PROCTER & GAMBLE Co

Previous wording

Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange or pricing controls; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments; (3) the ability to successfully manage uncertainties related to changing political and geopolitical conditions and potential implications such as exchange rate fluctuations, market contraction, boycotts, sanctions or other trade controls; (4) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (5) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, acts of war or terrorism or disease outbreaks; (6) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy, pension and healthcare; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, supply chain practices or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third-party information and operational technology systems, networks and services and maintain the security and functionality of such

Current wording

Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, currency exchange, pricing controls or tariffs; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments; (3) the ability to successfully manage uncertainties related to changing political and geopolitical conditions and potential implications such as exchange rate fluctuations, market contraction, boycotts, sanctions, tariffs or other trade controls; (4) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (5) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, acts of war or terrorism or disease outbreaks; (6) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy, pension and healthcare; (7) the ability to compete with our local and global competitors in new and existing sales channels, including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, supply chain practices or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third-party information and operational technology systems, networks and services and maintain the security and functionality of such

Previous wording

•Results of Operations – Three and Six Months Ended December 31, 2024

Current wording

•Results of Operations – Three and Nine Months Ended March 31, 2025

Previous wording

•Segment Results – Three and Six Months Ended December 31, 2024

Current wording

•Segment Results – Three and Nine Months Ended March 31, 2025

Previous wording

The following table provides the percentage of net sales and net earnings by reportable business segment (excluding Corporate) for the three and six months ended December 31, 2024:

Current wording

The following table provides the percentage of net sales and net earnings by reportable business segment (excluding Corporate) for the three and nine months ended March 31, 2025:

Previous wording

The following are highlights of results for the six months ended December 31, 2024, versus the six months ended December 31, 2023:

Current wording

The following are highlights of results for the nine months ended March 31, 2025, versus the nine months ended March 31, 2024:

Previous wording

•Net sales increased 1% to $43.6 billion versus the prior year period. Net sales increased 2% in Health Care, 1% in Fabric & Home Care and Baby, Feminine & Family Care and decreased 3% in Beauty. Net sales in Grooming were unchanged. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 2%. Organic sales increased 3% in Health Care, Fabric & Home Care and Grooming and increased 2% in Baby, Feminine & Family Care. Organic sales in Beauty were unchanged.

Current wording

•Net sales were $63.4 billion, a decrease of $112 million versus the prior year period. Net sales increased low single digits in Health Care, and decreased low single digits in Baby, Feminine & Family Care and Beauty. Net sales in Grooming and Fabric & Home Care were unchanged. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 2%. Organic sales increased low single digits in Health Care, Grooming, Fabric & Home Care, Beauty and Baby, Feminine & Family Care.

Previous wording

•Net earnings were $8.6 billion, an increase of $597 million, or 7%, versus the prior year period due to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year, partially offset by higher restructuring charges in the current year of $0.8 billion after tax related to the substantial liquidation of operations in certain Enterprise Markets, including Argentina.

Current wording

•Net earnings were $12.4 billion, an increase of $609 million, or 5%, versus the prior year period due to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year, partially offset by higher restructuring charges in the current year of $0.8 billion after tax related to the substantial liquidation of operations in certain Enterprise Markets, including Argentina.

Previous wording

•Net earnings attributable to Procter & Gamble were $8.6 billion, an increase of $601 million, or 8%, versus the prior year period.

Current wording

•Net earnings attributable to Procter & Gamble were $12.4 billion, an increase of $617 million, or 5%, versus the prior year period.

Previous wording

•Diluted EPS increased 8% to $3.49 due to the increase in net earnings. Core EPS, which excludes incremental restructuring charges and the prior year Gillette intangible asset impairment charge, increased 4% to $3.81.

Current wording

•Diluted EPS increased 6% to $5.03 due to the increase in net earnings. Core EPS, which excludes incremental restructuring charges and the prior year Gillette intangible asset impairment charge, increased 3% to $5.35.

Previous wording

•Operating cash flow was $9.1 billion. Adjusted free cash flow, which is defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the U.S. Tax Act, was $7.8 billion. Adjusted free cash flow productivity, which is defined as adjusted free cash flow as a percentage of net earnings excluding a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina, was 83%.

Current wording

•Operating cash flow was $12.8 billion. Adjusted free cash flow, which is defined as operating cash flow less capital expenditures and excluding payments for the transitional tax resulting from the U.S. Tax Act, was $10.6 billion. Adjusted free cash flow productivity, which is defined as adjusted free cash flow as a percentage of net earnings excluding a non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina, was 80%.

Previous wording

Global Economic Conditions. Our products are sold in numerous countries worldwide, with more than half our sales generated outside the United States. Our largest international markets are Greater China, the United Kingdom, Canada, Japan and Germany and collectively comprised approximately 20% of our net sales in fiscal 2024. As a result, we are exposed to global macroeconomic factors, geopolitical tensions and government policies. We are exposed to market risks from operating in challenging environments due to economic, political and social instabilities, natural disasters, debt and credit issues, currency controls, foreign exchange and interest rate changes. These risks can negatively impact our net sales, net earnings and cash flows. For example, we are exposed to risks due to the ongoing war between Russia and Ukraine. Our Russia business accounted for less than 2% of consolidated net sales and net earnings in the fiscal year ended June 30, 2024 and less than 2% of net assets as of June 30, 2024.

Current wording

Global Economic Conditions. Our products are sold in numerous countries worldwide, with more than half our sales generated outside the United States. Our largest international markets are Greater China, the United Kingdom, Canada, Japan and Germany and collectively comprised approximately 20% of our net sales in fiscal 2024. As a result, we are exposed to global macroeconomic factors, geopolitical tensions and government policies. We are exposed to various risks due to economic, political and social instabilities, market volatility, natural disasters, debt and credit issues, currency controls, new or increased tariffs (including any such tariffs between the U.S. and China or the U.S. and Canada), foreign exchange and interest rate changes. These risks can negatively impact our net sales, net earnings and cash flows. For example, we are exposed to risks due to the ongoing war between Russia and Ukraine. Our Russia business accounted for less than 2% of consolidated net sales and net earnings in the fiscal year ended June 30, 2024 and less than 2% of net assets as of June 30, 2024.

Previous wording

Government Policies. We are exposed to changes in U.S. and foreign government legislative, regulatory or enforcement policies that can have a negative impact on net sales, net earnings and cash flows. These include tax policy changes (both U.S.

Current wording

Government Policies. We are exposed to changes in U.S. and foreign government legislative, regulatory or enforcement policies that can have a negative impact on net sales, net earnings and cash flows. These include tax policy changes (both U.S. and foreign), including those resulting from the current work being led by the OECD/G20 Inclusive Framework focused on

Previous wording

and foreign), including those resulting from the current work being led by the OECD/G20 Inclusive Framework focused on "Addressing the Challenges of the Digitalization of the Economy”. Government controls such as currency exchanges, pricing and import authorizations as well as government policies related to environmental and climate change matters and changes to international trade agreements can also impact our financial performance.

Current wording

"Addressing the Challenges of the Digitalization of the Economy”. Government controls such as currency exchanges, pricing and import authorizations as well as government policies related to environmental and climate change matters and changes to international trade agreements, including tariffs, can also impact our financial performance.

Previous wording

Net sales for the quarter increased 2% to $21.9 billion as unit volume and mix each increased 1%. Pricing and foreign exchange had a neutral impact on net sales. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 3% and organic volume increased 2%.

Current wording

Net sales for the quarter decreased 2% to $19.8 billion. The decrease in net sales was due to unfavorable foreign exchange of 2% and unit volume decline of 1%, partially offset by higher pricing of 1%. Mix had a neutral impact on net sales. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 1% and organic volume was unchanged.

Previous wording

Gross margin decreased 30 basis points to 52.4% of net sales for the quarter. The decrease in gross margin was due to:

Current wording

Gross margin decreased 20 basis points to 51.0% of net sales for the quarter. The decrease in gross margin was due to:

Previous wording

•110 basis points of decline from unfavorable product mix,

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•120 basis points of decline from unfavorable product mix,

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•20 basis points of product and packaging investments,

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•40 basis points of product and packaging investments,

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•50 basis points of higher commodity costs,

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•30 basis points of higher commodity costs and

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•150 basis points of manufacturing productivity savings and

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•160 basis points of manufacturing productivity savings and

Previous wording

Total SG&A spending increased 1% to $11.2 billion versus the prior year period due to increased marketing spending and overhead costs. SG&A as a percentage of net sales increased 10 basis points to 25.8% due to the increase in marketing spending and overhead spending as a percentage of sales. Marketing spending as a percentage of net sales increased 30 basis points as the increase in marketing spending was partially offset by the positive scale impacts of the net sales increase and productivity savings. Overhead costs as a percentage of net sales increased 20 basis points due to wage inflation, partially offset by the positive scale impacts of the net sales increase and productivity savings. Other operating expenses as a percentage of net sales decreased 40 basis points primarily driven by favorable foreign exchange impacts. Productivity-driven cost savings delivered 90 basis points of benefit to SG&A as a percentage of net sales.

Current wording

Total SG&A spending decreased 6% to $5.5 billion versus the prior year period due to decreased marketing spending and overhead costs. SG&A as a percentage of net sales decreased 120 basis points to 27.9% due to decreases in marketing spending and overhead costs as a percentage of net sales. Marketing spending as a percentage of net sales decreased 30 basis points due to productivity savings. Overhead costs as a percentage of net sales decreased 70 basis points as wage inflation and foreign exchange headwinds were more than offset by productivity savings, which includes adjustments to expected variable compensation payouts. Other operating expenses as a percentage of net sales decreased 20 basis points due to favorable foreign exchange impacts. Productivity-driven cost savings delivered 120 basis points of benefit to SG&A as a percentage of net sales.

Previous wording

Operating income increased $1.3 billion, or 13%, to $11.5 billion and operating margin increased 290 basis points to 26.5% versus the prior year period due primarily to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year, as well as the increase in net sales, partially offset by the decrease in gross margin, the components of which are described above.

Current wording

Operating income increased $98 million, or 2%, to $4.6 billion and operating margin increased 90 basis points to 23.0% versus the prior year period primarily due to decreased marketing spending and overhead costs, partially offset by the decrease in gross margin, the components of which are described above.

Previous wording

Interest expense was $240 million for the quarter, a decrease of $8 million versus the prior year period. Interest income was $119 million for the quarter, a decrease of $14 million versus the prior year period. Other non-operating income/(expense) was $224 million, which is an increase of $47 million versus the prior year period due to an increase in the net periodic benefit credit for postretirement benefits.

Current wording

Interest expense was $217 million for the quarter, a decrease of $16 million versus the prior year period. Interest income was $111 million for the quarter, an increase of $7 million versus the prior year period. Other non-operating income/(expense) was $210 million, which is a decrease of $50 million versus the prior year period due to gains from the sale of minor brands in the prior year.

Previous wording

The effective income tax rate for the three months ended December 31, 2024, was 20.3%, compared to 22.3% for the three months ended December 31, 2023. The decrease in the effective tax rate was primarily driven by favorable geographic mix impacts and higher excess tax benefits of share-based compensation.

Current wording

The effective income tax rate for the three months ended March 31, 2025, was 18.6%, compared to 17.7% for the three months ended March 31, 2024. The increase in the effective tax rate was primarily driven by lower excess tax benefits of share-based compensation.

Previous wording

Net earnings increased $1.2 billion, or 33%, to $4.7 billion due primarily to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year. Foreign exchange had a negative impact of approximately $45 million on net earnings for the quarter, including both transactional and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble increased $1.2 billion, or 34%, to $4.6 billion for the quarter. Diluted EPS increased 34% to $1.88 versus the prior year period.

Current wording

Net earnings were unchanged at $3.8 billion versus the prior year period due primarily to the increase in operating income, partially offset by the decrease in other non-operating income and the increase in the effective tax rate. Foreign exchange had a negative impact of approximately $75 million on net earnings for the quarter, including both transactional and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble were unchanged at $3.8 billion for the quarter. Diluted EPS increased 1% to $1.54 versus the prior year period.

Previous wording

Gross margin decreased 10 basis points to 52.2% of net sales for the period. The decrease in gross margin was due to:

Current wording

Gross margin decreased 20 basis points to 51.8% of net sales for the period. The decrease in gross margin was due to:

Previous wording

•80 basis points of decline from unfavorable product mix,

Current wording

•100 basis points of decline from unfavorable product mix,

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•30 basis points of product and packaging investments,

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•40 basis points of product and packaging investments,

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•170 basis points of manufacturing productivity savings,

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•160 basis points of manufacturing productivity savings and

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•20 basis points of increase due to higher pricing and

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•20 basis points of increase due to higher pricing.

Previous wording

Total SG&A spending increased 4% to $5.7 billion versus the prior year period due to increased marketing spending and overhead costs. SG&A as a percentage of net sales increased 40 basis points to 26.2% due to an increase in marketing spending and overhead costs as a percentage of net sales. Marketing spending as a percentage of net sales increased 10 basis points as the increase in marketing spending was partially offset by the positive scale impacts of the net sales increase and productivity savings. Overhead costs as a percentage of net sales increased 40 basis points as wage inflation and foreign exchange were partially offset by the positive scale impacts of the net sales increase and productivity savings. Other operating expenses as a percentage of net sales was unchanged. Productivity-driven cost savings delivered 110 basis points of benefit to SG&A as a percentage of net sales.

Current wording

Total SG&A spending decreased 1% to $16.8 billion versus the prior year period due to higher foreign exchange transactional charges in the prior year period and decreased overhead costs. SG&A as a percentage of net sales decreased 40 basis points to 26.4% due primarily to a decrease in other operating expenses as a percentage of sales. Marketing spending as a percentage of net sales increased 10 basis points as the increase in marketing spending was partially offset by productivity savings. Overhead costs as a percentage of net sales were unchanged as wage inflation was offset by productivity savings, which includes adjustments to expected variable compensation payouts. Other operating expenses as a percentage of net sales decreased 40 basis points primarily driven by favorable foreign exchange impacts. Productivity-driven cost savings delivered 100 basis points of benefit to SG&A as a percentage of net sales.

Previous wording

Operating income increased $1.3 billion, or 30%, to $5.7 billion and operating margin increased 550 basis points to 26.2% versus the prior year period primarily due to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year, as well as the increase in net sales, partially offset by the decrease in gross margin, the components of which are described above.

Current wording

Operating income increased $1.4 billion, or 10%, to $16.1 billion and operating margin increased 230 basis points to 25.4% versus the prior year period due primarily to the non-cash impairment charge of $1.3 billion ($1.0 billion after tax) on the Gillette intangible asset in the prior year.

Previous wording

Interest expense was $478 million for the period, an increase of $6 million versus the prior year period. Interest income was $254 million for the period, a decrease of $8 million versus the prior year period. Other non-operating income/(expense) was $(330) million, which is a decrease of $639 million versus the prior year period primarily due to the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina recorded in the period ended September 30, 2024.

Current wording

Interest expense was $695 million for the period, a decrease of $10 million versus the prior year period. Interest income was $365 million for the period, a decrease of $1 million versus the prior year period. Other non-operating income/(expense) was $(120) million, which is a decrease of $690 million versus the prior year period primarily due to the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina recorded in the period ended September 30, 2024.

Previous wording

The effective income tax rate for the six months ended December 31, 2024, was 21.3%, compared to 21.8% for the six months ended December 31, 2023. The decrease in the effective tax rate was primarily driven by higher excess tax benefits of share-based compensation and favorable geographic mix impacts, partially offset by a 140 basis-point increase due primarily to the charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.

Current wording

The effective income tax rate for the nine months ended March 31, 2025, was 20.5%, compared to 20.6% for the nine months ended March 31, 2024. The decrease in the effective tax rate was primarily driven by higher excess tax benefits of share-based compensation, favorable geographic mix impacts and decreases from discrete impacts related to uncertain tax positions, partially offset by a 100 basis-point increase due primarily to the charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina.

Previous wording

Net earnings increased $597 million, or 7%, to $8.6 billion, as the increase in operating income, the components of which are described above were partially offset by the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina recorded in the period ended September 30, 2024. Foreign exchange had a positive impact of approximately $17 million on net earnings for the period, including both transactional and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble increased $601 million, or 8%, to $8.6 billion for the period. Diluted EPS increased 8% to $3.49 versus the prior year period due to the increase in net earnings. Core EPS, which represents diluted EPS excluding charges for incremental restructuring and the impairment of the Gillette intangible asset, increased 4% to $3.81.

Current wording

Net earnings increased $609 million, or 5%, to $12.4 billion, as the increase in operating income, the components of which are described above, were partially offset by the non-cash charge for accumulated foreign currency translation losses due to the substantial liquidation of operations in Argentina recorded in the period ended September 30, 2024. Foreign exchange had a negative impact of approximately $58 million on net earnings for the period, including both transactional and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble increased $617 million, or 5%, to $12.4 billion for the period. Diluted EPS increased 6% to $5.03 versus the prior year period due to the increase in net earnings. Core EPS, which represents diluted EPS excluding charges for incremental restructuring and the impairment of the Gillette intangible asset, increased 3% to $5.35.

Previous wording

SEGMENT RESULTS – Three and Six Months Ended December 31, 2024

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SEGMENT RESULTS – Three and Nine Months Ended March 31, 2025

Previous wording

The following discussion provides a review of results by reportable business segment. Analysis of the results for the three and six months ended December 31, 2024, is provided based on a comparison to the three and six months ended December 31, 2023. The primary financial measures used to evaluate segment performance are net sales and net earnings. The table below provides supplemental information on net sales, earnings before income taxes and net earnings by reportable business segment for the three and six months ended December 31, 2024, versus the comparable prior year period (dollar amounts in millions):

Current wording

The following discussion provides a review of results by reportable business segment. Analysis of the results for the three and nine months ended March 31, 2025, is provided based on a comparison to the three and nine months ended March 31, 2024. The primary financial measures used to evaluate segment performance are net sales and net earnings. The table below provides supplemental information on net sales, earnings before income taxes and net earnings by reportable business segment for the three and nine months ended March 31, 2025, versus the comparable prior year period (dollar amounts in millions):

Previous wording

•Hair Care net sales decreased mid-single digits. Negative impacts of divestitures, unfavorable foreign exchange and a unit volume decrease were partially offset by positive impacts of favorable geographic and brand mix (due to growth of the premium Native brand). The volume decrease was driven by a decline in Greater China (due to market contraction in the retail channel where we have higher shares and distribution footprint changes), partially offset by growth in Latin America and Europe (due to market growth). Organic sales increased low single digits driven by high single-digit growth in Latin America and a low single-digit growth in North America, partially offset by a mid-single-digit decline in Greater China. Global market share of the Hair Care category decreased 0.7 points.

Current wording

•Hair Care net sales decreased mid-single digits. Negative impacts of unfavorable foreign exchange, divestitures and a unit volume decrease were partially offset by positive impacts of favorable product mix and higher pricing (primarily in Latin America and North America). The volume decrease was driven by a decline in Greater China (due to market contraction and the impact of divestitures), partially offset by growth in Latin America and North America (both due to market growth). Organic sales were unchanged as a high single-digit growth in Latin America and a mid-single-digit growth in North America were offset by a double-digit decline in Greater China. Global market share of the Hair Care category decreased 1 point.

Previous wording

•Personal Care net sales increased high single digits. Positive impacts of an increase in unit volume, higher pricing (primarily in North America) and favorable product mix (due to the growth of the premium brands) were partially offset by unfavorable foreign exchange. The volume increase was driven by growth in North America (due to innovation), Europe (due to distribution expansion and innovation), and Latin America (due to market growth), partially offset by a decline in Greater China (due to market contraction). Organic sales increased double digits due to a more than 20% growth in Europe and a double digit growth in North America, partially offset by a mid-single-digit decline in Greater China. Global market share of the Personal Care category increased 0.6 points.

Current wording

exchange. The volume increase was driven by growth in Europe (due to distribution expansion and innovation), North America (due to innovation), and Latin America (due to market growth). Organic sales increased high single digits due to a more than 20% growth in Europe, a mid-teens growth in Latin America and a high single-digit growth in North America. Global market share of the Personal Care category increased 0.6 points.

Previous wording

Net earnings decreased 10% to $780 million due to a 230 basis-point decline in net earnings margin. Net sales were unchanged. Net earnings margin decreased due to a decrease in gross margin and an increase in SG&A as a percentage of net sales, partially offset by a lower effective tax rate. The gross margin decline was driven by negative product mix (due to the decline of premium brands) and higher commodity costs, partially offset by increased productivity savings and higher pricing. SG&A as a percentage of net sales increased due primarily to increases in marketing and overhead spending. The lower effective tax rate was driven by favorable geographic mix.

Current wording

Net earnings decreased 8% to $539 million due to a decrease in net sales and a 110 basis-point decline in net earnings margin. Net earnings margin decreased due to a decrease in gross margin and an increase in SG&A as a percentage of net sales. The gross margin decline was driven by unfavorable category and geographic mix, partially offset by increased productivity savings. SG&A as a percentage of net sales increased due to increases in marketing, overhead spending and higher foreign exchange transactional charges.

Previous wording

Beauty net sales decreased 3% to $7.7 billion, as unit volume decrease of 1%, negative impacts of unfavorable foreign exchange of 1% and unfavorable mix of 2% (due primarily to the decline of the super-premium SK-II brand, which has higher than segment-average selling prices) were partially offset by the positive impacts of higher pricing of 1%. Excluding the impact of acquisitions and divestitures and foreign exchange, organic volume and organic sales were unchanged. Global market share of the Beauty segment increased 0.1 points.

Current wording

Beauty net sales decreased 2% to $11.2 billion, driven by unfavorable mix of 2% (due primarily to the decline of the super-premium SK-II brand, which has higher than segment-average selling prices), unfavorable foreign exchange of 1% and a unit volume decrease of 1%, partially offset by the positive impacts of higher pricing of 2%. Excluding the impact of acquisitions and divestitures and foreign exchange, organic volume and organic sales increased 1%. Global market share of the Beauty segment decreased 0.2 points.