10-QPeriod: Q1 FY2024

COLGATE PALMOLIVE CO Quarterly Report for Q1 Ended Mar 31, 2024

Filed April 26, 2024For Securities:CL

Summary

Colgate-Palmolive Company reported robust financial results for the first quarter of 2024, demonstrating strong top-line growth and improved profitability. Net sales increased by 6.2% year-over-year, driven by both volume growth and significant price increases, with organic sales growing by 9.8%. This growth was broad-based across its core Oral, Personal and Home Care segment and the Pet Nutrition segment. The company also showcased enhanced profitability, with gross profit margin expanding to 60.0% from 56.9% in the prior year, attributed to higher pricing and cost savings initiatives. Operating profit saw a substantial 15% increase, reflecting improved operational efficiencies and strategic pricing actions. Diluted Earnings Per Share (EPS) rose to $0.83, up significantly from $0.45 in the first quarter of 2023, highlighting the company's ability to translate sales growth into enhanced shareholder returns. The company also announced an increase in its quarterly common stock dividend, signaling confidence in its financial health and commitment to returning value to shareholders.

Financial Highlights

48 data points
Beta

Revenue

$5.07B

60.0% Gross Margin

Net Income

$683.00M

13.5% Net Margin

EPS (Diluted)

$0.83

Total Assets

$16.57B

Cash & Equivalents

$1.08B

Free Cash Flow

$681.00M

Financial Statements
Beta
Revenue$5.07B
Cost of Revenue$2.03B
Gross Profit$3.04B
SG&A Expenses$1.92B
Operating Income$1.05B
Net Income$683.00M
EPS (Basic)$0.83
EPS (Diluted)$0.83
Shares Outstanding (Basic)822.80M
Shares Outstanding (Diluted)825.90M

Key Highlights

  • 1Net sales increased by 6.2% to $5,065 million in Q1 2024 compared to Q1 2023, driven by 1.3% volume growth and 8.5% net selling price increases.
  • 2Organic sales (excluding foreign exchange, acquisitions, and divestments) grew by a strong 9.8% year-over-year.
  • 3Gross profit margin improved significantly to 60.0% from 56.9% in the prior year, supported by pricing actions and cost savings initiatives.
  • 4Operating profit rose by 15% to $1,047 million, indicating effective cost management and operational leverage.
  • 5Diluted Earnings Per Share (EPS) increased to $0.83 from $0.45 in the prior year's quarter.
  • 6The company announced an increase in its quarterly common stock dividend to $0.50 per share, effective in the second quarter of 2024.
  • 7Hill's Pet Nutrition segment net sales grew 3.9%, with organic sales increasing by 4.2%, demonstrating continued strength in this division despite a slight volume decline.

Frequently Asked Questions

Net sales increased by 6.2% year-over-year primarily due to a combination of volume growth of 1.3% and net selling price increases of 8.5%. This indicates that Colgate-Palmolive effectively passed on costs and potentially gained market share through product desirability.

Profitability improved significantly with a 310 basis point increase in gross profit margin to 60.0%. This was driven by higher pricing and 250 basis points of cost savings from the Company's 'funding-the-growth' initiatives, which more than offset the impact of higher raw and packaging material costs.

Colgate-Palmolive anticipates continued challenging global macroeconomic, political, and market conditions, including inflation and higher interest rates, which could impact consumer demand and purchasing patterns. The company plans to continue implementing pricing strategies and cost-saving initiatives, such as the 2022 Global Productivity Initiative, to mitigate these effects and maintain profitability.

The company is involved in various legal proceedings, including tax and civil proceedings in Brazil, competition law matters, talcum powder litigation, and an ERISA litigation matter. While management believes the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial position, there is a disclosure of a range of reasonably possible losses ($0 to approximately $300 million) in excess of accrued liabilities for certain matters. The ERISA litigation matter resulted in a charge of $267 million in Q1 2023 and ongoing developments in March 2024 could lead to further appeals.