10-QPeriod: Q3 FY2013

COLGATE PALMOLIVE CO Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 24, 2013For Securities:CL

Summary

Colgate-Palmolive Company reported net sales of $4,398 million for the third quarter of 2013, a 1.5% increase over the prior year, driven by a 5.0% volume increase, partially offset by a 4.5% negative foreign exchange impact. Organic sales, excluding foreign exchange and acquisitions/divestitures, grew a healthy 6.0%. Net income attributable to the company was $656 million, with diluted EPS of $0.70, a slight increase from $0.69 in the prior year period. The company is actively managing a global restructuring program initiated in 2012, which is expected to yield significant cost savings over the next few years, though it incurred charges in the current quarter. Investments in advertising and promotional activities remain a key focus to drive brand growth.

Financial Highlights

49 data points
Beta

Revenue

$4.40B

58.8% Gross Margin

Net Income

$656.00M

14.9% Net Margin

EPS (Diluted)

$0.70

Total Assets

$13.44B

Cash & Equivalents

$721.00M

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$4.40B
Cost of Revenue$1.81B
Gross Profit$2.58B
SG&A Expenses$1.55B
Operating Income$1.02B
Net Income$656.00M
EPS (Basic)$0.71
EPS (Diluted)$0.70
Shares Outstanding (Basic)928.10M
Shares Outstanding (Diluted)936.90M

Key Highlights

  • 1Net sales increased 1.5% to $4,398 million in Q3 2013, with organic sales up 6.0%.
  • 2Diluted EPS rose to $0.70 from $0.68 in the prior year's third quarter.
  • 3The company is executing a global restructuring program (2012 Restructuring Program) with ongoing charges and projected future savings.
  • 4Gross profit margin improved to 58.8% from 58.4% year-over-year, driven by pricing and cost savings.
  • 5Significant investments were made in advertising and promotion, with SG&A expenses as a percentage of net sales increasing.
  • 6The company continues to experience challenges and manage the impact of currency devaluation and inflation in Venezuela.
  • 7Shareholders received a 10% increase in the annualized common stock dividend and a two-for-one stock split was approved and effected.

Frequently Asked Questions

Colgate-Palmolive reported a modest 1.5% increase in net sales to $4,398 million for the third quarter of 2013 compared to the same period in 2012. While volume growth was strong at 5.0%, this was partially offset by a negative foreign exchange impact. Organic sales, which exclude foreign exchange and M&A impacts, grew a more robust 6.0%. Net income attributable to the company was stable at $656 million, leading to a slight increase in diluted EPS to $0.70 from $0.68.

The company incurred $30 million in pretax charges related to the 2012 Restructuring Program in the third quarter of 2013. While these charges impacted reported profitability, the program is expected to generate substantial cost savings of $365 to $435 million annually by its fourth year. Management views this program as crucial for driving future growth and efficiency.

The report notes ongoing challenges in Venezuela due to currency devaluation and inflation, which negatively impacted reported results. However, the company also highlighted strong organic sales growth in key emerging markets such as Asia and Latin America, indicating continued opportunities for expansion in these regions. Geographic diversification, with 80% of net sales outside the U.S., helps mitigate country-specific risks.

Colgate-Palmolive is focusing on 'funding-the-growth' initiatives to improve efficiency and reduce costs. Gross profit margin improved to 58.8% in Q3 2013, driven by higher pricing and cost savings from these initiatives, which helped offset increased raw material costs. The company also increased advertising investment to support brand growth, leading to a slight rise in SG&A expenses as a percentage of net sales.