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 PG (Procter & Gamble) makes money is essential for investors and anyone interested in the business of household and personal care products. In this post, we break down PG'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 PG Overview

Procter & Gamble (PG) operates as a global leader in branded consumer packaged goods, offering a wide portfolio of products across fabric care, home care, baby care, feminine care, family care, beauty, and health care. Revenue comes primarily from the sale of everyday household and personal care products under iconic brands such as Tide, Pampers, Gillette, and Oral-B. The company organizes its business into five main segments: Fabric & Home Care, Baby, Feminine & Family Care, Beauty, Health Care, and Other.

Revenue Breakdown

• Total Revenue (Q3 2025): $22.4B (+3.0% YoY)
  • Fabric & Home Care Revenue: $7.793B (34.8% of total, +1.1% YoY)
  • Baby, Feminine & Family Care Revenue: $5.171B (23.1% of total, +1.4% YoY)
  • Beauty Revenue: $4.143B (18.5% of total, +6.4% YoY)
  • Health Care Revenue: $3.220B (14.4% of total, +2.3% YoY)
  • Other: $2.059B
  • Growth is powered by strong performance in Beauty and Health Care, as well as steady demand in core household categories.

Gross Profit and Margins

• Gross Profit: $11.5B (51.4% gross margin)
  • Cost of Revenue: $10.9B (+4.5% YoY)
  • PG maintains robust margins due to its scale, brand strength, and ongoing supply chain efficiencies.
• Most costs come from raw materials, manufacturing, and distribution of consumer goods.

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 Q3 2025
  • SG&A: $5.643B (+2.2% YoY, 25.2% of revenue) — Includes marketing, advertising, sales, and administrative costs to support global brands and innovation.
  • PG continues to invest in brand building and innovation while maintaining efficiency in its cost structure.

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)
• PG converts a significant portion of sales into profit due to its scale, pricing power, and operational discipline.

What Drives PG's Money Machine?

• Fabric & Home Care: 34.8% of revenue, led by brands like Tide and Ariel, remains the largest contributor.
• Brand Strength: PG’s ability to command premium pricing and maintain customer loyalty drives both revenue and margin.
• Strategic Investment: Heavy spending on SG&A supports global marketing and innovation, reinforcing brand equity and market share.
• Future Growth Areas: Health Care and Beauty segments show above-average growth, though some investments in emerging markets and new categories are not yet profitable.

Visualizing PG'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 marketing and administrative costs, 21.2% of revenue drops to the bottom line.

Key Takeaways

• PG's money comes overwhelmingly from branded household and personal care products, with Fabric & Home Care as the largest segment.
• High gross and net margins illustrate the power of PG's scale and brand-driven business model.
• Heavy investment in marketing and innovation, balanced by efficiency in operating costs.
• Ongoing growth is driven by premiumization, emerging market expansion, and product innovation.

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FAQ About PG's Income Statement

1. What is the main source of PG's revenue in 2025?

PG generates over 34% of its revenue from Fabric & Home Care products, including brands like Tide and Ariel. Other significant sources include Baby, Feminine & Family Care 23%, Beauty 19%, and Health Care 14%.

2. How profitable is PG in Q3 2025?

PG reported net income of $4.750B in Q3 2025, with a net margin of approximately 21.2%, reflecting strong profitability driven by scale, brand strength, and operational efficiency.

3. What are the largest expense categories for PG?

The biggest expenses on PG's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs, which reached $5.643B in Q3 2025 (25.2% of revenue), as PG prioritizes global marketing, advertising, and brand support.

4. Why does the "Other" segment operate at a loss?

The "Other" segment, despite generating $2.059B in revenue, may post an operating loss due to investments in emerging categories and geographies, where PG is building market presence for long-term growth—even if the division is unprofitable today.

5. How does PG's effective tax rate compare to previous years?

PG'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 related to global operations.