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The Procter & Gamble Company Message Board

  • crazyhorse1786 crazyhorse1786 May 25, 2012 2:45 PM Flag

    Your opinion needed

    Does PG advance from here long term or languish? We have got the increasing sales in Asia going forward but there is lots of competition. You pay up to buy a PG product and the dollar stores etc. are pushing private label brands. PG has great innovation but are their margins under pressure for the forseeable future?

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    • Longer term P&G will advance. There will always be strong competition and it is more highly felt during hard times (recession). P&G has just signaled they will retrench relaative to their expansion efforts (i.e. less aggressive investment) until they stablize and reclaim losses in their key markets (U.S. and China). I suspect Europe is a wait and see based on the termoil there.

      As for their gross margins, don't overemphasize their importance. Going into emerging markets was always going to put pressure on the margins. While an important statistic with a number of key meanings, P&G needs to focus on volume/share growth and EPS. I suspect they will come to realize they will have to cut costs more in the next year in order to manage the top/bottom lines. With 130,000 employees, they have a good 10%-15% room to accomplish this.

      Over the last couple of years P&G has made some classic mistakes, e.g. trying to be a price leader and not recognizing the impact on volume/share and not cutting costs more aggressively and quickly.

      All this said, P&G is a good company and maintains a strong dividend and will emerge a winner as both time and te economy move forward.

 
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