Cincinnati, Ohio
www.pg.com

Corporate Sales: $76.3 billion

Beauty Sales: $18.1 billion (beauty, hair & personal care)

Key Personnel: AG Lafley, chairman, president and chief executive officer (pending executive chairman of the board, November 1); David Taylor pending president and chief executive officer (November 1; former group president, global beauty, grooming and healthcare); Patrice Louvet, group president, global beauty; Colleen E. Jay, president, beauty specialty businesses; R. Alexandra Keith, president, global skin and personal care; Charles E. Pierce, group president, global grooming.

Major Products/Brands: Head & Shoulders, Olay, SK-II, Cover Girl, Nioxin, Pantene, Herbal Essences, Pert, Sebastian, Vidal Sassoon, Aussie, DDF, Nice ’n Easy, Dolce & Gabanna, 007, Hugo Boss, Lacoste, Puma, Dunhill, Escada, Dulce & Gabbana, Fekkai, Gucci Crest, Scope, Ivory, Old Spice, Safeguard.

New Products: CoverGirl Star Wars Collection, Head & Shoulders Full & Thick Advanced Thickening Tonic for Men, Olay {Out Of This Swirled!} Deep Pore Clean Plus Exfoliating Scrub, Essence of Honeysuckle + White Tea, Herbal Essences Wild Naturals Rejuvenating Body Wash, Vidal Sassoon Pro Series, Gillette Odor Shield Body Wash, Crest Pro-Health.

Comments: The heat is on at P&G, where a long talked about turnaround strategy has now been set in motion. But did it come too late? Or just in time?

Procter & Gamble reported a $7 billion profit for its 2015 fiscal year ended June 30, which was an alarming 40% plummet from the year before. Corporate sales decreased 5% to $76.3 billion.

The company attributed poor results mostly to weakened foreign currencies, which reduced total sales by 6%. In addition, the company experienced troubled sales in China, and took a $2.1 billion charge as it changed its accounting method for Venezuelan operations.

Organic sales for the Beauty, Hair and Personal Care segment declined 1%, as increased pricing only partially offset lower volume. Innovation-driven sales growth in Cosmetics and Salon Professional categories was offset by a sales decline in Skin and Personal Care due to competition and decreased sales in Prestige due to lower levels of innovation. Hair Care organic sales were unchanged as modest growth from pricing in developing markets was offset by lower volume in developing regions due to competition.

Beauty, Hair and Personal Care sales topped out at $18.1 billion, a 7% drop from last year.

The buzz throughout the year centered on Lafley’s targeted plan of selling off about 80 to 90 of the company’s 120 brands, keeping only the top performers. Rumors finally came to an end in June when P&G announced a huge merger deal with Coty.
Following an earlier sale to Unilever of Camay and Zest brands—the first time P&G transferred brands to a competitor—the consumer products giant made a large divestiture leap, accepting Coty’s offer of $12.5 billion for 43 brands, from hair care to cosmetics. The transaction includes P&G’s global salon professional hair care and color, retail hair color, cosmetics and fine fragrance businesses, along with select hair styling brands. (See Coty, at No. 12 on our list for a rundown on brands included in the deal.)

Following the transaction, which is expected to close in the second half of 2016, P&G shareholders will own 52% of all outstanding shares on a fully diluted basis (inclusive of all outstanding equity grants), while Coty’s existing shareholders will own 48% percent of the combined company.

P&G Beauty will remain focused on the Skin Care, Personal Care, and Hair Care categories and aims to continue to be a beauty industry leader with the No.1 or No. 2 brands globally in each category, including Olay, SK-II, Head & Shoulders, Pantene, Rejoice, Vidal Sassoon, Herbal Essences, Aussie, Old Spice, Safeguard and Secret.

While Lafley, in his second tenure at P&G’s helm, laid the groundwork for the selloff, this November he will hand the corporate reins to incoming president and CEO David Taylor, the company’s 14th CEO, who will be tasked with fixing the company’s flagging beauty business. Lafley will remain on the board of directors as executive chairman to smooth the leadership transition.

News of Note

In February, P&G announced plans to build a $500 million manufacturing plant in West Virginia, which will be only its second new site in the U.S. since 1971. The plant, set to open in 2017, will encompass more than 1 million square feet and employ 700 full-time workers. P&G says the facility will be able to supply products to 80% of the East Coast within one day, but is yet to disclose which brands will be manufactured at the new location.

In May, P&G announced one of its initial beauty divestments, returning the Frédéric Fekkai brand back to Fekkai Brands. P&G purchased the brand in 2008 when it expanded its reach into luxury hair care.

Toward the end of 2014, P&G released expanded sustainability goals, including a desire to double the company’s use of recycled resin in plastic packaging. The report covered 12 established environmental sustainability goals including the use of 100% recycled or renewable materials for all products and packaging.

According to P&G’s sustainability report, “While there are practical limits on how far packaging can be reduced, our continued focus on design optimization makes us confident that we will achieve our goal of reducing packaging by 20% per consumer use by 2020.” Since 2010, the company says it has shrunk packaging by 4.5% per consumer use.

Based on confidence that the 2020 goal will be reached, the company said it was eyeing the goal of doubling the use of recycled resin in plastic packaging. P&G also said it wants to ensure that 90% of its packaging is “recyclable or that programs are in place to create the ability to recycle it.”

Looking Ahead

P&G said that its guidance for fiscal year 2016 is relative to fiscal 2015 results “after estimated restatements to report the earnings from the Beauty categories it plans to exit as discontinued operations.”