Colgate Palmolive Company (CL) reported results for the fourth quarter and full year of 2009 with fourth quarter earnings of $1.21 per share, which was 8 cents above the Zacks Consensus Estimate of $1.13. Earnings were up 21% year-over-year, driven by effective price implementation and ongoing aggressive cost savings program.
Net sales for the quarter increased 11.5% year-over-year to $4.1 billion as unit volume increased 3.0%, pricing contributed 3.5% and foreign exchange contributed 5.0%. Organic sales (excluding foreign exchange, acquisitions and divestitures) increased 6.5% in the quarter.
Full-year 2009 net sales were flat year-over-year to $15.3 billion. Unit volume growth was 0.5% and pricing increased 6.0%, which was partially offset by a 6.5% negative foreign exchange impact. Organic sales for the year increased 6.5%.
North American sales increased 5.0% driven by 5.5% unit volume growth and a 1% favorable foreign exchange, partially offset by 1.5% lower pricing. In Latin America, sales grew 22.5% as unit volume increased 5.0%, driven by solid gains in Brazil and Columbia. In addition, pricing contributed 12.0% and foreign exchange contributed positive 5.5% to the top line.
In Europe/South Pacific, sales grew 12.5% as unit volume increased 2.5%, driven by volume gains in France, Italy, the United Kingdom and the GABA business. Although pricing was down 0.5%, foreign exchange contributed positive 10.5%. Sales in Greater Asia/Africa increased 10.5%, while unit volume grew 8.0% as volume gains in India, the Greater China and Thailand. Pricing increased 0.5% and foreign exchange contributed positive 2.0%.
Sales in the Hill’s Pet Nutrition business grew 1.5%, however unit volume declined 8.5% due to declines in the U.S., Japan and Russia, partially offset by gains in Germany, Australia and Mexico. Pricing contributed 3.0% and favorable foreign exchange contributed positive 4.0% to the top line.
Gross margins expanded 352 basis points (bps) to 59.4% from 56.0% in the prior-year period, driven by benefits of restructuring activities and pricing. The operating margin also increased 308 bps to 24.3% versus 21.2% in the prior-year quarter. Capital expenditures for fiscal 2009 were $575 million.
For the full year, net cash provided by operations increased 42% to $3.3 billion, due to efficient working capital management, especially a reduction in receivable days outstanding. The company has a debt-to-total-capitalization ratio of 50.5%.
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