Procter & Gamble Q1 Earnings & Sales Beat on Solid Pricing & Mix

Core Insights - Procter & Gamble Company (PG) reported strong first-quarter fiscal 2026 results, with sales and earnings per share (EPS) exceeding estimates and showing year-over-year improvement [1][2] - The company's core EPS increased by 3% to $1.99, surpassing the Zacks Consensus Estimate of $1.90 [1][7] - Net sales reached $22.4 billion, reflecting a 3% year-over-year growth and exceeding the Zacks Consensus Estimate of $22.2 billion [2][7] Sales Performance - Organic sales rose by 2% year over year, driven by a 1% increase from pricing and a favorable product mix, while organic volume had a neutral impact [2][4] - Sales growth was led by a 6% increase in the Beauty segment, 5% in Grooming, 2% in Health Care, and 1% each in Baby, Feminine & Family Care and Fabric & Home Care [4][7] Margin Analysis - The core gross margin declined by 50 basis points to 51.5%, while the reported gross margin fell by 70 basis points [7][8] - Core selling, general and administrative expenses (SG&A) as a percentage of sales decreased by 40 basis points to 24.9% [9] - The core operating margin remained flat at 26.7%, with a currency-neutral increase of 40 basis points to 27.1% [10] Financial Position - Procter & Gamble ended the quarter with cash and cash equivalents of $11.2 billion and long-term debt of $24.3 billion [12] - The company generated an operating cash flow of $5.4 billion and an adjusted free cash flow of $4.9 billion, achieving a productivity rate of 102% [12][13] Shareholder Returns - In the first quarter, Procter & Gamble returned $3.8 billion to shareholders, including $2.55 billion in dividends and $1.25 billion in share buybacks [13] Fiscal 2026 Guidance - The company anticipates all-in sales growth of 1-5% for fiscal 2026, with organic sales expected to be flat to up 4% [14][15] - Core EPS is projected to grow by 3-9% compared to fiscal 2025, with a core EPS range of $6.83-$7.09 [15] - Procter & Gamble expects capital expenditure to be 4-5% of net sales and plans to pay out $10 billion in dividends and repurchase $5 billion in shares during fiscal 2026 [17]