---
title: "From P&G's Earnings Call: The 'New Stage' of the Chinese Market in the Eyes of Foreign Companies"
description: "During the mid-year earnings season, international giants summarize their performance over the past half year or fiscal year, and their key takeaways carry significant industry guidance. On the morning of July 30, US time, global daily chemical giant P&G released its fiscal 2024 (July 2023 - June 2024) results, with net sales of $84.039 billion (approximately RMB 609.4 billion), up 2% year-over-year, once again setting a record high. The day before, P&G's stock price briefly broke through the $170 mark, hitting an all-time high..."
author: "Future Beauty"
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published: "2024-09-06"
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# From P&G's Earnings Call: The 'New Stage' of the Chinese Market in the Eyes of Foreign Companies

> During the mid-year earnings season, international giants summarize their performance over the past half year or fiscal year, and their key takeaways carry significant industry guidance. On the morning of July 30, US time, global daily chemical giant P&G released its fiscal 2024 (July 2023 - June 2024) results, with net sales of $84.039 billion (approximately RMB 609.4 billion), up 2% year-over-year, once again setting a record high. The day before, P&G's stock price briefly broke through the $170 mark, hitting an all-time high...

During the mid-year earnings season, international giants summarize their performance over the past half year or fiscal year, and their key takeaways carry significant industry guidance.
On the morning of July 30, US time, global daily chemical giant P&G released its fiscal 2024 (July 2023 - June 2024) results, with net sales of $84.039 billion (approximately RMB 609.4 billion), up 2% year-over-year, once again setting a record high.
The day before, P&G's stock price briefly broke through the $170 mark, hitting an all-time high. This shows that the capital market is quite satisfied with P&G's performance in fiscal 2024.
Overall, in the current challenging economic and geopolitical environment, achieving such growth with P&G's massive size is enough for P&G to praise itself with several "Strong" statements in its press release. P&G's CEO Jon R. Moeller also stated in the report, "The P&G team has met or exceeded our organic sales growth plan." However, amid the cheers, P&G also candidly acknowledged the objective challenges in the Chinese market. In the post-earnings conference call, P&G executives pointed out that **the era of double-digit growth in the Chinese market has ended, and P&G no longer expects to return to double-digit growth; China should be treated like other mature markets, and it is expected that the Chinese market may return to mid-single-digit growth levels in the future.**

**Stable $600 Billion Base, Another 4% Organic Growth**
Compared to the 2% net sales growth on the books, the capital market actually places more importance on P&G's 4% organic growth for the entire fiscal 2024 (excluding the impact of foreign exchange, acquisitions, and divestitures). This indicates that most of P&G's business segments and the overall group are in a relatively positive and healthy growth state. P&G CFO Andre Schulten noted that out of P&G's 10 categories, 8 categories saw growth, with home care, fabric and home care, and grooming products all achieving high single-digit growth. Out of 25 brands, 21 brands grew, with 11 achieving high single-digit growth, making the overall situation relatively optimistic.
The financial report shows that P&G's Beauty segment saw a 3% year-over-year increase in organic sales in 2024, but due to challenges with the SK-II brand and the Greater China market, the skin and personal care sub-segment did not achieve organic sales growth.
However, **through price increases and new product launches, hair care products achieved "high single-digit" organic growth, ultimately bringing the entire Beauty segment to annual sales of $15.22 billion, up 1% year-over-year.**
Notably, excluding SK-II, the Beauty segment's Q4 business grew 6%, and full-year revenue grew 7%. Head & Shoulders, Pantene, and Herbal Essence all achieved high single-digit or even double-digit growth, marking their best performance in the past five years, with the hair care category growing 9% globally.
In the earnings call, P&G executives also emphasized that Head & Shoulders sales increased 7% last fiscal year, Pantene rose 10%, and the personal care category showed good upward momentum. The Health Care segment's organic sales grew 4% year-over-year. Due to premium product lines and volume growth in North America and Europe, the Oral Care segment achieved high single-digit organic growth. Personal Health Care organic sales remained flat, as growth from price and volume increases was offset by an unfavorable mix due to lower cough and cold incidence. The Grooming segment's organic sales grew 7%, with actual growth of 4%. As the group's largest business segment, Fabric Care sales increased 2% compared to the same period last year. Volume growth in North America and Europe was offset by price decreases, leaving Fabric Care's overall organic sales flat. The Baby Care segment saw a low single-digit decline in organic sales due to volume declines from share loss, but this was offset by a premium product mix. However, the Feminine Care segment saw low single-digit organic sales growth. Overall, through effective pricing strategies and category adjustments, P&G achieved healthy growth in a challenging market environment, especially with volume growth for the first time in over two years. This shows that the relevant strategies have been accepted by the market. In the earnings press conference, Moeller used "Dynamic" and "Sustain" to describe this growth momentum.

**Accelerating Adjustments: Focus on "Returning to Growth" in China**
In P&G's earnings call, "China" was the market with the most questions from investors and reporters. Against the backdrop of overall group growth, P&G's "pressure" in the Chinese market is indeed of great concern. Looking at regional business performance in fiscal 2024, the US saw 5% organic sales growth, Europe 8%, but Greater China saw an 8% decline in organic sales, mainly attributed to the weak market environment and adverse factors such as Japan's nuclear wastewater. Andre Schulten further disclosed data on the Chinese market in the earnings call: in Q4 2024 (April-June), constrained by the weak market environment, especially the weakening of important promotional nodes like 6.18, P&G's organic sales in China declined 9%. During this period, P&G's overall volume grew 1%, and combined with a 1% increase from pricing, it offset the adverse impact of foreign exchange, resulting in flat net sales. However, P&G had anticipated the slow recovery in the Chinese market. Schulten pointed out, **"Market headwinds will persist, and we have emphasized that recovery in China will take time."** Throughout the fiscal year, whether it was the 2023 Double 11 or the Valentine's Day and Spring Festival in early 2024, promotional node performance seemed to fall short of P&G's expectations. Despite this, P&G remains confident in the growth of the Chinese market, calling Greater China "one of the most profitable regional markets." P&G executives stated in the call, "In the Chinese market, P&G still leads in many categories, and there are many leading opportunities." According to data from third-party platforms obtained by FBeauty Future, P&G's "group army" strategy still shows outstanding competitive advantages across various categories from skincare to personal care online. Overall, P&G's core brands in the Chinese market have mostly maintained stable growth online. In particular, categories such as oral care, men's grooming, and fabric washing still hold market leadership positions. Moreover, information from the earnings call indicates that P&G's turnover rates in most categories in the Chinese market are stable, and the core of the business remains strong.
P&G's beauty and skincare business has always been closely watched by the industry. In a fiercely competitive market, P&G's two major brands, SK-II and OLAY, are accelerating product upgrades and marketing innovation in both the high-end and mass segments, especially maximizing the technological heritage of the century-old company to bring more freshness to the market. Following the systematic presentation of niacinamide research results and the launch of the third-generation small white bottle in March this year, a few days ago, OLAY launched a new product from its professional lab line in China—the anti-wrinkle black tube essence—adding a new black lab line alongside the classic red and white lines, making a key move in the anti-aging track. It is also understood that SK-II, also targeting anti-aging, will soon officially launch a new ultra-high-end product series. And from the first half of this year, SK-II has maintained high activity, not only upgrading its offline department store counters in May to enhance customized services but also announcing Karen Mok as brand ambassador, demonstrating confidence in investing in the Chinese market. "SK-II is expected to return to growth after one or two quarters," the executive noted. In the Chinese market, SK-II's operational efficiency is very stable; as long as there is no obvious decline in turnover, P&G is confident that the annual plan transformation will occur.
It is worth mentioning that P&G's focus strategy has also paid off in the Chinese market. "Fabric care is the most profitable category in the Chinese market. Our product matrix selection focuses on the most profitable categories, and the results prove this is the right choice," P&G executives affirmed the overall performance of the home care brands. Additionally, facing China's increasingly diverse hair care trends, P&G is undergoing transformation. FBeauty Future also observed that not only are core brands like Head & Shoulders and Pantene making positive adjustments in product efficacy and form, but brands like Aussie and Hair Recipe are also actively positioning in emerging segments such as "efficacy hair care" and "scalp care." "Some brand improvements and enhancements may not show visible results now, but they will certainly play a role in the future," P&G executives pointed out in the earnings call.

**Adapting to "Uncertainty"**
**Using Innovation to Withstand Market Headwinds**
Even as the market environment becomes increasingly harsh, P&G has continued to achieve sustained growth in its overall business over the past few years. Besides the support of its nearly 200 years of accumulated "family assets" such as R&D, talent, and brand portfolio, there are also many new approaches at both strategic and tactical levels worth learning from peers. Facing an uncertain external environment, P&G first maintains a rational estimate and judgment of future market difficulties, but aims to "normalize and annualize these market headwinds." In the call, the executive noted, "P&G's business foundation is very solid; we can innovate, and we can make (positive) plans for the entire fiscal year." For fiscal 2025, P&G holds a sustainable growth expectation of 3%-5%, hoping to further win volume growth while smoothly advancing its pricing strategy, achieving a balance between the two contributions to performance. In the earnings call, P&G executives revealed that the company's cash flow is at a 17-year high. With such a solid foundation, P&G will continue to fully increase investment in R&D and marketing, driving a positive cycle of volume and performance growth, making the overall business structure stronger. Additionally, both globally and in China, P&G is advancing more consumer-centric innovation strategies, deeply promoting the upgraded strategy of "driving category development" to gain market increments. "Our inspiration comes from insights into Chinese consumers, and P&G's progress comes from the pursuit of innovation," summarized Xu Min, Chairman and CEO of P&G Greater China. Last year, P&G proposed the strategic upgrade of "leading category development," with a new strategic positioning centered on consumers and creating market increments, leading market growth by comprehensively enhancing five major excellence capabilities. To deepen consumer insights, P&G China invests 500,000 hours annually, surveying 20 million people to better understand consumer needs. With product upgrades and innovation as the starting point, insights must also be translated into consumer forms. The P&G R&D center in Beijing not only leads R&D projects in China but also undertakes innovation tasks for Asia and the world. It is worth noting that in the earnings call, P&G pleasantly surprised that despite declining birth rates, P&G's baby care category in China grew 6% and gained more share. The success is attributed to a richer and more innovative product matrix that is closer to Chinese consumers' needs and preferences. According to P&G's plan, it will replicate the mature experience of baby care to other categories, using innovation to drive business growth.
Looking ahead, how P&G, which has stabilized its global base, will return to growth in the weak Chinese consumer market and tell more new stories through innovation beyond financial numbers is worth watching. __


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