Colgate Reports In Line - Analyst Blog
October 27 2011 - 1:15PM
Zacks
Colgate-Palmolive Company (CL) posted
third-quarter 2011 earnings of $1.31 per share, remains in line
with Zacks Consensus Estimate. Earnings surpassed the prior-year
quarter figure of $1.21 per share by 8.2%.
Global net sales increased 11.2% year over year to $4,383.0
million based on 2.0% surge in pricing and 4.5% rise in foreign
exchange coupled with a 4.5% addition from global unit volume. On
an organic basis (excluding foreign exchange, acquisitions and
divestitures), sales increased 5.0% in the quarter. Global net
sales beat the Zacks Consensus Revenue Estimate of $4,374.0
million.
Gross profit increased by 5.0% to $2,462.0 million. However,
gross profit margin declined by 260 basis points to 56.8% compared
with the prior-year quarter, as higher material costs and steep
promotional investments hurt the cost savings benefits of the
Company’s funding-the-growth initiatives.
Colgate-Palmolive notified that its share of the global
toothpaste market has increased to 44.4% year to date, representing
an increase of 0.3 share points from the year-ago period. Colgate’s
market share in manual tooth brushes has increased to 31.8%,
representing an increase of 0.5 share point from a year ago.
Segment Discussion
North Americasales (18.0% of total sales) increased inched
up 3.0% in the quarter. An increase of 0.5% in unit volume and 0.5%
favorable foreign exchange was partially offset by 2.5% lower
pricing. On an organic basis, sales increased by 2.5%.
However, operating profit decreased by 5.0% to $213.0 million
due to lower gross profit as a percentage of net sales, partially
offset by decline in selling, general and administrative
expenses.
Latin America sales (28.0% of total sales) increased 16.0%
during the quarter as unit volume increased by 6.5%. Volume gains
were most prominent in Brazil and Mexico. In addition, pricing
contributed 9.0% to the growth, and foreign exchange added another
3.0%. On an organic basis, sales increased by 15.5%. Consequently,
operating profit climbed 10.0% to $364.0 million from the
prior-year quarter.
However, operating margin declined by 180 basis points to 29.3%
primarily due to lower gross profit as a percentage of Net sales,
partially offset by a decline in selling, general and
administrative expenses as a percentage of Net sales.
Europe/South Pacific sales (22.0% of total sales) jumped 18.5%
as foreign currency translation made a positive contribution of
11.0% while pricing negatively impacted growth by 2.5%. Unit volume
increased 10.0% while Sansex acquisition added 9.0% to sales during
the quarter. Volume gains were primarily led by better performance
in the United Kingdom, Spain and France. However, organic sales for
Europe/South Pacific inched down 1.5%.
However, operating profit margin in the region contracted by 380
basis points to 20.2%. The decline in operating profit margin was
primarily attributable to lower gross profit margin and higher
Selling, general and administrative expenses as a percentage of Net
sales.
Greater Asia/Africa sales (20.0% of total sales) climbed 9.5%,
with 4.0% increase in volume, primarily led by volume gains in the
Greater China region, India, Russia and Malaysia. Pricing
contributed 2.0% to the growth while foreign currency translation
made a positive contribution of 3.5% coupled with a 0.5% addition
from Sansex acquisition.
On an organic basis, sales grew 5.5%. Consequently, operating
profit rose 4.0%. However, operating profit margin decreased to
23.6% primarily due lower gross profit margin partially offset by
lower selling, general and administrative expenses as a percentage
of Net sales.
Hill’s sales (12.0% of total sales) upped 3.0%. Unit volume
decreased 4.0% due to lower volume in Russia. On an organic basis,
sales decreased 1.0% from the year-ago quarter. Operating profit
margin decreased to 23.6%.
Other Financial Details
Colgate-Palmolive ended the quarter with cash and cash
equivalents of $945.0 million, total debt of $4,756.0 million and
shareholders’ equity of $2,667.0 million. Net cash provided by
operating activities came in at $2,057.0 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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