Procter & Gamble Company (NYSE: PG) reported mixed fourth-quarter results, with adjusted earnings per share of $1.43 beating the analyst consensus estimate of $1.41, while total sales rose 2% year over year to $21.203 billion, missing the consensus estimate of $21.379 billion. Shares traded lower following the release as the company issued fiscal 2027 guidance below expectations, driven by significant cost headwinds and restructuring expenses that threaten near-term profitability.

Sales growth was primarily fueled by favorable foreign exchange, while volume, pricing, and mix had a neutral impact on organic sales, which remained flat year over year. The company’s core gross margin remained flat year over year, as productivity savings of 160 basis points, net tariff benefits of 40 basis points, other items contributing 20 basis points, and pricing adding 10 basis points were offset by unfavorable product mix of 120 basis points, product and packaging reinvestments of 70 basis points, and higher commodity costs of 40 basis points. Excluding 90 basis points of restructuring charges, core operating margin decreased 130 basis points, despite benefiting from 460 basis points of gross productivity savings.

Segment Performance

Organic sales performance varied across business units in the quarter:

Beauty delivered 4% year-over-year organic sales growth, with Hair Care organic sales increasing in the mid-single digits supported by volume growth in Asia Pacific and Europe. Personal Care organic sales also rose by the mid-single digits, driven by volume growth across all regions and higher pricing mainly in North America. In contrast, the Grooming segment saw flat organic sales as innovation-driven pricing was offset by lower volumes primarily in IMEA and an unfavorable product mix.

Health Care organic sales declined 1% year over year. Oral Care sales fell by the mid-single digits due to weaker volumes mainly in North America and Greater China, while Personal Health Care sales increased by the mid-single digits supported by higher pricing and volume growth primarily in North America. Fabric and Home Care organic sales were flat year over year, with Fabric Care increasing in the low single digits due to volume growth in Europe, while Home Care declined in the low single digits due to lower volumes. Baby, Feminine and Family Care organic sales decreased 2% from the prior year, with Baby Care rising by the low-single digits but offset by declines in Feminine and Family Care due to weaker volumes and merchandising investments.

What the Numbers Show

The divergence between strong productivity savings and declining operating margins highlights the pressure from structural cost increases and strategic reinvestments. While P&G generated 460 basis points of gross productivity savings, these gains were more than consumed by 120 basis points of unfavorable product mix, 70 basis points of reinvestments, and 40 basis points of commodity cost inflation, alongside 90 basis points of restructuring charges. This suggests that operational efficiency alone is insufficient to counteract current input cost pressures and portfolio adjustments, leading to a 130 basis point contraction in core operating margins excluding restructuring.

Outlook and Corporate Changes

For fiscal 2027, Procter & Gamble expects adjusted EPS of $6.89-$7.11, compared with the analyst estimate of $7.04. The company forecasts FY27 sales of $85.127 billion-$86.813 billion, below the consensus estimate of $89.412 billion. P&G expects fiscal 2027 reported and organic sales growth of 1%-3% year over year, with organic sales guidance including a 30-50 basis point headwind from brand, product, and go-to-market discontinuations.

The company expects fiscal 2027 earnings to be adversely affected by an after-tax headwind of approximately $1 billion from higher raw material, energy, and transportation costs, plus $150 million from higher net interest expense, $150 million from lower non-operating income, and $50 million from unfavorable foreign exchange. Together, these factors represent a 56-cent-per-share headwind, reducing core EPS growth by about 8%. P&G expects adjusted free cash flow productivity of 85%-90% and plans to return significant capital to shareholders through approximately $10 billion in dividends and about $5 billion in share repurchases during fiscal 2027.

Separately, under the portfolio and productivity plan announced in June 2025, P&G expects to incur $1.0-$1.6 billion of pre-tax non-core restructuring costs over two years. More than half of these costs were recognized in fiscal 2026, with the remaining charges expected in fiscal 2027. Additionally, President and CEO Shailesh Jejurikar will assume the additional role of Board Chairman effective Aug. 1, succeeding Jon Moeller.

The Board of Directors of The Procter & Gamble Company declared a quarterly dividend of $1.0885 per share on the Common Stock and on the Series A and Series B ESOP Convertible Class A Preferred Stock of the Company. The dividend is payable on or after August 17, 2026 to Common Stock shareowners of record at the close of business on July 24, 2026. Series A and Series B ESOP Convertible Class A Preferred Stock shareowners of record at the start of business on July 24, 2026 are also eligible.

Dividend History

The Procter & Gamble Company has paid a dividend for 136 consecutive years since its incorporation in 1890. The company has increased its dividend for 70 consecutive years, reinforcing its commitment to return cash to shareowners.

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