10-QPeriod: Q1 FY2018

COLGATE PALMOLIVE CO Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 27, 2018For Securities:CL

Summary

Colgate-Palmolive Company reported a strong first quarter for 2018, with net sales increasing by 6.5% to $4,002 million compared to the prior year. This growth was driven by a combination of volume increases (2.0%), positive foreign exchange impacts (4.5%), and a modest contribution from recent acquisitions in the professional skin care category. Organic sales, which exclude foreign exchange and acquisition impacts, grew by 1.5%, indicating underlying business momentum. Profitability also showed improvement, with operating profit rising 8% to $983 million. Diluted earnings per share increased to $0.72 from $0.64 in the prior year. The company continues to execute its "Global Growth and Efficiency Program," which aims to streamline operations and reduce costs, contributing to efficiency gains despite increased raw material costs. Management remains focused on driving innovation, expanding market leadership, and managing costs to deliver long-term shareholder value in a challenging global economic environment.

Financial Highlights

49 data points
Beta

Revenue

$4.00B

60.2% Gross Margin

Net Income

$634.00M

15.8% Net Margin

EPS (Diluted)

$0.72

Total Assets

$13.14B

Cash & Equivalents

$851.00M

Free Cash Flow

$616.00M

Financial Statements
Beta
Revenue$4.00B
Cost of Revenue$1.59B
Gross Profit$2.41B
SG&A Expenses$1.39B
Operating Income$983.00M
Net Income$634.00M
EPS (Basic)$0.72
EPS (Diluted)$0.72
Shares Outstanding (Basic)875.40M
Shares Outstanding (Diluted)879.90M

Key Highlights

  • 1Net sales increased by 6.5% to $4,002 million in Q1 2018, driven by volume growth and favorable foreign exchange.
  • 2Organic sales grew by 1.5%, demonstrating underlying business strength.
  • 3Operating profit increased by 8% to $983 million, showcasing improved profitability.
  • 4Diluted Earnings Per Share (EPS) rose to $0.72 from $0.64 in the prior year's quarter.
  • 5The company completed the acquisition of professional skin care businesses, Physicians Care Alliance and Elta MD, for approximately $730 million.
  • 6The "Global Growth and Efficiency Program" is on track, contributing to cost savings and operational improvements.
  • 7Gross profit margin slightly decreased by 10 basis points to 60.2% due to higher raw and packaging material costs, though this was partially offset by cost savings initiatives.

Frequently Asked Questions

Colgate-Palmolive's sales growth of 6.5% to $4,002 million was primarily driven by a 2.0% increase in volume and a 4.5% positive impact from foreign exchange. The acquisition of professional skin care businesses also contributed to volume growth.

The "Global Growth and Efficiency Program" is an ongoing initiative focused on streamlining operations, optimizing the supply chain, and reducing costs. While it involves restructuring charges, the program is designed to generate annual savings of $560 to $635 million pretax. In Q1 2018, the program contributed to efficiency gains and cost savings, helping to offset increases in raw material costs.

Colgate-Palmolive anticipates challenging global macroeconomic and market conditions with continued low category growth. The company expects heightened competition and potential volatility from foreign currency fluctuations and raw material costs. However, management believes its strong financial condition, global brand strength, and focus on key priorities like innovation and efficiency position it well to navigate these challenges and enhance shareholder value.

Yes, in January 2018, Colgate-Palmolive acquired Physicians Care Alliance, LLC and Elta MD Holdings, Inc., which are professional skin care businesses, for approximately $730 million. These acquisitions have expanded the company's presence in the skin care category.