P&G Remains Focused Says Chairman

Chairman John Pepper, and President and Chief Executive A. G. Lafley addressed The Procter & Gamble Company shareholders at the company’s annual meeting today. Lafley told shareholders he is confident in the company’s ability to deliver business and financial results despite turbulent times.

“While we do not under-estimate for a minute the challenges and risks ahead, we believe based on experience in troubled economies across the world, that P&G weathers downturns reasonably well,” Mr. Lafley said. “Typically, our industry and our company have performed better than most in tough economic times.”

Mr. Lafley said the company remains focused on its mission and what it does best-creating and building brands that deliver superior consumer value and businesses that deliver superior shareholder value.

“We won’t allow the tyranny of terrorism to deter us from P&G’s mission of improving consumers’ lives,” Mr. Lafley said.

P&G will not report results for the July-September period, the first quarter of its fiscal year, until October 30. However, Mr. Lafley said he is encouraged by the “steady progress” the company has made over the past six months. He attributed the progress to the focus on leading brands, big countries and top customers, and clear strategic choices.

“The focus on leading brands at top customers in our biggest markets is starting to pay off,” Mr. Lafley said. “Eight of our 11 billion dollar brands are worldwide category leaders, and shipments to top customers are up 7%.”

Reporting on the progress of P&G’s restructuring programs that began three years ago, Mr. Lafley said the transition to a new organization structure is producing new ways to become more effective and efficient. “As a result, we are restructuring some of our businesses, writing off or writing down less productive assets, and even shutting down brands or selling off businesses that are under-performing or no longer strategic,” he said.

The total restructuring efforts are on track and are expected to generate about $2 billion in annual savings by 2004. Some of these savings will flow to the bottom line and some will be reinvested to accelerate growth.

He also covered how P&G is driving out costs that do not deliver consumer or shareholder value. The company has reduced costs in every business by maximizing restructuring savings, continuing cost savings programs, taking advantage of softening packaging and raw material markets, and leveraging global scale in reverse auctions.

Mr. Lafley talked about striking the right balance for optimum consumer and shareholder value. “P&G is not a cost story; it is not a growth at any cost story. P&G is a consistent, reliable, superior shareholder return story.”