Procter & Gamble Earnings Call Nuggets: Market Share and Tax Rates

On Friday, Procter & Gamble (NYSE:PG) reported its second quarter earnings report and then discussed the following topics at its earnings conference call. Take a look.

Tax rate expectations and Market Share

Dara Mohsenian – Morgan Stanley asked: Jon, what’s your tax rate expectation for the full year and what’s your expectation on an ongoing basis beyond this year? Second, Bob, I just want to get an update on your view point between gaining market share and driving profitability going forward.

We saw a pretty pronounced focus on market share if you go back a year or year and a half ago and that shifted here the last couple of quarters–more of a profit focus with the higher pricing–but now it looks like you are losing some of the market share momentum you had.

I want to get an update over the next few quarters here if you are willing to see a little bit of market share and you are not too concerned by the share loss given that you led pricing. Or, do you anticipate taking more aggressive actions beyond this selective adjustment you outlined today?

Jon R. Moeller – CFO responded: On the tax rate, the range for this year is 25 percent to 26 percent and the growing rate is one of the biggest questions we have right now. It’s a policy-based question, but assuming status quo, we’d expect a rate of around 26 percent for an ongoing basis.

Bob McDonald – CEO responded: Our leaders are rewarded for building both market share and profit. The overarching goal is to be in the top third of our peer group in total shareholder returns. We also talk about it in our leadership.

At the time where you–I think you and others have interpreted–what I was saying is being a focus on share that was after the AMJ quarter of 2009 and AG. I reported that our market share was growing or in line in about 25 percent of our business.

What was critical at that time was to regain our market share. We’ve gone through a period,as John said earlier, of tremendous pricing and we had lost quite a bit of market share; we had to regain that.

Today’s situation is very different as Jon indicated earlier; we’re in line and growing market share in about 45 percent of our business. We know where the issues are and we’re working on them but our job going forward is to improve the profitability of the company, to grow market share at the same time and to be in the top third of our peer group and total shareholder return. We’re not going to stop until we’re there and we’re even not going to stop once we are there.