Procter & Gamble Co. plans to seek out new consumers in emerging markets around the globe while giving shoppers in the U.S. and other developed markets more choices in products and prices as their countries’ economies continue to sputter.
The maker of Gillette shavers, Tide detergent and Pamper diapers reported double-digit net income and revenue increases for its fourth quarter with sales gains in countries led by Brazil, India and China. But it gave a cautious forecast for the year ahead because of expectations for little growth in the United States and other developed countries. P&G’s guidance indicated slowing sales in this quarter, which began July 1.
“I don’t think there’s any question that consumers, particularly in developed markets, are under pressure,” Bob McDonald, P&G’s chairman and CEO, told reporters Friday in a conference call.
P&G shares rose $1.01 to $60.59. They’ve traded from $59.17 to $67.72 in the past year.
The company said it is cutting costs by restructuring management and streamlining operations, but is outspending competitors in research and development of new products and in marketing. The world’s biggest advertiser said it spent $9.3 billion on marketing last year, the second straight year it has set a company record, while investing $2 billion in R&D.
P&G also raised prices on products including Pampers diapers, Charmin toilet paper and Cascade dish detergent to offset higher costs for oils, resin and other raw materials. McDonald said the company is putting more focus on offering pricing ranges, including at low price tiers to head off trading down to private label competitors. The aim is to help P&G compete “no matter the price point the consumer wants to spend.”
During the recession, P&G went after consumers who were trading down to store brands by introducing cheaper “Basic” versions of Charmin toilet paper and Bounty paper towels, and restaged Cheer laundry detergent as a value brand.
“We’ve been to this movie before,” McDonald said.
At a Kroger supermarket near downtown Cincinnati, store shelves Friday offered P&G’s line of laundry detergents at a variety of sizes and prices: Cheer 2X concentrated at $13.99 for a 64-load container; Gain at $11.20 for 64-load container, while the top brand Tide was priced at $19.99 for a 96-load container. Private label brands were priced slightly lower, but they lack the marketing muscle and track record of P&G’s brands.
P&G dish cleaning liquids cost 20 cents or more per bottle than most competing brands, but shoppers could save $2 by buying two bottles of Dawn and also could get Dawn enhanced with P&G Olay skin cream ingredients to protect hands while washing dishes.
“In this environment, you’ve got to raise prices because of commodity costs to protect margins,” said Jack Russo, an Edward Jones analyst. “(But) you’ve got be careful you’re not alienating consumers. These guys have great brands, and as they innovate, they emphasize value.”
P&G’s growth is coming from overseas, as it goes into new markets and expands its number of products for emerging consumers in places such as Indonesia and Nigeria. P&G says it’s now reaching some 4.4 billion consumers globally, well over half the world’s population.
P&G has scored a big hit in India with the Gillette Guard razors that sell for pennies. The company hopes getting men in emerging markets to try its big brand will lead to them trading up to higher-priced Gillette products.
Other strong growth came from SK2 cosmetics and Always feminine products in China, Olay skin care in the Philippines, Saudi Arabia and India, and Pantene and Head & Shoulders shampoos in Brazil.
P&G expects earnings for the year ahead to be in a range of $4.17 to $4.33 per share, with sales growing 5 to 9 percent. Analysts expect earnings of $4.29 per share on revenue of $87 billion, up 5 percent.
In the current quarter, P&G expects earnings per share in a $1 to $1.04 range; analysts were looking for $1.14. P&G also sees sales slowing down in places such as the U.S., Europe, and Japan. It projects organic sales growth of 2 to 4 percent overall, with net sales up 6 to 9 percent.
Sheriff Reports Preliminary Autopsy Results On Gene Hackman and Betsy Arakawa
Preliminary autopsy results didn't determine how Oscar-winner Gene Hackman and his wife died at their home in Santa Fe, New Mexico, but did rule out that they were killed by carbon monoxide poisoning, the sheriff leading the investigation said Friday.
The condition of the bodies found Wednesday indicated the deaths occurred at least several days earlier and there was no sign of foul play.
At a news conference, Santa Fe County Sheriff Adan Mendoza said the initial examination by the medical examiner showed no sign of carbon monoxide, a colorless and odorless gas produced from kitchen appliances and other fuel-burning items. When it collects in poorly ventilated homes, it can be fatal.
Mendoza also said an examination of the 95-year-old Hackman's pacemaker showed it stopped working on Feb. 17, which means he may have died nine days earlier.
Hackman's body was found in an entryway. The body of his wife, Betsy Arakawa, 65, was in a bathroom. She was on her side and a space heater was near her head. Investigators said the heater likely was pulled down when she fell. There also was an open prescription bottle and pills scattered on a countertop.
Whether the pills or other drugs were a factor won't be known until toxicology tests are completed in the coming weeks.
Dr. Philip Keen, the retired chief medical examiner in Maricopa County, Arizona, said it would be unlikely for a person who tests negative for carbon monoxide initially to later be found to have been poisoned by it.
He also said the moment when a pacemaker stops working could mark the point when a person dies, but not always.
"If your heart required a pacemaker, there would certainly be an interruption at that point — and it might be the hallmark of when... Read More