pg 2012 analyst slides
TRANSCRIPT
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November 15, 20122012 Analyst Meeting
Agenda
Results & Outlook
Growth & Productivity Strategy Strengthen Core Developed Markets Maintain Developing Market Momentum Strengthen Innovation Productivity Plans and Progress
Q&A
P&G Vice Chairmen
Werner Geissler Vice Chairman, Global Operations
Dimitri PayanotopoulosVice Chairman, Global Business Units
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Todays Presenters
Bob McDonaldChairman of the Board
President and Chief Executive Officer
Jon Moeller Chief Financial
Officer
Melanie HealeyGroup PresidentNorthAmerica
and Global Hyper,Super, Mass Channel
Patrice LouvetPresident
Global Shave Care
Alex KeithVice President
Fabric Care, North America and Brand
Fabric Leader,Fabric Enhancers
ShantanuKhosla
Vice PresidentIndia
Bruce BrownChief Technology
Officer
Laurent PhilippeGroup President
Central and EasternEurope, Middle East
and Africa and GlobalHigh FrequencyStores Channel
Jorge MesquitaGroup President
New BusinessCreation and Innovation
and Global Pet Care
Yannis SkoufalosGlobal ProductSupply Officer
Marc PritchardGlobal Brand
Building Officer
Jorge UribeGlobal Productivity and
OrganizationTransformationOfficer
Teri List-StollSenior Vice
President andTreasurer
Creating Value for Shareholders
122 93% 56 Consecutive Yearsof Dividends
Consecutive Years of Dividend Increases
Rolling 10-year quarterly returns haveexceeded the S&P 500
and Dow Jones
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Big, Highly Profitable Businesses
Strategies
Maintaining Strong Developing Market Momentum Strengthening Core Developed Markets Building a Strong Innovation Pipeline Improving Productivity
http://news.duracell.com/sites/duracell.newshq.businesswire.com/files/logo/image/Duracell_Logo_Black.jpghttp://www.ariel-info.com/images/ariel-logo.pnghttp://upload.wikimedia.org/wikipedia/fr/0/07/Vicks_Logo.jpg -
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Productivity
Across all Operations Global Business Units Market Development
Organizations Global Business
Services Corporate Functions
Jul Sept 12 (Q1 FY 13) ResultsOrganic Sales Growth
0%
1%
2%
3%
4%
5%
6%
JAS 11 OND 11 JFM 12 AMJ 12 JAS 12
Organic sales up in 4 of 5 reporting segments
4% 4%
3% 3%
2%
0%
10%
20%
30%
40%
50%
60%
70%
JAS 11 OND 11 JFM 12 AMJ 12 JAS 12
Jul Sept 12 (Q1 FY 13) Results% of Global Sales In-Line or Growing Value Share
Market share data is value basis, constant currency.
Intervention plans on key businesses are driving improvedshare results
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Jul Sept 12 (Q1 FY 13) Results% of U.S. Sales In-Line or Growing Value Share
0%
10%
20%
30%
40%
50%
60%
70%
JAS 11 OND 11 JFM 12 AMJ 12 JAS 12
Intervention plans on key businesses are driving improvedshare results
Market share data is value basis, constant currency.
Jul Sept 12 (Q1 FY 13) ResultsCore EPS Growth
-5%
0%
5%
10%
JAS 11 OND 11 JFM 12 AMJ 12 JAS 12
0%0%1%
-2%
5%
* History adjusted for Snacks moving to Discontinued Operations.
Results largely driven by strong productivity progress
Jul Sept 12 (Q1 FY 13) ResultsCash
Free Cash Flow $2B
Dividends $1.6B
Share Repurchase $2.6B
Value to Shareholders $4.2B
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FY 2013 GuidancePricing
0
1
2
3
4
5
6
FY 09 FY 10 FY 11 FY 12 FY 13E
+1%
+2%
+5%
+4%
+1%
$3.5billion
FY 2013 GuidanceFY 13 Guidance Unchanged
FY 13
Organic Sales Growth +2% to +4%FX -2% to -3%
All-In Sales Growth 0% to +1%
Core EPS $3.80 to $4.00Core EPS Growth -1% to +4%
FY 2013 GuidanceItems Included in Guidance
Included in GuidanceLower interest expense & minor brand divestitures $0.04 - 0.05
Higher effective tax rate on core earnings $(0.04) - (0.05)
Pension & employee benefit plan impacts ($0.06)
VZ mandated prices & AR import restrictions ($0.06)
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FY 2013 GuidanceItems Not Included in Guidance
Included in Guidance Not Included in Guidance
Lower interest expense & minor branddivestitures $0.04 - 0.05 Foreign Exchange Items:
Higher effective tax rate on core earnings $(0.04) - (0.05) - Significant strengthening of U.S. Dollar
Pension & employee benefit plan impacts ($0.06) - Venezuela devaluation post election
VZ mandated prices & AR importrestrictions ($0.06) Market Growth Deceleration from:
- Deepening European financial crisis
- Uncertainty from U.S. fiscal cliff
U.S. Tax Policy Extensions:
- Subpart F "Look Through"
- R&D Tax Credit
Q2 FY 2013 GuidanceQ2 FY 13 Guidance Unchanged
FY 13
Organic Sales Growth +1% to +3%FX -2%
All-In Sales Growth -1% to +1%
Core EPS $1.07 to $1.13Core EPS Growth -2% to +4%
Capital StructureStrategy Maintaining Strong
Balance Sheet to
Ensure adequate liquidity
Optimize interest expense
Give flexibility to act on valuecreation opportunities(e.g. dividends, share repurchase,strategic acquisitions)
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8
105%
120%Consistently Delivering 90%
Cash Productivity Target
Adjusted Free Cash Flow Product iv ity
0%
15%
30%
45%
60%
75%
90%
FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13e
Working Capital
$1.8bn cash from freedinventory & receivables overpast 3 years
funding large portion of accelerated capital spendingin developing markets
Debt & Interest Expense
Maintaining AA-credit rating
$700 million savings over past 4 years
FY12 average effective interest rate =2.5% Down 140 bps vs. FY 08 Top 10% of S&P 500
Last 5 long-term debt instruments issued atrecord-low coupon rates
Low-cost commercial paper providingdependable liquidity in volatile markets
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Returning Value to Shareholders
$ Billions Past 10 Years
Dividends $42
Share Repurchase * 46
Value to Shareholders $88
*P10Yr share repurchase excludes $20 billion of repurchases associated with the Gillette acquisition.
90% of Net Earnings Returned to Shareholders
Dividends
FY13 = >$6bn in dividends 122 consecutive years of dividend payments 56 consecutive years of dividend increases
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
$2.25
1956 1964 1972 1980 1988 1996 2004 2012
Dividends per Share
ShareRepurchase Will purchase $4bn from
July 12 Dec. 12 Front- end loaded to
Minimize price paid Maximize EPS impact Increase flexibility to buy
more in second-half of FY
Now expect range of $4bn to $6bn in FY13
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Returning Value to ShareholdersFY13 Cash Outlook
Free Cash Flow Productivity ~90%Capital Spending, % sales 5.5%
Dividends >$6bn
Share Repurchase $4 to 6bn
Value to Shareholders $10 to $12bn
Shareholder Yield * 5.3% to 6.3%
*Shareholder yield calculated based on current market cap value of approximately $190 billion
Developing MarketsCurrent Footprint & Developing Market Sales
62%
38%32%
68%63%37% 46%54%
DevelopingMarket Sales
Developed
Developing
P&G Unilever LOreal Colgate
$32B $22B $9B $9B
Developing MarketsP&G Sales Progression: 2000 to 2012
FY '00 FY '12
% o
f T o t a l C o m p a n y
S a
l e s
Developed
Developing
80%
62%
38%
$32 bn
$8 bn
12% Sales Growth CAGR Over 12 Years
20%
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Developing MarketsP&G Asia Sales Growth
1991 2001 2012
$15.0B
~$1.5B
$4.0B
Asia Sales Up 10X
Developing MarketsP&G Latin America Sales Growth
1991 2001 2012
$8.3B
$1.0B
$2.9B
Latin America Sales Up 8X
Developing MarketsP&G Central & Eastern Europe, Middle East
& Africa Sales Growth
1991 2001 2012
$12.1B
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Developing MarketsMarket Growth Potential
+800MMWorld population growth by 2020
+1.5BMiddle class incomes by 2020
95%World population growth indeveloping markets
Developing MarketsMarket Growth Potential
150 YearsFor Britain to Double GDP per Capita
Less than 20 YearsFor China & India to Double GDP per Capita
50 YearsFor U.S. to Double GDP per Capita
Developing Markets
Resources concentrated on biggestopportunities
Profitable expansion by focusing on: Growing Markets Increasing Market Share Improving Mix Localizing Production Leveraging Scale
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Top 10 Developing Markets IndiaOrganic Sales Growth
FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12
Decade of +20% OrganicSales Growth
Top 10 Developing Markets IndiaValue Share Growth
FY 02 FY 12
Value Share from3.5% to ~12%
Top 10 DevelopingMarkets India
30% Sales GrowthPast 2 Fiscal Years
95% of Sales Growing ShareFY 2012
Recent Growth
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Top 10 Developing Markets IndiaShare Leadership
Value SharePosition
Diapers 1Laundry 2Batteries 1Respiratory 1Hair Care 2Salon Professional 2Male Blades & Razors 1Pre & Post Shave Care 2Feminine Care 1Toothbrushes 2
Top 10 DevelopingMarkets India
6 million retail storesSelling P&G brands
700 Million Indian ConsumersUsed at least 1 P&G Brand in the Last Year
Distribution Expansion &Household Penetration
Top 10 DevelopingMarkets India
Products of superior performance and value
Strong Innovation
Effective Communicationof product benefits
Improved Productivity
Winning with:
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Top 10 Developing Markets IndiaInnovation
Top 10 Developing Markets IndiaInnovation
Top 10 Developing Markets IndiaInnovation
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Top 10 Developing Markets IndiaInnovation
6
10
14
FY 09 FY 10 FY 11 FY 12
India Laundry Value Share
Top 10 Developing Markets IndiaInnovation
20
35
50
65
JFM 07 JFM 08 JFM 09 JFM 10 JFM 11 JFM 12
Huggies Pampers
Top 10 Developing Markets IndiaInnovation
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Top 10 Developing Markets IndiaProductivity
FY 09 FY 10 FY 11 FY 12 FY 13E
Rupees Per Employee
Top 10 Developing Markets Sub-Sahara Africa
TUNISIAMOROCCO
SAHARA
ALGERIA
MAURITANIAMALI
NIGER
LIBYA
CHAD
Sea
EGYPT
SUDAN
ETHIOPIA
DJIBOUTI
ERITREA
KENYA
TANZANIA
DEMOCRATIC
(ZAIRE)
CENTRAL
RWANDA
CONGO
NIGERIABENIN
DIVOIRESIERRA
SENEGAL
GHANA
GUINEA
LIBERIA CAMEROON
MALAWI
ZAMBIA
MOZAMBIQUE MADAGASCARZIMBABWE
BOTSWANA
SWAZILANDLESOTHO
NAMIBIA
ANGOLA
WESTERN
Red
UGANDA
OF THECONGO
REPUBLIC
BURUNDI
REP.OF
TOGOCOTE
BURKINAFASO
GUINEA
LEONE
GAMBIA
BISSAU
SOUTH
REPUBLIC
AFRICAN
THE
AFRICA
EQUATORIAL
GABONGUINEA
SAOTOMEandPRINCIPE
CAPEVERDE
Top 10 Developing Markets Sub-Sahara AfricaPopulation Growth
0%
5%
10%
15%
20%
25%
Sub-Sahara India China
% of Global Population
2012 2025 2050
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Top 10 Developing Markets Sub-Sahara AfricaPast 10 Year Average GDP Growth
2.8
5.3
4.7
3.7
World Sub-Sahara Russia Brazil
Top 10 Developing Markets Sub-Sahara Africa
GROWING
DYNAMIC
BIGGeographyPopulationStores
EconomyUrbanizationTechnologyEducation
Women:-Mums-Professionals-Beauty
Growth Potential
Top 10 Developing Markets Sub-Sahara Africa
Source: Adapted from McKinsey Global Institute Report: Lions on the move: The progress and potential of African economies, June 2010
0%
20%
40%
60%
80%
100%
2000 2008 2020Struggling ($20,000)
Wealth Potential
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Top 10 Developing Markets Sub-Sahara AfricaExpansion Model
New LaunchesOral-B, Safeguard
Growing FastDuracell, Gillette
Core BrandsPampers, Always, Ariel
Top 10 Developing Markets Sub-Sahara AfricaFabric Care
Top 10 Developing Markets Sub-Sahara AfricaFeminine Care
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Top 10 Developing Markets Sub-Sahara AfricaBaby Care
Top 10 Developing Markets Sub-Sahara AfricaBaby Care Local Manufacturing
Top 10 Developing Markets Sub-Sahara AfricaDistribution Expansion
2012 2015
Stores Covered
Doubling # of covered storesin the next 3 years
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Top 10 Developing Markets Sub-Sahara AfricaSales Growth
FY 03 FY 13E FY 20E
Quadruple Sub-SaharaSales by 2020
Top 10 Developing Markets Sub-Sahara AfricaOperating Margin Growth
FY 03 FY 13E
Margin growth while expandinginto new categories
Developing Markets
Continued StrongLevels of Investment
Delivering ProfitableGrowth
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Developing MarketsIntegrating for Faster Growth
Sales Growth
P3 Fiscal Years
Top 10 Developing Markets (113)
Integration impact on Top 10Developing Markets:
~40% increase inrate of sales growth
Developing Markets
Top 10 Developing Market After Tax Profit +35%*
Building Scale & Profitable Growth through: Geographic expansion of portfolio Innovation that accelerates category development &
trade-up Productivity from localizing the supply chain &
overhead efficiency
* Based on mid-October fx rates
FY 2013 Profit Growth Expectation
Strengthening Our Core Business
40 Largest and MostProfitable BusinessesTop 40 Focus
MarketsHousehold
CareBeauty &Grooming
United States 7 6Other Developed 7 7China 2 4Other Developing 4 3Total 20 20
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Top 40 Businesses United States
North America
Sales All Other Regions
Sales
P&G Global Sales
Top 40 Businesses United States
1. Win with Base Business2. Win with Innovation3. Win with Productivity
Top 40 Investment Plan
Top 40 Businesses United States
P&GRetailSales
HenkelC&D
Energizer
Reckitt
JNJ
ColgateL'Oreal
Unilever KC
All OtherManufacturers
Retail Sales
Base Business: Retail Sales >$30B
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Top 40 Businesses United StatesBase Business: Consumer Value
Top 40 Businesses United StatesBase Business: Value and Power Claims
Top 40 Businesses United StatesBase Business: Value and Power Claims
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Top 40 Businesses United StatesBase Business: Value and Power Claims
Top 40 Businesses United StatesBase Business: Value and Power Claims
Top 40 Businesses United StatesBase Business: Driving Growth at Shelf
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Top 40 Businesses United StatesInnovation
Top 40 Businesses United StatesPremium Innovation
Top 40 Businesses United StatesInnovation: In-Store
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Top 40 Businesses United StatesInnovation: In-Store
Top 40 Businesses United StatesInnovation: Hair Care
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Top 40 Businesses United StatesInnovation: Multi-Brand
Top 40 Businesses United States
FY 11 FY 12 FY 13E
# of US MDO Employees
Productivity
Top 40 Businesses United StatesShare Improvements
June Quarter (CYA) September (CYA)
Value Share (-0.8pts) (-0.2pts)
Volume Share (-0.9pts) ~Flat
% of Sales Holding or Growing $ Share ~15% ~60%
US AOS thru 9/29/12
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Top 40 Businesses U.S. Shave CareGlobal Leadership
Top 40 Businesses U.S. Shave Care
US Male B&R Retail Sales($MM)
U.S. Leadership
P&G Energizer Bic AO Market
Fusion
Mach
All Other Gillette
Hydro
Sensor
AO ENRQuattro
Xtreme 3
Productivity
Top 40 Businesses U.S. Shave CareKey Strategies
IrresistibleInnovation
StrategicPortfolio
Activation
CommunicatePerformance
and Value
BeCompetitive
In-StoreEveryday
Unlock thePower of Gillette
Branding
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Top 40 Businesses U.S. Shave Care
14%Value Share
14%Value Share
Innovation
Top 40 Businesses U.S. Shave CareInnovation
70%of men believe to
have Sensitive Skin
Top 40 Businesses U.S. Shave CareStrategic Portfolio Activation
FusionProglide
Styler Fusion
ProGlide Mach 3Sensor 3
DisposablesGood NewsDisposables
PriceIndex
647 148 Base 66 23
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Top 40 Businesses U.S. Shave CarePower of the Gillette Brand
Top 40 Businesses U.S. Shave CareIn-Store Trial Generation
Top 40 Businesses U.S. Shave CareProductivity
FY 12 FY 13E
>10% reduction byend of FY 13
# of Global B&R Employees
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Top 40 Businesses U.S. Fabric CareMarket Leader
0
15
30
45
60
P&G C&D Sun Henkel Private Label Reckitt All Other
US Laundry Value Share*
Gain
Tide
Era, Cheer & Dreft
A&H
Xtra
* P3M Value share thru 9/29/12
Top 40 Businesses U.S. Fabric Care
Trade In: Making P&G Fabric Care brandsattractive to more consumers
Trade Up: By innovating to grow market & share
Trade Across: By leveraging competitiveadvantage across categories
Key Strategies
Top 40 Businesses U.S. Fabric Care
Just one sheet of Bounce Outdoor Freshgives you more freshness than two sheets
of the leading value brand.
Trade In
Basedonstainremovalperformanceof1 doseofEraliquidvs.2 doses of the leadingliquidbargainbrandbasevariantina standardtoploadingmachine.
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Top 40 Businesses U.S. Fabric CareTrade In
Top 40 Businesses U.S. Fabric Care
Just one sheet of Bounce Outdoor Freshgives you more freshness than two sheets
of the leading value brand.
Trade In
Top 40 Businesses U.S. Fabric CareTrade In
* Era claimbased on stainremoval performance of 1 dose of Era liquid vs. 2 doses of the leading liquid bargain brand base variant ina standard top loading machine.
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Top 40 Businesses U.S. Fabric CareTrade In
Top 40 Businesses U.S. Fabric CareTrade In
Top 40 Businesses U.S. Fabric CareTrade In
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Top 40 Businesses U.S. Fabric CareTrade In
Top 40 Businesses U.S. Fabric CareTrade Up
* Freshness outof storage
Top 40 Businesses U.S. Fabric CareTrade Across
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Top 40 Businesses U.S. Fabric CareProductivity
Top 40 Businesses U.S. Fabric CareProductivity
FY 11 FY 13E
# of US Fabric Care Employees
>20% Reductionby end of FY 13
-4
-2
0
2
4
Top 40 Businesses U.S. Fabric CareResults: Tide Value Share
Tide Pods Launch
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0
1
2
3
4
5
6
7
Unstopables Purex Crystals
% o
f w e
i g h t t h a
t s p e r f u m e
i n g r e
d i e n t s
% of Weight that's Perfume Ingredients
Top 40 Businesses U.S. Fabric CareResults: Downy Unstopables
Top 40 Businesses U.S. Fabric CareResults: Gain
Top 40 Businesses U.S. Fabric CareResults: Fabric Care Value Share*
-1.0
-0.5
0.0
0.5
1.0
1.5
P12M P6M P3M Sept 12
US Fabric Care US Laundry
* US AOS thru 9/29/12
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Why InnovationMatters Lifeblood of the company
Differentiates brands Prevents commoditization Wins the consumer
value equation Creates value for
retail partners Creates new businesses
Investing for GrowthR&D Spending
Investing for GrowthConnect + Develop Innovation Network
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Innovation
Unmatched portfolio of brands and businesses
Science andTechnology Platforms
Geographic Reach
Sustained Competitive Advantage
Innovation
Top 2 new products of 2011 8 of the Top 25 new products 140 products on Top 25 Pacesetter List in the
past 17 years more than our six biggestcompetitors combined
2012 IRI New Product Pacesetters List
InnovationDiscontinuous Innovation
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InnovationFabric CareOne Tide POD outperforms the next6 competitors combined !
InnovationFabric CareKeeps clothes fresh in your closet for up to 12 weeks until you wear them.
InnovationPersonal Health CareNot for colds, not for pain, JUST FOR SLEEP
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InnovationOral Care
InnovationSalon Professional
InnovationPrestige Fragrances
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InnovationDish CareEven removes hidden grease from your dishwasher parts
InnovationSkin Care1st Mass Skin Careproduct delivering
Anti-Aging benefits &BB type instant coverage
InnovationSkin Care
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InnovationSkin Care
InnovationHair Care
InnovationHair Care
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InnovationHair Care
InnovationShave Care
TransformativePlatform Technologies
Leverage corporate scaleto solve tough problems
Create ownabletechnologies
Applied across multiplebusiness areas
Span multiple generationsof product improvements
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Solid State Formation
Sustainable Materials
Change Innovation
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Change InnovationPortfolio
09/10 10/11 11/12 12/13 13/14 14/15 15/16
Number of Change Projects
Productivity
Accelerates Innovation 50% faster to market
Drives Greater Value 70% greater value
versus non C+D projects
Improves Productivity
Connect + Develop
Productivity
Virtual Design Validation
Enhanced Prototyping
Simulation Tools
Fast & Agile Capabilities
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Mega-Hubs
Specialist Hubs
Trend Translation
R&D FootprintProductivity
Current Goal
3-Year Sufficiency vs. Growth Goals 121% 100%
5-Year Sufficiency vs. Growth Goals 113% 100%
Bigger Sales per Initiative +62% +50%
Forward Looking PortfolioInnovation
Disruptive Market Innovation
First safety razor, conceived by King C. Gillettein 1895, is patented in 1904
1904: Gillette
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Disruptive Market Innovation
First heavy-duty household synthetic
laundry detergent
1946: Tide
Disruptive Market Innovation
First Fluoride toothpaste recognized by the ADA tobe effective against cavities
1955: Crest
Disruptive Market Innovation
First successful, mass-marketed disposable diaper
1961: Pampers
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Swiffer
98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12
Disruptive Market Innovation
Disruptive Market Innovation
New Business Creation
LEAP Team: R&D Managers
Technologists
Marketers
Consumerists
Industrial Designers
Organization
http://rds.yahoo.com/_ylt=A0WTefiWfLFKbgkB6AuJzbkF;_ylu=X3oDMTBzNjVvbTlxBHBvcwMzMDIEc2VjA3NyBHZ0aWQDSTExNl8xMzc-/SIG=1jlorsvdu/EXP=1253232150/**http:/images.search.yahoo.com/images/view?back=http://images.search.yahoo.com/search/images?p=swiffer&b=295&ni=21&ei=utf-8&pstart=1&fr=yfp-t-701&w=500&h=235&imgurl=www.kitchenadd.com/images/12CT-Wet-Swiffer-Refill-B0007P743Y-L-A1IZCISXTFZ9OX_.jpg&rurl=http://www.kitchenadd.com/Procter-Gamble/12CT-Wet-Swiffer-Refill-B0007P743Y.htm&size=25k&name=12CT+Wet+Swiffer...&p=swiffer&oid=ad15cab46b0c9e4e&fr2=&no=302&tt=16094&b=295&ni=21&sigr=12fjm16st&sigi=12ivdh53j&sigb=131o0egq4 -
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New Business Creation
Focus on category and
brand-creating innovations Sold in current retail
channels Leveraging our current
business model With sufficient opportunities
to grow the brand andcategory over time
Portfolio
FebrezeDisruptive Market Innovation
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
New Business Creation
New jobs to be done thatcreate new categories or disrupt existing markets
Clear technology right to win,with strong IP positions
Structurally attractive
Contribute sales within a fiveyear time horizon
Portfolio Criteria
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New Business Creation
Portfolio Size: 2X versus YA
Balance of long and shortterm potential
Large, profitable new markets
Balance across GBUs andinnovation type
Portfolio
New Business Creation
Pure new jobs to be done
Portfolio
New Business Creation
Reinvention of existing tasks
Portfolio
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New Business Creation
Meet the needs of
underserved consumers Demographic Groups
PsychographicSegmentation
Portfolio
Innovation at P&G
Lifeblood of the Company Robust innovation portfolio Focus on discontinuous innovation
ImprovingProductivity Drives shareholder
value creation Fuels growth
investments Provides bottom-line
cushion in volatilemacro environment
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Productivity & Cost Savings$10 Billion Over 5 Years through FY16
Non-manufacturingOverhead
10Billion
$
Cost of Goods Marketing
Efficiencies
$3B
$1B$6B
Productivity & Cost Savings
Cost of Goods Sold: >$1bn savings in FY12 Plans for $1.2bn with stretch goal of $1.4bn in FY13
Marketing: Reinvesting savings to strengthen our core developed
market business
Non-manufacturing Overhead: ~4,700 roles reduced as of 10/31/12 Ahead of original plan to reduce 5,700 roles by
end of FY13
Savings Progress
Productivity & CostSavings Product Supply Organization
$42 billion in COGS annually 137 Plants 280 Distribution Centers 79,000 Suppliers 75,000 Employees
A huge cost pool and ahuge savings opportunity!
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Materials Savings
$26 billion in spending annually $20 billion raw materials
$6 billion packaging materials
~$1 billion in savings annuallyfrom three key areas: Supplier localization &
synchronization
Formula and package redesign
Strategic supplier relationships
Materials SavingsFormula & Package Redesign
Materials SavingsFormula & Package Redesign
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Materials Savings Strategic Supplier Relationships
Materials Savings Supplier Localization
ManufacturingProductivity 5% annual net productivity
improvement
Enables ~20 new sites indeveloping markets with noincremental headcount
Equivalent of 4 plant closuresper year
Up to $1 billion in savings thruFY 16
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ManufacturingProductivityIntegrated Work Systems Cost
Customer Service
Process Reliability
Work Process Improvement
Quality
Safety
ManufacturingProductivity Manufacturing Platforms
Drives productivity andreduces cost
Enables reapplication of process improvements
Improves flexibility and agility
Increases speed to market
Facilitates faster globalexpansions to new markets
Transportation &WarehousingSupply Network Design
FY 13 & 14 developing marketmanufacturing start-ups
New plant start-ups China Nigeria Brazil Indonesia
New category start-ups Poland India Venezuela
Capacity increases India EMEA (multiple sites)
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Transportation & WarehousingChina
Multi-category supply chain
P&G Benchmark for T&W costs
Getting all regions to this benchmarkrepresents $1 billion in savings
Direct fulfillment of orders fromP&G warehouses
Reduces customer costswhile increasing replenishmentspeed
P&G eliminates all T&W costs
Multi-category sites enablefurther reapplication
Transportation &WarehousingQuantum Tunnel
MaterialSavings
ManufacturingProductivity
Transportation& Warehousing
~$4.5 billion ~$1.5billion
Productivity & Cost Savings Cost of Goods Sold
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Productivity & Cost Savings Advertising + Other Marketing Costs
14.0%
15.0%
16.0%
17.0%
FY '06 FY '07 FY '08 FY '09 FY '10 FY '11 FY '12 FY '13e
% S
a l e s
Productivity & Cost Savings
Productivity & Cost Savings
We are developing fewer, bigger creativeideas that travel around the world.
In the past, multiple campaigns, multiplemarkets, with multiple agencies create:
Too many messages on air Fragmented media spending Ads undermining core equity benefit
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Productivity & Cost Savings Advertising Fewer, Bigger Ideas That Travel
Productivity & Cost SavingsInvestment in Digital
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FY '06 FY '07 FY '08 FY '09 FY '10 FY '11 FY '12
Productivity & Cost SavingsOther Marketing Percent of Sales
Productivity & Cost Savings
Applying purchasing scale Save up to 20%
Consolidating suppliers From 20,000 to 13,000 suppliers already
Eliminating wasteful spending
Fewer, bigger multi-brand commercial programs
Other Marketing
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$1 Billion in savingswhile still building
Mass Awarenessto drive Growth
Improving Productivity Core SG&A Overhead
~4,700 roles reducedas of 10/31/12
Ahead of original planto reduce 5,700 rolesby end of FY13
Core SG&A Overhead
Best-in-class, business-weighted, scale-adjusted Core SG&A % of sales
12% to 13% of sales would put P&G 100to 200 basis points below competitivebenchmark
Aggressive goalneed to do MORE,beyond plans announced
Objective
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Core SG&A Overhead
Plan to reduce 5,700roles by end of FY13
PLUS additional 2%to 4% annual overheadenrollment reductionfrom FY14 to FY16
P&G Latin AmericaGrowth & Productivity
3X organic salesover past 8 years
>15% enrollmentreduction over past5 years
Productivity &OrganizationTransformation
Organization design-based productivityimprovements
Productivity Councilof senior executiveswith cross-section of responsibilities(e.g. GBU, MDO, GBS,Function Heads)
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Productivity &OrganizationTransformation
Creating a culture of productivity and costsavings
Empowering theorganization bygenerating more fuelfor growth
Design-Based Overhead Savings
Streamlined responsibilities Eliminated duplications ~1,000 role reductions
Global Brand Building Organization
Global Brand Building Organization
GBU(Design & Delivery)
GlobalCategoryStrategy
RegionBusiness Units
MDO(Operations)
Design-Based Overhead Savings
Local MarketExecution
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Core SG&A Overhead
Best-in-class business-weighted, scale-adjusted Core SG&A % of sales
12% to 13% of sales would put P&G 100to 200 basis points below competitivebenchmark
Aggressive goalneed to do MORE,beyond plans announced
Objective
Balancing ProductivityImprovement andGrowth
~19% core operatingprofit margin in FY12
Among best inindustryregardless of business mix
Significant value creationopportunity fromGROWTH
Balancing ProductivityImprovement andGrowth
Ultimate objective isVALUE CREATION
SubstantialPRODUCTIVITYopportunityAND Substantial GROWTHopportunity
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Numerous Growth Opportunities
New markets, price tiers and channels Category growth and trade-up
Growing share in existing products Disrupting current categories with innovation Creating entirely new categories
P&Gs People Are ItsMost Important
Competitive Advantage
RightStrategies
RightLeaders
BestPeople
Accountability & Common Objectives
7 metrics tied to shareholder value creation:1. Volume2. Sales3. Market Share4. Operating Profit5. Productivity6. Cash Flow7. Internal Controls
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Focused on DeliveringSuperior Shareholder Return
Forward Looking StatementsCertain statements in this release or presentation, other than purely historical information, including estimates, projections, statements relating toour business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, ar e forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21Eof the Securities Exchange Act of 1934. These forward- looking statements generally are identified by the words believe, project, anticipate,estimate, intend, strategy, future, opportunity, plan, may, should, will, would, will be, will continue, will likely results, and similar expressions. Forward-looking statemen ts are based on current expectation and assumptions that are subject to risks and uncertainties which maycause results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-lookingstatements, whether because of new information, future events or otherwise. Risks and uncertainties to which our forward-looking statements aresubject include: (1) the ability to achieve business plans, including growing existing sales and volume profitably and maintaining and improvingmargins and market share, despite high levels of competitive activity, an increasingly volatile economic environment, lower than expected marketgrowth rates, especially with respect to the product categories and geographical markets (including developing markets) in which the Company haschosen to focus, and/or increasing competition from mid- and lower tier value products in both developed and developing markets; (2) the ability tosuccessfully manage ongoing acquisition, divestiture and joint venture activities to achieve the cost and growth synergies in accordance with thestated goals of these transactions without impacting the delivery of base business objectives; (3) the ability to successfully manage ongoingorganizational changes and achieve productivity improvements designed to support our growth strategies, while successfully identifying,developing and retaining key employees, especially in key growth markets where the availability of skilled employees is limited; (4) the ability tomanage and maintain key customer relationships; (5) the ability to maintain key manufacturing and supply sources (including sole supplier andplant manufacturing sources); (6) the ability to successfully manage regulatory, tax and legal requirements and matters (including product liability,patent, intellectual property, price controls, import restrictions, environmental and tax policy), and to resolve pending matters within currentestimates; (7) the ability to resolve the pending competition law inquiries in Europe within current estimates; (8) the ability to successfullyimplement, achieve and sustain cost improvement plans and efficiencies in manufacturing and overhead areas, including the Company'soutsourcing projects; (9) the ability to successfully manage volatility in foreign exchange rates, as well as our debt and currency exposure(especially in certain countries with currency exchange controls, such as Venezuela, China and India); (10) the ability to maintain our current creditrating and to manage fluctuations in interest rate, increases in pension and healthcare expense, and any significant credit or liquidity issues; (11)the ability to manage continued global political and/or economic uncertainty and disruptions, especially in the Company's significant geographical
markets, due to a wide variety of factors, including but not limited to, terrorist and other hostile activities, natural disasters and/or disruptions tocredit markets, resulting from a global, regional or national credit crisis; (12) the ability to successfully manage competitive factors, including prices,promotional incentives and trade terms for products; (13) the ability to obtain patents and respond to technological advances attained bycompetitors and patents granted to competitors; (14) the ability to successfully manage increases in the prices of commodities, raw materials andenergy, including the ability to offset these increases through pricing actions; (15) the ability to develop effective sales, advertising and marketingprograms; (16) the ability to stay on the leading edge of innovation, maintain a positive reputation on our brands and ensure trademark protection;and (17) the ability to rely on and maintain key information technology systems and networks (including Company and third-party systems andnetworks), the security over such systems and networks, and the data contained therein. For additional information concerning factors that couldcause actual results to materially differ from those projected herein, please refer to our most recent 10-K, 10-Q and 8-K reports.
Regulations FD and G Disclosures
For a full reconciliation, please visit:www.pg.com/investors