Quality of earnings growth was strong as operating profit increased 13% for the fourth quarter and 11% for the fiscal year behind sales growth and operating margin improvement. Operating margin was up due to overhead productivity improvements and increased pricing, which combined, more than offset a significant increase in commodity and energy costs.
In terms of full year results, net sales in fiscal 2008 increased 9% to $83.5 billion behind 4% volume growth. Volume growth was driven by continued double-digit growth in developing regions. Net earnings grew 17% during the fiscal year to $12.1 billion behind sales growth, operating margin improvement and a lower tax rate.
Fabric Care and Home Care net sales increased 13% during the fourth quarter to $6.1 billion. Volume grew 4% and was broad-based with growth in every region. Price increases added 4% to net sales and foreign exchange contributed 6% to sales growth.
Baby Care and Family Care net sales increased 10% during the quarter to $3.6 billion. Volume grew 3%, including a negative 6% impact from the Western European Tissue divestiture. Favorable foreign exchange added 6% and price increases added 2% to net sales growth for the quarter. Disproportionate growth in developing regions as well as product mix shifts toward larger pack sizes and mid-tier brands resulted in a negative 1% mix impact on sales. Organic sales were up 10% behind a 9% increase in organic volume. Baby Care volume grew high-single digits driven by strong growth on Pampers and Luvs.
"Once again, P&G delivered top and bottom line growth at or above the company's targets—while also successfully completing the integration of Gillette," said chairman and CEO A.G. Lafley. "We're leading innovations across the brand portfolio, building value for consumers and customers, which is critical to delivering good results in a difficult economic environment. The strength of the portfolio and our focus on innovation and productivity give us confidence that we will continue to deliver sustained growth in the coming year and beyond."