Procter & Gamble Company (the) · NYSE:PG
Procter & Gamble Company (the) — CAGNY Conference 2005
46 slides from Procter & Gamble Company (the)'s conference presentation, Feb 24, 2005
Slide 1: CAGNY Conference February 24, 2005
CAGNY Conference February 24, 2005 1
Slide 2: AG Lafley, Chairman, President and Chief Executive
AG Lafley 2 Chairman, President and Chief Executive
Slide 3: Agenda
Agenda P&G Business Update Gillette Business Update P&G the Best Partner for Gillette The Growth Opportunity Q&A 3
Slide 4: Forward Looking Statement
Forward Looking Statement All statements, other than statements of historical fact included in this presentation, are forward- looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition to the risks and uncertainties noted in this release, there
Slide 5: Regulation G Disclosure
Regulation G Disclosure Sales excluding foreign exchange Organic sales Core earnings Free cash flow productivity 5
Slide 6: Strategies are Working
Strategies are Working Focus on core business Faster growing, higher margin, more asset-efficient health and beauty care businesses Developing markets and lower income consumers 6
Slide 7: Business Update - Volume
0% 2% 4% 6% 8% 10% 12% 14% 16% FY '02 FY '03 FY '04 1st Half FY'05 Business Update - Volume Volume Growth * Excludes acquisition & divestiture impacts Organic* Acquisitions & Divestitures 7
Slide 8: Business Update - Sales
Business Update - Sales * Excludes foreign exchange and acquisition & divestiture impacts Target 4% - 6% Sales Growth, ex. FX Organic* Acquisitions & Divestitures 0% 2% 4% 6% 8% 10% 12% 14% 16% FY '02 FY '03 FY '04 First Half FY'05 8
Slide 9: Business portfolio / Customer portfolio / Geographic portfolio / Balance
9 Business portfolio Customer portfolio Geographic portfolio Balance
Slide 10: Market leader
10 Market leader in two thirds of total sales #1 innovator (IRI pacesetter report) Indispensable brands for retailers Leadership
Slide 11: Growth Focus Areas are Delivering: Billion Dollar Brands
11 Growth Focus Areas are Delivering Portfolio is growing volume double digits Leading Billion Dollar Brands
Slide 12: Growth Focus Areas are Delivering: Big Customers
12 Growth Focus Areas are Delivering Top 10 customers are growing volume 7% Big Customers
Slide 13: Growth Focus Areas are Delivering: Core Countries
Top 16 countries are growing volume 8% Growth Focus Areas are Delivering Italy Mexico UK Japan U.S. Canada Germany China France Spain Brazil Saudi Arabia Turkey Russia Philippines Poland 13 Core Countries
Slide 14: Growth Focus Areas are Delivering: Developed Markets
North America Western Europe Northeast Asia Mid single digit organic volume growth Growth Focus Areas are Delivering 14 Developed Markets
Slide 15: Growth Focus Areas are Delivering: Developing Markets
Brazil Mexico Saudi Arabia Turkey Russia China Philippines Poland 8 of top 16 countries are in developing markets 6 consecutive quarters of mid to high teens growth Growth Focus Areas are Delivering 15 Developing Markets
Slide 16: Growth Focus Areas are Delivering: Health Care & Beauty Care
Growth Focus Areas are Delivering Sales Growth ex. FX Organic* Acquisitions & Divestitures * Excludes foreign exchange and acquisition & divestiture impacts 0% 5% 10% 15% 20% 25% 30% FY '02 FY '03 FY '04 Q1'05 Q2'05 16 Health Care & Beauty Care
Slide 17: Growth Focus Areas are Delivering
Growth Focus Areas are Delivering FY ‘98 Health & Beauty Care Balance of Company FY ’05 e +11% pts $ Sales With Gillette +14% pts 17 36% 47% 50%
Slide 18: Integration
Integration Plug & play capability Core Business Resources Oral Care Razors Braun Duracell Personal Care 18 Corporate Functions
Slide 19: Growth Focus Areas are Delivering: Fabric & Home Care, Snacks & Coffee, Baby & Family Care
Growth Focus Areas are Delivering 0% 2% 4% 6% 8% 10% FY '02 FY '03 FY '04 Q1 '05 Q2 '05 Sales Growth ex. FX 19 Fabric & Home Care, Snacks & Coffee, Baby & Family Care
Slide 20: Balance and Leadership
20 Sustainable growth Consistent shareholder returns Balance and Leadership
Slide 21: Sustainable Performance
Sustainable Performance x x x x x Historical P&G Strengths What’s different today Sustainable Growth, Consistent Returns = = = = = 21 Consistent Shareholder Returns Branding Go-to-Market Scale Innovation Connect & Develop Globally Faster Pace of Innovation Winning Value Equation Excellence in Execut
Slide 22: Business Update - EPS
0% 2% 4% 6% 8% 10% 12% 14% 16% FY '02 FY '03 FY '04 Q1 '05 Q2 '05 Business Update - EPS *Growth rates calculated vs. prior year core results EPS Growth Target 10%+ Gain from Juice Divestiture 22
Slide 23: Guidance Update – Jan. 28, 2005
Guidance Update – Jan. 28, 2005 Sales growth estimate: March ' 05: high single digits Fiscal ' 05: high single digits EPS estimate: March ' 05: $0.60 - $0.62 (+ 9-13%) Fiscal ' 05: $2.61 - $2.64 (+13-14%) 23
Slide 24: AG Lafley, Chairman, President and Chief Executive
AG Lafley Chairman, President and Chief Executive
Slide 25: Strategic Rationale
Combine 2 best-in-class CPG companies with great momentum Strategic Rationale 2
Slide 26: Strategic Rationale: Strengthen the portfolio
Combine 2 best-in-class CPG companies with great momentum Strengthen the portfolio - 21 billion dollar brands and #1 market position in categories representing about two thirds of total sales Strategic Rationale 3
Slide 27: Strategic Rationale: Strengthen combined retail relationships
Combine 2 best-in-class CPG companies with great momentum Strengthen the portfolio - 21 billion dollar brands and #1 market position in categories representing about two thirds of total sales Strengthen combined retail relationships Strategic Rationale 4
Slide 28: Strategic Rationale: Leverage our strengths
Combine 2 best-in-class CPG companies with great momentum Strengthen the portfolio - 21 billion dollar brands and #1 market position in categories representing about two thirds of total sales Strengthen combined retail relationships Leverage our strengths of branding, innovation, scale and go-to-mar
Slide 29: Two Best-In-Class Companies Getting Stronger
6 • Four core strengths Branding Innovation Scale Go-to-market capability • Complementing and amplifying strengths with Gillette Two Best-In-Class Companies Getting Stronger
Slide 30: Multiplying Innovative Capability
Multiplying Innovative Capability Sustainable Performance x x Historical P&G Strengths What’s different today 7 Innovation Connect & Develop Globally Faster Pace of Innovation
Slide 31: Complementary Innovation Platforms
Complementary Innovation Platforms Brands Technologies Design 8
Slide 32: Complementary Innovation Platforms: Women's hair removal
Complementary Innovation Platforms Women’s hair removal 9
Slide 33: Complementary Innovation Platforms: Male grooming
Complementary Innovation Platforms Male grooming 10
Slide 34: Complementary Innovation Platforms: Design
Complementary Innovation Platforms Design 11
Slide 35: Multiplying Innovative Capability
Multiplying Innovative Capability Sustainable Performance x x x Historical P&G Strengths What’s different today 12 Innovation Connect & Develop Globally Faster Pace of Innovation Scale Cash & Cost Discipline Winning Value Equation
Slide 36: Winning the Value Equation
Winning the Value Equation Eliminating SG&A overlap Generating efficiencies in marketing and retail selling Leveraging scale in purchasing, manufacturing, logistics ~80% $1 to 1.2 billion in cost synergies Constant turnaround mentality 13
Slide 37: Multiplying Innovative Capability
Multiplying Innovative Capability Sustainable Performance x x x x Historical P&G Strengths What’s different today 14 Scale Innovation Connect & Develop Globally Cash & Cost Discipline Faster Pace of Innovation Winning Value Equation Go-to-Market Unique Organization Structure Excellence in Execution
Slide 38: Developing Markets
Developing Markets Developing Market Sales ~$11bn 15 ~$2.2bn * Euromonitor and Company estimates, constant prices and FX
Slide 39: Developing Markets Potential
Developing Markets Potential Source: ACNielsen, company estimates ~ 70 ~ 240 Average P&G Category Consumption Index (Volume per capita) Developing Developed ~ 2 ~ 5 Weekly Shaving Frequency China, India, Turkey U.S. ~ 3 X 16
Slide 40: China
17 Puyang City, supermarket with about 2,000sqm Razors & Blades PG Hair Care Store Front P&G covering more than 30% of China’s population in more than 2000 cities and more than 11000 towns Gillette covering about 10% of China’s population focus on top 4 cities distributed in about 60 cities China
Slide 41: Improving Sub-scale Market Positions
Improving Sub-scale Market Positions Net Outside Sales Company Avg. Top 8 developing market scale countries incl. China 18 subscale countries incl. India, Brazil
Slide 42: Multiplying Innovative Capability
Multiplying Innovative Capability Sustainable Performance x x x x x Historical P&G Strengths What’s different today 19 Go-to-Market Scale Innovation Connect & Develop Globally Cash & Cost Discipline Unique Organization Structure Faster Pace of Innovation Winning Value Equation Excellence in Executio
Slide 43: Advantaged Categories, Trade-up marketing, In-store execution
Advantaged Categories Trade-up marketing In-store execution 20
Slide 44: The Gillette Dynamic
Multiplying Innovative Capability x x x x x Historical P&G Strengths What’s different today Technology Leadership Turnaround Mentality Advantaged Categories Trade Up Acceleration The Gillette Dynamic Superior Sustainable Performance 21 Initiative Success Excellence in Execution Winning Value Equatio
Slide 45: Upside To Sustainable Growth Model Through The End Of The Decade
Upside To Sustainable Growth Model Through The End Of The Decade Double Digit EPS Growth Sales Growth to 2010 Operating Margin of 24 – 25% 22 Upside +5% +7%
Slide 46: Q&A
Q&A 23 Thank you for inviting us to be with you. Two months ago, at P&G’s analyst meeting in Boston, we explained why we’re confident that P&G’s strategies and capabilities will enable sustained long-term top and bottom line growth. Last month, we announced the acquisition of Gillette – a combinatio