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Colgate Q2 Sales Rise 2%

July 26, 2012

Foreign exchange rate cuts into gains.

Colgate-Palmolive Company's second quarter sales rose 2% to more than 4.2 billion. Unit volume grew 5.0%, pricing increased 3.5% and foreign exchange was negative 6.5%. Excluding divested businesses, global unit volume grew 5.5%. The Sanex acquisition contributed 1.0% to sales and volume growth. Organic sales grew 8.0%. Net income rose less than 1% to $627 million. Gross profit margin was 57.7% in second quarter 2012, an increase of 30 basis points

"We are very pleased that our top and bottom line growth momentum continued this quarter, with net sales, gross profit, operating profit, net income and diluted earnings per share all increasing versus year ago," said Ian Cook, chairman, president and chief executive officer. "The excellent 8.0% organic sales growth, which was the largest increase we have seen in eight quarters, was driven by unit volume gains and higher pricing on a worldwide basis. The robust growth was led by the emerging markets where organic sales grew 13.0% in the quarter, and we are encouraged by the 2.5% organic sales growth in the developed markets."

Colgate's global market shares in toothpaste and manual toothbrushes are both at record highs year to date. Colgate's share of the global toothpaste market strengthened to 45.0% year to date, up 0.6 share points versus year ago. The company's global leadership in manual toothbrushes also strengthened during the quarter with Colgate's global market share in that category reaching 32.8% year to date, up 0.6 share points versus year ago.

"Looking ahead, we continue to be sharply focused on our aggressive funding-the-growth programs and our strategic worldwide pricing initiatives," said Cook. "We anticipate that the combined benefits from those programs will help us offset the transaction impact of negative foreign exchange and achieve gross margin expansion in 2012, allowing for even higher levels of advertising support behind a full pipeline of new products planned for launch in the balance of the year."

Here's a closer look at results by region:

North America (18% of Company Sales): Net sales increased 2.0% in second quarter 2012. Unit volume decreased 0.5% with 3.0% higher pricing and 0.5% negative foreign exchange. Organic sales increased 2.5% during the quarter.

In the U.S., new product launches including Colgate Optic White and Colgate Sensitive Pro-Relief toothpastes are strengthening Colgate's leadership in toothpaste, with its share of that market reaching 36.6% year to date, up 1.5 share points versus year ago. In manual toothbrushes, Colgate achieved brand market leadership year to date, driven by the success of Colgate 360° Optic White, Colgate 360° Sensitive Pro-Relief, Colgate 360° Total Advanced and Colgate Extra Clean manual toothbrushes.

Successful new products in the U.S. in other categories include Softsoap brand Pampered Hands Jasmine Oasis foaming hand soap, Softsoap brand Vineyard Escape Scrub, Irish Spring Deep Action Scrub and Irish Spring Clear & Fresh Skin body washes, Palmolive Soft Touch with Vitamin E and Palmolive Fresh Sponge dish liquids, Tom's of Maine Naturally Dry antiperspirant, Speed Stick Power antiperspirants/deodorants and Fabuloso Sunset Spice liquid cleaner.

Latin America (29% of Company Sales): Net sales rose 3.0% with unit volume increasing 6.5%. Excluding the divested detergent business in Colombia, Latin America unit volume grew 9.5%. Volume gains were led by Brazil, Venezuela, Mexico and Colombia. Higher pricing added 6.0% and foreign exchange was negative 9.5%. Organic sales for Latin America increased 15.5% during the quarter.

Colgate's strong leadership in oral care throughout Latin America continued during the quarter with toothpaste market share gains year to date led by Mexico, Brazil, Central America, Chile and the Dominican Republic. Strong sales of Colgate Luminous White, Colgate Sensitive Pro-Relief Multi-Protection, Colgate Total Pro Gum Health and Colgate Triple Action Extra Whitening toothpastes contributed to growth throughout the region. Colgate strengthened its leadership of the manual toothbrush market throughout the region, driven by strong sales of Colgate 360° Surround, Colgate 360° Luminous White and Colgate Triple Action manual toothbrushes. In mouthwash, Colgate's year-to-date market share is at a record high in the region with gains driven by Colgate Luminous White mouthwash and the relaunch of Colgate Plax mouthwash.

Products in other categories contributing to market share gains included Palmolive Naturals Relaxing Softness Cream and Lavender and Protex Advanced Clean bar soaps, Lady Speed Stick pH Active and Speed Stick X5 Multi-Protect deodorants, Suavitel Good-Bye Ironing fabric conditioner and Axion with Ajax dish liquid.

Europe/South Pacific (20% of Company Sales): Net sales decreased 1.0% during second quarter 2012. Unit volume increased 9.5% with 1.5% lower pricing and 9.0% negative foreign exchange. The Sanex acquisition contributed 6.5% to Net sales and volume growth for the region. Volume gains were led by France, Iberia, Australia, the United Kingdom and the GABA business. Organic sales for Europe/South Pacific increased 1.5%.

Colgate strengthened its oral care leadership in the Europe/South Pacific region with toothpaste share gains across the region led by Germany, Sweden, Spain, Denmark, Poland, Austria, Norway and Portugal. Successful premium products driving share gains include Colgate Sensitive Pro-Relief Enamel Repair, elmex Sensitive Professional plus Gentle Whitening, Colgate Total Pro Gum Health, Colgate Max White Shine and Colgate Max White One Active toothpastes. In the manual toothbrush category, Colgate 360° Surround and Colgate Max White manual toothbrushes contributed to growth throughout the region.

Recent premium innovations contributing to strength in other product categories include Colgate Total Pro Gum Health and Colgate Sensitive Pro-Relief mouthwashes, Sanex Dermo Repair shower gel, Palmolive Ayurituel shower gels and liquid hand soaps inspired by ancient Indian Ayurvedic rituals and ingredients known traditionally to help restore the wellbeing of body and mind and Ajax Pure Home liquid cleaner.

Greater Asia/Africa (20% of Company Sales): Net sales and unit volume increased 5.0% and 7.5%, respectively, during second quarter 2012. Volume gains were led by India, Russia, South Africa, the Philippines and Thailand. The Sanex acquisition contributed 0.5% to Net sales and volume growth for the region. Pricing increased 5.0% and foreign exchange was negative 7.5%. Organic sales for Greater Asia/Africa increased 12.0%.

Colgate continued its toothpaste leadership in Greater Asia, driven by market share gains in India, China, Malaysia, Singapore and Hong Kong. Successful new products including Colgate Total Pro Gum Health, Darlie Expert White, Colgate Sensitive Pro-Relief Enamel Protect, Colgate Sensitive Pro-Relief Multi-Protection and Colgate Max Fresh Ice toothpastes contributed to growth throughout the region.

Successful products contributing to growth in other categories in the region include Colgate 360° Surround and Colgate Slim Soft manual toothbrushes, Colgate Plax Fresh Tea and Colgate Plax Fruity Mint mouthwashes and Protex for Men and Palmolive Thermal Spa Coco-Jojoba shower gels.

Hill's Pet Nutrition (13% of Company Sales): Net sales decreased 1.0% during second quarter 2012. Unit volume decreased 3.0%, pricing increased 5.0% and foreign exchange was negative 3.0%. Volume gains in France were more than offset by volume declines in the U.S. Hill's organic sales increased 2.0% during the quarter.

Recent new product introductions contributing to sales in the U.S. include Science Diet Ideal Balance canine and feline, which combine natural ingredients with the power of advanced nutrition in one balanced package, Science Diet Savory Stew canine, Science Diet Senior 11+ Age Defying feline, Prescription Diet y/d Feline Thyroid Health, Science Diet Tender Dinners feline and Prescription Diet i/d Low Fat GI Restore Canine, specially formulated to help manage gastrointestinal disorders.

New pet food products contributing to international sales include reformulated Prescription Diet r/d Canine and Feline, the relaunch of Prescription Diet c/d Multicare Feline Bladder Health with evidence of improved efficacy and taste, Science Diet Mature Adult Light Canine and Feline, Prescription Diet y/d Feline Thyroid Health, reformulated Science Plan Adult and Mature Adult Canine and Feline with improved taste and the relaunch of Nature's Best with upgraded ingredients and package design.