Good morning, and welcome to Procter and Gamble's Quarter End Conference Call. P and 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 ks, 10 Q and 8 ks reports, you will see a discussion of factors that could cause the company's actual results to differ materially from these projections. Additionally, the company has posted on its Investor Relations website, www.pginvestor.com, a full reconciliation of non GAAP and other financial measures. Now I will turn the call over to P&G's Vice Chairman and Chief Financial Officer, John Moeller.
Join me this morning. I'm going to provide an update on company results. David will update us on key strategy and focus areas. We'll close with guidance and then turn to your questions. We continue to make important progress, strong volume and consumption growth, earnings per share atorabovetarget, cash above target, market shares improving, progress, though room for improvement on all metrics, most notably the top line.
Organic volume grew 2% for the year, 3% in Q4. Organic sales growth fell just shy of rounding up to 2%. 8 of 10 global categories grew organic sales. In aggregate, these categories grew at over a 3% pace. Online sales grew 30% for the year to nearly $4,500,000,000 in sales, approaching 7% of our total business.
Roughly the size of the next 2 largest consumer e commerce businesses combined, we added nearly $1,200,000,000 of e commerce sales in fiscal 2018 after adding about $1,000,000,000 in sales in fiscal 2017. All channel consumption grew at a faster rate than sales between 2% 3%. As a result, our share positions improved. Fiscal 'eighteen market share trends fiscal 2018 market share trends improved in 8 of
the 15 largest countries versus the
prior year with 4th quarter trends better than fiscal year average in 10 of 15. Market share trends advanced in 7 of 10 global product categories with improvement as the year progressed. We held our built e commerce value share in 8 of 10 product categories. We made good progress in our 2 largest markets. U.
S. All outlet value share improved from a 30 basis point decline in fiscal 'seventeen to flat for fiscal 'eighteen to 30 basis points share growth in April June. 7 of 10 product categories grew all outlet value share in Q4. 7 of 10 categories improved their share trends on a past 6 months versus 12 month basis and on a past 3 month versus 6 month basis. All outlet unit consumption grew 2.5% for the full year in the U.
S. And was up more than 3% in the 4th quarter. We continued the strong turnaround in China improving from a 5% sales decline in fiscal 'sixteen to 1% growth in 'seventeen to 7% organic sales growth last year. Sales growth accelerated as the year progressed, growing 6% in the first half and 8% in the second half, including 10% organic sales growth in Q4. 6 of 7 categories are holding our growing sales, up from 1 of 7 categories 2 years ago.
We generated about $1,600,000,000 in e commerce sales, nearly 30% of the China business. Our global top line was challenged by several unexpected disruptions. In Brazil, the worst transportation strike in more than 20 years, virtually shutting down shipments for 2 weeks. Saudi Arabia and the Gulf markets contracted significantly due to sharp increases in utility and gas prices, higher taxes and an exodus of foreign workers. Renewed trade restrictions with Iran, Algerian bans on imported products, severe consumption contraction in Egypt and Nigeria due to high inflation and decreasing affordability following more than 100% currency devaluation.
Organic sales in these markets declined 13% off a $2,200,000,000 base, a 40 basis point drag on company wide organic sales growth. Global retail inventory reductions took an additional 30 to 40 basis points out of sales as customers managed cash and purchases shifted to e commerce. As you know, we've been pointing to challenges in 2 categories, grooming and baby care. While there's still more work to do, we've made significant progress on both. Global shave care share was in line with prior year with Braun share up 0.5 point.
We improved U. S. Male blades and razors value share from a 4 point decline in fiscal 'seventeen to nearly flat for fiscal 'eighteen to over a 1 point increase in the 4th quarter. We launched Gillette 3 and Gillette 5 Razors in the U. S.
Last quarter to strengthen our position at opening price points for male shaving systems. We've revamped and strengthened our online programs to let on demand, increasing the rate of new user recruitment and retention. We're currently growing volume share and value share on a past 3 6 month basis. U. S.
Male Shave Care delivered 3% volume growth last fiscal year with male shaving systems up 5%. Venus all outlet share of female blades and razors in the U. S. Grew 0.5 point last year and 1.5 points in the 4th quarter. We face new challenges on Gillette as a value tier competitor is expanding in store distribution in the U.
S. And as competitors are expanding their direct to consumer Baby Care had a challenging year, but we significantly strengthened our long term position. China sales and share trends improved sequentially through the year. In the Q4, the business grew organic sales mid single digits and share progress accelerated, returning Pampers to overall share leadership in Mainland China. Pampers more than doubled its share of premium tier diapers last year, extended its share lead on pants and took value share leadership in e commerce.
Baby Care sales in India, an important growth market for the future, grew 34%. U. S. Baby Care was challenged by aggressive private label pricing primarily impacted the Luvs brand, retail inventory adjustments, smaller retail funded promotions and a comparison against the base period that included the successful re launch of Pampers Easy Ups Training Pants. We strengthened our consumer value proposition on Luvs with value share starting to stabilize.
We introduced Pampers Pure Protection diapers and Aqua Pure Wipes in April. In just a few weeks, we achieved share leadership in the natural segment and track channels. Consumer reviews of Pampers Pure have been very strong and we expect momentum to grow as we drive awareness and trial. We continue to build on the success of our diaper pant products. Pampers is a global share leader in pants style diapers with nearly a 30% share of a form growing at a double digit rate, positioning us well as the market continues to shift towards pants.
New premium tier innovation and new pack sizes are launching this quarter that include a price increase on most items, equivalent to a 4% increase across the North America Pampers diaper business. Challenges remain on both grooming and baby care and competition strong, but we're much better positioned as we enter fiscal 2019 than we were heading into 2018. Moving to the bottom line, our going in fiscal year guidance called for core earnings per share growth of 5% to 7%. Despite significant cost challenges, nearly double what we expected at the start of the year, increased transportation costs and increased investments in consumer and customer value, core earnings per share was $4.22 for the fiscal year, up 8%, above the high end of the going in guidance range and at the high end of our mid year revised range. Commodities and transportation costs were a $500,000,000 after tax headwind, a 5 point drag on core earnings per share growth.
Foreign exchange was a modest earnings help for the year. Tax reform was around $150,000,000 benefit. Core operating margin contracted 50 basis points as pricing lagged commodity cost increases. We've grown core operating margin 270 basis points over the preceding 4 fiscal years, 6.10 points excluding foreign exchange and expect to resume margin growth as pricing is implemented to offset commodity costs and as more productivity savings come online. Productivity improvements generated 2 60 basis points of savings for the year that we just completed.
Our current 21.6 percent core operating profit margin is among the highest in the industry, and we continue to hold advantages in below the line costs. We borrow at some of the most favorable rates in the industry. We have a tax rate that is among the industry's lowest. All of this leaves us with a core after tax profit margin of nearly 17 percent, one of the highest after tax margins in the industry with 3 years of the current productivity program still ahead of us. Cash flow remains dependably strong with adjusted free cash flow productivity of 104%, well above our go in and target of 90%.
We raised the dividend 4%, growing it for the 62nd consecutive year. We paid out more than $7,000,000,000 in dividends and repurchased $7,000,000,000 of stock, returning more than $14,000,000,000 in value to share owners. Over the last 10 years, we've returned more than $120,000,000,000 in dividends and share repurchase, greater than 100% of adjusted net earnings.
Our current
dividend yield of 3.6% is nearly a full point higher than the consumer staple Spider Fund average. Detailed 4th quarter results are provided in our press release, so I'll just hit a few of the highlights. Organic volume up 3%, organic sales were up over 1% excuse me, core earnings per share were $0.94 up 11% for the quarter, All in earnings per share was $0.72 including $0.14 per share of non core restructuring charges and $0.09 per share of early debt retirement costs. Adjusted free cash flow productivity was 158%. In summary, core earnings per share growth above the going in guidance range and at the high end of the revised range despite significant commodity and transportation cost increases, cash ahead of target, strong consumption with improving share trends, sales growing but modestly below our target range, progress in many areas, but again importantly, room to improve on all metrics, particularly organic sales growth.
David?
I'd like to add some perspective on our results, especially the top line sales and share growth. The sales growth was softer than we want, but share is showing why I am confident the interventions are working and moving us forward in a sustainable way. We have more brands, categories and countries growing than we did last year or the year before. The trends over time are very clear. Importantly, the improvements are driven by the strategic interventions and plans, starting with interventions to improve the superiority of our products, packages, communications, go to market and value, both consumer and customer.
I'd like to provide some highlights on the progress on brands and markets and then go into more detail on the actions and the impact of our choices. First, some quick highlights. As John said, 8 of 10 product categories and 18 of our top 25 brands held or grew organic sales in fiscal 2018. SK II grew more than 30%. Downy grew sales double digits, driving mid single digit growth on the fabric enhancer category and over a point of value share growth over the past 3, 6 12 months.
8 brands grew organic sales mid to high single digits, including Ariel, Always, Olay, Oral B, Old Spice, Braun, Febreze and Swiffer. 12 of our top 15 countries held or grew organic sales in fiscal 2018, with 6 of those growing mid single digits or faster. Turkey and India each delivered strong double digit growth with all categories in each country growing sales. Japan grew mid single digits with value share up over 0.5 point for the year and up more than a point in the past 6 3 months. Mexico grew organic sales in mid single digits.
26 of our largest category country combinations held and grew market share, up from 21 to 50 last year. As John has said, we have more work to do to accelerate results. We clearly are operating in a very dynamic environment, changing government policies, including tax, trade and privacy, retail transformation, disruption of the media ecosystem, rising input and transportation costs, and foreign exchange headwinds. With highly capable multinational and local competitors determined to win. We are accelerating changes to meet these challenges and further improve results.
This will enable us to spot and capitalize on opportunities in identifying fixed issues faster than we ever had in the past. We will be the disruptors in our industry. We're investing to improve superiority, our margin of advantage. We're making P and G ever more productive. We are structuring an organization and building a culture that continues to put us in front of change, riding the wave of this dynamic environment versus being hit by it.
We're leading disruption across the value chain, innovation, supply systems, consumer communication, retail execution, customer and consumer value to consistently and sustainably grow sales, margins and cash. And next, I'd like to offer a few points on superiority, which is really our basis to win. We've made a deliberate choice to invest in the superiority of our products and packages, retail execution, marketing and value, and not just in the premium tier, but in each price tier where we compete. We need to strengthen the long term health and competitiveness of our brands. To do this, we've raised our standards for each of these superiority drivers.
In brand country combinations, where we judge ourselves to be noticeably superior in at least 4 of the 5 elements, We deliver meaningful improvement in key business success measures, including household penetration, which is the number of people that buy our brands each year market growth critical to us and our retailers, value share growth, sales growth and profit, all 80% of the time. When we are superior in just 3 or fewer of the superiority elements, we grow all of the business success measures 0% of the time. A few examples of where superiority is driving growth include our Fabric Care business, where in the U. S, we grew organic volumes 6% behind superior innovations like Tide Pods, Gain Flings and Fabric Enhancer Scent Beads. These innovations have been the driving force of Fabric Care market growth.
Unit dose detergents in scent beads have driven Japan Fabric Care to a record organic sales growth of 9%. In Europe, Fabric Care organic sales grew 5% for the 2nd consecutive year, driving category growth and delivering 27 consecutive months of share growth. Feminine Care has delivered 11 consecutive quarters of organic sales growth with the combination of outstanding product innovations and packaging on Always Pads and Always Discrete in adult continents. They've developed compelling marketing campaigns that are building brand equity and driving trial. They're growing the category, earning strong distribution and display of new items.
They're driving trade up to premium variants that consumers view as an excellent value for the product performance they receive. Turning to skin care. Olay and SK II are serving different segments of the skin care markets and both are delivering strong results by improving superiority. SK II sales have grown from 15 consecutive quarters at an average rate of over 20%, including 30% last fiscal year. SK II's superior product is based on a proprietary formula that works to dramatically rejuvenate the skin's appearance.
It's a product that solves problems for consumers in a noticeable way. It's presented in prestige packaging that builds brand equity and consumer confidence in the product. SK2's marketing campaign has accelerated growth of new users by connecting them on a more emotional level while reinforcing product benefits. Excellent retail execution in stores and online leverage a rich consumer database and technology like our state of the art skin analysis tool, which we call the beauty imaging system, to make a personal connection with consumers. The combination of these support SK II's premium price and value for the consumer.
OLED China has delivered 5 consecutive quarters of double digit organic sales growth behind superiority across all touch points. We launched Olay Cell Science last year, Olay's first ever super peptide formula, delivering visible skin transformation in 28 days. We've upgraded Olay packaging to prestige like quality and attractiveness. We've completely revamped our Olay beauty counselor program. We reduced the number of beauty counters and upgraded the remaining counters with higher and tighter standards.
Our fearless of age campaign with an empowering message for consumers is driven consumption and has contributed to strong e commerce sales that are up 80% fiscal year to date and has grown allay's market share. Now we've talked about the work we're doing to respond to a changing world and changing consumer needs, including increased demand for natural and sustainable products. We've now introduced products in nearly every category that address these emerging consumer needs: Tide Pure Clean, Gain Botanicals, Dreft Pure Touch, Tifo Pure Zs, Febreze 1, Whisper Pure Cotton and more recently, we just launched Pampers Pure Protection Diapers and Aqua Pure Wipes. Our natural segment offerings quadrupled sales in fiscal 2018. We expect more than double sales again in 2019.
We're in this game and in this important segment to win. We're augmenting organic innovations with acquisitions, Native, a natural deodorant and Snowberry Skincare, a natural brand based in New Zealand. We recently announced our agreement to acquire First Aid Beauty, a full line of prestige quality skincare products that deliver superior skin health solutions specifically designed for sensitive skin and skin conditions like redness, irritation and eczema. We are leveraging lean innovation practices to create and extend product and packaging superiority faster and more cost effectively than ever before. And Pampers Pure is a good example.
It reached the market at half the time of a typical product innovation in a very capital intensive diaper category. We're using the lean approach to explore how we can solve new problems for consumers, addressing new jobs to be done. We have several new products in various stages of market testing right now. We brought them to that point in a fraction of the time and investment it would have taken us without this lean approach. We're making a big move to more deliberately consider and pursue external monetization of P and G Innovation in non competing industries and occasionally where we think the benefit of sharing the innovation will enhance value creation and the societal benefit can be meaningful, we may make the technology available within our competitive set.
I'll give an example. Air assist packaging that we invented for e commerce shipping of liquids delivers significantly better visual impression and end use experience, and it reduces plastic usage by 50%. We just started licensing this technology broadly. We're doing the same with other P and G innovations that provide significant sustainability benefits. We invented a breakthrough technology to revolutionize the plastic recycling industry.
It separates color, odor and other contaminants from recycled polypropylene plastic to purify it into a nearly new quality resin. By allowing others to utilize and commercialize this technology, we'll lower the cost, unlike value and improve environmental sustainability of entire industries. In addition to products and packages, we're improving the superiority of consumer communication and retail execution, as well as consumer and customer value. At this year's Cannes Lions International Festival of Creativity, P&G and our agencies won 26 Lions for the outstanding work on P&G brand campaigns, including 2 of the Grand Prix honors for the It's a Tide ad campaign, which launched during the Super Bowl and The Talk, which started an important conversation about racial bias. We used the forum to announce further commitments to advancing diversity and gender equality in our advertising.
Now an external measure of our improved retail execution is the Global Advantage Monitor Report, an independent retailer assessment of manufacturers across 7 key focus areas. Our objective is to be ranked number 1 overall in the top third versus competition in all areas. For the 3rd straight year, we were number 1 ranked globally with the highest number of countries ranking P and G as the number 1 manufacturer. We also ranked number 1 in all 7 practice areas for the 2nd year in a row with noticeable improvements in the categories, business relationship and support, importantly category development, supply chain and customer service. We've done this by improving our capability to take faster action with customers and align our people with the categories they sell.
We've increased investments to improve retail execution, distribution, assortment and display and consumer and customer value, all important elements of our superiority strategy. We're making good progress on extending our margin of advantage and increasing the quality of execution, but we face highly capable competitors who continue to innovate their products and business models. Addressing these challenges and extending our product and package advantages, superior execution in consumer and customer value will require continued investments. The need for this investment and the need to drive balanced top and bottom line growth, including margin expansion, underscores the importance of productivity. We are driving cost savings and efficiency improvement in all facets of our business, approaching the midpoint of our 2nd 5 year $10,000,000,000 productivity program.
We've consistently delivered $1,200,000,000 to 1 point $6,000,000,000 in annual cost of goods sold savings. I expect we'll be at the high end of the range again this fiscal year. Another area of savings is elimination of substantial waste in the media supply chain. A year ago, we highlighted the need for media transparency with 5 calls to action: 1 viewability standard, 3rd party measurement verification, transparent agency contracts, fraud eliminations and brand safety. The entire industry stepped up, including strong partnerships with Google and Facebook to take action on their platforms.
The progress has been impressive, about 90% complete on delivering the appropriate standards and measurements. These efforts enable us to cut waste and reduce media cost by 20%. In addition, we have eliminated waste related to excess frequency. A deeper look at 3rd party data indicated that some consumers were being reached by our ads 10 to 20 times in a month, significantly higher than our suggested average of 3. We reduced excess frequency and reinvested these savings to increase media reach, the number of consumers seeing our ads by a 10% by about 10% and trial building activities by 50%.
We see further opportunity moving from wasteful mass marketing to mass 1 to 1 brand building enabled by data and technology. In China, where 70% of our media is digital and 30% of our sales are in e commerce, we have one of the largest data management platforms in the country, which we use for consumer analytics. We can effectively manage frequency and engage people when and where it matters. We saved 30% on digital spending in China, while increasing digital reach by 60%. We're reinventing advertising from mass clutter to less doing more.
For example, Olay China was running up to 6 different ads at a time and changing ads every 2 months. Now focus on one highly effective ad and stick with it over time. With fewer ads and lower frequency, we focus on creating deeper one to one engagement by improving in store presence. With these interventions, Olay China has delivered its 5th consecutive quarter of double digit growth with media spending down 50% over the past 2 years. With our access to data and analytics and experienced purchasing professionals, we can bring more media buys in house.
We are returning to 1 stop shops where it makes sense, reuniting media and creative. We are implementing a fixed and flow model, reducing the number of agencies on fixed retainers while flowing creative resources in and out on an as needed basis. These changes not only reduce the number of agencies and save money, but lead to better quality, greater creativity and faster ad development cycle times. We delivered nearly $1,000,000,000 of savings in advertising agency fees and production costs over the last 4 years. We see more savings potential in these areas along with more efficiency in media delivery.
We expect the majority of these savings to be reinvested in more effective delivery of ads to more consumers. We're continuing to drive savings in the organization, redeploying resources closer to consumers and customers, improving the and effectiveness of our business to operate at the speed of the market. We're focused on cost productivity and cash. We've made great progress on working capital. Over the past 5 years, we've improved receivables by 3 days, inventory by 10 days and payables by more than 30 days.
We're driving our cost and inventory with our supply network transformation. We're making progress toward our vision of synchronizing the supply chain with real time point of sales data with the consumer purchase triggering updates to our manufacturing schedules and orders of materials to suppliers. Our 6 new mixing centers in North America are enabling faster customer response times and optimized mixed product loads to improve customer service levels. P and G consistently holds best in class receivables positions. We're making further improvements by leveraging technology, using robotic process automation to digitize key elements of our work process.
Over the last 3 years in North America, we've delivered $100,000,000 in savings and improved cash flow by reducing days outstanding by more than a day, while simultaneously improving productivity, reducing roll up by 30% and organizational cost by 50%. An important cash productivity project has been supply chain financing, which we continue to expand. This program, which is a win for suppliers and for P and G, has yielded nearly $5,000,000,000 in cash in the 5 years we've been driving it. We improved payables by 5 full days last year on a constant currency basis. Now alongside the productivity work, we're making needed organizational structure and culture changes to position us to win in the changing retail and competitive landscape.
We're moving more resources into the businesses and closer to the consumers we serve with higher accountability, more agility and greater speed. We're simplifying organization structure and clarifying responsibility and accountability. We're tailoring the organization to win by category and by market. One great example is Greater China, moving from minus 5 sales in fiscal 2016 all the way to +7 in fiscal 2018 behind China specific innovations, more on the ground resources and better execution by category in all markets. The direction of smaller markets has changed from every category managing low level activities in each country to each category building the framework at the start of the year and enabling the local market experts to run the business consistent with those plans.
Malaysia, Singapore, Vietnam and Distributor Markets Group is a great example. The group has accelerated organic sales growth from double digit declines to strong growth over the last year. We're supplementing our internal talent with skilled experienced external hiring to improve category mastery. We're strengthening compensation and incentive programs. A year ago, we increased the granularity of annual bonus awards, moving from about 20 bonus pools to over 100, tie in incentives closer to results individuals deliver.
Last December, we announced that the Board's Compensation Leadership Development Committee modified the performance stock program available to our top 200 or so leaders to include relative sales growth metrics and a total shareholder return modifier to ensure awards reflect performance versus external competitive benchmarks. These changes go in effect this fiscal year. Last month, we announced further adjustments to the annual bonus program, increasing the percentage of total compensation at risk, increasing the weighting of business unit results versus company results, now into 70% business and 30% company versus fifty-fifty in the past. We've widened the payout factors for the business unit and the company components to 0% to 200% of target and increase the number of people participating in the program. Each of these organization and culture changes are aimed at creating a company designed to win in today's market with today's consumer at the speed of the market, more agile, more accountable, more efficient, more productive.
Our focus on superiority enabled by a strong productivity cost savings program and supported by an improved organization and culture, we yield faster growth, higher margins and strong cash generation.
I'll turn it back to John to cover the outlook for fiscal 2019. The dynamic macro environment from this past fiscal year, geopolitical impacts on markets, tariffs, intense competition, rising input costs, headwinds from FX will continue to confront us in fiscal 2019. We've attempted to construct guidance ranges that reflect this reality at their midpoints and through the range. We expect to make further progress on market share, but there will likely continue to be a gap between retail sales and P and G sales as trade inventories continue to contract until we annualize more of the investments we've made over the last year and until new price increases are reflected in our results. We're taking a price increase of around 4% on Pampers diapers in North America.
Just yesterday, we began notifying customers across North America that we're taking a list price increase on Bounty Charmin's and Puffs brands, which averages around 5% across the category on an annual basis. Bounty and Charmin pricing will be effective October 31 and PUSS in February. As commodity prices and foreign exchange rates continue to move, we'll take pricing when the degree of cost impact warrants it and competitive realities allow it. There is uncertainty and will be volatility with these pricing moves. They will negatively impact consumption.
We'll have to adjust as we go and as we learn. Against this backdrop, we're currently expecting organic sales growth in the range of 2% to 3% for fiscal 2019. We expect organic sales growth to be driven by organic volume growth. Pricing will start the year as a drag on sales growth, but should turn positive by the end of the fiscal year. All in sales growth is forecast in the range of in line to up 1% versus last year.
This includes a headwind of about 2 points from the combination of foreign exchange and acquisitions and divestitures. The all in outlook also includes the impact of lost sales from the dissolution of the Personal Healthcare joint venture with Teva at the start of the fiscal year and the assumption that we'll close the acquisition of Merck's OTC business at the end of the calendar year. Our bottom line guidance is for core earnings per share growth of 3% to 8%. This range includes a $900,000,000 after tax headwind from the combination of foreign exchange rates and commodity costs, dollars 500,000,000 from FX and the balance from commodities. At the midpoint of the range, fiscal year core earnings per share guidance is $4.45 per share.
Excluding the macro impacts, the low, mid and top of the core earnings per share range each reflect double digit earnings per share growth. Interest expense, interest income and non operating income will be a net drag of about 2.5 points on core earnings per share growth. We estimate the core effective tax rate will be in the range of 19% to 20% for the year, adding about 2.5 points to core earnings per share growth. This tax rate is is 2 points lower than we first projected when we discussed the impacts of U. S.
Tax reform, given we have now had the time to fully assess the nuances of the new laws. We expect diluted share count to be a 2 percentage points lower in fiscal 2019. We plan to deliver another year of 90% or better adjusted free cash flow productivity. This includes CapEx in the range of 5% to 5.5%. We'll continue our strong track record of cash return to shareholders.
We increased our dividend in April, as I said earlier, for the 62nd consecutive year. We expect to pay over $7,000,000,000 in dividends and repurchase up to $5,000,000,000 of stock in fiscal 2019. The share repurchase range factors in the cash required to complete the acquisition of Merck's OTC business during the year and cash spent on other deals. 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 anticipated within this guidance range.
As you consider the quarterly profile of your sales and earnings estimates, please keep in mind the pricing dynamics I described earlier. We'll mitigate more of commodity and FX headwind in the second half of the year. Productivity savings should build as the year progresses. As a result, we expect somewhat stronger organic sales growth in the second half. Bottom line results will be pressured most in Q1 and improve throughout the year.
Now I'll hand it back to David for some quick closing comments.
While the external environment presents many challenges, we're making important progress and we're accelerating the pace of change. Our efforts to extend our margin of competitive superiority to drive productivity savings to fund investments for growth and enhance our industry leading margins, to simplify our organization structure and increase accountability are all aimed at one thing, delivering balanced top and bottom line growth that creates value of the short, mid and long term. We know we have more work to do, but we're up to the challenge, and we're committed to take the actions needed to win. And with that, John and I are happy to take your questions.
Thank you, sir. Your question first comes from the line of Lauren Lieberman with Barclays.
Thanks very much. Good morning. Good morning. I just want to talk a little bit about pricing overall, at least pricing as it flows through on the P and L being down, call it, roughly 2% this quarter. And in the release and in the commentary today, you talked about a couple of different things.
So investments made in consumer and some of the investments some of the investments you're making, what's showing up in store, the couponing element, because obviously it was a very big spread between what happened with the U. S. Nielsen data through the quarter and what the reported U. S. Organic felt like?
And then what your visibility is or confidence is that volume will continue to respond that this isn't shouldn't be placed in the bucket of they're buying volume and this too shall pass if you pull back on some of these investments that you've mentioned? Thanks.
Okay. I'll make some comments and then certainly John can jump in on a couple more thoughts. First, the interventions that we've made to date have made sure that we got back in pricing quarters that we know position our brands to win over time. And then the superiority then kicks in when you're in a reasonable range. We've made those across the business, and frankly, I'm encouraged by the share results we're seeing, And I feel we've gotten to a very good place now.
We'll have to see what happens going forward with competitive pricing and the pricing we're taking. But right now, the trends to me are very positive and indicating the interventions on both customer consumer product are making a big difference. We announced or John mentioned a little bit about 2 of the categories that have been under the most pressure because of rising commodity cost pricing is going into the market, 1 now on Pampers and Baby Care and secondly, later this fall on Family Care. These are aimed to address commodity costs the entire industry is experiencing. So I believe that the interventions that we've made and the investments we've made showing up whether it's the U.
S. Or China or across the world, the trends of share growth are indicating that P and G is getting more competitive on the key brands and key categories that really matter to the company's growth.
Your next question comes from the line of Wendy Nicholson with Citi.
Hi. Could you talk a little bit more about China because those numbers sounded actually terrific to me? 10% growth in the Q4 is great. So number 1, what was the cost of that growth? Did your margins go up or down maybe for all of fiscal 2018 relative to 2017?
What's your outlook for growth in China for fiscal 2019? And I know you said that babies turned positive baby turned positive in the 4th quarter, but how much of that growth was driven just by SK II and Olay? Are other categories like oral care or whatever else kicking into the China growth? Just more color on that market would be great. Thanks.
Sure. I'll make some comments on that. And we're very pleased with China. You know the trends. We talked this at probably every investor conference, the minus 5 to plus 1 to plus 7.
We've improved across the majority of brands And frankly, the Q4 was very encouraging at plus 10%. And we have 6 or 7 categories are growing or holding share. Baby has been the one exclusion, and it's turned in the Q4 to growing sales. And Baby in China started growing share in the hyper and online channels, which is critically important. And to me, the breadth is strong.
The fact that e commerce, most of our brands now are holding a growing share and in the hyper growing share is very encouraging to me. Yes, SK II and Olay were very important and they grew. But again, it's broad based. Fem Care grew 18%. We've had very strong growth now for 2 years on Power Oral Care, and that's turning.
Fabric Care was, I think, mid- to high single digits recently. So businesses that have struggled in the past, the superiority investments and importantly, the organizational change that put on the ground capability is now getting us operating at a speed that is showing tremendous progress. I think we mentioned earlier, front half 6%, back half 8%, all trending in the direction we want. So I'm very encouraged by it. John?
And with that, just briefly, both before tax and after tax margins increasing year on year. So it's been a productive investment and
we expect that to continue.
Your next question comes from the line of Bill Chappell with SunTrust.
Thanks. Good morning. Can you just, I guess, delve a little bit further into grooming in terms of, I guess, what you were talking about on Harry's and what you're seeing? It did seem like there were some positive data points or I guess you talked about some positive data points maybe that it had bottomed out intra quarter. So have we seen the bottom?
Are you seeing kind of increased competition as we move into the back half? And kind of how should we look at that over the next year?
A couple of comments. The interventions we made last year clearly have made a difference, and you've seen that in the U. S. Share results. The fact that they turned positive over the last 3 6 months is a strong indication.
We've got our eyes though very wide open. Harry's is expanding distribution in Walmart. We expect continued competition online, both in the U. S. And now in several markets in Europe.
However, at this time, we're being much more attentive to making sure we support the business online and offline, both in the U. S. And in Europe and frankly, across the world. And it's reflected at the total positive trends on grooming share, if you look globally and in the U. S.
I do want to be very open about we expect the competitive environment to stay very heavy for a while. And the right actions would be get within pricing corridors, superior products, improve your in store execution, and then we've stepped up our investment and capability online, both in U. S. And Europe. And most recently, we've been gaining new users at a faster rate than our competition in the last couple of months, even in the U.
S. So we understand and see the opportunity, and we're going to address in each market, online or offline, what it takes to grow because we clearly have the superior products. We clearly have the ladder that gives us the tools to win. And now that we're putting innovation in disposables mid tier and the premium tier, I think we're well positioned now to grow this business.
Your next question comes from the line of Jason English with Goldman Sachs.
Hey, good morning folks. Thank you for letting
me ask the question.
I wanted to stick on the topic of diving a little bit deeper into some of the segments. Profitability or margins were particularly soft in baby and fence. I presume that's predominantly the input cost environment, hence the pricing. You confirm that? And then can you go a little bit deeper in fabric and home?
I was surprised to see the margin degradation there and I was also surprised to see the reference to investments in consumer and customer value, given the strong innovation you've had in that segment.
Thanks, Jason. You've just mentioned the 3 categories where the commodity costs impacts are the most significant from both the pulp and energy basis on the paper businesses and clearly from a petro complex standpoint on the Fabric Care business. Those are also businesses where freight costs and delivery is a relatively high aspect of the cost structure. And as you know, the transportation market, particularly in the U. S, has presented us with some challenges as the year progressed.
So that is indeed, you rightly cite the reason why margins are compressed in those businesses. As we make moves both from an innovation standpoint and a pricing standpoint, we expect to recover that margin. We did make some investments in fabric care in the U. S. In both customer value and consumer value.
And that's really just designed to continue the momentum in that business and continue pushing that market. And business has responded very well with volume up 6%, value also increasing. And so we're reasonably happy with those choices.
Your next question comes from the line of Nik Modi with RBC Capital Markets.
Yes, thanks. Good morning, everyone. I was hoping you guys could reconcile kind of this dynamic of John to your point, P and G has very good margins, industry leading margins. But at the same time, you have a lot of competitors that are money losing and it almost seems capital is unlimited out there right now for startups. So I'm just wondering how you guys internally think about that dynamic because it doesn't look like or it doesn't feel like that trend is going to slow down anytime soon?
Well, I think Nick and Dave can comment on this as well. We've talked about the need to offer competitive value propositions across all price tiers that we choose to compete in, And that's versus multinational competitors. It's also versus local and regional competitors and startups. And we needed to be more productive from a cost structure standpoint to do that and still generate the margins that we feel we need to earn. And so that's why we keep talking about the combination of 3 things.
1 is increasing advantage, which does allow us to price above the market at times productivity, which funds the investments in advantage and also provides margin and also consumer and customer value competitiveness. All three of those have to go together for us to win, whether that's first versus a startup or an established multinational competitor.
The other thing I'd add to that is what you say is very real. I mean, you face reality. There are some coming into categories that are aggressively spending. What we're choosing to do is make sure we're being more competitive in protecting our businesses. And to me, when we do that and leverage the tools that we have, I think we're in a good place to be able to sustain the appropriate support to build the brand over time.
And that may call for us at some times in some countries and some brands to be more aggressive to make sure that we don't seed a good bit of market share when we truly have a better proposition for consumers in a sustainable proposition. And I think that's one of the opportunities, if I look back over the last couple of years, is when the first is a very substantive competitive threat to make sure each category in each country addresses the appropriate action. And that will look very different depending on the category of the country and the competitor. But clearly, we believe that the combination of these five elements of superiority positions us well to be able to sustain both share and margin growth over time.
Your next question comes from the line of Dara Mohsenian with Morgan Stanley.
Hey, good morning guys. So I hate to belabor the pricing point. You guys mentioned progress in a number of areas in the last fiscal year ex organic sales, but margins and profit ended up being disappointing. I think you were only up 1% year over year. You'd originally expected 5% to 6%.
I guess the commodities ran up, so I'm not necessarily looking to go back through that. But what's surprising is when there is large commodity pressure, you're also seeing negative just perhaps even commodity pressures above pricing yet again. So I'm just trying to understand the forward looking strategy at a very high level, perhaps taking advantage of your presence on the call, David. Is this lack of pricing power just sort of more the reality of the marketplace now with the retailer pushback, a competitive branded get better environment, private label pressure, etcetera? Is it more of a purposeful choice in your minds to drive P and G market share as you articulated and hopefully reinvigorate organic sales growth.
I'm just sort of wondering is this a new normal going forward where we shouldn't expect much pricing from P&G and how you think about that at a very high level?
Yes. First, no, I do not think that the new normal is we don't have pricing power at all. What I do believe is it varies by category when you take pricing and how much you take pricing. It is not unusual in several categories. If I take the one that we announced yesterday on tissue tau, it's not unusual to for the industry to wait until the commodity costs build up to a certain level to be able to take pricing, then there's a threshold, you take it and you do recover.
If you look over time, over 3, 5 years in many of these industries, and I've got a lot of familiarity with the tissue towel industry, we've been able to recover those costs. And do I see anything fundamentally changing that tells me we could not recover those costs well? Not at all. I believe superior products at competitive prices will win, and I believe in time, the industry has to address input costs. And it just sometimes doesn't happen the 1st 3 to 6 months that you see those.
The other thing that I very much believe is when executed well, Superior Products command premium pricing, and we've got excellent examples of that, whether it's China or the U. S. And again, it just causes us to have to up our game on the level of superiority and has to up our game on the productivity in the periods of time we have to bridge costs going up before we're able to address that either with innovation or with pricing. But we are we do not accept that we've lost pricing power. We do not accept that any category doesn't have the responsibility over time to grow.
But it's the over time, and there'll be smart times to do it. We learned a lot from 2 or 3 years ago when we may have been too aggressive trying to recover and got ahead of the market, but over time, very committed to deliver the sustainable margin growth and sales and share growth that I think our investors expect of us.
Next question comes from the line of Ali Dibadj with Bernstein.
Hey, guys. Just to follow-up on that. And you mentioned over time, want to focus on 2019 as time and get a sense of your confidence in the guidance. 1st, in terms of the acceleration in top line of 2 to 3 organic sales, what does that assume in terms of price mix versus volume? Is it more kind of Marlboro Friday type Thursday type pricing and couponing, so price mix there?
Is it and then the 2% to 3% top line turns into a pretty wide range of EPS at the 3% to 8%. That's I would say, large range on margins. I understand all the uncertainties, but want to understand how much of those uncertainties are macro uncertainties versus competitive or consumer uncertainties, so to understand the flexibility you need there. And then lastly, and don't take this the wrong way, but did you consider not giving guidance at all, particularly given kind of some transformation you're going through, the fact that's back half weighted again and what you've admitted to be a lot of uncertainties in the marketplace?
So let me take that one and David can jump in. First of all, the relationship between volume and price and the top line guidance estimate, Ali, as I mentioned, we expect over the total fiscal year basis, organic sales growth to be volume driven. So volume will drive most of that. I also mentioned in the prepared remarks that pricing will be a negative impact on the top line for the first half or so, and then become positive in the second half. So the relationship between volume and price will evolve as the year progresses.
Even the price increases that we've talked today don't become effective until close to the end of the calendar year, actually one of them in October and I think the other in February. So we're going to continue to see for the next couple of quarters some price degradation, but as pricing is implemented in the marketplace, we should see that situation reverse itself. Relative to the bottom line guidance, I think you said it very well, and David talked about it in his remarks. We're operating in a very dynamic environment. We try to reflect that reality in terms of the width of the range, the combination of foreign exchange, currency, the real uncertainty associated with trade and the political environment and even the potential spillover into consumer purchase choices, just a very dynamic time.
And I think there are opportunities within that, which is why the high end of the guidance range reflects meaningful progress, but there are also challenges within that. So we're just trying to be representative of the reality that we see as we sit here today. And generally, we feel we have a responsibility to give investors an indication of in fact what we see in front of us and what we're working towards. And as you know, we've moved away from 2 things relative to guidance over time. 1 is quarterly guidance, which we don't provide.
So this is just a fiscal year slice. And we've also moved away from a lot of guidance on the internals in terms of individual margin components, for example, because with currency and commodities, those move all over the place. And we'll manage that, but we don't need to distract you with that. So that's kind of how we're thinking about the guidance.
Your next question comes from the line of Olivia Tong with Bank of America Merrill Lynch.
Thanks. Good morning. Just wanted to focus again on price. I mean, the environment, whether it's macro, retail, has changed pretty considerably since the last time you guys needed to push through price. So it would be great if you could talk about the different ways you can try and realize prices time around beyond just the diapers and tissue towel that you mentioned?
Are there other categories you're looking at? Have the levers changed? Do you think about not only straight list, but also reducing ounces in the tube or bottle or package count, which I assume is what you're doing in diapers and tissue towel? And are there other areas, whether it be concessions for fuller truckloads, the focus on premium end? Just I'm trying to understand the potential leverage you may have to push through top line improvement and how that compares in developed versus emerging markets and how much volume you'd be willing to sacrifice in order to get price?
Thanks.
Sure. Let me make just a few comments on that because we absolutely have many tools to address price. Certainly, there's straight list prices, and we've got some that we just announced. The majority of times we do pricing, it's coupled with innovation. So the consumer value can actually improve.
With a higher price, you can recover cost of commodities. We've done that for years in many of our businesses and done it successfully. Again, the timing may not line up perfectly with the input cost increase. We've done a lot of resizing where we think that works well and helps keep a critical price point. We've done a number with new pack sizes.
We certainly can use innovations with new forms to create new price points and price expectations. There's also the tool of promotional spending. And again, that varies widely by country where it can often be a de escalation of promotional spending is a way to get average price up. And again, depending on the market dynamics, it can be a smart choice. One of the reasons we're trying to put more decision space into markets where appropriate is that they can be a little more agile.
And if you take U. S. And China as the 2 probably best illustrations is what we want is each category to understand exactly what's required to grow both their sales, their top line and their bottom line over time. And they'll have the appropriate strategy then to address what tool in the pricing toolbox to address that over time. And again, I think that China is probably the most successful.
The last 2 years, we've seen sales growth, share trends moving very much in the right direction. And at the same time, as John mentioned, the structural financials have improved, and it's largely been superiority driven, supported by a lot of cost savings that allow us to invest in the demand creation as well as a lot of productivity to make sure the money we spent is very efficiently spent.
And I would just add one tool to the arsenal, which we'll be familiar to and that's just being as David referred to this, as productive as we can across the cost structure, so that we have the flexibility to adjust when competitive realities dictate that we do that.
Your next question comes from the line of Stephen Powers with Deutsche Bank.
Hey, thanks. Good morning. So David, last quarter you described things as not business as usual at P and G, underscoring the need to deliver more balanced top and bottom line progress and really issuing at least what I heard is an incremental call to action. But this quarter, on what seemed like pretty similar results to me at least, you seem a lot more upbeat. So I guess my question is what's driven the change in tone?
And I definitely see that the market share trends at retail have improved, but it's obviously still coming at a cost. So just a little bit more expansion on why you believe future results will be more balanced. And I agree the volume and the market share trends are impressive. But to Lauren's initial question, as you pull back on the promotions and the couponing over the course of fiscal 2019, what gives you confidence that the volume and share momentum can be sustained? And if I could tack on a related point maybe just with regards to your SG and A efficiency this quarter.
If you annualize the lower SG and A versus consensus expectations, it's like a $1,000,000,000 positive gap on a full year. And that's an amazing run rate if it's sustainable. But I guess the risk that I'm grappling with is in pulling back so dramatically, is there a risk that you're jeopardizing long term business health by cutting back on important investment? And I know you said you're not, but the gap is just so sizable, I feel compelled to ask the question. So thanks a lot.
All right. Steve, let me take the first part of that question and then I ask John to cover some of the specifics on the SG and A efficiency and the annualization question that you have. Again, my comments and certainly that the optimistic view going forward, it is underpinned heavily by the share growth and the fact that many of the things we've been working on over time to get the propositions, the total proposition, we talked the 5 elements, Those don't happen immediately, and they don't happen on every brand in every country. As more have fallen in place, we're seeing things to me that are very positive. The global value share trends over the last 2 years are getting better and better and just recently turned positive.
For the first time this year, last year, where the total company in June was positive, driven by strong North America growth. Go back 2 years ago, we said we had to fix U. S. And China. We had to address a number of key categories.
Each of those sequentially is getting better. U. S. Share meaningfully better from losing 0.3 to losing 0.1 to flat to past 3 months plus 0.3, past month plus 0.6. And it's driven by the right things.
It's driven by products and packages and better and more efficient communication. That I think is sustainable. And what is happening now in the phasing does affect certainly quarters is recovering a lot of the input costs and T and W costs, transportation and warehousing costs has taken time. And yes, the competitive environment is very difficult, which is why we've said business is not we're not business as usual. We know we have to take more cost out.
And that's why we're doubling down and looking to accelerate many of the cost savings that we planned over several years into tighter time frames. That's being worked. We don't disclose everything, but clearly accelerated productivity that puts smart investments in the right area of the superiority and recovering costs when it makes sense with the right tool and pricing does give me confidence. The fact that the consumers are voting for us more and more often, volume growth is strong, we're seeing many of the brands household penetration start to move, And then you see China, India, we didn't talk a lot about double digit and the outlook is very strong. And if you're starting to get the U.
S. Growing, you get China growing, India, Europe has had solid growth, you start to feel you've got more and more of the key countries that drive profit and share and volume positive. And for that reason, I think we're going to double down. But we need to do it faster. We need an organization that owns outcomes in each market, and that's what we're building.
And relative to SG and A, going back to the importance of balanced top and bottom line growth, which we feel very strongly about, it wouldn't make sense to dial back on support for brand creation and the spending behind that. And we haven't done that. So media, for example, was up 4% in the quarter, even as we faced a very difficult year with lots of cost increases in the balance of the business. You wouldn't see the volume and consumption trends that you're seeing, if we weren't continuing to support the business at relatively high levels. So the commitment to grow that top line and through the productivity efforts that David mentioned and the innovation efforts, which build margin continue to build the bottom line, it remains fully present.
And your next question comes from the line of Bonnie Herzog with Wells Fargo.
Thank you. Good morning. I just had a quick follow on question regarding the pricing. Just hoping to hear more from you on what the retailers' response has been to the price increases that you've announced and how have these increases possibly changed your different price gaps? And then a question on innovation.
If you look back at your fiscal 2018, how would you characterize your pace of innovation and how successful it was, especially in the context of your organic sales growth? Did it meet your expectations? And then as you look forward into fiscal 2019, could you touch on your innovation pipeline and how different it may be from last year? Will there be more and or will the innovation be more breakthrough type of innovation? Thanks.
Okay. There's many questions in there. The first one is difficult to answer and that the we don't talk specific retailer reactions other than if you step back and look at the industry, we're all pressed to recover costs, Transportation and warehousing costs are experienced not only by manufacturers, but by retailers. And so I believe broadly, as long as it is cost justified and or innovation provides meaningfully new benefits, I believe retailers will work with us. And I think generally, the industry has to recover a rising input cost.
All participants are experiencing this all over the world. So that's all I really can say. I won't talk about individual retailers. And the one we've just announced today, we're just announcing today. So I don't have any data there.
And generally, if I look around the world, not just the U. S, generally, I believe when you have innovation and or there's an environment that it's justified, we've been able to get pricing. And so that's all I'll comment on that. In terms of the pace of innovation, it has increased in terms of the impact, and that's what we really want is this magnitude of superiority. And if I take just the one example that we've talked many times, but it matters is things like the set beads.
Growing that faster, moving it from a 2 $50,000,000 business to a $500,000,000 business adds real profitable sales to the company. And we are driving those faster and harder and driving things like household penetration, which is more users. Those are the most profitable additional cases you can get because you've already got a sizable business and you're leveraging the assets that you've employed. We want more innovations and what we're working on is more meaningful innovations. We learned a lot if I go back several years ago, with over proliferating, very minor extensions.
What we want is meaningful, consumer significant innovations and we're smart, differentiated solutions that help our retailers and we'll work with them as well. And that's an area I expect we'll do more going forward because the combination of those 2 addresses the consumer and customer value and that's a key part of our superiority strategy. Pipeline, I believe, is very strong and the fact that we've put additional effort into our upstream innovation several years ago, those will come out over time, and both John and I have mentioned that we have many tests going on to continue to make sure that we learn fast and then bring to the market consumer meaningful innovation that will grow category size, which helps both us and our retailers.
Next, we'll go to Joe Altobello with Raymond James.
Hey, guys. Good morning. Thanks for squeezing me in here. I guess, just wanted to dig in a little more into your 2% to 3% organic sales growth outlook. And from a different direction, what are you guys assuming in terms of the overall market growth rate for this year?
And I assume if it's still in that similar 2% to 3% range, with trade inventory reductions still a modest headwind likely? I'm trying to understand how much in the way of market share gains you're assuming or does that imply in terms of your organic growth rate for this year? Thanks.
Okay. Just a comment on the 2% to 3% and I may need to get the last part of your question. I wasn't sure I got it. The 2% to 3% as far as market growth, it is in the still the 2% to 3%. And understand, we have to grow a little faster because consumption tends to be ahead of what we experience because there have been inventories that have come down across the world as e commerce grows, especially in the big major markets.
And I'm not seeing anything dramatically different. We'll see what happens in places where there's pricing, the benefit of pricing versus the impact on the consumer versus the impact on the consumer with volume. But right now, to me, the market is pretty steady.
So we should with the dynamics that David mentioned, if we gross organic sales 2% to 3%, we should be building share against our current assumption of market growth because consumption will be slightly higher than
that. Next, we'll go to John Feeney with Consumer Edge.
Good morning. Thanks very much. You cited real quick one. You cited 120 basis points of mix factors within your gross margin buildup. And I was it's mix and other factors.
I'm assuming the way you wrote that, that's mostly mix. And could you I know you're not going to guide on that, but could you give us a sense what the single largest buckets are of negative gross margin mix and maybe if there's a big positive one in there that's offsetting and what you're thinking about for 2019 as far as gross margin mix as a contributor based on current trends? Thanks.
So I'll
give you two examples of what are driving mix, one of which will hopefully reverse itself, the other will hopefully not, and I'll explain that. One example of negative mix is the decline year on year in sales in blades and razors, which is one of our most profitable businesses. So as that business grows at a lower rate or declines, grows at lower rates in the balance of the business, that generates a negative gross margin mix hurt. That I hope resolves itself as we continue to strengthen results on that business. Another example that might be somewhat counterintuitive and tongue in cheek, I hope it doesn't resolve itself is the is when you grow a premium priced item, David mentioned beads, for example, at a rate that's faster than the balance of the business.
Those items and both Tide Pods Unit Dose and Fabric enhancer beads are examples of this, have a higher price. They have a higher significantly higher penny profit, typically dollars higher than comparable items. But the combination of those yields mathematically a lower margin, meaning that when you sell more of those products, your gross margin declines. But it's a very good day, and we want to sell as many of those items as we can. So John can help you offline kind of tease out those components, but those are 2 of the largest drivers in the quarter that we've just completed, for example.
And next we'll go to Mark Astrachan with Stifel.
Yes, thanks and good morning everybody. I wanted to ask about where retailers are in increasing focus on private label, less so as it kind of relates to your ability to price and more to do with how branded companies compete when retailers seem to want to put more private label on shelves. An example of this would be your reductions in shaving razor prices. A year ago with a large wholesale club coming out with its own private label about a year after those reductions. And just sort of related to that, where do you believe your current shelf space is a year from now or so relative to current levels?
Just a couple of comments on that. First, we've experienced retailers putting varying levels of focus on the retailer brand, private label. We understand for most retailers, it's an important part of their strategy, both from an equity standpoint and a margin revenue standpoint. We've also shown over time and probably Europe is the best illustration because it's most advanced there, the ability to win in that environment where brand and the retailer brand can mutually be successful. And what's and it comes back to the same point.
What you have to have is the brand consumers prefer because then retailers want to carry it because it builds the basket. And yes, they will continue to put emphasis and at times add shelf space. And if we're doing our job and have the innovation, it comes at the expense of somebody else. It's one of the reasons you have to watch being in the middle without a distinctive positioning in a brand that's meaningfully different to consumers. It is the reason why we believe that consumers that I think retailers will continue to put more emphasis in many of the cases on the retailer brands and we can accelerate our growth, but means the advantage has to be enough that the consumer that's interested in the retailer brand is not the consumer that typically buys our brands.
And when we really do our job, we're able to source from a variety of sources, but frankly, usually, it's the brands and the weaker businesses in the middle. So that part, I think, is still true. I don't believe the you'll see a spike when a retailer makes a new push into either a category or broadly into retailer brands. But again, we've seen this over time. Europe is the best illustration, but the same is true in the U.
S. When there may be a spike and then it studies out with what the consumer wants. And they will follow the shopper just as we do. And our job is to make sure more shoppers pick our brands. I believe we can earn shelf space over time with innovation, And that's certainly been our experience.
You better be enough different. And again, it's especially to me successful when you bring meaningful difference or a new form to the consumer or a new benefit area. It's one of the reasons pods and beads have been able to grow both share, sales, profit and space in most cases because the retailer wants to feature for the reason John mentioned for us and for them because the penny profit is higher for them and to me the absolute sales and total profit for us and the consumer gets a product that's meaningfully better. And that's a good example of superiority in place and shelf space can be earned. And frankly, the expectation I'd have for each of our businesses is they need to have propositions that are able to earn shelf space from their retail partners because it's in their best interest.
The next question comes from the line of Andrea Teixeira with JPMorgan.
So following up on pricing, are you going to continue to increase the gap between your own price points? Are you just positioned Luvs diapers cheaper before and now with the announced price increase in Pampers. Should we expect the price realization gaps in between those two brands to continue to widen? And the same for Bounty and Charming brands against these brands on basic and essential value extensions, basically going back to the point about private label, as you mentioned in the last few quarters. And in the long run, should we continue to see P and G use high lowest strategies with the premium products funding price reductions in the key categories as happening in grooming and now in diapers?
Thank you.
Just a couple of comments on the pricing. Found in Charmin will our pricing to recover the cost increases we and rest of the industry participants are experiencing. We have for each of our brands and for each of our tiers desired pricing corridors that we know the consumers believe provides good value. Over time, we'll take the actions to make sure we address that. I believe in many of the categories where we're taking pricing on our premium brands, there is pressure for all participants to understand what they think is right to deal with the rising input cost.
We'll have to respond to whatever each of the competitors choose, and we'll do so. And again, we've learned very clearly what is the pricing corridor where we can grow share over time. We also know that we increase the margin of superiority. We often can grow that price premium. And that again is one of the reasons why we're doubling down on the superiority.
I believe, and again, we've gone through times where input cost went up significantly, where we priced and we were able to build our business. And if something happens with another retailer that causes an issue or rather another competitor, we'll have to be agile in each market and we'll do so.
And next we'll go to the line of John Anderson with William Blair.
Good morning.
Thank you for the question. I want to ask about e commerce. Sorry if I missed it, but what percent of the total company sales were e commerce related in fiscal 2018? How would you characterize your major brand market shares online versus offline at present? And also if you could talk briefly about margins, offline, online, where you stand today and what some of the opportunities are ahead to improve that?
Thank you.
Sure. First, we're very pleased with the progress we've made in our total e commerce business led primarily by the 2 biggest, then U. S. And China, but also Europe well and in other markets, Korea very strong. We're winning online with 30% growth this year.
We're up to $4,500,000,000 And in total, to answer specifically your question, it's about 7% of our global sales. And the other point I'd make, generally, it varies widely by country and category, but our market shares and our margins online are roughly equal to offline. And for that reason, we and we want to keep it that way as best we can because we can be channel agnostic. We can go wherever the shopper wants to go and have our brands available. And then we work the cost structure and certainly our productivity programs to ensure we can do that.
But again, that varies widely by category and country because we have to deal with whatever the competitive set is in that category and country. The broadly 7% global sales in markets, shares and margins roughly equal.
And next we'll go to Kevin Grundy.
First a housekeeping question if I can. John, so the tax rate guidance for fiscal 2019 of 2019 percent, is that permanently lower? If so, what's driving it? Is that also reflective of the cash tax rate? And then David, the broader question on the Beauty and Natural space, and you touched on the 3 tuck in deals that you've transacted on so far this year, small, but add to brands like Olay and SK II.
Can you compare and contrast the approach here maybe versus past mistake that Procter has made in the beauty space, maybe how you'll integrate these differently, maybe let them sort of operate on a standalone basis, views on managing the number of brands in the portfolio. The company obviously went through a period of rationalizing the portfolio and reducing a number of brands. Maybe talk about that now as you sort of enter back to more active M and A and maybe touch on the pipeline a bit and broadly what we can expect going forward? Thank you.
Hey. First
on the taxes, based on everything we know today, which will change tomorrow, we'd expect 19% to 20% to be going a good estimate of a going tax rate, probably closer to 20% than 19%, Kevin. The cash tax rate, if you consider the cash that we're paying on the repatriation tax, which has already been recognized as a one time charge to earnings, inclusive of that would be a little bit higher, but not significantly.
Just I'll give some comments on naturals. First, we're quite committed to winning there. And while, yes, I will talk a minute about the acquisitions, to me, the biggest part of the growth is coming from organic innovation from our existing brands. I mentioned almost every brand now has deeply understood that consumer and what they've been working and the reason it's taken time in some of the cases is we want to solve the trade off between often the free of and full either free of or full of depending on how it's expressed in each market benefit as well as with the core functional benefit of the category. And the ones I mentioned at least, whether it's Tide Pure Clean or Gain, Febreze 1, Whisper Pure Cotton and recently Pampers Pure Protection, all of these are showing very good growth in the market because they're addressing the consumer need.
And yes, we will supplement when we see an opportunity that gives us either people capabilities or a key brand that we think we can turn from a small brand into a bigger brand and grow over time. How it contrasts this with potentially the past is we're not looking to proliferate a ton of brands, and we want a huge number of small brands. What we want to do is grow our big brands, and we believe it's very important that we plant seeds in high growth areas, either organically or through acquisition and make them bigger brands by bringing our capability, be it product, package, technology, communication and or supply chain, which often is what enables you to turn these brands from small unprofitable brands to midsized to bigger profitable business and is growing fast. And now we've got organic innovation coming in the market and supplements. And then the last thing you asked, what are we doing on the ones that we have purchased?
As at this time, we are leaving them where they are right now and giving them time. We want to learn from them and then make available the capabilities that P and G has without imposing anything that would slow down the rate of growth or our rate of learning. And to me, I'm quite excited about what we're learning from Native and Snowberry and what we will learn from First Aid Beauty and frankly, what we'll learn from our Healthcare acquisition because we have talent coming in and we have products and brands that we think are catalyst for accelerated growth.
Our last question comes from the line of Steve Strycula with UBS.
Hi, good morning. Two quick questions on the portfolio. First with Fabric Care. Can you speak, John, a little bit more about the acuteness of where we saw the price mix investments and what catalyzed the behavior? And should this be a trend that was contained to the Q4?
Should we expect it to linger on through fiscal 2019? And then for the second part, I can appreciate that there's a number of different items happening in grooming right now competitively. But all in, should we expect revenues for that business segment to be down in fiscal 2019? Thank you.
So on laundry in the U. S, we made several investments to that I made earlier about maintaining pricing within proven quarters for growth. And you saw that generate some solid growth. Where we go from here will depend a lot on the competitive environment. We want to drive as much top line revenue as possible, but we know we need to be price competitive to do that sustainably.
And the other, we don't give guidance by business, but no, I have not accepted and we have not accepted that any of our core categories are not going to grow in fiscal 2019. We'll have to deal with what happens in each market. And for grooming, our aspiration is to grow that business, and we're putting the innovation and plans in place to do just that. I think that wraps up the call. And thank you very much.
We appreciate the questions. And again, I'll just close with we're quite committed to making the changes and the strategy to me is showing the right signs in terms of positive share trends, and we're quite committed to delivering balanced top and bottom line growth. Thank you all.
That does conclude today's conference. We thank everyone again for their participation.