P&G CEO switch will not lead to big strategy change: CFO

CINCINNATI, Fri May 24, 2013 — Procter & Gamble Co. said on Friday the surprise return of A.G. Lafley as chairman and chief executive was not an indication of any bigger problems at the world’s largest consumer products maker.

Lafley replaces Bob McDonald, effective immediately, at P&G, which is in the midst of a major restructuring.
“This change very simply reflects Bob McDonald’s decision to retire and the board’s view that A.G. Lafley was currently the best person to replace Bob and build on the momentum that Bob has initiated and led,” Chief Financial Officer Jon Moeller said on a very brief conference call for analysts on Friday morning.
The CFO said there would not be any dramatic change in strategy due to the switch in CEOs.
The announcement late Thursday was “not indicative of any kind of bigger problem or financial issue,” he said.
Shares of P&G rose to $81.90 in premarket trading after closing at $78.70 on Thursday, before the decision was announced. P&G, the maker of Tide detergent and Gillette razors, did not give a specific reason for McDonald’s departure other than to say that he is retiring. McDonald is 59 and Lafley is 65.
Moeller was the only speaker on the call and he did not take questions from analysts.
He said P&G, which maintained its financial guidance as it made Thursday’s announcement, will continue to focus on maintaining its momentum in developing markets and strengthening its core developed market business, and that the company continues to be “optimistic.”

 

P&G forecasts profit below Street, shares drop

CINCINNATI, Wed Apr 24, 2013 — Procter & Gamble Co. on Wednesday forecast current-quarter profit below Wall Street expectations and year-ago levels, sending shares 3.5 percent lower in early trading.

The world’s largest household products maker also posted fiscal third-quarter profit that topped estimates despite sales that were weaker than both the company and analysts had anticipated.

P&G has been trying to reinvigorate itself under Chief Executive Bob McDonald. The company has held or gained market share in more of its businesses in the latest quarters after stiffer competition from rivals like Unilever and Colgate-Palmolive Co.

While products such as Tide Pods have boosted U.S. sales, P&G still needs to figure out the formula for getting products such as Pantene shampoo to stand out among competitors, it said. P&G plans to promote several brands during the current quarter, including Olay skin care products.

Net sales decreased in the hair care and skin care business in the latest quarter.

“We’ve got a little bit more work to do” in skin care, McDonald told reporters.

In February 2012, McDonald unveiled a $10 billion restructuring plan including thousands of job cuts after P&G acknowledged it was not nimble enough, especially in emerging markets.

Shares of P&G fell to $79.65 in premarket trading after closing at an all-time high of $82.54 on Tuesday

P&G shows turnaround taking hold with results, outlook

CINCINNATI, Fri Jan 25, 2013 — Procter & Gamble Co.’s (PG.N) quarterly profit soared past expectations as the world’s largest household products maker used higher prices and new products to drive sales growth, the strongest indication yet that turnaround efforts are paying off.

The results, along with improved forecasts for the fiscal year, follow months of criticism from analysts and most notably from activist investor William Ackman, who blamed P&G’s top brass, led by Chairman and CEO Bob McDonald, for earlier missteps.

Shares of P&G, the maker of Pampers diapers and Gillette razors and a component of the Dow Jones industrial average jumped to $71.84 in premarket trading from Thursday’s close of $70.42.

The results, with profit and sales ahead of analysts’ expectations, come after months of P&G trying to reignite growth in sluggish markets such as the United States while also expanding in emerging markets, where it typically sells lower-priced merchandise.

Back in April 2012, analysts took McDonald to task on a tense conference call after P&G cut its outlook. That summer, Ackman’s Pershing Square Capital Management bought the company’s shares and began pushing for more change.

Profit has exceeded analysts’ expectations every quarter since, helped by new products such as Tide Pods single-dose laundry detergent.

Procter & Gamble soars past profit expectations

CINCINNATI, Thu Oct 25, 2012 – Procter & Gamble Co.’s profit rose more than expected, indicating that the world’s largest household products maker is making progress after coming under pressure from activist investor William Ackman, and its shares soared to the highest level in four years.

Rival Colgate-Palmolive), meanwhile, said it plans to cut about 6 percent of its workforce over the next four years as it strives to operate more nimbly as economies slow in many countries. Its quarterly profit matched expectations.

Several consumer goods makers are trimming jobs, including P&G, as concerned consumers hold off on some purchases and growth slows in major markets such as China.

P&G is on track to cut 4,200 jobs by the end of October on its way to eliminating 5,700 jobs by the end of its fiscal year. On Wednesday, Kimberly-Clark Corp. said it would eliminate 1,300 to 1,500 jobs as it leaves some low-margin businesses in Europe. Colgate’s plans, including moving away from single-country units toward regional hubs, should lead the toothpaste maker to trim about 2,300 jobs by the end of 2016.

Shares of P&G rose 4 percent to $70.83 on Thursday, their highest level since October 2008. Colgate’s shares fell 2.9 percent to $103.44.

“It wouldn’t surprise me if we’re seeing some people saying it is time to sell some Colgate, buy some Procter, given Colgate’s outperformance year to date,” said JP Morgan analyst John Faucher, who has a “neutral” rating on Colgate and an “overweight” rating on P&G.

Colgate’s shares had risen 15 percent this year through Wednesday, while P&G shares were up less than 1 percent.

Procter & Gamble CEO defends plan at staid shareholder meeting

CINCINNATI, Tue Oct 9, 2012 – Procter & Gamble Co.’s CEO stood behind the company’s plan for increasing profit and sales at a drama-free annual meeting notable for the absence of William Ackman, the activist investor who has pushed hard for change in recent months at the world’s largest maker of household products.

Chief Executive Bob McDonald defended the strategy of developing major new products while the company at the same time seeks to cut $10 billion in costs.

Tuesday’s meeting, held in P&G’s hometown of Cincinnati, came as something of a respite for McDonald months after Ackman’s Pershing Square Capital Management took a stake in P&G, putting pressure on the CEO and the board to improve performance.

McDonald, who has been at the helm since July 2009, is refocusing on core categories, countries and innovations with both the $10 billion restructuring and a strategy laid out in June that homes in on the company’s 40 biggest businesses, 20 biggest new products and 10 key developing markets.

Ackman, who disclosed his stake in the maker of Tide detergent and Crest toothpaste too late to have any proposals on the agenda, was not in attendance, and only one shareholder referred to him, asking why it took the investment of an activist to boost P&G’s stock.

“If we remain focused on the plan I talked about, the 40/20/10 plan, with improved innovation from discontinuous innovation, with productivity improvement, then we are all convinced that shareholders will get an increase in value and the stock will reflect that,” McDonald replied, without mentioning Ackman directly. “We are focused like a laser, we are holding our own feet to the fire to do this.”

P&G CEO’s pay down 6.1 percent after tough year

CINCINNATI, Fri Aug 24, 2012 – Procter & Gamble Co. Chairman and CEO Bob McDonald took home a little less last year after disappointing results that he is trying to reverse with a major overhaul.

McDonald, the leader of the world’s largest household products company since 2009, earned nearly $15.2 million in the year ended in June, down 6.1 percent from $16.19 million in fiscal 2011, according to a filing P&G made with the U.S. Securities and Exchange Commission on Friday.

P&G, whose brands include Pampers, Gillette and Tide, is in the midst of a $10 billion restructuring. On top of that, activist investor William Ackman bought roughly $1.8 billion worth of its stock this summer. While Ackman has not yet pushed for any changes at the company, P&G’s board came out in July in support of McDonald and his turnaround plan.

In June, P&G took the blame for a lack of big new products and not cutting costs fast enough as demand slows in some major markets. McDonald said it would take time to reverse the negative trends and that he expected little improvement in fiscal 2013, which began on July 1.

McDonald’s salary was flat in fiscal 2012 at $1.6 million. With 89 percent of his total pay tied to the company’s performance, his overall payout declined as P&G’s results came in below target. His bonus fell by $200,000, to $2.43 million.

Most of McDonald’s compensation comes in stock and option awards. Their combined value fell 8 percent to $10.85 million.

Shares of P&G were down 0.3 percent at $66.49 in early trading. The shares fell 3.6 percent to $61.25 during fiscal 2012.

Procter & Gamble profit tops forecast, plans buybacks

CINCINNATI, Fri Aug 3, 2012 – Procter & Gamble Co. posted a higher-than-expected quarterly profit despite a drop in sales, just weeks after the world’s largest household products maker took the blame for its disappointing performance and said it was focusing on ways to improve.

The results, released on Friday, are being watched closely for any early signals of how well P&G and its current leadership can fix a long list of problems, especially after activist investor William Ackman stepped in and bought about $1.8 billion worth of its shares.

The maker of Pampers diapers and Tide laundry detergent said it had talked with Ackman’s Pershing Square Capital Management, but did not divulge details of those discussions.

“We have a dialogue with Pershing just as we do with all investors, but of course we keep the content of these discussions confidential to protect the interests and proprietary thoughts of our investors,” CEO Bob McDonald told reporters on a conference call on Friday.

P&G also said it would repurchase $4 billion worth of its shares this fiscal year. In June it said it did not expect to do so because it wanted to preserve its credit rating.

CFO Jon Moeller said P&G changed its mind because it had growing confidence in its turnaround plan and more cash on hand than it had anticipated in June, while interest rates continued to fall.

Procter & Gamble cuts outlook for year; restructuring under way

CINCINNATI, Fri Apr 27, 2012 – Procter & Gamble Co. lowered its profit expectations for the year on Friday as it works on its new restructuring plan and continues to feel some pressure from higher commodity costs.

Shares of P&G fell 2 percent to $65.55 in premarket trading.

The world’s largest household products maker posted a lower quarterly profit, weighed down by charges for its restructuring, which calls for eliminating 5,700 nonmanufacturing jobs and cutting $10 billion in costs by the end of fiscal 2016.

The maker of Pampers diapers and Gillette razors earned $2.41 billion, or 82 cents per share, in the third quarter ended in March, compared with $2.87 billion, or 96 cents per share, a year earlier.

Core earnings per share, which exclude items such as restructuring charges, were flat at 94 cents. The results topped analysts’ expectations of 93 cents, according to Thomson Reuters I/B/E/S.

Sales rose 2 percent to $20.19 billion.

P&G said it now expected to post core earnings per share of $3.82 to $3.88 this year. Back in February, it had forecast $3.93 to $4.03 for the year ending in June.

P&G outlined its restructuring plan in February.

The human side of the performance equation

Nancy Gipson, Jackson plant manager, Pringles

A few years ago, Procter & Gamble’s Pringles plant in Jackson, Tenn., had an enviable reputation. The plant produced and distributed all of Pringles’ products in North and South America and the Asia-Pacific Region. The plant had received P&G’s highest certification, awarded for superior discipline and best work processes and practices. Its performance in all aspects of the business – production, delivery, service, quality and safety – was spectacular. In short, the plant was a shining star in the P&G family, performing at a world-class level.

It would have been easy to rest on their laurels. But for Nancy Gipson, plant manager, great wasn’t good enough. She was convinced they could do even better. She took action to further lean the plant’s best practice standard operating procedures.

As part of her efforts to further lean the operations, Gipson conducted a safety assessment. She came to the realization that not all safety incidents were being reported, because employees didn’t want to jeopardize the plant’s prized certification.

This realization was sobering to Gipson and the plant leadership team. Although the safety numbers were very impressive, Gipson wanted to improve them even more based on the assessment implications. And she wanted to ensure that no incident would ever go unreported again.

Upon closer review, the safety work processes were found to be solid and as lean as they could be without investing a ton of money for minimal returns. So Gipson turned her attention to the plant’s culture and individual behavioral practices. She found inconsistencies and tremendous variation within the workforce when it came to how they performed the safety processes on a day-to-day basis.

With Bright Side’s help, led by partner Chad Cook, Gipson and her colleagues came to understand that even the best processes rely on individual discretion and decision-making. In other words, work processes have a fundamental human component that increases variability and risk of failure. To significantly reduce lean process variability, Gipson and her team didn’t need to focus on the tasks being performed; they needed to focus on the human factor.

In order to ensure that the human or behavioral aspect was better integrated with work processes, Bright Side and P&G focused on three strategic behaviors:

1.   Transparency. The focus here was on creating a climate of trust where people could feel free to tell the truth, since reliable data about safety depends on people reporting what is really happening. At the same time, employees were helped to understand that safety holds a higher priority than productivity in the eyes of leadership. Maximizing production is not more important than safety when it comes to making decisions on the floor.

2.   Shared leadership and accountability. Safety is the responsibility of all employees. Employees were engaged to take responsibility and be accountable for their own individual safety and the safety of others over and above just following the safety processes.

3.   Business, self-rationalization. Employees were encouraged to actively engage their brains when making decisions rather than robotically following processes. The outcome is that they keep themselves and others safe while achieving the business plans and outcomes.

By intentionally modeling these behaviors, leaders proved that they believed in, were committed to and were taking the behaviors of safety seriously. Employees could see and hear in their behaviors that leadership was sincere about these changes, and that led to greater trust on all sides. With consistent and constant leadership, these behaviors took hold on the floor and throughout the plant.

The long-term impact has been exactly what Gipson originally sought: the plant has become an even greater model of success in its safety processes and beyond. The plant is measurably safer, has reduced costs, increased efficiency, reduced turnover, expanded production and improved quality. Employees, their families and leadership feel secure that people who work in the plant will leave work as healthy as when they arrived. On a recent tour, an exec from outside P&G remarked, “I have been to many facilities in the food industry, and you set the standard for any I have ever visited.” The plant is now expanding their behavioral strategies to intentionally encompass every work process in the facility.

Our work with Pringles demonstrates what Bright Side endorses and delivers: to significantly improve performance and get a magnified return on investment, organizations need to find the balance between both the task and behavioral aspects of getting work accomplished. Many companies mistakenly believe that focusing exclusively on tasks is the solution for everything. They think they can infinitely improve processes and competencies by working harder. But the reality is that once you have removed most of the waste from a system or process, you get minimal benefit from continuing to focus on tiny gains in task improvement. A lean task focus has its limits.

The REAL, leverage-able opportunity for improvement then comes from a conscious and intentional focus on the human/behavioral side of getting work done, as the Pringles case study illustrates. It’s only when companies really commit to exploring and improving leadership engagement focused on strategic behaviors (actions, words, beliefs and assumptions) that productivity, consistency and effectiveness rise off the charts.

If you are already on the journey to lean your organization, don’t neglect the human/behavioral component. Expand your thinking to add the behavioral side of the performance equation to your current lean tools and processes.

Donna Rae Smith has forged a career, enterprise and an applied discipline on the practice of teaching leaders to be masters of change.  She is the founder and CEO of Bright Side Inc., a transformational change catalyst company with an emphasis on the behavior-side of change.  For more than two decades, Donna Rae Smith and the Bright Side team have been recognized as innovators in executing behavioral strategies coalesced with business strategies to accelerate and sustain business results. Bright Side®, The Behavioral Strategy Company, has partnered with over 250 of the world’s most influential companies.  For more information, please visit www.bright-side.com or contact Donna Rae Smith at [email protected]

Procter & Gamble quarterly profit in line, keeps year view

CINCINNATI, Ohio ― Procter & Gamble Co. posted a slight dip in quarterly profit that was in line with expectations as the world’s largest household products maker raised prices and notched sales gains in each unit.

The maker of Pampers diapers and Tide detergent earned $3.02 billion, or $1.03 per share, in the first quarter ended on Sept. 30, compared with $3.08 billion, or $1.03 per share, a year earlier. It had fewer shares outstanding in the most recent quarter.

P&G, which makes everything from Gillette razors to Pantene shampoo, announced or implemented price increases on brands that account for the majority of its U.S. sales and has pulled back on some promotional spending, which also effectively raises the prices consumers pay.

Sales rose 8.9 percent to $21.92 billion. Organic sales, which strip out the impact of acquisitions, divestitures and foreign exchange fluctuations, rose 4 percent, coming in at the high end of the company’s 2 percent to 4 percent forecast.

Analysts on average were looking for a profit of $1.03 per share on $21.53 billion in sales, according to Thomson Reuters I/B/E/S. P&G had forecast earnings of $1.00 to $1.04 per share.

The volume of goods sold rose 2 percent, excluding acquisitions, asset sales and currency fluctuations, with growth in developing regions partially offset by a decline in developed regions.

The company still expects full-year earnings of $4.17 to $4.33 per share, with sales up 3 percent to 6 percent. Analysts expect it to earn $4.20 per share this year.

For the current second quarter, which ends in December, P&G forecast earnings of $1.05 to $1.11 per share, with sales growth of 3 percent to 5 percent.

P&G shares rose 0.9 percent to $65.53 in thin premarket trade.