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
• P&G may be scaling back its push into emerging markets,
but the company is going full speed ahead with its aggressive
campaign for Tide pods, the all-in-one detergent, stain remover
and brightener that makes it easy to do the laundry quickly and
correctly. Although the pods are priced at a premium, a 14-pod
package retails for $4.47 at Walmart online, p&G execs are confident that the segment will eventually become a $300 million segment within the $4.3 billion US laundry market.
But first, p&G and other single-use detergent makers must
deal with some bad publicity. In May, reports came out that at
least 250 young children were accidently ingesting the bright, colorful packs manufactured by p&G and other detergent makers.
p&G reacted quickly by redesigning the Tide pods container
and working with the American Cleaning Institute to warn parents
to keep pods, as well as all household cleaning products, away
PODS: THE GOOD & BAD
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
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-seg-ment-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