10-QPeriod: Q1 FY2012

COLGATE PALMOLIVE CO Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 26, 2012For Securities:CL

Summary

Colgate-Palmolive Company reported a solid first quarter for 2012, with net sales increasing by 5.0% to $4.2 billion compared to the same period in 2011. This growth was driven by a combination of volume increases and strategic pricing, partially offset by unfavorable foreign exchange rates. Diluted earnings per share also saw a healthy increase to $1.23, up from $1.16 in the prior year, indicating improved profitability. The company's core Oral, Personal, and Home Care segment performed well, with notable growth in Latin America and Greater Asia/Africa. The acquisition of the Sanex business continued to contribute positively to sales. While raw material costs and certain one-time expenses impacted gross profit margins, the company's 'funding-the-growth' initiatives and pricing strategies helped to mitigate these pressures.

Financial Highlights

48 data points
Beta

Revenue

$4.20B

58.0% Gross Margin

Net Income

$593.00M

14.1% Net Margin

EPS (Diluted)

$0.61

Total Assets

$13.25B

Cash & Equivalents

$1.04B

Free Cash Flow

$662.00M

Financial Statements
Beta
Revenue$4.20B
Cost of Revenue$1.76B
Gross Profit$2.44B
SG&A Expenses$1.48B
Operating Income$938.00M
Net Income$593.00M
EPS (Basic)$0.62
EPS (Diluted)$0.61
Shares Outstanding (Basic)960.20M
Shares Outstanding (Diluted)967.80M

Key Highlights

  • 1Net sales increased by 5.0% to $4.2 billion in Q1 2012, driven by 3.5% volume growth and 3.5% price increases.
  • 2Diluted Earnings Per Share (EPS) rose to $1.23 in Q1 2012, compared to $1.16 in Q1 2011, reflecting improved profitability.
  • 3The Oral, Personal, and Home Care segment saw a 6.0% increase in net sales, with Latin America and Greater Asia/Africa showing robust growth.
  • 4The Sanex acquisition, completed in June 2011, contributed positively to net sales and volume growth.
  • 5Gross profit margin slightly decreased to 58.0% from 58.4% due to higher raw material costs, though offset by cost savings and pricing.
  • 6Operating profit increased by 3% to $938 million, despite some costs related to business realignments and the sale of land in Mexico.
  • 7Cash and cash equivalents increased by $166 million to $1,044 million by the end of Q1 2012.

Frequently Asked Questions

Colgate-Palmolive's sales growth in the first quarter of 2012 was primarily driven by a combination of volume increases (3.5%) and net selling price increases (3.5%), which together offset a negative foreign exchange impact. The acquisition of the Sanex business also contributed positively to sales.

Profitability improved in the first quarter of 2012. Net income attributable to Colgate-Palmolive Company increased to $593 million from $576 million in the prior year. Diluted earnings per share rose to $1.23 from $1.16, a 6% increase, and on a non-GAAP basis (excluding certain costs), it increased by 7% to $1.24.

The company faces several challenges, including global macroeconomic uncertainties, heightened competition from multinational companies, volatile foreign currency fluctuations, high commodity costs, and specific operational challenges in Venezuela such as currency devaluations, inflation, and governmental controls on imports and pricing. The company also faces ongoing investigations and potential fines related to competition law matters in Europe.

Colgate-Palmolive expects capital expenditures for 2012 to be around 3.5% of net sales. The company demonstrated its commitment to shareholder returns by increasing its annualized common stock dividend by 7% to $2.48 per share effective in the second quarter of 2012 and has an active share repurchase program in place.