Key facts
- First-quarter sales beat analysts' estimates of $22.80 billion.
- Core earnings per share of $2.00 exceeded the $1.88 estimate.
- The company now forecasts commodity costs will reduce fiscal 2027 profit by $1.4 billion, up from $1 billion.
Procter & Gamble warned on Thursday that higher commodity-related costs would impact its annual profit more than previously expected, despite beating Wall Street's revenue estimates for the first quarter. The company now anticipates that increased raw material, energy, and transportation expenses will reduce fiscal 2027 profit by approximately $1.4 billion, an upward revision from its prior forecast of $1 billion. Despite a 80 basis point decline in core operating margin, P&G achieved 250 basis points of productivity savings through supply chain efficiencies. Higher fuel prices have significantly increased transportation and freight costs for packaged-goods companies, exacerbated by a shortage of truck drivers. P&G is implementing strategies such as product innovation, supplier negotiations, and transportation route optimization to mitigate these rising costs. The company's first-quarter net sales increased by 4% to $23.28 billion, exceeding analysts' expectations of $22.80 billion. Volume growth was observed in the beauty segment, driven by demand for premium hair-care products, as consumers continued to prioritize self-care despite budget pressures from inflation. Overall volumes rose 2.4% in the quarter, with prices increasing by approximately 0.4%. P&G maintained its fiscal 2027 forecasts for organic sales growth between 1% and 3% and core earnings of around $7 per share. First-quarter core earnings per share came in at $2.00, surpassing the analyst estimate of $1.88.