Colgate-Palmolive’s Unit Volume Rises 7%

Colgate-Palmolive worldwide top-line unit volume increased 7% while earnings per share grew 16% in the first quarter. Each of Colgate’s operating divisions achieved strong volume growth and also increased operating earnings in the period. Earnings per share rose to $.44 vs. $.38 on a diluted basis. Net income increased 12% to $267.9 million, and global sales of continuing businesses excluding exchange rose 9%. Including the effect of the strong dollar, continuing sales rose 3.5%.

Reuben Mark, Colgate chairman and CEO, said: “We are delighted that strong market share gains here and abroad have again generated strong top-line growth momentum. Every division increased volume at a mid single-digit rate or better.

“This increased volume, combined with gross profit increases led to another significant profit gain. The goal we set in 1995 of reaching gross margin of 55% by the end of 2002 has been achieved almost two years early, in the first quarter of 2001. This gives us confidence in our ability to reach our 2008 gross margin goal of 60% earlier as well.

“Strong cash generation continues, and the after-tax return on capital increased again, to a record 27.6%, versus 24.0% in the year-ago quarter and 26.4% for full year 2000.

“With our broad-based growth momentum in volume and profitability coming from all parts of the world, we are optimistic that Colgate will deliver another strong year.”

By region, Colgate-North America, which accounts for 25% of company sales, reported unit volume grew 7% and sales increased 6% in the first quarter. Consumer takeaway of Colgate-U.S. products grew almost 10% in dollar value, as measured by A.C. Nielsen for food, drug and mass outlets, more than twice as fast as the aggregate category growth rate. Operating profits increased 11%.

In Latin America (26% of sales), unit volume grew 5%, and dollar sales increased 3% excluding divested business. Colgate achieved healthy volume growth in the important markets of Brazil and Mexico, as well as in Central America, Ecuador, Venezuela and the Dominican Republic, offsetting an expected volume decrease in Colombia caused by economic conditions. Operating profits for the division increased 13%. Cost-savings projects, SAP, a more profitable product mix and regional sourcing all contributed to higher profitability.

In Europe (20% of sales) unit volume rose 7% as innovative new products drove top-line increases in nearly every country. Germany, France, Greece, the United Kingdom, Switzerland, Central Europe and Russia were among the strongest performers. Both sales and operating profits increased 7% in local currency and 1% in dollar terms, reflecting the weak Euro.

In Asia/Africa (17% of sales), new products helped produce 11% volume growth in Asia/Africa, marked by vigorous growth in China, as well as strong gains in Thailand, Malaysia, Australia and Vietnam. Sales for the region increased 4% as a result of exchange while operating profits increased 17%.