), a global dealer in consumer goods, reported second-quarter
2013 adjusted earnings of 70 cents a share that came in line with
the Zacks Consensus Estimate and rose 4.0% from the year-ago
quarter's adjusted earnings of 67 cents.
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Global sales of $4,346 million increased 2.0% from the prior-year
quarter's level of $4,267 million, primarily benefiting from a
4.0% rise in global unit volumes and 1.0% upside in pricing,
partially offset by a negative impact of 3.0% from foreign
exchange. However, quarterly revenue marginally fell short of the
Zacks Consensus Estimate of $4,362 million.
On an organic basis (excluding foreign exchange, acquisitions and
divestitures), the company recorded sales growth of 5.5%.
Adjusted gross profit margin expanded 70 basis points (bps) to
58.6%, driven by better pricing and cost containment endeavors.
This was more than offset by increased raw and packaging material
Adjusted selling, general and administrative (SG&A) expenses,
as a percentage of revenue grew 60 bps from the year-ago quarter
to 34.8%. The rise was mainly due to higher advertising
investment partly offset by lower overhead costs.
In the quarter, adjusted operating profit of $1,032 million
climbed 3.0% from $1,001 million compared to the year-ago period,
while operating margin expanded 20 bps to 23.7% from 23.5%
recorded in the prior year quarter. .
Colgate-Palmolive's market share of global toothpaste and manual
toothbrushes reached 45.4% and 33.3%, respectively. Global
toothpaste and manual toothbrushes share represented an increase
of 0.1 and 0.4 share points, respectively, from the year-ago
sales (18% of total sales) rose 5.0% in the quarter, driven by a
6.0% rise in unit volume partly offset by 1% downside in prices.
On an organic basis, sales increased 5.0%.
Segment operating profit surged 20% to $227 million, while
operating margin expanded nearly 370 bps to 29.8%. The
year-over-year rise in operating profit margin was chiefly driven
by increased gross profit margin and lower SG&A expenses as a
percentage of net sales.
sales (29% of total sales) inched up 1.5% year over year,
primarily driven by a 4.5% increase in pricing and 2.0% unit
volume growth, partially offset by negative foreign exchange
impact of 8.0%. Volume gains were most prominent in Mexico,
Brazil, Venezuela and the Southern Cone region. On an organic
basis, sales increased 7.0%.
However, operating profit declined 6.0% to $352 million from the
prior-year quarter primarily due to lower gross profit margin and
higher SG&A expenses as a percentage of sales. Moreover,
operating margin contracted 120 bps to 27.5%.
sales (19% of total sales) declined 3.0% year over year, driven
by almost flattish growth in unit volume along with 3.0% downside
in pricing as well as a 0.5% negative impact from foreign
currency exchange. Volume gains were primarily led by United
Kingdom, Germany and Australia, which were partly offset by
volume declines in France and Greece. Organic sales for the
region were down 2.0%.
Operating profit increased 6.0% year over year to $189 million.
Furthermore, the operating profit margin in the region expanded
180 bps to 22.9%, driven by higher gross profit margin and lower
SG&A expenses as a percentage of sales.
sales (21% of total sales) climbed 8.0%, with a 9.5% increase in
unit volume, offset by a 1.5% negative impact from foreign
currency. Volume growth was primarily led by gains in India, the
Greater China region, Thailand, Turkey and Russia. On an organic
basis, sales grew 9.5%.
Operating profit jumped 8.0% to $238 million on account of
improved gross profit, partly offset by higher SG&A expenses,
as a percentage of sales. Operating margin remained even at
Hill's Pet Nutrition
sales (13% of total sales) inched up 3.5%. Unit volume increased
2.5% due to volume gains in U.S., Russia, Korea, Germany, France
and Brazil, partly offset by volume declines in Japan, Italy and
the United Kingdom. Pricing had a 3.0% positive impact on sales
growth, while foreign exchange negatively impacted sales by 2.0%.
On an organic basis, sales rose 5.5% from the year-ago quarter.
Operating profit dipped 6.0% to $136 million, whereas operating
profit margin contracted 250 bps to 24.8%. The decline was due to
lower gross profit margin and higher SG&A expenses, as a
percentage of net sales.
Other Financial Details
Colgate-Palmolive ended the quarter with cash and cash
equivalents of $884 million, total debt of $5,628 million and
shareholders' equity of $1,531 million. Net cash provided by
operating activities came in at $1,325 million for the first-half
Looking ahead, Colgate-Palmolive anticipates its growth momentum
to continue into 2013 as it remains on track with its global
restructuring program. Further, the company's stringent focus on
the funding-the-growth programs and strategic worldwide pricing
endeavors should help boost its bottom line.
As a result, the company expects strong organic sales as well as
gross margin expansion in 2013. The company projects 4.5% to 5.5%
growth in earnings per share for 2013. The company's earnings for
the year are expected to be impacted by currency devaluation in
Venezuela and the recent fluctuations in foreign exchange in
Other Stocks to Consider
Colgate-Palmolive carries a Zacks Rank #3 (Hold). Other stocks in
the same industry that are worth considering include
Nu Skin Enterprises Inc.
Church & Dwight Co. Inc.
Reckitt Benckiser Group plc
). Nu Skin carries a Zacks Rank #1 (Strong Buy) whereas Church
& Dwight and Reckitt Benckiser carry a Zacks Rank #2 (Buy).