FOR IMMEDIATE RELEASE
P&G DELIVERS ON THIRD QUARTER RESULTS
-------------------------------------
CINCINNATI, May 1, 2001 - The Procter & Gamble Company reported net
earnings of $893 million or $0.63 per share for the quarter ended March 31,
2001. Results included a $113 million after-tax charge related to the
Organization 2005 restructuring program. Core net earnings, excluding
Organization 2005 charges, were $1.01 billion for the quarter or $0.71 per
share. Core net earnings per share increased 11 percent.
Net sales for the quarter were $9.51 billion, equal to year-ago, excluding
a three percent unfavorable impact of exchange. Favorable pricing and mix
effects offset a unit volume decline of three percent due to major new brand
introductions in the base period.
Business segment after-tax earnings were up 12 percent as pricing benefits
and tax savings offset the impact of foreign exchange and increased product
costs. Divestiture gains also contributed to the company's core net earnings
growth.
"We met expectations and made solid progress this quarter - we are making
the strategic choices necessary to accelerate growth," said P&G president and
chief executive, A.G. Lafley. "Since last quarter, we formed a new company with
Coca-Cola to develop and market snacks and juices on a global basis; we
announced an accelerated and expanded restructuring program to ensure
competitive costs and enable accelerated growth; and we announced our intent to
explore strategic options for our Crisco and Jif brands. These choices will
enable P&G to deliver consistently superior consumer and shareholder value."
For the first nine months, reported net earnings were $3.24 billion, or
$2.29 per share. Results included charges of $318 million after-tax related to
the Organization 2005 program. Excluding Organization 2005 charges, core net
earnings were $3.56 billion, while core net earnings per share were $2.52, five
percent above the prior year. Net sales were up one percent to $29.66 billion,
excluding a three percent unfavorable exchange rate effect. Unit volume
decreased one percent.
The following provides additional perspective on the company's results by
business segment:
. Health care delivered net sales growth of two percent to $1.10 billion,
despite flat unit volume, on a stronger mix of new oral care and
pharmaceutical products, notably Actonel(R). Excluding the impact of
foreign exchange, net sales grew five percent. Net earnings declined 10
percent to $91 million. Excluding the major investment in the Iams(R)
expansion, health care earnings grew double-digits.
. Beauty care net sales were $1.78 billion, down one percent, excluding the
four percent impact of unfavorable currencies and divestitures. Innovation
on core brands - Pantene, Head & Shoulders and Olay - is growing share in
the U.S., and beginning to expand to international markets. Volume was down
two percent, excluding divestitures, due to the launch of Physique(R) in
the base period. Gross margin improvements and marketing cost efficiency
helped deliver $243 million in net earnings, five percent growth over the
prior year.
. Fabric and home care delivered double-digit earnings growth. Net sales of
$2.77 billion were down three percent excluding negative exchange of three
percent on a comparable volume decline, due to heavy new brand activity in
the base period. Net earnings grew 23 percent to $348 million, including
the benefit of lower taxes, gains from divestitures and pricing in North
America laundry. Western Europe laundry continues to face strong
competition, although shares have begun to improve indicating progress in
restoring price competitiveness.
. The paper segment achieved solid earnings progress during the quarter. The
competitive environment kept volume flat, despite growth in baby care and
in Latin America and Europe. Pricing actions and improved mix offset
unfavorable exchange impacts. Net sales of $2.94 billion were up three
percent, excluding an unfavorable foreign exchange impact of three percent.
Net earnings for the quarter grew eight percent to $236 million, as pricing
actions particularly in tissues and towel and lower investment spending
offset commodity-related cost increases.
. In food and beverage, net earnings grew to $67 million, a 34 percent
increase due to global snacks price increases and heavy new initiative
spending in the base period. Net sales of $938 million were flat excluding
one percent foreign exchange, and the divestiture of institutional
shortening and oils. A favorable mix impact partially offset the volume
decline.
FOURTH QUARTER ESTIMATES:
- -------------------------
The company confirmed that it is comfortable with the range of analysts'
estimates for core earnings per share growth for the quarter. Unit volume for
April-June is forecasted to be flat to up two percent while net sales excluding
exchange effects are expected to grow low single digits.
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(R), Ariel(R),
Crest(R), Pantene Pro-V(R), Always(R), Whisper(R), Pringles(R), Pampers(R),
Olay(R), Iams(R) and Vicks(R). Based in Cincinnati, Ohio, USA, P&G has
on-the-ground operations in over 70 countries. 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, May 1, 2001, at 8:30 a.m.
to review its third 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/investors
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.
CONSOLIDATED STATEMENT OF EARNINGS
QUARTER
Millions of dollars (except per share amounts) W/O O-2005 Restructuring Chgs
JFM 01 JFM 00 % CHG JFM 01 JFM 00 % CHG
------- ------- ----- ------- ------- -----
NET SALES $ 9,511 $ 9,783 (3)% $ 9,511 $ 9,783 (3)%
COST OF PRODUCTS SOLD 5,175 5,327 (3)% 5,073 5,220 (3)%
------- ------- ------- -------
GROSS MARGIN 4,336 4,456 (3)% 4,438 4,563 (3)%
MARKETING, RESEARCH & ADMINISTRATION 3,034 3,136 (3)% 2,984 3,059 (2)%
------- ------- ------- -------
OPERATING INCOME 1,302 1,320 (1)% 1,454 1,504 (3)%
TOTAL INTEREST EXPENSE 204 180 204 180
OTHER NON-OPERATING, NET 227 51 227 51
------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES 1,325 1,191 11 % 1,477 1,375 7 %
INCOME TAXES 432 438 471 452
NET EARNINGS 893 753 19 % 1,006 923 9 %
======= ======= ======= =======
EFFECTIVE TAX RAT 32.6% 36.8% 31.9% 32.9%
EBITDA 1,986 1,876 2,138 2,046
PER COMMON SHARE:
BASIC NET EARNINGS $ 0.66 $ 0.55 20 % $ 0.75 $ 0.68 10 %
DILUTED NET EARNINGS $ 0.63 $ 0.52 21 % $ 0.71 $ 0.64 11 %
DIVIDENDS $ 0.35 $ 0.32 $ 0.35 $ 0.32
AVERAGE DILUTED SHARES OUTSTANDING 1,404.9 1,426.7 1,404.9 1,426.7
Basis Basis
COMPARISONS AS A % OF NET SALES Pt Chg Pt Chg
- -------------------------------
COST OF PRODUCTS SOLD 54.4% 54.5% 53.3% 53.4%
GROSS MARGIN 45.6% 45.5% 10 46.7% 46.6% 10
MARKETING, RESEARCH & ADMINISTRATION 31.9% 32.1% (20) 31.4% 31.3% 10
OPERATING MARGIN 13.7% 13.5% 20 15.3% 15.4% (10)
EARNINGS BEFORE INCOME TAXES 13.9% 12.2% 15.5% 14.1%
NET EARNINGS 9.4% 7.7% 10.6% 9.4%
FYTD
W/O O-2005 Restructuring Chgs
3/31/01 3/31/00 % CHG 3/31/01 3/31/00 % CHG
------- ------- ----- ------- ------- -----
NET SALES $29,662 $30,290 (2)% $ 29,662 $30,290 (2)%
COST OF PRODUCTS SOLD 15,899 16,096 (1)% 15,653 15,774 (1)%
------- ------- -------- -------
GROSS MARGIN 13,763 14,194 (3)% 14,009 14,516 (3)%
MARKETING, RESEARCH & ADMINISTRATION 8,971 9,185 (2)% 8,806 8,980 (2)%
------- ------- -------- -------
OPERATING INCOME 4,792 5,009 (4)% 5,203 5,536 (6)%
TOTAL INTEREST EXPENSE 607 505 607 505
OTHER NON-OPERATING, NET 624 147 624 147
------- ------- -------- -------
EARNINGS BEFORE INCOME TAXES 4,809 4,651 3 % 5,220 5,178 1 %
INCOME TAXES 1,567 1,625 1,660 1,725
NET EARNINGS 3,242 3,026 7 % 3,560 3,453 3 %
======= ======= ======== =======
EFFECTIVE TAX RAT 32.6% 34.9% 31.8% 33.3%
EBITDA 6,849 6,685 7,260 7,112
PER COMMON SHARE:
BASIC NET EARNINGS $ 2.42 $ 2.23 9 % $ 2.66 $ 2.56 4 %
DILUTED NET EARNINGS $ 2.29 $ 2.10 9 % $ 2.52 $ 2.40 5 %
DIVIDENDS $ 1.05 $ 0.96 $ 1.05 $ 0.96
AVERAGE DILUTED SHARES OUTSTANDING 1,408.3 1,432.9 1,408.3 1,432.9
Basis Basis
COMPARISONS AS A % OF NET SALES Pt Chg Pt Chg
-------------------------------
COST OF PRODUCTS SOLD 53.6% 53.1% 52.8% 52.1%
GROSS MARGIN 46.4% 46.9% (50) 47.2% 47.9% (70)
MARKETING, RESEARCH & ADMINISTRATION 30.2% 30.3% (10) 29.7% 29.6% 10
OPERATING MARGIN 16.2% 16.5% (30) 17.5% 18.3% (80)
EARNINGS BEFORE INCOME TAXES 16.2% 15.4% 17.6% 17.1%
NET EARNINGS 10.9% 10.0% 12.0% 11.4%
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
---------------------------------------------------------------------
Three Months Ended March 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 $2,773 -6% $510 11% $348 23%
Paper 2,936 0% 403 5% 236 8%
Beauty Care 1,780 -6% 356 -1% 243 5%
Health Care 1,097 2% 144 -12% 91 -10%
Food and Beverage 938 -4% 118 51% 67 34%
--------- -------- --------------- -------- -------- --------
Total Business Segments 9,524 -3% 1,531 6% 985 12%
Corporate (excluding O-2005 costs) (13) n/a (54) n/a 21 n/a
--------- -------- --------------- -------- -------- --------
Total Company - Core 9,511 -3% 1,477 7% 1,006 9%
Organization 2005 Costs n/a n/a (152) n/a (113) n/a
--------- -------- --------------- -------- -------- --------
Total Company - Reported 9,511 -3% 1,325 11% 893 19%
---------------------------------------------------------------------
Nine Months Ended March 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 $8,777 -5% $1,836 -3% $1,236 5%
Paper 9,022 -1% 1,399 -4% 860 1%
Beauty Care 5,503 -2% 1,152 1% 796 9%
Health Care 3,237 10% 513 0% 336 6%
Food and Beverage 3,169 -10% 435 -7% 266 -9%
--------- -------- --------------- -------- -------- --------
Total Business Segments 29,708 -2% 5,335 -2% 3,494 4%
Corporate (excluding O-2005 costs) (46) n/a (115) n/a 66 n/a
--------- -------- --------------- -------- -------- --------
Total Company - Core 29,662 -2% 5,220 1% 3,560 3%
Organization 2005 Costs n/a n/a (411) n/a (318) n/a
--------- -------- --------------- -------- -------- --------
Total Company - Reported 29,662 -2% 4,809 3% 3,242 7%
JANUARY-MARCH 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 -3 -3 -3 +2 -2 -6 -3
Tissues and Towel +1 +5 -2 +7 +1 +7 +9
Baby Care +4 +4 -4 -1 0 -1 +3
Feminine Care -5 -5 -4 +2 +1 -6 -2
Subtotal Paper 0 +2 -3 +2 +1 0 +3
Beauty Care -4 -2 -4 +1 +1 -6 -2
Health Care 0 -2 -3 +1 +4 +2 +5
Food and Beverage -8 -3 -1 0 +5 -4 -3
Total Company -3% -1% -3% +2% +1% -3% 0%
<FN>
* These sales percentage changes are approximations based on quantitative
formulas that are consistently applied.
</FN>