Active Stocks
Tue Mar 19 2024 10:01:05
  1. Tata Consultancy Services share price
  2. 4,032.60 -2.71%
  1. Tata Steel share price
  2. 150.00 0.27%
  1. NTPC share price
  2. 313.55 -1.14%
  1. HDFC Bank share price
  2. 1,442.00 -0.29%
  1. ITC share price
  2. 416.40 -0.24%
Business News/ Money / P&G’s visibility improves at the retail level, ad revenues jump
BackBack

P&G’s visibility improves at the retail level, ad revenues jump

P&G’s visibility improves at the retail level, ad revenues jump

Premium


Its FY09 (year ended June) performance was more subdued. While revenues grew by a smart 20% to Rs772 crore, its operating profit grew at a lower rate of 18%. P&G operates in two difficult categories. Vicks is a valuable but old brand that has to keep looking younger. There are years in which its growth flags, though the past two years have seen good growth. Competition is stiff in this category with several new products being launched. Whisper is targeting a vast feminine hygiene market, but one where penetration is low since consumers don’t convert easily.

Graphics: Paras jain / Mint

In FY09, higher input costs and advertising expenses pulled down operating margins by 44 basis points (100 basis points equals?1?percentage point). Material costs softened in the latter part of the year. If net profit grew by 36% despite lower operating profit, it was due to higher other income and lower income tax. P&G generated nearly Rs130 crore cash in fiscal 2008 and would have seen healthy accretion in FY09. Hence, other income rose by 147% to Rs37 crore.

While P&G’s advertising spend slowed in the last quarter, that need not be a trend, since spends are not evenly?spread?during?the?year.

In the past, a poor monsoon has had an effect on the market for cold remedies. This may be seen in the current quarter’s performance. Sustaining growth rates at these levels is indeed a challenge. But P&G has fallen back upon well established strategies of expanding distribution, improving visibility, advertising and brand re-launches. They may seem simple, but if done well can work wonders in difficult categories such as these.

Write to us at marktomarket@livemint.com

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 28 Aug 2009, 10:10 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App