Procter & Gamble
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Presented by Group #4
Calderon, Jennifer
Cho, Sunghee
Choi, Okjoo
Desimone, Thomas
Kim, Mi
Procter & Gamble History
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1837 – founded by William Procter
and James Gamble
Family operated soap and candle
business in Cincinnati Ohio
1879 – Introduced Ivory soap, the
floating soap
1890 – Incorporates
1930 – International Corporation
History Continue…
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1946 – Tide is introduced with new formula
1955 – Crest is co-developed with Indiana University
1957 – Acquired Charmin Paper Company
1961 – Pampers, the first affordable successful
disposable diapers
History Continue….
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1985 – Acquired Richardson-Vicks
Late 1980s – Acquired Noxell, Max Factor & Ellen
Betrix
1996 – Febreze to eliminate odors
2001 – Crest Whitestrips
2005 – P&G acquires Gillette
P&G Today
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2008 sales of $83.5 billion
Over 138,000 employees and in over 180 countries
Divided in three business units
300 brands and 24 are billion dollar brands
$8.6 billion in advertising expense
98% of household have a P&G product
Alan G. Lafley, CEO & Chairman
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MBA – Harvard School of Business – 1977
Started at PG in 1977 as Brand Assistant
Help several positions on path to CEO
Alan G. Lafley, CEO & Chairman
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1977 - Brand Assistant, Joy
1978 - Sales Training, Denver Sales District
1978 - Assistant Brand Manager, Tide
1980 - Brand Manager, Dawn & Ivory Snow
1981 - Brand Manager, Special Assignment
& Ivory Snow
1982 - Brand Manager, Cheer
1983 - Associate Advertising Manager,
PS&D Division
1986 - Advertising Manager, PS&D Division
1988 - General Manager, Laundry Products,
PS&D Division
1991 - Vice President-Laundry and
Cleaning Products, Procter & Gamble USA
1992 - Group Vice President and President
Laundry and Cleaning Products, Procter &
Gamble USA
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1994 - Group Vice President, The
Procter & Gamble Company, and
President-Procter & Gamble
Far East
1995 - Executive Vice President, The
Procter & Gamble Company, (PresidentAsia, Procter &
Gamble Asia)
1998 - Executive Vice President, The
Procter & Gamble Company, (PresidentNorth America,
Procter & Gamble North America)
1999 - President-Global Beauty Care
and North America
2000 - President and Chief Executive
2002 - Chairman of the Board, President
and Chief Executive
2007 - Chairman of the Board and Chief
Executive Officer
Alan G. Lafley, CEO & Chairman
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1992 – delivered record sales and profits
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1995 – built growth in Japan and Asia
markets
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Introduced Liquid Tide and Tide with Bleach
Brought $1 mil. Chinese market to $90 bil.
1999 – N.A. record high net sales
Alan G. Lafley, CEO & Chairman
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2000 – Elected to CEO
Laid extensive pathway for PG
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several acquisitions - Gillette
Stock price has more than doubled from
2000 to 2004
Named CEO of the Year, Chief Executive
Magazine, 2006
Corporate Culture
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5 principles
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Integrity:
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Leadership
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Personal responsibility over actions
Passion for Winning
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Develop goals and pathway to achievement
Ownership
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honest culture with employees and stakeholders; respect
Must be better than the competition
Trust
COMPETITORS
Revenue
Net
income
Operating
Margin
R&D
Spending
R&D as
% of
Total
Revenue
P&G
$83,503
$12,075
20.46%
$2,226
2.67%
9.00%
Unilever
$58,508
$6,022
13.05%
$1,264
2.16%
1.37%
L'oreal
$24,842
$3,870
20.21%
$815
3.28%
8.06%
Kimberly
-Clark
$18,266
$1,822
14.32%
$277
1.52%
9.07%
Unit: $M
Revenue
Growth
from
2006/2007
CORE STRENGTHS
Innovation
Advantage
Brand
Building
Scale
Advantage
Go-to
Market
Consumer
Understanding
Weakness/Controversies
Animal Testing
Environmental record
Folgers Coffee – no more P&G’s subsidiary
Smucker bought Folgers on Nov, 6, 2009
 This merger is win-win?
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-P&G will have $350 million less debt.
-Folgers is expected to produce 42%
of Smuckers’ future sale.
-Smuckers will be more than double
its current size.
P&G and Smucker’s tax game
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How to avoid a tax jam
- Reverse Morris Trust transaction: tax avoidance technique
P&G
Spin off
Smucker
Folgers Coffee
Merge into
How did the P&G finance growth?
Operating Activities
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2008
2007
2006
Net earnings
12,075
10,340
8,684
Total Operating Cash Flow
15,814
13,435
11,375
Free Cash Flows
12.8 billion
10.5 billion
8.7 billion
In 2007, Net earning included the benefit of an additional three
months of Gillette. The Gillette business was acquired on Oct 1,
2005.
Investing activities
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In 2008, Acquisition of Frederic Fekkai, a premium hair
care brand
In 2007, Acquisition of Beauty and health care, including
the Swiss Precision Diagnostic business
2008
Capital expenditures
(% of net sale)
2007
2006
-3,046
(3.6%)
-2,945
(3.9%)
Acquisitions, net of cash acquired
-381
-492
171
Total Investing Cash Flow
-2,549
-2,483
-730
-2,667
Financing Activities
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Dividends per common shares increased 13% in 2008
($1.45, $1.28, $1.15 per share in 08, 07 and 06)
Total Debt $36.7 billion in 2008, $35.4 billion in 2007,
$38.1 billon in 2006
Stock Repurchase $24 -30 billion of shares at a rate of $8
-10 billion per year.
2008
2007
2006
Dividends to shareholders
-4,655
-4,209
-3,703
Additions to long-term debt
7,088
4,758
22,545
Reductions of long-term debt
-11,747
-17,929
-5,282
Treasury stock purchases
-10,047
-5,578
-16,830
Total Financing Cash Flow
-15,650
-12,478
-10,578
Operating cash flow
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To finance operating needs and capital
expenditures
Shareholders dividends
Share repurchases
Procter & Gamble