Conservative · Stocks to Consider and Updates

Colgate-Palmolive Reported Mixed Results

  Oral care and household products company Colgate-Palmolive (NYSE: CL – $75.03) reported worldwide net sales of $3.76 billion in first quarter, even with the first quarter 2016 level. Performance in Latin American grew by 9%, offset by North American, Europe and Asia-Pacific. Africa/Eurasia net sales increased 6.5%.  Revenue at Hill’s pet nutrition division increased 0.5%. Global unit volume decreased 2.0%, pricing increased 2.5% and foreign exchange was negative 0.5%. Organic sales grew 0.5%. Excluding special items in both periods, net income was $601 million, an increase of 5% versus last year, and earnings per share was $0.67, an increase of 6% versus first quarter 2016 and a penny higher than analysts’ views.

       Excluding charges, the company’s gross profit margin was 60.7% in first quarter, an increase of 70 basis points versus the year ago quarter. The increase was primarily driven by cost savings from the company’s funding-the-growth initiatives and the 2012 Restructuring Program, and higher pricing, partly offset by higher raw and packaging material costs. Excluding charges, selling, general and administrative expenses increased by 30 basis points to 35.6% of net sales, as a result of higher overhead expenses. Worldwide advertising investment increased 1%. Net cash provided by operations year-to-date was $691 million compared to $614 million in the comparable 2016 period, reflecting strong operating earnings and a continued tight focus on working capital.

       Colgate’s leadership of the global toothpaste market continued during the quarter with its global market share now at 43.8% year-to-date. Global leadership in manual toothbrushes also continued with Colgate’s global market share in that category now at 32.7%. Overall company sales will ultimately benefit from rising incomes and changing lifestyles, especially in less mature overseas markets. The stock dipped about 1.7% on the earning’s news, but are up over 10% so far this year. The high-quality shares can be retained for long-term total returns.

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