Proctor and Gamble 2011 Annual Report Download - page 4

We made meaningful progress toward these long-term goals
for fiscal , despite significant external challenges.
ō Organic sales grew 4%. Organic volume grew %.
ō Core earnings per share grew %.
ō Free cash flow productivity was % of net earnings.
We increased our quarterly dividend by %, making
this the st consecutive year that P&G has paid
a dividend and the th consecutive year that the
dividend has increased.
Over the past  years, P&G’s dividend has increased at an
annual compound average rate of approximately .%. In total,
we paid approximately $. billion in dividends in fiscal .
We also returned $. billion to shareholders through the
repurchase of P&G stock. Based on our current market
capitalization, dividends and share repurchase, we provided
shareholders with an effective cash yield of nearly %, with
additional potential for capital appreciation.
This is good performance in a very demanding business and
economic environment. It is not yet great performance. I am
confident, however, that we will continue to grow our business
on the strength of our Purpose-inspired Growth Strategy:
ō We are executing the strategy as planned, with
unrelenting focus on innovation.
ō We are increasing productivity, which frees up resources
to invest in innovation.
ō We continue to strengthen our portfolio of businesses.
ō We are tackling growth challenges head on.
ō We have solid, executable plans in place to capture the
enormous growth potential that our strategy creates.
Further, P&G people are inspired and are performing heroically
to improve lives, to grow our business, and to create value
for our shareholders. My objective, with this Letter, is to explain
what we are doing in each of these areas.
Growth Drivers
P&G’s Purpose is to touch and improve people’s everyday lives.
This is an inspiring but demanding aspiration. There are nearly
seven billion people on the planet today and we are currently
reaching about . billion of them. We want to reach all of
them with products and services that make their everyday lives a
little better. We know that if we do this well, we’ll be rewarded
with sales and profit growth, market share leadership, a strong
company reputation and, ultimately, the creation of value that
allows our people, our shareholders and the communities in
which we live and work to prosper.
Our growth strategy, which we established two years ago, is
inspired by our Purpose. We are executing this strategy by
innovating to improve people’s everyday lives in every part of
the world, and by then expanding our portfolio of innovation
up and down price tiers, into new markets, and into new and
existing product categories.
This strategy is fundamentally right for P&G because it inspires
our people and our partners, focuses us where the growth
opportunities are greatest, and leverages our core strengths:
consumer understanding, brand building, go-to-market capability,
global scale and, most importantly, innovation.
Innovation Wins Decades
Innovation is the driving force behind our strategy, as it always
has been at P&G. Our experience has proven that price promotion
may win a quarter here and there, but innovation wins decades.
There are many examples to prove this. Take our Laundry
business in the U.K., for instance. In the late s, we were
competing hard just to defend and maintain our % market
share leadership position. We then stepped up our innovation
efforts. In the three decades since, we’ve introduced a series of
game-changing innovations such as Daz automatic detergent,
concentrated liquid detergent, and most recently, Liquitabs.
We now enjoy around a % share.
We’ve seen the same dynamic in Oral Care. In the s, we
lost our historical lead versus our top competitor because they
simply out-innovated us. We stepped up our innovation game
once again and delivered a string of product breakthroughs
including Crest Whitestrips, Crest Pro-Health, and Crest D White.
We restored P&G’s leadership of the U.S. Dentifrice category,
which is now enabling us to expand these innovative products
around the world.
2The Procter & Gamble Company