P&G CEO Says Company Hasn’t Been Delivering
David Taylor says ‘we need to bring our standards up’
Growth has evaded Procter & Gamble, the world’s biggest consumer-products company, as more nimble competitors have stolen share and notched fast growth in emerging markets. PHOTO: MARIO ANZUONI/REUTERS
BOCA RATON, Fla.—Procter & Gamble Co. Chief Executive David Taylor sees a company with many problems and no easy fix.
In his first public comments since taking the reins in November, Mr. Taylor laid out the challenges and strategic missteps he is working to overcome at the world’s biggest consumer-products company—from years of tepid growth in the U.S. to P&G’s failure to keep pace with growing incomes in China, its second-biggest market.
“We know we haven’t been delivering lately and we need to bring our standards up,” Mr. Taylor said Thursday at an industry conference.
David Taylor, chief executive of Procter & Gamble. PHOTO: PROCTER & GAMBLE
Mr. Taylor laid out plans to double cost reductions with a goal of paring another $10 billion over the next five years, in addition to a $10 billion cost-cutting plan implemented in 2012. The cuts will be broad and include everything from marketing to supply chain.
Growth has evaded P&G for years as more nimble competitors have stolen share and notched fast growth in emerging markets. The maker of Gillette razors and Pampers diapers has scrambled to slash costs, but thousands of job cuts and more than $20 billion in divestitures implemented under previous CEO A.G. Lafley haven’t been enough to jump start P&G.
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Mr. Taylor faced a tough crowd of analysts, who pressed him to convince them that his plans go beyond the status quo of recent years.
“We keep hearing this,” said a member of the audience during a question-and-answer period following P&G’s presentation. “What are competitors doing that you aren’t doing?” asked another.
A 36-year P&G veteran who ran beauty, grooming and health-care businesses before becoming CEO, Mr. Taylor said he would continue P&G’s shift away from unprofitable product categories. The company, having already sharpened its focus to prioritizing 10 of 40 product categories, will narrow that even more to emphasize four areas: infants, fabric, hair and grooming.
“Is P&G willing to change? We know some shareholders are concerned it isn’t,” Mr. Taylor said. “We are willing to adapt and evolve and change what is needed to win.”
P&G shares fell about 1% to $81.71 in midday trading Thursday.
A major area of concern for P&G has been poor results out of China. Mr. Taylor called the company’s performance “unacceptable,” noting it is losing ground in all categories after failing to keep pace with rising income levels.
A recent trip to China was a wake-up call for Mr. Taylor. He said he spent time at the home of a 33-year-old mother who doesn’t buy P&G products which she considered “old and outdated and not high-end enough.”
“We looked at China too much like a developing market as opposed to the most-discerning market in the world,” he said.
In its recent quarterly results, P&G reported that sales in China fell by a high single digit in percentage terms, similar to its decline in the prior quarter. In October, the company said it had fallen behind in innovating premium products which was contributing to weak revenue growth at the company as a whole.
In a bid to gain ground in high-end consumables P&G has introduced a new line of Pampers diapers, complete with “Made in Japan” labels and gold labels. “We expect to see over the coming quarters meaningful progress” in China, Mr. Taylor said.
