Procter & Gamble Co Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
The Procter & Gamble Co. Q1 2026 earnings call covered key financial results, business segment performance, capital allocation strategies, industry trends, the competitive landscape, macroeconomic factors, growth opportunities, and financial guidance for fiscal year 2026.
Key Financial Results
Organic sales rounded up to 2%.
Volume was in line with prior year, pricing and mix were each up 1%.
Core earnings per share were $1.99, up 3% versus prior year.
On a currency neutral basis, core EPS also increased 3%.
Core gross margin was down 50 basis points and core operating margin was equal to prior year.
Currency-neutral core operating margin was up 40 basis points.
Adjusted free cash flow productivity was 102%.
Business Segment Results
Skin & Personal Care led the growth, up high-single digits.
Hair Care, Grooming, Personal Health Care, Home Care, and Baby Care each grew low-singles.
Oral Care and Feminine Care were in line with prior year.
Fabric Care and Family Care were each down low-single digits.
Latin America organic sales were up 7%.
Greater China organic sales grew 5%, with Pampers and SK-II each growing double-digits.
Capital Allocation
Returned $3.8 billion of cash to shareowners this quarter.
$2.55 billion in dividends.
$1.25 billion in share repurchases.
Expect to pay around $10 billion in dividends and to repurchase approximately $5 billion in common stock in fiscal year 2026.
Industry Trends and Dynamics
Global market growth for P&G's portfolio footprint is around 2% on a value basis.
Consumption in categories decelerated throughout the quarter, with unit volumes essentially flat for both markets and P&G brands.
Consumers continue to move into larger pack sizes and shop in mass, club, and online channels.
Competitive Landscape
Heightened competitive activity in the US and Europe.
Increased promotional activity in Fabric Care and Baby Care.
24 of the top 50 category/country combinations held or grew share for the quarter.
Global aggregate market share was down 30 basis points.
Macroeconomic Environment
Difficult, geopolitical, competitive, and consumer environment.
Fiscal 2026 outlook includes approximately $500 million before tax in higher costs from tariffs.
Commodity cost headwind of approximately $100 million after tax and a foreign exchange tailwind of approximately $300 million after tax.
Growth Opportunities and Strategies
Drive superiority in every part of the portfolio across all value tiers, all retail channels and all consumer segments.
Strengthen the integration of all vectors of superiority, starting with a very strong innovation program this year.
Accelerate productivity in all areas of operation, including the recently announced restructuring work.
Actively manage portfolio across markets and brands.
Constructively disrupt themselves and the industry by changing, adapting, and creating new ideas, technologies, and capabilities.
Focus on driving more users into the category, increasing usage, and driving value per use.
Financial Guidance and Outlook
Maintaining all guidance ranges for the fiscal year.
Organic sales growth of in line to plus 4%.
Includes a 30 basis points to 50 basis points headwind from product and market exits that are part of restructuring work.
Core EPS growth in line to plus 4%, which equates to a range of $6.83 to $7.09 per share.
Forecasting adjusted free cash flow productivity in the range of 85% to 90% for the year.
