A. G. Lafley
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Procter & Gamble (PG) shareholders want more than new CEO is likely to deliver Thursday

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CINCINNATI -  

You never get a second chance to make a first impression, unless you are A.G. Lafley and shareholders are hungry for wise words.

When Procter & Gamble Co. delivers fourth quarter earnings results Thursday morning, it will be the first center stage appearance for Lafley in his second round as CEO. Lafley replaced Bob McDonald in the top job two months ago. Company officials stressed at the time that no major strategy changes were behind the move, but veteran P&G watchers are looking for a bigger answer than that.

“Expectations are elevated for him to do something,” said Matt McCormick, vice president and portfolio manager at Bahl & Gaynor Investment Counsel downtown. “If he comes in with bold strokes and an outline of his vision, people will warm to it. Remember, he wrote a book on strategy. Here’s his first chance to make an impression.”

Analysts polled by FactSet expect P&G to report earnings of 77 cents per share on revenue of $20.55 billion. In the same period a year ago, P&G earned $1.24 per share on revenue of $20.21 billion.

P&G has already warned Wall Street that its fourth-quarter profits would be reduced by currency devaluation in Venezuela. Last week, P&G rivals Colgate-Palmolive, Unilever Inc. and Kimberly Clark all said a stronger U.S. dollar would negatively impact future profits.

Unilever CEO Paul Polman pointed to a “noticeable slowdown” in emerging markets, which now account for more than one third of P&G’s global revenue.

“Brazil, Russia, India and China have all seen downgrades to growth forecasts, and the markets in which we operate certainly have slowed,” Polman told shareholders July 25.

Oru Mohiuddin, senior analyst for Euromonitor International, recently laid out an argument for the sale of P&G’s fragrance brands, which include Hugo Boss, Gucci and Dolce & Gabbana.

“Premium fragrances appear to be a misfit in Procter & Gamble’s portfolio, requiring a different distribution platform to its other products,” Mohiuddan wrote in April. “Moreover, Procter & Gamble generates only 6 percent of its total beauty and personal care revenue from premium fragrances.”

In an interview, Mohiuddin said the pruning of P&G’s beauty portfolio could free up resources for Olay and other skin care products, which are being outspent by L’Oreal in research and development.

In a January interview with WCPO Digital, Lafley said P&G needed to "reinvent itself" in beauty care. Chief Financial Officer Jon Moeller told analysts in June that the company was "working hard to fix" two key beauty brands: Olay and Pantene. Together, they account for $5 billion in annual revenue and more than 25 percent of beauty care sales.

Bernstein Research analyst Ali Dibadj said the odds are "very slim" that Lafley will use the earnings call to reveal a big shift in strategy.

"They may indeed divest things and say they will double-down on beauty, but I’m not sure we’ll get details (Thursday)" he said.

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