By  on February 2, 2011

Procter & Gamble Co. is consolidating its three business units into two, with Global Beauty and Grooming absorbing oral care and feminine care and Global Household Care absorbing the personal health, pet and snacks businesses.

The move is designed to cut costs within P&G.

P&G spokesman Paul Fox said the consolidation “will ensure that each business gets the full investment required to grow globally” and that there “will be a benefit of operating synergies.”

A paper by Stifel Nicolaus authored in December pointed out various ways for the consumer products giant to reduce costs — specifically by lowering its selling, general and administrative expenses and by implementing a cost-reduction program “in line with those announced by its large-cap peers [which] could result in a benefit to [earnings per share] of between 6 and 30 percent.

“We think an increased focus on cost savings could result in upside to P&G’s high-single-digit to low-double-digit EPS growth algorithm.”

One industry watcher added that the move “increases their flexibility from a business standpoint. They have a lot of opportunity to reduce costs in their own footprint and I think that this [restructuring] is an evident by-product of this. There’s no surprise that pet and snack is going over to someone that deals more with something like that and Ed Shirley ran oral care at Gillette [early in his career]. Overall it aligns resources better. It was redundant [before] so this makes sense to me.”

As of Tuesday, Charlie E. Pierce, group president, Global Oral Care, and Steve Bishop, group president, Global Feminine Care, report to beauty and grooming head Ed Shirley.

Tom Finn, president, Global Health Care, and Dan Rajczak, senior vice president, Global Snacks and Pet Care, report to household head Dimitri Panayotopoulos.

The announcement came following the planned retirement of Robert A. Steele, vice chairman, Global Health and Well-Being, responsible for oral care, feminine care, personal health care, pet care and snacks, which is effective Sept. 1.

On Tuesday, Steele became vice chairman, Health Care Strategy, reporting to P&G chairman, president and chief executive officer Robert A. McDonald.

Steele is credited with introducing items such as Swiffer, as well as designing and leading P&G’s North American Market Development Organization, leading P&G’s family care, coffee, pet care and snacks businesses, and leading the strategy for P&G’s consumer health care business, including the divestiture of pharmaceuticals.

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