Procter & Gamble Co at Morgan Stanley Global Consumer & Retail Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dara Mohsenian - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>So with that, maybe just to start with, obviously, over the last decade, you guys have made a lot of strategy changes that have culminated in a fundamental improvement, really, over the last six years, as you outlined at Analyst Day. Maybe just taking a step back, as you look going forward from here, what are the biggest organizational priorities? Is there anything left from a culture standpoint you're really trying to tweak going forward? And how do you think about the success of those forward strategies and then, going forward, what the key strategies are in place from here?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Great, that's helpful. The recent success hasn't gone unnoticed by your competitors. So the question is, how do you stay ahead of competitors, many of whom have basically taken some of your strategies and put them to play in the marketplace? What's the sustained competitive advantage for P&G as you think out over the next few years, if you do see competitors come back to you with more of a marketing innovation playbook, et cetera?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Great. And maybe we can turn to some of the short-term recent organic sales results. You've talked about your business and an 85%-15% bucket -- 85% doing very well. 15% has been more challenged in the last few quarters, primarily China. You mentioned at Analyst Day SK-II had seen a bit of improvement over [11-11]. You now have a full set of numbers in. So can you just give us a little bit of short term perspective there, but also talk about broader China travel retail also with SK-II, the rest of the business in China? And that's a short-term question. But the long-term part of it is, given the changes we've seen in the market in terms of the consumer, in terms of the channel mix, et cetera, how do you think about adjusting your China business strategically for what you're seeing in the market today longer term?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay. And a bit of uncertainty left, I'm sure, on the Blue Yonder situation. But generally, it feels like you have a pretty good handle on it at this point in terms of that range of impact that you indicated.

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay, and that was a helpful walk around the world. You've talked about organic sales improving as we move through the year. So obviously, there's some innovation coming in. There's easier comps. How do you think about the pace of improvement relative to Q1 as you think quarterly within the year, Q2, Q3, Q4? Are we seeing progress each quarter? Is it more -- it really ramps up in Q3? Is it a big impact in Q4? Just conceptualize a bit, given some of this volatility we're seeing in some of these dynamics. How do you think about the overall work sales?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Great, that's helpful. Maybe we can return to the 85% of the business. Pretty extraordinary results in the US, just given your large size, over the last six years. And you've really driven sustained market share success. Help us think about the durability of that success as you look going forward. What gives you confidence behind that in the US?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay. And a similar question for Europe, which has been a more challenging structural market over time from a category standpoint. And you've had remarkable success the last few years. Obviously, some of that pricing component from a category standpoint comes off. But as you think about your ability to drive volume growth and market share, can you talk about perhaps what's changed in Europe, why you've had such success as an organization, how that translates from here now that we have a more normalized operating environment in terms of category growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 1:00PM, PG.N - Procter & Gamble Co at Morgan Stanley Global Consumer & Retail Conference

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay. Latin America has had remarkable growth the last few years, but that's really been driven primarily by pricing. We saw a more normalized pace last quarter. Just as you look out from here in Latin America, can you talk a little bit about the volume growth opportunity, the pricing opportunity? Maybe give us a bit of update on Mexico, given some of the post election worry in Mexico down there and election worries up here, just what you're seeing. And obviously, the exit from Argentina, you're seeing more volatility in general. So how does that translate to the Latin American business overall?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay. And while we're on the subject of enterprise markets, you talked about the expansion opportunity over time. You've also seen a substantial increase in margins in enterprise markets over the last few years, as you outlined at Analyst Day. How do you think about the unlock going forward, really, to go after that potential in terms of greater penetration? From a top line standpoint, what are the key drivers to get you there? And now that you've got this more profitable business, is there an ability to spend more? Can you harness lower margin expansion with higher scale? How do you think about it from a profitability standpoint also?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Right, okay. And we talked about your ability to drive category growth in a lot of the regions. You've increased your ad spend quite significantly over the last couple of years. Can you just talk about the level of ROI you're seeing behind that? And the second question would be just around AI and technology. How big of an unlock is that for you guys? Do you think about it more from a marketing perspective or innovation perspective or productivity perspective? Because I know that will tie into the marketing question. So again, marketing ROI and level of yields from AI and advances in technology around those few areas I mentioned.

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay. And we spent a lot of time on top line, so just as you think about earnings trajectory over the next few quarters, you mentioned the Blue Yonder issue in Q2. And obviously, FX has moved that way it has since the elections. I guess when you talked about productivity, pricing, maybe some flexibility in marketing, is your thought process around the full year more that you have some positives to offset those issues? Are you moving within the range a bit as you think about earnings for the full year? Just how do you put all those pieces together when you think about some of the headwinds versus some of the tailwinds that are behind your business?

Question: Dara Mohsenian - Morgan Stanley - Analyst : Okay. And on the subject of volume growth, it's been a controversy in CPG, as we're coming off these unsustainable pricing levels, how much volume recovers ex China, where we've had some specific issues that are unique to SK-II. You've generally seen a pretty healthy volume recovery, particularly in the US. So maybe just give us a bit of perspective there. I'd also love your perspective across CPG in general. We haven't seen as much recovery in beverages and food. So just perspective on why you've been able to drive that volume recovery in the US and context relative to what we've seen in terms of consumer spending recently. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 1:00PM, PG.N - Procter & Gamble Co at Morgan Stanley Global Consumer & Retail Conference

Question: Dara Mohsenian - Morgan Stanley - Analyst : Great. Well, we are exactly out of time. So thank you very much for being here today. We appreciate it.