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Colgate-Palmolive Company – a global dealer in consumer goods – came up with fourth-quarter 2012 adjusted earnings of $1.41 per share, approximately 8.5% above the year-ago quarter’s adjusted earnings of $1.30. Moreover, quarterly earnings came ahead of the Zacks Consensus Estimate of $1.40 per share.

Global sales of $4,286 million inched up nearly 2.7% from the prior-year quarter’s level of $4,172 million, primarily benefiting from a 2.5% upside in pricing and 1.5% increase in global unit volumes (excluding divested businesses), partially offset by a negative impact of 1.5% from foreign exchange.

However, quarterly revenue remained below the Zacks Consensus Estimate of $4,309 million. On an organic basis (excluding foreign exchange, acquisitions and divestitures), the company recorded sales growth of 4%.

Adjusted gross profit margin expanded 90 basis points (bps) to 58.6%, driven by increased prices as well as cost savings from the company’s funding-the-growth initiatives. This was offset in part by higher raw and packaging material expenses and increased manufacturing costs in Venezuela. Selling, general and administrative expenses, as a percentage of revenue, grew 10 bps to 34.6% on account of a rise in overhead costs, partially offset by reduced advertising expenses.

Fourth-quarter adjusted operating profit of $1,035 million climbed 6% compared to the year-ago period, while operating margin expanded 80 bps to 24.1%. On a reported basis, including costs associated with Global Growth and Efficiency Program and the sale of land in Mexico, operating profit inched up 2% to $942 million.

Colgate-Palmolive’s market share of global toothpaste and manual toothbrushes reached 44.6% and 32.7%, respectively. Global toothpaste and manual toothbrushes share represented an increase of 0.5 and 0.8 share points from the year-ago period.

Segment Discussion

North America sales (18% of total sales) increased 4.0% in the quarter. The growth was primarily driven by a 2.0% upside in prices, a 1.5% rise in unit volume and 0.5% positive impact from foreign currency translation. On an organic basis, sales increased 3.5%.

Segment operating profit surged 23.0% to $236 million, while operating margin expanded nearly 460 bps to 30.0%. The year-over-year increase in operating profit margin was primarily driven by increased gross profit margin and reduced selling, general and administrative expenses as a percentage of net sales.

Latin America sales (29% of total sales) were up 1.5% year over year primarily driven by a 5.0% increase in pricing, partially offset by 1.5% decline in volume and negative foreign exchange impact of 2.0%. Volume gains were most prominent in Brazil and Central America, but were weak in Venezuela. On an organic basis, sales increased 4.0%.

However, operating profit declined 4.0% to $348 million from the prior-year quarter. Moreover, operating margin expanded 170 bps to 28.5%, primarily due to lower gross profit margin and increased selling, general and administrative expenses as a percentage of sales.

Europe/South Pacific sales (20% of total sales) were flat year over year, as the benefit coming from 2.5% increase in unit volume was fully offset by a decline of 1.0% in pricing and 1.5% negative impact on from foreign currency exchange. Volume gains were primarily led by better performance in Australia, Denmark and France, while volumes in Germany and Iberia declined. Organic sales for the region were up by 1.5%.

Operating profit increased 14% year over year to $187 million. Furthermore, the operating profit margin in the region expanded 270 bps to 22.1%, driven by higher gross profit margin and lower SG&A expenses as a percentage of sales.

Greater Asia/Africa sales (20% of total sales) climbed 9.0%, with an 8.0% increase in unit volume, primarily led by volume gains in India, the greater China, Russia, the Philippines and South Africa. Pricing contributed 2.0% to growth, which was partially offset by a 1.0% negative impact from foreign currency. On an organic basis, sales grew 10.0%.

Operating profit jumped 6% to $215 million on account of improved gross profit, while operating margin contracted 80 bps to 24.7%. Higher SG&A expenses as a percentage of sales more than offset the benefit of improved gross profit margin.

Hill’s Pet Nutrition sales (13% of total sales) inched down 1.0%. Unit volume decreased 2.5% as volume declines in the U.S., Japan and Europe overshadowed the volume gains in Brazil and South Africa. Pricing had a 2.5% positive impact on sales growth, while foreign exchange negatively impacted sales by 1.0%. On an organic basis, sales grew marginally by 1.5% from the year-ago quarter.

Operating profit inched down 2.0% to $149 million. However, the operating profit margin contracted 30 bps to 26.7%, since the rise in gross profit margin was more than offset by an increase in selling, general and administrative expenses, as a percentage of net sales.

Other Financial Details

Colgate-Palmolive ended fiscal 2012 with cash and cash equivalents of $884 million, total debt of $5,230 million and shareholders’ equity of $2,189 million. Net cash provided by operating activities came in at $3,196 million for the fiscal.

Guidance

Looking ahead, Colgate-Palmolive anticipates that growth momentum will continue in fiscal 2013 with gross margin expansion and a double-digit growth in earnings per share.

Other Stocks to Consider

Colgate-Palmolive carries a Zacks Rank #2 (Buy). Other stocks in the same industry that are worth considering include Inter Perfums Inc. , Proctor & Gamble Company and Church & Dwight Company Inc. . Inter Perfums carries a Zacks Rank #1 (Stong Buy), while the other two carry a Zacks Rank #2 (Buy).

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