Colgate Announces Record 1st Quarter Strong Top-Line Dollar Sales
and Volume Growth NEW YORK, April 21, 2004 /PRNewswire-FirstCall/
-- Colgate-Palmolive Company today announced its 32nd consecutive
quarter of increased net income, earnings per share and gross
profit margin in the first quarter 2004. The earnings growth was
driven by a global sales increase of 8.0% excluding divestments,
and a global unit volume increase of 4.0% on the same basis.
Top-line growth was especially strong in Latin America, Europe,
Asia/Africa and Hill's. Despite difficult comparisons, worldwide
gross profit margin increased 40 basis points to an all-time high
of 55.7% and increased well above expectations in Colgate's
overseas divisions. Total worldwide commercial investment in
support of Colgate's core franchises increased 14%. Worldwide
dollar sales as reported increased 7.0%. This increase was driven
by 3.0% volume growth and favorable foreign exchange of 5.0%.
Dollar operating profit and net income reached new records in the
first quarter, increasing 4% to $531.3 million and $338.5 million,
respectively. Diluted earnings per share increased 5% to $.59 vs.
$.56 in the year ago period. Colgate's strong balance sheet
strengthened even further, with all key balance sheet ratios
improving. Net working capital declined again as a percent to
sales. Excluding a one-time capital gains tax payment of $27.2
million during the quarter from sale of European detergents in
2003, net cash provided by operations increased 9% and free cash
flow before dividends rose 11%. As reported, including these tax
payments, net cash provided by operations increased 1% and free
cash flow before dividends rose 3%. Worldwide after-tax return on
capital was 36.2% in first quarter 2004, up 90 basis points versus
the year ago period. Reuben Mark, Colgate's Chairman and CEO said,
"We are delighted to begin 2004 so well, with solid results that
exceed our expectations on virtually every line of the P&L.
"Excellent sales growth and record gross profit margin during the
quarter funded a substantial increase in commercial investment in
every operating division which should benefit the remainder of the
year. "Colgate's international businesses delivered strong 7.0%
unit volume growth during the quarter, excluding divestments, while
the momentum of our U.S. business is building nicely. "Looking
around the world, our market shares are good, the new product
process is working well and margin gains are exceeding
expectations. Accordingly, we are encouraged by our prospects for
the balance of the year." At 11:00 a.m. ET today, Colgate will host
a conference call to elaborate on first quarter results and to
discuss the Company's ongoing expectations. To access this call as
a webcast, please go to Colgate's web site at
http://www.colgate.com/. The following are comments about
divisional performance. See attached Geographic Sales Analysis and
Segment Information schedules for additional information on
divisional sales and operating profit. North America (23% of
Company Sales) North American sales and unit volume declined 3.5%
and 3.0%, respectively, in the quarter, compared to record sales
performance in the year ago period due to strong sales of Colgate
Simply White tooth whitening gel. Excluding Colgate Simply White
gel, North American sales and unit volume increased 2% and 3%,
respectively, in first quarter 2004. North American operating
profit declined 8%, also reflecting the difficult year-on-year
comparison and increased commercial investment during the quarter.
Excluding the Simply White comparison, North American operating
profit increased 5%. Colgate's national leadership of the U.S.
toothpaste market continued during the quarter with its ACNielsen
market share at 34.3% year to date, nearly three share points ahead
of the number two competitor. Innovative new products driving U.S.
growth include Colgate Simply White and Colgate Total Advanced
Fresh toothpastes, Colgate Whitening and Colgate Massager manual
toothbrushes, Colgate powered toothbrushes for kids featuring LEGO
BIONICLE, BRATZ and LOONEY TUNES characters, and Softsoap Naturals
Milk & Rose and Milk & Lavender body washes and liquid hand
soaps. New Palmolive Oxy Plus dishwashing liquid, with powerful
oxygenated cleaning action that lifts dirt and grease, began
shipping late in the first quarter and is off to a great start.
Europe (24% of Company Sales) European sales and unit volume,
excluding the divested detergent business, grew a very strong 19.0%
and 8.5%, respectively, during the quarter. Excellent volume gains
were achieved in the United Kingdom, Italy, France, Spain,
Scandinavia, Belgium, Holland, Poland, Russia, Turkey, Adria,
Ukraine and Romania. European sales as reported, which reflect the
divestment of detergents in Europe, increased 14.5%. This increase
reflected 4.0% volume growth and favorable foreign exchange of
13.5%. Dollar operating profit increased 14% even after strongly
increased commercial investment. Colgate continued to strengthen
its Oral Care leadership in Western Europe during the quarter. The
recent roll-out of Colgate Total Advanced Fresh toothpaste and the
continued success of Colgate Sensitive toothpaste drove gains
throughout the region with the Company's toothpaste market shares
in the United Kingdom reaching an all-time high. Other new products
contributing to growth include Colgate powered toothbrushes for
kids featuring LEGO BIONICLE, Palmolive Aromatherapy, Palmolive
Thermal and Palmolive Thermal Spa shower gels and Soupline Hearts
fabric conditioner tablets. Colgate Propolis and Colgate Total
Advanced Fresh toothpastes, Colgate Whitening toothbrush, Palmolive
Thermal Spa shower gel and Ajax multipurpose squeeze spray cleaner
contributed to growth throughout Central Europe and Russia. Latin
America (21% of Company Sales) Latin American dollar sales and unit
volume grew 7.0% and 5.5%, respectively, in first quarter 2004
continuing the strong momentum seen in this region late in 2003.
Strong volume gains were achieved in Brazil, Venezuela, Central
America, Ecuador and Peru. Dollar operating profit increased 6%
even after a substantial increase in commercial investment in
brand-building activities throughout the region. Colgate continues
to strengthen its Oral Care leadership in key countries throughout
the region. Recent introductions contributing to gains include
Colgate Triple Action, Colgate Herbal Whitening and Sorriso Jua
plus Baking Soda toothpastes and Colgate Total Plus Whitening
toothpaste, which helped drive market shares for the Colgate Total
equity to record levels in Central America. Other new products
driving growth in Latin America are Colgate Massager and Colgate
Extra Clean toothbrushes, Palmolive Aromatherapy, Protex Sun Care
and Palmolive Naturals Milk & Rose Petals bar soaps, Palmolive
Caprice Specialties shampoo and conditioner and Fabuloso Orange
Energy liquid cleaner. Asia/Africa (19% of Company Sales)
Asia/Africa sales and unit volume, excluding the divested detergent
business, grew a strong 12.5% and 7.5%, respectively, in the first
quarter, on top of a very strong performance in the year ago period
and continuing the positive momentum seen throughout 2003. China,
Malaysia, Thailand, Philippines, Australia, Taiwan and South Africa
each contributed strong volume gains. Asia/Africa sales as reported
rose 11.0% reflecting 6.0% volume growth and favorable foreign
exchange of 9.0%. Dollar operating profit increased 28% to an
all-time record level, reflecting improved profitability combined
with strengthened local currencies. Successful new products driving
growth in Oral Care are Colgate Herbal White and Colgate Fresh
Confidence Citrus Blast toothpastes, Colgate powered toothbrushes
for kids featuring LEGO BIONICLE, and Colgate Massager and Colgate
Navigator Plus manual toothbrushes. In China, for example, Colgate
continues its leadership of the toothpaste market with its national
ACNielsen market share at 31.4% year to date, over 12 share points
ahead of the number two competitor. In Personal Care, the success
of Palmolive Naturals and Palmolive Aromatherapy shampoos led to
record high market shares in this category in the Philippines and
helped expand market share growth in the region. Hill's Pet
Nutrition (13% of Company Sales) Innovative new products and
veterinary endorsements continue to drive growth at Hill's, the
world leader in specialty pet food. Healthy results both
domestically and internationally contributed to 4.0% global volume
growth in the first quarter. This growth is on top of a very strong
volume increase in the year ago period. Dollar sales rose 8.5%
versus first quarter 2003, reflecting this volume growth together
with favorable foreign exchange of 5.0%. Dollar operating profit
increased 9% after increased commercial investment. The continued
growth of Science Diet Nature's Best and Science Diet Advanced
Protection contributed to volume growth in the U.S. specialty
retail channel. Prescription Diet Feline m/d, a low carbohydrate
diet clinically proven to alter a cat's metabolism for effective
weight loss and to help nutritionally manage cats with diabetes,
contributed to growth in the veterinary channel. Internationally,
France, the United Kingdom, Italy, Russia, Turkey, Spain, Germany,
South Africa and Australia each achieved strong volume gains. The
continued success of Science Plan Nature's Best and the recent
roll-out of Prescription Diet Feline m/d throughout Europe
contributed to the strong international results. * * * About
Colgate-Palmolive: Colgate-Palmolive is a leading global consumer
products company, tightly focused on Oral Care, Personal Care,
Household Surface Care, Fabric 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, Mennen, Softsoap, Irish Spring, Protex, Sorriso,
Kolynos, Ajax, Axion, Soupline, Suavitel and Fab, as well as Hill's
Science Diet and Hill's Prescription Diet pet foods. For more
information about Colgate's global business, visit the Company's
website at http://www.colgate.com/. LEGO and BIONICLE(TM) are
trademarks of the LEGO Group used here with special permission.
(C)2004 The LEGO Group LOONEY TUNES is a (TM) & (C) of Warner
Bros. Entertainment Inc. BRATZ trademarks are owned by and used
under license from MGA Entertainment, Inc. (C)2004 Certain
financial measures contained in this release, as noted, exclude
results for Colgate Simply White tooth whitening gel. Management
believes this provides useful information to investors as it allows
comparisons of Colgate's other product lines and businesses without
the impact of Colgate Simply White, sales of which began in the
third quarter of 2002. In addition, sales and unit volume growth
both worldwide and in relevant geographic divisions are discussed
in the release both as reported and excluding divestments.
Management believes this provides useful information to investors
as it allows comparisons of sales and volume growth from ongoing
operations. The Company defines free cash flow before dividends as
net cash provided by operations less capital expenditures. As
management uses this measure to evaluate the Company's ability to
satisfy current and future obligations, repurchase stock, pay
dividends and fund future business opportunities, the Company
believes that it provides useful information to investors. Free
cash flow before dividends is not a measure of cash available for
discretionary expenditures since the Company has certain
non-discretionary obligations such as debt service that are not
deducted from the measure. Free cash flow before dividends is not a
GAAP measurement and may not be comparable to similarly titled
measures reported by other companies. This press release and the
related webcast (other than historical information) may contain
forward-looking statements. Actual events or results may differ
materially from those statements. Investors should consult the
Company's filings with the Securities and Exchange Commission
(including the information set forth under the caption "Cautionary
Statement on Forward- Looking Statements" in the Company's Form
10-K for the year ended December 31, 2003) for information about
factors that could cause such differences. Copies of these filings
may be obtained upon request from the Company's Investor Relations
Department or the Company's website at http://www.colgate.com/.
(See attached tables for first quarter results.) Colgate-Palmolive
Company Condensed Consolidated Statements of Income For the three
months ended March 31, 2004 and 2003 (Dollars in Millions Except
Per Share Amounts) (Unaudited) 2004 2003 Net Sales $2,513.5
$2,348.4 Cost of Sales 1,113.9 1,050.2 Gross Profit 1,399.6 1,298.2
Gross Profit Margin 55.7% 55.3% Selling, General &
Administrative Expenses 868.3 787.7 Operating Profit 531.3 510.5
Operating Profit Margin 21.1% 21.7% Net Interest Expense 28.3 34.0
Income Before Income Taxes 503.0 476.5 Provision for Income Taxes
164.5 152.5 Effective Tax Rate 32.7% 32.0% Net Income 338.5 324.0
Net Earnings Per Common Share Basic $.62 $.59 Diluted $.59 $.56
Average Common Shares Outstanding Basic 532.9 537.1 Diluted 572.5
579.7 Colgate-Palmolive Company Condensed Consolidated Balance
Sheets As of March 31, 2004, December 31, 2003 and March 31, 2003
(Dollars in Millions) (Unaudited) March 31, December 31, March 31,
2004 2003 2003 Cash and cash equivalents $271.5 $265.3 $205.8
Accounts receivable, net 1,204.8 1,222.4 1,157.1 Inventories 788.7
718.3 737.1 Other current assets 300.0 290.5 277.1 Property, plant
and equipment, net 2,495.2 2,542.2 2,464.4 Other assets, including
goodwill and intangibles 2,440.9 2,440.1 2,407.1 Total assets
$7,501.1 $7,478.8 $7,248.6 Total debt 3,115.1 3,102.9 3,596.0 Other
current liabilities 2,115.0 2,027.4 1,910.3 Other non-current
liabilities 1,463.6 1,461.4 1,406.1 Total shareholders' equity
807.4 887.1 336.2 Total liabilities and shareholders' equity
$7,501.1 $7,478.8 $7,248.6 Supplemental Balance Sheet Information:
Debt less cash and marketable securities* $2,820.5 $2,800.7
$3,371.9 Working capital % of sales 1.5% 1.7% 2.5% After-tax return
on capital 36.2% 38.0% 35.3% * Marketable securities of $23.1,
$36.9 and $18.3 as of March 31, 2004, December 31, 2003 and March
31, 2003, respectively, are included in Other current assets.
Colgate-Palmolive Company Condensed Consolidated Statements of Cash
Flows For the three months ended March 31, 2004 and 2003 (Dollars
in Millions) (Unaudited) 2004 2003 Operating Activities: Net income
$338.5 $324.0 Restructuring (6.2) - Depreciation and amortization
79.9 75.7 Deferred income taxes 8.0 7.1 Changes in: Accounts
receivable 12.0 (10.2) Inventories (73.8) (60.4) Accounts payable
and other accruals (26.6) 25.4 Other non-current assets and
liabilities 39.5 5.5 Net cash provided by operations 371.3 367.1
Investing Activities: Capital expenditures (43.3) (48.2) Other
investing activities 9.3 (14.5) Net cash used in investing
activities (34.0) (62.7) Financing Activities: Proceeds from
(payments on) debt issuances, net 2.5 (27.9) Dividends paid (129.4)
(97.4) Purchases of treasury shares (220.3) (154.0) Proceeds from
exercise of stock options 21.3 11.3 Net cash used in financing
activities (325.9) (268.0) Effect of exchange rate changes on cash
and cash equivalents (5.2) 1.5 Net increase in cash and cash
equivalents 6.2 37.9 Cash and cash equivalents at beginning of
period 265.3 167.9 Cash and cash equivalents at end of period
$271.5 $205.8 Supplemental Cash Flow Information: Free cash flow
before dividends (net cash provided by operations less capital
expenditures) Net cash provided by operations $371.3 $367.1 Less:
Capital expenditures (43.3) (48.2) Free cash flow before dividends
$328.0 $318.9 Colgate-Palmolive Company Segment Information For the
three months ended March 31, 2004 and 2003 (Dollars in Millions)
(Unaudited) Three Months Ended March 31, Net Sales 2004 2003 Oral,
Personal, Household Surface and Fabric Care North America $568.5
$588.5 Latin America 533.5 498.5 Europe 607.0 530.9 Asia/Africa
468.2 421.1 Total Oral, Personal, Household Surface and Fabric Care
2,177.2 2,039.0 Total Pet Nutrition 336.3 309.4 Total Net Sales
$2,513.5 $2,348.4 Three Months Ended March 31, Operating Profit
2004 2003 Oral, Personal, Household Surface and Fabric Care North
America $135.4 $147.8 Latin America 158.3 148.7 Europe 129.7 113.9
Asia/Africa 84.1 65.9 Total Oral, Personal, Household Surface and
Fabric Care 507.5 476.3 Total Pet Nutrition 95.4 87.8 Total
Corporate (71.6) (53.6) Total Operating Profit $531.3 $510.5 The
Company evaluates segment performance based on several factors,
including operating profit. The Company uses operating profit as a
measure of operating segment performance because it excludes the
impact of corporate-driven decisions related to interest expense
and income taxes. Corporate operations include research and
development costs, unallocated overhead costs, restructuring costs,
and gains and losses on sales of non-strategic brands and assets.
Colgate-Palmolive Company Geographic Sales Analysis Percentage
Changes For the three months ended March 31, 2004 v. 2003
(Unaudited) COMPONENTS OF SALES CHANGE Pricing 1st Qtr 1st Qtr
Coupons Sales Sales Consumer & Change Change Ex-Divested Trade
Region As Reported Ex-Divestment Volume Incentives Exchange Total
Company 7.0 % 8.0 % 4.0 % -1.0 % 5.0 % Europe 14.5 % 19.0 % 8.5 %
-3.0 % 13.5 % Latin America 7.0 % 7.0 % 5.5 % 3.0 % -1.5 %
Asia/Africa 11.0 % 12.5 % 7.5 % -4.0 % 9.0 % Total International
11.0 % 13.0 % 7.0 % -1.0 % 7.0 % North America -3.5 % -3.5 % -3.0 %
-1.5 % 1.0 % Total CP Products 7.0 % 8.0 % 3.5 % -1.0 % 5.5 %
Hill's 8.5 % 8.5 % 4.0 % -0.5 % 5.0 % DATASOURCE: Colgate-Palmolive
Company CONTACT: Bina Thompson, +1-212-310-3072, or Hope Spiller,
+1-212-310-2291, both of Colgate-Palmolive Company Web site:
http://www.colgate.com/
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