Moody's Lifts P&G Credit Rating Outlook to Positive

Procter & Gamble's credit rating outlook has been revised to positive by Moody's, reflecting the company's strong ability to generate free cash flow and earnings growth. The firm's Aa3 senior unsecured ratings were affirmed along with its Prime-1 commercial paper program ratings.

The outlook change is due to P&G's sustained performance in generating significant positive free cash flow and earnings growth through pricing, innovation, and cost savings programs. The company has also reshaped its portfolio to focus on more stable and attractive globally-scalable products that have generated stable earnings even in periods of geopolitical volatility.

Moody's notes that Procter & Gamble has consistently strong credit metrics, including a debt-to-EBITDA leverage below 2x and retained cash flow to net debt well above 25%. The company's recently announced acquisition of Thorne for $3.8 billion demonstrates its ability to increase its presence in high-growth markets while maintaining low leverage.

Moody's expects leverage to rise to just above 1.6x following the Thorne acquisition, but return below 1.6x through innovation and cost optimization as well as scaling and integration of the Thorne brand into P&G's supplements business.