P&G’s CFO talks productivity, cost-cutting–Productivity is the great enabler.
P&G’s CFO Jon Moeller
James Ritchie Staff Reporter- Business Courier
Procter & Gamble Co. is adding 200 million consumers per year in developing markets as it expands distribution and promotes higher-tier products. The company also is several months ahead of schedule in its plan to cut $10 billion in costs by 2016.
P&G (NYSE: PG) Chief Financial Officer Jon Moeller outlined the company’s growth, innovation and cost-cutting measures at the Consumer Analyst Group of New York conference in Boca Raton, Fla. The event draws some of the country’s top analysts.
P&G’s Asia sales hit $15 billion in fiscal 2012, up from $4 billion in 2001. The consumer-goods giant, whose brands include Tide detergent and Gillette razors, has added 100 new category/country combinations since 2010.
P&G served $3.8 billion consumers in developing markets in 2012, compared with $3.4 billion in 2010, according to the presentation.
Part of the company’s strategy is to nudge customers toward higher-priced products.
For example, in China, P&G expects its mid-tier Pampers product to account for 70 percent of the brand’s sales volume and its premium-tier Pampers to account for 8 percent this year. That’s up from 59 percent mid-tier and 3 percent premium tier in 2010.
Moeller also said P&G is on track to meet its goal of achieving $10 billion in cost reductions by 2016. About 5,850 jobs have been cut so far, which was part of the plan the company rolled out at the same conference last year. P&G expects to cut management and administrative expenses by 2 percent to 4 percent a year.
“Productivity is the great enabler,” he said. “It creates financial flexibility to pursue more growth. It empowers people to think differently about how things are done. And it provides a cushion to protect bottom-line growth even in a challenging macro environment.”
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