Moore Capital starts new position in Procter & Gamble



Moore Capital and Procter & Gamble

Moore Capital started a new position in the Procter & Gamble Company (PG). The quarter also saw Moore raise its positions in Baidu Inc. (BIDU) and Apple Inc. (AAPL). Moore Capital lowered its stakes in JPMorgan Chase & Co (JPM), Hertz Global Holdings, Inc. (HTZ), and Citigroup Inc (C).

The hedge fund disclosed a new position in Procter & Gamble that accounted for 1.23% of the fund’s 2Q14 total portfolio. Renaissance Technologies also added a new position in Procter & Gamble in 2Q14.


Company overview

Procter & Gamble, or P&G, is a global leader in retail goods. It’s focused on providing branded consumer packaged goods. Its customers include mass merchandisers, grocery stores, membership club stores, drug stores, high-frequency stores, distributors, and e-commerce retailers.

The company has five reportable segments under U.S. generally accepted accounting principles (or GAAP)—Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care.

Net sales flat  in 1Q 2015

Article continues below advertisement

P&G reported first-quarter fiscal year 2015 core EPS, or earnings per share, of $1.07, an increase of 2% compared to the previous year. Net sales were unchanged compared to a year ago, at $20.8 billion. Organic sales grew 2% for the quarter, while organic volume remain unchanged in both developed and developing regions. The sales were at or above the levels in each reporting segment last year. P&G posted annual core EPS of $1.07—an increase of 9% compared to the previous year.

Management further added that “P&G’s first quarter results were in-line with our expectations, despite a very difficult operating  environment, this keeps us on-track to deliver our fiscal year commitments.”

The Health Care segment’s organic sales increased 6% due to innovation-driven volume growth in Oral Care and Personal Health Care, along with higher pricing in Oral Care. The Beauty and Grooming segments’ organic sales were flat, as higher pricing benefits were offset by lower volumes.

Baby, Feminine, and Family Care segments’ organic sales increased 4% due to higher pricing in Baby Care and positive sales mix in Feminine care.

P&G closed the divestiture of its pet business in the Americas to Mars, Inc. in July. In September, P&G signed an agreement to divest its European pet business to Spectrum Brands.

Spinoff of Duracell company

The company announced its intention to exit the Duracell personal power business by creating a stand-alone Duracell company. This move will maximize value for the company’s shareholders and minimize earnings per share dilution. P&G plans to exit the battery business by first selling its interest in a China-based battery joint venture, and then splitting off the Duracell business into a stand-alone unit.

Plans to streamline brand portfolio

P&G makes Gillette razors, Pampers diapers, and Tide detergent. It has been in the news because it plans to sell between 90 and 100 of its brands. Selling the products will improve its stock market performance and its competitive position. Without naming the brands, the company said it will retain its core 70 to 80 brands that “are consumer preferred and customer supported.”

On its fourth quarter earnings call, management said, “the 70 to 80 brand portfolio has accounted for 90% of company sales and over 95% of profit” over the last three years. After selling off these brands, the “new streamlined PG should continue to grow faster and more sustainably and reliably create more value,” CEO A.G. Lafley said. He added that this move will “create a faster growing more profitable company that is far simpler to manage and operate.”

P&G said it expects organic sales growth in the low-to-mid single-digit range in fiscal year 2015. The company now expects net sales growth in the low single digits compared to the previous fiscal year. Core EPS is forecasted to grow in the mid-single-digit range for the fiscal year.

The next part of the series covers Moore’s increased stake in Baidu Inc.


More From Market Realist