P&G’s Multi-billion Dollar War Chest

Procter & Gamble has $8-10 billion to finance acquisitions, said company chairman A.G. Lafley in an interview published in French daily La Tribune on Monday. Mr. Lafley said the group had carried out the bulk of the divestments he considered necessary and its external growth strategy was focused on key product categories.

“We are certainly going to pursue our acquisitions, giving priority to beauty and health,” he said. “This external growth ought to count for less than one percent of our target for global growth. Given our cash flow, we have between eight and 10 billion dollars to finance our acquisitions.”

The maker of such household names as Tide laundry detergent, Pringles potato chips and Crest toothpaste, purchased the Clairol hair care business in 2001 and Mr. Lafley said it had just completed the purchase of perfume brand Lacoste.

Last week P&G raised its quarterly earnings forecast for the fourth straight quarter citing a strong performance in its health care business and in developing markets.

“All our targets are currently being achieved and ought to bring us to sustainable turnover growth of 4-6%, and double digit growth in our earnings per share,” Mr. Lafley said.

Mr. Lafley said the group, which has 12 star brands with more than a billion dollars in turnover, had completed 90 if not 95 percent of the divestments he considered necessary.