01—Abstract
Summary
Summary of the 10-K filed August 28, 2008. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble's 2008 10-K filing highlights a company deeply entrenched in global consumer markets, operating across three primary business units: Beauty, Health & Well-Being, and Household Care.
With a business model focused on brand strength, innovation, and efficient supply chains, P&G serves over 180 countries. The company's scale is evident, with over 138,000 employees and a significant portion of net sales originating from international markets, particularly developing regions.
While the laundry category represents a substantial 16%a of net sales, P&G strategically aims to shift its portfolio towards faster-growing, higher-margin businesses. The company acknowledges significant risks including fluctuating consumer demand, intense competition, cost pressures from commodities and foreign exchange, successful integration of large acquisitions like Gillette, and regulatory scrutiny, particularly concerning antitrust investigations in Europe.
02—Key points
Key Highlights
- Procter & Gamble operates across three global business units: Beauty, Health & Well-Being, and Household Care, serving consumers in over 180 countries.
- The company relies on innovation and brand strength, with research and development expenditures totaling $2.226 billion in fiscal year 2008.
- International operations are significant, accounting for approximately 56% of total net sales in fiscal year 2008, with a strategic focus on growth in developing markets.
- The Gillette acquisition, completed in October 2005, is a key strategic move, significantly enhancing P&G's global market leadership in areas like male grooming and batteries.
- P&G faces substantial risks, including potential material changes in consumer demand, intense competition, cost pressures from commodities, foreign exchange volatility, and significant international operational risks.
- The company is subject to ongoing antitrust investigations in the European Union and other countries, which could result in substantial fines.
- P&G actively repurchases its stock, with a significant repurchase program authorized between $24 billion and $30 billion over three years, demonstrating a commitment to shareholder returns.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Procter & Gamble Co kept $0.15.
- Revenue$79.26B100.0%
- Cost of revenue−$39.26B49.5%
- Gross profit$40.00B50.5%
- Operating costs−$24.02B30.3%
- Operating income$15.98B20.2%
- Interest, other & tax−$3.90B4.9%
- Net income$12.07B15.2%
Where FY2008 revenue went
$79.26B- Cost of revenue: $39.26B, 50% of revenue
- SG&A: $24.02B, 30% of revenue
- Net income: $12.07B, 15% of revenue
- Interest, other & tax: $3.90B, 4.9% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed August 28, 2008Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $79.26B$72.44B | +9.4% |
| Cost of Revenue | $39.26B$35.38B | +11.0% |
| Gross Profit | $40.00B$37.06B | +7.9% |
| SG&A Expenses | $24.02B$22.58B | +6.4% |
| Operating Income | $15.98B$14.48B | +10.3% |
| Interest Expense | $1.47B$1.30B | +12.5% |
| Net Income | $12.07B$10.34B | +16.8% |
| EPS (Basic) | $3.86$3.22 | +19.9% |
| EPS (Diluted) | $3.64$3.04 | +19.7% |
| Shares Outstanding (Basic) | 3.08B— | — |
| Shares Outstanding (Diluted) | 3.32B— | — |
05—Questions
Frequently Asked Questions
What were the major business segments for Procter & Gamble in fiscal year 2008?
In fiscal year 2008, Procter & Gamble was organized into three Global Business Units: Beauty, Health & Well-Being, and Household Care. Under U.S. GAAP, these were further broken down into six reportable segments: Beauty; Grooming; Health Care; Snacks, Coffee and Pet Care; Fabric Care and Home Care; and Baby Care and Family Care.
What are the primary risks facing Procter & Gamble as highlighted in the 2008 10-K?
Key risks identified include a material change in consumer demand, intense competition and pricing pressures, the ability to successfully integrate major acquisitions like Gillette, cost pressures from fluctuating commodity prices and foreign exchange rates, significant risks associated with its substantial international operations, potential impacts from regulatory changes, and the risk of reputational damage to its leading brands.
How significant is P&G's international business, and where is it focused for growth?
International operations are a major driver for P&G, accounting for approximately 56% of total net sales in fiscal year 2008. The company is particularly focused on achieving disproportionate growth in developing regions, which represented 30% of net sales in 2008, an increase from 27% in 2007 and 26% in 2006.
Is Procter & Gamble actively returning capital to shareholders?
Yes, the company has a significant share repurchase program. In August 2007, the Board authorized the repurchase of $24 billion to $30 billion of the Company's common stock over the subsequent three years. The filing shows active repurchases were made during the reported periods.
06—Continue