Procter & Gamble Co. (NYSE:PG)

The financial performance, as measured by economic profit, demonstrates a generally positive trend over the analyzed period. Net operating profit after taxes (NOPAT) exhibits consistent growth, while the cost of capital remains relatively stable. Invested capital fluctuates, but ultimately increases, contributing to the overall economic profit trajectory.

NOPAT Trend

Net operating profit after taxes shows a steady increase from US$12,785 million in 2020 to US$16,618 million in 2025. The growth is not linear, with a slight deceleration between 2022 and 2023, but resumes acceleration in the final two years of the period. This indicates improving operational efficiency and profitability.

Cost of Capital Trend

The cost of capital experiences a gradual increase from 8.35% in 2020 to 8.67% in 2024, before decreasing slightly to 8.57% in 2025. This suggests a moderate increase in the risk or opportunity cost associated with capital employed, followed by a minor reduction. The changes are relatively small, indicating a stable capital market environment for the company.

Invested Capital Trend

Invested capital initially decreases from US$101,100 million in 2020 to US$93,924 million in 2022, potentially due to asset divestitures or improved capital efficiency. However, it then begins to rise, reaching US$100,282 million in 2025. This suggests a reinvestment phase, potentially driven by growth opportunities or strategic acquisitions.

Economic Profit Trend

Economic profit increases from US$4,339 million in 2020 to US$8,021 million in 2025. This growth is not consistent year-over-year, mirroring the fluctuations in NOPAT and invested capital. The largest increase occurs between 2020 and 2021, and again between 2024 and 2025. The overall upward trend demonstrates the company’s ability to generate returns exceeding its cost of capital.

In summary, the period under review demonstrates a positive trajectory in economic profit, driven by increasing NOPAT and, ultimately, a growing invested capital base. While the cost of capital experienced a slight increase, it did not impede the overall improvement in economic profit. The fluctuations in invested capital warrant further investigation to understand the underlying drivers of these changes.

Net earnings attributable to Procter & Gamble (P&G)

The net earnings of the company demonstrated a consistent upward trend over the analyzed periods. Starting at 13,027 million US dollars in mid-2020, earnings increased steadily each year, reaching 15,974 million US dollars by mid-2025. The growth, although steady, showed minor fluctuations in the rate of increase, with a slightly slower increment between mid-2022 and mid-2023, followed by renewed acceleration towards the end of the period.

Net operating profit after taxes (NOPAT)

NOPAT exhibited a parallel pattern to net earnings, indicating effective operational management and stable profitability. It rose from 12,785 million US dollars in mid-2020 to 16,618 million US dollars in mid-2025. The increment was generally consistent, with a slight deceleration in growth between mid-2021 and mid-2022, before regaining momentum through to the final period. This trend suggests sustained operational efficiency and the capacity to enhance profitability over time.

Tax Expense

Over the period from June 30, 2020, to June 30, 2025, the tax expense exhibits an overall upward trend. Starting at 2,731 million USD in 2020, it increases to 3,263 million USD in 2021. A slight decline occurs in 2022 with 3,202 million USD, followed by a renewed increase to 3,615 million USD in 2023. The upward trajectory continues through 2024 and 2025, reaching 3,787 million USD and 4,102 million USD, respectively. This reflects an aggregate growth of approximately 50% over the six-year span.

Cash Operating Taxes

Cash operating taxes also show an upward movement initially but with some fluctuation. Beginning at 3,400 million USD in 2020, the figure rises steadily through to 2023, peaking at 4,168 million USD. However, subsequent years see a slight decline, with values of 4,135 million USD in 2024 and further reduction to 4,054 million USD in 2025. Despite this late decrease, cash operating taxes overall have increased by roughly 19% compared to the initial 2020 figure.

Comparative Insights

Both tax expense and cash operating taxes show general increases across the analyzed timeframe, indicating a growing tax burden in absolute terms. The tax expense growth is more consistent and robust, whereas cash operating taxes peak earlier and then slightly decline. The divergence in the last two years could suggest changes in tax payment timing, cash management strategies, or variations in tax structures impacting cash taxes differently than accrued tax expenses.

Total Reported Debt & Leases

The total reported debt and leases showed a general decline from 35,611 million USD in mid-2020 to 32,293 million USD by mid-2022. However, this downward trend reversed slightly, with debt levels rising again to 35,424 million USD by mid-2023, followed by a moderate decrease in mid-2024 to 33,369 million USD, before increasing once more to 35,464 million USD by mid-2025. This pattern indicates fluctuations in debt levels, with no clear long-term reduction or increase over the six-year period.

Shareholders’ Equity Attributable to Procter & Gamble

Shareholders’ equity remained relatively stable between mid-2020 and mid-2023, fluctuating marginally between approximately 46,378 million USD and 46,777 million USD. From mid-2023 onward, equity showed a notable upward trend, rising to 50,287 million USD by mid-2024 and further to 52,012 million USD by mid-2025. This growth suggests an improvement in the company's net asset base and potential enhancement in shareholder value in recent years.

Invested Capital

Invested capital declined from 101,100 million USD in mid-2020 to 93,924 million USD by mid-2022, reflecting a reduction in the total funds employed in operations. After this trough, invested capital began to increase again, reaching 96,550 million USD in mid-2023 and continuing to rise steadily to 100,282 million USD by mid-2025. This trend implies a recovery in capital investment levels, trending toward the original 2020 amounts.

Overall Insights

The data reveals a cyclical pattern in key financial metrics over the six-year timeframe. Debt levels experienced a decrease followed by a rebound, while shareholders’ equity showed stability initially and then increased significantly in the later years. Invested capital decreased initially but reversed to a recovery path toward previous levels. Together, these trends indicate a period of financial adjustment followed by stabilization and growth in equity and capital investment, with debt management remaining somewhat variable.

The economic spread ratio demonstrates a generally positive trend over the observed period. Economic profit also exhibits an upward trajectory, though with some fluctuation. Invested capital shows a more moderate pattern of change.

Economic Spread Ratio

The economic spread ratio increased from 4.29% in 2020 to 6.59% in 2021, representing a substantial improvement. This growth continued to 7.01% in 2022, indicating an increasing ability to generate returns above the cost of capital. A slight decrease to 6.61% occurred in 2023, but the ratio recovered to 6.80% in 2024. The most significant increase is observed between 2024 and 2025, with the ratio reaching 8.00%. This suggests improving operational efficiency and/or a more favorable investment landscape.

Economic Profit

Economic profit increased from US$4,339 million in 2020 to US$6,269 million in 2021, mirroring the rise in the economic spread ratio. The value continued to grow, reaching US$6,587 million in 2022. A minor decline to US$6,384 million was noted in 2023, followed by a recovery to US$6,643 million in 2024. The most substantial increase in economic profit occurs between 2024 and 2025, reaching US$8,021 million. This indicates a strong and growing capacity to generate wealth beyond the required rate of return.

Invested Capital

Invested capital decreased from US$101,100 million in 2020 to US$95,095 million in 2021. This decline continued to US$93,924 million in 2022, potentially reflecting divestitures or improved capital management. A modest increase to US$96,550 million occurred in 2023, and further growth to US$97,641 million was observed in 2024. The largest increase in invested capital is seen between 2024 and 2025, reaching US$100,282 million. While the economic spread ratio is increasing, the growth in invested capital suggests continued investment in the business.

The consistent increase in the economic spread ratio, coupled with growing economic profit, suggests effective capital allocation and strong financial performance. The moderate changes in invested capital indicate a balanced approach to growth and efficiency.

The economic profit margin demonstrates a generally positive trajectory over the observed period, though with some fluctuation. Initial growth is followed by a period of stabilization and then renewed expansion. A detailed examination of the trends is presented below.

Economic Profit

Economic profit consistently increased from 2020 to 2025, moving from US$4,339 million to US$8,021 million. The rate of increase was more pronounced between 2020 and 2021, followed by a more moderate growth rate until 2023. A significant increase is then observed between 2023 and 2025.

Net Sales

Net sales exhibited a steady upward trend throughout the period, increasing from US$70,950 million in 2020 to US$84,284 million in 2025. The growth rate in net sales appears relatively consistent year-over-year, with a slight deceleration in the final year.

Economic Profit Margin

The economic profit margin increased from 6.12% in 2020 to 8.24% in 2021, representing substantial improvement. It remained relatively stable at 8.22% in 2022 before decreasing to 7.78% in 2023. A slight recovery to 7.90% occurred in 2024, culminating in a notable increase to 9.52% in 2025. This suggests that while sales are consistently growing, the efficiency with which those sales translate into economic profit has varied, with a strong finish in the observed period.

Overall, the company demonstrates an increasing ability to generate economic profit as evidenced by the rising margin in the later years of the period. The dip in the economic profit margin in 2023 warrants further investigation to understand the underlying factors contributing to the temporary decline, despite continued growth in net sales. The substantial increase in the margin in 2025 indicates a positive shift in profitability relative to sales.