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Analysts give Procter & Gamble positive longer-term forecast

By Simon Pitman , 10-Jan-2013
Last updated on 11-Jan-2013 at 13:04 GMT2013-01-11T13:04:24Z

It seems that the restructuring plan implemented by Procter & Gamble CEO Bob McDonald last year is now giving financial analysts reason to believe the company's longer term future is looking bright.

In the past week a hand full of analysts have given the thumbs up to the direction the company is going in following its restructuring, suggesting that the longer-term prospects for the business will be reversed following its particularly poor financial performance in 2012.

Procter and Gamble’s long-term outlook is much brighter, despite the recent disappointing financial performance, said Tim Travis in a recent contribution to the Seeking Alpha Portal.

Don't expect anything amazing to happen right now

“I believe that the company's disappointing performance over the last several years has created an attractive long-term entry-point for the patient investor,” Travis said.

He also points to the fact that both US and worldwide demographic patterns are likely to favor P&G in the future, particularly given the fact that there is a growing middle class in developing markets where the company is already well established.

Likewise, the company is also being tipped as a future outperform, according to a post to the investing community website Motley Fool, by expert Brian Pacampara.

Ahead of the plan on restructuring objectives

Procter & Gamble executives have reported that they are ahead of objectives for restructuring plans aimed at saving the company $10 billion by the year 2016.

Pacampara’s post also refers to two other trends that are likely to be in P&G favor - the continuing pattern of industry consolidation, which is resulting in fewer competitors, together with the continuing downward direction of commodity costs.

Although P&G has been losing market share to competitors such as Colgate Palmolive and Kimberly-Clark, business that have weathered the economic downtown better, since implementing a restructuring program that also entails focusing on its strongest brands, the company is now starting to see clear returns.

Four-point plan for innovation

The company has also underlined a four-point plan for innovation, which has evolved which aims to help shape the business structure, especially during the challenging economic conditions it is facing up to presently.

The four points center on the fact that innovation has to be balanced, must communicate value, it concerns all of the company's employees and that it has to be sparked by connecting with the consumer.

 This is expected to give way to an emphasis on technologically advanced product formulations and packaging, together with an actual emphasis on technology itself in the form of electronic devices for hair and skin care applications.

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