financial analysis of p & g

8/7/2019 financial analysis of P & G

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A PRESENTATION ONFINANCIAL ANALYSIS OF

PROCTOR & GAMBLE

PERSENTED BY: HITESH MAHAJAN2010MBE08



BRIEF HISTORY

1837: William Procter and James Gamble form Procter & Gamble, a partnership inCincinnati, Ohio, to manufacture and sell candles and soap.

1890: The Procter & Gamble Company is incorporated.

1985: P&G purchases Richardson-Vicks Company, owner of the Vicks, NyQuil, and Oil of Olay Brands.



1992: Pantene Pro-V shampoo is introduced.

2001: P&G acquires the Clairol hair-care

business from Bristol-Myers Squibb Company.



Latest Full Context Quarter Ending Date

2010/12Gross Profit Margin 55.0%

EBIT Margin 19.6%

EBITDA Margin 23.4%

Pre-Tax Profit Margin 18.5%

Interest Coverage 18.3

Current Ratio 0.8

Quick Ratio 0.4

Leverage Ratio 2.1

Receivables Turnover 12.2

Inventory Turnover 5.0

Asset Turnover 0.6

Revenue to Assets 0.6

ROE from Total Operations 17.7%

Return on Invested Capital 13.1%

Return on Assets 8.3%

Debt/Common Equity Ratio 0.34

Price/Book Ratio (Price/Equity) 2.69

Book Value per Share $22.53

Total Debt/ Equity 0.51

Long-Term Debt to Total Capital 0.25

SG&A as % of Revenue 31.6%

R&D as % of Revenue 0.0%

Receivables per Day Sales $29.64

Days CGS in Inventory 72

Working Capital per Share $-1.93

Cash per Share$1

.16

Free Cash Flow per Share $1.46

Tangible Book Value per Share $-8.89

Price/Cash Flow Ratio 12.2

Price/Free Cash Flow Ratio 41.5

Price/Tangible Book Ratio -6.82



Return on Equity 18.1%

Return on Assets 8.4%

Return on Invested Capital 12.8%

Gross Profit Margin 55.4%

Pre-Tax Profit Margin 19.1%

Post-Tax Profit Margin 13.8%

Net Profit Margin (Total Operations) 14.8%

R&D as a % of Sales 0.0%

SG&A as a % of Sales 31.3%

Debt/Equity Ratio 0.39

Total Debt/Equity Ratio 0.56

Current P/E Ratio 16.5

P/E Ratio 1 Month Ago 17.5

P/E Ratio 26 Weeks Ago 14.8

P/E Ratio 52 Weeks Ago 15.2

5-Year High P/E Ratio 23.7

5-Year Avg. High P/E Ratio 19.8

5-Year Low P/E Ratio 9.6

5-Year Avg. Low P/E Ratio 14.9

5-Year Avg. P/E Ratio 16.9

Current P/E as % of 5-Year Avg. P/E 97%

P/E as % of 2 Digit MG Group P/E 72%

P/E as % of 3 Digit MG Group P/E 104%

12 Month Normalized P/E Ratio 16.5



SHARE PRICE

(IN COMPARISON WITH SOME

COMPETITORS)Company Symbol Price Change Market Cap P/E

Reckitt Benckiser

Group PLCRB.L 3,027.00 0.23% 109.86b 7,079.05

Hindustan Unilever

Ltd.HUL.BO 266.75 0.65% 581.96b 27.01

L'Oreal OR.PA 78.51 0.15% 231.47b 103.58

L'Oreal OR.MI 77.55 1.11% 228.64b 102.31

Procter & Gamble

Co.PG 60.60 0.28% 169.73b 16.52

Dabur India Ltd. DABUR.NS 96.95 0.05% N/A N/A



Currency in

Millions of U.S. Dollars

: Jun 30

2007

Restated

Jun 30

2008

Restated

Jun 30

2009

Restated

Other Non-Operating Income (Expenses) 565.0 373.0 397.0 -28.0

EBT, EXCLUDING UNUSUAL ITEMS 14,264.0 14,885.0 14,413.0 15,047.0

EBT, INCLUDING UNUSUAL ITEMS 14,264.0 14,885.0 14,413.0 15,047.0

Income Tax Expense 4,201.0 3,594.0 3,733.0 4,101.0

Earnings from Continuing Operations 10,063.0 11,291.0 10,680.0 10,946.0

EARNINGS FROM DISCOUNTINUED

OPERATIONS277.0 784.0 2,756.0 1,790.0

NET INCOME 10,340.0 12,075.0 13,436.0 12,736.0

NET INCOME TO COMMON INCLUDING

EXTRA ITEMS10,179.0 11,899.0 13,244.0 12,517.0

NET INCOME TO COMMON EXCLUDING

EXTRA ITEMS9,902.0 11,115.0 10,488.0 10,727.0



Gross Property Plant and

Equipment34,721.0 38,086.0 36,651.0 37,012.0

Accumulated Depreciation -15,181.0 17,446.0 -17,189.0 -17,768.0

NET PROPERTY PLANT AND

EQUIPMENT19,540.0 20,640.0 19,462.0 19,244.0

Goodwill 56,552.0 59,767.0 56,512.0 54,012.0

Long-Term Investments -- - 212.0 57.0

Other Intangibles 33,626.0 34,233.0 32,606.0 31,636.0

Other Long-Term Assets 4,265.0 ,837.0 4,136.0 4,441.0

TOTAL ASSETS 138,014.0 143,992.0 134,833.0 128,172.0

LIABILITIES & EQUITY

Accounts Payable 5,710.0 6,775.0 5,980.0 7,251.0

Accrued Expenses 3,928.0 9,897.0 7,879.0 7,937.0

Short-Term Borrowings 9,495.0 11,338.0 9,379.0 7,908.0

Current Portion of Long-Term

Debt/Capital Lease

2,544.0 1,746.0 6,941.0 564.0



Current Portion of Capital Lease

Obligations-- -- -- 44.0

Current Income Taxes Payable 3,382.0 945.0 722.0 622.0

Other Current Liabilities, Total 5,658.0 257.0 -- --

TOTAL CURRENT LIABILITIES 30,717.0 30,958.0 30,901.0 24,282.0

Long-Term Debt 23,375.0 23,581.0 20,652.0 21,003.0

Capital Leases -- -- -- 357.0

Minority Interest -- -- 283.0 324.0

Pension & Other Post-Retirement Benefits 3,401.0 3,658.0 5,314.0 6,616.0

Deferred Tax Liability Non-Current 12,015.0 11,805.0 10,752.0 10,902.0

Other Non-Current Liabilities 1,746.0 4,496.0 3,832.0 3,573.0

TOTAL LIABILITIES 71,254.0 74,498.0 71,451.0 66,733.0



Preferred Stock Convertible 1,406.0 1,366.0 1,324.0 1,277.0

TOTAL PREFERRED EQUITY 1,406.0 1,366.0 1,324.0 1,277.0

Common Stock 3,990.0 4,002.0 4,007.0 4,008.0

Additional Paid in Capital 59,030.0 60,307.0 61,118.0 61,697.0

Retained Earnings 41,797.0 48,986.0 57,309.0 64,614.0

Treasury Stock -38,772.0 -47,588.0 -55,961.0 -61,309.0

Comprehensive Income and Other -691.0 2,421.0 -4,698.0 -9,172.0

TOTAL COMMON EQUITY 65,354.0 68,128.0 61,775.0 59,838.0

TOTAL EQUITY 66,760.0 69,494.0 63,382.0 61,439.0

TOTAL LIABILITIES AND EQUITY 138,014.0 143,992.0 134,833.0 128,172.0



CASH FLOWCurrency in

Millions of U.S. Dollars

s of : Jun 30

2007

Restated

Jun 30

2008

Restated

Jun 30

2009

Restated

Jun 30

2010

NET INCOME 10,340.0 12,075.0 13,436.0 12,736.0

Depreciation & Amortization 2,490.0 2,517.0 2,434.0 2,507.0

Amortization of Goodwill and Intangible Assets 640.0 649.0 648.0 601.0

DEPRECIATION & AMORTIZATION, TOTAL 3,130.0 3,166.0 3,082.0 3,108.0

(Gain) Loss from Sale of Asset -153.0 -284.0 -2,377.0 -2,670.0

Change in Accounts Receivable -729.0 432.0 415.0 -14.0

Change in Inventories -389.0 -1,050.0 721.0 86.0

Change in Accounts Payable -278.0 297.0 -742.0 2,446.0

Change in Other Working Capital -151.0 -1,270.0 -758.0 -305.0

CASH FROM OPERATIONS 13,410.0 15,008.0 14,919.0 16,072.0



Capital Expenditure -2,945.0 -3,046.0 -3,238.0 -3,067.0

Sale of Property, Plant, and

Equipment281.0 928.0 1,087.0 3,068.0

Cash Acquisitions -492.0 -381.0 -368.0 -425.0

Investments in Marketable &

Equity Securities673.0 -50.0 166.0 -173.0

CASH FROM INVESTING -2,483.0 -2,549.0 -2,353.0 -597.0

Short-Term Debt Issued 9,006.0 2,650.0 -- --

Long-Term Debt Issued 4,758.0 7,088.0 4,926.0 3,830.0

TOTAL DEBT ISSUED 13,764.0 9,738.0 4,926.0 3,830.0

Short Term Debt Repaid -- -- -2,420.0 -1,798.0

Long Term Debt Repaid -17,929.0 -11,747.0 -2,587.0 -8,546.0

TOTAL DEBT REPAID -17,929.0 -11,747.0 -5,007.0 -10,344.0



Issuance of Common Stock 1,499.0 1,867.0 681.0 721.0

Repurchase of Common Stock -5,578.0 -10,047.0 -6,370.0 -6,004.0

Common Dividends Paid -4,048.0 -4,479.0 -4,852.0 -5,239.0

Preferred Dividends Paid -161.0 -176.0 -192.0 -219.0

TOTAL DIVIDEND PAID -4,209.0 -4,655.0 -5,044.0 -5,458.0

CASH FROM FINANCING -12,453.0 -14,844.0 -10,814.0 -17,255.0

Foreign Exchange Rate

Adjustments187.0 344.0 -284.0 -122.0

NET CHANGE IN CASH -1,339.0 -2,041.0 1,468.0 -1,902.0



SOME IMPORTANT RATIOSCash Management 30 Sep 2010 30 Jun 2010 30 Sep 2009 5-Yr Avg

Current Ratio 0.7 0.8 0.9 0.9

LTD to Equity 34.0% 34.8% 33.5% 36.7%

Debt/CFO (years) 2.4 1.9 2.2 2.6

Inventory/CGS (days) 65.6 65.3 75.4 69.8

Finished

Goods/Inventory63.7% 64.0% 66.6% 66.5%

Days of Sales

Outstanding (days)27.7 27.6 30.8 30.5

Working

Capital/Revenue-5.2% -5.7% -12.9% -5.4%

Cash Conversion Cycle

Time (days)34.8 34.3 49.3 51.5



Profitability 30 Sep 2010 30 Jun 2010 30 Sep 2009 5-Yr Avg

Operating

Expense/Revenue79.7% 79.7% 79.6% 79.9%

ROIC 12.3% 12.7% 11.7% 12.6%

Free CashFlow/Invested Capital

11.5% 14.1% 13.2% 12.5%

Accrual Ratio -0.2% -2.1% -0.2% -0.7%

Value 30 Sep 2010 30 Jun 2010 30 Sep 2009 5-Yr Avg

P/E 14.5 14.5 13.4 18.4

P/E vs. S& P 500 P/E 1.0 1.0 0.6 1.1

PEG 6.0 4.6 2.4 1.7

Price/Sales 2.3 2.3 2.4 2.7

Enterprise Value/Cash

Flow (EV/CFO)15.2 13.1 13.1 16.9

Share Price ($) $59.97 $59.98 $57.92 -



�

Year over year, Procter & Gamble Co. has seennet income shrink from $13.4B to $12.7B

despite relatively flat revenues.

� A key factor has been an increase in the

percentage of sales devoted to SGA (selling,

general and administrative expense) costs

from 29.51% to 31.67%.



The company's market value is currently about $190billion, which makes P&G one of the ten most-valuable U.S. corporations.



Sales %: Was up by almost 3% to $78.9 billionin 2010

Net Income:Net income of P&G in 2010 was $12.7 billion as compared to last years$13.4billion.

Net income was down by $.7 billion (5%),which was due to spendingmore money in R&D process. Another reason was due to the loss inpharmaceuticals and coffee businesses

Dividends:

Dividend growth is a good indicator of the financial health of acompany. Dividends per common share increased 10% to $1.80 per share in 2010



� The gross profit margin is a measurement of acompany's manufacturing and distributionefficiency during the production process.

� Gross margin of 2010 is $51.9 billion ascompared to 2009 is $49.5 billion. An increase

of 2.4% has been seen in the gross margin in2010 which was due to manufacturing andlogistics cost savings projects.



� Liquidity refers to the ability of a concern to meetits current obligations as and when these becomedue.

� Current Ratio: current assets/current liabilities2010 is .77 n 2009 is .71

�

Quick Ratio: cash + net receivables + marketablesecurities/ current liabilities 2010 is .51 and 2009.49



REFERENCES

� http://investing.businessweek.com/businessweek/research/stocks/earnings/earnings.asp?ticker=PG:US

� http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=us:PG

� http://www.financial-gauges.com/2010/11/pg-financial-gauge-analysis-for.html



THANK

YOU

financial analysis of p & g

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