Price increases drive Procter & Gamble's Q4 performance to exceed expectations, with a projected $1 billion tariff impact in the next fiscal year | Earnings Report Insights

Consumer giant Procter & Gamble's Q4 fiscal year 2025 performance exceeded expectations, but tariffs will have a significant impact on profits for the next fiscal year, with an estimated additional cost of $1 billion in fiscal year 2026 due to tariffs and other factors. On Tuesday before the U.S. stock market opened, Procter & Gamble released its fourth-quarter results, reporting a 2% increase in net sales to $20.89 billion, surpassing market expectations, with earnings per share of $1.48, also exceeding the market expectation of $1.42. This performance was driven by price increases, with the company stating that sales growth was primarily due to price hikes and product mix optimization, with the personal care segment seeing a 4% price increase, and sales growth "driven by innovation-based pricing." At the same time, Procter & Gamble emphasized the impact of tariffs in its earnings guidance, expecting tariffs to cause approximately $1 billion in cost impact in fiscal year 2026, with an after-tax impact of about $800 million, a figure that exceeds 1% of Procter & Gamble's net sales of $84.3 billion for the fiscal year ending in June. Q4 Performance Exceeds Expectations, Price Increases Drive Sales Growth The company's reported net sales increased by 2% to $20.89 billion, exceeding the expected $20.8 billion, with organic sales growth also up 2% after excluding the effects of foreign exchange, acquisitions, and asset divestitures. Net profit was $3.62 billion, with earnings per share of $1.48, higher than $3.14 billion or $1.27 per share in the same period last year, also surpassing market expectations. Procter & Gamble emphasized that its personal care product prices increased by 4%, with sales in that segment "driven by innovation-based pricing strategies." Tariffs May Cause $1 Billion Impact Procter & Gamble expects tariffs to cause approximately $1 billion in cost impact in fiscal year 2026, with an after-tax impact of about $800 million. This figure exceeds 1% of Procter & Gamble's net sales of $84.3 billion for the fiscal year ending in June. The company's Chief Financial Officer Andre Schulten previously stated in April that tariffs would impact Procter & Gamble's growth by $1 billion to $1.5 billion annually. Trump's tariffs have increased the costs of imported goods and raw materials for Procter & Gamble. In addition to price increases, Procter & Gamble executives are also working to address rising costs by improving company productivity, shifting sourcing, and reformulating products. Procter & Gamble has also raised prices on products that contain ingredients that cannot be sourced locally. The company is working to improve its products that are currently seeing price increases, with CEO Jon Moeller stating: Consumers are under pressure, and it is crucial for us to provide higher value. This quarter, American consumers are noticeably more discerning; they are purchasing larger packages, seeking more promotions, and in some cases, reducing spending. In pre-market trading, Procter & Gamble's stock price rose nearly 1%, while the company has fallen about 6% year-to-date. JP Morgan and Evercore both downgraded Procter & Gamble's rating earlier this month, with the former predicting weak organic sales and the latter pointing out concerns about the company's loss of market share on the Amazon platform amid the trend of online retail migration.