10-QPeriod: Q2 FY2014

COLGATE PALMOLIVE CO Quarterly Report for Q2 Ended Jun 30, 2014

Filed July 31, 2014For Securities:CL

Summary

Colgate-Palmolive Company's second quarter of 2014 reported flat net sales compared to the prior year, reaching $4,352 million. This stability was achieved despite a 4.0% negative impact from foreign exchange, as volume growth of 2.5% and a 1.5% increase in net selling prices helped offset this headwind. The company's organic sales, which exclude currency fluctuations, grew by a healthy 4.0%. Diluted earnings per share (EPS) increased to $0.67 from $0.60 in the prior year's second quarter, reflecting improved operational efficiencies and a favorable tax rate. The company continues to navigate challenging global macroeconomic conditions, including volatile foreign currency exchange rates and increased competition. Significant efforts are underway through the '2012 Restructuring Program' to drive efficiency and cost savings, which contributed positively to gross profit margin. The company also highlighted the significant impact of the Venezuelan economic situation, including currency devaluation and new foreign exchange regulations, which resulted in a substantial pretax loss in the first quarter of 2014. Despite these challenges, Colgate-Palmolive remains focused on its core strategies of brand building, innovation, and operational efficiency to drive long-term shareholder value.

Financial Highlights

49 data points
Beta

Revenue

$4.35B

58.6% Gross Margin

Net Income

$622.00M

14.3% Net Margin

EPS (Diluted)

$0.67

Total Assets

$13.99B

Cash & Equivalents

$1.16B

Free Cash Flow

$569.00M

Financial Statements
Beta
Revenue$4.35B
Cost of Revenue$1.80B
Gross Profit$2.55B
SG&A Expenses$1.51B
Operating Income$980.00M
Net Income$622.00M
EPS (Basic)$0.68
EPS (Diluted)$0.67
Shares Outstanding (Basic)916.10M
Shares Outstanding (Diluted)925.90M

Key Highlights

  • 1Net sales for the three months ended June 30, 2014, were $4,352 million, largely flat compared to $4,346 million in the same period of 2013.
  • 2Organic sales (excluding foreign exchange, acquisitions, and divestitures) increased by 4.0% for the quarter, indicating underlying business strength.
  • 3Diluted earnings per share (EPS) rose to $0.67 in Q2 2014, up from $0.60 in Q2 2013.
  • 4Gross profit margin improved to 58.6% from 58.3% year-over-year, driven by pricing and cost savings initiatives.
  • 5The company incurred a significant pretax loss of $266 million in Q1 2014 due to the remeasurement of its Venezuelan subsidiary's financial statements following currency devaluation and new foreign exchange regulations.
  • 6Operating profit increased by 8% to $980 million in the second quarter of 2014.
  • 7The company's '2012 Restructuring Program' is progressing, with expected cumulative pretax charges between $1,100 million and $1,250 million, aimed at driving long-term efficiency and cost savings.

Frequently Asked Questions

Net sales remained flat at $4,352 million because volume growth of 2.5% and a 1.5% increase in net selling prices were offset by a 4.0% negative impact from foreign currency exchange rates. The company's organic sales, which exclude these currency effects, grew by 4.0%, indicating underlying sales momentum.

The economic and currency situation in Venezuela led to a substantial pretax loss of $266 million in the first quarter of 2014 due to the remeasurement of the Venezuelan subsidiary's financial statements following currency devaluation and new foreign exchange regulations. The company continues to manage its operations in Venezuela under challenging conditions, including currency controls and high inflation.

Colgate-Palmolive is actively executing its '2012 Restructuring Program,' which aims to improve efficiency and reduce costs. This program involves initiatives like expanding commercial hubs, extending shared business services, and optimizing the global supply chain. These efforts contributed to a 20 basis point increase in gross profit margin for the quarter.

The company anticipates challenging global macroeconomic and market conditions, including volatile foreign currency fluctuations and heightened competition. However, Colgate-Palmolive believes its strong financial position, diversified geographic presence, ongoing strategic initiatives, and brand strength will enable it to navigate these challenges and create long-term shareholder value.