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P&G earnings rise as it moves to cut lagging brands

US consumer products giant Procter & Gamble Friday (August 1) unveiled plans to eliminate dozens of underperforming brands as it reported a big increase in quarterly earnings.

NEW YORK: US consumer products giant Procter & Gamble Friday (August 1) unveiled plans to eliminate dozens of underperforming 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 on a conference call. "We want to be in the businesses we should be in, not the business we are in."

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 per cent of sales and 95 per cent 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 US$2.6 billion (S$3.2 billion) in profits for its fiscal fourth quarter ending June 30, a 38 per cent increase compared with a year ago. Part of the improvement came from a seven percent cut in expenses to US$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 per cent to US$20.16 billion, below the US$20.48 billion projected by analysts.

For the full year, P&G reported net income of US$11.6 billion, up three percent from the prior year. Annual sales were US$83.06 billion, up 0.6 per cent.

P&G shares were the best performing in the 30-company Dow Jones Industrial Average, rising 4 per cent to US$80.41 at mid-morning.

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