PROCTER & GAMBLE Co 10-K form for the fiscal year ended 2024-06-30, page 18: 
18 The Procter & Gamble Company



RECENT DEVELOPMENTS


Limited Market Portfolio Restructuring

In December 2023, the Company announced a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. In connection with this announcement, the Company announced that it expected to record incremental restructuring charges of $1.0 to $1.5 billion after tax, consisting primarily of foreign currency translation losses to be recognized as non-cash charges upon the substantial liquidation of operations in the affected markets.
As of June 30, 2024, the Company has substantially liquidated its operations in certain Enterprise Markets, including Nigeria, and recorded a non-cash charge of $216 million after tax for accumulated currency translation losses previously included in Accumulated other comprehensive income/(loss). On July 1, 2024, the Company completed the divestiture of its business in Argentina. The Company expects to record a non-cash charge of approximately $750 million for accumulated currency translation losses in the first quarter of the fiscal year ending June 30, 2025. Consistent with our historical policies for ongoing restructuring-type activities, resulting charges were funded by and included within Corporate for segment reporting. Restructuring charges above the normal ongoing level of restructuring costs were reported as non-core charges. For more details on the restructuring program, refer to Note 3 to the Consolidated Financial Statements.

Intangible Asset Impairment

During the fiscal year ended June 30, 2024, the Company recorded a $1.3 billion before tax ($1.0 billion after tax) non-cash impairment charge on an indefinite-lived intangible asset acquired as part of the Company's 2005 acquisition of The Gillette Company. The impairment charge arose from a reduction in the estimated fair value of the Gillette indefinite-lived intangible asset due to a higher discount rate, weakening of several currencies relative to the U.S. dollar and the impact of the non-core restructuring program described above. This impairment charge adjusted the carrying value of the Gillette indefinite-lived intangible asset to fair value. For a more detailed discussion of the Gillette impairment, refer to Note 4 to the Consolidated Financial Statements.

SUMMARY OF 2024 RESULTS
|    |                                               |        |        |      |        |                       |        |    |    |    |    |
|---:|:----------------------------------------------|:-------|:-------|:-----|:-------|:----------------------|:-------|:---|:---|:---|:---|
|  1 | Amounts in millions, except per share amounts | 2024   |        | 2023 |        | Change vs. Prior Year |        |    |    |    |    |
|  2 | Net sales                                     | $      | 84,039 |      |        | $                     | 82,006 |    |    | 2  | %  |
|  3 | Operating income                              | 18,545 |        |      | 18,134 |                       |        | 2  | %  |    |    |
|  4 | Net earnings                                  | 14,974 |        |      | 14,738 |                       |        | 2  | %  |    |    |
|  5 | Net earnings attributable to Procter & Gamble | 14,879 |        |      | 14,653 |                       |        | 2  | %  |    |    |
|  6 | Diluted net earnings per common share         | 6.02   |        |      | 5.90   |                       |        | 2  | %  |    |    |
|  7 | Core earnings per share                       | 6.59   |        |      | 5.90   |                       |        | 12 | %  |    |    |
|  8 | Cash flow from operating activities           | 19,846 |        |      | 16,848 |                       |        | 18 | %  |    |    |

•Net sales increased 2% to $84.0 billion versus the prior year. The net sales growth was driven by mid-single-digit increases in Health Care, Fabric & Home Care and Grooming and a low single-digit increase in Beauty. Net Sales were unchanged in Baby, Feminine & Family Care. Organic sales, which exclude the impact of acquisitions and divestitures and foreign exchange, increased 4%. Organic sales increased high single digits in Grooming, mid-single digits in Fabric & Home Care and Health Care and low single digits in Beauty and Baby, Feminine & Family Care.
•Operating income increased $411 million, or 2%, to $18.5 billion due to the increase in net sales, partially offset by the non-cash impairment charge of $1.3 billion related to the Gillette intangible asset.
•Net earnings increased $236 million, or 2%, to $15.0 billion due to the increase in operating income, partially offset by a higher effective tax rate. Foreign exchange impacts reduced net earnings by approximately $589 million. 

•Net earnings attributable to Procter & Gamble increased $226 million, or 2%, to $14.9 billion.

•Diluted EPS increased 2% to $6.02 due to the increase in net earnings. Core EPS, which excludes the charge for the Gillette intangible asset impairment and incremental restructuring charges, increased 12% to $6.59.
•Cash flow from operating activities was $19.8 billion.
◦    Adjusted free cash flow, which is operating cash flow less capital expenditures and certain other impacts, was $16.9 billion.
◦    Adjusted free cash flow productivity, which is the ratio of adjusted free cash flow to net earnings excluding the Gillette intangible asset impairment charge and a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria, was 105%.


, PROCTER & GAMBLE Co 10-K form for the fiscal year ended 2024-06-30, page 24: 
24 The Procter & Gamble Company


Europe (due to increased pricing), Latin America (due to increased competitive activity) and IMEA (due to increased pricing), partially offset by growth in North America (due to increased marketing support and distribution gains). Organic sales increased mid-single digits driven by mid-single-digit increases in Europe and IMEA and a low single-digit increase in North America. Market share of the feminine care category increased 0.2 points.
•Net sales in Family Care, which is predominantly a North American business, increased low single digits driven by a unit volume increase (due to market growth and increased marketing support) and higher pricing, partially offset by unfavorable product mix (due to growth of larger pack sizes with lower than category-average selling prices). Organic sales also increased low single digits. North America's share of the family care category decreased 0.4 points.
Net earnings increased 13% to $4.0 billion due to a 230 basis-point increase in net earnings margin. Net earnings margin increased primarily due to an increase in gross margin, partially offset by an increase in SG&A as a percentage of net sales. Gross margin increased primarily due to lower commodity costs, productivity savings and increased pricing, partially offset by unfavorable foreign exchange. SG&A as a percentage of net sales increased due to an increase in marketing and overhead spending.

CORPORATE


|    |                     |          |        |                 |
|---:|:--------------------|:---------|:-------|:----------------|
|  1 | ($ millions)        | 2024     | 2023   | Change vs. 2023 |
|  2 | Net sales           | $601     | $765   | (21)%           |
|  3 | Net earnings/(loss) | $(1,430) | $(399) | N/A             |

Corporate includes certain operating and non-operating activities not allocated to specific business segments. These include but are not limited to incidental businesses managed at the corporate level, gains and losses related to certain divested brands or businesses, impacts from various financing and investing activities, impacts related to employee benefits, asset impairments and restructuring activities including manufacturing and workforce optimization. Corporate also includes reconciling items to adjust the accounting policies used within the reportable segments to U.S. GAAP. The most notable ongoing reconciling item is income taxes, which adjusts the blended statutory rates that are reflected in the reportable segments to the overall Company effective tax rate.
Corporate net sales decreased $164 million to $601 million due to a decrease in net sales of incidental businesses managed at the corporate level. Corporate net earnings decreased $1.0 billion due to a loss of $1.4 billion due primarily to the impairment charge of the Gillette intangible asset and incremental restructuring charges.

Restructuring Program to Deliver Productivity and Cost Savings

The Company has historically had an ongoing restructuring program with annual spending in the range of $250 to $500 million before tax. On December 5, 2023, the Company announced an incremental limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria. 
In fiscal 2024, the Company incurred before tax restructuring costs of $659 million, which include foreign currency translation losses recognized as a non-cash charge of approximately $216 million due to the substantial liquidation of operations in certain Enterprise Markets, including Nigeria. Restructuring accruals of $166 million as of June 30, 2024, are classified as current liabilities. Excluding the non-cash charges of foreign currency translation losses for certain Enterprise Markets, including Nigeria, approximately 64% of the restructuring charges incurred in fiscal 2024 either have been or will be settled with cash. Consistent with our policies for restructuring-type activities, the resulting charges are funded by and included within Corporate for segment reporting.
Savings generated from the Company's restructuring program are difficult to estimate, given the nature of the activities, the timing of the execution and the degree of reinvestment. In addition to our restructuring programs, we have additional ongoing savings efforts in our supply chain, marketing and overhead areas that yield additional benefits to our operating margins. Refer to Note 3 to the Consolidated Financial Statements for more details on the restructuring program.

CASH FLOW, FINANCIAL CONDITION AND LIQUIDITY

We believe our financial condition continues to be of high quality, as evidenced by our ability to generate substantial cash from operations and to readily access capital markets at competitive rates.
Operating cash flow provides the primary source of cash to fund operating needs and capital expenditures. Excess operating cash is used first to fund shareholder dividends. Other discretionary uses include share repurchases and acquisitions to complement our portfolio of businesses, brands and geographies. As necessary, we may supplement operating cash flow with debt to fund these activities. The overall cash position of the Company reflects our strong business results and a global cash management strategy that takes into account liquidity management, economic factors and tax considerations.


, PROCTER & GAMBLE Co 10-K form for the fiscal year ended 2024-06-30, page 45: 
The Procter & Gamble Company 45



NOTE 3


SUPPLEMENTAL FINANCIAL INFORMATION

The components of property, plant and equipment were as follows:
|    |                                     |          |        |      |          |    |        |
|---:|:------------------------------------|:---------|:-------|:-----|:---------|:---|:-------|
|  1 | As of June 30                       | 2024     |        | 2023 |          |    |        |
|  2 | PROPERTY, PLANT AND EQUIPMENT       |          |        |      |          |    |        |
|  3 | Machinery and equipment             | $        | 37,507 |      |          | $  | 36,521 |
|  4 | Buildings                           | 8,534    |        |      | 8,277    |    |        |
|  5 | Construction in progress            | 3,126    |        |      | 2,980    |    |        |
|  6 | Land                                | 895      |        |      | 867      |    |        |
|  7 | TOTAL PROPERTY, PLANT AND EQUIPMENT | 50,063   |        |      | 48,645   |    |        |
|  8 | Accumulated depreciation            | (27,911) |        |      | (26,736) |    |        |
|  9 | PROPERTY, PLANT AND EQUIPMENT, NET  | $        | 22,152 |      |          | $  | 21,909 |
Selected components of current and noncurrent liabilities were as follows:|    |                                         |       |        |      |       |    |        |
|---:|:----------------------------------------|:------|:-------|:-----|:------|:---|:-------|
|  1 | As of June 30                           | 2024  |        | 2023 |       |    |        |
|  2 | ACCRUED AND OTHER LIABILITIES - CURRENT |       |        |      |       |    |        |
|  3 | Accrued marketing and promotion         | $     | 4,172  |      |       | $  | 3,894  |
|  4 | Accrued compensation                    | 2,161 |        |      | 2,030 |    |        |
|  5 | Taxes payable                           | 1,042 |        |      | 828   |    |        |
|  6 | Accrued interest                        | 282   |        |      | 235   |    |        |
|  7 | Lease liabilities                       | 243   |        |      | 222   |    |        |
|  8 | Restructuring reserves                  | 166   |        |      | 174   |    |        |
|  9 | Derivative liabilities                  | 54    |        |      | 631   |    |        |
| 10 | Other                                   | 2,953 |        |      | 2,915 |    |        |
| 11 | TOTAL                                   | $     | 11,073 |      |       | $  | 10,929 |
| 13 | OTHER NONCURRENT LIABILITIES            |       |        |      |       |    |        |
| 14 | Pension benefit obligations             | $     | 2,884  |      |       | $  | 3,116  |
| 15 | Uncertain tax positions                 | 723   |        |      | 622   |    |        |
| 16 | Lease liabilities                       | 666   |        |      | 595   |    |        |
| 17 | Other retiree benefit obligations       | 653   |        |      | 690   |    |        |
| 18 | U.S. Tax Act transitional tax payable   | 592   |        |      | 1,154 |    |        |
| 19 | Derivative liabilities                  | 325   |        |      | 445   |    |        |
| 20 | Other                                   | 555   |        |      | 530   |    |        |
| 21 | TOTAL                                   | $     | 6,398  |      |       | $  | 7,152  |

RESTRUCTURING PROGRAM

The Company has historically incurred an ongoing annual level of restructuring-type activities to maintain a competitive cost structure, including manufacturing and workforce optimization. Before tax costs incurred under ongoing programs have generally ranged from $250 to $500 annually.
In December 2023, the Company announced a limited market portfolio restructuring of its business operations, primarily in certain Enterprise Markets, including Argentina and Nigeria, to address challenging macroeconomic and fiscal conditions. In connection with this announcement, the Company expects to record incremental restructuring charges of $1.0 to $1.5 billion after tax, consisting primarily of foreign currency translation losses to be recognized as non-cash charges upon the substantial liquidation of operations in the affected markets.
The Company incurred total restructuring charges of $659 and $329 for the fiscal years ended June 30, 2024 and 2023. Of the charges incurred for fiscal year 2024, $248 were recorded in Costs of products sold, $155 in SG&A and $255 in Other non-operating income, net. Of the charges incurred in fiscal year 2023, $160 were recorded in Costs of products sold, $160 in SG&A and $9 in Other non-operating income, net.
Amounts in millions of dollars except per share amounts or as otherwise specified.




, PROCTER & GAMBLE Co 10-K form for the fiscal year ended 2024-06-30, page 46: 
46 The Procter & Gamble Company


The following table presents restructuring activity for the fiscal years ended June 30, 2024 and 2023:
|    |                       |                  |                     |             |       |       |       |    |    |     |
|---:|:----------------------|:-----------------|:--------------------|:------------|:------|:------|:------|:---|:---|:----|
|  1 |                       | Separation Costs | Asset-Related Costs | Other Costs | Total |       |       |    |    |     |
|  2 | RESERVE JUNE 30, 2022 | $                | 121                 |             | $     | -     | $     | 26 | $  | 147 |
|  3 | Cost incurred         | 175              |                     | 43          |       | 111   | 329   |    |    |     |
|  4 | Cost paid/settled     | (141)            |                     | (43)        |       | (118) | (302) |    |    |     |
|  5 | RESERVE JUNE 30, 2023 | 155              |                     | -           |       | 19    | 174   |    |    |     |
|  6 | Cost incurred         | 202              |                     | 101         |       | 355   | 659   |    |    |     |
|  7 | Cost paid/settled     | (224)            |                     | (101)       |       | (342) | (667) |    |    |     |
|  8 | RESERVE JUNE 30, 2024 | $                | 133                 |             | $     | -     | $     | 32 | $  | 166 |

Separation Costs

Employee separation costs relate to severance packages that are primarily voluntary and the amounts calculated are based on salary levels and past service periods.

Asset-Related Costs

Asset-related costs consist of both asset write-downs and accelerated depreciation for manufacturing and facilities consolidations. Asset write-downs relate to the establishment of a new fair value basis for assets held-for-sale or for disposal. These assets are written down to the lower of their current carrying basis or amounts expected to be realized upon disposal, less minor disposal costs. Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the end of their normal service period.

Other Costs

Other restructuring-type charges are incurred as a direct result of the restructuring plan. Such charges include accumulated foreign currency translation losses, asset removal and termination of contracts related to Enterprise Market portfolio restructuring. As of June 30, 2024, the Company has substantially liquidated its operations in certain Enterprise Markets, including Nigeria, and recorded a non-cash charge of $216 for accumulated foreign currency translation losses previously included in Accumulated other comprehensive income/(loss).
Consistent with our historical policies for ongoing restructuring-type activities, the restructuring charges are funded by and included within Corporate for management and segment reporting. However, for information purposes, the following table summarizes the total restructuring costs related to our reportable segments: 

|    |                              |      |      |      |    |     |    |     |
|---:|:-----------------------------|:-----|:-----|:-----|:---|:----|:---|:----|
|  1 | Fiscal years ended June 30   | 2024 | 2023 | 2022 |    |     |    |     |
|  2 | Beauty                       | $    | 43   |      | $  | 15  | $  | 11  |
|  3 | Grooming                     | 76   |      | 17   |    | 14  |    |     |
|  4 | Health Care                  | 33   |      | 28   |    | 32  |    |     |
|  5 | Fabric & Home Care           | 84   |      | 87   |    | 42  |    |     |
|  6 | Baby, Feminine & Family Care | 50   |      | 21   |    | 83  |    |     |
|  7 | Corporate (1)                | 371  |      | 161  |    | 71  |    |     |
|  8 | TOTAL                        | $    | 659  |      | $  | 329 | $  | 253 |

(1)Corporate includes costs related to allocated overheads, including charges related to our Enterprise Markets, Global Business Services and Corporate Functions activities.
Amounts in millions of dollars except per share amounts or as otherwise specified.






Question: What are the potential risks associated with Procter & Gamble's portfolio restructuring efforts, and how is Procter & Gamble managing these risks in fiscal year 2024?
Answer: Procter & Gamble’s (P&G) restructuring efforts face several key risks. Financially, the company expects to record post-tax restructuring charges of $1.0 to $1.5 billion due to foreign currency translation losses. In fiscal 2024, P&G incurred $659 million in restructuring costs, up from $329 million in 2023, including $216 million in non-cash charges for currency translation losses, particularly from operations in Nigeria.

Operationally, business continuity may be disrupted due to the liquidation of markets like Nigeria and Argentina, affecting supply chains and customer relations. Significant asset write-downs are involved.

Execution risks also arise from the complexity of restructuring, with annual costs historically ranging between $250 to $500 million. P&G mitigates these risks by implementing structured financial controls, detailed operational oversight, and a focus on optimizing manufacturing and workforce costs to ensure efficiency and competitiveness during transitions.