All Eyes on P&G At Paris Consumer Conference

Chairman-CEO McDonald To Discuss Financials As Investor Pressure Rises Over Restructuring

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Procter & Gamble Co. is expected by some to issue guidance below analysts' consensus for the fiscal year starting July 1 and possibly pre-announce an earnings miss for the current quarter when Chairman-CEO Bob McDonald delivers a closely watched talk at the Deutsche Bank Global Consumer conference in Paris tomorrow.

Mr. McDonald's speech is getting more attention than a typical midterm investor conference after a series of harsh analyst reports; a contentious conference call about the fiscal-third-quarter results in April amid a disappointing top-line performance; and a February restructuring plan calling for $10 billion in cost cuts, including $1 billion in restrained marketing spending growth.

Spokesman Paul Fox declined to comment ahead of the presentation, though he said financials will be discussed.

"We have a very clear focus on what we must do to return to the level of growth we and our shareholders expect," he said in an e-mail. "We face this reality with absolute clarity. We need to provide better balance on the top and bottom line over the short and long term. We need to win where it matters most and that is with our top 40 businesses, top 20 innovations and top 10 developing markets."

In an unusually scathing report on Monday, particularly from an analyst with an outperform rating on the stock, Sanford C. Bernstein's Ali Dibadj said he expects below-consensus earnings-per-share growth guidance of 0%-5% and possibly an earnings miss for the current quarter given data suggesting poor market-share performance.

Mr. Dibadj outlined a dozen cases over the past three years where he said investors or analysts questioned P&G's strategy or prospects and the company provided reassurances but "ended up being simply wrong," undermining credibility with Wall Street . Those included rosier-than-reality outlooks on how consumers would react to price hikes and how tough competitors were getting with cost savings of their own.

Mr. Dibadj recommended a series of options, including deeper or faster restructuring and organizational change, broader price cuts or simply moving away from being a growth company in favor of offering cash and dividend generation.

He also said P&G should communicate a succession plan for Mr. McDonald, even if it's a long-term plan, either identifying a current candidate or considering an external hire from among a long list of P&G veterans, including former Vice Chairs Jim Kilts, Susan Arnold , Ed Shirley and Rob Steele.

P&G declined to comment on Mr. Dibadj's report. The investor pressure on P&G comes after two years of the biggest U.S. and global advertiser ramping up spending considerably, but still falling behind key rivals such as Unilever, L'Oreal and Colgate-Palmolive Co.on the top line and seeing market shares decline broadly in recent quarters. P&G spent $9.3 billion in reported advertising globally and around $13.7 billion on all-in marketing outlays in its last fiscal year.

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