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Procter & Gamble to Vend Lindor Adult Incontinence Brand
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The Procter & Gamble Company (PG - Free Report) intends to divest its Lindor adult incontinence brand in Spain and Portugal along with a manufacturing plant to Germany’s leading international supplier of medical and hygiene products, The HARTMANN GROUP.
The deal covers all Procter & Gamble assets related to the Lindor portfolio (Lindor, Salvacamas, Lindor Care, Lindor Pants), Intellectual Property, contracts with employees as well as a 25,000-square meter manufacturing facility in Montornés, Spain.
This move is in sync with the company’s strategy to streamline its portfolio in order to focus on about 65 brands under 10 core categories.
The company had announced portfolio strengthening and simplification plans in Aug 2014 to streamline its business and increase focus on Billion Dollar Brands like Tide, Pampers and Oral-B. After the close of the beauty brands merger with Coty in Oct 2016, Procter & Gamble has a portfolio of about 65 consumer and shopper preferred leading brands focusing on 10 categories organized under four industry-based sectors. These brands have historically grown faster and have proved to be more profitable than the others.
Procter & Gamble claims that each of these categories (baby, feminine and family care, fabric and home care, hair, skin, grooming, oral and personal healthcare) has considerable value creation opportunity in the U.S. and also in other developed nations like Germany and Japan as well as key developing markets.
We believe that a smaller and more focused company should be able to grow faster, create more value and will be much easier to manage. The latest divestiture thus positions the company for stronger sales and earnings growth.
Procter & Gamble’s long-term goals include growing organic sales modestly above market growth, achieving core earnings growth in mid-to-high single digits and generating free cash flow productivity (ratio of free cash flow to net earnings) of over 90%.
The company has been struggling over the past few quarters to boost sales. Significant negative Fx impact, divestures and slowing market growth have been hurting sales.
That said, the company is investing in its brands and products as well as redesigning the supply chain to improve productivity and organic growth. Importantly, its productivity improvements and aggressive cost-saving efforts have consistently improved margins with the trend expected to continue in the future quarters.
Stock Performance
Procter & Gamble has underperformed the Zacks categorized Soap & Cleaning Preparations industry over the last three months. The company’s shares have gained around 8.3%, compared with the 12.9% increase of the industry.
Better-ranked stocks in the consumer staples sector include Unilever PLC (UL - Free Report) , Unilever N.V. and Ingredion Incorporated (INGR - Free Report) , all carrying a Zacks Rank #2 (Buy).
For full-year 2017, Unilever PLC’s EPS is expected to grow 8.7% while that for Unilever N.V. is estimated at 3.9%.
Meanwhile, Ingredion has a decent earnings surprise history, beating the Zacks Consensus Estimate in all of the last four quarters, the average being 10.36%.
Zacks' Top 10 Stocks for 2017
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Procter & Gamble to Vend Lindor Adult Incontinence Brand
The Procter & Gamble Company (PG - Free Report) intends to divest its Lindor adult incontinence brand in Spain and Portugal along with a manufacturing plant to Germany’s leading international supplier of medical and hygiene products, The HARTMANN GROUP.
The deal covers all Procter & Gamble assets related to the Lindor portfolio (Lindor, Salvacamas, Lindor Care, Lindor Pants), Intellectual Property, contracts with employees as well as a 25,000-square meter manufacturing facility in Montornés, Spain.
This move is in sync with the company’s strategy to streamline its portfolio in order to focus on about 65 brands under 10 core categories.
The company had announced portfolio strengthening and simplification plans in Aug 2014 to streamline its business and increase focus on Billion Dollar Brands like Tide, Pampers and Oral-B. After the close of the beauty brands merger with Coty in Oct 2016, Procter & Gamble has a portfolio of about 65 consumer and shopper preferred leading brands focusing on 10 categories organized under four industry-based sectors. These brands have historically grown faster and have proved to be more profitable than the others.
Procter & Gamble claims that each of these categories (baby, feminine and family care, fabric and home care, hair, skin, grooming, oral and personal healthcare) has considerable value creation opportunity in the U.S. and also in other developed nations like Germany and Japan as well as key developing markets.
We believe that a smaller and more focused company should be able to grow faster, create more value and will be much easier to manage. The latest divestiture thus positions the company for stronger sales and earnings growth.
Procter & Gamble’s long-term goals include growing organic sales modestly above market growth, achieving core earnings growth in mid-to-high single digits and generating free cash flow productivity (ratio of free cash flow to net earnings) of over 90%.
The company has been struggling over the past few quarters to boost sales. Significant negative Fx impact, divestures and slowing market growth have been hurting sales.
That said, the company is investing in its brands and products as well as redesigning the supply chain to improve productivity and organic growth. Importantly, its productivity improvements and aggressive cost-saving efforts have consistently improved margins with the trend expected to continue in the future quarters.
Stock Performance
Procter & Gamble has underperformed the Zacks categorized Soap & Cleaning Preparations industry over the last three months. The company’s shares have gained around 8.3%, compared with the 12.9% increase of the industry.
Zacks Rank & Key Picks
Procter & Gamble carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Better-ranked stocks in the consumer staples sector include Unilever PLC (UL - Free Report) , Unilever N.V. and Ingredion Incorporated (INGR - Free Report) , all carrying a Zacks Rank #2 (Buy).
For full-year 2017, Unilever PLC’s EPS is expected to grow 8.7% while that for Unilever N.V. is estimated at 3.9%.
Meanwhile, Ingredion has a decent earnings surprise history, beating the Zacks Consensus Estimate in all of the last four quarters, the average being 10.36%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >