Q1 Results Are In At Colgate

Colgate-Palmolive Company today reported worldwide net sales of $3.762 billion in first quarter 2016, a decrease of 7.5% versus first quarter 2015. Excluding divested businesses and the impact of the previously disclosed deconsolidation of the company’s Venezuelan operations, unit volume increased 3.5%, pricing increased 1.5% and foreign exchange was negative 8.0%. Organic sales (net sales excluding foreign exchange, acquisitions, divestments and the impact of the deconsolidation of the Company’s Venezuelan operations) grew 5.0%, according to the company.
 
Net income and diluted earnings per share in first quarter 2016 were $533 million and $0.59, respectively. Net income in first quarter 2016 included $38 million ($0.04 per diluted share) of aftertax charges resulting from the implementation of the Company’s Global Growth and Efficiency Program.
 
Net income and diluted earnings per share in first quarter 2015 were $542 million and $0.59, respectively. Net income in first quarter 2015 included $67 million ($0.07 per diluted share) of aftertax charges resulting from the 2012 Restructuring Program.
 
Excluding charges from the 2012 Restructuring Program in both periods, net income in first quarter 2016 was $571 million, a decrease of 6% versus first quarter 2015, and diluted earnings per share in first quarter 2016 was $0.63, a decrease of 5% versus first quarter 2015. On a currency-neutral basis and excluding charges from the 2012 restructuring program and Venezuela in both periods, Diluted earnings per share increased double digit.
 
 “In the face of continued challenging macroeconomic conditions worldwide, we are pleased to start the year with another quarter of strong organic sales growth, with every operating division contributing,” said Ian Cook, chairman, president and CEO. “The 5.0% worldwide organic sales growth was led by emerging markets where organic sales grew a robust 7.5%, despite economic challenges in certain countries.”
 
Additionally, Cook said “Gross profit margin, operating profit margin and net income as a percent to sales all increased versus the year ago period. We are particularly pleased to have achieved a record 60.0% gross profit margin, a new milestone for Colgate.
 
Accordin to Cook, Colgate’s leadership of the global toothpaste market continued during the quarter with its global market share now at 43.8% year-to-date. The firm’s global leadership in manual toothbrushes also continued with Colgate’s global market share in that category now at 33.5% year-to-date, he said.
 
North America net sales increased 1.5% in first quarter 2016. Unit volume increased 4.0% with 2.0% lower pricing, while foreign exchange was negative 0.5%. Organic sales increased 2.0% during the quarter. Operating profit in North America increased 10% in the first quarter of 2016 to $239 million, or 230 basis points to 29.9% of net sales.
 
The increase in operating profit as a percentage of net sales was primarily due to an increase in gross profit and a decrease in selling, general and administrative expenses, both as a percentage of net sales. This increase in gross profit was primarily driven by cost savings from the company’s funding-the-growth initiatives and lower raw and packaging material costs, which were partially offset by lower pricing due to increased in-store promotional activities. This decrease insSelling, general and administrative expenses was primarily due to decreased advertising investment, in part reflecting a shift from advertising investment to in-store promotional activities.
 
In the US new product launches are contributing to volume growth. Market share gains year-to-date were seen in toothpaste, manual toothbrushes, body wash, liquid cleaners and fabric conditioners. Colgate gained leadership in toothpaste during the quarter with its market share in that category strengthening to 35.9% year-to-date, up 0.5 share points versus the year ago period, driven by strong sales of Colgate Total Daily Repair, Colgate Enamel Health Mineral Repair, Colgate Optic White Platinum High Impact White, Colgate Sensitive Smart White and Tom’s of Maine toothpastes. In manual toothbrushes, Colgate strengthened its brand market leadership in the U.S. with its market share in that category at 42.5% year-to-date, up 0.7 share points versus the year ago period. Strong sales of Colgate 360° Enamel Health Whitening, Colgate 360° Optic White Platinum and Colgate 360° Total Advanced Floss-Tip manual toothbrushes contributed to volume growth in the quarter.

Successful new products driving volume growth in the U.S. in other categories include Colgate Total Daily Repair and Colgate Kids mouthwashes, Softsoap Pure foaming hand soap, Softsoap Luminous Oils and Irish Spring Signature For Men body washes and Palmolive Fusion Clean dish liquid.
 
Latin America net sales fell 22.0% in first quarter 2016. Excluding the impact of the deconsolidation of the Company’s Venezuelan operations, unit volume increased 2.5%. Volume gains were led by Brazil, Mexico and Colombia. Pricing increased 7.0%, while foreign exchange was negative 19.0%. Organic sales for Latin America increased 9.5%. Operating profit in Latin America decreased 20% in the first quarter of 2016 to $247 million, while as a percentage of net sales, it increased 80 basis points to 29.1% of net sales.
 
Europe/South Pacific net sales decreased 7.5% in first quarter 2016. Unit volume was even with the year ago quarter. Pricing decreased 3.0% and foreign exchange was negative 4.5%. Excluding divested businesses, volume increased 4.0% led by volume gains in France, Australia and Poland. Organic sales for Europe/South Pacific increased 1.0%. Operating profit in Europe/South Pacific decreased 9% in the first quarter of 2016 to $168 million, or 30 basis points to 24.5% of net sales.
 
Colgate said its strengthened its oral care leadership in the Europe/South Pacific region, driven by toothpaste market share gains in Spain, France, Belgium, Germany, Poland, Greece, Austria, Latvia, Bosnia, Serbia and Australia. Successful premium products contributing to volume gains in oral care include Colgate Max White Whiten & Protect, elmex Sensitive Professional Repair & Prevent, Colgate Total Proof and Colgate Sensitive Pro-Relief Extra Strength toothpastes, Colgate Max White Expert White Toothbrush + Built-In Whitening Pen, Colgate Sensitive Pro-Relief Toothbrush + Built-In Sensitivity Pen and Colgate 360° Advanced manual toothbrush.
Premium innovations contributing to volume growth in other product categories include the Sanex Advanced line of shower gels, shower oils, deodorants, hand creams, body lotions and body balms, Palmolive Naturals and Palmolive Gourmet shower gels, Palmolive Sensorials line of dish liquids, Ajax Kitchen Specialist line of spray cleaners and Soupline Complete Care fabric conditioner.
 
Asia net sales decreased 2.5% during first quarter 2016. Unit volume increased 4.0%, pricing was even with the year ago quarter and foreign exchange was negative 6.5%. Volume gains were led by the Greater China region, India and the Philippines. Organic sales for Asia increased 4.0%. Operating profit in Asia decreased 1% in the first quarter of 2016 to $192 million, while as a percentage of Net sales, it increased 50 basis points to 29.7% of net sales.
 
Colgate continued its toothpaste leadership in Asia during the quarter, driven by toothpaste market share gains in Hong Kong, Taiwan, the Philippines and Pakistan
 
Africa/Eurasia net sales decreased 9.0% during first quarter 2016. Unit volume was even with the year ago quarter, pricing increased 8.0% and foreign exchange was negative 17.0%. Volume gains led by Russia and the Gulf States offset volume declines in South Africa and Ukraine. Organic sales for Africa/Eurasia increased 8.0%.
Operating profit in Africa/Eurasia increased 10% in the first quarter of 2016 to $43 million, or 320 basis points to 18.6% of net sales.