Fiscal Year 2027 First Quarter
Filed Oct 22, 2026Net Sales +4.0%; Organic Sales +4.0%; Diluted EPS $1.97, +1%; Core EPS $2.00, +1%
Net sales and organic sales each increased 4.0%, with all five operating segments posting net sales growth, while diluted EPS and Core EPS each increased 1% amid gross-margin pressure and higher operating costs.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three months ended September 30, 2026GAAP | $23.28B | – | 4% |
| Organic sales, July - September 2026non-GAAP | 4.0% | – | 4.0% |
| Cost of products sold, three months ended September 30, 2026GAAP | $11.68B | – | 7% |
| Gross profit, three months ended September 30, 2026GAAP | $11.60B | – | 1% |
| Gross margin, three months ended September 30, 2026GAAP | 49.8% | – | (160) BPS |
| Core gross profit, three months ended September 30, 2026non-GAAP | 11,642 | – | – |
| Core gross margin, three months ended September 30, 2026non-GAAP | 50.0% | – | (150) BPS |
| Currency-neutral Core gross margin, three months ended September 30, 2026non-GAAP | 50.0% | – | (150) BPS |
| Selling, general and administrative expense, three months ended September 30, 2026GAAP | 5,661 | – | —% |
| Selling, general and administrative expense as a % of net sales, three months ended September 30, 2026GAAP | 24.3% | – | (90) BPS |
| Core selling, general and administrative expense, three months ended September 30, 2026non-GAAP | 5,607 | – | – |
| Core selling, general and administrative expense as a % of net sales, three months ended September 30, 2026non-GAAP | 24.1% | – | (80) BPS |
| Currency-neutral Core selling, general and administrative expense as a % of net sales, three months ended September 30, 2026non-GAAP | 24.2% | – | (70) BPS |
| Operating income, three months ended September 30, 2026GAAP | 5,937 | – | 1% |
| Operating margin, three months ended September 30, 2026GAAP | 25.5% | – | (70) BPS |
| Core operating income, three months ended September 30, 2026non-GAAP | 6,035 | – | – |
| Core operating margin, three months ended September 30, 2026non-GAAP | 25.9% | – | (80) BPS |
| Currency-neutral Core operating margin, three months ended September 30, 2026non-GAAP | 25.8% | – | (90) BPS |
| Interest expense, three months ended September 30, 2026GAAP | (223) | – | 13% |
| Interest income, three months ended September 30, 2026GAAP | 102 | – | (6)% |
| Other operating income/(expense), net, three months ended September 30, 2026GAAP | 207 | – | (23)% |
| Earnings before income taxes, three months ended September 30, 2026GAAP | 6,023 | – | —% |
| Income taxes, three months ended September 30, 2026GAAP | 1,267 | – | 1% |
| Effective tax rate, three months ended September 30, 2026GAAP | 21.0% | – | – |
| Net earnings, three months ended September 30, 2026GAAP | 4,757 | – | (1)% |
| Net earnings attributable to Procter & Gamble, three months ended September 30, 2026GAAP | $4.73B | – | —% |
| Basic net earnings per common share, three months ended September 30, 2026GAAP | $ 2.00 | – | —% |
| Diluted net earnings per common share, three months ended September 30, 2026GAAP | $ 1.97 | – | 1% |
| Core EPS, three months ended September 30, 2026non-GAAP | $ 2.00 | – | 1% |
| Currency-neutral Core EPS, three months ended September 30, 2026non-GAAP | $ 1.99 | – | —% |
| Operating cash flow, three months ended September 30, 2026GAAP | $5.77B | – | – |
| Capital expenditures, three months ended September 30, 2026GAAP | −$1.37B | – | – |
| Free cash flow, three months ended September 30, 2026non-GAAP | $4.40B | – | – |
| Free cash flow productivity, three months ended September 30, 2026non-GAAP | 93% | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $15.37B | – | – |
| Debt due within one year, September 30, 2026GAAP | 17,028 | – | – |
| Long-term debt, September 30, 2026GAAP | 21,897 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| BeautyOrganic sales increased 5.4%, led by Hair Care, Personal Care and Skin Care growth from innovation-based pricing, volume and favorable mix. | $4.41B | – | 6% |
| GroomingOrganic sales increased 4.5%, driven by innovation-based pricing, primarily in North America and IMETA, and favorable product mix. | 1.89B | – | 4% |
| Health CareOrganic sales increased 2.7%; Oral Care and Personal Health Care benefited from premium product mix and innovation-based pricing, partly offset by unit-volume declines. | 3.32B | – | 3% |
| Fabric & Home CareOrganic sales increased 4.8%, led by volume increases in North America and Europe, favorable geographic mix and favorable product mix. | 8.21B | – | 4% |
| Baby, Feminine & Family CareOrganic sales increased 3.0%; Baby Care benefited from unit volume and favorable premium product mix, while lower pricing partly offset growth. | 5.32B | – | 3% |
| CorporateNot provided. | 132M | – | N/A |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Fiscal Year 2027 outlook
- Revenue+2% to +4%
- Tax rate20% to 21%
- NoteOrganic sales growth: +1% to +3% versus the prior year.
- NoteOrganic sales growth guidance includes a headwind of 30 to 50 basis points from brand, product form and go-to-market discontinuations.
- NoteDiluted net earnings per share growth: +1% to +5% versus fiscal 2026 diluted net EPS of $6.62.
- NoteCore earnings per share growth: in-line to +3% versus fiscal 2026 core EPS of $6.89.
- NoteCore EPS: $6.89 to $7.11 per share, with a mid-point estimate of $7.00.
- NoteCommodity cost headwind: approximately $1.4 billion after tax.
- NoteHigher net interest expense: $300 million after-tax.
- NoteLower non-operating income: $150 million after-tax.
- NoteUnfavorable foreign exchange rates: $50 million after-tax.
- NoteCombined impacts: a headwind of $0.79 per share for fiscal 2027, or an eleven percent drag on core EPS growth.
- NoteCapital spending: four and a half to five and a half percent of fiscal 2027 net sales.
- NoteFree cash flow productivity: 85% to 90%.
- NoteDividends: over $10 billion.
- NoteCommon-share repurchases: approximately $5 billion.
Capital returns
- The Company returned $3.9 billion of cash to shareowners via $2.6 billion of dividend payments and $1.3 billion of share repurchases.
- Dividends to shareholders, three months ended September 30, 2026: (2,603).
- Treasury stock purchases, three months ended September 30, 2026: (1,250).
- Dividends per common share: $ 1.0885, compared with $ 1.0568.
What drove it
- Total organic sales growth reflected a two percent increase from volume, a one percent increase from favorable mix and a minor positive impact from pricing.
- Beauty had 2.2% volume growth and 2.5% mix growth.
- Fabric & Home Care had 4.3% volume growth, while price was (0.3)%.
- Gross-margin pressure reflected 140 basis points of higher commodity costs, 140 basis points of product reinvestments and 50 basis points of unfavorable mix, partly offset by 120 basis points of gross productivity savings, 50 basis points of tariff impact from lower costs and recognized recoveries and 20 basis points of increased pricing.
- Core SG&A leverage reflected 130 basis points of productivity savings and 100 basis points of net sales growth leverage, partly offset by 120 basis points of reinvestments.
Concerns
- Reported gross margin decreased 160 basis points and core operating margin decreased 80 basis points versus the prior year.
- Grooming organic volume was (0.4)% and Health Care organic volume was (2.9)%.
- Net earnings declined (1)% to 4,757 despite 4% net sales growth.
- Fiscal 2027 guidance incorporates approximately $1.4 billion after-tax commodity cost headwind and a combined $0.79 per-share headwind.
- Baby, Feminine & Family Care earnings before income taxes declined (4)% and net earnings declined (4)%.
What to watch
- Delivery against the fiscal 2027 +1% to +3% organic sales growth outlook.
- The 30 to 50 basis point headwind from brand, product form and go-to-market discontinuations.
- Commodity, energy and transportation costs underlying the approximately $1.4 billion after-tax commodity cost headwind.
- Whether gross productivity savings and SG&A productivity savings offset product reinvestments and unfavorable mix.
- Progress toward 85% to 90% free cash flow productivity and the planned over $10 billion of dividends plus approximately $5 billion of repurchases.
Balance sheet and cash flow
- Operating cash flow was $5.8 billion for the quarter.
- Free cash flow was $4,401 for the three months ended September 30, 2026.
- Cash and cash equivalents were $ 15,365 at September 30, 2026, compared with $ 9,942 at June 30, 2026.
- Debt due within one year was 17,028 and long-term debt was 21,897 at September 30, 2026.
- Accounts receivable were 6,620 and inventories were 8,485 at September 30, 2026.
Analysis
P&G opened fiscal 2027 with $ 23,276 of net sales, up 4%, and 4.0% organic sales growth. Growth was volume-led, with total volume up 2.4%, alongside 1.1% favorable mix and 0.4% pricing. All five operating segments reported net sales growth. Beauty led at 6%, while Fabric & Home Care grew 4%, Grooming grew 4%, and Health Care and Baby, Feminine & Family Care each grew 3%.
The sales mix was uneven beneath the company result. Fabric & Home Care produced 4.3% volume growth and 4.8% organic sales growth. Beauty delivered 5.4% organic sales growth on favorable mix and volume. Conversely, Grooming volume declined (0.4)% and Health Care volume declined (2.9)%, even as innovation-based pricing and mix supported organic sales in those businesses. Baby, Feminine & Family Care faced lower pricing in Baby Care and merchandising investments in Family Care.
Profit growth trailed sales. Gross profit rose 1% to $ 11,598, while reported gross margin fell 160 basis points to 49.8%. Core gross margin declined 150 basis points to 50.0%. Higher commodities, product reinvestments and unfavorable mix outweighed productivity savings, tariff-related lower costs and recoveries, and increased pricing. SG&A as a percentage of sales improved 90 basis points to 24.3%, but this was insufficient to prevent reported operating margin from declining 70 basis points to 25.5%. Net earnings declined (1)% to 4,757, while diluted EPS increased 1% to $ 1.97 and Core EPS increased 1% to $ 2.00.
Cash generation remained substantial. Operating cash flow was $5,767, capital spending was $(1,366), and free cash flow was $4,401, producing 93% free cash flow productivity. The company returned $3.9 billion of cash to shareowners, including $2.6 billion of dividends and $1.3 billion of repurchases. Cash and cash equivalents were $ 15,365 at September 30, 2026, while debt due within one year was 17,028 and long-term debt was 21,897.
For fiscal 2027, P&G updated all-in sales growth guidance to +2% to +4% to reflect the Thorne acquisition as of October 1, 2026, while maintaining +1% to +3% organic sales growth, +1% to +5% diluted EPS growth and in-line to +3% Core EPS growth. The company expects approximately $1.4 billion after-tax of commodity cost headwind and combined headwinds of $0.79 per share, or an eleven percent drag on core EPS growth. It maintained 85% to 90% free cash flow productivity expectations and expects to pay over $10 billion in dividends and repurchase approximately $5 billion of common shares.
Management, verbatim
Our solid sales, earnings and cash results in the first quarter reflect sharpened execution of our integrated strategy
Shailesh Jejurikar, Chairman of the Board, President and Chief Executive Officer
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.
Shailesh Jejurikar, Chairman of the Board, President and Chief Executive Officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided; therefore, comparison of reported results with prior guidance is unavailable.
- Prior-year free cash flow and free cash flow productivity were not reported.
- Sequential comparisons for the reported income-statement metrics were not reported.
- Fiscal 2027 gross-margin guidance and operating-expense guidance were not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.