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CINCINNATI — Procter & Gamble Co. (P&G) is spinning off its Duracell business, the latest brand to be jettisoned by the world’s largest consumer products business as it concentrates on its most important markets and brands.
Procter & Gamble Co. (P&G) is spinning off its Duracell business, the latest brand to be jettisoned by the world’s largest consumer products business as it concentrates on its most important markets and brands.
It is likely to split the battery business into a stand-alone company and give shareholders the option of exchanging P&G shares for stock in the new entity, P&G said on Friday as it reported its first quarter financial results.
P&G profits fell 34% in the quarter on sales of $20.8 billion, flat against the same period a year ago. When a hit from foreign exchange rates is excluded, sales rose 2% in the quarter, aided by higher prices, the company said.
Jon Moeller, the company’s chief financial officer, said growth in the U.S. market improved in the period due to modest wage growth, an increase in employment and lower gasoline prices.
"We expect the headwinds facing our industry to continue," Moeller said in a conference call with analysts. "We are taking an important strategy step forward to streamline, simplify and strengthen the company’s business and brand portfolio. We will become a simpler and more focused company of 70 to 80 category-leading, competitively advantaged brands organized into about a dozen business units and four industry-based sectors."
Company officials have said they may divest up to 100 slower-selling brands. P&G boasts dozens of billion-dollar consumer brands — including Tide, Pampers, Crest, Gillette, Oral-B and Olay — sold in 180 countries.
The decision to sell the Duracell business follows the April announcement by Energizer Holdings Inc. that it would split into two separate and publicly traded companies, one selling batteries and household items, and the other selling personal care brands such as Playtex and Stayfree feminine care products.
Sales of disposable batteries have softened since electronic devices began relying mainly on rechargeable batteries.
Duracell controls about one-quarter of the global market for disposable batteries. It generates $2 billion in annual sales and employs 2,700 people.
"Since we acquired the business in 2005 as part of Gillette, Duracell has strengthened its position as the global market leader in the battery category," said P&G chief executive officer A.G. Lafley. "It’s a business with attractive operating profit margins and a history of strong cash generation. I’m confident the business and its employees will continue to thrive as its own company."
