Good Quarter and Year for P&G

The Procter & Gamble Co. announced today strong growth for the April-June quarter and the fiscal year ended June 30, 2003, exceeding expectations. The company delivered excellent top line growth behind strong volume. In addition, the company achieved excellent cash flow productivity for the fiscal year behind higher earnings, lower capital spending and working capital improvements.

For the quarter ended June 30, 2003, unit volume grew 5% over the prior year behind another quarter of double-digit growth in the health care business and continued strong results in Asia and Central and Eastern Europe.

Net sales were $10.92 billion. Excluding restructuring impacts in the prior period, sales were up 8%. Organic sales, which exclude foreign exchange and the impact of acquisitions and divestitures, were up 5%. Net earnings for the quarter were up 5% to $955 million.

For the fiscal year, unit volume grew 8% behind double-digit volume growth in beauty care and health care. Net sales were $43.38 billion, up 8%, which includes a positive 2%

For the fiscal year, gross margin was 49%, an improvement of 120 basis points. Restructuring charges in gross margin during 2003 were $377 million compared to $439 million in 2002.

The company said fiscal 2003 was another strong year for beauty care. Volume was up 15%, including 7% for the impact of acquisitions and divestitures. Sales grew 14% to $12.22 billion. A positive 3% impact for foreign exchange was partially offset by a 2% impact from pricing, as the company repositioned Pert, Daily Defense, Renewal 5X and Clairol Ultress to mid-tier price points. Mix also negatively impacted sales by 2%. Earnings grew 23% to $1.98 billion behind strong volume and significant manufacturing savings and overhead reductions due, in part, to the efficiency improvements behind the Clairol integration.

On the fiscal year, P&G said health care delivered another year of strong top and bottom line growth. Volume was up 18%, driven by solid results in pharmaceuticals, behind Actonel, and oral care, behind Crest Whitestrips. Sales were $5.80 billion, up 16%, including a positive 2% foreign exchange impact offset by a negative 2% impact from mix and a negative 2% pricing impact behind competitive adjustments to Crest Whitestrips. Earnings were up 35% to $706 million behind volume growth in high-margin products, partially offset by increased marketing spending behind product launches.

For the new fiscal year, P&G expects volume, excluding the impact of acquisitions and divestitures, to increase 5-7%. Sales growth, excluding the impacts of foreign exchange, is expected to increase toward the top end of the company’s long-term range of 4-6%. For the current quarter, volume is projected to increase 5-7%. Sales are expected to grow in the mid- to high-single digits, with foreign exchange impacting sales by a positive 2-3%.