PG · 10-K · 2026A · Full report

Operating Margin Drivers

PROCTER & GAMBLE Co · 2026-08-04 · Importance 49 · Surprise 32 · Matches filing data

Operating income decreased $703 million, or 3%, to $19.7 billion in fiscal 2026 despite the $2.7 billion increase in net sales. Operating margin declined 160 basis points to 22.7% because the 100-basis-point gross-margin decline and higher marketing spending more than offset sales growth. Segment net earnings declined 2% in Beauty to $2.7 billion, 3% in Grooming to $1.5 billion, 1% in Health Care to $2.4 billion and 4% in Fabric & Home Care to $5.6 billion. Baby, Feminine & Family Care net earnings were not included in this MD&A section.

Key facts

• Operating income decreased to $19,748 million in fiscal 2026 from $20,451 million in the prior year (decrease of $703 million, or 3%). source
• Operating income decreased $703 million, or 3%, to $19.7 billion as the increase in net sales was more than offset by the decrease in gross margin and increase in SG&A spending. source
• Beauty net earnings were $2,672 million in fiscal 2026 versus $2,715 million prior year (decrease of 2%); net earnings margin was 16.7% vs 18.1% (down 140 bps). source
• Grooming net earnings decreased 3% to $1,529 million and net earnings margin decreased 160 basis points to 22.1% from 23.7%. source
• Health Care net earnings decreased 1% to $2,404 million and net earnings margin decreased 100 basis points to 19.3% from 20.3%. source
• Fabric & Home Care net earnings were $5,632 million in fiscal 2026 versus $5,848 million prior year (decrease of 4%); net earnings margin decreased 110 basis points to 18.6% from 19.7%. source
• Operating margin decreased 160 basis points to 22.7% of net sales (from 24.3%). source

Impact estimates