Sales: $69.1 billion (estimated) for personal care, household care and oral care products. Corporate sales: $83.6 billion. Net income: $9.3 billion for the year ended June 30, 2012.
Key Personnel: AG Lafley, chairman president and chief executive officer; Werner Geissler, vice chairman, global operations; Dimitri Panayotopoulos, vice chairman, global business units; Bruce Brown, chief technology officer; Giovanni Ciserani, group president, global fabric care; Linda W. Clement-Holmes, senior vice president, global business services research & development, product supply and employee solutions; Joanne Crewes, president, global prestige, P&G; Philip J. Duncan, global design officer; Tarek Farahat, president, Latin America and global club, cash and carry channel; Mary Lynn Ferguson-McHugh, group president, Western Europe and global discounter and pharmacy channels; Thomas M. Finn, president, global health care; Robert L. Fregolle Jr., global customer business development officer; William P. Gipson, senior vice president, global diversity and research and development, global hair care and color; Melanie L. Healey, group president, North America and global hyper, super, mass channel; Deborah A. Henretta, group president, global beauty care; Colleen E. Jay, president, global retail hair care and color; Hatsunori Kiriyama, president, Asia; Joan M. Lewis, global consumer and market knowledge officer; Patrice Louvet, group president, global grooming and shave care; Deborah P. Majoras, chief legal officer and secretary; Adil Mehboob-Khan, president, P&G Salon Professional, Global Wella Professional; Jon R. Moeller, chief financial officer; Fillippo Passerini, group president, global business services & chief information officer; Kirk L. Perry, president, global family care, P&G; Laurent L. Philippe, group president, CEEMEA and global high frequency store channel; Charles E. Pierce, group president, global oral care; Marc S. Pritchard, global brand building officer; Martin Riant, group president, global baby care; Jeffrey K. Schomburger, president, global Walmart team; Valarie Sheppard, senior vice president & comptroller; Yannis Skoufalos, global product supply officer; Shannan Stevenson, president, greater China, P&G; Nancy K. Swanson, vice president, corporate, P&G; David S. Taylor, group president, global home care; Alex Tosolini, senior vice president, global ebusiness; Jorge A. Uribe, global productivity and organization transformation officer.
Major Products: 50 leadership brands, including 25 billion dollar brands. Household Care—Tide, Ariel, Cheer, Gain, Bold, Dreft, Era detergents; Joy and Cascade dish detergents; Febreze and Downy laundry additives; Mr. Clean, Comet and Swiffer household cleaners. Personal Care—Head & Shoulders, Nioxin, Pantene, Herbal Essences, Pert, Sebastian, Vidal Sassoon and Aussie hair care; DDF, Olay and SK-II skin care; Nice ‘n Easy hair color; Cover Girl, Dolce & Gabanna cosmetics; 007, Hugo Boss, Lacoste, Puma, Dunhill, Escada, Dulce & Gabbana, Fekkai and Gucci fragrances.
New Products: Beauty & Grooming—Secret Clinical Strength Stress Response, Gillette Sensitive, Olay Regenerist Micro-Sculpting Eye & Lash Duo, Gucci Guilty Black, Oral-B Deep Sweep Power Brush, Olay Fresh Effects, Vidal Sassoon Pro Series, Wella Illumina Color, Gucci Premiere, Olay Total Effects CC Tone Correcting UV Moisturizers, Dolce & Gabbana Pour Femme; Household Care—Ariel Pod, Febreze Stick & Refresh, Cascade Platinum, Swiffer WetJet Extra Power Pad, Febreze Car Vent Clip, Cascade Complete Pacs.
Comments: Procter & Gamble’s executive team was done in by insider meddling. After 18 months of complaining about the performance of P&G stock under the direction of chairman Bob McDonald, activist investor Bill Ackman finally got his wish in May when Procter’s board ousted McDonald and brought back former P&G CEO AG Lafley to serve as president, chief executive officer and chairman.
Ackman’s stake in P&G is nearly $2 billion, so when he speaks, corporate boards tend to listen. More than a year ago, Ackman and others urged P&G to trim overhead and raise productivity. Early in 2013, McDonald launched a $10 billion cost-cutting program that would eliminate more than 6,000 jobs. At the same time, McDonald cut back on aggressive expansion plans in emerging markets in order to focus on the 40 product-country combinations that account for the majority of its earnings.
Unfortunately for McDonald, the January-March 2013 quarter did little to boost Ackman’s confidence in the CEO. Stronger earnings to close out the year and the turnaround efforts quieted criticism, but disappointing sales for the first three months of 2013 revived questions about whether the company was on the right track. Ackman also had a beef with McDonald’s time spent outside the office, charging that McDonald served on too many corporate boards that, Ackman insisted, took up 25% of his time.
Thus, it was out with the new and in with the old at P&G. McDonald left after less than four years at the helm. Just days after tapping Lafley to lead P&G, the company reconfigured its Global Business Units into four industry-based sectors as part of its “ongoing plan to improve business performance.” These changes support the company’s current growth strategies of strengthening developed market businesses, maintaining developing market momentum, building a strong innovation pipeline, and driving productivity improvements.
“This sector organization and leadership team will help us operate more effectively and efficiently to continue momentum behind P&G’s growth strategies,” said Lafley in a statement. “These changes build on the productivity and organization design work led by Bob McDonald, and will help us get closer to consumers and become more agile with customers.”
According to P&G, each sector is focused on common consumer benefits, shares common technologies, and faces common competitors. Each will be led by a group president as follows:
- Martin Riant has been elected group president of global baby, feminine and family care. This sector includes the following global categories: baby care, family care and feminine care.
- Deborah A. Henretta has been elected group president of global beauty. This sector includes the following global categories: beauty care, retail hair care and color, salon professional and prestige.
- David S. Taylor has been elected group president of global health and grooming. This sector includes the following global categories: shave care, Braun, oral care, health care and pet care.
“We expect this structure to facilitate faster global expansion of brand and product innovations to win with consumers,” Lafley said. “Sectors will also drive technical, commercial, financial and organizational synergies to improve results.”
Concurrent with these changes, P&G is also announcing that Dimitri Panayotopoulos has been elected vice chairman and advisor to the chairman and chief executive officer effective July 1. He will continue to report to Lafley. At the same time, Melanie L. Healey, group president, North America and global hyper, super and mass channel, will report to Lafley in addition to Werner Geissler, vice chairman, global operations. This change reflects the size and impact of the North America market to P&G’s business. Geissler will continue reporting to Lafley as vice chairman, global operations, with particular focus on Western Europe and developing markets.
“This will strengthen our focus on go-to-market excellence in our core developed and developing markets,” said Lafley. “Taken together, these organization changes will help us operate better and faster as one unified team to win.”
Sales Rise as Earnings Fall
Playing musical chairs in the executive suite is nice, but ultimately, analysts and investors expect results. For the year ended June 30, 2012, P&G’s sales rose 3%, but net earnings declined 20%. Organic sales rose 3%, but unit volume was flat. Beauty volume rose in the low single digits, but declined by the same in household care. Similarly, volume grew in the mid-single digits in developing markets, but fell by low single digits in developed regions. Gross margin declined 160 basis points to 49.3%, driven by a 230-basis point impact from higher commodity and energy costs.
By segment, beauty reported a 2% increase in volume and sales ($20.3 billion), but earnings fell 6%. Organic sales grew 2% on organic volume growth and price increases added 3% to net sales growth. Net sales were hurt by a 3% decline in salon professional as well as a decline in developed market sales.
Fabric care and home care sales rose 3% to more than $27 billion on a 1% decline in volume. Net earnings fell 6%. Unit volume fell 1% and organic sales were up 3%. Volume in developing regions rose in the mid-single digits, but declined by the same percentage in development regions, according to P&G.
The end for McDonald, as noted, came after the company reported that sales rose 2% for the three months ended March 31, 2013. Although fabric and home care sales rose in the low single digits, the gains were offset by a similar decline in beauty and grooming. In that fiscal Q3, net income rose 5% to nearly $2.6 billion.
For the nine months, sales were flat at $63.5 billion, but net earnings jumped 32% to $9.5 billion. Beauty sales were off 3%, while fabric and home care sales were flat.