P&G Gets Boost From Stronger Results In Fight Against Peltz
Procter & Gamble, facing a proxy contest against activist investor Nelson Peltz, has fresh munitions to use in the fight.
The company posted quarterly sales and earnings that topped analysts’ estimates on Thursday, showing that the massive consumer-products maker is performing better than Wall Street figured.
The results lend weight to CEO David Taylor’s argument that the company is successfully navigating a turnaround. Peltz, head of Trian Fund Management, began a proxy battle for a board seat this month, saying he can help shake up a complex and slow-moving bureaucracy.
“We, as a management team and board, are confident we have the right plan in place,” Taylor said in Thursday’s statement.
The shares climbed as much as 2.7% to $91.68 in early trading. They had been up 6.2% this year through Wednesday’s close.
Earnings in the fiscal fourth quarter were 85 cents a share, excluding some items, topping the 78-cent estimate of analysts. Sales amounted to $16.08 billion in the period, which ended in June. That compared with a projection of $16.01 billion.
Restoring growth has been a key objective for P&G. On that front, the last quarter was mixed. Though the company posted a 2% gain in organic revenue - a figure that strips out currency effects and deals - its net sales were unchanged.
P&G, based in Cincinnati, expects organic revenue to grow 2% to 3% in the coming year. Earnings will climb 5% to 7%.
Like many consumer-products giants, P&G is contending with sluggish demand and heavier competition from upstart brands. Retailers also are putting more pressure on the companies as they try to become more efficient and ward off a threat from Amazon.
P&G has shed scores of brands in recent years, aiming to refocus on its best-performing products. Taylor, who took over in November 2015, also has pledged to shake up the company’s famously sclerotic culture. He’s pursuing a $10 billion cost-cutting program and opening up hiring to more outside talent.
But P&G is still moving too slowly, according to Peltz. In a statement that followed P&G’s earnings results, Trian said that the company’s return to shareholders is less than half the level of its peers over the past decade.
“While P&G says it is addressing the underperformance issue, shareholders have heard similar promises in the past and results have not materially improved,” Trian said.