Procter & Gamble (PG) Q1 2025 earnings

Procter & Gamble on Friday reported weaker-than-expected revenue as lower demand in China again weighed on its sales.

The company’s organic sales in Greater China, its second-largest market, fell 15% in the fiscal first quarter. As home prices drop and jobless rates rise in the country, shoppers have pulled back their spending, hurting P&G’s sales for shampoo, diapers and other consumer staples.

While executives maintained their confidence in China long term, demand isn’t expected to recover for at least several more quarters.

“The market continues to be weak and will be weak, we believe, for a number of quarters to come,” CFO Andre Schulten said on a call with the press.

P&G’s outlook for China didn’t take into account the Chinese government’s recently announced plans to boost the country’s economy.

Shares of the company fell roughly 1% in morning trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: $1.93 adjusted vs. $1.90 expected
• Revenue: $21.74 billion vs. $21.91 billion expected

P&G’s net sales dropped 1% to $21.74 billion. Organic revenue, which strips out foreign exchange, acquisitions and divestitures, rose 2%, helped by higher prices.

The company reported flat volume for the quarter. The metric excludes pricing, which makes it a more accurate reflection of demand than sales. Like many consumer companies, P&G has seen demand for its products fall after several years of price hikes. Last quarter was the first time in more than two years that its volume increased.

In the U.S., P&G’s volume grew in eight of its 10 categories, and the company isn’t seeing any trade down to private-label products, Schulten said.

But it’s a different story in Greater China, which saw its organic sales worsen compared with the prior quarter. The company called out volume declines in China for both its hair care and oral care segments. Still, Greater China accounts for less than 10% of P&G’s revenue.

“The issues around Asia and execution are pretty minimal compared to some of the other rough spots that the company’s gone through in the past,” said Charles Rinehart, chief investment officer of Johnson Investment Counsel, a longtime shareholder in Procter & Gamble.

P&G’s beauty business, which includes brands like Pantene and Olay, saw volume fall 2% in the quarter. In particular, its skin care segment struggled, with organic sales tumbling more than 20%. P&G blamed the steep decline on lower volume and decreased sales of its pricey SK-II brand, which has struggled ever since pandemic lockdowns. Anti-Japanese sentiment in China has been the latest challenge for the brand; last year, SK-II sales took a hit as Chinese consumers boycotted the brand, fearing that Japan’s release of treated radioactive waste would contaminate the products.

Both P&G’s health care and baby, feminine and family care divisions reported 1% declines in volume for the quarter. But its baby care segment, which…