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Procter & Gamble profit growth impressive - Erin Lash

Tuesday, April 26, 2016 - 04:22

Morningstar equity analyst Erin Lash talks with Bobbi Rebell about Procter & Gamble's results including why they have been able to raise prices, as well as why they have a competitive advantage.

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Procter & Gamble all the consumer products giant behind it countless brand names including tied to let out with yet another decline in sales though. Overall results for the quarter beat forecasts here with more its air and passion covers the company over at Morningstar. She is that our Chicago bureau great to have you. Thank you for having me you focusing on the profit improvement saying it is impressive talk about your take on this company and where they are now. You know obviously. Top line performance remains tepid. The company has been plagued by foreign currency headwinds as well as their own strategic efforts to clean up the core business and it. If you eliminate. Selling. Unprofitable. Businesses. Use to focus on driving Morse sustainable profitable growth longer term. We do think that the profit growth was quite impressive. And what ultimately provide the fuel to fund further brand investments. Ball behind product innovation as well as marketing support to ultimately reignite that top line performance over the longer term. You know it's interesting Matt you mentioned product innovation and that is something that they talk about. Wondering if any from PNG where is that product donation and it can account got. You know obviously. The firm has focusing on its core brands and businesses two of its largest obviously diapers and laundry and we're not you. We're not only hearing about it innovation. Both within the last. But also on emerging markets there's significant opportunities that the companies and violating. Particular to. Cater its products in emerging markets to more that premium tier type. Consumer which is growing faster than the middle segment of the market. And while growth has slowed in several emerging markets. We think favorable. Demographic. And income trends over the longer term. I stand to bolster the company's performance in those regions where they're more underpenetrated. Rather relative to their peers. Over the longer term. And you mention that higher and segment weren't able to raise prices. In a lot of areas how sustainable is that is that. Part of this you know strategy that would work to turn this company around. You know as they bring new products to market several have been coming with higher priced hey you wouldn't think about the I'm single dose laundry launch a few years back that product is priced at about a 20%. Premium to base liquid tide. But it's a product that offers the consumer convenience. And so it's a product that consumers have been willing to pay out for until I think that that showcases the fact. That if innovations on China with consumer. Preferences. That consumers are willing to pay out. And the stock. It is down a bit not not severely today on the news that you like it. Yes we do think that it P&G is competitively advantaged. That there are strategic efforts to rationalize their brand mix stand to bolster their competitive positioning over the longer term. By any labeling them to focus their resources on the highest return opportunities. And we think the mock market is still reluctant to buy into the fact that they can reignite their top line over the longer term. Even to a low to mid single digit rate on an annual basis. Which is ultimately created an attractive buying opportunity for long term investors. And just quickly any red flags that you see them. Any concern obviously competitive pressures around the globe percents and we've heard several consumer product companies. Talk about the fact that competitive intensity. Has increased particularly from well goal. Players that really understand. The local tastes and preferences as well as the routes to market. And we think that. That is a another challenge and another layer to the competitive landscape. That's likely to persist longer term. Aaron we'll leave it there thank you so much. Thank you for having me I thanks to morningstar's Aron latched on Bobby repel this is Reuters.

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Procter & Gamble profit growth impressive - Erin Lash

Tuesday, April 26, 2016 - 04:22