CINCINNATI - Procter & Gamble Co. CEO A.G. Lafley told reporters and Wall Street analysts Thursday morning that he spent his first two months on a "deep dive," talking to consumers, business partners and company critics to identify the best ways to improve growth and market-share performance.
In his first public comments since reclaiming the top job at Procter & Gamble, Lafley confirmed that Bob McDonald was on the right track in restoring growth and cutting costs at the Cincinnati-based consumer products company
But he stopped short of unveiling major new strategic directions for the company. Instead, he expressed confidence that changes in P&G's struggling beauty business are working and promised to make ongoing productivity improvements, continuing an initiative announced last year by former CEO Bob McDonald.
In fact, the biggest policy change announced by P&G today came from Chief Financial Officer Jon Moeller, who said the company will no longer provide quarterly earnings guidance, focusing instead on a full-year earnings projections. Moeller said P&G will grow earnings per share by seven to nine percent for the fiscal year that began July 1. That would be an improvement over the 5 percent in core earnings per share achieved in 2013.
Despite the lack of news, analysts seemed generally pleased with Lafley's return, even as they pressed him for more details on how P&G will restore growth in developing markets and key product segments like beauty.
"We were hoping for more specific diagnosis and prescription on the call, but much of shifting an organization is believing in a leader and employees certainly do that with A.G," said Bernstein Research analyst Ali Dibadj, who was one of McDonald's leading critics.
P&G shares were up nearly two percent to $81.83 in the first hour of trading, as investors reacted to news that P&G's fourth-quarter profits exceeded analyst expectations.
Still, the Thursday morning conference calls with reporters and analysts offer P&G stakeholders their first chance to learn how A.G. Lafley views the company he led from 2000 to 2009, only to return as CEO and Chairman in late May.
Here are excerpts of Lafley's remarks:
"We have spent the past two months doing a deep dive, seeking to understand consumers and markets, trying very hard to see things as they are, not as we want them to be. We are focused on winning with consumers who matter most, deliver shareholder value creation that puts P&G among the very best. … We know we’re not consistently winning now and we’re committed to make changes we know we need to make to significantly improve P&G’s performance. We’ve established value creation for consumers and shareholders as our clear priority. Operating total shareholder return will be our primary operating measure. It requires more of our businesses to consistently improve sales growth, gross and operating margin growth and cash flow productivity. We will be guided by disciplined strategies and operating plans that focus on the most important choices."
"I don’t think this institution or company is unique. As you get bigger and broader, you have to work a little harder to be a little more choiceful and focused and to set really clear priorities. We’re just going to be more focused and we’re going to begin where we ought to begin with the consumer as the boss."
"Clearly, when you come through a major recession, you've got to be attentive to your costs and your cash. We’ve done a very good job of managing our cash. We’ve done quite a good job of returning cash to shareholders. It’s no secret and we’ve addressed very frequently over the last year plus, we are getting after our costs ... We want to turn productivity into a core strength around here that’s just as strong as our innovation core strength. We’re going to turn it into a systemic strength, not an episodic event."
"I’m optimistic about the beauty business. It’s a $24 billion business. In less than a decade we went from a contender in the top ten to the second leading player in the world. … It’s no secret that we’ve stalled in a couple of places but we still a very robust prestige business. We have very strong brands. Head & Shoulders is just one example. We know what to do on Pantene and Olay. Pantene’s still a $3 billion business, the leading brand in the world. Olay’s still a $2 billion business, one of the leading skin care brands in the world. Both businesses and brands have very strong consumer groups that we can build on. So, we like the brands. We like the product innovation program that’s in the pipeline. We’ve stalled before and we know what it takes to get these businesses growing again."
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