Procter & Gamble Company (PG) Earnings Report: Q1 2015 ... · Good morning, and welcome to Procter...
Transcript of Procter & Gamble Company (PG) Earnings Report: Q1 2015 ... · Good morning, and welcome to Procter...
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page1of21
Procter&GambleCompany(PG)EarningsReport:Q12015ConferenceCallTranscriptThefollowingProcter&GambleCompanyconferencecalltookplaceonApril23,2015,08:30AMET.Thisisatranscriptofthatearningscall:
CompanyPart icipants
JonMoeller;TheProcter&GambleCompany;CFO
OtherPart icipants
BillSchmitz;DeutscheBank;AnalystDaraMohsenian;MorganStanley;AnalystJohnFaucher;JPMorgan;AnalystOliviaTong;BandofAmerica-MerrillLynch;AnalystChrisFerrara;WellsFargoSecurities;AnalystWendyNicholson;Citigroup;AnalystStevePowers;UBS;AnalystLaurenLieberman;BarclaysCapital;AnalystNikModi;RBCCapitalMarkets;AnalystJavierEscalante;ConsumerEdgeResearch;AnalystAliDibadj;SanfordC.Bernstein&Company;AnalystCarolineLevy;CLSALimited;Analyst
MANAGEMENTDISCUSSIONSECTION
Operator :
Goodmorning,andwelcometoProcter&Gamble'squarter-endconferencecall.Today'sdiscussionwillincludeanumberofforward-lookingstatements.IfyouwillrefertoP&G'smostrecent10-K,10-Qand8-Kreports,youwillseeadiscussionoffactorsthatcouldcausetheCompany'sactualresultstodiffermateriallyfromtheseprojections.
AsrequiredbyregulationG,P&GneedstomakeyouawarethatduringthecalltheCompanywillmakeanumberofreferencestonon-GAAPandotherfinancialmeasures.Managementbelievesthesemeasuresprovideinvestorsvaluableinformationontheunderlyinggrowthtrendsofthebusiness.
Organicreferstoreportedresultsexcludingtheimpactsofacquisitionsanddivestituresandforeignexchangewhereapplicable.Adjustedfreecashflowrepresentsoperatingcashflow,lesscapitalexpendituresandexcludingtaxpaymentsforthepetcaredivestiture.Adjustedfreecashflowproductivityistheratioofadjustedfreecashflowtonetearningsadjustedforimpairmentcharges.
AnymeasuredescribedascorereferstotheequivalentGAAPmeasureadjustedforcertainitems.CurrencyneutralreferstotheequivalentGAAPmeasure,excludingtheimpactofforeign-exchangeratechanges.
P&Ghaspostedonitswebsite,www.pg.com,afullreconciliationofnon-GAAPandotherfinancialmeasures.
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page2of21
NowIwillturnthecallovertoP&G'sChiefFinancialOfficer,JonMoeller.
JonMoeller (CFO):
Goodmorning.
JanuarytoMarchwasanotherchallengingquarterfromamacrostandpoint,withsignificantforeignexchangeheadwinds,modestmarketgrowth,andcontinuedpoliticalandeconomicvolatility.Thecurrencychallengeincreasedthroughthequarter,withcurrenciesinBrazil,Turkey,andtheUkraineweakeningsequentiallyversusthedollar.
Despitethesechallenges,wegrewconstant-currencycoreearningspershareatadouble-digitrate.Wegrewcoregrossmargin,includingandexcludingforeignexchange,andmadestrongcoreoperatingmarginprogressup170basispointsonaconstant-currencybasis.Allofthiswasenabledbyover400basispointsofproductivitysavings.
Organicsalesgrewmodestly,up1%.Grooming;healthcare;andbaby,feminine,andfamilycaresegmentsgrew9%,6%,and2%respectively.OrganicsaleswereinlinewiththeprioryearinfabricandhomecareduetothetimingofinnovationlaunchesinNorthAmericainboththebaseperiodandthecurrentyear.
Thebaseperiodincludedpipelineandshipmentsforthemajorfabriccareinnovationbundle,includingtheTidePlusupgradesandintroductionsofTideSimplyClean&FreshandGainFlings,whichledto6%organicsalesgrowthforthesegmentintheyear-agoquarter.Thecurrentperiodincludestheimpactoftradeinventorydrawdownaheadofthelaunchofnewliquiddetergentandfabricenhancerformulations.
FabriccareconsumptionremainsstronginNorthAmerica,withmarketsharegrowthonbothavalueandavolumebasis.Beautysegmentresults,however,reflectsoftnessinprestigefragranceandmaskskincare.
Organicvolumewasdown2pointsversustheprioryear.Developingmarketvolumewasdownlowsingledigitsfollowingpriceincreasestakentooffsetforeign-exchangedevaluationinseveralcountriesandadjustmentsmadetocorrecttradeinventoriesinMexicoandChina.Theseadjustmentshadabouta1-pointimpactontheCompany'stoplineinthequarter.
Developedmarketorganicvolumewasdown2%,drivenmainlybytimingimpactsassociatedwiththeApril1stincreaseintheJapaneseconsumptiontaxlastyear.ShipmentsinJapanwereup22%,aheadoftheconsumptiontaxincreaselastyear.Andasaresult,weredownmid-teensinthecurrent-yearquarter.Thishadabouta0.5pointimpactontotalCompanyorganicsalesgrowth.
Pricingcontributed2pointstoorganicsalesgrowthandmixadded1point.All-insalesweredown8%versustheprioryearduetoan8-pointheadwindfromforeignexchangeanda1-pointreductionfromminorbranddivestitures.WeheldorgrewworldwideshareonbusinessesrepresentingabouthalfofCompanysales,andonbusinessesrepresentingmorethan60%ofsalesinourhomeUSmarket.
Wecontinuedtogrowshareonmanyofourcategory-leadingbrandsincountrieswhereitmattersmost.Pampers,Tide,GilletteFusion,andAllwasintheUnitedStates,forexample.Onaconstant-currencybasis,coreearningspersharewereup10%,keepingusontrackfordouble-digitconstant-currencycoreearningspersharegrowthforthefiscalyear.IncludingFX,whichwasan18-percentage-pointdragonthequarter,coreearningspersharewere$0.92,down8%versustheprioryear.
Foreignexchangehurtstotaled$530millionafter-taxintheMarchquarterand$1.2billionafter-taxfiscalyeartodate.Theyareforecasttobea$1.5billionafter-taxhurtforthefiscalyear.Formanagingthrough
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page3of21
theFXchallengewasacombinationofpricing,mixenhancement,andproductivitycostsavingsandbypursuingopportunitiesonbrandsincountriesandregionsunaffectedbyFX.
GrossandoperatingmargingrowthimprovedsequentiallyversustheDecemberquarteronbothanall-inandX-currencybasis,drivenbyproductivitysavings.
Coregrossmarginincreased20basispointsintheMarchquarterversustheprioryear.Thiscomparestoa20-basis-pointdeclinelastquarter.Excludingforeignexchange,coregrossmarginwasup90basispoints.Thiscomparestoa40-basis-pointimprovementlastquarter.
Inthecurrentperiod,costsavingsofapproximately250basispointsand90basispointsofimprovementfromhigherpricingwereoffsetby150basispointsofmix,50basispointsofinnovationandcapacityinvestments,andamodestincreaseincommoditycosts.
CoreSG&Acostsasapercentageofsalesincreased50basispoints;excludingFXtheyweredown80basispoints.160basispointsofoverheadandmarketingsavingsweremorethanoffsetby130basispointsofforeign-exchangeimpacts,50pointsoforganizationcapabilityinvestmentsinR&Dandsales,and30basispointsofotheroperatingitems.
CostofgoodssoldandSG&Asavingstotaled410basispoints,aswecontinuetoaccelerateproductivityinitiativesandprogramsandtheydeliveraheadofourobjectives.
Coreoperatingmarginwasdown30basispointsversustheprioryearincludingFX.Thiscomparestoa60-basis-pointdeclinelastquarter.Coreoperatingmargin,excludingFX,wasup170basispoints,50basispointsbetterthan120-pointimprovementlastquarter.Weexpectevenstrongermarginexpansioninthefourthquarter.
Theeffectivetaxrateoncoreearningswas19.6%,0.5pointsabovelastyear'squarterlyrate.Thisleavesusontrackfortheguidanceorfiscalyearcoretaxrateofabout21%,whichisroughlyinlinewithlastfiscalyear'srate.
Marchquarterall-inGAAPearningspersharewere$0.75,whichincludeapproximately$0.07persharefornon-corerestructuringchargesand$0.10pershareofchargesfromdiscontinuedoperations,primarilyanadjustmenttoDuracellcarryingbalancestoreflectP&G'sMarch-endingstockprice.Wegenerated$3.6billioninoperatingcashflowand$2.9billioninadjustedfreecashflow,with117%adjustedfreecashflowproductivitythisquarter.
Lastweekweincreasedourdividendforthe59thconsecutiveyear,up3%.Wewillbepayingourdividendforthe125thconsecutiveyear,everyyearsinceourincorporationin1890.
Insummary,wegeneratedmodestorganicsalesgrowthinthequarter,constantcurrencycoreearningspersharegrewdoubledigits,drivenby410basispointsofproductivitysavings.Constant-currencygrowthandoperatingmarginswerewellaheadofayearago,andwecontinuetobuildonourstrongtrackrecordofcashproductivityandcashreturntoshareholders.
Whilewemustandwillmanagethroughtheexternalheadwindsandmarketvolatilitythatislargelyoutofourcontrol,thebulkofoureffortiscenteredondrivingsignificantopportunitiesinourcontrol:brandinitiativesandproductinnovation,businessandbrandportfoliosimplification,overheadsavings,andmajorsupplychainproductivityinitiatives.
TheCompanyandportfoliostrengtheningandsimplificationannouncedlastAuguststrategicallyresetsP&G'sWheretoPlaychoices.We'refocusedonwinningwithconsumersandcustomerswhomattermostinchannelsincountriesthatmattermost,withcorebrandsandbusinessesthatcreatethestrongestconsumerpreferenceandthebestbalanceofgrowthandvaluecreation.Wewilleliminate60%ofthe
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page4of21
brandsandthecomplexitytheycreatewhileretainingabout85%ofsalesand95%ofbefore-taxprofit.That'sagoodtrade.
ThenewCompanywillconsistofabout65leadingbrands,wherethesizeofprizeandprobabilityofwinningarethehighestin10categoriesthatarestructurallyattractive,andplaytoP&G'scorestrengthsofconsumerunderstanding,innovation,branding,go-to-marketandleverageP&G'sscale.Itwillenablemoreresourcesandattentiononthebiggestopportunities,resultinginfaster,moreprofitablegrowth.
It'safocusedportfoliowithjustsevencategoriesrepresenting84%ofsalesand85%ofprofit.It'salsofocusedgeographicallywiththetopfivecountriesforeachcategorydeliveringabouthalftoessentiallyallofglobalprofits.
Everybrandweplantokeepisstrategicwiththepotentialtogrowandcreatevalue.Withinthesebrands,wewilloperatewithmoreefficientproductlineandSKUofferings,reducingSKUs15%to20%oftheremainingportfoliooverthenexttwoyears,theSKUsthatshopperswantandconsumersuse.
Discontinuedweedingwillensurenewbrandandproductinnovationasampleroomtogrow.Wewillcreateafastergrowing,moreprofitableCompanythatisfarsimplertooperate.Wecurrentlyexpecttoexitapproximately100brandpositionswithafairamountoftheworkalreadycomplete.
Todate,wehavedivested,discontinued,orplannedtheconsolidationofover40brandsandabout40%oftargetedsales.Wehaveexitedthebleachbusiness,petcare,Duracell,MDVIP,severalfragrancebrands,theDDFandNoxzemaskincarebrands,VicksVapoSteam,andtheCamayandZestbarsoapbrands.
We'retargetingtobeinapositiontohavenegotiatedannouncedtheentireprogramoratleastalargecomponentsasearlyasthissummer,roughlyoneyearafterourinitialannouncement,andtohaveexecuted,inotherwords,closedtheprogram,bytheendofFY16.ThiswouldenableustoheadintoFY17withanewportfoliofullyinplace.
Anothersignificantopportunityisstrengtheningandfocusingourstrategiesandbusinessmodels,towinwithconsumersandinchannelsandmarketsthatmattermost.
Thestrategytopicthathascomeupwithincreasingfrequencyinrecentinvestordiscussionsisifleadingbrandsarestillrelevantinawinningmodelandcanstillgrow.WecontinuetobelievethatP&G'sstrategyandbusinessmodel,consumerinsightsandinnovationsthatleadtoconsumer-preferredproductsfrombrandsthatovertimeareleadersintheircategories,isawinningformulaforus,aconstant,reliable,andsustainabledriverofbalancedgrowthandvaluecreation.
Overthelastfiveyears,ourcategory-leading$1-billionbrandshavebeengrowingsales1pointfasterthanour$0.5-billionbrands,andseveralpointsfasterthanoursmallerbrands.
Inmostcategories,ourleadingbrandshavetheleadingequitiesandnetpromoterscores.Theyarebrandsthatretailerswantandneedintheirstores,becausecategory-leadingP&Gbrands'householdpenetrationandreachdrivesstoretraffic,andtheirpurchasefrequencyandmodestpricepremiumsdrivebasketsize.
Leadingbrandsandproductinnovationgrowcategories.Theselargebrandsareplatformsforinnovationswhichcanbecommercializedfarmoreeffectivelyandmoreprofitablythancanbedoneonsmallerones.Theytypicallyearnadisproportionateamountofcategoryprofitandcreateadisproportionateamountofcategoryvalue.
AgoodexampleisPampers,ourlargestbrandwith$10billioninannualsales.Pampersisgrowingata5%
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page5of21
paceoverthepastthreeyears.Inthelargestmarket,theUnitedStates,Pampersisdrivingcategoryvaluegrowthof3%,reversingamulti-yeardeclinecausedbydecliningbirthratesandbothcompetitorandtradepricediscounting.
P&G'sUSdiapershareisupatover90%ofcustomers,wideningourmarginofcategoryvalueshareleadershipto9points.ThepremiumpricedSwaddlerslineisontracktoreachover$750millioninsalesthisfiscalyear,upmorethan30%versustheprioryear,andLovesisgrowinginthemid-tierwithsalesupmid-singledigitsthisfiscalyear.
WehavebuilttheleadingbabydiaperbusinessintheUSandintheworldwithoutaconsumerpreferredpants-stylediaper.WehaverecentlytherolloutofournewPampersPants,designedtoprovideexceptionaldrynessandskincomfortinanunderwear-likedesign.Achievingfairshareoftheglobalpantmarketrepresentsanother$2billionsalesgrowthopportunity.
AnothergoodexampleisTide,oursecondlargestbrand,atabout$5billionofsales.Tidehasalsobeengrowingaheadofcategorygrowthrates,buildingshare.
IntheMarchquarteroflastyear,weintroducedastrengthenedfabriccarebrandandproductlinethatsignificantlybroadenedconsumerappeal.Weofferedshoppersafullrangeofbrandsandproductspricedfromabout$0.12to$0.28alaundryload,includingbroadenedPodofferings,newandimprovedliquiddetergentoptions,andTideSimplyClean&Fresh,apreferredbrandofproductformanyconsumersinterestedingood,basiccleaningatattractiveeverydayvalue.
Inaddition,wefocusontradinginnew-to-the-categoryconsumerstheTide,withnewwashingmachinebuyerandnewhouseholdformationprograms.Moreconsumerstradedinandtradedupthantradeddown.
Infact,Tidehouseholdpenetrationisupmorethan200basispointsforthefirsttimeinseveralyears.Werecentlyhitanall-timerecordhighUSlaundrydetergentvalueshareof60%.Tidenowholdsa40%valueshareofUSlaundrydetergents,withbrandequityandnetpromoterscoresasstrongasthey'veeverbeen.
GainisthenumbertwobrandintheUSdetergentcategoryatovera15share.Bothoftheseleadingbrandshavegrownmarketshareoverthepast12,sixandthreemonthperiods.
TheTideandGainbrandshaveprovidedabroadplatformforunitdoseinnovation.Theyaretrustedleadingbrandsthatconsumersarewillingtotrytheirnewproductofferings.ItwouldtakealotlongerandcostalotmoretogeneratetrialofPodswithasignificantlysmallerbrandoracrossaportfolioofseveralbrands.
TidePodsandGainFlingshavereachedacombinedvalueshareofover10%oftheUSlaundrymarket,andP&G'sshareoftheunitdosesegmentisnearly80%.WecontinuetoexpandPodsaroundtheworld,leveraginganothermultibillion-dollarbrand,Ariel.Weexpectourunitdoseproductsalonetoreach$1.5billioninsalesthisfiscalyear.
Downy,alongwithitssisterbrandLenor,isanothermultibillion-dollarfranchiseinthefabriccarecategory.It'sbeengrowingatahighsingle-digitrateoverthepastthreeyears,drivenmainlybythesuccessofourscentbeadsinnovation.Sincescentbeadswereanewproductforconsumerstoaddtotheirlaundryregimen,wecouldhavetriedtolaunchthemwithanewbrand.WechoseinsteadtoleveragethestrongequityofDownyandLenor,alongwithGainandBounce,tocommercializethisnewinnovation.
WelaunchedDownyUnstoppablesintheUSaboutfouryearsago.Sincethen,scentbeadshavegrown
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page6of21
to17%ofsalesinthefabricenhancercategoryandthecategoryhassustained3%growth.P&G'sbigbrandshaveearnednearlyan80%shareofthesegment.
Thelargestmaleandfemalegroomingbrands,Gillette'sFusionandVenus,haveproventobehugeplatformsforbladeandrazorinnovation.TheoriginalFusionrazorlaunchedinJanuary2006isstillP&G'sfastestbrandtoreach$1billioninsales.
We'vecontinuedthegrowthofFusionwiththeProGlideinnovationin2010andthebig,obvious,andpreferredFlexballinnovationlastyear.Fusionvalueshareofmalerazorsistrackinginthehigh50sandisup2pointsfromlastyear.TheFlexballrazorhandleinnovationhastranslatedintosharegrowthoncartridges.Fusionvalueshareofmalecartridgesisupmorethan2pointsversusayearago.
We'veput12millionFusionFlexballrazorsintothehandsofmenintheUSinlessthanayearsincelaunch.Andwe'renowextendingthebreakthroughrazorinnovationtoVenus,themarket-leadingfemalerazorbrand,withVenusSwirl,whichbeganshippinginFebruary.
Earlyconsumptionresultsareverystrong,andlessthanthreemonthssincelaunch,we'vesoldover1millionSwirlrazorsintheUS.AndVenus'svalueshareoffemalerazorswasupmorethan10points,nearly65%inMarch,thefirstfullmonthVenusSwirlwasavailable.
ThesenewinnovationsfromGillettehavehelpedreversethedecliningvaluetrend--marketvaluetrendinUSbladesandrazors,improvingyear-on-yeargrowthratesby3pointsversusthe12monthspriortotheFlexballlaunch.Consumerssignificantlypreferthesebetterperformingproducts.Themarket-leaderconsumertrustedFusionandVenusbrandsaredrivingawareness,trial,andshareresultsfromnewinnovationsthatwillbemoredifficultforanewsmallerbrandtoachieve.
We'retakingasimilarapproachinthefemaleincontinencecategory,leveragingourmultibillion-dollarAlwaysbrandtoenterthis$7-billionfaster-growingglobalcategory.WebeganshipmentsofAlwaysDiscreetintheUKinJuly,andtheUS,Canada,andFranceinAugust.
IntheUK,theadultincontinencecategoryisgrowingdoubledigits,roughly50%fastersinceourentry.TheUScategorygrowthratehasalsomorethandoubledtoaround9%,withP&Gvalueshareexceeding10%inthemostrecentfour-weekperiod.We'vecontinuedtheexpansionofAlwaysDiscreetwithlaunchesintoGermany,Switzerland,andAustria,withmoreEuropeanmarketscomingsoon.
Afewofourleadingbrandsarenotgrowinglikeweknowtheycan.We'rebringingthesamestrategicfocusandoperatingdisciplinetothesebrandsthatwehavetotheonesI'vejustmentioned.Ensuringthebrandstrategiesandbusinessmodelsareaimedatdelightingthetargetconsumer,buildingstrongpipelinesandportfoliosofconsumermeaningfulproductinnovation,ensuringSKUassortmentandbrandpresenceareattractiveandeasytoshopattheshelf,andensuringthatmarketingandsalesprogramspersuasivelyconveythevalueandrelevanceofourbrandsandproductbenefitstoconsumers.
Anotheropportunitydirectlyinourcontrolisproductivity.Wehavemadeverygoodprogressandhavealotofrunwayremaining.Wehavesignificantlyacceleratedandwillsignificantlyexceedthecostsavingsandoverheadenrollmentgoalswesetthreeyearsago.We'redrivingcostofgoodssavingswellabovetheoriginaltargetrunrateof$1.2billionperyear,with$1.6billionofsavingsthisfiscalyear.
Weexpecttoimprovemanufacturingproductivityby5%thisyear.Thiswillbringcumulativepastthree-yearmanufacturingenrollmentreductionto15%,includingnewstaffingnecessarytosupportcapacityadditions.Onasame-sitebasis,enrollmentwillbedownnearly20%overthispastthreeyears,enabledbytechnology,andourintegratedworksystemsapproach.
Weexpecttostartupatleast18newplantsormodulesinthedevelopingmarketsinthenextfewyears.
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page7of21
Thiswillnotonlyhelpourforeignexchangeexposure,butwilldrivemanufacturing,transportation,andcustomsanddutiessavings.
Aswestartupthesenewsites,wehaveopportunitiestoapplytechnologyandautomateinanaffordablewayandtoclosecoupleandintegratefurtherwithsuppliers,deliveringadditionalmanufacturingefficiencies.
Indevelopedmarkets,wehavebegunworkonwhatisthebiggestsupplychainredesignintheCompany'shistory.We'redesigningthesupplychaintoaccelerateconsumerpreferredproductstomarketandtomakeanddistributetheminboththecustomerservicepreferredandcost-advantagedway.
SupplychaintransformationbeganwiththedistributionnetworkintheUnitedStatesconsolidatingcustomershipmentsintofewerCompanydistributioncenters.Thesedistributioncentershavestrategicallylocatedclosertokeycustomersandkeypopulationcenters,enabling80%oftheCompany'sbusinesstobewithinonedayofthestoreshelfandtheshopper.
Allsixofthenewdistributionalandmixingcentersareupandrunning,allonoraheadofschedule.Weexpecttocompletetheconversionoutoflegacylocationsthisyear.Inadditiontolowercosts,thistransformationwillallowbothP&Gandourretailpartnerstooptimizeinventorylevelswhileimprovingserviceandon-shelfavailability.
InFebruary,weannouncedthatwewillbeconstructinganewmulti-categorymanufacturingfacilityinWestVirginia,thenextstepintheNorthAmericansupplychangeredesign.We'vetakenthefirststepsinthetransformationofourEuropeansupplychain.WerecentlyannouncedtheconsolidationofdistributioncentersinFranceandtheUKandtheconsolidationofmanufacturingforsomehomecareproductsintoourplantsinItaly.
Weseea$1-billionto$2-billionvalue-creationopportunityfromtheglobalsupplychainreinventioneffort.Wearetargetingtobuild$400millionto$600millioninannualcostsavingsoverfiveyearsandareexpectingtop-linebenefitsformoreeffectivecustomerserviceandreductionofout-of-stocks.Thisvalueandthesesavingsareincrementaltothe$6billionofcost-of-goodssavingsweoriginallycommunicatedandareontracktoexceed.
ThroughMarch,we'vereducednon-manufacturingoroverheadenrollmentbyover19%,nearlydoublethe10%reductionweinitiallyenvisionedwhenwelaunchedourrestructuringprogram.Wecontinuetoevolvetheorganizationdesignsothatisbusiness-focused,startingwithconsumersandcustomers,andsothatitissimpler,moreeffective,moreresponsive,andmoreefficient.
We'veorganizedaroundindustry-basedsectors;wearestreamliningandde-duplicatingtheworkofbusinessunitsandsellingoperations;we'veconsolidatedfourbrand-buildingfunctionsintoone.Eachofthesechangesreducescomplexityandeachcreatesclearaccountabilityforperformanceandresults.
Amorefocusedportfolioofbrandsandbusinesseswillenablefurtherorganizationchanges.Weshouldbeclosetothehighendofourestimated16%to22%non-manufacturingenrollmentreductionrangebytheendofthisfiscalyear,morethanayearaheadofplan,withadditionalopportunityremaining.Asaresult,weareincreasingouroverheadenrollmentreductiontargetto25%to30%,excludingdivestituresbytheendofFY17,reflectingadditionalopportunitieswesee.
Thethirdcostareawherewecontinuetohavesignificantsavingsopportunityismarketing.Byfollowingtheconsumer,weareimprovingmarketingspendingeffectivenessandefficiencytodelivermorewithless.We'reshiftingmoreadvertisingtodigitalmedia,search,social,video,andmobile,whichiswhereconsumersarespendingmoreoftheirtime.
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page8of21
Onenon-mediacostareathatofferssignificantopportunityisagencyspending,whichincludesfeesandproductioncostsforagenciesweuseforadvertising,media,publicrelations,packagedesign,anddevelopmentofin-storematerials.
Weplantosignificantlysimplifyandreducethenumberofagencyrelationshipsandthecostassociatedwiththecurrentcomplexityandinefficiency,whileupgradingagencycapabilitytoimprovecreativequalityandcommunicationeffectiveness.Weseeanopportunityforupto$0.5billionincostsavingsinthisarea,alongwithstrongercommunicationtoconsumersacrossalltouchpoints.
Theseefficienciesareenablingustomaintainstrongmediaweights,despitethecoststructurewe'refacingfromforeignexchangeandtoreinvestinallelementsofthemarketingmixtoimproveourpositionsandsupportnewinnovationslikeAlwaysDiscreet;FusionFlexball;VenusSwirl;DownyUnstopables;andTide,Gain,andArielunit-dosedetergents.
Productivity-drivencostsavingscontinuetobeakeyenablerofoureffortstostrengthenprofitabilityindevelopingmarkets.Constant-currencyearningsgrewtwotimesfasterthansalesindevelopingmarketsin2013,fourtimesfasterthansalesin2014,andareforecasttogrowsixtimesfasterthansalesthisfiscalyear.Overthosethreeyears,we'llhavegrowndevelopingmarketconstant-currencyearnings13%,28%,and27%respectively.Intotal,we'reforecastingdevelopingmarketmargins,includingFX,tobeupabout40basispointsfortheyear.
Wearefocusedondrivingproductivityimprovementupanddowntheincomestatementandacrossthebalancesheet.Disciplinedworkingcapitalmanagement,strongexecutionofoursupplychainfinancingprogram,andthescarcitymentalityincapitalspendingwillcontinuetodrivestrongcashflowresults.
Withthat,letmeturntoguidance.AswelooktotheApril/Junequarter,productivitysavingsshouldcontinuetogrow.Thebenefitsfromportfoliostrengtheningandsimplificationshouldcontinuetobuild.Oil-basedcommoditycostsshouldbecomeatailwindandadditionalforeign-exchange-relatedpricingwillkickin.
Withjustonequarterremaining,wenowexpectorganicsalesgrowthoflowsingle-digitsforthefiscalyear.Pricesshouldbeasignificantcontributortosalesgrowthagaininthefourthquarter,whichshouldmorethanoffsetpressureonunitvolumegrowth.
FXwillcontinuetobeheadwind,andwewillcontinuetoinvestincategory-leadingestablishedbrandslikePampers,Tide,andGillette,andproductintroductionslikeAlwaysDiscreetandVenusSwirl,andR&Dforfutureinnovationandsalescoverageandeffectiveness,andincapabilitiesandpeoplethatwillenhanceourchancesofsuccessinthenear,mid,andlongterm.
Wearemaintainingouroutlookfordouble-digit,constant-currencycoreearnings-per-sharegrowthforthefiscalyear.Weexpectforeignexchangetohaveabouta13-pointimpactoncoreearnings-per-sharegrowthfortheyear.We'remaintainingourcoreearnings-per-shareguidancerangeofinlinetodownlowsingledigitsversuslastyear'scoreearningspershareof$4.09.Withthecurrentforeign-exchangeoutlook,weexpecttobetowardthelowerhalfofthisguidancerange,consistentwithanalystconsensusestimates.
We'reforecastingall-insalestobedown5%to6%forthefiscalyear;thisincludesthe6-to7-pointnegativeimpactfromforeignexchangeanda1-pointimpactforminorbrandinvestitures.
Weexpectall-inGAAPearningspersharetobedown21%to22%versusthepriorfiscalyear.Thisincludesapproximately$0.83pershareofnon-corecosts,primarilyfrom$0.63pershareofnon-cashadjustmentstocarryingvaluesoftheDuracellbusinessand$0.20pershareofnon-corerestructuringcharges.
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page9of21
Asyouconstructyourfourth-quarterearnings-per-sharemodels,keepinmindthatseveraloftheminorbranddivestituresImentionedearlierareexpectedtocloseinthefourthquarter.Altogether,we'reexpectingabout$0.04pershareofnon-operatingincomegainsincoreearningspershareversustheprioryear.
Reflectingthesameproductivityfocuswe'rebringingtocostsavings,wearenowforecasting100%adjustedfreecashflowproductivity,abovepriorguidanceofatleast90%.Keyenablersofthisstrongcashproductivityincludeimprovedresultsonpayables,includingcontinuedprogressonoursupplychainfinancingprogramandsteadyimprovementsoninventorymanagement.
Wearemaintainingouroutlookforcashreturntoshareholders.Weplantoreturncashtoshareownersthroughdividendpaymentsofmorethan$7billionandsharerepurchaseofapproximately$5billion.Thisguidancerangeassumesmid-Aprilspotratesforforeignexchange.Furthersignificantcurrencyweakness,includingVenezuelaisnotanticipatedwithinthisguidancerange.
Ouroutlookisbasedoncurrentmarketgrowthrates,whichwearemonitoringclosely,especiallyinmarketswherewearetakinglargepriceincreasestooffsetcurrencyimpacts.WealsocontinuetomonitorunrestinseveralmarketsintheMiddleEast,RussiaandtheUkraine,andwecontinuetocloselymonitormarketslikeVenezuelaandArgentinawherepricingcontrols,importrestrictions,andaccesstodollarspresentrisk.
Ontheflipside,ourguidancedoesnotreflectsomepotentialtailwinds.Ourresultscouldimproveifcurrenciesease,ifmarketsbegantoexpandinasustainableway,orifUSeconomicgrowthaccelerates.
Steppingback,wearecontinuingtoinvestinourbrandsandproducts,andincriticalCompanycapabilitiesthatwillenablemuchbetterconsumerandcustomerresponsiveness,withsystemsthataremoreagile,faster,better,andcheaper.Wecontinuetoinveststrategicallyinadditionalcapacityforcriticaldevelopingmarkets,andwecontinuetorationalizeourmanufacturingprocessessothatcommon,simpler,andmoregloballystandardmakingandpackingplatformssupportacceleratedproductinnovationandalowercash,capital,andoperatingcosts.
Wecontinuetoevolvetheorganizationdesignsothatitisbusiness-focused,startingwithconsumersandcustomers,simpler,moreeffective,moreresponsive,andmoreefficient.Wecontinuetoinvestselectivelyinsalescoverageandmerchandisingtoimproveexecutionforshoppersinstoresandonline.Wecontinuetoinvestselectivelyinproductinnovationtechnologiesandproductinitiativeacceleration.Weareimprovingourdigitalande-commercecapabilitiesandarereinventingoursupplychain.
Throughthistransformation,wearecreatingamorein-touch,agile,coordinated,andintegratedorganizationthatputswinningwiththeconsumerfirst.Wearesharpeningourstrategiesandbusinessmodels.Weareoperatingandexecutingwithmoreconsistency.Thesearethechoicesandthecapabilitiesthatwillenablebalancedgrowthandvaluecreationinthemid-andlong-termasweworkourwaythroughthecurrencydevaluationsintheshortterm.
Thatconcludesourpreparedremarksforthismorning.Asareminder,businesssegmentinformationisprovidedinourpressreleaseandwillbeavailableinslides,whichwillbepostedonourwebsite,www.pg.comfollowingthecall.NowI'dbehappytotakequestions.
QUESTIONS&ANSWERS
Operator :
Thankyou.(OperatorInstructions)
YourfirstquestionwillcomefromBillSchmitzfromDeutscheBank.
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page10of21
BillSchmitz (Analyst-DeutscheBank):
Goodmorning.
JonMoeller (CFO):
Goodmorning.
BillSchmitz (Analyst-DeutscheBank):
Hey,canyoujusttalkaboutthefirstderivativeimpact,thestrongdollar?Sowhat'sgoingoninsomeoftheemergingmarketswithsomeofthebigpriceincreasesyou'vetaken?Andthenyoulookatsomeofthe[scanrate]intheUSanditsclearingcategorieslikeshampoowherepercentageofsalesandACVismassivelyspiking.
L'OrealistalkingaboutseekingrevengeHenkelislaunchingPersilexclusivelyatWalmart.Socanyoujusttalkaboutwhatthatisrelativetoyourexpectationsandhowyouplanoncombatingthatgoingforward?Thankyou.
JonMoeller (CFO):
Thankyou,Bill.First,Iwouldsayit'sstillrelativelyearlyinthedevelopmentofthat,thedevelopmentofwhateverdynamicoccurshere.Butsofar,marketshaveheldupfairlywell.AsIsaid,it'sprettyearly,sowereallywon'tknowtheimpactsinmarketslikeRussiauntilnextquarterorthequarterafter.
Ithinkyou'veseenfromseveralofthecompaniesintheindustrythathavereportedthroughthelastquartertheRussianmarketwasactuallyup,astheyanticipateapriceincreasewascoming.Soagain,wehaven'tseenasecondlagthere.
WhatIwouldtellyou,broadlyisthat,andI'llgettotheUSinasecond,butindevelopingmarkets,thosecurrencieshavedevaluednotjustversusthedollar,butalsoversustheeuro.IfyoutakethecaseofRussia,whichwetalkedthroughinsomedetailinthelastcall,there'severyreasonforbothlocalcompetitorsandmultinationalcompetitorstobepricinginmanyofthesemarkets.Andthat'sgenerallywon'tbeinearlydayswhatweareseeing.
Asitarelatestotheoverall,theoverallpromotionalenvironment,competitiveness,etc.,andreflectingspecificallyontheUS,ifwelookatthepercentageofvolumethatwassoldonpromotionintheJanuarytoMarchquarter,itindexesat100,soitwasidenticaltolastyear.Andifyoulookatitsequentiallyquartertoquarter,there'sverylittlechange.Thatdoesn'tmeanthatitcouldn'tchange,butthat'sthedatathusfar,andthat'sconsistentwiththedynamicsinourownbusiness.
Obviously,bycategory,youmentionedhaircare;wemayseemorepromotioninonequarteroranother.There'sobviouslypromotionascompetitorsandourselvesintroducenewproductsandaretryingtogeneratetrialsofthoseitems.Buttodate,there'snothingfromeitheradevelopingmarketstandpointoradevelopedmarketstandpointthatwouldindicatesystemicchange.
Operator :
OurnextquestionwillcomefromDaraMohsenianofMorganStanley.
DaraMohsenian (Analyst-MorganStanley):
Hey,goodmorning.
JonMoeller (CFO):
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page11of21
Goodmorning,Dara.
DaraMohsenian (Analyst-MorganStanley):
SoIjustwantedtotalkalittlebitaboutEPSguidance,andclearlyyou'rekeepingtheEPSguidanceheredespitetheFXhitandorganicsalescomingin,thatarenowexpectedtocomeinabitbelowwhatyouoriginallyexpected.Doyouthinkyou'restretchingtheorganizationheretohittheseEPStargets?Itseemslikeeveryyearwe'vegotthishockeystickinQ4earnings.
You'venowgotsomegainscomingthroughQ4earningsinQ4;adspend'sbeendownoverthelastfewyears,andIknowalotofthatistheexternalenvironment.Clearlymacrosareworkingagainstyou.ButI'mjustwonderingiftherewasathoughtprocessasyoulookouttonextyearintheearningsguidancethat,givensomeofthisexternalvolatilityandsomeoftheinternalissues,youmightneedtoprovideyourselfmorecushionroomwhenyoulookatguidanceversuswhathasbeenthecaseoverthelastfewyearshere?Thankyou.
JonMoeller (CFO):
Soyoumakeacoupleofgoodobservationsthere,Dara.Letmetrytoaddressthemholistically.Intermsoftheforecastandguidance,we'llobviouslygetintothatinmorespecificsinAugust.We'rejustinthemiddleofourprepseasonrightnow.
Butthereisalmostnoamountofcushiononwhichyoucanbuildinthatovercomes$1.5billionofafter-taxforeignexchangecost,themajorityofwhichwerenotanticipatedbasedonspotmarketsaswewentintotheyearandstructuredourbudgetslastyear.
Butthatdoesn'tmean,Iagreewithyourpoint,thatweneedtoprovidesufficientroomtoinvestinthebusiness,andfrankly,wehavenotpulledoffinthatregard.Wehavecontinuedtoinvest,asItriedtomakeclearinmyremarks,incertainpartsoftheorganization,bothR&Dandsales.Wecontinuetoinvestinourbrandandproductplatforms;wehavecontinuedtoinvestintheredesignofoursupplychain;we'vecontinuedtoinvestinnewproductlaunchesandthat'sclearlygoingtocontinuethroughnextquarter.
We'rejustinthefirst-quarterlaunchesofthingslikeVenusSwirlandAlwaysDiscreet,andtheywillreceivefullsupport.Aswell,forinstance,thelaundryinnovationsthatIbrieflymentionedinouropeningremarks.
Sowhatallowsus,ifFXisgoingtocontinuetobeaheadwindandwearegoingtocontinuetoinvest,whichweare,whatallowsustodeliverthefourth-quarternumberthat,asyourightlypointout,willbemateriallybetterthanthefirstthreequarters.Wewillhave,asImentioned,commoditycosttailwinds.Wewillhavethefullbenefitofthisyear'sproductivitysavings.
Pricingforsomeofthecurrencieswillbegintokickin;therewillbeaminorimpact,aswenotedonaminordivesturegains.Butit'sthoseitems,lookatthe410basispointsofproductivitysavingsinthisquarter,whilewecontinuetoinvestinallofthethingsI'vetalkedabout.It'sacontinuationofthatthatshouldallowustodeliver.
Philosophically,Ihavenodifference,I'mcompletelyalignedtowhatyou'resuggestingintermsofhowweconstructplansandbudgets.AndIthinkourcurrentplanandbudgetisconstructedthatway.Recall,inthemiddleoftheyear,wetookearnings-per-shareguidancedown,sowe'renotaslavetothat.AsI'vesaidmanytimes,ifI'veprovenanythingoverthelastsixorsevenyears,it'sthatI'mnotconstrainedbyguidance.
Sowewillcontinueinvesting,butwewillcontinuetodevelopproductivitysavingsaswell.Andweare
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page12of21
hopefulthatreinvestingtherightamountofthoseinthetoplinewillgetboththetoplineandbottomlinegrowingatveryattractiverates.
Operator :
WewillnowmoveontoJohnFaucherofJPMorgan.
JohnFaucher (Analyst-JPMorgan):
Thankyou.Jon,canyoutalkalittlebitaboutgrossmargin?You'vedeliveredgrossmarginexpansionacoupleoftimesnow,despiteprettyweaktopline.Andit's--we'reseeing--itseemslikewemightbeseeingone-offmixbenefitsfromthatstandpoint,intermsoflessemergingmarketsorpotentiallygroomingbeingbetterthat'sdrivingthat.
Socanyoutalktousabouttheprogressionongrossmarginaswelookoutoverthenextcoupleofquarters?Doyouneedone-offthingstohappenwithinthosequartersinordertogetthere?Andwhatdoyouthinkistherateofbenefitcomingfromlocalmanufacturing,particularlyintermsoflesseningthemiximpactovertime?Thankyou.
JonMoeller (CFO):
Sothebiggestdriverofgrossmargin,byfar,weretheproductivitysavingsof250basispoints,andthat'snotonetimeanddoesn'trelyoncertaincategoriesgrowingfasterthanothers.That'sthere;it'ssystemic.Isuspectwewillmaintainorincreasethat,andIexpectgrossmargintocontinuetoimprovenextquarter,whichwouldmakeit,Ithinkthreequartersinarow,whichagain,issomeindicationofthesystemicimprovementthere.
Therewassomebenefit,asyourightlymentioned,frommix,whichisfrankly,thedevelopinganddevelopedmarketsgrowingatcloserratestoeachother.Andifdevelopingmarketsweretoaccelerate,thatmixbenefitwouldbeslightly--excuseme,thatmixhurtwouldbeslightlyincreased.
Intermsofthebenefitoflocalmanufacturing,thatcontinuestobuild;it'spartofthe250basispoints.Ihonestlydon'tknowexactlyhowthatbreaksoutintermsofbasis-pointimprovement,butJohnandKatiecanhelpyouwiththat.Butitissignificant,andasImentioned,we'remakingverygoodprogressondevelopingmarketmarginsthroughthatandotherdynamics,includingpositivemixdevelopmentsasthosemarkets,insomecasespremiumize.
AndasIsaid,we'regoingconstant-currencyearningsaheadofconstant-currencysalesgrowth2Xthreeyearsago,4Xlastyear,6Xthisyear,andthat'satrendthatshouldcontinue.
Operator :
WewillnowtakeaquestionfromOliviaTongwithBankofAmericaMerrillLynch.
OliviaT ong (Analyst-BandofAmerica-MerrillLynch):
Thankyouverymuch.Jon,withorganicsalesnowhavingdeceleratedabitmore,canyoutalkthroughsomeoftheincrementalbiginitiativesthatneedtobetakentodriveimprovements?Becauseitseemsabittoosimpletosaythatgettingoutofsomeoftheslowergrowingcategoriesandtheportfolioshipisgoingtobeenough.Isitafunctionofconsumersacrossanumberofcategories,notjustwithinHPC,butacrossstaples,sortoftradingoutabiggerbrandwhichhaspotentiallymorenichierofferingshereandthere?
JonMoeller (CFO):
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page13of21
Thankyou,O livia.Ourlargestbrandsareourfastest-growingbrands.That'strueoverafive-yearperiod,overathree-yearperiod,overaone-yearperiod,anditwastruelastquarter.SoI'mnotdisputingthedynamicthatyoudescribeintermsofsmallerbrands'impactinsomecategories.Ithinkit'smoreprevalent,forexampleinsomeofthebeveragecategoriesandfoodcategories.
Butanyperiodoftimewelookatconvincesusthatalongwiththeintuitivebenefitsandbigbrandplatformsintermsofinnovation,importancetoretailers,etc,convincesusthatthisisabusinessmodelthatwillcontinuetoworkforus.
Intermsof--youmentionedorganicsalesdeceleration,Ijustwanttoputthatincontextalittlebit.Ireally--reallyIsdon'tseesignificantdecelerationandletmeexplainthat.Weroundeduptotwoforthelasttwoquarters;thisquarterweroundeddowntoone.We'retalkingverysmalldifferencesquartertoquartersequentially.
ImentionedinmypreparedremarkstheimpactthatthetimingoftheconsumptiontaxincreasehadinJapan.Thatitemalone,ifyoutakethatoutoftheresults,wewould'veroundedto2.Mypointisnotthatthat'sameasureofvictoryordefeat;mypointissimplythatIdon'tseeanysystemicdecelerationinthesalesquartertoquarter.
Portfolio,asyourightlyindicate,willhelppromotethetop-lineandthebottom-line.Andyouareabsolutelyright,thereisadditionalworkonbrandsintosomemarketsweneedtodotofullymaximizegrowth,andImentionedthoseinmypreparedremarksaswell.
WehaveworktodoinMexicothatwe'regettingthroughthatverynicely.WehaveworktodoinChina,andasImentioned,Chinagrowthratescontinuetobegood,sothatalllooksprettyreasonable.
Andasyouknowfromourresults,wehavecontinuedworktodoinbeauty,someofwhichwillbeaddressedthroughtheportfolio,andsomeofwhichwearecurrentlymakingsignificantprogresson.
Ithinkwhenyoustepback,andIrealizeit'salittlebitdifficulttosee,andIcertainlyappreciatethat,butwe'rereallyontrackoraheadwitheverythingwearetryingtodototransformthisCompanytoamoresustainable,morereliablegrower,onboththetopandbottomline.Andthatgetslostinthemessinessofexecution,ifyouwill,andfrankly,throughthefogofFXcurrently.
Butweareveryhappywithwherewesitintermsoftheprogresswe'remakingonboththeportfolioandonthebrandsthataregoingtoconstitutethenewCompany.
Operator :
NowwewilltakeaquestionfromChrisFerrarafromWellsFargo.
ChrisFerrara(Analyst-WellsFargoSecurities):
Thankyou.Jon,IguessIapologizeinadvanceforalongquestion,butinventoryreductionsandunprofitablepromos,right,thatyouguyshavebeenbackoutof,Iguess.Iwantedtotalkalittlebitabout.
Socanyourevisit,specifically,thedriversoftheweaknessinMexico?BecauseIknowyou'retalkingaboutconsumptiontax.Ithinktherewassomeexitingofsomeunprofitablepromotion.Ithinkyou'realsocitingsomeinventoryreductions.Socanyouatleastgivemorespecificsaroundhowthoseissuesaremayberelated?
AndthenforMexicoandforChina,howlongdotheseinventorycorrectionstake?IknowinChinaUnileversortofrippedtheBand-Aidoffandtooka20%hit.Doyouhaveadefinedstrategyonthisand
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page14of21
howlongwillitdrag?
Andthenjustlastly,arethereanyothermarketswherethisstuffishappeningmaybejustevenonasmallerscale?Thankyou.
JonMoeller (CFO):
Thankyou,Chris.LetmedealwithMexicofirst.Thiswassimply--inanyofthedevelopingmarkets,thesupplychainsfromamanufacturer'sdoortoastorearelongandlayered.Chinaasanexample,you'regoingthroughdistributors,wholesalers,secondarywholesalers.
Andsowhenthere'sasignificantchangeinmarketgrowthrate,astherewasinMexicoasaresultoftheconsumptiontaxincreaselastyear,astherehavebeeninChina,asmanyofourcompetitorshavereported,thereisalotofinventoryinthesystem,whichneedstogetdrawndown.Andyou'renotincompletecontrolofhowquicklythatcanbeaccomplishedbecauseyouarenotowningallofthatinventory.Butwe'reworkingourwaythroughthat.
InMexico,ifyoulookatgrowthratesquartertoquarter,they'veimprovedsignificantlyontheorderofmagnitudeof10points.AndweareexpectingsignificantfurtherimprovementinAMJ,soIwouldsaythatone,wearelargely,atleastfromavisibilityhorizon,weseeourwaythroughthat.
ChinaasImentioned,ifyoulookatconsumption,we'reinaverygoodplaceinChinaandinmanycategories.We'reprobablytwoquartersintotheinventoryreductionthatneedstooccur,andthat'slargelyconsistentwithwhatourcompetitorshavereportedaswell.Iwouldsaywe'vegotanotherquarterortwotogothere,andthenwehavesomestructuralworkthatweneedtodo.
ButasIsaid,thesearelarge,developingmarketswithverycomplicatedlong-layeredsupplychains,andthesearedynamicsthatareaffectingtheindustrybroadly.Butoncewe'rethroughthem,it'sbacktobusinessasnormal,andwecompeteonthebasisofthestrengthofourproductsandbrands,andwefeelverygoodaboutthat.
Iwouldtellyou,Chris,thattherearenootherlargeissueslikethisthatI'mcurrentlyawareof.Wewillhaveto,andwe'vetalkedaboutthisseveraltimes,havetomanageverycarefullyinsomeofthemarketswhereourcurrencydevaluationhasbeensignificant,becausethosemarketsizescanchangeprettysignificantly,andwe'lldothat.
Operator :
AndnowwillgotoWendyNicholsonofCiti.
WendyNicholson (Analyst-Citigroup):
Hi,acouplethings.Firstofall,justafollow-uponChina.Iwaslisteningtowhatyousaid,andIguessIdon'tunderstandsomeoftheothercompanieslikeUnileverandColgatetalkedaboutdestockinginChinaasoflastsummer,ifnotearlier,andnowit'sonlyhittingyou.SoI'mjustcuriouswhydoesitseemthatthetimingisuniquetoonemanufactureratatime?That'sjustafollow-up.
Butthenthebiggerquestionis,fromavolume-growthperspectiveandhowitpertainstoyourlonger-termgrowthalgorithm,itjuststrikesmethatwe'veseenanenormousnumberofreallybig,maybenotenormous,butorderofmagnitude,reallybig,successfulinnovationsfromyouoverthelastfourquarters
Andyet,westillhaven'tseenmuchvolumegrowth.Andso,Iknowwe'regoingtogetintoiteasiercomps,butI--itdoesn'tsoundtomeliketheinnovationsthatarecomingdownthepikeareasbigasFlexballorasbigasPodsorFlingsorwhatnot.Andso,isthereachangeinyourlong-termoutlookforhowmuch
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page15of21
volumegrowthisgoingtocontributetothetopline?
Andlastone,Ipromise,justonthemarketingbudget.Iunderstandtheideaofdoingmorewithless,butgivenhowcompetitivethemarketisandgivenhowlowyourvolumegrowthis,whywouldn'tyouchoosetotakesomeofthoseproductivitysavingsandjustdomorewithmore?Thankyou.
JonMoeller (CFO):
Allright,first,intermsoftiming,differentcompanies,frankly,haveverydifferentproductmixesandtheymovethroughdifferentdistributionchannels.SoifyouthinkaboutUnileverwithalargefoodbusinessinChina,it'sverypossiblethattheycouldhaveadifferentdynamicthantheotherchannels.Andwe'retalkingdisplacementofonequarterhereorsomethinglikethat.Sothat'sthatitem.
Intermsofvolumeandinitiatives,thebiggestimpactonvolumehasbeenthepricingforFX,andthatwillcontinueuntilthosemarketsrecoveroruntilthatannualizes.Butourinnovations,ifyoulookatthebigonesthatyoumentioned,firsttheyarecontributingtobothcategorygrowthandsharegrowth,andcategorygrowthisarealindicationofthestrengthofaninnovation.Doesitlifttheentirecategory?AndwehaveseenthatbehindthethingsthatImentionedearlier.
Andthegoodnewsisthatthoselargelyhavebeenfullyexpandedinonemarket,theUS,andasweexpandthoseglobally,weexpecttoseethatsameimpact,justlikewedidwithAlwaysDiscreetinboththeUKandtheUS,forexample.
Sowe'reprettyoptimisticaswelookforwardaboutthestrengthofourinnovationprogramandwhatthatcandofromthetopline.We'regoingtohavetocontinuetomanagethevolumeimpactsofFX,butwe'rereallyfocusedontherevenuenumberastheleveragetogenerateoperatingprofitandcash,andwe'redoingreasonablywellthere.
Onmarketing,asImentioned,wearedoingexactlywhatyouwouldsuggestwewoulddo,Wendy,whichisinvestmorewhereitmakessensetodothat.AndtheseinnovationsthatI'vetalkedaboutourexactlyoneplacewherewearedoingjustthatandwewillcontinuetothat.
Theinvestmentbehindtheintroductionofnewbrand,intermsofAlwaysDiscreet,asyoucanimagineissignificant,andwe'reveryhappywiththatbecauseofthereturnthatwecangenerateandbecauseoftheimpactthat'shadonthosemarkets,whichare,asImentioned,havedoubledthegrowthrateversusthepre-entryperiod.
Sowe'renottalkinghereaboutconstrictionofmarketingdollars.Whatwearetalkingaboutisbeingasefficientandeffectiveaswecanandspendingthosedollarswheretheydrivereturns.
Operator :
AndnowwehaveaquestionfromStevePowersofUBS.
StevePowers (Analyst-UBS):
HiJon.Ijustwantedtodigintoyourcommentsonstrategyabitmore.Asyoustepback,asyoumentionedproductivityeffortshavebeensizableforanumberofyears,andtheyseemtoberunningaheadofplan.You'vemadesignificantshiftsinhowyou'reorganizedandnowhowyourportfolioisstructured,butalongsidethat,growthhasbeenastruggle.
AndIthinkwewouldallacknowledgethatthemacroenvironmenthasn'thelped.Butdoyouthinkthere'sariskthatallthisinwardlyfocusedchangeinoperationalimprovementhasactuallyimpededyoureffortstoexecuteonthelargerstrategythatyouarticulated,namelyuncoveringconsumerinsightsanddriving
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page16of21
consumer-preferredinnovations?Becauseitjustseemslikealltheseinternalimprovementsarecontinuallybeingoffsetbyrelativestrugglesinthatexternalmarketplace.
AndIdon'tmeanforthistobeanunfairquestion,butI'mjustwonderingatwhatpointit'sworthaskingwhetherorganicgrowthchallengesmayactuallybeexasperatedbyallthisinternalchange?Andwhetherimprovementmayhaveto,tosomeextent,justwaituntilthoseinternalprojectsruntheircourse?Thankyou.
JonMoeller (CFO):
Thankyou,Steve.That'sactuallyaverygoodandveryfairquestion,anditsomethingthatwecontinuetobeinactivedialogueonhereatP&G.We'rebeingverydeliberateaboutthepaceofsomeofthechangesandensuringthatwehavethecapacitytoexecutetoserveconsumers,toserveshoppers,andtodothatinamoreeffectivemannereveryday.Sothat'sexactlythequestionthatweaskourselves.
It'swhy,forexample,wesaidweweregoingtotaketwoyearstocompletetheportfolioprogram,asopposedtoovernight.Wehavethecapacitytodothatanddeliverthebusiness.
Soagain,Ithinkyouareaskingtherightquestion.It'sonethatweaskourselvesandwewillmakechoicesthatmaximizethetotal.That'soneofthebeautiesofthemetricthatwe'reworkingagainstintermsofoperatingPSR;it'sanintegratedmetric,whichdriveschoiceandbalanceacrossbothgrowthandvaluecreation.Wesimplycan'ttherewithoutonelegofthatstool;thethirdlegbeingcashcreation.
Soweareapproachingthisinaveryholisticsense,verycognizantoftherightquestionthatyouaskedandaretryingtogetthebalanceright.AsIindicatedearlier,wefeelverygoodaboutwhereweareintermsoftheprogressionagainstthosestrategicinitiativesthatyououtlinedandothers,includingtheredesignofthesupplychain.Andinmostofourbigbrandsandcategories,we'regrowingfairlywell.
AsImentioned,ifyoulookatgrooming,healthcare,babycare,andfamilycare,wegrewat9%,6%,and2%respectively.Sothat'snotanindicationofanysystemicpinchpoint,ifyouwill.Wherewehaven'tperformedaswellismoreafunctionofanindividualbusinessdynamic.
Operator :
AndnowwewillmovetoLaurenLiebermanofBarclays.
LaurenLieberman (Analyst-BarclaysCapital):
Thankyou.Goodmorning.
JonMoeller (CFO):
Goodmorning,Laura.
LaurenLieberman (Analyst-BarclaysCapital):
Goodmorning.Ihadafollow-uponthat,wastheideaofdoing--takingtwoyearsforthedivestureprocess.Towhatdegree,though,isthatcreatingorisitanydisruptiononemployeeswonderingaboutwhat'sbeingsoldandwhenorretailersorcompetitorslookingatthething?Ooh,wecanpounceonthebusinessorwethinkthatP&Gmaybedeemphasizing.Sowhatdegreedoyouthinkthatmayactuallybeweighingonorganicsalestrend?
TheotherthingwasthatJon,you'vebeentalkingabouthowyoufeelgoodinternallyabouttheprogressbeingmade.Yousaidbutit'sbeingmaskedbythemessinessofexecution.Maybethiswasn'tagreatwordchoice,butIfeelliketheonethingAGcommittedtonearlytwoyearsagowaswewillimprove
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page17of21
execution,andthatdoesn'tfeellikeit'shappening.
Sowhetherit'stheone-offthingsthatpopupwithChina,Mexicoandhonestly,I'mnotconvincedtherewon'tbeanotherbigone-offtwoorthreequartersfromnow.Whatisitthathasorhasn'tchangedontheexecutioninthemarket?Thankyou.
JonMoeller (CFO):
Wellletmetacklethatlastonefirst.Itwasapoorwordchoice;Ishould'vesaidthechunkinessofexecution.Frankly,we'vebeenveryintentionalinthefocusonimprovingexecutionandfeelverygoodabouttheprogressthatwe'remakingthere.SoIapologizeforthatwordchoice,buttherearejustbigchunksmovinginandoutaswemaketheseverybigtransformationalmoves,whichcanbutterthingsupalittlebit.
Intermsoforganicsalesgrowthandtheportfolioimpact,ifyoulookatthebusinesses,takeDuracellasanexample,whichiscurrentlyworkingtotransitiontoBerkshireHathaway.Buttheentireperiodthatthebusinesswasworkingonthatprojectleadinguptothesigningofthedealandpostthesigningofthedeal,managingthroughtransition,thatbusinesshasheldupextremelywell.It'sbuildingmarketshare.
Iwon'tgointothedetails,butseveraloftheotherbusinessesthatwewillbelookingtosellarealsoperformingverywell.Inotherwords,growthrateswellabove100indexversusyearago.SoIthinkwe'vegotabouttherightbalanceintermsofthepaceatwhichwearemovingandtheworktobedone.AsIsaid,itissomethingthatwerelookeveryday,butit'snotamajorconcernatthispoint.
Operator :
AndnowwehaveaquestionfromNikModiofRBCCapitalMarket.
NikModi(Analyst-RBCCapitalMarkets):
Yes,goodmorning,guys.Justtwoquickonesforme.Jon,someinthemediaworldwouldsuggesthatP&Gistakingitsmarketingmixtoodigitalheavy.SoIjustwonderifyoucouldrespondtothatandyourperspectivearoundthat?
Andthenthesecondquestionisinyourpreparedremarksyouindicated(inaudible)rationalizationwilltakeplaceinthecoreportfoliothenextcoupleofyears,ifIheardthatright.Justcurioushowweshouldthinkaboutthatandit'simpactonorganicrevenuegrowthaswelookoutthenextcoupleofyears.Iknowyou'renotgivingguidance,butjusthowshouldwethinkaboutitfromamagnitudestandpoint?
JonMoeller (CFO):
TheseareSKUsthatareatthelong,fartailintermsofproductivity.Sowehavebusinesseswherethebottom20%oftheSKUsarelessthan1%ofthesales,andthesameistruewithprofit.SoIthinkifanything,byremovingtheclutter,byallowingustofocusonproductlinesandSKUsthatreallymattertoconsumersandcustomers,itshouldhaveapositiveimpactonthetopline,notanegative;theseare[eaches]insomecases.Buttheyaremeaningfulintermsoftheamountofcomplexitythattheycreate.That'strueinouroperation;that'strueattheshelf;that'strueinthewarehouse.
Intermsofourapproachtodigitalversustraditionalmedia,weviewedthisverymuchasand,notanor.Theycomplementeachother,sowelookatitveryholistically.Weareguidedinourchoicebytwothings:oneiswhereconsumersarespendingtheirtimeintermsofconsumptionofmedia.Weneedtobereasonablyinstepwiththat.
Andthesecondisdependingonthecategory,whatmediatheywanttointeractwithandlearnaboutour
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page18of21
productson,andthat'sdifferentacrosscategories.Sowe'regoingtobeguided,asineverythingwedobytheconsumer,andifwestaywiththatapproach,wewillprobablynotstraytoofarfromwhat'sright.
Operator :
AndnowwewillmovetoJavierEscalanteofConsumerEdgeResearch.
JavierEscalante (Analyst-ConsumerEdgeResearch):
Goodmorning,everyone.Jon,IhavetosaythatI'mstillhavingahardtimereconcilingthetop-linegrowthof1%,whereyourpositiveremarksaboutsomeofyourbigbrands,TideandPampers?TheflipsideoftheresponsethatyougavetoOliviaearlieristhatyoubasicallyaretellinginvestorsthatProcterperformanceinthepastquartershavebeenactuallyweaker,andorganicsalesonlyroundupto2.
Shouldn'tyoubeconsideringabiggerportfoliochangeorbreakupeven,giventhatsectorslikebeautyarenotonlygettingmorefermentedandsmallerthananyfoodandbeveragescategorythatyoualludedearlier?AndinsteadofreducingSKUsby15%and20%,asNikjustsaid,whatyouaregoingtohaveissubpar,top-linegrowthforthenexttwoyears?Thankyou.
JonMoeller (CFO):
We'regoingtotrytohavefullvisibilityontheportfoliomovesbythesummer,andIthinkwewillbeinapositionthentoarticulatewhywethinkthesearetherightmoves.AndsoI'mgoingtosavethatconversationforthatpointintime.
Butwearebeingthoroughinourapproachacrosseachofthecategoriesandbrands.There'snobusinessthatwehaven'tobjectivelyanalyzed,andsoIthinkwe'regoingtoendupinaprettygoodplaceinthatregard.
Intermsof--look,onthiswholethingofsmallbrandsandfragmentation,one,ourdatadoesn'tsupportthatbeinganissueformostofthebusinessesthatwe'regoingtomaintain.Second,wheredifferentiatedperformancemattersandwheredifferentiatedperformanceisdelivered,thisdynamicisnotgermane.
Soforexample,andI'llbringittobeautyinasecond,Javier,butifyouthinkaboutPampersasanexample,Ican'tthinkofanewmotherwhowouldbeaskingherselfwhereperformancereallymatters,wouldbeaskingherselfwhat'sthenewdiaperthatnobody'severtriedbefore?WherecanIdiscoverthenextdiaper?That'snotthethoughtprocess.
There'sajobthatneedstobedone.There'sabrandthathasprovenoverdecadesitcandothejob.Itcandoitbetterthantheotherofferingsthatareoutthere,andit'sofferedatapricethatcreatesagoodvalue.
Ifyouthinkaboutperformanceandwhereperformancemattersinabeautycontext,thinkaboutanti-dandruffshampoos.I'vegotaproblem,Ineedasolution.Thisisnottimetoexperiment,thistimetosolve.
Head&Shouldershasbeensolvingdandruffissuesfordecades.It'sabrandthatconsumersknowandtrust,andit'sofferedatareasonablevalue.SoIthinkwehavetothinkaboutthespecificdynamicsofacategory,theconsumerapproachtothecategory,therelevanceofinnovationofthecategoryanddifferentialperformanceasadriverofpurchase,beforewemakebroadconclusionsaboutwhetherfragmentationisgoingtooccurornot.
Andintermsofyourquestiononsplitup,again,let'swaituntilwehavetheportfolioinfrontofusandtalkaboutitatthatpoint.We'reverybullish.Andagain,thisisnotjustbasedonwhatwethinkisgoingtohappen;thisisbasedon10,5,3,and1yearsofdata,whichisveryconsistentinitsoutcome.Andthese
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page19of21
arecategoriesthatwehavelongtrackrecordsofwinningin,wherewearetypicallythemarketleaderwithbrandsandprototypesinthosecategories.
Operator :
AndnextwehaveJoeAltobellowithRaymondJames.
Unidentif iedPart icipant :
Hithisis[Christine]onforJoe.Ijustwantedtochangethetopicquicklyandgotocommoditycostsandwhetheryouarestillexpectingthattobea$500millionto$700milliontailwindnextyear?Andhowmuchofthatdoyouactuallyexpecttorecovernetofpricing?
JonMoeller (CFO):
Wewould--ourcurrentestimatewouldbemoreontheorderofmagnitudeof$600millionto$800millionofBTcommoditycostssavingsnextfiscalyear.Reallydon'thaveapointofviewyetonhowmuchofthatwe'llbeabletotaketothebottomline,asopposedtopassthroughinprice.
Soifyoujustreflectonthedynamicsintheindustry,thiswasanindustrythat,withtheexceptionofsomeinternationalcompetitorswhohaveFXtailwinds,ischallengedfromaprofit-growthstandpoint.Andthat'sadynamicthatgenerallysupportsusingthesesavingsasawaytohelpthatsituation.Sowe'rehopefulthatmanyofthesewillcometothebottomline,butthat'ssomethingthatwewillhavetoseeaswemoveforward.
Operator :
YournextquestionwillcomefromAliDibadjatBernstein.
AliDibadj(Analyst-SanfordC.Bernstein&Company):
Heyguys.Jon,you'regettingthesamequestionfrommanyfolksoverandoveragain,andI'mnotsurethemessageisnecessarilyclear,whichiswe'vebeenhearingalotofpromisethathelpisaroundthecornerforyears,years.Andeverybackhalfoftheyear,youkindoflimpacrossthefinishline;it'snotjustthisyear.
AndIguessformeatleast,IjustwonderwhetherP&Ghastherighttobeconsistentlyinashort-termoptimistatleast,givenitsrecenttrackrecord.Andnowthepromiseiswaittillwebreakup14%sales,6%ofoperatingcostoutofourbusiness,thingswillbemuchbetter.Butatthatpoint,howmuchlongerwouldwehavetowaitto--foryouguystodecidethatmaybesomethingevenbiggerhastohappen.Maybeyoureallygottorebaseyourguidance,andyoushouldbedeliveringdouble-digitEPSgrowth.MaybeyoureallyhavetobreakuptheCompanyevenfurther.
Ithinkthere'salotoffrustrationintermsoftryingtoseeresults,grantedthemacrostuff,grantedtheFX,butothershavethattoo.Howmuchlongerdowehavetowait,Iguess,isreallythecorequestion?Especiallyafterthisnextpromiseofdivestitures,howmuchlongerdowehavetowaitafterthat?Thankyou.
JonMoeller (CFO):
SolastyearyoumentionedFX,Ithinkyou'rerighttomentionthat.ExcludingFX,wegrew14%onthebottomlinelastyear.Thisyear,wewillgrowdoubledigits.Ithinkit'sprettyclearthattheoperatingimprovementsthatwe'remaking,productivityandotherwise,arecomingthrough.Andifitweren'tforFX,we'dbehavingaverydifferentdiscussionrightnow.
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page20of21
Wedohavebrandsandbusinesseswhereweneedtocontinuetostrengthenthetopline;wearecognizantofthat.Imentionedthat.Andthatiswhatitis.
Aswelookatthechangethatwe'reinthemiddleofexecuting,it'sprobablythebiggesttransformationthisCompanyhasgonethroughacrossthetotalityofportfoliosupplychain,organization,structure,anddesigned.AndasIsaid,it'shardtoseethatallcometogetheratthispoint.Buteachofthepieceswe'reveryhappywiththeprogress,andwe'llsee.
Operator :
YourfinalquestioncomesfromthedeskofCarolineLevyofCLSA.
CarolineLevy(Analyst-CLSALimited):
Goodmorning,thankyoumuch.Justaquestionaboutbeautyagain.O layandPantenearedifferentfromHead&Shouldersbecausethere'snotthisclearneedandpromiseanddelivery.SoifyoujustlookatOlayandtheperformance,IknowChinahasbeenveryproblematic,butaroundtheworld,whydoyouthinkP&Greallyshouldbeinthattypeofbusiness?
JonMoeller (CFO):
Whatfirstofall,Caroline,youngerlookingskin,Ithinkisarealneed.It'sincreasinglyaneedofminebeyondmyhair-careneed.AndI'mnotgoingtocommentonspecificbusinessesthatwe'regoingtobeinoroutagain.
We'lldothatwhenwearereadytodothat.Butthat'sabusinesswherefunctionandperformance--differentiatedperformancedoesmatter.It'swhatenabledustobuildoneofthelargest--thelargestfacialskincarebrandintheworld.Thatcontinuestohaveincrediblystrongequity,andfrankly,isgrowingsignificantlyinmanypartsoftheworldwherewehaven'tclutteredtheequityontheshelfasbadlyaswehave,forinstanceintheUSandinChina.
Iwasjust,acoupleweeksagointheGulf,intheMiddleEast,andthat'samarketwherethebrandarchitectureismuchcleanerandclear.Andthatbusinessisgrowingdoubledigits.ThesamethingistrueintheUKonOlaywhereagain,wehaven'tclutteredeitherthemessaging,theequity,ortheshelf.
Soskincareisclearly,lookatSK2asanexample;itdeliversaclearbenefitthat'scovetedbywomenparticularlyinAsia.Soit'snotabusinessthatisallaboutfashionsandstyle;it'saboutabusiness--it'sabusinessthat'saboutperformance.
Operator :
Ladiesandgentlemen,thatconcludestoday'sconference.
Allrightsreserved(c)2014TheStreet,Inc.
Pleasefeelfreetoquoteupto200wordspertranscript.Anyquoteshouldbeaccompaniedby"ProvidedbyTheStreet"andalinktothecompletetranscriptandwww.thestreet.com.Anyotheruseormethodofdistributionisstrictlyprohibited.
THEINFORMATIONCONTAINEDINEACHWRITTENORAUDIOTRANSCRIPT(the"TRANSCRIPT")ISAREPRODUCTIONOFAPARTICULARCOMPANY'SCONFERENCECALL,CONFERENCEPRESENTATIONOROTHERAUDIOPRESENTATION.THETRANSCRIPTSAREPROVIDED"ASIS"AND"ASAVAILABLE"ANDTHESTREETISNOTRESPONSIBLEINANYWAYNORDOESITMAKEANYREPRESENTATIONORWARRANTYREGARDINGTHEACCURACYORCOMPLETENESSOFTHETRANSCRIPTSASPRODUCED,NORTHESUBSTANCEOFAPARTICULARCOMPANY'SINFORMATION.
CompanyName:Procter&GambleCoCompanyTicker:PGSector:ConsumerGoodsIndustry:ConsumerNon-Durables
EventDescription:Q12015EarningsCallMarketCapasofEventDate:224.36BPriceasofEventDate:80.95
©2014TheStreet,Inc.Al l R ightsReserved Page21of21
THETRANSCRIPTSAREPROVIDEDFORINFORMATIONALPURPOSESONLY.THESTREETISNOTPROVIDINGANYINVESTMENTADVICEORENDORSINGANYPARTICULARCOMPANY.