P&G Flags $1B Fuel Cost Hit To 2027 Profits, Q3 Results Beat Expectations

• Procter & Gamble reported adjusted earnings of $1.59 per share, beating expectations of $1.56
• All 10 of P&G's products saw organic sales growth during the quarter.
• Flagged a $1 billion fuel cost hit due to the Iran war in 2027.

Procter & Gamble (PG) shares rose 2.6% on Friday and were flat after-hours after the firm’s third-quarter (Q3) earnings and revenue beat Wall Street expectations, though the baby care product maker flagged a $1 billion hit to profits in 2027 due to soaring fuel prices. 

The Tide and Pampers maker reported Q3 adjusted earnings of $1.59, up from $1.54 a year ago, beating analysts’ estimate for $1.56, according to Fiscal.ai. Net sales totaled $21.2 billion, above expectations of $20.5 billion, while organic sales grew 3%.

All 10 of Procter & Gamble’s product categories—which range from baby care to home care—saw organic sales growth in the third quarter. Market share held steady or grew globally, the company said in its earnings presentation. 

Iran War And Fuel Cost Hit

The company flagged a $1 billion headwind to its 2027 profits due to rising fuel costs. "The noise, I would call it, from the commodity exposure is significant, as a billion dollars after tax is ​nothing to sneeze at from a headwind standpoint," P&G finance chief Andre Schulten said on a post-earnings call. 

"We have a lot of work to do, to work ​through the supply chain side and the cost side."

P&G joins a host of companies that have flagged rising fuel costs denting margins, suggesting that the consumer staples industry is absorbing an energy shock, along with weaker-than-expected retail spending.

P&G also flagged a $150 million commodity-linked cost in the current fiscal year. 

Tariff Hit And Refund 

P&G expects a $400 million hit to its fiscal 2026 profit from tariffs. 

"We have about $150 million after tax in refunds available from the IEEPA tariff. How much of that is recoverable or not? We'll find out," CFO Schulten said.

The U.S. Supreme Court, in its February ruling, declared the International Emergency Economic Powers Act (IEEPA) tariffs imposed by President Donald Trump as unlawful, and U.S. Customs and Border Protection is now processing an estimated $175 billion in refunds to affected importers. 

Earnings Guidance 

Providing forward-looking guidance, Schulten said, “Given all the above, we now expect full-year EPS results to be toward the lower end of the guidance range. Our fiscal 2026 outlook continues to call for approximately $500 million before tax in higher costs from tariffs.” 

“We continue to forecast adjusted free cash flow productivity in the range of 85%-90% for the year. This includes an increase in capital spending as we add capacity in several categories and as we incur the cash costs from the restructuring work.”

Retail View 

Sentiment on Stocktwits was ‘bullish’ with ‘high’ message volumes. 

One user appreciated the firm’s “slow grind higher.”

The stock has gained 3.4% year-to-date. 

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