Back to top

Analyst Blog

According to a recent Bloomberg report, The Procter & Gamble Company (PG - Analyst Report) is planning to reorganize its international business to reduce costs and improve sales growth.

Bloomberg reported that according to sources close to the company the consumer giant is considering merging its Western European unit with its Central and Eastern Europe business to create one group for the continent. Also, the Indian unit is being planned to be merged with the Middle East and Africa unit.

Currently, P&G has five geographic units: North America, Latin America, Asia, Western Europe, and CEEMEA (which includes Central and Eastern Europe, the Middle East and Africa).

The sources further hinted that some senior managers in Europe could lose their jobs under this restructuring initiative, which is not expected to be announced before 2014.

The restructuring initiative is part of the Chief Executive Officer, Alan George Lafley’s plan to cut costs. P&G brought back Lafley to replace Robert McDonald in May this year to turn around its struggling business.

Lafley announced a new strategy in August to improve the company’s operating performance. The plan focuses on value creation for shareholders through sales growth, gross and operating margin expansion and strong cash flow productivity. In this regard, Lafley laid out four functions. Firstly, the company will invest selectively in core businesses, which include the most profitable categories, brands, markets, channels and customers. The other three functions include, making strategic, focused investments in innovation and go-to-market capabilities accelerating cost savings and improving productivity and operating discipline.

Overall, we are encouraged by this Zacks Rank #3 (Hold) company’s strong brand recognition, diversified portfolio, rapid growth in developing nations, impressive product development capabilities and marketing prowess. The company’s improving market share trends, disciplined geographic/product expansion and accelerated cost savings bode well for further growth. Though weaker in the first half, earnings growth is expected to accelerate in the second. However, currency headwinds, rising commodity costs, increasing competitive pressures, challenging consumer spending environment in the U.S. and volatile market dynamics in other countries remain overhangs.

Other better-ranked consumer staples companies are Reckitt Benckiser Group plc (RBGLY), Green Mountain Coffee Roasters, Inc. (GMCR - Analyst Report) and The Hain Celestial Group, Inc. (HAIN - Analyst Report). While Reckitt Benckiser sports a Zacks Rank #1 (Strong Buy), Hain Celestial and Green Mountain carry a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%
NUSTAR GP H… NSH 41.14 +2.59%