10-QPeriod: Q1 FY2015

COLGATE PALMOLIVE CO Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 30, 2015For Securities:CL

Summary

Colgate-Palmolive Company's first quarter 2015 results showed a year-over-year decline in net sales, primarily driven by unfavorable foreign currency exchange rates, which significantly impacted reported figures. Despite the top-line decrease, the company demonstrated resilience with a notable increase in operating profit and net income, largely due to effective cost management and a substantial improvement in gross profit margin. The company's "funding-the-growth" initiatives and restructuring programs are showing positive impacts on profitability. While overall sales were down, organic sales, which exclude currency fluctuations, showed positive growth across most segments, indicating underlying demand for Colgate's products. The company continues to manage its operations effectively in challenging global economic conditions, with a focus on innovation, cost efficiencies, and strategic market leadership. Investors should note the continued impact of foreign exchange and the company's ongoing restructuring efforts as key factors influencing reported financial performance.

Financial Highlights

49 data points
Beta

Revenue

$4.07B

58.8% Gross Margin

Net Income

$542.00M

13.3% Net Margin

EPS (Diluted)

$0.59

Total Assets

$13.16B

Cash & Equivalents

$859.00M

Free Cash Flow

$727.00M

Financial Statements
Beta
Revenue$4.07B
Cost of Revenue$1.68B
Gross Profit$2.39B
SG&A Expenses$1.45B
Operating Income$860.00M
Net Income$542.00M
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)907.70M
Shares Outstanding (Diluted)916.30M

Key Highlights

  • 1Net sales decreased by 6.0% to $4,070 million compared to the prior year quarter, significantly impacted by a 10.0% negative foreign exchange effect.
  • 2Organic sales (excluding foreign exchange, acquisitions, and divestitures) increased by 4.0%, demonstrating underlying business strength.
  • 3Operating profit increased by 36% to $860 million, and net income attributable to Colgate-Palmolive Company rose by 40% to $542 million.
  • 4Gross profit margin improved to 58.8% from 58.4% in the prior year quarter, driven by higher pricing and cost savings initiatives.
  • 5The company is actively executing its 'Global Growth and Efficiency Program,' incurring $100 million in pretax charges in the quarter, which is expected to yield significant long-term cost savings.
  • 6Diluted earnings per share increased to $0.59 from $0.42 in the prior year quarter.
  • 7The company's market share in global toothpaste and manual toothbrush categories saw slight increases.

Frequently Asked Questions

The primary reason for the decrease in reported net sales was the significant negative impact of foreign currency exchange rates, which reduced reported sales by 10.0% for the quarter.

The increase in operating profit and net income was driven by improved gross profit margin due to higher pricing and cost savings from 'funding-the-growth' initiatives and restructuring programs. The company also managed selling, general, and administrative expenses effectively.

The 'Global Growth and Efficiency Program' (also referred to as the '2012 Restructuring Program') is an ongoing initiative focused on expanding commercial hubs, extending shared business services, streamlining global functions, and optimizing the supply chain. In the first quarter of 2015, the company incurred $100 million in pretax charges related to this program, which is expected to drive long-term cost savings and efficiency improvements.

Approximately 50% of the company's net sales are generated from emerging markets. However, the operating environment in Venezuela remains challenging due to currency devaluations, high inflation, and governmental restrictions. The company is actively managing its exposure and investment in Venezuela, which represents about 4% of consolidated net sales.