Core Summary

  • Procter & Gamble Chief Financial Officer Andre Schulten said on Friday that the Middle East conflict is expected to impact the company's fiscal 2026 results by approximately$150 million after tax, mainly due to higher energy costs and supply chain pressures.
  • Schulten attributed this to "conflict-related commodity cost inflation, raw material supply risks, and logistics disruptions."
  • "Almost all of these increased costs will be reflected in the fourth fiscal quarter," he said during the company's third-quarter fiscal 2026 earnings call. "Our teams are making tremendous efforts to ensure supply continuity and minimize the cost impact."

In-Depth Analysis

Cincinnati-based P&G, which owns consumer products such as Tide laundry detergent and Crest toothpaste, issued this warning as a survey released Thursday by S&P Global showed that U.S. business activity in Aprilrecovered only modestly。

after business activity nearly stalled in March due to the outbreak of the Middle East war. Services growth remained weak as demand cooled. New orders for service providers increased only slightly, marking the slowest pace in two years. Survey respondents attributed sales losses to war-related uncertainty and disruptions, among other issues.

In the face of disruptions, P&G is leveraging tools such as data analytics to support rapid product formula adjustments and supplier diversification, Schulten said. He noted that the war's impact extends beyond direct commodity costs to include other upstream and downstream effects on the company's profitability.

"Regarding supply impacts, we hope that material flows will fully recover in the coming weeks," he said. "We are working closely with suppliers and contract manufacturers to identify potential short-term risks."

The full-year guidance remains unchanged, but Schulten noted that geopolitical volatility has increased uncertainty about where results will land within the expected range.

He said the company will not issue fiscal 2027 guidance until July, but acknowledged that investors are concerned that sustained oil price increases or further supply disruptions from the Middle East conflict could affect next year's costs.

He cited as an example that if Brent crude oil prices remain around $100 per barrel, compared with approximately $65 per barrel before the conflict, it would increase the company's annual after-tax costs by about $1 billion.

The company announced Thursday that for the third fiscal quarter ended March 31,net sales were $21.2 billion, up 7% year over year.

Meanwhile, Schulten said P&G estimates it could receive approximately $150 million in tariff refunds (after tax) from the Trump administration, but noted that the final amount the company can recover remains uncertain.

"We are following the procedures that the U.S. government has begun to establish," Schulten said.