Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Procter & Gamble Company (PG) Posting Q1 in Line Enough to Appease Ackman?

PERSHING SQUAREThe Procter & Gamble Company (NYSE:PG) has returned over 13% since the end of the second quarter, giving funds like Bill Ackman’s Pershing Square, which opened a $1.34 million position in the company during the second quarter as well as a $514,000 call position, a solid return. But, according to the Wall Street Journal, Ackman has said “that P&G needs to address a bloated cost structure that has had an effect on results in recent years” and has “advocated for deeper cost cuts and the replacement of [Bob] McDonald,”  Procter & Gamble Co.’s Chief Executive Officer.
McDonald may have received a slight reprieve after the Procter & Gamble Company (NYSE:PG)’s posted first quarter fiscal results in line with analyst estimates. The company had posted a profit of 96 cents per share, falling short of last year’s $1.03 a share but met consensus expectations. On revenue, Procter & Gamble posted sales of $20.7 billion for the quarter, under last year’s $21.92 billion and in line with analyst predictions of $20.78 billion. But, while these figures were “ahead of the company’s forecast due to easing commodity prices and cost savings… P&G continued to lose market share in most of its businesses.”
The Wall Street Journal writes that Procter & Gamble Company (NYSE:PG) lost “market share in businesses that represent more than 55% of overall sales in the period, but it was an improvement from the prior quarter, when it lost market share in 70% of its business. In the U.S., where P&G has imposed price cuts in categories like razor blades and powdered laundry detergent, P&G held or gained market share in businesses representing 60% of sales, up from just 15% in the prior quarter.” With this in mind, the company is holding its view for the year. “We’re going to take this opportunity to lean forward and strengthen marketing plans,” said P&G Chief Financial Officer Jon Moeller. “The maker of Tide laundry detergent and Gillette razors also hinted at furthering its cost-savings program beyond the $10 billion restructuring plan announced earlier this year.”
“We’re focused on embedding a culture of productivity in the company that’s equal to our culture of innovation,” Mr. McDonald said Thursday in a conference call, but critics of the Procter & Gamble Company (NYSE:PG)’s recent policies and Mr. McDonald in general, like Pershing Square’s Bill Ackman, are not convinced that this is the right move for right now. McDonald had reduced P&G’s forecast several times last fiscal year, earning a 75-page litany of complaints from the fund manager and activist investor for that and other issues – complaints that are not going to be addressed by merely making the mark.
Loading Comments...