* To focus efforts on 70 to 80 core brands
* Sees fewer jobs cut than the 9,600 in 2001
* Sees higher organic sales, core profit in 2015
* Shares rise 4.3 pct
(Adds details, CEO comment)
By Devika Krishna Kumar
Aug 1 Procter & Gamble Co, the world's
largest household products maker, said it could sell about half
of its brands in the next two years and cut jobs to revive sales
growth and save costs, sending its shares up as much as 4.3
The maker of Gillette razors and Tide detergent said it
would consider selling about 90 to 100 brands whose sales have
been declining for the past three years.
P&G said the 70 to 80 "core" brands it will focus on
accounted for 90 percent of sales and more than 95 percent of
profit over the past three years. Twenty-three of the brands
have sales of between $1 billion and $10 billion.
"Less will be much more," Chief Executive A.G. Lafley said.
P&G did not name the brands it planned to sell, keep or
discontinue, but Lafley told Reuters the company's family,
feminine and baby care business would lose fewer brands than its
other four businesses.
The business, which houses brands such as Pampers diapers
and Always sanitary napkins, is P&G's fastest-growing and was
the company's second-biggest revenue contributor in the year
ended June 30.
P&G's top 80 brands had sales of about $84.1 billion in 2013
while the other roughly 100 brands had sales of just $2.4
billion, according to Sanford Bernstein analyst Ali Dibadj.
Dibadj expects the company to sell laundry brands Fab and
Trojan, Perma Sharp shaving blades and Fekkai hair products
among others. P&G is unlikely to sell its Gillette, Tide,
Pantene, Oral B, Olay and Old Spice brands, he said.
P&G said it would have fewer but larger distribution centers
in North America and would focus on strengthening its presence
in emerging markets, or what Lafley called the company's
"engines of growth".
Lafley told Reuters he expects the moves to result in fewer
job cuts than the near 10,000 the company cut in 2002.
P&G's revenue growth has been sluggish, with sales missing
Wall Street's estimates in nine of the last 13 quarters.
The company says it has been hurt by "choppy" growth in
developed markets, tough competition and a strengthening U.S.
P&G has sought to cut expenses by streamlining management,
reducing costs and cutting jobs under a five-year, $10 billion
restructuring plan announced in 2012.
P&G's organic sales, which excludes divestitures and
acquisitions, rose 2 percent in the fourth quarter, but currency
losses wiped out the gains. Net sales fell 1 percent to $20.16
billion, missing the average analyst estimate.
P&G said it expected fiscal 2015 organic sales to rise by a
low- to mid-single digit percentage and core earnings to rise by
a mid-single digit.
A 7 percent fall in operating expenses in the quarter helped
P&G post a core profit of 95 cents per share, beating the
average analyst estimate of 91 cents.
"PG's earnings quality is below its potential," BMO Capital
Markets analysts wrote in a note.
P&G's shares were up 3.5 percent at $80.03 in early
afternoon trading on Friday.
(Editing by Savio D'Souza)