Fundamentals Bender Trust Project Dec. 2011 Little Investment Bankers of Rutgers Rutgers University Josselinne Rodriguez, Michael Kornblum, & Dor Alaluf Dec. 2011

Procter & Gamble Company Overview A Fortune 500 American multinational corporation manufactures of a wide range of consumer goods Headquartered in downtown Cincinnati, Ohio Serves approximately 4.4 billion consumers around the world with strong portfolio of trusted, quality, leading brands. Known globally for its household and personal goods in the following categories: Beauty products (e.g. Gillette, Old Spice, CoverGirl) Health & Well-Being (e.g. Crest, Oral-B) Household Care (e.g. Ace, Tide, Duracell) Continuously expands its products offering through in-house development and acquisitions P&G serves approximately 4.4 billion people around the world with its brands. The Company has one of the strongest portfolios of trusted, quality, leadership brands, including Pampers(R), Tide(R), Ariel(R), Always(R), Whisper(R), Pantene(R), Mach3(R), Bounty(R), Dawn(R), Fairy(R), Gain(R), Pringles(R), Charmin(R), Downy(R), Lenor(R), Iams(R), Crest(R), Oral-B(R), Duracell(R), Olay(R), Head & Shoulders(R), Wella(R), Gillette(R), Braun(R), Fusion(R), Ace(R), Febreze(R), and Ambi Pur(R). The P&G community includes operations in about 80 countries worldwide. Beauty (34.0% of 2010 sales, 38% of 2010 net income)[9]PG 2009 10-K, Note 11, page 70</ref>: The Beauty GBU includes all hair and skin products, medications, razors, electric shavers, and batteries. This business unit includes several product lines acquired when the P&G bought consumer products company Gillette in 2005. Proctor & Gamble's global market share in blades and razors is 70% .Health and Well-Being (18.3% of 2010 sales, 20% of 2010 net income)[9]: The Health and Well-Being GBU provides oral care, feminine health, pharmaceuticals, snacks, coffee, and pet care products.[12] In oral care, the company has the number two market share position at 20% globally. [12] In potato chips, the company's Pringles brand holds a market share of approximately 10%. [12] Household Care (48.4% of 2010 sales, 50% of 2010 net income)[9]: The Household Care GBU manufactures a wide range of products from laundry detergent to diapers. The company's baby care market

Procter & Gamble Company Overview P&G serves approximately 4.4 billion people around the world with its brands. The Company has one of the strongest portfolios of trusted, quality, leadership brands, including Pampers(R), Tide(R), Ariel(R), Always(R), Whisper(R), Pantene(R), Mach3(R), Bounty(R), Dawn(R), Fairy(R), Gain(R), Pringles(R), Charmin(R), Downy(R), Lenor(R), Iams(R), Crest(R), Oral-B(R), Duracell(R), Olay(R), Head & Shoulders(R), Wella(R), Gillette(R), Braun(R), Fusion(R), Ace(R), Febreze(R), and Ambi Pur(R). The P&G community includes operations in about 80 countries worldwide. Beauty (34.0% of 2010 sales, 38% of 2010 net income)[9]PG 2009 10-K, Note 11, page 70</ref>: The Beauty GBU includes all hair and skin products, medications, razors, electric shavers, and batteries. This business unit includes several product lines acquired when the P&G bought consumer products company Gillette in 2005. Proctor & Gamble's global market share in blades and razors is 70% .Health and Well-Being (18.3% of 2010 sales, 20% of 2010 net income)[9]: The Health and Well-Being GBU provides oral care, feminine health, pharmaceuticals, snacks, coffee, and pet care products.[12] In oral care, the company has the number two market share position at 20% globally. [12] In potato chips, the company's Pringles brand holds a market share of approximately 10%. [12] Household Care (48.4% of 2010 sales, 50% of 2010 net income)[9]: The Household Care GBU manufactures a wide range of products from laundry detergent to diapers. The company's baby care market

Value Trends

Procter & Gamble Stock Information Symbol (NYSE): PG Current Price (11/25/2011): $61.00 Volume (11/25/2011): 4,734,711 52 Week Range: 57.56 - 67.72 S&P 500: 1,257.81 2010 A 2011 E 2012 E EPS 3.67 4.19 4.58 P/E 17.24 15.10 13.82 S&P EPS 77.35 89.55 98.14 S&P P/E 16.26 14.05 12.82 Relative P/E 106% 107% 108%

Procter & Gamble Stock Behavior Chart

Procter & Gamble Porter’s 5 Forces Analysis

Procter & Gamble Buyers   Mass merchandisers Grocery stores Membership club stores Drug stores Neighborhood stores Average consumer Problem: High dependency on mass consumers

Procter & Gamble Suppliers Suppliers: 6 of the top 80,000 are: Havpak Inc. Hayco Ltd. Nelson Packaging Company Inc. Nippon Shokubai Company Ltd. Novozymes Pegas Nonwovens Strong codependent supplier relationship

Barriers to Entry Entrance Brand-building Large and diverse product range Consumer confidence and loyalty in brand Understanding of consumer needs as a point for innovation more production  more consumption  more profits

Threats to Market Share Niche market firms Example: Mac vs. Cover girl Lack of presence in emerging markets (i.e. BRIC nations) Due to economic downturns, consumer spending has decreased globally. Threats • There is a cut throat competition in the fast moving consumer’s goods markets today. Companies like Kimberly Clark, Unilever, Johnsons & Johnsons and Colgate-Palmolive etc pose a serious threat to its market share in different countries. • The competitors are making their product portfolios diverse day b day and using different marketing and promotional strategies to increase their market share. • In the market many substitutes are available for P & G products at cheaper prices. • The private label growth is also a serious threat to the P & G’s market share. • Due to recession, the consumer spending has decreased globally. Also, the prices for raw materials are increasing so cost to the company is increasing.

Procter & Gamble Substitutes Large number of substitutes Unilever (UL) L’Oreal Kimberly-Clarke Clorox Company (CLX) However Continuing product differentiation Strong research & development division Go-to market capabilities always looking to expand & develop with consumer needs as a guide Unilever-P&G generates approximately one and half times the revenue than its closest competitor Unilever (UL) (Johnson & Johnson, Kimberly-Clarke, Unilever)

Leading Household Products Ranked by sales Company Sales (MIL $) Net Income Procter & Gamble 70,029 11,291 Unilever 57,118 7449 L’Oreal 24,726 2,909 Kimberly- Clark 19,145 1,690 Colgate-Palmolive 15,330 1,957 Kao 12,993 656 Avon 19589 875 Reckitt Benckiser 9,161 1,654 Estee Lauder 7,324 218 Clorox 5,450 537 Church &Dwight 2,422 195 Alberto-Culver 1443 106 Revlon 1,347 58 Leading Household Products Ranked by sales

Procter & Gamble Industry Competition

Procter & Gamble Industry Competition Significant competition in 3 Industries where P&G offers products and services in: Advantages: Strong consumer presence and confidence Strong relations with suppliers i.e. Target, Walmart Diverse product range in all 3 sectors Large market share Disadvantages: Needs international expansion No strong online presence Loss of local jobs, outsourcing manufacturing and back-office operations work overseas  cheap labor Consumer Understanding: Interact with more then 5 million consumers a year in 100 countries. 20,000 reaserch studies & invest $400 million annually in consumer understanding. (ak.a becoming more competitive)! Innovation: Widely recognized .P&G has had 132 products on top 25 Pacesetters list- 5th place on Fortune 2011 list of the World’s Most Admired Companies & won 22 “Product of the Year” recognitions. Brand-Building- Strongest porfolio with 50 leadership brands & which together make up 90% of P&Gs sales and more than 90% of profits. 24 of this brands generate 1 Billillion in annual sales. Scale: low operating cost

Stock Recommendation: BUY It’s a steady Company People are looking for a safer investment This may be more for people who are close to retirement 50s & up