Procter & Gamble (PG) Tops Fiscal Q1 Estimates as Volumes Grow 2%
P&G earned $2.00 a share on a core basis, above the $1.88 analysts expected, on sales of $23.3 billion, up 4%. It kept its full-year outlook despite a $1.4 billion commodity-cost headwind.
Procter & Gamble (PG), the maker of Tide and Crest, reported net sales of $23.3 billion for the July to September quarter, the first of its 2027 fiscal year, up 4% year on year and above analysts’ estimates of about $22.8 billion. Core earnings per share, which exclude restructuring charges, rose 1% to $2.00, beating the $1.88 analysts polled by FactSet expected. The shares closed at $156.84 on Wednesday; regular trading opens at 9:30 a.m. ET.
What stood out
P&G grew by selling more, not just by charging more. Organic sales, which strip out currency moves and acquisitions, rose 4%, driven by a 2% increase in volume and 1% from a richer product mix, while pricing had only a minor effect, the company said in its results release. All five segments grew: Beauty, Grooming and Fabric & Home Care each rose 5% on an organic basis, and Health Care and Baby, Feminine & Family Care each rose 3%.
Volume did the work in laundry and home cleaning. Fabric Care organic sales rose by a mid-single-digit percentage on volume gains in North America and Europe, and Home Care did the same. Baby Care also grew on higher unit volume in Greater China and North America.
The cost was margin. Core gross margin fell 1.5 percentage points, as 1.4 points of higher commodity costs and 1.4 points of product reinvestment were only partly offset by 1.2 points of productivity savings and smaller gains from tariffs and pricing, the release said. P&G returned $3.9 billion to shareholders, $2.6 billion in dividends and $1.3 billion in buybacks.
The outlook
P&G kept its fiscal 2027 forecast for organic sales growth of 1% to 3% and core EPS of $6.89 to $7.11, or growth of flat to 3%. It raised its all-in sales growth forecast to 2% to 4% to include Thorne, which it acquired on 1 October.
It now puts the commodity cost headwind at about $1.4 billion after tax for the year, from higher raw materials, energy and transportation costs. Adding interest, lower non-operating income and currency, the hit comes to $0.79 a share, an 11% drag on core EPS growth.
“While we expect there will continue to be geopolitical and economic challenges, this strong start keeps us on track to deliver within our guidance ranges,” said Chief Executive Shailesh Jejurikar.
Our take
Volume growth of 2% with oil near $100 a barrel is the good news, because it means shoppers are buying more P&G products, not just paying more for them. The bad news is the margin: by P&G’s estimate, commodity costs, higher interest expense and currency add up to an 11% drag on this year’s core EPS growth. Next quarter, watch whether volumes hold up as those costs flow through.
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Mostly Markets is for information and education only and isn't investment advice. Claire Okafor is a pen name. Prices are from Nasdaq and CNBC as of the time stated.
