P&G Earnings Show Mixed Q2 Results
P&G earnings showed a $22.2 billion Q2 revenue miss and a $1.88 core EPS beat, signaling near-term top-line pressure and trading risk.
KEY TAKEAWAYS
- P&G posted Q2 net sales of $22.2 billion, missing Street consensus.
- Core EPS of $1.88 beat estimates while volumes declined across key categories.
- Company maintained fiscal-2026 guidance but flagged restructuring-related EPS pressure and top-line risk.
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Procter & Gamble’s fiscal second-quarter results on Jan. 22 showed mixed performance as pricing supported a slight sales increase while volumes and U.S. demand in grooming and baby care weakened. The company left its fiscal 2026 outlook broadly unchanged.
Second-Quarter Results
The company said in a press release that net sales for the quarter ending Dec. 31, 2025, were $22.2 billion, up 1.0% from the prior year but below the Street consensus of about $22.3 billion, marking a P&G revenue miss. Organic sales were flat year over year, with roughly 1.0 percentage point of price increases offset by a 1.0 percentage-point volume decline.
Core earnings per share (EPS) were $1.88, flat year over year and above expectations of about $1.86–$1.87, delivering a core EPS beat. This earnings resilience contrasted with the revenue shortfall and softer volumes across several categories, signaling near-term top-line risk.
Reported diluted net EPS fell 5.0% to $1.78, weighed down by incremental restructuring charges. Reported net earnings declined 7.0% to $4.3 billion. Core gross margin contracted 50 basis points year over year (currency-neutral down 30 basis points), and core operating margin fell 70 basis points (currency-neutral down 80 basis points), indicating margin pressure despite pricing actions.
Operating cash flow totaled $5.0 billion, providing flexibility as management balances cost controls and pricing.
By segment, organic sales rose 4.0% in Beauty and 3.0% in Health Care. Grooming and Fabric & Home Care were unchanged, while Baby, Feminine & Family Care declined 4.0% due to volume drops. Management cited weak U.S. consumer spending in laundry detergent, toilet paper, razors, and diapers as factors behind the softness.
Guidance and Outlook
Procter & Gamble maintained its fiscal 2026 guidance, forecasting all-in sales growth of 1.0% to 5.0%, including about a one-percentage-point tailwind from foreign exchange and acquisitions or divestitures. Organic sales are expected to be flat to up 4.0%. Core EPS growth is projected flat to up 4.0%, while diluted net EPS growth was lowered to 1.0% to 6.0% from a prior 3.0% to 9.0% range, partly due to restructuring charges.
Commodity costs are expected to be neutral. Foreign-exchange effects should provide an after-tax tailwind of roughly $200 million, while tariffs will create an after-tax headwind of about $400 million, or approximately $0.19 per share. Management said it remains on track to meet guidance and anticipates a stronger second half.
