• by David Goetzl  @dgoetzl, June 20, 2008

A top executive at the country's largest advertiser offered a somewhat mixed review Thursday of the company's prospects in light of the economic slowdown. Procter & Gamble CFO Clay Daley said the marketer should continue to have solid growth, but at a slower rate.

"We're confident that our focus on productivity and innovation is going to allow the company to deliver on its objectives during more challenging times," he said.

He said the company "was exceeding targets when times were better, and we're delivering our targets when times are tougher."

Daley made his comments at an industry event, pointing out that P&G has a recession-resistant underpinning, with household products ranging from laundry detergent to diapers to toothpaste. He acknowledged that some consumers are looking to "economize," but so far appear to be doing so in bigger-ticket categories--autos, appliances, clothing--than items in the P&G realm.

"Consumers really do not view our products as discretionary ... and as long as we can continue to represent a good value to them," he said, "our business--and we think our markets--could continue to perform reasonably well, albeit [at a] slightly lower growth rate than we would have seen if we had been here a year ago."

In the recently completed first quarter, P&G saw net worldwide sales up 9% to $20.5 billion, and 4% volume growth. In the same period a year ago, net sales were up a lesser 8%, but volume growth was higher at 6%. The company does not break out U.S. results.

P&G shares Thursday were trading in the $65 range, down from a near-$75 52-week high. P&G has raised prices to offset the higher costs it faces in the commodity and energy areas. The company expects its expenses there to be up some $2 billion over the next year.

But Daley said the price jumps (on average about 2% around the world) are not at a "sticker shock" level that should lead to reduced consumption, or nudge consumers to buy less-expensive goods. Even so, P&G's portfolio has products in multiple pricing tiers, he said.

Daley did not address whether some of P&G's cost-savings initiatives would include marketing dollars. The company spent some $4.9 billion in the U.S. on advertising in 2006, according to Ad Age. While domestic growth in the P&G competitive set has slowed about 1% over the last nine months, Daley said P&G's "markets in the United States are still growing at a rate of 2% to 3%."

Private-label competition--the less-expensive products consumers might gravitate to in a challenged economy--have been "relatively flat," Daley added. "They have grown in a few categories, but in most instances P&G share is still performing well."

Daley also said U.S. consumers still appear to be willing to "to trade up to premium products," citing the Gillette Fusion line continuing to grow in share, although it's priced about 30% higher than P&G's Mach 3.

"At the end of the day, if you can deliver the consumer good innovation that is really clear--premium pricing and trading up is still very much available in the marketplace," he said.