Procter & Gamble $PG reported fiscal third-quarter net sales of $21.2 billion, a 7% increase from a year earlier, as volume grew across three of its five business segments. The company also beat Wall Street expectations on both revenue and earnings.
Diluted earnings per share came in at $1.63, up 6% from the prior year. Core earnings per share were $1.59, up 3%. Analysts had projected earnings of $1.56 per share and revenue of $20.5 billion, according to CNBC.
Stripping out currency swings, acquisitions, and divestitures, organic sales climbed 3%, with a 2% lift in volume and a 1% contribution from pricing. According to CNBC, companywide volume growth had not appeared in P&G's results for a full year prior to this quarter.
The beauty segment led the quarter, with organic sales up 7% and volume up 5%. P&G attributed the gains to innovation-based volume growth in personal care, hair care, and skin care. Baby, feminine, and family care organic sales rose 3%, while fabric and home care organic sales grew 3%. Volume slipped 2% in both the grooming and health care segments, making them the only two units to post a decline during the quarter.
Despite the strong quarterly results, P&G warned that tariffs will weigh on its full-year finances. The company now estimates tariffs will cost about $400 million after tax in fiscal 2026. It also expects commodity costs to be a headwind of about $150 million after tax. P&G said fiscal 2026 earnings per share results are now expected to land toward the lower end of its guidance range of flat to 4% growth.
Gross margin fell 150 basis points from a year ago on a reported basis. Measured on a currency-neutral core basis, gross margin shed 100 basis points, extending a losing streak that has now run for six quarters in a row, according to Reuters. Within that margin compression, productivity improvements of 210 basis points and a 50-basis-point pricing benefit provided only partial relief against headwinds that included a 180-basis-point drag from unfavorable mix, 100 basis points tied to reinvestments, and a 50-basis-point hit from tariffs.
P&G maintained its full-year guidance for all-in sales growth of 1% to 5% and organic sales growth of flat to up 4%. The company said it returned $3.2 billion to shareholders in the quarter through $2.5 billion in dividends and more than $600 million in stock repurchases.
"We're increasing investments to accelerate momentum with consumers despite the challenging geopolitical and economic environment, while still maintaining our guidance ranges for the fiscal year," CEO Shailesh Jejurikar said in a statement.
Correction: The headline accompanying an earlier version of this article misstated what Procter & Gamble said about tariffs. The company estimated that tariffs will cost about $400 million after tax in fiscal 2026. It did not warn that tariffs could force it to increase prices.