Trian Partners Activist Presentation Deck
P&G's Headline Productivity Plans Appear Unrealistic
M
▪ P&G has announced two major productivity programs, beginning in fiscal 2012 and running through 2021,
for a total of up to $23bn in targeted savings(1). For context, net sales were only $65bn in 2017
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N
$23bn represents ~29% of 2017 gross sales, and ~33% of net sales (excluding trade spend from the savings)
- in Trian's view an unrealistic target
Trian believes the $23bn number includes a combination of the following, obfuscating the target and result
- Savings projected in future (higher) dollars
Gross savings targets before certain roles and functions are
added back elsewhere in the Company
- "Cost avoidance:" treating expense categories that
grow slower than an assumed baseline rate as real
savings when costs still rise from prior year's levels
▪ In Trian's view, beginning a cost savings program with an unrealistic target based on future numbers and
theoretical benchmarks diminishes the probability of achieving the desired result
FY 2012-2016 Productivity Program
Announced Savings: $10 billion
Total Savings ($bn)
Cost
Trade Spend
Cost of Goods Sold
Marketing
General & Administrative
Total
N/A
$6bn
$3bn
Gross savings targets before accounting for roles or functions
that are outsourced
$1bn
$10bn
FY 2017-2021 Productivity Program
Announced Savings: $12-13 billion
Total Savings ($bn)
Cost
Trade Spend
Cost of Goods Sold
Marketing
General & Administrative
Total
$1.5bn
$7bn
$2bn
$1-2bn
$12-$13bn
Source: P&G investor presentations.
(1) P&G announced a goal to reduce costs by $10 billion dollars by 2016 at the Consumer Analyst Group of New York Conference held on February 23, 2012. In
addition, P&G detailed an additional savings opportunity of up to $13 billion on their Q3 2017 earnings call on April 26, 2017.
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