Proctor and Gamble 2005 Annual Report Download - page 31
Download and view the complete annual report
Please find page 31 of the 2005 Proctor and Gamble annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Management’sDiscussionandAnalysis TheProcter&GambleCompanyandSubsidiaries 27
amongmanycompetitiveofferings.TheGBUisfocusedonwinning
the“secondmomentoftruth”–whentheconsumerusestheproduct
andevaluateshowwelltheproductmeetshisorherexpectations.
°GlobalBusinessServices(GBS)operatesasthe“backoffice”for
theGBUandMDOorganizations,providingworld-classtechnology,
processesandstandarddatatoolstobetterunderstandthebusiness
andbetterserveconsumersandcustomers.GBSpersonnelorhighly
efficientandeffectivethirdpartypartnersprovidetheseservices.
• Focusingrelentlesslytoimprovecostsandgeneratecash.Each
GBUisevaluatedontheirabilitytosupporttheCompany’sfinancial
goals.Thisincludesanevaluationofnetsalesgrowth,earnings
growthandprofitmarginexpansion.GBUsarealsoevaluatedon
theirabilitytogeneratecash,forexample,byincreasingcapacity
utilizationandmeetingcapitalspendingtargets.
Summaryof2005Results
ForthefiscalyearendedJune30,2005,wedeliveredourfourth
consecutiveyearofsalesgrowth,earningspersharegrowthandfree
cashflowproductivityatoraboveourtargets.
• Netsalesincreased10%.Netsalesincreased8%excludingthe
impactofforeignexchange–aboveourtargetof4%to6%.
Organicsales,whichexcludestheimpactsofacquisition,divestitures
andforeignexchange,alsoincreased8%.
°EveryGBUdeliveredvolumegrowthratesofhigh-single
digitsorgreater.WithintheMDO,everygeographicregion
postedvolumegrowth,ledbydevelopingmarketsuphigh-teens.
°Weincreasedouroverallmarketshareincategoriesrepresenting
approximatelytwo-thirdsoftheCompany’snetsales.Weincreased
marketshareineachofourcorebusinessesofBabyCare,Fabric
Care,FeminineCareandHairCare.
• Dilutednetearningspershareincreased15%dueprimarilyto
volumegrowth.
• Cashflowfromoperatingactivitieswas$8.72billion.Freecashflow
productivitywasin-linewithourtargetof90%.
MarketOverviewandChallenges
Ourmarketenvironmentishighlycompetitive,withbothglobaland
localcompetitors.Inmanyofthemarketsandindustrysegments
inwhichwesellourproducts,wecompeteagainstotherbranded
products,aswellasretailerandprivate-labelbrands.Additionally,
manyoftheproductsegmentsinwhichwecompetearedifferentiated
byprice(referredtoaspremium,mid-tierandvalue-tierproducts).
Generallyspeaking,wecompetewithpremiumandmid-tierproducts
andarewellpositionedintheindustrysegmentsandmarketsinwhich
weoperate–oftenholdingaleadershiporsignificantshareposition.
P&GBeauty.Wecompeteinseveralcategoriesofthebeautymarket
includingRetailandProfessionalHairCare,SkinCare,FeminineCare,
Cosmetics,FineFragrancesandPersonalCleansing.Thebeautymarkets
inwhichwecompetecompriseapproximately$200billioninglobal
retailsales,resultinginouroverallsharepositionofabout10%.
Wearetheglobalmarketleader inHairCare,one of ourcore
businesses,withapproximatelya24%shareoftheglobalmarket.
WearealsotheglobalmarketleaderintheFeminineCarecategory,
anothercorebusiness,withapproximatelya36%shareofthemarket.
Billion-dollarbrandsinP&GBeautyincludePantene,Wella,Olay,Always
andHead&Shoulders.
P&GFamilyHealth.InP&GFamilyHealth,wecompeteinseveraldistinct
healthcareproductcategoriesincludingOralCare,Pharmaceuticals,
PersonalHealthandPetHealthandNutrition.InOralCare,thereare
severalglobalcompetitorsinthemarket,ofwhichwehavethenumber
twoshareposition.OurPharmaceuticalsbusinesshasapproximately
33%oftheglobalbisphosphonatesmarketforthetreatmentof
osteoporosisundertheActonelbrand.Actonel,alongwithCrestand
Iams,eachhaveannualsalesoveronebilliondollars.
BabyCareandFamilyCarecompeteprimarilyintheDiapers,Baby
Wipes,BathTissueandKitchenTowelcategories.BabyCareisoneof
ourcorebusinesseswithaglobalshareofapproximately37%ofthe
marketbehindthestrengthofPampers,withannualsalesinexcessof
$6billion.Themarketsinwhichwecompetegenerallyincludetwoto
threeglobalcompanies,aswellaslocalcompetitorsandretailerbrands.
FamilyCareispredominantlyaNorthAmericanbusiness.TheBounty
andCharminbrands,withapproximatelya43%and27%marketshare
intheUnitedStates,respectively,eachhaveannualsalesoverone
billiondollars.
P&GHouseholdCare.InP&GHouseholdCare,theFabricCareand
HomeCarebusinessesoperateinaglobalmarketcontainingnumerous
brandsineachgeography.Wegenerallyhavethenumberoneornumber
twosharepositioninthemarketsinwhichwecompete,withparticular
strengthinNorthAmericaandEurope.FabricCareisoneofourcore
businessesandwearetheglobalmarketleaderwithapproximatelya
32%share.HomeCarecompetesintheDishCare,SurfaceCareandAir
Careproductcategories.Fourofourbillion-dollarbrandsarepartofthe
FabricCareandHomeCarebusinesses:Tide,Ariel,DownyandDawn.
InSnacksandCoffee,wecompeteprimarilyintwoindustrycategories:
SaltedSnacksandCoffee.InSaltedSnacks,wecompeteagainst
bothglobalandlocalcompanies.Oneglobalcompanydominates
thecategory.InCoffee,weholdaleadershippositionofthebrands
soldpredominantlythroughgrocery,massmerchandiseandclub