Despite strong economic headwinds, Procter & Gamble Co.’s growth strategy remains on course, chairman and chief executive officer A.G. Lafley told shareholders during the company’s annual meeting Tuesday morning.
This story first appeared in the October 15, 2008 issue of WWD. Subscribe Today.
“Last year, I told you P&G is designed to grow,” he said, acknowledging that at the time few could have predicted the economy’s current beleaguered state of high gas prices, rising unemployment and declining retail and auto sales. “I am as confident today as I was a year ago,” said Lafley, adding that while it’s more difficult to grow and sustain growth today than it has been in many years, P&G’s fundamentals remain intact.
He told those in attendance that P&G’s long-term growth drivers include its portfolio of leading brands, focus on creating consumer value, cash and cost management discipline and mission for developing innovation that “delights the customer.”
“While the economic environment remains volatile and uncertain, I am confident that P&G can and will continue to prosper over the long term,” said Lafley. “We are committed to ensuring P&G will continue to be a company you can count on.”
He noted the P&G portfolio includes 24 billion-dollar brands, which range in size from $1 billion to $8 billion. “These brands are all built to last for decades — through and beyond any economic cycle,” said Lafley. “P&G has a portfolio of brands consumers rely on every day,” for laundering clothes, baby care and personal care. “These are needs that don’t go away.”
The company competes in 22 consumer products categories, and ranks number one or number two in two-thirds of those categories, according to Lafley.
He told shareholders the company’s cost discipline helps fund its research and development efforts. “Our discipline enables us to invest in the business even when the external environment is challenging.” He added that the company invests $2 billion annually on innovation, about twice the amount of its nearest consumer products competitor, according to P&G. “Innovation is our lifeblood,” he declared.
Lafley reminded shareholders of P&G’s steady performance: “Your company has grown consistently for decades.” He pointed out that the company’s sales have nearly doubled for each of the past three decades, from $10 billion in 1980 to more than $80 billion today.
During the meeting, shareholders voted against a proposal to allow shareholders an advisory vote on executive pay as well as a proposal to rotate the site of the annual meeting from the company’s headquarters in Cincinnati to other major U.S. cities.