Colgate-Palmolive Posts Weak Results; Guides Lower

Despite a dismal quarterly report, shares of consumer products company Colgate-Palmolive (NYSE: CL – $73.27) tacked on 1.6% in today’s trading after a lower opening. Colgate matched second-quarter profit expectations but missed on sales. Net profit fell to $524 million from $600 million, and excluding special items, earnings per share came to $0.72, in line with the consensus and two cents better than a year ago. Revenue fell to $3.83 billion from $3.85 billion, and below the Street expectation of $3.90 billion. Oral, personal and home care revenue slipped while Hills pet nutrition revenue was flat. Gross profit margin was 60.7% in second quarter, an increase of 50 basis points versus the year ago quarter. This increase was primarily driven by cost savings from the company’s funding-the-growth initiatives and the 2012 restructuring program, and higher pricing, partially balanced by higher raw and packaging material costs and foreign exchange transactions. Sales in Latin America and Africa/Eurasia were higher by 7% and 1%, respectively, offset by declines in North America, Europe and the Asia-Pacific Region.

       “As we look ahead, uncertainty in global markets and slowing category growth worldwide remain challenging,” said Chief Executive Ian Cook. “Based on current spot rates, we continue to expect a low-single-digit net sales increase for 2017, and given our slower than expected first half, we are now planning for low single-digit organic sales growth for 2017. The shares have moved sharply higher since the beginning of the year on takeover rumors, and are fully valued at current levels. Nonetheless, positions in this quality name can be held in a well-diversified conservative portfolio for safety, income and moderate capital gains out to late decade.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: