By John Byczkowski
Enquirer staff writer

Cincinnati-based consumer products giant Procter & Gamble Co. reported one of its best years ever Monday, and the reason wasn't Tide or Ivory.

Growth worldwide and the recent acquisition of German hair-care giant Wella AG means that nearly half of P&G's sales come from health and beauty care products.

"You've got to stop looking at them as just a soap company," said Donald Keller, chief investment officer, Haberer Registered Investment Advisor in downtown Cincinnati. "There's an awful lot of growth engines within that company."

For P&G's 2004 fiscal year, which ended June 30, sales rose 19 percent from a year earlier to $51.4 billion - the first time in the company's history that sales topped $50 billion. Net earnings rose 25 percent to $6.5 billion, or $2.32 per share. Net earnings for the fourth quarter were up 44 percent to 50 cents a share, above what Wall Street had expected.

That's strong growth for a company as large as P&G, No. 28 on this year's Fortune 500 list of the nation's largest corporations.

CEO A.G. Lafley said all five business units posted growth at or above the company's targets, and sales grew in all regions of the world.

Still, Lafley confidently predicted P&G can put up strong growth again in the 2005 fiscal year, and two reasons are the potential of health and beauty care.

Beauty care became P&G's biggest business unit in 2004, surpassing fabric and home care with $17.1 billion in sales. Worldwide, "this is a huge and growing business - nearly $170 billion," Lafley told analysts Monday. "We have only about a 10 (percent) share in beauty care today. This is a business that plays to P&G's strengths, and we've added even more capability with Clairol and Wella. I'm optimistic that we're well-positioned for strong growth in beauty."

Wella was acquired last September, and added about $3 billion in annual sales to P&G. Clairol was acquired in 2001.

In health care, last year P&G found its first billion-dollar pharmaceutical brand in Actonel, a prescription drug for osteoporosis, and has another winner in Prilosec OTC, an over-the-counter drug for indigestion. Future products include Intrinsa, a testosterone patch for increasing sex drive in women, but that's not expected in 2005.

P&G now has 16 billion-dollar brands, and 10 more brands have sales between $500 million and $1 billion. As a group, those 10 are growing faster than the billion-dollar brands, said Clayt Daley, P&G's chief financial officer.

Lafley said he's confident that P&G's new products will add to sales. Products introduced this summer include Tide With A Touch of Downy detergent and fabric softener, Downy Simple Pleasures fabric softener, Mr. Clean Magic Eraser Duo cleaning pad, Pampers Feel N' Learn advanced training pants, Olay Moisture Rinse body lotion, Iams pet foods improvements, and Lacoste With A Touch of Pink perfume.

For the current quarter, which ends Sept. 30, Daley said P&G "should deliver another quarter of double-digit ... growth" in earnings per share, and sales growth of 5 percent to 6 percent.

The company's stock jumped $1.19, or 2.3 percent, to close Monday at $53.34.

Keller, at Haberer, said P&G's biggest challenge might be maintaining its stock price, which is trading at more than 20 times next year's projected earnings.

That's a little rich, he said, and the stock could tumble if P&G doesn't meet expectations. Nothing company executives said Monday, however, suggests there are problems on the horizon. "They're obviously very comfortable with where they are," Keller said.

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E-mail johnb@enquirer.com