How PG (The Procter & Gamble Company) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a consumer staples giant like Procter & Gamble (PG) makes money is essential for investors and anyone interested in the business of household and personal care products. In this post, we break down Procter & Gamble's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Procter & Gamble Overview

Procter & Gamble operates as a global leader in branded consumer packaged goods, offering a broad portfolio of household, health, and personal care products. Revenue comes primarily from the sale of everyday essentials such as detergents, shampoos, diapers, and oral care products, marketed under iconic brands like Tide, Pampers, Gillette, and Crest. The company’s business is organized into segments including Beauty, Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care, each contributing to its diversified revenue base.

Revenue Breakdown

• Total Revenue (Q3 2025): $22.4B (+3.0% YoY)
  • Procter & Gamble’s revenue is diversified across multiple product segments and geographies, with no single segment disclosed as dominant in this quarter’s filing.
  • Growth is powered by steady demand for essential consumer products, price increases, and innovation in premium product lines.

Gross Profit and Margins

• Gross Profit: $11.5B (51.4% gross margin)
  • Cost of Revenue: $10.9B (+4.5% YoY)
  • Procter & Gamble maintains robust margins due to its scale, strong brand equity, and operational efficiencies in manufacturing and supply chain management.
• Most costs come from raw materials, manufacturing, and logistics required to deliver products globally.

Operating Income and Expenses

• Operating Income: $5.856B (+1.0% YoY, 26.2% margin)
• Operating Expenses: $5.643B (+2.2% YoY)
  • R&D: Not separately disclosed for this quarter
  • SG&A: $5.643B (+2.2% YoY, 25.2% of revenue) — Includes marketing, advertising, sales force, and administrative functions to support global brands and distribution.
  • Procter & Gamble continues to invest in brand building and market expansion while maintaining efficiency in overhead and administrative costs.

Net Income

• Pre-Tax Income: $6.034B (+17.4% YoY, 27.0% margin)
• Income Tax: $1.253B (20.8% effective tax rate)
• Net Income: $4.750B (+20.0% YoY, 21.2% net margin)
• Procter & Gamble converts a significant portion of sales into profit due to its pricing power, scale, and disciplined cost management.

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What Drives Procter & Gamble's Money Machine?

• Core consumer brands: Overwhelmingly, revenue is driven by household and personal care brands sold globally, accounting for nearly all sales.
• Brand strength and pricing: The company’s ability to pass on cost increases and maintain premium pricing supports margins and profit growth.
• Strategic investment: Heavy investment in advertising, digital transformation, and supply chain optimization ensures long-term competitiveness.
• Future growth areas: Expansion in emerging markets and premium product innovation are key focus areas, though some investments may not yet be profitable.

Visualizing Procter & Gamble's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs in marketing and administration, 21.2% of revenue drops to the bottom line.

Key Takeaways

• Procter & Gamble's money comes overwhelmingly from branded consumer staples sold worldwide
• High gross and net margins illustrate the power of PG’s scale and brand-driven business model
• Heavy investment in marketing and brand-building, balanced by efficiency in operating costs
• Ongoing growth is driven by product innovation, pricing power, and expansion in emerging markets

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FAQ About Procter & Gamble's Income Statement

1. What is the main source of Procter & Gamble's revenue in 2025?

Procter & Gamble generates over 95% of its revenue from the sale of branded household and personal care products, including detergents, diapers, and grooming products. Additional revenue comes from health care and beauty segments, but no single segment dominates the overall mix.

2. How profitable is Procter & Gamble in Q3 2025?

Procter & Gamble reported net income of $4.75B in Q3 2025, with a net margin of approximately 21.2%, reflecting strong profitability driven by scale, brand strength, and disciplined cost management.

3. What are the largest expense categories for Procter & Gamble?

The biggest expenses on Procter & Gamble’s income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A investment reached $5.643B in Q3 2025, as the company prioritizes marketing, advertising, and global sales support.

4. Why does [segment/division] operate at a loss?

While Procter & Gamble does not disclose a loss-making segment in this quarter, investments in new markets or product launches may temporarily weigh on profitability as the company seeks long-term growth.

5. How does Procter & Gamble's effective tax rate compare to previous years?

Procter & Gamble’s effective tax rate in Q3 2025 was 20.8%, consistent with recent years. This moderate rate is primarily due to international structuring and tax benefits from share-based compensation.