A Strong Q3 Reported by Colgate

Colgate-Palmolive Company oday announced excellent worldwide sales growth with every operating division increasing sales during the quarter. Worldwide sales grew 13% to $3.988 billion and unit volume grew 3%. Global pricing increased 6.5% and foreign exchange added 3.5%. The strong top-line growth was supported by a 6% increase in worldwide advertising spending to a record level for the quarter.

Third quarter 2008 results include $31.2 million of aftertax charges related to the 2004 Restructuring Program.

Gross profit margin as reported was 56.1% in third quarter 2008 and 56.2% in the year ago period. Excluding restructuring charges, gross profit margin decreased 90 basis points from 57.3% in 2007 to 56.4% in 2008, reflecting significant increases in raw and packaging material costs worldwide. These sharp increases were partially offset by increased pricing and successful savings initiatives.

Operating profit as reported increased 15% versus third quarter 2007 to $768.4 million. Excluding restructuring charges in both periods and the 2007 Other Item noted above, operating profit rose 11% to an all-time record $815.6 million.

Reported net income and diluted earnings per share in the third quarter 2008 were $499.9 million and $.94, respectively. Ian Cook, Chief Executive Officer, commented on the results without restructuring charges and Other Items, “We are delighted with our strong double-digit growth momentum in sales, operating profit, net income and earnings per share.

“Pleasingly, organic sales (excluding foreign exchange, acquisitions and divestments) grew 9.5% worldwide, driven by healthy unit volume growth on top of strong price increases.

“Colgate’s market shares continue to be strong in key markets around the world. Colgate’s global leadership in toothpaste and manual toothbrushes strengthened during the quarter with our global market share in both categories increasing to all-time record highs. Other categories achieving global share gains include power toothbrushes, mouth rinse, bar soaps, hand dish liquid and shampoo.

“While significant increases in raw and packaging material costs worldwide impacted gross profit margin in the quarter, we are forecasting less of a decline in the fourth quarter. As the benefits of recently easing commodity and oil prices begin to flow through in first quarter 2009, coupled with higher pricing and our aggressive savings programs, we are optimistic that gross profit margin for full year 2009 will be up solidly versus 2008.

“We are very pleased with the continued strength of our balance sheet and cash flow, with operating cash flow reaching a record level year to date, and this ongoing strength serves us well especially in light of recent challenges in the global financial markets.”

Mr. Cook further commented, “Given our strong momentum and excellent savings initiatives, we are comfortable with external profit expectations for the fourth quarter and full year 2008. While our 2009 budget process is still in its initial stages, we anticipate another year of double-digit earnings per share growth in 2009. Our ongoing savings programs combined with the benefits of lower oil and commodity costs should fully offset the expected impact of the strengthening dollar.”