Procter & Gamble Co. made good on its mission to reach more consumers in more places in 2010, helping the firm to reverse market share losses from one year ago.
This story first appeared in the August 4, 2010 issue of WWD. Subscribe Today.
“In fiscal 2010, we reached an additional 200 million consumers, bringing the total we served to 4.2 billion, on track toward our goal of serving 5 billion consumers by 2015,” chairman, president and chief executive officer Bob McDonald told analysts during the company’s fourth-quarter earnings call Tuesday.
“We are growing market share now in about 60 percent of our business. It was half that a year ago,” said McDonald.
The company plans to increase share by growing globally, as well. McDonald noted that all 36 of the company’s categories are sold in the U.S., but only 16 are sold in China. “That’s the white space,” he said. “We’ve got a lot of work to do to get the categories that we currently are in into all markets.”
The company introduced the bulk of its 2010 innovations — including Gillette Fusion ProSeries men’s skin care and the overhauled Pantene hair care range — in the fourth quarter, and expects their impact to carry over into this year.
McDonald said in fiscal 2010 P&G invested $2 billion in research and development, or about 50 percent more than the company’s closest competitor. It also ramped up advertising spending throughout the year. Annual advertising spending accounted for approximately 10 to 11 percent of revenue, according to P&G.
For the quarter ended June 30, net earnings for P&G’s beauty business declined 1 percent to $497 million while sales rose 6 percent to $4.73 billion. P&G’s overall profits decreased 11.6 percent to $2.19 billion, or 71 cents a diluted share, from $2.47 billion, or 80 cents, a year earlier, on sales that gained 4.7 percent to $18.93 billion, from $18.08 billion in the prior-year period. Organic sales gained 4 percent, and unit growth increased 8 percent in the quarter.
For the full year, profits in P&G’s beauty business rose 2 percent to $2.7 billion, as better sales overcame the impact of divestitures and higher taxes. Net sales increased 3 percent to $19.5 billion for the year. Unit volume also rose 3 percent. Price increases of 1 percent were offset by an unfavorable geographic and category mix. P&G’s overall profits for the year ended June 30 fell 5.2 percent to $12.74 billion, or $4.11 a diluted share, from $13.44 billion, or $4.26, a year earlier. Sales rose 2.9 percent to $78.94 billion from $76.69 billion.