⚠ Every Segment Earned LessModerate threat

Procter & Gamble (PG) — threat to the moat

In fiscal 2026 every P&G segment sold more and earned less, and the company expects an 8% cost headwind in fiscal 2027.

Fiscal 2026 had an unusual pattern: every one of P&G's five segments grew its sales and every one earned less. Beauty sales rose 7% and net earnings fell to $2,672 million from $2,715 million; Grooming sales rose 4% and earnings fell to $1,529 million from $1,577 million; Health Care rose 4% and fell to $2,404 million from $2,440 million; Fabric & Home Care rose 2% and fell to $5,632 million from $5,848 million; Baby, Feminine & Family Care rose 1% and fell to $3,930 million from $4,013 million1. The five together earned $16,167 million against $16,593 million, about 2.6% less2.

Segment net earnings change, FY2026 vs FY2025 (%)Baby, Feminine and Family Care-2.1%Fabric and Home Care-3.7%Health Care-1.5%Grooming-3.0%Beauty-1.6%P&G Form 10-K FY2026, segment note; calculated
Five segments, five declines.

In the June 2026 quarter every segment's net earnings fell by between 10% and 19%3.

The causes are spread across the cost base: mix, product and package investment, restructuring and tariffs in the gross margin4, and marketing in SG&A5. Restructuring charges hit every segment6. Group net earnings still rose slightly, to $16,046 million7, because Corporate lost less, helped by the $343 million Glad gain8.

Fiscal 2027 adds costs. P&G expects about $1 billion after tax of higher commodity, energy and transport costs and a total headwind of $0.56 a share, an eight percent drag9.

Corporate flattered the total. The Corporate line lost $23 million after tax in fiscal 2026 against $527 million in fiscal 202510; fiscal 2025 carried a $752 million currency translation charge from Argentina and fiscal 2026 included the $343 million Glad gain11. Without those swings, group net earnings would have fallen along with the segments.

The threat is that the margin is falling in every business at once, which points to a company-wide cause rather than a weak brand. The number to watch is total segment net earnings; a second year of decline in fiscal 2027 would mean P&G's reinvestment is outrunning its productivity, and a return to growth would mean fiscal 2026 was the cost of a transition.

The number that tests this threat
Moat Explorer calc
Segment net earnings, five segments, FY2026
$16,167M, about -2.6%

The combined profit of the businesses; a second year of decline would mean reinvestment is outrunning productivity.

How it's calculated: Sum of the five reportable segments' net earnings (excluding Corporate) in FY2026 ($16,167M) against FY2025 ($16,593M), from the 10-K segment note.
Source: Moat Explorer calculation from P&G filings ↗
References
  1. ReportedBeauty sales rose 7% and net earnings fell to $2,672 million from $2,715 million; Grooming sales rose 4% and earnings fell to $1,529 million from $1,577 million; Health Care rose 4% and fell to $2,404 million from $2,440 million; Fabric & Home Care rose 2% and fell to $5,632 million from $5,848 million; Baby, Feminine & Family Care rose 1% and fell to $3,930 million from $4,013 million.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Note 2 segment information: net sales, earnings before tax, net earnings, margins, capital spending and depreciation by segment. — FY2026 · publ. 4 August 2026 · source ↗
  2. Moat Explorer calcThe five together earned $16,167 million against $16,593 million, about 2.6% less.
    Moat Explorer calculation from Procter & Gamble's reported figures ($ millions unless stated; fiscal years end 30 June). Net debt: FY2026 11,296 + 22,842 - 9,942 = 24,196; 24,196 / 54,311 = 0.45 times equity; 24,196 / 19,556 = 1.24 years of operating cash flow; debt due within one year 11,296 / (11,296 + 22,842) = 33% of debt; FY2025 9,513 + 24,995 - 9,556 = 24,952; FY2024 7,191 + 25,269 - 9,482 = 22,978. Capital spending 4,409 / 87,032 = 5.1% of net sales. Adjusted free cash flow over dividends 15,835 / 10,232 = 1.55 times. Dividends paid over net earnings attributable: 10,232 / 16,046 = 63.8% (FY2026); 9,872 / 15,974 = 61.8% (FY2025); 9,312 / 14,879 = 62.6% (FY2024). Buybacks 5,028 / 11,009 = 45.7% of the FY2021 peak. Peer market values on 25 September 2026 ($bn): 132.99 + 68.60 + 34.19 + 34.18 + 32.74 + 22.86 + 10.13 = 335.69, against P&G 339.64; P&G / Clorox 339.64 / 10.13 = 33.5 times. P/E: 339.64 / 16.046 = 21.2 (now); 394.82 / 14.879 = 26.5 (December 2024 over FY2024). Free cash flow yield 15,835 / 339,640 = 4.7%. Goodwill plus Gillette brand 41,276 + 12,800 = 54,076; 54,076 / 126,521 = 42.7% of total assets. Segments (five reportable, excluding Corporate): FY2026 sales 16,023 + 6,918 + 12,456 + 30,314 + 20,401 = 86,112; net earnings 2,672 + 1,529 + 2,404 + 5,632 + 3,930 = 16,167; FY2025 net earnings 2,715 + 1,577 + 2,440 + 5,848 + 4,013 = 16,593; 16,167 / 16,593 - 1 = -2.6%. Segment net earnings changes FY2026: Beauty 2,672 / 2,715 - 1 = -1.6%; Grooming 1,529 / 1,577 - 1 = -3.0%; Health Care 2,404 / 2,440 - 1 = -1.5%; Fabric & Home Care 5,632 / 5,848 - 1 = -3.7%; Baby, Feminine & Family Care 3,930 / 4,013 - 1 = -2.1%. Fabric & Home Care share of segment net earnings 5,632 / 16,167 = 34.8%. Pre-tax margins FY2026: Beauty 3,473 / 16,023 = 21.7%; Grooming 1,966 / 6,918 = 28.4%; Health Care 3,163 / 12,456 = 25.4%; Fabric & Home Care 7,290 / 30,314 = 24.0%; Baby, Feminine & Family Care 5,145 / 20,401 = 25.2%. Net margins FY2023: Beauty 3,178 / 15,008 = 21.2%; Health Care 2,125 / 11,226 = 18.9%; Fabric & Home Care 4,828 / 28,371 = 17.0%; Baby, Feminine & Family Care 3,545 / 20,217 = 17.5%. Three-year growth FY2023-FY2026: Health Care sales 12,456 / 11,226 - 1 = 11.0%; Health Care net earnings 2,404 / 2,125 - 1 = 13.1%; Grooming sales 6,918 / 6,419 - 1 = 7.8%; Baby, Feminine & Family Care sales 20,401 / 20,217 - 1 = 0.9%. Segment capital spending over sales FY2026: Grooming 540 / 6,918 = 7.8%; Baby, Feminine & Family Care 1,520 / 20,401 = 7.5%; Health Care 592 / 12,456 = 4.8%; Fabric & Home Care 1,250 / 30,314 = 4.1%; Beauty 415 / 16,023 = 2.6%. Geography FY2026 ($bn): international 45.3 / 87.0 = 52.1%; United States 41.7 / 87.0 = 47.9%. Walmart about 16% x 87,032 = 13,925, about $13.9 billion. Top ten customers less Walmart (rounded percentages): FY2017 35 - 16 = 19; FY2020 38 - 15 = 23; FY2023 40 - 15 = 25; FY2026 43 - 16 = 27. Dividend per share 4.2589 / 4.0763 - 1 = 4.5% (FY2026); 4.0763 / 3.8286 - 1 = 6.5% (FY2025). Market exit charges after tax 1,200 + 131 = 1,331. P&G / Unilever market value 339.64 / 132.99 = 2.6 times. Restructuring charges FY2024-FY2026 659 + 1,114 + 1,230 = 3,003. Gillette write-downs 8.3 + 1.3 = 9.6 billion. Operating margin 19,748 / 87,032 = 22.7% (FY2026); 20,451 / 84,284 = 24.3% (FY2025) - segment results, geography and customer concentration. — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Procter & Gamble's Forms 10-K, results releases, earnings slides and market data; operands shown in the source line.
  3. ReportedIn the June 2026 quarter every segment's net earnings fell by between 10% and 19%.
    Procter & Gamble fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1, with fiscal 2027 guidance - segment results for the quarter and fiscal year. — Q4 FY2026 · publ. 29 July 2026 · source ↗
  4. ReportedThe causes are spread across the cost base: mix, product and package investment, restructuring and tariffs in the gross margin, and marketing in SG&A. Restructuring charges hit every segment.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: net sales drivers, organic sales and gross margin bridge. — FY2026 · publ. 4 August 2026 · source ↗
  5. ReportedThe causes are spread across the cost base: mix, product and package investment, restructuring and tariffs in the gross margin, and marketing in SG&A. Restructuring charges hit every segment.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: net sales drivers, organic sales and gross margin bridge. — FY2026 · publ. 4 August 2026 · source ↗
  6. ReportedThe causes are spread across the cost base: mix, product and package investment, restructuring and tariffs in the gross margin, and marketing in SG&A. Restructuring charges hit every segment.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - notes: restructuring, goodwill and intangibles, acquisitions and divestitures, subsequent events and commitments. — FY2026 · publ. 4 August 2026 · source ↗
  7. ReportedGroup net earnings still rose slightly, to $16,046 million, because Corporate lost less, helped by the $343 million Glad gain.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - notes: restructuring, goodwill and intangibles, acquisitions and divestitures, subsequent events and commitments. — FY2026 · publ. 4 August 2026 · source ↗
  8. ReportedGroup net earnings still rose slightly, to $16,046 million, because Corporate lost less, helped by the $343 million Glad gain.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Note 2 segment information: net sales, earnings before tax, net earnings, margins, capital spending and depreciation by segment. — FY2026 · publ. 4 August 2026 · source ↗
  9. ReportedP&G expects about $1 billion after tax of higher commodity, energy and transport costs and a total headwind of $0.56 a share, an eight percent drag.
    Procter & Gamble fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1, with fiscal 2027 guidance - fiscal 2027 guidance. — Q4 FY2026 · publ. 29 July 2026 · source ↗
  10. ReportedThe Corporate line lost $23 million after tax in fiscal 2026 against $527 million in fiscal 2025; fiscal 2025 carried a $752 million currency translation charge from Argentina and fiscal 2026 included the $343 million Glad gain.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: net sales drivers, organic sales and gross margin bridge. — FY2026 · publ. 4 August 2026 · source ↗
  11. ReportedThe Corporate line lost $23 million after tax in fiscal 2026 against $527 million in fiscal 2025; fiscal 2025 carried a $752 million currency translation charge from Argentina and fiscal 2026 included the $343 million Glad gain.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 7 MD&A: net sales drivers, organic sales and gross margin bridge. — FY2026 · publ. 4 August 2026 · source ↗
Sources
Generated September 26, 2026