10-QPeriod: Q1 FY2019

COLGATE PALMOLIVE CO Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 26, 2019For Securities:CL

Summary

Colgate-Palmolive Company's first quarter 2019 results, filed on April 25, 2019, showed a slight decrease in net sales to $3.88 billion from $4.00 billion in the prior year's quarter, largely due to unfavorable foreign exchange impacts. Despite this, organic sales grew by 3.0%, driven by a 1.0% volume increase and a 2.0% rise in net selling prices, indicating underlying business strength. Net income attributable to Colgate-Palmolive Company declined to $560 million ($0.65 per diluted share) from $634 million ($0.72 per diluted share) in the first quarter of 2018. This decline was influenced by higher raw and packaging material costs and increased advertising investment, partially offset by cost savings initiatives and a slight decrease in selling, general and administrative expenses. The company continues to execute its Global Growth and Efficiency Program, which is in its final year and aims to streamline operations and reduce costs.

Financial Highlights

50 data points
Beta

Revenue

$3.88B

58.9% Gross Margin

Net Income

$560.00M

14.4% Net Margin

EPS (Diluted)

$0.65

Total Assets

$12.88B

Cash & Equivalents

$843.00M

Free Cash Flow

$605.00M

Financial Statements
Beta
Revenue$3.88B
Cost of Revenue$1.60B
Gross Profit$2.29B
SG&A Expenses$1.36B
Operating Income$879.00M
Net Income$560.00M
EPS (Basic)$0.65
EPS (Diluted)$0.65
Shares Outstanding (Basic)862.00M
Shares Outstanding (Diluted)863.20M

Key Highlights

  • 1Net sales decreased by 3.0% to $3.88 billion in Q1 2019 compared to $4.00 billion in Q1 2018, primarily due to a 6.0% negative foreign exchange impact.
  • 2Organic sales (excluding foreign exchange, acquisitions, and divestitures) increased by 3.0%, driven by 1.0% volume growth and 2.0% net selling price increases.
  • 3Diluted Earnings Per Share (EPS) decreased to $0.65 in Q1 2019 from $0.72 in Q1 2018.
  • 4Gross profit margin decreased to 58.9% from 60.2%, mainly due to higher raw and packaging material costs, partially offset by cost savings and pricing.
  • 5Selling, general and administrative expenses as a percentage of net sales increased slightly to 35.1% from 34.8%, driven by increased advertising investment.
  • 6The company's Global Growth and Efficiency Program is in its final year, with expected annual savings of $590-$635 million pretax.
  • 7Hill's Pet Nutrition segment showed strong performance with a 3.0% increase in net sales and 6.0% organic sales growth.

Frequently Asked Questions

The primary driver for the decrease in net sales was the negative impact of foreign exchange, which decreased net sales by 6.0%. While volume and pricing contributed positively, the currency headwinds offset these gains.

Profitability saw a decline. Gross profit margin decreased due to higher raw and packaging material costs. Operating profit margin also decreased, impacted by both the decline in gross profit and an increase in selling, general and administrative expenses as a percentage of net sales, largely due to increased advertising investment.

The Global Growth and Efficiency Program is in its final year, with implementation on track. The company expects it to contribute significantly to future cash flows and cost reductions. Charges related to the program were $29 million pretax for the quarter.

Colgate-Palmolive is involved in various legal proceedings, including tax disputes in Brazil, competition law matters in France and Greece, and talcum powder litigation. While management believes the ultimate resolution of these matters will not have a material adverse effect on the company's financial position, significant uncertainties exist, and an adverse outcome in one or more could be material to quarterly or annual results.