Buffett Tells CNBC He Doesn’t Know Solution for P&G
“What goes on inside the place, what mistakes have been made, what the plans are, I don’t know the answers on that,” Buffett, 82, told CNBC today. “The jury’s out on that now, because they have disappointed in terms of earnings and we’ll see what happens. I know the board is actively engaged and trying to come up with a strategy they think makes sense to take the earnings forward.”
Chief Executive Officer Bob McDonald is under pressure from activist investor Bill Ackman after cutting P&G’s forecast three times this year and scaling back price increases that hurt sales. Ackman, whose Pershing Square Capital Management LP took a $1.8 billion stake in P&G in July, has pushed to fire McDonald and split the CEO and chairman roles, a person familiar with the matter has said.
McDonald is working on a turnaround that includes $10 billion in cost cuts through 2016 and a renewed focus on the company’s top categories and markets. P&G’s board in July said it unanimously supports him and his plan after Bloomberg reported that some directors were dissatisfied with his performance and had discussed replacing him. The board said it would monitor the plan’s effectiveness.
“The board and management team are not only fully engaged but also confident in our growth and productivity plan,” Paul Fox, a spokesman for Cincinnati-based P&G, said today in an e- mailed statement. “At P&G, we remain focused on execution and value creation - we are on track and laser focused.”
He declined to comment directly on Buffett’s CNBC interview.
Berkshire’s P&G holding declined 19 percent to 59.6 million shares in the second quarter, according to an August filing disclosing its U.S. stock portfolio. That represents about a 2.2 percent stake in the company and would be valued at about $4 billion at yesterday’s closing price.