Procter & Gamble achieved both profit and organic sales growth last year despite a “dynamic, difficult and volatile” economic environment.
However, the Ariel, Oral-B and Head & Shoulders owner estimated it would take a $1bn hit from Donald Trump’s trade tariffs in the 2025/26 financial year.
The hit to the bottom line would be unwelcome, but might be partially recoverable through price rises, according to AJ Bell analyst Dan Coatsworth.
“With such a big presence in North America, P&G was always going to be swept up in Trump’s new tariff regime,” he told The Grocer. “Guidance for a $1bn hit from tariff-related costs is unwelcome, but P&G should be able to recover some of these extra costs by raising prices without dampening demand too much.
“It has an enviable portfolio of big brands that many consumers regularly put in their shopping basket, believing them to be the best products of their kind. Charging a little bit more shouldn’t alienate these loyal customers.”
P&G’s operating profit jumped 10% to $20.5bn in the year to 30 June 2025, with net profit reaching $16.1bn, up 7% on 2024, according to final year results posted today (29 July).
Net sales at the US-headquartered group held steady at $84bn as a 1% increase from higher prices was offset by a 1% hit from unfavourable foreign currency exchange.
It was also buoyed by 2% organic sales growth, which disregards acquisitions, divestments and currency exchange impacts, thanks to the price hikes and a small rise in organic volumes.
“We grew sales and profit in fiscal 2025 and returned high levels of cash to shareowners in a dynamic, difficult and volatile environment,” said CEO Jon Moeller, who is set to become executive chairman of P&G on 1 January 2026 as current COO Shailesh Jejurikar takes over as CEO.
“We’ve put in place strong plans to continue to deliver for all stakeholders in the current environment. In fiscal 2026, we expect to deliver another year of organic sales growth, core EPS growth and strong adjusted free cashflow productivity.”
Continued uncertainty over wider macro-economic fortunes led P&G to guide for sales growth of 1% to 5% in the new financial year, with organic growth forecast to fall in the range of 0% to 4%. Earnings per share growth is expected to come in at 3% to 9%.
Coatsworth added the “unusually wide range” for guidance reflected the ongoing uncertainty around tariffs.
“The key takeaway is that both sales and earnings guidance imply growth even at the bottom end of the range,” he said. “One can expect investors to put pressure on the company to narrow this range at the next set of quarterly results as P&G should have a better idea about tariffs by then.”
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