Sponsored Links 
Colgate Cautions, Stock Takes Hit
Print
Share
Colgate-Palmolive Company (CL - Analyst Report), one of the leading consumer products companies, recently posted second-quarter 2010 results. The quarterly earnings of $1.17 per share beat the Zacks Consensus Estimate by a penny and rose 9.3% from $1.07 posted in the prior-year quarter on the heels of increase in volume and pricing, and a gain in market share.
However, the world's largest toothpaste maker cautioned that the weakening of the Venezuelan currency would hurt its fiscal 2010 earnings by 10 cents to 15 cents a share, up from 6 cents to 10 cents previously anticipated. Consequently, shares have fallen 6.5% in morning trading.
Global net sales grew 1.8% year-over-year to $3,814 million as unit volume increased 3%, and pricing rose 0.5%, countered by a negative foreign exchange impact of 1.5%. On an organic basis (excluding foreign exchange, acquisitions and divestitures), sales increased 3.5% in the quarter. Colgate's sales improved as consumers loosened their purse strings for branded goods.
However, the global net sales were weaker-than-expected and fell short of the Zacks Consensus Revenue Estimate of $3,949 million.
Gross profit climbed 1.9% to $2,242 million. However, gross profit margin of 58.8% remained flat compared to the prior-year quarter, reflecting cost-containment initiatives, offset by adverse foreign exchange translation.
Colgate-Palmolive notified that its share of the global toothpaste market has increased to 44.4% year-to-date, led by better performance across Brazil, China, India, Russia, Venezuela, France and the United Kingdom. Colgate’s market share in manual toothbrushes has increased to 31.6%.
Segment Discussion
North America sales (20% of the total sales) climbed 4.5% in the quarter, driven by a 5% unit volume growth and 1% favorable foreign exchange, partially offset by 1.5% on account of lower pricing. On an organic basis, sales rose by 3.5%. Operating profit jumped 14%.
Latin America sales (28% of the total sales) grew marginally by 0.5% as unit volume increased 1% driven by gains in Mexico, Colombia, Argentina, Dominican Republic and Central America, offset by a volume decline in Venezuela. Volume climbed 5%, excluding Venezuela. In addition, pricing contributed 7% to the top-line, countered by a negative foreign exchange impact of 7.5%. On an organic basis, sales soared 8%, whereas operating profit slipped 10% during the quarter.
Europe/South Pacific sales (20% of the total sales) dropped 2.5% as pricing was down 2.5% and foreign currency translation made a negative contribution of 1.5%. Unit volume rose 1.5% driven by GABA business, the United Kingdom and Italy Adria, partially offset volume declines across Belgium, Spain and Greece. On an organic basis, sales fell 1%, whereas operating profit climbed 4% in the quarter.
Greater Asia/Africa sales (19% of the total sales) climbed 14%, while unit volume surged 11.5%, led by volume gains in India, the Greater China region, Thailand, Russia and South Africa. Pricing dropped marginally by 1.5% but foreign currency translation made a positive contribution of 4%. On an organic basis, sales grew 10%, whereas operating profit rose 31%.
Hill’s sales (13% of the total sales) tumbled 7.5%. Unit volume fell 4%, due to volume declines across U.S., France, the United Kingdom, Japan and Russia, offset by gain in Canada, Mexico and South Africa. Pricing dropped 4%, but foreign currency translation made a positive contribution of 0.5% to the top-line. On an organic basis, sales slipped 8%, whereas operating profit dipped 4%.
Other Financial Details
Colgate-Palmolive ended the quarter with cash and cash equivalents of $555 million, total debt of $3,373 million and shareholders’ equity of $2,632 million. Year-to-date, net cash provided by operating activities rose 7.5% to $1,302 million, due to efficient working capital management.
However, the world's largest toothpaste maker cautioned that the weakening of the Venezuelan currency would hurt its fiscal 2010 earnings by 10 cents to 15 cents a share, up from 6 cents to 10 cents previously anticipated. Consequently, shares have fallen 6.5% in morning trading.
Global net sales grew 1.8% year-over-year to $3,814 million as unit volume increased 3%, and pricing rose 0.5%, countered by a negative foreign exchange impact of 1.5%. On an organic basis (excluding foreign exchange, acquisitions and divestitures), sales increased 3.5% in the quarter. Colgate's sales improved as consumers loosened their purse strings for branded goods.
However, the global net sales were weaker-than-expected and fell short of the Zacks Consensus Revenue Estimate of $3,949 million.
Gross profit climbed 1.9% to $2,242 million. However, gross profit margin of 58.8% remained flat compared to the prior-year quarter, reflecting cost-containment initiatives, offset by adverse foreign exchange translation.
Colgate-Palmolive notified that its share of the global toothpaste market has increased to 44.4% year-to-date, led by better performance across Brazil, China, India, Russia, Venezuela, France and the United Kingdom. Colgate’s market share in manual toothbrushes has increased to 31.6%.
Segment Discussion
North America sales (20% of the total sales) climbed 4.5% in the quarter, driven by a 5% unit volume growth and 1% favorable foreign exchange, partially offset by 1.5% on account of lower pricing. On an organic basis, sales rose by 3.5%. Operating profit jumped 14%.
Latin America sales (28% of the total sales) grew marginally by 0.5% as unit volume increased 1% driven by gains in Mexico, Colombia, Argentina, Dominican Republic and Central America, offset by a volume decline in Venezuela. Volume climbed 5%, excluding Venezuela. In addition, pricing contributed 7% to the top-line, countered by a negative foreign exchange impact of 7.5%. On an organic basis, sales soared 8%, whereas operating profit slipped 10% during the quarter.
Europe/South Pacific sales (20% of the total sales) dropped 2.5% as pricing was down 2.5% and foreign currency translation made a negative contribution of 1.5%. Unit volume rose 1.5% driven by GABA business, the United Kingdom and Italy Adria, partially offset volume declines across Belgium, Spain and Greece. On an organic basis, sales fell 1%, whereas operating profit climbed 4% in the quarter.
Greater Asia/Africa sales (19% of the total sales) climbed 14%, while unit volume surged 11.5%, led by volume gains in India, the Greater China region, Thailand, Russia and South Africa. Pricing dropped marginally by 1.5% but foreign currency translation made a positive contribution of 4%. On an organic basis, sales grew 10%, whereas operating profit rose 31%.
Hill’s sales (13% of the total sales) tumbled 7.5%. Unit volume fell 4%, due to volume declines across U.S., France, the United Kingdom, Japan and Russia, offset by gain in Canada, Mexico and South Africa. Pricing dropped 4%, but foreign currency translation made a positive contribution of 0.5% to the top-line. On an organic basis, sales slipped 8%, whereas operating profit dipped 4%.
Other Financial Details
Colgate-Palmolive ended the quarter with cash and cash equivalents of $555 million, total debt of $3,373 million and shareholders’ equity of $2,632 million. Year-to-date, net cash provided by operating activities rose 7.5% to $1,302 million, due to efficient working capital management.
Read the full analyst report on CL
Loading Stories...
-74.92