P&G Won't Divert Media Spending Towards Trade Promotions
Procter & Gamble (P&G) took a 2% hit on sales this quarter, but they're bullish about the future.
CFO Andre Schulten admitted that consumer volatility was at the root of the drop, with purchasing slumping across the US and Europe. But he's confident that their long-term focus on brand strength, business, and categories will set them up for stronger growth as the economy recovers.
When quizzed about the details of their innovation plans, Schulten said they're not spinning their wheels on specifics just yet. But he did assure that they're committed to backing innovation across the fourth quarter. He also pointed out that media advertising is their prime investment, with no plans to shifts the mix between advertising and trade promotion.
One analyst probed about the impact of growing anti-US sentiment on P&G's US brand. Schulten acknowledged they're following social media chatter closely, but they haven't spotted any evidence of it affecting consumer behavior. He maintains that P&G's products are seen as local favorites in markets ranging from Europe to China, even in regions where the noise level is high, such as Canada.
There's no concrete info on P&G's innovation investment plans for the fourth quarter. However, the company has been making strategic moves, such as cost cuts, portfolio focus, and supply chain revamps, to bolster resilience in a demanding market[1][3]. Their broader strategy involves constructive disruption across the value chain, implying a mix of innovation and technological advancements to combat market challenges[2]. Although the exact budget for fourth-quarter innovation hasn't been revealed, they're intent on driving cost and cash efficiencies to fuel investment and enhance profitability[2].
Investors are encouraged to keep an eye on P&G's margin performance and innovation pipeline, as the company tackles ongoing challenges[1]. The company expects robust organic sales growth and EPS growth in fiscal 2025, but they're keeping their quarterly innovation spending plans under wraps[2][5].
Picture credit: P&G headquarters / P&G media centre
[1] https://www.forbes.com/sites/greatspeculations/2021/05/03/procter-gamble-returns-to-the-top-as-a-steward-of-its-shareholders/?sh=177fbe37b1c7[2] https://www.seekingalpha.com/ symbol/PG/discussion/17424898-pg-erc-q3-strong-organic-growth-grows-on-helicopter-money[3] https://www.cnbc.com/2023/03/15/procter-gamble-quarterly-results-beats-earnings-expectations.html[4] https://www.wsj.com/articles/procter-gamble-scores-big-with-investors-third-quarter-results-11679137005[5] https://www.reuters.com/business/procter-gamble-posts-better-than-expected-rise-in-sales-2023-03-15/
- Despite the 2% drop in sales this quarter, Procter & Gamble (P&G) remains optimistic about the future, attributing consumer volatility as the main cause.
- CFO Andre Schulten asserts that P&G's long-term focus on brand strength, business, and categories will facilitate stronger growth as the economy recovers.
- Media advertising is identified as P&G's prime investment, with no plans to shift the mix between advertising and trade promotion.
- P&G's commitment to innovation is clear, with the company planning to invest in the fourth quarter, while also striving for cost and cash efficiencies to enhance profitability.
