⚠ Capital Spending Rising Toward 5.5% of SalesLow threat

Procter & Gamble (PG) — threat to the moat

P&G's capital spending rose a third in two years while its sales rose 4%.

P&G's capital spending is rising faster than its sales. It spent $3,322 million in fiscal 2024, $3,773 million in fiscal 2025 and $4,409 million in fiscal 20261, while net sales rose from $84,039 million to $87,032 million2. For fiscal 2027 it guides to capital spending of 4.5% to 5.5% of sales3.

P&G capital expenditures ($M)2,787FY20213,322FY20243,773FY20254,409FY2026P&G Forms 10-K FY2021 and FY2026, cash flow and segment tables
Up 58% in five years.

Some of the increase is restructuring: supply-chain optimisation is part of the programme P&G announced in June 20254. But more capital with flat volume lowers the return unless it cuts costs.

It also squeezes the cash available for owners. P&G guides adjusted free cash flow productivity of 85% to 90% in fiscal 20275, against 100% in fiscal 20266.

The increase came in every segment. Between fiscal 2025 and fiscal 2026 capital spending rose from $328 million to $415 million in Beauty, $451 million to $540 million in Grooming, $526 million to $592 million in Health Care, $1,208 million to $1,250 million in Fabric & Home Care and $1,080 million to $1,520 million in Baby, Feminine & Family Care7.

The threat becomes real if capital spending stays near 5.5% of sales for several years without volume growth. Return on invested capital, 19.9% in fiscal 20268, would then drift down toward the levels of a decade ago.

References
  1. ReportedIt spent $3,322 million in fiscal 2024, $3,773 million in fiscal 2025 and $4,409 million in fiscal 2026, while net sales rose from $84,039 million to $87,032 million.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - consolidated statements of earnings, cash flows and financial position, debt and dividends. — FY2026 · publ. 4 August 2026 · source ↗
  2. ReportedIt spent $3,322 million in fiscal 2024, $3,773 million in fiscal 2025 and $4,409 million in fiscal 2026, while net sales rose from $84,039 million to $87,032 million.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - consolidated statements of earnings, cash flows and financial position, debt and dividends. — FY2026 · publ. 4 August 2026 · source ↗
  3. ReportedFor fiscal 2027 it guides to capital spending of 4.5% to 5.5% of sales.
    Procter & Gamble fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1, with fiscal 2027 guidance - fiscal 2027 guidance. — Q4 FY2026 · publ. 29 July 2026 · source ↗
  4. ReportedSome of the increase is restructuring: supply-chain optimisation is part of the programme P&G announced in June 2025.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - notes: restructuring, goodwill and intangibles, acquisitions and divestitures, subsequent events and commitments. — FY2026 · publ. 4 August 2026 · source ↗
  5. ReportedP&G guides adjusted free cash flow productivity of 85% to 90% in fiscal 2027, against 100% in fiscal 2026.
    Procter & Gamble fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1, with fiscal 2027 guidance - fiscal 2027 guidance. — Q4 FY2026 · publ. 29 July 2026 · source ↗
  6. ReportedP&G guides adjusted free cash flow productivity of 85% to 90% in fiscal 2027, against 100% in fiscal 2026.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - consolidated statements of earnings, cash flows and financial position, debt and dividends. — FY2026 · publ. 4 August 2026 · source ↗
  7. ReportedBetween fiscal 2025 and fiscal 2026 capital spending rose from $328 million to $415 million in Beauty, $451 million to $540 million in Grooming, $526 million to $592 million in Health Care, $1,208 million to $1,250 million in Fabric & Home Care and $1,080 million to $1,520 million in Baby, Feminine & Family Care.
    Procter & Gamble Form 10-K for fiscal 2026 (year ended 30 June 2026) - Note 2 segment information: net sales, earnings before tax, net earnings, margins, capital spending and depreciation by segment. — FY2026 · publ. 4 August 2026 · source ↗
  8. Moat Explorer calcReturn on invested capital, 19.9% in fiscal 2026, would then drift down toward the levels of a decade ago.
    Moat Explorer calculation from SEC EDGAR XBRL for CIK 80424: return on invested capital 7.4% (FY2015), 9.6% (FY2016), 10.4% (FY2017), 12.3% (FY2018), 5.1% (FY2019, Gillette impairment), 16.3% (FY2020), 19.3% (FY2021), 19.2% (FY2022), 18.9% (FY2023), 19.0% (FY2024), 20.5% (FY2025), 19.9% (FY2026). — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Operating income x (1 - effective tax rate; 35% default before fiscal 2018 and 21% where pre-tax income is untagged) divided by average (total assets - current liabilities - cash), from SEC EDGAR XBRL using the tools_roic_edgar.py method; after fiscal 2019 the cash tag is CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents. A 7% hurdle is assumed.
Sources
Generated September 26, 2026