Proctor and Gamble 2004 Annual Report Download - page 3

P&G฀is฀delivering฀broad-based,฀organic฀growth฀driven฀by฀
clear฀strategies฀and฀a฀unique฀combination฀of฀P&G฀strengths.฀
The฀Company’s฀performance฀has฀accelerated฀over฀the฀past฀
three฀years,฀and฀we฀are฀confident฀double-digit฀earnings-per-
share฀growth฀is฀sustainable฀for฀the฀foreseeable฀future.
P&G’s฀goals฀are฀to฀deliver฀4%–6%฀sales฀growth฀(excluding฀
the฀impact฀of฀foreign฀exchange),฀10%฀or฀better฀earnings-
per-share฀growth,฀and฀free฀cash฀flow฀equal฀to฀90%฀or฀more฀
of฀net฀earnings.1฀We฀know฀we฀have฀to฀earn฀your฀trust฀฀
every฀year฀by฀meeting฀or฀exceeding฀these฀goals฀consistently฀
and฀reliably.฀
P&G฀exceeded฀all฀its฀financial฀goals฀in฀fiscal฀2004.฀
•฀Volume฀is฀up฀17%.฀Organic฀volume฀is฀up฀10%.2
•฀Sales฀are฀$51.4฀billion,฀up฀19%.฀Organic฀sales฀are฀up฀8%.3
•฀฀Earnings฀are฀$6.5฀billion,฀up฀25%.฀Earnings฀are฀up฀13%฀
versus฀prior-year฀core฀earnings.4
•฀฀Earnings฀per฀share฀are฀$2.32,฀up฀25%.฀Earnings฀per฀฀
share฀are฀up฀14%฀versus฀prior-year฀core฀earnings฀per฀share.
•฀Free฀Cash฀Flow฀is฀$7.3฀billion,฀or฀113%฀of฀earnings.
•฀Dividends฀are฀up฀13%,฀annualized.
•฀Total฀Shareholder฀Return฀is฀24%.
Growth฀was฀broad-based.฀All฀five฀Global฀Business฀Units฀
delivered฀at฀or฀above฀the฀sales฀goal;฀four฀of฀five฀were฀at฀or฀
above฀the฀earnings฀goal.฀Every฀Market฀Development฀
Organization฀delivered฀sales฀and฀volume฀growth฀at฀or฀above฀
Company฀targets.฀P&G฀brands฀grew฀share฀in฀categories฀
accounting฀for฀more฀than฀two-thirds฀of฀total฀Company฀sales.
This฀year’s฀results฀culminate฀increasingly฀strong฀performance฀
over฀the฀past฀three฀years.฀Since฀July฀2001:
•฀฀P&G฀cumulative฀sales฀have฀grown฀30%.฀Fiscal฀2004฀
marked฀the฀first฀time฀in฀P&G฀history฀that฀sales฀exceeded฀
$50฀billion.
•฀฀Earnings฀per฀share฀have฀grown฀over฀40%,฀cumulatively,฀
from฀core฀results฀three฀years฀ago.4
•฀฀P&G฀businesses฀have฀generated฀more฀than฀$20฀billion฀฀
in฀cumulative฀free฀cash฀flow.
•฀฀Most฀important,฀P&G฀has฀delivered฀a฀cumulative฀
shareholder฀return฀of฀81%฀over฀the฀past฀three฀years,฀฀
and฀the฀price฀of฀P&G’s฀stock฀has฀increased฀more฀฀
than฀70%.฀(In฀fact,฀over฀the฀past฀four฀years,฀cumulative฀
shareholder฀return฀is฀above฀100%.)
Three฀years฀of฀strong฀performance฀is฀a฀good฀start.฀But฀we฀
know฀it’s฀only฀that฀–฀a฀start.฀Necessary,฀but฀not฀sufficient.฀฀
It’s฀consistent฀long-term฀performance฀that฀counts,฀and฀
consistent฀performance฀is฀not฀easy.฀Growing฀P&G฀sales฀฀
4%–6%฀per฀year,฀for฀example,฀is฀the฀equivalent฀of฀adding฀฀
a฀business฀the฀size฀of฀P&G’s฀total฀business฀in฀the฀U.K.฀or฀a฀
brand฀the฀size฀of฀Tide฀–฀every฀year.฀
The฀challenge฀is฀significant,฀and฀we฀don’t฀take฀it฀lightly,฀฀
but฀I’m฀confident฀P&G฀can฀reliably฀deliver฀the฀balanced,฀
consistent฀growth฀to฀which฀we’ve฀committed.฀There฀are฀
three฀reasons฀for฀my฀confidence:
1.฀P&G฀strategies฀are฀working,฀and฀there฀is฀still฀considerable฀
room฀for฀growth.
2.฀P&G฀strengths฀give฀us฀the฀ability฀to฀respond฀to฀major฀
external฀trends฀and฀challenges.
3.฀Systemic฀and฀structural฀changes฀implemented฀over฀฀
the฀past฀several฀years฀are฀improving฀the฀consistency฀and฀
reliability฀of฀P&G฀performance.
When฀combined฀with฀the฀strength฀of฀P&G’s฀culture฀and฀฀
P&G฀people,฀these฀three฀factors฀make฀P&G฀a฀better฀
investment฀proposition฀today฀than฀we฀have฀been฀in฀฀
many฀years.
Growth฀Strategies฀Are฀Working
In฀my฀2001฀Letter฀to฀Shareholders,฀I฀outlined฀five฀growth฀
Sustaining
P&G’s
Growth
1 
2 
3 
4 
P&G฀is฀delivering฀broad-based,฀organic฀growth฀driven฀by฀clear฀strategies฀
and฀a฀unique฀combination฀of฀P&G฀strengths.฀P&G’s฀performance฀has฀
accelerated฀over฀the฀past฀three฀years,฀and฀we฀are฀confident฀double-digit฀
earnings-per-share฀growth฀is฀sustainable฀for฀the฀foreseeable฀future.
Fellow฀Shareholders,