Good morning, and welcome to Procter & Gamble's quarter end conference call. P&G would like to remind you that today's discussion will include a number of forward-looking statements. If you will refer to P&G's most recent 10-K, 10-Q, and 8-K reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections. Also, as required by Regulation G, Procter & Gamble needs to make you aware that during the discussion, the company will make a number of references to non-GAAP and other financial measures. Procter & Gamble believes these measures provide investors with useful perspective on underlying business trends, and has posted on its investor relations website, www.pginvestor.com, a full reconciliation of non-GAAP financial measures. Now I will turn the call over to P&G's Vice Chairman, Chief Operating Officer, and Chief Financial Officer, Jon Moeller.
Good morning. As this was another relatively straightforward quarter, as David Taylor will be with us to provide additional depth at CAGNY in just a few weeks, I'm going to keep prepared remarks this morning brief, turning fairly quickly to your questions. This was another very solid quarter, top line, bottom line, and cash, driven by our portfolio, superiority, productivity, constructive disruption, and organization strategies. Organic sales up 5%, 3 points of volume growth, 2 points of price mix. Two-year stacked average growth of 4.5%, fiscal year-to-date organic sales growth of 6%, calendar year 2019 organic growth of 6%. This growth continues to be broad-based. Nine of 10 global categories grew organic sales. Skin and personal care up double digits. Personal healthcare and home care grew high singles. Fabric care, feminine care, hair care, oral care, and grooming grew mid-single digits. Family care grew low singles.
Focus markets and enterprise markets each grew mid-singles. We continue to perform very well in our two largest markets, the U.S. up 4% and China up 13% for the quarter. Aggregate market share continuing to grow. These results required us to overcome several challenges. While we're seeing real signs of progress, with grooming organic sales up 4% this quarter, we're still working to sustainably improve results in this business and in baby care. Sales results in Japan, our third largest market, created nearly a half point drag on total company organic sales growth due to timing of VAT changes that went into effect on October 1st. The timing, as we highlighted last quarter, led to higher shipments last quarter and lower shipments in the quarter we just completed.
We faced market-level challenges in an increasing number of markets, India, the U.K., Australia, Turkey, Iraq, Nigeria, Kenya, Lebanon, Argentina, Chile, Mexico, and the Hong Kong market. Through all of this, we grew organic sales 5% on the quarter and 6% over the first half. Moving to the bottom line, core earnings per share were up 14% versus the prior year. Foreign exchange was a one-point earnings growth headwind, so on a constant currency basis, core earnings per share increased 15%. Fiscal year- to- date, core earnings per share are up 18%, up 19% on a constant currency basis. Gross margin up 200 basis points in the second quarter. Core operating margin up 190 basis points. Continued strong cash generation with operating cash flow of $4.4 billion and free cash flow productivity of 100%.
$1.9 billion of dividends paid, $3.5 billion of P&G stock repurchased, $5.4 billion of cash returned to shareowners. Net another strong quarter, solid volume sales and market share trends across both categories and geographies, strong operating earnings, margins advancing, strong core earnings per share growth, and continued high levels of cash generated and returned to shareowners. We continue to face the challenges of a very volatile macro and geopolitical landscape and of competitive response to our growth. All in, we're continuing to make progress behind a set of integrated and mutually reinforcing strategies.
The strategic choices we've made to focus and strengthen our portfolio in daily use categories where performance drives brand choice, to establish and extend the superiority of our brands, to make productivity as integral to our culture as innovation, to lead constructive disruption across the value chain, and to improve organization focus, agility, and accountability, reinforce and build on each other. They position us well within our industry to deal with near-term macro and competitive challenges. They are the foundation for stronger balanced growth and value creation over the short, mid, and long term. Moving to guidance, we're again increasing our fiscal year outlook for organic sales growth, for core earnings per share growth, and for free cash flow productivity, as well as cash return. We started the year with organic sales growth guidance of 3%-4%.
We increa sed the range to 3%-5% last quarter and are now increasing the range to 4%-5%. This 4%-5% range compares with underlying market growth of 3%-4%, implying continued market share growth. On the bottom line, our core earnings per share growth guidance started the year at a range of 4%-9%. We raised the range to 5%-10% last quarter, we're now increasing the range again to 8%-11% for the year. We're increasing our outlook for adjusted free cash flow productivity from 90% going into the year to 95% last quarter, now to 100%.
We'll extend our long track record of significant cash generation and cash returned, expecting to pay over $7.5 billion in dividends, and now increasing our outlook for share repurchase from a range of $6 billion-$8 billion to a range of $7 billion-$8 billion in fiscal 2020. While we've delivered strong first half results, please keep in mind that comps get more difficult as we move through the year, both top line and bottom line. Pricing annualizes as we move through the back half of the year, affecting both top and bottom line trends. We'll comp the earnings gains from the Boston Land sale and oral care brand divestitures in Q4. Competitors are responding to our outperformance, which will require continued innovation and equity building investments on our part.
The market level challenges I mentioned earlier will be top and bottom line headwinds for the balance of the year. Our guidance is based on current market growth rates, commodity prices, and foreign exchange rates. Significant currency weakness, commodity cost increases, or additional geopolitical disruptions are not included within the new improved guidance ranges. We look forward to seeing many of you at the CAGNY Conference in just a few weeks. As I mentioned, David Taylor will join us and will provide further perspective on forward-looking strategies and plans. We look forward to engaging with you and to benefiting from your thoughts and reactions. With that, I'm happy to take questions.
Ladies and gentlemen, if you have a question, please press star followed by one on your phone. If your question has been answered or you would like to withdraw your question, please press star followed by two. Your first question comes from the line of Dara Mohsenian with Morgan Stanley.
Hey, Jon. I wanted to focus on organic sales growth. Obviously, the 5% result, still very healthy this quarter, but it is below 7% in each of the prior two quarters. It sounds like some of that's Japan timing based on the prepared remarks. I'm assuming perhaps some U.S. inventory reductions as the retailers approach fiscal year-end. Just wanted to get your read on an underlying basis, looking at retail sales growth, ex shipment timing, ex inventory changes. Has anything changed in terms of the underlying momentum as you look at fiscal Q2 results versus the last couple of quarters? Within that answer, perhaps you can just touch briefly on the competitive environment. Have you seen incremental promotion with the recent commodity pullback?
Also give us an update on China performance in the quarter and any impact so far from the virus that we're seeing over there. Thanks.
That could complete the whole call, Dara.
It's a three-parter.
On the first part of your question, we're very pleased with the top-line growth in the quarter that we just completed. As you all know, we delivered 7%, as you mentioned, Dara. In the prior quarter, our guidance was for 3%-5% for the full fiscal year, implying something below that beyond the first quarter, and we delivered at the high end of that range. As I mentioned in my prepared remarks, that growth was broad-based, both across categories and regions, and we built market share. From an underlying consumption standpoint, you've seen the offtake numbers, at least through December, which continue to be very strong, and we really haven't seen anything that would cause us to change that outlook in the first part of the current quarter. All the fundamentals are there. Our superiority levels continue to increase. We're investing behind that while building margins.
We're building market share and, increasingly, the growth is broader as you look at both categories and geographies. We did have some headwinds in the quarter from two items. You mentioned probably three. You mentioned one, which is Japan, and that had a half point impact, which benefited the prior quarter. The other dynamic has been a series, and I mentioned this also in my prepared remarks, of geopolitical, economic, societal, and other impacts in individual markets. Think about what's happened in the last, well, since we last gathered, even. The situation in the Hong Kong market has continued to be difficult, which had a real impact on the quarter and had an impact on the travel retail business. Some of the market-level events in South America, whether that's Argentina or Chile, where stores were burnt and are not yet back in place.
Some of the events that you're very familiar with in our headline items in the Middle East impacted our business as well. Those items will impact us going forward for the balance of the year. We're very pleased that we were able to overcome all of that and still deliver very strong numbers that build share and build household penetration and allow us to deliver significant bottom-line benefits. From a competitive environment standpoint, which was the second part of your question. Promotion levels, percentage of sales in our category sold on promotion are actually down. They index at 98 for the last quarter. That's all I have visibility to. I don't have visibility to the future. Where individual competitors are up versus a year ago, they're up typically a point.
Very simply, and we can get into this later with others if you want more detail, we're not seeing competitive activity that's indicative of downward price spirals by any means. That can change tomorrow, what we have in front of us today continues to look very healthy. China, we are very optimistic about our prospects in China. It's a difficult market. It moves at a very fast pace, both from a consumer and trade channel standpoint. We continue to increase the rate of growth in that market. You'll recall four years ago, we were at -1%. The following year, we were at +7%. Excuse me, -5%, +1%, +7%. Last year at +10%, and fiscal year- to- date at +13%. That continues to be a very attractive market. Within that, some really strong growth rates in some categories.
I'm talking the high 20% in categories like skincare. Feminine care, over 20%. Fabric care, double digits. Generally, a very strong market. I have no idea what the developments are going to be relative to the new virus. We're obviously monitoring that closely as it relates both to the health of our employees and broader community. We'll have to see what impact that has, if any, on the business going forward. It's one of those things that I do think is important to mention, because it can have broad impacts well beyond China. It can also affect consumer confidence in large parts of the market. It can affect travel, which does affect our business.
It's one of the many pieces of volatility that's just important we keep in front of us as we think about the prospects for the future, which I view as generally extremely positive, but not without risk and without challenge.
Your next question will come from the mind of Steve Strycula with UBS.
Hi, good morning. Jon, I'll stick to one topic here. Just to clarify one of your responses. Is the slowdown you're seeing in travel and retail, is that specific to Hong Kong, or is it a little bit broader based in China? That would be the quick clarification. The broader question would be, can you talk to just what we're seeing across the global beauty spectrum in your portfolio right now? How is China performing with SK-II versus Olay? What is the opportunity to extend SK-II to broader markets looking forward? Thank you.
Another three parter. I'll try to get to each of the pieces efficiently. Travel retail concentrated in Hong Kong. Beauty broadly continues to do extremely well. This is our 17th consecutive quarter of growth, with Q2 up 8%. That growth is broad-based. Hair care grew 6% in the quarter. Our skin and personal business grew 10%. It was actually a relatively slow quarter for SK-II, given both the VAT dynamic in Japan, where SK-II has a big business, and the Hong Kong dynamics. Skincare broadly in China, as I mentioned, is doing extraordinarily well. Olay was up a strong double digits. The balance of the business as well, our Safeguard business, which is part of our beauty segment, grew double digits. Again, strong double digits, over 20%. The growth in beauty, both on a global basis and within the China market, is broad based.
I think you asked another question. SK-II expansion. Yeah. First of all, there are significant opportunities in the markets that we're in, as evidenced by the current growth rates. There are also, at the right time and in the right way, expansion opportunities available. Are there other questions?
Your next question will come from the line of Andrea Teixeira with JPMorgan.
Hi, good morning, everyone. Thank you. I just want to double-click on what you just said, Jon, on the China, how it evolved through the quarter, and if you're baking any more level of conservatism into the back end of the year given what happened recently. I think what you also discussed, is hair care coming back? Is that a mitigating effect from what could be expected in a continuation of a deceleration for SK-II? Thank you.
Let me first talk about hair care, and I'm assuming the question's in a China context. We grew hair care in the mid to high single digits in China, which is the fastest growth rate in a period of time. Yes, that can offer some offsets, if you will, to other businesses that may soften due to competitive activity or other things. On the other hand, the hair care business is a highly competitive business, as are many of our categories, so the dynamics can change there quite rapidly. Our job is to continue to steadily increase our margin of superiority, and if we do that over time, if not quarter to quarter, we'll continue to have a strong business.
In terms of the conservatism on the back half of the year, I'll answer this question both relative to China, which obviously we don't provide specific guidance for, and the balance of the company. One thing to keep in mind with China is the timing of Chinese New Year, which as you know from all the press on China recently, is beginning as we speak. That is earlier in the calendar year than it typically occurs. It's likely there was some sell-in, in the OND period that wouldn't have been there in the prior year period. On a global P&G basis, that doesn't move the needle significantly, but something just to be aware of as it relates to the China specific situation.
I talked in my prepared remarks about some of the headwinds that exist that increased during the quarter and will impact us in the back half of the year, or could impact us in the back half of the year. We talked about the market level dynamics. If you take a market, it may not be that large, but take a market like Chile. That impact happened at the very end of the quarter, and will exist through the balance of the year. The same with, for example, the situation in Lebanon. The same for the situation in Iraq. The India market, the growth rates have slowed. Still growing, and we're doing very well in building share. The challenges there have increased and will likely remain for the balance of the year.
That's one thing that needs to be netted against the strong progress that we hope to continue to make. The other is the annualization of price increases. For example, in February, we annualized both a dish care price increase from a year ago and a family care price increase from a year ago. I don't want to talk about how we're going to handle pricing going forward. That's kind of off limits. Irregardless, those annualization impacts, as well as some of the price increases we've taken for devaluation over the last year will annualize. Third is the competitive environment. I don't know what that's going to hold. I've described what it's held so far. Most of our competitors are calendar year based. They start their new fiscal years as we speak, and many of them have talked, understandably, about increasing investments for growth.
That can be a very healthy thing. It can grow categories. We can all benefit from that. Certain implementations of that obviously are less healthy. Now, against all of that backdrop, we continue to make progress on the things that we control. We're making very strong progress. Our margin of superiority is increasing across the board. It's dynamic. It's not static. We have moves forward and moves back, but the net move is a forward move. We're in a position because of our productivity programs to invest, to support communication of that superiority. That's really driving some outsized growth in many of our categories. Over time, and it will take some time, I expect we'll deliver higher growth rates on businesses like baby care. Overall, we're very optimistic about where we stand today and what the future holds, at least in the near term.
It would be irresponsible not to acknowledge the challenges that exist.
Your next question will come from the line of Lauren Lieberman with Barclays.
Great. Thanks. Good morning. I'm going to ask one question. I just wanted to talk a little bit about grooming and particularly shaving. You'd mentioned there were still some devaluation-driven pricing. I just was curious if you could talk about performance of the business, just specific to developed markets. How things are trending, the impact of Gillette Sensitive. You've made some portfolio moves. Bevel's already been a part. You've just acquired Billie. If you can maybe give us a little bit of the lay of the land on how you're chipping away and making progress, or not so much, in shave care would be great.
Thanks, Lauren. Within that one question, you've managed to ask three, which is very well done. Our grooming business strengthened in the quarter. Overall, we were up 4%, and that's the third consecutive quarter of growth. Importantly, we grew global market share, 0.3 points, which is very encouraging. Shaving within that was up versus a year ago. Not as much as the dry shave business, but the wet shave business did grow. We've seen a pretty strong response to our investments, both in product and in communication. Encouragingly, we've added 18 million new users to our brands over the last 12 months. SkinGuard is contributing to category growth, is doing well, and continues to expand. In the U.S., for example, razor value share on SkinGuard is now 9%, which is the third largest for a P&G sub-brand. We're building, unlike most of our competitors, our shave business online.
We're pretty excited about the Billie acquisition. That's something that obviously needs to pass regulatory clearance, and we need to remain separate from that business until that happens. There's a real unique set of skills, experiences, and knowledge between Billie and P&G that we think has the potential to create some real magic. Clearly, they've created, very effectively, a fresh new brand that extends across several categories. They've done it, and we can benefit from their experience on this in a digital fashion with one-to-one mass marketing, which is something we're continuing to increase our focus on and capabilities related to. We have innovation capability across the majority of their categories. We have best-in-class manufacturing across the majority of their categories, and we have a go-to-market presence both online and bricks and mortar, certainly in omni-channel, that can accelerate the growth in that business.
We're very excited about the potential and are working through the clearance process.
Your next question will come from the line of Ali Dibadj with Bernstein.
Hey, guys, thanks. I wanted to ask in more detail your view about the future on pricing, so kind of the future solidness of some of the recent price increases globally, given there is starting to be, to your point, Jon, competitive murmurs of more investments coming. Most recently, Essity in Europe yesterday, seemingly talking about pricing, and commodities clearly continuing to fall. I get you're not seeing anything yet, but in that context, two questions. One is, what kind of lead time notice do you get in terms of price competition? Can you feel comfortable saying it's all clear for a quarter, or it's all clear for two quarters, or is it just like, literally, this may change tomorrow? The second thing is, part of our collective jobs is pattern recognition, historically, we have seen net prices.
I think this increased rate's been on everything down in categories, especially baby and family, with these types of commodity declines. Do you think this time is different, and if so, why? There's a technical question on timing, and there's more of a how do you see the go forward given the patterns we've seen historically? Thank you.
Thanks, Ali. Obviously, just related to Essity, first, they're talking about a market that we're not competing in. I know that you know that. It's a very different market. It's much more of a commodity market than our primary market from a tissue towel standpoint, which is what I believe they were talking about, which is North America. In general, we see commodity prices as supportive of the current prices in the market. While they're down some versus historical levels and where we were before the price increases went into effect, we feel the current prices are justified. That does not speak to an indication of future activity. I won't go there. Our outlook for those commodities continues to be relatively flat to slight increases, particularly in the pulp space. I don't see the kind of sea change environment that would necessitate activity.
Having said that, each competitor will do what they choose to do, and we need to be responsive to that, which gets to your second question. Candidly, we do not have advance notice of the implementation of price increases. Decreases, sorry, either one. We react as we see those in the marketplace. That reaction time typically is anywhere from a quarter to six months. If we think along reasonable periods of time, I don't expect this to be a crippling dynamic or anything resembling that going forward. It may cause a quarter or two of benefit or hurt, but not a big thing to worry about.
Your next question will come from the line of Wendy Nicholson with Citi.
Hi. Unlike some of your peers who have had less margin expansion, your margin trends have been terrific, and a lot of that seems to have been driven by the productivity initiatives. I know you're kind of coming, are you in your fourth maybe of your five-year program? I'm just wondering. What's your outlook, not for the next quarter, but sort of for the next two to three years? Is there another $10 billion restructuring program coming, or how do you keep those productivity benefits accruing when you're coming to the end of the program? Thanks.
Thanks, Wendy. I mentioned as one of our strategic choices, the desire to make productivity as integral to our nature as innovation, and be leaders in productivity just as we are in innovation. I think we've made a lot of progress on that journey, as you rightly point out, which is reflected in our margins certainly this quarter. My hope is that as we move forward, this is simply an integral part of our operating strategy. It needs to be, because we will need to continue to invest in both holding and advancing our margin of superiority. Some of the continuous disruption we're talking about will also require some investment, whether that's in human resources, capital, et cetera. I feel very good about each of the business units' understanding and commitment to continue delivering productivity.
That brings us to another part of the question, which is, are there degrees of freedom that enable that to occur? Will is one thing, delivery is another. I don't think we've ever been in a place where there are more degrees of freedom or more opportunities to improve productivity. The tools that we have available to us now across the digital spectrum, and that's everywhere from marketing to the manufacturing floor to the office environment, have never offered more opportunity than they do today. We have significant opportunities still in terms of how we think about our new organization structure, and are there opportunities within that as we learn more about it to become even more efficient and effective, and I certainly believe there are.
I just attended, along with David, a review of our product supply innovation program last week, and there are big opportunities relative to robotics, relative to a tighter sequencing of the entire supply chain from order signal all the way back to delivery. We're in the middle of still the product supply transformation across markets and geographies. I continue to believe that productivity will be an inherent part of our operating strategy, and we have the tools and opportunities to continue to deliver that.
Your next question will come from the line of Olivia Tong with Bank of America.
Great. Thanks. Good morning. I wanted to talk a little bit about advertising, because that continues to move up 150 basis points this quarter. At this point, I think there's a fair bit of investment already in the base. Was that always the plan to continue to increase, or is this more opportunistic than you expected? Is there anything that you need to defend? Obviously, you said that we haven't seen that much of a change in percent of sales holds on promos. Just wondering where that advertising dollar is going towards. Thank you.
A couple of things there, Olivia. We've been very clear, I think, that while we need to be competitive from a trade spending standpoint and need to offer attractive margins to our retail partners where we have a degree of flexibility, we would prefer to spend that incremental dollar on advertising or innovation every day of the week. The reason is very simple. There's nothing proprietary in pricing. We can build proprietary advantage with both advertising and innovation. Again, on the margin where we have the opportunity to make those shifts, we're doing it, and we're doing it in a way that is attractive to our retail partners as well because it drives business and grows categories.
The second piece we've talked a lot about, and Marc Pritchard, our Chief Marketing Officer, has talked a lot about externally, is the opportunity to move what were historically a significant amount of non-working dollars into working in advertising. That's been about a billion-dollar shift, and it continues. The third piece of this is when you have innovation that's noticeably superior, you need to and want to and should be communicating that superiority and those performance benefits and the value that comes with them to consumers. The good news is we have a lot of very strong innovation in the marketplace that has a lot of legs left in terms of either it's just launched or something like pods or beads, which have been on the market for a number of years that have significant household penetration opportunities and are pure delighters from a consumption standpoint.
We want to be supporting those. I mentioned both as relates to competitive activity, but also in general, that we will continue to invest in both equity and innovation as we move forward.
Your next question will come from the line of Kevin Grundy with Jefferies.
Thanks. Good morning, Jon, and congratulations on another strong quarter. Can we come back to China, which was particularly strong in the quarter against a notably difficult comparison? Can you delineate a bit the company's progress in that market between category strength and superior Procter market share performance, and maybe how that's changed? You talk about skincare, obviously very strong, up 20%, and fem care, I think, was up double digits. Maybe just talk a little bit about how much of this is category versus strategic execution by Procter in certain categories, and then your expectations here for the balance of the year. Thanks.
Thanks, Kevin. It's honestly hard to separate those, because if we do our job right from an execution standpoint and an innovation standpoint, we grow markets. We don't view market growth as something that is separate from our efforts. It's in many cases, obviously not 100%, but it's caused by our efforts. I realize that's not that helpful to you, but it's an important point. As we back up from that, and I look at category growth in China, it continues to be strong in our categories. The one area that's under a little bit of pressure from a category growth standpoint is baby care, and that relates to the birth rates, which have gone from about 15 million babies a year down to 10, which is a significant impact.
Within that category, there are significant premiumization opportunities, and the premium part of our business is growing 20% or 30%, depending on whether that's premium tape diapers or pant-style diapers. In general, in China, the answer on category growth remains very strong. The answer on, if you will, P&G's specific efforts, if you pretend for a second that they're not impacting category growth, that also is abundant and real. It's not the inflection in category growth rate that has changed the results on skincare. It's our share progress within the category, albeit in a very growthful category. We've gone from perennial declines on that business to perennial gains and strong double-digit gains.
The improvement in our hair care top line, still not what we'd like it to be, but definitely improved from where we've been, is a result of much stronger branding and innovation efforts, as well as go-to-market strengthening. It's hard for me to tease those apart. The simple answer is it's both, and that's a good thing.
Your next question will come from the line of Jason English with Goldman Sachs.
Hey, good morning, folks, and Happy New Year. Two questions from me. First, on U.S. growth, you mentioned 4%, obviously solid in context of the U.S., but it is a decel from last quarter, and it comes despite an easier comp. Is there anything worth calling out, any nuance to take note of there on that growth? Secondly, on the baby, fem, and family care segment, growth was a little weaker than we expected this quarter. It's kind of the weakest we've seen in a while. I know this has been one business that's been a little harder for you to kind of get going like everything else. Can you walk us through what the game plan is and what our expectations should be for that business as we think about the next 12 months? Thank you.
To start where you started, U.S. growth of 4% is indeed very strong and it's building market share. We've built market share in the U.S. over the past three, six, and 12 months periods. Nine of our 10 categories grew in the U.S. in the last quarter. The one that didn't was either at a 98.5 or 99.5 index. The difference between the quarters reflects a number of things. Part of it is trade inventory, which was reduced as we went through the second quarter. There's initiative timing that impacts this pretty significantly as well. I would expect going forward, we're going to continue to see some chop if we look at it on a quarter-to-quarter basis. Across a slightly longer period of time, we remain very happy with the way the business is progressing.
If we look at underlying consumption, going back to a discussion earlier in this call, that continues to be, as you've seen in at least the scanner data, very strong. From a baby care standpoint, if we look at the first half of the year, baby care was flat to up slightly, which is a better position than we've been in. It ranges from, if we look at our two largest markets, China and the U.S., those are, again, on a relative basis, healthy. China, the first half, we grew at 5%. That's the fastest growth rate we've had on a semester basis in about six years. We regained market share leadership about two years ago and have continued to hold that. As I mentioned in the last answer, we're growing our premium business and our pant business very strongly.
The U.S. were about flat versus a year ago, which again, is an improvement on a relative basis. What should take both of those businesses, as well as the broader baby care business, to a stronger position. It's innovation, which builds superiority. We have, across parts of the portfolio, not been offering a superior product. It's largely been, in some of those cases, a parity product. We have strong innovation plans in place, not only in terms of incrementality, but we've really increased the pace of innovation and the amount that's coming to market, a lot of which has driven the China results that I talked about. Innovation, whether it's in baby care or beauty care, is not an overnight endeavor, and we'll continue to hopefully improve sequentially as we go forward.
Your next question will come from the line of Mark Astrachan with Stifel.
Thanks. Morning, everybody. I guess maybe just a quick question for you, Jon. The enterprise versus rest of business seems to have slowed a little bit. You guys don't really talk about EM versus DM anymore, but maybe talk a bit about what has driven the slowdown. You touched on Chile, Hong Kong, et cetera. How much is that in terms of country-specific issues versus lapping the pricing, and how should we be thinking about that dynamic on a go-forward basis?
We're pretty pleased with the growth rates in the enterprise markets currently. We mentioned mid-single digits. It's really at the border of mid-single digits and high single digits. I'll leave you to interpret that. That's despite these pretty significant impacts. If you think about two of the largest markets in the enterprise environment are India and Mexico. I talked about the slowing growth rates in India, largely as a result of some of the monetary policies, which has created a bit of a liquidity squeeze, which is drying up inventory through the system. We continue to grow well in India and are building share. Mexico is technically, from an economic growth standpoint, in a recession. We continue to grow reasonably well there, mid-single digits, and are growing share there as well. Broadly, we continue to be pretty pleased with our progress.
Just briefly, even though it wasn't part of your question, on the bottom line, we're creating more value in these markets currently than we ever have. Our bottom line progress was strong double digits, well ahead of the company average. We need to be focused on value creation in these markets. That includes growth where we can generate a meaningful return, and that's what we're focused on doing, and there's tons of opportunity.
Your next question will come from the line of Robert Ottenstein with Evercore ISI.
Great. Thank you, Jon. I'd like to focus on e-commerce. I think in the past you've said that it's about 8% of sales. Has that moved up maybe closer to 10%? Globally, how fast is it growing on a global basis? Specifically, how fast in China, how fast in the U.S., and are you gaining share in e-commerce in China and the U.S.? Thank you.
It continues to be a significant opportunity for growth. It's currently growing at about 30%. In the big e-commerce markets, while that growth differs across categories, it's pretty much at that level across markets. It is now about 10% of our total business. Just for clarity, when I mention e-commerce, I'm talking obviously the totality of e-commerce, which includes omni-channel. Our market share, in general, has been increasing. Of course, there's some volatility to that, but particularly in a China context, and again, it differs by category, we've been making significant progress in that space.
I see us as very well-positioned to succeed in that space, though that's something that requires eternal effort, flexibility, and the constructive disruption of ourselves, which we're committed to ensure that we offer a competitive and relevant offering wherever consumers want to shop, whether that's e-commerce, whether that's large format, whether that's small format. Generally, we're progressing well in each of those.
Your next question will come from the line of Nik Modi with RBC.
Yes. Good morning. Thanks, everyone. Jon, maybe you can talk a little bit about the Merck OTC business. Healthcare was a pretty nice contributor to the top line, so just wanted to understand what's driving that business, what's the strategy there? Any context would be helpful. Thanks.
As you probably recall, Merck offers a very complementary portfolio to our legacy personal healthcare P&G business. Has a strong presence in the developing world, complementary categories across geographies, there were significant, we felt, cost synergies in addition to revenue synergies by bringing the best of both companies together and driving growth. It's early days. We're still in the middle of integrating. We just closed 18 months ago. We're very pleased with the results so far. This is the first quarter in which Merck is reported as part of our organic sales growth rate. It contributed positively to that. It's a real asset to our overall personal healthcare business, and it's playing out that way. The revenue synergies are on track, the cost synergies are on track, with some real exciting examples of the possibility of driving both of those ahead of what our initial plans had been.
The organization is a strong organization, and they're doing a great job. So far, really good.
Your next question will come from the line of Bill Chappell with SunTrust Robinson Humphrey.
Thanks, good morning. Jon, just circling back to the Billie acquisition. Just a little surprised that P&G thinks that can pass with the FTC and just with your market share and also with FTC kind of cracking down on a lot of even recent small acquisitions, that surprised me. Any thoughts there on why you're moving forward with that, especially on the U.S. positioning, if that's part of a plan, do you think there's more opportunities to do tuck-ins to where you have 40, 50 share of a market?
In general, just starting from the strategic level, we want to ensure that we are serving consumers in all relevant segments of the categories that we've chosen to play in. Sometimes that's easier and more straightforward from an organic standpoint. If you think about the natural segment, for example, something like Pampers Pure. On the other hand, getting a quick presence in some of these high-growth segments or with different groups of consumers is sometimes easier to do via acquisition. A good example of this is L. on feminine care, which is now the number one natural product from a market share standpoint. Obviously very early, but so far has proven to be a very strong idea to expand in a very relevant consumer segment very quickly. That's the motivation here. I'm obviously not going to speak to regulatory dynamics or anything related to that.
We're excited about this, and we're hopeful we have the opportunity to really work to grow this combined set of categories, grow the market, and create value.
Your next question will come from the line of Kaumil Gajrawala with Credit Suisse.
Hi, good morning. Jon, can you talk a little bit about how you and the board think about valuation in the context of share buybacks? Your results are obviously the best that they've been probably in a decade, but perhaps appropriately so is the value of your shares. Can you just talk a little bit about valuation in buyback context?
Sure. Obviously, over the last decade, buybacks have created extraordinary value. That's been on the back, which is implicit in your question, on over time, a significant increase in the stock price. If I look at it today, first of all, we don't try to forecast where the market's going to go. We don't pretend that we know that. In general, we feel very strong about our prospects as a company. There's no reason at present not to feel reasonably good about the market itself. We're kind of, if you will, dollar cost averaging over time. The other thing that's important, though, is to think about the context of our dividend yield relative to financing rates that are available. At some level, what you're dealing with is, can I retire a dividend rate with an incremental financing cost that's lower than that rate?
With negative interest rates in many parts of the world, this is a very attractive time to be, if you will, financing share repurchase. Now, we're going to stay within our credit limits as we do that. That's another constraint, if you will, or another rail. We'll continually look at this. Obviously, capital allocation is a broad topic, inclusive of share repurchase is something that is reviewed regularly with the board, and we value their input to that. The current plan obviously reflects that, and as we sit here today, I don't have a reason to suggest a change in that plan.
Your final question will come from the line of Jonathan Feeney with Consumer Edge.
Hey, Jon. Thank you. Are you concerned at all that your business has become much more macro sensitive in the past 5 to 10 years? In some segments of outsized growth would seem to indicate that, but any historical context or consumer data you have that could affirm or dispel that, I'd appreciate.
I think, Jon, we're actually less sensitive to the macro environment. That's been a very deliberate choice we've made. Let me explain that. We were in, as we went into the last recession, as an example, a lot of or a number of relatively to highly discretionary product categories. Things like salon hair color, high-end premium fragrance, just two examples. An intentional and strategic part of our portfolio focus was to be instead in daily use categories, that are used in good times and bad times because they're just important to get through the day. Sometimes multiple use is important to get through the day. If you look at the total portfolio through that lens, we're more macro resilient, I would argue today, than we were some years ago.
The second reason I say that is the effort that we've made and will continue to make, and the investment we've put behind it, on product superiority, product package, the whole set of drivers. That inherently increases consumer value. The value of each purchase is higher than it would have been, even inclusive of small price increases. That too, puts us in a better position relative to things like trade down that can happen, as a result of macro dynamics in more difficult economic times. Not immune, but in a better position today. The third thing I would argue is, to the extent that we've been successful in creating a culture where productivity is as integral to our being as innovation, we have more financial flexibility, and therefore more degrees of freedom for how we manage the difficulties that the macroeconomic situation can present.
For those three reasons, Jon, I think we're in a much better place today. We will be impacted if there are negative developments in any part of the world. It does create challenge. It's the right question to continue to ask. I'm not talking in absolutes, but on a relative basis, we're much more macro resilient than I think we were historically. Great. Well, thanks, everybody. Again, just a quick summary. We really view this quarter as another step in our journey forward. Strong top-line progress, building market share, strong operating earnings growth, building margin, strong core earnings per share, generating cash, returning that cash to shareholders, all behind an integrated strategy that's working and we will continue to execute. We look forward to seeing many of you, as I said earlier, at CAGNY, and I look forward to our conversations. Thanks.
Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.