Procter & Gamble Company (the) · NYSE:PG
Procter & Gamble Company (the) — CAGNY Conference 2012
99 slides from Procter & Gamble Company (the)'s conference presentation, Feb 23, 2012
Slide 1: CAGNY February 23, 2012
Slide 2: Forward Looking Statements
Forward Looking Statements All statements, other than staternents of historical fact included in this release or presentation, are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based an financial data, market assumpti
Slide 3: Regulation G Disclosure
Regulation G Disclosure For a full reconciliation, please visit: www.pg.com/investors
Slide 4: Guidance Update
Slide 5: Bob McDonald
Bob McDonald Chairman of the Board President & Chief Executive Officer Jon Moeller Chief Financial.Officer
Slide 6: Agenda
Agenda « Recent Results & Guidance ¢ Strategy * 3 Key Questions
Slide 7: Recent Results
Recent Results Organic Sales Growth 6% 5% 4% 3% 2% 1% 0% -1% Past 9 Quarter CAGR = 4.1% OND 09 JFM 10 AMJ10° JAS 10° OND 10. JPM 14 AMJ11 JAS 11 OND 11. JPM 126 AMI 426
Slide 8: +4.1% CAGR
+4.1% CAGR ~$7 billion
Slide 9: Recent Results
Recent Results Organic Sales Trends ices: 9 6% - Pre-Crisis: 9 qtrs @ 5.2% 4.1% Post-Crisis: 9 gtrs LLGNO usw LL PA Lb War ol aNo oLsyr OL ray ol War 60 0NO 60svP OA 60 War 80 GNO go swe 80 rAy soar 20.0NO Zosvr LOrA 4OWar 90 GNO 90S¥r 5% 4 4% 4 3% 5 2% 5 1% 5 0% + 1% J
Slide 10: Recent Results
Recent Results Pricing impact to Sales Growth 55 FY'12 Pricing of ~$3.5B or +4% to Sales Growth +4% a ~0% OND10 JFM11. AMJ11 JAS11 OND11 JFM12e AMJ 12e
Slide 11: Recent Results
Recent Results P&G Global Constant $ Value Share 20 5 i) 18 JAS OND JFM AMJ JAS OND JFM AMJ JAS OND JFM AMJ JAS OND 08 08 09 09 O98 o9 10 10 10 10 1 ab 11 1
Slide 12: Recent Results
Recent Results Volume Market Growth - IYA 5.8% + 48% + 3.8% + 2.8% 1.8% 4 0.8% + L 1 a -0.2% ~ Total North Western CEEMEA Asia Latin Markets America Europe America P12M m@P6M mP3M
Slide 13: Recent Results
Recent Results Key Commodities Cost Index 300 5 4 Month Rolling Average of Spot Prices 250 4 200 4 150 4 100 Base OND 02 OND 03 OND 04 OND 05 OND 06 5 OND 07 OND 08 OND 09 OND 10 OND 11 - —lIndexvs. Jan 2002
Slide 14: Recent Results
Recent Results Foreign Exchange Volatility % Devaluation vs. Initial FY Guidance Brazil -10 India -11 Mexico -12 Poland -19 Russia -10 South Africa -15 Turkey -14
Slide 15: Recent Results
Recent Results Core Operating Profit Growth a +10% to +15% 15% 4 10% 5 5% + 0% MH FY 11 5% - * includes Pringles
Slide 16: Recent Results
Recent Results Core EPS Growth 10% 8% 6% 4% 2% 0% * Includes Pringles L +1% to +4% Pye Pais
Slide 17: Cash Generation
Cash Generation Adjusted Free Cash Flow Productivity* Target = 90%+ 125% 102% 400% MAKE 99% : FY 07 FY 08 FY ‘09 FY 10 FY'11 FY 06 FY 42 (Est) * Adjusted free cash flow is operating cash flow less capital spending and tax impacts from major divestitures. Adjusted free cash flow productivity is the r
Slide 18: Dividends
Dividends FY Dividend per Share, Adjusted for Stock Splits 55 consecutive fiscal years of increases at a 2.00 + compound average growth rate of ~9.5% ‘E10 | qole) = 0.50 one 1956 1967 1978 1989 2000 2011
Slide 19: Guidance Update
Slide 20: FY '12 All-in GAAP EPS Guidance
FY °12 All-in GAAP EPS Guidance Previous Guidance $3.85 to $4.08 -2% to +4% Diamond Transaction ($0.55) to ($0.65) Excluding Pringles Gain $3.30 to $3.43 -16% to -13% Kellogg Transaction $0.47 to $0.50 Including Pringles Gain $3.77 to $3.93 -4% to Flat
Slide 21: FY '12 Core EPS Guidance
FY ’12 Core EPS Guidance FY ‘12 FY ‘11 Previous Guidance $4.00 to $4.10 $3.95 Growth +1% to +4% Pringles Restatement ($0.07) ($0.07) Updated Guidance $3.93 to $4.03 $3.88 Growth +1% to +4%
Slide 22: JFM '12 Core EPS Guidance
JFM ’12 Core EPS Guidance FY ‘12 FY ‘11 Previous Guidance $0.91 to $0.97 $0.96 Pringles Restatement ~($0.02) ~($0.02) Updated Guidance $0.89 to $0.95 $0.94 EPS Growth -5% to +1%
Slide 23: Our Purpose
Our Purpose We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders, and
Slide 24: Long-Term Growth Strategy
Long-Term Growth Strategy portfolios vertically to higher and lower value tiers In More Parts of the World...by expanding geographically into category whitespaces (+) More Completely...by improving existing products (1) More Consumers...by extending our category and extending portfolios into adjacen
Slide 25: Key Questions
3 Key Questions 1. Can P&G still grow in Developed Markets? 2. Can Developing Market growth be profitable? 3. Can P&G generate sufficient Productivity and Cost Savings to support both our strategic and financial goals?
Slide 26: Innovation
Slide 27: Developed Markets: Product Innovation: U.S. Oral Care
Developed Markets Product Innovation: U.S. Oral Care
Slide 28: US Pampers Value Share Growth
Developed Markets US Pampers Value Share Growth* 33.0 4 31.0 29.0 27.0 RRMODMDDARDHRGOGDGO- ee Ssoaeaaaesae sage eeett ae HAasS2>HNOS2H05 20052 2SES2SESLLESLSESLE S67 f3F65 C9765 4597657455 * Pampers Diapers share growth on a constant § basis
Slide 29: Japan Growth - IYA
Developed Markets Japan Growth - IYA Growing Sales & Market Share in a Declining Market 110% 4 100% iL ; : + : + : JFM10 AMJ1 JAS 1 OND 1p JFI AM) 1 JAS 1 ON 90% mP&G Sales IYA OMarket IYA * P&G Sales calculated ona local currency basis
Slide 30: Product Innovation: Downy Unstopables
Developed Markets Product Innovation: Downy Unstopables Un STOPABLES
Slide 31: Product Innovation: Febreze Car Vent Clip
Slide 32: Product Innovation: Bounty
PAPER on TOATAS pre i> ii Developed Markets Product Innovation: Bounty aw One Sheet | Ere, ee \ Locks i in the Mess / White Blancas’ Una hoja retiene la suciedad _J GROLESROLLOSS 25.99 (605 SOF» G4 TWE-PLY SHEETS PER A OP ATTN A FEIN IRSS FO
Slide 33: Product Innovation: Oral Care
Developed Markets Product Innovation: Oral Care (Cressi PRO-HEALTH™ CLINICAL OUR MOST ADVANCED RINSE EVER CLINICAL “i
Slide 34: Product Innovation: U.S. Feminine Care
Developed Markets Product Innovation: U.S. Feminine Care
Slide 35: Product Innovation: Tide PODS
Slide 36: Insert Tide Pods Copy
Insert Tide Pods Copy
Slide 37: Commercial Innovation
Slide 38: Retailer Support
Slide 39: Developed Markets: Expansion
Developed Markets Expansion
Slide 40: Continued Industry Leading R&D Investment
Innovation Continued Industry Leading R&D Investment $B $2.0 4 $1.0 4 $0.0 + i) & S > i) xO SS + is RB e a SS Oo : ee SS S Te FS
Slide 41: Key Questions
3 Key Questions 1. Can P&G still grow in Developed Markets? 2. Can Developing Market growth be profitable?
Slide 42: Long-Term Growth Strategy
Long-Term Growth Strategy In More Parts of the World...by expanding geographically into category whitespaces
Slide 43: Developing Markets: Source of Population Growth
Developing Markets Source of Population Growth — 2010 to 2020 Population is forecast to grow 700 million people 4oo, by 2020 with ~95% of the Growth from Developing Markets 300 200 + Millions of People 100 - 0 |_| r = North Western Latin CEEMEA Asia America Europe America
Slide 44: Developing Markets: Increasing Wealth
Developing Markets Increasing Wealth 4,500 - +1.2 Billion New Consumers Crossing the $10/day Threshold in Developing Markets $ 1,000 4 500 5 / mehal NorthAmerica) Western LatinAmerica CEEMEA Asia Europe *2010 vs. 2020. Source Euromonitor.
Slide 45: Developing Markets: Increasing Wealth
Developing Markets Increasing Wealth 2000, +~1.4 Billion New Middle Class Consumers in Developing Markets 9 1,500 | S a @ 1,000 4 ¢ _ L im NorthAmerica Western LatinAmerica CEEMEA Asia Europe *Per OECD Development Centre, Jan. 2010 Study. Time periods are 2009 vs. 2020
Slide 46: Number of Millionaire Households
# of Millionaire Households (000's) Developing Markets Increasing Wealth +200% Increase in Millionaire Households 1,500 5 In Developing Markets 1,000 5 . 2 ' 0 T T - T 1 Brazil Russia India China *Per Deloitte Development LLC 2011. Time periods are 2011 vs. 2020
Slide 47: P&G Sales Growth: 2000 to 2012
Developing Markets P&G Sales Growth: 2000 to 2012 % of Total Company Sales I Developed 80% 77% Developing 63% 37% 20% ast $8 $13 bn bn FY'00 FY'05
Slide 48: Profitable Growth - Scale
Developing Markets Profitable Growth - Scale After-tax Margin Global Average ~14% \ China Poland Russia Saudi Arabia Philippines
Slide 49: Global Toothpaste Expansion FY '08
Global Toothpaste Expansion FY ‘08
Slide 50: Global Toothpaste Expansion
Global Toothpaste Expansion Organic Sales After Tax Growth Profit Growth FY ‘06 thru FY ‘10 + Mid-Singles + Double-Digits OralB:
Slide 51: Global Toothpaste Expansion FY '11
Global Toothpaste Expansion FY ‘14
Slide 52: Global Toothpaste Expansion
Global Toothpaste Expansion Organic Sales After Tax Growth Profit Growth FY ‘06 thru FY ‘10 + Mid-Singles + Double-Digits mel + High-Singles - Single-Digits OralB:
Slide 53: Global Toothpaste Expansion FY '12
Global Toothpaste Expansion FY ‘42
Slide 54: Global Toothpaste Expansion
Global Toothpaste Expansion Organic Sales After Tax Growth Profit Growth FY ‘06 thru FY ‘10 + Mid-Singles + Double-Digits ml + High-Singles - Single-Digits FY ‘12 Estimate + High-Singles +Low-Singles OralB:
Slide 55: Global Toothpaste Expansion FY Plan
Global Toothpaste Expansion FY 45 Plan
Slide 56: Global Toothpaste Expansion
Global Toothpaste Expansion Organic Sales After Tax Growth Profit Growth i FY ‘06 thru FY ‘10 + Mid-Singles + Double-Digits | PY ‘11 + High-Singles - Single-Digits f | FY ‘12 Estimate + High-Singles +Low-Singles | PY 13th FY 15 +High-Singles | Accelerating Profit | Growth | FY ‘15 Estimate + High-Si
Slide 57: Brazil Pantene Expansion
Brazil Pantene Expansion Profit Positive Day 1 PRO-V
Slide 58: Developing Markets: Market Spending Split
Developing Markets Market Spending Split FY ‘11 Brazil Premium Premium Russia India China
Slide 59: Market Spending Split & Growth - China
Developing Markets Market Spending Split & Growth — China Market Size Market Value Split% Growth (IYA) P12M Premium
Slide 60: Brazil Hair Care
Developing Markets Brazil Hair Care Sales per Unit: FY09 Base 122 Index 167 Index Treatments =| Conditioner Shampoo up +37% 944 Index 194 Index 139 Index 122 Index x 6. EA Ampoules = Treatments g , Conditoner Shampoo e@ = % of Volume *All numbers at constant FX (at 1.76)
Slide 61: Brazil Toothpaste
Developing Markets Brazil Toothpaste Sales per Unit: up +29% FY12 FY11 500 Index 4188 Index — 125Index (MNPYTy Base @ = y_-Pro-Health Oral 6 Fem Complete | Ora? 133 Index CuK (SDE Complete! bs 1234 123 (0) = % of Volume *All numbers at constant FX (at 1.76) 533 Index 167 Index Pro-Healthi Gold 883 I
Slide 62: Brazil Fabric Care
Developing Markets Brazil Fabric Care Sales per Unit: up +30% FY0S 144 Index Ariel (powder and liquids) 1Kg HL foes Ace Powder 1Kg FY12 167 Index vr. Index © 118 Index 46% é re Downy Ariel 500ml ( (powder and Ace Liquid liquids) Ace Powder aL, Kg! IL 1Kg © = % of Volume *All numbers at constant FX (
Slide 63: Brazil Hair Care Market Growth
Developing Markets Brazil Hair Care Market Growth 9.5% P&G Value Share ND’11 127 113 2.8% P&G Value 07 Share JF’08 00 FY 2008 FY 2009 FY 2010 FY 2011 *ConstantFX @ 1.76
Slide 64: Brazil Oral Care Market Growth
Developing Markets Brazil Oral Care Market Growth 6.4% P&G Value Share 117. ~-ND*11 107 0% P&G Value Share JF’08 100 FY 2008 FY 2009 FY 2010 FY 2011 *ConstantFX @ 1.76
Slide 65: Brazil Fabric Care Market
Developing Markets 13.6% Brazil Fabric Care Market - IYA Bas ND’11 119 6 110 10.4% P&G Value Share JF’08 100 FY 2008 FY 2009 FY 2010 FY 2011 *ConstantFX @ 1.76
Slide 66: Developing Markets: Profitable Growth
Developing Markets Profitable Growth ¢ Faster Growth ¢« Demographic Trends: Wealth is increasing * Scale: Leads to Margin Expansion ¢ Virtuous Investment: Short-term Investment for Long-Term profitable growth ¢ Premium & Super Premium Tiers Expanding: Positive Mix Opportunities ¢ Total Markets are G
Slide 67: Key Questions
3 Key Questions 1. Can P&G still grow in Developed Markets? 2. Can Developing Market growth be profitable? 3. Can P&G generate sufficient Productivity and Cost Savings to support both our strategic and financial goals?
Slide 68: Productivity & Cost Savings
Slide 69: Cost Reduction Opportunity
Productivity & Cost Savings Cost Reduction Opportunity $85 billion cost pool billions FY'11 CAGR | FY'16 Net Sales $826 | 5% $105.4 | coGs $40.8 | 5% $52.1 Core SG&A* $257 | 5% aa Core Operating Profit $16.1 | 5% $20.5 Core Operating Margin | 195% | 5% 19.5% | “Core SG&A costs exclude certain one-ti
Slide 70: Cost Opportunity by FY'16
Productivity & Cost Savings Cost Opportunity by FY’16 ~$10 billion Cost Reduction ~950 bps operating margin flexibility... ... before reinvestments, negative margin mix and net margin impact of commodities, F/X and pricing
Slide 71: Cost Opportunity by FY'16
Productivity & Cost Savings Cost Opportunity by FY’16 ~$10 billion Cost Reduction ~$8 bn via Cost Reduction ~$2 bn via Cost Control & Leverage
Slide 72: Cost Opportunity by FY'16
Productivity & Cost Savings Cost Opportunity by FY’16 ~$10 billion Cost Reduction ~$3 bn Overheads ~$6 bn Cost of Goods (ex. Admin) ~$1 bn Marketing
Slide 73: Overheads - Making Progress, Still Big Opportunity
Productivity & Cost Savings Overheads — Making Progress, Still Big Opportunity ~$3 bn Overhead Cost Reduction ~150 bps Improvement over last 5 Years FY 06 FY 07 FY 08 FY 09 FY 10 AE Wal
Slide 74: Overhead - Recent Progress
Productivity & Cost Savings Overhead — Recent Progress V.P. & Above Base Year (-15%) @ e @ @ @ 6/30/07 6/30/08 6/30/09 6/30/10 6/30/11 Base Year (-15%) Next 2 Levels
Slide 75: Overheads - Making Progress, Still Big Opportunity
Productivity & Cost Savings Overheads — Making Progress, Still Big Opportunity ~$3 bn Overhead Cost Reduction FY 06 FY 07 FY 08 FY 09 FY 10 AE Wal
Slide 76: Overhead - Accelerating Savings
Productivity & Cost Savings Overhead — Accelerating Savings FY12 | FY'13 | FY’14 Total % Reduction* ~3% ~7% ~10% Positions 1,600_| 4,100 5,700 Savings, $MM $240 A) $800 “% reduction of “Selling, Research, General Admin and Product Supply Admin” positions
Slide 77: Overhead
Productivity & Cost Savings Overhead $3 bn Overhead Cost Reduction Organization Design & Simplification ¢ Eliminating duplication of work ¢ Simplifying through digitization * Optimizing number of business units & functions ¢ Optimizing our global footprint
Slide 78: Improve Productivity in All We Do
Slide 79: Cost of Goods: Manufacturing
Productivity & Cost Savings Cost of Goods: Manufacturing Units Produced per Manufacturing Employee (in thousands) 58 38 FY '01 FY 11
Slide 80: INSERT BROCK VIDEO
INSERT BROCK VIDEO
Slide 81: Cost of Goods: Materials
Slide 82: Cost of Goods: Manufacturing
Slide 83: Cost of Goods: Logistics
Slide 84: Productivity & Cost Savings: Research & Development
Slide 85: R&D Efficiency
Slide 86: R&D Efficiency
Slide 87: Productivity & Cost Savings: Marketing
Slide 88: Advertising + Other Marketing Costs
Slide 89: Advertising + Other Marketing Costs
Slide 90: Marketing Efficiency: P&G Olympic Games Journey
Slide 91: Marketing Efficiency
Slide 92: Marketing Efficiency
Slide 93: Insert Olympics Video: Future
Slide 94: Slide 94
Slide 95: Cost Opportunity by FY'16
Slide 96: Restructuring Investments
Slide 97: Cost Opportunity by FY'16
Slide 98: Productivity & Cost Savings
Slide 99: Reg G Reconciliation of Non-GAAP measures
The Procter & Gamble Company: Reg G Reconciliation of Non-GAAP measures In accordance with the SEC’s Regulation G, the following provides definitions of the non-GAAP measures used in the earnings call and slides with the reconciliation to the most closely related GAAP measure. The measures provided