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, and economic profit shows an overall upward trajectory.

Net Operating Profit After Taxes (NOPAT)

NOPAT increased from US$12,785 million in 2020 to US$16,618 million in 2025. Growth was particularly strong between 2020 and 2021, followed by more moderate increases in subsequent years. The period from 2021 to 2023 shows relatively flat growth, before accelerating again in 2024 and 2025.

Cost of Capital

The cost of capital experienced a gradual increase from 9.24% in 2020 to 9.59% in 2024, before decreasing slightly to 9.48% in 2025. This indicates a modest rise in the required rate of return for investments, followed by a minor reduction. The changes are relatively small, suggesting a stable capital market environment during the period.

Invested Capital

Invested capital decreased from US$101,100 million in 2020 to US$93,924 million in 2022, before beginning to recover. By 2025, invested capital reached US$100,282 million. This suggests a period of capital restructuring or divestment followed by reinvestment and growth. The recovery in invested capital contributes to the overall positive trend in economic profit.

Economic Profit

Economic profit increased from US$3,442 million in 2020 to US$7,116 million in 2025. The largest increase occurred between 2020 and 2021. While there was a slight decrease between 2022 and 2023, economic profit resumed its upward trend in 2024 and continued to grow in 2025. This indicates that the company is generating returns exceeding its cost of capital and creating value for its investors.

In summary, the observed trends suggest improving financial performance. The consistent growth in NOPAT, coupled with a manageable cost of capital and increasing invested capital, drives the positive trend in economic profit. The slight fluctuations in invested capital warrant further investigation, but the overall picture is one of value creation.

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 moderate decrease initially, followed by a period of stabilization and then growth.

Economic Spread Ratio

The economic spread ratio increased from 3.40% in 2020 to 5.69% in 2021, representing a substantial improvement. This growth continued to 6.10% in 2022 before experiencing a slight decline to 5.70% in 2023. The ratio then rose again to 5.89% in 2024 and further increased to 7.10% in 2025, reaching its highest point within the analyzed timeframe. This indicates an increasing ability to generate returns above the cost of capital.

Economic Profit

Economic profit increased from US$3,442 million in 2020 to US$5,413 million in 2021, a significant rise. It continued to grow to US$5,734 million in 2022, then decreased slightly to US$5,508 million in 2023. A recovery was observed in 2024, with economic profit reaching US$5,748 million, and further growth in 2025 to US$7,116 million. The overall trend is positive, suggesting improved profitability relative to the capital employed.

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, representing the lowest level observed. From 2022, invested capital began to increase, reaching US$96,550 million in 2023 and US$97,641 million in 2024. The upward trend continued into 2025, with invested capital reaching US$100,282 million. This suggests a reinvestment phase following a period of capital reduction or optimization.

The concurrent increase in economic spread ratio and economic profit, alongside the stabilization and subsequent growth of invested capital, suggests improving efficiency in capital allocation and a strengthening financial performance.

The economic profit margin exhibited a generally positive trend over the observed period, though with some fluctuation. Initial values increased significantly before stabilizing and then increasing again towards the end of the period. A detailed examination of the economic profit margin reveals key observations regarding the company’s profitability relative to its capital costs.

Economic Profit Margin Trend

The economic profit margin began at 4.85% in 2020 and rose substantially to 7.11% in 2021. This increase suggests improved profitability or more efficient capital allocation during that year. The margin remained relatively stable between 2021 and 2023, fluctuating between 7.15% and 6.72%. A slight increase to 6.84% was observed in 2024, followed by a more pronounced increase to 8.44% in 2025, indicating a strengthening of economic profitability.

Economic profit itself demonstrated a consistent upward trajectory, supporting the observed margin improvements. The increase in economic profit from US$3,442 million in 2020 to US$7,116 million in 2025 suggests successful strategies in generating returns exceeding the cost of capital. The correlation between the increasing economic profit and the economic profit margin indicates that revenue growth is effectively translating into enhanced economic value creation.

Relationship to Net Sales

Net sales increased steadily throughout the period, moving from US$70,950 million in 2020 to US$84,284 million in 2025. While net sales growth contributed to the increase in economic profit, the economic profit margin analysis demonstrates that profitability improvements were not solely driven by revenue increases. The margin fluctuations suggest that changes in cost of capital or operational efficiency also played a role in determining economic profitability.

The period between 2022 and 2023 saw a slight decrease in the economic profit margin despite continued growth in net sales. This suggests that the cost of capital may have increased, or operational efficiencies may have been temporarily impacted during those years. However, the subsequent increase in the margin in 2024 and 2025 indicates a recovery and strengthening of the company’s ability to generate economic profit.