 "P&G")
Procter & Gamble (P&G), the world's largest consumer goods company, is moving away from unprofitable businesses in India as it seeks to improve its domestic performance, the firm said while announcing its March 2016 quarterly results in Cincinnati, US, on Wednesday.
In an analysts' concall, P&G's global chief financial officer Jon Moeller said the firm had made a choice to de-prioritise several unprofitable lines of business that negatively impacted short-term top-line growth rates.
"The strategic portion of our India business is growing at a high single-digit pace. Sales in the portions we're fixing or exiting have been down 30 per cent. This top-line pain is worth it. We're making significant progress in improving local profit margins, up about 700 basis points," said Moeller during the call with investors. P&G follows a July-June accounting year.
While the company has been saying for the past three quarters that its strategic Indian businesses such as haircare, skincare, feminine hygiene, and detergents were growing in high single digits, it had admitted while disclosing its September 2015 quarterly numbers that this revenue growth was down from the mid-teens it was clocking earlier.
For the financial year ended June 30, 2015, P&G's India business cumulatively grew 12.7 per cent to touch Rs 10,347.7 crore. In India, P&G has three entities including listed firms Gillette India and P&G Hygiene and Healthcare, and unlisted company P&G Home Products Ltd. Together, these companies produce items from razors and shaving products to feminine hygiene and baby-care products to detergents, anti-cold balms, oral care products, shampoos, creams, etc.
Abneesh Roy, associate director, research (institutional equities) at Edelweiss, said in a report that P&G would likely exit Duracell (batteries), AmbiPur (air fresheners) Old Spice (men's after-shave lotion) and Oral-B toothpaste. "Also, it could de-focus on lower-end Tide (detergent) and Wella (hair care products)," he added.
The company has in the past few quarters attempted to move away from lower-priced stock-keeping units in detergents as it looks to improve financial performance, analysts said.
The India business developments also come as P&G globally exits 105 brands including the sale its Duracell battery business to Berkshire Hathaway and 43 beauty products to New-York-based Coty Inc.
Roy notes in his report that P&G's defocus will benefit rivals such as Hindustan Unilever, Dabur, Colgate, and Godrej Consumer, which compete with the firm in those categories.
