Colgate Matches Zacks Estimates - Analyst Blog
July 28 2011 - 7:17AM
Zacks
Colgate-Palmolive Company (CL) posted second
quarter 2011 earnings of $1.26 per share, keeping in line with
Zacks Consensus Estimate. Earnings surpassed the prior-year quarter
figure of $1.17 per share by 7.7%.
Global net sales increased 9.5% year over year to $4,185
million based on 0.5% increase in pricingand 6% rise in foreign
exchange coupled witha 3% addition from global unit volume. On an
organic basis (excluding foreign exchange, acquisitions and
divestitures), sales increased 3.5% in the quarter. Global net
sales beat the Zacks Consensus Revenue Estimate of $4,159
million.
Gross profit increased by 7.2% to $2,404 million. Gross profit
margin declined by 140 basis points to 57.4% compared with the
prior-year quarter, as higher material costs and steep promotional
investments hurt the cost savings benefits from the Company’s
funding-the-growth initiatives.
Colgate-Palmolive notified that its share of the global
toothpaste market has increased to 44.6% year to date, representing
an increase of 0.4 share points from the year-ago period. Colgate’s
market share in manual tooth brushes has increased to 31.9%, which
represents an increase of 0.7 share point from a year ago.
Segment Discussion
North Americasales (18.0% of total sales) declined 3.0% in
the quarter. An increase of 0.5% in unit volume was offset by 4.5%
lower pricing, and 1.0% favorable foreign exchange. On an organic
basis, sales declined by 4.0%. Operating profit decreased by 15.0%
to $194 million due to lower gross profit partially offset by
higher selling, general and administrative expenses.
Latin Americasales (29.0% of total sales) increased 17.0% during
the quarter as unit volume increased by 4.0%. Volume gains were
most prominent in Brazil, Mexico and Colombia.
In addition, pricing contributed 6.5% to the growth, and foreign
exchange added another 6.5%. On an organic basis, sales increased
by 10.5%. Operating profit climbed 19.0% to $360 million
attributable to higherGross profit as a percentage of Net sales,
partially offset by an increase in Selling, general and
administrative expenses as a percentage of Net sales.
Europe/South Pacific sales (20.0% of total sales) inched up
11.5% as foreign currency translation made a positive contribution
of 13.5% while pricing negatively impacted the growth by 2.5%. Unit
volume increased 0.5% during the quarter.
Volume gains led by the United Kingdom and Denmark were
partially offset by volume declines in the GABA business and
France. Organic sales for Europe/South Pacific declined 2.0%.
Greater Asia/Africa sales (20.0% of total sales) climbed 12.0%,
with 6.5%, increase in volume primarily led by volume gains in the
Greater China region, India and Malaysia. Pricing remained flat
year over year but foreign currency translation made a positive
contribution of 5.5%. On an organic basis, sales grew 6.5%.
Operating profit rose 5.0%.
Hill’s sales (13.0% of total sales) upped 9.5%. Unit volume
increased 2.0% on the back of volume gains in Russia, Canada,
Brazil and Australia partially offset by volume declines in France
and the U.S. On an organic basis, sales increased 3.5% while
operating profit beat year-ago level by 5%.
Other Financial Details
Colgate-Palmolive ended the quarter with cash and cash
equivalents of $739.0 million, total debt of $5,011 million and
shareholders’ equity of $2,969 million. Net cash provided by
operating activities came in at $1,154 million.
Colgate-Palmolive, which competes with Procter &
Gamble Company (PG) and Church & Dwight
Company Inc. (CHD), maintains a Zacks #3 Rank, which
translates into a short-term Hold recommendation. Our long-term
recommendation on the stock remains Neutral.
CHURCH & DWIGHT (CHD): Free Stock Analysis Report
COLGATE PALMOLI (CL): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
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