Graco 2010 Annual Report Download - page 12

8 NEWELL RUBBERMAID 2010 Annual Report
With most of our transformation initiatives now implemented and
gaining traction, we are positioned to leverage these operational
improvements to drive sustained growth going forward.
MEETING OUR GROWTH OBJECTIVES
Despite economic conditions that remained less than ideal, in
2010 our teams met the challenge to create our own momentum
and grow core sales and earnings. The Company expanded
gross margins even as we increased investments in product inno-
vation, consumer research, advertising and other brand-building
initiatives essential to growth. We delivered improvements
across three important performance metrics: top-line sales,
gross margin and normalized earnings. For the year:
• Net sales increased by 3.3 percent to $5.8 billion, while
core sales (which exclude the impact of foreign currency
and our 2009 product line exits) grew by 4.7 percent.
• Gross margin expanded by 100 basis points to 37.7 percent
of sales, strengthened by product and business mix and
productivity gains. We made signifi cant progress towards
our 40 percent gross margin target.
• Normalized earnings grew from $1.31 to $1.52 per share,
a 16 percent increase.
GOOD IDEAS TRAVEL
In 2010, sales increases were led by our international businesses,
which grew 7.9 percent in constant currency for the year. We saw
particular strength in the fast-growing, emerging markets of Asia
and Latin America, where we generated double-digit constant
currency sales increases. High-priority targets are markets such
as China and Brazil, which enjoy rapidly expanding middle classes
and robust growth in personal incomes.
There is substantial room to accelerate growth in global markets.
Only five of our fifteen largest brands generate more than
half their sales outside of North America. Our opportunity goes
beyond simply doing business in geographies where we have
not had a presence in the past. It’s a compelling story that speaks
to the fact that our products are highly transferable across markets.
Experience tells us quite clearly that innovations are appreciated
In fact, it’s not really magic at all. And it’s not luck. Exciting a
consumer with great products is the result of a methodical,
disciplined and highly repeatable process. That process is
brought to life each day by thousands of Newell Rubbermaid
employees who are passionate about understanding consumer
needs and skilled at translating those insights into innovative
solutions to drive best-in-class results.
For shareholders, the payoff from this ongoing commitment to
innovation is growth: growth in sales, growth in market share
and growth into new global markets. In 2010, with the most
severe impact of the economic recession mostly behind us, core
sales growth resumed in all of our business segments. We earned
increased benefits from the consistent implementation of
the three strategies that underpin our success: leveraging the
portfolio for growth, building Brands That Matter™ to drive
demand and fueling growth through margin expansion and
scale synergies.
In the last five years we have honed our portfolio; today it
comprises fewer, but more tightly focused business units that
compete in more global, more profi table and faster-growing
product categories. Our business model is more consumer-
centric, innovation-driven and structured to generate the gross
margins necessary to invest in building brands. And we’ve
restructured our supply chain and leveraged the scale benefi ts
of one Newell Rubbermaid to drive best cost and effi ciency.
NET SALES
(in billions)
08 09 10
$5.76
$5.58
$6.47
OPERATING CASH FLOW
(in millions)
$583
$603
$455
08 09 10
“NORMALIZED” EARNINGS PER SHARE*
(in dollars)
$1.52
$1.31
$1.21
08 09 10
* Please refer to the Reconciliation of Non-GAAP Financial Measures on page 84
for a reconciliation to the most directly comparable GAAP fi nancial measure.