P&G lifts sales outlook after Q1 beat

Procter & Gamble posted stronger-than-expected fiscal first-quarter results and raised its full-year sales growth outlook. For the quarter ended Sept. 30, core earnings per share were $2, ahead of the $1.89 analyst estimate and slightly above $1.99 a year earlier. Net sales rose 4% to about $23.28 billion, exceeding forecasts of roughly $22.82 billion. The company now projects fiscal 2027 all-in sales growth in a range of 2% to 4% compared with the prior year, up from a previous outlook of 1% to 3%, reflecting the acquisition of supplements brand Thorne that closed on Oct. 1.

Shares traded more than 2% higher in premarket activity after the earnings and revenue beat. Management reiterated guidance for fiscal 2027 core earnings per share in a range of $6.89 to $7.11, even as it flagged several cost and macro headwinds. The company also indicated that this quarter’s performance keeps it on track to deliver within its guidance ranges.

P&G’s 4% rise in net sales to about $23.28 billion was supported by a 4% increase in organic sales. Organic growth came from a 2% gain in volume and a 1% contribution from favorable product mix, while pricing added a minor positive effect. The fabric and home care division, which includes brands such as Tide and Febreze, was a top performer, with segment volume up 4.3% in the quarter. The baby, feminine and family care segment and the beauty business each reported volume growth of more than 2%.

Overall company volume rose 2.4%, marking a stronger start to the fiscal year after a period in which value-conscious consumers had weighed on demand. In contrast to other units, the grooming division, which includes Gillette and Venus razors, saw volume decline by 0.4%. Net income attributable to the company was $4.73 billion, or $1.97 per share, compared with $4.75 billion, or $1.95 per share, a year earlier, while diluted EPS of $1.97 was up 1%.

Despite the revenue and earnings beat, profitability narrowed in the quarter. Gross margin decreased to 49.8% from 51.4% a year earlier, reflecting higher commodity costs and product reinvestments, partly offset by productivity savings. Operating margin slipped to 25.5% from 26.2%. Net earnings were $4.76 billion, slightly below $4.78 billion in the prior-year period.

For fiscal 2027, P&G forecast core EPS of $6.89 to $7.11, below the $7.39 analysts expect, and identified several headwinds totaling an estimated $0.79 per share. The company expects about $1.4 billion after tax in higher commodity, energy and transportation costs. It also anticipates $300 million after tax from higher net interest expense, $150 million from lower non-operating income and $50 million from unfavorable currency movements.

In conjunction with the updated outlook, P&G raised its all-in sales growth forecast for fiscal 2027 to 2% to 4%, incorporating the impact of the Thorne acquisition as of Oct. 1. Guidance for organic sales growth was maintained at 1% to 3%. Core EPS in the quarter was unchanged on a currency-neutral basis, underscoring the role of foreign exchange in reported results.

The company continued significant capital returns to shareholders. During the quarter, P&G returned $3.9 billion, including $2.6 billion in dividends and $1.3 billion in share repurchases. For fiscal 2027, it expects to pay more than $10 billion in dividends and to repurchase about $5 billion of its stock, signaling an ongoing commitment to shareholder distributions alongside its growth investments.