Colgate’s Q1 Sales Rise 5%

Colgate-Palmolive Company’s Q1 sales rose 5% to $4.2 billion. Global unit volume grew 3.5%, pricing increased 3.5% and foreign exchange was negative 2.0%. Excluding divested businesses, global unit volume grew 4.5%. The Sanex acquisition contributed 1.5% to sales and volume growth. Organic sales (Net sales excluding foreign exchange, acquisitions and divestments) grew 6.5%.

“We are very pleased to begin the year with strong top and bottom line growth, building on the growth momentum we saw in 2011,” said Ian Cook, chairman, president and chief executive officer. “”The excellent 6.5% organic sales growth, which was the largest increase we have seen in seven quarters, was driven by unit volume gains and higher pricing worldwide. The robust growth was led by the emerging markets where organic sales grew 11.5% in the quarter, and we are encouraged by positive organic sales growth in the developed markets as well.”

Net income and diluted earnings per share in first quarter 2012 were $593 million and $1.23, respectively. Net income in the quarter included $8 million of aftertax charges ($0.01 per diluted share) resulting from the previously disclosed implementation of various business realignment and other cost-saving initiatives (“business realignments”) and the sale of land in Mexico. Net income and Diluted earnings per share in first quarter 2011 were $576 million and $1.16, respectively.

Excluding the above noted items, Net income in first quarter 2012 was $601 million, an increase of 4% versus first quarter 2011, and Diluted earnings per share in first quarter 2012 was $1.24, an increase of 7% versus first quarter 2011.

Gross profit margin was 58.0% in first quarter 2012, down 40 basis points versus the year ago quarter. Excluding the above noted items, primarily the costs related to the sale of land in Mexico, gross profit margin was 58.2% in first quarter 2012, down 20 basis points versus the year ago quarter, reflecting continued increases in raw and packaging material costs worldwide in the second half of 2011. These increases were partially offset by higher pricing and cost savings from the company’s funding-the-growth initiatives.

Selling, general and administrative expenses were 35.2% of Net sales in first quarter 2012 and 2011. Excluding costs associated with the business realignments, Selling, general and administrative expenses were 35.0% of Net sales in first quarter 2012, 20 basis points lower than the year ago quarter, as overhead expenses decreased by 40 basis points and advertising increased by 20 basis points. Worldwide advertising spending increased 7% versus the year ago quarter to $448 million.

Operating profit increased 3% to $938 million in first quarter 2012 compared to $915 million in first quarter 2011. Excluding costs associated with the business realignments and the sale of land in Mexico noted above, operating profit increased 4% to $950 million.

Net cash provided by operations in first quarter 2012 was $662 million compared to $680 million in first quarter 2011. The decrease in first quarter 2012 was primarily due to higher income tax payments and the payment for the previously disclosed competition law matter in France related to a divested detergent business. Working capital as a percentage of Net sales was negative 0.1%, up 50 basis points versus the very low level in the year ago period. This increase was primarily due to higher levels of accounts receivable and inventories, although both accounts receivable days sales outstanding and inventory days coverage improved versus the year ago period. Free cash flow before dividends remains very strong, once again exceeding 100% of Net income.

“Pleasingly, the higher pricing combined with the benefits of our cost-savings programs in all areas of the business allowed for higher advertising spending behind Colgate’s brands worldwide. While these investments increased in both absolute dollars and as a percent to sales, we still delivered increases in operating profit, net income and diluted earnings per share versus the year ago quarter.

“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 45.2% year to date, up 0.8 share points versus year ago. Our global leadership in manual toothbrushes also strengthened during the quarter with Colgate’s global market share in that category reaching 32.7% 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 initiatives and anticipate that the benefits from those programs, combined with our strategic worldwide pricing initiatives, will help us achieve gross margin expansion in 2012, and allow for even higher levels of advertising support behind a full pipeline of new products planned for launch in the balance of the year.

“Overall, we continue to expect diluted earnings per share for the year to grow at a double-digit rate, on a currency neutral basis and, as such, we remain comfortable with external profit growth expectations for the year.”

At 11:00 a.m. ET today, Colgate will host a conference call to elaborate on first quarter results. To access this call as a webcast, please go to Colgate’s web site at http://www.colgatepalmolive.com.