The sharp rise in oil prices triggered by the conflict in Iran is weighing heavily on Procter & Gamble (P&G). The U.S. consumer goods giant expects a post-tax profit hit of approximately one billion dollars for the 2027 fiscal year starting in July. Costs for plastics, paper packaging, and transportation have skyrocketed, the maker of brands such as Pampers diapers and Pantene shampoo announced on Friday. Since the outbreak of the war, oil prices have climbed from 60 to around 100 dollars per barrel. CFO Andre Schulten described the headwinds as substantial. P&G is not alone in facing these challenges: European rivals such as Nestle and Nivea manufacturer Beiersdorf have also recently warned of higher costs resulting from the blockade of the Strait of Hormuz.

Despite the bleak outlook, P&G exceeded Wall Street expectations in the most recent quarter, sending the stock up about four percent in early trading. Revenue climbed seven percent to 21.24 billion dollars. Adjusted earnings per share, at 1.59 dollars, also beat analyst estimates. However, management dampened expectations for the current 2026 fiscal year, stating that earnings per share growth is likely to come in at the lower end of the target range of zero to four percent. In the fourth quarter alone, the company anticipates 150 million dollars in additional costs due to more expensive raw materials and logistics issues in the Middle East.

High fuel costs are also weighing on U.S. consumers, particularly those in lower income brackets. 'Inflation in food, energy, healthcare, and many other expenses has taken a toll on consumers,' explained CFO Schulten. Recent geopolitical events have raised concerns to a new level. P&G CEO Shailesh Jejurikar announced that despite the difficult environment, the company will increase investments to stimulate growth. Furthermore, the group is hoping for refunds from Washington: P&G began applying this week for customs duty refunds totaling approximately 150 million dollars, after the U.S. Supreme Court declared certain special tariffs invalid in February.

(Report by Alexander Marrow and Juveria Tabassum, edited by Patricia Weiss and Sabine Wollrab. For inquiries, please contact our editorial office at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)