheet, and we have significant opportunities ahead for which we can leverage both making strong investments to capture those opportunities, we're funding those investments with cost savings while also expanding margins, all enabled by excellent execution of our integrated growth strategy. Back to you, Jon.

Thanks, Andre. We're now going to spend some time on our efforts to strengthen the superiority of our offerings and how we're improving our capabilities to create and extend delight. Superiority matters, as I said at the outset, across all 5 vectors. It's not one vector of superiority that carry the day by itself. It's all 5 together. They all need to be superior. They all mutually reinforce each other. We have the data that supports this conclusion. When we get at least 4 out of the 5 vectors to be superior, we drive market growth, household penetration, share growth, sales growth and profit growth 80% of the time. And when we're superior on 3 or fewer of these dimensions, we grow markets, household penetration, share sales and profit exactly 0% of the time. Couldn't be clearer. So we're really working hard at getting all 5 vectors to be superior in all categories in all markets. Over the balance of the day, you'll hear about P&G's capabilities to drive superiority, create productivity and disrupt ourselves in the categories we operate in all with an intent to grow markets by delighting more consumers every day. We'll start with several of our corporate officers who are leading this work. Victor Aguilar, P&G's Chief Research Development and Innovation Officer, will talk about our work to raise the bar on product and package superiority and innovation. We'll then hear from Marc Pritchard, our Chief Brand Officer; and Mindy Sherwood, our Chief Sales Officer, how we're raising the bar in brand communication and retail execution. To deliver this superiority, we need a world-class supply chain. To pay for the superiority, we need ongoing high levels of productivity improvement and a superior cost structure. Luc Reynaert will talk about how we're delivering these objectives with Supply Chain 3.0. But first, Victor, over to you.

Thank you, Jon. Consumer needs continue to evolve, which offers many, many opportunities to create better, superior product and package solutions. There are still many opportunities from our existing categories to improve consumer delight. For example, 50% of women experienced a bladder leak do not use an adult incontinence product. 74% of consumers are still dissatisfied with the laundry process. Nearly 70% of consumers who are pet owners want to live in healthier homes with cleaner floors and surfaces. Nearly 60% of consumers still use a mop and bucket to clean their floors because they think it delivers best cleaning. With a clear superiority to be a core element of our strategy in 2017, and since then, we've made a lot of progress. But given the opportunities I just outlined, we have raised the bar on how we innovate and deliver superiority. So how do we meet this higher bar? We must win with consumers versus best-in-class competition, including alternative solutions like the mop and bucket example I just showed, deliver noticeable recognition of superior performance with the first dose of use. This means that for some of our products, such as Oral-B iO, it is an instant dentist clean feel. For some products that benefit from consistent use, such as Metamucil, we deliver superior flavors and communications such as the 2-week challenge to create long-lasting usage habits. Next, we must win across the core and more portfolio. Laundry detergent and liquid fabric enhancers are the core of our Fabric Care business, but we have an opportunity to drive category growth in adjacent businesses such as Downy Rinse and scent beads [indiscernible] more. Finally, we must design to encourage more sustainable usage habits such as cold water washing. P&G has unique R&D platform and capabilities that enable us to deliver superior products and packaging even against our own higher standards. We have R&D expertise in formulated products, think about shampoos, toothpaste, detergents; constructed products such as diapers, menstrual products, toilet paper; and devices, such as Febreze plugs-in and Braun electric shavers. Leveraging our R&D capability to combine these technologies and capabilities leads to breakthrough innovation. No other peer company has the combination of these technologies and expertise in their portfolio. We invested over $2 billion in research and development last year. Our spending has become more effective and efficient as we raise the bar to new superiority standards driven by our investment in digital technologies and new predictive testing methods. For example, in fragrances and perfumes, we know consumers value a pleasing scent to create more enjoyable experiences with our products, and this is true across most categories. We have now developed a perfume development digital suite, which integrates perfume character models based on consumer acceptance, [ bioeffective ] models based on materials on levels that are perceivable by our human nose, regulatory and safety models, among others, to identify winning formulations. This enables the identification of irresistibly superior fragrances 5x faster with significant fewer resources, a broader, faster, cheaper molecular discovery. Let's walk through a few innovation examples demonstrating how we're leveraging this mastery and capability to deliver on higher standards of Irresistible Superiority I mentioned earlier. First, ensuring our products win versus competition versus the best-in-class, including alternative solutions. To deliver a superior experience for consumers in the floor cleaning category, we needed to upgrade Swiffer from being better than competitive quick clean solutions to irresistibly superior to a mop and bucket. This insight led to the evolution of Swiffer from a dry electrostatic path to Swiffer sweeper mop and now to Swiffer PowerMop. We needed to resolve the trade up between cleaning and performance and convenience, primarily on complex surfaces like floors with grout. The team learned through many iterations to redesign the path, leveraging our experience in assembled materials coming from Baby Care and Feminine Care on the device itself, leveraging our industrial design and device expertise coming from Febreze. And finally, the fast-drying cleaning formula, leveraging our cleaning core competencies from dish and Fabric Care. Swiffer PowerMop is protected with multiple patents and designed rights. Our testing indicates that Swiffer PowerMop creates instant consumer recognition of its superior performance upon its first use and creates long-lasting usage habits. This demonstrate the second criteria on how we're raising the bar on superiority by delivering a one-use wow. Swiffer PowerMop has emerged as the largest product launch in Swiffer history, contributing to 40% of the growth in the Swiffer portfolio and driving a remarkable 35% category growth, becoming the #1 growth driver in the category. Third, winning across the core and more portfolio. North America Personal Care has grown double digits by delivering Irresistible Superiority on our core antiperspirant and deodorant business while also being and offering aluminum-free deodorant for consumers looking to avoid certain ingredients across multiple brands such as Secret, Old Spice and Native. The more innovation has attracted new users to the category, increasing dollars per use driven by consumer delight. But we also know some consumers naturally tend to have more body perspiration, which creates body odor concerns. And after identifying this adjacent opportunity, the more, we developed plans in Personal Care to extend our portfolio and introduce irresistibly superior whole body deodorant sticks, sprays and creams, leveraging our superior long-lasting freshness as skin care and spray technologies. This innovation, which delivers on the higher standards of superiority across all the 5 vectors, delivered great results. P&G Secret spray is now the #1 whole body item for females. And Old Spice is the #1 male brand in the whole body odor segment. Our portfolio focus on core and more is helping us to accelerate growth in our Old Spice, Secret and Native. Fourth, reducing our environmental footprint to help consumers reduce theirs is critical to Irresistible Superiority strategy. In Fabric Care, we're introducing new technologies to improve overall cold water cleaning performance, enabling consumers to reduce their energy usage. Superior cleaning performance even in cold is needed as body soils are more ingrained due to consumers using more synthetic apparel fabrics, among other habits. And we continue to advance our fiber-based platform technology to create these continuous high-performing products with less water in the product and more sustainable packaging such as Olay facial melts, Tide evo, currently in test market in Colorado and Mr. Clean toilet cleaner in test market in Louisville, Kentucky. We resolved the perceived conflict between value creation and sustainability by integrating environmental sustainability considerations in our superiority vectors, grounded in consumer needs and willingness to pay. This has resulted in more of our innovation portfolio addressing performance and sustainability benefits while driving towards reduced environmental footprint. By driving sustainability via our product and package innovation, we're leveraging our R&D capability to drive sustainable solutions applicable to multiple industries. Recently, we received a Dow Packaging Innovation Platinum Award related to a versatile packaging technology. The packaging material with flexible honeycomb structure that is 100% recyclable and enables up to 85% storage and transportation space savings. Another example, our [indiscernible] process in the areas of polypropylene and polyethylene, which allow us to create recycled resin that is near virgin light quality. We have now licensed these technologies externally, enabling scale across industries while creating a revenue stream to fund future development. In closing, the strategic focus on superiority remains at the core of delivering sustained business performance. We will continue to raise the bar on how we deliver our superiority through the lenses of winning versus best-in-class competition, including alternatives, delivering a one-dose wow, winning across our core and more portfolios and delivering superior and increasingly more sustainable innovation. Thank you. I'll now pass it on to Marc, who will talk to superior brand communication.

Thank you, Victor. Hello, everyone. Superior brand communication reaches current and potential consumers with effective advertising is placed in relevant media to increase brand awareness, grow sales and build equity at an efficient cost. We're raising the bar again to strengthen brand building, integrated across all vectors of superiority to attract more users, encourage more usage and enable more value per use for profitable category growth and value creation. And for brand communication, that means absolute superiority on reach, effectiveness and efficiency. Here's the steps we're taking. Step one, we're raising the bar to achieve higher media reach to attract more consumers into daily use product categories. We start by identifying all current and potential consumers who could be interested in buying brands in these categories. And the good news is that's pretty much everyone. Let's illustrate with a show of hands. Who here wants clean clothes? Clean dishes? Clean, healthy teeth? Clean and conditioned hair? If you don't have hair, Gary, how about clean and conditioned scalp? The point is there's significant potential for category growth because nearly 100% of people are potential consumers, as we just illustrated, yet on average, we still reach less than 80% of people in our top countries. That's why we're using automated media buying to increase media reach with greater precision. Programmatic and algorithm-based media buying enables brands to reach consumers across relevant media, fueled by viewing data and permission-based first-party consumer data that we transparently collect in the Consumer 360 data platform. This proprietary database enables brands to use target audience algorithms to reach the widest range of consumers where they're most receptive to messages, serving us at the right frequency each week, all year round. We're making progress. For example, in the past 5 years, U.S. average media reach has increased from 64% to 80%, and Europe is up 75%. And several brands are achieving 90%, which points to significant potential for profitable category growth by increasing reach another 10 to 15 points on more brands. We're increasing reach among relevant consumer segments through multicultural media. See, consumer needs and preferences can be influenced by factors such as gender, age, race and ethnicity. So we're increasing media reach among a diverse range of consumer segments. We use customized algorithms from the Consumer 360 data platform to sharpen media targeting and precisely reach each consumer segment in relevant media programming. For example, in the U.S., several brands reach up to 80% of black, white, Hispanic and Asia Pacific American consumers. And in Canada, up to 80% of French, English and Asian-Canadian consumers. Now we see more potential since future population growth will largely be from multi-culture consumers. And achieving market shares equal to the national average across all segments could accelerate sales growth in North America by 1 to 2 points. Now Oral Care's campaigns are good examples of accelerating growth across each segment, each brand in the Oral Care category by reaching 80% of each consumer segment with relevant advertising. Here's 2 Crest ads to illustrate. [Presentation]

And we're also investing in retail media to reach consumers closer to when they purchase, particularly in retailer search, which is the largest element of retail media spending. We broadly use a proprietary program called Search Auto Better that automatically adjusts search ad buying every 15 minutes on retailer search platforms, increasing brand sales return by 4x, and driving category growth. The search content optimizer uses generative AI to analyze ratings and reviews and consumer comments and then automatically optimizes e-commerce ads and product description pages to improve search results and further increase purchase. And more retailers are partnering with P&G in privacy safe clean rooms to identify proprietary insights from both consumer media behavior data and retailer purchase data so we can automatically serve custom ads that reach more shoppers, new shoppers and encourage buying more items more often. We're steadily increasing media reach to drive category growth and value creation. And we have significant potential ahead through even higher reach to attract even more consumers. But reach is not enough. Step two is raising bar on advertising effectiveness, proven to grow sales. It starts with deep consumer insights. The product jobs to be done, the problems to solve, and the habits to form to get the best benefits, these insights lead to brand superiority campaigns that communicate the superior performance and value across all ad formats, lengths and media placements to optimize awareness and sales. Tide's, it's got to be Tide, and Dawn, the better grease-getter, are good examples. [Presentation]

Now brand superiority campaigns are a high priority for growth since brands with proven effective campaigns grow 5% to 7% faster than brands without. We're developing advertising and optimizing effectiveness across all formats using automated digital testing technology. AI studios uses decades of P&G brand ad research correlated to end market sales results for fast cycle and iterative premarket ad testing based on consumer reactions. Ads can now be tested and optimized in just a few days versus weeks and at 1/10 of the cost versus the prior methods. For example, on Swiffer PowerMop, in-home visits with consumers led to the insight that the mop and bucket really isn't a dreaded chore, it's what they consider the gold standard of cleaning. The team engaged multiple TikTok creators, brought them into our labs to learn about PowerMop with P&G scientists and created multiple executions that you see up here for testing to find the best ones that engage consumers. From there, the team used AI studios to test and iterate on executions and create the mop smarter campaign, which is optimized across all ad formats and lengths, and here it is. [Presentation]

And we're also accelerating the development and effectiveness of advertising ideas using generative AI applications. Great ideas generator is a proprietary platform that uses the vast database of historical P&G concept data as well as consumer insights and language that are sourced from ratings and reviews, consumer comments, external trend analysis and other online sources. This is transforming the idea creation process by enabling concept development in minutes versus weeks, increasing the number of concepts created tenfold, reviewing and editing in 1 to 2 hours versus 600-plus hours and improving the quality that we have in the ideation process since AI leverages an array of data sources well beyond what's available in current processes. And we're increasing ad effectiveness by reducing time from awareness to purchase through shoppable ads that allow you to instantly see and buy. We work with several retail partners to provide consumers a variety of shopping options, including add to cart, buy now, shop now features that enable people to see an ad and simply click to buy without interruption, eliminating the gap between communication and commerce. This is a game changer. We see significant potential in the shoppable ads. And we're innovating with retailers, digital platforms and streaming TV providers in the U.S., Europe and China. We're steadily improving advertising effectiveness to grow brand sales and drive profitable category growth. And step 3 is raising the bar on cost efficiency for a profitable return on investments. We have runway for $500 million to $700 million of annual savings and efficiencies, which we expect to continue reinvesting in media reach and advertising effectiveness for a profitable ROI. We're reinventing the agency model again. We reduced the number of agencies retained by more than half from more than 6,000 10 years ago, delivering $100 million in average annual savings. We now enable broad agency partnership flexibility from long-term partnerships with one core agency to a most valuable partner model that selects and hire star creative talent regardless of agency. So brands can literally source the best creative work from anywhere. We see the trend for flexibility continuing and built an automated enterprise technology platform called Agency Marketplace to enable fast cycle selection and hiring. We're implementing in-house media operations, achieving annual media savings of up to $500 million through data and analytics capabilities that we apply to planning, negotiations, scheduling placement and buying. We now have analysis operations nearly 100% of North America, China and Europe-focused markets, representing nearly 80% of total P&G media spending. And we're now starting in Enterprise Markets. And we're moving to more in-house advertising production. What this does is, help brands develop ideas and high-quality executions faster to increase sales and save $100 million annually in ad production spending. North America Personal Care is leading the way, reducing from dozens of agencies to only 1, improving quality and reducing cost per ad as well as ad development and execution time by 50%. So taken together, we're continually raising the bar on reach, effectiveness and efficiency for absolute superiority in brand communication and improving the ROI on our brand-building investments to drive profitable category growth and value creation. Thank you, and now I'll hand it over to Mindy to talk superior retail execution.

Thank you, Marc. Hello, everyone. Superior retail execution, it's our unwavering commitment to excellence in every aspect of retail, both physical and digital. It provides a great shopping experience for the consumer regardless of when, where and how they choose to shop. By partnering with retailers to achieve superior execution, we increase users, usages and dollars to drive sustainable category growth for the retailer and growth for P&G. We deliver superiority in a constantly changing retail landscape when we are outcome-focused, adaptable and data-driven to improve their shopping experience. When shopping a physical or digital store, we have got to make it easy for people to find what they're looking for, to choose the best performing products with a good value and add one more item to their basket. If we do this well, consumers win, customers win and P&G wins. So how do we deliver superior retail execution? Simply put, we must win the shelf. We've got to win both physical shelf and digital. It's our #1 focus. Winning the shelf requires looking at it from a shopper's mind. And in today's day and age, it could also be the picker, who's responsible for picking up your order that's going to be delivered to your house or put it into the trunk of your car. Can they look down the aisle and easily see our brands? Is our brand the first one that they see? Is our brand the easiest to navigate, to understand our good, better, best model? When our brands are designed from the very beginning to be the fastest and easiest for shoppers to see, select and buy, when consumers can find the right product in 10 seconds or less, they put twice as much into their basket than if it takes them more than 2 minutes to find what they're looking for. So we aim to seamlessly integrate brand architecture, superior packaging design and shelving principles to make our brands easier to shop. This comes to life in stores and online with superior retail execution and deliver superior consumer value at a price that is considered worth it across each price tier when the brand is offered. A great example of this is our Cascade automatic dishwashing business in the U.S. We created Cascade Platinum Plus as a new premium tier. But in doing so, we ensure that it fits seamlessly with our other tiers, base, base platinum so that shoppers could easily find the right product at the right value for their needs. This was fueled by extensive shopper research that helped us to understand how to best integrate our brand architecture, our packaging design and our shelf design in a way that delight shoppers and grew the category at the same time. As a result, Cascade Platinum Plus is the #1 automatic dishwashing sub-brand in the category. Last fiscal year, Cascade grew 9% organic sales and 60 basis points of value share. In just a little over a year since it launched, the brand is responsible for 100% of the U.S. auto dish category growth. In addition to this framework that helps us to optimize the shelf starting with the shopper, leading digital tools are enabling us to automate, elevate and continuously revolutionize retail execution. At the physical store, we have proprietary tools such as programmatic shelf, which enable us to use our wealth of data, knowledge and insights to recommend optimized shelf sets to retailers in terms of the right amount of space, the right assortment and the arrangement to deliver profitable category growth. This makes the shelf easier to shop and help shoppers understand the value and better performing products. This digital technology helps us understand the consumers wants, their needs and responses without ever having to physically experiment in the actual store. In Asia Pacific, Middle East and Africa alone, we've analyzed more than 20 million images and point-of-sale data across 300 country, customer, category combinations to offer retailer choices to optimize their shelf sets. For example, in a retailer in the United Arab Emirates, we combined insights on the ideal portfolio with the programmatic shelf capability to design an elevated shelf for hair care. In the process, we were able to identify 60 items, including some of our own, that represented 10% of the shelf but only 3% of the sales. The retailer chose to leverage these insights, which has resulted in growth across the category and disproportionate growth for P&G. Fewer items on the shelf also reduces complexity and cost for the retailers and their overall supply chain network. For the digital shelf, we're focused on delivering superior content and search on retailer sites. So when shoppers pick up their mobile, they search for a product, we're easy to find and a very obvious choice for them. For content, we have a proprietary capability that optimize and qualifies content on our product pages to maximize conversion. For search, in addition to the tools that Marc just mentioned, we've created a digital tool supported with algorithms that optimizes our paid search investment by integrating and automating all elements of the paid search ecosystem from planning to execution to measurement. It's enabling productivity as we're delivering more relevant sponsored search results to customers at a much more efficient cost. Consumers are evolving the way they shop as more convenient options become available to them. These industry disruptions, they're going to continue to evolve as more innovation happens in this space. We must ensure our products are available whenever and however people shop. To achieve best-in-class availability, we've developed a real-time solution that combines retailer and P&G data with proprietary algorithms to accurately predict and detect out-of-stock situations. It can identify the structural reason for the issue and recommend solutions that optimize the supply chain. So the fix not only drives availability but also improves cost and cash efficiency. Our tools provide suggested actions and insights with a vision to automate decision and interventions going forward. In addition to availability, we're also experimenting with new ways to expand our reach, especially in areas of the world where there are a large number of small independent retailers. For example, we're transforming our sales call in India through advanced AI and machine learning. We've implemented a tailored approach for over 2 million stores, using data-driven insights to provide neighborhood-level recommendations on product assortment and order quantities. This has resulted in over $50 million in incremental sales and $3.5 million in savings over the past 2 years with much more opportunity ahead. And in China, we're in the midst of a transformation, inclusive of our distributor partnerships that will reinvent off-line go-to-market and expand our reach across 5.5 million physical stores with huge category and business growth potential. This effort will improve quantity and quality of retail execution, create value through an integrated supply network and digitize the sales force so that all of our categories have deep and wide distribution, and consumers are increasingly delighted with their shopping experience. In summary, together with retail partners, we are improving availability for shoppers, removing friction from the shopping experience and doing so in a way that structurally addresses root cause issues and creates value. These are just a few examples that demonstrate how we're delivering a delightful shopping experience and creating sustainable category growth through superior retail execution. Now let me pass it to Luc, who's going to share details on Supply Chain 3.0.

Thanks, Mindy. Hi, everyone. P&G's supply chain goal is to delight consumers and customers, consistently producing superior product quality at the lowest cost and at the best-in-class service. Today, this journey is carried out through Supply 3.0 framework as we call it, where we're making meaningful progress. Now our evolution to Supply 3.0 began in the 1990s when we developed a manufacturing-centric approach to operational excellence, driven by the implementation of integrated work systems, IWS, also called Supply 1.0. IWS continues to deliver significant cost savings even today and improved reliability within our operations. In fact, it is so effective that we've commercialized the program to support and elevate the industry excellence and generate some funds to reinvest in it. Our next phase, Supply 2.0, consisted of an integrated supply chain from our material suppliers down to finished product distribution combined into one network to drive optimization of all operations in response to consumer demand. This integration was particularly meaningful during the global pandemic as it allowed for greater flexibility, enabled us to respond quickly to market volatility as well demand surges. Now our current strategy, Supply 3.0, is the next phase of our integration from suppliers to customers but now extending all the way to the retailer's shelf. It targets 98% on-shelf and online availability all time with a runway of up to $1.5 billion before tax in gross productivity savings every year and a 90% or greater free cash flow productivity, all to enable us to beat or exceed our total shareholder return targets. The power behind the strategy is embodied in the concept of one supply chain, which extends our focus beyond the customer door to the shelf and online versus simplifying and optimizing each piece. Now when we connect our own supply chain processes, data and technology directly from our own supply base all the way into the retail customer systems, we can seamlessly move projects from our manufacturing plant to a consumer's shopping cart in a way that has never done before. We're driving improvements in service, cost and cash by optimizing not only P&G's cost of goods sold, but also identifying jointly with our customers and distributors additional ways to drive further losses out of our collective supply chains. And we believe that this shift, which includes both physical as well as data flow, will unlock value and enable consistent productivity savings while also creating a win-win-win for retail partners, their shoppers as well as P&G. Now how do we do this? Let's start with the 2 ends of the supply chain, material supply in and customer orders out. So we continue to increase raw and package material flexibility across our supply base. By diversifying our supply pool and qualifying alternate materials that deliver the same superiority that consumers know and trust, we can balance material usage for optimal cost and respond in real time for any supply disruptions. One example is in Fabric and Home Care, where we have invested in digital modeling and simulation tool that enables us to optimize cost and performance of our laundry products through various combinations of surfactants, solvents, polymers and enzymes. Now on the other hand, we are doing important work across markets to connect real time to customers' order systems. In North America, we activated elements of the one supply chain across customer systems that cover nearly 75% of our sales. For example, we created a seamless data collection in a controlled environment to automatically correct orders with master data defects. This improved retailers' order quality from 75% to 91% and drove a 17% product availability improvement. While in Europe, we partner with the retailer to connect our supply data systems and processes which honestly increased visibility to orders. It moved more to direct plan shipments, and it incorporated more optimized vehicles for transport. The partnership with the retailer also included intermodal shipments as well as backhaul fleet using alternative fuel. And as a result, over the past 3 years, our business with this retailer grew 18%, our cost to serve went down 18%, inventory down 23%, and we reduced greenhouse gas emissions per truck. These are just a few examples of how one supply chain works in practice. Now moving on to the production lines, where we know that automation technologies will play a key role in accelerating supply chain progress in our manufacturing sites. We have now reached a phase at a stage where real-time vision cameras are able to capture visual data and then advanced algorithms can analyze products for superior quality. Gone are the days where we only check the quality of a case picked from the production line every half an hour. With real-time touchless quality, we can now evaluate each individual item as it is being produced, an amazing opportunity to eliminate human touches and errors in data transfer, driving a productivity advantage and guaranteeing superior quality in every unit produced. Additionally, the Gillette Berlin plant for global grooming has successfully implemented the unattended night shift, eliminating the need for technicians and reducing touches. They transitioned from three, 8-hours to two 10-hour shifts with touchless operations for the remaining 4 hours. This transformation delivered structural savings but also delivered a more desirable employee experience by eliminating that unpopular overnight shift. Now there's a lot of additional opportunity in Berlin as well as in other sites around the world. Now let's move to warehouse operations, where we are on a multiyear journey to transform and connect our network of warehousing. In Europe, our warehouse center of excellence will serve as a hub for our 50 distribution centers, coordinating warehousing activity from a moment a truck enters the gate until it leaves. The central coordination is delivering 50% productivity on our indirect administrative work by eliminating redundant positions at each of these individual sites. We're also optimizing the customer receiving process by certifying P&G deliveries price to shipment. Today, for example, it takes 2 people on average 2.5 days to process a health and beauty truck. And with certified receiving, the effort is going to take approximately 10 minutes, more than a 99% savings in time. Sustainability. Sustainable solutions are fully integrated in our work. It's not a separate endeavor, it's part of everything we do. We're making progress across all of our Ambition 2030 sustainability goals. Based on current projections, we are on track to meet climate Scope 1 and 2, renewable electricity, waste recyclability as well as water efficiency goals. On top, we have developed glide paths for Scope 3 for supply raw and pack materials as well as finished product transportation emission goals. And finally and importantly, superior employee experience. Our people are at the center of everything we do. So we're doubling down on our efforts to prepare them with the skills and capabilities needed to lead the supply chains of the future. In North America, we're launching a capability program that aims to upskill nearly half of our people over the next 2 years. We also are looking to enable more flexibility in how we manage shifts for both technicians and managers as the typical 12-hour shifts with quick rotation between night and day is not a desirable schedule for many in the workforce. We believe that these efforts combined with investments in our facilities with robust hiring and appropriate compensation and benefits will continue to advance P&G's position as global supply chain employer of choice. For 9 consecutive years, P&G has been ranked the #1 supplier by retailers in the Advantage Report, a global survey that captures retailers' perception of manufacturers. Also for 10 consecutive years, P&G has been named by Gartner as a Supply Chain Master, the highest level of recognition. While these external recognitions are important checks on our capabilities, we know that customer and consumer expectations will continue to increase and demand that we're faster, more flexible, transparent and cost efficient. We are confident that we have the right strategy with Supply 3.0 to meet those expectations with a passionate and a committed team to deliver superior products for each of our categories and for each of our markets while fostering strong partnerships with our customers and suppliers that are based on exceptional service and mutual success. Thank you, and I will hand it over back to Jon.

Thanks, Luc. I hope this drill down into our strategy and the ways we're strengthening it has been informative and provided you with a better sense of the work that we're undertaking. The work is significant and necessary to keep winning with consumers, with customers and for shareowners. We're building on our successes and addressing our challenges by doubling down on our integrated strategy to grow markets, sales, profit, household penetration and through this, our share. We're strengthening the execution of our strategy and driving productivity to fund investments, offset headwinds and build margins. Our best path forward is to stay focused on executing and strengthening the integrated strategies that have enabled strong results over the past 6 years and are the foundation for balanced growth and value creation. Good news. We're now about halfway through our presentation. After a break, we're going to hear from each of our sector CEOs and our Chief Operating Officer on how they're bringing the strategy to life and their respective businesses. And following that, we'll have time for questions. Right now, we're going to take a short 10-minute break. Please be back in your seats by 3:55. Thank you. [Break]

Welcome back. My colleagues and I are going to share how our integrated strategies are coming to life in each of our sectors. The Fabric and Home Care sector is a $145 billion industry that has grown an average of 5% over the past 6 years. P&G has outperformed this growth with organic sales growing 8%. This focus on category growth has enabled P&G to grow value share by nearly 4 points in this time period. This sector accounts for 36% of the company's sales last fiscal year with Fabric Care accounting for 2/3 of the business and Home Care constituting the remaining 1/3. P&G leads globally in both the Fabric and Home Care categories with a portfolio of brands that are designed to serve core consumer needs. Our brands are designed to help tackle various challenges across laundry detergents, fabric enhancers, dish care, air care and surface care. The 10 billion-dollar brands represented on this chart hold nearly 80% of our sales and have leading positions in each of their respective markets. Consistent with our company's integrated growth strategy, this slide captures the essence of our integrated value creation model and the virtuous cycle we create when they all work in sync. It all begins with the consumer, addressing unmet consumer needs with all 5 vectors of superiority, product packaging, communication, retail execution and value. Our innovation strategy is focused on growing categories by attracting more users, increasing usage and delivering maximum revenue per use to enhance delight. When we execute this strategy with operational excellence end-to-end, we identify inefficiencies. And by eliminating them, we deliver productivity and reinvest productivity back into the 5 vectors of superiority, completing the virtuous cycle of value creation that benefits both consumers as well as the company. Success in our highly competitive and increasingly dynamic market requires a disrupt-or-be-disrupted mindset. We call this constructive disruption, a mandate to lead change and transform our products, our business and our organizational model while creating disproportionate value. There are 3 areas of constructive disruption that we'd like to highlight for you today. The first one is deeper consumer understanding, using connected homes and laundry rooms. The second is, formula design and brand building, leveraging state-of-the-art digital tools. And third, smart chemistry integrated with smart appliances. Let's start with connected homes. This year, we're celebrating 100 years of P&G's analytics and insights capabilities. Building on this legacy, we are continuing to learn about consumer habits and practices in the context of their real lives, not just in the lab, powered by smart technology and sensors in homes of consenting consumers. This reads to behavioral insights that inform our innovation, our 5 vectors of superiority and feed proprietary models that enable the creation of future solutions to today's consumer problems. Next, formula design and brand building based on state-of-the-art digital tools. We're leveraging proprietary algorithms to primarily design products. And these products are designed in real time for optimal performance based on raw material availability and cost. This is enabling us to create irresistible and sustainable solutions that are meeting consumers' evolving needs while reducing the product development time from years to months and of course, while reducing costs. We're also converting AI-enabled insights into consumer concepts and delivering more precise media buying, thereby reducing costs and increasing speed and effectiveness in the process. Finally, smart chemistry in smart appliances. The advent of smart technology is revolutionizing the world of appliances, both washing machines as well as dishwashers. This is done with the integration of sensors and algorithms that analyze things like load size, fabric type and soil levels. And we're partnering and co-innovating with the thought leaders in the industry, the appliance industry, in order to deliver smart chemistry that leverage these smart algorithms and better -- deliver better consumer interfaces. Today, we're already the #1 recommended partner in the appliance industry. And we are leveraging their partnership and collaborating with them to design future solutions for consumers that deliver better performance and value. Over the past decade, P&G's Fabric and Home Care sector has consistently delivered strong, balanced top and bottom line growth with top line accelerating as of 2018 and profits doubling from $2.7 billion to $5.7 billion. Consistent execution of these strategies and focus on market growth has been the key contributor to these sustained results. Let's look at the U.S. Fabric Care business as an example. P&G's growth in U.S. Fabric Care over the past 50 years is impressive, with a remarkable increase of 10x in a market that's grown 7x. Market growth has been the primary contributor of these results, contributing to over 80% of the growth, thanks to our focus on superior innovation, which you can see on the bottom of the slide. This is not just a story of the past. We see this story continuing into the future with significant opportunity to drive further market growth. Let me share why we believe that. Consumers face daily challenges in maintaining clean clothes and clean homes, and these challenges continuously change. We call these jobs to be done. And these are identified ranging from how to eliminate odors, preserving the shape and feel of fabrics, tackling tough kitchen messes, providing fresh scents, enhancing wellness and killing germs. Each of these represents an opportunity to delight consumers and drive category growth. For example, only 26% of our consumers today report a high level of satisfaction with the laundry process. We know that we can boost laundry satisfaction from 26% to over 90% by providing consumers with the right regimen of products. We also have a ton of opportunity on household penetration. With most of our brands, top brands representing only 30% or lower household penetration, we have a significant opportunity for growth and value creation by getting our products into more households. Let me bring these concepts to life with examples of our innovations. First, sustainability fully integrated with superiority. In Europe, Ariel provides superior cold water washing, great cleaning even in cold temperatures that enables improved garment life, energy cost savings for consumers and improved sustainability of the laundry process by reducing the energy required to heat the water. 60% of the carbon footprint of the laundry process is in the consumer use space. So if there is one thing we can do to lower the footprint of the laundry process, it's to enable consumers to wash in lower temperatures. Ariel also offers superior packaging in a cardboard box on our PODS business. Collectively, this improves consumers' ability to wash more sustainability -- more sustainably without any trade-offs in performance. And the data shows this consumer innovation is preferred. The 2 numbers you see on the screen, the overall rating, which measures how the product delights consumers with its competition is 10 points higher. And if we compare this versus the best-in-class competition, it's 14 points higher. You will see these data points on each of the innovation examples I share. This innovation contributed to a 15% organic sales growth on 140 basis point improvement in share in our Europe-focused markets last fiscal year. Next, in the U.K., there is a shared appreciation for the unparalleled freshness of laundry when dried outside, outdoor freshness. However, due to frequent rainfall, many people are forced to dry their laundry indoors, leading to musty odors and a lot of frustration. We addressed this challenge with Lenor outdoorables, which recreates outdoor freshness even when dried inside when incorporated -- by incorporating musty odor resistance into the product. Let's watch the ad. [Presentation]

This innovation delivered 85% incrementality to our liquid fabric enhancers portfolio in the U.K., growing the category by nearly 30%. We are currently expanding this innovation to other European markets. In the hand dishwashing category, consumer habits continue to evolve. More than 60% of consumers now prefer to clean on the go, demanding faster and more effective method for washing their dishes. In response, we designed an intuitive, upside down, easy-to-dose packaging format for Fairy Max, aimed at delighting consumers regardless of their dishwashing habits. This innovative packaging delivered a 50% incrementality to the brand, contributing to a 30% growth in the category since its launch. Laundry remains a burdensome chore for many consumers who struggle with the inconvenience of heavy bottles or bulky plastic packaging. Tide evo represents the biggest innovation in laundry, crafted by concentrating active surfactant ingredients into a mixture that is spun into individual fibers. This sophisticated process ensures that each functional fiber delivers the powerful cleaning of Tide even in cold water while also enabling the innovation to be convenient and sustainable to consumers, given no plastic bottles and no extra water. That's the Tide evo unit dose form. This new-to-the-world formulation and assembly process is proprietary to P&G and protected by over 50 granted patents, making it a truly unique technology. Let's see how we are communicating Tide evo to consumers. [Presentation]

The Tide evo pilot launched in Colorado in April of 2024, and consumer response to date has been overwhelmingly positive. It surpassed year 1 performance goals within the first 12 weeks, showcasing its Irresistible Superiority. And we are progressing Tide evo through the last phase of full supply chain readiness and validating industrial manufacturing scale. National expansion will be assessed in the next few months once the test market is completed. Victor and Marc already touched on Swiffer PowerMop. Cleaning floors remains one of the most physically demanding tasks in the home. And while many consumers would have a faster and easier clean, more consumers, particularly among growing numbers of Hispanic and African ancestry consumers who have a very high bar for the quality of clean, are not willing to compromise on the quality. Swiffer PowerMop now offer consumers the higher level of cleaning efficacy, faster and cleaner than ever before. Its wider head, dynamic design and 3D pads reach and scrub into tight corners and grout lines, delivering the clean of a traditional mop and bucket in half the time. It has emerged as the largest product launch in Swiffer's history, contributing to 40% growth of the Swiffer portfolio and a remarkable 35% category growth, becoming the #1 growth driver in the category. In closing, our strategies are working. We have a strong record of growing categories despite macroeconomic challenges. We have an endless runway for growth on both delighting consumers as well as household penetration. And we're consistently -- constructively disrupting the way we work in order to innovate faster and better than ever before. I'm very confident in the potential of our business and look forward to seeing you in the Fabric and Home Care booths to show you this and other innovations in action. Now I'll hand it over to Fama Francisco to discuss our Baby, Feminine and Family Care business.

Thank you, Sundar. Our Baby, Feminine and Family Care business is 24% of the total company and $20 billion in sales with 38% in Baby Care, 35% in Family Care and 27% in Feminine Care. Baby, Feminine and Family Care is at $110 billion industry that has grown 3% since 2018. P&G's Baby, Feminine and Family Care sector has grown organic sales by 4% on average over the same period. Feminine Care led with high single-digit growth. Family Care grew mid-single digits. And Baby Care grew low single digits, while nearly doubling structural profitability. Our sector delivered $2.2 billion in incremental sales, $1.8 billion in incremental profits while expanding our operating margins by 650 basis points and generating $21 billion of cash. Baby Care is one of P&G's largest categories with about $8 billion of sales. We have continuously innovated to deliver superior products that support the happy and healthy development of babies and win with parents, caregivers and health care professionals. North America Swaddlers is a great example of how superiority enables us to win with consumers and drive category growth by providing up to 100% leakproof skin protection. Swaddlers leverages a suite of patented platform technologies that are exclusive to P&G. One of our global platform technologies is our patented absorbent core, which provides excellent leakage protection with amazing dryness by locking in the wetness to help prevent it from touching baby's skin after it's been absorbed. We combine this with our proprietary Absorb Away inner liner that pulls wetness and the pull mess away from baby's skin. And we are the only brand in the market with our all-around wrap and protect system for dry and lasting comfort. These investments in superiority have allowed North America Swaddlers to grow sales double digits over the last 5 years. Last fiscal year, sales exceeded $1 billion, and share increased by over 1 point. While we're pleased with our progress in the premium segment in North America, we recognize that it was offset by softness in other parts of the portfolio, particularly the value tier. Step 1 to achieving superiority across all tiers is our recently upgraded Luvs Platinum Protection, which rolled out last summer. We are seeing run rates improving since the launch, and Luvs Platinum Protection is rated 4.5 stars by consumers for great leakage performance at the value. In Mainland China, we grew sales double digits and increased share 130 basis points versus a year ago. We are leading growth in the premium and the super premium segments of the market behind consistently upgrading our superior offerings to deliver ultimate comfort, protection and luxury softness on skin. Globally, we are constructively disrupting how we reach parents. Reaching consumers precisely with the right message at the right time is an important part of our superiority model. Just think about it. Only 10% of households have diaper-aged children. Our consumers turn every 3 years, and their needs change with every stage. We created Pampers Club, which is the largest opt-in database of parents in the industry with over 15 million consumers worldwide. This enables a full digital model with target precision on scale, improving our digital on-target reach by 50% with significant productivity. Baby Care is one of the most superiority sensitive categories we compete in. Where we have brought our full innovation potential to the marketplace, we are winning even in the most difficult market conditions like China. Our opportunity is now to expand this level of superiority across our full geographical and vertical portfolio to enable sustained top and bottom line growth and accelerate market growth. We have the plans, and we now have the capacity to roll them out. Moving on to Feminine Care. P&G Feminine Care has been a growth engine for the company, driving 1.4x category growth over the past 5 years. We have done this through a relentless focus on Irresistible Superiority across all vectors, growing users, uses, premium performance and value to lead category growth. Since entering the incontinence business a decade ago, Always Discreet has been driving category growth, growing more users and resulting in $1 billion of incremental retail sales. In the past year alone, we grew over 1 million users globally, driving double-digit category growth. And there is still significant runway. Less than 40% of women who experience bladder leaks use a product design for adult incontinence. In the menstrual category, we are driving category growth by educating consumers on tampon usage and building a day and night pads regimen. We know that consumers who use multiple types of product forms or sizes as part of their regimen have a better experience. In the past year, Tampax led category growth at 1.4x fair share, growing category volume by 2% and value by 4%. Overnight pads delivered 10% organic sales growth, and there is more runway. Up to 60% of consumers still experience nighttime leaks, and only half use night pads. We continue to drive superiority across all 5 vectors by trading consumers up to our most innovative and our most superior product, Always FlexFoam. Our proprietary technology allows Always FlexFoam to absorb 10x its weight and provide an experience unlike any other with up to 0 leaks, 0 feel and 0 bunching. Let's take a look. [Presentation]

Always FlexFoam grew sales 15% in the U.S., 20% in China, accounting for more than 30% of the menstrual category growth in these markets. Now moving on to Family Care. Family Care has been a significant driver of shareowner value for the company over decades by leading category growth behind Irresistible Superiority. Over the past 10 years, we have grown a highly penetrated category 7x faster than population growth. This has enabled us to capture 32% of the category dollar share in majority of the value creation in the industry. Bounty towels and Charmin bath tissue deliver exceptional absorbency, softness and strength due to our unique proprietary technology. Smooth Tear Charmin Ultra Soft is the biggest innovation to toilet paper in over 100 years and addresses the top consumer frustration with toilet paper tearing outside the perforated line. We developed Charmin Smooth Tear with our patented scallop edge for a better tear. Our 5-vector superior offering led to very strong results with Charmin sales up 5% last year, contributing to mid-single-digit category growth. Bounty grew sales and volume last year by driving superiority in softness, absorbency and durability through our recent innovation and through very strong communication, which shows consumers how Bounty can be used for multiple cleaning and hygiene tasks at home. We are committed to continue leading the industry with outright superiority in every sheet while upsizing consumers to extended roles in larger packs so they don't run out. Importantly, to fund our superiority investments across the sector and cover for cost inflation, we will continue to drive productivity across every area of cost, manufacturing, product, media, go-to-market and overhead cost. This involves optimizing our global manufacturing footprint and accelerating automation and digitization of our supply chain. It also includes expanding our digital media in superior on-target reach using advanced algorithms, machine learning and predictive analytics. We will continue transforming ourselves by leading disruption in a constructive way that delivers better outcomes and creates value. In closing, we see many opportunities for growth and value creation in each of the categories. And we are confident in our strategy, focused on Irresistible Superiority that drives market growth fueled by productivity and constructive disruption. Our Baby, Feminine and Family Care team is agile, is passionate. And it's driven to lead category growth by delighting consumers with superior experiences across all the life stages. We are focused on executing every element of our strategy with excellence, adapting to the ever-changing needs of consumers and customers. And we are committed to accelerating our growth even further in the future. Now I'll hand it over to Alex to talk Beauty.

P&G Beauty is over $15 billion in sales and is 18% of the total company. Today, half of our sales come from Hair Care with the balance roughly split between Personal Care and Skin Care. We have a healthy, growing portfolio that includes market-leading brands and an exciting portfolio of smaller acquired brands. Beauty is a large, high-growth industry with a market size today of $250 billion for the categories in which we play, growing 4% over the past 6 years. P&G Beauty grew organic sales and profit 5% over the last 6 years with constant currency profit up 9%. P&G Beauty has contributed more than its fair share to the overall market growth with programs designed to address the estimated $500 million global penetration opportunity by educating consumers to use antidandruff shampoo in every wash and dose conditioner based on their hair length, along with exciting launches of new higher-value jobs to be done like Olay Super Serum and whole body deodorants. The key driver of this growth is superiority, fueled and funded by productivity and brought to life with beauty acumen, intuition and execution. I'll share a few examples we have from around the world, starting with North America. In the past 2 years, North America Personal Care has grown double digits. This growth has been broad-based and portfolio spanning across deodorants and body wash with all brands growing ahead of year ago. Native, a brand acquired in 2017, has been a key driver of growth. In fact, Native has grown over 10x across categories and forms since acquisition. In 2023, Native reinvented the spray deodorant experience for consumers with nitrogen-powered sprays that deliver a superior application experience that's more sustainable because the formula contains no hydrocarbons. This ozone-friendly natural propellent was expanded across Native, Old Spice and Secret with the more recent launch of whole body deodorants. We were the first company to launch whole body deodorant sprays, and we now have the #1 product in this segment. This portfolio-wide spray innovation is a great example of how we are innovating to lead category growth. Moving to North America Hair Care, another category with a 2-year track record of double-digit growth and strength across the portfolio. In 2023, we launched Head & Shoulders BARE. It is a superior, gentle yet effective antidandruff shampoo formulated with just 9 ingredients versus the typical 20-plus ingredients. BARE has driven more than its fair share of category growth, bringing new users to the brand and to the antidandruff segment. It is more than 70% incremental to Head & Shoulders with users who are more frequently female, multicultural and younger than those who purchase our core brands. BARE is packaged in a bottle made with 45% less plastic than the brand's classic bottle. The packaging is mono material, meaning both bottle and cap are made with recyclable HDPE, one of the few packages like this in the hair care industry. We have protected these technologies with 17 granted patents around the world. And BARE is not the only part of the portfolio where we are reducing virgin plastic. For more than a year, nearly 100% of hair care bottles supplied from our Western Europe manufacturing plant have been made with 100% post-consumer recyclable plastic. The 2023 launch of Olay Super Serum has ignited the serum segment in mass skin care, adding 4 points of growth. Super Serum offers the power of 5 serum benefits in one product and provides visible results that are superior to the leading prestige serum, a great example of Olay's reframing to democratize superior skin care. After only 1 year, Super Serum's a top 3 serum in a very fragmented and dynamic market. Moving outside North America, in Latin America, our Pantene deep conditioning treatment collection is leading category growth, thanks to formula featuring visibly enticing melting pearls, which deliver superior hair repair. Pantene has grown annually 30% over the last 2 years in this region. In Japan, SK-II's renewed focus on PITERA, its superior hero ingredient, delivered an average of 18% growth over the past 2 years. This gives us confidence that the brand fundamentals are healthy and strong. To fuel the investments we are making in superiority, we have average productivity savings of roughly $750 million per year over the last 3 years. Hair Care's global SKU and simplification formula program is a great example. We've reduced SKUs by 26% and formulas by 23% while improving category growth for retailers by 1 to 4 points by focusing on more productive and incremental SKUs. For example, in French hypermarkets, we removed less productive Head & Shoulders products from the shelf while increasing the number of facings for the brand's remaining highly productive products. This simplification reduced shopper confusion and resulted in total category growth of 3 points. We believe there's much more opportunity here to deliver productivity and superiority by further simplifying our operations and reducing consumer choice paralysis. We are also driving productivity and effectiveness in media. All of our North America brands now share an in-house media ecosystem, enabled by strong data and digital capabilities. This ecosystem has helped drive new levels of efficiencies and also stronger media effectiveness, which directly correlates to top line acceleration. This is especially evident on Secret, the original pilot brand, which in the last 3 years has doubled media effectiveness while growing organic sales 11% annually over this same period. When we met 2 years ago, I noted emerging challenges in China tied to SK-II's high salience in travel retail and Hair Care's low online salience. This caused us major headwinds during COVID as people were not able to travel, and they shifted to predominantly shopping online. Then we faced new challenges as has the entire industry. Low consumer confidence is causing market decline. The categories in which we compete in China are down 6 to 9 points over the last year. On top, we've encountered additional headwinds on SK-II, given its Japanese heritage. We are facing these challenges by doubling down on our proven strategies led by consumer-centric superiority. We have a strong portfolio of daily use brands that are leaders in their categories and can play a meaningful role in growing categories for retail partners. To shift our online salience further in China Hair Care, we continue to invest in capability and portfolio-wide superiority. This has resulted in a 6-point increase through fiscal '24. We've grown online share for more than a year now. And our portfolio is leading category growth on Douyin, the fastest-growing online retailer in China. Leading this progress, Pantene in China has grown steadily over the last 5 years with product and packaging superiority investments and penetration-focused dosing communication leading category growth, both online and offline. An analogous head and shoulders product and packaging superiority upgrade, coupled with encouragement to use anti-dandruff shampoo in every wash is launching now in China. And in the near term, we will launch a superiority upgrade on Rejoice. Shifting to SK-II, we've taken a multipronged approach centered on demonstrating PITERA's superiority. How? A first-ever study on skin aging demonstrates that SK-II users in their 50s with decades of continuous PITERA use have skin age that can be more than 20 years younger than their real age. We are using these results to demonstrate PITERA superiority throughout our communications. In addition, SK-II just launched a supercharged product line called LXP. It contains 8x the concentration of PITERA and is positioned in the super premium segment of the prestige skin market. This segment has remained healthy and growing while the rest of the market stalled. We're confident that our focus on superiority across the brand will strengthen our results going forward. As an early sign of encouragement, since September, SK-II's domestic consumption in China is both ahead of a year ago and ahead of the market. Across our business, we have grown mid-single digits by leveraging superiority and productivity. Given the strength and momentum on our businesses outside of China and the encouraging progress we are making within China, we're confident we'll deliver on the levels of growth and value creation that we expect and we know you depend on. I will now pass it on to Jen Davis to share an update on the health care business.

Thanks, Alex. P&G plays in a $375 billion global health care market that has grown 5% to 6% per year since 2018. We expect sustained market growth behind social and demographic trends such as anti-aging, chronic disease and the desire for well-being through self-care. Over the same period, P&G Health care grew sales plus 7%, improved margins to enable double-digit profit growth and earned over 2 points of value share. In fact, we're one of the fastest-growing major consumer health manufacturers in the world and are the #2 player in the industry. The health sector represents 14% of P&G sales, about 60% of which is oral care and 40% personal health care. Both categories have delivered outstanding value creation for P&G over the last 4 years with balanced sales growth, productivity to enable faster profit growth and strong cash generation. Our leading brands like Oral B, Crest, Vicks and Metamucil help consumers enhance quality of life through better daily habits that are worth it with noticeable results that treat, manage and prevent health issues, enabling consumers to thrive and be their best. Our focus continues to be on deeply understanding consumer jobs to be done, problems to solve and habits to form. Our consumer centricity is focused on the outcome of habit formation. And we have many new insights on the variables that enable or inhibit adoption and compliance of daily habits that are more sustainable. We're efficiently turning these insights into innovation that delivers irresistible superiority across all vectors. We're using data and analytics to codify these key business drivers to operationalize accelerated market growth through trial of underpenetrated segments, more usage occasions and more value per use. Finally, we're turning ongoing productivity into a capability that fuels investments in this balanced and sustainable model. Collectively, these elements generate competitive advantage. In oral care, we understand the significant public health problem of oral diseases largely preventable by using a powered toothbrush twice daily at home with stannous fluoride toothpaste. This combination reduces the risk of cavities, reverses gingivitis and prevents early gum disease, which has been associated with higher rates of dementia, diabetes and cardiovascular disease, important and valuable consumer problems to solve. Helping consumers tackle these problems presents a sizable market growth opportunity. As a global leader in both the Power Brush and Paste segments, P&G Oral Care is uniquely positioned to transform the daily brushing habit for better oral and whole body health outcomes by deeply understanding how consumers perceive the role of toothbrushes and toothpaste. Our goal is to make this habit worth it. That means approaching every vector of superiority to increase the gain and reduce the pain of habit adoption and compliance. One way we've done this is by making it easier and more obvious for consumers to know that a power brush is right for them. The power brushing segment returned to market growth in fiscal 2024, led by Oral B, the global leader in power and the #1 dentist recommended brand. We've restarted market growth in power through the mind opening why that manual brushes leave 50% of plaque behind and that only Oral B iOs oscillating round brush head removes 100% more plaque than a manual brush, not just clinically superior but noticeably superior with cues and signs of efficacy in use and payoff for our dentist clean teeth feel that consumers recognize. As a result, in fiscal year 2024, the category growth rate doubled and Oral B grew double digits. Now let's see how Oral-B iO delivers a perfect clean for everyone's unique smile. [Presentation] Now this superior communication is on air in the U.S., Germany, France and Italy, and it's driving a remarkable 50% increase in engagement compared to the same period last year. The new creative was the highest qualifying copy and pretesting and we're extending this communication through increased media reach and with our dental professionals and at every retail touch point. Even with this progress, we still have tremendous opportunity to drive household penetration. Consider Europe, one of our most developed power brush markets. Only 20% of consumers use one. In North America, the opportunity is even greater. Household penetration is less than 15%. To step change penetration of power brushes, we are now introducing iO2, the first iO designed specifically to help consumers trade up to power from a manual toothbrush at an accessible price point, creating superior value for consumers across price tiers. It has a delightful, simplified start-up experience that overcomes the harshness and complexity perception trial barriers. Early results in the U.S. are very encouraging with sales exceeding our expectations. We launched across our major global markets throughout fiscal 2025. We're also reducing the guesswork of when to change your power toothbrush head like dentists recommend 4 times per year. Smart bristles fade from blue to white, signaling time to change and will come in bigger packs to help make Oral B the obvious choice. Paste is also critical for us, and Crest is the #1 brand in the U.S. Later this year, we're excited to launch our best-ever whitening paste technology, 3D White Deep stain remover. With time, stains build up and get harder to remove with whitening toothpastes that typically use a mechanical action. Our new formula works in just one day, one day to dissolve the bonds, locking stains to your teeth and better preventing them from occurring. It's holistically designed experience seen as an irresistibly superior value to both the category-leading paste and to lower-priced sources of volume. Now let's talk the global personal health care category, which is about $275 billion and consistently growing low to mid-single digits. With a broad presence in key segments and a strong portfolio of physician-supported multi-region brands, personal health care has been a consistent growth and value creation driver. We have driven productivity across the business to enable accelerated profit growth while simultaneously strengthening investment in consumer messaging. Our portfolio includes iconic brands like Vicks, the #1 over-the-counter and cough, cold, flu brand in the world. It also includes category-leading brands like Metamucil in Digestive Wellness and Neurobion in nerve care. In fact, in the U.S., we are a top 2 player across respiratory, sleep and digestive wellness. Vicks has long been synonymous with trust and reliability. Consistent investment in media reach behind superior advertising content has built a powerful equity ownership of relief you can feel rooted in soothing vapors. This strong foundation enables us to innovate to offer more forms and diverse ways to treat, further strengthening Vicks position against competition and from the seasonal variances in the incidence rates of respiratory illness. Through studying consumer behaviors and jobs to be done, Vicks has extended the sensory experience of its vapors to new forms like VapoStick and VapoPatch as well as introducing new usage occasions through products like Vaposhower and Vapobath. Let's take a look. [Presentation] New products like VapoStick as well as DayQuil and NyQuil with honey and elderberry have not only attracted new users, especially multicultural consumers and families but have also increased relevancy, usage and basket size. The Vicks team also recently launched ultra-concentrated liquid caps that are 25% smaller, provide more doses per package and coming easy to open bottles instead of traditional blister packaging. These changes make it easier to use, addressing 2 top consumer tensions, hard to open packaging and product size that was difficult to swallow. In the U.S., the digestive wellness market, we lead with superior brands, Metamucil, Align and Pepto-Bismol. Household penetration is only 60% despite 80% of U.S. adults experiencing at least one digestive issue annually. This is an opportunity to win with more consumers and grow our 16% market share through meaningful product innovation driven by a clear consumer interest in brands like Align. For example, the #1 unmet need for nearly half of all consumers is bloating associated with the inability to digest food. Align clearly communicates the symptoms one of the most common relatable signs of bloating for consumers not being able to button their pants. [Presentation]

The results have been impressive. Align value consumption is up mid-teens over the past 6 months. And we further expanded our offering with a gummy version launched earlier this year. In closing, across our Consumer Health business, we remain confident in our strategic choices and our ability to continue delivering sustainable, balanced growth and value creation by helping consumers treat, manage and prevent health care issues and enhance their life through healthy daily habits. Our health care team is agile, passionate and committed to accelerating this category even further in the future. Now I'll hand it over to Gary Coombe to discuss the Grooming sector.

Thank you, Jen. Good afternoon. P&G Grooming is over $6.5 billion in sales and is 8% of the total company. Our Grooming business is split 75% in male grooming, 25% in female grooming with 2/3 in focused markets and 1/3 in enterprise markets. Grooming is now a $24 billion industry and we are the global leader. Following a decade of underperformance up to 2018, our strategies to transform the Grooming business are working. We've restored growth in the category and reestablished P&G as the driver of value creation in the industry, growing both organic sales and share meaningfully over this period. Our performance has accelerated since 2020 and the end of COVID's negative impact on our business, delivering an average of 6% organic sales growth over the last 4 years with double-digit constant currency profit growth. The central pillar of this transformation has been our strategic shift from being a wet shaving business to a true grooming company. This recognizes the many ways that consumers choose to groom and the range of tools that they use. It also focuses our organization on the competitive advantage that we have as the P&G grooming company. Uniquely in our industry, we're able to combine deep technical expertise in blades and razors and appliances and chemistry to offer superior products to all consumers, whatever their grooming choices might be. We're also raising the bar across our Grooming business to truly offer irresistible superiority that brings more users into the category, more usage and trade up into more delightful premium performance. We're driving this approach across all the vectors of superiority on Gillette, Venus and Braun and in all the markets around the world. Systemic interventions to strengthen superiority on our core male blades and razors business helped our $4 billion Gillette business grew 8% last year. Worth $370 million in sales since launching in 2022 and growing 44% in the U.S. last year, Gillette Labs extends our superiority in male shaving to a new level and is driving this performance. In 2025, we will further strengthen this advantage. Innovations on the blades, the lubra strips and the razor handles are combined with the exfoliating bar and our contour flex desk to provide unbeatable smoothness and comfort for what is the ultimate shaving experience from Gillette. Redesigned packaging provides clearer brand recognition and better communication of superiority benefits and better stand out on the shelf. And new slim travel cases, razor stands and wall hangers delight consumers and increased consumption in the category. Now we're supporting this innovation with superior communication as well. In Europe, we're bringing the iconic 1980s Gillette song back but with a modern twist. It's nostalgia for those that remember the first ad and it's introducing the younger audiences to the best a man can get. The ad has become a cultural sensation in the U.K. Gillette Labs awareness has increased 20% as a consequence. Positive brand sentiment online is up an incredible 140% and Gillette's value for money rating has increased 15%. We're now expanding this campaign across other European markets. Now all of this superiority is then brought to life by a transformation in retail superiority. Our house of grooming shelf executions significantly improved the shopping experience with clearer brand [indiscernible], easier navigation of the range and clearer performance and benefit communication. These solutions are now in more than 30,000 stores in our focus markets and are proven to drive category growth up to 5%. The plastic-free packaging we introduced together with these changes helped transform the shelf presence, dramatically improving the experience for our consumers. And of course, they're fully recyclable. In female blades and razors, our Venus brand grew 11% last year, creating and leading continued category growth. But once again, we're not resting on our laurels. We will extend this advantage next year with our biggest products upgrade in 25 years. New razor handle designs and significant blade improvements will be presented in beautiful new packaging. Our most popular platinum range will be upgraded and expanded. And for the first time ever, all Venus system razors will be sold with a shower hook, which we know delights consumers and increases consumption in the category. This innovation will be amplified by the brand's new digital and social media-led communications and the accelerating rollout of our female house of grooming retail executions. Now in 2022, I shared in this meeting how we are complementing our superiority efforts in our core business with a measured but intentional shift to broader grooming jobs, opening new growth opportunities in beard care and styling, intimate and body grooming and semi-permanent hair removal. King C Gillette serves all the needs of men with facial hair under one brand. It continues to deliver double-digit organic sales growth year-on-year and is leading category growth in Europe. Our intimate grooming ranges for men and women provides superior performance for the majority of consumers who do this grooming job at home but were previously using tools not designed for the purpose. Delighting consumers with better products drives both category value and P&G sales. And our Intense Pulse Light or IPL appliances from Braun provide long-lasting hair removal from the comfort and convenience of your own home. This has a profound impact on category value as the alternative is using a salon, a multibillion-dollar out-of-home industry that we are bringing in home with our superior products. Again, we are strengthening superiority to accelerate growth with the launch of the world's first smart IPL. The connected app is like a beauty consultant in your living room. It learns as you use the product and guides you through your treatments to provide the very best experience and performance for your individual hair and skin. Now 6 years ago, sales in these 3 segments were less than $20 million. They now generate $400 million of annual sales for P&G. All the investments we are making in superiority are fueled by ongoing productivity efforts with Grooming delivering between $200 million and $250 million of gross productivity every year for the past 5 years. We're smartly leveraging digital tools and removing complexity that overburdens, frustrates and slows down our organization. And we're combining this with major supply chain transformations around the world, including, of course, the Berlin automated shift that you heard about from Luke earlier. So Grooming is a growth category again. Our interventions across the vectors of superiority have accelerated growth on our core business and added close to $0.5 billion of sales from new grooming expansions. And yet, our best years are still ahead of us. A few short years ago, we were locked into a wet shaving business in a stagnant category. But now we've created and are competing in a much broader grooming category, where consumers are underserved and hungry for superior performance. We are uniquely placed with platform and technological advantages to capture this growth and value creation opportunity into the future. Thank you very much. I'm now going to hand over to Shailesh.

As Chief Operating Officer, I have P&L responsibility for enterprise markets in addition to responsibility for product supply, global business services, information technology, sales and market operations in all regions as well as our new business ventures organization. Today, I'll focus my time on the exciting results we are delivering in enterprise markets. In fiscal 2024, enterprise markets were about $18 billion in sales with an average organic sales growth of 9% over the past 4 years led by pricing. We expect continued sales growth this year with balanced contribution from volume and price. After-tax profits have been growing 13% on average, driving margins to be approximately 1.5x higher than they were in fiscal 2019. Excluding foreign exchange, after-tax profits have been growing on average 30% with operating margins improving every year. In fiscal 2024, all of our enterprise markets were profitable with the exception of Argentina. As you know, enterprise markets bring unique challenges such as foreign exchange, long supply chains, markets with evolving demographics and geopolitical volatility. Overall, we've consistently been able to deliver results despite the ups and downs by market. We've done this by managing complexity with agility and discipline, raising the bar on superiority across the 5 vectors, which drives market growth with the continued focus on productivity to fund reinvestment, all underpinned by an empowered organization and strong culture. What works in focused markets is also true for enterprise markets. Enterprise markets provide big opportunities to drive market growth through superiority. Let me share a few examples. As part of our Beauty portfolio, Hair Care has grown organic sales 12% on average across enterprise markets over the last 3 years. Alex talked about Latin America Hair Care. In Mexico, Pantene has transformed what a great hair day means for consumers with a portfolio that drives brand superiority across the vectors and drives category growth. This has come from a focus on the biggest benefit spaces consumers care about such as hair repair and hydration, enhanced packaging design with conditioners in tubes and large-sized pumps and superior value across all tiers. Let's take a look. [Presentation]

Across the total portfolio, Hair Care Mexico has doubled sales and quadrupled profit over the past 4 years while driving category growth 1.5x its fair share. We've become the #1 hair care company in value share with Head & Shoulders #1 and Pantene #2, growing in both volume and value. Grooming enterprise markets have grown organic sales 15% on average over the past 3 years. In India, Gillette has delivered its fourth consecutive year of category-leading growth behind superior product and communication. 10 years ago, Indian men were primarily using double-edged razors. They lived with the belief that nicks and cuts were a normal part of shaving. Gillette Guard has changed the paradigm, proving shaving without cuts is possible and affordable. They've accomplished this through a product with a safety comb to help with nicks and cuts, an open design for easy rinsing without running water and flexible pivoting to better maneuver difficult zones. And it's in a package that calls out the value for the consumer with clear communication. Let's take a look. [Presentation]

Today, Gillette Guard is the biggest shave care brand in India with a 28 share. It's gone from 0 to 50 million users over a decade. Grooming continues to grow double digits by trading up double-edge users to the superior shaving experience. Oral care enterprise markets have grown organic sales 10% on average over the past 3 years. Our power toothbrush business in enterprise markets has grown 15% in the same time frame. In Poland, for example, where only 1 in 10 consumers use power toothbrushes, Oral B is accelerating category growth behind the launch of the superior performing premium IO brush. As Jen said, through superior cleaning, a more delightful experience and educational communication, IO is bringing manual brush users into the power category. This has helped double the power market growth rate to 26% since launch, delivering 70% of the market growth, 3x its fair share with a strategy that raised the bar across all 5 vectors of superiority. To continue to fuel our investment in superiority and to offset cost and currency challenges, we are driving productivity improvements in all areas of our operations. In Asia, the Middle East and Africa, we've been on a journey towards a leaner, more effective SKU lineup. Through our programmatic shelf tool, we have validated assortment and shelving recommendations that deliver profitable category growth. Execution of our recommendations in fabric enhancers at a customer in the Philippines led to 7% sales growth for P&G and accelerated category growth for the customer. This was enabled by increased shelf space for productive SKUs and improved on-shelf availability 4%. In the Philippines hair care business, we applied programmatic shelf capability to provide insights, which led to one retailer's decision to focus shelf space to support high productivity SKUs. This resulted in P&G growing 10% and leading category growth, a win for P&G, the retailer and the consumer. In Latin America, we are focused on media productivity. As Mark described, we've shifted from an agency-led operation to in-house media capabilities, leveraging proprietary algorithms to optimize planning and buying. Our in-house model is delivering 15% to 20% efficiency in digital media, while improving quality. Media return on investment has improved more than 10%. In terms of portfolio and enterprise markets, we continue to be disciplined, active and focused on delivering U.S. dollar-based return on investment. For example, we've changed our go-to-market approach in Nigeria to further sharpen our focus and strengthen our value creation potential. We made the choice to divest our business in Argentina, starting with Fabric & Home Care last March and with the rest of the business divested July 1. These examples demonstrate the dynamic nature of our strategy and our desire to aggressively allocate resources to where they create the most shareowner value. While we know our portfolio of enterprise markets are and will always be volatile, our integrated growth strategy is the right strategy to manage the volatility. Our organizational structure continues to prove beneficial for us, highly accountable and agile at the country level with freedom within a framework that enables quick decisions in times of crisis. We remain laser-focused on delivering balanced top and bottom line growth, organic sales growth from increasing volume and pricing with innovation, improving profitability through productivity in all areas of cost. I continue to see tremendous opportunities across all categories, including attractive margins. I am confident enterprise markets will continue providing value creation for the company. Thank you. I will now hand it back to John.

Thanks, Shailesh. I want to take just a few minutes. We're almost there to put a wrapper around what you've heard over the last couple of hours. Everything we've talked about is in the support of this strategy, portfolio superiority, productivity, constructive disruption and organization. We're strengthening the execution of the strategy through increased focus on supply, sustainability, digital acumen and a superior employee value equation. As you've heard, this is not a menu to pick and choose from. Each part of the strategy needs to be delivered. The advantage comes in being able to do all of these things at the same time. These strategic choices are the enabler to deliver against our long-term growth algorithm, growing organic sales modestly ahead of underlying growth of the market, growing core earnings per share mid- to high single digits and delivering 90% or better free cash flow productivity to deliver balanced growth and value creation to delight all of our stakeholders, consumers, customers, employees, society and share owners alike. Thank you. With that, I'll invite Andre, Shailesh, the 5 sector CEOs to join me on stage to answer any questions. We'd ask that you use the microphones to ask your questions so they can be brought to your seat so that we enable people listening in online to be able to hear you.

Robert Ottenstein, Evercore ISI. So a couple of questions on China. First one, a short-term one and the second, a little bit longer term in the context of the entire company. So first off, can you talk a little bit about how 11/11 went? And is China and the Chinese market getting less worse? And then perhaps maybe even a more important question, if it looks like for whatever reason that China is going to be in a malaise for an extended period of time, how would you manage that circumstance? Would you perhaps look at other countries to be focused markets and look to get the growth that you had expected long term to get in China in other markets? Are you able to pivot in that circumstance?

So let me ask Shailesh from a market operations standpoint to talk a little bit about 11/11. And also, maybe Alex can add some perspective from a beauty standpoint. We're still, frankly, digesting it, Robert. It's fairly new, but we've got some perspective. We'll happy to share. Shailesh, why don't you start?

Yes. I would say, relatively, 11/11 was good in the sense that we saw a flattening out of our sales performance with, of course, variation by categories. But overall, we would say it went off pretty well. We have made a deliberate effort to reduce key consumption periods and have more everyday sales, and we continue to do that in spite of increased depth of promotion by some competitors.

Maybe just building on that for our 2 big businesses in China, SK-II and China Hair Care, both performed quite well in 11/11. SK-II was well ahead of a year ago. And both businesses moved up in rankings on the platform to top 3 positions in several platforms, #1 position for China hair care.

And from a total business standpoint, obviously, we're in the middle of a quarter. But as we had forecast, certainly from an index standpoint, the numbers are strengthening pretty much in line with what we had projected. I think in terms of your long-term question, Robert, we probably -- we may have a different view between you and I in terms of the potential there, which we still view as very high. But if we just grow North America and one of the new growth engines called Europe at the rates that we're targeting, which is slightly above the market, we'll be able to deliver against our growth algorithms even with China that's essentially flat. Did I get that about right, Andre?

Filippo Falorni, Citi. There was a lot of focus on innovation as typical in your presentation. Maybe can you give us a context of the contribution that you're expecting from innovation this fiscal year, particularly in the second half? And then over the last couple of years, you've clearly improved the speed to market. So can you review a bit what has changed and why you can improve further in terms of innovation and contribution?

Maybe to try to bring some of the specificity to that, I'll ask one of the category leaders to answer that question in the context of their category. Sundar, I put you on the spot.

Yes. No worries. If I understood the question right, it's about the contribution of innovation as opposed to go-to-market. I say for us, if you take Fabric and Home Care overall, innovation has fueled most of the category growth, as we showed, whether it is the -- on Fabric Care, scent beads, rinse and the high household penetration opportunity we have on pods, that has been bulk of the growth. And on Home Care, Power Wash, Platinum Plus, Easy Squeeze, those have been the primary driver of growth. In each of the focus markets, we think about the go-to-market on top, whether it is the depth of distribution, the visibility, the programmatic shelf and the ability to activate data that has brought up the overall growth to the remaining portions. It's tough to quantify them exactly by market, but innovation-led, but topped up by go-to-market is how I describe for the category.

Just maybe directional to try to get another aspect of your question, the relative strength of your innovation program, second half, first half?

Yes, it continues to be the same level of growth that we have had over the past 6 years that I showed you. We have the same level of innovation coming. If you take any of the next 3 to 5 years, that's the strength of the program.

In the beginning of the presentation, you talked about the 800 basis point improvement in profitability in enterprise markets. And I was curious how that changes, if at all, investment decisions in those markets. Does it -- do the markets get a greater right to invest, more innovation flows more quickly? And what might that unlock from a growth standpoint?

Shailesh?

Obviously, Lauren, means that the businesses are much better investment grade, much more attractive for the categories to invest in to grow. And so it has been a very deliberate choice. And that's why I mentioned earlier as well, we're very focused on dollar-based returns so that for the GBUs, it becomes easier to design and invest in those markets. But for sure, it has enabled significant investments for growth in those markets.

And Gary, maybe you can address that question from a grooming standpoint, your relative interest in growth in enterprise markets versus what it may have been historically?

I mean, yes, we have benefited from strong margins in enterprise markets and grooming for some years. And as a consequence of that, enterprise markets gets at least, if not more than fair share of the innovation that we derive. And you see the growth come as a consequence. Shailesh talked about what's happening on -- on grooming and Shave Care in India, I mean, absolutely extraordinary results, and that was one example of many. One of the reasons I'm so excited about this business is there are many, many more opportunities like that as these margins have strengthened. It's going to be a bright few years ahead of us in that regard.

And Jen, you're looking at enterprise markets, if you think about the business on a global basis it's being a source of growth and value creation as well, right?

Yes, absolutely. The power brush opportunity is almost universal, as you heard Shailesh talk, and that's as true in Central and Eastern Europe as we're finding even in places like Latin America. Latin America is a great market. I mean the consumer problems to solve from an oral care epidemic standpoint are vast everywhere. And we're finding often more common -- and the problems to solve even with the way we need to bring the communication and sometimes the portfolio to market in slightly different ways.

And [ Alex ], I know from our conversations that you're increasingly interested in the potential of that particularly in hair care that...

For sure. And I would just maybe tie a couple of points that Sundar and John, you mentioned and Shailesh. The melting pearls innovation that I showed in my presentation, we launched first in Latin America because of the profitability improvement and because of the consumer passion in the category. So certainly, innovation is flowing to these markets in a primary way.

So when you put all that together, Lauren, I think we're in a very interesting and exciting place as a company. For the first time in a long time, we have, I believe, the ability to both grow and create value and looked at over the right period of time in every major market and in every major category, as hopefully, you saw today. That's not where we've been historically. And that's, frankly, a wonderful place to be, right?

Kevin Grundy of BNP Paribas. My question pertains to the presidential election, the outcome and some of the market dynamics that we've seen, which have been pretty sharp in certain cases, steeper yield curve, stronger dollar, higher likelihood of tariffs, some potential for U.S. corporate taxes. When you kind of pull all that together, understanding that we're still dealing with a lot of uncertainty, maybe you can comment on potential implications for Proctor and then just remind us of some of the flexibility that you believe you have from a supply chain perspective should tariffs be on the table again?

Andre, I'll throw that gem over to you.

Thank you. Look, maybe to dissect it, yes, there are immediate headwinds in terms of foreign exchange. You've seen that. It's broadly in line with what we had expected at this point in time. There might or might not be tariff implications. We have a very global supply chain with a lot of built-in flexibility. You heard both Sundar and Victor talk about our ability to iterate and revise formula cards as needed, which allows us to shift not only ingredients, but also sourcing of ingredients. And in most cases, we're already multi-region sourced, multi-supplier sourced. So we'll have to adjust that as we see this develop. And lastly, from a tax perspective, there's one positive that we see is the 2017 reform is likely going to be extended at least to a degree. So you put it all together, I would say it's noise, right? It's noise in which we operate every day. We've operated in all sorts of environments around the world. And I think we've proven and I'm convinced we can continue to prove that we have the flexibility to adapt, evolve and continue to operate our business model with focus on the consumer and superiority.

There's one -- I agree with everything Andre just said. One thing I would just remind us of is that our economic model prioritizes production that's proximate to consumption simply because of the distribution costs involved in our business. So before any of this, we were organized in a way, certainly within our company, but also within the industry that's very different than how some other industries are organized, not right or wrong, but different and makes it not easy, but easier to manage some of what may be ahead of us.

Dara Mohsenian, Morgan Stanley. So John -- or maybe this is an Andre question. Can you just give us an update on product superiority over the last couple of years and the scorecard in terms of your progress there? I know at some point, you rebased upwards, but relative to that revised base, how much progress have you made? And just given the difference in performance between when you move to 4 vectors versus 3, are there any of those 5 vectors where you're behind, where you can make a lot of progress as an organization? And any thoughts there?

So I know he's not up on stage, but let me ask Victor to comment on superiority generally. Behind you, Victor?

Yes. So we indeed rebased our superiority based on the new standards that I talked about. And we moved from 80% with the previous standards to 45%. Now we're up to 55%. And we continue to see evidence that, that significant shift in the way we assess and deliver superiority is driving our business growth by a significant margin versus the previous [ scorecard ]. I'm confident that we continue to make progress. And we see some of the innovation that is being delivered based on the new standards, it's hitting the market and some of that will be further out in the following fiscal years.

And maybe [indiscernible], sorry, a little bit of a cool. Can you tell? Maybe you could comment on Dara's second question, which is within your business, where do you see the most opportunity from a superiority standpoint across the 5 vectors?

Yes. I mean, as Victor said, the good thing about superiority is it's a never-ending journey. We can never say we've met the target and the target is always static because especially for our categories, whether it's baby care or feminine care or family care, our consumers are always changing. So the needs and expectations are always changing. There's competitors that come into the market. So our benchmarks are constantly changing and then the goal is always raising, which is frankly a great challenge for the entire organization.

Andrea Teixeira from JPMorgan. I was just hoping to see if you can comment a little bit on the guide, given that the 15%, if I understood you correctly, both Beauty and China, China, in particular, China and the Middle East, I guess, in particularly China getting a little bit better than what was before. And obviously, you have an easier comp there as well. What has to happen with the other 85%? It seems like the U.S. and Europe, John just called like a growth market, a new growth market. So if that continues to be the case, what would not take you to the higher end of guidance?

Andre?

Look, Andrea, I don't think the story has changed much. As we said, I think China is now developing in line with expectations, which is good to see. But it doesn't mean that China turns suddenly positive. If China turns positive in the second half and it gets to mid-single-digit growth, if the Middle East situation stabilizes and we see growth coming out of Saudi, Gulf, some of those markets that are lagging behind, North America will continue to operate at the growth rate that we have seen. Europe continues to operate the growth rate that we have seen. That takes us to 4 and higher. If any of those don't come true, we'll be below 4% towards the 3%. We believe it's too early. All of those outcomes are still within range. But I think the one stability that we see is the 85% of the business, we're very confident we'll continue to perform at the level that we've seen. The variability really sits all within China and the Middle East.

Nick Modi from RBC. John, I wanted to ask you about competitive moats. Obviously, a big value creation driver for Procter & Gamble is growing above the market. And so I wanted to ask you this along kind of 2 lines. First is a lot of your competitors are behind Procter & Gamble in terms of the initiatives that you implemented maybe 10 years ago, right? And so they're all kind of using the Procter & Gamble playbook. And so I'm just curious on your -- if you've done benchmarking to understand how far ahead P&G is relative to the peer group in terms of how long it would take them to actually catch up to where you are today? And then the second question is, as we talk to retailers, it's pretty clear that they're changing the way they think about what they take on the shelf. The innovation strategies that many companies employ, line extensions, flavor extensions, fragrance extensions is no longer enough, like their hurdle has gone up. And you guys have been doing a pretty good job around disruptive innovation. So how have those conversations changed? And do you think you'll be getting more share of shelf just simply by your innovation pipeline?

Congratulations for asking a 2-day long question, Nick. There's a lot there, but a lot of good stuff. Let me just offer a couple of pieces of perspective. There were lots of questions some time ago about -- in fact, our Board asked me this question all the time. They said, why are you so obsessed about talking about our strategy? Isn't that something that should be confidential? And I would ask them the question back, why do you -- why are you concerned about that? I said, well, because competitors can copy it. And my answer was that will be a very good day because it's a market constructive strategy. If we're all innovating, we're all focused on growing the market, we're focused on creating profitability for our retail partners and at the same time, offering great value to consumers, that's a good place to be. So let me just rest on that one. The second thing is -- we may be the slowest on earth, but it took us a long time to put this together. If you look at any one of the pieces, they're not easy. So think about a portfolio as an example. That's viewed as in our distant past. We're still very active, both geographically and from a product line standpoint. But to go from 225 brands down to 65 and from 22 categories down to 10 and to do that with a commitment to create value every step of the way and to increase market cap every step of the way, that is not a timid endeavor. Organization change. Again, we may be the slowest on earth, but I would argue it took us 20 years. If you go all the way back to 2000, when we started trying to focus on global categories and then really made the final declaration in 2018. Cost productivity, if you don't want to -- if you want to keep the airplane flying, it doesn't happen overnight or some really bad things happen. So it takes time. And I think there are some good examples that make people -- other companies making good progress along those lines, but it's not easy. The third and most important thing is something I tried to articulate at the beginning. And this is something we have to keep reminding ourselves, this doesn't work if each of the pieces isn't in place. You need all of it. So you have a superior product and you don't have superior communication, that's what David Taylor, my predecessor used to call confidential superiority. It doesn't work. And if you can't execute that proposition with excellence in a store at a value that a consumer finds attractive. So the magic in my mind, and I really give all the credit to this team and the team that spoke earlier and others who aren't here today, is putting that all together at the same time without compromise. And that is very difficult and still an opportunity for us. We don't have it all together in all places all the time. Would any of my colleagues like to comment on that question any further?

It's Mark Astrachan from Stifel. I wanted to ask about how you see the evolution of the enterprise markets over time. Where do they go from here as a percentage of the business in the future? And I guess I ask in the context of if my math is right, it accounted for about 1/3 of organic sales growth '21 to '24 or about 2 points or so of growth. What gives the right for a multinational business to succeed in smaller local and regional markets, particularly where it seems like some local and regional players are gaining share and in the context of a world that also seems to becoming a bit more nationalistic or protectionist.

Shailesh, do you want to comment on that, and then I'll add some comments.

Sure. I think, firstly, there is plenty of growth opportunity in many of these markets. One of the things, and I deliberately picked examples which bring that to life. Our perception very often of these markets is there's a gravitational force down. I actually think in many of these markets, one of the most wonderful opportunities we have is as incomes rise, the consumer confidence is always much higher, and that allows for much more category growth. So typically, that is one driver we see that as people move to new oral care habits, I believe power brushes will grow at a very fast pace. When you look at the growth of hair care treatment products, and Alex mentioned it, I talked about it, there's a reason we started with some of those products in Latin America, and those are really premium, and they are just doing extremely well. We launched Pantene, Livon Oil in Brazil 3, 4 months back. Honestly, we could be doing 4x, 5x easily of what we are selling today just based on the opportunity given how people are wearing their curls and many other things. So I think this whole thing of consumer income progression in many of these markets will drive a tailwind through the consumer confidence and consumption. That's one. Second is even on value, even on value, people very often who are income constrained, say, I cannot afford to buy a cheap product because they don't want to make a mistake. It is no surprise that Head & Shoulders, which is one of our most premium shampoos and typically sold at a premium to the market is extremely successful in most of these enterprise markets.

So I would just add a couple of things. One is, remember, portfolio of categories where performance drives a significant part of brand choice. I mean that matters as consumers come into these categories. It's not all about price. Value is defined very holistically. And you see that reflected in many of the examples that were shared today. The second thing I would remind you, if we were having this conversation 20 years ago or more, 25 years ago, dating myself. And we were contemplating what was going to happen in China. There were a ton of local manufacturers in China 25 years ago. But in these categories where performance drives brand choice, over time, whether it was us or Japanese competitors or others that were able to deliver that vector of delight, what grew fastest was the premium end of the market because of the performance that was associated with that price. So if we just look at that as one example of what can happen. I see that happening in parts of India as we sit here today as well. So I think there's a ton of opportunity. The last thing I would say is go back to China. When I was working there in the '90s, again, there were tons of local competitors, and I hated them. And it wasn't because I didn't hate them as people, of course, but I hated their presence. And it wasn't because they were good. It was because they were bad. And the game in developing markets is all about market. It's actually not so much about share. And when you have -- now in China as an example, there are good local competitors. That's a good thing. It's not a bad thing because when a consumer comes into a category for the first time and has a bad experience, that's a category growth killer. If they come in and have a good experience, even if it's not with our product, that's a positive thing. So anyway, obviously, the answer is going to be different by market. It won't be linear, but I think there's a ton of opportunity.

All right. I think I have to cut us off here. That was all the time we had reserved for Q&A. Thanks for those of you who joined on the webcast.