Procter & Gamble posted stronger-than-expected sales and profit

Procter & Gamble $PG reported first-quarter net sales of $23.3 billion, up 4% from a year earlier, and core earnings of $2.00 a share, up 1%. Both figures topped analyst forecasts of $22.8 billion in revenue and $1.88 a share, according to CNBC.

P&G stock climbed over 2% ahead of the market open.

Diluted earnings per share were $1.97, compared with $1.95 a year earlier. Net earnings attributable to the company were $4.73 billion, compared with $4.75 billion. Core earnings per share exclude restructuring charges above the company's normal level.

Organic sales, which exclude foreign exchange and acquisitions and divestitures, also rose 4%. Volume rose 2% and favorable mix added 1%, while pricing had a minor positive effect. The 2.4% volume increase follows a fiscal 2026 in which P&G posted volume growth in only one quarter.

Fabric & Home Care volume rose 4.3%. Health Care volume fell 2.9% and Grooming volume fell 0.4%. Organic sales rose 5% in Beauty, 5% in Grooming, 3% in Health Care and 3% in Baby, Feminine & Family Care.

Core gross margin fell 150 basis points. The company cited 140 basis points of higher commodity costs and 140 basis points of product reinvestments, offset in part by 120 basis points of productivity savings. Core operating margin fell 80 basis points.

"While we expect there will continue to be geopolitical and economic challenges, this strong start keeps us on track to deliver within our guidance ranges for organic sales growth, core EPS growth and free cash flow productivity for the fiscal year," Chairman, President and CEO Shailesh Jejurikar said in a statement.

For fiscal 2027, P&G updated its all-in sales growth guidance to a range of 2% to 4%, reflecting the acquisition of Thorne as of Oct. 1. The prior range was 1% to 3%, according to CNBC. The company maintained its organic sales growth outlook of 1% to 3%.

P&G also maintained its core earnings per share outlook of in line to 3% growth from $6.89, or $6.89 to $7.11 a share. It expects a commodity cost headwind of about $1.4 billion after tax. Combined with higher interest expense, lower non-operating income and unfavorable exchange rates, the company said these items equate to a $0.79 per share headwind for the fiscal year.

Operating cash flow was $5.8 billion in the quarter. P&G returned $3.9 billion to shareholders, including $2.6 billion in dividends and $1.3 billion in share repurchases. It expects to pay more than $10 billion in dividends and repurchase about $5 billion of stock in fiscal 2027.