Procter & Gamble taking out its batteries
Oct. 24, 2014
NEW YORK (AP) — Procter & Gamble plans to remove its batteries and make Duracell a stand-alone company.
The world's largest consumer products maker, which acquired Duracell in 2005, has been trimming its product lineup to focus on its top performers. After it finishes jettisoning more than half its brands around the globe over the next year or two, P&G said it will be left with about 70 to 80 brands.
If a split-off of Duracell occurs, P&G said its shareholders would have the option of exchanging some, none or all of their P&G shares for shares of the new Duracell company.
Jon Moeller, the company's chief financial officer, said during a call with reporters that Duracell is an "attractive" business that generates about $2 billion a year in sales. But he said P&G wants to focus on products that are "even more attractive."
P&G also makes Tide detergent, Pampers diapers and Olay skin care.
The Procter & Gamble Co., based in Cincinnati, said Friday it prefers a spinoff of Duracell, but that it's considering a sale or other options for Duracell.
The decision to sell or discontinue 90 to 100 brands — many of them smaller, regional products — comes as Procter & Gamble fights to boost sluggish sales. In the latest quarter, for instance, the company said sales volume declined in its beauty, hair and personal care unit. Volume also fell in its grooming unit, with blades and razors declining in developed markets.
Under pressure to boost its performance, the company brought back A.G. Lafley as its CEO last year.
Lafley has said the company's expansive portfolio is the result of a natural evolution of multinational companies, which have a tendency to create or acquire brands over time. But P&G had already been trying to slim down in recent years, including the sale of food brands including Jif peanut butter, Folgers coffee and Pringles chips.
Looking ahead, P&G said it now expects sales in 2015 to be flat to up to low-single digits. It previously forecast growth in the low single digits.
It stood by its guidance for core earnings per share to grow in the mid-single-digit range.
For the quarter ended Sept. 30, it earned $1.99 billion, or 69 cents per share. Not including one-time items, it earned $1.07 per share. That matched the consensus of analysts surveyed by FactSet.
Revenue slipped to $20.79 billion. Analysts polled by FactSet expected $20.76 billion.
Shares of P&G climbed $1.52, or 1.8 percent, to $84.75 in premarket trading about 90 minutes ahead of the market open.