Photo by Yorgos Ntrahas on Unsplash
 

Procter & Gamble (NYSE: PG) announced its fiscal year 2026 second-quarter results, revealing a mixed performance against market expectations. While the company reported an earnings per share (EPS) beat, it did not meet revenue expectations. The company remains optimistic about its fiscal year guidance, maintaining its projections for sales and core EPS growth.
 

P&G Posts Q2 Profit Beat as Sales Growth Stays Modest

Procter & Gamble (PG) reported second-quarter fiscal year 2026 net sales of $22.2 billion, marking a 1% increase compared to the previous year. However, this figure fell slightly short of the market’s expectations, which were set at $22.34 billion. Despite this, the company’s core earnings per share (EPS) came in at $1.88, slightly above the anticipated $1.86, showcasing a modest triumph in terms of profitability.

Although the overall net sales saw a modest increase, the organic sales remained unchanged. This stagnation was attributed to a balance between a 1% rise in pricing and an equivalent decline in unit volume. The company’s performance in various segments was varied, with the Beauty segment experiencing a 4% organic sales growth, driven by innovation and pricing strategies in key markets. However, the Baby, Feminine & Family Care segment saw a 4% decline in organic sales, primarily due to volume decreases.

In terms of profitability, the diluted net earnings per share decreased by 5% to $1.78, primarily due to incremental restructuring charges. Despite this, the core EPS remained stable year-over-year, indicating that the company’s underlying earnings capacity was not significantly impacted by these charges. The operating cash flow for the quarter stood at $5.0 billion, with net earnings reported at $4.3 billion, reflecting a 7% decrease from the previous year.
 

Full-Year Outlook Stays Intact as P&G Navigates Pricing and Costs

Looking ahead, Procter & Gamble has maintained its guidance range for fiscal year 2026, projecting all-in sales growth between 1% and 5% compared to the previous year. The company anticipates that foreign exchange rates and acquisitions will provide a slight boost of approximately 1% to this growth. Additionally, the outlook for organic sales growth remains steady, ranging from flat to a 4% increase year-over-year.

Despite the challenges posed by restructuring charges, P&G adjusted its outlook for fiscal 2026 diluted net earnings per share growth to a range of 1% to 6%, down from the previous guidance of 3% to 9%. This adjustment reflects the impact of higher non-core restructuring charges. However, the company continues to expect core EPS growth to fall within the range of flat to a 4% increase, aligning with its strategic objectives for long-term growth and value creation.

Procter & Gamble also provided insights into its expectations for commodity costs, foreign exchange impacts, and tariff-related expenses. The company now projects that commodity costs will be neutral for the year, while foreign exchange is expected to contribute positively, with a forecasted benefit of approximately $200 million after tax. Conversely, higher costs from tariffs are estimated at around $400 million after tax for fiscal 2026. These factors collectively result in a projected headwind of $0.19 per share for the fiscal year.

Overall, Procter & Gamble remains committed to its integrated growth strategy, focusing on delivering balanced top- and bottom-line growth despite the ongoing challenges in the consumer and geopolitical landscape. The company continues to prioritize innovation, productivity improvements, and cost savings to navigate the evolving market conditions and achieve its fiscal year targets.

More By This Author: