Consumer giants are in a hurry! Inflation stickiness is draining consumption power, and Procter & Gamble (PG.US) Q4 revenue loss warns that growth will slow in 2027
The Zhitong Finance App learned that global consumer goods leader Procter & Gamble (PG.US) predicts that revenue growth will slow in the 2027 fiscal year. Previously, due to the “very challenging geopolitical and economic environment,” unbalanced market demand in fields such as barber and oral care fell short of expectations. According to financial reports, P&G's net sales for the fourth quarter increased 1.5% to $21.20 billion, but fell short of expectations of $21.38 billion; adjusted earnings per share were $1.43, which narrowly beat analysts' expectations of $1.41.
Rising food and gasoline prices and consecutive quarters of sticking inflation have forced low-income consumers to tighten spending and find cheaper alternatives to some everyday items.
P&G shares fell about 3% during Wednesday's pre-market trading.
The Tide manufacturer expects total net sales growth of between 1% and 3% in fiscal 2027, compared to a 3.3% increase in fiscal 2026. On a median basis, this forecast is slightly below the 2.7% increase expected by analysts on average.
According to data compiled by LSEG, the company expects adjusted earnings per share for the 2027 fiscal year between $6.89 and $7.11, which is slightly lower than analysts' expectations of $7.04.
Shailesh Jejurikar, who took over as CEO of the consumer goods giant in January of this year, said, “FY2026 is a year to lay the foundation.”
The company also designated Shailesh Jejurikar as chairman from August 1, and announced that executive chairman and former CEO Jon Moeller will retire on August 14.
Profit margins under pressure
P&G's core operating margin fell 130 basis points. This is the third consecutive quarter in which the company experienced a decline due to increased marketing investment while coping with the impact of rising commodity costs brought about by the US-Iran war.
The company maintained its original forecast that FY2027 profits would be affected by approximately $1 billion due to rising raw materials, energy, and transportation costs due to soaring oil prices.
A P&G spokesperson said there is still some uncertainty about how long the high costs will last and how prices will fluctuate.
Consumer-facing companies, including Pepsi, also pointed out that investment costs will be higher in the second half of the year.
P&G's overall organic sales remained flat in the fourth quarter, with a decline in three of the five business segments it announced. However, its more expensive hair care and personal care products once again became a highlight, and sales in the beauty category increased 3% even though overall prices remained largely unchanged in the fourth quarter.
In contrast, competitor Unilever recorded its best single-quarter sales performance in more than a decade as the company turned its focus to beauty and health products.
This category bucked the trend and broke the wider haze of weak consumption. Consumers continue to buy self-care products that help improve their quality of life, giving companies room to raise prices for new products such as shampoo and skincare products they launch.