Barclays Back-to-School Conference 2014 - September 4, 2014
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Barclays Back-to-School Conference 2014
September 4, 2014
FY 2014 Results
Organic Sales & Core EPS Growth
FY ‘14
Organic Sales Growth 3%
Core Earnings Per Share Growth 5%
Constant Currency Core EPS
14%
Growth
FY 2014 Results
Cash Generation
FY ‘14
Free Cash Flow $10bn+
Free Cash Flow Productivity 86%
Free Cash Flow Productivity excl.
94%
Voluntary Pension Contribution
FY 2014 Results
Returning Value to Shareholders
$ billions FY ‘14
Dividends $6.9
Share Repurchase 6.0
Value to Shareholders $12.9
% of Net Earnings 110%
FY 2014 Results
Market Value Growth
FY ’14
vs. FY‘13 P3M
Worldwide (1.1%) ~2.5%
Developed (1.2%) ~0%
Developing (2.2%) ~6%
FY 2014 Results
Productivity Savings Summary
Original Revised FY 2014
Target Target Actual
Non Manufacturing
Enrollment Reduction 10% 16% -22% 16%*
(5-years ending 6/30/16)
Manufacturing
+5% +6% +7%
Productivity
Cost of Goods
$1.2 Bn $1.4 Bn $1.6 Bn
Savings
Marketing Expense
-20 bps -20 bps -80 bps
(% Sales)
* As of July 1, 2014
FY 2014 Results
Core EPS Growth vs Year Ago
Share Ct.
Tax
FX
Savings
Mix
Commod-
ities
5%
Core
EPS
Sales Growth
Focused Portfolio Core 70 to 80 brands are leaders in their industries, categories, or segments. Generate ~90% of sales and more than 95% of profit.
Focused Portfolio Disciplined Process, Minimal Distraction • Timing driven by ability to create value • 90-100 brands, NOT 90-100 transactions
Innovation Drives Value Creation • Creates value for consumers • Combats commoditization • Stimulates category growth • Builds cumulative advantage for our brands • Creates value for shareowners
Innovation Fabric Care
Innovation
Fabric Care
U.S. Value Share P1W P4W P13W
P&G Laundry 61.6 61.6 60.4
Tide 42.0 42.3 40.7
P&G Unit Dose 11.0 10.3 9.5
xAOC Brand $.Share thru 8/23/14Innovation
U.S. Diapers
46
44
42
40
38
36
34
P&G
32
KC
30
01/31/09 07/26/14Innovation Pampers Premium Care Pants
Innovation
Salon Hair Care
% of Top 25 Markets with
Growing/Holding/Declining Sales
FY '12 FY '13 FY '14 FY '15eInnovation Oral Care
Innovation Adult Incontinence
Innovation
Batteries
Duracell U.S. Value Share
44.0%
42.0%
40.0%
38.0%
36.0%
34.0%
FY '11 FY '12 FY '13 FY '14Innovation & Productivity
Sales
Growth
Profit
Growth
Margin Total
Improvement Shareholder
Return
Cash Flow
Growth
Asset
EfficiencyProductivity
Cost of Goods Savings ($Bn)
$1.6
$1.3
$1.2
FY 12 FY 13 FY 14Productivity
Supply Chain Redesign
From To
Many, Single Fewer, Multi-category
Plants
Multiple Manufacturing Common Manufacturing
Platforms Platforms
“Mass Channel” Multi-channel
Supply SystemSupply Chain Redesign
TODAY END-STATE DESIGNProductivity Organization
Productivity Marketing Efficiency
Marketing Efficiency
Shorter – but stronger – TV Copy
70%
60%
50%
40%
30%
20%
10%
0%
General Recall Brand Linkage Brand Recall
:15 Copy :30 Copy Women's Hair Care Norm
* General Recall - % of viewers who remember ad’s content the next day
Brand Linkage - % of viewers who also remember the advertised brand
Brand Recall - % of viewers who remember both the ad’s content & the brandMarketing Efficiency ~50% reduction in Head & Shoulders spokesperson spending
Marketing Efficiency
Targeted Investments
Marketing % Sales
(FY’14 vs. FY’13)
U.S. Tide +60bps
U.S. Pampers +230bpsExecution
Branding
Trial / Penetration Rate
Tide Pods 11%
Gain Flings 4%
Fusion ProGlide 14%
Swiffer Sweeper 10%
Metamucil 4%Execution Selling • Retail Account, Wholesaler and Distributor Strategies • Distribution, Shelving and Merchandising In-Store • Pricing Execution
FY 2015 Guidance
FY ‘15
Low to Mid-Single
Organic Sales Growth
Digits
Core Earnings Per Share
Mid-Single Digits
GrowthFY 2015 Guidance Cash Productivity Free Cash Flow Productivity: ~ 90% Capital Spending, % Sales: 4% to 5% Dividends: ~$7B Share Repurchase: $5-7B
FY 2015 Guidance Risks Not Included in Guidance • Further currency weakness • Unrest in the Middle East and Eastern Europe • Further pricing controls and import restrictions • Any major portfolio moves • Further market size contraction
FY 2015 Guidance Q1 Headwinds • Pricing investments • Foreign Exchange • Hiring off-sets
Forward Looking Statements Certain statements in this release or presentation, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,” “project,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue”, “will likely result,” and similar expressions. Forward-looking statements are based on current expectation and assumptions that are subject to risks and uncertainties which may cause results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise. Risks and uncertainties to which our forward-looking statements are subject include: (1) the ability to achieve business plans, including growing existing sales and volume profitably and maintaining and improving margins and market share, despite high levels of competitive activity, an increasingly volatile economic environment, lower than expected market growth rates, especially with respect to the product categories and geographical markets (including developing markets) in which the Company has chosen to focus, and/or increasing competition from mid- and lower tier value products in both developed and developing markets; (2) the ability to successfully manage ongoing acquisition, divestiture and joint venture activities to achieve the cost and growth synergies in accordance with the stated goals of these transactions without impacting the delivery of base business objectives; (3) the ability to successfully manage ongoing organizational changes and achieve productivity improvements designed to support our growth strategies, while successfully identifying, developing and retaining particularly key employees, especially in key growth markets where the availability of skilled employees is limited; (4) the ability to manage and maintain key customer relationships; (5) the ability to maintain key manufacturing and supply sources (including sole supplier and plant manufacturing sources); (6) the ability to successfully manage regulatory, tax and legal requirements and matters (including product liability, patent, intellectual property, price controls, import restrictions, environmental and tax policy), and to resolve pending matters within current estimates; (7) the ability to resolve the pending competition law inquiries in Europe within current estimates; (8) the ability to successfully implement, achieve and sustain cost improvement plans and efficiencies in manufacturing and overhead areas, including the Company's outsourcing projects; (9) the ability to successfully manage volatility in foreign exchange rates, as well as our debt and currency exposure (especially in certain countries with currency exchange controls, such as Venezuela, Argentina, China, India and Egypt); (10) the ability to maintain our current credit rating and to manage fluctuations in interest rate, increases in pension and healthcare expense, and any significant credit or liquidity issues; (11) the ability to manage continued global political and/or economic uncertainty and disruptions, especially in the Company's significant geographical markets, due to a wide variety of factors, including but not limited to, terrorist and other hostile activities, natural disasters and/or disruptions to credit markets, resulting from a global, regional or national credit crisis; (12) the ability to successfully manage competitive factors, including prices, promotional incentives and trade terms for products; (13) the ability to obtain patents and respond to technological advances attained by competitors and patents granted to competitors; (14) the ability to successfully manage increases in the prices of commodities, raw materials and energy, including the ability to offset these increases through pricing actions; (15) the ability to develop effective sales, advertising and marketing programs; (16) the ability to stay on the leading edge of innovation, maintain a positive reputation on our brands and ensure trademark protection; and (17) the ability to rely on and maintain key information technology systems and networks (including Company and third-party systems and networks), the security over such systems and networks, and the data contained therein. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our most recent 10-K, 10-Q and 8-K reports.
Regulations FD and G Disclosures
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