Growing revenue is the primary goal at large consumer products companies. Over the next 12 months these companies are looking for a 6.3% increase, up from 4.8% in the first quarter of this year, according to PricewaterhouseCoopers' Retail & Consumer Industry Practice's Consumer Products Barometer.
"We saw an interesting up-tick this quarter in revenue growth projections, specifically among those consumer products companies concerned about oil/energy prices," said John Maxwell, leader of PricewaterhouseCoopers' Retail & Consumer Industry Practice. "We believe these companies have passed along costs by raising prices. As a result, revenue growth projections shot up this quarter, which also attributes to the increase in global economic optimism and anticipated M&A activity within the industry."
The Barometer shows that price flexibility is positively impacting large consumer products businesses. Fifty-one percent increased their prices, 15 points higher than both the previous quarter and a year ago (36% each). In fact, more of the oil/energy vulnerable companies raised their prices: 56% versus 46% than their non-vulnerable peers. Costs were also higher by 64%.
Concern about oil/energy prices dropped sharply this quarter (down 19 points to 51%), along with anxiety about market demand (down 13 points to 17% from the first quarter).
Nearly three-quarters (72%) of executives are considering other business initiatives over the next 12 months, led by M&A activity (51%), an increase of 15 points
Looking at future investments over the next 12 months 51%of the companies are going to make capital investments. The overall level of planned investment was moderately high at 6.1% of total sales.
Increased investments are expected in six areas within the next year: new product/service introductions (59%), marketing and sales promotion (49%), information technology (47%), advertising (45%), research & development (38%) and business acquisitions (36%).
Forty percent of executives are planning to increase their workforce over the next 12 months, up 10 points, but still well below the all-industry consensus of 52%. Thirteen percent of consumer products companies expect a net reduction in staff. On average, executives expect the size of their workforce will decrease slightly by 2.1% over the next 12 months due to larger layoffs.