⚠ A Billion Dollars of Input Costs in Fiscal 2027Moderate threat

Procter & Gamble (PG) — threat to the moat

P&G expects about $1 billion of higher input costs in fiscal 2027 and holds no financial commodity hedges.

P&G expects its costs to rise in fiscal 2027 just as its pricing power looks weakest. The company guides to about $1 billion after tax of higher raw material, energy and transportation costs1. Together with $150 million of higher net interest, $150 million of lower non-operating income and $50 million of currency, that is a headwind of $0.56 a share, which the company calls an eight percent drag2.

FY2027 after-tax headwinds guided ($M)Commodities, energy, transportabout 1,000Higher net interest150Lower non-operating income150Currency50P&G Q4 FY2026 earnings release; total $0.56 per share
Commodities are most of the drag.

Its main inputs are oil-derived materials such as resins and paper-based materials such as pulp3, and P&G says it had no financial commodity hedging in fiscal 2025 or fiscal 20264. It relies on pricing, productivity and sourcing instead.

The test of the moat is how much of that billion comes back through price. In fiscal 2024 P&G took 4% of price5; in fiscal 2026, 1%6. Core EPS guidance of $6.89 to $7.117 assumes productivity and modest price cover most of it.

The swing is sharp. In January 2026 P&G expected commodities to be neutral for fiscal 20268, and in the full year they cost 20 basis points of gross margin9. A billion dollars after tax in fiscal 2027 is a much larger bill arriving immediately after a year when input costs barely mattered.

The number to watch is first-quarter earnings: P&G guided to a fall of 5% or more10. A larger fall, with price still near 1%, would say the brands can no longer pass costs on at the speed they did three years ago.

References
  1. ReportedThe company guides to about $1 billion after tax of higher raw material, energy and transportation costs.
    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 ↗
  2. ReportedTogether with $150 million of higher net interest, $150 million of lower non-operating income and $50 million of currency, that is a headwind of $0.56 a share, which the company calls 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 ↗
  3. ReportedIts main inputs are oil-derived materials such as resins and paper-based materials such as pulp, and P&G says it had no financial commodity hedging in fiscal 2025 or fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 1A risk factors, Item 5 market information and performance graph, and critical accounting estimates (Gillette brand). — FY2026 · publ. 4 August 2026 · source ↗
  4. ReportedIts main inputs are oil-derived materials such as resins and paper-based materials such as pulp, and P&G says it had no financial commodity hedging in fiscal 2025 or fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Item 1A risk factors, Item 5 market information and performance graph, and critical accounting estimates (Gillette brand). — FY2026 · publ. 4 August 2026 · source ↗
  5. ReportedIn fiscal 2024 P&G took 4% of price; in fiscal 2026, 1%.
    Procter & Gamble Form 10-K for fiscal 2024 - net sales drivers by segment for fiscal 2024 (price +4%) and top-ten customer share. — FY2024 · publ. August 2024 · source ↗
  6. ReportedIn fiscal 2024 P&G took 4% of price; in fiscal 2026, 1%.
    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 ↗
  7. ReportedCore EPS guidance of $6.89 to $7.11 assumes productivity and modest price cover most of it.
    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 ↗
  8. ReportedIn January 2026 P&G expected commodities to be neutral for fiscal 2026, and in the full year they cost 20 basis points of gross margin.
    Procter & Gamble second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1, with the revised tariff estimate. — Q2 FY2026 · publ. 22 January 2026 · source ↗
  9. ReportedIn January 2026 P&G expected commodities to be neutral for fiscal 2026, and in the full year they cost 20 basis points of gross margin.
    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 ↗
  10. ReportedThe number to watch is first-quarter earnings: P&G guided to a fall of 5% or more.
    Procter & Gamble fourth-quarter fiscal 2026 earnings slides, Form 8-K exhibit 99.1 - organic sales and core EPS history, share results and fiscal 2027 guidance assumptions. — Q4 FY2026 · publ. 29 July 2026 · source ↗
Sources
Generated September 26, 2026