Earnings Call Insights: Procter & Gamble (PG) Q2 2026
Management View
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CEO Shailesh Jejurikar emphasized confidence in the company’s interventions and investments to improve near-term performance, noting, “We are confident the interventions and investments we are making now will improve our near-term performance, strong innovation supported by sharper consumer communication and retail execution.” Jejurikar highlighted success stories such as Greater China Baby Care, where Pampers Prestige has driven double-digit organic sales growth over the past 18 months, and Mexico fabric enhancers, which achieved double-digit growth through product innovation and sharper brand communication.
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The CEO announced a longer-term reinvention of P&G, describing the initiative as “the next important phase of constructive disruption that will create and extend our competitive advantages in each element of our strategy.” He outlined the company’s intent to leverage data and technology, referencing the buildout of a data lake and AI capabilities, and stated, “We will double down on productivity with multiyear visibility to fund capabilities, innovation and demand creation and to mitigate cost headwinds while delivering financial results at the levels you and we expect.”
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CFO Andre Schulten remarked, “As we expected, second quarter top line results heavily reflect underlying market trends and impacts from base period dynamics.” Schulten noted that the quarter was anticipated to be the softest of the fiscal year, with confidence in stronger growth ahead. He reported that “organic sales were in line with prior year,” and “core earnings per share were $1.88, in line with prior year.” Schulten also shared that P&G returned $4.8 billion of cash to shareowners in the quarter.
Outlook
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CFO Schulten reiterated that fiscal 2026 guidance ranges are unchanged, continuing to expect organic sales growth of in line to plus 4%. He projected global market growth for the company’s portfolio footprint at around 2% on a value basis and expects stronger growth in the U.S. as interventions take hold. The core EPS outlook remains in line to plus 4% versus prior year, or a range of $6.83 to $7.09 per share. Schulten stated, “We expect to pay around $10 billion in dividends and to repurchase approximately $5 billion in common stock, combined a plan to return roughly $15 billion of cash to shareowners in fiscal ’26.”
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The outlook includes approximately $500 million before tax in higher costs from tariffs and a core effective tax rate of 20% to 21%. Adjusted free cash flow productivity is forecast between 85% and 90%.
Financial Results
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P&G’s organic sales were flat year over year, with volume down 1 point, pricing up 1 point, and mix flat. Seven of ten product categories held or grew organic sales. Notably, Family Care was down approximately 10% due to base period dynamics. Excluding Family Care, organic sales rose 1%. North America organic sales declined by 2%, while Latin America and the Europe Enterprise Market region grew 8% and 6%, respectively. Greater China organic sales advanced 3%.
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Core gross margin was down 50 basis points, and core operating margin decreased by 70 basis points. Productivity improvement was 270 basis points, and adjusted free cash flow productivity was 88%.
Q&A
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Lauren Lieberman, Barclays: Asked about the rationale behind expected near-term acceleration and the company’s reinvention. CFO Schulten pointed to strong performance outside the U.S. and said, “The main element here, I think, is the fundamental execution of the same interventions we made outside of the U.S. earlier.” Jejurikar described growth opportunities and a unique chance to leverage shifts in media, technology, and consumer demographics.
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Stephen Powers, Deutsche Bank: Sought more detail on where acceleration is expected and the transformation timeline. Schulten outlined that “the innovation interventions, the commercial interventions, the execution focus is consistently applied across every part of the portfolio,” with Family Care, Baby Care, and Fem Care expected to benefit most in the near term. Jejurikar estimated, “by the time we really get the future evenly distributed, I think we are talking 12 to 18 months.”
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Christopher Carey, Wells Fargo: Asked about investment levels and cost structure. Schulten explained, “Many of the investments have been made over the last decade…The investment to activate the technology, specifically around the innovation capabilities, the media capabilities won’t be significant.”
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Dara Mohsenian, Morgan Stanley: Inquired about U.S. priorities. Jejurikar responded that key interventions include adapting to the new media landscape, innovating with a stronger core and bigger adjacencies, and delivering consumer value without price changes.
Sentiment Analysis
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Analysts frequently pressed for clarity on the pace of U.S. recovery, margin trajectory, and market share, with a slightly cautious tone and focus on execution risk and competitive headwinds.
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Management maintained a confident tone in both prepared remarks and responses, repeatedly stressing confidence in interventions, innovation, and reinvention. Schulten used phrases like “we believe” and “we are confident,” while Jejurikar emphasized, “We know what we need to do, and we are excited by the opportunities ahead.”
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Compared to the previous quarter, analyst tone remains probing, but management’s tone has shifted from cautious optimism to a stronger emphasis on strategic reinvention and technology integration.
Quarter-over-Quarter Comparison
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Guidance for organic sales growth (in line to plus 4%), core EPS range, and financial targets are unchanged from Q1.
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Market share declined 20 basis points this quarter, compared to a 30 basis point decline in Q1. Management confidence has increased regarding U.S. interventions and the timeline for benefits, while reinforcing the need for sharper execution and integration of technology and data.
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Analysts continue to focus on U.S. growth, innovation, and promotional activity, with persistent questions on margin outlook and share recovery.
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Management’s language has evolved to highlight a more comprehensive reinvention and accelerated integration of data-driven strategies.
Risks and Concerns
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Schulten acknowledged “a challenging start to the fiscal year with softer consumer markets, aggressive competition and a dynamic geopolitical landscape.”
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Management noted that the outlook does not anticipate significant currency, commodity, or supply chain disruptions.
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Base period dynamics, particularly in the U.S., have weighed on results, and market share loss remains a concern, though interventions are underway.
Final Takeaway
Procter & Gamble’s leadership emphasized a confident outlook for the remainder of fiscal 2026, maintaining guidance and outlining a major reinvention initiative leveraging data and technology. Interventions in innovation and sharper execution are expected to drive performance improvements, particularly in the U.S., as the company aims for stronger growth and market share gains in the second half of the year. Management is focused on operational rigor, productivity, and building competitive advantage for the long term, while navigating a challenging consumer and competitive landscape.