Bloomberg TV in its “In The Loop” program commented on the streamlining efforts being made by Alan G. Lafley, who is the Chairman of the Board, President, Chief Executive Officer of FMCG major The Procter & Gamble Company (NYSE:PG) in order to increase its profitability and turn the company around.
Julie Hyman of Bloomberg reported that The Procter & Gamble Company (NYSE:PG) has finalized plans to either spin off, discontinue nearly 100 brands from its global product portfolio over the next two years time frame. These steps are being taken by the $217 billion market cap global giant; Hyman explained that in order to cut its operational costs and realign its focus on its most popular and profitable products.
Commenting about the likely impact the elimination of these 100 identified brands could have on the top line and bottom line of The Procter & Gamble Company (NYSE:PG), Julie Hyman indicated that, “the brands they are getting rid of, whether they sell them or discontinue them, or spin them off in some way, account for only about 10% of revenue and five percent of profits”. This means that the products/ brands that are being discontinued were the “least profitable brands” of the company.
On completion of this consolidation program, The Procter & Gamble Company (NYSE:PG) portfolio is expected to include roughly 70 to 80 core brands. The reporter noted that these brands would constitute the cream, top performing brands for the company.
The program then went on to note that these realignment efforts that are afoot within The Procter & Gamble Company (NYSE:PG) are a continuation of the turnaround steps which were initiated last summer when the current CEO made his way back into the company to replace Bob McDonald. Hyman went on to quote analysts she has spoken with about the impact of these moves, to have commented that, “it would allow the company to keep costs in check, focus on the core here”.
She also provided a background to the current CEO making his way back to lead The Procter & Gamble Company (NYSE:PG) after activist investor Bill Ackman forced the hand of the company board to sideline Bob McDonald as CEO.