Procter & Gamble Co Chief Executive AG Lafley is spending US$12 billion to expand the 166-year-old company's beauty-products business.
That investment by the largest US household goods maker so far hasn't done much to help earnings, which the company will report Monday. P&G forecast third-quarter profit, excluding some costs, will rise about 14 percent. Any gains will come from job cuts and increased promotions of items such as Pampers diapers and Tide laundry detergent, investors said.
Lafley last month agreed to pay US$6.9 billion for hair-products maker Wella AG, after spending US$4.95 billion two years ago on hair-coloring maker Clairol.
He is counting on revved-up growth from both businesses in the coming decade to help take customers from industry leader L'Oreal SA of France. He says he doesn't expect instant results.
"We're thinking about building a beauty-care and personal-care business that will be a leading business in 2025," Lafley said in an interview in Geneva on April 7.
Investors and analysts say Lafley's ambitions are fine; they just are wary of his methods for achieving those goals.
"His desire is to have a higher-margin, more rapidly growing business," said Daniel Peris, an analyst with Federated Investors, which owns about 450,000 P&G shares. "I'm very suspect of a business that grows through acquisition. It allows you to mask a lack of internal growth."
Shares of P&G fell US$0.73 to US$89.14 at 4:16pm in New York Stock Exchange composite trading. The stock has gained less than 0.5 percent in the past year, the second-best performance among 30 stocks in the Dow Jones Industrial Average, which fell 17 percent.
Net income for the quarter, excluding restructuring costs, probably rose to US$0.96 a share, according to a survey of analysts by Thomson Financial. P&G reported net income of US$1.04 billion, or US$0.74, on sales of US$9.9 billion a year earlier. Sales in the latest period rose as much as 9 percent, led by Crest toothpaste and Olay skin cream.
The Wella purchase, which the company expects to complete by September, will boost beauty-products sales to more than a quarter of P&G's revenue, from 18 percent in 2001. The company entered the business in 1985 with the acquisition of Richardson-Vicks, which included Pantene shampoo and Olay skin creams, which have grown to about US$1 billion in annual sales each.
Investors say they have reason to be patient. Earnings have risen more than originally forecast for the past two years and sales are rising in excess of Lafley's target for gains of as much as 6 percent.
He has eliminated more than 16,000 jobs over the past three years to reduce costs.
BYPASSING CHINA TARIFFS: In the first five months of this year, Foxconn sent US$4.4bn of iPhones to the US from India, compared with US$3.7bn in the whole of last year Nearly all the iPhones exported by Foxconn Technology Group (富士康科技集團) from India went to the US between March and last month, customs data showed, far above last year’s average of 50 percent and a clear sign of Apple Inc’s efforts to bypass high US tariffs imposed on China. The numbers, being reported by Reuters for the first time, show that Apple has realigned its India exports to almost exclusively serve the US market, when previously the devices were more widely distributed to nations including the Netherlands and the Czech Republic. During March to last month, Foxconn, known as Hon Hai Precision Industry
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and the University of Tokyo (UTokyo) yesterday announced the launch of the TSMC-UTokyo Lab to promote advanced semiconductor research, education and talent development. The lab is TSMC’s first laboratory collaboration with a university outside Taiwan, the company said in a statement. The lab would leverage “the extensive knowledge, experience, and creativity” of both institutions, the company said. It is located in the Asano Section of UTokyo’s Hongo, Tokyo, campus and would be managed by UTokyo faculty, guided by directors from UTokyo and TSMC, the company said. TSMC began working with UTokyo in 2019, resulting in 21 research projects,
Taiwan’s property market is entering a freeze, with mortgage activity across the nation’s six largest cities plummeting in the first quarter, H&B Realty Co (住商不動產) said yesterday, citing mounting pressure on housing demand amid tighter lending rules and regulatory curbs. Mortgage applications in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung totaled 28,078 from January to March, a sharp 36.3 percent decline from 44,082 in the same period last year, the nation’s largest real-estate brokerage by franchise said, citing data from the Joint Credit Information Center (JCIC, 聯徵中心). “The simultaneous decline across all six cities reflects just how drastically the market
Ashton Hall’s morning routine involves dunking his head in iced Saratoga Spring Water. For the company that sells the bottled water — Hall’s brand of choice for drinking, brushing his teeth and submerging himself — that is fantastic news. “We’re so thankful to this incredible fitness influencer called Ashton Hall,” Saratoga owner Primo Brands Corp’s CEO Robbert Rietbroek said on an earnings call after Hall’s morning routine video went viral. “He really helped put our brand on the map.” Primo Brands, which was not affiliated with Hall when he made his video, is among the increasing number of companies benefiting from influencer
RSS