P&G will merge or divest more than half of its brands

Jack Neff
ADVERTISING AGE

Published: August 4, 2014 2:24 pm ET
Updated: August 4, 2014 2:29 pm ET

Image By: P&G

Related to this story

Topics Packaging
Companies & Associations Procter & Gamble Co.

Procter & Gamble Co. plans to divest, discontinue or merge more than half of its brands globally as it restructures to focus on its top 70 to 80 brands, Chairman-CEO A.G. Lafley said on the company’s earnings conference call today.

The move comes more than 14 months after Lafley returned as CEO, and at the end of a fiscal year he described as meeting P&G’s financial commitments but falling well short of what it should have done.

“We delivered our business and financial commitments in 2013-14, but we could have and should have done better,” Lafley said. “If just a couple of businesses that missed their going-in operating plans had delivered, we would have achieved our initial leadership-team goals,” which includes 4 percent sales growth vs. the 3 percent organic growth reported for the year and 2 percent for the quarter, and improved market share rather than “roughly holding share,” as reported.

“Today we are announcing an important strategic step forward that will significantly streamline and simplify the company’s business and brand portfolio,” Lafley said. “We will become a much more focused, much more streamlined company of 70 to 80 brands.”

That move will mean divesting, discontinuing or finding partners for another 90 to 100 brands in P&G’s current portfolio.

Lafley didn’t provide a timeframe for how long the restructuring would take, other than to say it’s “more time than we would like.”

“The timing on this will be governed by our ability to create value,” said Chief Financial Officer Jon Moeller, though he estimated it would take 12 to 24 months to complete the process.

“In an ideal world, we would have done this in the depth of the financial crisis,” Lafley said, acknowledging that had occurred during his last watch as CEO. “I don’t want to wait another minute.”

Those 70 to 80 keeper brands account for 90 percent of company sales and over 95 percent of profit over the past three years, Lafley said. That still leaves room for elimination of brands accounting for more than $8 billion in sales annually.

“We will harvest, partner, discontinue or divest the balance of 90 to 100 brands,” Lafley said. On the whole, the brands in question have seen sales declining 3 percent and profits declining 16 percent, he said, and have margins less than half the company average.


Comments

P&G will merge or divest more than half of its brands

Jack Neff
ADVERTISING AGE

Published: August 4, 2014 2:24 pm ET
Updated: August 4, 2014 2:29 pm ET

Post Your Comments


Back to story


More stories

Image

French investment firm buys Alabama-based CSP Technologies

January 30, 2015 1:10 pm ET

A French investment firm has finalized a deal to buy CSP Technologies Inc., an Auburn, Ala., company that makes specialty plastics packaging.    More

Image

Report: Brands are falling short on packaging sustainability

January 29, 2015 5:19 pm ET

Packaging in general, and plastic packaging in particular, has a long way to go in terms of recycling, according to a pair of environmental groups.    More

Image

Profit dips at Bemis Co. Inc.

January 29, 2015 2:04 pm ET

Profit dipped for Bemis Co. Inc. for all of 2014, but were up during the fourth quarter in what the company's leader called a “pivotal year....    More

Image

Plastics News Now: Losing weight with style, plastics in the Dragons' Den

January 29, 2015 6:00 am ET

A 19-year-old entrepreneur brings business to a U.K. injection molder after winning support on TV's Dragons' Den, auto suppliers combine...    More

Image

African equity fund invests in Kenya's General Plastics

January 28, 2015 4:24 pm ET

An African investment fund specializing in agriculture has invested in Kenyan packaging firm General Plastics Ltd. to provide funds to expand in the r...    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events