10-QPeriod: Q3 FY2012

COLGATE PALMOLIVE CO Quarterly Report for Q3 Ended Sep 30, 2012

Filed October 25, 2012For Securities:CL

Summary

Colgate-Palmolive Co. reported its third-quarter and nine-month results for the period ending September 30, 2012. For the third quarter, net sales saw a slight decrease of 1.0% year-over-year, primarily due to unfavorable foreign exchange rates, although organic sales (excluding FX, acquisitions, and divestitures) grew by 5.0%. Diluted earnings per share (EPS) increased to $1.36 from $1.31 in the prior year's third quarter. For the nine-month period, net sales increased by 2.0%, with organic sales growing by 6.5%. Diluted EPS for the nine months rose to $3.89 from $3.73 in the comparable period of 2011. The company highlighted strong performance in the Greater Asia/Africa region and Pet Nutrition segment, while Europe/South Pacific experienced a decline in net sales. A significant new initiative, the "Global Growth and Efficiency Program," was announced, expecting substantial restructuring charges and future cost savings. The company also noted ongoing challenges related to global macroeconomic conditions, competition, and currency fluctuations, particularly in Venezuela.

Financial Highlights

49 data points
Beta

Revenue

$4.33B

58.4% Gross Margin

Net Income

$654.00M

15.1% Net Margin

EPS (Diluted)

$0.68

Total Assets

$13.42B

Cash & Equivalents

$909.00M

Free Cash Flow

$940.00M

Financial Statements
Beta
Revenue$4.33B
Cost of Revenue$1.80B
Gross Profit$2.53B
SG&A Expenses$1.50B
Operating Income$1.03B
Net Income$654.00M
EPS (Basic)$0.69
EPS (Diluted)$0.68
Shares Outstanding (Basic)949.80M
Shares Outstanding (Diluted)958.40M

Key Highlights

  • 1Third-quarter net sales decreased by 1.0% to $4,332 million, but organic sales increased by 5.0%, indicating underlying business growth.
  • 2Diluted earnings per share (EPS) rose to $1.36 for the third quarter of 2012, up from $1.31 in the same period of 2011.
  • 3For the first nine months of 2012, net sales increased by 2.0% to $12,799 million, with organic sales showing robust growth of 6.5%.
  • 4Diluted EPS for the nine-month period improved to $3.89 from $3.73 in the prior year.
  • 5The Greater Asia/Africa segment demonstrated strong performance with a 5.0% increase in net sales and 14% increase in operating profit for the third quarter.
  • 6A new "Global Growth and Efficiency Program" was announced, expected to incur $1.1 billion to $1.25 billion in pretax charges over four years, with projected annual savings of $365 to $435 million by its fourth year.
  • 7The company continues to operate in a challenging global environment, facing volatile foreign currency fluctuations and increased competition.

Frequently Asked Questions

Colgate-Palmolive reported a slight decrease in net sales of 1.0% to $4,332 million compared to the third quarter of 2011. However, organic sales, which exclude the impact of foreign exchange, acquisitions, and divestitures, increased by a healthy 5.0%. Net income attributable to Colgate-Palmolive Company increased by 2% to $654 million, and diluted earnings per share (EPS) rose to $1.36 from $1.31 in the prior year.

Performance varied by segment. North America saw a 2.5% net sales increase. Latin America's net sales remained flat, though organic sales grew 9.0%. Europe/South Pacific experienced an 11.0% decline in net sales, partly due to foreign exchange impacts and volume decreases. The Greater Asia/Africa segment showed strong growth with a 5.0% increase in net sales and a significant 14% rise in operating profit.

Colgate-Palmolive announced a new "Global Growth and Efficiency Program" to be implemented over four years. This program is designed to drive sustained growth, enhance efficiency, and reduce structural costs. It is expected to result in cumulative pretax charges between $1.1 billion and $1.25 billion, but also projected annual savings of $365 to $435 million by the fourth year. The program involves initiatives like expanding commercial hubs, extending shared business services, and optimizing the global supply chain.

The company highlighted ongoing challenges, including a difficult global macroeconomic environment, volatile foreign currency fluctuations, and heightened competitive activity. Specific concerns were raised regarding operating in Venezuela due to economic uncertainty, currency devaluations, inflation, and governmental restrictions like import authorization controls and price controls. These factors could adversely affect future operating results and the ability to repatriate earnings.