Proctor and Gamble 2007 Annual Report Download - page 9

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We’re focused on these opportunities, realistic about challenges,
and condent P&G’s design for growth will enable us to keep
P&G growing. Over the next few years, our portfolio will continue
to shift toward faster-growing, higher-margin businesses.
We’ll extend the advantages we’ve created with our core
strengths. We’ll make the disciplined choices required to create
even more shareholder value. We’ll continue to develop the
industry’s strongest, broadest and deepest leadership bench.
And we’ll continue to focus on inspiring and enabling P&G
people to fulll our Company’s Purpose: improving consumers’
lives in small but always meaningful ways every day. This is critical.
Our design for growth reects the management choices we’ve
made to create the opportunities and capability for growth
—
but it’s P&G people who deliver it. Their performance in scal
2007 was outstanding once again, and their capability, creativity
and potential will ensure P&G out-performs the consumer
products industry year after year.
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Opportunities for growth remain substantial in each of our
strategic focus areas.
• P&G’s Core. We are widening P&G’s share advantages versus
competition. For example, in fabric care, we were the number
two player globally in the early 1990s. Today, P&G has a 34%
share of the global fabric care market, nearly double the next
competitor, and we’ve grown share for six consecutive years.
We have a lot of opportunity to keep growing all of P&G’s
billion-dollar brands. We’re proving in category after category
that a leading share, even a relatively high share, is not a
barrier to growth. We will continue to leverage our brand
lineup and category-leading innovation to keep core
businesses healthy and growing.
• Faster-Growing, Higher-Margin Businesses. We have even
greater upside in businesses such as beauty and health care.
The beauty and health categories in which P&G competes are
a combined $360 billion market today, and are projected to
grow 3% to 4% a year for the balance of the decade. P&G
has nearly doubled its share of beauty and health over the
past decade, and yet P&G’s share of this combined market
is only about 10% globally.
• Developing Markets and Lower-Income Consumers.
We can still grow substantially in developing markets by
increasing household penetration and consumer usage
frequency, and by entering categories where we’re not yet
competing. For example, the average U.S. household buys
ve to ten times as much P&G product per year as the
average household in developing markets. In addition, there
is a large number of households in developing regions that
do not yet purchase any P&G product. Closing this gap,
which we’re condent we can do over time, will continue
to drive strong growth for years to come.
There are signicant bottom-line growth opportunities, as well.
We’ll continue to leverage P&G’s scale. We’ll reduce overhead
costs by simplifying the way we work and eliminating duplication
between global business units and market development
organizations. We’ll be more effective and efcient in how
we manage our smaller country organizations and brands.
And we’ll continue to increase productivity in every one of
our businesses.
We’ll also continue to improve gross margins. The Company’s
current gross margin is about 52%. We can earn a higher total-
company margin by achieving best-in-class margins in more
categories and business units. Based on industry benchmarking,
we believe that only about half of P&G businesses have gross
margins better than their competitive peer set. As we get more
of our businesses to best-in-class levels, we’ll increase our total-
company margin.

Chairman of the Board and Chief Executive Ofcer
August 14, 2007
The Procter & Gamble Company 7