Procter & Gamble more than doubles its earnings but it still lags in emerging markets

January 25, 2013
January 25, 2013

Procter & Gamble, the world’s largest household goods maker, more than doubled its earnings (press release) in the quarter ended Dec. 31. P&G today reported a net income of $4.06 million for the quarter, up from $1.69 million a year ago.

It’s a sign P&G, which has recently struggled against its consumer-goods competitors, is turning something of a corner, and also that sluggish spending in the US may be picking up. The Cincinnati-based company’s revenues have declined over the past few quarters after the company raised and lowered prices too much on some of its items, which range from Tide laundry detergent to Pampers diapers. Now P&G is in the middle of a massive restructuring by adjusting prices and cutting staff. It hopes to cut $10 billion in costs by fiscal year 2016.

Some of P&G’s best earnings reported today came from emerging markets, with more sales of women’s products like Always in Latin America and Whisper in Asia. Last quarter, organic sales from emerging markets increased 7%. But there’s a yet bigger battle for P&G to wage for the hearts of this expanding group of middle-class shoppers. Unilever, the world’s second-largest consumer-goods maker, reported earnings on Jan. 23, beating growth expectations with sales of hair and soap products in Asia and Latin America. Its sales have been growing at more than double the rate of P&G’s. While P&G makes almost 40% of its revenues from developing markets, its competitors Unilever and Colgate both get more than half from there.

P&G is shifting its attention more towards these new shoppers. It has said that it will focus on 10 emerging economies: the BRICs (Brazil, Russia, India, China and South Africa) as well as the MISTs (Mexico, Indonesia, South Africa, and Turkey), and Nigeria and Poland.

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