Proctor and Gamble 2005 Annual Report Download - page 10
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categorieswherewedidnotcompeteorthatdidnotexist
fouryearsago.
Wewillcontinuetoinvestinnewbusinesses,withemphasis
onenteringorcreatingcategoriesadjacenttoexistingP&G
categories.Wehaveidentifiedmorethan$20billionof
opportunityincategoriesthataregrowinganaverage6%
peryearwithP&G-averagemargins.Thesenewcategories
arecloseenoughtoP&G’scoretogiveusconfidencewe
couldbeaseriouscontenderforleadership.
ChallengestoGrowth
Evenwiththesesignificantgrowthopportunities,weare
realisticaboutthechallengesweface.
CompletingtheintegrationofGilletteisakeychallenge.
We’veidentified$1–$1.2billionincostsynergies.Weremain
confidentwecanachievethesesynergieswhileintegrating
ourcompaniesand,importantly,keepingP&G’sandGillette’s
existingbusinesseshealthyandgrowing.
Competitivepressureisunrelenting.P&Gcompetesagainst
someofthebestcompaniesintheworld,andwecanexpect
themtocontinuecompetingaggressively.Weknowwemust
sustainthepaceofinnovationthathasbeenakeydriver
ofP&G’ssuccessoverthepastseveralyears.Atthesame
time,weknowitislikelythatcompetitorswillcontinueto
competeonpriceandtradeincentives,sowemustpreserve
thefinancialflexibilitytopricecompetitivelytoensure
consumervalueandtoprotectP&Gbrandmarketshares.
Thehighcostofcommoditiesandothermaterialsisanother
significantchallenge.Oilisup45%versusyearago.Resin
costsareup20%.Coffeebeansareupmorethan40%.All
thisisresultinginhigherproductcosts.Wewillcontinueto
takepricingactionstorecovercommodityincreaseswhere
andwhenwecan,andwewillcontinuetofocusonongoing
costsavingstooffsetcommodityincreases.
Thesearesomeofthechallengesweface.Therewillbe
otherchallengeswecannotpredict.Thekeyistohave
thefinancialflexibilityandorganizationalagilitytorespond
evenwhenunexpectedissuesarise.ThisiswhyP&G’s
balanceandleadershiparesoimportant.TheCompany’s
balanceprovidesthefinancialflexibilityweneedtorespond
toexternalchallenges.P&G’sleadershipenablesusto
continueinvestingingrowthandtocontinuecreatingvalue
withretailpartnersandsuppliers,evenaswemanage
throughtoughchallenges.
Wearerealistic
aboutthechallenges
wewillface,andwe
havethefinancial
flexibilityand
organizational
agilitytorespond
evenwhenunexpected
issuesarise.