April 24 (Reuters) - Procter & Gamble ( PG ) on Friday warned of a roughly $1 billion hit to its fiscal 2027 profit from surging oil prices due to the Middle East conflict.

"A lot of our materials are petrol-based, so with oil at around $100, there's a significant impact in terms of input cost," said finance chief Andre Schulten on a media call.

"Geopolitical dynamics have thrown new challenges in front of us, but we will continue to fully support the business to maintain the momentum we're creating."

The Tide parent also flagged a $150 million impact from commodity costs for the fourth quarter and expects fiscal 2026 earnings per share to be at the lower end of its target range of flat to 4% up.

The company, whose total cost of goods sold was 40.85 billion in 2025, said the cost impact was due to a combination of commodity-linked cost inflation, feedstock exposure and logistics disruption from the Middle East conflict.

Consumer goods companies such as Nestle have warned of higher costs due to the blockade of the Strait of Hormuz, which has driven up oil prices.

PRODUCT INVESTMENTS PAY OFF

P&G's volumes rose in three of its five reported segments in the third quarter, helped by new launches of products such as Pantene shampoo and Olay skin cream at higher prices in North America and Europe. Its shares rose 4% at $150.44 in premarket trading.

Wealthier consumers spent on nice-to-have items, even as lower-income households trade down to stretch budgets under stress from higher cost of living.

"We're increasing investments to accelerate momentum with consumers despite the challenging geopolitical and economic environment," said Shailesh Jejurikar, who took over as P&G's CEO at the start of the year.

TARIFF REFUND

The company's currency-neutral gross margin fell 100 basis points, sliding for the sixth straight quarter, partly due to tariffs and its ongoing investment in product innovation.

P&G maintained its expectation of a nearly $400 million hit from tariffs on fiscal 2026 earnings. About half of the impact was from the tariffs imposed under the International Emergency Economic Powers Act, which were invalidated by the U.S. Supreme Court in February.

P&G is planning to follow the process of applying for refunds, which was launched earlier this week, a company spokesperson told Reuters, adding that there was no certainty as to when the refunds would be issued.

HAIR CARE DRIVES GROWTH

Overall organic volume rose 2%, led by a 5% growth in the beauty segment, while total price rose 1% in the third quarter.

Rival French cosmetics group L'Oreal also reported strong demand for premium hair care products and fragrances in North America and Europe, which led to its fastest quarterly growth in two years.

However, Nivea-maker Beiersdorf said it would consider raising prices in the second half of the year if commodity costs continued to rise.

P&G's quarterly sales rose 7% from a year ago to $21.24 billion, topping estimates of $20.50 billion, according to data compiled by LSEG.

Excluding items, third-quarter earnings per share of $1.59 also beat estimates of $1.56.

(Reporting by Juveria Tabassum in Bengaluru and Alexander Marrow in London; Editing by Arun Koyyur)