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Newell Rubbermaid 5 2015 Annual Report
In short, the Growth Game Plan is working and is delivering
performance acceleration a year earlier than we had
planned when we launched the new strategy in 2012.
Win Bigger Businesses Led Growth in 2015
In 2015, Newell Rubbermaid grew reported net sales
3.3 percent to $5.92 billion. Core sales increased
5.5 percent, an acceleration from 3.0 percent last year,
with core growth in every business segment and all four
geographic regions. Our Win Bigger businesses, which
include Writing & Creative Expression, Tools, Commercial
Products and Food & Beverage, recorded combined
core sales growth of 9.4 percent.
Our Writing business performed exceptionally well, growing
core sales 10.9 percent, led by a great Back-to-School
marketing eort, our best ever innovation, record brand
support and pricing. Core sales in drawing and coloring,
comprising Mr. Sketch®, Prismacolor® and Flair®, were up
strong double digits for the year. We also recorded strong
performances in our Baby segment, which delivered
a 6.4 percent increase in core sales thanks to strong
innovation and excellent commercial execution, and
in our Commercial Products business, which grew core
sales 4.8 percent driven by strong pricing and volume
growth in North and Latin America.
Despite unprecedented currency volatility and pressure
on costs, normalized gross margin expanded by 40 basis
points to 39.2 percent. Advertising and promotion
investment increased 17 percent to 4.9 percent of sales.
The eectiveness of this enhanced level of investment,
combined with more impactful advertising campaigns,
enabled Newell Rubbermaid to grow value market share in
ten of thirteen product categories measured in the U.S. While
spending more behind our brands, we also simultaneously
increased normalized operating margin by 50 basis points,
enabled by the savings from Project Renewal. These
accomplishments resulted in normalized earnings per
share of $2.18, a 9 percent increase over the previous
year, despite an approximately $0.39 per share negative
foreign currency impact.
Investments to Accelerate Growth
As part of the Growth Game Plan, we are expanding
investments behind our brands and enhanced capabilities
to further drive sales and margin expansion. Over the past
several years we have increased the level of advertising
and promotion investment from 2.7 percent in 2011 to
nearly 5 percent as a percentage of sales in 2015. And
we expect to increase that level even more in 2016 on
our way to our long-term ambition of approximately
7 percent of sales.
This increase in brand investment has been largely focused
on our rapidly strengthening innovation funnel. Since our
investments in insights, design and innovation began in
2013, the value of the projects in our innovation funnel
has more than doubled, and individual project size has
increased by over 150 percent. We measure the impact
of our innovation by evaluating the innovation rate or the
percentage of our revenue that’s been touched by products
launched in the last three years. Our strengthened capa-
bilities have resulted in our innovation rate increasing from
the low teens in 2013 to an expected 30 percent in 2016.
Sharper Portfolio Choices
Our organic growth agenda has been complemented
by making sharp choices to strengthen our portfolio.
We are pivoting the business toward more attractive,
higher-growth and higher-margin opportunities while
simultaneously exiting businesses that oer less strategic
potential. During 2015, we seized the opportunity to
acquire Elmer’s Products, whose brands include Elmer’s®,
Krazy Glue® and X-Acto®. These arts and crafts brands
further strengthen our market-leading Writing segment,
enhance our merchandising scale in the key Back-to-
School period, and oer great cross-selling and distribution
synergies with our retailer and channel footprint.
A Transformative Opportunity
Four years we ago we made the strategic choice to
reposition Newell Rubbermaid from a holding company
to an operating company, releasing costs through Project
Renewal and reinvesting those savings in support of our
brands and an advantaged set of capabilities. Our strong
2015 performance gives us confidence that the operating
model we have in place today can be extended to more
categories, more brands and more geographies. That is
the core logic behind our decision to combine with Jarden
Corporation, which was announced in late 2015. The deal
is expected to close in the second quarter of 2016.
The combination provides a unique and exciting
opportunity for long-term growth and value creation.
Newell Brands will possess a complementary and
LEADERSHIP /
1KRAZY GLUE is a registered trademark of Toagosei Co. Ltd., used with permission.
Since our investments in insights, design
and innovation began in 2013, the value of
the projects in our innovation funnel has
more than doubled and individual project
size has increased by over 150 percent.