P&G results raise concerns about pace of turnaround

Tide detergent pods, from Procter & Gamble, are seen at the Safeway store in Wheaton, Maryland February 13, 2015. REUTERS/Gary Cameron (Reuters)

By Yashaswini Swamynathan (Reuters) - Procter & Gamble Co reported its sixth straight quarter of falling sales, hurt mainly by the stronger dollar. Even after stripping out the impact of the dollar and acquisitions, sales rose just 1 percent, raising concerns about the slow pace at which P&G is turning around its business. The company's shares fell as much as 4.3 percent in morning trading on Thursday, after it said sales would fall by a low-to-mid single-digit percentage in the year ending June 2016. P&G, struggling in an increasingly competitive consumer products industry, has been trying to turn itself around since 2014 by focusing on fewer, faster-growing brands. It has also made management changes, including appointing company veteran David Taylor CEO this week. But these moves have failed to convince investors that the company, which gets two-thirds of its revenue from outside the United States, has done enough to get back on track. JP Morgan analysts noted that P&G's volume sales were the weakest in five years. Some analysts question whether P&G is too big and whether it would be better off splitting its businesses into separate companies. Analysts on a conference call grilled executives about why P&G was still struggling to show underlying earnings growth, why steps taken so far have been ineffective and whether the company had a Plan B. "We clearly recognize the need to grow faster ... we're not going to get there in the next quarter or two but we do expect sequential progress as we move through the next fiscal year," Chief Financial Officer Jon Moeller said. Sanford Bernstein analyst Ali Dibadj said P&G should break into three companies — beauty, grooming and health, and home care. P&G has dropped about 50 brands since 2014, of which 43 were sold to perfume maker Coty Inc for $12.5 billion this month. P&G intends to retain a core portfolio of 65 brands, including Tide detergent, Pampers diapers and Gillette shaving products. Neil Saunders, CEO of research firm Conlumino, said P&G needs to get rid of more brands if it wants to turn itself around faster. Net income attributable to P&G fell 80 percent to $521 million, or 18 cents per share, in the fourth quarter ended June 30, mainly due to a $2.03 billion one-time charge related to its Venezuelan operations. Revenue fell 9.2 percent to $17.79 billion. (Additional reporting by Ramkumar Iyer; Editing by Simon Jennings and Kirti Pandey)