Procter & Gamble (PG) fell in early trading on Thursday after the household products giant missed FQ2 revenue estimates. “Our results in the second quarter keep us on track to deliver within our fiscal year guidance ranges for organic sales growth, core EPS growth, and adjusted free cash flow productivity in a challenging consumer and geopolitical environment,” noted CEO Jon Moeller.
Organic sales were unchanged in FQ2, missing the consensus estimate for a gain of 0.5%.
Notably, beauty segment organic sales increased 4% year-over-year as hair care organic sales increased mid-single digits driven by volume increases and innovation-driven pricing in Latin America and Europe, partially offset by unfavorable geographic mix. Grooming segment organic sales were unchanged compared to a year ago as innovation-driven pricing, primarily in North America and Europe, was offset by volume declines. The healthcare segment’s organic sales increased 3%. Baby, Feminine, and Family Care segment organic sales decreased 4%. Baby Care organic sales decreased in low single digits due to a unit volume decrease and unfavorable geographic mix, partially offset by higher pricing, primarily in North America.
The Cincinnati-based company reported core gross margin for the quarter decreased 50 basis points versus the prior year and, on a currency-neutral basis, decreased 30 basis points. Benefits from gross productivity savings of 160 basis points and increased pricing of 50 basis points were more than offset by 120 basis points of unfavorable mix, 60 basis points of product reinvestments, and 60 basis points of higher costs from tariffs.
Looking ahead, P&G (PG) now expects net impacts of foreign exchange rates and acquisitions and divestitures to be a tailwind of approximately one percentage point to all-in sales growth. The company also maintained its outlook for organic sales growth in the range of in-line to up 4%. P&G continues to expect adjusted free cash flow productivity of 85% to 90% and expects to pay around $10 billion in dividends and to repurchase approximately $5 billion of common shares in FY26.
“We have confidence in our plans to deliver stronger results in the second half of the fiscal year,” highlighted Moeller.
Shares of Procter & Gamble (PG) fell 1.7% in premarket trading. Church & Dwight (CHD), Clorox (CLX), and Colgate-Palmolive (CL) were all slightly higher as well in the early session. The ETFs with the highest weighting of P&G are the iShares US Consumer Staples ETF (IYK), the Vanguard Consumer Staples Index Fund ETF (VDC), and the Fidelity MSCI Consumer Staples Index ETF (FSTA).