Colgate-Palmolive reports Q1 net earnings of US$388M, down 15.7% from year-ago period amid aftertax charge of US$174M related to remeasurement of Venezuelan balance sheet; net sales flat at US$4.33B

NEW YORK , April 25, 2014 (press release) – Strong Organic Sales Growth Worldwide

Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net sales of $4,325 million in first quarter 2014, even with first quarter 2013. Global unit volume grew 5.0%, pricing increased 1.5% and foreign exchange was negative 6.5%. Organic sales (Net sales excluding foreign exchange, acquisitions and divestments) grew 6.5%.

Net income and Diluted earnings per share in first quarter 2014 were $388 million and $0.42, respectively. Net income in first quarter 2014 included an aftertax charge of $174 million ($0.19 per diluted share) related to the remeasurement of the Venezuelan balance sheet as a result of several changes to Venezuela's foreign exchange system enacted by the Venezuelan government during the first quarter of 2014. Net income in first quarter 2014 also included $74 million ($0.07 per diluted share) of aftertax charges resulting from the implementation of the previously disclosed four-year Global Growth and Efficiency Program (the "2012 Restructuring Program") and costs associated with the sale of land in Mexico.

Net income and Diluted earnings per share in first quarter 2013 were $460 million and $0.48, respectively. Net income in first quarter 2013 included aftertax charges of $166 million ($0.18 per diluted share) resulting from the items described in Table 6.

Excluding the above noted items in both periods, Net income in first quarter 2014 was $636 million, an increase of 2% versus first quarter 2013, and Diluted earnings per share in first quarter 2014 was $0.68, an increase of 3% versus first quarter 2013.

Gross profit margin was 58.4% in first quarter 2014 versus 58.3% in the year ago quarter. Excluding the above noted items in both periods, Gross profit margin was 58.6% in first quarter 2014, even with the year ago quarter, as higher pricing, cost savings from the Company's funding-the-growth initiatives and cost savings from the 2012 Restructuring Program were offset by higher raw and packaging material costs, which included the impact of foreign exchange transaction costs.

Selling, general and administrative expenses were 35.7% of Net sales in first quarter 2014 versus 35.6% of Net sales in first quarter 2013. Excluding the above noted items in both periods, Selling, general and administrative expenses decreased by 10 basis points to 35.3% of Net sales in first quarter 2014, as lower overhead expenses were partially offset by increased advertising investment, both as a percentage of Net sales. Worldwide advertising investment increased 1.5% versus the year ago quarter to $478 million.

Operating profit decreased 15% to $634 million in first quarter 2014 compared to $742 million in first quarter 2013. Excluding the above noted items in both periods, Operating profit increased 2% to $1,003 million.

Net cash provided by operations year to date was $820 million compared to $777 million in the comparable 2013 period, due to strong operating earnings and a continued tight focus on working capital. Free cash flow before dividends (Net cash provided by operations less Capital expenditures) exceeded 100% of Net income. Working capital as a percentage of Net sales was negative 0.8%, an improvement of 30 basis points versus the year ago period.

Ian Cook, Chairman, President and Chief Executive Officer, commented on the results excluding the 2014 and 2013 items noted above, "We are very pleased to have started the year with strong organic sales growth, building on the momentum we saw in 2013. Operating profit, net income and diluted earnings per share all increased versus the year ago period.

"All operating divisions contributed to the strong 6.5% organic sales growth, led by the emerging markets where organic sales grew a robust 10.0%.

"Advertising investment increased versus year ago, both absolutely and as a percent to sales, and we continue to plan for higher levels of advertising investment in the balance of the year in support of a very full pipeline of new products worldwide.

"Colgate's leading global market shares in toothpaste and manual toothbrushes remain strong at 44.3% and 33.1%, respectively, on a year-to-date basis. We continue to make great progress in mouthwash, with our global market share in that category reaching a record high at 17.3% year to date, up 60 basis points versus the year ago period.

"We expect our growth momentum to continue as we progress through the year. Our 2012 Restructuring Program is on track and proceeding smoothly. We also continue to be sharply focused on our aggressive funding-the-growth programs and our strategic worldwide pricing initiatives."

As previously disclosed, Venezuela enacted changes to its foreign exchange system in the first quarter of 2014. Since that disclosure, the SICAD I rate has moved to a quarter-end rate of 10.70 bolivares per dollar. Based on this and assuming that rate remains for the balance of the year, the Company now expects the ongoing impact on diluted earnings per share to be approximately $0.03 per quarter during 2014.

In closing, Mr. Cook commented on the Company's outlook excluding the 2014 and 2013 items noted above, "Looking forward, we anticipate another year of strong organic sales growth and gross margin expansion in 2014, and expect diluted earnings per share for the year to grow 4% to 5% on a dollar basis and at a double-digit rate on a currency neutral basis."

At 11:00 a.m. ET today, Colgate will host a conference call to elaborate on first quarter results. To access this call as a webcast, please go to Colgate's web site at http://www.colgatepalmolive.com.

The following are comments about divisional performance for first quarter 2014 versus the year ago period. See attached Geographic Sales Analysis Percentage Changes and Segment Information schedules for additional information on divisional net sales and operating profit.

North America (18% of Company Sales)

North America Net sales increased 2.5% in first quarter 2014. Unit volume increased 4.5% with 1.0% lower pricing due to increased promotional activities and 1.0% negative foreign exchange. Organic sales increased 3.5% during the quarter.

Operating profit in North America was $216 million in first quarter 2014, even with the year ago quarter, while as a percentage of Net sales it decreased 60 basis points to 27.5%. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit and an increase in Selling, general and administrative expenses, both as a percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs and pricing, which were partially offset by cost savings from the Company's funding-the-growth initiatives. This increase in Selling, general and administrative expenses was driven by increased advertising investment, which was partially offset by lower overhead expenses.

In the U.S., new product launches are contributing to volume growth. Market share gains year to date were seen in manual toothbrushes, mouthwash, dish liquids, liquid cleaners and fabric conditioners. In toothpaste, Colgate Optic White, Colgate Optic White Dual Action, Colgate Optic White Platinum Whiten and Protect, Colgate Total Advanced Clean and Tom's of Maine toothpastes had strong sales during the quarter.

In manual toothbrushes, Colgate continued its brand market leadership in the U.S. with its market share in that category reaching a record 41.9% year to date, up 4.5 share points versus the year ago period. This success was driven by strong sales of Colgate 360° Optic White Toothbrush + Built-In Whitening Pen, Colgate 360° Optic White, Colgate 360° Total Advanced Floss Tip bristles and Colgate Slim Soft manual toothbrushes.

Successful products driving volume growth in the U.S. in other categories include Colgate Total Advanced Pro-Shield and Colgate Optic White mouthwashes, Speed Stick Gear deodorants with new DryCore technology, Softsoap brand Décor Collection liquid hand soaps, Suavitel Fast Dry fabric conditioner and Palmolive Dish & Sink dish washing liquid.

Latin America (27% of Company Sales)

Latin America Net sales decreased 5.0% in first quarter 2014. Unit volume increased 4.5% with 6.5% higher pricing and 16.0% negative foreign exchange. Volume gains were led by Venezuela, Brazil, Mexico and Colombia. Organic sales for Latin America increased 11.0% during the quarter.

Operating profit in Latin America decreased 7% in first quarter 2014 to $290 million, or 50 basis points to 25.2% of Net sales. This decrease in Operating profit was primarily due to a decrease in Gross profit, which was partially offset by a decrease in Selling, general and administrative expenses, both as a percentage of Net sales. This decrease in Gross profit was due to higher costs, including higher costs in Venezuela due to inflation and the impact of charging Cost of sales, as required, with the historical U.S. dollar cost of inventory acquired prior to the effective devaluation as a result of the changes to Venezuela's foreign exchange system. This decrease was partially offset by cost savings from the Company's funding-the-growth initiatives and pricing. This decrease in Selling, general and administrative expenses was due to lower overhead expenses and decreased advertising investment.

Colgate's strong leadership in toothpaste throughout Latin America continued during the quarter with Chile, Peru and Puerto Rico achieving record high market shares year to date. Strong sales of Colgate Luminous White, Colgate Luminous White Advanced and Colgate Maximum Cavity Protection plus Neutrazucar toothpastes drove volume growth throughout the region. Colgate's leadership of the manual toothbrush market continued throughout the region, driven by strong sales of Colgate 360° Luminous White and Colgate Slim Soft manual toothbrushes. In mouthwash, Colgate's strong market share performance continued throughout the region, driven by the success of Colgate Plax Fresh Tea and Colgate Plax 2 in 1 mouthwashes.

Products in other categories contributing to volume growth include Protex Men, Protex Vitamin E, Protex Omega 3 and Palmolive Naturals Olive and Aloe bar soaps, Palmolive Naturals Argan Oil hair care and Axion Oats and Axion Magnetic Power dish liquids.

Europe/South Pacific (20% of Company Sales)

Europe/South Pacific Net sales increased 2.0% in first quarter 2014. Unit volume increased 3.5% with 2.5% lower pricing due to increased promotional activities and 1.0% positive foreign exchange. Volume gains were led by Australia, Poland, France and the United Kingdom. Organic sales for Europe/South Pacific increased 1.5%.

Operating profit in Europe/South Pacific increased 9% in first quarter 2014 to $217 million, or 150 basis points to 25.1% of Net sales. This increase in Operating profit was primarily due to an increase in Gross profit, which was partially offset by an increase in Selling, general and administrative expenses, both as a percentage of Net sales. This increase in Gross profit was primarily driven by cost savings from the Company's funding-the-growth initiatives, cost savings from the Company's 2012 Restructuring Program and lower raw and packaging material costs, which were partially offset by pricing. This increase in Selling, general and administrative expenses was driven by increased advertising investment, which was partially offset by lower overhead expenses.

Colgate strengthened its oral care leadership in the Europe/South Pacific region with toothpaste share gains led by the United Kingdom, Switzerland, Poland, Germany, Czech Republic, Romania, Hungary, Bosnia, Serbia, Croatia, Ireland, Australia and New Zealand. Successful premium products driving share gains include Colgate Max White One Optic, Colgate Max White One Luminous, Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer, elmex Sensitive Whitening and Colgate Total Pro Interdental toothpastes. In the manual toothbrush category, Colgate 360° Interdental and Colgate Slim Soft manual toothbrushes contributed to volume growth throughout the region.

Recent premium innovations contributing to volume growth in other product categories include elmex Sensitive Professional, elmex Junior and Colgate Plax Complete Care mouthwashes, Sanex Surgras and Palmolive Mediterranean Moments shower gels, Sanex Dermo No Perfume deodorant, Palmolive Hygiene-Plus liquid hand soap, Paic Excel + dish liquid and Soupline Perfect Glide fabric conditioner.

Asia (15% of Company Sales)

Asia Net sales increased 2.5% during first quarter 2014. Unit volume increased 7.0%, with 0.5% higher pricing and 5.0% negative foreign exchange. Volume gains were led by the Greater China region, India, the Philippines and Malaysia. Organic sales for Asia increased 7.5%.

Operating profit in Asia increased 4% in first quarter 2014 to $193 million, or 30 basis points to 28.7% of Net sales. This increase in Operating profit was primarily due to an increase in Gross profit margin, as Selling, general and administrative expenses as a percentage of Net sales were flat. This increase in Gross profit was primarily due to cost savings from the Company's funding-the-growth initiatives and pricing, partially offset by higher raw and packaging material costs, which included foreign exchange transaction costs.

Colgate continued its toothpaste leadership in Asia, driven by market share gains in India, Thailand, the Philippines, Malaysia and Singapore. Successful new products including Colgate 360° Pro Gum Health, Colgate Optic White, Colgate Visible White, Colgate Active Salt, Darlie Charcoal and Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer toothpastes contributed to volume growth throughout the region.

Successful new products contributing to volume growth in other categories in the region include Colgate Slim Soft Charcoal and Colgate 360° Interdental manual toothbrushes, Colgate Plax Jasmine Tea, Colgate Plax Fruity Fresh and Darlie mouthwashes, Palmolive Care and Protex Men Power shower gels and Palmolive Naturals Beautifully Long shampoo.

Africa/Eurasia (7% of Company Sales)

Africa/Eurasia Net sales decreased 0.5% during first quarter 2014. Unit volume increased 9.5% with 0.5% higher pricing and 10.5% negative foreign exchange. Volume gains were led by Turkey, Russia, the Central Asia/Caucasus region and South Africa. Organic sales for Africa/Eurasia increased 10.0%.

Operating profit in Africa/Eurasia decreased 5% in first quarter 2014 to $59 million, or 90 basis points to 19.8% of Net sales. This decrease in Operating profit was due to a decrease in Gross profit, which was partially offset by a decrease in Selling, general and administrative expenses, both as a percentage of Net sales. This decrease in Gross profit was primarily due to higher raw and packaging material costs, which included foreign exchange transaction costs, partially offset by cost savings from the Company's funding-the-growth initiatives and pricing. This decrease in Selling, general and administrative expenses was due to decreased advertising investment.

Colgate continued its toothpaste leadership in Africa/Eurasia, driven by market share gains in Saudi Arabia, Sub Saharan Africa, the Central Asia/Caucasus region and Ukraine. Successful products contributing to volume growth in the region include Colgate Total, Colgate Altai Herbs, Colgate Active Salt and Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer toothpastes, Colgate Slim Soft Charcoal manual toothbrush, Colgate Altai Herbs and Colgate Plax Tea mouthwashes and Palmolive Gourmet Spa, Palmolive Thermal Spa Skin Renewal and Protex for Men shower gels.

Hill's Pet Nutrition (13% of Company Sales)

Hill's Net sales increased 3.5% during first quarter 2014. Unit volume increased 3.5% with 2.0% higher pricing and 2.0% negative foreign exchange. Volume gains in Japan, Russia, the United States and France were partially offset by volume declines in Canada. Hill's organic sales increased 5.5%.

Hill's Operating profit increased 6% in first quarter 2014 to $144 million, or 50 basis points to 26.0% of Net sales. This increase in Operating profit was primarily due to a decrease in Selling, general and administrative expenses and Other (income) expense, net, which were partially offset by a decrease in Gross profit, all as a percentage of Net sales. This decrease in Gross profit was primarily driven by higher raw and packaging material costs, due in part to formulation changes and foreign exchange transaction costs, which were partially offset by cost savings from the Company's funding-the-growth initiatives and pricing. This decrease in Selling, general and administrative expenses was due to decreased advertising investment, which was partially offset by higher overhead expenses, due to increased investment in customer development initiatives. This decrease in Other (income) expense, net was primarily due to the expiration of a third party royalty agreement.

New product introductions driving volume growth in the U.S. include Hill's Ideal Balance Slim & Healthy, Feline Indoor and Hairball, Hill's Science Diet Perfect Weight, Grain Free and Sensitive Stomach and Skin, and Hill's Prescription Diet Metabolic.

New product introductions driving volume growth internationally include Hill's Prescription Diet Metabolic and c/d Urinary Stress, Hill's Ideal Balance, Hill's Science Plan Small & Miniature Breed, and the relaunch of Hill's Science Diet with improved taste.

Exciting new products planned for launch in second quarter 2014 include Hill's Prescription Diet c/d Multicare Ocean Fish Flavor and Prescription Diet Stews leveraging breakthrough technology in the therapeutic canned food segment.

***

About Colgate-Palmolive: Colgate-Palmolive is a leading global consumer products company, tightly focused on Oral Care, Personal Care, Home Care and Pet Nutrition. Colgate sells its products in over 200 countries and territories around the world under such internationally recognized brand names as Colgate, Palmolive, Speed Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, elmex, Tom's of Maine, Sanex, Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill's Science Diet, Hill's Prescription Diet and Hill's Ideal Balance. For more information about Colgate's global business, visit the Company's web site at http://www.colgatepalmolive.com. To learn more about Colgate Bright Smiles, Bright Futures® oral health education program, please visit http://www.colgatebsbf.com. CL-E

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

© 2017 Business Wire, Inc., All rights reserved.