01—Abstract
Summary
Summary of the 10-K filed August 13, 2010. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble (PG) filed its 2010 annual report on Form 10-K, reflecting its operations for the fiscal year ending June 30, 2010.
The company maintained its position as a leading global consumer goods provider, operating across three primary Global Business Units (GBUs): Beauty and Grooming; Health and Well-Being; and Household Care. The report highlights P&G's extensive international presence, with 62% of net sales originating from outside the United States, demonstrating a significant global footprint. A key strategic move during the fiscal year was the divestiture of its global pharmaceuticals business in October 2009 for $2.8 billiona, a move that repositioned the company to focus on its core consumer packaged goods offerings.
Despite economic volatility, P&G emphasized its commitment to innovation and brand building, acknowledging the highly competitive nature of its markets and the need to adapt to evolving consumer demand and trends. Investors should note P&G's significant reliance on major retailers, with Wal-Mart accounting for approximately 16% of total revenue. The company also detailed its ongoing research and development expenditures, totaling $1.95 billionb for the fiscal year, underscoring its strategy to drive growth through product innovation.
Risk factors discussed include potential shifts in consumer demand, competitive pressures, cost fluctuations, international operational complexities, and the impact of brand reputation. The company also disclosed ongoing investigations into potential competition law violations in Europe, which could result in substantial fines.
02—Key points
Key Highlights
- Divested global pharmaceuticals business in October 2009 for $2.8 billion to focus on core consumer packaged goods.
- Operates across three Global Business Units: Beauty and Grooming, Health and Well-Being, and Household Care, with significant international sales comprising 62% of total net sales.
- Wal-Mart remains the largest single customer, representing approximately 16% of total revenue.
- Invested $1.95 billion in research and development for the fiscal year ended June 30, 2010, emphasizing innovation.
- Faces ongoing investigations into potential competition law violations in Europe, with potential for significant fines.
- Manages a global portfolio with significant operational risks tied to currency fluctuations, economic conditions, and varying regulatory environments.
- Actively engaged in share repurchases, with a $22 billion repurchase plan expiring on June 30, 2010.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Procter & Gamble Co kept $0.16.
- Revenue$77.57B100.0%
- Cost of revenue−$37.04B47.8%
- Gross profit$40.52B52.2%
- Operating costs−$24.79B32.0%
- Operating income$15.73B20.3%
- Interest, other & tax−$3.00B3.9%
- Net income$12.74B16.4%
Where FY2010 revenue went
$77.57B- Cost of revenue: $37.04B, 48% of revenue
- SG&A: $24.79B, 32% of revenue
- Net income: $12.74B, 16% of revenue
- Interest, other & tax: $3.00B, 3.9% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed August 13, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $77.57B$76.69B | +1.1% |
| Cost of Revenue | $37.04B$38.69B | −4.3% |
| Gross Profit | $40.52B$38.00B | +6.6% |
| SG&A Expenses | $24.79B$22.63B | +9.6% |
| Operating Income | $15.73B$15.37B | +2.3% |
| Interest Expense | $946.00M$1.36B | −30.3% |
| Net Income | $12.74B$13.44B | −5.2% |
| EPS (Basic) | $4.32$4.49 | −3.8% |
| EPS (Diluted) | $4.11$4.26 | −3.5% |
| Shares Outstanding (Basic) | 2.90B2.95B | −1.7% |
| Shares Outstanding (Diluted) | 3.10B3.15B | −1.7% |
05—Questions
Frequently Asked Questions
What were the major strategic actions taken by P&G during the fiscal year ended June 30, 2010?
The most significant strategic action was the divestiture of its global pharmaceuticals business in October 2009 for $2.8 billion. This move allowed P&G to streamline its operations and focus more intensely on its core consumer packaged goods businesses.
How significant is P&G's international business, and what are the associated risks?
P&G has a substantial global presence, with 62% of its net sales generated internationally. However, this international exposure comes with risks, including currency exchange rate fluctuations, economic instability in various regions, political uncertainties, and differing regulatory environments. The company actively works to manage these risks, including navigating exchange controls in certain countries.
What is P&G's approach to innovation and competition?
P&G emphasizes innovation as a key driver of growth, investing $1.95 billion in research and development during fiscal year 2010. The company operates in highly competitive markets and focuses on developing new products and effective marketing strategies to appeal to consumers and maintain market share against both global competitors and private-label brands.
Are there any significant legal or regulatory challenges P&G is facing?
Yes, P&G is subject to multiple investigations by European authorities concerning potential competition law violations. While the company states its policy is to comply with all laws and cooperates with investigations, these proceedings could potentially result in substantial fines, the exact amount of which is still uncertain.
06—Continue