10.27.23
Net sales for Colgate-Palmolive Company increased 10.5% in Q3 2023.
Organic sales increased 9.0% with growth in five out of six divisions and in all four categories.
GAAP Gross profit margin increased 130 basis points to 58.5%.
Base Business Gross profit margin increased 140 basis points to 58.6%, up 190 basis points excluding a negative 50 basis point impact from private label sales resulting from the previously disclosed acquisitions of pet food businesses.
Net cash provided by operations was $2.6 billion for the first nine months of 2023 up 39% versus 2022.
Colgate’s leadership in toothpaste continued with its global market share at 41.0% year-to-date. Its leadership in manual toothbrushes continued with its global market share at 31.5% year-to-date.
“We are very pleased to have delivered another quarter of strong top and bottom-line growth,” said Noel Wallace, chairman, president and CEO. “We are particularly pleased with the quality of our results this quarter on top of our strong first half results. This was our third quarter of sequential improvement in gross profit margin and our second quarter in a row delivering double-digit operating profit growth along with a double-digit increase in advertising spending. Strong investment levels behind brand-building activities and innovation should continue in the remainder of the year as we continue to work towards balanced organic sales growth.”
He continued, “The momentum in our business and the strength of our profit and cash flow performance adds to our confidence that we are executing the right strategies to deliver on our raised 2023 financial targets and generate long-term value for our stakeholders.”
Full Year 2023 Guidance
The company expects net sales growth to be 6% to 8% (versus 5% to 8% previously), including the benefit from our acquisitions of pet food businesses and a low-single-digit negative impact from foreign exchange.
The company increased its organic sales growth guidance to 7% to 8% (versus 5% to 7% previously).
On a GAAP basis, the company expects gross profit margin expansion, increased advertising investment and double-digit earnings-per-share growth.
On a non-GAAP (base business) basis, the company anticipates gross profit margin expansion and increased advertising investment and increased its earnings-per-share growth guidance to high-single digits.
North America
North America accounted for 20% of company sales. Organic sales growth was led by oral care and personal care. In the United States, Colgate's share of the toothpaste market is 33.7% year to date and its share of the manual toothbrush market is 40.9% year to date.
The increase in operating profit as a percentage of net sales was primarily due to higher pricing and cost savings from the company’s funding-the-growth initiatives, partially offset by significantly higher raw and packaging material costs.
Latin America
Latin American accounted for 24% of company sales. Organic sales growth was led by Argentina, Mexico, Brazil and Colombia. The increase in Operating profit as a percentage of Net sales was primarily due to higher pricing, cost savings from the company’s funding-the-growth initiatives and lower overhead expenses, partially offset by higher raw and packaging material costs, a value-added tax refund in the third quarter of 2022 and increased advertising investment.
Europe
Europe accounted for 15% of company sales. Organic sales growth was led by Germany and the United Kingdom. The increase in operating profit as a percentage of net sales was primarily due to higher pricing, cost savings from the company’s funding-the-growth initiatives, favorable mix and lower amortization expenses, partially offset by significantly higher raw and packaging material costs and increased advertising investment.
Asia Pacific
Asia Pacific accounted for 14% of company sales. Organic sales declines in the Greater China region were partially offset by organic sales growth in India and the Philippines. The increase in Operating profit as a percentage of Net sales was primarily due to cost savings from the company's funding-the-growth initiatives and higher pricing, partially offset by significantly higher raw and packaging material costs.
Africa/Eurasia
Africa/Eurasia accounted for 5%. Organic sales growth was led by Türkiye, the Eurasia region, Nigeria and South Africa. The increase in operating profit as a percentage of net sales was primarily due to cost savings from the company’s funding-the-growth initiatives, higher pricing and lower overhead expenses, partially offset by significantly higher raw and packaging material costs, which included foreign exchange transaction costs.