NEW YORK (AP) — Procter & Gamble is bringing back former CEO A.G. Lafley, a 33-year industry veteran, to its top post in a surprise move as the world's largest consumer goods maker tries to improve its results globally.
Lafley, 65, replaces CEO Bob McDonald, effective immediately. McDonald, who will retire June 30 after a transition period, served as CEO since 2009. Lafley, who is also taking the president and chairman titles, previously held the role from 2000 to 2009.
"A.G.'s track record and his depth of experience at P&G make him uniquely qualified to lead the Company forward at this important time," said board director Jim McNerney in a statement.
Under McDonald, P&G, which makes Tide detergent, Crest toothpaste and other household goods, has been cutting costs and ramping up innovation to offset a weakened European economy and slowing growth in China. P&G is in the middle of a cost-cutting plan aimed at saving $10 billion by 2016. But investors have been frustrated by slow revenue growth and stagnant market share gains globally.
"It sounds like the board needed a change at the top," said Bernstein analyst Ali Dibadj. "We thought maybe there would be a little bit more of a test runway for current management, but clearly, frustration was very high."
The pressure stepped up last July, when activist investor William Ackman, took a 1 percent stake. He has been vocal about the company's need to streamline operations and improve results.
Last year, P&G acknowledged that it had made missteps in some emerging markets — which make up nearly 40 percent of its sales — when it expanded in certain product areas too quickly. But it then introduced a plan to focus on its 20 biggest new products and its 10 most-profitable emerging markets, which has led to improving market share.
In P&G's most recent quarter, net income rose 6 percent as the company cut costs, and revenue rose 2 percent to $20.6 billion. It had also begun to gain market share in North America. But fourth-quarter guidance was below expectations as the company spent more to market new products.
Dibadj said Lafley was appealing because he knows the culture of P&G. "Everybody respects him," he said.
Lafley said the board approached him "very recently" after McDonald decided to retire and asked him to reclaim the top spot.
"Frankly, duty called," he said in an interview with The Associated Press. "I'm back, I'm full on."
His first order of business, he said, will be to stay on the strategic course that the company has been implementing, focusing on core developed markets as well as developing markets, introducing new products and cutting costs.
"I spent nearly 33 years at this company, and the company has got some momentum right now," he said.
Meanwhile, the board thanked McDonald, who joined the company in 1980, for his service.
"Under his leadership, the company expanded its business in developing markets, built a strong innovation pipeline, and has made substantial progress implementing a $10 billion cost savings and productivity program," McNerney said.
Shares rose 42 cents to $79.12 in aftermarket trading.