Proctor and Gamble 2008 Annual Report Download - page 50

48 TheProcter&GambleCompany Management’sDiscussionandAnalysis
average.Fabriccarevolumeincreasedmid-singledigitsbehindhigh-
single-digitgrowthindevelopingregionsandmid-single-digitgrowth
indevelopedregions.Growthwasdrivenbytheliquidlaundrydetergent
compactionlaunchinNorthAmericaandinitiativeactivityonTide,Gain,
ArielandDowny.Homecarevolumewasupmid-singledigitsdueto
double-digitgrowthindevelopingregionsandhigh-teensgrowthon
FebrezefromthelaunchofFebrezeCandles.Batteriesvolumewasup
mid-singledigitsbehinddouble-digitgrowthindevelopingregions
andmid-single-digitgrowthindevelopedregions.
NetearningsinFabricCareandHomeCareincreased9%to$3.4billion
in2008primarilybehindhighernetsales.Netearningsmarginwas
down20basispointsprimarilyduetolowergrossmargin,partially
offsetbyareductioninSG&Aasapercentageofnetsales.Gross
marginwasdownduetohighercommoditycosts,whichmorethan
offsetbenetsfrompricing,increasedvolumescaleleverageand
manufacturingcostsavingsprojects.SG&Aimprovedasapercentage
ofnetsalesduetoloweroverheadspendingasapercentageofnet
salesresultingfromafocusonoverheadproductivityimprovements.
FabricCareandHomeCarenetsalesincreased13%in2007to
$21.5billion.Salesgrowthwasdrivenbya10%increaseinvolume
anda3%favorableforeignexchangeimpact.Theextrathreemonths
ofbatteriesresultsinscal2007contributed3%tothesegment’s
salesgrowthand2%tosegmentvolumegrowth.Volumewasup
high-singledigitsinbothfabriccareandhomecareledbydouble-
digitgrowthindevelopingregions.Indevelopedregions,fabriccare
volumegrewmid-singledigitsandhomecarevolumegrewhigh-
singledigitsbehindproductinitiativessuchasTideSimplePleasures,
GainJoyfulExpressions,FebrezeNoticeables,upgradesonSwifferand
thelaunchofFairyauto-dishwashinginWesternEurope.Ourmarket
shareinbothfabriccareandhomecareincreasedbyabout1point
globallyduringtheyear.Inbatteries,organicvolumeincreasedmid-
singledigitsbehindhigh-single-digitdevelopingregiongrowthfrom
expandeddistributioninhigh-frequencystoresinLatinAmerica.Net
earningsin2007wereup20%to$3.1billionbehindorganicsales
growth,theadditionalthreemonthsofbatteriesresultsandan
80-basispointimprovementinnetearningsmargin.Earningsmargin
improvedbehindhighergrossmarginandlowerSG&Aasapercentage
ofnetsales.Thegrossmarginimprovementwasdrivenbyscale
benetsofvolumegrowthandcostsavingsprojectsthatmorethan
offsethighercommoditycosts.SG&Aimprovedprimarilybehind
loweroverheadexpensesasapercentageofnetsalesresultingfrom
volumescaleleverageandGillettesynergysavings.

   Changevs.  Changevs.
(inmillionsofdollars)  PriorYear 2007 PriorYear
Volume  +4% n/a +5%
Netsales  +9% $12,726 +6%
Netearnings   +20% $ 1,440 +11%
BabyCareandFamilyCarenetsalesincreased9%in2008to
$13.9billion.Volumewasup4%,includingtheimpactoftheWestern
Europeanfamilycaredivestiture.Priceincreasescontributed1%to
netsalesandforeignexchangehadapositive4%impactonnet
sales.Organicvolumeandorganicsales,whichexcludetheimpacts
oftheWesternEuropeanfamilycaredivestitureandforeignex-
change,bothgrew8%.Organicvolumegrowthwasbalancedacross
thesegmentwithhigh-single-digitgrowthinbothbabycareand
familycare.Babycarevolumeindevelopedregionswasupmid-single
digitsbehindgrowthonthePampersBabyStagesofDevelopment
andontheBabyDryCaterpillarFlexinitiative.Indevelopingregions,
babycarevolumewasupdouble-digitsbehindcontinuedgrowthon
Pampers.BabycaremarketshareintheU.S.wasupnearly1pointto
about29%.Familycarevolumewasdownlow-singledigitsdueto
thedivestitureoftheWesternEuropeanfamilycarebusinessbutwas
uphigh-singledigitsonanorganicbasisbehindtheBountyand
Charminproductrestages.U.S.marketshareonbothBountyand
Charminwasupover1pointtoabout45%and28%,respectively.
NetearningsinBabyCareandFamilyCarewereup20%to$1.7billion
in2008behindhighernetsalesandearningsmarginexpansion.Net
earningsmarginimproved110basispointsprimarilybehindhigher
grossmarginandlowerSG&Aasapercentageofnetsales.Gross
marginwasupduetoamoreprotableproductmixfollowingthe
WesternEuropefamilycaredivestiture,thebenetofincreased
volumescaleleverage,pricingandmanufacturingcostsavingsprojects,
whichmorethanoffsethighercommodityandenergycosts.SG&A
improvedasapercentageofnetsalesduetoloweroverheadspend-
ingasapercentageofnetsales,partiallyoffsetbyhighermarketing
expensesasapercentageofnetsales.
BabyCareandFamilyCarenetsalesincreased6%in2007to
$12.7billionbehind5%unitvolumegrowth.Babycarevolumegrew
mid-singledigitswithdevelopingregionsupdoubledigits.Indevel-
opedregions,babycarevolumewasuplow-singledigitsasgrowth
onPampersBabyStagesofDevelopmentandBabyDryCaterpillar
FlexmorethanoffsetsoftnessonPampersinWesternEuropeand
LuvsinNorthAmericafromlowercompetitorpricingofbothbranded
andprivatelabelproducts.Familycarevolumeincreasedmid-single
digitsbehindproductperformanceupgradesonBountyandcontinued
growthonBountyandCharminBasicproducts.Disproportionategrowth
onbabycareindevelopingregionsandontheBasictierproducts,
whichhavealoweraveragesellingprice,ledtoanegative1%mix
impact.Favorableforeignexchangecontributed2%tosalesgrowth.
NetearningsinBabyCareandFamilyCareincreased11%to$1.4billion
in2007behindnetsalesgrowthanda50-basispointimprovementin
netearningsmargin.EarningsmarginincreasedaslowerSG&Aasa
percentageofnetsalesmorethanoffsetareductioningrossmargin.
Grossmarginwasdownslightlyasmanufacturingcostsavingsand
volumescaleleverageweremorethanoffsetbytheimpactofhigher
pulpcostsandalessprotableproductmix.SG&Aimprovedasa
percentageofnetsalesduetoloweroverheadexpensesfromvolume
scaleleverageandareductioninmarketingexpensesasapercentage
ofnetsales.