The Procter & Gamble Company (NYSE:PG) Q4 2015 Earnings Conference Call - Final Transcript
Jul 30, 2015 • 08:30 am ET
10 categories and 65 brands that best leverage our core competencies with leading global positions and historically superior top and bottom-line performance. This positions us over time for stronger top and bottom-line growth. Fourth, we continued to invest in our future and more dedicated selling resources and product innovation and brand building, and in transforming our supply chain.
For the fiscal year organic sales grew 1%. Excluding the businesses we're in the process of exiting, organic sales grew 2%. All-in sales were down 5%, including the 6-point headwind from foreign exchange.
When we had to make choices between the top and bottom-line, for example, the price for foreign currency rather than shift volume at a negative gross margin, or to continue unprofitable/non-strategic product lines we've deliberately placed emphasis on driving value creation and cash.
Core operating margin was 19.3%, in line with the prior year despite a 130 basis point challenge from foreign exchange. On a constant currency basis, core operating margin was up 130 basis points. Productivity savings contributed approximately 330 basis points to core operating margin expansion for the year.
Core gross margin, including foreign exchange grew 30 basis points. On a constant currency basis, core gross margin was up 80 basis points. We delivered this margin progress while making important investments in the business. As I mentioned earlier, we've increased investments in sales coverage. We're investing in innovation, in the upstream innovation, pipeline and behind recent launches, Pods, beads, Pampers Pants, Gillette FlexBall and Venus Swirl, launches which both create and build markets.
We're investing the supply chain, including the start-up of six new US mixing and distribution centers. We invested in a new business, with our market expanding entry into the adult incontinence category.
Core earnings per share for the year were $4.02, down 2% versus the prior year. This includes a 13-point headwind from foreign exchange, over $1.5 billion after tax. On a constant currency basis, core earnings per share grew at a double-digit 11% rate. On an all-in GAAP basis, earnings per share were $2.44, this includes non-core restructuring costs, battery business impairment charges and the Venezuela charge.
We continue to be one of the strongest cash generators among competitive peers and comparable mega cap companies. We generated $11.6 billion in adjusted free cash flow with 102% adjusted free cash flow productivity. Increasing our dividend for the 59th consecutive year and returning $11.9 billion in cash to shareholders. $7.3 billion in dividends and $4.6 billion in share repurchase, 105% of adjusted net earnings. Over the past five years we've returned $60 billion to shareholders, $12 billion a year on average. And intend to pay dividends, retire and repurchase shares worth up to $70 billion over the next four years.
Two important drivers of our strong cash generation have been a reduction in payables for the broader implement of our supply chain financing program and our work to reduce inventory levels. Inventory days on hand are down five days on a constant currency basis, seven