Proctor and Gamble 2012 Annual Report Download - page 19
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Please find page 19 of the 2012 Proctor and Gamble annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.The Procter & Gamble Company 17
following discussion of risks is not all inclusive but is
designed to highlight what we believe are important factors
to consider when evaluating our expectations. These factors
could cause our future results to differ from those in the
forward-looking statements and from historical trends.
A material change in consumer demand for our products
could have a significant impact on our business.
We are a consumer products company and rely on
continued global demand for our brands and products. To
achieve business goals, we must develop and sell products
that appeal to consumers. This is dependent on a number of
factors including our ability to develop effective sales,
advertising and marketing programs. We expect to achieve
our financial targets, in part, by shifting our portfolio
towards faster growing, higher margin businesses and by
focusing on the most profitable businesses, biggest
innovations and most important emerging markets. We
expect to achieve our financial targets, in part, by achieving
disproportionate growth in developing regions. If demand
for our products and/or market growth rates in either
developed or developing markets fall substantially below
expected levels or our market share declines significantly in
these businesses, our volume, and consequently our results,
could be negatively impacted. This could occur due to,
among other things, unforeseen negative economic or
political events, changes in consumer trends and habits, or
negative consumer responses to pricing actions.
The ability to achieve our business objectives is
dependent on how well we can compete with our local
and global competitors in new and existing markets and
channels.
The consumer products industry is highly
competitive. Across all of our categories, we compete
against a wide variety of global and local competitors. As a
result, there are ongoing competitive pressures in the
environments in which we operate, as well as challenges in
maintaining profit margins. This includes, among other
things, increasing competition from mid- and lower-tier
value products in both developed and developing markets.
To address these challenges, we must be able to successfully
respond to competitive factors, including pricing,
promotional incentives and trade terms. In addition, the
emergence of new sales channels, such as sales made
through the Internet directly to consumers, may affect
customer and consumer preferences, as well as market
dynamics. Failure to effectively compete in these new
channels could negatively impact results.
Our ability to meet our growth targets depends on
successful product and operations innovation and our
ability to successfully respond to competitive innovation.
Achieving our business results depends, in part, on
the successful development, introduction and marketing of
new products and improvements to our equipment and
manufacturing processes. Successful innovation depends on
our ability to correctly anticipate customer and consumer
acceptance, to obtain and maintain necessary intellectual
property protections, and to avoid infringing the intellectual
property rights of others. We must also be able to
successfully respond to technological advances by and
intellectual property rights granted to competition, and
failure to do so could compromise our competitive position
and impact our results.
Our businesses face cost fluctuations and pressures which
could affect our business results.
Our costs are subject to fluctuations, particularly
due to changes in commodity prices, raw materials, labor
costs, energy costs, pension and healthcare costs, foreign
exchange and interest rates. Therefore, our success is
dependent, in part, on our continued ability to forecast and
manage these fluctuations through pricing actions, cost
savings projects (including outsourcing projects) and
sourcing decisions, while maintaining and improving
margins and market share. In addition, our financial
projections include cost savings described in our announced
productivity plan. Failure to deliver these savings could
adversely impact our results.
There are risks inherent in global manufacturing which
could negatively impact our business results.
In the manufacturing and general overhead areas,
we need to maintain key manufacturing and supply
arrangements, including any key sole supplier and sole
manufacturing plant arrangements, to achieve our targets on
cost. While we have business continuity and contingency
plans for key manufacturing sites and the supply of raw
materials, significant disruption of manufacturing, such as
labor disputes, loss or impairment of key manufacturing
sites, natural disasters, acts of war or terrorism, and other
external factors over which we have no control, could
interrupt product supply and, if not remedied, have an
adverse impact on our business.
We face risks associated with having significant
international operations.
We are a global company, with manufacturing
operations in more than 40 countries, and a significant
portion of our revenue is outside the U.S. Our international
operations are subject to a number of risks, including, but
not limited to:
• compliance with U.S. laws affecting operations
outside of the United States, such as the Foreign
Corrupt Practices Act;
• compliance with a variety of local regulations and
laws;
• changes in tax laws and the interpretation of those
laws;
• sudden changes in foreign currency exchange
controls;
• discriminatory or conflicting fiscal policies;
• difficulties enforcing intellectual property and