Conservative · Stocks to Consider and Updates

Colgate-Palmolive Reports Fourth Quarter Results; Lackluster Outlook

Oral care and consumer products company, Colgate-Palmolive (NYSE: CL – $61.79) reported net income rose to $606 million or $0.74 a share on an adjusted basis from last year’s $0.75. The Street consensus was $0.73. Sales fell to $3.81 billion from $3.89 billion but was above the Street views of $3.78 billion. North America oral, personal and home products sales growth of 5.1% to $839 million was just below the consensus of $840 million, but Hill’s pet nutrition grew sales 6.2% to $680 million beating expectations of $599 million. Sales in Latin America declined 9% (organic sales excluding currency translations increased 1%); Europe declined 2.5% (organic sales increased 1%); Asia-Pacific sales declined 6.5% (organic sales decreased 1%); and Africa-Eurasia fell 11% (organic sales increased 4%).  Gross profit margin fell to 59.1% from 59.8%.

       Looking ahead to 2019, management expects sales to be flat to up low-single-digits, with organic sales growth of 2% to 4%. The company is planning for increased investment behind its brands, higher pricing and strong innovation, led by the relaunches of Colgate Total and Hill’s Science Diet and continued focus on naturals.  New York-based Colgate is also planning to invest in expanding its portfolio offerings by bringing oral-care brands like Elmex and Meridol into new markets and by broadening its e-commerce/direct to consumer offerings. The company also plans to continue to increase its investment behind its professional skin care businesses – Elta MD and PCA Skin. The high-quality shares, yielding 2.7%, can be held for its long-term defensive characteristics and dividend growth.

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