P&G commits to marketing despite profit hit

Procter & Gamble has stood by its strategy to invest in brands and product innovation to drive long-term growth despite posting worse than expected sales and profit growth.


The FMCG giant says net sales grew 2 per cent to $20.6bn in the three months to 31 March, the same growth rate registered in the previous quarter.

Core operating profit, which strips out one-off charges, increased 2 per cent during the first quarter was driven by factors including productivity savings.

However, the FMCG company says some of the impact of such efficiency savings was “offset” by higher marketing spend.

P&G is part way through a $10bn cost cutting strategy which includes plans to cut $1bn from its marketing costs. In its third quarter earnings call today (24 April) CEO Bob McDonald reiterated P&G’s commitment to growth through innovation, productivity improvement and cost savings.

The company claims it has made progress in its effort to drive efficiencies by shifting more of its marketing budget to digital media that has a higher ROI than traditional channels.

McDonald also added that innovation “underpins” P&G’s growth strategy and that includes innovation in marketing as well as new products.

He said: “Innovation is not just about invention its about execution. We’re strengthening our execution and communications … in digital media, on packaging and on the shelf, to demonstrate the superior quality our brands provide.”

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