• by Thom Forbes  @tforbes, November 9, 2018

As part of its mission of “constructive disruption,” Procter & Gamble yesterday said at its annual investor meeting that it will reorganize next July into six “sector business units” (SBUs) from the previous 10 “product categories,” each with its own CEO reporting to chairman, president and CEO David Taylor. 

P&G also added the vice chairman and COO titles to CFO Jon Moeller’s CV, making him the companywide No. 2. Moeller will also oversee the markets not directly managed within the new SBUs. 

The SBUs and their CEOs will be: beauty (Alex Keith), baby and feminine care (Fama Francisco); fabric and home care (Shailesh Jejurikar); family care and ventures (Mary Lynn Ferguson-McHugh); grooming (Gary Coombe); health care (Steve Bishop).

“These SBUs will have direct sales, profit, cash and value creation responsibility for its largest markets -- U.S., Canada, China, Japan, U.K., Germany, France, Spain, Italy, Russia and smaller adjacent countries -- accounting for about 80% of company sales and 90% of after-tax profit. The SBUs will have responsibility for all facets of the business in these markets: consumer understanding, product and package innovation, brand communications, selling and retail execution, and supply chain,” according to the release announcing the changes. 

“This is the most significant organization change we’ve made in the last 20 years,” Taylor states. “We will have a more engaged, agile and accountable organization focused on winning with consumers through superiority, fueled by productivity, and operating at the speed of the market.”

“The announcement comes after activist investor Nelson Peltz joined the board in March following a vigorous proxy battle. Peltz had previously pushed for a simplified structure, saying it would improve accountability, agility and responsiveness to local needs,” points out CNBC’s Lauren Hirsch.

“Shares of P&G have jumped by more than 29% since hitting a 52-week low of $70.73 a share in May, giving it a market value of $227.6 billion. They closed at $91.36 a share Thursday and were about flat in aftermarket trading,” Hirsch reports. Her colleague, Sara Eisen, taped an interview with CEO Taylor that will air at 10 this morning on “Squawk on the Street."

“Last month, P&G reported its strongest quarterly sales gains in five years, snapping a stretch of lackluster growth. The gains were a signal that the consumer-products giant may be entering a period of more robust growth after a years-long struggle to adapt to rising competition, higher costs and a consumer shift toward smaller brands,” Aisha Al-Muslim writes for the Wall Street Journal.

In an interview, Al-Muslim asked Taylor whether job cuts would be forthcoming. 

“The business leaders will decide over time if changes need to be made to adjust to market conditions and opportunities,” he (sort-of) replied. The company has about  92,000 employees worldwide. Four unit presidents will now report to SBU CEOs, and the roles of two of the sales presidents will be reduced. A spokesman told Al-Muslim that no executives were leaving as part of the reorganization. 

“P&G is already in the middle of a five-year, $10 billion cost-cutting program,” Bloomberg’s Lauren Coleman-Lochner reminds us. That announcement by CFO Moeller in 2016 doubled down on one in 2012, when it also said it would slash $10 billion in costs by “[eliminating] more than 4,000 jobs and [streamlining] its massive marketing budget,” as the WSJreported at the time. 

P&G has not had a COO since Robert McDonald held the title prior to becoming CEO from 2009 to 2013, Alexander Coolidge reports for the Cincinnati Enquirer. But “P&G officials said Moeller’s enhanced role doesn’t necessarily make him a successor to Taylor,” And “unless P&G returns to consistent growth,” he adds, “analysts aren't sure P&G's next CEO will come from within the company.”

Writing before yesterday’s announcement for Dividend Stocks Rock in a piece that was picked up by Seeking Alpha, Olivier Gélinas likes what he’s seeing from Taylor, Moeller at al: “Management’s vision of the future is simple but effective. The company has built a tremendous brand portfolio from which basically everyone is finding what it needs. One of its strongest growth vectors is its name itself. By always stepping up its standards, by delivering ever-increasing volumes to retailers and by never letting shelves empty, PG is building a trustworthy bond between every party involved.”

But, as comments to that piece indicate, not everyone is sold.