Sales: $65 billion
Sales: $65 billion (estimated) for household, personal care and oral care products. Corporate sales: $83.5 billion. Net income: $12 billion for the fiscal year ending June 30, 2008.
Key Personnel: A.G. Lafley, chairman; Robert A. McDonald, president and chief operating officer; Jon R. Moeller, chief financial officer; Dimitri Panayotopolous, vice chairman, global household care; Robert A. Steele, vice chairman, global health and well-being; Ed Shirley, vice chairman, global beauty and grooming; Werner Geissler, vice chairman, global operations.
|Robert A. McDonald|
Comments: While its competitors are cutting back, P&G is moving ahead via acquisitions and expansion. In June, for example, the company made it clear that it is targeting the men’s grooming category via the acquisitions of The Art of Shaving and Zirh. According to Euromonitor International, last year, sales of men’s grooming products in the U.S. increased 1.6% to $4.74 billion. The market includes sales of shaving products and toiletries, such as bath and shower products, deodorant, hair care and skin care, according to Euromonitor. While P&G has dominated the mass side of men’s grooming via Gillette, these two acquisitions give it a presence in the upscale portion of the market.
|The famed Ivory Towers at P&G’s global headquarters in Cincinnati.|
Sustainability is a key consideration in the planning and construction of these facilities. At least 77 sustainability-related “resource conservation measures” are evaluated in the planning of each facility. P&G has bucketed each into major categories such as site, water, materials, systems and lighting.
The plan addresses items such as solar panels, geothermal energy, rapidly renewable materials, building orientation, premium efficiency motors, passive heating of outside air, recycled asphalt and thermal energy storage. It also gives each facility manager a goal for element adoption and measures to capture return on investment.
|With P&Gphasing out its Max Factor brand, Cover Girl remains the dominant name in mass color cosmetics.|
For example, in Poland, a new beauty care manufacturing facility is projected to reduce CO2 emissions by 26% and energy usage by at least 11%. At the site, which is located in the south-central region, P&G is using Rapidly Renewable Materials in the construction and low-E glazing on the windows, which carry a slightly higher premium, but will reduce energy costs by as much at 30-50%. In addition, water generated from the utilities process is regenerated for reuse in cooling, on-site irrigation and other feasible operations. This reduces the amount of water being discharged to the environment and reduces the consumption of city water, according to P&G.
Meanwhile, in Romania, P&G studied wind and solar potential, rainfall, humidity patterns and the solar path of the proposed site location before designing the building’s sustainability plan. As part of its anticipatory design, the administration building roof faces due south, maximizing the possible future use of solar panels. Large windows throughout bring in natural light and connect employees with the outdoors, but also are high-efficiency glass, reducing energy use. External sunshades—or louvers—reduce sunshine where and when necessary. P&G also has designed the facility to recover and reuse heat created in the manufacturing process to heat the building and water.
Living and Thriving
P&G is committed to and making progress in improving the environmental profile of P&G’s products and operations, as well as bettering lives of children in need through its Live, Learn and Thrive corporate social responsibility programs. The company recently released increased sustainability goals for 2012. One goal is to develop and market at least $50 billion in cumulative sales ofso-called sustainable innovation products (SIP)—products with a significantly reduced (>10%) environmental footprint versus previous or alternative products. When compared against P&G’s original target of $20 billion in cumulative SIP sales, the new goal reflects a strengthened pipeline of initiatives.
|The Dawn franchise was extended with the addition of new Direct Foam.|
Through its Children’s Safe Drinking Water program, P&G will deliver three billion liters of clean water to 300 million children. The company says it has identified new opportunities to expand its programs to serve more children in need around the world.
According to P&G, its long term, disciplined approach to sustainability enables the company to continuously assess progress and establish targets that further improve results. The company’s “no tradeoffs” approach to innovation means consumers do not have to choose between the performance and price they expect and with being sustainable.
P&G was recently recognized by the Financial Times and Just Means with the 2008/2009 Social In- novation Award for its work in shaping the new world of sustainable and socially responsible enterprise. P&G was also recently recognized in Corporate Respon- sibility Officer magazine’s 10th Annual 100 Best Corporate Citizens List, which ranks companies according to their environmental, climate change, human rights, philanthropic, employee relations, financial and governance practices.P&G was ranked 14th out of the 100 companies included on the list.
Lafley Goes Out a Winner
These moves come at a time when P&G is undergoing big changes in management. Last month, Robert A. McDonald, 55, was elected president and chief executive. He had been chief operating officer. A.G. Lafley will remain chairman. During his nine-year tenure, Mr. Lafley refocused P&G on consumer-driven innovation and consistent, reliable sustainable growth. Moreover, the company more than doubled sales since the beginning of the decade, and has grown its portfolio of billion-dollar brands from 10 to 23. On average, organic sales have grown 5%, core earnings-per-share have grown 12%, and free cash flow productivity has increased 111% since 2001.
Last year, P&G’s corporate sales rose 9%. Beauty sales improved 9% to $19.5 billion on the strength of 2% volume growth and 6% growth due to favorable currency exchange. Favorable product mix added 1% due to growth in skin care and fragrances.
Grooming sales rose 11% to $8.2 billion on a 5% gain in volume, a 7% favorable exchange rate and 2% price increase offset by a 3% decline due to product mix.
Health care sales rose 9% to $14.6 billion. More specifically, oral care sales rose in the mid-single digits on the strength of Oral B and Crest.
Fabric and home care sales surged 11% to $23.8 billion on volume gains of 6%. Fabric care growth was aided by the North American launch of compact laundry detergents and initiative activity on Tide, Gain and Downy. Home care volume rose in the mid-single digits due to big gains in developing regions and the launch of Febreze candles.
For the nine months ended March 31, 2009, corporate sales fell 1% to $60.3 billion, but net earnings jumped 21% to $10.9 billion. Within the beauty global business unit, beauty sales fell 1% to $14.3 billion. Grooming sales fell 6% to $5.8 billion. Within the health and well-being GBU, health care sales (including oral care) fell 5% to $10.4 billion. In the household care GBU, sales of fabric and home care products were flat at $17.6 billion.