P&G Announces Fourth Quarter and Fiscal Year 2016 Results

Q4’16: Net Sales -3%; Organic Sales +2%;
Diluted Net EPS $0.69, +283%; Core EPS $0.79, -15%

FY’16: Net Sales -8%; Organic Sales +1%;
Diluted Net EPS $3.69, +51%; Core EPS $3.67, -2%

CINCINNATI–(BUSINESS WIRE)–The Procter & Gamble Company (NYSE:PG) reported April – June 2016
quarter net sales of $16.1 billion, a decrease of three percent versus
the prior year period driven by a negative three percentage point impact
from foreign exchange and a negative two percent combined impact from
Venezuela deconsolidation and minor brand divestitures. Organic sales
increased two percent for the quarter driven by a two percent increase
in organic shipment volume. Diluted net earnings per share were $0.69,
an increase of 283% versus the prior year period that included a
Venezuelan deconsolidation charge of $0.71 per share. Core earnings per
share were $0.79, a decrease of 15%. Core EPS results declined due to
increased marketing investments, lower gains from minor brand
divestitures, and a higher core effective tax rate versus the comparison
period. Excluding the impact of foreign exchange, currency-neutral core
earnings per share decreased eight percent. P&G delivered 145% adjusted
free cash flow productivity for the quarter.

“The fourth quarter was another period of progress driving P&G’s results
to a balance of strong top-line growth, bottom-line growth and cash
generation,” said Chairman, President and Chief Executive Officer David
Taylor. “We grew organic volume and sales in all reporting segments. We
increased investments in innovation and advertising, funded by strong
productivity improvement. Looking forward, we’re committed to continued
productivity improvement and cost savings that provide the fuel for
innovation and investments needed to accelerate and sustain faster
top-line growth. We expect fiscal 2017 to mark another significant step
toward our goal of balanced growth and value creation and total
shareholder return in the top third of our competitive peer group.”

April – June 2016 Quarter Discussion

In the April – June quarter net sales decreased three percent to $16.1
billion, including a negative three percentage point impact from foreign
exchange and a negative two percent combined impact from Venezuela
deconsolidation and minor brand divestitures. Organic sales grew two
percent on a two percent increase in organic volume. All-in volume was
unchanged.

* Net sales percentage changes are approximations based on quantitative
formulas that are consistently applied.
** Other includes the sales
mix impact of acquisitions/divestitures and rounding impacts necessary
to reconcile volume to net sales.

• Beauty segment organic sales grew one percent versus the prior year
  driven by pricing benefits and higher organic volume. Organic sales
  increased in Skin and Personal Care driven by growth of the
  super-premium SK-II skin care brand, partially offset by lower sales
  of Olay. Hair Care organic sales were unchanged as innovation-driven
  growth on Pantene and Head & Shoulders was offset by declines in other
  brands from competitive activity.
• Grooming segment organic sales increased seven percent driven by
  higher pricing and volume. Sales growth was strong in developing
  markets driven by Fusion FlexBall innovation expansion and higher
  pricing while in developed markets sales growth behind the Fusion
  ProShield launch was offset by competitive activity in North America.
  Organic sales increased on Braun behind innovation-driven volume
  increases.
• Health Care segment organic sales increased eight percent. Organic
  sales in Oral Care were up versus the prior year driven by increased
  marketing, strong innovation results and increased pricing. Personal
  Health Care organic sales increased due to a late cough and cold
  season and due to higher pricing mainly in developing markets.
• Fabric & Home Care segment organic sales increased one percent due to
  an increase in organic volume. Fabric Care organic sales were
  unchanged as increased organic volume from premium product innovation
  and increased marketing support was offset by pricing investments.
  Home Care sales increased primarily due to strong innovation-driven
  growth in the Dish Care business.
• Baby, Feminine & Family Care segment organic sales increased one
  percent versus year ago. Baby Care and Feminine Care organic sales
  both increased behind innovation-driven volume growth. Family Care
  organic sales decreased as volume growth in the U.S. was more than
  offset by pricing investments and a decline in Mexico from
  discontinuation of certain product lines.

Diluted net earnings per share from continuing operations were $0.71, an
increase of 318% over the base period that included a Venezuelan
deconsolidation charge of $0.71 per share. Diluted net earnings per
share were $0.69, an increase of 283% versus the prior year. Current
year results included a $0.02 per share loss from discontinued
operations and non-core restructuring costs of $0.08 per share. Core
earnings per share, which exclude non-core restructuring charges and the
results of discontinued operations, were $0.79, a decrease of 15% versus
the prior year. Excluding the impact of foreign exchange,
currency-neutral core earnings per share decreased eight percent for the
quarter.

Reported gross margin increased 130 basis points, including a 30 basis
point increase in non-core restructuring charges. Core gross margin
improved 160 basis points, including 80 basis points of negative foreign
exchange impacts. On a currency-neutral basis, core gross margin
increased 240 basis points, driven by 280 basis points of productivity
cost savings and a 110 basis point benefit from lower commodity costs,
which more than offset headwinds from 140 basis points of unfavorable
mix and 10 basis points from innovation and capacity investments.

Selling, general and administrative expense (SG&A) as a percent of sales
increased 290 basis points on a reported basis versus the prior year,
including a 20 basis point net benefit from a year-on-year decline in
non-core restructuring charges. Core SG&A as a percentage of sales
increased 310 basis points, including 40 basis points of unfavorable
foreign exchange impacts. On a currency-neutral basis, core SG&A
increased 270 basis points versus the prior year driven by 280 basis
points of increased advertising and sampling investments and 70 basis
points of R&D and sales coverage investments and other operating costs,
partially offset by 40 basis points of productivity savings from
overhead and 40 basis points of savings in agency-related marketing
costs.

Reported operating profit margin increased 1,060 basis points driven by
the impact of the non-core Venezuelan charge in the prior year. Core
operating profit margin was down 150 basis points versus the prior year,
including 120 basis points of foreign exchange impacts. On a
currency-neutral basis, core operating profit margin decreased 30 basis
points as the gross margin improvement was more than offset by the
increased investments in SG&A. Total productivity cost savings were 360
basis points for the quarter.

Fiscal Year 2016 Results

Fiscal year 2016 net sales were $65.3 billion, a decrease of eight
percent versus the prior year, including a negative six percentage point
impact from foreign exchange and a negative two percent from the
combined impacts of Venezuela and minor brand divestitures. Organic
sales grew one percent as the benefit of increased pricing more than
offset a reduction in organic shipment volume. Diluted net earnings per
share were $3.69, an increase of 51% versus the prior year which
included the one-time charge for the deconsolidation of Venezuela. Core
earnings per share were $3.67, a decrease of two percent.

Operating cash flow was $15.4 billion for the year. Adjusted free cash
flow productivity was 115%. The Company reduced common stock outstanding
at a value more than $8 billion through the combination of direct share
repurchases and shares that were exchanged in the Duracell transaction.
The Company also returned $7.4 billion of cash to shareholders as
dividends. P&G announced an increase to the quarterly dividend in April,
making this the 60^th consecutive year of dividend increases.

Fiscal Year 2017 Guidance

P&G said it is projecting organic sales growth of approximately 2% for
fiscal 2017. The Company expects the combined headwinds of foreign
exchange and minor brand divestitures to reduce sales growth by about
one percentage point. As a result, P&G estimates all-in sales growth of
about 1% for fiscal 2017.

The Company said it expects core earnings per share growth of mid-single
digits versus fiscal 2016 core EPS of $3.67. P&G noted that core EPS
growth in the first quarter of fiscal 2017 will be disproportionately
affected by foreign exchange headwinds, which do not fully annualize
until later in the year, and the impact of lost finished product sales
to its Venezuelan subsidiaries.

All-in GAAP earnings per share are expected to increase 45% to 55%
versus fiscal year 2016 GAAP EPS of $3.69. The fiscal 2017 GAAP EPS
estimate includes approximately $0.10 per share of non-core
restructuring costs and a substantial gain from the divestiture of 41
beauty brands to Coty Inc. The exact earnings gain from the transaction
with Coty will not be known until the completion of the deal, which is
targeted for October 2016.

Forward-Looking Statements

Certain statements in this release or presentation, other than purely
historical information, including estimates, projections, statements
relating to our business plans, objectives, and expected operating
results, and the assumptions upon which those statements are based, are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements generally are identified by the words
“believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,”
“would,” “will be,” “will continue,” “will likely result,” and similar
expressions. Forward-looking statements are based on current
expectations and assumptions, which are subject to risks and
uncertainties that may cause results to differ materially from those
expressed or implied in the forward-looking statements. We undertake no
obligation to update or revise publicly any forward-looking statements,
whether because of new information, future events or otherwise.

Risks and uncertainties to which our forward-looking statements are
subject include, without limitation: (1) the ability to successfully
manage global financial risks, including foreign currency fluctuations,
currency exchange or pricing controls and localized volatility; (2) the
ability to successfully manage local, regional or global economic
volatility, including reduced market growth rates, and generate
sufficient income and cash flow to allow the Company to effect the
expected share repurchases and dividend payments; (3) the ability to
manage disruptions in credit markets or changes to our credit rating;
(4) the ability to maintain key manufacturing and supply arrangements
(including sole supplier and sole manufacturing plant arrangements) and
manage disruption of business due to factors outside of our control,
such as natural disasters and acts of war or terrorism; (5) the ability
to successfully manage cost fluctuations and pressures, including
commodity prices, raw materials, labor costs, energy costs and pension
and health care costs; (6) the ability to stay on the leading edge of
innovation, obtain necessary intellectual property protections and
successfully respond to technological advances attained by, and patents
granted to, competitors; (7) the ability to compete with our local and
global competitors in new and existing sales channels, including by
successfully responding to competitive factors such as prices,
promotional incentives and trade terms for products; (8) the ability to
manage and maintain key customer relationships; (9) the ability to
protect our reputation and brand equity by successfully managing real or
perceived issues, including concerns about safety, quality, ingredients,
efficacy or similar matters that may arise; (10) the ability to
successfully manage the financial, legal, reputational and operational
risk associated with third party relationships, such as our suppliers,
contractors and external business partners; (11) the ability to rely on
and maintain key information technology systems and networks (including
Company and third-party systems and networks) and maintain the security
and functionality of such systems and networks and the data contained
therein; (12) the ability to successfully manage regulatory and legal
requirements and matters (including, without limitation, those laws and
regulations involving product liability, intellectual property,
antitrust, privacy, tax, accounting standards and environmental) and to
resolve pending matters within current estimates; (13) the ability to
manage changes in applicable tax laws and regulations; (14) the ability
to successfully manage our portfolio optimization strategy, as well as
ongoing acquisition, divestiture and joint venture activities, to
achieve the Company’s overall business strategy, without impacting the
delivery of base business objectives; (15) the ability to successfully
achieve productivity improvements and cost savings and manage ongoing
organizational changes, while successfully identifying, developing and
retaining particularly key employees, especially in key growth markets
where the availability of skilled or experienced employees may be
limited; and (16) the ability to manage the uncertain implications of
the United Kingdom’s withdrawal from the European Union. For additional
information concerning factors that could cause actual results and
events to differ materially from those projected herein, please refer to
our most recent 10-K, 10-Q and 8-K reports.

About Procter & Gamble

P&G serves consumers around the world with one of the strongest
portfolios of trusted, quality, leadership brands, including Always®,
Ambi Pur®, Ariel®, Bounty®, Charmin®, Crest®, Dawn®, Downy®, Fairy®,
Febreze®, Gain®, Gillette®, Head & Shoulders®, Lenor®, Olay®, Oral-B®,
Pampers®, Pantene®, SK-II®, Tide®, Vicks®, and Whisper®. The P&G
community includes operations in approximately 70 countries worldwide.
Please visit http://www.pg.com for
the latest news and information about P&G and its brands.

* Basic net earnings per common share and diluted net earnings per
common share are calculated on net earnings attributable to Procter &
Gamble.

* Sales percentage changes are approximations based on quantitative
formulas that are consistently applied.
** Other includes the sales
mix impact of acquisitions/divestitures and rounding impacts necessary
to reconcile volume to net sales.

The Procter & Gamble Company

Exhibit 1: Non-GAAP Measures

In accordance with the SEC’s Regulation G, the following provides
definitions of the non-GAAP measures used in Procter & Gamble’s August
2, 2016 earnings call and associated slides and the reconciliation to
the most closely related GAAP measure.

Contacts

P&G Media Contacts:
Damon
Jones, 513-983-0190
Jennifer Corso, 513-983-2570
or
P&G
Investor Relations Contact:
John Chevalier,
513-983-9974

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