10-QPeriod: Q1 FY2022

COLGATE PALMOLIVE CO Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 29, 2022For Securities:CL

Summary

Colgate-Palmolive Company (CL) reported first-quarter 2022 results showing a slight increase in net sales to $4,399 million, up 1.5% year-over-year. This growth was primarily driven by a 5.5% increase in net selling prices, which more than offset a 1.5% decline in volume and a 2.5% negative impact from foreign exchange. The company's organic sales, excluding currency fluctuations, increased by 4.0%, highlighting resilient underlying demand. Despite top-line growth, operating profit saw a significant decline of 14% to $860 million, impacted by a 220 basis point decrease in gross profit margin to 58.5%. This margin compression was largely attributed to a substantial rise in raw and packaging material costs, which added 590 basis points, though partially mitigated by pricing actions and cost savings initiatives. Diluted earnings per share decreased to $0.66 from $0.80 in the prior year, reflecting these cost pressures and the impact of the new 2022 Global Productivity Initiative charges.

Financial Highlights

47 data points
Beta

Revenue

$4.40B

58.5% Gross Margin

Net Income

$559.00M

12.7% Net Margin

EPS (Diluted)

$0.66

Total Assets

$15.72B

Cash & Equivalents

$877.00M

Free Cash Flow

$386.00M

Financial Statements
Beta
Revenue$4.40B
Cost of Revenue$1.83B
Gross Profit$2.57B
SG&A Expenses$1.64B
Operating Income$860.00M
Net Income$559.00M
EPS (Basic)$0.67
EPS (Diluted)$0.66
Shares Outstanding (Basic)840.60M
Shares Outstanding (Diluted)843.70M

Key Highlights

  • 1Net sales increased by 1.5% to $4,399 million, driven by a 5.5% rise in selling prices, partially offset by a 1.5% volume decline.
  • 2Organic sales grew by 4.0%, demonstrating underlying brand strength despite inflationary pressures and FX headwinds.
  • 3Gross profit margin contracted by 220 basis points to 58.5% due to significant increases in raw and packaging material costs (590 bps).
  • 4Operating profit decreased by 14% to $860 million, reflecting margin pressures and the impact of the 2022 Global Productivity Initiative charges.
  • 5Diluted earnings per share (EPS) fell to $0.66 from $0.80 in the prior year.
  • 6Hill's Pet Nutrition segment showed strong performance with net sales up 11.0% and organic sales up 13.0%.
  • 7The company incurred $63 million in charges related to the 2022 Global Productivity Initiative, aimed at cost efficiencies and streamlining the supply chain.

Frequently Asked Questions

Revenue growth was primarily driven by net selling price increases of 5.5%. While volume saw a slight decline of 1.5%, the price increases were strong enough to lead to a 1.5% overall increase in net sales. Organic sales, which exclude currency impacts, grew by 4.0%, indicating healthy underlying demand for Colgate-Palmolive's products.

Profitability and margins were significantly impacted by a sharp rise in raw and packaging material costs, which increased by 590 basis points and compressed the gross profit margin by 220 basis points to 58.5%. Additionally, higher logistics costs contributed to increased selling, general, and administrative expenses as a percentage of net sales. The company also incurred $63 million in charges related to its 2022 Global Productivity Initiative.

The Hill's Pet Nutrition segment was a strong performer, with net sales increasing 11.0% and organic sales growing by 13.0%. The Oral, Personal and Home Care segment experienced a slight decrease in net sales of 1.0%, though organic sales for this segment grew 2.0%. Performance varied geographically, with Latin America and Africa/Eurasia showing positive organic sales growth, while Europe and Asia Pacific saw declines.

Colgate-Palmolive anticipates continued challenging global macroeconomic, political, and market conditions, including persistent high raw and packaging material costs and increased logistics expenses. The company plans to mitigate these pressures through its 2022 Global Productivity Initiative, funding-the-growth initiatives, and revenue growth management strategies, including pricing. While aware of global uncertainties like the war in Ukraine and COVID-19 impacts, the company believes its strong financial position and focused strategy position it well for long-term value creation.