01—Abstract
Summary
Summary of the 10-K filed August 14, 2009. Cited figures are marked; the original filing is the authoritative source.
The Procter & Gamble Company's 2009 10-K filing reflects a company navigating the global economic downturn while continuing to focus on innovation and brand strength.
Despite challenging macroeconomic conditions, P&G maintained its market leadership in key consumer categories like laundry and diapers, which together represented a significant portion of net sales. The company's diversified portfolio across Beauty, Health and Well-Being, and Household Care segments, coupled with its extensive global reach in over 180 countries, provided resilience. Significant strategic activity during the year included the divestiture of its coffee business (Folgers) in an all-stock transaction with The J.M.
Smucker Company, which resulted in a substantial after-tax gain. This move signals P&G's ongoing efforts to refine its brand portfolio towards higher-growth, higher-margin businesses.
The company also highlighted its commitment to research and development, though expenditures saw a slight decrease year-over-year. Investors should note the ongoing risk factors related to consumer demand, competitive pressures, cost fluctuations, and international operations, particularly in developing markets.
02—Key points
Key Highlights
- Procter & Gamble's portfolio is organized into three Global Business Units (Beauty; Health and Well-Being; Household Care) with six reportable segments under U.S. GAAP, including Fabric Care and Home Care, and Baby Care and Family Care.
- The company generated approximately 39% of its net sales in the United States, with no other single country exceeding 10% of total net sales.
- In fiscal year 2009, the laundry category accounted for approximately 17% of net sales, and the diaper category accounted for approximately 11% of net sales.
- Sales to Wal-Mart Stores, Inc. and its affiliates represented approximately 15% of total revenue in 2009, with no other single customer accounting for more than 10%.
- P&G completed the divestiture of its coffee business (Folgers) in November 2008 through a merger with The J.M. Smucker Company, recording an after-tax gain of $2.0 billion.
- Research and development expenditures totaled $2,044 million in fiscal year 2009, a decrease from $2,212 million in 2008.
- The company is subject to ongoing investigations into potential competition law violations across various European countries, with potential for substantial fines.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Procter & Gamble Co kept $0.18.
- Revenue$76.69B100.0%
- Cost of revenue−$38.69B50.4%
- Gross profit$38.00B49.6%
- Operating costs−$22.63B29.5%
- Operating income$15.37B20.0%
- Interest, other & tax−$1.94B2.5%
- Net income$13.44B17.5%
Where FY2009 revenue went
$76.69B- Cost of revenue: $38.69B, 50% of revenue
- SG&A: $22.63B, 30% of revenue
- Net income: $13.44B, 18% of revenue
- Interest, other & tax: $1.94B, 2.5% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed August 14, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $76.69B$79.26B | −3.2% |
| Cost of Revenue | $38.69B$39.26B | −1.5% |
| Gross Profit | $38.00B$40.00B | −5.0% |
| SG&A Expenses | $22.63B$24.02B | −5.8% |
| Operating Income | $15.37B$15.98B | −3.8% |
| Interest Expense | $1.36B$1.47B | −7.4% |
| Net Income | $13.44B$12.07B | +11.3% |
| EPS (Basic) | $4.49$3.86 | +16.3% |
| EPS (Diluted) | $4.26$3.64 | +17.0% |
| Shares Outstanding (Basic) | 2.95B3.08B | −4.2% |
| Shares Outstanding (Diluted) | 3.15B3.32B | −4.9% |
05—Questions
Frequently Asked Questions
What were the main strategic initiatives for Procter & Gamble in fiscal year 2009?
The primary strategic initiative highlighted was the divestiture of the Folgers coffee business through a merger with The J.M. Smucker Company, which yielded a significant gain. This aligns with P&G's broader strategy to focus on faster-growing, higher-margin businesses and optimize its brand portfolio.
How did the global economic conditions impact P&G's business in fiscal year 2009?
The filing acknowledges the impact of global economic uncertainty, noting risks associated with potential changes in consumer demand and pressures on commercial relationships with customers, suppliers, and creditors due to the credit crisis. P&G highlighted that its significant operating cash flows and access to credit markets provided discretionary funding capacity to manage these conditions.
What are the major risks facing P&G as outlined in the filing?
Key risks include material changes in consumer demand, intense local and global competition, cost pressures from fluctuating commodity prices and foreign exchange rates, risks associated with significant international operations (including currency fluctuations and geopolitical instability), potential erosion of brand reputation, and the successful management of ongoing organizational and acquisition/divestiture changes.
How is P&G managing its international operations and exposure to foreign markets?
P&G has significant international operations, accounting for 61% of net sales in fiscal year 2009. The company explicitly mentions exposure to currency exchange rate fluctuations and the need to manage local currency cash balances in countries with exchange controls. They also aim for disproportionate growth in developing regions, while acknowledging the associated risks like economic changes and political unrest.
06—Continue