01—Abstract
Summary
Summary of the 10-Q filed January 23, 2026. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble reported its fiscal second-quarter results, showcasing modest revenue growth driven by price increases and favorable foreign exchange, partially offset by a slight decline in unit volume.
While overall net sales saw a 1%a increase year-over-year for the quarter and 2% for the six-month period, profitability faced pressure. Operating income and net earnings declined for the three-month period, impacted by unfavorable product mix, increased restructuring costs, and higher marketing spend. For the six-month period, net earnings saw a 5% increase driven by a significant favorable swing in "Other non-operating income/(expense), net," largely due to the prior year's substantial restructuring charges related to the liquidation of operations in Argentina.
Despite the earnings increase, the company continues to navigate cost pressures, including tariffs and commodity costs, while investing in marketing and productivity initiatives. The company reaffirmed its expectation to reduce outstanding shares by approximately $5 billionb in fiscal year 2026.
02—Key points
Key Highlights
- Net sales increased by 1% to $22.2 billion for the three months ended December 31, 2025, and by 2% to $44.6 billion for the six months ended December 31, 2025.
- Diluted EPS decreased by 5% to $1.78 for the three-month period but increased by 7% to $3.73 for the six-month period, with Core EPS showing a 2% increase for the six-month period.
- Gross margin declined in both periods due to unfavorable product mix, increased restructuring costs, and product/packaging investments, partially offset by manufacturing productivity savings and higher pricing.
- Selling, general, and administrative (SG&A) expenses as a percentage of net sales increased, primarily due to higher marketing spending and overhead costs.
- The company incurred $369 million in restructuring charges for the three months and $584 million for the six months ended December 31, 2025, related to its portfolio and productivity plan.
- Operating cash flow for the six-month period was $10.4 billion, and adjusted free cash flow was $8.7 billion, with productivity at 95%.
- The company repurchased approximately 15.5 million shares for $2.2 billion during the three-month period and expects to reduce outstanding shares by approximately $5 billion in fiscal year 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Procter & Gamble Co kept $0.19.
- Revenue$22.21B100.0%
- Cost of revenue−$10.83B48.8%
- Gross profit$11.37B51.2%
- Operating costs−$6.01B27.1%
- Operating income$5.37B24.2%
- Interest, other & tax−$1.05B4.7%
- Net income$4.32B19.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed January 23, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $22.21B$21.88B | +1.5% |
| Cost of Revenue | $10.83B$10.42B | +4.0% |
| Gross Profit | $11.37B$11.46B | −0.8% |
| SG&A Expenses | $6.01B$5.72B | +5.0% |
| Operating Income | $5.37B$5.74B | −6.5% |
| Net Income | $4.32B$4.63B | −6.7% |
| EPS (Basic) | $1.82$1.94 | −6.2% |
| EPS (Diluted) | $1.78$1.88 | −5.3% |
| Shares Outstanding (Basic) | 2.34B2.35B | −0.7% |
| Shares Outstanding (Diluted) | 2.42B2.46B | −1.4% |
05—Questions
Frequently Asked Questions
What drove the change in net sales for the quarter?
Net sales increased 1% to $22.2 billion, driven by favorable foreign exchange of 1% and higher pricing of 1%. This was partially offset by a decline in unit volume of 1%. Excluding the impact of acquisitions, divestitures, and foreign exchange, organic sales were unchanged.
Why did net earnings and operating income decrease in the three-month period?
Net earnings and operating income decreased primarily due to a lower gross margin, impacted by unfavorable product mix, higher restructuring costs, and product/packaging investments. SG&A expenses also increased as a percentage of net sales, largely due to higher marketing spending and overhead costs.
What is the impact of the announced portfolio and productivity plan?
The company announced a plan to streamline its portfolio and organization, expecting to incur approximately $1.5 to $2.0 billion in before-tax restructuring costs over two years. For the six months ended December 31, 2025, the company incurred $584 million in restructuring charges related to this plan.
How is the company managing its cash flow and returning capital to shareholders?
The company generated $10.4 billion in operating cash flow and $8.7 billion in adjusted free cash flow for the six-month period, demonstrating strong cash generation. During the quarter, the company repurchased approximately $2.2 billion of its shares, and it expects to reduce outstanding shares by approximately $5 billion in fiscal year 2026, funded by operating cash flows and debt.
06—Continue