The Procter & Gamble Company (NYSE:PG) Q4 2015 Earnings Conference Call - Final Transcript
Jul 30, 2015 • 08:30 am ET
(Operator Instructions) John Faucher.
So you guys have delivered a lot on the structural stuff, sort of brand disposals, et cetera, and you're delivering on the productivity as evidenced by the gross margin performance. But unlike many of the other companies we all cover, the underlying business appears to be getting worse and maybe at an accelerating rate. So I think this could argue for two things. One, that the organization can't handle this much change at one time and you need to slow down, or conversely, there needs to be a lot more and bigger change, structural leadership, et cetera. So you guys are obviously going with option three right now, which is to sort of stay the course with the initial plan. But why should we all feel comfortable that that's the right course given the results and a little bit to some extent the guidance?
Well, I'd say, John, that we're in the middle of executing that plan, course three as you've outlined, and are to a place where we have the full benefit for instance being able to focus on the 10 product categories which we will as we get through the beauty transition. We're also in the middle of dealing with some very significant market level events, which are kind of outside the strategy completely. But we're the market leader in a lot of the countries that are difficult right now, Russia's an example.
And as I mentioned, we've made a very deliberate choice. The choice we had in Russia was very simple. We could accept negative gross margins in perpetuity, or we could price to restore structural economics so that future growth would be worth something. And that's the choice we've taken there as in other markets. And it's had a significant impact as we expected. So if you look at the month of June, for example, our sales in Russia were down 57%, and we've got to work our way through these things. But we're taking an approach that we're convinced is the right approach for the long-term.
As A.G. mentioned as well, the innovation pipeline which we've been investing to accelerate, that acceleration is going to start hitting the marketplace as we go through the next year, which will help as well. And then hopefully at some point, we get to a place where FX isn't as much of an issue on either the top or bottom line, and we continue to deliver productivity savings which allow us to reinvest behind this innovation and grow faster. We clearly recognize the need to grow faster. We think we're making the choices that will allow that to happen in a sustainable way over the long-term. We're not going to get there in the next quarter or two. But we do expect sequential progress as we move through next fiscal year.
John, I'd just add two quick ones. On your first direct question, I actually think the employees, management and leadership has really stepped up. I