A consumer spending slowdown in the U.S. and Western Europe, as well as anemic foreign exchange rates that have undercut profits from Asian and European emerging markets, have taken a toll on Procter & Gamble Co., the Cincinnati-based consumer goods manufacturer.
After reporting a 9 percent increase in net sales and a 20 percent increase in diluted earnings per share, to $3.64, for the fiscal year ended June 30, the maker of products such as Tide laundry detergent and Pampers disposable diapers reported second-quarter results in January of 94 cents per share from continuing operations, less than the 99 cents that analysts had expected. The company also lowered its fiscal 2009 earnings forecast, telling analysts and investors that sales could fall by as much as 4 percent for the year. P&G’s stock tumbled 2.7 percent on the day the company revised its forecast and was down 25.4 percent for the 12 months ended February 28.
John Chevalier, P&G’s director of investor relations, says remaining available to shareholders when times are tough is almost more important than doing so during market upswings. “We’re trying to be more accessible,” he says. “It’s helpful to have a forum for investors to ask questions about how the company is managing in this environment.”
This approach helps set P&G, which investors deem the Most Shareholder-Friendly Company in the Cosmetics, Household & Personal Care Products sector, apart from its competitors. “P&G’s active contact with me as a shareholder in post-earnings-reporting periods, active interest in whether or not I will be attending their presentations at industry conferences and visits to my office periodically with investor relations and other senior management all support my high regard for this company,” explains one money manager.
Jon Moeller, who took over as chief financial officer in January, after Clayton Daley Jr. announced plans to retire this year, places communication with shareholders and providing accessibility to senior management at the top of his list of priorities — during good times and bad.
“At the heart of our investor relations approach is the clear understanding that our shareholders are the owners of the company and that we need to be pro-actively responsive to them,” he says, adding that P&G hosts investor meetings eight times a year at its headquarters and also attends most major investor conferences. “We make sure they understand our strategy, how we’re competitively advantaged and how we’re building on that.”
“I would think most companies should be going out of their way to do that these days, but I’m not sure all of them are,” says one shareholder.
Keeping investors informed when the company revises its estimates is also part of that strategy. P&G faces a challenging and volatile environment, thanks to unfavorable foreign exchange rates, fluctuating commodities prices and illiquid credit markets, and “this makes it more difficult to see what’s ahead,” Moeller says.
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