Proctor & Gamble to Reorganize Business to Spur Growth

Michael Teague |

PGProctor & Gamble (PG), the world’s leading manufacturer of consumer goods, announced late on Wednesday that it would be restructuring its global business units into four different industry-specific sectors.

Previously, the company had much success with its global business being divided into two units: beauty and grocery, and household care. According to P&G, this arrangement, since it was implemented over a decade ago, led to some $900 million in savings.

Since 2009, however, the company’s sales growth has been lagging. Over 2013, the company has been matched or overtaken by competitors such as Unilever (UN), Johnson & Johnson (JNJ) and Colgate-Palmolive (CL). Just last year, CEO Bob McDonald implemented a $10 billion cost-reduction plan based primarily on a $6 billion decrease in the cost of goods sold, 7,500 layoffs, and savings on overhead and marketing.

Just two weeks ago, McDonald was replaced with his predecessor AG Lafley, who, plans to continue efforts to cut expenses, and the new ordering of the company’s global business units can be seen as a supplement to that turnaround plan.

The new arrangement will see a global baby, feminine and family care sector; a global beauty sector; global health and grooming; and global fabric and home care. In a statement, Lafley said that the new organization and leadership structure would allow the company to operate more effectively, and would help lead to better growth numbers.

The four units will be directed by executives that are already part of the company, all of whom will report to Lafley. In addition, Dimitri Panayotopoulos, the vice chairman of global business, will step up to vice chairman of the board, as well as adviser to Lafley.

P&G has lost market share to competitors in categories such as detergents and beauty products, as well as in the increasingly prized emerging markets.

The news was received with little commotion on the market on Thursday. The $208.5 billion market cap company was down 0.75 percent to $76.08, and has dropped 2.8 percent over the past week.

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Companies

Symbol Name Price Change % Volume
CL Colgate-Palmolive Company 73.60 0.14 0.19 2,684,990
JNJ Johnson & Johnson 119.39 0.17 0.14 5,076,091
NCT.P.C Newcastle Investment Corporation Preferred Series 25.15 -0.05 -0.20 1,199
PG Procter & Gamble Company (The) 89.46 1.10 1.24 89,805,967
UN Unilever NV 46.52 0.32 0.69 1,256,327

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