Fabric and home care sales increased 3% to $28.3 billion. P&G is the No. 1 player in the segment with a 35% global share (unchanged from fiscal 2022). Net sales increased 3% driven by higher pricing of 11% and favorable mix of 1%, partially offset by unfavorable foreign exchange of 5% and a 4% decrease in unit volume. Fabric care net sales increased low single digits. Positive impacts of higher pricing and favorable geographic mix were partially offset by unfavorable foreign exchange and a decrease in unit volume. The volume decrease was primarily driven by declines in Europe, North America and Greater China. Organic sales increased high single digits driven by more than 20% increases in Latin America and IMEA, high single-digit increases in Asia Pacific and Europe and a low single-digit increase in North America.

Home care net sales increased mid-single digits. Positive impacts of higher pricing and favorable product mix were partially offset by unfavorable foreign exchange and a decrease in unit volume. The volume decrease was driven by declines in Europe and North America. Organic sales increased high single digits driven by a mid-teens growth in Europe and a high single-digit growth in North America. Global market share of the home care category increased more than a point.

Beauty net sales increased 2% to $15.0 billion as the positive impacts of higher pricing of 8% and benefit from acquisitions of 1% were partially offset by unfavorable foreign exchange of 5%, unfavorable mix of 1% (due to struggling SK-II sales) and a 1% decrease in unit volume. P&G calls itself the largest hair care company in the world with a nearly 20% share. The company’s biggest brands are Pantene and Head & Shoulders. Hair care net sales increased low single digits. Positive impacts of higher pricing and benefit from acquisitions were partially offset by the negative impacts of unfavorable forex and unit volume decline. The volume decrease was driven primarily by declines in Europe, Greater China and Asia Pacific. Organic sales increased high single digits driven by 20% growth in Latin America and double-digit growth in Europe and North America, partially offset by a mid-single-digit decline in Greater China. Global market share of the hair care category decreased more than half a point, according to the company.

In skin care, Olay is among the world’s largest brands, with a 5% share in fiscal 2023. Skin and personal care net sales increased low single digits. Positive impacts of higher pricing, a unit volume increase and a benefit from acquisitions were partially offset by the negative impacts from unfavorable mix (due primarily to the decline of the super-premium SK-II brand) and unfavorable forex. The volume increase was driven primarily by growth in North America, Latin America and Greater China (all due to innovation), partially offset by a decline in Asia Pacific (due to the decline of SK-II in the travel). Organic sales increased mid-single digits as more than 20% increases in Latin America and Europe and a double-digit increase in North America were partially offset by a double-digit decrease in Asia Pacific. Global market share of the skin and personal care category increased nearly a point.

P&G is the largest maker of blades and razors with a 60% share, thanks to the success of Gillette and Venus. Grooming net sales decreased 3% to $6.4 billion driven by unfavorable foreign exchange of 7%, a 3% decrease in unit volume and unfavorable mix of 2% (due to decline of appliances, which have higher than segment-average selling prices), partially offset by higher pricing of 9% (driven by all regions). The volume decrease was primarily driven by decreases in Europe and North America. Excluding the impact of acquisitions and divestitures and forex, organic sales increased 5% driven by growth in all regions led by a more than 20% growth in Latin America and a double-digit growth in Asia Pacific. Global market share of the grooming segment increased one point.

Health care sales rose 4% to $11.2 billion. Behind Crest and Oral-B, P&G is the No. 2 oral care manufacturer in the world. Health care net sales increased 4% to $11.2 billion driven by higher pricing of 5% and favorable mix of 4%, partially offset by unfavorable foreign exchange of 4% and a 1% decrease in unit volume. Oral care net sales decreased low single digits. Negative forex impacts and a unit volume decrease were partially offset by increased pricing and favorable premium product mix. Volume decline was primarily driven by Europe, North America and Greater China. Organic sales rose low single digits driven by more than 20% growth in Latin America and low single-digit growth in North America. Global market share of the oral care category was unchanged. Personal health care net sales increased double digits. Favorable mix, higher pricing and a unit volume increase were partially offset by unfavorable foreign exchange. Volume increase was primarily driven by growth in North America and Latin America, partially offset by a decline in IMEA. Organic sales increased thanks to gains in North America, Europe and Latin America. Global market share of the personal health care category was unchanged. Net earnings increased 6% to $2.1 billion due to the increase in net sales and a 40 basis-point increase in net earnings margin.

As consumption in China improves, things are looking better in fiscal 2024. For the third quarter ended March 31, sales rose 1% to $20.2 billion. Sales continued to benefit from price increases and market share gains which led to sequential volume recovery within North America, Europe, Asia Pacific and Latin America as consumption remained healthy. This helped the company offset softness in Greater China due to headwinds from a decline of the SK-II brand, slowdown in Africa due to lower demand and weakening Middle Eastern markets due to heightened geopolitical tensions. By category, beauty, grooming, health care and fabric and home care all posted sales gains of 2%. But baby, feminine and feminine care fell 3%.

“We delivered solid sales and strong earnings growth in the third quarter despite multiple headwinds, enabling us to raise our EPS growth guidance and maintain our top-line outlook for the fiscal year,” said CEO Jon Moeller. “We remain committed to our integrated strategy of a focused product portfolio of daily use categories where performance drives brand choice, superiority — across product performance, packaging, brand communication, retail execution and consumer and customer value — productivity, constructive disruption and an agile and accountable organization. We are increasing investments in superiority to drive market growth and sustain strong momentum. We have confidence this remains the right strategy to deliver balanced growth and value creation.”

Hair care organic sales increased high single digits driven by increased pricing in Latin America, Europe and North America. Grooming segment organic sales increased 10% driven primarily by higher pricing in Latin America and Europe.

Health care segment organic sales increased two percent versus year ago. Oral care organic sales increased mid-single digits due to premium product mix, partially offset by volume declines mainly in Asia Pacific and North America.

Fabric and home care segment organic sales increased three percent versus year ago.

The Outlook for FY24

P&G maintained 2024 sales guidance in the range of 2-4%. Forex is expected to be a headwind of approximately 1-2 percentage points to all-in sales growth. P&G maintained its outlook for organic sales growth in the range of 4-5%.

Skin and personal care organic sales fell low single digits due to lower sales of the super-premium SK-II brand, partially offset by volume growth from innovation in personal care.

In the Q3 earnings call, CFO Andre Schulten noted that, excluding SK-II, P&G is making sequential progress in China with share being flat and organic sales improving quarter-over-quarter. He mentioned specific strengths in baby care and appliance business growth, with ongoing investments in hair care.

Sales: $60.1 billion

Brands like Tide are a big reason why fabric and home care accounts for 35% of corporate sales.

Sales in Happi’s areas of interest rose nearly 7%. Corporate sales rose 5% to $80.2 billion on a 2% increase in unit volume. By region, volume increased mid-single digits in North America and Latin America, increased low single digits in Asia Pacific and IMEA. Volume in Europe was unchanged and decreased mid-single digits in Greater China.

By category, fabric & home care accounted for 35% of sales; followed by baby, feminine & family care (25%), beauty (18%), health care (14%) and grooming (8%). Net earnings increase 3% to $14.8 billion. P&G said sales growth was driven by a high single digit increase in health care, mid-single digit increases in fabric & home care, and baby, feminine & family care and low single digit increases in beauty and grooming.

CEO Jon Moeller credits the gains, in part, to P&G’s focus on market-leading, premium products. Speaking at Cornell University, his alma mater, Moeller said the strategy evolved after he became CFO. P&G moved away from “flavors, fragrances and fashion,” to high-performance, daily-use products. The result is that P&G exited six product categories and reduced the number of brands from 170 to 65.

It’s a Beauty!

In fiscal 2022, beauty net sales increased 2% to $14.7 billion. Unit volume was unchanged. Higher pricing increased net sales by 3%. Foreign exchange had no impact on net sales. Unfavorable mix decreased net sales by 1% due to the disproportionate decline of SK-II sales. P&G said its global market share of the beauty segment increased 0.1 points. Despite the increase, P&G remains No. 4 in the global beauty space, behind L’Oréal, Unilever and Estée Lauder.

Dawn, Olay and Febreze are just three of Procter & Gamble’s billion-dollar brands.

Hair care net sales increased low single digits on increased pricing and mix, offset a bit by a decline in volume. Volume declined mid-single digits in Greater China due to pandemic-related lockdowns. Volume fell in India, Middle East and Africa, and Europe and Asi-Pacific. Boosted by the acquisition of Ouai, volume increased low single digits in North America. Overall, P&G’s global market share of the hair care category decreased less than a point.

Skin and personal care net sales increased low single digits. Positive impacts of a low single digit increase in volume and increased pricing were partially offset by negative category mix due to the decline of SK-II brand (which has higher than category-average selling prices). Organic sales increased low single digits. Volume increased mid-teens in Latin America (due to innovation) and increased mid-single digits in North America (due to innovation in personal care and acquisitions) and in Greater China (due to innovation and market growth). Global market share of the skin and personal care category increased half a point.

Grooming sales increased 2% to nearly $6.6 billion. Unit volume was unchanged. P&G’s share of the global grooming category rose 1.2 points. Shave care sales increased mid-single digits, but appliance sales dropped mid-single digits.

Health Care sales increased 9% to $10.8 billion. Oral care sales increased low-single digits. Oral care sales benefitted from gains in North America and a consumer preference for premium-priced products. Sales in Asia-Pacific jumped double-digits. However, sales in Greater China and Europe fell.

P&G participates in the wellness category via Voost.

Fabric & Home Care sales increased 6% to $27.6 billion on a 3% increase in unit volume. P&G’s global market share of the fabric & home care segment increased 1.5 points. Fabric care sales increased high single digits. P&G credited the gain, in part, to demand for higher-priced fabric enhancers. Home care sales were flat. P&G’s global market share of the home care category increased more than a point, according to the company.

In fiscal Q3, sales rose 4% to $20.1 billion.

Just in time for Spring cleaning activities, P&G revamped two Febreze products, Febreze Fabric Refresher and Febreze Air. The former has an upgraded formula that officials say is proven to deliver odor-fighting power with longer-lasting freshness, even hours after spraying. It is currently available in Gain Original, Gain Island Fresh, Extra Strength and Downy April Fresh.

Febreze Air has an upgraded sprayer that creates a wider and finer spray pattern, enabling each spritz to stay in the air longer while increasing the fragrance’s longevity. There has been an upgrade to the product’s name, too; it is now Febreze Air Mist.

In May, P&G expanded its Swiffer franchise with the launch of Powermop. The home cleaning device features a 3D Mop Pad includes 300+ powerful scrubbing strips made up of six layers of 2-sided strips to provide 5x the cleaning power vs. the WetJet pad. Moreover, the mop head is 30% larger with 360° swivel for easy maneuverability.

Sales: $57.0 billion (estimated) for home, personal and oral care products.
Corporate sales: $76.1 billion

Procter & Gamble’s balanced portfolio continues to shine regardless of what’s going on in the world. At the height of the pandemic, consumers stayed home and cleaned their homes more than ever. The pandemic lifted P&G’s sales to new heights. P&G continues to build on those gains for fiscal Q3 2022 (the most recent quarter available), P&G reported a 7% increase in sales to $19.4 billion—driven in large part by price increases. Q3 sales rose in all segments led by health care, which includes oral care (+13%), fabric care and baby, feminine and family care (+7% for each), grooming (+3%) and beauty (+2%). For the nine months, sales topped $60.6 billion.

For fiscal 2022, P&G raised its outlook for all-in sales growth from 3-4% to 5-6%. The company also raised its guidance for organic sales growth from 4-5% to 6-7%. Like every other company, P&G faces higher commodity costs. Specifically, the fiscal 2022 outlook includes headwinds of $2.5 billion after-tax from higher commodity costs, $400 million after-tax from higher freight costs and $300 million after-tax from negative foreign exchange impacts.

Prestige Beauty Purchases

Headwinds haven’t stopped P&G from making headway into the prestige beauty space. In fiscal 2022, the company acquired well-known names like Tula Skincare, Ouai haircare and Farmacy Beauty. The acquisitions bolster P&G’s existing prestige brand portfolio, which already includes SK-II and First Aid Beauty. Clearly, the maker of Olay is ready to take on competitors like L’Oréal, Estée Lauder and Unilever in the prestige beauty space. Tula had sales of $150 million last year.

In November, when P&G acquired cult brand Farmacy Beauty, which had sales of about $80 million, Markus Strobel, president of skin and personal care for P&G Beauty told WWD, “It’s an attractive brand with amazing potential and unusual positioning—deeply rooted in science combined with natural ‘farm-to-face’ ingredient sourcing.”

Commenting on P&G’s burgeoning prestige portfolio, Alex Keith, CEO, P&G Beauty, noted: “Our portfolio is small but powerful. Farmacy is a unique addition, appealing to the Gen Z consumer as a conscious brand and strengthening our presence in the specialty beauty channel. This combination is super attractive and fills a space in our portfolio that we don’t have.”

In a Costco exclusive, P&G introduced Super Nature shampoo and conditioner.

Acquisitions play a big role in P&G’s expansion plans, but home-grown brands have their place, too. During the past nine months, Procter introduced two personal care brands that will certainly benefit from P&G’s multi-billion-dollar marketing budget. In a Costco exclusive, P&G introduced Super Nature shampoo and conditioner. According to P&G the products are made from sustainable aloe. Super Nature products are sulfate free, paraben free, dye free, mineral oil free, PETA-certified cruelty free, made from 96% naturally derived formulas and are pH balanced. Additionally, bottles are made with recycled material and manufactured in a zero waste to landfill facility.

In a new-for-the-US move, P&G rolled out Vöost. P&G acquired the Australian vitamin brand in 2021. Vöost Beauty vitamins tablets contains biotin for hair, skin, and nails, as well as vitamin E, vitamin C and collagen peptides. Other formulas include Vitamin C; Vitamin D3 for overall bone, muscle, and immune function; Magnesium to support bone health and muscle function; Women’s multi-vitamin; Men’s multi-vitamin; Energy and Hydrate.

A Very Good Year

Few companies weathered the pandemic better than Procter & Gamble. In fiscal 2021, corporate sales rose 7% to $76.1 billion. The gains came on a 3% increase in unit volume and 2% increase in product mix (due to disproportionate growth in North America, the health care business and the home care and appliances categories, all of which have higher than company-average selling prices). Favorable foreign exchange and pricing, each added 1% to sales.

Sales growth was driven by double-digit increases in health care and in fabric & home care, a high single digit increase in beauty, a mid single digit increase in grooming and a low single digit increase in baby, feminine & family care. By region, sales rose mid-single digits in North America and IMEA and increased low single digits in Latin America. Europe was unchanged and decreased low single digits in Asia Pacific due to pandemic-related market contraction.

By category, fabric & home care accounted for 34% of sales, followed by baby, feminine & family care (25%), beauty (19%), health care (13%), and grooming (9%).

Taking a closer look at category activity, fabric & home care sales increased 10% to $26.0 billion, due to a 5% increase in unit volume. Forex and higher prices added 1% each. Positive mix impacts increased net sales by 3% due to the disproportionate growth of the home care category and North America, both of which have higher than segment-average selling prices. Fabric & home care’s global market share increased one point. Fabric care sales increased high single digits due to a low single digit increase in volume, favorable foreign exchange impacts and positive mix impacts due to the disproportionate growth of premium products (including scent beads and unit dose) and the North America region, all of which have higher than category-average selling prices. Volume grew high single digits in North America and Greater China and grew low single digits in Latin America. Sales in Asia Pacific fell due to pandemic-related market contraction and competitive activity. The pandemic and renewed interest in cleaning, helped home care sales surge nearly 20%. Global market share of the home care category increased more than a point.

Beauty net sales increased 8% to $14.4 billion on a 3% increase in unit volume. Hair care sales increased mid-single digits due to a low single digit increase in volume and increased pricing. Skin and personal care sales increased high single digits due to a low-single digit volume increase, favorable mix due to the disproportionate growth of the super-premium SK-II brand, increased pricing and favorable foreign exchange rate. Volume increased double digits in Greater China and increased low single digits in North America driven by increased consumption of personal care products due to the pandemic. This volume growth was partially offset by a double-digit decline in India, Middle East and Australia (IMEA) and a low-single digit decline in Asia Pacific due to pandemic-related market contractions. Global market share of the skin and personal care category fell nearly half a point, according to P&G.

Grooming sales rose 6% to $6.4 billion, due primarily to a 3% increase in unit volume. Shave care sales increased low single digits due to a low single digit increase in volume and increased pricing, partially offset by unfavorable mix impacts due to the disproportionate growth of lower priced products in IMEA and Latin America. The volume increase was driven by gains in IMEA, Greater China, Latin America and North America; these were partially offset by a mid-single digit decline in Asia Pacific and a low single digit decline in Europe due to pandemic-related consumption declines. Global market share of the shave care category was unchanged. Appliances net sales increased more than 20% due to a high teens increase in volume. Volume increased in all regions led by high teen increases in Europe and Greater China and double digit increases in North America and Asia Pacific. Global market share of the appliances category increased more than a point.

Health care net sales increased 10% to $10.0 billion on a 6% increase in unit volume. Oral care sales increased double digits driven by a high-single digit volume increase, favorable mix impacts from the disproportionate growth of premium power brush and paste products, favorable foreign exchange impacts and increased pricing. Global market share of the oral care category increased more than a point.

Microban 24 Multi-Purpose Cleaner

Just last month, the US Environmental Protection Agency (EPA)  registered Microban 24 Multi-Purpose Cleaner (EPA Reg No. 4091-21-3573) to keep killing 99.9% of bacteria and viruses that cause the flu and covid-19, for up to 24 hours, even when the surface is touched or contacted multiple times. Prior to this approval, Microban 24 Multi-Purpose Cleaner was registered by the EPA to initially kill viruses, including the virus that causes covid-19, in just 60 seconds and was included on EPA List N.

“Microban 24 Multi-Purpose Cleaner is a brand that has dedicated years to research in order to create meaningful science-backed products that bring consumers a sense of confidence they’re doing what they can to defend their home and surfaces in this ever-changing world,” said Marchoe Northern, SVP North America Home Care, P&G.

To kill 99.9% of bacteria and viruses for up to 24 hours on hard, non-porous, non-food contact surfaces, consumers can simply preclean visibly dirty surfaces and then spray Microban 24 Multi-Purpose Cleaner until thoroughly wet and allow to air dry without wiping.

“It remains extremely important to sanitize against both bacteria and viruses. Having a tool that will keep killing both for up to 24 hours will allow people to defend their households against these microbes,” said Dr. Frank Esper, an expert in respiratory viruses & emerging infectious diseases and an advisor to Microban 24. “As people continue to take preventative measures to reduce the spread of bacteria and viruses that can cause illnesses, the ability to use a 3-in-1 product that cleans, sanitizes and defends against 99.9% of bacteria and viruses for up to 24 hours is a game-changer.”

Prior to this approval, Microban 24 Multi-Purpose Cleaner was registered by the EPA to initially kill viruses, including the virus that causes covid-19, in just 60 seconds and was included on EPA List N.

Sales: $47.6 billion (estimated) for home, personal and oral care products
Corporate sales: $71 billion

Even during a global pandemic, Procter & Gamble flourished. Its lineup of detergents, cleaners and personal care products proved to be essential as consumers stayed home and cared for themselves and their families. Organic sales rose 6% for the year ended June 30, 2020 and corporate sales rose 5%. Unit volume rose 4%. E-commerce organic sales soared 40% and accounted for more than 10% of P&G’s sales. Walmart represented 15% of sales. The company said volume increased mid-single digits in fabric and home care and increased low single digits in beauty. Volume decreased low single digits in grooming.

P&G expects sales to remain strong in an environment focused on health, hygiene and cleaning. The company notes that back in 2017, it assessed its entire portfolio and found that 30% to be superior across all measures. Today, that percentage is 70%. Kathy Fish retired a year ago as chief research, development and innovation officer. During her six years at the helm of RD&I, Fish launched GrowthWorks, an initiative to bring lean innovation to scale. The business unit-led, corporately-supported idea eventually produced more than 130 projects. Fish was replaced by Victor Aguilar in October. Aguilar has spent more than 20 years at P&G. Most recently, he served as VP-corporate innovation and open innovation.

NPD and new technology may drive innovation, but marketing drives sales.

A Marketing Titan
P&G practically invented modern-day marketing and last year, The Cannes Lions Festival of Creativity named it the Brand Marketer of the Decade. In the past year, P&G began using propensity modeling to help understand where the consumer is on her path to purchase, letting Procter reduce spending while increasing its reach. In a nutshell, propensity marketing looks specifically at the variables that drive consumers to take certain actions or hold specific opinion; i.e., become followers of a specific brand or product. Of course, to successfully build propensity models, a brand needs robust first party data, as well as access to second- or third-party data.

In an advertising move, P&G brought some creative and media planning in-house for Secret and other brands. The company said in-sourcing of certain media planning and other services, along with business growth added 2% to the employee roster, which was about 99,000 at the end of fiscal 2020. CEO David Taylor proudly noted that P&G employees stepped up in the early days of the pandemic by producing PPE and hand sanitizer. Since then, P&G donated significant amounts of products, cash and PPE to families and communities around the world through relief partners such as International Federation of the Red Cross, Feeding America and Matthew 25: Ministries. This year, P&G launched Lead with Love, a program to commit 2,021 acts of good for communities, each other and the planet.

No promises, of course, but good deeds often lead to good things. That was certainly the case for P&G in fiscal 2020. Fabric and home care sales rose 7% to more than $23.7 billion on a 6% increase in unit volume. P&G maintains that, since 2018, it has driven about 60% of global category market growth and raised organic sales growth to double digits last year. Fabric care volume increased mid-single digits as volume grew double digits in North America and Latin America, grew mid-single digits in Greater China, and grew low single digits in Europe. Home care volume increased double digits. Volume increased in all regions, led by double digit growth in North America and Europe, high single digits growth in Asia-Pacific, mid-single digits growth in Latin America and low single digits growth in IMEA.

Beauty sales increased 4% to $13.4 billion on a 3% increase in unit volume. P&G credited the gain to disproportionate growth of the skin and personal care category, including Olay, which had higher than segment average selling prices. Hair care volume increased low single digits, and volume in skin and personal care increased mid-single digits.

Grooming sales declined 2% about $6.1 billion. Shave care volume fell low single digits, but appliance volume increased low single digits.

Oral care volume increased low single digits. Gains in IMEA, Latin America, North America and Asia Pacific were partially offset by volume declines in Europe and Greater China.

By region, North America accounted for 47% of sales, with Europe far behind at 22%. Elsewhere, Asia-Pacific represented 10% of sales, followed by Greater China (9%), and Latin America and India, Middle East and Africa (IMEA), each with 6%.

For the nine months of fiscal 2021, sales increased 7% to $57.2 billion, driven by a double-digit increase in fabric and home care, high single-digit increases in beauty and health care and mid-single digit increases in grooming. Specifically, beauty care sales rose 7% to nearly $11 billion. Grooming sales increased 5% to $4.7 billion, and fabric and home care sales jumped 12.5% to $19.4 billion.

In April, Olay launched three new premium body care collections, including two new wash-off formulations featuring retinol. The new launches—Olay Cleansing & Renewing Body Care Duo with Retinol, Olay Premium Exfoliating Body Wash Collection, and the Olay Dermatologist Designed Collection—were designed by dermatologists with dermatologist-recommended ingredients to address specific dry skin concerns.

As parts of the world begin to emerge from the pandemic, P&G executives insist the company is well positioned to overcome any headwinds.

Last month, Vice Chairman and COO Jon Moeller took part in Deutsche Bank’s dBAccess Global Consumer Conference. He noted that in the six quarters proceeding COVID, P&G grew its top line an average of 5%, which was ahead of market growth. That momentum continued during the past five quarters with plus 7% organic sales growth, despite significant challenges, including the lockdown in China, closure of the travel, retail, specialty beauty and away-from-home channels. Moreover, growth is broad-based.

“Nine of 10 categories are growing organic sales through Q3,” observed Moeller.

Sales:  $42.3 billion (estimated) for home care and personal care products.
Corporate sales: $67.7 billion

Consumer staples are the best bet in turbulent times for many investors and few places are safer place to invest in these days than Procter & Gamble, the world’s biggest maker of fast-moving consumer goods. When coronavirus hit the US earlier this year, P&G became a supplier of face shields, too. The company moved from design to production in Cincinnati and Boston in just two weeks. The company innovated around the pandemic in other ways, too. It held its first Virtual Innovation Challenge, which invited entrepreneurs and startups to submit products for a chance to win $10,000 and the opportunity to partner with P&G Ventures for product development. The pandemic didn’t reduce opportunities for summer internships, either. Each year, P&G welcomes more than 550 college students.

This year, interns at manufacturing sites and distribution centers are still on-site, but others joined a Virtual Internship Think Tank, and received customized work plans with challenging projects and regular contact with managers, team members and business partners.

Procter & Gamble’s lineup of laundry detergent, household cleaners and personal brands are essential during a health crisis. In its most recently-concluded fiscal third quarter, which coincided with COVID-19 expanding in the US, sales rose 5% thanks to a 6% increase in volume and a 1% gain in price that was partially offset by a 2% decline in FOREX.

By category, beauty sales increased 1% but gains in skin and personal care organic sales were partially offset by a double-digit decline in sales of super-premium SK-II brand across Asia and a sharp reduction in travel retail sales. Hair care sales increased low single digits.

Grooming sales fell 1%. Shave care sales decreased low single digits, which the company blamed on a disproportionate decline in North America.

Health care sales jumped 9%, as oral care organic sales increased by mid-single digits primarily due to innovation, market growth, increased pricing and positive mix driven by the disproportionate growth of premium products, partially offset by reduced volumes in China.

Fabric and home care sales increased 10%, as demand for premium products rose in North America and Europe.

Baby, feminine and family care sales increased 7% versus a year ago. Baby care organic sales increased low single digits driven by increased demand in certain markets and positive mix due to the disproportionate growth of premium products, partially offset by reduced volumes in China, according to P&G.

The fiscal Q3 gains came after P&G posted a 1% increase in corporate sales to $66.8 billion in fiscal 2019. Net earnings fell 60%, however, to just under $4 billion.

By segment, fabric and home care accounted for 33% of sales in fiscal 2019, followed by baby, feminine and family care, 27%; beauty, 19%; health care, 12% and grooming, 9%.

Fabric and home care sales increased 3% to nearly $22.1 billion. Thanks to brands like Tide, Ariel and Downy, P&G holds more than a quarter of the global fabric care segment and its home care market share tops 20%. Fabric and home care volumes increased 4%. In a meeting with analysts, CEO David Taylor noted that P&G’s Tide Pods and Gain Flings hold nearly 80% of the US unit dose market.
Further 20% of US households use unit dose, up 12 points over the past three years. In Poland over 50% of consumers use unit dose and the percentage is 33% in the UK. There’s more room for scent beads to grow, too. Taylor noted just 7% of US households use them.

Beauty sales rose 4% to nearly $12.9 billion, thanks to growing demand for SK-II and premium Olay products. P&G maintains it is the global leader in the retail hair care category with more than a 20% market share, primarily behind its Pantene and Head & Shoulders brands. Hair care volume was up in the low single digits, but P&G’s global hair care market share remained flat.

Grooming sales declined 5% to $6.2 billion on a 1% decrease in unit volume. P&G’s share of global razors and blades tops 60%, according to the company. While shave care sales decreased in the low single digits, appliance volume increased in low single digits.

Health care sales rose 5% to $8.2 billion on a 5% increase in volume, offset, in part, by unfavorable exchange rates. Oral care volume increased in the low single digits. The Crest and Oral-B brands have helped P&G hold the No. 2 spot in the global oral care market, behind Colgate-Palmolive’s Colgate.

Baby, feminine and family care sales fell 2% to $17.8 billion. Baby care volume fell mid-single digits, but P&G said it still holds 25% of the global wipes and taped diapers and pants market.

In fiscal 2019, P&G acquired Merck’s $1 billion OTC business.

By region, North America represented 45% of sales, followed by Europe (23%), Asia Pacific (10%), Greater China (9%), India, Middle East and Africa (7%) and Latin America (6%).

In his annual letter to shareholders, Taylor noted sales gains in 9 of 10 global categories and in all geographic regions. And in a CAGNY presentation in February, CFO Jon Moeller said that through the first half of fiscal 2020, organic sales rose in eight key segments, including: skin and personal care (13%), personal health care (11%), oral care (7%), home care (7%), fabric care (6%) and hair care (5%).

“In total we drove 28% of the global growth in the categories in which we compete,” he asserted. “And 45% of total US growth came from P&G—ahead of our 32% value share.”

As coronavirus consumed China, P&G’s second-largest market, in the first quarter of 2020, Moeller noted that P&G works with 387 suppliers in China that ship more than 9,000 different materials that end up in over 17,600 products.

To overcome coronavirus and other threats, P&G has developed several strategies to balance top and bottom line growth during the past four years. The company is focused on 10 daily use categories where it is No. 1 or No. 2 in each. Initial focus on the US and China has borne fruit. US organic sales rose just 1% in fiscal 2016 to 5% in the first half of FY20. The gains were much more dramatic in China, where organic sales declined 5% in FY16 to a gain of 13% in the first half of FY20.

Meanwhile, overall ecommerce organic sales rose 30% in the first half of FY20.

Internally, P&G redesigned it organization to “dematrix” the structure.

“People said we were too slow, too complicated, too bureaucratic to compete in today’s business environment,” recalled Taylor.

The move provides greater clarity on responsibilities and reporting lines, strengthens leadership accountability, and enables P&G employees to accelerate growth and value creation, according to Taylor.

“We’ve made the changes necessary to make P&G a leader again. A winner again,” he insisted. “We closed our (CAGNY) 2016 talk with a question, ‘Is P&G willing to change?’ We hope you’ll agree with us that the answer is a resounding yes. P&G has been and will continue to be willing to change everything and anything needed to win.”

The only things P&G won’t change, Taylor said, are its purpose, values and principles, and the commitment to winning and results.

Sales: $41.3 billion for household, beauty and oral care products.
Corporate sales: $66.8 billion.

After no growth in organic sales in FY 2018, and just 1% gains in FY 2016 and FY 2017, results are improving for Procter & Gamble, the No. 1 ranked company in the Top 50 year in and year out. For the third quarter of fiscal year 2019, sales rose 1% to $16.5 billion, and organic sales were up 5%. Beauty segment organic sales increased 9%, led by skin and personal care organic sales which increased mid-teens driven by premium innovation, positive product mix from the disproportionate growth of super-premium SK-II brand and increased pricing. Hair care organic sales increased mid-single digits with strong growth in developed and developing regions and increased pricing. Fabric and home care segment organic sales increased 7% for the quarter. Fabric care organic sales increased mid-single digits, driven by innovation, increased pricing and positive mix due to the disproportionate growth of premium products. Home care organic sales increased high single digits, driven by innovation, positive mix due to the disproportionate growth of premium products and increased pricing.

Through the first half of FY 2019, the company noted that eight of 10 categories were growing, with organic sales up 14% in skin and personal care; a 6% gain in fabric care and a 5% increase in home care. Organic sales grew in P&G top 15 markets, led by a 9% gain in China and a 20% increase in e-commerce sales. It was a similar story for market share, as 34 of P&G’s top 50 category/country combinations grew or held their value share and 8 of 10 global categories grew or held value share.

In Q3, the company posted a 1% increase in sales. For fiscal 2019, P&G estimates all-in sales growth of 1%, despite a 3-4% negative impact from foreign exchange. The company increased its guidance for organic sales growth from a range of 2-4% to a solid 4% for fiscal 2019.

Earlier this year, P&G took part in the Consumer Analyst Group New York (CAGNY) conference, a high-profile meeting of investors and analysts who follow consumer goods companies, where it shared a short recap of company results, reminding investors that the first half of FY 2019 was a very strong start to the year, with top line, bottom line, cash, volume and share growth.

In fiscal 2018, fabric and home care accounted for 32% of sales, followed by baby, feminine and family care, 27%; beauty, 19%; health care, 12% and grooming, 10%. By region, North America represented 44% of sales, followed by Europe, 24%; Asia Pacific and China, 9% each; and Latin America and India, Middle East and Africa (IMEA), each with 7%.

Beauty sales increased 9% on a 2% increase in unit sales. The gains were led by sales of super-premium SK-II and premium Olay skin care. Hair care sales rose low single digits, as fierce competition in developed regions led to sales declines that were offset by gains in developing regions, according to P&G.

Grooming sales fell 1%, but unit volume was unchanged. P&G blamed the decline, in part, on unfavorable product mix. To get growing again, Gillette earlier this year, rolled out eight new grooming products for men and women. These include Razor Maker customized razor handles, a heated razor and SkinGuard, which is designed to reduce irritation.

Oral care volume increased in the low single digits, but P&G acknowledged its global market share declined slightly.

Fabric and home care sales rose 3% on a 3% increase in unit volume. Fabric care volume increased low single digits. Home care volume also increased low single digits.

Baby, feminine and family care sales fell 1% on a 1% decline in unit volume.

Last year, P&G agreed to acquire the OTC healthcare business of Merck KGaA for $3.9 billion. The unit sells OTC consumer healthcare products primarily in Europe, Latin America and Asia. The business grew 6% in 2016 and 2017 and provides a broad range of OTC product remedies to relieve muscle, joint and back pain, colds and headaches as well as products for supporting physical activity and mobility. Top brands include Neurobion, Dolo-Neurobion, Femibion, Nasivin, Bion3, Seven Seas and Kytta.

At the end of FY 2018, P&G had 92,000 employees—down from 121,000 in 2013.

Sales: $40.3 billion for household, beauty and oral care sales.
Corporate sales: $65.1 billion.

Corporate sales dipped less than 1%. Not bad, when one considers P&G eliminated or consolidated more than 100 non-core brands and reduced the number of categories it operates in from 16 to 10 categories in 2016. By focusing on 65 brands in 10 categories, P&G net income rose slightly last year to nearly $10.2 billion.

By region, North America accounted for 45% of corporate sales, followed by Europe, 23%; Asia Pacific, 9%; Greater China, 8%; Latin America, 8%; and IMEA (India, Middle East and Africa), 7%.

Walmart remained Procter & Gamble’s biggest customer, representing 16% of sales in 2017, up from 15% in 2016.

In an effort to gauge and evaluate consumer experience, P&G is moving from a single evaluation metric, Weighted Purchase Intent, to a “body of evidence” approach, which uses a mix of technical tests, blind tests, context-aided tests, household panel data and in-market product reviews to provide a more complete assessment of the actual product experience. It includes behavioral data, which is more reliable than the attitudinal data P&G collected in the past. The goal, according to P&G, is to create products “that are so good, consumers don’t want to part with them after use, to the point where they consider their old product meaningfully inferior.”

That kind of thinking helped P&G place five products on Kantar TNS’ 2018 Product of the Year USA list, including Cascade Platinum Dishwasher Cleaner, Tide Pods Plus Downy, Gain Botanicals, Febreze One and Cascade Platinum.

But that doesn’t mean P&G isn’t focused on the bottom line. From fiscal 2012 through 2016, P&G saved $10 billion. Now, the company plans to save an additional $10 billion through 2021 with the majority of the savings opportunities in cost of goods sold, which includes reducing expenses related to raw and packaging materials, manufacturing expense, transportation and warehousing. Marketing spending is getting chopped, too. P&G identified savings opportunities such as driving down media rates; eliminating media supply chain waste; reducing agency fees and advertising production costs; and improving the efficiency of in-store materials, direct-to-consumer programs and sampling programs. Finally, in trade spending, there is a large spending pool where just a 10% efficiency will result in meaningful savings, according to the firm. This will come from improved execution against category and brand key business drivers, and better optimizing investments by category.

For the nine months ended March 31, 2018, corporate sales rose 3% to more than $50.3 billion. Beauty sales rose 8% and fabric and home care increased 4%.

In March, P&G acquired Snowberry, a New Zealand-based skin care company. The brand, founded by cosmetician Soraya Hendesi, markets a range of skin care products that include anti-aging treatments, serums and moisturizers. All of the company’s products are carboNZero-certified. The firm is based in Auckland where it manufactures and packs products. Snowberry also has a logistics center in the US.

To expand its health care business, In April, P&G acquired the consumer health business of Merck KGaA, Darmstadt, Germany, for about €3.4 billion. The business has a presence in 44 countries and offers more than 900 products. The move enables P&G to expand its consumer health care business by adding a fast-growing portfolio of differentiated, physician-supported brands across a broad geographic footprint. It also provides P&G with strong health care commercial and supply capabilities, deep technical mastery and proven consumer health care leadership that will complement P&G’s existing consumer health care capabilities and brands such as Vicks, Metamucil, Pepto-Bismol, Crest and Oral-B.

“We like the steady, broad-based growth of the OTC Health Care market and are pleased to add the Consumer Health portfolio and people of Merck KGaA, Darmstadt, Germany, to the P&G family,” said David Taylor, chairman of the board, president and CEO, P&G.

The Merck KGaA acquisition will improve P&G’s OTC geographic scale, brand portfolio and category footprint in the vast majority of the world’s top 15 OTC markets, too. These brands provide solutions in relieving muscle, joint and back pain, colds and headaches, as well as supporting physical activity and mobility, many of which are treatment areas not currently addressed in P&G’s portfolio. According to reports, approximately 3,300 Merck employees could move to P&G upon completion of the transaction, which is expected in the fourth quarter.

Elsewhere, P&G is successfully rebuilding its business in China. In 2015, six of seven categories there reported sales declines, which resulted in a 5% drop in sales. Two years later, sales in Greater China are up 7%, and every category is posting gains with the exception of baby care.

Alex Keith, president of P&G beauty business, told Women’s Wear Daily that to get back on track in China, the company focused on Olay, eliminating 20% of SKUs and improving packaging.
Meanwhile, in global laundry care, P&G maintains that 90% of laundry category growth can be attributed to unit dose. Throw in fabric enhancer beads and some fabric softener and P&G says it can double the average price per load from $0.30 to $0.60.

Sales: $35 billion for household, oral and personal care products.
Corporate sales: $65.3 billion.

P&G is lighter, but there’s still some heavy lifting ahead. More than a year ago, P&G sold a slew of personal care brands to Coty as part of its plan to be nimble and focused on 65 core brands. Now, more than a year into the process, the company is still struggling to find itself in a rapidly-changing market.

“We are a much simpler company,” explained CFO Jon Moeller at a CAGNY Conference in February. For example, the number of manufacturing sites, platforms and enrollment have all been slashed. Furthermore, category/country combinations were slashed 70% from 140 to just 50. Laundry, hair and skin care SKUs were cut 30% and oral care SKUs were reduced by 20%. But a leaner P&G is still counting on innovations such as Tide Pods 4-in-1 with Downy, fabric enhancer beads.

The new P&G is looking for balanced growth and value creation via sales growth, cash generation and margin expansion. Part of the gains will come from an overall haul of its advertising budget. P&G has cut advertising, PR and other agencies by 50%. Like many other FMCG companies, P&G says neither traditional advertising, nor online have lived up to their promise.

At CAGNY, Moeller expected fiscal 2017 all-in sales to be flat and organic sales to rise 2-3%.

Three-quarters of the way through fiscal 2017, the company is still finding its way as corporate sales dipped less than 1% to just under $49 billion. Beauty sales declined 1% to $8.6 billion, grooming fell 3% to $4.9 billion, and fabric & home care dropped 1% to $15.5 billion.

Gains in skin and personal care provided a lift to beauty sales. Procter & Gamble was pleased with the continued growth of SK-II its premium skin care brand, which helped offset lower volume in retail skin care. Organic hair care sales were flat.

Grooming sales were hurt by lower prices and volume. The Dollar Shave Club concept is clearly cutting into Gillette’s sales. To help remedy the situation, the brand recently introduced Gillette On Demand, a traditional subscription-only option along with a flexible on-demand purchase option that it is calling “an industry-first re-order process that is as simple as sending a one-word text message.”

Company executives say the new strategy is a cut above Dollar Shave Club’s strategy. According to Gillette, a 2015 Nielsen Homescan study found that 41% of guys who decided to leave traditional shave clubs said they were getting more blades than they needed. But the men’s grooming brand contends that Gillette On Demand is the industry’s first as-needed ordering option.

“Ordering blades has never been easier than we’re making it today,” said Mark Jeffreys, brand director, Gillette. “Gillette On Demand’s as-needed ordering capabilities and its convenient subscription options give guys smart choices, not trade-offs. This new service puts them in control without having to choose between convenience and flexibility, or between great quality and value.”

Health care volume and sales increased behind higher organic volume in both oral care and personal health care. Power toothbrushes provided a lift.

Fabric and home care volume and organic sales were up 1%. Home care organic sales fell low single digits as increased volume due to product innovation and increased customer support was more than offset by unfavorable geographic mix. Fabric care organic sales increased low single digits due to increased organic volume and favorable product mix from premium forms in developed markets and increased pricing in developing markets.

The declines for the nine months ended March 31, 2017 were modest and better than fiscal 2016 results when net sales fell 8% to $65.3 billion, which the company blamed primarily on a strong dollar. Organic sales rose 1% as increased pricing more than offset a 3% decline in volume. Fabric & Home Care accounted for 32% of sales, followed by Baby, Feminine & Family Care (28%), Beauty (18%), and Grooming and Health Care (11% each). P&G has more than 20 billion-dollar brands and is the leader in retail hair care with more than a 20% share. In grooming, P&G is the leader in blades and razors with a nearly 65% share. In oral care, P&G is No. 2 (behind Colgate) with a 20% share. Finally, in home care, P&G is No. 1 on the strength of Tide, Ariel and Downy.

Taking a closer look at the categories, beauty sales fell 9% to $11.4 billion. Hair care volume fell mid-single digits in both developed and developing markets. Skin care and personal care volume declined in the high single digits due, in part to the divestures of Camay and Zest and the Venezuelan deconsolidation. Health care sales fell 5% to $7.4 billion due to a 2% decline in unit volume and 6% decline on Forex. P&G noted that oral care volume fell in the low single digits due to a high single-digit decrease in developing regions caused by higher prices, more competition and less customer inventory. Meanwhile, volume in developed regions increased low single digits driven by product innovation. Fabric and home care sales fell 7% on a 1% decline in unit volume. Unfavorable foreign exchange reduced net sales by 6%. Fabric care volume declined low single digits due to a double-digit decrease in developing regions driven by increased pricing, reduced distribution of less profitable brands, minor brand divestitures and the Venezuela deconsolidation. Organic volume in developing regions decreased high single digits. Volume in developed markets increased mid-single digits due to innovation and increased marketing. Global market share of the fabric care category was flat. Home Care volume increased low single digits, as developed market volume increased low single digits as benefits from product innovation more than offset impacts from competitive activity. This was partially offset by a low single-digit decrease in developing regions following increased pricing. Global market share of the home care category was down slightly, according to P&G.

As P&G continues to evolve, company executives insist productivity savings from fiscal 2017 through 2021 could reach $10 billion. They’ll come through a combination of a reduction of manufacturing expenses, transportation and warehousing, and raw and pack materials. Transforming its supply chain will link P&G to its customers, according to the firm.

And yet, for all its efforts, some say P&G executives aren’t doing enough to boost the company’s and investors’ fortunes. Last month, P&G said it is in “ongoing constructive, active” talks with Trian Fund about the future of its brands, and is willing to take ideas from the hedge fund about how to improve its business. Trian has been increasing its stake in P&G, and an SEC filing last month showed it held more than 36M shares. The hedge fund, like investment houses before it, is urging P&G to consider a breakup that would unlock the company’s value.

Sales: $48 billion (estimated) for personal care, household care and oral care products.
Corporate sales: $76.2 billion for the year ended June 30, 2015.

Less is more. At least that’s the strategy at Procter & Gamble. A year ago, P&G sold more than 40 brands to Coty for $12.5 billion. The deal included P&G’s global salon professional hair care and color, retail hair color, cosmetics and fine fragrance businesses, along with select hair styling brands. The deal is expected to close in the second half of 2016.

P&G announced its brand trimming strategy three years ago. When it’s all finally over, the number of brands will shrink from 166 to 65 and sales growth will increase one point and before-tax margin will improve two points, according to the company.

But the divestment strategy hasn’t worked so well. In fiscal Q3, P&G’s sales fell more than $1 billion to $15.7 billion. It was the seventh time in the past eight quarters that sales have either been flat or declined from one quarter to the next. In the most recent quarter, P&G blamed the sales decline on a combination of weak organic growth, foreign currency headwinds, and the portfolio divestment initiative. Profits are on course to decline for their second straight fiscal year, and income investors received their smallest dividend raise in years.

More specifically, through March 31, 2016, net sales decreased 9% to $49.2 billion. Unit volume decreased 4%. Unfavorable foreign exchange reduced net sales by 7%. Higher pricing, primarily to offset inflation and devaluation, increased net sales by 2%. Volume decreased low single digits in fabric care and home care and decreased mid-single digits in beauty, grooming, health care and in baby, feminine and family care. Volume increased low single digits in developed regions and decreased high single digits in developing regions due to increased pricing, competitive activity, minor brand divestitures and the impact of the Venezuela deconsolidation. Organic sales were flat on a 2% decline in organic volume due to improved pricing.

By category, beauty net sales fell 10% to $8.7 billion on a 6% decline in unit volume. P&G’s global market share of the beauty category fell one point. Volume in hair care fell mid-single digits, but volume in skin and personal care declined double digits. Meanwhile, fabric and home care sales fell 8% to $15.6 billion on a 1% decline in unit volume. Volume increased mid-single digits in the developed region but fell double-digits in developing markets. Even oral care volume declined for the nine months.

To return to growth, P&G executives say that their company must act more quickly to changing markets and consumer tastes.

“A few years ago we got too central and global and too slow to address market opportunities. We need more direct ownership for our regional managers all the way to the store shelf,” CEO David Taylor said at an analyst conference earlier this year.

To keep talent focused, P&G brass won’t move employees around as much as it has done in the past. Keeping executives in place has worked for Church & Dwight, where ex-CEO James Craigie liked to boast that C&D kept its top players in place to get the most out of their experience.

Its people may be staying put, but there is plenty of movement in NPD; P&G rolled out Tide + Downy Odor Defense Collection, after an in-house study performed by Procter & Gamble found that over 70% of people have had problems with odors lingering in their active wear after its been washed. One reason these odors reoccur is because the clothes were not fully cleaned—an especially challenging feat when it comes to the active wear that many consumers are also using as everyday wear, which is made with synthetic fabrics that tend to trap dirt and odors deep down at the fiber level.

“Fitness-minded consumers demand a lot from their athletic gear, so it’s important they know how to properly care for these garments,” said Kristen Stutz, brand manager, North America Tide Innovation at Procter & Gamble. “This is also true for the many consumers who have embraced the athleisure trend we’ve been seeing as of late. With the Tide + Downy Odor Defense Collection, they’re getting a full laundry regimen that works from the inside out to remove dirt and odors.”

In recent months, P&G sold its Escudo soap brand in Mexico and other Latin American countries to Kimberly-Clark de México. The transaction, for an undisclosed amount, was expected to close during the first half of 2016 subject to regulatory approvals. Escudo, launched in Mexico more than 50 years ago, is the leading local antibacterial soap brand.
Meanwhile, in March, P&G said it would sell its Pert shampoo brand to Henkel. Pert, introduced in 1980, was part of a larger package, including other brands Shamtu and Blendax. Henkel is counting on the brands to shore up its position in Africa/Middle East and Eastern Europe.

That same week, P&G sold its Hipoglós diaper rash cream brand in Brazil to Johnson & Johnson Consumer Inc. The transaction, for an undisclosed amount. The deal closed earlier this year, according to P&G. The Hipoglós brand has been present for more than 70 years in Brazil. P&G insists that it is one of the most traditional and beloved brands among Brazilian moms, loved and trusted during generations to care and protect their babies’ skin from diaper rash.

P&G did some brand trimming in India as well, and the unit is profitable. Specifically, P&G India has posted double-digit growth in its hygiene and healthcare unit. Most recently, Gillette has been on a tear in the country.

“The strategic portion of our India business is growing at a high single-digit pace,” said CFO Jon Moeller. “Sales in the portions we’re fixing or exiting have been down more than 30%. This top line pain is worth it.”

And, of course, there was that battery steal, er, deal with Warren Buffett. Under terms of the agreement, P&G transferred its Duracell business to Berkshire Hathaway. P&G contributed $1.8 billion in cash to the Duracell Company in a pre-transaction recapitalization in exchange for Berkshire Hathaway’s 52 million shares of P&G stock.

“Duracell is a strong, global business with a great future ahead of it as part of the Berkshire Hathaway family,” said Taylor.

Trimming brands, cutting businesses, improving margin—P&G has a laundry list of changes and CEO Taylor insists that these moves demonstrate the company’s willingness to change.

Just last month, Taylor was appointed chairman, replacing executive chairman AG Lafley who retired. Also last month, P&G said it would remove, on a global basis, phosphates from its Fairy ADW formula. Fairy will be phosphate free by 2017, when the phosphate ban goes into effect in Europe.

Sales: $68.9 billion (estimated) for personal care, household care and oral care products.
Corporate sales: $83 billion, for the year ended June 30, 2014.

When you’re on top, everyone, it seems, is gunning for you. Procter & Gamble has always faced challenges from the likes of Unilever, Henkel, Colgate and Kao, but these days some of its biggest headaches come from Wall Street types who question the company’s size (too unwieldy), turnaround plan (not aggressive enough) and restructuring strategy (too slow to boost earnings). In fact, earlier this year, during a Q3 conference call, several analysts urged CFO Jon Moeller to do more; i.e., break up the company into more manageable units. Moeller, however, would have none of it, blaming the company’s lousy Q3 performance on FX.

That’s not exactly what analysts wanted to hear, however, and some made their dissatisfaction public: CLSA knocked P&G’s rating from Outperform to Underperform and Morgan Stanley added P&G to its list of 10 stocks selling at substantial premiums—that’s tough sledding, especially when you realize that P&G’s stock price has fallen 13% in 2015.

In Q3 of fiscal 2015, the company reported that net sales fell 8% versus the prior year to $18.1 billion in the January-March quarter, including a negative eight percentage point impact from foreign exchange and a negative one percentage point impact from minor brand divestitures. Organic sales grew 1%. Organic sales were at or above year ago levels in four of five reporting segments. Volume declined 2%. Pricing increased sales by 2%with higher pricing in four of five business segments. Favorable product mix across most segments increased sales by 1%.

This isn’t the first time that analysts have soured on the world’s largest FMCG company. And like so many other market timers, just when investors head for the exit, a rally ensues.

But past performance, as they say, is no guarantee of future results. And through the third quarter of fiscal 2015, things appear rather grim in Cincinnati. For the nine months, sales slipped 4% to $58.4 billion, while net earnings fell 28% to $6.6 billion. Every segment reported a decline in sales, with the exception of health care, where sales were flat.

Critics may be displeased with the pace of brand selloffs. P&G unveiled the strategy nearly a year, but since the August 2014 announcement, it had made only minor moves, such as the disposal of Rochas perfume (June 2015) and Camay and Zest (December 2014). Outside Happi’s scope, P&G sold the European pet care business (September 2014), as well as its Duracell battery unit (November 2014) to Berkshire Hathaway in deal that analysts rated as a steal for that Oracle of Omaha, Warren Buffet.
All that changed last month when rumors circulated that Coty would acquire several beauty business from P&G in a deal that could be worth $12 billion. Coty executives are said to have huddled with bankers in recent days to discuss buying P&G’s divisions through a Reverse Morris Trust, a source said. Such a move would save P&G from paying capital gains taxes on the deal. Under such a move, P&G would sell just under a majority stake to Coty and let Coty run the combined operations. P&G tried a similar, tax-free sale of its Pringles brand recently but the deal with Diamond Foods collapsed. For Coty chairman Bart Becht, winning the P&G auction is a homecoming of sorts. Becht held a variety of marketing, sales and finance positions at P&G before becoming CEO of RB (then Reckitt Benckiser) from 1995 to 2011.

The divestitures began nearly a year ago, when P&G announced plans to sell about 100 “underperforming” brands. At the time, Lafley planned to focus more on 70 to 80 of its biggest brands including the billion dollar brands like Tide, Pampers and Oral-B. At the time, P&G did not specify the brands it plans to keep or divest, it stated that these 70 to 80 brands have accounted for 90% of company sales and over 95% of profits.

In fiscal 2014, corporate sales rose by less than 1%. Net earnings increased 4%. By category, fabric and home care accounted for 32% of sales; baby, feminine and family care (25%), beauty (24%), grooming (10%) and health care (9%). Emerging markets accounted for 39% of sales.

Looking at key category performance, beauty sales fell 2% to $19.5 billion, and global market share declined 0.4%, according to P&G. Hair care and color volume was flat, with increases in developing regions offsetting declines in developed regions. Volume in salon professional fell mid-single digits due to competition and difficult conditions in Europe, according to P&G.

Fabric and home care increased 1% to $26.1 million on 5% increase in volume. Organic sales were up 4%. P&G said volume increased in high single digits in developing regions and low single digits in developed regions.

Sales: $69.5 billion (estimated) for personal care, household care and oral care products.
Corporate sales: $84.1 billion. Net income: $11.3 billion for the year ended June 30, 2013.

Sales rose just 1% in fiscal 2013, compared to a 3% gain in 2012. P&G said volume in baby care and family care grew mid-single digits.  Volume in fabric care and home care and in health care grew low single digits. Beauty volume was in line with the prior year. Grooming volume decreased low single digits. By segment, beauty sales fell 2% to $20 billion. Organic sales rose 1% and price increases added 2%, but gains were offset by an unfavorable geographic mix that reduced beauty sales by 1% (gains in emerging markets don’t reap the financial rewards from those in developed markets) and unfavorable foreign exchange reduced sales by 2%.

Sales may be flat and the CEO may be the same, but it’s never truly a quiet year when you’re the biggest household and personal products company on the planet. Procter & Gamble is always making moves that ultimately will impact industry. For example, in April the company said it would exit the dog food business and now has billions on hand to expand its brands, enter new markets or ramp up R&D. That’s because Mars Inc. agreed to buy P&G’s Iams, Eukanuba and Natura pet food brands for $2.9 billion.
For the nine months ended March 31, sales were up 1% to $63.5 billion, but gross profit fell 1% and net earnings declined 4% to $9.5 billion. By segment, fabric and home care sales rose 2% to nearly $19.9 billion; baby, feminine and family care sales increased 1% to $16.5 billion; beauty sales fell 2% to $14.8 billion; health care sales rose 1% to $7.2 billion and grooming sales fell 2% to $5.9 billion.

For the full year, Procter & Gamble expects organic sales growth of 3-4%. All-in sales growth is expected to be up 1%, including a negative foreign exchange impact of 2-3%. Core earnings per share are expected to grow 3-5% for the fiscal year, and reported earnings per share are expected to grow in the range of 1-4%.

Launch Pad
Even when business is flat Procter & Gamble is busy. In April, it launched its first ever in-wash fabric care product, Bounce Bursts, a bead-form product that allows consumers to control the amount of Outdoor Fresh scent added to the wash. The time released freshness capsules are said to release bursts of Outdoor Fresh scent throughout the day.

Around the same time that P&G chemists were bringing the outdoors in with Bounce Burst, they were taking Tide beyond the laundry room with the launch of Tide Oxi Multi-Purpose Stain Remover, its first product designed for use in and out of the wash. Said to be great for spot treating, cleaning hard surfaces and as a laundry booster, Tide Oxi is a true multi-purpose cleaner, with more than 225 uses (such as tile, upholstery and patio furniture), according to P&G. Back in the laundry room, Tide Oxi also gives a boost to detergent providing better stain removal, whiter whites and brighter colors. Its powerful stain removal technology is due to NOBS, which works with peroxide to form peracid, a color-safe bleach that makes it ideal for clothing and fabrics.

Earlier in the year, P&G expanded on its unit dose idea with the introduction of Gain Flings, which not only make detergent dosing easy, the line is billed as the best Gain detergent product to be introduced to the market. Flings provide a 3-in-1 benefit of Gain detergent plus OxiBoost plus malodor removal of Febreze. The new laundry packs deliver 2X more cleaning ingredients and 50% more scent vs. Gain liquid detergent all in a convenient pre-measured form. The products were a hit with loyal Gainiacs. In premarket testing, 97% said they would purchase Gain Flings in the future.

P&G is also rolling out new ideas in anti-aging. In March, it reformulated its best-selling Olay Regenerist line with new Skin Energizing Technology, which is billed as a hydrating formula designed to improve skin’s responsiveness to anti-aging ingredients and fight the look of skin fatigue by accelerating surface layer cell turnover, increasing brightness and decreasing the appearance of fine lines and wrinkles.

To make it easier for consumers to get whiter teeth, in March P&G introduced Crest 3D White Whitestrips Luxe Supreme FlexFit, the latest innovative addition to the Crest 3D White Whitestrips family. P&G says the new FlexFit technology allows the Whitestrips to stretch around the smile for better coverage and easier application. Earlier in the year, in January, Crest introduced Be, a line of toothpaste in three bold flavors including Mint Chocolate Trek, Vanilla Mint Spark and Lime Spearmint Zest.

Turn In, Tune Out
Too often, over-reliance on iPhones means iCan’tSleep. To cash in on the growing grassroots effort to get off the internet, in February, P&G launched the Sweet Dreams Collection fabric care regimen. The line of products is formulated with ingredients to clean, soften and freshen bedtime fabrics, from your linens to your pajamas, helping to create an ideal sleep environment so that you can relax in order to fall asleep. The regimen, all of which are official products of the National Sleep Foundation, includes Tide Plus a Touch of Downy Sweet Dreams, Downy Unstopables Dreams and Downy Infusions Sweet Dreams.

P&G researchers didn’t forget the guys. In January, they introduced Old Spice Hair, an assortment of shampoos, conditioners and styling products designed to give men the hair— and confidence—they need to succeed.

Kids could always use a burst of confidence, too. In January, P&G and Nickelodeon partnered to roll out Aussie Kids Dora the Explorer hair care collection. It is the brand’s first licensed product line.

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.

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.

In another move, Jorge S. Mesquita, who at one time led P&G’s detergent business, left the company to pursue other businesses. With their expanded roles, Ciserani, Henretta, Riant and Taylor report directly to Lafley.

“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.

Sales: $68.7 billion (estimated for personal care, oral care and household care products).
Corporate sales: $82.6 billion. Net income: $11.7 billion, for the year ended June 30, 2011.

Where in the world is P&G? Just about everywhere it would seem, but the company sent mixed messages to investors in May when CFO Jon Moeller told analysts that the company might have been expanding a bit too fast, particularly as it faces high commodity costs and an uncertain economy. Moeller said P&G now plans on stabilizing growth in its top 40 country-category combinations, which are disproportionately in North America and China. (In all, P&G has about 1,000 country-category combinations.) Then P&G will focus on expanding in its 10 largest emerging markets.

Olay Regenerist Micro-Sculpting Cream in a fragrance free formula.

That strategy would seem to fly in the face of P&G’s pledge to grow “by touching and improving more consumers’ lives in more parts of the world…more completely.”

But the fact is, high costs and issues like supply chain shortages, coupled with costs related to expanding, have led to disappointing results and shrinking market share for P&G, which lowered its fiscal-year guidance in April.

“In retrospect we may have overextended ourselves a bit with the pace of our portfolio and geographic expansions,” Moeller said. “Had we anticipated the commodity cost increases and markets contractions in developed markets that we ultimately experienced, we might have chosen a slightly slower pace.”

That said, Moeller insisted the company has no plans to pull out of any category-country combination and will maintain its growth in emerging markets.

“In terms of level of activity, it’s just being a little bit more deliberate and ensuring we have sufficiency before we push the button for the next expansion,” Moeller said.

Things got even dicier last month, when the company lowered its estimates for Q4 and fiscal 2013. For the April–June quarter, organic sales growth is now expected to be in the range of 2-3%, compared to a prior range of 4-5%. Net sales are expected to be in the range of -1-2% compared to a prior range of an increase of 1-2%. The revisions to the fourth quarter outlook are primarily driven by slower than anticipated top-line growth from slower than expected market growth rates and market share softness in developed regions and negative impacts from foreign exchange rate changes.

Looking ahead to fiscal 2013, P&G expects organic sales growth of 2-4%.

A Tough Earnings Environment
For the nine months ended March 31, 2012, P&G’s sales rose 5% to more than $60.5 billion, but net income fell 23% to $7.1 billion. Beauty sales rose 4% to $15.5 billion with a 7% decline in earnings to $2 billion. Grooming sales rose 4% to $6.3 billion and earnings rose 2% to $1.4 billion. Fabric and home care sales rose 4% to $20.7 billion, but earnings fell 10% to $2.2 billion.

On June 1, P&G completed the sales of its Pringles business to Kellogg in a nearly $2.7 billion all-cash deal. With completion of the sale, the Pringles workforce will transfer to Kellogg.

The Olympics open in London this month, and few US companies are more involved in The Games than P&G. Once again, Procter is sponsoring the US Olympic Team and is honoring all the moms around the world who work behind the scenes to make sure that their sons and daughters can perform at their peak level.

Fiscal 2011 Results
For the year ended June 30, 2011, P&G’s corporate sales rose 5% to $82.6 billion on a 4% gain in organic sales and a 6% increase in unit volume. Net earnings fell 7% to $11.8 billion. Developing markets accounted for 35% of sales, up from 34% in 2010 and 33% in 2009. All geographic regions contributed to volume growth, led by double-digit growth in Asia, high single-digit growth in Latin America and mid-single-digit growth in CEEMEA and Western Europe. All six of the business segments contributed to volume growth with high single-digit growth in the Baby Care and Family Care and Fabric Care and Home Care segments, mid-single-digit growth in the Beauty and Health Care segments, and a low single-digit growth in the Grooming and Snacks and Pet Care segments.
More specifically, beauty net sales increased 3% to $20.2 billion on unit volume growth of 4%. Organic sales also grew 3%. Mix negatively impacted net sales by 2% behind disproportionate growth in developing regions, which have lower-than-segment-average selling prices, and declines in the premium-priced Prestige Products and Salon Professional categories. Favorable foreign exchange positively impacted net sales growth by 1%. Volume in developing regions increased double digits, while volume in developed regions declined low single digits.

Volume in Retail Hair Care grew mid-single digits behind growth in all regions except North America. Developing regions grew double digits behind initiative activity on Pantene, Head & Shoulders and Rejoice, distribution expansions and market growth, which were partially offset by a mid-single-digit decline in North America due to competitive activity. Global market share of the hair care category was up slightly. Volume in Female Beauty was up low single digits primarily due to higher shipments of Olay, Venus and Safeguard behind initiative activity, and distribution expansion and market growth in developing markets. Volume in Salon Professional was down high single digits mainly due to the planned exit of non-strategic businesses and market size contractions in developed regions. Volume in Prestige Products declined low single digits primarily due to the divestiture of minor brands and lower shipments in Western Europe.

Grooming net sales increased 5% to $8.0 billion on volume growth of 3%. Organic sales were up 5%. Price increases, taken primarily across blades and razors in Latin America and developed regions, contributed 2% to net sales growth. Volume grew high single digits in developing regions and decreased low single digits in developed regions. Volume in Male Grooming was up low single digits due to higher shipments of blades and razors, mainly in developing regions driven by market growth, and deodorants in North America, partially offset by reduced volume in blades and razors in the developed regions. Gillette Fusion shipments increased double digits behind the continued expansion and success of Fusion ProGlide, while Mach3 shipments increased low single digits due to growth in developing regions, partially offset by decreases in developed markets.

Volume in oral care grew mid-single digits behind initiative activity and incremental merchandising support of Crest and Oral-B. Global market share of the oral care category was up over half a point.
Fabric care and home care net sales increased 4% to $24.8 billion on a 7% increase in unit volume. Organic sales were up 3%. Organic volume, which excludes the impact of the Ambi Pur acquisition, increased 5%. Mix negatively impacted net sales growth by 2% due to disproportionate growth of mid-tier product lines and powdered laundry detergents, which have lower than segment average selling prices. Unfavorable foreign exchange reduced net sales by 1%. Volume in developing regions was up high single digits, while volume in developed regions grew mid-single digits. Fabric Care volume increased mid-single digits, led by high single-digit growth in developing regions behind initiative activity, increased distribution and market growth. Global market share of the fabric care category increased slightly.

Home Care volume increased double digits due, in part, to the Ambi Pur acquisition. Organic volume in home care was up high single digits driven mainly by initiative activity, including launches of Gain hand dishwashing liquid and Febreze Set & Refresh in North America, and geographic expansion of dish and air care product lines.

Effective February 2011, P&G consolidated the three global business units (GBUs) into two: Beauty & Grooming and Household Care. As a result, the Health Care segment largely became part of P&G’s Beauty and Grooming GBU, while the Snacks and Pet Care segment became part of P&G’s Household Care GBU.

Sales: $64.6 billion (estimated) for personal care, oral care and household products. Net sales: $78.9 billion. Net income: $12.7 billion for the year ended June 30, 2010.

The Tide franchise gets a lift from Acti-Lift. Get ready for Tide Pods, which debut in 2012.

It may be the biggest player on the block, but Procter & Gamble hasn’t lost focus on the things that have made it king-of-the-hill in the global household and personal products business. P&G will continue to rely on innovative new product launches, the world’s biggest advertising budget and a bushel of billion-dollar brands to keep climbing.

But the high cost of materials is starting to take its toll on the world’s largest consumer products company. For the nine months ended March 31, 2011, the company reported that gross margin contracted 140 basis points to 51.4% of net sales. The gross margin decline was driven by a 180-basis point increase in commodity and energy costs and unfavorable product mix from disproportionate growth in developing regions and low and mid-tier value products. These declines were partially offset by manufacturing cost savings and the favorable impact of volume scale leverage. At the same time, aggressive discounting in the household care space wreaked havoc on results.

Through the first nine months of fiscal 2011, corporate sales increased just 3% to nearly $61.7 billion on a 6% increase in unit volume. Volume growth was broad based with growth in all geographic regions, led by double-digit growth in Asia and high single digit growth in Latin America and Central and Eastern Europe, Middle East and Africa (CEEMEA). All six of the business segments contributed to volume growth, with high single-digit growth in the baby care and family care and fabric care and home care segments, mid-single-digit growth in the beauty, grooming and health care segments, and a low single-digit increase in the snacks and pet care segment. Organic volume, which excludes acquisitions and divestitures, was up 6%. Mix reduced net sales by 2% due mainly to disproportionate growth in developing regions and low and mid-tier value products, both of which have lower than company average selling prices. Unfavorable foreign exchange lowered net sales by 1% as key foreign currencies weakened versus the US dollar. Organic sales were up 4% driven by unit volume growth, partially offset by unfavorable mix. By category, beauty volume was up 5%, grooming volume rose 4% and fabric and home care volume jumped 7%.

More specifically, beauty sales for the nine months rose 2% to nearly $15.1 billion. During the third quarter, volume in retail hair care grew high single digits behind double-digit growth in developing regions due to initiative activity and distribution expansions in Asia and Latin America. Global market share of the hair care category was up nearly half a point. Volume in female beauty was flat as Olay skin care distribution expansion in Asia and Latin America and deodorants growth in North America were offset by a mid-single digit decline in developed regions driven by the Zest divestiture, competitive activity in cosmetics, and decreased shipments in skin due to an Olay UV reformulation and restage. Volume in salon professional declined high single digits due to the exit of non-strategic businesses and market contraction in Western Europe. Volume in prestige products was up high single digits behind the continued impact of fragrance initiatives, partially offset by minor brand divestitures.

Grooming sales increased 4% to $6.0 billion. Price increases, taken primarily across blades and razors in Latin America and developed regions, contributed 2% to net sales growth. Unfavorable foreign exchange reduced net sales by 2%. Volume grew high single digits in developing regions and was in line with the prior year period in developed regions. Volume in male grooming was up mid-single digits due to higher shipments of blades and razors, mainly in developing regions driven by market growth, and deodorants in North America, partially offset by softness in blades and razors in the developed regions. Global market share of the blades and razors category was down more than half a point. Volume in appliances decreased low single digits due to continuing economic difficulties in Western Europe as well as a high base period behind hair care appliances initiatives. Global market share of the dry shave category was in line with the prior year period. Net earnings increased 8% to $1.3 billion behind higher net sales and increased operating margin. Operating margin expanded due to higher gross margin and lower SG&A as a percentage of net sales. Gross margin increased due to price increases and the favorable impact of volume scale leverage. SG&A as a percentage of net sales was down due to lower foreign currency exchange costs and reduced overhead spending, partially offset by higher marketing spending.

Home care net sales increased 2% to $18.7 billion. Organic sales were up 3%. Volume grew 7%, while organic volume, which excludes the impact of the Ambi Pur acquisition, increased 6%. Lower pricing, mainly in developed regions, reduced net sales by 1%. Mix negatively impacted net sales growth by 2% mainly due to disproportionate growth of low and mid-tier product lines and powdered laundry detergents, which have lower than segment average selling prices. Unfavorable foreign exchange reduced net sales growth by 2%. Volume in developing regions was up double digits, while volume in developed regions grew mid-single digits. Fabric care volume increased mid-single digits mainly due to growth in developing regions behind initiative activity, increased distribution and market growth. Global market share of the fabric care category increased about half a point. Home care volume increased double digits due, in part, to the Ambi Pur acquisition. Organic volume in home care was also up double digits driven mainly by initiative activity, including the prior-period launches of Gain hand dishwashing liquid and Febreze Set & Refresh in North America, and geographic expansion of dish and air care product lines. Global market share of the home care category was up over one point. Batteries volume grew mid-single digits primarily due to price reductions executed through pack count increases in North America, which were implemented in January 2010, initiative activity in Western Europe and market growth and distribution expansion in Asia. Global market share of the batteries category increased about one point. Net earnings decreased 10% to $2.4 billion as net sales growth was more than offset by operating margin contraction. Operating margin declined primarily due to lower gross margin, mainly due to higher commodity costs and unfavorable product mix behind disproportionate growth of developing regions and low and mid-tier value products. SG&A as a percentage of net sales increased marginally behind higher marketing spending.

Big Personnel Moves

There have been several key personnel moves in the past few months. In May, Ed Shirley announced his retirement as vice chairman, beauty and grooming, after 33 years with the company. His retirement is effective Jan. 1, 2012. Until then, he will serve as vice chairman on special assignment. Meanwhile, Dimitri Panayotopoulos, vice chairman-global household care, was appointed vice chairman-global business units, assuming responsibility for both the beauty and grooming and household care businesses. Panayotopoulos will continue to report to McDonald.

Last month, Patrice Louvet, president, global prestige, was appointed president, global male grooming, succeeding Charles (Chip) V. Bergh who left P&G after 28 years service to pursue his aspiration to be CEO of a major company (his dreams came true in June when he was picked to lead Levi Strauss). Joanne Crewes, currently VP-global SKII and female beauty, Australasian, ASEAN, India, Japan and Korea, has been appointed president, global prestige, succeeding Louvet.

Pods on Hold

New products are the lifeblood of any consumer product company and P&G has been a leader in this area for decades and other companies recognize P&G’s prowess. For example, SymphonyIRI’s 2010 Pacesetters list included eight P&G products in the top 25 non-food list. During the past 16 years, P&G had 132 products on the top 25 Pacesetters list—more than its six largest competitors combined. In addition to the New Product Pacesetters, four P&G products are on track for future stardom; i.e, Pacesetter Rising Stars, including Gillette Fusion ProGlide and Tide plus Febreze Freshness Sport.

Last month, P&G postponed the launch of Tide Pods until next year on grounds of supply constraints, which may make it impossible for the company to meet the huge demand forecasted, according to reports.

The three-chamber Tide Pods are similar to water-soluble tablets for dishwashers, which have been embraced by consumers whole heartedly. Analysts say that the delay may prompt P&G’s competitors to speed up the launch of competitive products and pose a threat to Tide. Analysts suggest that Cincinnati-based P&G is taking precautions because it has already stumbled before in such high-profile launches as in case of Gillette Fusion ProGlide.

Analysts say that in such a competitive scenario, postponing such a mega launch could make situations tougher. Henkel and Unilever already sell similar highly condensed liquid-filled laundry tablets in Western Europe. Water-soluble tablets for dishwashers that can be easily adapted for laundry products also exist.

Meanwhile, new Downy fabric-softener in bead form called Unstoppables is set for launch. The product’s unique selling proposition is its ability to keep clothes smelling fresh in the closet for up to 12 weeks, according to the company.

Finally, an upgrade for Ariel laundry detergent, which P&G says uses 3-D technology, is also scheduled to come out this month. Aimed at consumers in developing countries, it will roll out to 50 markets over the next six months.

A Look at 2010

For fiscal 2010, P&G reported a 3% gain in corporate sales to $78.9 billion on a 4% increase in unit volume, but net earnings declined 5% to $12.7 billion. Volume increased low single digits in developed regions and mid-single digits in developing regions. P&G said all geographic regions contributed to volume growth, but gains were greatest in Asia and CEEMA where sales rose in the high single digits.

By category, beauty sales rose 3% to nearly $19.5 billion. Net earnings were up 2% to $2.7 billion. Volume growth was driven by high single-digit gains in developing regions, but developed region volume was flat. Hair care volume rose in the mid-single digits, but cost-conscious consumers skipped trips to the salon, which pushed salon professional volume down in the double digits. Beauty volume was up low single digits as higher shipments of female skin care and personal cleansing products in developing regions were somewhat offset by the discontinuation of Max Factor in North America, the fiscal 2009 divesture of Noxzema and volume share losses on non-strategic personal cleansing brands in developed regions. Meanwhile, grooming sales increased 3% to $7.6 billion and net earnings were up 9% to nearly $1.5 billion. Gains were attributed to the launch of Fusion ProGlide.

Fabric care and home care sales rose 3% to $23.8 billion on a 6% increase in unit volume. Net earnings increased 10% to $3.3 billion. Fabric care volume grew mid-single digits behind new product launches, price reductions and merchandising activity. In July, 2010, Sara Lee completed the sale of its Ambi Pur air care business to P&G. The move gave P&G a bigger slice of the global air care category.

Of course, cost-cutting plays a role at P&G, too. Last year, the company noted that it had more than 16,000 product formulas that use more than 4000 colors in product labels and plastic packaging. By the end of 2012, P&G expects to reduce the number of formulas and package specifications by 30% and the number of colors used by 50-75%. Color simplification alone could generate annual savings of $50 million, according to P&G.

Sales: $63.1 billion (estimated) for personal care, oral care and household products. Net sales: $79 billion. Net income: $13.4 billion for the year ended June 30, 2009

The recession took a bite out of Procter & Gamble’s sales in fiscal 2009, as sales declined 3%. However, net income increased 11%. Most of the sales decline was attributed to more discretionary categories such as prestige fragrances, professional hair care and Braun appliances, along with personal health care.

Here’s a look at P&G’s billion-dollar brands.

By category, beauty sales fell 4% to $18.7 billion on a 2% decline in volume. Volume in developed regions declined mid-single digits, while volume in developing regions grew low single digits. Retail hair care volume grew low single digits behind growth of Pantene, Head & Shoulders and Rejoice. Prestige fragrance volume declined high single digits and professional hair care volume declined mid-single digits mainly due to market contractions and trade inventory reductions. Volume in skin care declined mid-single digits primarily due to competitive activity affecting shipments of Olay and the divestiture of Noxzema. Personal cleansing volume was down high single digits behind trade inventory reductions, market contractions and divestiture activity, the company said.

Grooming net sales declined 9% in 2009 to $7.5 billion on a 6% decline in unit volume. Growth of Fusion sales was offset by a decline in Braun sales. Overall, volume in developed regions declined high single digits and volume in developing regions declined mid-single digits. Blades and razors volume declined low single digits primarily driven by market contractions in developed regions and trade inventory reductions.

Health and well-being sales fell 7% to $13.6 billion. The divestitures of Thermacare and other minor brands resulted in 1% of the unit volume decline, according to the company.

Oral care volume declined low single digits behind trade inventory reductions and market contractions in North America and Central Eastern Europe, Middle East and Africa (CEEMEA). Still, P&G maintains that its share of the global oral care market was in line with the prior year.

Household care, including fabric and hard surface cleaners, posted a 2% decline in sales to $23.1 billion on a 3% decline in unit volume. P&G blamed a low single digit decline on trade inventory reductions and net market share declines following price increases. At the same time, lower shipments of premium-priced Tide and Ariel were only partially offset by growth of Gain and Downy.

Bob McDonald Takes Over

Bob McDonald

But the recession wasn’t the only marker of 2009. During the year, A.G. Lafley turned the reigns over to Bob McDonald who established a robust platform for growth, based on three principles:
1. Grow its leading global brands and core categories—with an unrelenting focus on innovation;
2. Build business with underserved and unserved consumers; and
3. Continue to grow and develop faster-growing, structurally attractive businesses with global leadership potential.

According to P&G, its 43 billion-dollar and aspiring billion-dollar brands account for 85% of sales and more than 90% of profits. And while P&G is a leader in many categories, the company wants more. For instance, P&G holds a 20% share of the $200 billion global household care market. In the $300 billion beauty and grooming category, P&G only has a 13% share and in the $240 billion consumer health care market, P&G holds just 5%. Obviously, there’s room for growth, and P&G expects to gain share and profits by utilizing its core strengths such as consumer understanding, brand building and innovation.

To reach “underserved and unserved” consumers, P&G is increasing its presence in developing markets, extending its distribution systems to reach more consumers through underserved retail channels (including drug, pharmacy and perfumery outlets, high frequency stores, export operations and e-commerce), expanding its portfolio into the premium-priced, value-priced portion of the market, and using existing brands to enter new segments; i.e., Febreze candles.

The third growth strategy—develop faster-growing, structurally attractive businesses with global leadership potential—demands that the company focus on beauty and health care segments as well as several household care categories.

It’s all part of chief executive McDonald’s plan to build a $100 billion company with the speed and agility of a $10 billion company. At the start of the decade, P&G served 2.5 billion people around the world. Today, that number is four billion, but still one billion short of the number the company hopes to serve a decade from now, according to McDonald.

McDonald’s team has been putting that plan in place for nearly a year now, and so far, the results are promising. For the nine months ended March 31, 2010, sales rose 2% to $60 billion.

Taking a closer look at the numbers, beauty net sales increased 6% to $4.6 billion for the quarter ended March 31, 2010, on unit volume growth of 4%. Grooming net sales grew 11% for the quarter to $1.8 billion on a 6% increase in unit volume. Health care net sales were up 5% to $2.8 billion during the third fiscal quarter on a 5% increase in unit volume. Fabric care and home care net sales increased 8% to $5.8 billion for the quarter on a 10% increase in unit volume.

During the year, P&G made a couple of key acquisitions. In May, it agreed to acquire Natura Pet Products, Inc., a privately-held pet food business based in Davis, CA. This move enables P&G to expand into the attractive “holistic and naturals” segment of the pet food category, complementing P&G’s current Iams and Eukanuba brands, and helps the company advance its overall growth strategy of“reaching more consumers in more parts of the world more completely.”

Natura’s brands include Innova, Evo, California Natural, Healthwise, Mother Nature and Karma. These brands are sold in a limited number of pet specialty stores and through veterinarians, mainly in the U.S. and Canada.

For the fiscal year, ended June 30, P&G expects net sales growth to be 3-5%.

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.

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.

Acquisitions aside, P&G is in the midst of its largest capacity expansion in the company’s 170-plus year history, with plans to build 19 production plants over the next four years, according to company officials. Multi-billion dollar expansion work is underway across a variety of product categories, with planned production expansions in Romania, Poland, Mexico, South Africa, Thailand and the U.S. P&G has begun production at new sites in India, South Africa and Singapore.Plans are also in place to begin construction on sites in Egypt and Pakistan. P&G is anticipating new sites in China, Columbia, Malaysia/Vietnam and Ukraine over the next several years. In addition, the company is building a state-of-the-art paper plant in Box Elder, UT. The $300 million facility, scheduled for completion in 2010, is the first new P&G plant in the U.S. in more than 30 years.

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.

P&G worked with experts in the field to develop the plan, including LEED experts, Herman Miller, Arup, William McDonough and leading design consultants. McDonough and his experts actually helped create the design for a number of P&G facilities.The company’s aim was to take the best in current industry knowledge and blend it with both widely accepted best practices and cutting edge thinking while adding P&G’s own experiences, business objectives and strategies. P&G’s goal is to deliver a virtual blue print of sustainability building options, detailing current pluses and minuses, along with company recommendations.

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.

Moreover, the company expects to deliver a 20% reduction (per unit of production) in carbon dioxide emissions, energy consumption, water usage and disposed waste from P&G plants, leading to a total reduction over the decade of at least 50%. P&G originally targeted a 10% reduction in each of its operational categories and now sees new opportunities in all aspects of operations, according to the company.

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.

Sales: $55.7 billion for household, personal care and oral care products.
Corporate sales: $76.4 billion. Net income: $10.3 billion for the year ended June 30, 2007.

It was another year of double-digit gains for the largest household and personal products company in the world. Corporate sales rose 12% last year, while net income increased 13.5%. By global business unit (GBU), beauty accounted for 30% of net sales, followed by fabric and home care (24%); baby care and family care (16%); health care (12%); blades and razors (7%); snacks, coffee and pet care (6%); and Duracell and Braun (5%).

Sales were up behind 9% unit volume growth, including the impact of an extra three months of Gillette results in the current year. Organic volume increased 5% and growth was broad-based, with 15 of P&G’s top 16 countries posting year-on-year growth. Developing regions continued to lead the growth with double-digit increases for the year. Organic sales increased 7% versus the prior year.

By business segment, fabric and home care grew organic sales 8%, with double-digit growth in developing markets and mid-single-digit growth in developed regions. Key growth drivers included Tide Simple Pleasures, Gain Joyful Expressions and Febreze Noticeables. Net sales rose 11% to nearly $19 billion. Unit volume was up 8%. Global market share increased 1%.

Beauty organic sales increased 5%, led by strong growth in feminine care, prestige fragrances and hair care. Billion-dollar brands Always, Olay and Head & Shoulders each grew sales double-digits for the year. Overall, beauty sales rose 9% to nearly $23 billion and net earnings increased 12% to nearly $3.5 billion. Unit volume was up 5%, driven by double-digit gains in developing regions. Prestige fragrance volume was up double digits behind The One, Boss Selection and Boss Femme fragrance initiatives and the addition of Dolce & Gabbana. Now P&G wants more. Last month, the company signed a fragrance licensing deal with singer Avril Lavigne, a pop star who hits high notes with consumers in their early teens. A fragrance will debut in 2009. Ms. Lavigne joins a growing stable of youth-oriented fragrance licenses including Puma, Christina Aguilera and Replay, an Italian jeans brands. Last year, P&G Prestige Products sold 4711 cologne to Maurer + Wirtz.

Skin care volume was up in the high single digits, behind Olay Definity and Regenerist product initiatives. Hair care volume increased in the mid-single digits, due to product initiatives on Pantene, Head & Shoulders and Herbal Essences, and continued expansion in developing regions.

Health care organic sales increased 6%, driven by very strong growth in oral care. Net sales increased 14% to $9 billion. In the U.S., Crest extended its category market leadership to 38% behind the success of the Pro-Health line.

More than 80% of P&G’s sales come from its 41 largest brands—each generating more than $500 million in annual sales. At the end of fiscal 2007, the company boasted 23 billion-dollar brands. Among the highlights, Head & Shoulders has nearly doubled its annual sales in just four years, making it the second largest shampoo brand in the world. Meanwhile, Pantene is the largest hair care brand in the world, with sales approaching $3 billion. In laundry care, Gain has doubled sales in the past five years on the strength of its fragrance. Finally, Crest remains the largest toothpaste brand in the U.S. thanks to demand for Nature’s Expressions and Pro-Health.

In fiscal 2007, P&G generated more than $20 billion in sales from developing markets, which is more than double the sales level at the beginning of the decade.

Gross margins improved 60 basis points to 52%.

For fiscal 2008, the company has restructured its global business units into three groups: Beauty (beauty and grooming), Health and Well-being (health care, snacks, coffee and pet care) and Household Care (fabric care and home care, baby care and family care).

For the nine months ended March 31, 2008, P&G’s sales rose 9% to $62.2 billion and net income rose 2% to $9 billion. Sales of beauty products rose 8% to $14.4 billion. Grooming product sales increased 11% to $6.1 billion. Health care sales increased 9% to $10.9 billion, and fabric and home care sales increased 10% to $17.7 billion.

In May, P&G put its Stamford, CT property on the market. The nearly 33-acre site had been the home of Clairol.

“Clairol has enjoyed its tenure in Stamford. Now with the sale of this property we are committed to bringing a positive influence to the future of Stamford as a vital community,” said Patrice Louvet, vice president and general manager of P&G global retail hair color, in a statement.

Also in May, P&G announced that G. Gilbert Cloy, chief technology officer, will retire Sept. 1, 2008 after more than 33 years of service. Bruce Brown, who had been vice president, research & development, global hair care and global hair colorants, is the new CTO.

Last month, P&G sold its Folgers coffee business to J.M. Smucker Company. The all-stock transaction is valued at $3.3 billion.

“Strategically, P&G has exited certain categories in order to focus on our core businesses and enhance the growth profile of the portfolio,” said A.G. Lafley, chairman and chief executive officer of Procter & Gamble. “The structure and terms of this transaction deliver on the goals we stated for the separation of the coffee business from P&G. This transaction maximizes the after-tax value of the coffee business for P&G shareholders and minimizes earnings per share dilution.”

Also last month, P&G elected Ed Shirley, 51, vice chairman, global beauty & grooming, reporting to Susan E. Arnold, president, global business units. Steve Bishop, 44, replaces Mr. Shirley as group president, P&G North America. Mr. Bishop had been president, North America market operations.

Febreze Marks a Milestone

For the past several years, fragrance has been an important facet of Procter & Gamble’s growth strategy. The marketing departments and R&D staffs have worked overtime to enhance the consumer’s experience via fragrance. It’s no surprise then, that P&G took time in May to celebrate the 10th anniversary of the Febreze launch.

“Through leadership in air care innovation, fragrance development and by listening to the needs of our consumers, Febreze has become the leading brand for creating a fresh and clean ambience for the home,” said Martin Hettich, North American marketing director of Febreze. “The future of Febreze will continue to be driven by our desire to offer a high quality, long-lasting freshness experience to our consumers.”

Within two years of that 1998 launch, more than 50% of U.S. households had tried Febreze. Since its debut, the Febreze brand has grown to include nine products, including candles and an allergen reducer. In February, P&G added the scent of Febreze to Swiffer and Mr. Clean products to help consumers keep their homes looking and smelling clean. Swiffer Dusters, Dry and Wet Cloths, WetJet Anti-Bacterial Solution and Mr. Clean’s sprays, liquids and Magic Erasers are now available with Febreze fresh scents.

This summer, the company will restage Febreze Fabric Refresher with better freshness experience supported by updated packaging, enhanced product performance and a new advertising campaign, according to the company.

P&G Brands Bag Viva Beauty Awards

P&G beauty brands Wella and Braun Satin Hair were named as Viva readers’ ultimate beauty products at the Viva Beauty Awards 2008 held in Dubai. Wella Koleston was named Best Hair Colourant, while Braun Satin Hair was triumphant in the Best Curling Iron category and runner-up for Best Straightener. The ceremony, held at the Monarch hotel in Dubai last month, honored the most premium beauty brands in the Middle East, with the winners selected by a panel of beauty experts from the fields of hair care, skin care and makeup. In the category of Best Hair Colourant, Wella Koleston, the premium brand of home coloring products, was chosen as winner.