Colgate Q1 Adj Profit Meets View, But Revenues Top

(RTTNews) - Consumer goods giant Colgate-Palmolive Co. (CL) reported Friday a profit for the first quarter that declined from last year, despite sales growth, reflecting lower operating margins and higher charges.

However, adjusted earnings per share matched analysts' expectations, while quarterly revenues topped their estimates by a whisker. Looking ahead, the company said it expects earnings per share growth with strong organic sales growth and gross margin expansion for the full-year 2014.

"We are very pleased to have started the year with strong organic sales growth, building on the momentum we saw in 2013. Operating profit, net income and diluted earnings per share all increased versus the year ago period. All operating divisions contributed to the strong 6.5% organic sales growth, led by the emerging markets where organic sales grew a robust 10.0%," Chairman, President and CEO Ian Cook said.

The New York-based consumer goods major reported net income of $388 million or $0.42 per share for the first quarter, lower than $460 million or $0.48 per share in the prior-year quarter. Results for the latest quarter include $0.26 per share of charges, while the year-ago quarter included $0.18 per share of charges.

Excluding items, adjusted net income for the latest quarter was $636 million or $0.68 per share, compared to $626 million or $0.66 per share in the year-ago quarter.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.68 per share in the quarter. Analysts' estimates typically exclude special items.

Worldwide net sales for the quarter edged up to $4.33 billion from $4.32 billion reported in the same quarter last year, and topped twenty Wall Street analysts' consensus estimate of $4.32 billion by a whisker.

Global unit volume grew 5.0 percent, pricing increased 1.5 percent and foreign exchange was negative 6.5 percent. Organic sales grew 6.5 percent, led by the Latin America, where organic sales grew a robust 11 percent.

Total oral, personal and home care sales edged down to $3.77 billion from $3.78 billion in the prior-year quarter, while pet nutrition sales grew to $553 million from $534 million last year.

On a geographic basis, sales growth in Asia was 2.5 percent, was 2.0 percent in Europe/South Pacific, and was 2.5 percent in North America. Latin America sales declined 5.0 percent and Africa/Eurasia sales edged down 0.5 percent. Emerging markets sales were down 1.5 percent, while sales grew 2.0 percent in developed markets.

Colgate's global market shares in toothpaste and manual toothbrushes remained strong, with global toothpaste market share of 44.3 percent and global manual toothbrushes market share of 33.1 percent.

The company added that it has made great progress in mouthwash as well, with global market share currently reaching a record high of 17.3 percent, up 60 basis points from last year.

Operating profit margin for the quarter contracted 250 basis points to 14.7 percent from the year-ago quarter. Meanwhile, gross margin improvement of 10 basis points was offset by a 10 basis points increase in selling, general and administrative expenses as a percentage of net sales.

Looking ahead to fiscal 2014, the company said it expects another year of strong organic sales growth and gross margin expansion, with adjusted earnings per share projected to grow 4 to 5 percent on a dollar basis and at a double-digit rate on a currency neutral basis.

Street is currently looking for full-year 2014 earnings of $3.00 per share on annual revenues of $17.78 billion.

"We expect our growth momentum to continue as we progress through the year. Our 2012 Restructuring Program is on track and proceeding smoothly. We also continue to be sharply focused on our aggressive funding-the-growth programs and our strategic worldwide pricing initiatives," Cook added.

CL closed Thursday's regular trading session at $66.43, up $0.38 on a volume of 3.99 million shares. In the past 52-week period, the stock has been trading in a range of $55.47 to $67.40.