Procter & Gamble Warns of $1 Billion Profit Hit From Middle East War

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4.27.2026

Quick Facts

P&G expects $1 billion after-tax profit hit in fiscal 2027 from oil price surge driven by U.S.-Iran war
Oil prices jumped 55% since conflict began February 28, with Brent crude rising from $72 to nearly $120 per barrel
Company reported 7% net sales growth to $21.24 billion in Q3 2026 despite margin pressures

Procter & Gamble warned investors that the ongoing Middle East conflict could slash its after-tax profits by $1 billion in fiscal 2027 as surging oil prices drive up manufacturing costs across its consumer goods portfolio.

CFO Andre Schulten delivered the stark projection during the company’s third-quarter fiscal 2026 earnings call on April 24. Oil prices have surged more than 55% since the U.S.-Iran war began February 28, with Brent crude jumping from around $72 per barrel to nearly $120 at its peak.

“A billion dollars after tax is nothing to sneeze at from a headwind standpoint, and we have a lot of work to do to work through the supply chain side and the cost side,” Schulten told analysts.

The warning comes despite P&G reporting strong third-quarter results. Net sales rose 7% to $21.24 billion, while net income increased to $3.93 billion, or $1.63 per share, up from $3.78 billion a year earlier. The company posted its first volume growth in a year, with volumes up 2%.

P&G attributes the cost pressure to what Schulten called a “combination of commodity-linked cost inflation, feedstock exposures, and logistics disruptions” tied to the conflict. Many of the company’s materials are petroleum-based, making it particularly vulnerable to oil price volatility.

“A lot of our materials are petrol-based, so with oil at around $100, there’s a significant impact in terms of input cost,” Schulten said.

The conflict has disrupted traffic through the Strait of Hormuz, a strategic waterway that normally handles one-fifth of the world’s oil supply. The war has already suspended about 20% of global crude and natural gas supply.

For fiscal 2026, P&G expects a smaller $150 million after-tax impact, with almost all increased costs hitting the fourth quarter. The company maintained its full-year core earnings guidance of $6.83 to $7.09 per share despite the headwinds.

P&G plans to avoid broad price increases across its portfolio, instead focusing hikes on premium products. The company is using data analytics to support rapid product reformulation and supplier diversification to manage costs.

The consumer goods giant joins other companies flagging rising fuel costs. European rival Nestle has warned of higher costs due to the Strait of Hormuz blockade, while Nivea-maker Beiersdorf is considering price hikes if commodity costs continue rising.

Despite the uncertainty, P&G shares rose 3.7% in pre-market trading to $151.10 after beating analyst expectations. TD Cowen cut its price target to $142 from $156, maintaining a Hold rating.

Schulten said the company would not issue fiscal 2027 guidance until July, citing geopolitical volatility. “What do we know what the world looks like three months from now, with what we know today?” he said.