PG Under Pressure: Rising Costs Threaten Margins

Procter & Gamble's (PG) margins are under pressure due to elevated raw material, energy, and transportation costs. The company expects a $1 billion after-tax cost headwind in fiscal 2027, primarily driven by higher raw material, energy, and transportation costs.

This estimate assumes an effective Brent crude oil price of around $90 per barrel, based on actual prices since March 2026 and futures contracts through February 2027. Including foreign-exchange pressure, higher interest expense, and lower non-operating income, the company anticipates a combined $1.4 billion after-tax earnings headwind in fiscal 2027.

PG's core gross margin declined 40 basis points, while core operating margin fell 70 basis points in fiscal 2026. Management expects fiscal 2027 first-quarter EPS to decline 5% or more, with cost pressures likely to be most pronounced in the first half of the fiscal year.