Procter & Gamble profit jumps
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- Published on Tuesday, 29 January 2013 00:00
- Written by AP
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NEW YORK — Procter & Gamble, the world’s largest consumer goods company, whose products like Tide detergent and Gillette razors are in 98 percent of Americans’ households, in recent years had lost business to competitors as it grew too fast overseas and kept prices high.
But on Friday the company reported that its fiscal second quarter profit more than doubled as the plan that it launched last year to lower costs and focus on rolling out new products helped boost its bottom line. It was the second quarter in a row that P&G beat Wall Street estimates.
“We have more work to do, but the underlying trends are improving,” said CFO Jon Moeller in a call with analysts.
P&G, like many U.S.-based companies, has been focusing on growing its business in places such as China and India to drive growth as more developed regions like North America have slowed. But while other competitors lowered prices, P&G, based in Cincinnati, took for granted that it was a household name in some areas, and held its ground on pricing. As a result, the company lost market share in more than half of the categories in which it sells products.
In February, P&G launched a massive restructuring plan to focus on the company’s 40 top businesses, 20 biggest new products and 10 most profitable emerging markets. It also rolled out cost-cutting measures aimed at saving $10 billion by fiscal 2016. Later in the year, the company lowered prices for laundry detergent, toothpaste and other products in the U.S., and cut jobs.
The company’s quarterly results show that the strategy is working. The company held or grew market share in businesses representing almost 50 percent of sales during the fiscal second quarter that ended in December.
Another good sign: positive results were broad based, coming from both developed markets like North America as well as emerging markets like China, India and Brazil. For instance, in China, a key emerging market that has been facing slowing growth, P&G held or grew market share in about half of the categories it competes in, while market share improved for two-thirds of its portfolio there.
“We’re really seeing growth both in developed markets and developing markets,” said CEO Bob McDonald said in a conference call.
The growth was driven in part by recent product launches that include 3D White toothpaste in Brazil and the introduction of a low-priced razor Gillette Guard in Egypt. In the U.S., Tide Pods drove the improvement in the detergent category and Cascade dish detergent, Gillette Fusion razors and Crest toothpaste were other strong sellers.
