For some big companies, breaking up is in vogue — but not Procter & Gamble Co., according to its CEO.
Analysts on a call after the company reported its earnings Friday asked CEO Bob McDonald whether the world's biggest consumer products maker would do better if it were broken into separate units.
Sanford C. Bernstein analyst Ali Dibadj said some investors believe the company is "too complex" and that more-focused competitors like Colgate-Palmolive Co. or Kimberly-Clark Corp. will perform better in the future. Some would like P&G to break into one company producing personal-care products like shampoo and another making home-care products like paper towels.
There's plenty of precedent: Kraft Foods Inc. announced this summer that it would split into one company producing groceries and another making candy and snacks. And Ralcorp Holdings Inc. is spinning off its Post cereal business, and Sara Lee Corp. is cleaving into a beverage maker and a retail and food service company.
In contrast, McDonald said P&G's economies of scale actually give it an advantage, but he also noted that the company has been streamlining by getting rid of food brands.
MCDONALD: The question is, can a company with the scale like ours win versus the more focused company that you had talked about. And we will help you see evidence of that along the way. I've gotten asked ... many times recently, would we consider doing something like Kraft? I would argue that's exactly what we have been doing, as major portions of our business, whether it's pharmaceuticals or coffee and now snacks, leave the portfolio. But I think the fact that we're making good progress in oral care — and ... we're expanding our oral care offerings to the balance of Latin America - you're going to see further evidence of this."
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