P&G CEO reassures investors at annual meeting
CHICAGO (Reuters) - Procter & Gamble Co's lineup of beauty and household products can succeed -- even in these volatile economic times, the world's largest consumer product told investors on Tuesday at its annual meeting.
Chairman and Chief Executive A.G. Lafley said that while he cannot guarantee performance in this or any other environment, he is "confident" about P&G's prospects, even though the challenge to grow is "more demanding" now.
Lafley did not comment on P&G's financial prospects, citing a quiet period ahead of its release of first-quarter results on October 29.
"While the economic environment remains volatile and uncertain, I am confident that P&G can and will continue to prosper over the long term," Lafley said. "We are committed to ensuring P&G will continue to be a company you can count on."
Lafley stressed that P&G is saving money even while it spends more than $2 billion per year on innovation, taking cost-reduction steps such as virtual product testing.
He highlighted how products are being promoted to cash-strapped consumers around the world. New U.S. commercials for the men's Fusion razor emphasize that it only costs about $1 per week to use. In the Philippines, the company targets women who wash clothes by hand with advertisements, showing that P&G's Downy can save time since it only needs to be rinsed once, rather than three times as is often done.
Lafley also reminded investors that P&G has paid dividends for 118 years, with increases in the last 52 years. The company is set to pay $5 billion in dividends in the current fiscal year, which ends in June, and plans to repurchase $8 billion to $10 billion of its shares this year.
SHAREHOLDER PROPOSALS DEFEATED
Shares of P&G were up 93 cents, or 1.47 percent, at $64.22 in midday trading after rising to $65.75.
Through Monday, P&G shares had fallen nearly 13.8 percent since the beginning of 2008, compared with a 29.2 percent decline in the Dow Jones industrial average , of which it is a component.
Two shareholder proposals were defeated at the meeting. First, investor Evelyn Davis' motion to have P&G rotate the location of its annual meeting among major cities was voted down. And second, a group request that the board allow shareholders an advisory vote to approve or disapprove the compensation discussion in the annual proxy statement was denied.
"The proxy is a work of art, and the art is obfuscation," Peter Flaherty, the president of the National Legal and Policy Center, who presented the proposal, said.
"I disagree," James McNerney, the chairman of the compensation and leadership development committee, replied. McNerney is chairman and CEO of Boeing Co.
In a lighter moment during the meeting, a retired shareholder asked Lafley why the company uses beauty product models "who have never had a wrinkle in their lives," and said the use of such women defies credibility.
"If it's so good we could use real people," she said, to a round of applause from the crowd, which includes dozens of retirees each year.
P&G's beauty lineup includes the Olay line of skin products and Cover Girl cosmetics.
In August, P&G forecast fiscal 2009 earnings of $3.80 to $3.87 per share, excluding a 50 cent a share gain from the sale of the Folgers coffee business and 12 cents a share in increased restructuring costs. Analysts' average forecast is currently $3.90, according to Reuters Estimates.
(Reporting by Jessica Wohl; editing by Gunna Dickson)