Colgate Announces Positive Q1 2009 Earnings

Colgate-Palmolive Company reported net income and diluted earnings per share in the first quarter 2008 were $466.5 million and $.86, respectively, which included $21.2 million of aftertax charges related to its 2004 restructuring program. Excluding restructuring charges (which pertain only to 2008), net income and diluted earnings per share increased 4% and 8%, respectively.

Worldwide sales declined 5.5% during the first quarter to $3,502.8 million and unit volume declined 0.5%. Excluding divested businesses, worldwide sales declined 5.0% and unit volume was flat with the year ago period. Organic sales (excluding foreign exchange, acquisitions and divestments) grew 8.0%. Global pricing increased 8.0% and foreign exchange was negative 13.0%. Gross profit margin increased to 57.5% in first quarter 2009, from 56.6% in first quarter 2008. Excluding restructuring charges in 2008, gross profit margin increased 20 basis points to 57.5% in first quarter 2009 from 57.3% in first quarter 2008, reflecting the benefits of increased pricing and aggressive cost-savings programs, which more than offset the impact of higher raw and packaging material costs.

"We are delighted to begin 2009 with continued strong top-line momentum with organic sales increasing 8.0%," said Ian Cook, chairman, president and CEO, Colgate. "Also, our gross margin, operating margin and net profit as a percent to sales increased during the quarter, despite difficult economic conditions worldwide. Our cost-cutting and efficiency programs as well as increased pricing more than offset the impact during the quarter of higher raw and packaging material costs worldwide and the strengthening dollar. Value-added new products at various price points across categories continue to drive market share gains worldwide. Looking ahead, we have a very full new product pipeline for the balance of the year, which should contribute to positive unit volume growth in the second quarter and for the full year. We expect our strong organic sales growth to continue, driven by both positive volume and higher pricing."

Operating profit was $811.4 million and $745.7 million in first quarter 2009 and 2008, respectively. Excluding restructuring charges in 2008, operating profit rose 4% to $811.4 million in first quarter 2009 from $784.1 million in first quarter 2008, increasing to 23.2% from 21.1% as a percentage to sales.

In the U.S., new product launches are contributing to market share gains across categories. Market share gains year to date were seen in toothpaste, manual toothbrushes, power toothbrushes, liquid hand soap, body washes, hand dish liquid and liquid cleaners. In oral care, Colgate Max Fresh with Mouthwash Beads, Colgate Sensitive and Colgate Max White with Mini Bright Strips toothpastes contributed to the share gains. Colgate's toothpaste market share reached 36.9% year to date, up 0.5 share points versus year ago. Colgate's share of the manual toothbrush market reached a record 27.8% year to date, up 0.7 share points versus year ago, fueled by the success of Colgate 360° Deep Clean, Colgate Max Fresh and Colgate Max White manual toothbrushes.

Successful new products contributing to growth in the U.S. in other categories include Colgate 360° Sonic Power battery toothbrush, Softsoap Body Butter Apricot Scrub and Irish Spring Hair and Body and Cool Relief body washes, Softsoap Ensembles liquid hand soap, Palmolive Pure + Clear and Ajax Lime with Bleach Alternative dish liquids and Colgate Wisp, a first of its kind mini-brush with a breath freshening bead that is used without water, designed for on-the-go teeth cleaning and breath freshening.

Looking ahead, new product activity in the U.S. planned for second quarter 2009 includes full distribution and advertising support behind Colgate Wisp mini-brush and Colgate Sensitive Enamel Protect toothpaste.

Latin American sales declined 3.5% and unit volume increased 1.5%. Volume gains were led by Brazil, Venezuela, Colombia and Argentina. Europe/South Pacific sales and unit volume declined 20.0% and 4.0%, respectively. Greater Asia/Africa sales declined 3.0% and unit volume increased 3.5%.

The complete report is available here.

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