P&G expects profit to fall by 1 billion dollars due to rising oil prices

Published: 2026-04-26 05:01:08 ET PG

Published on 04/26/2026 at 05:01 am EDT

Key takeaways

Procter & Gamble (P&G) is expecting a significant drop in profit for the 2027 financial year, due to the rise in the oil price. P&G anticipates a decline in profit after tax of around 1 billion dollars, as a result of oil prices increasing from 60 dollars to about 105 dollars per barrel. The company is one of the market leaders in the consumer goods sector.

Rising costs

This cost pressure stems from higher spending on packaging materials such as plastic and paper. Transport costs have also risen. Andre Schulten, P&G’s CFO, acknowledges this sharp increase in raw material prices. He points to the need for strategic adjustments in the supply chain and cost structure.

The rising oil prices are adding to inflationary pressure, hitting lower-income consumers in the US particularly hard. They are already facing high costs in areas such as food, energy and healthcare. Schulten says recent geopolitical events have further heightened these concerns.

Profit outlook

On top of the long-term effects, P&G also expects a negative impact of 150 million dollars on profit in the fourth quarter. This is due to raw material inflation, exposure to commodity prices and logistical disruptions. These disruptions are linked to the conflict in the Middle East. As a result, the company anticipates additional pressure on its results. It expects earnings per share in the 2026 financial year to come in at the lower end of the projected range.

Despite these challenges, P&G performed strongly in the third quarter. Revenue rose by 7 per cent year on year to 21.24 billion dollars. Adjusted earnings per share came in at 1.59 dollars. P&G thus beat analysts’ estimates. The company attributes this growth to successful product launches in North America and Europe, including Pantene shampoo and Olay skin cream. P&G positioned these products in the premium segment and sold them at higher prices.

Sustainability of price increases

Although P&G reported higher sales volumes in three of its five segments, analysts warned that ongoing price hikes for popular brands may not be sustainable indefinitely.

In addition, P&G is actively seeking reimbursement of customs duties previously imposed under the International Emergency Economic Powers Act. These duties were later invalidated by the Supreme Court of the United States. The company expects a potential reimbursement of around 150 million dollars after tax and is currently going through the refund application process. (rd) (em)

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