Proctor and Gamble 2012 Annual Report Download - page 30
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Please find page 30 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.28 The Procter & Gamble Company
Improving Productivity and Creating a Cost Savings Culture
We have taken significant steps to accelerate cost savings
and create a more cost-focused culture within the Company,
including a five-year, $10 billion cost savings initiative,
which was announced in February 2012. The cost savings
program is based on:
• Reduction in overhead spending, with a target of
approximately 5,700 non-manufacturing overhead
positions by the end of fiscal year 2013.
• Annual savings planned in cost of goods across raw
materials, manufacturing and transportation and
warehousing expenses.
• Generating efficiencies to enable us to grow
marketing costs at a slightly slower rate than sales
growth while still increasing consumer reach and
effectiveness, saving approximately $1 billion over
the five year period.
Strengthening our Upstream Innovation Program and
Pipeline
Innovation has always been - and continues to be - P&G's
lifeblood. To consistently win with consumers around the
world across price tiers and preferences, and to consistently
win versus our best competitors, each P&G product category
must have a full portfolio of innovation. The innovation
portfolios must include a mix of commercial programs,
incremental product improvements and discontinuous
innovations. We have made the creation of more
discontinuous innovation a top priority, dedicating R&D
resources and funding to develop new innovations aimed at
changing the game in existing product categories and
creating new ones.
SUMMARY OF 2012 RESULTS
Amounts in millions, except per share amounts 2012
Change vs.
Prior Year 2011
Change vs.
Prior Year 2010
Net Sales $ 83,680 3% $ 81,104 5% $ 77,567
Operating Income 13,292 (14)% 15,495 (2)% 15,732
Net Earnings from Continuing Operations 9,317 (20)% 11,698 8% 10,851
Net Earnings from Discontinued Operations 1,587 593% 229 (89)% 1,995
Net Earnings attributable to Procter & Gamble 10,756 (9)% 11,797 (7)% 12,736
Diluted Net Earnings per Common Share 3.66 (7)% 3.93 (4)% 4.11
Diluted Net Earnings per Share from Continuing Operations 3.12 (19)% 3.85 11% 3.47
Core Earnings per Common Share 3.85 (1)% 3.87 7% 3.61
• Net sales increased 3% to $83.7 billion.
Organic sales increased 3%.
Unit volume was consistent with the prior year
period as mid-single digit growth in developing
regions was offset by a low single-digit decline in
developed regions.
• Net earnings attributable to Procter & Gamble were
$10.8 billion, a decrease of $1.0 billion or 9% versus
the prior year period.
The decrease in net earnings attributable to Procter
& Gamble was due to impairment charges,
incremental restructuring charges and gross margin
contraction, partially offset by net sales growth and
the gain on the sale of the snacks business. The
impairment charges included $1.6 billion of before-
tax non-cash goodwill and intangible asset
impairment charges associated with the Appliances
and Salon Professional businesses. The
incremental restructuring charges totaled $721
million before tax, resulting from the Company's
productivity and cost savings plan announced
during the year. A 160-basis point decline in gross
margin was driven primarily by higher commodity
costs and negative mix, partially offset by price
increases and manufacturing cost savings.
Net earnings from discontinued operations
increased $1.4 billion due to the gain on the sale of
the snacks business.
• Diluted net earnings per share from continuing
operations decreased 19% to $3.12.
Diluted net earnings per share decreased 7% to
$3.66, including earnings from discontinued
operations of $0.54 per share.
Core EPS decreased 1% to $3.85.
• Cash flow from operating activities was $13.3 billion.
Free cash flow was $9.3 billion.
Free cash flow productivity was 85%.
ECONOMIC CONDITIONS, CHALLENGES AND
RISKS
We discuss expectations regarding future performance,
events and outcomes, such as our business outlook and
objectives, in annual and quarterly reports, press releases
and other written and oral communications. All such
statements, except for historical and present factual