Top Companies Report

2. Colgate-Palmolive

July 9, 2010

New York, NY
212.310.2000
www.colgate.com
Sales: $13.1 billion


Sales:
$13.1 billion for oral, personal and home care products. Net sales: $15.3 billion. Net income: $2.2 billion
Fast Fact:
Last month, Colgate teamed up with the Hispanic Dental Association (HDA) to celebrate the launch of Colgate’s Oral Health Month. Minority populations bear a disproportionate burden of oral disease in the U.S., according to a recent report by the U.S. Surgeon General.


Key Personnel:
Ian M. Cook, chairman, president and chief executive officer; Michael J. Tangney, vice chairman; Stephen C. Patrick, chief financial officer; Fabian Garcia, chief operating officer, Europe, global marketing, customer development, supply chain and technology; Franck J. Moison, chief operating officer, emerging markets; Stephen C. Patrick, chief financial officer; Andrew D. Hendry, senior vice president, general counsel and secretary

Major Products:
Oral care—Colgate, Elmex, Kolynos, Meridol, Sorriso, Tom’s of Maine and Ultra Brite toothpastes; Colgate, Elmex and Meridol toothbrushes; Colgate Total and Tom’s of Maine dental floss. Personal care—Irish Spring, Palmolive, Protex, Softsoap and Tom’s of Maine body wash and shower gel; Palmolive shampoos and conditioners; Afta and Skin Bracer; and Colgate, Palmolive and Tom’s of Maine shave cream. Home care—Ajax, Axion and Palmolive dishwashing; Ajax, Fabuloso, La Croix and Murphy Oil Soap cleaners and cleansers; Fabric care—Cold Power, Dynamo, Softlan, Soupline and Suavitel

New Products:
Speed Stick Stain Guard, Irish Spring Intensify, Colgate Wisp, Softsoap Nutri Serums and Softsoap Body Butter Mega Moisture body washes, Softsoap Crisp Cucumber and Melon and Softsoap Cherry Blossom liquid hand soaps, Ajax Lime with Bleach Alternative dish liquid

Comments:
Corporate sales were flat on volume growth of 0.5%. Similarly, net sales in the oral, personal and home care segment were flat, although volume was up 2%.

Despite the flat results, Colgate’s market shares “are healthy and growing around the world,” chairman Ian Cook told shareholders at the annual meeting in May. For example, last year Colgate’s global toothpaste share reached 44.2%, compared to 31.0% in 1994.

Cook credited the company’s exceptional return to investors on four key strategies:
• Focus on the consumer, the dental professional and the retailer;
• Effectiveness and efficiency in everything;
• Innovation everywhere; and
• Leadership.

According to Cook, while consumer insight is always important, during the recession it took on even greater urgency. As a result, Colgate employees stepped up efforts to understand the consumer by going on shopping trips with them and even living with them.

“This new approach is especially important in emerging markets, where we’re living with consumers in India to see how they clean their homes and their oral hygiene habits, and find out who the community leaders are,” he told shareholders.

At the same time, Colgate is increasing the number of endorsements it receives from dental professionals. Endorsements rose 43% last year, according to Cook.

In areas of effectiveness and efficiency, Colgate posted $400 million in procurement savings and recently completed construction of a toothbrush plant in Vietnam.

A new innovative approach for Colgate is using virtual reality to learn new ways to engage and sway the consumer. According to Cook, while traditional media will always have an important rolein Colgate’s marketing plans, there is plenty of room for online media. Just such a campaign provided a big boost to sales of Colgate Wisp, the company’s portable oral care system. In fact, Wisp now holds a 6% share of the U.S. manual toothbrush market.

Along the way, Colgate hasn’t neglected its own employees. It offers 150 classroom courses and 120 e-learning courses. Recently, Colgate’s interactive online training program instructed 600 executives in 55 countries in a single day, according to Cook.

Colgate Sales: Holding their Own
Taking a closer look at 2009 sales by region, Colgate’s net sales in North America increased 3.5% to more than $2.9 billion due to a 4% gain in volume that was partially offset by a 0.5% negative impact of foreign exchange. Organic sales in North America grew 4% in 2009. Products contributing to growth in oral care included Colgate Total Enamel Strength, Colgate Sensitive Enamel Protect and Colgate Max White with Mini Bright Strips toothpastes, Colgate 360° ActiFlex, Colgate Max Fresh and Colgate Max White manual toothbrushes and the Colgate Wisp mini-brush. Products contributing to growth in other categories included Softsoap Nutri Serums, Softsoap Body Butter Coconut Scrub, Irish Spring Hair and Body and Cool Relief body washes, and Palmolive Pure + Caring and Ajax Lime with Bleach Alternative dish liquids.

Net sales in Latin America increased 5.5% in 2009 to $4.3 billion on a 3% volume gain and net selling price increases of 13.5%, partially offset by an 11% negative impact of foreign exchange. Organic sales
What’s Driving Colgate’s Sales in the UK?
CEOs are known for many things, but humor and humility often aren’t the first traits that come to mind. While his predecessor Reuben Mark often had shareholders cheering for him at annual meetings, Colgate chairman Ian Cook proved he can get a laugh or two as well.

Noting the UK success of Colgate Sensitive Pro-Relief, the toothpaste which was launched in January and quickly grabbed a 2.5% market share in a few short months, Cook wryly observed, “Our UK market share has gone up every year since I left!”

Cook joined Colgate in the UK in 1976 and progressed though a series of senior marketing and management roles around the world.
in Latin America grew 16.5% in 2009. Volume gains were led by Brazil, Venezuela, Colombia and Mexico. Products contributing to growth in oral care included Colgate Total Professional Sensitive, Colgate Total Professional Whitening and Colgate Triple Action toothpastes, Colgate 360° ActiFlex, Colgate 360° Deep Clean and Colgate Max White manual toothbrushes and Colgate Plax Complete Care and Colgate Plax Sensitive mouthwashes. Products contributing to growth in other categories included Protex Aloe bar soap, Axion Professional dish liquid, Lady Speed Stick Depil Control and Speed Stick Waterproof deodorants, and Suavitel GoodBye Ironing and Suavitel Magic Moments fabric conditioners.

Net sales in Europe/South Pacific fell 8.5% to $3.2 billion as net selling price increases of 0.5% were more than offset by 0.5% in volume declines and an 8.5% negative impact of foreign exchange. The 2008 divestment of a non-core brand in Germany impacted sales growth for 2009 by 0.5% versus 2008. Excluding the impact of this divestment, net sales decreased 8% in 2009 and volume was level with 2008. Organic sales in Europe/South Pacific grew 0.5% in 2009. Volume gains in the UK, Greece, Denmark and Australia were more than offset by volume declines in Spain, Germany, Slovenia and Ireland. Products contributing to growth in oral care included Colgate Sensitive Pro-Relief, Colgate Total Advanced Clean and Colgate Max Fresh with Mouthwash Beads toothpastes, Colgate 360° ActiFlex and Colgate Max White manual toothbrushes and Colgate Plax Alcohol Free and Colgate Plax Ice mouth rinses. Products contributing to growth in other categories included Palmolive Aromatherapy Morning Tonic shower gel, Ajax Professional bucket dilutable and Ajax Professional glass cleaners, Lady Speed Stick Clinical Protection and Lady Speed Stick Depil Protect deodorants and Soupline Magic Moments and Soupline Aroma Tranquility fabric conditioners.

Net sales in Greater Asia/Africa were flat at $2.6 billion, as volume growth of 2% and net selling prices of 6% were offset by an 8% negative impact of foreign exchange. Organic sales in Greater Asia/Africa grew 8% in 2009. Volume gains were led by India, the Greater China region, Turkey and Thailand, the company said. Products driving oral care growth included Colgate Sensitive Pro-Relief, Colgate Total Professional Clean and Colgate 360° Whole Mouth Clean toothpastes, Colgate 360° ActiFlex and Colgate Max White manual toothbrushes and Colgate Plax Ice and Colgate Plax Complete Care mouthwashes. Products contributing to growth in other categories included Palm-olive Spa Banya shower liquid and bar soap and Lady Speed Stick Depil Control deodorant.

But what a difference a quarter makes! For the first quarter of 2010, Colgate’s worldwide sales rose 9.5% to nearly $3.9 billion and unit volume increased 6%. North American sales grew 3% in the first quarter. Unit volume increased 5%. Latin American sales grew 10.5% and unit volume increased 8%. Volume gains were achieved in nearly every country, led by significant increases in Brazil, Colombia and Mexico, according to the company. Europe/South Pacific sales increased 14.5% and unit volume increased 7% led by France, Italy, Spain, Denmark, the UK, Poland and the GABA business, which Colgate acquired in 2003. Greater Asia/Africa sales and unit volume increased 14.5% and 9%, respectively. Volume gains in India, the Greater China region, Thailand, Philippines and Malaysia more than offset a volume decline in South Africa.
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