Strong Profit Amid Tariff Pressures and Shifting Consumer Trends
Procter & Gamble delivered first-quarter results that exceeded Wall Street expectations, reporting higher earnings and revenue driven by strength in its beauty and grooming segments. The company navigated headwinds including persistent tariffs and a cautious consumer climate, yet maintained its fiscal outlook.
Financial Highlights Point to Resilience
For the quarter ending September 30, P&G posted $1.99 in adjusted earnings per share, outperforming analyst projections of $1.90. Net revenue reached $22.39 billion, topping the $22.18 billion estimate. On a year-over-year basis, net income rose to $4.75 billion from $3.96 billion. Organic sales, which exclude external factors, grew 2%, though overall volume remained flat.
Despite the topline growth, unchanged volume indicates tempered consumer demand, particularly among price-sensitive shoppers. CFO Andre Schulten noted that while consumers are more selective, behavior remains stable, with higher-income groups buying in bulk and value-focused consumers stretching usage.
Beauty and Grooming Lead the Way
The standout performer this quarter was the beauty division, led by Olay and SK-II. Volume rose 4% and sales climbed 6%, signaling consumer willingness to pay for premium skincare. Grooming also showed strength, with 1% volume growth and 5% in sales, as brands like Gillette and Venus regained momentum.
Conversely, other segments struggled. Health care and fabric & home care both saw a 2% drop in volume, facing intensified competition and aggressive discounting. P&G aims to combat this with innovation and product upgrades — such as a major refresh to Tide liquid detergent, billed as its most significant in two decades.
Tariff Costs Decline, but Trade Tensions Loom
Projected after-tax tariff costs for fiscal 2026 have been revised down to $400 million from the previous $800 million, primarily due to canceled retaliatory tariffs from Canada. This revision allows the company to moderate planned price hikes. Still, renewed trade tensions with Canada — spurred by a dispute over a TV ad — could reverse this trend.
Looking ahead, P&G reaffirmed its full-year guidance of 1% to 5% sales growth and earnings per share between $6.83 and $7.09. Despite volume stagnation, the company’s diversified portfolio and focus on premium categories appear to be anchoring performance in a mixed macroeconomic environment.
