01—Abstract
Summary
Summary of the 10-K filed February 27, 2009. Cited figures are marked; the original filing is the authoritative source.
Colgate-Palmolive Company's 2008 10-K filing reflects a company demonstrating resilience and growth amidst a challenging global economic environment.
The company reported a 11.0% increase in worldwide net sales to $15.3 billiona, driven by a combination of volume growth, price increases, and positive foreign exchange impacts. This growth was observed across both its Oral, Personal and Home Care segment and its Pet Nutrition segment, with particularly strong performance in Latin America and Greater Asia/Africa. The company successfully finalized its significant 2004 Restructuring Program, which aimed to enhance global leadership positions and streamline operations.
This program is expected to contribute to future cash flows and profitability. Despite facing risks from international operations, currency fluctuations, and the broader economic downturn, Colgate-Palmolive maintained robust operations and a strong focus on innovation and cost-saving initiatives. The company also continued its commitment to shareholder returns through consistent dividend payments and active share repurchase programs.
02—Key points
Key Highlights
- Worldwide Net Sales grew 11.0% to $15.3 billion in 2008, driven by volume (3.5%), pricing (5.5%), and foreign exchange (2.0%).
- The company finalized its comprehensive 2004 Restructuring Program, which incurred $1,069.2 million in pretax charges but is projected to yield annual savings of $475-$500 million.
- Operating profit increased by 14% to $3,020.7 million, with double-digit growth in organic sales excluding the impact of divestitures in most segments.
- Hill's Pet Nutrition segment showed strong performance with a 15.5% increase in net sales, driven by a 10.5% increase in selling prices.
- The company maintained access to significant credit facilities, with $2.6 billion in unused domestic and foreign lines of credit at year-end 2008.
- Colgate-Palmolive continued to return capital to shareholders, with dividend payments increasing to $1.56 per share in 2008 and ongoing share repurchase programs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Colgate-Palmolive kept $0.13.
- Revenue$15.33B100.0%
- Cost of revenue−$6.70B43.7%
- Gross profit$8.63B56.3%
- Operating costs−$5.53B36.0%
- Operating income$3.10B20.2%
- Interest, other & tax−$1.14B7.5%
- Net income$1.96B12.8%
Where FY2008 revenue went
$15.33B- Cost of revenue: $6.70B, 44% of revenue
- SG&A: $5.42B, 35% of revenue
- Net income: $1.96B, 13% of revenue
- R&D: $240.0M, 1.6% of revenue
- Interest, other & tax: $1.14B, 7.5% of revenue
Kept 13% as net incomeNet income $1.96B · 13%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 27, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $15.33B$13.79B | +11.2% |
| Cost of Revenue | $6.70B$6.04B | +10.9% |
| Gross Profit | $8.63B$7.75B | +11.3% |
| R&D Expenses | $240.00M— | — |
| SG&A Expenses | $5.42B$4.97B | +9.0% |
| Operating Income | $3.10B$2.72B | +14.0% |
| Interest Expense | $115.00M— | — |
| Net Income | $1.96B$1.74B | +12.7% |
| EPS (Basic) | $1.91$1.68 | +13.7% |
| EPS (Diluted) | $1.83$1.60 | +14.4% |
| Shares Outstanding (Basic) | 1.01B— | — |
| Shares Outstanding (Diluted) | 1.07B— | — |
05—Questions
Frequently Asked Questions
What were the key drivers of Colgate-Palmolive's sales growth in 2008?
Colgate-Palmolive's net sales grew by 11.0% in 2008. This growth was primarily driven by a 3.5% increase in sales volume, a 5.5% increase in net selling prices, and a 2.0% positive impact from foreign exchange rates. The company also benefited from strong performance in emerging markets and its Pet Nutrition segment.
How did the 2004 Restructuring Program impact the company's financial performance?
The 2004 Restructuring Program, which was finalized in 2008, involved significant charges totaling $1,069.2 million pretax ($775.5 million aftertax) since its inception. However, it successfully streamlined the global supply chain and reallocated resources, leading to estimated annual savings of $475-$500 million. These savings are expected to enhance future cash flows and support increased profitability.
What are the primary risks facing Colgate-Palmolive, as highlighted in the filing?
The filing identifies several key risks, including significant exposure to international operations (approximately 75% of net sales are from outside the U.S.), which brings risks related to currency fluctuations, political/economic instability, and varying legal systems. Additionally, the company faces risks from the global credit crisis and economic downturn, intense competition, changes in retail customer policies, rising material costs, and potential damage to its reputation. Regulatory compliance is also a factor.
How did the company manage its financial resources and capital in 2008?
Colgate-Palmolive generated strong cash flow from operations ($2,238.3 million in 2008) and maintained significant access to credit facilities ($2,641.9 million in unused credit lines). The company continued to invest in capital expenditures ($683.5 million) primarily for growth initiatives and restructuring programs. It also returned capital to shareholders through dividend payments and share repurchases, while managing its debt levels.
06—Continue