EXHIBIT
FOR IMMEDIATE RELEASE
P&G DELIVERS SECOND QUARTER EXPECTATIONS
CINCINNATI, Jan. 30, 2001 - The Procter & Gamble Company reported net
earnings of $1.19 billion or $0.84 per share for the quarter ended December 31,
2000. Results included a $120 million after-tax charge related to the
Organization 2005 restructuring program. Core net earnings, which exclude the
Organization 2005 charges, were $1.31 billion for the quarter. Core net earnings
per share were $0.93, a six percent increase versus the prior year.
Net sales were $10.18 billion for the quarter. This is equal to year-ago
record levels, after adjusting for a four percent unfavorable currency impact,
primarily the euro. Unit volume was down two percent against an all-time record
quarter last year, when new brand introductions, strong initiative activity and
marketing support, and geographic expansions of established brands fueled
growth.
Business segment after-tax earnings were up two percent as pricing and tax
savings offset the impact of foreign exchange and increased product costs,
driven by higher commodity-based prices. Divestiture gains, primarily from the
sale of Clearasil, were an important factor in delivering the six percent
earnings per share growth.
"We delivered the earnings per share results we said we would - for the
second quarter in a row. Still, we can and must do better. Our goal is to get
back to consistent annual double-digit EPS growth," said P&G Chief Executive,
A.G. Lafley. "Our choices to focus on big brands and leading customers, tighter
cost and cash management and better consumer value are providing a solid
foundation for further progress."
For the first six months, reported net earnings were $2.35 billion, or
$1.66 per share. Results included a charge of $205 million after-tax related to
the Organization 2005 program. Excluding Organization 2005 charges, core net
earnings were $2.55 billion, while core net earnings per share grew three
percent to $1.81. Worldwide sales were down two percent to $20.15 billion,
including a four percent effect due to unfavorable exchange rates, on flat unit
volume.
The following provides additional perspective on the company's results by
business segment:
. On top of record results in the year-ago quarter, the health care segment
again delivered excellent growth, reflecting strong execution of initiative
plans. Net earnings grew 31 percent to $164 million. Disciplined focus on
costs complemented top-line growth, particularly in Iams, North America
pharmaceuticals, and oral care. Net sales were up seven percent to $1.15
billion, including a three percent negative impact from weaker currencies.
Excluding this effect, the double-digit sales growth was driven by an 11
percent increase in unit volume. Iams continues to exceed expectations, as
the expansion into new retail channels has delivered substantial growth,
while the brand continues to be number one in pet specialty outlets.
. Beauty care also delivered earnings growth, as the segment continues to
focus on premium products. Net earnings grew five percent to $286 million.
The business supported continued investment in business-building
initiatives by managing costs, primarily lower taxes. Share progress on key
brands was not directly reflected in top-line results due to trade
inventory adjustments, primarily related to the Pantene relaunch. Net sales
were $1.86 billion, down two percent driven entirely by a five percent
negative impact of currency. Excluding exchange, the net sales growth in
the face of a two percent decline in unit volume reflects the benefit of
pricing as the business extends its hair and skin care product lines.
Notable progress was achieved in the hair care business in Latin America,
and earnings progress in China following challenges in the prior year.
. The company's largest segment, fabric and home care, began to show signs of
share improvement, despite a continued difficult competitive environment.
Net earnings were $390 million, down four percent against particularly
strong growth in the prior year. Net sales were $2.93 billion, with a four
percent volume decline exacerbated by a five percent unfavorable exchange
impact. The unit volume trend reflects the strength of the year-ago base
period, which included the initial shipments of Swiffer, Febreze and Dryel,
as well as the impact of inventory builds in advance of last quarter's
North America laundry price increase. Recent pricing actions in Western
Europe and laundry product improvements in North America are designed to
improve the value equation with consumers to support achievement of our
future growth objectives.
. The paper segment posted a one percent growth in earnings as pricing and a
disciplined focus on controllable costs countered exchange impacts and
higher raw material prices. Net earnings for the quarter were $295 million.
Excluding a five percent unfavorable exchange impact, net sales grew one
percent to $3.05 billion. Pricing benefits, primarily in North America
tissues and towel and baby care, mitigated a slight decrease in unit
volume. Growth in Latin America volume, primarily in baby care, was offset
by a decline in North America, following particularly strong results in the
prior year. This segment continues to face competitive challenges and is
focused on the best approaches to deliver a winning consumer value equation
in the future.
. The food and beverage segment improved significantly versus July -
September but remains below the record level of year-ago. Net earnings were
$124 million, down nine percent, due to lower volume versus record
shipments in the year-ago quarter. Net sales were $1.18 billion, down 11
percent due to a seven percent decline in unit volume and a three percent
impact of unfavorable exchange rates.
FISCAL YEAR AND THIRD QUARTER ESTIMATES:
- ----------------------------------------
The company confirmed that it is comfortable with the high end of the
current range of analysts' estimates for core earnings per share growth for the
year. Based on current trends and expectations, the company now expects unit
volume to be about flat for the year, and sales, excluding exchange effects, to
be up two to four percent.
Unit volume for January - March is forecasted to be flat or down two
percent versus a strong prior year base period. Net sales excluding exchange
effects are expected to grow in the low single digits. Double-digit earnings per
share growth is expected for the quarter, with core net earnings per share in
the range of $0.72 - $0.74.
This news release contains 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 news release, there are certain
factors that could cause results to differ materially from those anticipated by
some of the statements made. These include achievement of the business unit
volume and income growth projections, the achievement of the company's cost
containment goals, and the timely divestiture of assets within the company's
ongoing minor brand divestiture program, as well as factors listed in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in the company's most recently filed Forms 10-K and 8-Ks.
Procter & Gamble markets approximately 300 brands to nearly five billion
consumers in over 140 countries. These brands include Tide, Ariel, Crest,
Pantene Pro-V, Always, Whisper, Pringles, Pampers, Olay, Iams and Vicks. Based
in Cincinnati, Ohio, USA, P&G has on-the-ground operations in over 70 countries
and employs more than 110,000 people worldwide. For more information on P&G and
its products, please visit our worldwide website at http://www.pg.com.
# # #
P&G Contacts
Thomas M. Millikin (513) 983-8248
Linda L. Ulrey (513) 983-8975
P&G will web cast its conference call on Tuesday, January 30, 2001, at 8:30
a.m. to review its second quarter 2000/01 results. The call will last
approximately one hour. You may receive the web cast by going to our web site
at: http://www.pg.com/investor
Check the Corporate Information section of the investor site to view the web
cast.
We suggest you check in at least ten minutes in advance of the start time to
complete the brief registration process and ensure you are set up to receive
the web cast.
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
THREE MONTHS ENDED DECEMBER 31, 2000
------------------------------------
Millions of Dollars (except per share amounts) WITHOUT O-2005 RESTRUCTURING CHARGES
% ------------------------------------
2000/01 1999/00 Change 2000/01 1999/00 % Change
------- ------- ------ ------- ------- --------
NET SALES $10,182 $10,588 (4%) $10,182 $10,588 (4%)
Cost of products sold 5,417 5,563 (3%) 5,336 5,453 (2%)
------- ------- ------- -------
GROSS MARGIN 4,765 5,025 (5%) 4,846 5,135 (6%)
Marketing, research and administrative exp. 3,054 3,183 (4%) 2,981 3,111 (4%)
------- ------- ------- -------
OPERATING INCOME 1,711 1,842 (7%) 1,865 2,024 (8%)
Interest Expense 224 178 224 178
Other income/(expense), net 294 51 292 51
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES 1,781 1,715 4% 1,933 1,897 2%
Income taxes 587 589 619 634
------- ------- ------- -------
NET EARNINGS $ 1,194 $ 1,126 6% $ 1,314 $ 1,263 4%
======= ======= ======= =======
PER COMMON SHARE:
Basic net earnings $ 0.89 $ 0.83 7% $ 0.99 $ 0.94 5%
Diluted net earnings $ 0.84 $ 0.78 8% $ 0.93 $ 0.88 6%
Average diluted shares outstanding - diluted 1,411.0 1,434.8 1,411.0 1,434.8
% BASIS POINT % BASIS POINT
OF NET SALES CHANGE OF NET SALES CHANGE
--------------------- ----------- --------------------- -----------
GROSS MARGIN 46.8% 47.5% (70) 47.6% 48.5% (90)
OPERATING MARGIN 16.8% 17.4% (60) 18.3% 19.1% (80)
SIX MONTHS ENDED DECEMBER 31, 2000
----------------------------------
Millions of Dollars (except per share amounts) WITHOUT O-2005 RESTRUCTURING CHARGES
% ------------------------------------
2000/01 1999/00 Change 2000/01 1999/00 % Change
------- ------- ------ ------- ------- --------
NET SALES $20,151 $20,507 (2%) $20,151 $20,507 (2%)
Cost of products sold 10,724 10,769 (0%) 10,580 10,554 0%
------- ------- ------- -------
GROSS MARGIN 9,427 9,738 (3%) 9,571 9,953 (4%)
Marketing, research and administrative exp. 5,937 6,049 (2%) 5,822 5,922 (2%)
------- ------- ------- -------
OPERATING INCOME 3,490 3,689 (5%) 3,749 4,031 (7%)
Interest Expense 403 325 403 325
Other income/(expense), net 397 96 397 96
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES 3,484 3,460 1% 3,743 3,802 (2%)
Income taxes 1,135 1,187 1,189 1,272
------- ------- ------- -------
NET EARNINGS $ 2,349 $ 2,273 3% $ 2,554 $ 2,530 1%
======= ======= ======= =======
PER COMMON SHARE:
Basic net earnings $ 1.76 $ 1.68 5% $ 1.91 $ 1.88 2%
Diluted net earnings $ 1.66 $ 1.58 5% $ 1.81 $ 1.76 3%
Average diluted shares outstanding - diluted 1,410.0 1,434.8 1,410.0 1,434.8
% BASIS POINT % BASIS POINT
OF NET SALES CHANGE OF NET SALES CHANGE
--------------------- ----------- --------------------- -----------
GROSS MARGIN 46.8% 47.5% (70) 47.5% 48.5% (100)
OPERATING MARGIN 17.3% 18.0% (70) 18.6% 19.7% (110)
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
CONSOLIDATED EARNINGS INFORMATION
------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31
------------------------------------------------------------------------
% Change % Change % Change
Versus Earnings Before Versus Net Versus
Net Sales Year Ago Income Taxes Year Ago Earnings Year Ago
------------------------------------------------------------------------
Fabric and Home Care $2,929 -8% $590 -10% $390 -4%
Paper 3,047 -4% 483 -3% 295 1%
Beauty Care 1,858 -2% 412 -2% 286 5%
Health Care 1,150 7% 252 25% 164 31%
Food and Beverage 1,178 -11% 195 -11% 124 -9%
--------- -------- --------------- -------- -------- --------
Total Business Segments 10,162 -5% 1,932 -3% 1,259 2%
Corporate (excluding O-2005 costs) 20 n/a 1 n/a 55 n/a
--------- -------- --------------- -------- -------- --------
Total Company - Core 10,182 -4% 1,933 2% 1,314 4%
Organization 2005 Costs n/a n/a (152) n/a (120) n/a
--------- -------- --------------- -------- -------- --------
Total Company - Reported 10,182 -4% 1,781 4% 1,194 6%
------------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31
------------------------------------------------------------------------
% Change % Change % Change
Versus Earnings Before Versus Net Versus
Net Sales Year Ago Income Taxes Year Ago Earnings Year Ago
------------------------------------------------------------------------
Fabric and Home Care $6,004 -5% $1,326 -7% $888 0%
Paper 6,086 -2% 996 -7% 624 -2%
Beauty Care 3,723 0% 796 2% 553 11%
Health Care 2,140 14% 369 6% 245 14%
Food and Beverage 2,231 -12% 317 -18% 199 -18%
--------- -------- --------------- -------- -------- --------
Total Business Segments 20,184 -2% 3,804 -5% 2,509 1%
Corporate (excluding O-2005 costs) (33) n/a (61) n/a 45 n/a
--------- -------- --------------- -------- -------- --------
Total Company - Core 20,151 -2% 3,743 -2% 2,554 1%
Organization 2005 Costs n/a n/a (259) n/a (205) n/a
--------- -------- --------------- -------- -------- --------
Total Company - Reported 20,151 -2% 3,484 1% 2,349 3%
OCTOBER-DECEMBER NET SALES INFORMATION
(PERCENT CHANGE VS. YEAR AGO)*
Volume
-----------------------------
With Without
Acquisitions/ Acquisitions/ Total Total Impact
Divestitures Divestitures FX Price Mix Impact Ex-FX
---------------------------------------------------------------------------------------------
Fabric and Home Care -4 -3 -5 +1 0 -8 -3
Tissues and Towel -1 -1 -2 +8 -1 +4 +6
Baby Care 0 0 -6 +1 -2 -7 -1
Feminine Care -3 -3 -7 +1 0 -9 -2
Subtotal Paper -1 -1 -5 +3 -1 -4 +1
Beauty Care -2 -2 -5 +5 0 -2 +3
Health Care +11 +12 -3 +1 -2 +7 +10
Food and Beverage -7 -7 -3 -1 0 -11 -8
Total Company -2% -2% -4% +2% 0% -4% 0%
<FN>
*These sales percentage changes are approximations based on quantitative
formulas that are consistently applied.
</FN>