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June 11, 2009

New P&G leader sees potential overseas

Strongest sales growth recently is emerging markets

DAN SEWELL AP Business Writer

CINCINNATI — New Procter & Gamble Co. chief Bob McDonald sees a brighter future for the 172-year-old company through selling more diapers, detergent and shampoo in places like India and Africa.

With plans to double sales and streamline the world’s largest consumer products company, whose earnings growth have slowed during the recession, McDonald is to move from chief operating officer to CEO in three weeks.

“We’re going to focus even more on winning with consumers in emerging markets,” McDonald said in a conference call Wednesday shortly after P&G announced he will succeed A.G. Lafley on July 1. “We’re serving about 3.5 billion people of nearly 7 billion people on the planet today, and I’m confident we can reach at least another billion or more in the decade ahead.”

Lafley will stay on as a full-time chairman and adviser to McDonald after nine years as CEO of the maker of Tide detergent, Crest toothpaste and Olay skin cream. Lafley turns 62 on Saturday, while McDonald will be 56 later this month.

P&G’s board praised McDonald in a statement as “the most broadly and globally experienced CEO in P&G history.” McDonald has lived and worked in Europe, Canada and Asia. He went to the Philippines in 1991 as general manager and later led P&G’s Asian operations from Japan.

P&G’s strongest sales growth in the last few years has been in emerging markets, and McDonald, who just returned from a trip to Russia and southeast Asia, plans to step that up. He thinks P&G can more than double its annual sales, to $175 billion a year, over the next 15 years mainly in countries with booming populations and still-developing economies.

The company’s paper products plant in Mehoopany is its largest North American facility, with about 2,200 employees and 2,000 subcontractors.

Ali Dibadj, a senior analyst for Sanford C. Bernstein, said there is some question about whether consumers in such countries will keep trading up to big-brand products, but the potential for growth is clear.

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