Colgate-Palmolive Company (CL) posted third-quarter earnings of $1.21 per share, outpacing the Zacks Consensus Estimate of $1.19 and prior-year quarter earnings of $1.12.

Global net sales fell 1.5% year over year to $3,943 million as pricing remained flat while unit volume rose 3%, countered by a negative foreign exchange impact of 4.5%. On an organic basis (excluding foreign exchange, acquisitions and divestitures), sales increased 3.0% in the quarter. Global net sales also fell short of the Zacks Consensus Revenue Estimate of $4,030 million.

Gross profit decreased marginally by 0.97% to $2,344 million. However, gross profit margin of 59.4% grew 20 basis points compared with the prior-year quarter, riding on cost-containment initiatives, partly offset by adverse foreign exchange translation and higher promotional investments.

Colgate-Palmolive notified that its share of the global toothpaste market has increased to 44.2% year-to-date, led by better performance across Brazil, China, India, Russia, Venezuela, France and the United Kingdom. Colgate’s market share in manual toothbrushes has increased to 31.5%.

Segment Discussion

North Americasales (19% of total sales) climbed 2.0% in the quarter, driven by a 3% unit volume growth and a 0.5% favorable foreign exchange, partially offset by 1.5% on account of lower pricing. On an organic basis, sales rose by 1.5%. Operating profit jumped 3.0%.

Latin America sales (27% of the total sales) declined 6.0% during the quarter, as unit volume increase of 1% driven by gains in Mexico, Colombia, Argentina, Dominican Republic and Central America was fully offset by a volume decline in Venezuela. Additionally a 5% pricing contribution to the top-line was countered by a negative foreign exchange impact of 12.0%. On an organic basis, sales increased 6%, whereas operating profit slipped 4% during the quarter.

Europe/South Pacific sales (21% of total sales) dropped 8.5% as pricing was down 3.5% and foreign currency translation made a negative contribution of 5.5%. Unit volume rose 0.5% driven by the GABA business, the United Kingdom and Australia, partially offset by volume declines across France and Greece. On an organic basis, sales fell 3.0%, and operating profit plunged 10% in the quarter.

Greater Asia/Africa sales (20% of total sales) climbed 12%, with unit volume increasing at the same rate, led by volume gains in India, the Greater China region, the Philippines, Russia and South Africa. Pricing dropped marginally by 2.0% but foreign currency translation made a positive contribution of 2%. On an organic basis, sales grew 10%, and operating profit rose 21%.

Hill’s sales (13% of total sales) tumbled 2.0%. Unit volume fell 0.5% due to volume declines across the U.S and Japan, offset by gain in Russia and Taiwan. On an organic basis, sales slipped 1.5%, whereas operating profit increased 1%.

Other Financial Details

Colgate-Palmolive ended the quarter with cash and cash equivalents of $654 million compared with $847 million in the year-ago period, total debt of $3,388 million and shareholders’ equity of $2,672 million. Year-to-date, net cash from operations came in at $2,243.0 million.

Colgate-Palmolive’s shares maintain a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation. Our long-term recommendation for the stock remains ‘Neutral’.

 
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