01—Abstract
Summary
Summary of the 10-K filed August 10, 2011. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble's (PG) 2011 10-K filing highlights the company's focus on providing branded consumer packaged goods across diverse global markets.
The company operates through two primary Global Business Units: Beauty and Grooming, and Household Care, encompassing six reportable segments. A significant portion of revenue, approximately 16%a in fiscal year 2011, is derived from the laundry category, with diapers representing another key category at 11% of net sales. The company emphasizes innovation and product development as critical drivers of sustained organic growth in a highly competitive environment.
Financially, the company reported substantial net sales of $82.6 billionb ($30.5 billion in the U.S. and $52.1 billion internationally) for the fiscal year ended June 30, 2011. P&G's global presence is evident, with North America accounting for 41% of net sales, followed by Western Europe (20%) and Asia (16%).
The company is actively engaged in managing operational risks, including cost pressures from commodity prices, foreign exchange fluctuations, and the inherent risks of global manufacturing. Significant R&D investments of $2,001 millionc underscore their commitment to innovation.
02—Key points
Key Highlights
- Procter & Gamble's fiscal year 2011 net sales reached $82.6 billion, with international operations contributing $52.1 billion to this total.
- The company is strategically organized into two Global Business Units: Beauty and Grooming, and Household Care, managing six distinct reportable segments.
- Key product categories include Laundry (16% of net sales) and Diapers (11% of net sales), demonstrating their importance to the company's revenue.
- Significant investment in Research and Development ($2,001 million in FY2011) indicates a strong focus on innovation and future product pipeline.
- The company faces operational risks associated with global manufacturing, fluctuating commodity prices, and foreign exchange rates, which are actively managed.
- Sales to Wal-Mart and its affiliates represent approximately 15% of total revenue, highlighting a concentration risk with a major customer.
- P&G has robust share repurchase programs, with $7 billion repurchased in fiscal year 2011 under a $6 to $8 billion plan.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Procter & Gamble Co kept $0.15.
- Revenue$81.10B100.0%
- Cost of revenue−$39.86B49.1%
- Gross profit$41.24B50.9%
- Operating costs−$25.75B31.7%
- Operating income$15.49B19.1%
- Interest, other & tax−$3.70B4.6%
- Net income$11.80B14.5%
04—Financials
Financial Highlights
Figures from 10-KFY2011filed August 10, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $81.10B$77.57B | +4.6% |
| Cost of Revenue | $39.86B$37.04B | +7.6% |
| Gross Profit | $41.24B$40.52B | +1.8% |
| R&D Expenses | $2.00B— | — |
| SG&A Expenses | $25.75B$24.79B | +3.9% |
| Operating Income | $15.49B$15.73B | −1.5% |
| Interest Expense | $831.00M$946.00M | −12.2% |
| Net Income | $11.80B$12.74B | −7.4% |
| EPS (Basic) | $4.12$4.32 | −4.6% |
| EPS (Diluted) | $3.93$4.11 | −4.4% |
| Shares Outstanding (Basic) | 2.80B2.90B | −3.3% |
| Shares Outstanding (Diluted) | 3.00B3.10B | −3.1% |
05—Questions
Frequently Asked Questions
What are Procter & Gamble's primary business segments and key revenue drivers?
Procter & Gamble's business is organized into two Global Business Units: Beauty and Grooming, and Household Care. These units encompass six reportable segments: Beauty; Grooming; Health Care; Snacks and Pet Care; Fabric Care and Home Care; and Baby Care and Family Care. The most significant revenue drivers identified are the laundry category, which accounted for approximately 16% of net sales in fiscal year 2011, and the diaper category, which contributed about 11% of net sales.
What are the main risks facing Procter & Gamble based on this filing?
Key risks identified include material changes in consumer demand, intense global competition leading to pricing and margin pressures, cost fluctuations from commodity prices and labor, risks associated with extensive international operations (including currency exchange rate volatility and political/economic instability in developing regions), potential erosion of brand reputation, challenges in adapting to organizational changes, and the impact of legislation and regulatory changes. The company also highlights risks related to customer relationships and IT system failures.
How does Procter & Gamble manage its global operations and exposure to foreign markets?
Procter & Gamble has a significant international presence, with 41% of net sales in fiscal year 2011 coming from North America, followed by Western Europe (20%) and Asia (16%). The company acknowledges risks associated with these operations, such as changing currency values, differing inflation rates, and economic/political uncertainties. While the filing doesn't detail specific hedging strategies for all risks, it mentions that fluctuating commodity prices and foreign exchange rates are managed through pricing actions, cost-saving projects, sourcing decisions, and certain hedging transactions. They also aim for disproportionate growth in developing regions, while acknowledging the associated risks.
What was the company's approach to capital return to shareholders during fiscal year 2011?
In fiscal year 2011, Procter & Gamble had a share repurchase plan to acquire between $6 billion and $8 billion of its common stock. The company ultimately repurchased $7 billion worth of shares during this period. These repurchases were conducted through open market and private transactions and were planned to be financed by a combination of long-term and short-term debt.
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