TLDR
- Procter & Gamble reported first-quarter earnings of $1.99 per share, beating analyst estimates by 9 cents on strong beauty and grooming product sales.
- The company reduced annual tariff cost projections to $400 million after tax from $800 million following Canada’s removal of retaliatory duties.
- Operating margins contracted 50 basis points year-over-year as higher commodity costs and competitive discounting pressured profitability.
- Beauty segment volumes increased 4% while China’s baby care category posted double-digit growth driven by premium diaper sales.
- The company plans 7,000 job cuts over two years and is exiting laundry bar operations in India and the Philippines.
Procter & Gamble delivered better-than-expected results for its first quarter. The consumer goods giant posted earnings per share of $1.99, surpassing Wall Street estimates by 9 cents.
Revenue reached $22.39 billion for the quarter ended September. Analysts had projected $22.17 billion.
Shares climbed approximately 3% after the announcement. The stock has declined about 9% year-to-date.
The Procter & Gamble Company, PG
Beauty and hair-care categories powered the earnings beat. The beauty segment saw volume growth of 4%, a sharp jump from the 1% increase recorded in the previous quarter.
Brands including Pantene and Olay attracted consumers despite elevated prices. The grooming division also contributed with gains in both pricing and volume.
Split Consumer Behavior Emerges
CFO Andre Schulten characterized the consumer landscape as “not great, but stable.” He observed a slowdown in U.S. consumption across P&G’s product categories.
Shopping patterns reveal a clear divide. Financially secure consumers are purchasing larger package sizes.
Budget-conscious shoppers are selecting smaller packs of essential items. They’re making their supplies last longer as prices stay high.
The company faces increased promotional activity from rivals in fabric-care and baby-care segments. P&G is responding by expanding its range of affordably priced products, especially in diapers.
Tariff Relief Provides Breathing Room
P&G cut its annual tariff cost estimate in half to $400 million after tax. The previous forecast stood at $800 million.
Canada’s decision to lift retaliatory tariffs on U.S. goods drove most of the reduction. P&G had implemented price increases in the U.S. to counter tariff impacts.
Prices came down in Canada after tariff cancellations. President Trump ended all trade talks with Canada on Thursday, though Schulten said this hasn’t changed the company’s tariff outlook.
Operating margins fell 50 basis points compared to last year. Higher commodity costs and competitive discounting both contributed to the compression.
The company still maintains superior operating margins compared to peers like Colgate-Palmolive and Unilever. But pressure is mounting as P&G balances price increases against maintaining sales volumes.
China delivered encouraging results despite difficult market conditions. Baby care categories posted double-digit growth rates.
Premium Bum Bum diapers fueled Chinese demand. Consumer confidence remains subdued in the country overall.
P&G kept its full-year guidance intact. CEO Jon Moeller said the results keep the company on track in a “challenging consumer and geopolitical environment.”
Moeller will hand over the CEO role to Shailesh Jejurikar on January 1. The leadership transition occurs as P&G executes its strategy of launching upgraded products at premium price points.
P&G continues restructuring operations globally. The company is withdrawing from laundry bar businesses in India and the Philippines.
Manufacturing operations in Pakistan have closed as P&G switches to a distribution model. The company confirmed plans to eliminate roughly 7,000 non-manufacturing positions over the next two years.
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