P&G Posts Strong Q1 Earnings With 20% Profit Surge Driven by Price Hikes and Tariff Mitigation

Procter & Gamble (P&G), the US consumer goods giant, commenced its fiscal year with robust performance in the first quarter, spanning July to September. The company reported an attributable net profit of $4,750 million (approximately €4,093 million), marking a significant 20% increase compared to the same period in the previous year. This positive financial start comes as the owner of iconic brands such as Gillette and Pantene has successfully halved the previously anticipated adverse impact of tariffs, indicating effective mitigation strategies.

During the quarter, P&G's net sales reached $22.386 billion (approximately €19.29 billion), representing a 3% year-on-year increase on a reported basis. Organic growth, which meticulously excludes the fluctuating effects of foreign exchange and the impacts of acquisitions and divestitures, stood at a solid 2%. This organic growth was notably supported by a 1% increase in prices across its product portfolio. Delving into divisional performance, the Beauty segment was a strong contributor, generating sales of $4,143 million (€3,570 million), a 6% increase year-on-year. The Grooming segment also saw healthy growth, with sales reaching $1,817 million (€1,566 million), up 5%.

Further strengthening its market position, P&G's Health Care division posted sales of $3,220 million (€2,775 million), an increase of 2%. The Home Care division, its largest segment, grew by 1% to $7,793 million (€6,715 million). The Baby, Feminine, and Family Care segment also recorded a 1% year-on-year increase in sales, reaching $5,171 million (€4,456 million). Jon Moeller, P&G's chairman and CEO, affirmed the company's trajectory, stating, "These results keep us on track to meet our forecast ranges on all key financial metrics for the fiscal year, in a challenging geopolitical and consumer environment."

Looking ahead to the current fiscal year as a whole, the multinational remains confident in achieving total sales growth within the range of 1% to 5%. This projection includes an anticipated tailwind from foreign exchange, acquisitions, and divestitures, which is expected to add approximately one percentage point to the total sales growth. The company has also maintained its outlook for organic sales growth, forecasting it to be in the range of 3% to 9%. Furthermore, P&G has reiterated its forecast for growth in diluted net earnings per share in fiscal year 2026, expecting an increase of 3% to 9%, building on the diluted net earnings per share of $6.51 reported in fiscal year 2025.

In a detailed update on expected financial impacts for fiscal year 2026, P&G now anticipates a headwind linked to raw material costs of approximately $100 million (€86 million) after tax. The company also projects an increase in tariff costs of approximately $400 million (€345 million), which is notably half of what was initially anticipated in July. Additionally, a net negative impact of approximately $250 million (€215 million) after tax is expected due to net interest expense. Conversely, P&G continues to foresee favorable exchange rates resulting in a positive after-tax impact of approximately $300 million (€259 million), helping to balance these financial headwinds.