Colgate-Palmolive Company
(
CL
) reported first-quarter 2012 adjusted earnings of $1.24 per share,
which rose 7% from the year-ago quarter while meeting the Zacks
Consensus Estimate.
Global sales of $4,200 million surged nearly 5% from the
prior-year quarter, breezing past the Zacks Consensus Estimate of
$4,168 million. Sales growth in the quarter mainly resulted from a
3.5% upside in both pricing and global unit volumes, partially
offset by a 2% negative impact from foreign exchange. On an organic
basis (excluding foreign exchange, acquisitions and divestitures),
the company recorded sales growth of 6% in the quarter.
Adjusted gross profit margin for the quarter dipped 20 basis
points to 58.2%, as higher material and packaging costs hurt the
cost savings benefits of the company's funding-the-growth
initiatives throughout the second half of 2011. On a reported
basis, including costs associated with the business realignments,
other cost-saving initiatives and the sale of land in Mexico, gross
profit increased $106 million to $2,437 million while gross margin
dipped 40 basis points to 58.0%.
First quarter adjusted operating profit of $950 million rose 4%
compared to last year. On a reported basis, including costs
associated with the business realignments and the sale of land in
Mexico, operating profit increased 3% to $938 million while
operating margin contracted 60 basis points to 22.3%.
Colgate-Palmolive stated that its market share of global
toothpaste and manual toothbrushes are at record highs year to date
at 45.2% and 32.7%, respectively. The global toothpaste share
represented an increase of 0.8 share points from the year-ago
period while the share of manual tooth brushes increased 0.5 share
point from a year ago.
Segment Discussion
North America
sales (18% of total sales) increased 5% in the quarter. The growth
was primarily driven by a 5% rise in unit volume, 0.5% upside in
prices and a 0.5% negative foreign exchange. On an organic basis,
sales increased 5.5%.
However, operating profit decreased 5% to $183 million with
operating margin contracting 24.2%, due to lower gross margin and
higher selling, general and administrative expenses as a percentage
of net sales.
Latin America
sales (28% of total sales) grew 6.5% during the quarter as unit
volume inched up 1% and pricing rose 10%, partially offset by
negative foreign exchange impact of 4.5%. Volume gains were most
prominent in Brazil, Mexico and Central America, slightly offset by
declines in Venezuela. On an organic basis, sales increased
13.5%.
Consequently, operating profit climbed 6% to $344 million from
the prior-year quarter. Moreover, operating margin contracted to
30.2%, primarily due to an increase in selling, general and
administrative expenses and other expenses, both as a percentage of
sales, partially offset by higher gross profit margin.
Europe/South Pacific
sales (20% of total sales) rose 2.5% as unit volume made a positive
contribution of 7.5% while pricing and foreign exchange had a 2.5%
and 2% negative impact on growth, respectively. The Sanex
acquisition contributed 6.5% to sales during the quarter. Volume
gains were primarily led by better performance in the United
Kingdom, France, Iberia and Australia. However, organic sales for
Europe/South Pacific inched down 2%.
Operating profit during the quarter declined 1% year over year
to $183 million. Furthermore, the operating profit margin in the
region contracted to 21.4%, primarily due to an increase in other
expenses because of higher amortization of intangible assets
related to the Sanex acquisition, partially offset by a rise in
gross profit margin.
Greater Asia/Africa
sales (21% of total sales) climbed 8%, with a 6% increase in unit
volume, primarily led by volume gains in the Greater China region,
India and the Philippines, partially offset by volume decline in
South Africa. Pricing contributed 5% to growth while the Sanex
acquisition added 0.5%, which was offset by a 3% negative impact
from foreign currency. On an organic basis, sales grew 10.5%.
Operating profit rose 8% to $220 million on account of strong
sales growth. However, operating profit margin remained flat year
over year at 25%, as lower gross profit margin was fully offset by
lower selling, general and administrative expenses as a percentage
of net sales.
Hill's Pet Nutrition
sales (13% of total sales) increased 1.5%. Unit volume decreased
1.5% as volume declines in the U.S. overshadowed the volume gains
in Australia. Pricing had a 3.5% positive impact on sales growth
while foreign exchange negatively impacted sales by 0.5%. On an
organic basis, sales rose 2% from the year-ago quarter.
Operating profit increased by 5% to $148 million. Furthermore,
the operating profit margin increased to 27.3%, primarily due to a
rise in gross profit margin, which is offset by an increase in
selling, general and administrative expenses, as a percentage of
net sales.
Other Financial Details
Colgate-Palmolive ended first-quarter 2012 with cash and cash
equivalents of $1,044 million, total debt of $4,967 million and
shareholders' equity of $2,290 million. Net cash provided by
operating activities came in at $662 million in the first three
months of 2012.
Colgate-Palmolive competes with
Procter & Gamble Company
(
PG
) and
Church & Dwight Company Inc.
(
CHD
). The company retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Our long-term recommendation on the stock
remains Neutral.
CHURCH & DWIGHT (
CHD
): Free Stock Analysis Report
COLGATE PALMOLI (
CL
): Free Stock Analysis Report
PROCTER & GAMBL (
PG
): Free Stock Analysis Report
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