Colgate Announces 1st Quarter 2017 Results

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NEW YORK–(BUSINESS WIRE)–Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net sales
of $3,762 million in first quarter 2017, even with the first quarter
2016 level. Global unit volume decreased 2.0%, pricing increased 2.5%
and foreign exchange was negative 0.5%. Organic sales (Net sales
excluding the impact of foreign exchange, acquisitions and divestments)
grew 0.5%.

Net income and Diluted earnings per share in first quarter 2017 were
$570 million and $0.64, respectively. Net income in first quarter 2017
included $31 million ($0.03 per diluted share) of aftertax charges
resulting from the Company’s Global Growth and Efficiency Program (the
“2012 Restructuring Program”).

Net income and Diluted earnings per share in first quarter 2016 were
$533 million and $0.59, respectively. Net income in first quarter 2016
included $38 million ($0.04 per diluted share) of aftertax charges
resulting from the 2012 Restructuring Program.

Excluding charges resulting from the 2012 Restructuring Program in both
periods, Net income in first quarter 2017 was $601 million, an increase
of 5% versus first quarter 2016, and Diluted earnings per share in first
quarter 2017 was $0.67, an increase of 6% versus first quarter 2016.

Gross profit margin was 60.3% in first quarter 2017 versus 59.8% in
first quarter 2016. Excluding charges resulting from the 2012
Restructuring Program in both periods, Gross profit margin was 60.7% in
first quarter 2017, an increase of 70 basis points versus the year ago
quarter. This increase was primarily driven by cost savings from the
Company’s funding-the-growth initiatives and the 2012 Restructuring
Program, and higher pricing, partially offset by higher raw and
packaging material costs.

Selling, general and administrative expenses were 36.2% of Net sales in
first quarter 2017 versus 36.0% of Net sales in first quarter 2016.
Excluding charges resulting from the 2012 Restructuring Program in both
periods, Selling, general and administrative expenses increased by 30
basis points to 35.6% of Net sales in first quarter 2017, as a result of
higher overhead expenses. Worldwide advertising investment increased 1%
to $400 million versus $398 million in the year ago quarter.

Operating profit increased to $885 million in first quarter 2017
compared to $867 million in first quarter 2016. Excluding charges
resulting from the 2012 Restructuring Program in both periods, Operating
profit was $931 million in first quarter 2017, an increase of 1% versus
first quarter 2016. Operating profit margin was 23.5% in first quarter
2017 versus 23.0% in first quarter 2016. Excluding charges resulting
from the 2012 Restructuring Program in both periods, Operating profit
margin was 24.7% in first quarter 2017, an increase of 20 basis points
versus the year ago quarter.

Net cash provided by operations year-to-date was $691 million compared
to $614 million in the comparable 2016 period, reflecting strong
operating earnings and a continued tight focus on working capital.
Working capital as a percentage of Net sales was negative 4.3% compared
to negative 2.8% in the year ago period.

Ian Cook, Chairman, President and Chief Executive Officer, commented on
the first quarter results, “Clearly the first quarter was challenging
and did not meet our organic sales growth expectations, driven mainly by
softer results in North America. Net sales were even with the year ago
quarter, while organic sales grew 0.5%, led by emerging markets where
organic sales grew 3.0%.

“Colgate’s leadership of the global toothpaste market continued during
the quarter with its global market share now at 43.8% year-to-date. Our
global leadership in manual toothbrushes also continued with Colgate’s
global market share in that category now at 32.7% year-to-date.

“Pleasingly, gross profit margin, operating profit margin, net income as
a percent to sales and operating cash flow all increased versus the year
ago period.

“As we look ahead, uncertainty in global markets and slowing category
growth worldwide remain challenging. While based on current spot rates,
we continue to expect a low-single-digit net sales increase for 2017,
based on our slow start to the year, we now expect organic sales growth
for 2017 to be modestly below our 4% – 7% range with sequential
improvement throughout the year.

“On a GAAP basis, based on current spot rates, we are planning for a
year of gross margin expansion and expect earnings per share on a dollar
basis to be flat.

“Excluding charges resulting from the 2012 Restructuring Program and the
other 2016 one-time items previously disclosed, based on current spot
rates, we continue to plan for a year of strong operating cash flow,
gross margin expansion, increased advertising investment and
low-single-digit earnings per share growth on a dollar basis.”

At 11:00 a.m. ET today, Colgate will host a conference call to elaborate
on first quarter results. To access this call as a webcast, please go to
Colgate’s website at http://www.colgatepalmolive.com.

The following are comments about divisional performance for first
quarter 2017 versus the year ago period. See attached Geographic Sales
Analysis Percentage Changes and Segment Information tables for
additional information on divisional net sales and operating profit.

North America (20% of Company Sales)

North America Net sales decreased 5.0% in first quarter 2017. Unit
volume decreased 5.0% with 0.5% lower pricing, while foreign exchange
was positive 0.5%. Organic sales for North America decreased 5.5%,
reflecting the impact of market share losses during the quarter from a
portfolio transition within our home care business, retailer inventory
reductions and a further slowdown in category growth.

Operating profit in North America decreased 3% in first quarter 2017 to
$233 million, while as a percentage of Net sales, it increased 80 basis
points to 30.7% of Net sales. This increase in Operating profit as a
percentage of Net sales was due to a decrease in Selling, general and
administrative expenses, partially offset by a decrease in Gross profit,
both as a percentage of Net sales. This decrease in Gross profit was
primarily driven by higher raw and packaging material costs, partially
offset by cost savings from the Company’s funding-the-growth initiatives
and the 2012 Restructuring Program. This decrease in Selling, general
and administrative expenses was due to lower overhead expenses and
decreased advertising due to the timing of advertising investment in the
prior year.

In the U.S., Colgate maintained its leadership in the toothpaste
category during the quarter with its market share at 35.6% year-to-date.
Successful new products include Colgate Total Clean-In-Between, Colgate
Optic White Beauty Radiant, Colgate Sensitive Smart White and Tom’s of
Maine Rapid Relief Sensitive toothpastes. In manual toothbrushes,
Colgate maintained its brand market leadership in the U.S. with its
market share in that category at 41.2% year-to-date, driven by strong
sales of Colgate Total 360° 4 Zone manual toothbrush.

New products succeeding in other categories include Colgate Total
Advanced Health and Colgate Kids mouthwashes, Colgate Total 360° Whole
Mouth Clean battery toothbrush and Softsoap Luminous Oils and Irish
Spring Signature For Men body washes.

Latin America (25% of Company Sales)

Latin America Net sales increased 9.0% in first quarter 2017. Unit
volume was even with the year ago quarter, while pricing increased 7.0%
and foreign exchange was positive 2.0%. Excluding the impact of divested
businesses, unit volume increased 0.5%. Volume gains in Mexico, the
Caribbean region and the Southern Cone region were offset by volume
declines in Brazil. Organic sales for Latin America increased 7.5%.

Operating profit in Latin America increased 9% in first quarter 2017 to
$269 million, while as a percentage of Net sales, it remained even at
29.1%. Operating profit as a percentage of Net sales was even with the
year ago quarter, as an increase in Gross profit was offset by an
increase in Selling, general and administrative expenses, both as a
percentage of Net sales. This increase in Gross profit was mainly driven
by cost savings from the Company’s funding-the-growth initiatives and
higher pricing, which were partially offset by higher raw and packaging
material costs. This increase in Selling, general and administrative
expenses was due to higher overhead expenses and increased advertising
investment.

Colgate maintained its leadership in toothpaste in Latin America during
the quarter, with market share gains in Mexico, Peru, the Dominican
Republic, Puerto Rico and Paraguay. Strong sales of Colgate Total
Professional Daily Repair, Colgate Triple Action Extra Whitening,
Colgate Sensitive Pro-Alivio and Colgate Max Fresh toothpastes
contributed to volume growth throughout the region. Colgate’s leadership
in the manual toothbrush category continued throughout the region,
driven by strong sales of Colgate Triple Action manual toothbrush.

Products in other categories contributing to growth throughout the
region include Colgate Plax Ice Glacial mouthwash, Protex Pro-Hidrata
shower gel, bar soap and liquid hand soap, Palmolive Natural Secrets
shower gel and bar soap, Suavitel Sweet Pleasures fabric conditioner,
Axion Active Foam dish liquid and Fabuloso Perfect Fusion liquid cleaner.

Europe (15% of Company Sales)

Europe Net sales decreased 5.0% in first quarter 2017. Unit volume
increased 0.5%, pricing decreased 1.0% and foreign exchange was negative
4.5%. Volume gains led by the United Kingdom, Spain and the Netherlands
were partially offset by volume declines in France. Organic sales for
Europe decreased 0.5%.

Operating profit in Europe decreased 1% in first quarter 2017 to $140
million, while as a percentage of Net sales it increased 110 basis
points to 25.1% of Net sales. This increase in Operating profit as a
percentage of Net sales was due to a decrease in Selling, general and
administrative expenses, partially offset by a decrease in Gross profit,
both as a percentage of Net sales. This decrease in Gross profit was
primarily driven by higher raw and packaging material costs, which
included foreign exchange transaction costs, and lower pricing due to
increased in-store promotional activities. These decreases in Gross
profit were partially offset by cost savings from the Company’s
funding-the-growth initiatives and the 2012 Restructuring Program and
sales mix. This decrease in Selling, general and administrative expenses
was due to decreased advertising, due to the timing of advertising
investment in the prior year, and lower overhead expenses.

Colgate maintained its oral care leadership in Europe during the
quarter, with toothpaste market share gains in Italy, Ireland, Czech
Republic, Slovenia, Bosnia and Bulgaria. Premium products succeeding in
oral care include Colgate Enamel Strength, Colgate Natural Extracts and
meridol Parodont Expert toothpastes, Colgate 360° Advanced Whole Mouth
Health and Colgate 360° Advanced Max White Expert White manual
toothbrushes and Colgate MinionsTM interactive battery
powered brush for kids.

Premium innovations succeeding in other product categories include Sanex
Zero% shower gel and deodorant, Palmolive Naturals with precious oils
and Palmolive Gourmet shower gels, Sanex Men 7in1 deodorant, Paic
Extreme dish liquid, the Ajax Optimal7 range of multi-benefit cleaners
available in liquid, spray and wipes and Soupline Parfum Supreme line of
fabric conditioner products.

Asia Pacific (19% of Company Sales)

Asia Pacific Net sales decreased 3.0% during first quarter 2017. Unit
volume decreased 1.0%, pricing was even with the year ago quarter and
foreign exchange was negative 2.0%. Volume declines in India, the
Greater China region and Thailand were partially offset by volume gains
in the South Pacific region, Vietnam and the Philippines. Organic sales
for Asia Pacific decreased 1.0%.

Operating profit in Asia Pacific was $219 million in first quarter 2017,
even with first quarter 2016, while as a percentage of Net sales it
increased 90 basis points to 30.4% of Net sales. This increase in
Operating profit as a percentage of Net sales was due to an increase in
Gross profit and a decrease in Selling, general and administrative
expenses, both as a percentage of Net sales. This increase in Gross
profit was mainly driven by cost savings from the Company’s
funding-the-growth initiatives, partially offset by higher raw and
packaging material costs, which included foreign exchange transaction
costs. This decrease in Selling, general and administrative expenses was
due to decreased advertising, in part reflecting a shift from
advertising investment to in-store promotional activities and due to the
timing of advertising investment in the prior year, which was partially
offset by higher overhead expenses.

Colgate continued its toothpaste leadership in the Asia Pacific region
during the quarter with market share gains in the Philippines and
Singapore. New products succeeding in the region include Colgate Total
Pro Breath Health, Colgate Natural, Colgate Sensitive Pro-Relief Extra
Protect and Colgate Sensitive Pro-Relief Smart White toothpastes.

New products succeeding in other categories in the region include
Colgate Slim Soft Advanced, Colgate 360° Advanced and Colgate Peppa PigTM
manual toothbrushes, Colgate Plax Ice Infinity and Colgate Plax Spicy
Fresh mouthwashes, Protex Thai Therapy bar soap, Ajax Spray n’ Wipe
cleaners and Softlan Gentle Care and Softlan Charcoal Cupboard Fresh
fabric conditioners.

Africa/Eurasia (6% of Company Sales)

Africa/Eurasia Net sales increased 6.5% during first quarter 2017. Unit
volume decreased 6.5%, pricing increased 7.0% and foreign exchange was
positive 6.0%. Volume declines in the Sub Saharan Africa region and
Russia were partially offset by volume gains in the North Africa/Middle
East region. Organic sales for Africa/Eurasia increased 0.5%.

Operating profit in Africa/Eurasia increased 5% in first quarter 2017 to
$45 million, while as a percentage of Net sales it decreased 30 basis
points to 18.3% of Net sales. This decrease in Operating profit as a
percentage of Net sales was primarily due to an increase in Selling,
general and administrative expenses, partially offset by an increase in
Gross profit, both as a percentage of Net sales. This increase in Gross
profit was primarily driven by higher pricing, cost savings from the
Company’s funding-the-growth initiatives and lower raw and packaging
material costs, driven by foreign exchange transaction gains. This
increase in Selling, general and administrative expenses was due to
increased advertising investment and higher overhead expenses.

Colgate continued its toothpaste leadership in Africa/Eurasia during the
quarter, with market share gains in Saudi Arabia, the United Arab
Emirates, Kazakhstan, Morocco, Lebanon, Qatar and Jordan. Successful
products contributing to sales in the region include Colgate Total Pro
Breath Health, Colgate Optic White Lasting White and Colgate Maximum
Cavity Protection toothpastes, and Colgate Zig Zag Charcoal and Colgate
Double Action manual toothbrushes.

Hill’s Pet Nutrition (15% of Company Sales)

Hill’s Net sales increased 0.5% in first quarter 2017. Unit volume
decreased 4.0% with 4.0% higher pricing and foreign exchange was
positive 0.5%. Volume declines in the United States, Western Europe and
Turkey were partially offset by volume gains in South Africa, Russia and
Thailand. Hill’s organic sales were even with the year ago quarter.

Hill’s Operating profit increased 1% in first quarter 2017 to $157
million, or 20 basis points to 28.3% of Net sales. This increase in
Operating profit as a percentage of Net sales was primarily due to an
increase in Gross profit, partially offset by an increase in Selling,
general and administrative expenses, both as a percentage of Net sales.
This increase in Gross profit was mainly driven by cost savings from the
Company’s funding-the-growth initiatives and higher pricing, partially
offset by higher costs, driven by higher raw and packaging material
costs. This increase in Selling, general and administrative expenses was
due to increased advertising investment and higher overhead expenses.

Successful products contributing to sales in the U.S. include Hill’s
Prescription Diet Dental Care Chews, Hill’s Prescription Diet z/d for
skin and food sensitivities, Hill’s Prescription Diet i/d and i/d Low
Fat Natural for digestive care and Metabolic Natural for weight
management, Hill’s Prescription Diet Derm Defense for environmental
sensitivities, Hill’s Science Diet Urinary and Hairball Control, Hill’s
Science Diet Perfect Weight and Hill’s Science Diet Youthful Vitality.

Successful products contributing to sales internationally include Hill’s
Prescription Diet Metabolic + Mobility and Metabolic + Urinary, Hill’s
Prescription Diet Derm Defense, Hill’s Prescription Diet z/d, Hill’s
Prescription Diet i/d, Hill’s Science Diet Perfect Weight, Hill’s
Science Diet Youthful Vitality and Hill’s Science Diet Healthy Cuisine
Stews.

***

About Colgate-Palmolive: Colgate-Palmolive is a leading global consumer
products company, tightly focused on Oral Care, Personal Care, Home Care
and Pet Nutrition. Colgate sells its products in over 200 countries and
territories around the world under such internationally recognized brand
names as Colgate, Palmolive, Speed Stick, Lady Speed Stick, Softsoap,
Irish Spring, Protex, Sorriso, Kolynos, elmex, Tom’s of Maine, Sanex,
Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science
Diet, Hill’s Prescription Diet and Hill’s Ideal Balance. For more
information about Colgate’s global business, visit the Company’s website
at http://www.colgatepalmolive.com.
To learn more about Colgate Bright Smiles, Bright Futures® oral health
education program, please visit http://www.colgatebsbf.com.
CL-E

Market Share Information

Management uses market share information as a key indicator to monitor
business health and performance. References to market share in this
press release are based on a combination of consumption and market share
data provided by third-party vendors, primarily Nielsen, and internal
estimates. All market share references represent the percentage of the
dollar value of sales of our products, relative to all product sales in
the category in the countries in which the Company competes and
purchases data (excluding Venezuela from all periods). The Company
measures year-to-date market shares from January 1 of the relevant year
through the most recent period for which market share data is available,
which typically reflects a lag time of one or two months. The Company
believes that the third-party vendors it uses to provide data are
reliable, but it has not verified the accuracy or completeness of the
data or any assumptions underlying the data. In addition, market share
information calculated by the Company may be different from market share
information calculated by other companies due to differences in category
definitions, the use of data from different countries, internal
estimates and other factors.

Cautionary Statement on Forward-Looking Statements

This press release and the related webcast may contain forward-looking
statements (as that term is defined in the U.S. Private Securities
Litigation Reform Act of 1995 or by the Securities and Exchange
Commission (SEC) in its rules, regulations and releases) that set forth
anticipated results based on management’s plans and assumptions. Such
statements may relate, for example, to sales or volume growth, organic
sales growth, profit or profit margin growth, earnings per share growth
(including on a currency-neutral basis), financial goals, the impact of
foreign exchange volatility, cost-reduction plans including the 2012
Restructuring Program, tax rates, the need to repatriate undistributed
earnings of foreign subsidiaries, new product introductions or
commercial investment levels, acquisitions, divestitures, or legal or
tax proceedings, among other matters. These statements are made on the
basis of our views and assumptions as of this time and we undertake no
obligation to update these statements whether as a result of new
information, future events or otherwise, except as required by law or by
the rules and regulations of the SEC. Moreover, the Company does not,
nor does any other person, assume responsibility for the accuracy and
completeness of these statements. We caution investors that any such
forward-looking statements are not guarantees of future performance and
that actual events or results may differ materially from those
statements. For more information about factors that could impact the
Company’s business and cause actual results to differ materially from
forward-looking statements, investors should refer to the Company’s
filings with the SEC (including, but not limited to, the information set
forth under the captions “Risk Factors” and “Cautionary Statement on
Forward-Looking Statements” in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2016 and subsequent Quarterly Reports on
Form 10-Q). Copies of these filings may be obtained upon request from
the Company’s Investor Relations Department or on the Company’s website
at http://www.colgatepalmolive.com.

Non-GAAP Financial Measures

The following provides information regarding the non-GAAP financial
measures used in this earnings release and/or the related webcast:

This release discusses Net sales growth (GAAP) and organic sales growth,
which is Net sales growth excluding the impact of foreign exchange,
acquisitions and divestments (non-GAAP). Management believes the organic
sales growth measure provides investors and analysts with useful
supplemental information regarding the Company’s underlying sales trends
by presenting sales growth excluding the external factor of foreign
exchange as well as the impact from acquisitions and divestments. See
“Geographic Sales Analysis Percentage Changes” for the three months
ended March 31, 2017 vs 2016 included with this release for a comparison
of organic sales growth to Net sales growth in accordance with GAAP.

To supplement Colgate’s Condensed Consolidated Statements of Income
presented in accordance with GAAP, the Company has disclosed non-GAAP
measures of operating results that exclude certain items. Worldwide
Gross profit, Gross profit margin, Selling, general and administrative
expenses, Selling, general and administrative expenses as a percentage
of Net sales, Other (income) expense, net, Operating profit, Operating
profit margin, Effective income tax rate, Net income attributable to
Colgate-Palmolive Company and Diluted earnings per common share are
discussed both as reported (on a GAAP basis) and excluding charges
resulting from the 2012 Restructuring Program (non-GAAP). These non-GAAP
financial measures exclude items that, either by their nature or amount,
management would not expect to occur as part of the Company’s normal
business on a regular basis, such as restructuring charges, charges for
certain litigation and tax matters, gains and losses from certain
divestitures and certain unusual, non-recurring items.

Contacts

Colgate-Palmolive Company
John Faucher, 212-310-3653
Hope
Spiller, 212-310-2291

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