P&G to close another U.S. factory
Procter & Gamble says it will close a chemical factory in New Jersey as part of its ongoing overhaul of its supply chain.
The facility in Avenel, which employs 85 workers and serves P&G's fragrances business, will be closed and sold sometime in 2018. The decision is linked to the company's recent decision to boost capacity at its laundry plant in Lima. Company officials said P&G will relocate or give severance pay to affected workers.
"This is consistent with P&G’s desire to have large, multi-category facilities in strategic locations to better serve our retail customers and consumers," spokesman Damon Jones said.
P&G CEO: Acquisitions may fuel growth
As part of an ongoing review of production sites, P&G has already shuttered two U.S. factories, one in Augusta, Georgia, and another in Puerto Rico. P&G has already sold off a dozen factories and will shed eight more plants under a series of brand divestitures.
The move was disclosed as P&G released financial results Tuesday for its latest fiscal year. The Cincinnati-based consumer products giant reported a $10.5 billion annual profit – up 49 percent from a year ago.
Annual sales dropped 8 percent to $65.3 billion during the fiscal year ended June 30. Organic sales – a closely watched metric that excludes the impact of foreign exchange and mergers and acquisitions – rose a modest 1 percent.
In the final quarter, P&G generated a $2 billion profit on $16.1 billion in sales.
Sales and core profit results beat Wall Street expectations. P&G shares hit a new 52-week high Tuesday of $87.15 before closing $86.76, up 35 cents or 0.4 percent. The stock is up 9.3 percent in 2016, but has been aided investors shift to "safety" stocks that have propelled shares in consumer staples in recent months.
Analysts said P&G enjoyed a solid quarter, but some were underwhelmed by the company's cautious sales forecast.
"We're not sure that the fiscal year 2017 outlook will be enough for P&G shares to hold on to their recent strength," wrote Barclays analyst Lauren Lieberman.
David Taylor, who became CEO Nov. 1 and chairman last month, pledged P&G's rebound will continue.
"We expect fiscal 2017 to mark another significant step toward our goal of balanced growth and value creation and total shareholder return in the top third of our competitive peer group," Taylor said.
Looking ahead, P&G forecast its organic sales would climb 2 percent, while total sales would notch a 1 percent increase. The company also predicted foreign exchange and minor brand divestitures would slightly ding sales growth by 1 percent. The company also said core earnings would increase mid-single digits.
The company's sales have ebbed in recent years amid a worldwide economic slowdown. Two-thirds of P&G's sales come from outside the United States.
Last year, P&G posted a $7 billion profit on sales of $76.3 billion. However, the company has restated it previous financial results to reflect its pending sale of one-third of its beauty business to New York-based Coty. Excluding those brands, P&G's profit was $7 billion on $70.7 billion in sales in the 2015 fiscal year.
P&G's pending beauty sale to Coty is the last major piece of a massive brand-shedding campaign unveiled in 2014. Two years ago, then-CEO A.G. Lafley announced P&G would shed 100 brands in a bid to simplify operations and jump-start sales growth. As part of that, P&G has sold off its Iams and other pet food businesses and Duracell batteries.
P&G expands Ohio plant as it reviews factory ops
OTHER TOP STORIES