NEW YORK (AP) — Procter & Gamble's fiscal first quarter net income fell 7 percent on a stronger dollar and costs related to restructuring, but its results beat Wall Street expectations in a sign that a turnaround plan that it started in the spring is beginning to work.
The world's largest consumer products company, which has faced declining global market share, in May announced a plan to focus on its 40 top businesses, 20 biggest new products and 10 most profitable emerging markets as it undergoes a cost-cutting plan aimed at saving $10 billion by fiscal 2016.
The maker of well-known consumer goods such as Tide detergent and Pampers diapers said on Thursday that it's ahead of schedule with its planned job cuts, and that it might consider going beyond its $10 billion cost cutting plan. P&G also said it has created a new position called global productivity officer that will report to the CEO and monitor possibilities for cost cuts.
But perhaps most importantly, P&G said is beginning to grow market share. During the three months ending Sept. 30, the company said that it held or grew market share in businesses representing over 45 percent of its revenue during the quarter, up from 30 percent in the fourth quarter. That jumped to nearly 60 percent in the U.S., up from 15 percent in the fourth quarter. Its market share is still slightly down globally, but the company expects global market share gains by the second half of the year
The news comes as P&G has been facing increasing investor displeasure about its lack of global market share growth and pricing and product missteps. The pressure has grown since activist investor William Ackman disclosed that he has a 1 percent stake in the company. Ackman has agitated for change at other companies he has a stake in, such as J.C. Penney and Canadian Pacific Railway.
The results also are a much-need positive for CEO Bob McDonald, who has been criticized for not doing enough to turn around the company that makes well-known consumer goods such as Tide detergent and Pampers diapers. McDonald said the quarterly results show that the company is in the "early innings" of its restructuring plan and that it is showing progress.
"We're confident that this strategy will enable P&G to generate superior levels of shareholder return in both the short and long term," he said.
The results are a step in the right direction for P&G, which has admitted to missteps in balancing growth in emerging markets like China, which account for about 30 percent of its revenue, amid an uncertain global economy and lackluster market share growth overall. As growth in developed markets like the U.S. has slowed, consumer product makers have looked abroad for new customers.
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