2026 04 24 Earnings PG Q3 Fy2026

Summary

P&G reported Q3 FY2026 organic sales +3% (volume +2pts, pricing +1pt, mix flat), broad-based across all seven regions. Load-bearing causal claim — a precise Brent-crude → consumer-staples cost-pass-through mechanism: "the annual cost impact of Brent crude at around $100 per barrel is roughly $1.3 billion before tax, or $1 billion after tax, versus a pre-conflict oil price in the mid-sixties" (Schulten) — almost all landing in fiscal Q4, driven by "commodity-linked cost inflation, feedstock exposures, and logistics disruptions resulting from the conflict in the Middle East." Dated catalysts/guidance: FY2026 organic sales "in line to 4%"; core EPS "in line to 4%" but now "toward the lower end"; $500M pre-tax tariff headwind; ~$15B returned to shareholders (70th consecutive dividend raise). Falsifiers/tension: the consumer "has been hit with cumulative inflation beyond anything seen in recent history" and energy-cost impact on near-term spending "is unclear" — yet management insists pricing power is intact and saw no broad private-label trade-down, a partial counter to an extreme K-shaped/down-trade thesis.

NOTE: Key speaker-attributed extracts from the full Motley Fool transcript (every quote verbatim and attributed); not the complete verbatim call.

Transcript

Andre Schulten (CFO): "Volume increased two points, pricing was up one point, and mix was flat for the quarter" because of "improved consumption and trade inventory dynamics" in North America.

Andre Schulten (CFO): "When the consumer sees excitement and value—something they enjoy—they will go there and pay the premium." (on SK-II and Pampers growth in Greater China)

Andre Schulten (CFO): "When we innovate—when we deliver a better solution for our consumers and our categories—they respond. The prime example for me is the Tide liquid intervention."

Andre Schulten (CFO): "Strong productivity improvement of 330 basis points was offset by healthy reinvestment in innovation and demand creation."

Andre Schulten (CFO): "Almost all of these increased costs will be in the fiscal fourth quarter" due to "commodity-linked cost inflation, feedstock exposures, and logistics disruptions."

Andre Schulten (CFO): "For perspective, the annual cost impact of Brent crude at around $100 per barrel is roughly $1.3 billion before tax, or $1 billion after tax, versus a pre-conflict oil price in the mid-sixties."

Andre Schulten (CFO): "We now expect a headwind of approximately $150 million after tax for the fiscal year from a combination of commodity-linked cost inflation, feedstock exposures, and logistics disruptions resulting from the conflict in the Middle East."

Andre Schulten (CFO): "Our fiscal 2026 outlook continues to call for approximately $500 million before tax in higher costs from tariffs."

Andre Schulten (CFO): "We continue to expect organic sales growth of in line to 4%" for fiscal 2026.

Andre Schulten (CFO): "We now expect full-year EPS results to be toward the lower end of the guidance range" due to cost pressures.

Andre Schulten (CFO): "We expect fourth-quarter organic sales [will be] somewhat lower than third quarter" due to inventory timing and cost headwinds.

Andre Schulten (CFO): "It is unclear how much higher gas and energy costs will impact near-term consumer spending in our categories."

Andre Schulten (CFO): "The consumer has been hit with cumulative inflation beyond anything seen in recent history."

Analyst Q&A

Steve Powers (Deutsche Bank): Asked whether "productivity alone will be relied upon ... or do you feel the building advantages and momentum ... will allow for potential use of pockets of incremental pricing should the need arise?"

Andre Schulten (CFO): "Selective pricing with innovation—where the consumer tells us their interest is high and their willingness to pay for better performance is there—will be the other part of the offset that we are driving."

Chris Carey (Wells Fargo Securities): Questioned whether P&G has "lost the concept of pricing power" given cumulative inflation, and whether competition "needs to become a bit more rational."

Andre Schulten (CFO): "I do not think we have lost pricing power. Pricing power has to be earned, and the way to earn it is to combine pricing with a truly delightful experience for the consumer." On competition: "It is too early to say. This is just a few weeks, and everybody is still grappling with what reality we are looking at."

Lauren Lieberman (Barclays): Asked about China market performance and SK-II acceleration.

Andre Schulten (CFO): "The market is still difficult. Consumer confidence is still low ... Market growth is still negative across most channels, and the only growth you see is online and in Douyin ... SK-II was up 18% in total; I think China was up 13% in the quarter."

Bonnie Herzog (Goldman Sachs): Asked about Baby Care turnaround and whether growth is "end-market-led growth versus market share gains."

Andre Schulten (CFO): "At a global level, Baby Care is growing share. Five of seven regions are growing share, and the biggest region not growing share is the U.S.—that is where the focus is."