Procter & Gamble Co (PG.US), a global leader in consumer goods, has forecast a slowdown in revenue growth for its 2027 fiscal year. This comes after quarterly sales fell short of expectations due to uneven demand in categories like grooming and oral care, driven by what the company described as a "very challenging geopolitical and economic environment."
For the fourth quarter, Procter & Gamble reported net sales rose 1.5% to $212.0 billion, missing the anticipated $213.8 billion. Adjusted earnings per share came in at $1.43, narrowly beating the analyst consensus of $1.41. Rising food and gasoline prices, coupled with persistent inflation over several quarters, have forced lower-income consumers to tighten their budgets and seek cheaper alternatives for everyday essentials. In pre-market trading on Wednesday, shares of Procter & Gamble fell about 3%.
The Tide manufacturer expects total net sales growth for the 2027 fiscal year to be between 1% and 3%, compared to 3.3% growth in the 2026 fiscal year. Based on the midpoint of this range, the forecast is slightly below the average analyst estimate of 2.7% growth. According to data compiled by LSEG, the company projects adjusted earnings per share for the 2027 fiscal year to be between $6.89 and $7.11, with the midpoint marginally below the analyst estimate of $7.04.
Shailesh Jejurikar, who took over as CEO of the consumer goods giant in January, described the 2026 fiscal year as "a year of laying the foundation." The company also appointed Shailesh Jejurikar as chairman, effective August 1, and announced that Executive Chairman and former CEO Jon Moeller will retire on August 14.
Profit Margins Under Pressure
Procter & Gamble's core operating profit margin fell 130 basis points, marking the third consecutive quarter of decline. This was attributed to increased marketing investments and the impact of rising commodity costs, partly driven by the Middle East conflict. The company maintained its earlier forecast that the 2027 fiscal year will see a hit of approximately $1 billion to profits due to higher costs for raw materials, energy, and transportation, stemming from surging oil prices. A spokesperson for Procter & Gamble noted that there remains uncertainty about how long high costs will persist and how prices will fluctuate. Other consumer-facing companies, including PepsiCo, have also pointed to higher input costs in the second half of the year.
Overall organic volume for Procter & Gamble in the fourth quarter was flat, with three of its five reported business segments experiencing declines. However, its higher-priced haircare and personal care products once again stood out. Even as overall prices remained largely unchanged in the fourth quarter, the beauty category saw volume growth of 3%. In contrast, competitor Unilever posted its best single-quarter volume performance in over a decade, driven by a shift in focus toward beauty and wellness products. This category bucked the broader trend of weak consumer spending, as shoppers continued to purchase self-care items that enhance their quality of life, giving companies room to raise prices for new lines of shampoo and skincare products.
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