Procter & Gamble Surprises with Strong Earnings But Cautions on Tariff Impact Ahead

Procter & Gamble (P&G) recently shared their quarterly results, which surprised many by exceeding Wall Street’s expectations. However, they also warned of challenges ahead for fiscal 2026, including a substantial impact of $1 billion due to rising tariff costs.

CEO Jon Moeller highlighted that despite a tough market, P&G managed to grow both sales and profits in 2025. He expressed pride in returning significant cash to shareholders, noting the unpredictable economic climate.

During a media call, CFO Andre Schulten explained that P&G plans to raise prices on about 25% of its products in the first quarter of fiscal 2026. This increase is largely due to tariffs. They anticipate that this tariff impact breaks down as follows: $200 million from items imported from China, another $200 million linked to Canadian tariffs, and $600 million affecting goods from other global markets.

While P&G has invested heavily in U.S. operations, some materials still need to be imported, making the company vulnerable to these tariff challenges. Schulten mentioned that they could mitigate some costs through improved efficiency, but some will inevitably be passed to consumers. He described today’s shoppers as “value-seeking” and “selective,” indicating a shift in consumer behavior.

For fiscal 2026, P&G expects sales growth between 1% and 5% and earnings per share (EPS) between $6.83 and $7.09. This guidance takes into account a projected loss of 39 cents per share due to tariffs and other economic factors.

Interestingly, analysts had predicted revenue growth of about 3.1% with an EPS of $6.99. Schulten pointed out that uncertainty over the economy makes future projections tricky.

P&G’s recent results also coincide with a leadership change; COO Shailesh Jejurikar will take over as CEO on January 1, with Moeller moving into an executive chairman role.

Here’s a quick comparison of P&G’s latest results versus what was expected:

• Earnings per share: $1.48 vs. $1.42 expected
• Revenue: $20.89 billion vs. $20.82 billion expected

P&G’s net income rose to $3.62 billion, or $1.48 per share, for the quarter ending June 30, up from $3.14 billion or $1.27 per share a year prior. Total net sales also increased by 2% to $20.89 billion, with organic sales climbing the same amount.

In this challenging retail environment, customer demand has remained steady, with P&G’s healthcare division seeing a slight decline in volume while beauty products grew slightly. For context, China’s market, while crucial for P&G, showed only modest growth of 2% in organic sales, though overall consumption fell by 2%.

P&G’s guidance follows an earlier adjustment in April, where they projected the impact of tariffs would range from $1 billion to $1.5 billion annually. This situation reflects ongoing challenges for companies facing global trade issues. JPMorgan and Evercore recently downgraded P&G, suggesting concerns about slow growth and increased competition from online retailers.

To adapt, P&G announced a restructuring plan aimed at improving costs and competitiveness, which includes cutting about 7,000 non-manufacturing jobs, or roughly 15% of its workforce, over the next two years.

Currently, P&G shares have fallen about 6% year-to-date, mirroring broader economic uncertainties that many companies face today.

For more details on their earnings report, you can find the official announcement here.

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