10-QPeriod: Q1 FY2009

COLGATE PALMOLIVE CO Quarterly Report for Q1 Ended Mar 31, 2009

Filed April 30, 2009For Securities:CL

Summary

Colgate-Palmolive Company reported its first-quarter results for the period ending March 31, 2009, demonstrating resilience in a challenging global economic environment. The company reported a net sales decrease of 5.5% to $3,502.8 million, primarily due to a significant negative foreign exchange impact of 13.0%, while net selling price increases of 8.0% partially offset a slight volume decline of 0.5%. Despite the top-line pressure from currency headwinds, Colgate-Palmolive achieved an 8.0% increase in organic sales, indicating strong underlying business performance driven by pricing strategies and product innovation. Profitability saw a notable improvement, with net income rising to $507.9 million from $466.5 million in the prior year, leading to a diluted earnings per share of $0.97, up from $0.86. This improvement was driven by a higher gross profit margin (57.5% vs. 56.6%), a decrease in selling, general, and administrative expenses as a percentage of sales, and a significant reduction in restructuring charges compared to the prior year. The company also announced an increase in its annualized common stock dividend, signaling confidence in its financial stability and future prospects.

Financial Highlights

19 data points
Beta

Revenue

$3.50B

57.5% Gross Margin

Net Income

$508.00M

14.5% Net Margin

EPS (Diluted)

$0.48

Cash & Equivalents

$702.00M

Free Cash Flow

$690.00M

Financial Statements
Beta
Revenue$3.50B
Cost of Revenue$1.49B
Gross Profit$2.01B
SG&A Expenses$1.19B
Operating Income$811.00M
Net Income$508.00M
EPS (Basic)$0.50
EPS (Diluted)$0.48

Key Highlights

  • 1Net sales decreased by 5.5% to $3,502.8 million, largely impacted by a negative foreign exchange of 13.0%.
  • 2Organic sales grew by 8.0%, demonstrating strong underlying performance despite currency headwinds and divestitures.
  • 3Net income increased by 8.9% to $507.9 million, with diluted EPS rising to $0.97 from $0.86 in the prior year.
  • 4Gross profit margin improved to 57.5% from 56.6% (adjusted for restructuring charges), driven by higher pricing and cost savings.
  • 5Selling, general, and administrative expenses as a percentage of net sales decreased to 33.9% from 36.3%, aided by lower advertising spend and absence of restructuring charges.
  • 6Net cash provided by operations increased by 21% to $690.2 million, reflecting improved profitability and lower restructuring program spending.
  • 7The company increased its annualized common stock dividend by 10% to $1.76 per share.

Frequently Asked Questions

The primary driver for the decrease in net sales was a significant negative foreign exchange impact of 13.0%. While net selling price increases helped offset this, they were not enough to fully compensate for the currency headwinds and a slight volume decline.

Colgate-Palmolive improved profitability through a combination of strategies. This included higher net selling price increases, a continued focus on cost-savings programs, a reduction in advertising spending, and the absence of significant restructuring charges compared to the prior year. The gross profit margin also saw an improvement.

The company acknowledges that global macroeconomic and market conditions are expected to remain challenging. However, they believe they are well-prepared due to their strong financial condition, experience operating in difficult environments, and continued focus on strategic initiatives such as innovation, cost-effectiveness, and global brand strength. The benefits from easing commodity prices and ongoing savings programs are expected to offset the impact of a stronger dollar.

Colgate-Palmolive demonstrated its commitment to shareholder returns by increasing the annualized common stock dividend by 10% to $1.76 per share. They also continued with their share repurchase program, repurchasing over 3.2 million shares during the quarter.