Earnings Call Insights: Procter & Gamble (PG) Q1 2026
Management View
-
Andre Schulten, Chief Financial Officer, opened with, “First quarter results reflect strong execution of our integrated strategy in a difficult geopolitical competitive and consumer environment. This marks 40 consecutive quarters of organic sales growth and keeps us on track for the tenth consecutive fiscal year of core EPS growth.” He noted broad-based growth, with 8 of 10 product categories growing or holding organic sales, led by Skin & Personal Care, which was up high single digits. Volume was in line with the prior year, while pricing and mix were each up 1%.
-
Schulten highlighted, “We recently started shipments of Tide’s biggest upgrade to liquid detergent in 20 years.” The company is expanding Tide evo, developed on their Functional fibers platform, with online launches and incremental retail demand. Investments in innovation span multiple categories, including upgrades to U.S. Baby Care and premium body wash launches in Greater China.
-
The company is executing a restructuring program that includes reducing up to 7,000 nonmanufacturing roles, or up to 15% of the current nonmanufacturing workforce, over the fiscal year and fiscal ’27. Schulten stated, “We’re making very good progress with organization designs to deliver this objective.”
-
Portfolio changes include shifting to an import model in Pakistan, discontinuing certain products in India, the Philippines, and enterprise markets, and focusing the Olay brand on the most productive European markets. Schulten explained these steps are designed to drive efficiency, faster innovation, and margin expansion.
Outlook
-
Schulten reported, “We’re maintaining all guidance ranges for the fiscal year. Organic sales growth of in line to plus 4%.” The guidance includes a 30 to 50 basis point headwind from product and market exits related to restructuring.
-
The company expects core EPS growth of in line to plus 4%, translating to a range of $6.83 to $7.09 per share, or $6.96 at the center. Modest earnings growth is anticipated over the balance of the year due to increased investment in innovation and competitiveness, especially in the U.S. and Europe.
-
The outlook factors in a commodity cost headwind of approximately $100 million after tax and a foreign exchange tailwind of $300 million after tax. Tariff costs are now expected to be $500 million before tax. Free cash flow productivity is forecasted at 85% to 90%, with $10 billion in dividends and $5 billion in stock repurchases planned, returning $15 billion to shareholders.
Financial Results
-
Core earnings per share for the quarter were $1.99, up 3% year-over-year. Core gross margin was down 50 basis points, and core operating margin was equal to the prior year. Productivity improvement was 230 basis points, and adjusted free cash flow productivity reached 102%.
-
$3.8 billion in cash was returned to shareowners, with $2.55 billion in dividends and $1.25 billion in share repurchases for the quarter.
Q&A
-
Dara Mohsenian, Morgan Stanley: Asked about the restructuring’s internal reception and impact on competitiveness. Schulten responded, “We are right now perfectly on track on all elements of the restructuring execution… We’ll end up with a faster-growing and more effective portfolio when we’re done.”
-
Peter Galbo, BofA Securities: Inquired about heightened competitiveness in North America Fabric Care and Baby Care. Schulten said both categories face intense promotion, but the company is “executing across both baby and Fabric Care” with integrated superiority, innovation, and retailer collaboration.
-
Lauren Lieberman, Barclays: Questioned market share declines. Schulten explained, “Global aggregate share… is down 30 basis points over the past 3 and past 6 months,” but noted improving U.S. absolute share and confidence in exiting the year with share growth.
-
Stephen Powers, Deutsche Bank: Asked about China’s outlook. Schulten attributed progress to “fundamentally chang[ing] many of the variables that drive the business,” including go-to-market and innovation.
-
Additional questions covered pricing strategies, regional outlooks, portfolio changes, and the impact of tariffs and competitive dynamics.
Sentiment Analysis
-
Analysts raised concerns about competitive pressure, market share losses, and category deceleration, frequently probing for details on restructuring, pricing, and regional trends. The tone was neutral to slightly cautious, with pointed questions about how P&G would regain growth momentum.
-
Management maintained a confident and proactive tone during prepared remarks and the Q&A, emphasizing execution, innovation, and restructuring progress. Phrases such as “We are confident…” and “We believe…” were common, though Schulten acknowledged the challenges in competitive and consumer environments.
-
Compared to the previous quarter, analyst sentiment remains cautious, with ongoing focus on share, competitiveness, and restructuring effects. Management’s tone is consistent, focusing on strategy and operational execution, with slightly more detail on restructuring progress in this quarter.
Quarter-over-Quarter Comparison
-
Guidance for organic sales and core EPS growth remains unchanged at in line to plus 4% from the prior quarter. The company reduced projected tariff headwinds from $1 billion to $500 million before tax.
-
Strategic focus has shifted further toward executing the restructuring program, with more concrete details on portfolio changes and workforce reductions.
-
Analysts continued to focus on competitiveness, innovation, and category trends, with persistent attention to market share and growth in North America and China.
-
Management’s confidence in the restructuring and innovation pipeline is more pronounced this quarter, emphasizing faster execution and agility.
Risks and Concerns
-
Challenges identified include heightened competitive activity in the U.S. and Europe, decelerating category consumption, and ongoing tariff and commodity cost volatility.
-
Management’s mitigation strategies involve accelerated innovation, targeted investments, portfolio restructuring, and supply chain enhancements.
-
Analysts expressed concerns about market share, competitive promotions, and the durability of improvements in China and Latin America.
Final Takeaway
Procter & Gamble’s fiscal 2026 outlook underscores a commitment to disciplined execution of its integrated strategy while navigating a challenging environment. The company is maintaining growth guidance, investing in innovation, and advancing a significant restructuring to enhance agility and efficiency. Management remains confident that these steps, combined with a robust innovation pipeline and targeted portfolio actions, will drive long-term growth and value creation for shareholders.