Executives Focused on Growing Revenue

Aug. 16, 2007
Companies will hire new workers and go after acquisitions to achieve goals.

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.

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