P&G earnings rise as it moves to cut lagging brands
US consumer products giant Procter & Gamble Friday unveiled plans to eliminate dozens of underperfomring brands as it reported a big increase in quarterly earnings.
P&G, which makes Pantene shampoo, Tide detergent and other mainstays, plans to cull 90-100 lower-selling brands over the next 12-24 months as it aims to further build up its best-sellers.
"Less will be much more," said chief executive A.G. Lafley.
"We want to be in the businesses we should be in, not the business we are in," Lafley said on a conference call.
P&G did not disclose the brands that are targeted for discontinuation or divestment. The company will keep its 70-80 top brands that account for about 90 percent of sales and 95 percent of profit.
Lafley highlighted the recently launched close-shaving Gilette "Flexball" razor and an upcoming "revolutionary" Crest strip product for sensitive teeth as examples of products that can command a premium.
"We're bringing renewed focus to brands," Lafley said, adding that the goal is to build "lasting practice and loyalty" among consumers.
The announcement came as P&G reported $2.6 billion in profits for its fiscal fourth quarter ending June 30, a 38 percent increase compared with a year ago. Part of the improvement came from a seven percent cut in expenses to $6.3 billion.
P&G chief financial officer Jon Moeller said results were hit by softening currencies in some of its biggest markets, such as Japan, Venezuela and the Ukraine.
P&G's "core earnings" per share, which strips out currency effects and the impact of restructuring charges, were 95 cents for the quarter, four cents above analyst expectations.
Revenues slipped 0.7 percent to $20.16 billion, below the $20.48 billion projected by analysts.
For the full year, P&G reported net income of $11.6 billion, up three percent from the prior year. Annual sales were $83.06 billion, up 0.6 percent.
P&G shares were the best performing in the 30-company Dow Jones Industrial Average, rising 4 percent to $80.41 at mid-morning.