Procter & Gamble Reports Q1 FY2027 Earnings: Net Sales Up 4%, Updates Guidance for Thorne Acquisition

Executive Summary

On October 22, 2026, The Procter & Gamble Company filed a Form 8-K under Item 2.02 reporting financial results for the first fiscal quarter ended September 30, 2026. The company delivered solid top-line performance with 4% growth in both reported net sales and organic sales, while core earnings per share rose 1% to $2.00. P&G updated its full-year all-in net sales guidance to reflect the acquisition of Thorne (effective October 1, 2026) while maintaining its organic sales, core EPS growth, and capital return targets.

---

Financial & Operating Highlights

• Net Sales: $23.3 billion, up 4.0% year-over-year compared to $22.4 billion in Q1 FY2026.
• Organic Sales Growth: +4.0%, driven by +2.4% volume growth and +1.1% positive mix, with pricing contributing +0.4%.
• Diluted EPS: $1.97, up 1% from $1.95 in the prior-year period.
• Core EPS: $2.00, up 1% compared to $1.99 in the prior-year quarter (flat on a currency-neutral basis).
• Margins:
  • Reported gross margin fell 160 bps; Core gross margin contracted 150 bps, impacted by 140 bps of commodity cost headwinds and 140 bps in product reinvestments, partly offset by 120 bps of gross productivity savings and 50 bps from tariff recoveries/cost reductions.
  • Core SG&A expense as a percentage of sales improved 80 bps (70 bps currency-neutral) due to 130 bps in productivity savings and 100 bps of sales leverage.
  • Core operating margin declined 80 bps (90 bps currency-neutral), supported by 250 bps in total gross productivity savings.
• Cash Flow & Capital Allocation: Operating cash flow stood at $5.8 billion; net earnings were $4.8 billion. Free cash flow productivity was 93%. P&G returned $3.9 billion to shareholders through $2.6 billion in dividends and $1.3 billion in share repurchases.

---

Segment Performance Overview

• Beauty: Organic sales +5.4% (Volume +2.2%, FX +1.1%, Price +0.7%, Mix +2.5%). Mid-single-digit gains in Hair Care, Personal Care, and Skin Care driven by premium mix and volume expansion.
• Grooming: Organic sales +4.5% (Volume -0.4%, Price +3.5%, Mix +1.5%), bolstered by pricing in North America and IMETA.
• Fabric & Home Care: Organic sales +4.8% (Volume +4.3%, Price -0.3%, Mix +0.8%), led by volume gains in North America and Europe across Fabric Care and Home Care.
• Health Care: Organic sales +2.7% (Volume -2.9%, Price +2.8%, Mix +2.8%), where pricing and premium mix offset volume declines in Oral Care and Personal Health Care.
• Baby, Feminine & Family Care: Organic sales +3.0% (Volume +2.3%, Price -1.2%, Mix +1.8%), driven by Baby Care volume in China and North America.

---

Fiscal Year 2027 Guidance

• All-In Net Sales Growth: Raised to 2% to 4% (updated to include the Thorne acquisition).
• Organic Sales Growth: Maintained at 1% to 3% (including a 30 to 50 bps drag from portfolio and GTM rationalizations).
• Diluted Net EPS Growth: Reaffirmed at 1% to 5% versus FY2026 base of $6.62.
• Core EPS Growth: Reaffirmed at in-line to +3% ($6.89 to $7.11 per share; midpoint of $7.00, or ~1.5% growth).
• Headwinds Expected: Total after-tax drag of $1.9 billion ($0.79/share, or an 11% core EPS headwind), consisting of:
  • $1.4B commodity cost inflation
  • $300M higher net interest expense
  • $150M lower non-operating income
  • $50M foreign exchange pressures
• Capital Allocation & Tax: Core tax rate projected at 20%–21%; Capex at 4.5%–5.5% of net sales; FCF productivity targeted at 85%–90%; planned return of >$10 billion in dividends and ~$5 billion in share repurchases.