Procter & Gamble makes progress but weakness persists in some divisions
New York — Less than two weeks after declaring victory in a proxy war, Procter & Gamble’s (P&G) results show the company is making progress in some areas — but robust sales growth remains elusive.
Profit exceeded forecasts and sales met expectations. Nonetheless, the company reported weakness in the grooming, baby, feminine and family-care divisions. Billionaire investor Nelson Peltz has said that P&G is being held back by an unwieldy structure and trails peers in performance and innovation, while the company argues a turnaround is taking hold.
"First-quarter sales and earnings results were in line with our going-in expectations and keep us on track to deliver our targets for the fiscal year," CEO David Taylor said in a statement.
Profit was $1.09 a share on an adjusted basis, the company said on Friday, topping the consensus estimate of $1.08. Overall organic sales rose 1%. Growth in the beauty, healthcare, and fabric and homecare segments offset declines in the other areas.
Shares of the maker of Tide, Pantene and Pampers fell as much as 1.9% to $89.89 in early New York trading.
The growth of years past has been elusive for many consumer-products companies. Pressure from private-label brands and retailers’ push for cost cuts have weighed on manufacturers, Andrea Teixeira, an analyst at JPMorgan Chase, said in a note this week. P&G’s results in particular are under scrutiny after Peltz highlighted market share losses and sales performance, she said.
P&G says that Peltz’s criticisms are outdated and the company has acknowledged its problems and is targeting them.
After three months of tit-for-tat press releases from the two sides, preliminary results showed that P&G prevailed earlier in October in denying Peltz a seat — but by a margin of less than 1%. Peltz has challenged the results and has argued that he deserves a board seat regardless of the actual count.