10-KPeriod: FY2012

COLGATE PALMOLIVE CO Annual Report, Year Ended Dec 31, 2012

Filed February 21, 2013For Securities:CL

Summary

Colgate-Palmolive Company's 2012 10-K report highlights a year of steady growth, with consolidated net sales increasing by 2.0% to $17,085 million. This growth was driven by a 3.0% increase in volume and a 3.0% rise in net selling prices, partially offset by a 4.0% negative impact from foreign exchange. Organic sales, excluding foreign exchange, acquisitions, and divestments, grew by a strong 6.0%, indicating robust underlying business performance. The company operates two primary segments: Oral, Personal and Home Care, and Pet Nutrition. The Oral, Personal and Home Care segment, accounting for the majority of sales, saw a 2.5% increase in net sales, driven by volume and pricing. The Pet Nutrition segment experienced a slight decrease of 0.5% in net sales. Geographically, approximately 80% of net sales originated from outside the U.S., with a significant portion from emerging markets, which helps diversify risk but also exposes the company to currency fluctuations and economic instability, as noted in Venezuela.

Financial Highlights

55 data points
Beta

Revenue

$17.09B

58.1% Gross Margin

Net Income

$2.47B

14.5% Net Margin

EPS (Diluted)

$2.57

Total Assets

$13.39B

Cash & Equivalents

$884.00M

Free Cash Flow

$2.63B

Financial Statements
Beta
Revenue$17.09B
Cost of Revenue$7.15B
Gross Profit$9.93B
R&D Expenses$259.00M
SG&A Expenses$5.93B
Operating Income$3.89B
Interest Expense$81.00M
Net Income$2.47B
EPS (Basic)$2.60
EPS (Diluted)$2.57
Shares Outstanding (Basic)952.10M
Shares Outstanding (Diluted)960.20M

Key Highlights

  • 1Colgate-Palmolive reported a 2.0% increase in consolidated net sales to $17,085 million in 2012, driven by volume and pricing, despite negative foreign exchange impacts.
  • 2Organic sales grew by 6.0% in 2012, demonstrating underlying business strength excluding currency fluctuations, acquisitions, and divestments.
  • 3The Oral, Personal and Home Care segment is the largest contributor to revenue, while Hill's Pet Nutrition saw a slight sales decline.
  • 4Approximately 80% of net sales are generated internationally, highlighting the company's global reach and diversification, but also its exposure to foreign currency risks.
  • 5The company initiated a four-year Global Growth and Efficiency Program (2012 Restructuring Program) in Q4 2012, with projected pretax charges of $1.1 to $1.25 billion and estimated annual savings of $365 to $435 million by its fourth year.
  • 6Cash flow from operations remained strong at $3,196 million in 2012, supporting debt service, dividends, capital expenditures, and share repurchases.
  • 7The company actively returned capital to shareholders through dividends and share repurchases, with total repurchases of $1,943 million in 2012.

Frequently Asked Questions

Colgate-Palmolive's strategy focuses on providing consumers globally with products that enhance health and enjoyment, aiming to increase market leadership in key product categories within its two main segments: Oral, Personal and Home Care; and Pet Nutrition. The company operates globally, with a significant portion of sales derived from international markets.

In 2012, Colgate-Palmolive achieved a 2.0% increase in net sales to $17,085 million, with organic sales growth of 6.0%. Gross profit margin improved to 58.1% (GAAP) from 57.3% in 2011, and diluted earnings per share increased to $5.15 from $4.94 in the prior year. Operating profit saw a modest increase of 1% to $3,889 million.

Key risks include significant exposure to international operations, leading to currency fluctuations and political/economic instability (particularly highlighted in Venezuela). Other risks involve intense competition, increasing dependence on key retailers, challenges in developing and launching innovative products, potential impacts from the 2012 Restructuring Program, volatility in material costs, reputational damage, product liability claims, and regulatory risks across its global operations.

The company manages international exposure through a combination of cost-containment, price increases, and selective hedging, although these measures may not always fully offset negative impacts. To drive future growth and efficiency, Colgate-Palmolive launched the 2012 Restructuring Program, a four-year initiative involving significant charges but aiming for substantial annual savings through organizational simplification, shared services, and supply chain optimization.