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Report of the month

February 2009
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Procter & Gamble

Cincinnati, Ohio, U.S.A.



Report Facts

Company name: The Procter & Gamble Company
Fiscal year end: June 30, 2008
Report title: Designed to Innovate
Chairman and CEO: Alan G. Lafley
Number of books: One
Report length: 82 pages
Auditors: PricewaterhouseCoopers LLP
Design: VSA Partners, Inc.
E-mail: shareholders.im@pg.com

Report Rating

3.5/5

(Rating scale below)

Profile-Mission (Excerpts, as from the report)

P&G's business is focused on providing branded consumer goods products… sold in… 180 countries. Since the beginning of the decade, P&G has more than doubled the number of brands in its portfolio that generate over a billion dollars in annual sales –from 10 to 24. P&G’s top 44 brands account for more than 85% of sales... Brands include: Pantene, Gillette, Ariel, Wella, Pampers, Always, Olay, Head & Shoulders… (Annual Report excerpts) (Italics are own company’s words)

Key Figures

Net sales: $ 83,503 million
Operating income: $ 17,083 million
Net earnings: $ 12,075 million
Net earnings per share: $ 3.64 (diluted)
Dividend per share: $ 1.45
Equity: $ 69,494 million
Long-term debt: $ 23,581 million
(Source: 2008 figures sourced from the annual report)

Some Competitors

  • Unilever
  • Johnson & Johnson
  • Henkel
  • Energizer
  • Colgate-Palmolive
  • L'Oréal
  • 3M
  • SCA
  • Clorox
 

Triple A

> A cover that invites to open the book. Inside, the theme is effectively (yet a bit conventionally) sustained in a strongly branded exercise (also applied in the Sustainability Report).
> Highly strategically driven CEO letter to shareholders, focusing on growth objectives, and on Delivering a Steady Stream of Innovation, but not overlooking performance achievement, thanks to a matter-of-fact Report Card stressing Organic Sales Growth and Free Cash Flow Productivity.
> Communicative illustration (see Selected Pages below) yo display the relentless focus on productivity improvements and cost savings.
 

Double A

> Informative and well-structured Management’s Discussion and Analysis.
> Short report, easy to read through.
 

Simple A

> Key, historical, quarterly and segment figures are OK -see e.g. Net Sales Change Drivers on p 45)- but lack in details and medium-term ratios.
> Yet lagging behind best global practices (there are more facts than figures and measures), the sustainability report is more substantial (longer than the “core” report itself) and substantiated than in the past and goes a bit further that the banal narrative or cosmetics.
 

Some Bs

> What is the Chairman’s first name? If this was the only shortcoming as regards governance. In line with last years’ U.S. practice, those matters are left off the widely spread annual report.
> Risk factors and their management certainly not up to what such a large and diversified group should provide.
> Twelve notes to statements, uneven in content and unbalanced in additional information. For more, go to the indigestible Form 10-K.
 

How does the company report in key areas? What are the main report pluses and minuses? The Report Scan gives an overview of strengths and weaknesses, and scores each item.
Contact e.com@reportwatch.net

 

Selected Page

(pp 15-16 of Procter & Gamble Annual Report 2008)
pp 15-16 of Procter & Gamble Annual Report 2008
Rating Scale
5
First-Rate
4.5
Excellent
4
Very good
3.5
Sound
3
Average
2.5
Uneven
2
Common
1.5
Substandard
1
Poor
0.5
Uncompetitive
The rating is based on ReportWatch internal desk research and does not take into account the independent Rating Panel’s judgment.