Procter & Gamble (P&G) has raised its estimate of the impact of rising raw material, energy and freight costs on its fiscal 2027 profit to $1.4 billion, up from the earlier projection of $1 billion. The warning comes as the consumer goods giant reported better-than-expected first-quarter sales, supported by resilient demand for its beauty and home-care products. CFO Andre Schulten said commodity cost pressures are expected to intensify over the next two quarters, potentially squeezing profit margins as inflation weighs on household budgets.
For the quarter ended September 30, P&G reported net sales of $23.28 billion, a 4% increase that exceeded analysts’ expectations of $22.80 billion. Overall sales volumes rose 2.4%, while prices increased by around 0.4%. The company’s beauty business benefited from sustained demand for premium hair-care products, reflecting consumers’ continued spending on personal care despite rising fuel and food costs. However, its core operating margin declined by 80 basis points, even after productivity savings of 250 basis points.
Despite the growing cost pressures, P&G maintained its fiscal 2027 outlook, forecasting organic sales growth of 1% to 3% and core earnings of approximately $7 per share. The company is negotiating with suppliers and optimising transportation routes to manage expenses while continuing to invest in product innovation. Rising oil prices and elevated freight costs remain major concerns for consumer goods companies, as passing higher input costs on to customers becomes increasingly difficult. P&G’s performance highlights the challenge of sustaining profitability amid inflationary pressures and changing consumer spending patterns.
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