P&G Trims Sails to "Achieve More Balanced Growth"

Procter & Gamble keeps lowering expectations for investors, partly because P&G keeps getting disappointed by shoppers worldwide.

One of the world's largest CPG companies and marketers cut forecasts for its fiscal fourth-quarter (April-June 2012) revenues and earnings today, citing weakness in developed markets such as Europe and North America, less progress than hoped for in emerging markets, and its own inability to cut costs and streamline the business as fast as CEO Bob McDonald would like to.

The new forecast projects a 1 to 2 percent drop in revenue for the April to June quarter, compared with the company's previous forecast of a 1 to 2 percent gain. "We are making the necessary adjustments to our growth strategy to increase focus on our core business and to achieve more balanced growth across geographies, product categories and the top and bottom lines," McDonald said in a statement.

Why does P&G have to keep ratcheting down expectations to catch up with its performance? The company already is in the midst of a restructuring plan that calls for cutting 5,700 jobs by the end of fiscal 2013 and saving $10 billion in costs — including trimming $1 billion in marketing expenditures — by the end of fiscal 2016.

P&G cited several factors, including slower-than-expected market growth rates and market-share softness in developed regions and negative foreign-exchange rates. McDonald told investors on a call that the company has still "struggled with operating profit."

To continue to press his fixes, McDonald said, P&G will try to "keep growing in our home market" even as developing economies represent an ever-bigger portion of its sales, up to 37 percent this year compared wtih 20 percent in 2000.

P&G will focus on promoting and driving growth in its top 40 best-performing businesses, mostly based in China, Brazil and Russia; top 20 innovations; and top 10 developing markets, McDonald said.

And clearly McDonald and his brain trust will be working even harder to make sure they're getting some results during this quarter. He doesn't want to have to deliver the same message again in three months.