NEW YORK – Procter & Gamble is turning a corner.
The world’s largest consumer goods company, whose products like Tide detergent and Gillette razors are in 98 percent of U.S. households, in recent years has lost business to competitors as it grew too fast overseas and kept prices high.
But Friday, P&G reported that its fiscal second-quarter profit more than doubled as the plan the company launched last year to lower costs and roll out new products boosted its bottom line. It is the second quarter in a row that P&G beat Wall Street estimates.
We have more work to do, but the underlying trends are improving, CFO Jon Moeller said in a call with analysts.
The results signal a change for P&G, which like many U.S. companies has been focusing on growing its business in places such as China and India as growth in more developed regions like North America have slowed. But while competitors lowered prices, P&G took for granted that many of its products are household names in some regions, and the company held its ground on pricing.
As a result, P&G lost market share in more than half the categories in which it sells products.
Investors, most notably activist investor Bill Ackman, became vocal about the company’s need to streamline operations and grow market share globally. So P&G in February launched a plan to focus on the company’s 40 top businesses, 20 biggest new products and 10 most profitable emerging markets.
It also rolled out cost-cutting measures aimed at saving $10 billion by fiscal 2016. Later in the year, P&G lowered prices for laundry detergent, toothpaste and other products in the U.S. and cut jobs.
P&G’s quarterly results show that the strategy is finally working. The company, based in Cincinnati, held or grew market share in businesses representing almost 50 percent of sales during the fiscal second quarter that ended Dec. 31.
Another good sign: The positive results come from both developed markets as well as emerging markets. For instance, in China, a key emerging market that has been facing slowing growth, P&G held or grew market share in about half of the categories it competes in, while market share improved for two-thirds of its portfolio there.
CEO Bob McDonald is pleased.
We’re really seeing growth both in developed markets and developing markets, he said in a conference call.