Procter & Gamble first-quarter net sales rise 4% to $23.3 billion

Procter & Gamble Co. (PG) said Thursday in an earnings release attached to a filing with the Securities and Exchange Commission that net sales for the quarter ended Sept. 30 rose 4% from a year earlier to $23.3 billion.

Diluted earnings per share were $1.97, up 1%, and core earnings per share were $2.00, also up 1%, the filing showed.

Organic sales, which exclude foreign exchange and acquisitions and divestitures, also rose 4%.

Here's how the company did:

• Net sales: $23.3 billion vs. $22.4 billion a year earlier
• Diluted EPS: $1.97 vs. $1.95 a year earlier
• Core EPS: $2.00 vs. $1.99 a year earlier
• Operating cash flow: $5.8 billion
• Net earnings: $4.8 billion, down 1% from a year earlier

Volume rose 2% and favorable mix added 1%, the company said. Pricing had a minor positive impact on sales.

Reported gross margin fell 160 basis points to 49.8% from 51.4%. Core gross margin, which excludes incremental restructuring charges, fell 150 basis points to 50.0% from 51.5%.

Higher commodity costs cut 140 basis points from gross margin, and product reinvestments cut another 140 basis points, according to the filing.

Gross productivity savings added 120 basis points, and tariff impact from lower costs and recognized recoveries added 50 basis points.

Reported selling, general and administrative expense fell to 24.3% of net sales from 25.2%, a decline of 90 basis points.

Reported operating income rose 1%, and reported operating margin fell 70 basis points to 25.5% from 26.2%.

Core operating margin fell 80 basis points. Core results exclude $98 million of incremental restructuring charges taken in the quarter.

The effective tax rate was 21.0%, compared with 20.8% a year earlier.

Segment results

Beauty net sales rose 6% to $4.4 billion, and organic sales rose 5.4%.

Grooming net sales rose 4% to $1.9 billion, and organic sales rose 4.5%.

Health Care net sales rose 3% to $3.3 billion, and organic sales rose 2.7%.

Fabric & Home Care net sales rose 4% to $8.2 billion, and organic sales rose 4.8%.

Baby, Feminine & Family Care net sales rose 3% to $5.3 billion, and organic sales rose 3.0%.

Chairman of the Board, President and Chief Executive Officer Shailesh Jejurikar said, “Our solid sales, earnings and cash results in the first quarter reflect sharpened execution of our integrated strategy.” He added that “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 for organic sales growth, core EPS growth and free cash flow productivity for the fiscal year.”

Jejurikar also said, “We remain committed to our strategy to delight consumers with superior products at a superior value by putting the consumer first in everything we do. We are confident in the near term and excited about the future.”

Fiscal 2027 guidance

The company updated its all-in net sales growth guidance to a range of 2% to 4% versus the prior year, reflecting the acquisition of Thorne as of Oct. 1. The filing did not give the previous all-in sales range.

The company maintained its organic sales growth guidance of 1% to 3%. That outlook includes a headwind of 30 to 50 basis points from brand, product form and go-to-market discontinuations.

The company maintained diluted EPS growth guidance of 1% to 5% from fiscal 2026 diluted EPS of $6.62. It also maintained core EPS growth guidance of in-line to 3% from fiscal 2026 core EPS of $6.89.

The company said that outlook equates to a range of $6.89 to $7.11 per share, with a mid-point estimate of $7.00, or an increase of approximately one and a half percent.

The company now expects a commodity cost headwind of approximately $1.4 billion after tax, driven by higher raw materials, energy and transportation costs. It also expects $300 million after tax from higher net interest expense, $150 million after tax from lower non-operating income and $50 million after tax from unfavorable foreign exchange rates.

Combined, those impacts equal a headwind of $0.79 per share for fiscal 2027, or an 11% drag on core EPS growth, the filing said.

The company now expects a core effective tax rate of 20% to 21% in fiscal 2027. Capital spending is estimated at 4.5% to 5.5% of fiscal 2027 net sales.

The company continues to expect free cash flow productivity of 85% to 90%, more than $10 billion in dividends and about $5 billion in share repurchases in fiscal 2027.

Restructuring costs

Under a portfolio and productivity plan announced in June 2025, the company expects about $2 billion in pre-tax restructuring costs over two years.

The company has incurred more than half of those costs in fiscal 2026, with the remainder expected in fiscal 2027.