FOR IMMEDIATE RELEASE
P&G DELIVERS ON FOURTH QUARTER AND
FISCAL YEAR RESULTS
CINCINNATI, Aug. 7, 2001 - The Procter & Gamble Company said today it
delivered on commitments for fourth quarter and total fiscal year financial
results.
For the quarter ended June 30, unit volume grew three percent. Net
sales for the quarter were $9.58 billion, down one percent. Excluding a three
percent impact of unfavorable foreign exchange and a two percent impact from
charges related to decisions to phase out certain initiatives, primarily Olay
Cosmetics(R), sales increased four percent. As anticipated, the company reported
a net loss for the quarter of $320 million or -$0.23 per share due to a $1.16
billion after-tax restructuring charge taken as part of the company's efforts to
streamline its organization structure and business portfolio.
Core net earnings, which exclude restructuring charges, were $837
million for the quarter. Core net earnings per share increased nine percent to
$0.60. Core operating earnings were up 12 percent, driven by core business
growth, overhead cost reductions, and favorable pricing and mix, which more than
offset negative exchange impacts.
Health care and paper business units led sales and volume progress for
the quarter behind incremental volume from new products and improved consumer
value. Health care and fabric and home care led profit improvement on higher
volumes and lower costs.
"We're encouraged by our results this quarter. We delivered improved
top-line results and core earnings - in fact, ahead of what we said we would
deliver," said P&G president and chief executive, A.G. Lafley. "These results
are the outcome of the plans we put in place this year - making tougher choices,
focusing on our biggest brands and customers, and tighter cash and cost
control."
- More -
For the fiscal year, net sales were $39.24 billion. Exchange impacts
reduced sales by over three percent. Excluding these effects, net sales were up
two percent on flat unit volume. Net earnings were $2.92 billion or $2.07 per
share. Excluding restructuring costs, core net earnings were $4.40 billion, or
$3.12 per share, up six percent. Core earnings progress reflects actions to
improve margins, as well as divestiture gains from non-strategic brands and
improved tax rates.
"Our goal this year was to get P&G's business growing again. We've
made solid progress throughout the year, but we still have work to do," Lafley
continued. "Our focus for fiscal 2002 will be to continue to deliver superior
consumer value, restore consistent innovation on our core brands and achieve the
restructuring savings we've promised. I have confidence in P&G's long-term
growth potential. We will continue to drive the key strategic choices we have
made this year and deliver on our commitments."
FISCAL YEAR SEGMENT HIGHLIGHTS
Health care delivered exceptional growth on the expansion of new products.
Net sales were $4.35 billion, up 14 percent excluding a three percent
unfavorable exchange impact. Unit volume increased 15 percent, driven by
the excellent performance of Iams(R) pet health and nutrition,
pharmaceuticals and oral care businesses. Net earnings were $390 million, a
16 percent increase over the previous year. Iams drove health care's
progress behind continued growth in North America and expansion into new
retail channels in the United Kingdom, Italy and Japan. Pharmaceutical
sales grew primarily due to the strength of Actonel(R), the company's
post-menopausal osteoporosis drug, which achieved $150 million in total
global sales. Oral care sales growth reflected benefits of broadening the
appeal of core brands beyond cavity and tartar protection into new
whitening and cleaning benefits.
Beauty care increased profitability behind innovative, high-margin, global
brands. Net sales were $7.26 billion, up two percent excluding a four
percent impact of unfavorable exchange rates, primarily in Western Europe
and Asia. Unit volume was flat versus the prior year, excluding a one
percent negative impact of divestitures. Volume growth in hair care and
skin care was offset by competitive activity in deodorants and bar soaps.
Net earnings were $972 million, up nine percent behind the successful
expansion of high-performance, premium-priced products, and the global
restage of Pantene(R)and Head and Shoulders(R). Latin America in
particular, posted record results on double-digit top line growth. Skin
care, hair care and cosmetics had strong years led by recent launches of
Olay Daily Facials(R), Olay Total Effects(R), Max Factor Lipfinity(R)and
Cover Girl Outlast(R)- breakthrough technologies that provide superior
consumer value and form the foundation for future growth.
Fabric and home care trends reflect the significant effort to restore
historical margins through innovation combined with necessary pricing,
disciplined cost focus, and more efficient marketing. Net sales for the
segment were $11.66 billion, down one percent versus a strong year ago
base, excluding a three percent unfavorable exchange impact. Unit volume
decreased two percent impacted by heavy competitive activity, primarily in
Western Europe. Net earnings grew 13 percent to $1.64 billion. Earnings
growth was primarily due to pricing actions and lower taxes. Latin America
delivered significant earnings progress, reflecting disciplined cost
management. Earnings progress in the June quarter was particularly strong
due to the benefits of accelerated overhead reduction efforts.
The paper segment, which includes baby, feminine and family care, reflected
mixed results. Net sales were $11.99 billion, up four percent excluding a
four percent impact of unfavorable exchange rates. Unit volume grew two
percent driven by new introductions and base business growth in North
America family care, and by baby care growth in Latin America and Central
and Eastern Europe. Commodity-related cost increases and weaker foreign
currencies resulted in net earnings being down two percent to $1.04
billion. These were partially offset by pricing actions and lower overhead
and marketing spending. During the June quarter, volume growth was
particularly strong as price premiums versus competition in family care
returned to historical levels. Initiative programs are currently underway
to drive future growth.
Food and beverage results were below year ago, as strong sales and earnings
in coffee were offset by soft snacks and juice results. Net sales were
$4.14 billion, down eight percent excluding one percent impact of
divestitures and a two percent unfavorable foreign exchange impact. Unit
volume declined eight percent excluding a two percent impact of
divestitures. Net earnings were $333 million, down nine percent. During the
June quarter, business results began to improve, reflecting the strength of
coffee and a return to competitive pricing and merchandising in snacks and
juice.
OTHER FISCAL YEAR HIGHLIGHTS
The company's restructuring program remains on track versus expectations
for both costs and savings. An expansion of the program in the fourth
quarter of this year, covers a significant reduction in enrollment,
manufacturing rationalization, and portfolio choices to scale back or
discontinue under-performing businesses and initiatives. The overall
program is expected to deliver nearly $2 billion in annual after-tax
savings by fiscal 2004.
Dividends will increase nine percent to $1.52 per share, effective August
15, 2001, marking the 46th consecutive year of increased dividend payments.
Capital spending declined as a percentage of sales to 6.3 percent. This
significant accomplishment reflects the company's commitment to improved
cash efficiency and puts us ahead of the glidepath toward our three-year
goal. Going forward, the company will strive toward consistent attainment
of six percent of sales or better in each business.
FISCAL YEAR 2001/2002
The company confirmed that it is comfortable with the guidance provided
earlier for fiscal 2002. Core earnings per share are expected to grow at a rate
that equals or exceeds the previous year's growth, but not yet at the company's
double-digit earnings growth target. Sales growth, excluding foreign exchange,
should also equal or exceed the previous year, but be below the company's
long-term growth target of four to six percent. If foreign exchange remains at
current levels, it is expected to negatively affect top-line growth by about two
percent -- though continued currency volatility makes it difficult to predict.
Unit volume for the fiscal year is forecasted to be up in the low single digits.
These estimates exclude any impact on results from the pending Clairol
acquisition, a venture with The Coca-Cola Company, the Crisco(R)/Jif(R)
divestiture or any accounting changes associated with goodwill.
For the September quarter, unit volume is expected to be about flat.
Sales excluding foreign exchange will be up slightly. At current rates, exchange
would negatively impact sales by about three percent. Earnings per share will be
up low-to-mid single digits.
The company will adopt the new accounting requirements for business
combinations and goodwill in the July-September quarter. Although still
reviewing the requirements of these recently issued statements, the company
expects the impact to reduce goodwill amortization by approximately $0.13 per
share.
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
growth projections; the successful execution of current restructuring programs
within the company's planned timing, including achievement of expected cost and
tax savings and successful management of organizational and work process
restructuring; the ability to achieve business plans, including volume growth
and pricing plans, despite high levels of competitive activity, especially with
respect to product categories and geographical markets in which the company has
chosen to focus; the achievement of growth in significant developing markets
such as China, Korea, the Southern Cone of Latin America and the countries of
Central and Eastern Europe; the successful and timely execution of planned brand
divestitures; the timely execution of definitive agreements and the receipt of
timely and successful regulatory clearances with respect to a transaction with
The Coca-Cola Company; the timely and successful receipt of regulatory
clearances and subsequent successful integration of the Clairol business, 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.
P&G markets more than 250 brands including Pampers(R), Tide(R),
Ariel(R), Always(R), Whisper(R), Pantene(R), Bounty(R), Pringles(R), Folgers(R),
Charmin(R), Downy(R), Lenor(R), Iams(R), Olay(R), Crest(R), Vicks(R) and
Actonel(R). P&G employs nearly 106,000 people in more than 80 countries
worldwide. For more information about P&G, please visit our website at
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, August 7, 2001, at 8:30
a.m. to review its fourth quarter and fiscal year 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
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 FYTD
W/O O-2005 W/O O-2005
Millions of dollars (except per share Restructuring Restructuring
amounts) Chgs Chgs
AMJ 01 AMJ 00 %CHG AMJ 01 AMJ 00 %CHG 6/30/01 6/30/00 %CHG 6/30/01 6/30/00 %CHG
------ ------ ---- ------ ------ ---- ------- ------- ---- ------ ------- ----
NET SALES $9,582 $9,661 (1)% $9,713 $9,661 1% $39,244 $39,951 (2)% $39,375 $39,951 (1)%
======================================
COST OF PRODUCTS SOLD 6,203 5,418 14% 5,313 5,244 1% 22,102 21,514 3% 20,966 21,018 (0)%
------ ----- ----- ----- ------ ------ ------ ------
GROSS MARGIN 3,379 4,243 (20)% 4,400 4,417 (0)% 17,142 18,437 (7)% 18,409 18,933 (3)%
======================================
MARKETING, RESEARCH & ADMINISTRATION 3,435 3,298 4% 3,017 3,185 (5)% 12,406 12,483 (1)% 11,823 12,165 (3)%
------ ----- ----- ----- ------ ------ ------ ------
OPERATING INCOME (56) 945 106% 1,383 1,232 12% 4,736 5,954 (20)% 6,586 6,768 (3)%
======================================
TOTAL INTEREST EXPENSE 187 217 187 217 794 722 794 722
OTHER NON-OPERATING, NET 50 157 50 157 674 304 674 304
------ ----- ----- ------ ------- ------- ------- -------
EARNINGS BEFORE INCOME TAXES (193) 885 (122)% 1,246 1,172 6% 4,616 5,536 (17)% 6,466 6,350 2%
======================================
INCOME TAXES 127 369 409 395 1,694 1,994 2,069 2,120
NET EARNINGS (320) 516 (162)% 837 777 8% 2,922 3,542 (18)% 4,397 4,230 4%
====== ====== ====== ====== ======= ======= ======= ========
======================================
EFFECTIVE TAX RATE NM 41.7% 32.8% 33.7% 36.7% 36.0% 32.0% 33.4%
EBITDA 833 1,705 2,272 1,992 7,681 8,449 9,531 9,263
PER COMMON SHARE:
BASIC NET EARNINGS $(0.27) $0.37 (173)% $0.62 $0.57 9% $2.15 $2.61 (18)% $3.29 $3.13 5%
DILUTED NET EARNINGS (0.23) 0.36 (164)% 0.60 0.55 9% 2.07 2.47 (16)% 3.12 2.95 6%
DIVIDENDS 0.35 0.32 0.35 0.32 1.40 1.28 1.40 1.28
AVERAGE DILUTED SHARES OUTSTANDING 1,397.0 1,413.0 1,397.0 1,413.0 1,405.6 1,427.2 1,405.6 1,427.2
Basis Basis Basis Basis
COMPARISONS AS A % OF NET SALES Pt Chg Pt Chg Pt Chg Pt Chg
- -------------------------------
COST OF PRODUCTS SOLD 64.7 % 56.1 % 54.7 % 54.3 % 56.3 % 53.9 % 53.2 % 52.6 %
GROSS MARGIN 35.3 % 43.9 % (860)45.3 % 45.7 % (40) 43.7 % 46.1 % (240) 46.8 % 47.4 % (60)
MARKETING, RESEARCH & ADMINISTRATION 35.8 % 34.1 % 31.1 % 33.0 % 31.6 % 31.2 % 30.0 % 30.4 %
OPERATING MARGIN (0.6)% 9.8 % (1,040)14.2 % 12.8 % 140 12.1 % 14.9 % (280) 16.7 % 16.9 % (20)
EARNINGS BEFORE INCOME TAXES (2.0)% 9.2 % 12.8 % 12.1 % 11.8 % 13.9 % 16.4 % 15.9 %
NET EARNINGS (3.3)% 5.3 % 8.6 % 8.0 % 7.4 % 8.9 % 11.2 % 10.6 %
THE PROCTER & GAMBLE COMPANY AND SUBSIDIARIES
(Amounts in Millions Except Per Share Amounts)
Consolidated Earnings Information
-----------------------------------------------------------------------------------
Three Months Ended June 30
-----------------------------------------------------------------------------------
% Change % Change % Change
Versus Earnings Before Versus Net Versus
Net Sales Year Ago Income Taxes Year Ago Earnings Year Ago
-----------------------------------------------------------------------------------
Fabric and Home Care $2,883 0% $591 36% $405 46%
Paper 2,969 2% 336 -7% 183 -14%
Beauty Care 1,754 -1% 252 -2% 176 7%
Health Care 1,116 16% 71 163% 54 184%
Food and Beverage 970 -14% 112 12% 67 -6%
-----------------------------------------------------------------------------------
Total Business Segments 9,692 0% 1,362 16% 885 19%
Corporate (excluding restructuring costs) 21 n/a (116) n/a (48) n/a
-----------------------------------------------------------------------------------
Total Company - Core 9,713 1% 1,246 6% 837 8%
Restructuring Costs (131) n/a (1,439) n/a (1,157) n/a
-----------------------------------------------------------------------------------
Total Company - Reported 9,582 -1% (193) n/a (320) n/a
-----------------------------------------------------------------------------------
Twelve Months Ended June 30
-----------------------------------------------------------------------------------
% Change % Change % Change
Versus Earnings Before Versus Net Versus
Net Sales Year Ago Income Taxes Year Ago Earnings Year Ago
-----------------------------------------------------------------------------------
Fabric and Home Care $11,660 -4% $2,427 5% $1,641 13%
Paper 11,991 0% 1,735 -5% 1,043 -2%
Beauty Care 7,257 -2% 1,404 1% 972 9%
Health Care 4,353 11% 584 8% 390 16%
Food and Beverage 4,139 -11% 547 -3% 333 -9%
-----------------------------------------------------------------------------------
Total Business Segments 39,400 -2% 6,697 1% 4,379 6%
Corporate (excluding (25) n/a (231) n/a 18 n/a
restructuring costs -----------------------------------------------------------------------------------
Total Company - Core 39,375 -1% 6,466 2% 4,397 4%
Restructuring Costs (131) n/a (1,850) n/a (1,475) n/a
-----------------------------------------------------------------------------------
Total Company - Reported 39,244 -2% 4,616 -17% 2,922 -18%
APRIL-JUNE NET SALES INFORMATION
(Percent Change vs. Year Ago) *
Volume
--------------------------------
With Without
Acquisitions/ Acquisitions/ Total Total Impact
Divestitures Divestitures FX Price Mix/Other Impact Ex-FX
---------------------------------------------------------------------------------------------------
Fabric and Home Care +1 +2 -3 0 +2 0 +3
Family Care +15 +15 -2 -1 +3 +15 +17
Baby Care +4 +4 -4 -2 -2 -4 0
Feminine Care -1 -1 -5 0 +2 -4 +1
Subtotal Paper +6 +6 -4 -1 +1 +2 +6
Beauty Care +3 +4 -4 0 0 -1 +3
Health Care +24 +22 -2 +1 -7 +16 +18
Food and Beverage -13 -9 -2 -2 +3 -14 -12
Total Company (Core) +3% +4% -3% 0% +1% +1% +4%
* These sales percentage changes are approximations based on quantitative
formulas that are consistently applied.