Strong Worldwide Organic Sales
Growth
Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net
sales of $4,066 million in second quarter 2015, a decrease of 6.5%
versus second quarter 2014. Global unit volume grew 3.0%, pricing
increased 2.5% and foreign exchange was negative 12.0%. Organic
sales (Net sales excluding foreign exchange, acquisitions and
divestments) grew 5.5%.
Net income and Diluted earnings per share in second quarter 2015
were $574 million and $0.63, respectively. Net income in second
quarter 2015 included $65 million ($0.07 per diluted share) of
aftertax charges resulting from the implementation of the Company’s
four-year Global Growth and Efficiency Program (the “2012
Restructuring Program”), an effective devaluation in Venezuela and
a previously disclosed foreign tax matter.
Net income and Diluted earnings per share in second quarter 2014
were $622 million and $0.67, respectively. Net income in second
quarter 2014 included $54 million ($0.06 per diluted share) of
aftertax charges resulting from the items described in Table 8.
Excluding the above noted items in both periods, Net income in
second quarter 2015 was $639 million, a decrease of 5% versus
second quarter 2014, and Diluted earnings per share in second
quarter 2015 was $0.70, a decrease of 4% versus second quarter
2014. On a currency-neutral basis and excluding the above noted
items in both periods, Diluted earnings per share increased double
digit.
Gross profit margin was 58.2% in second quarter 2015 versus
58.6% in second quarter 2014. Excluding the above noted items in
both periods, Gross profit margin was 58.3% in second quarter 2015,
a decrease of 50 basis points versus the year ago quarter,
primarily as a result of higher raw and packaging material costs,
driven by significant foreign exchange transaction costs, which
were partially offset by higher pricing and the benefits from cost
savings from the Company’s funding-the-growth initiatives and the
2012 Restructuring Program.
Selling, general and administrative expenses were 34.0% of Net
sales in second quarter 2015 versus 34.6% of Net sales in second
quarter 2014. Excluding the above noted items in both periods,
Selling, general and administrative expenses decreased by 70 basis
points to 33.7% of Net sales in second quarter 2015, due to
decreased advertising investment as a percentage of Net sales.
Worldwide advertising investment decreased 12% to $410 million
versus the year ago quarter.
Operating profit decreased 5% to $932 million in second quarter
2015 compared to $980 million in second quarter 2014. Excluding the
above noted items in both periods, Operating profit decreased 5% to
$1,000 million in second quarter 2015. Operating profit margin was
22.9% in second quarter 2015 versus 22.5% in second quarter 2014.
Excluding the above noted items in both periods, Operating profit
margin was 24.6% in second quarter 2015, an increase of 30 basis
points versus the year ago quarter.
Net cash provided by operations year to date was $1,223 million
compared to $1,389 million in the comparable 2014 period, primarily
due to lower operating earnings and higher payments related to
income taxes and a previously disclosed European competition law
matter. Working capital as a percentage of Net sales was negative
0.2%, an improvement of 90 basis points versus the year ago
period.
Ian Cook, Chairman, President and Chief Executive Officer,
commented on the results and outlook excluding the 2015 and 2014
items noted above, “In the face of challenging macroeconomic
conditions worldwide, we are pleased to have achieved another
quarter of broad-based organic sales growth, driven by positive
unit volume growth and higher pricing.
“All operating divisions contributed to the 5.5% worldwide
organic sales growth, led by emerging markets where organic sales
grew a strong 7.5%, despite economic challenges in certain
countries.
“Colgate’s leading share of the global toothpaste market
strengthened to 45.0% year to date, up 0.5 share points versus the
year ago period. Our global leadership in manual toothbrushes also
strengthened with Colgate’s global market share in that category
reaching 34.1% year to date, up 0.2 share points versus the year
ago period.”
In closing, Mr. Cook commented, “As we look ahead, macroeconomic
conditions and foreign exchange volatility remain challenging.
Despite that, we anticipate another year of solid organic sales
growth driven by a full new product pipeline across all categories
and geographies. While our long-term goal of double-digit annual
earnings per share growth remains unchanged, we continue to see
significant deterioration in foreign exchange rates. We continue to
plan for a year of gross margin expansion, however, based on
current spot rates, we expect a low-single-digit earnings per share
decline on a dollar basis, excluding charges related to the 2012
Restructuring Program. This earnings per share decline would
reflect a double-digit increase on a currency-neutral basis.”
At 11:00 a.m. ET today, Colgate will host a conference call to
elaborate on second quarter results. To access this call as a
webcast, please go to Colgate’s web site at
http://www.colgatepalmolive.com.
The following are comments about divisional performance for
second quarter 2015 versus the year ago period. See attached
Geographic Sales Analysis Percentage Changes and Segment
Information schedules for additional information on divisional net
sales and operating profit.
North America (19% of Company
Sales)
North America Net sales increased 1.5% in second quarter 2015.
Unit volume increased 3.0% with 0.5% lower pricing, while foreign
exchange was negative 1.0%. Organic sales increased 2.5% during the
quarter.
Operating profit in North America decreased 3% in second quarter
2015 to $223 million, or 140 basis points to 28.6% of Net sales.
This decrease in Operating profit as a percentage of Net sales was
due to an increase in Selling, general and administrative expenses
and an increase in Other (income) expense, net, which were
partially offset by an increase in Gross profit, all 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 which were partially offset by
higher costs, which included higher raw and packaging material
costs, and lower pricing due to increased promotional activities.
This increase in Selling, general and administrative expenses was
due to higher overhead expenses and increased advertising
investment. This increase in Other (income) expense, net was in
part due to higher intercompany expense from purchases of inventory
from the Latin America reportable operating segment.
In the U.S., new product launches are contributing to volume
growth. Market share gains year to date were seen in toothpaste,
mouthwash, liquid hand soaps, body wash and fabric conditioners.
Colgate’s share of the toothpaste market strengthened to 35.2% year
to date, up 0.2 share points versus the year ago period, driven by
strong sales of Colgate Enamel Health, Colgate Optic White Platinum
Express White and Tom’s of Maine toothpastes. In manual
toothbrushes, Colgate continued its brand market leadership in the
U.S. with its market share in that category at 41.4% year to date.
Strong sales of Colgate Sensitive Toothbrush + Built-In Sensitivity
Relief Pen, Colgate 360° Enamel Health, Colgate 360° Optic White
Platinum and Colgate Extra Clean manual toothbrushes contributed to
volume growth in the quarter.
Successful products driving volume growth in the U.S. in other
categories include Colgate Total for Gum Health, Colgate Total
Lasting White and Colgate Kids mouthwashes, Softsoap Fragrant
Foaming Collection of liquid hand soaps, Softsoap Fresh & Glow
body washes, Irish Spring Signature For Men body wash and bar soap
and Suavitel Fragrance Pearls fabric conditioner.
Latin America (27% of Company
Sales)
Latin America Net sales decreased 8.5% in second quarter 2015.
Unit volume increased 0.5% with 9.0% higher pricing, while foreign
exchange was negative 18.0%. Acquisitions contributed 0.5% to
volume. Volume gains led by Mexico, Argentina and Brazil were
partially offset by volume declines in Venezuela. Organic sales for
Latin America increased 9.0%.
Operating profit in Latin America increased 3% in second quarter
2015 to $321 million, or 320 basis points to 28.5% of Net
sales. This increase in Operating profit as a percentage of
Net sales was due to a decrease in Selling, general and
administrative expenses and a decrease in Other (income) expense,
net, partially offset by a decrease in Gross profit, all as a
percentage of Net sales. This decrease in Gross profit was due to
higher raw and packaging material costs, driven by foreign exchange
transaction costs, partially offset by cost savings from the
Company’s funding-the-growth initiatives and the 2012 Restructuring
Program and higher pricing. This decrease in Selling, general and
administrative expenses was due to decreased advertising
investment, reflecting in part a shift from advertising investment
to in-store promotional activities, and lower overhead expenses.
This decrease in Other (income) expense, net was in part due to
higher intercompany income from sales of inventory to the North
America reportable operating segment.
Colgate strengthened its leadership in toothpaste throughout
Latin America during the quarter driven by market share gains in
Mexico, Brazil, Venezuela, Argentina, Chile, El Salvador and
Honduras. Strong sales of Colgate Total 12, Colgate Luminous White
Advanced, Colgate Luminous White Instant, Colgate Total
Professional Breath Health, Colgate Sensitive Pro-Relief Enamel
Repair and Colgate Maximum Cavity Protection plus Neutrazucar
toothpastes contributed to volume growth throughout the region.
Colgate’s leadership in the manual toothbrush category continued
throughout the region, driven by strong sales of Colgate 360°
Surround Whitening, Colgate 360° Interdental, Colgate 360° Luminous
White Advanced, Colgate Slim Soft and Colgate Triple Action manual
toothbrushes.
Products in other categories contributing to volume growth
include Colgate Luminous White and Colgate Plax Whitening Tartar
Control mouthwashes, Protex Complete 12, Protex Omega 3, Palmolive
Men and Palmolive Naturals Berries and Coconut Water bar soaps,
Lady Speed Stick Powder Fresh and Speed Stick Xtreme Tech
deodorants, Suavitel Complete and Suavitel Aroma Intense fabric
conditioners, Axion Complete dish liquid and Fabuloso Pure &
Clean liquid cleaner.
Europe/South Pacific (18% of Company
Sales)
Europe/South Pacific Net sales decreased 16.5% in second quarter
2015. Unit volume increased 4.5% with 3.0% lower pricing due to
increased promotional activities, while foreign exchange was
negative 18.0%. Divestments decreased volume by 0.5%. Volume gains
were led by Germany, Australia and France. Organic sales for
Europe/South Pacific increased 2.0%.
Operating profit in Europe/South Pacific decreased 19% in second
quarter 2015 to $183 million, or 100 basis points to 25.0% of Net
sales. This decrease in Operating profit as a percentage of Net
sales was primarily due to a decrease in Gross profit as a
percentage of Net sales. This decrease in Gross profit was
primarily due to higher raw and packaging material costs, driven by
foreign exchange transaction costs, and lower pricing due to
increased promotional activities, partially offset by cost savings
from the Company’s funding-the-growth initiatives and the 2012
Restructuring Program. Selling, general and administrative expenses
as a percentage of Net sales were even with the second quarter of
2014, as lower overhead expenses were fully offset by increased
advertising investment.
Colgate strengthened its oral care leadership in the
Europe/South Pacific region driven by toothpaste market share gains
in France, Italy, Spain, the Netherlands, Belgium, Hungary, Czech
Republic, Slovenia, Croatia and the Baltic region. Successful
premium products driving market share gains include Colgate Max
White One Optic, Colgate Maximum Cavity Protection plus Sugar Acid
Neutralizer and elmex Sensitive Plus Gentle Whitening toothpastes.
In the manual toothbrush category, Colgate Cavity Protection and
Colgate Slim Soft Charcoal manual toothbrushes contributed to
market share gains across the region.
Recent premium innovations contributing to volume growth in
other product categories include the Sanex Advanced line of shower
gels, deodorants, hand creams and body lotions, Palmolive Aroma
Sensations shower gel, Ajax All Usage Gel and Ajax Fete des Fleurs
liquid cleaners, Ajax Easy Rinse spray cleaner and Soupline Fruity
Sensations fabric conditioner.
Asia (16% of Company
Sales)
Asia Net sales increased 2.0% during second quarter 2015. Unit
volume increased 5.5% with 0.5% lower pricing, while foreign
exchange was negative 3.0%. Volume gains were led by the Greater
China region, the Philippines and India. Organic sales for Asia
increased 5.0%.
Operating profit in Asia increased 2% in second quarter 2015 to
$181 million, while as a percentage of Net Sales it decreased 10
basis points to 29.1%. This decrease in Operating profit as a
percentage of Net sales was primarily due to an increase in
Selling, general and administrative expenses, which was partially
offset by an increase in Gross profit, both as a percentage of
Net sales. This increase in Gross profit was mainly driven by cost
savings from the Company’s funding-the-growth initiatives, which
were partially offset by higher costs, primarily driven by higher
raw and packaging material costs, which included foreign exchange
transaction costs, and lower pricing. This increase in Selling,
general and administrative expenses was due to increased
advertising investment, which was partially offset by lower
overhead expenses.
Colgate continued its toothpaste leadership in Asia during the
quarter. Successful new products including Colgate 360° Pro Gum
Whitening, Colgate Optic White Plus Shine, Colgate Active Salt Neem
and Colgate Power White Bamboo Charcoal toothpastes contributed to
volume growth in the region.
Successful products contributing to volume growth in other
categories in the region include Colgate Slim Soft Dual Action,
Colgate 360° Charcoal Gold and Colgate 360° Pro Gum Health
Whitening manual toothbrushes, Colgate Plax Active Salt, Colgate
Plax Bamboo Charcoal Mint and Colgate Total Pro Gum Health
mouthwashes and Palmolive Naturals shampoo and conditioner.
Africa/Eurasia (6% of Company
Sales)
Africa/Eurasia Net sales decreased 17.5% during second quarter
2015. Unit volume decreased 3.0% with 7.0% higher pricing, while
foreign exchange was negative 21.5%. Volume declines in the Central
Asia/Caucasus region, Ukraine, South Africa and Russia were
partially offset by volume gains in the Sub-Saharan Africa region.
Organic sales for Africa/Eurasia increased 4.0%.
Operating profit in Africa/Eurasia decreased 22% in second
quarter 2015 to $45 million, or 110 basis points to 17.7% of Net
sales. This decrease in Operating profit as a percentage of Net
sales was primarily due to a decrease in Gross profit, which was
partially offset by a decrease in Selling, general and
administrative expenses, both as a percentage of Net
sales. This decrease in Gross profit was primarily due to
higher raw and packaging material costs, driven by higher foreign
exchange transaction costs, partially offset by cost savings from
the Company’s funding-the-growth initiatives and higher pricing.
This decrease in Selling, general and administrative expenses was
due to lower overhead expenses and decreased advertising
investment.
Colgate continued its toothpaste leadership in Africa/Eurasia,
driven by market share gains in nearly every country in the region.
Successful products contributing to growth in the region include
Colgate Total, Colgate Optic White Instant and Colgate Maximum
Cavity Protection plus Sugar Acid Neutralizer toothpastes, Colgate
Slim Soft Charcoal and Colgate 360° Whole Mouth Clean manual
toothbrushes, Palmolive Gourmet Spa Peach Sorbet, Palmolive Gourmet
Spa Creamy Coffee and Palmolive Men Taiga Freshness shower gels and
Palmolive Altai Herbs and Protex Men Power bar soaps.
Hill’s Pet Nutrition (14% of Company
Sales)
Hill’s Net sales decreased 1.5% during second quarter 2015. Unit
volume increased 5.5% with 1.5% higher pricing, while foreign
exchange was negative 8.5%. Volume gains were led by the United
States and Japan. Hill’s organic sales increased 7.0%.
Hill’s Operating profit was $146 million in second quarter 2015,
even with second quarter 2014, while as a percentage of Net sales,
it increased 30 basis points to 26.4% of Net sales. This
increase in Operating profit as a percentage of Net sales was due
to a decrease in Selling, general and administrative expenses,
partially offset by an increase in Other (income) expense, net,
both as a percentage of Net sales. Gross profit as a percentage of
Net sales was even with the second quarter of 2014, as cost savings
from the Company’s funding-the-growth initiatives and higher
pricing fully offset higher costs, primarily driven by higher raw
and packaging material costs, which included foreign exchange
transaction costs. This decrease in Selling, general and
administrative expenses was primarily due to decreased advertising
investment. This increase in Other (income) expense, net was in
part due to the expiration of a foreign sales tax exemption.
New product introductions driving volume growth in the U.S.
include Hill’s Ideal Balance Crafted, Hill’s Prescription Diet
Metabolic Plus Mobility and Metabolic Plus Urinary, Hill’s
Prescription Diet stews and Hill’s Ideal Balance Slim &
Healthy.
New product introductions driving volume growth internationally
include Hill’s Science Diet Perfect Weight, Hill’s Prescription
Diet Metabolic Plus Mobility, Metabolic Plus Urinary and c/d
Multicare Urinary Stress, Hill’s Ideal Balance and Hill’s Science
Diet Neutered.
***
About Colgate-Palmolive: Colgate-Palmolive is a leading global
consumer products company, tightly focused on Oral Care, Personal
Care, Home Care and Pet Nutrition. Colgate sells its products in
over 200 countries and territories around the world under such
internationally recognized brand names as Colgate, Palmolive, Speed
Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex, Sorriso,
Kolynos, elmex, Tom’s of Maine, Sanex, Ajax, Axion, Fabuloso,
Soupline and Suavitel, as well as Hill’s Science Diet, Hill’s
Prescription Diet and Hill’s Ideal Balance. For more information
about Colgate’s global business, visit the Company’s web site at
http://www.colgatepalmolive.com. To learn more about Colgate Bright
Smiles, Bright Futures® oral health education program, please visit
http://www.colgatebsbf.com. CL-E
Market Share Information
Management uses market share information as a key indicator to
monitor business health and performance. References to market share
in this press release are based on a combination of consumption and
market share data provided by third-party vendors, primarily
Nielsen, and internal estimates. All market share references
represent the percentage of the dollar value of sales of our
products, relative to all product sales in the category in the
countries in which the Company competes and purchases data. Market
share data is subject to limitations on the availability of
up-to-date information. We believe that the third-party vendors we
use to provide data are reliable, but we have not verified the
accuracy or completeness of the data or any assumptions underlying
the data. In addition, market share information calculated by the
Company may be different from market share information calculated
by other companies due to differences in category definitions, the
use of data from different countries, internal estimates and other
factors.
Explanatory Note Regarding
Currency-Neutral Calculations
Diluted earnings per share growth for second quarter 2015, on a
currency-neutral basis, eliminates from Diluted earnings per share
growth (GAAP) the impact of the items described in Table 8, and the
period-over-period changes in foreign exchange rates in the
translation of local currency results into U.S. dollars.
Accordingly, for purposes of calculating Diluted earnings per share
growth for second quarter 2015, on a currency-neutral basis, second
quarter 2015 local currency results, which include the impact of
foreign currency transaction gains and losses, are translated into
U.S. dollars using average foreign exchange rates for second
quarter 2014.
Management’s estimate of earnings per share growth on a
currency-neutral basis for full year 2015 eliminates from earnings
per share growth (GAAP) the impact of the items described in Table
9, the 2012 Restructuring Program and period-over-period changes in
foreign exchange rates in the translation of local currency results
into U.S. dollars. Accordingly, for purposes of estimating earnings
per share growth for full year 2015, on a currency-neutral basis,
estimated full year 2015 local currency results, which include the
impact of estimated foreign currency transaction gains and losses,
are translated into U.S. dollars using 2014 average foreign
exchange rates by quarter.
Cautionary Statement on Forward-Looking
Statements
This press release and the related webcast may contain
forward-looking statements. Such statements may relate, for
example, to sales or volume growth, organic sales growth, profit or
profit margin growth, earnings per share growth (including on a
currency neutral basis), financial goals, the impact of currency
devaluations, exchange controls, price controls and labor unrest,
including in Venezuela, cost-reduction plans including the 2012
Restructuring Program, tax rates, new product introductions or
commercial investment levels, among other matters. These statements
are made on the basis of our views and assumptions as of this time
and we undertake no obligation to update these statements except as
required by law. We caution investors that any such forward-looking
statements are not guarantees of future performance and that actual
events or results may differ materially from those statements.
Investors should consult the Company’s filings with the Securities
and Exchange Commission (including the information set forth under
the caption “Risk Factors” in the Company’s Annual Report on Form
10-K for the year ended December 31, 2014) for information about
certain factors that could cause such differences. Copies of these
filings may be obtained upon request from the Company’s Investor
Relations Department or on the Company’s web site at
http://www.colgatepalmolive.com.
Non-GAAP Financial Measures
The following provides information regarding the non-GAAP
financial measures used in this earnings release and/or the related
webcast:
This release discusses organic sales growth, which is Net sales
growth excluding the impact of foreign exchange, acquisitions and
divestments. Management believes this measure provides investors
with useful supplemental information regarding the Company’s
underlying sales trends by presenting sales growth excluding the
external factor of foreign exchange as well as the impact from
acquisitions and divestments. See “Geographic Sales Analysis
Percentage Changes” for the three and six months ended June 30,
2015 vs 2014 included with this release for a comparison of organic
sales growth to net sales growth in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”).
To supplement Colgate’s Condensed Consolidated Statements of
Income presented in accordance with GAAP, the Company has disclosed
non-GAAP measures of operating results that exclude certain items.
Worldwide Gross profit, Gross profit margin, Selling, general and
administrative expenses, Selling, general and administrative
expenses as a percentage of Net sales, Other (income) expense, net,
Operating profit, Operating profit margin, Net income attributable
to Colgate-Palmolive Company and Diluted earnings per common share
are discussed both as reported (on a GAAP basis) and, as
applicable, excluding charges related to the 2012 Restructuring
Program, charges related to the effective devaluations in 2014 and
2015 as a result of the changes to Venezuela’s foreign exchange
system, a charge related to a foreign tax matter and costs related
to the sale of land in Mexico (non-GAAP). Management believes these
non-GAAP financial measures provide investors with useful
supplemental information regarding the performance of the Company’s
ongoing operations. See “Non-GAAP Reconciliations” for the three
and six months ended June 30, 2015 and 2014 included with this
release for a reconciliation of these financial measures to the
related GAAP measures.
The Company uses these financial measures internally in its
budgeting process and as factors in determining compensation. While
the Company believes that these financial measures are useful in
evaluating the Company’s business, this information should be
considered as supplemental in nature and is not meant to be
considered in isolation or as a substitute for the related
financial information prepared in accordance with GAAP. In
addition, these non-GAAP financial measures may not be the same as
similar measures presented by other companies.
The Company defines free cash flow before dividends as Net cash
provided by operations less Capital expenditures. As management
uses this measure to evaluate the Company’s ability to satisfy
current and future obligations, repurchase stock, pay dividends and
fund future business opportunities, the Company believes that it
provides useful information to investors. Free cash flow before
dividends is not a measure of cash available for discretionary
expenditures since the Company has certain non-discretionary
obligations such as debt service that are not deducted from the
measure. Free cash flow before dividends is not a GAAP measurement
and may not be comparable to similarly titled measures reported by
other companies. See “Condensed Consolidated Statements of Cash
Flows” for the six months ended June 30, 2015 and 2014 for a
comparison of free cash flow before dividends to Net cash provided
by operations as reported in accordance with GAAP.
(See attached tables for second quarter
results.)
Table 1 Colgate-Palmolive Company
Condensed Consolidated Statements of Income For
the Three Months Ended June 30, 2015 and 2014
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2015 2014 Net sales $ 4,066 $ 4,352 Cost of
sales 1,699 1,800 Gross profit 2,367 2,552 Gross
profit margin 58.2 % 58.6 % Selling, general and
administrative expenses 1,381 1,507 Other (income) expense,
net 54 65 Operating profit 932 980 Operating profit
margin 22.9 % 22.5 % Interest (income) expense, net 6 9
Income before income taxes 926 971 Provision for
income taxes 310 310 Effective tax rate 33.5 % 31.9 %
Net income including noncontrolling interests 616 661 Less:
Net income attributable to noncontrolling interests 42 39
Net income attributable to Colgate-Palmolive Company $ 574 $ 622
Earnings per common share Basic $ 0.63 $ 0.68 Diluted $ 0.63
$ 0.67 Average common shares outstanding Basic 904.6 916.1
Diluted 912.4 925.9
Table 2 Colgate-Palmolive Company
Condensed Consolidated Statements of Income For
the Six Months Ended June 30, 2015 and 2014 (Dollars
in Millions Except Per Share Amounts) (Unaudited) 2015
2014 Net sales $ 8,136 $ 8,677 Cost of sales 3,377
3,601 Gross profit 4,759 5,076 Gross profit margin
58.5 % 58.5 % Selling, general and administrative expenses
2,831 3,051 Other (income) expense, net 136 411
Operating profit 1,792 1,614 Operating profit margin 22.0 %
18.6 % Interest (income) expense, net 14 16 Income
before income taxes 1,778 1,598 Provision for income taxes
579 505 Effective tax rate 32.6 % 31.6 % Net income
including noncontrolling interests 1,199 1,093 Less: Net
income attributable to noncontrolling interests 83 83 Net
income attributable to Colgate-Palmolive Company $ 1,116 $ 1,010
Earnings per common share Basic $ 1.23 $ 1.10 Diluted $ 1.22
$ 1.09 Average common shares outstanding Basic 906.1 917.8
Diluted 914.4 927.3
Table 3 Colgate-Palmolive Company
Condensed Consolidated Balance Sheets
As of June 30, 2015, December 31, 2014,
and June 30, 2014
(Dollars in Millions) (Unaudited) June
30, December 31, June 30, 2015 2014 2014 Cash and cash
equivalents $ 1,059 $ 1,089 $ 1,161 Receivables, net 1,691 1,552
1,803 Inventories 1,324 1,382 1,508 Other current assets 914 840
702 Property, plant and equipment, net 4,039 4,080 4,077 Other
assets, including goodwill and intangibles 4,633
4,516 4,737 Total assets $ 13,660
$ 13,459 $ 13,988 Total debt $ 6,683 $
6,148 $ 6,061 Other current liabilities 3,709 3,442 3,741 Other
non-current liabilities 2,511 2,484
2,115 Total liabilities 12,903 12,074 11,917 Total
Colgate-Palmolive Company shareholders' equity 454 1,145 1,779
Noncontrolling interests 303 240
292 Total liabilities and shareholders' equity $ 13,660
$ 13,459 $ 13,988
Supplemental
Balance Sheet Information Debt less cash, cash equivalents and
marketable securities* $ 5,376 $ 4,859 $ 4,745 Working capital % of
sales (0.2 )% 0.8 % 0.7 %
* Marketable securities of $248, $200 and $155 as of June
30, 2015, December 31, 2014, and June 30, 2014 respectively, are
included in Other current assets.
Table 4 Colgate-Palmolive Company
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2015 and 2014
(Dollars in Millions) (Unaudited) 2015 2014
Operating Activities Net income including noncontrolling
interests $ 1,199 $ 1,093 Adjustments to reconcile net income
including noncontrolling interests to net cash provided by
operations: Depreciation and amortization 225 215 Restructuring and
termination benefits, net of cash 59 68 Venezuela remeasurement
charges 16 266 Stock-based compensation expense 51 54 Deferred
income taxes (60 ) (37 ) Cash effects of changes in: Receivables
(222 ) (198 ) Inventories 8 (90 ) Accounts payable and other
accruals (77 ) (8 ) Other non-current assets and liabilities
24 26 Net cash provided by operations 1,223
1,389
Investing Activities Capital expenditures (280
) (314 ) Purchases of marketable securities and investments (365 )
(165 ) Proceeds from sale of marketable securities and investments
195 177 Payment for acquisitions, net of cash acquired - (25 )
Other 12 13 Net cash used in investing
activities (438 ) (314 )
Financing Activities
Principal payments on debt (4,178 ) (4,282 ) Proceeds from issuance
of debt 4,686 4,707 Dividends paid (689 ) (662 ) Purchases of
treasury shares (767 ) (746 ) Proceeds from exercise of stock
options and excess tax benefits 192 153
Net cash used in financing activities (756 ) (830 ) Effect
of exchange rate changes on Cash and cash equivalents (59 )
(46 ) Net (decrease) increase in Cash and cash equivalents
(30 ) 199 Cash and cash equivalents at beginning of the period
1,089 962 Cash and cash equivalents at
end of the period $ 1,059 $ 1,161
Supplemental Cash Flow Information Free cash flow before
dividends (Net cash provided by operations less Capital
expenditures) Net cash provided by operations $ 1,223 $ 1,389 Less:
Capital expenditures (280 ) (314 ) Free cash flow
before dividends $ 943 $ 1,075 Income
taxes paid $ 640 $ 514
Table 5 Colgate-Palmolive Company
Segment Information For the Three and Six Months
Ended June 30, 2015 and 2014 (Dollars in Millions)
(Unaudited) Three Months Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014
Net Sales Oral, Personal and Home Care
North America $ 780 $ 770 $ 1,569 $ 1,555 Latin America
1,126 1,231 2,213 2,383 Europe/South Pacific 731 873 1,472 1,738
Asia 623 610 1,284 1,282 Africa/Eurasia 254
308 508 606 Total Oral,
Personal and Home Care 3,514 3,792 7,046 7,564 Pet Nutrition
552 560 1,090
1,113
Total Net Sales $ 4,066 $ 4,352
$ 8,136 $ 8,677 Three Months
Ended
June 30,
Six Months Ended
June 30,
2015 2014 2015 2014
Operating Profit Oral, Personal and Home
Care North America $ 223 $ 231 $ 441 $ 447 Latin America 321
311 629 601 Europe/South Pacific 183 227 367 444 Asia 181 178 374
371 Africa/Eurasia 45 58 84
117 Total Oral, Personal and Home Care
953 1,005 1,895 1,980 Pet Nutrition 146 146 293 290
Corporate(1) (167 ) (171 ) (396 ) (656
)
Total Operating Profit $ 932 $ 980 $
1,792 $ 1,614 Note: (1) Corporate operations
includes costs related to stock options and restricted stock units,
research and development costs, Corporate overhead costs,
restructuring and related implementation costs and gains and losses
on sales of non-core product lines and assets. Corporate
Operating profit (loss) for the three months ended June 30, 2015
includes charges of $52 related to the 2012 Restructuring Program
and a charge of $16 related to the remeasurement of the Company's
Venezuelan subsidiary's local currency-denominated net monetary
assets as a result of an effective devaluation. For the three
months ended June 30, 2014, Corporate Operating profit (loss)
included charges of $74 related to the 2012 Restructuring Program
and costs of $2 related to the sale of land in Mexico.
Corporate Operating profit (loss) for the six months ended June 30,
2015 includes charges of $152 related to the 2012 Restructuring
Program and a charge of $16 related to the remeasurement of the
Company's Venezuelan subsidiary's local currency-denominated net
monetary assets as a result of an effective devaluation. For the
six months ended June 30, 2014, Corporate Operating profit (loss)
included charges of $176 related to the 2012 Restructuring Program,
a charge of $266 related to the remeasurement of the Company's
Venezuelan subsidiary's local currency-denominated net monetary
assets as a result of an effective devaluation and costs of $3
related to the sale of land in Mexico.
Table 6 Colgate-Palmolive Company
Geographic Sales Analysis Percentage Changes For
the Three Months Ended June 30, 2015 vs 2014
(Unaudited) COMPONENTS OF SALES
CHANGE Pricing Coupons Sales
Consumer & Change Organic As
Reported Organic Ex-Divested Trade
Foreign
Region
As
Reported
Sales
Change
Volume
Volume
Volume
Incentives
Exchange
Total Company (6.5 )% 5.5 % 3.0 % 3.0 % 3.0 % 2.5 %
(12.0 )%
Europe/South Pacific (16.5 )% 2.0 % 4.5 %
5.0 % 5.0 % (3.0 )% (18.0 )%
Latin America (8.5 )%
9.0 % 0.5 % - % 0.5 % 9.0 % (18.0 )%
Asia 2.0 % 5.0 %
5.5 % 5.5 % 5.5 % (0.5 )% (3.0 )%
Africa/Eurasia
(17.5 )% 4.0 % (3.0 )% (3.0 )% (3.0 )% 7.0 % (21.5 )%
Total International (9.5 )% 5.5 % 2.5 % 2.5 % 2.5 % 3.0 %
(15.0 )%
North America 1.5 % 2.5 % 3.0 % 3.0 % 3.0 %
(0.5 )% (1.0 )%
Total CP Products (7.5 )% 5.0 % 2.5 %
2.5 % 2.5 % 2.5 % (12.5 )%
Hill's (1.5 )% 7.0 % 5.5 %
5.5 % 5.5 % 1.5 % (8.5 )%
Emerging Markets
(1) (7.0 )% 7.5 % 2.0 % 2.0 % 2.0 % 5.5 % (14.5 )%
Developed Markets (6.0 )% 3.0 % 4.0 % 4.0 % 4.0 % (1.0 )%
(9.0 )%
Note:
(1) Emerging Markets include Latin America, Asia (excluding
Japan), Africa/Eurasia and Central Europe.
Table 7 Colgate-Palmolive
Company Geographic Sales Analysis Percentage
Changes For the Six Months Ended June 30, 2015 vs
2014 (Unaudited)
COMPONENTS OF SALES CHANGE Pricing
Coupons
Sales
Consumer & Change Organic As
Reported Organic Ex-Divested Trade
Foreign
Region
As
Reported
Sales
Change
Volume
Volume
Volume
Incentives
Exchange
Total Company (6.0 )% 4.5 % 2.5 % 2.0 % 2.5 % 2.5 %
(11.0 )%
Europe/South Pacific (15.5 )% 1.5 % 5.0 %
5.5 % 5.5 % (4.0 )% (16.5 )%
Latin America (7.0 )%
9.0 % 1.0 % 0.5 % 1.0 % 8.5 % (16.5 )%
Asia - % 2.0 %
3.5 % 3.0 % 3.5 % (1.0 )% (2.5 )%
Africa/Eurasia
(16.0 )% 6.0 % (1.5 )% (1.5 )% (1.5 )% 7.5 % (22.0 )%
Total International (9.0 )% 5.0 % 2.0 % 2.0 % 2.0 % 3.0 %
(14.0 )%
North America 1.0 % 2.0 % 1.5 % 1.5 % 1.5 %
0.5 % (1.0 )%
Total CP Products (7.0 )% 4.5 % 2.0 %
2.0 % 2.0 % 2.5 % (11.5 )%
Hill's (2.0 )% 6.0 % 3.5 %
3.5 % 3.5 % 2.5 % (8.0 )%
Emerging Markets
(1) (6.5 )% 7.0 % 2.0 % 1.5 % 2.0 % 5.5 % (14.0 )%
Developed Markets (6.0 )% 2.5 % 3.0 % 3.0 % 3.0 % (0.5 )%
(8.5 )%
Note:
(1)
Emerging Markets include Latin America, Asia (excluding
Japan), Africa/Eurasia and Central Europe.
Table 8 Colgate-Palmolive Company
Non-GAAP Reconciliations For the Three Months
Ended June 30, 2015 and 2014 (Dollars in Millions
Except Per Share Amounts) (Unaudited)
Gross Profit 2015 2014 Gross profit, GAAP $
2,367 $ 2,552 2012 Restructuring Program 4 6 Costs related to the
sale of land in Mexico - 2 Gross
profit, non-GAAP $ 2,371 $ 2,560
Basis
Point Gross Profit Margin 2015 2014
Change Gross profit margin, GAAP 58.2 % 58.6 % (40 ) 2012
Restructuring Program 0.1 % 0.2 % Gross profit
margin, non-GAAP 58.3 % 58.8 % (50 )
Selling, General and Administrative Expenses 2015
2014 Selling, general and administrative expenses, GAAP $
1,381 $ 1,507 2012 Restructuring Program (11 ) (12 )
Selling, general and administrative expenses, non-GAAP $ 1,370
$ 1,495
Basis Point Selling, General
and Administrative Expenses as a Percentage of Net Sales
2015 2014 Change Selling, general and
administrative expenses as a percentage of Net sales, GAAP 34.0 %
34.6 % (60 ) 2012 Restructuring Program (0.3 %) (0.2
%) Selling, general and administrative expenses as a
percentage of Net sales, non-GAAP 33.7 % 34.4 % (70 )
Other (Income) Expense, Net 2015
2014 Other (income) expense, net, GAAP $ 54 $ 65 2012
Restructuring Program (37 ) (56 ) Venezuela remeasurement charges
(16 ) - Other (income) expense, net, non-GAAP
$ 1 $ 9
Operating Profit
2015 2014 % Change Operating profit, GAAP $
932 $ 980 (5 %) 2012 Restructuring Program 52 74 Venezuela
remeasurement charges 16 - Costs related to the sale of land in
Mexico - 2 Operating profit,
non-GAAP $ 1,000 $ 1,056 (5 %)
Basis
Point Operating Profit Margin 2015 2014
Change Operating profit margin, GAAP 22.9 % 22.5 % 40 2012
Restructuring Program 1.3 % 1.7 % Venezuela remeasurement charges
0.4 %
-
% Costs related to the sale of land in Mexico
-
%
0.1
% Operating profit margin, non-GAAP 24.6 %
24.3 % 30
Net Income Attributable to
Colgate-Palmolive Company 2015 2014 %
Change Net income attributable to Colgate-Palmolive Company,
GAAP $ 574 $ 622 (8 %) 2012 Restructuring Program 40 53 Venezuela
remeasurement charges 10 - Charge for a foreign tax matter 15 -
Costs related to the sale of land in Mexico -
1 Net income attributable to Colgate-Palmolive
Company, non-GAAP $ 639 $ 676 (5 %)
Diluted Earnings Per Common Share(1) 2015
2014 % Change Diluted earnings per common share, GAAP
$ 0.63 $ 0.67 (6 %) 2012 Restructuring Program 0.04 0.06 Venezuela
remeasurement charges 0.01 - Charge for a foreign tax matter
0.02 - Diluted earnings per common
share, non-GAAP $ 0.70 $ 0.73 (4 %)
Note: (1) The impact of non-GAAP adjustments on diluted
earnings per share may not necessarily equal the difference between
"GAAP" and "non-GAAP" as a result of rounding.
Table 9 Colgate-Palmolive Company
Non-GAAP Reconciliations For the Six Months Ended
June 30, 2015 and 2014 (Dollars in Millions Except
Per Share Amounts) (Unaudited) Gross
Profit 2015 2014 Gross profit, GAAP $ 4,759 $
5,076 2012 Restructuring Program 8 16 Costs related to the sale of
land in Mexico
-
3 Gross profit, non-GAAP $ 4,767 $
5,095
Basis Point Gross Profit Margin
2015 2014 Change Gross profit margin, GAAP
58.5 % 58.5 %
-
2012 Restructuring Program 0.1 % 0.2 % Gross
profit margin, non-GAAP 58.6 % 58.7 % (10 )
Selling, General and Administrative Expenses
2015 2014 Selling, general and administrative
expenses, GAAP $ 2,831 $ 3,051 2012 Restructuring Program
(29 ) (29 ) Selling, general and administrative expenses,
non-GAAP $ 2,802 $ 3,022
Basis Point
Selling, General and Administrative Expenses as a Percentage of
Net Sales 2015 2014 Change Selling,
general and administrative expenses as a percentage of Net sales,
GAAP 34.8 % 35.2 % (40 ) 2012 Restructuring Program (0.4 %)
(0.4 %) Selling, general and administrative expenses
as a percentage of Net sales, non-GAAP 34.4 % 34.8 %
(40 )
Other (Income) Expense, Net 2015
2014 Other (income) expense, net, GAAP $ 136 $ 411 2012
Restructuring Program (115 ) (131 ) Venezuela remeasurement charges
(16 ) (266 ) Other (income) expense, net, non-GAAP $
5 $ 14
Operating Profit
2015 2014 % Change Operating profit, GAAP $
1,792 $ 1,614 11 % 2012 Restructuring Program 152 176 Venezuela
remeasurement charges 16 266 Costs related to the sale of land in
Mexico - 3 Operating profit,
non-GAAP $ 1,960 $ 2,059 (5 %)
Basis
Point Operating Profit Margin 2015 2014
Change Operating profit margin, GAAP 22.0 % 18.6 % 340 2012
Restructuring Program 1.9 % 2.0 % Venezuela remeasurement charges
0.2 % 3.1 % Operating profit margin, non-GAAP
24.1 % 23.7 % 40
Net Income
Attributable to Colgate-Palmolive Company 2015
2014 % Change Net income attributable to
Colgate-Palmolive Company, GAAP $ 1,116 $ 1,010 10 % 2012
Restructuring Program 107 126 Venezuela remeasurement charges 10
174 Charge for a foreign tax matter 15 - Costs related to the sale
of land in Mexico - 2 Net income
attributable to Colgate-Palmolive Company, non-GAAP $ 1,248
$ 1,312 (5 %)
Diluted Earnings Per Common
Share (1) (2) 2015 2014 % Change
Diluted earnings per common share, GAAP $ 1.22 $ 1.09 12 % 2012
Restructuring Program 0.11 0.13 Venezuela remeasurement charges
0.01 0.19 Charge for a foreign tax matter 0.02
- Diluted earnings per common share, non-GAAP $ 1.36
$ 1.41 (4 %)
Notes: (1) The impact of non-GAAP adjustments on diluted
earnings per share may not necessarily equal the difference between
"GAAP" and "non-GAAP" as a result of rounding. (2) Basic and
diluted earnings per share are computed independently for each
quarter and any year-to-date period presented. As a result of
changes in shares outstanding during the year and rounding, the sum
of the quarters’ earnings per share may not necessarily equal the
earnings per share for any year-to-date period.
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Colgate-Palmolive CompanyBina Thompson, 212-310-3072orHope
Spiller, 212-310-2291
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