Procter & Gamble

Sector: CPG Countries of operation: Operates in 84 countries across Africa, the Americas, Asia, Australia, Europe and the Middle East, and sells to over 160 countries. Key product categories: Baby, beauty products, fabric and home care, feminine and family care, grooming, healthcare Annual Metrics [caption id="attachment_151631" align="aligncenter" width="700"] Fiscal year ends on June 30 of same calendar year
*Trailing 12 months ended March 31, 2022[/caption]   Summary Founded in 1837 and headquartered in Cincinnati, Ohio, Procter & Gamble (P&G) is a CPG company that sells products in the baby, beauty products, fabric and home care, feminine and family care, grooming and healthcare categories. The company operates in 84 countries across Africa, the Americas, Asia, Australia, Europe and the Middle East, and sells products in over 160 countries. Top P&G brands include Bounty, Charmin, Crest, Dawn, Downy, Febreze, Gain, Gillette, Head & Shoulders, Herbal Essences, Olay, Oral-B, Pampers, Pantene, Tide, and Vicks, among many others. Company Analysis Coresight Research insight: P&G aims to rely on product innovation and investments into premium beauty to drive growth and fend off high input costs and supply chain difficulties in 2022. The second quarter of fiscal 2022 was a strong quarter for P&G—nine of 10 of its product categories grew despite rising input costs and logistics inflation. The company aims to establish superiority in products where performance is a deciding factor of brand choice, such as in its Dawn dish soap business. Additionally, it hopes to attract US premium consumers through an expansion into prestige beauty, as this category is least susceptible to inflationary pressures, which are expected to increase this year.

Tailwinds

Headwinds

P&G’s “portfolio superiority” rose to 75% in 2021, up from 30% in 2016, according to the company’s 2021 annual report. The company is publishing messages and educational videos to platforms such as TikTok, YouTube and even video games to reach new, younger consumers.

P&G expects freight and transport costs to amount to $300 million in 2022. The company estimates that pandemic-related lockdowns and work stoppages will cost an additional $2.3 billion in 2022. The company will likely need to increase prices across various categories in 2022 to offset the rise in input and freight costs. This could lead to consumers switching to competitors or local players offering products at lower prices.

  Strategy P&G has outlined the following key focus areas to meet customers’ expectations and protect its margins from ongoing supply chain and inflation uncertainties: 1. Implement pricing actions

• To combat high input costs and logistics fees, P&G plans to increase prices in all 10 product categories in the US, affecting approximately 80% of US sales. This pricing strategy is tailored for each category, market and SKU to ensure products remain as affordable as possible to consumers.

2. Ensure product superiority

• P&G is keen to establish product superiority, especially in products where effectiveness is a key determinant of brand choice. Although the company increased its portfolio superiority to 75% in 2021—up from 30% in 2016—competition is always fluctuating, and P&G is eager to improve.

3. Invest in Prestige Beauty

• The company is focused on expanding its Prestige Beauty portfolio through mergers and acquisitions, such as its acquisitions of beauty brands Farmacy Beauty, Ouai and Tula. With these brands, the company specifically plans to target US premium consumers.

4. P&G’s Integrated Strategy

• P&G’s integrated strategy comprises a strong and focused product portfolio across 10 categories designed to win consumers.
• P&G focuses on improving the superiority of these product categories through tests, data, reviews and in-market measurements and maintains higher standards of excellence.
• It also focuses on improving productivity through lower costs, using fewer resources and leveraging digital tools.
• P&G looks at the pandemic-led disruption constructively to bring in positive change through innovation and technology, and create value for its stakeholders. For example, its investment in digitally enabled technology platforms such as the Minimum Order Quantity platform (MOQx) provides flexibility and scalability to produce new SKUs in less than a week (from ideation to production), offering supply chain agility.

Revenue Breakdown (FY21) [caption id="attachment_151633" align="aligncenter" width="700"] Fiscal year ended on June 30, 2021
North America includes Canada, Puerto Rico and the US
Fiscal year ended June 30, 2021[/caption]   Company Developments

Date	Development
June 1, 2022	P&G announces that the US Environmental Protection Agency (EPA) recognized that its Microban 24 Multi-Purpose Cleaner kills 99.9% of the bacteria and viruses that cause Covid-19, for up to 24 hours, despite repeat contact with the cleaned surface.
Apr 20, 2022	Olay and Pantene, in collaboration with Walmart, launch a new Booster collection, offering personalized haircare and skincare solutions. The companies’ R&D teams leveraged consumer data insights to develop products specific to certain skin and hair types, responding to consumers’ demand for personalization and value. The collection is available both in Walmart stores and online.
Apr 20, 2022	P&G estimates that cost pressures, unfavorable foreign exchange rates and tight labor and transportation markets will lead to a $2.5 million after-tax commodity cost headwind in fiscal 2022. It further estimates that the freight and transportation costs will lead to a $400 million after-tax headwind in fiscal 2022.
Jan 19, 2022	P&G estimates that pandemic-related lockdowns and work stoppages in operations will cause $2.3 billion in headwinds in 2022, in addition to $300 million in freight and transport costs.
Oct 12, 2021	P&G appoints Jon R. Moeller, Vice Chair and Chief Operating Officer, to President and Chief Executive Officer by P&G’s Board of Directors, effective November 1, 2021.

  Management Team

• David S. Taylor—Executive Chairman of the Board
• Jon R. Moeller—President, CEO and Vice Chairman
• Andre Schulten—Chief Financial Officer
• Shailesh G. Jejurikar—Chief Operating Officer

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Source: Company reports/S&P Capital IQ