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Procter & Gamble (PG) stock rose Thursday after the consumer goods giant reported better-than-expected fiscal first-quarter results and affirmed its fiscal 2027 organic sales and earnings guidance.
The company reported adjusted earnings of $2 per share, beating analysts' consensus estimate of $1.88.
Net sales rose 4% year over year to $23.276 billion, exceeding the consensus estimate of $22.795 billion.
The maker of household brands such as Tide, Gillette and Pampers continued to drive sales growth across all five business segments, even as rising commodity, energy and transportation costs squeezed margins.
Organic sales increased 4% year over year, driven by a 2% rise in volume, a 1% improvement in product mix and a modest benefit from pricing.
However, core gross margin narrowed 150 basis points from a year earlier, reflecting higher commodity costs, product reinvestments and an unfavorable product mix.
Gross productivity savings, favorable tariff effects and higher pricing partially offset those pressures.
Core operating margin, excluding restructuring charges, declined 80 basis points, or 90 basis points on a currency-neutral basis, despite productivity improvements.
Procter & Gamble ended the quarter with $15.4 billion in cash and cash equivalents and $38.9 billion in total debt.
The company returned $3.9 billion to shareholders, including $2.6 billion in dividends and $1.3 billion in share repurchases.
Chairman and CEO Shailesh Jejurikar said the company expects continued geopolitical and economic challenges but remains on track to meet its fiscal 2027 targets for organic sales growth, core earnings growth and free cash flow productivity.
Procter & Gamble reported organic sales growth across all five business segments, although volume trends varied.
Beauty organic sales rose 5%, supported by higher pricing, favorable product mix and volume growth. Hair Care, Personal Care and Skin Care each posted mid-single-digit organic sales gains.
Grooming organic sales increased 5%, driven by innovation-led pricing, particularly in North America and India, the Middle East, Turkey and Africa, along with a favorable product mix.
Health Care organic sales climbed 3%, with both Oral Care and Personal Health Care recording low-single-digit growth. Higher pricing and premium product offerings helped offset weaker volumes.
Fabric and Home Care organic sales increased 5%, supported by mid-single-digit growth in both Fabric Care and Home Care. Stronger demand in North America and Europe contributed to the gains.
Baby, Feminine and Family Care organic sales rose 3%. Baby Care posted mid-single-digit growth, while Feminine Care and Family Care recorded low-single-digit increases.
Volume growth was strongest in Fabric and Home Care, up 4.3%, followed by Baby, Feminine and Family Care at 2.3% and Beauty at 2.2%.
Health Care volume fell 2.9%, while Grooming volume declined 0.4%.
Procter & Gamble affirmed its fiscal 2027 adjusted earnings guidance of $6.89 to $7.11 per share, compared with analysts' consensus estimate of $6.97.
The company also maintained its GAAP earnings outlook of $6.69 to $6.95 per share, compared with the $6.85 consensus estimate.
Procter & Gamble raised its full-year sales growth forecast to 2% to 4%, reflecting its acquisition of Thorne on Oct. 1, 2026.
That implies revenue of approximately $85.97 billion to $87.66 billion, below analysts' consensus estimate of $88.838 billion.
The company maintained its organic sales growth outlook of 1% to 3%, including a 30- to 50-basis-point headwind from discontinued brands, product formats and distribution channels.
Higher costs remain a major challenge.
Procter & Gamble expects approximately $1.4 billion in after-tax pressure from rising raw material, energy and transportation costs, along with $300 million in higher net interest expenses, $150 million in lower nonoperating income and $50 million in unfavorable foreign exchange effects.
Together, those factors represent a 79-cent-per-share headwind, reducing core earnings growth by approximately 11 percentage points.
The company expects capital spending to account for 4.5% to 5.5% of fiscal 2027 sales.
Procter & Gamble maintained its free cash flow productivity forecast of 85% to 90% and plans to return more than $10 billion in dividends and approximately $5 billion through share repurchases during the fiscal year.
PG Price Action: Procter & Gamble shares were trading up 5.67% at $165.73 at the time of publication on Thursday, according to market data.
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