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Procter & Gamble planning extensive reorganization of overseas business

By Simon Pitman+

16-Dec-2013

Procter & Gamble is planning an extensive reorganization of its overseas business units as part of efforts to cut down on costs – according to a Bloomberg report.

Three people who are said to be in on the negotiations to finalize the deal, revealed certain details of the plan to two Bloomberg reporters at the end of last week, with the changes focused on Europe, Africa, The Middle East and India.

The changes will see the Western European business unit merged with the Eastern and Central Europe business to create one unit that will continue to focus on the continent as a whole.

Merging geographic units to save on costs

Meanwhile, the other significant move will see the Africa and Middle East business unit merged with the Indian business unit, to form a second, significantly increased unit.

According to the Bloomberg report, the three individuals who revealed the information have chosen to remain anonymous as the news of the reorganization is not due to be announced until the New Year.

The streamlining should serve to make significant back office savings, as well as helping to cut down on certain logistical and distribution costs that can also be shared.

If the move does happen, the number of business units will remain at five – which is currently accounted for by North America, Latina America, Western Europe and the CEEMA business unit, which accounts for Central and Eastern Europe, together with the Middle East and Africa.

Procter & Gamble has had a tough couple of years, with consistent expansion during the prior ten year period resulting in a business that now looks over-stretched and in need of restructuring.

Focus on restructuring US brands

At the beginning of the year, the company announced that former CEO A.G. Lafley would once again be returning to the position in an attempt to turn around the fortunes of the business, ousting Bob McDonald, who oversaw the company during several years of falling sales growth and profitability.

Last month the company said it was putting a plan in place to restructure two of its brands back on the road to recovery after the company’s performance in the all-important North America market continued to decline.

The plan will focus on revamping the Olay and Pantene brands, with CFO Jon Moeller revealing that recent gains in the company’s other beauty segments had been offset by their performance.

"P&G is expecting a heightened level of promotional spending ahead of our product initiatives launched in early next calendar year especially in North America fabric care and beauty,” he said.

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