P&G Outlines Path Ahead, How To Survive The Fiscal Cliff

Procter & Gamble (NYSE: PG) is trying to fight shareholder activism at the moment as Bill Ackman has been trying to attract more attention to his calls against the path that P&G has been on. The company said on Tuesday that it is executing on its growth and productivity plan to enhance performance and drive shareholder value. Chairman, President and Chief Executive Officer Bob McDonald made his general statements at the annual shareholder meeting.

We recently said that P&G was one of the great American companies which will survive the coming Fiscal Cliff.   McDonald talked about consistent growth and superior long-term shareholder, a proven business model, taking insights into products, and supporting products with strong marketing programs and broad distribution. Another key issue addressed was P&G's $10-billion productivity program as key drivers to future growth. The board of directors has so far rebuffed real activist efforts and has stood behind McDonald and also behind the company's plan. Product innovations in the market now which were talked up include Tide PODS, Downy UnStopables, ZzzQuil, Pampers Baby Dry, Charmin DuraClean, Bounty Trap & Lock, Crest Pro-Health for Life, and on.

McDonald said that objectives are unchanging, and these include winning with consumers and delivering total shareholder return. Investors will have to wait for third quarter earnings until October 25, 2012. That being said, a policy of "unchanging objectives" is going to drive a call for yet more calls from Bill Ackman as an activist investor.

P&G shares are down 0.6% at $68.70 against a 52-week range of $59.07 to $69.97 and the consensus price target is $71.14. Our take in the Fiscal Cliff survivors list is that P&G's 3.2% dividend yield and some added shareholder pressure may actually take the stock up to $75 or so.

JON C. OGG


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