Procter & Gamble's (PG.US) price increase strategy helped Q1 performance exceed expectations and reduce the impact of tariffs

The Zhitong Finance App learned that Procter & Gamble (PG.US) announced the results for the first fiscal quarter ending September 30. The company's sales performance in the latest quarter exceeded expectations, thanks to price increases. Organic revenue in Q1 increased 2% — above analysts' average expectations, an indicator that excludes exchange rate fluctuations and acquisitions. Revenue reached $22.39 billion (up 3.0% year over year), exceeding expectations of $220 million. Revenue reached $22.39 billion, up 3.0% year over year, exceeding expectations of $220 million. Non-GAAP earnings per share were $1.99, up 3% year over year, and also higher than market expectations.

The company's sales volume and sales in the beauty and care product category both exceeded expectations, making up for weak performance in other areas such as baby products, women's products, and home care products, which led to an increase in overall sales performance.

Core gross margin for the quarter was 50 basis points lower than the same period last year, and by 30 basis points when excluding exchange rate factors. Operating profit margin decreased by 50 basis points compared to the same period last year.

These results reflect the resilience of consumer demand and show that P&G's strategy of charging higher prices for its products while promoting them as superior to competitors is paying off. For example, the company advertises stain remover laundry detergent that can better remove stains from clothing, thereby saving consumers money.

Additionally, the consumer goods company announced that it will cut its workforce by about 15% over the next two years to improve efficiency. At the same time, the company will appoint a new CEO and review its brand portfolio.

Procter & Gamble has generally maintained its guidelines for the current fiscal year, and the impact of tariffs and commodity prices is currently expected to weaken. Procter & Gamble now expects the impact of post-tax tariffs to be $400 million, compared to the previous estimate of $800 million.

P&G maintained its guidance range for overall sales growth in the 2026 fiscal year between 1% and 5%. The net impact of foreign exchange rates, acquisitions, and asset divestments is expected to have a positive impact of around 1%. The company also maintained the expected range of growth in organic sales between the same level and a 4% increase from current levels.

The company raised prices in all business segments except baby products, women's products, and home care products. Some consumers are pressured by rising costs across the US economy and are starting to cut expenses and look for discounted and more cost-effective products.

In pre-market trading on Friday, P&G shares were up about 4% as of press time. By Thursday's close, the company's stock price had fallen 9.2% this year, while the S&P 500 index had risen nearly 15% during the same period.