Good morning. Welcome to P&G's quarter end conference call. 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. As required by Regulation G, P&G needs to make you aware that during the call, the company will make a number of references to non-GAAP and other financial measures. Management believes these measures provide investors valuable information on the underlying growth trends of the business. Organic refers to reported results excluding the impacts of acquisitions and divestitures, and foreign exchange, where applicable. Adjusted free cash flow represents operating cash flow, less capital expenditures, and excluding tax payments for the Pet Care divestiture.
Adjusted free cash flow productivity is the ratio of adjusted free cash flow to net earnings adjusted for impairment charges. Any measure described as core refers to the equivalent GAAP measure adjusted for certain items. Currency neutral refers to the equivalent GAAP measure, excluding the impact of foreign exchange rate changes. P&G has posted on its website, www.pg.com, a full reconciliation of non-GAAP and other financial measures. Now, I will turn the call over to P&G's Chief Financial Officer, Jon Moeller.
October and December was another challenging quarter from a macro standpoint, with significant foreign exchange headwinds, modest market growth, and continued political and economic volatility. Against this backdrop, we were able to deliver organic top-line growth and currency-neutral core earnings growth that were in line with our going-in expectations. Organic sales grew 2%. Four of five business segments, Baby, Feminine & Family Care, Grooming, Healthcare, and Fabric and Home Care, reported growth versus the prior year. Top-line growth trends improved as we moved sequentially through the quarter, finishing with mid-single digit organic sales growth in December. Organic volume was in line with the prior year. Organic volume was up one point in developed markets. Developing market volume was down slightly as we took pricing to offset foreign exchange devaluation across several countries. Pricing and mix each added a point to sales growth.
Overall, we held or grew worldwide share on businesses representing about half of company sales and about 60% of sales in the home U.S. market. We continue to grow share in Latin America and held share in Europe and India, Middle East, and Africa. We lost some share in Asia, principally in China and Japan. As we reported at the analyst meeting in November, we're growing share on more of our category-leading brands in countries where it matters most. Pampers, Tide, Gillette, and Pantene in the United States, for example. We have opportunities on other important businesses like Family Care in the U.S. and in countries like China. On a constant currency basis, core earnings per share were up 6%, in line with our expectations, keeping us on track for double-digit constant currency core earnings per share growth for the fiscal year.
Virtually every currency in the world devalued versus the U.S. dollar, with the Russian ruble leading the way. While we continue to make steady progress on strategic business and company brand and product initiatives, and continue to increase and accelerate productivity savings, the progress has not been sufficient enough to offset FX. All-in sales were down 4% versus the prior year, including a 5-point headwind from foreign exchange and a 1-point reduction from minor brand divestitures. Including FX, which was a 14 percentage point drag on the quarter, core earnings per share were $1.06, down 8% versus the prior year. Given the magnitude of the impact, I thought it might be helpful to briefly recount how FX impacts reported results. I'll use the example of the ruble, which depreciated 53% versus the U.S. dollar during the quarter and was down 78% for the first half of the fiscal year.
The declining ruble impacts reported earnings in three ways, for a total fiscal year hurt of about $550 million after tax. Here are the building blocks and how they break down. First, transaction impacts increase the cost of non-ruble-denominated inputs. We import, as an example, Gillette blades and razors into Russia from Germany. Widening of the cross rate between the euro and the ruble increases the Russian unit's cost of razors and reduces profit. Similarly, the local cost of plastic bottles, which are denominated in euros and imported into Russia for the production of fabric care and hair care products, have increased significantly. This transaction cost impact affects all manufacturers, multinational and local, whose materials or finished products are imported from similar sources and are similarly denominated. We attempt to recover these cost increases through pricing when local legal requirements and market realities allow it.
Though there's a lag between the time a currency devalues, the costs are incurred, and the pricing is taken and executed through our channels of distribution. Second, we need to revalue transaction-related foreign currency working capital balances. This includes the revaluation of working capital balances related to transactions between P&G legal entities that operate in different currencies. To continue the prior example, while razors produced in Germany are being transported and are moving through the customs process into Russia, our Russian books hold a euro-denominated. At the end of every quarter, working capital balances are revalued at current spot rates. Gains or losses from revaluing transactional working capital balances typically flow through SG&A and are included in core earnings per share. The only exception is the case of a fixed exchange rate currency that is also hyperinflationary.
In this case, we need to revalue not just the foreign currency transactional balances, but also the local currency working capital balances. All of these impacts are reported in non-core earnings. The Venezuelan bolívar is the only currency that currently fits this definition. Third, income statements of foreign subsidiaries like Russia that do not use the U.S. dollar as their functional currency are translated back to U.S. dollars at new exchange rates. Just the Russian ruble transaction, balance sheet revaluation, and translation impacts have been and are projected to be significant at about $150 million, $100 million, and $300 million after tax, respectively, for a total, as I said earlier, of $550 million after tax for the year.
Across all currencies, foreign exchange hurts totaled $450 million after tax in the December quarter, $650 million fiscal year to date, and are forecast to be a $1.4 billion after-tax profit hurt over the course of the fiscal year. This is the most significant fiscal year currency impact we have ever incurred. The currencies of six countries, Russia, Ukraine, Venezuela, Argentina, Japan, and now Switzerland, account for over a billion dollars of the $1.4 billion after-tax headwind from FX. In the first five of these markets, we have larger businesses than nearly all of our multinational competitors, and we have a large Swiss franc exposure from our European headquarters in Geneva. In aggregate, we have more than $8.8 billion of sales in these markets, two to three times our next largest competitor.
Of the $1.4 billion hurt, about 30% is from transaction, about 20% is from balance sheet revaluation, and the remaining 50% is from translation. Because of these impacts, the outlook for the fiscal year will remain challenging. We have and will continue to offset as much of this currency impact as we can through pricing and productivity cost savings. At the same time, we'll continue to invest in our businesses, brands, product innovation, and capabilities, because it's the right thing to do for the mid and long term. We'll adjust fiscal year targets accordingly, as I'll cover when we get to guidance. As these FX impacts flow through the income statement, they obviously impact margins. Core gross margin was down 20 basis points in the December quarter. Excluding foreign exchange, it was up 40 basis points.
Cost savings of approximately 190 basis points and 60 basis points of improvement from higher pricing were offset by 110 basis points of mix, 50 points from innovation and capacity investments, and 50 basis points from commodity cost increases. While we're beginning to benefit from lower fuel prices, which reduce transportation costs, the cost of materials such as resin and other specialty chemicals were still higher in the December quarter than in the prior year. Pulp is also up year-over-year. If oil stays at or around current levels, these material cost headwinds should turn to tailwinds by the fourth quarter of the fiscal year. Core SG&A costs as a percentage of sales increased about 30 basis points. Excluding FX, they were down 80 basis points.
70 basis points of overhead savings and 70 basis points of marketing savings, mainly from non-media cost efficiencies, were more than offset by 120 basis points of foreign exchange impact and 50 basis points of organizational capability investments in R&D and sales. Productivity savings and cost of goods sold and SG&A totaled 330 basis points as we continue to meet or beat all of our productivity objectives. Core operating margin was down 60 basis points versus the prior year, including FX, and was up 120 basis points excluding FX. The effective tax rate on core earnings was 22.3%, 130 basis points above last year's rate. This keeps us on track with our fiscal year outlook of about 21%.
December quarter all-in GAAP earnings per share were $0.82, which include approximately $0.03 per share of non-core restructuring charges and a $0.06 per share benefit from earnings of the discontinued batteries and pet care operations. Also included is a $0.26 per share one-time non-core non-cash charge, as we explained during our Analyst Day in November, to adjust the carrying value of the battery business. It was a strong cash quarter. We generated $3.4 billion in operating cash flow and $3 billion in adjusted free cash flow with 95% adjusted free cash flow productivity. We returned $3.7 billion of cash to shareholders, $1.8 billion in dividends, and $1.9 billion in share repurchase. Fiscal year to date, we've returned $7.9 billion to shareholders, $3.6 billion in dividends, and $4.3 billion in share repurchase.
In summary, second quarter organic sales and constant currency core earnings growth were in line with going in expectations. Productivity savings continued at or ahead of plans, with constant currency gross and operating margins well ahead of year ago. We continued our strong track record of cash productivity and cash return to shareholders. We're maintaining investments necessary to support our brands and product innovations. These include continuing strategic investments in breakthrough product innovations like Gillette ProGlide FlexBall, our entry into the adult incontinence category with Always Discreet, as well as investments to restore the competitive value equation of leading brands like Bounty and Charmin. We will strike what we believe to be the appropriate balance between short-term FX cost recovery and investment to support the mid- and long-term health of our business.
We will continue our efforts to focus our portfolio, to lead business model and product innovation, to become ever more productive and cost-efficient, and to execute with excellence. As we announced in August, we're taking a significant and strategic step forward to streamline, simplify, and strengthen the company's business and brand portfolio. We will become a simpler, more focused company of 70 to 80 category-leading, competitively advantaged brands organized into about a dozen business units and four industry-based sectors. We will compete in businesses that are structurally attractive and that play to P&G's strengths, where we can achieve sustainable advantage. Every brand we plan to keep is strategic with the potential to grow and create value. The 70 to 80 brands are leaders in their industries, categories, or segments. They are brands shoppers buy, consumers use, and customers support. They're leaders in brand equity, awareness, trial, purchase, and loyalty.
They're leaders in product performance and product innovation, and leaders in growth and value creation. Within these brands, we will operate with more efficient brand product line and SKU offerings, reducing SKUs 15%-20% over the next two years. We will create a faster-growing, more profitable company that is far simpler to operate. We've been progressing this work at a healthy pace. In November, we announced plans to exit the Duracell business through a split transaction in which we will exchange a recapitalized Duracell company for Berkshire Hathaway's shares of P&G stock. We expect to complete the deal in the second half of this calendar year. While we're progressing very well, those of you who have built your fiscal year 2016 models, assuming a July 1st closing and related share count reduction, are probably a quarter or two too aggressive.
In late December, we closed the divestiture of the European pet care business to Spectrum Brands. We also signed and communicated a deal to divest Camay and Zest soap brands. To date, we've divested, discontinued, or consolidated 35 brands. As we continue to strengthen our category and brand portfolio, we will focus our brand-building and product innovation support and investment against the biggest consumer and market opportunities. We're committed to be or become the brand and product innovation leader in the categories in which we compete. Year after year, decade after decade, successful brand-building and product innovation have grown our categories, created entirely new categories, built our business, and have been a major source of value creation. Innovation combats commoditization, stimulates category growth, and builds the cumulative advantage of our brands over time. Our biggest business by far is baby care and the Pampers brand.
Our biggest country is the U.S. As first reported last month at Analyst Day, we continue to stimulate category growth at 2% to 3% over the last year, reversing a multi-year decline. The Pampers business model that focuses on stimulating point-of-market entry demand and trade-up to mom-preferred, better-performing, and premium-priced products, like the unique Swaddlers innovation, and better-performing, better value point-of-entry products from Luvs, have resulted in broad and sustainable category growth that benefits retailers, suppliers, and manufacturers and has grown share for P&G. Our U.S. diaper share is now 44%, up 2 points versus a year ago. We've turned a 10-point share disadvantage into an 8-point category leadership advantage over the past five years. Both Pampers and Luvs are growing share. Pampers Swaddlers share is up 3 points to an absolute category share of 12%. We're bringing diaper pants to market.
We just introduced Pampers Premium Care Pants in Russia, where the platform accounts for 23% of the market. Pampers Pants provide exceptional skin comfort and dryness benefits in an underwear-like design. The Russia launch is off to a very good start, with shipments about 50% ahead of target. We'll be bringing Pants to China this month and Latin America next quarter. Achieving fair share of the global diaper pant market represents up to a $2 billion growth opportunity. Our strategy for fabric care in the U.S., our second-biggest business, is having a similar positive impact for P&G and for category growth. It begins with creating and delivering a consumer-preferred mix of brands, products, and values. Nearly a year ago, we introduced a strengthened fabric care brand and product lineup that significantly broadened consumer appeal.
Essentially, we offered shoppers a full range of brands and products priced from about $0.15 to $0.28 a laundry load, including broadened Pod offerings, new and improved liquid detergent options, and Tide Simply Clean and Fresh, a preferred brand of product for consumers interested in value at an affordable price. As a result, Tide and Gain have both grown market share over the past 52, 26, 13, and four-week periods. Tide now holds a 40 share. Gain is the number 2 brand with a 16 share. Pods have reached an 11 share of the U.S. market, and P&G's share of that segment has grown above 80. We're seeing the first indication of category sales stability and even growth in recent weeks, which is good for retailers, suppliers, and manufacturers. This is the first category growth in seven years.
We continue to expand Pods around the world into developed and developing markets. We expect unit dose detergents to reach $1.5 billion in retail sales this fiscal year. conditioner category, a smaller but even faster-growing core strategic business. The business model stimulates category growth by trading more consumers into the discretionary fabric conditioner product category via meaningful product innovation like scent beads and liquid products that deliver better functional and sensory benefits. Beads alone will deliver $400 million in global sales this fiscal year. We continue to grow our Downy and Lenor brands in established markets while we expand selectively into new countries where the size of the prize and the value creation return are attractive. P&G fabric conditioners are growing at about a 7% compound average growth rate, approaching $3 billion in global sales. We're growing the Grooming category and P&G's share behind the Gillette FlexBall innovation.
The male razor segment is up 17% on a unit volume basis over the last six months. Gillette's razor volume share was up 7% in the December quarter. As expected, we're beginning to see strong razor sales translate into an improved blade or cartridge share, which was up two points in the December quarter. We're expanding FlexBall right now to Europe, the Middle East, and Africa. We're extending this breakthrough to women with Venus Swirl, which began shipping in the U.S. this month. Women and men are telling us that they significantly prefer these products. It looks like FlexBall may be the biggest, most consumer-obvious new shaving system innovation ever introduced by Gillette. Our hair care business is now growing share in both the U.S. and China.
Pantene has now grown share seven months in a row in the U.S. Head & Shoulders is up about half a point in both markets. Both brands are responding to improved products and better brand building. These brands in this category have a full pipeline of product innovation that will come to market this year and in the years ahead. Pantene is shipping its new product line with formulations that work from the inside out to deliver on Pantene's promise of delivering the most beautiful, healthy hair so you shine. Head & Shoulders' new product line delivers 100% dandruff-free results and an improved in-use experience that enables consumers to feel the product working instantly. We're accelerating the growth of the adult incontinence category with Always Discreet. Women are not fully satisfied with current category product offerings.
One in three women over 18 years old suffers from incontinence. Only one in nine uses an incontinence product. Always Discreet pad and pant style offerings deliver significantly better fit and protection from Always, a brand that women trust and prefer. We began shipments of Always Discreet in the U.K. in July and the U.S., Canada, and France in August. In the U.K., the adult incontinence category is growing double digits, roughly 50% faster since our entry. In the U.S., the category growth rate has more than doubled to around 9%. Our shipments are running ahead of target in both markets with value share of over 7% in each. We're continuing the expansion of Always Discreet with launches in Germany, Switzerland, and Austria this quarter.
We're committed to be the innovation leader in our categories to drive category growth and the growth of our businesses. We're increasing investment where we have consumer-preferred brands and products. In addition to innovation, productivity will continue to drive total shareholder return. The best companies in any industry find a way to lead both innovation and productivity. We're turning productivity into a core strength at P&G, making it a systemic enduring value creation pillar alongside innovation. We've significantly accelerated and will significantly exceed the $10 billion cost savings goal we set two and a half years ago. We're driving cost of goods savings well above the original target run rate of $1.2 billion a year, with $1.6 billion of savings this fiscal year. We expect to improve manufacturing productivity by at least 6% again this year, reducing staffing even as we add capacity and start up new production modules.
We've begun work on what is probably the biggest supply chain redesign in the company's history. We're transforming our distribution network in the U.S., consolidating customer shipments into fewer distribution centers. These centers are strategically located closer to key customers and key population centers, enabling 80% of the business to be within one day of the store shelf and the shopper. All six of the new mixing centers will be operational by the end of February, on or ahead of schedule. We expect to complete the conversion out of legacy locations this calendar year. The distribution network projects will allow both P&G and our retail partners to optimize inventory levels while still improving service and on-shelf availability and reducing in-store out-of-stocks. We've established a $1 billion-$2 billion value creation target from the global supply chain reinvention effort.
We're targeting to deliver $400 million-$600 million in annual cost savings, building to this level over the next three to five years. These savings are incremental to the $6 billion of cost of goods savings we originally communicated and are on track to exceed. We expect additional top and bottom-line benefits from improved service levels. We continue to invest strategically in additional capacity for critical developing markets. We continue to rationalize our manufacturing processes so that common, simpler, and more global standard making and packing platforms support accelerated product innovation at lower cash, capital, and operating costs. This enables not only better and cheaper, but also more agile, flexible, and faster. We've reduced non-manufacturing or overhead enrollment by nearly 18%, 80% more than we initially envisioned when we launched our restructuring program.
We continue to evolve the organization design so that it is business-focused, starting with consumers and customers, and so that it is simpler, more effective, more responsive, and more efficient. Around industry-based sectors, we're streamlining and de-duplicating the work of the business units and selling operations. We've consolidated four brand-building functions into one. Each of these changes reduces complexity. Each creates clear accountability for performance and results. A more focused portfolio of brands and businesses will enable further changes. We should be close to the high end of our estimated 16%-22% non-manufacturing enrollment reduction range by the end of this fiscal year, more than one year ahead of plan. We have additional opportunity to improve marketing efficiency in both media and non-media areas while increasing overall marketing effectiveness and the strength of our programs.
We'll continue to drive marketing productivity through an optimized mix driven by new, more efficient digital media. We have quietly strengthened and invested in all of our digital capabilities, including mobile search and social, with a wide range of partners. More than 30% of our working media is now digital. We've developed proprietary systems to target digital media more precisely and more efficiently. Three of our brand communications designed specifically for digital were among the top 10 YouTube viewings in 2014. These efficiencies are enabling us to maintain strong media weights despite the cost pressure we're facing from foreign exchange. We're focused on driving productivity improvement up and down the income statement and across the balance sheet. Disciplined working capital management, strong execution of our supply chain financing program, and a scarcity mentality in capital spending are driving strong cash flow results.
One of the productivity-related questions we often hear concerns developing market margins. We're growing constant currency earnings margins in developing markets. Constant currency earnings grew two times faster than sales in 2013, four times faster than sales in 2014, and are forecast to grow four times faster than sales again this year. Over those three years, we'll have grown constant currency earnings 12%, 26%, and 26% respectively. Even with the unprecedented FX impact, we're making progress. Our margin all-in in Latin America is forecast to be up more than a point this year. In the BRIC markets, Brazil and India should each be up about four points, and China should hold its industry-leading margin. Russia is forecast to be down a few points because the pricing intended to recover the FX impacts will not be fully in place until the spring.
In total, though, we're forecasting developing market margins, including FX, to be up about 60 basis points for the year. The final priority area I'll touch on this morning is execution, the only strategy our consumers and customers actually see. For many of our big brands, building trial is still a huge opportunity. For example, repurchase rates on unit-dose laundry detergents are over 50%, but trial rates are barely double digits. We have a number of programs underway to increase trial on our brands. In several categories in many countries, we have an opportunity to improve coverage, dedication, and in-store merchandising of our brands. We're investing selectively in dedicated sales coverage and merchandising to improve execution for shoppers in-store and online. This should lead to improved distribution, shelving, merchandising, and pricing execution to consistently win at the first moment of truth.
We're also continuing to grow our e-commerce business with omni-channel and pure-play e-tailers as shoppers evolve their shopping preferences and habits. As we look beyond the January-March quarter, we're hopeful that industry and company tailwinds will begin to improve. Productivity should continue to grow. The benefits from portfolio strengthening and simplification should continue to build. Pricing should help. Oil-based commodity costs should become a tailwind by the fourth quarter. Beyond the cost benefit, lower energy prices will hopefully become a stimulant to demand in petroleum importing countries. The world's top 15 oil importing countries, which include the U.S., China, Japan, and many Western European markets, account for nearly 2/3 of P&G's global sales, and an even higher share of profits. Interest rates should remain low, and we hold out hope for a sequentially stronger economy in the United States, our largest market. There will continue to be headwinds.
Foreign exchange is obviously at the top of the list and has a significant short-term impact. Pricing to recover that impact, taken by both P&G and other industry players, is likely to result in some market contraction and reduced consumption in several countries. Lower commodity costs will create a consumption headwind in energy-producing countries. Political instability will continue to result in some ongoing amount of market-level disruption. In a time of unprecedented currency devaluation that impacts our company more than any other in our industry, it's important to stay balanced. We need to balance doing what's right for the short, mid, and long term. We need to balance the focus on delivering operating cash flow in the short term and continuing to deliver good returns for shareholders with continuing to invest in our businesses, brands, products, capabilities, and people for the mid and long-term health of the company.
We are maintaining our forecast for organic sales growth of low to mid single digits for the fiscal year. We delivered 2% organic sales growth in the first half of the year, and we could see a modest acceleration in the second half. Pricing should be a larger contributor to sales growth in the second half as price increases are more fully reflected in our results. We're seeing positive trends in big core businesses like U.S. baby care, fabric care, Grooming, and hair care. We're continuing to expand several important product innovations, pants, Pods, beads, FlexBall and Swirl, upgraded hair care products, Always Discreet. Maintaining our outlook for double-digit constant currency core earnings per share growth for the fiscal year. We expect foreign exchange to have a 12-point impact on core earnings per share growth for the year.
This is more than double what we had estimated last quarter and more than five times the impact we expected at the beginning of the fiscal year. Including FX, we now expect core earnings per share to be in line to down low single digits versus last year core earnings per share of $4.09. We're now forecasting all-in sales to be down 3%-4% for the fiscal year. This includes a five-point drag from foreign exchange and a one-point impact from minor brand divestitures. We expect all-in GAAP earnings per share to be down mid-teens versus the prior fiscal year. Essentially, all of the year-to-year reduction in GAAP earnings per share is due to the $0.58 of one-time non-cash battery impairments. In total, current year GAAP earnings per share includes $0.67 per share of non-core items.
In addition to impairments, the other main items are $0.20 per share of restructuring costs and about $0.14 of gains in discontinued operations from the combination of the Duracell and pet businesses. We're currently forecasting 96% adjusted free cash flow productivity above guidance of at least 90%. We're maintaining our outlook for cash return to shareholders. We plan to return cash to shareowners through dividend payments of about $7 billion and share repurchase in the range of $5 billion-$7 billion, $10 billion-$12 billion all in. This forecast and guidance range assumes mid-January spot rates for foreign exchange. Further significant currency weakness, including Venezuela, is not anticipated within our guidance range. Our outlook is based on current market growth rates, which we are monitoring closely, especially in markets where we're taking large price increases to offset currency impacts.
We also continue to monitor unrest in several markets in the Middle East, Russia, and the Ukraine, and we continue to closely monitor markets like Venezuela and Argentina, where pricing controls, import restrictions, and access to dollars can present risk. On the flip side, our guidance does not reflect some potential tailwinds. Our results can improve if currencies ease, if markets begin to expand in a sustainable way, or if U.S. economic growth accelerates. There are a few things you should keep in mind as you construct your models for the second half of the year. Our organic sales comps ease a bit in the back half of the year, and we're taking significant pricing to offset foreign exchange impacts.
We expect significant top and bottom-line headwinds from foreign exchange in the back half of the year, including a large negative impact from balance sheet revaluation related to the Swiss franc in the March quarter. There's also a quarterly translation hit to earnings as we are operationally net short to Swiss franc due to the significant local cost structure related to our Europe and India, Middle East, and Africa headquarters in Geneva. Productivity savings will build as the year progresses. We expect sequential improvement in commodity costs as we go through the remainder of the year. Stepping back, we're not only investing in our brands and products, but also in critical company capabilities that will enable much better consumer and customer responsiveness with systems that are more agile, faster, better, and cheaper. We've talked about the supply chain.
The overall goal is a seamless and synchronized flow of information and product with shoppers, customers, retailers, and e-tailers. Our strategies continue to sharpen. Our category and brand business models continue to improve. Our product innovation pipeline continues to fill. Our productivity yield continues to grow with several more years of significant cash and cost savings ahead. We are operationalizing plans more consistently and executing them more broadly and reliably. We continue to invest strategically in additional capacity for critical developing markets. We continue to rationalize our manufacturing processes so that common, simpler, and more globally standard making and big packing platforms support accelerated product innovation at a lower cash, capital, and operating costs. We continue to evolve the organization design so that it is business-focused, starting with consumers and customers, simpler, more effective, more responsive, and more efficient.
We continue to invest selectively in sales coverages and merchandising to improve execution for shoppers in stores and online. We continue to invest in product innovation technologies and product initiative acceleration. Through this transformation, we are creating a more in-touch, agile, coordinated, and integrated organization that puts winning with the consumer first. We are sharpening our strategies and business models. We are operationalizing plans and executing with more consistency and excellence. These are the choices and capabilities that will enable balanced growth and value creation in the mid and long term as we work our way through the currency devaluations in the short term. That concludes our prepared remarks for this morning. As a reminder, business segment information is provided in our press release and will be available in slides, which we posted on our website, www.pg.com, following the call. With that, I'd be 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, press star followed by two. Your first question comes from the line of Wendy Nicholson from Citi.
Hi, good morning. My question has to do with the sort of multiplier effect between the currency pressure on your top line and your bottom line, because it's just so much bigger than we see at any other company. My question is how much of that is going to go away? This is sort of a long-term strategic issue. How much of that is going to go away as you get your new plants and new manufacturing facilities online in emerging markets? Or is that just a structural thing where we're never going to have more than three razors and blades plants, so we are always going to see a significantly disproportionate impact on earnings? Thanks.
Clearly, as it is apparent, you understand from your question the difference between the top line and bottom line impact of FX is driven by sourcing and where product is being manufactured and imported to. It also has to do with where we're disproportionately sized versus our competitors, just in terms of our business footprint. We're disproportionately impacted due to our business size and market position in countries that have seen some of the highest levels of devaluation. In Venezuela, Russia, Ukraine, and Japan, we have significant businesses, and we estimate that in those markets, our top and bottom line impacts are more than double our top multinational competitors. Then we're also importing significant amount of product into markets like Venezuela, into markets like Argentina, into markets like Russia, and into Japan.
We are working, as you rightly point out, to further localize our manufacturing supply chain over time, and that should help as we go forward. We're building roughly 20 new manufacturing facilities, all of which are in developing markets, which are the ones that have been most impacted by foreign exchange. As we do that, and even with our existing manufacturing platforms, we're working to localize our suppliers with us. As I mentioned in the example on the ruble, this is both a cost in terms of importing finished product, but also importing materials. The more that we can localize both of those components of the supply chain, the better off we're going to be in terms of being operationally hedged to FX. The issue will never go away in its entirety. Again, I think you mentioned a very good example on blades and razors.
We are not going to have 180 blades and razors manufacturing facilities, we are localizing to a greater extent, even that supply chain, with significant investments we've made, for example, in Mexico. Hopefully this will continue to reduce as we move forward. It is not likely to ever completely disappear.
Your next question comes from the line of Chris Ferrara with Wells Fargo.
Hey, thanks. Jon, I guess obviously, FX drives the need for pricing, I think you said you're going to be more aggressively taking pricing in the back half. I guess the question is, with crude at 45, is there a risk that we get into a situation like 2008, 2009, where you priced more than peers and ended up losing share?
A fair question, that's obviously something we're going to watch very carefully. The good news, if you want to call it that, is in markets where the most significant pricing is needed, the currency impacts far overwhelm the energy cost impacts. Again, going back to our example of Russia, with 78% currency devaluation, we might not be able to recover all of that, certainly, we're going to have to take into account both competitive consumer dynamics, which will reflect the commodity cost environment as well. We'll watch that carefully. That's also why, as I talk about the efforts to offset FX, I always mention as well productivity and cost savings.
There's going to have to be a higher component of that this time around for the reason you cite, as well as for the simple reason that our euro and yen domiciled competitors don't have as much of a headwind as we have. We're going to have to approach this very deliberately, very carefully. Still, I think there's significant opportunity for pricing.
Your next question comes from the line of John Faucher with J.P. Morgan.
Yes. Good morning. Thank you. I want to talk a little bit about the organic revenue growth guidance here. You talked about an improving trend in the second quarter. Can you talk about sort of what you're seeing? Can you give us any sort of clue in terms of what you're seeing in the third? Going back to, I guess looking at this, why not just take it down to low singles, I guess, from that standpoint? Not that I think many people are pricing in mid, but it seems a little overly optimistic. Sort of looking at Chris's question here, what's the outlook as you look at things getting better sequentially in terms of the volume versus pricing breakdown?
Is it all going to be pricing as things get better in the back half of the year, or do you think you can get volumes improving? Thanks.
First of all, low single-digit organic sales growth is, as you know, covered within our guidance range. We're going to have to see, there's both tailwinds and headwinds going forward here. We have seen some pickup in the U.S. market. As I mentioned in our prepared remarks, volume was up two points in developed markets in the quarter. We've seen an increase in the market growth rate in the U.S. If that continues, that's obviously our biggest market and our most profitable market. That could be a real benefit to the top line. We have several businesses where we have admittedly struggled recently, but where we believe the fix is right around the corner. I mentioned in our prepared remarks the Family Care business. That's a big business for us in North America, where we've been losing share.
We've adjusted pricing on that business and are starting to see both volume and sales respond. Hopefully that picks up for us. Another big business that I didn't mention in the prepared remarks is Mexico. If we look at sales in Mexico, we're down almost 20% on the quarter. It constitutes almost a full point of organic sales growth. Were it not for Mexico, we would have rounded to three. The driver there is a combination of three things. There's a consumption tax increase, which was put in place January a year ago. That's annualizing, and the consumption impacts of that are annualizing. We also took pricing to deal with the value in peso, and we changed some of our trade terms to increase pricing transparency in the marketplace. All of that should begin to annualize here very shortly.
If we can continue to make progress, if we can continue the growth that we have on some of our big brands, if we can address a few of the admitted challenges that we have, I mentioned China as another example, there's no reason we couldn't get up into, or let's just say it this way, pick up another point of growth. Then we'll have to see what happens as we price, as Chris mentioned, as you Bradley mentioned, to market sizes in some of these other markets. I would say quite honestly, there's more uncertainty in the top line than there has been in some time just because of all these variables, but there's both positive variables and variables to watch out for.
Your next question comes from the line of Lauren Lieberman with Barclays.
Thanks. Good morning. I guess two things. One was just to clarify that last point, Jon, that when you say pick up another point of growth, that you meant another point in the back half, not another point on the full year from the 2% run rate.
Yes.
Okay, perfect. Okay, good. I didn't want to get cut off. I'm scared of the operator cutting me off if I stop talking. The other thing was just on the promotional environment in the U.S. I feel like Unilever's comments were pretty direct around their sort of quote, savings, be it on commodities or obviously currency benefits being reinvested and passed back to the consumer. I was curious about your view of the promotional environment, particularly in the U.S., and then also specifically looking at beauty. This is anecdotal, but it feels like the year has started off in a very promotional way. I was just curious about, particularly on beauty. That'd be great. Thanks.
Okay. I'm going to start way macro, and I'll get down to micro, including beauty. In general, as you know, promotion is the last place we'd like, in most cases, to spend a dollar. We'd rather spend it on equity or innovation. If you just look at the drivers of our top line growth over time, I think it bears that out. In the quarter we just completed, pricing inclusive of promotion was a one point benefit to the top line. It's been a benefit for 16 consecutive quarters. It's been a benefit for 10 consecutive years. That doesn't mean that we won't have individual product categories that are up and down at any given time, given both the trial needs of innovation we're bringing to the market and the competitive situation. Broadly, that is not our game.
Reflecting just on the U.S. market, to the first point of your question, if we look at the indices for percentage of volume sold on promotion over the last four quarters, the indices sequentially have been 101. This is all business, so it's category business, not just P&G. 101, 103, 101, and 98. Broadly, that's not indicative of an environment that's heavily promotional. Now, again, within individual product categories, of course, there are differences. To be fair, those figures that I just provided you don't include couponing, but they don't include couponing in the base period either, so they're kind of free of that. On P&G Beauty, we did increase promotion a little bit, particularly on hair care behind some of the products I mentioned that are driving share growth on Pantene and Head & Shoulders.
It's very important, particularly on Pantene, given some of the struggle that we went through prior to the last seven months, that we give opportunities to consumers to experience and re-experience and retry our brands. There has been some level of promotional increase, but again, most of our spending is on equity building and innovation and will remain that way.
Your next question comes from the line of Olivia Tong with Bank of America Merrill Lynch.
Hi, good morning. Thanks, Jon. On M&A and the paring down of your portfolio, do the current market dynamics change your thinking in any way around brands or businesses that might be up for divestiture or harvesting, including the timing of said moves? Conversely, as you speak with potential acquirers, I suspect some of them might be overseas. Without going into specifics, have your discussions been impacted in any way as in the opportunities for that?
We view the strategic move we're making on the portfolio as a long-term strategic move, and so the impact of one year in FX, either positive or negative, doesn't dramatically change that. In my conversations with potential buyers, they seem to be. They're looking at longer periods of time. Now, you can imagine that there are specific situations where, let's say you have a large component of a business that happens to be operating in Russia or Ukraine or name a couple markets. That certainly, I wouldn't say, that it affects buyer strategic interest, but it affects obviously the tone of the overall conversation as it should. I view that really as on the margin, on the whole, as the year has evolved and as the currency situation has worsened.
Honestly, I can't think of one conversation that we've been holding with potential buyers that has changed dramatically in terms of its tone as a result of currency. I think we're full steam ahead.
Your next question comes from the line of Dara Mohsenian with Morgan Stanley. Dara, please go ahead. Your line is open.
Sorry, I was on mute there. Jon, you highlighted the recent volume pickup in the U.S., it looks clearly like retail sales growth has accelerated the last couple months in the scanner data, including through mid-January release today. That being said, the two-year averages look relatively stable given easier comps the last couple of months in the scanner data. I just want to get a sense from you on how much of the recent U.S. top-line rebound in your mind is due to a more sustainable U.S. consumer recovery, or is it more easier comps? Second, on pricing, can you give us a bit more granularity on how much of the FX pressure this year you think you can eventually recover through pricing?
Also from a commodity standpoint, given it's expected to turn to a tailwind by Q4, do you expect to get a margin windfall at some point looking out to fiscal 2016, or do you think that will be priced back into the marketplace? Thanks.
Sorry, I'm struggling, Dara, to remember all components of this. I'm going to start from the back and go to the front. On commodities, if oil stayed at current prices, we would expect an annualized benefit of about $600 million before tax. That should start flowing through in the fourth quarter. If you look at the combination of our contractual lags and our inventories, on average they are six to seven weeks. The recent moves should start coming through really by the very end of this quarter, but more fully in the fourth quarter. We'll just have to see what happens in terms of what competitors do relative to pricing. Having the FX issues at the same time, though, directionally moves us in a position of expecting more pricing rather than less. You're right to point it out as something that we need to watch.
Historically, in FX moves like this, not identical to this because this is one of the bigger ones we've ever seen. Historically, we've been able to recover over time about 50% to two-thirds of the impact through pricing, and then we get the balance through productivity savings. My sense is we're going to have to move that balance, and maybe this time we'll get 40% or 50%, we'll see. We're going to have to depend more on productivity savings to get there. The good news is we've got a very strong productivity program that we have visibility on for a couple years going out. That's how I look at pricing in general.
On your question on the U.S. and how much of that is just better comps and how much of it's market, again, I just point to the market growth rates, which are up about half a point in the U.S. At least that portion of it is due to the market. Then I mentioned that we're holding or building share in businesses representing more than 60% of sales. There's an element there of share growth as well. All of that combined with the easier comps driving the data.
Your next question comes from the line of Bill Schmitz with Deutsche Bank.
Hi, good morning, guys.
Good morning, Bill.
Hey, a couple, three questions. The first is there a concrete turnaround plan in China? It seems like it's been two or three years now with share losses in a lot of big categories. I know you guys understand that there's a problem there. I haven't really heard anything sort of concretely what you're going to do to turn it around. On the divestitures, I know you said 35 brands have been sold. Can you tell us what percentage of the 10% of sales you're done with there? The last one, which is more technical, how big magnitude-wise is going to be the Swiss franc impact in the March quarter? Thanks.
Again, I'll start with the last one. There should be about an 80 basis point or excuse me, $80 million after-tax balance sheet revaluation impact from the Swiss franc in the third quarter. We'll have the translation issue as well. As I mentioned, we're short the franc overall. That's just driven by the fact that we have a very large cost base there. Our European and Eastern European, Middle East, Africa headquarters are there. Switzerland's a small country, we have proportionately less volume. That will be an impact from a balance sheet valuation in the third quarter and from a translation standpoint in both the third and the fourth quarters. On China, we've built that business. We've grown about 50% over the last four years. It's now our second largest business of both sales and profit.
There are two things that we're working to improve in China. One, quite frankly, is the amount of price transparency that exists in the marketplace. I think the market, in general, has become, over the last year or so, last two years, a little bit too promotional in nature, which tends to happen when you have major changes in consumption patterns. It's created a degree of opacity in terms of consumers and customers understanding the true value equation that exists, we need to fix that. I think in general, the industry is working to fix that's why you see some of the impacts that you've seen from some of the other manufacturers in terms of their results in China as well. I would say that we're in the fifth inning in terms of getting that squared around.
As I've mentioned in several category discussions previously, there's just a massive opportunity in China as that market premiumizes. If you look at that market by price tier, the premium and super premium price tier, the top 2 price tiers now represent 50% of consumption in the market, across competitors, those tiers are growing at 11%. The balance of the market is flat. In some categories, we haven't followed the consumer as quickly as we needed to up that price ladder. That's part of the issue on Olay. We're not yet where we want to be, for instance, on Pampers, though, as I mentioned, the premium pant product coming to market this month will help significantly. Those are really two of the areas generally that we're focused on dealing with China. Again, there's huge opportunity in that market.
Your next question comes from the line of Stephen Powers from UBS.
Yes. Hi, good morning. Jon, a question on beauty, maybe following up a little bit about your comments there just on Olay. I guess it continues to be a work in progress with organic growth negative, despite successes like Pantene domestically. Can you talk just a little bit more about the key initiatives there, what is likely to change versus stay the same, given David Taylor's new appointment to that segment? Thanks.
I mentioned the progress on Pantene, and the haircare portfolio broadly, which we're very encouraged by. On Olay, we actually did fairly well in the U.S. in the last quarter. I think we were up about 3%. Jon can get that number right for you afterwards, but I think that's pretty close. We're still working in several other parts of the world, as I mentioned, to increase the salience of the brand in terms of both the channels, the price tiers, and the product benefits that consumers are looking for in skincare products. That's work that takes some time. I would say we're still in the early days there. We have people working on that business who have deep experience in skincare, have been associated historically with the better days on Olay, and so we continue to be very hopeful that that will come around.
David frankly brings a new set of eyes, which can only help, and has tremendous brand-building experience across many of our product categories. He's managed in the beauty business before. He managed our haircare business in China when he and I were working in China together in the mid-'90s. That's only good.
Your next question comes from the line of Nik Modi, RBC Capital Markets.
Yeah. Good morning, guys. Most of my questions were asked, but I was curious, Jon, if you can talk about pricing analytics at P&G and over the last couple of years, if you've seen an evolution or increased sophistication, more accuracy. Because if you go back the last couple of years on the pricing, it really led to multi-quarter string of share losses. I'm just curious if you've sharpened some of the analytics on the pricing side. Thanks.
Yeah. First thing I would say, Nik, is the primary metric that we're looking at as we analyze pricing choices both up and down is value creation. That may mean, and I don't want to overstate this, that there may be some situations where it's right to accept some share loss to get the structural economics to an attractive place in our brands. In terms of though knowing if value creation is the primary metric, whether we're delivering that or not on a real-time basis, we have been constantly working to improve our analytical capability. I won't say that we're all the way to where we need to be. I mentioned investment in capabilities, and this is one of the areas, analytics in general, that we're investing in.
Simple things like our sales force being in the field as opposed to being in the office working on brand work will only help in terms of understanding what's happening on a real-time basis. Mentioned, I think in response to John's question, we're going to be depending just as much on productivity as we are pricing to try to deal with this FX issue. That was not the case in the years that John mentioned. We didn't have the productivity program, and certainly didn't have it at the level that we have now, and so we were more dependent on pricing as a way to restore those structural economics. This is obviously something that we have to stay close to, as you rightly point out, and as several others have. It's something we will. We will not get it right every time.
We cannot predict competitive behavior. We can't completely predict consumer behavior. There will be some steps forward and some steps backward, but hopefully the net is forward as it has been historically.
Your next question comes from the line of Javier Escalante with Consumer Edge Research.
Hi, good morning, everyone. My question is on beauty and particularly on prestige. It seems like it led the decline of the GBU this quarter. More broadly, when you talk about the portfolio, you basically said structurally attractive categories that play to Procter's strength. I wonder whether you would say that channels so specific as prestige beauty and professional haircare, do you think that plays to Procter's strengths or not? Thank you.
Thanks, Javier. A large part of the trend in prestige is driven by a very strong base period where we had a very strong innovation program. That's primarily what's going on there. I think your question on fit with P&G's core capabilities and strengths is a good question and an appropriate question. I'll just provide a quick refresher on those capabilities and strengths because they do provide, along with structural attractiveness and track record, the screens through which we look at our portfolio strategy. Those core strengths are branding, innovation, consumer understanding, go-to-market, and benefiting where appropriate from our scale. I've given the example before in our pharmaceuticals business, where if you go across those capabilities, consumer understanding, not terribly relevant. Brand building, advertising, only legally permissible in three countries in the world. Innovation, challenged, just because of the model in the industry.
Go-to-market, grocery stores, mass merchants, doctors. That's a clear example of a business that doesn't benefit from our core capabilities. Our job in that case becomes to find somebody who does have those capabilities, who can create more value that we can create, and then monetize some of that value for our shareholders. We have gotten out of businesses because of channel fit in the past. I would argue that the pet care choice was in part related to that. There was a specialty pet channel. There was an influencer channel with both breeders and veterinarians that we did not have broader company expertise in. Those are the kinds of things that we will be looking at as we finalize portfolio choices.
Your next question comes from the line of Michael Webber with Credit Suisse.
Good morning, John. My question relates to how you expect mix to impact earnings going forward in the second half in particular. It was obviously a tailwind on the top-line growth this quarter, but a drag on gross margins. I wonder why that is and how you expect that to drive earnings going forward.
Basically, in a scenario where we have relatively similar growth rates between developed and developing markets, and where we have relatively similar growth rates across our product segments, so in other words, beauty grows faster than it did over the last quarter, the mix impact is not significant. In quarters where one of those two things aren't true, so where developing markets grow disproportionately, or where our higher margin businesses like beauty don't grow as fast as the rest of the portfolio, we'll have a mix impact on the bottom line. It really comes down to your estimation of those two drivers going forward as to what the mix impact is going to be.
Your next question comes from the line of Connie Maneaty with BMO Capital.
Good morning. I do have a question on Venezuela. I appreciated your commentary about all the components of an FX impact. In that context, I'm wondering why you're still reporting your results at the official rate, given where the SICAD II is and where the parallel rate is. Can you quantify for us the move of your Venezuela results from SICAD I to SICAD II?
We provide all of our exposures in our disclosures because we know this is an important item for investors. You can get there. I haven't actually done the math, but you can. The reason that we continue to translate our results at a combination of SICAD I 11 to 12, and then the 6.3 official rate, is simply because those are the rates at which we're transacting business in Venezuela. We're getting $ at those rates for imports of both finished product and raw materials. We're told that dividends and royalties would be paid, for example, at the SICAD I rate. Right now, as I think you may be aware, the government of Venezuela is working through, as I understand it, modifications to the exchange regime. I don't have transparency or visibility into that.
Obviously, we'll look at that and understand really what's the rate at which we're going to be transacting business, and that's the rate that we should be translating our results at. Importantly, I'm in no way suggesting that others who have come to two different outcomes are doing anything that's wrong or incorrect. For them, it should reflect what rates they're transacting business at.
Your next question comes from the line of Joseph Altobello with Raymond James.
Thanks. Good morning. Just two quick ones, I guess. First, how much of the pricing you've taken so far or announced to the trade has been matched by competitors? Here, I'm specifically talking about the developed world, not developing. Secondly, was there anything unusual in the month of December organic growth of 5%? Because previous to that, I guess if you look at October, November, it looks like you were flat to modestly down going into that month. I would imagine there's probably some pre-buying or pull forward ahead of some price increases. Thanks.
Joe, broadly, without going into detail, because we can't do that, our pricing is going to be centered on the developing markets. There's not a lot of developed market pricing that is planned. As a result, and because of the timing of certain moves, it's still early days in terms of understanding both what the competitive and what the consumer dynamic's going to be. Maybe we'll have an update for you at CAGNY, but even that'll probably be too soon. We're in the early days there. Again, the main point is most of this will be focused on developing markets, not on developed markets.
Your next question comes from the line of Bill Chappell with SunTrust.
Thanks. Good morning. Just actually follow up on Bill Schmitz's question, which I'm not sure I got the answer to, percentage of sales that the 35 brands that you've divested or consolidated represents of that total 10%, and whether that 10% number has actually changed as you've started to look at the portfolio a little bit closer. Then also, with regards, I didn't really understand what you were saying in terms of the timing of the shares coming back in a little bit later from the Duracell divestiture. Maybe can you help me understand that, too?
Yeah. All helpful, and thanks for reminding me of the other part of Bill's question. You know what the Duracell sales are, you know what the pet sales are. They've all been moved to discontinued operations, and we've given you the amounts as those moves have been made. Those are the two largest, and then there's a bunch of smaller things. I think you can get pretty close to an estimate, with a little bit of thumb in the air, on where we're at. The number is not a static number. It does change. We have said very clearly that we intend to create value as we exit businesses. It doesn't make any sense to exit a business if we can't create value in the process.
By definition, we haven't made definitive choices on what goes and what stays, as we're still working to negotiate terms and see if we can, in fact, create sufficient value in some instances. That's not a static figure. That was a figure that was designed to get us close.
Shares.
Oh, shares. Thank you. As I've read several of your updates from the sell side, we obviously haven't given you a lot of direction other than saying sometime in the second half we'll close the transaction with Berkshire Hathaway on Duracell and retire those shares. I've seen a number of the estimates, understandably, picking different time points, one of them being July 1st. My only point is, while we're making good progress, I don't expect that this will be complete by July 1st. I do expect it'll be completed in the second half of the calendar year. I think July 1st is aggressive as you model the retiring of those shares.
Your next question comes from the line of Ali Dibadj with Sanford C. Bernstein.
Hey, guys. Believe it or not, I still have a question around FX. Look, I get that you're guiding everything organically effectively the same, and you're attributing the guide down to FX alone. I guess, why is that good enough? Why aren't we seeing things like some of your peers are doing that's more aggressive internally to offset some of those impacts? We've talked a little bit about pricing, but productivity doesn't seem like it's ramping up, at least doesn't look like it yet. You certainly looks like you're investing in some areas in SG&A. I'm certainly mindful of the word that you used earlier, balanced. What are you doing internally to pull in the belt a little bit more given the headwinds from currencies that you're facing?
Good question. We can look at constant currency earnings growth that we're forecasting for the year and guiding to, it's double-digit. That's not an insignificant number. I get asked just as frequently, and I think appropriately, if that isn't too much as I do if that isn't too little. It all comes back to this balance point. If you look at our competitors, I mentioned, I think in response to Wendy's question, whether we like it or not, our impacts from FX are more significant than some of our competitors, simply because of our footprint. Obviously we have others that are, as you know, either euro or yen domiciled or have largely U.S. focus of their footprint. Even with that double-digit constant currency earnings per share growth, we end up at or slightly below a year ago.
We will execute any smart cost savings program. I mentioned the fact that we're going to be close to the top end of our range on overhead reduction by the end of this year. That's more than a year ahead of pace, and again, it's at the top of a six-point range. We're continuing to move pretty aggressively. As you rightly point out and as we've tried to communicate, we need to do that in a balanced way. We just have so many things that present opportunity, both in the way that we operate in our long-term cost structure, in delighting consumers with some of our brands, products, and technologies, that it would be the wrong answer to pull back from those. We'll continue to be balanced. We will continue to be diligent and aggressive in terms of the identification of savings opportunities.
Another one, for example, that we've talked about, granted it doesn't happen all this year, but getting those 6 mixing centers set up and operational by the end of February. That was acceleration of a project that we did specifically to help deal with the current reality. We'll look for more opportunities like that.
Your final question comes from the line of Jon Andersen with William Blair.
Thanks for taking the question. John, I think you mentioned earlier that volume actually declined in developing markets in the quarter, and I'm wondering if you could just talk a little bit about that. Is that a reflection of further slowing in consumption in developing markets? Or do you attribute it to this FX-related pricing that you discussed and what your expectations are there going forward?
Thanks, John. Quarter-to-quarter, there was no significant change in developing market growth from a market standpoint. The one exception to that, which is very difficult to sort out, is Russia, which when you look at it, actually, the growth rate increased. I think that's in large part purchase ahead of pricing that people know are coming. I would say the market is not a big driver of the small volume reduction we had in developing markets. One driver is one that you rightly point out, which is foreign exchange. Where we haven't priced yet on some of the most recent moves, like the big ruble moves, we have been pricing in places like Ukraine, Mexico, Argentina, Brazil, Venezuela, obviously, when that was legally allowed. That is having some impact.
Typically, we see that having an impact in most cases for about a 12-month period. In more significant cases like Russia, maybe a longer period of time. The other impact is what I indicated, which is some issues we've had in both Mexico, sales were down 20%. I'm not sure what the volume was, but it was significant. In China, where we've been kind of flattish. Those are two situations where we're working to improve. Really, markets, with the exception of the unknown in Russia, pretty much holding quarter-to-quarter.
Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.