Procter & Gamble Reports Flat Organic Sales Amid Rising Costs

Procter & Gamble Company (NYSE:PG) shares are trading lower after the company reported mixed fourth-quarter results and issued FY27 guidance below estimates.

Details

Adjusted earnings per share of $1.43, beating the analyst consensus estimate of $1.41. Sales rose 2% year over year (Y/Y) to $21.203 billion, which came below the consensus estimate of $21.379 billion.

Sales benefited from favorable foreign exchange, while volume, pricing and mix had a neutral impact. Organic sales remained flat Y/Y in the quarter.

Core gross margin remained flat Y/Y as gain of 160 basis points of productivity savings, 40 basis points of net tariff benefits, 20 basis points from other items, and 10 basis points from pricing were offset by 120 basis points of unfavorable product mix, 70 basis points of product and packaging reinvestments, and 40 basis points of higher commodity costs.

Excluding 90 basis points of restructuring charges, core operating margin decreased 130 basis points, despite benefiting from 460 basis points of gross productivity savings.

The company also announced that President and CEO Shailesh Jejurikar will assume the additional role of Board Chairman effective Aug. 1, succeeding Jon Moeller.

Segment Details

• Beauty delivered 4% Y/Y organic sales growth in the quarter, with Hair Care organic sales increasing in the mid-single digits, supported by volume growth in Asia Pacific and Europe, innovation-led pricing in Latin America and Asia Pacific, and a favorable geographic mix. Personal Care organic sales also rose by the mid-single digits, driven by volume growth across all regions and higher pricing, mainly in North America.

• Grooming segment organic sales remained flat Y/Y, as innovation-driven pricing was offset by lower volumes, primarily in IMEA, and an unfavorable product mix.

• Health Care organic sales declined 1% Y/Y. Oral Care sales fell by the mid-single digits due to weaker volumes, mainly in North America and Greater China, while Personal Health Care sales increased by the mid-single digits, supported by higher pricing and volume growth, primarily in North America.

• Fabric and Home Care organic sales were flat year over year. Fabric Care organic sales increased in the low single digits, driven by volume growth in Europe and a favorable product mix. Home Care organic sales declined in the low single digits due to lower volumes.

• Baby, Feminine and Family Care organic sales decreased 2% from the prior year. Baby Care sales rose by the low-single digits, supported by volume growth in Greater China and a favorable product mix. Feminine Care sales declined in the low single digits due to weaker volumes in Europe, while Family Care sales fell in the mid single digits due to lower volumes, merchandising investments, and an unfavorable product mix.

Outlook

For FY27, the company expects adjusted EPS of $6.89-$7.11, compared with the analyst estimate of $7.04. Procter & Gamble also forecasts FY27 sales of $85.127 billion-$86.813 billion, below the consensus estimate of $89.412 billion.

P&G expects fiscal 2027 reported and organic sales growth of 1%-3% year over year. Organic sales guidance includes a 30-50 basis point headwind from brand, product, and go-to-market discontinuations.

The company expects fiscal 2027 earnings to be adversely affected by an after-tax headwind of approximately $1 billion from higher raw material, energy, and transportation costs, plus $150 million from higher net interest expense, $150 million from lower non-operating income, and $50 million from unfavorable foreign exchange. Together, these factors represent a 56-cent-per-share headwind, reducing core EPS growth by about 8%.

P&G expects adjusted free cash flow productivity of 85%-90% and plans to return significant capital to shareholders through approximately $10 billion in dividends and about $5 billion in share repurchases during fiscal 2027.

Separately, under the portfolio and productivity plan announced in June 2025, P&G expects to incur $1.0-$1.6 billion of pre-tax non-core restructuring costs over two years. More than half of these costs were recognized in fiscal 2026, with the remaining charges expected in fiscal 2027.

PG Stock Price Activity: Procter & Gamble shares were down at 2.58% at $144.92 at last check on Wednesday.

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