P&G reorgs global businesses

P&G reorgs global businesses

P&G reorgs global businesses

Consumer goods company will be divided into three new global units; Gillette will no longer be a separate business unit.

Procter & Gamble Co. announced an overhaul of its business structure Monday, dividing into three new global units and breaking up the Gillette Co. business it acquired in 2005.

As part of the restructuring, the company will promote Susan Arnold to president, global business units, and Robert McDonald to the newly created position of chief operating officer. Both will be on the same rung of the corporate ladder as Chief Financial Officer Clayton Daley, a level below Chairman and Chief Executive A.G. Lafley.

P&G which competes with Johnson & Johnson and Kimberly-Clark Corp, has nearly doubled its business since 2000 with the acquisitions of the Clairol and Wella hair care businesses and Gillette. The change in structure is designed to meet the needs of a larger business that is also developing new initiatives faster than in the past, Lafley said in a news release.

As part of the restructuring, Gillette will no longer operate as its own global business unit. Its Duracell battery operation will be part of the global household care unit, while the shaving part of the business will come under beauty care.

Several unit presidents and other corporate officers will also leave the Cincinnati-based company, P&G said.

The changes will take effect July 1.

CEO succession?

Arnold, 53, will be in charge of the company's three worldwide business units: beauty care, global health & well being and household care. In that job, she will be responsible for development and innovation in P&G's brands, which also include Tide laundry detergent and the Olay skin care line. She is currently vice chairman for P&G beauty and health products.

McDonald, 53, is vice chairman for global operations. As COO he will be in charge of global operations, including the units that develop P&G's businesses in local markets.

"We believe this news formalizes a potential near-term succession plan with Arnold and McDonald as the primary successors to Lafley," Goldman Sachs analyst Amy Low Chasen wrote in a research note. She rates the shares "buy."

Still, as she noted, "Lafley has no intention to retire" soon. Should the CEO, who turns 60 in June, stay until P&G's mandatory retirement age of 65, he will have five more years at the helm.

At that point, "it is conceivable the board could go with a younger CEO," Chasen wrote. If Lafley were to stay until he turns 65, Arnold and McDonald would both be in their late 50s.

CFO Daley, 55, was given the added role of vice chair.

Bruce Byrnes, 59, vice chairman of the board overseeing household care, has already said he plans to retire in 2008. Until then, Byrnes will serve as vice chair for global brand building training.

Among the other retirements, Mark Leckie, 53, group president of the Gillette global business unit, plans to retire on Sept. 1. Until then, he will serve as group president on special assignment reporting to Daley.

P&G shares were unchanged at $61.64 in afternoon trading on the New York Stock Exchange. The stock, a Dow Jones Industrial Average component, is down about 4 percent this year, while the Blue chip index is up nearly 7 percent.

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