Proctor and Gamble 2005 Annual Report Download - page 37
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Please find page 37 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 33
profitgrowthfromhighervolumeandproductcostsavings.Family
Careearningsdeclinedslightlyduetoincreasesincommoditycosts
(bothpulpandnaturalgas)andincreasedspendingtokeepprices
competitiveinadifficultmarketenvironment.
P&GHouseholdCare
FabricCareandHomeCare.Unitvolumeincreasedby9%inFabric
CareandHomeCare,withbothbusinessesdeliveringupper-single
digitgrowth.AcquisitionsinEuropeandLatinAmericacontributed
2%tovolumegrowthversustheprioryear.Unitvolumeincreased
behindstronginitiativeactivity,expansionoftheportfoliotoserve
more consumersandcontinued growthin developingmarkets.
VolumeincreasedbehindthecontinuedsuccessofLenor,Febreze
AirEffects,SwifferDusterandGain,aswellasthelaunchesofTide
Coldwater,DownySimplePleasuresandMr.CleanMagicReach.
Developingmarketsgrewvolumebydouble-digits,ledbythecontinued
successofTideinGreaterChina.Netsalesincreased10%to$15.26
billion.Foreignexchangeadded2%tosalesgrowth.Themiximpact
ofhigherrelativegrowthindevelopingmarketsreducedsalesby1%.
GlobalmarketsharefortheFabricCarebusinesswasupslightlycompared
tothepreviousyearto32%.GlobalmarketshareforHomeCarealso
increasedmodestlyto20%.InAirCare,Febrezeearneda14%share
oftheinstantairfreshenermarketbehindthesuccessfullaunchof
FebrezeAirEffects.
Netearningswere$2.13billion,adecreaseof2%comparedtothe
prioryear.After-taxearningsmargindecreased180basispointsdue
primarilytohighercommoditycosts,whichmorethanoffsetthescale
benefitsofvolumegrowthandpricingactionsincertainmarkets.
Additionally,after-taxmarginin2005waslowerduetothemixeffect
ofhighergrowthratesindevelopingmarkets,wherethemarginsare
lowerthanindevelopedmarkets.Weexpectcontinuedmarginpressure
in2006fromhighercommoditycostsandgrowthindevelopingmarkets.
In2004,FabricCareandHomeCareunitvolumeincreased9%behind
growthonestablishedbrandssuchasTide,Ariel,GainandAceand
thesuccessofinitiativesincludingMr.CleanMagicEraser,Mr.Clean
AutoDry,SwifferDuster,GainFabricEnhancerandtheexpansionof
Febreze.Netsalesincreased10%,to$13.87billion.Salesgrowth
includesapositive3%foreignexchangeimpact.Negativepricing
of1%wasprimarilydrivenbyactionstomaintaincompetitiveshelf
pricinginkeygeographies,includingNorthAmericaandWestern
Europe.Mixreducedsalesby1%drivenprimarilybydouble-digit
growthindevelopingmarkets.Netearningsin2004increased
7%to$2.19billion.Netearningsmarginwasdownslightlycompared
to2003duetothemixeffectofdisproportionategrowthoutsideof
theU.S.(asweexpandedourbusinessincertaingeographiesincluding
China,IndiaandEasternEurope)andmarketinginvestmentsbehindnew
productinitiatives.Startupcostsforincreasedliquiddetergentcapacity
inNorthAmericatosupportnewproductinitiativeactivityandinvestments
insupplychain optimizationalsocontributed tothelower net
earningsmargin.
SnacksandCoffee.SnacksandCoffeeunitvolumeincreased3%
comparedtotheprioryear.Pringlesvolumegrewbehindexpanded
distributionandmerchandizingofcustomizedflavorsandPringles
PrintsinNorthAmerica.Coffeevolumeincreasedbehindcustom
Folgersdarkroasts.FolgersnowhasamarketshareintheU.S.of
approximately32%.Netsalesincreased8%to$3.14billion.Pricing
increasedsales4%dueprimarilytoactionsonFolgerstorecoverhigher
commoditycosts.Foreignexchangehadapositive2%effectonsales
growth,whileproductmixreducedsalesby1%.Netearningsincreased
21%to$417millionbehindhighervolume,pricingtorecovercommodity
costsandlowermerchandisingspendingversustheprioryear.After-tax
earningsmarginincreased145basispointsto13.3%.
In2004,unitvolumeinSnacksandCoffeeincreased6%.Netsales
were$2.91billion,anincreaseof9%comparedto2003.Foreign
exchangeadded3%tosalesgrowth.Productmixincreasedsalesby
1%primarilybehindhigherrelativegrowthofFolgers,whichhasa
higherunitsalesratethanthesegmentaverage.Pricingreducedsales
by1%reflectinghighpromotionalspendingintheCoffeecategory.
SnacksandCoffeenetearningsin2004were$344million,anincrease
of18%,asvolumeandbasebusinesssavingsmorethanoffsethigher
commoditycosts.
Corporate
Corporateincludescertainoperatingandnon-operatingactivitiesthat
arenotreflectedintheresultsusedinternallytomeasureandevaluate
theGBUs,aswellaseliminationstoadjustmanagementreporting
principlestoU.S.GAAP.OperatingactivitiesinCorporateincludethe
resultsofincidentalbusinessesmanagedatthecorporatelevel,certain
restructuringcostsandtheeliminationofindividualrevenuesand
expensesgeneratedbycompaniesoverwhichweexertsignificant
influence,butdonotcontrol.OperatingelementsheldinCorporate
alsoincludecertainemployeebenefitcostsandothergeneralcorporate
items.Thenon-operatingitemsheldinCorporateprimarilyinclude
financingandinvestingactivities.Additionally,Corporateincludesthe
historicalresultsofcertaindivestedbusinesses,includingtheJuice
business,whichwasdivestedinAugustof2004.Corporateassets
primarilyincludecash,investmentsecuritiesandgoodwill.
Corporatenetsalesprimarilyreflecttheadjustmenttoeliminate
thesalesofunconsolidatedentitiesincludedinbusinessunitresults.
NetsalesreportedinCorporateincludetheresultsofdivested
businesses(e.g.,Juice).In2005,Corporatenetearningsdeclineddue
tohigherinterestexpense,partiallyoffsetbythegainfromtheJuice
businessdivestiture.TheimprovementtoCorporateearningsin2004
wasdrivenprimarilybyafavorablebaseperiodcomparison,astheprior
yearincludedrestructuringprogramcharges.Thisimprovementwas