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Procter and Gamble to sell 100 brands

Friday, August 01 17:05:53

Procter and Gamble, the world's largest household products maker, said it could sell about half of its brands in an effort to revive sales growth and cut costs, sending its shares up as much as 4 percent.

P and G, under pressure to launch innovative products and streamline its businesses, said it would consider selling about 90 to 100 brands whose sales have fallen about 3 percent a year for the past three years.

"We're going to create a faster growing more profitable company that is far simpler to manage and operate," Chief Executive A.G. Lafley said on a conference call.

The maker of Pampers diapers and Tide detergent said the 70 to 80 "core" brands it will focus on have accounted for 90 percent of sales and over 95 percent of profit over the past three years. 23 of the brands have sales of $1-$10 billion.

P and G, which did not name the brands it planned to sell or keep, said it expects to sell the non-core brands within the next 12 to 24 months.

The brands that could be sold include Trojan, Hi Wash, Gabriela Sabatini, Pregnavit and Escada, according Sanford Bernstein analyst Ali Dibadj.

He reckons P and G will keep Gillette, Pantene, Oral B, Olay, Always and Old Spice besides Pampers and Tide, among the company's most popular brands.

P and G's shares were up 3.8 percent at $80.26 in late morning trading on Friday.

P and G's revenue growth has been sluggish, with sales missing Wall Street's estimates in nine of the last 13 quarters, hurt by a "choppy" growth in developed markets, tough competition and a strengthening U.S. dollar.

The company has sought to cut expenses by streamlining management, lowering overhead and marketing costs, and cutting jobs under a five-year, $10 billion restructuring plan announced in February 2012.

While P and G's organic sales, which excludes the impact of divestitures and acquisitions, rose 2 percent in the quarter ended June 30, currency headwinds wiped out the gains.

Net sales fell 1 percent to $20.16 billion in the fourth quarter, missing the average analyst estimate of $20.48 billion, according to Thomson Reuters I/B/E/S.

P and G, which has been pushing hard for market share in emerging markets, forecast organic sales to rise in the low- to mid-single digit percentage range in the full year started July.

The company said it expects full-year core earnings to rise in the mid-single digit percentage range.

A 7 percent fall in operating expenses in the fourth quarter helped P and G post a core profit of 95 cents per share, beating the average analyst estimate of 91 cents.

"PG's earnings quality is below its potential," BMO Capital Markets analysts wrote in a note. (Reuters)

For more visit: www.businessworld.ie