Can Procter & Gamble (PG) Earnings Still Show Resilience Amid Tariffs Turmoil?

$Procter & Gamble(PG)$ is scheduled to announce its Q3 fiscal 2025 results on Thursday, April 24, 2025, before the market opens.  

Revenue: Revenue is forecasted to be approximately $20.3 billion to $20.34 billion, indicating very modest growth of about 0.7% compared to the prior-year quarter.

Earnings Per Share (EPS): Wall Street analysts expect EPS to be around $1.54 to $1.55. This represents a slight year-over-year increase of roughly 1.3% to 2.0% from $1.52 in the same quarter last year. Consensus estimates have edged down slightly in recent weeks.

Organic Sales Growth: Analysts anticipate organic sales (which excludes impacts from foreign exchange, acquisitions, and divestitures) to grow by around 3.2%, likely driven by continued pricing power and favourable product mix. Growth is expected across most segments, although reported net sales in Beauty and Grooming might show slight declines possibly due to currency effects.  

Margins: Productivity savings are expected to contribute to core gross margin expansion (estimated +150 basis points year-over-year), although rising SG&A costs could offset some gains.

Procter & Gamble (PG) Last Neutral Earnings Call Saw Share Price Gain 6.15%

P&G reported Q2 results on January 22, 2025, showing 3% organic sales growth and a 2% increase in core EPS to $1.88, slightly beating expectations. Procter & Gamble had a neutral earnings call on 22 Jan 2025 which saw its share price gained 6.15%.

The earnings call highlighted steady organic sales growth and several successful product innovations, alongside strong performance in North America and Europe. However, challenges remain with currency and commodity cost headwinds, ongoing difficulties in Greater China, and a softening consumer environment in some areas. Overall, the company maintains a cautiously optimistic outlook for the second half of the fiscal year.

Procter & Gamble (PG) Guidance On Long-Term Strategy Despite Headwinds

The company maintained its full-year fiscal 2025 guidance, forecasting 3-5% organic sales growth and 5-7% core EPS growth, while acknowledging a volatile global environment.

In the earnings call for Procter & Gamble's Q2 2025, detailed guidance for the fiscal year was provided, highlighting expectations for organic sales growth between 3% to 5% and core EPS growth of 5% to 7%, translating to a range of $6.91 to $7.05 per share. The company anticipates a commodity cost headwind of approximately $200 million after tax, equating to $0.08 per share, and a foreign exchange headwind of about $300 million, or $0.12 per share. Procter & Gamble expects adjusted free cash flow productivity of 90% and plans to return $16 billion to $17 billion to shareholders through dividends and share repurchases.

Despite these headwinds, the company remains committed to its long-term growth strategy, focusing on innovation and productivity to offset challenges and drive market growth.

Key Drivers Influencing PG Q3 2025 Earnings

Organic sales for the quarter grew 3%, with volume contributing 2 points and mix adding 1 point. Nine out of ten product categories showed organic sales growth.

Adjusted free cash flow productivity was 84%, with $4.9 billion returned to shareholders through dividends and share repurchases.

Pricing Power vs. Volume Growth

PG has consistently leveraged price increases to offset inflation, but volume growth will be critical in 2025. If consumer demand softens (e.g., due to economic downturns), reliance on pricing alone could strain market share, especially in competitive categories like laundry detergents and personal care.

North America and Europe Focus Markets each grew 4% in organic sales, driven by volume growth. Volume and value share increased in eight out of ten categories in North America.

Investors will look closely at the balance between sales growth driven by price increases versus actual sales volume changes across different categories and regions.

Category Performance: Strength in premium segments (e.g., SK-II skincare, premium Tide/Olay variants) and healthcare products (Vicks, Oral-B) may offset weaker demand in discretionary categories.

SK-II in Greater China grew 5%, marking a recovery from a previous 15% decline in the market.

Segment Performance: Performance in key segments like Fabric & Home Care, Baby, Feminine & Family Care, and Beauty will be important.

Commodity and Supply Chain Costs

Input costs (resins, pulp, freight) have moderated recently, but volatility in energy prices or geopolitical disruptions (e.g., Red Sea shipping) could pressure margins. PG’s productivity program ($2 billion in annual cost savings by 2026) should help stabilize gross margins (~50% in recent quarters).

Margins: Confirmation of gross margin expansion and the impact of SG&A costs on overall profitability.

Foreign Exchange (FX) Impact

PG generates ~50% of sales internationally. A stronger U.S. dollar could hurt translated revenues, especially if emerging markets (e.g., China, India) face currency depreciation or demand slowdowns.

Projected $200 million post-tax headwind from commodity costs and $300 million from currency exchange rates, affecting EPS.

Innovation and Digital Growth

PG’s focus on R&D-driven innovation (e.g., sustainable packaging, efficacy upgrades) and e-commerce expansion (digital now ~15% of sales) could drive market share gains. AI-driven supply chain optimization and personalized marketing may further enhance efficiency.

Launches include Charmin smooth tear, Old Spice and Secret deodorant sprays, Dawn Powerwash, Swiffer PowerMop, Oral-B iO toothbrushes, Crest 3D white toothpaste, and Zevo insect products.

Emerging Markets vs. Developed Markets

Growth in developing regions (Latin America, Asia-Pacific) is critical, but economic instability or competition from local brands (e.g., Nirma in India) could limit upside. North America and Europe may see steady, low-single-digit growth.

Despite improvements, Greater China organic sales still declined 3% compared to the prior year. Noted volatility in consumer consumption patterns in the U.S. and a generally challenging consumer environment in China.

Organic sales in the Asia, Middle East, and Africa region declined in low single digits, indicating ongoing market challenges.

Outlook: Any updates or confirmations to the full-year fiscal 2025 guidance, especially considering ongoing challenges like input costs, currency fluctuations, and consumer behaviour in key markets.

Procter & Gamble (PG) Price Target

Based on 19 Wall Street analysts offering 12 month price targets for Procter & Gamble in the last 3 months. The average price target is $178.18 with a high forecast of $209.00 and a low forecast of $157.00. The average price target represents a 4.42% change from the last price of $170.63.

PG price target could be affected by these risks :

1. Consumer Downturn: A recessionary environment could push shoppers to private-label alternatives, particularly in Europe and North America.

2. Regulatory Pressures: Stricter regulations on PFAS (“forever chemicals”) in cleaning products or plastics could raise compliance costs.

3. Competition: Aggressive pricing by rivals (Unilever, Colgate-Palmolive) and digital-native brands (e.g., Dollar Shave Club) in grooming and beauty.

4. Sustainability Costs: PG’s commitment to ESG goals (e.g., reducing virgin plastic) may require upfront investments, though long-term savings are likely.

Technical Analysis - Exponential Moving Average (EMA)

From the technical, we are seeing PG performing much better than its peers, and the bulls are back in control having defend the 50-day level well, and we can see that it is attempting to build a daily uptrend continual.

But RSI need more momentum to see a strong push maybe towards a daily uptrend expansion, I think we might see some good progress closer to its earnings call.

PG’s defensive positioning and dividend aristocrat status (67 consecutive years of payout growth) make it a staple for conservative portfolios, but growth hinges on execution in a volatile macro climate.

I would get into PG for defensive play and for the dividend in the current market conditions.

Summary

Procter & Gamble’s Q3 2025 earnings are expected to reflect its resilience as a consumer staples leader, balancing pricing discipline with gradual volume recovery. Key strengths include its diversified portfolio, premiumization strategy, and cost-saving initiatives. However, macroeconomic uncertainty, FX volatility, and competitive pressures remain challenges.

Analysts expect Procter & Gamble to report modest earnings and revenue growth for Q3, driven primarily by organic sales increases from pricing and mix. The key will be whether the company meets these expectations, shows continued margin strength through productivity, and maintains its full-year outlook despite global economic uncertainties.

Appreciate if you could share your thoughts in the comment section whether you think PG would be able to navigate through the tariffs turmoil with its resilience with diversified portfolio and pricing strategy.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.