2019 Annual Report - Procter & Gamble

1 2019 AnnualReport(1) Diluted net earnings per common share are calculated based on net earnings attributable to Procter & Gamble .(2) Core EPS is a measure of the Company s diluted net earnings per common share from continuing operations adjusted for certain items not viewed as part of our sustainable results. Please see page 74 of the Annual Report for detail on the reconciling items.(3) These results exclude net sales in Corporate.(4) North America includes the United States, Canada, and Puerto STATEMENTS IN THIS Annual Report , including estimates, projections, objectives and expected results, 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 and are generally identified by the words believe, expect, anticipate, intend, opportunity, plan, project, will, should, could, would, likely and similar expressions.

2 Forward-looking statements are based on current assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements, including the risks and uncertainties discussed in Item 1A Risk Factors of the Form 10-K included in this Annual Report . We undertake no obligation to update or revise publicly any forward-looking Sales$ $ $ $ $ Income$ $ $ $ $ Earnings Attributable to P&G$ $ $ $ $ Earnings Margin from Continuing Net Earnings per Common Share from Continuing Operations 1$ $ $ $ $ Net Earnings per Common Share 1$ $ $ $ $ Earnings per Share 2$ $ $ $ $ Cash Flow$ $ $ $ $ per Common Share$ $ $ $ $ HIGHLIGHTS (UNAUDITED)Amounts in billions, except per share amountsLetter to Shareowners iP&G s 10-Category Portfolio iiNoticeable Superiority viConstructive Disruption xForm 10-K xvCompany and Shareholder Information 73 Measures Not Defined by GAAP 74 Company Leadership 76 Board of Directors 77 Recognition and Commitments 78 Citizenship at P&G Inside Back CoverTable of Contents2019 NET SALES BY GEOGRAPHIC REGION2019 NET SALES BY BUSINESS SEGMENT3 North America4 45% Europe 23% Asia Pacific 10% Greater China 9% India, Middle East & Africa (IMEA)

3 7% Latin America 6% Fabric & Home Care 33% Baby, Feminine & Family Care 27% Beauty 19% Health Care 12% Grooming 9%In fiscal year 2019, P&G met or exceeded each of our core financial goals organic sales growth, core earnings per share growth and adjusted free cash flow productivity all while improving market share and generating leadership levels of shareholder value sales grew 5%. This was above our going-in estimate and represents significant improvement, with sales by quarter improving sequentially from 4% to 4% to 5% to 7%. Core earnings per share were $ , up 7% versus last year and toward the high end of our target range. Foreign exchange was an 8% after-tax earnings headwind. On a constant currency basis, core earnings per share were up 15%.

4 All-in GAAP earnings per share were down versus year ago, reflecting a one-time, non-cash accounting charge to reduce the carrying value of the Gillette Shave Care free cash flow results were very strong. Adjusted free cash flow was $ billion, with adjusted free cash flow productivity of 105% well above our going-in target. Growth was broad-based in fiscal year 2019 across product categories, geographies and the key components of top-line growth volume, price and mix. Nine of our 10 global categories grew organic sales with Skin & Personal Care up mid-teens; Fabric Care, Home Care, Feminine Care and Personal Health Care all up high single digits; and Oral Care and Family Care up mid-single digits. All six of our regions grew organic sales with all 15 of our top markets growing or holding sales.

5 We continue to make progress in our largest markets. In the , sales grew 4%, including 7% in the last quarter. This is after averaging about 1% over the past three fiscal years. In Greater China, we grew 10% with double-digit growth across our Fabric Care, Feminine Care, and Skin & Personal Care categories. In addition, P&G s global e-commerce organic sales grew 25% for the year, accounting for about 8% of our total breadth of top-line growth across categories, countries and components provides confidence in our ability to grow at or above market growth rates going Shareowners,Organic SalesCore EPSA djusted Free Cash Flow Productivity FISCAL YEAR 20199/ 10 All 6 Global CategoriesGeographic RegionsGrowing in:FISCAL YEAR 2019 ORGANIC SALES5%105%7%ii The Procter & Gamble CompanyOur strong market share trends support this.

6 Eight of 10 global categories held or grew value share and 33 of our top 50 country/category combinations held or grew share, up from 26 last fiscal year, 23 in fiscal 2017 and just 17 in fiscal 2016. We returned $ billion of cash to shareowners through a combination of share repurchases and dividends. We announced a 4% increase in the dividend the 63rd consecutive Annual increase and the 129th consecutive year in which P&G has paid a dividend. P&G is one of only 10 companies to pay a dividend for more than 120 consecutive years, and only three companies have increased dividends more consecutive years than P&G. Personal Health CareOral CareHEALTH CARE$135+ billion63 years129 yearsOf dividend paymentsOf dividend increasesValue returned to shareholders (past decade)

7 *RETURNING VALUE TO SHAREHOLDERSTOP 50 COUNTRY/CATEGORY COMBINATIONSGROWING OR HOLDING MARKET SHAREFY16FY17FY18FY1917232633We ve focused and strengthened P&G's portfolio in daily-use categories where product performance drives brand choice, and in categories where we have a number one or two share position categories that have historically grown faster than the balance of the Company and have done so more s 10-Category Portfolio* Through dividend payments and share repurchases/exchanges combinedThe Procter & Gamble Company iii Hair CareSkin & Personal CareBEAUTYF abric CareGroomingHome CareFeminine CareBaby CareFamily CareFABRIC AND HOME CAREBABY AND FEMININE CAREFAMILY CARE AND P&G VENTURESGROOMINGiv The Procter & Gamble CompanyThe benefits of the portfolio choices we made a few years ago are clearly paying out focusing and strengthening our portfolio in daily-use categories where performance drives brand choice in categories where we

8 Occupy a number one or two share position, which have historically grown faster than the balance of the Company and done so more profitably. Daily-use categories are important to our retail partners as they drive shopping trips and consumer loyalty is often higher. We re selectively strengthening our portfolio with acquisitions designed to augment our current offerings. For example, we completed the acquisition of the Merck KGaA Consumer Health business, which significantly enhances our international presence in personal health , it was a good year with much-improved organic sales and share growth, strong constant currency core earnings per share growth, and a continued, best-in-class track record of cash return to shareowners.

9 All of this was delivered while working to address several category-specific challenges and in a difficult external environment, characterized by volatile and challenging government policies, retail transformation, rising input and transportation costs, and highly capable competition. While we re making good progress, we still have work to do to deliver sustained, strong results balanced top- and bottom-line growth and value creation. We know we need to continue to raise the bar to keep our momentum are focused on winning with consumers. That s job #1 winning with consumers and shoppers through superiority, fueled by productivity, and delivered by an empowered, agile and accountable organization that is driving constructive disruption across the entire value chain in our to Win with ConsumersOur strategy starts with noticeable superiority across all elements of our consumer proposition products, packaging, brand communication, retail execution (in-store and online), and consumer and customer value.

10 This strategic choice is holistic. It recognizes that consumers don t focus on one element of a brand only. Consumers interact with the whole brand the product, package, what we say and how they feel about the brand, how they experience it in the store or online, and whether it truly creates value versus the alternatives he or she has. When these elements are taken together, they drive category growth, prevent commoditization, and provide the basis to build sustainable competitive advantage. Notably, when we deliver superiority on four or more of the five vectors, we drive all business success metrics: sales, profit, value share, household penetration and category growth. Category growth is an important point of emphasis.