Power 50 Profile Ranking: 28
The last 12 months had ups and downs for the Procter & Gamble Co., Cincinnati, but in the end, it did very well — again.
One negative was when the company’s respected pet food brand, Iams, was tainted by the melamine contamination recall. Another is sharply higher prices for raw material costs, like the 20% hike announced recently by Dow Chemical.
But the financials show revenues, margins and earnings per share all up, with dividends continuing to be paid. Plus, A.G. Lafley, the P&G’s chairman and chief executive officer, wrote a book, “The Game Changer,” with co-author Ram Charan.
“P&G is designed to grow in any environment — in good times and challenging times alike,” Lafley said in a recent presentation to analysts and media.
A significant development is the pending sale of the Folgers coffee brand to J.M. Smucker, Orrville, Ohio. “They have pruned the portfolio,” said Don Stuart, managing director, Cannondale Associates, Wilton, Conn. “They are down to one single food brand [Pringles] at this point as Folgers goes away.”
Lafley’s tenure has become almost legendary. “A.G. has continued to reinvent the game. He has continued to focus on costs, innovation and putting the customer first,” Stuart said.
Globalization helps P&G weather economic conditions in the U.S., noted both Stuart and Neil Stern, partner, Mc- Millan Doolittle, Chicago.
“Over the next 12 months, the U.S. economy will continue to be challenged,” Stern said. “This represents a hurdle for manufacturers with rising costs and slowing sales, but also an opportunity to gain market share as weaker competitors retract spending. We expect A.G. to pursue the course of gaining share and continuing P&G’s course.”
In his analyst presentation, Lafley said, “We have a proven track record of industry-leading innovation and we have a long heritage of disciplined productivity improvement.” He added that innovation and productivity leadership are “part of P&G’s DNA.”
As Lafley wrote in his book, which was published in the spring, “Through many trials and too many errors, I have learned that innovation is an integrated process and that innovation is a gamechanging and winning strategy that can transform the everyday work and behaviors of managers and employees.
“We have not perfected the process of innovation — not by a long shot. But I have no doubt that the right building blocks are in place because we have thought innovation through, step by step.”
— DAN ALAIMO