P&G Reports Profit and Sales Growth; Announces a Plan to turn Folgers into a stand alone Coffee Company

P&G Reports Profit and Sales Growth; Announces a Plan to turn Folgers into a stand alone Coffee Company
Febrero 02, 2008
The Procter &Gamble Company (NYSE: PG) announced net sales growth of nine percent to $21.6 billion for the quarter. Sales were up behind strong volume growth from continued success on key product initiatives and double-digit organic growth in developing regions. Organic volume increased six percent and organic sales were up five percent for the quarter. Diluted earnings per share increased 17 percent to $0.98 per share, above the top end of the company's $0.95 to $0.97 per share guidance range. Earnings grew as topline growth and continued Gillette synergy benefits more than offset higher commodity costs.

P&G announced plans to separate its coffee business and create an independent company named The Folgers Coffee Company. The coffee business had sales of approximately $1.6 billion and operating income of about $350 million in fiscal 2007. The new company will employ approximately 1,250 employees at four sites in the U.S., and will be headquartered in Cincinnati, Ohio.

P&G believes the transaction will be good for the coffee business as the business will get greater priority and attention as a standalone company. Folgers is the leading retail coffee brand in North America, has attractive operating profit margins and is a strong cash generator.

In anticipation of the transaction, P&G has named Mr. Jamie Egasti to serve as Chief Executive Officer of The Folgers Coffee Company. Mr. Egasti currently serves P&G as President, Coffee and Global Snacks.

P&G's announcement that Folgers will become a stand-alone company follows a long period of speculation in the financial world that P&G would spin off Folgers, Duracell and Pringles (August 2007, January 2008). No announcements were made related to the future of Duracell and Pringles.

This announcement is likely to fuel further speculation on the future of Duracell and Pringles. 

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