Strong Worldwide Organic Sales
Growth
Announces Accounting Change For Venezuelan
Operations
Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net
sales of $3,899 million in fourth quarter 2015, a decrease of 7.5%
versus fourth quarter 2014. Global unit volume was even with the
year ago quarter. Excluding divested businesses, unit volume
increased 1.0%. Pricing increased 4.0% and foreign exchange was
negative 11.5%. Organic sales (Net sales excluding foreign
exchange, acquisitions and divestments) grew 5.0%.
Net income (loss) and Diluted earnings (loss) per share in
fourth quarter 2015 were $(458) million and $(0.51), respectively.
Net income (loss) in fourth quarter 2015 included a $1,058 million
($1.18 per diluted share) aftertax charge resulting from a change
in accounting for the Company’s Venezuelan operations (see
discussion later in this press release) and $55 million ($0.06 per
diluted share) of aftertax charges resulting from the
implementation of the Company’s Global Growth and Efficiency
Program (the “2012 Restructuring Program”) and a previously
disclosed competition law matter in Australia.
Net income and Diluted earnings per share in fourth quarter 2014
were $628 million and $0.68, respectively. Net income in fourth
quarter 2014 included $71 million ($0.08 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
fourth quarter 2015 was $655 million, a decrease of 6% versus
fourth quarter 2014, and Diluted earnings per share in fourth
quarter 2015 was $0.73, a decrease of 4% versus fourth 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 58.8% in fourth quarter 2015 versus
58.6% in fourth quarter 2014. Excluding the above noted items in
both periods, Gross profit margin was 59.0% in fourth quarter 2015,
an increase of 20 basis points versus the year ago quarter, as cost
savings from the Company’s funding-the-growth initiatives and the
2012 Restructuring Program and higher pricing, were partially
offset by higher costs, which included higher raw and packaging
material costs, driven by significant foreign exchange transaction
costs.
Selling, general and administrative expenses were 33.0% of Net
sales in fourth quarter 2015 versus 34.0% of Net sales in fourth
quarter 2014. Excluding the above noted items in both periods,
Selling, general and administrative expenses decreased by 100 basis
points to 32.5% of Net sales in fourth quarter 2015, due to
decreased advertising investment as a percentage of Net sales, in
part reflecting a shift in advertising investment to in-store
promotional activities. Worldwide advertising investment decreased
21% to $323 million versus the year ago quarter, largely reflecting
the impact of negative foreign exchange.
Operating profit (loss) decreased to $(139) million in fourth
quarter 2015 compared to $995 million in fourth quarter 2014.
Excluding the above noted items in both periods, Operating profit
(loss) decreased 6% to $1,015 million in fourth quarter 2015.
Operating profit margin was (3.6%) in fourth quarter 2015 versus
23.6% in fourth quarter 2014. Excluding the above noted items in
both periods, Operating profit margin was 26.0% in fourth quarter
2015, an increase of 40 basis points versus the year ago
quarter.
Net cash provided by operations for full year 2015 was $2,949
million compared to $3,298 million in full year 2014, primarily due
to lower operating earnings and higher payments related to income
taxes and a European competition law matter. Working capital as a
percentage of Net sales was 0.5% compared to 0.8% in the year ago
period. This decrease is primarily due to the exclusion of the
working capital of the Company’s Venezuelan operations as of
December 31, 2015.
For the full year 2015, worldwide Net sales were $16,034
million, a decrease of 7.0% versus full year 2014. Global unit
volume grew 1.5%, pricing increased 3.0% and foreign exchange was
negative 11.5%. Excluding divested businesses, unit volume
increased 2.0%. Organic sales grew 5.0%.
Net income and Diluted earnings per share for full year 2015
were $1,384 million and $1.52, respectively. Full year 2015 results
include an aftertax gain of $120 million ($0.13 per diluted share)
from the sale of the Company’s laundry detergent business in the
South Pacific and $1,292 million ($1.42 per diluted share) of
aftertax charges resulting from the change in accounting for the
Company’s Venezuelan operations, the implementation of the 2012
Restructuring Program, remeasurements resulting from effective
devaluations in Venezuela, a foreign competition law matter and a
foreign tax matter.
Net income and Diluted earnings per share for full year 2014
were $2,180 million and $2.36, respectively. As previously
disclosed, full year 2014 results included aftertax charges of $532
million ($0.57 per diluted share) resulting from the items
described in Table 9.
Excluding the items noted above in both periods, Net income for
full year 2015 decreased 6% versus full year 2014, and Diluted
earnings per share decreased 4% versus full year 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 58.6% for full year 2015 versus 58.5% in
full year 2014. Excluding the items noted above in both periods,
Gross profit margin was 58.7% in full year 2015, even with the full
year 2014 level, as cost savings from the Company’s
funding-the-growth initiatives and the 2012 Restructuring Program
and higher pricing, were offset by higher raw and packaging
material costs, driven by significant foreign exchange transaction
costs.
Venezuela
Effective December 31, 2015, the Company began accounting for
its Venezuelan operations using the cost method of accounting and
as a result its consolidated balance sheet no longer includes the
assets and liabilities of its Venezuelan operations. As a result of
this change in accounting, the Company recorded an aftertax charge
of $1,058 million ($1.18 per diluted share) in the fourth quarter
of 2015. The change in accounting reflects a significant decrease
in the availability of U.S. dollars together with other government
controls that the Company expects to continue for the foreseeable
future.
In future periods, the Company will no longer include the
results of its Venezuelan operations in its consolidated financial
statements and will include income relating to its Venezuelan
operations only to the extent it receives cash for sales of
inventory to its Venezuelan subsidiary or for dividends or
royalties remitted by the subsidiary.
Colgate has been operating in Venezuela for 72 years and the
Company expects its operations in Venezuela to continue to provide
Venezuelan consumers with the Company’s market leading brands.
Ian Cook, Chairman, President and Chief Executive Officer,
commented on the fourth quarter results and outlook for 2016,
excluding the 2015 and 2014 items noted above, “In the face of
continued challenging macroeconomic conditions worldwide, we are
pleased to have finished the year with another quarter of strong
organic sales growth, with every operating division
contributing.
“The 5.0% worldwide organic sales growth was led by emerging
markets where organic sales grew a robust 6.5%, despite economic
challenges in certain countries.
“Pleasingly, gross profit margin, operating profit margin and
net income as a percent to sales all increased versus the year ago
period.
“Colgate’s leading share of the global toothpaste market
increased to 44.7% 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 34.7% year to date, up 1.0 share point 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 in 2016 driven by a full new product pipeline across all
categories and geographies. Based on current spot rates, we are
planning for a year of gross margin expansion, and 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 includes a $0.10 impact in 2016
resulting from the change in accounting for our Venezuelan
operations and reflects a double-digit increase on a
currency-neutral basis, excluding Venezuela from 2016 and 2015
results.”
At 11:00 a.m. ET today, Colgate will host a conference call to
elaborate on fourth 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
fourth 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 (20% of Company
Sales)
North America Net sales increased 1.0% in fourth quarter 2015.
Unit volume increased 2.0% with 0.5% higher pricing, while foreign
exchange was negative 1.5%. Organic sales increased 2.5% during the
quarter.
Operating profit in North America increased 15% in fourth
quarter 2015 to $275 million, or 430 basis points to 34.9% of Net
sales. This 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, partially offset by higher costs,
primarily driven by higher raw and packaging material costs. This
decrease in Selling, general and administrative expenses was
primarily due to decreased advertising investment and lower
overhead expenses.
In the U.S., new product launches are contributing to volume
growth. Market share gains year to date were seen in toothpaste,
manual toothbrushes, mouthwash, liquid hand soap, body wash, liquid
cleaners and fabric conditioners. Colgate’s share of the toothpaste
market strengthened to 35.3% year to date, up 0.3 share points
versus the year ago period, driven by strong sales of Colgate
Enamel Health, Colgate Optic White Platinum Express White, Colgate
Total Daily Repair 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 41.2% year to
date, up 0.8 share points versus the year ago period. Strong sales
of Colgate 360° Enamel Health and Colgate 360° Optic White Platinum
manual toothbrushes contributed to volume growth in the
quarter.
Successful products driving volume growth in the U.S. in other
categories include Colgate Enamel Health, Colgate Total for Gum
Health and Colgate Kids mouthwashes, Softsoap Fragrant Foaming
Collection of liquid hand soaps, Softsoap Fresh & Glow and
Irish Spring Signature For Men body washes, Palmolive Soft Touch
Almond Milk and Blueberry dish liquid and Suavitel Fragrance Pearls
fabric conditioner.
Latin America (27% of Company
Sales)
Latin America Net sales decreased 12.0% in fourth quarter 2015.
Unit volume decreased 4.0% with 13.0% higher pricing, while foreign
exchange was negative 21.0%. Volume declines in Venezuela and
Brazil were partially offset by volume gains in Mexico. Organic
sales for Latin America increased 9.0%.
Operating profit in Latin America decreased 20% in fourth
quarter 2015 to $280 million, or 250 basis points to 26.7% of Net
sales. This decrease in Operating profit as a percentage of
Net sales was primarily due to a decrease in Gross profit,
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 significant
foreign exchange transaction costs, and higher manufacturing costs
in Venezuela, which were partially offset by higher pricing and
cost savings from the Company’s funding-the-growth initiatives and
the 2012 Restructuring Program. This decrease in Selling, general
and administrative expenses was due to decreased advertising
investment, which was partially offset by higher overhead expenses
in Venezuela driven by the hyperinflationary environment.
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, Honduras,
Nicaragua, Peru, Puerto Rico and Panama. Strong sales of Colgate
Total 12, Colgate Luminous White Instant and Colgate Total
Professional Breath Health toothpastes contributed to growth
throughout the region. Colgate’s leadership in the manual
toothbrush category continued throughout the region, driven by
strong sales of Colgate Slim Soft and Colgate Triple Action manual
toothbrushes.
Products in other categories contributing to growth throughout
the region include Colgate Plax Ice Infinity mouthwash, Protex
Complete 12 bar soap, 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 Cleaning liquid cleaner.
Europe/South Pacific (18% of Company
Sales)
Europe/South Pacific Net sales decreased 14.5% in fourth quarter
2015. Unit volume decreased 0.5% with 2.5% lower pricing, while
foreign exchange was negative 11.5%. Excluding the impact of the
divested laundry detergent business in the South Pacific, volume
increased 4.0% led by volume gains in France, Germany and
Australia. Organic sales for Europe/South Pacific increased
1.5%.
Operating profit in Europe/South Pacific decreased 10% in fourth
quarter 2015 to $177 million, while as a percentage of Net sales,
it increased 130 basis points to 26.4% of Net sales. This 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 as a percentage of Net sales was
driven by cost savings from the Company’s funding-the-growth
initiatives and the 2012 Restructuring Program, which were
partially offset by higher raw and packaging material costs, which
included foreign exchange transaction costs, and lower pricing due
to increased promotional activities. This decrease in Selling,
general and administrative expenses was primarily due to decreased
advertising investment, in part reflecting a shift in advertising
investment to in-store promotional activities, which was partially
offset by higher overhead expenses.
Colgate strengthened its oral care leadership in the
Europe/South Pacific region driven by toothpaste market share gains
in France, Ireland, Belgium, Switzerland, Poland, Czech Republic,
Croatia, Latvia, Lithuania and Slovenia. Successful premium
products contributing to volume gains include Colgate Max White
Expert White, elmex Sensitive Professional, Colgate Total Daily
Repair and Colgate Sensitive Pro-Relief Repair & Prevent
toothpastes. In the manual toothbrush category, Colgate Cavity
Protection and Colgate Slim Soft Charcoal manual toothbrushes
contributed to volume growth across the region.
Premium innovations contributing to volume growth in other
product categories include the Colgate ProClinical electric
toothbrush, the Sanex Advanced line of shower gels, deodorants,
hand creams and body lotions, Palmolive Aroma Sensations and
Palmolive Gourmet shower gels, Ajax All Usage Gel liquid and wipe
cleaners, Ajax Easy Rinse spray cleaner and Soupline Fruity
Sensations fabric conditioner.
Asia (15% of Company
Sales)
Asia Net sales decreased 5.0% during fourth quarter 2015. Unit
volume increased 2.5% with 0.5% lower pricing, while foreign
exchange was negative 7.0%. Volume gains were led by the Greater
China region and Thailand. Organic sales for Asia increased
2.0%.
Operating profit in Asia increased 3% in fourth quarter 2015 to
$184 million, or 260 basis points to 32.3% of Net sales. This
increase in Operating profit as a percentage of Net sales was 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 due to cost
savings from the Company’s funding-the-growth initiatives,
partially offset by higher costs, primarily driven by raw and
packaging material costs, which included foreign exchange
transaction costs. This decrease in Selling, general and
administrative expenses was due to decreased advertising
investment, in part reflecting a shift in advertising investment to
in-store promotional activities.
Colgate continued its toothpaste leadership in Asia during the
quarter. Successful new products including Colgate 360° Gold
Ginseng, Colgate Sensitive Sensifoam, Colgate Active Salt Neem,
Colgate Max White Bamboo Charcoal, Colgate Power White Lemon Salt
and Darlie All Shiny White Multicare toothpastes contributed to
volume growth in the region.
Successful products contributing to volume growth in other
categories in the region include Colgate Optic White Toothbrush +
Built-In Whitening Pen, Colgate Natural Essence Lotus, Colgate 360°
Charcoal Gold and Darlie Charcoal manual toothbrushes, Colgate Plax
Bamboo Charcoal Mint mouthwash and Palmolive Naturals shampoo and
conditioner.
Africa/Eurasia (6% of Company
Sales)
Africa/Eurasia Net sales decreased 16.5% during fourth quarter
2015. Unit volume decreased 1.5% with 8.0% higher pricing, while
foreign exchange was negative 23.0%. Volume declines in Russia and
the Central Caucasus region were partially offset by volume gains
in South Africa and the Sub Saharan Africa region. Organic sales
for Africa/Eurasia increased 6.5%.
Operating profit in Africa/Eurasia decreased 14% in fourth
quarter 2015 to $50 million, while as a percentage of Net sales, it
increased 60 basis points to 20.5% of Net sales. This increase
in Operating profit as a percentage of Net sales was primarily due
to a decrease in Selling, general and administrative expenses,
partially offset by a decrease in Gross profit, both as a
percentage of Net sales. This decrease in Gross profit was
primarily due to higher costs, which included higher raw and
packaging material costs, driven by higher foreign exchange
transaction costs, which were partially offset by cost savings from
the Company’s funding-the-growth initiatives and higher
pricing. The decrease in Selling, general and administrative
expenses was due to decreased advertising investment, in part
reflecting a shift in advertising investment to in-store
promotional activities, which was partially offset by higher
overhead expenses.
Colgate continued its toothpaste leadership in Africa/Eurasia,
driven by market share gains in Israel, Jordan, Kenya, Kuwait,
Qatar, Russia, South Africa, Saudi Arabia, Uganda, Ukraine, Algeria
and Tunisia. 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, Colgate Natural Extracts
and Colgate Zig Zag manual toothbrushes, Palmolive Gourmet Spa Mint
Shake, Palmolive Aroma Sensations and Palmolive Men Citrus Crush
shower gels and Protex Complete 12 bar soaps.
Hill’s Pet Nutrition (14% of Company
Sales)
Hill’s Net sales were even with fourth quarter 2014. Unit volume
increased 4.0% with 2.0% higher pricing, while foreign exchange was
negative 6.0%. Volume gains were led by the United States and
Western Europe. Hill’s organic sales increased 6.0%.
Hill’s Operating profit increased 6% in fourth quarter 2015 to
$162 million, or 150 basis points to 28.1% of Net sales. This
increase in Operating profit as a percentage of Net sales was due
to an increase in Gross profit and a decrease in Selling, general
and administrative expenses, which were partially offset by an
increase in Other (income) expense, net, all as a percentage of Net
sales. This increase in Gross profit was primarily due to cost
savings from the Company’s funding-the-growth initiatives and
higher pricing, which were partially offset by higher costs,
primarily driven by higher raw and packaging material costs, which
included higher foreign exchange transaction costs. This decrease
in Selling, general and administrative expenses was primarily due
to decreased advertising investment and lower overhead expenses.
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 Prescription Diet Metabolic Plus Mobility and
Metabolic Plus Urinary, Hill’s Prescription Diet i/d Stress and i/d
Sensitive and Hill’s Science Diet Urinary Plus Hairball Control.
Successful products that also contributed to U.S. volume growth
included Hill’s Prescription Diet stews and Hill’s Science Diet
Perfect Weight Small Kibble.
New product introductions driving volume growth internationally
include Hill’s Ideal Balance, Hill’s Prescription Diet Metabolic
Plus Mobility, Metabolic Plus Urinary and c/d Multicare Urinary
Stress and Hill’s Science Diet Perfect Weight.
***
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
The Company’s annual meeting of shareholders is currently
scheduled for Friday, May 6, 2016.
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. The
Company measures year-to-date market shares from January 1 of the
relevant year through the most recent period for which market share
data is available, which typically reflects a lag time of one or
two months. The Company believes that the third-party vendors it
uses to provide data are reliable, but it has 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 fourth 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 fourth quarter 2015, on a currency-neutral basis, fourth
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 fourth
quarter 2014.
Diluted earnings per share growth for full year 2015, on a
currency-neutral basis, eliminates from Diluted earnings per share
growth (GAAP) the impact of the items described in Table 9 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 full year 2015, on a currency-neutral basis, full year
2015 local currency results, which include the impact of foreign
currency transaction gains and losses, are translated into U.S.
dollars using 2014 average foreign exchange rates by quarter.
Management’s estimate of earnings per share growth on a
currency-neutral basis for full year 2016 eliminates from earnings
per share growth (GAAP) the impact of the items described in Table
9, the 2012 Restructuring Program, 2015 and 2016 Venezuela results
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 2016, on a currency-neutral basis, estimated full
year 2016 local currency results, which include the impact of
foreign currency transaction gains and losses, are translated into
U.S. dollars using 2015 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,
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 twelve months ended December
31, 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 the charge resulting from a change in
accounting for the Company’s Venezuelan operations, the gain on
sale of the Company’s laundry detergent business in the South
Pacific, 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, charges
related to foreign tax matters, costs related to the sale of land
in Mexico and charges related to foreign competition law matters
(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 twelve months ended December 31,
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 twelve months ended December 31, 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 fourth quarter
results.)
Table 1
Colgate-Palmolive Company
Condensed Consolidated Statements of Income
For the Three Months Ended December 31, 2015 and 2014
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2015 2014
Net sales $ 3,899 $ 4,221 Cost of sales 1,606 1,746
Gross profit 2,293 2,475 Gross profit margin 58.8 %
58.6 % Selling, general and administrative expenses 1,286
1,434 Other (income) expense, net 62 46 Charge for
Venezuela accounting change 1,084 - Operating profit (loss)
(139 ) 995 Operating profit margin (3.6 %) 23.6 %
Interest (income) expense, net 7 4 Income (loss) before
income taxes (146 ) 991 Provision for income taxes 275 325
Effective tax rate (188.4 %) 32.8 % Net income (loss)
including noncontrolling interests (421 ) 666 Less: Net
income attributable to noncontrolling interests 37 38 Net
income (loss) attributable to Colgate-Palmolive Company $ (458 ) $
628 Earnings (loss) per common share Basic $ (0.51 ) $ 0.69
Diluted (1) $ (0.51 ) $ 0.68 Average common shares
outstanding Basic 896.5 911.3 Diluted (1) 896.5 920.0 Note:
(1)The computation for Diluted (loss) per
common share for the three months ended December 31, 2015
excludes 6.6 million of incremental common
shares outstanding during the period as they are anti-dilutive.
Table 2
Colgate-Palmolive Company Condensed
Consolidated Statements of Income For the Twelve
Months Ended December 31, 2015 and 2014 (Dollars in
Millions Except Per Share Amounts) (Unaudited)
2015 2014
Net sales $ 16,034 $ 17,277 Cost of sales 6,635 7,168
Gross profit 9,399 10,109 Gross profit margin 58.6 % 58.5 %
Selling, general and administrative expenses 5,464 5,982
Other (income) expense, net 62 570 Charge for
Venezuela accounting change 1,084 - Operating profit 2,789
3,557 Operating profit margin 17.4 % 20.6 % Interest
(income) expense, net 26 24 Income before income taxes 2,763
3,533 Provision for income taxes 1,215 1,194
Effective tax rate 44.0 % 33.8 % Net income including
noncontrolling interests 1,548 2,339 Less: Net income
attributable to noncontrolling interests 164 159 Net income
attributable to Colgate-Palmolive Company $ 1,384 $ 2,180
Earnings per common share Basic $ 1.53 $ 2.38 Diluted $ 1.52 $ 2.36
Average common shares outstanding Basic 902.2 915.1 Diluted
909.7 924.3
Table 3
Colgate-Palmolive Company Condensed
Consolidated Balance Sheets As of December 31, 2015
and December 31, 2014 (Dollars in Millions)
(Unaudited) December 31,
December 31, 2015 2014 Cash and cash
equivalents $ 970 $ 1,089 Receivables, net 1,427 1,552 Inventories
1,180 1,382 Other current assets 807 840 Property, plant and
equipment, net 3,796 4,080 Other assets, including goodwill and
intangibles 3,778 4,516 Total assets $
11,958 $ 13,459 Total debt $ 6,571 $ 6,148
Other current liabilities 3,232 3,442 Other non-current liabilities
2,199 2,484 Total liabilities 12,002
12,074 Total Colgate-Palmolive Company shareholders' equity (299 )
1,145 Noncontrolling interests 255 240
Total liabilities and shareholders' equity $ 11,958 $ 13,459
Supplemental Balance Sheet Information Debt
less cash, cash equivalents and marketable securities* $ 5,499 $
4,859 Working capital % of sales 0.5 % 0.8 % * Marketable
securities of $102 and $200 as of December 31, 2015 and 2014,
respectively, are included in Other current assets.
Table 4
Colgate-Palmolive Company Condensed
Consolidated Statements of Cash Flows For the Twelve
Months Ended December 31, 2015 and 2014 (Dollars in
Millions) (Unaudited) 2015
2014
Operating Activities Net income
including noncontrolling interests $ 1,548 $ 2,339
Adjustments to reconcile net income
including noncontrolling interests to net cash provided by
operations:
Depreciation and amortization 449 442 Restructuring and termination
benefits, net of cash 69 64 Voluntary benefit plan contribution -
(2 ) Venezuela remeasurement charges 34 327 Charge for a foreign
tax matter - 66 Stock-based compensation expense 125 131 Gain on
sale of South Pacific laundry detergent business (187 ) - Charge
for Venezuela accounting change 1,084 - Deferred income taxes (51 )
18 Cash effects of changes in: Receivables (75 ) (109 ) Inventories
(13 ) (60 ) Accounts payable and other accruals (67 ) 57 Other
non-current assets and liabilities 33 25
Net cash provided by operations 2,949 3,298
Investing Activities
Capital expenditures (691 ) (757 ) Sale of property and non-core
products 9 24 Purchases of marketable securities and investments
(742 ) (340 ) Proceeds from sale of marketable securities and
investments 599 283 Proceeds from sale of South Pacific laundry
detergent business 221 - Payment for acquisitions, net of cash
acquired (13 ) (87 ) Reduction in cash due to Venezuela accounting
change (75 ) - Other 7 18 Net cash used
in investing activities (685 ) (859 )
Financing
Activities Principal payments on debt (9,181 ) (8,525 )
Proceeds from issuance of debt 9,602 8,960 Dividends paid (1,493 )
(1,446 ) Purchases of treasury shares (1,551 ) (1,530 ) Proceeds
from exercise of stock options and excess tax benefits 347
371 Net cash used in financing activities
(2,276 ) (2,170 ) Effect of exchange rate changes on Cash
and cash equivalents (107 ) (142 ) Net (decrease)
increase in Cash and cash equivalents (119 ) 127 Cash and cash
equivalents at beginning of the period 1,089
962 Cash and cash equivalents at end of the period $ 970
$ 1,089
Supplemental Cash Flow
Information Free cash flow before dividends (Net cash
provided by operations less Capital expenditures) Net cash provided
by operations $ 2,949 $ 3,298 Less: Capital expenditures
(691 ) (757 ) Free cash flow before dividends $ 2,258
$ 2,541 Income taxes paid $ 1,259 $ 1,009
Table 5
Colgate-Palmolive Company Segment
Information For the Three and Twelve Months Ended
December 31, 2015 and 2014 (Dollars in Millions)
(Unaudited) Three Months
Ended
December 31,
Twelve Months Ended
December 31,
2015 2014 2015 2014
Net Sales Oral, Personal and Home Care North America
$ 789 $ 780 $ 3,149 $ 3,124 Latin America 1,050 1,192 4,327 4,769
Europe/South Pacific 670 782 2,870 3,406 Asia 570 599 2,478 2,515
Africa/Eurasia 244 292 998
1,208 Total Oral, Personal and Home
Care 3,323 3,645 13,822 15,022 Pet Nutrition 576
576 2,212 2,255
Total Net Sales $ 3,899 $ 4,221 $
16,034 $ 17,277 Three Months Ended
December 31,
Twelve Months Ended
December 31,
2015 2014 2015 2014
Operating Profit (Loss) Oral, Personal
and Home Care North America $ 275 $ 239 $ 974 $ 926 Latin
America 280 348 1,209 1,279 Europe/South Pacific 177 196 750 877
Asia 184 178 753 736 Africa/Eurasia 50 58
178 235 Total Oral,
Personal and Home Care 966 1,019 3,864 4,053 Pet Nutrition
162 153 612 592 Corporate(1) (1,267 ) (177 )
(1,687 ) (1,088 )
Total Operating Profit
(Loss) $ (139 ) $ 995 $ 2,789 $ 3,557
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 December 31, 2015 includes a charge of
$1,084 related to a Venezuela accounting change, charges of $56
related to the 2012 Restructuring Program and a charge of $14 for a
foreign competition law matter. For the three months ended December
31, 2014, Corporate Operating profit (loss) included charges of $55
related to the 2012 Restructuring Program and a charge of $30 for a
foreign competition law matter. Corporate Operating profit
(loss) for the twelve months ended December 31, 2015 includes a
charge of $1,084 related to a Venezuela accounting change, charges
of $254 related to the 2012 Restructuring Program, charges of $34
related to the remeasurement of the Company's Venezuelan
subsidiary's local currency-denominated net monetary assets as a
result of effective devaluations, charges of $14 for foreign
competition law matters and a gain of $187 on the sale of the
Company's laundry detergent business in the South Pacific. For the
twelve months ended December 31, 2014, Corporate Operating profit
(loss) included charges of $286 related to the 2012 Restructuring
Program, a charge of $327 related to the remeasurement of the
Company's Venezuelan subsidiary's local currency-denominated net
monetary assets as a result of effective devaluations, a charge of
$41 for a foreign competition law matter and costs of $4 related to
the sale of land in Mexico.
Table 6
Colgate-Palmolive Company Geographic Sales
Analysis Percentage Changes For the Three Months
Ended December 31, 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 (7.5)% 5.0 % - % 1.0 % 1.0 % 4.0 %
(11.5)%
Europe/South Pacific (2) (14.5)% 1.5 %
(0.5)% 4.0 % 4.0 % (2.5)% (11.5)%
Latin America
(12.0)% 9.0 % (4.0)% (4.0)% (4.0)% 13.0 % (21.0)%
Asia (5.0)% 2.0 % 2.5 % 2.5 % 2.5 % (0.5)% (7.0)%
Africa/Eurasia (16.5)% 6.5 % (1.5)% (1.5)% (1.5)% 8.0 %
(23.0)%
Total International (11.5)% 5.5 % (1.5)% - %
- % 5.5 % (15.5)%
North America 1.0 % 2.5 % 2.0 % 2.0
% 2.0 % 0.5 % (1.5)%
Total CP Products (9.0)% 4.5 %
(0.5)% 0.5 % 0.5 % 4.0 % (12.5)%
Hill's - % 6.0 % 4.0
% 4.0 % 4.0 % 2.0 % (6.0)%
Emerging Markets
(1) (10.5)% 6.5 % (1.5)% (1.5)% (1.5)% 8.0 % (17.0)%
Developed Markets (4.5)% 3.0 % 1.5 % 3.5 % 3.5 % (0.5)%
(5.5)% Note: (1) Emerging Markets include Latin
America, Asia (excluding Japan), Africa/Eurasia and Central Europe.
(2)The sale of the Company's laundry
detergent business in the South Pacific was completed on August 31,
2015. The impact of the sale of the Company's laundry detergent
business in the South Pacific on three months sales and volume was
1.0% for the Total Company and 4.5% for Europe/South Pacific
region.
Table 7
Colgate-Palmolive Company Geographic Sales
Analysis Percentage Changes For the Twelve Months
Ended December 31, 2015 vs 2014 (Unaudited)
COMPONENTS OF SALES CHANGE
Pricing
Coupons Consumer & Change
Organic As Reported Organic Ex-Divested
Trade Foreign
Region
As
Reported
Sales
Change
Volume
Volume
Volume
Incentives
Exchange
Total Company (7.0)% 5.0 % 1.5 % 2.0 % 2.0 % 3.0 %
(11.5)%
Europe/South Pacific (2) (15.5)% 1.0 %
2.0 % 4.0 % 4.0 % (3.0)% (14.5)%
Latin America (9.5)%
9.5 % (1.0)% (1.0)% (1.0)% 10.5 % (19.0)%
Asia (1.5)%
2.5 % 4.0 % 3.5 % 4.0 % (1.0)% (4.5)%
Africa/Eurasia
(17.5)% 6.0 % (1.5)% (1.5)% (1.5)% 7.5 % (23.5)%
Total
International (10.5)% 5.5 % 1.0 % 1.5 % 1.5 % 4.0 % (15.5)%
North America 1.0 % 2.0 % 2.0 % 2.0 % 2.0 % - %
(1.0)%
Total CP Products (8.0)% 4.5 % 1.0 % 1.5 % 1.5
% 3.0 % (12.0)%
Hill's (2.0)% 6.0 % 3.5 % 3.5 % 3.5 %
2.5 % (8.0)%
Emerging Markets (1)
(8.5)% 7.0 % 1.0 % 1.0 % 1.0 % 6.0 % (15.5)%
Developed
Markets (6.0)% 2.5 % 2.0 % 3.0 % 3.0 % (0.5)% (7.5)%
Note:
(1) Emerging Markets include Latin
America, Asia (excluding Japan), Africa/Eurasia and Central
Europe.
(2)The sale of the Company's laundry
detergent business in the South Pacific was completed on August 31,
2015. The impact of the sale of the Company's laundry detergent
business in the South Pacific on twelve months sales and volume was
0.5% for the Total Company and 2.0% for Europe/South Pacific
region.
Table 8
Colgate-Palmolive Company Non-GAAP
Reconciliations For the Three Months Ended December
31, 2015 and 2014 (Dollars in Millions Except Per
Share Amounts) (Unaudited) Gross Profit
2015
2014 Gross profit, GAAP $ 2,293 $ 2,475 2012
Restructuring Program 9 6 Gross profit,
non-GAAP $ 2,302 $ 2,481
Basis Point
Gross Profit Margin 2015 2014 Change
Gross profit margin, GAAP 58.8 % 58.6 % 20 2012 Restructuring
Program 0.2 % 0.2 % Gross profit margin,
non-GAAP 59.0 % 58.8 % 20
Selling, General and Administrative Expenses 2015
2014 Selling, general and administrative expenses, GAAP $
1,286 $ 1,434 2012 Restructuring Program (20 ) (20 )
Selling, general and administrative expenses, non-GAAP $ 1,266
$ 1,414
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 33.0 %
34.0 % (100 ) 2012 Restructuring Program (0.5 %) (0.5
%) Selling, general and administrative expenses as a
percentage of Net sales, non-GAAP 32.5 % 33.5 % (100
)
Other (Income) Expense, Net 2015
2014 Other (income) expense, net, GAAP $ 62 $ 46 2012
Restructuring Program (27 ) (29 ) Charges for foreign competition
law matters (14 ) (30 ) Other (income) expense, net,
non-GAAP $ 21 $ (13 )
Operating Profit
(Loss) 2015 2014 % Change Operating profit
(loss), GAAP $ (139 ) $ 995 (114 %) Venezuela accounting change
1,084 - 2012 Restructuring Program 56 55 Charges for foreign
competition law matters 14 30
Operating profit, non-GAAP $ 1,015 $ 1,080 (6 %)
Basis Point Operating Profit Margin
2015 2014 Change Operating profit margin, GAAP
(3.6 %) 23.6 % (2720 ) Venezuela accounting change 27.8 % - % 2012
Restructuring Program 1.4 % 1.3 % Charges for foreign competition
law matters 0.4 % 0.7 % Operating profit
margin, non-GAAP 26.0 % 25.6 % 40
Net Income (Loss) Attributable to Colgate-Palmolive
Company 2015 2014 % Change Net income
(loss) attributable to Colgate-Palmolive Company, GAAP $ (458 ) $
628 (173 %) Venezuela accounting change 1,058 - 2012 Restructuring
Program 41 41 Charges for foreign competition law matters 14
30 Net income (loss) attributable to
Colgate-Palmolive Company, non-GAAP $ 655 $ 699 (6 %)
Diluted Earnings (Loss) Per Common Share(1)
(2) 2015 2014 % Change Diluted earnings
(loss) per common share, GAAP $ (0.51 ) $ 0.68 (175 %) Venezuela
accounting change 1.18 - 2012 Restructuring Program 0.04 0.05
Charges for foreign competition law matters 0.02
0.03 Diluted earnings per common share,
non-GAAP $ 0.73 $ 0.76 (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.
(2) The computation for Diluted (loss) per
common share, GAAP for the three months ended December 31, 2015
excludes 6.6 million of incremental common shares outstanding
during the period as they are anti-dilutive. These incremental
common shares are included in the computation for Diluted earnings
per common share, non-GAAP.
Table 9
Colgate-Palmolive Company Non-GAAP
Reconciliations For the Twelve Months Ended December
31, 2015 and 2014 (Dollars in Millions Except Per
Share Amounts) (Unaudited) Gross Profit
2015 2014
Gross profit, GAAP $ 9,399 $ 10,109 2012
Restructuring Program 20 29 Costs related to the sale of land in
Mexico - 4 Gross profit, non-GAAP $
9,419 $ 10,142
Basis Point Gross
Profit Margin 2015 2014 Change Gross
profit margin, GAAP 58.6 % 58.5 % 10 2012 Restructuring Program
0.1 % 0.2 % Gross profit margin, non-GAAP
58.7 % 58.7 % -
Selling,
General and Administrative Expenses 2015 2014
Selling, general and administrative expenses, GAAP $ 5,464 $ 5,982
2012 Restructuring Program (64 ) (62 ) Selling,
general and administrative expenses, non-GAAP $ 5,400 $
5,920
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 34.1 %
34.6 % (50 ) 2012 Restructuring Program (0.4 %) (0.3
%) Selling, general and administrative expenses as a
percentage of Net sales, non-GAAP 33.7 % 34.3 % (60 )
Other (Income) Expense, Net 2015
2014 Other (income) expense, net, GAAP $ 62 $ 570 2012
Restructuring Program (170 ) (195 ) Venezuela remeasurement charges
(34 ) (327 ) Charges for foreign competition law matters (14 ) (41
) Gain on sale of South Pacific laundry detergent business
187 - Other (income) expense, net, non-GAAP $
31 $ 7
Operating Profit
2015 2014 % Change Operating profit, GAAP $
2,789 $ 3,557 (22 %) Venezuela accounting change 1,084 - 2012
Restructuring Program 254 286 Venezuela remeasurement charges 34
327 Charges for foreign competition law matters 14 41 Costs related
to the sale of land in Mexico - 4 Gain on sale of South Pacific
laundry detergent business (187 ) -
Operating profit, non-GAAP $ 3,988 $ 4,215 (5 %)
Basis Point Operating Profit Margin
2015 2014 Change Operating profit margin, GAAP
17.4 % 20.6 % (320 ) Venezuela accounting change 6.8 % - % 2012
Restructuring Program 1.6 % 1.7 % Venezuela remeasurement charges
0.2 % 1.9 % Charges for foreign competition law matters 0.1 % 0.2 %
Gain on sale of South Pacific laundry detergent business
(1.2 %) - % Operating profit margin, non-GAAP
24.9 % 24.4 % 50
Net Income
Attributable to Colgate-Palmolive Company 2015
2014 % Change Net income attributable to
Colgate-Palmolive Company, GAAP $ 1,384 $ 2,180 (37 %) Venezuela
accounting change 1,058 - 2012 Restructuring Program 183 208
Venezuela remeasurement charges 22 214 Charges for foreign tax
matters 15 66 Charges for foreign competition law matters 14 41
Costs related to the sale of land in Mexico - 3 Gain on sale of
South Pacific laundry detergent business (120 ) -
Net income attributable to Colgate-Palmolive Company,
non-GAAP $ 2,556 $ 2,712 (6 %)
Diluted Earnings Per Common Share (1) (2) 2015
2014 % Change Diluted earnings per common share, GAAP
$ 1.52 $ 2.36 (36 %) Venezuela accounting change 1.16 - 2012
Restructuring Program 0.20 0.23 Venezuela remeasurement charges
0.02 0.23 Charges for foreign competition law matters 0.02 0.04
Charges for foreign tax matters 0.02 0.07 Gain on sale of South
Pacific laundry detergent business (0.13 ) -
Diluted earnings per common share, non-GAAP $ 2.81 $
2.93 (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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160129005170/en/
Colgate-Palmolive CompanyBina Thompson, 212-310-3072orHope
Spiller, 212-310-2291
Colgate Palmolive (NYSE:CL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Colgate Palmolive (NYSE:CL)
Historical Stock Chart
From Apr 2023 to Apr 2024