Procter & Gamble Company

10/22/2026 | Press release | Distributed by Public on 10/22/2026 14:11

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including without limitation, in the following sections: "Management's Discussion and Analysis," "Risk Factors" and "Notes 3, 6 and 7 to the Consolidated Financial Statements." These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result" and similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, except to the extent required by law.
Risks and uncertainties to which our forward-looking statements are subject include, without limitation: (1) the ability to successfully manage global financial risks, including foreign currency fluctuations, changes in global interest rates and rate differentials, currency exchange or pricing controls and tariffs; (2) the ability to successfully manage local, regional or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow the Company to effect the expected share repurchases and dividend payments; (3) the ability to successfully manage uncertainties related to changing political and geopolitical conditions and potential implications such as exchange rate fluctuations, market contraction, boycotts, variability and unpredictability in trade relations, sanctions, tariffs or other trade controls; (4) the ability to manage disruptions in credit markets or to our banking partners or changes to our credit rating; (5) the ability to maintain key manufacturing and supply arrangements (including execution of supply chain optimizations and sole supplier and sole manufacturing plant arrangements) and to manage disruption of business due to various factors, including ones outside of our control, such as natural disasters, conflicts or acts of war, terrorism or disease outbreaks; (6) the ability to successfully manage cost fluctuations and pressures, including prices of commodities and raw materials and costs of labor, transportation, energy, pensions and healthcare; (7) the ability to compete with our local and global competitors in new and existing sales channels,
Amounts in millions of dollars except per share amounts or as otherwise specified.
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including by successfully responding to competitive factors such as prices, promotional incentives and trade terms for products; (8) the ability to manage and maintain key customer relationships; (9) the ability to protect our reputation and brand equity by successfully managing real or perceived issues, including concerns about safety, quality, ingredients, efficacy, packaging content, cyber incidents, supply chain practices, social or environmental practices or similar matters that may arise; (10) the ability to successfully manage the financial, legal, reputational and operational risk associated with third-party relationships, such as our suppliers, contract manufacturers, distributors, contractors and external business partners; (11) the ability to rely on and maintain key company and third-party information and operational technology systems, networks and services and maintain the security and functionality of such systems, networks and services and the data contained therein; (12) the ability to successfully manage demand, supply and operational challenges; (13) the ability to stay on the leading edge of innovation, obtain necessary intellectual property protections and successfully respond to changing consumer habits, evolving and more fragmented digital marketing and selling platform requirements and technological advances attained by, and patents granted to, competitors; (14) the ability to successfully manage our ongoing acquisition, divestiture and joint venture activities, in each case to achieve the Company's overall business strategy and financial objectives, without impacting the delivery of base business objectives; (15) the ability to successfully achieve productivity improvements and cost savings and manage ongoing organizational changes while successfully identifying, developing and retaining key employees, including in key growth markets where the availability of skilled or experienced employees may be limited; (16) the ability to successfully manage current and expanding regulatory and legal requirements and matters (including, without limitation, those laws, regulations, policies and related interpretations involving product liability, product and packaging composition, manufacturing processes, intellectual property, labor and employment, antitrust, privacy, cybersecurity, data protection and data transfers, artificial intelligence, tax, the environment, due diligence, risk oversight, accounting and financial reporting) and to resolve new and pending matters within current estimates; (17) the ability to manage changes in applicable tax laws and regulations; and (18) the ability to continue delivering progress towards our environmental sustainability ambitions. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from those projected herein is included in the section titled "Economic Conditions and Uncertainties" and the section titled "Risk Factors" (Part II, Item 1A) of this Form 10-Q.
Purpose, Approach and Non-GAAP Measures
The purpose of Management's Discussion and Analysis (MD&A) is to provide an understanding of Procter & Gamble's financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. The MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying Notes.
The MD&A is organized in the following sections:
•Overview
•Recent Developments
•Summary of Results - Three Months Ended September 30, 2026
•Economic Conditions and Uncertainties
•Results of Operations - Three Months Ended September 30, 2026
•Segment Results - Three Months Ended September 30, 2026
•Liquidity and Capital Resources
•Measures Not Defined by U.S. GAAP
Throughout the MD&A we refer to measures used by management to evaluate performance, including unit volume growth, net sales, net earnings, diluted net earnings per common share (diluted EPS) and operating cash flow. We also refer to a number of financial measures that are not defined under U.S. GAAP, consisting of organic sales growth, Core earnings per share (Core EPS), free cash flow and free cash flow productivity. The explanation at the end of the MD&A provides the definition of these non-GAAP measures, details on the use and the derivation of these measures, as well as reconciliations to the most directly comparable U.S. GAAP measure.
Management also uses certain market share and market consumption estimates to evaluate performance relative to competition despite some limitations on the availability and comparability of share and consumption information. References to market share and consumption in the MD&A are based on a combination of vendor-purchased traditional brick-and-mortar and online data in key markets as well as internal estimates. All market share references represent the percentage of sales of our products in dollar terms on a constant currency basis relative to all product sales in the category. The Company measures quarter and fiscal year to date market share through the most recent period for which market share data is available, which typically reflects a lag time of one or two months as compared to the end of the reporting period. Management also uses unit volume growth to evaluate drivers of changes in net sales. Organic volume growth reflects year-over-year changes in unit volume excluding the impacts of acquisitions and divestitures and certain one-time items, if applicable, and is used to explain changes in organic sales. In the presentation of data in tables or other charts, certain columns and rows may not add due to rounding.
14 The Procter & Gamble Company
OVERVIEW
P&G is a global leader in the fast-moving consumer goods industry, focused on providing branded consumer packaged goods of superior quality and value to our consumers around the world. Our products are sold in about 180 countries and territories, primarily through mass merchandisers, e-commerce (including social commerce) channels, grocery stores, membership club stores, drug stores, department stores, distributors, wholesalers, specialty beauty stores (including airport duty-free stores), high-frequency stores, pharmacies, electronics stores and professional channels. We also sell direct to individual consumers. We have on-the-ground operations in approximately 65 countries.
Our market environment is highly competitive with global, regional and local competitors. In many of the markets and industry segments in which we sell our products, we compete against other branded products as well as retailers' private-label brands. Additionally, many of the product segments in which we compete are differentiated by price tiers (referred to as super-premium, premium, mid-tier and value-tier products). We believe we are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position.
The table below lists our reportable segments, including the product categories and brand composition within each segment.
Reportable Segments Product Categories (Sub-Categories) Major Brands
Beauty
Hair Care (Conditioners, Shampoos, Styling Aids, Treatments)
Head & Shoulders, Herbal Essences, Pantene, Rejoice
Personal Care (Antiperspirants and Deodorants, Personal Cleansing)
Native, Old Spice, Safeguard, Secret
Skin Care (Facial Moisturizers, Cleaners and Treatments)
Olay, SK-II
Grooming
Grooming (Appliances, Female Blades & Razors, Male Blades & Razors, Pre- and Post-Shave Products, Other Grooming)
Braun, Gillette, Venus
Health Care
Oral Care (Toothbrushes, Toothpastes, Other Oral Care)
Crest, Oral-B
Personal Health Care (Gastrointestinal, Pain Relief, Rapid Diagnostics, Respiratory, Vitamins/Minerals/Supplements, Other Personal Health Care)
Metamucil, Neurobion, Pepto-Bismol, Vicks
Fabric & Home Care
Fabric Care (Fabric Enhancers, Laundry Additives, Laundry Detergents)
Ariel, Downy, Gain, Tide
Home Care (Air Care, Dish Care, P&G Professional, Surface Care)
Cascade, Dawn, Fairy, Febreze, Mr. Clean, Swiffer
Habitat Care (Pest Prevention, Outdoor Care)
Spruce, Zevo
Baby, Feminine & Family Care
Baby Care (Baby Wipes, Taped Diapers and Pants)
Luvs, Pampers
Feminine Care (Adult Incontinence, Menstrual Care)
Always, Always Discreet, Tampax
Family Care (Paper Towels, Tissues, Toilet Paper)
Bounty, Charmin, Puffs
Throughout the MD&A, we reference business results by region, which are comprised of North America, Europe, Greater China, Latin America, Asia Pacific and India, Middle East, Türkiye and Africa (IMETA).
The following table provides the percentage of net sales and net earnings by reportable business segment (excluding Corporate) for the three months ended September 30, 2026:
Three Months Ended September 30, 2026
Net Sales Net Earnings
Beauty 19 % 18 %
Grooming 8 % 10 %
Health Care 14 % 16 %
Fabric & Home Care 36 % 34 %
Baby, Feminine & Family Care 23 % 22 %
Total Company 100 % 100 %
RECENT DEVELOPMENTS
Focused Portfolio, Supply Chain and Productivity Plan
In June 2025, the Company announced a portfolio and productivity plan to streamline its portfolio and organization to improve its cost structure and competitiveness. The Company expects to incur approximately $2.0 billion in before-tax restructuring
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costs over a two-year period. The Company incurred over half of the costs under this plan in fiscal 2026, with the remainder expected to be incurred in fiscal 2027. The restructuring activities are being executed across the Sector Business Units as well as the Enterprise Markets, Corporate Functions and Global Business Services. These restructuring activities include a plan for a reduction of up to 7,000 non-manufacturing overhead personnel by the end of fiscal 2027.
Consistent with our historical policies for ongoing restructuring-type activities, resulting charges were funded by and included within Corporate for segment reporting. Restructuring charges above the normal ongoing level of restructuring costs are reported as non-core charges. For more details on the restructuring program, refer to Note 7 to the Consolidated Financial Statements.
Thorne Acquisition
On October 1, 2026, the Company completed the acquisition of Thorne, a premium wellness and supplement brand in the vitamins, minerals and supplements category for $3.9 billion in an all-cash transaction. Thorne primarily sells in North America and will be part of our Personal Health Care operating segment. The results of Thorne, which are not material to the Company, will be reported in our Consolidated financial statements beginning with the three months ending December 31, 2026.
SUMMARY OF RESULTS - Three Months Ended September 30, 2026
The following are highlights of results for the three months ended September 30, 2026, versus the three months ended September 30, 2025:
•Net sales were $23.3 billion, an increase of $890 million, or 4.0%, versus the prior year period. Net sales increased mid-single digits in Beauty, Fabric & Home Care and Grooming and low single digits in Health Care and Baby, Feminine & Family Care. Organic sales, which exclude the impacts of acquisitions and divestitures and foreign exchange, increased 4.0% versus the prior year period. Organic sales increased mid-single digits in Beauty, Fabric & Home Care and Grooming and low single digits in Baby, Feminine & Family Care and Health Care.
•Diluted EPS increased 1% to $1.97. Core EPS, which represents diluted EPS excluding charges for incremental restructuring, increased 1% to $2.00.
•Operating cash flow was $5.8 billion. Free cash flow, which is defined as operating cash flow less capital expenditures, was $4.4 billion. Free cash flow productivity, which is defined as free cash flow as a percentage of net earnings, was 93%.
ECONOMIC CONDITIONS AND UNCERTAINTIES
Global Economic Conditions. Our products are sold in numerous countries worldwide, with more than half our sales generated outside the United States. Our largest international markets are Greater China, the United Kingdom, Canada, Japan and Germany and collectively comprised approximately 21% of our net sales in fiscal 2026. As a result, we are exposed to global macroeconomic factors, geopolitical tensions and government policies. We are exposed to various risks due to economic, political and social instabilities, market volatility, natural disasters, debt and credit issues, currency controls, new or increased tariffs, foreign exchange, the availability and cost of materials and interest rate changes. These risks can negatively impact our net sales, net earnings and cash flows. For example, we are exposed to risks due to the conflict in the Middle East and the ongoing war between Russia and Ukraine. Our Russia business accounted for 1% of consolidated net sales, net earnings and net assets as of June 30, 2026.
Foreign Exchange. We have significant exposure to exchange rate fluctuations, both due to translation and transaction exposures. Translation exposures arise from measuring income statements of foreign subsidiaries with functional currencies other than the U.S. dollar. Transaction exposures involve impacts from 1) input costs that are denominated in currencies other than the local reporting currency and 2) revaluation of working capital balances denominated in currencies other than the functional currency. We have experienced significant foreign exchange impacts in the past due to the weakening of certain foreign currencies versus the U.S. dollar, which have negatively impacted net sales, net earnings and cash flows. In response to the devaluation of foreign currencies (including those deemed highly inflationary), any lags or inability (due to government restrictions) to implement price increases or the negative impacts of such actions on product consumption may lead to a decline in our net sales, net earnings and cash flows.
Commodities and Supply Chain. Our costs are subject to fluctuations due to changes in commodity and input material prices, transportation costs, inflationary impacts and productivity efforts. We have significant exposures to certain commodities and input materials, in particular certain oil-derived materials like resins and paper-based materials like pulp. Volatility in the market price of commodities and input materials directly affects our costs. Disruptions in manufacturing, supply and distribution operations can lead to increased costs. Legal or regulatory requirements and sustainability initiatives may result in increased costs. We strive to implement, achieve and sustain cost improvement plans, including supply chain optimization and general overhead and workforce optimization. Increased pricing in response to certain inflationary or cost increases may also offset portions of the cost impacts; however, such price increases may negatively impact product consumption. If we are unable to manage cost impacts through pricing actions and consistent productivity improvements, it may negatively impact our net sales, net earnings and cash flows.
Government Policies. We are exposed to changes in U.S. and foreign government legislative, regulatory or enforcement policies that can have a negative impact on net sales, net earnings and cash flows. These include tax policy changes (both U.S.
16 The Procter & Gamble Company
and foreign), including those resulting from the current work being led by the OECD/G20 Inclusive Framework focused on "Addressing the Challenges of the Digitalization of the Economy". Government controls such as currency exchanges, pricing and import authorizations as well as government policies related to environmental and climate change matters and changes to international trade agreements, including tariffs, can also impact our financial performance.
For additional information on risk factors that could impact our business results, please refer to Risk Factors in Part I, Item 1A of the Company's Form 10-K for the fiscal year ended June 30, 2026.
RESULTS OF OPERATIONS - Three Months Ended September 30, 2026
The following discussion provides a review of results for the three months ended September 30, 2026, versus the three months ended September 30, 2025.
Three Months Ended September 30
Amounts in millions, except per share amounts 2026 2025 % Chg
Net sales $ 23,276 $ 22,386 4%
Operating income 5,937 5,856 1%
Earnings before income taxes 6,023 6,034 -%
Net earnings 4,757 4,781 (1)%
Net earnings attributable to Procter & Gamble 4,731 4,750 -%
Diluted net earnings per common share 1.97 1.95 1%
Core net earnings per common share 2.00 1.99 1%
Three Months Ended September 30
COMPARISONS AS A PERCENTAGE OF NET SALES 2026 2025 Basis Pt Chg
Gross margin 49.8 % 51.4 % (160)
Selling, general & administrative expense 24.3 % 25.2 % (90)
Operating income 25.5 % 26.2 % (70)
Earnings before income taxes 25.9 % 27.0 % (110)
Net earnings 20.4 % 21.4 % (100)
Net earnings attributable to Procter & Gamble 20.3 % 21.2 % (90)
Net Sales
Net sales for the quarter increased 4.0% to $23.3 billion. The increase in net sales was due to a unit volume increase of 2.4%, favorable geographic mix of 1.1% and higher pricing of 0.4%. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales also increased 4.0%.
The following table summarizes key drivers of the change in net sales by reportable segment:
Net Sales Change Drivers 2026 vs. 2025 (Three Months Ended September 30) (1)
Volume with Acquisitions & Divestitures Volume Excluding Acquisitions & Divestitures Foreign Exchange Price Mix
Acquisitions & Divestitures (2)
Net Sales Growth
Beauty 2.2 % 2.2 % 1.1 % 0.7 % 2.5 % - % 6.4 %
Grooming (0.4) % (0.4) % (0.4) % 3.5 % 1.5 % (0.1) % 4.0 %
Health Care (2.9) % (2.9) % 0.4 % 2.8 % 2.8 % (0.1) % 3.1 %
Fabric & Home Care 4.3 % 4.3 % (0.6) % (0.3) % 0.8 % - % 4.2 %
Baby, Feminine & Family Care 2.3 % 2.3 % (0.1) % (1.2) % 1.8 % - % 2.9 %
Total Company 2.4 % 2.4 % - % 0.4 % 1.1 % - % 4.0 %
(1)Net sales percentage changes are approximations based on quantitative formulas that are consistently applied.
(2)Acquisitions and Divestitures excluding the volume impact.
Operating Costs
Gross margin decreased 160 basis points to 49.8% of net sales for the quarter. The decrease in gross margin was due to:
•140 basis points of higher commodity costs,
•140 basis points of product and packaging investments,
•50 basis points of decline from unfavorable product mix,
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•10 basis points of higher restructuring costs and
•10 basis points of other items and rounding.
These impacts were partially offset by:
•120 basis points of manufacturing productivity savings,
•50 basis points of due to lower tariff costs and recognized recoveries and
•20 basis points of increase due to higher pricing.
Total SG&A spending was unchanged versus the prior year period at $5.7 billion as increased marketing spending was offset by a decline in overhead costs. SG&A as a percentage of net sales decreased 90 basis points to 24.3% due primarily to a decrease in overhead costs as a percentage of net sales and a decrease in marketing spending as a percentage of net sales. Overhead costs as a percentage of net sales decreased 70 basis points driven by productivity savings and the positive scale impacts of the net sales increase, partially offset by wage inflation. Marketing spending as a percentage of net sales decreased 20 basis points driven by the positive scale impacts of the net sales increase and productivity savings, partially offset by an increase in marketing spending. Productivity-driven cost savings delivered 130 basis points of benefit to SG&A as a percentage of net sales.
Operating income increased 1% to $5.9 billion as the increase in net sales was partially offset by a decrease in gross margin, the components of which are described above. Operating margin decreased 70 basis points to 25.5% versus the prior year period due primarily to the decrease in gross margin, partially offset by productivity-driven cost savings.
Non-Operating Expenses and Income
Interest expense was $223 million for the quarter, an increase of $26 million versus the prior year period. Interest income was $102 million for the quarter, a decrease of $6 million versus the prior year period. Other non-operating income/(expense), net was $207 million, a decrease of $61 million versus the prior year period.
Income Taxes
The effective income tax rate for the three months ended September 30, 2026, was 21.0%, compared to 20.8% for the three months ended September 30, 2025. The increase in effective tax rate was primarily driven by discrete impacts related to uncertain tax positions, partially offset by favorable geographic mix impacts.
Net Earnings
Net earnings were $4.8 billion, a decrease of $24 million, or 1%, versus the prior year period, the details of which are described above. Foreign exchange had a positive impact of approximately $23 million on net earnings for the quarter, including both transactional and translational impacts from converting earnings from foreign subsidiaries to U.S. dollars. Net earnings attributable to Procter & Gamble were $4.7 billion, a decrease of $19 million for the quarter. Diluted EPS increased 1% to $1.97 versus the prior year period. Core EPS, which represents diluted EPS excluding charges for incremental restructuring, increased 1% to $2.00.
SEGMENT RESULTS - Three Months Ended September 30, 2026
The following discussion provides a review of results by reportable business segment. Analysis of the results for the three months ended September 30, 2026, is provided based on a comparison to the three months ended September 30, 2025. Certain amounts in the prior year presentation between segments were reclassified to conform to the current year's presentation. The primary financial measures used to evaluate segment performance are net sales and net earnings. The table below provides supplemental information on net sales, earnings before income taxes and net earnings by reportable business segment for the three months ended September 30, 2026, versus the comparable prior year period (dollar amounts in millions):
Three Months Ended September 30, 2026
Net Sales % Change Versus Year Ago Earnings/(Loss) Before Income Taxes % Change Versus Year Ago Net Earnings/(Loss) % Change Versus Year Ago
Beauty $ 4,410 6 % $ 1,139 1 % $ 868 (1) %
Grooming 1,889 4 % 619 6 % 477 3 %
Health Care 3,318 3 % 1,029 10 % 783 9 %
Fabric & Home Care 8,205 4 % 2,080 4 % 1,601 3 %
Baby, Feminine & Family Care 5,322 3 % 1,390 (4) % 1,060 (4) %
Corporate 132 N/A (234) N/A (32) N/A
Total Company $ 23,276 4 % $ 6,023 - % $ 4,757 (1) %
Beauty
Three months ended September 30, 2026, compared with three months ended September 30, 2025
18 The Procter & Gamble Company
Beauty net sales increased 6% to $4.4 billion, driven by favorable product mix of 2%, a unit volume increase of 2%, favorable foreign exchange of 1% and positive impacts of pricing of 1%. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 5%. Global market share of the Beauty segment decreased 0.2 points.
•Hair Care net sales increased mid-single digits driven by positive impacts of innovation-based pricing (primarily in North America and Latin America), favorable product mix, an increase in unit volume and favorable foreign exchange. The volume increase was driven by growth in Europe, Asia Pacific and Greater China (all due to innovation), partially offset by IMETA (due to go-to-market discontinuations under our restructuring program). Organic sales increased mid-single digits driven by growth in all regions, led by high single-digit growth in Asia Pacific and Latin America and mid-single-digit growth in North America, partially offset by low single digit growth in Greater China. Global market share of the Hair Care category was unchanged.
•Personal Care net sales increased high single digits driven by an increase in unit volume, favorable product mix and favorable foreign exchange, partially offset by lower pricing (due to trade investments). The volume increase was driven by growth in Greater China (due to innovation) and Europe (due to distribution gains). Organic sales increased mid-single digits driven by more than 20% growth in Europe and mid-single-digit growth in North America and Greater China. Global market share of the Personal Care category decreased 0.4 points.
•Skin Care net sales increased mid-single digits driven by favorable product mix (due primarily to the increase of the super-premium SK-II brand, which has higher than category-average selling prices), a unit volume increase and favorable foreign exchange. The volume increase was driven by North America (due to innovation), partially offset by Greater China (due to competitive activity). Organic sales also increased mid-single digits driven by double-digit growth in Asia Pacific, partially offset by low single-digit growth in Greater China and North America. Global market share of the Skin Care category decreased 0.6 points.
Net earnings decreased 1% to $868 million due to a 150 basis-point decline in net earnings margin, partially offset by an increase in net sales. Net earnings margin decreased due to a decrease in gross margin and an increase in SG&A as a percentage of net sales. The gross margin decline of 90 basis points was driven by the higher cost of commodities and unfavorable product mix, partially offset by productivity savings. SG&A as a percentage of net sales increased primarily due to an increase in marketing spending, partially offset by lower overhead spending.
Grooming
Three months ended September 30, 2026, compared with three months ended September 30, 2025
Grooming net sales increased 4% to $1.9 billion driven by innovation-driven pricing of 3% (primarily by North America and IMETA) and favorable product mix of 1%. Unit volume was unchanged as an increase in Europe (due to innovation) was offset by a decrease in Latin America (due to distribution losses) and IMETA (due to go-to-market discontinuations under our restructuring program). Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 5% led by high single-digit growth in Europe and mid-single-digit growth in North America and IMETA, partially offset by a low single-digit decline in Latin America. Global market share of the Grooming segment increased 0.2 points.
Net earnings increased 3% to $477 million due to an increase in net sales, partially offset by a 30 basis-point decrease in net earnings margin. Net earnings margin decreased due to an increase in the effective tax rate, partially offset by an increase in gross margin. The gross margin increase of 60 basis points was primarily driven by higher pricing, recognized tariff recoveries and productivity savings, partially offset by unfavorable product mix. SG&A as a percentage of net sales was unchanged as the positive scale impacts of the net sales increase and a decrease in overhead spending was offset by an increase in marketing spending. The higher effective tax rate was driven by unfavorable geographic mix.
Health Care
Three months ended September 30, 2026, compared with three months ended September 30, 2025
Health Care net sales increased 3% to $3.3 billion driven by higher pricing of 3% and favorable product mix of 3%, partially offset by a 3% decrease in unit volume. Excluding the impact of acquisitions and divestitures and foreign exchange, organic sales increased 3%. Global market share of the Health Care segment was unchanged.
•Oral Care net sales increased low single digits driven by positive impacts of favorable product mix (due to growth of power brushes and premium paste, which have higher than category-average selling prices) and innovation-based pricing (driven by North America), partially offset by a unit volume decline. The unit volume decrease was driven by declines in Latin America and Greater China (both due to go-to-market discontinuations under our restructuring program) and North America (due to competitive activity), partially offset by an increase in Europe (due to distribution gains). Organic sales increased low single digits driven by a double-digit increase in Europe, partially offset by a high single-digit decrease in Latin America and a low single-digit decrease in North America. Global market share of the Oral Care category decreased 0.6 points.
•Personal Health Care net sales increased mid-single digits driven by higher pricing (driven by North America and Latin America), favorable product mix and favorable foreign exchange, partially offset by a unit volume decrease. The unit
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volume decrease was driven by Latin America and North America (both due to lower average incidence of cough and cold). Organic sales increased low single digits driven by a high single-digit increase in IMETA and mid-single-digit increases in North America and Europe, partially offset by a low single-digit decrease in Latin America. Global market share of the Personal Health Care category increased 0.5 points.
Net earnings increased 9% to $783 million due to an increase in net sales and a 130 basis-point increase in net earnings margin. Net earnings margin increased due to a increase in gross margin, partially offset by a increase in SG&A as a percentage of net sales and an increase in the effective tax rate. The gross margin increase of 200 basis points was driven primarily by higher pricing, recognized tariff recoveries and productivity savings, partially offset by unfavorable product mix and the higher cost of commodities. SG&A as a percentage of net sales increased due to an increase in marketing spending, partially offset by a decrease in overhead spending. The higher effective tax rate was driven by unfavorable geographic mix.
Fabric & Home Care
Three months ended September 30, 2026, compared with three months ended September 30, 2025
Fabric & Home Care net sales increased 4% to $8.2 billion driven by a unit volume increase of 4% and favorable geographic mix of 1%, partially offset by unfavorable foreign exchange of 1%. Excluding the impact of foreign exchange and acquisitions and divestitures, organic sales increased 5%. Global market share of the Fabric & Home Care segment increased 0.3 points.
•Fabric Care net sales increased mid-single digits driven by positive impacts from a unit volume increase and favorable geographic mix, partially offset by negative impacts from unfavorable foreign exchange. The unit volume increase was driven by an increase in North America, Europe and Latin America (all due to market growth). Organic sales increased mid-single digits driven by a low teens increase in Latin America and mid-single-digit increases in North America and Europe. Global market share of the Fabric Care category increased 0.4 points.
•Home Care net sales increased mid-single digits driven by a unit volume increase and favorable product mix, partially offset by unfavorable foreign exchange. The increase in volume was led by North America (due to distribution gains) and Europe and Asia Pacific (both due to innovation). Organic sales increased mid-single digits driven by mid-single-digit increases in North America and Europe. Global market share of the Home Care category was unchanged.
Net earnings increased 3% to $1.6 billion due to an increase in net sales, partially offset by a 20 basis-point decrease in net earnings margin. Net earnings margin decreased due to a decrease in gross margin, partially offset by a decrease in SG&A as a percentage of net sales. The gross margin decrease of 290 basis points was driven by the higher cost of commodities, product investments and unfavorable product mix, partially offset by productivity savings. SG&A as a percentage of net sales decreased due to decreases in marketing spending and overhead spending.
Baby, Feminine & Family Care
Three months ended September 30, 2026, compared with three months ended September 30, 2025
Baby, Feminine & Family Care net sales increased 3% to $5.3 billion driven by a unit volume increase of 2% and favorable product mix of 2%, partially offset by lower pricing of 1%. Excluding the impacts of foreign exchange and acquisitions and divestitures, organic sales increased 3%. Global market share of the Baby, Feminine & Family Care segment was unchanged.
•Baby Care net sales increased mid-single digits driven by a unit volume increase and favorable impacts from product mix, partially offset by lower pricing (primarily in North America). The unit volume increase was driven by increases in Greater China and North America (both due to distribution gains), partially offset by a decrease in Europe (due to market contraction). Organic sales increased mid-single digits driven by a more than 40% increase in Greater China and a low teens increase in IMETA, partially offset by a low single-digit increase in North America and a low single-digit decrease in Europe. Global market share of the Baby Care category increased 0.8 points.
•Feminine Care net sales increased low single digits driven by favorable geographic mix and innovation-based pricing (primarily in North America), partially offset by a unit volume decrease. The unit volume decrease was driven by declines in Europe (due to competitive activity) and IMETA (due to go-to-market discontinuations under our restructuring program), partially offset by an increase in North America (due to distribution gains). Organic sales increased low single digits driven by high single-digit increases in North America and Greater China, partially offset by a mid-single-digit decrease in Europe. Global market share of the Feminine Care category was unchanged.
•Net sales in Family Care, which is predominantly a North America business, increased low single digits driven by a unit volume increase (due to market growth), partially offset by lower pricing (due to merchandising investments). Organic sales also increased low single digits. North America market share of the Family Care category decreased 0.5 points.
Net earnings decreased 4% to $1.1 billion due to a 150 basis-point decrease in net earnings margin, partially offset by an increase in net sales. Net earnings margin decreased due to a decrease in in gross margin, partially offset by a decrease in SG&A as a percentage of net sales. The gross margin decrease of 220 basis points was primarily due to the higher cost of commodities and merchandising investments, partially offset by the lower cost of tariffs. SG&A as a percentage of net sales decreased due a reduction in overhead spending, partially offset by an increase in marketing spending.
Corporate
20 The Procter & Gamble Company
Corporate includes certain operating and non-operating activities not allocated to specific business segments. These include but are not limited to incidental businesses managed at the corporate level, gains and losses related to certain divested brands or businesses, impacts from various financing and investing activities, certain impacts related to employee benefits, asset impairments and restructuring activities including manufacturing and workforce optimization. Corporate also includes reconciling items to adjust the accounting policies used within the reportable segments to U.S. GAAP. The most notable ongoing reconciling item is income taxes, which adjusts the blended statutory rates that are reflected in the reportable segments to the overall Company effective tax rate.
For the three months ended September 30, 2026, Corporate net sales decreased $33 million to $132 million. Corporate net earnings decreased $94 million to a loss of $32 million for the quarter.
LIQUIDITY & CAPITAL RESOURCES
Operating Activities
Operating cash flow was $5.8 billion fiscal year to date, an increase of $359 million versus the prior year period. Net earnings, adjusted for non-cash items (depreciation and amortization, share-based compensation expense, deferred income taxes and (gain)/loss on sale of assets), generated $5.8 billion of operating cash flow. Working capital and other impacts were largely neutral, generating $7 million of cash in the period. Accounts receivable increased, consuming $589 million of cash, driven primarily by sales growth. Days sales outstanding increased by one day. Total inventories increased, consuming $349 million of cash, driven primarily by increased safety stock levels. Days inventory on hand decreased by two days. Trade payables increased, generating $1.1 billion of cash, driven primarily by increased supply chain activity, partially offset by decreased marketing support activity. Other impacts consumed additional cash of $204 million primarily driven by a reduction in postretirement benefit and compensation accruals, partially offset by current year income tax accruals in excess of estimated payments.
Investing Activities
Investing activities used $1.5 billion of cash fiscal year to date primarily driven by capital expenditures.
Financing Activities
Financing activities generated $1.1 billion of net cash fiscal year to date, mainly due to a net debt increase related to the planned acquisition of Thorne. This was partially offset by dividends to shareholders and treasury stock purchases.
As of September 30, 2026, our current liabilities exceeded current assets by $12.5 billion. We anticipate being able to support our short-term liquidity and operating needs largely through cash generated from operations. We have strong short- and long-term debt ratings that have enabled and should continue to enable us to refinance our debt as it becomes due in commercial paper and bond markets. In addition, we have agreements with a diverse group of financial institutions that, if needed, should provide sufficient funding to meet short-term financing requirements.
MEASURES NOT DEFINED BY U.S. GAAP
In accordance with the SEC's Regulation S-K Item 10(e), the following provides definitions of the non-GAAP measures and the reconciliation to the most closely related GAAP measure. We believe that these measures provide useful perspective on underlying business trends (i.e., trends excluding non-recurring or unusual items) and results and provide a supplemental measure of period-to-period results. The non-GAAP measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes. These measures may be useful to investors, as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These measures are also used to evaluate senior management and are a factor in determining their at-risk compensation. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measures but rather as supplemental information to our business results. These non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.
Organic sales growth. Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of acquisitions and divestitures and foreign exchange from year-over-year comparisons. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. This measure is used in assessing the achievement of management goals for at-risk compensation.
The Procter & Gamble Company 21
The following tables provide a numerical reconciliation of net sales growth to organic sales growth:
Three Months Ended September 30, 2026 Net Sales Growth Foreign Exchange Impact Acquisition & Divestiture Impact Organic Sales Growth
Beauty 6.4 % (1.1) % - % 5.4 %
Grooming 4.0 % 0.4 % 0.2 % 4.5 %
Health Care 3.1 % (0.4) % - % 2.7 %
Fabric & Home Care 4.2 % 0.6 % - % 4.8 %
Baby, Feminine & Family Care 2.9 % 0.1 % - % 3.0 %
Total Company 4.0 % - % - % 4.0 %
Free cash flow. Free cash flow is defined as operating cash flow less capital spending. Free cash flow represents the cash that the Company is able to generate after taking into account planned maintenance and asset expansion. We view free cash flow as an important measure because it is one factor used in determining the amount of cash available for dividends, share repurchases, acquisitions and other discretionary investments.
The following table provides a numerical reconciliation of free cash flow ($ millions):
Three Months Ended September 30, 2026
Operating Cash Flow Capital Spending Free Cash Flow
$ 5,767 $ (1,366) $ 4,401
Free cash flow productivity. Free cash flow productivity is defined as the ratio of free cash flow to net earnings. We view free cash flow productivity as a useful measure to help investors understand P&G's ability to generate cash. Free cash flow productivity is used by management in making operating decisions, in allocating financial resources and for budget planning purposes. This measure is also used in assessing the achievement of management goals for at-risk compensation.
The following table provides a numerical reconciliation of free cash flow productivity ($ millions):
Three Months Ended September 30, 2026
Free Cash Flow Net Earnings Free Cash Flow Productivity
$ 4,401 $ 4,757 93 %
Core EPS. Core EPS is a measure of the Company's diluted EPS excluding items that are not judged by management to be part of the Company's sustainable results or trends. Management views this non-GAAP measure as a useful supplemental measure of Company performance over time. This measure is also used in assessing the achievement of management goals for at-risk compensation. The Core earnings measures included in the following reconciliation tables refer to the equivalent GAAP measures adjusted as applicable for the following items:
•Incremental restructuring: The Company has historically had an ongoing level of restructuring activities of approximately $250 - $500 million before tax annually. In June 2025, the Company announced a portfolio and productivity plan to streamline its portfolio and organization to improve its cost structure and competitiveness. The Company expects to incur approximately $2 billion in before-tax restructuring costs over two years and has incurred over half of the costs under this plan in fiscal 2026, with the remainder expected to be incurred in fiscal 2027. The adjustments to Core earnings include the restructuring charges that exceed the normal, recurring level of restructuring charges.
We do not view the above items to be part of our sustainable results, and their exclusion from Core earnings measures provides a more comparable measure of year-on-year results. This item is also excluded when evaluating senior management in determining their at-risk compensation.
22 The Procter & Gamble Company
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
Three Months Ended September 30, 2026
Amounts in millions except per share amounts As Reported (GAAP) Incremental Restructuring Core
(Non-GAAP)
Cost of products sold $ 11,678 $ (44) $ 11,634
Selling, general and administrative expense 5,661 (54) 5,607
Operating income 5,937 98 6,035
Other non-operating income/(expense), net 207 2 209
Income taxes 1,267 20 1,287
Net earnings 4,757 80 4,837
Less: Net earnings attributable to noncontrolling interests 26 2 28
Net earnings attributable to P&G 4,731 77 4,808
Core EPS
Diluted net earnings per common share (1)
$ 1.97 $ 0.03 $ 2.00
(1)Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.
CHANGE VERSUS YEAR AGO
Net earnings attributable to P&G - %
Core net earnings attributable to P&G (1) %
Diluted net earnings per common share 1 %
Core EPS 1 %
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
Three Months Ended September 30, 2025
Amounts in millions except per share amounts As Reported (GAAP) Incremental Restructuring Core
(Non-GAAP)
Cost of products sold $ 10,887 $ (39) $ 10,848
Selling, general and administrative expense 5,643 (77) 5,566
Operating income 5,856 116 5,972
Other non-operating income/(expense), net 268 7 275
Income taxes 1,253 23 1,276
Net earnings attributable to P&G 4,750 100 4,850
Core EPS
Diluted net earnings per common share (1)
$ 1.95 $ 0.04 $ 1.99
(1)Diluted net earnings per common share are calculated on Net earnings attributable to Procter & Gamble.
Procter & Gamble Company published this content on October 22, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 22, 2026 at 20:23 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]