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Perfumery and cosmetics groups in the world – August 2008

5.1. Procter & Gamble

More disposals are expected

Procter & Gamble
58,571 million euros consolidated turnover (*)

Cleansing products and food
27,751 million euros

Beauty care (**)
17,601 million euros

7,092 million euros

6,865 million euros

(*) The difference between the group total turnoverand the sum of that of each department (738 M€) stands for corporate activity. (**) Also includes articles which are neither perfumes nor cosmetics, such as razors or products for ladies’ personal hygiene. Closing date: 30th June 2007

Group presentation

The American Procter & Gamble group specializes in massconsumption articles: beauty care (deodorants, shampoos, shaving foam, etc.),healthcare (dental hygiene), household keeping (deodorants, detergents, washing powders, etc.), foods (snacks, pet food, etc.), razors, batteries and electrical fittings. It also does business abroad in 180 countries. This group is mainly positioned on the hair treatment segment and owns several famous international brands amongst which Pantene, the leading world hair treatment brand with annual salestopping 2 billion euros, and also Head & Shoulders, Herbal Essences and Wella.

Key figures for 2007

“Perfumery and cosmetics” turnover “Perfumery and cosmetics” operating result Operating result margin Group net profit Staff count (June 2007)

17.6 bn€ 3.7 bn€ 20.9% 7.9 bn€ 138,000

Recent outstanding events
January 2007 The American Procter & Gamble group buys the HDS cosmeticslaboratories from North Castle Partners, another American firm. This company produces Doctor’s Dermatological Formula (DDF) for skin treatment. Procter & Gamble signs an agreement to extend its hair treatment brands to the Beauty System Group chain professional salons in North America. This American giant takes the Blue Cross laboratories to court for having copied the Herbal Essences shampoo bottledesign. Procter & Gamble takes over the “star hairdresser” Frédéric Fekkai hair treatment brand from the Catterton Partners investment fund. This American group sells the Folgers coffee brand to Smucker, a family-owned listed company. The deal works out to something more than two billion euros.

February 2007 January 2008 March 2008 June 2008

Source: Xerfi through professional and economic pressarticles

No copy allowed – unauthorized photocopying is a legal offence (as stipulated by the French Intellectual Property Code)


Perfumery and cosmetics groups in the world – August 2008 Recent trends: Procter & Gamble sales increased 9% over the first nine months of business year 2008 (closing on 30/06/2008). All the group departments took part in this move, including the beauty polewhose sales increased 8% as compared to the same period a year earlier, owing to buoyant business on foreign markets and to a dollar to euro positive exchange effect. But rising production costs however weighed down upon the beauty pole operating margin, which improved no more than 5% during that period. Even if it still remains high, the profit-earning capacity (19.3%) fell back significantly ascompared to the whole 2007 taxation year (20.9%). Future strategies and prospects: Despite the slowdown of the world perfumery and cosmetics market, the group is still confident for the last taxation quarter (April to June 2008). It has disclosed it will put its prices up in order to compensate for the rise in costs of energy raw materials affecting its production costs. Although the company isexpecting a sharp growth of sales at constant business perimeter and exchange rate conditions, the group has already given out a warning concerning its profitability, which will improve less than in 2007. After having sold Folgers coffees in June 2008, the group might also shortly part with Duracell batteries and Pringles potato crisps, two brands whose sales growth is lower than that of the other...