01—Abstract
Summary
Summary of the 10-K filed August 8, 2014. Cited figures are marked; the original filing is the authoritative source.
Procter & Gamble's (PG) 2014 10-K filing shows a company focused on strengthening its core categories and markets, while also strategically narrowing its portfolio.
The company reported net sales of $83.1 billiona, a slight increase of 1% from the prior year, with organic sales growing by 3% driven by a 3% increase in unit volume. Net earnings attributable to Procter & Gamble rose by 3% to $11.6 billion. The company demonstrated a continued commitment to returning capital to shareholders, with $6.0 billion in share repurchases and a 7% increase in dividends, marking the 58th consecutive year of dividend increases.
Key strategic priorities include investing in developing markets, driving innovation across its five reportable segments (Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby, Feminine and Family Care), and enhancing productivity through cost savings initiatives. The company faced challenges including unfavorable foreign exchange impacts, which reduced net sales by 2%b, and mixed volume performance across its segments, with Beauty volume remaining flat. Despite these challenges, P&G maintained strong financial health, evidenced by substantial operating cash flow and a commitment to maintaining strong credit ratings.
The report also highlights ongoing efforts in portfolio optimization, including the recent divestiture of its pet care operations. Management's focus remains on delivering total shareholder return in the top third of its peer group through organic sales growth, core EPS growth, and free cash flow productivity.
02—Key points
Key Highlights
- Net sales reached $83.1 billion, a 1% increase year-over-year, with organic sales growing by 3%.
- Net earnings attributable to Procter & Gamble increased by 3% to $11.6 billion.
- The company returned $6.0 billion to shareholders through share repurchases.
- Dividends per share increased by 7%, marking the 58th consecutive year of dividend increases.
- The company operates across five key segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby, Feminine and Family Care.
- Productivity and cost savings remain a strategic focus, with significant progress noted in streamlining operations.
- International operations constitute a significant portion of sales, with North America accounting for 39% and other regions contributing to the remaining 61%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Procter & Gamble Co kept $0.16.
- Revenue$74.40B100.0%
- Cost of revenue−$39.03B52.5%
- Gross profit$35.37B47.5%
- Operating costs−$21.46B28.8%
- Operating income$13.91B18.7%
- Interest, other & tax−$2.27B3.0%
- Net income$11.64B15.6%
04—Financials
Financial Highlights
Figures from 10-KFY2014filed August 8, 2014Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $74.40B$80.12B | −7.1% |
| Cost of Revenue | $39.03B$39.99B | −2.4% |
| Gross Profit | $35.37B$40.13B | −11.8% |
| R&D Expenses | $1.90B$1.90B | 0.0% |
| SG&A Expenses | $21.46B$26.00B | −17.5% |
| Operating Income | $13.91B$13.82B | +0.7% |
| Interest Expense | $709.00M$667.00M | +6.3% |
| Net Income | $11.64B$11.31B | +2.9% |
| EPS (Basic) | $4.19$4.04 | +3.7% |
| EPS (Diluted) | $4.01$3.86 | +3.9% |
| Shares Outstanding (Basic) | 2.72B2.74B | −0.8% |
| Shares Outstanding (Diluted) | 2.90B2.93B | −0.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of net sales growth in fiscal year 2014?
Net sales grew by 1% to $83.1 billion, primarily driven by a 3% increase in unit volume. Organic sales also increased by 3%, reflecting growth in product categories and geographies where P&G has focused its resources, although this was partially offset by a 2% negative impact from foreign exchange.
How did Procter & Gamble return capital to shareholders in fiscal year 2014?
The company demonstrated a strong commitment to shareholder returns by repurchasing $6.0 billion of its stock. Additionally, it increased its quarterly dividend by 7% to $0.6436 per share, continuing its long-standing practice of consistent dividend growth.
What are Procter & Gamble's key strategic priorities?
P&G's strategic priorities include strengthening its leading, most profitable categories and markets, investing in developing markets with high growth potential, narrowing and refocusing the company's portfolio to focus on attractive brands and categories, driving innovation, and improving productivity and cost savings across all areas of the business.
How did the company perform across its different business segments?
The company's five segments showed varied performance. Fabric Care and Home Care, and Baby, Feminine and Family Care saw mid-single-digit volume growth. Grooming and Health Care experienced low-single-digit volume growth, while the Beauty segment's volume remained unchanged. International operations, particularly in developing regions, contributed to overall volume growth.
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