Colgate Achieves All-Time Record Sales and Earnings
EPS up 11% to $.63 vs. $.57
NEW YORK, Oct. 23, 2003 /PRNewswire-FirstCall/ -- Colgate-Palmolive
Company (NYSE: CL) today announced third quarter net earnings which set a new
all-time record, reaching $365.4 million, a 10% increase from third quarter
2002. Fully diluted earnings per share also set a new record at $.63, up
11% from the year ago quarter. This is Colgate's 30th consecutive quarter of
increased net income, increased earnings per share and increased gross profit
margin.
The Company recorded a 6.0% global sales increase in the quarter, the
highest third quarter growth rate in almost 10 years with quarterly sales
exceeding $2.5 billion for the first time. Unit volume grew 2.5%, against
very strong volume growth in the year ago period. The Company's global volume
increased 4.0% for the first nine months of this year.
Operating profit also reached a record of $535.3 million in the third
quarter, up 4% after significantly higher media and commercial spending on
worldwide brand-building activities. Every operating division increased its
commercial spending behind the Company's core brands.
Gross profit margin increased 30 basis points to 55.0%, also a third
quarter record and on top of the 120 basis point gross margin expansion in the
year ago period which was aided by the sell-in of Colgate Simply White tooth
whitening gel in the U.S. Excluding the impact of the Colgate Simply White
launch, global gross margin in the third quarter increased 50 basis points.
Colgate's already strong balance sheet continues to strengthen with debt
declining and all balance sheet ratios improving. Net cash provided by
operations was up 6% and free cash flow before dividends rose 10% year to
date. After-tax return on capital reached a record 37.1% in the first nine
months of 2003, up 310 basis points, and worldwide working capital declined as
a percent to sales.
Reuben Mark, Colgate's Chairman and CEO said, "We are encouraged that our
unrelenting focus on strategic priorities continues to pay off. Worldwide
toothpaste sales are growing faster than the Company average. Our global
flagship brand, Colgate Total, had volume increases of 9% in the U.S. and 8%
worldwide during the quarter. Our toothpaste market shares are up in the U.S.
and in most of the countries where we do business.
"Market shares across categories are strong around the world and were
supported by an excellent global increase in commercial investment, both
absolutely and as a percent to sales. These investments were in part funded by
successful global tax planning strategies.
"The third quarter and nine month tax rates of 27.6% and 30.4%,
respectively, include the benefits of these strategies and it is expected that
the tax rate in 2003 will decline for the fourth year in a row. The tax rate
reduction versus prior year is largely due to tax incentives in Europe, which
enabled the Company to provide even more marketing support behind our leading
brand positions worldwide. I am hopeful that our tax rate next year will show
an even lower rate than this year due to additional tax planning initiatives.
"We are pleased that despite very difficult comparisons versus last year
and economic softness in areas of the world, Colgate's global organization
generated healthy results in both volume and gross margin. This reinforces
our strong belief that 2003 will be Colgate's eighth year of double-digit EPS
growth. Looking forward to next year, while our budget process is not yet
completed, I expect that 2004 will be the ninth consecutive year of strong
earnings growth for the Company."
For the first nine months of 2003, diluted earnings per share were
$1.81 versus $1.60 in the year ago period, up 13%. Net income rose 11% to
$1,049.2 million. Worldwide unit volume grew 4.0% and sales rose 6.5%.
At 11:00 a.m. ET today, Colgate will host a conference call to elaborate
on third quarter results and to discuss the Company's ongoing expectations.
To access this call as a webcast, please go to Colgate's web site on the
internet at www.colgate.com.
The following are comments about divisional performance:
North America (24% of Company Sales)
North American sales and unit volume declined 3.5% and 3.0%, respectively,
when compared with all-time record sales in the year ago quarter aided by the
very successful sell-in of Colgate Simply White which began during that
period. Excluding the impact of Simply White, U.S. volume increased 4% in the
current quarter. North American operating profit declined 13% due to a record
high level of commercial investment supporting numerous new product
initiatives during the quarter.
Colgate's leadership of the U.S. toothpaste market expanded during the
quarter with its national ACNielsen market share at 34.7% year to date, up 50
basis points versus full year 2002 and over five full share points ahead of
the number two competitor. Colgate Total, the individual brand leader in the
U.S. toothpaste market, continues to advance achieving record market shares in
the third quarter 2003 driven by the success of new Colgate Total Advanced
Fresh toothpaste. Other new products driving growth include Colgate Total
Plus Whitening and Colgate Herbal White toothpastes, Colgate Massager and
Colgate Active Angle toothbrushes, Palmolive Aromatherapy dishwashing liquid,
Palmolive Dish Wipes, Softsoap Aromatherapy body wash and liquid hand soap,
Irish Spring Icy Blast bar soap and Mennen Speed Stick 24/7 deodorant.
Latest introductions recently announced to begin shipping later this year
include Colgate Simply White toothpaste, a revolutionary toothpaste that goes
beneath the tooth surface to whiten deeper - removing stains that are actually
embedded inside the teeth as well as removing surface stains. Also announced
was Colgate Whitening toothbrush with unique soft polishers that help remove
stains and polish teeth.
Europe (24% of Company Sales)
European unit volume grew 3.5% in the third quarter on top of a very
strong performance in the year ago quarter. The United Kingdom, Spain,
Switzerland, Russia, Nordic, Romania, Adria and Turkey each contributed
healthy volume increases which more than offset expected volume declines in
Germany and France due to poor economic conditions and negative GDP growth.
Dollar sales in Europe rose 13.0% and dollar operating profit increased 15%.
New products driving growth in Western Europe include Colgate Sensitive
and Colgate Herbal White toothpastes, Colgate Massager and Colgate Whitening
toothbrushes, Palmolive Aromatherapy, Palmolive Thermal and Palmolive Thermal
Spa shower gels and bath foams, Palmolive Citrus and Vitamins shampoo and Ajax
Orange Force all purpose cleaner available in liquid, spray and wipe forms.
Throughout Central Europe and Russia, successful new products driving
growth include Colgate Triple Action and Colgate Total Plus Whitening
toothpastes, Colgate Extra Clean and Colgate Navigator Plus toothbrushes, Lady
Speed Stick Aloe and Mennen Speed Stick Power of Nature deodorants, Palmolive
Aromatherapy shower gel and liquid hand soap and Ajax multipurpose spray.
Latin America (21% of Company Sales)
Despite soft economic conditions, Latin American unit volume grew
1.5% during the quarter and dollar sales rose 3.0%. Strong volume gains were
achieved in Central America, Colombia, Ecuador and Venezuela while volume was
relatively flat in Mexico and Brazil. Dollar operating profit for the
division declined 5%, somewhat better than expected.
Colgate continues to strengthen its already strong oral care leadership in
Latin America with regional toothpaste shares up nearly two share points
versus the year ago period. New products contributing to growth throughout
the region are Colgate Total Plus Whitening, Colgate Fresh Confidence and
Colgate Triple Action toothpastes, Colgate Simply White at-home tooth
whitening gel, Colgate Active Angle and Colgate Extra Clean toothbrushes,
Palmolive Aromatherapy translucent soap, Palmolive Naturals bar soap, Protex
Herbal anti-bacterial soap, and Fabuloso Orange Energy and Ajax Baking Soda
and Citrus liquid cleaners.
Asia/Africa (18% of Company Sales)
Asia/Africa unit volume grew 9.5% in the third quarter. Positive volume
growth was achieved in nearly every country in the region led by Australia,
China, Hong Kong, India, Malaysia, Middle East, Morocco, Philippines, Senegal,
South Africa and Taiwan. Dollar sales grew 14.0% in the third quarter and
dollar operating profit increased 25% to an all-time record level.
Successful new products driving growth in oral care throughout the region
include Colgate Herbal and Colgate Herbal White toothpastes, Colgate Simply
White at-home tooth whitening gel, Colgate Active Angle toothbrush and the
recently revitalized Colgate Anti-Cavity toothpaste. Driving significant
growth in personal care are Protex Herbal bar soap, Palmolive Aromatherapy
shower cream, liquid hand soap, bar soap and talc, and Protex Sun Care shower
cream, bar soap and talc delivering moisturizing after-sun skin care benefits.
Sta-Soft and Softlan Jasmine fabric conditioners contributed to growth in home
care during the quarter.
Hill's Pet Nutrition (13% of Company Sales)
Innovative new products and veterinary endorsements are driving growth at
Hill's, the world leader in specialty pet food. Healthy results both
domestically and internationally contributed to 3.5% unit volume growth in the
third quarter. This growth is on top of a very strong volume increase in the
year ago period. Dollar sales rose 9.0% versus third quarter 2002 and dollar
operating profit increased 15%.
Hill's increased consumption of Science Diet and Prescription Diet in the
U.S. specialty retail channel. Volume growth was driven by the continued
success of Hill's Science Diet Nature's Best and the initial sell-in of new
Science Diet Advanced Protection, a diet clinically proven to increase
vitality and alertness in adult dogs and cats. Off to a great start in the
veterinary channel is Prescription Diet m/d, a low carbohydrate diet
clinically proven to alter metabolism for effective weight loss in cats. This
diet has also been shown to nutritionally manage cats with feline diabetes.
Increased commercial investment in support of these new products included
consumer rebates and other free product promotional offers.
Internationally, Australia, Germany, Japan, Korea, Nordic, Singapore,
Spain, Switzerland, Russia, Taiwan and Thailand each generated strong volume
growth. The continued roll-out of Science Plan and Science Diet Nature's Best
throughout Europe and Asia contributed to the strong international results.
* * *
About Colgate-Palmolive: Colgate-Palmolive is a leading global consumer
products company, tightly focused on Oral Care, Personal Care, Household
Surface Care, Fabric Care and Pet Nutrition. Colgate sells its products in
over 200 countries and territories around the world under such internationally
recognized brand names as Colgate, Palmolive, Mennen, Softsoap, Irish Spring,
Protex, Sorriso, Kolynos, Ajax, Axion, Soupline, Suavitel and Fab, as well as
Hill's Science Diet and Hill's Prescription Diet pet foods. For more
information about Colgate's global business, visit the Company's website at
www.colgate.com.
Certain financial measures contained in this release, as noted, exclude
results for Colgate Simply White tooth whitening gel to allow comparisons of
Colgate's other product lines and businesses without the impact of Colgate
Simply White, sales of which began in the U.S. in the third quarter of 2002.
This press release and the related webcast (other than historical
information) may contain forward-looking statements. Actual events or results
may differ materially from those statements. Investors should consult the
Company's filings with the Securities and Exchange Commission (including the
information set forth under the caption "Cautionary Statement on Forward-
Looking Statements" in the Company's Form 10-K for the year ended December 31,
2002) for information about factors that could cause such differences. Copies
of these filings may be obtained upon request from the Company's Investor
Relations Department or the Company's website on the internet at
www.colgate.com.
(See attached tables for third quarter results.)
Colgate-Palmolive Company Condensed Consolidated Statements of Income
For the three months and nine months ended September 30, 2003 and 2002
(Dollars in Millions Except Per Share Amounts) (Unaudited)
Third Quarter Nine Months
2003 2002 2003 2002
Net Sales $2,523.8 $2,381.7 $7,330.8 $6,873.9
Cost of Sales 1,136.5 1,079.1 3,292.5 3,124.5
Gross Profit 1,387.3 1,302.6 4,038.3 3,749.4
Gross Profit Margin 55.0% 54.7% 55.1% 54.5%
Selling, General & Administrative
Expenses 852.0 788.5 2,435.0 2,256.8
Operating Profit 535.3 514.1 1,603.3 1,492.6
Operating Profit Margin 21.2% 21.6% 21.9% 21.7%
Net Interest Expense 30.4 38.7 95.7 110.7
Income Before Income Taxes 504.9 475.4 1,507.6 1,381.9
Provision for Income Taxes 139.5 144.7 458.4 434.5
Effective Tax Rate 27.6% 30.4% 30.4% 31.4%
Net Income 365.4 330.7 1,049.2 947.4
Net Earnings Per Common Share
Basic $.67 $.60 $1.92 $1.71
Diluted $.63 $.57 $1.81 $1.60
Average Common Shares Outstanding
Basic 537.9 539.4 537.7 544.5
Diluted 579.1 585.0 580.4 591.3
Colgate-Palmolive Company Condensed Consolidated Balance Sheets
As of September 30, 2003, December 31, 2002 and September 30, 2002
(Dollars in Millions Except Per Share Amounts) (Unaudited)
September 30, December 31, September 30,
2003 2002 2002
Cash and marketable securities $261.3 $177.5 $203.9
Accounts receivable, net 1,195.4 1,145.4 1,129.0
Inventories 772.8 671.7 689.6
Other current assets 245.4 233.5 211.0
Property, plant and
equipment, net 2,502.4 2,491.3 2,412.9
Other assets, including goodwill and
intangibles 2,428.7 2,367.8 2,281.9
Total assets $7,406.0 $7,087.2 $6,928.3
Total debt 3,235.7 3,603.9 3,643.1
Other current liabilities 1,915.5 1,755.6 1,719.9
Other non-current liabilities 1,417.6 1,377.4 1,241.9
Total shareholders' equity 837.2 350.3 323.4
Total liabilities and
shareholders' equity $7,406.0 $7,087.2 $6,928.3
Supplemental Balance Sheet
Information:
Debt less cash and marketable
securities $2,974.4 $3,426.4 $3,439.2
Working capital % of sales 3.0% 3.2% 3.3%
After-tax return on capital 37.1% 34.6% 34.0%
Colgate-Palmolive Company Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2003 and 2002
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2003 2002
Operating Activities:
Net income $1,049.2 $947.4
Depreciation and amortization 230.6 218.7
Voluntary contributions to
benefit plans (63.1) (50.0)
Deferred income taxes 17.4 29.1
Changes in:
Accounts receivable (10.4) (17.8)
Inventories (74.3) (34.4)
Accounts payable and
other accruals 75.6 105.2
Other non-current
assets and liabilities 54.7 5.3
Net cash provided by
operations 1,279.7 1,203.5
Investing Activities:
Capital expenditures (187.1) (214.0)
Other investing activities 50.5 (13.0)
Net cash used in
investing activities (136.6) (227.0)
Financing Activities:
(Payments on) proceeds from
debt issuances (414.0) 233.6
Dividends paid (366.4) (305.8)
Purchases of treasury shares (348.7) (929.5)
Proceeds from exercise of
stock options 71.5 52.7
Net cash used in
financing activities (1,057.6) (949.0)
Effect of exchange rate changes on
cash and cash equivalents 2.7 0.5
Net increase in cash and cash equivalents 88.2 28.0
Cash and cash equivalents at
beginning of period 167.9 172.7
Cash and cash equivalents at end of period $256.1 $200.7
Supplemental Cash Flow Information:
Free cash flow before dividends (net
cash provided by operations less
capital expenditures) $1,092.6 $989.5
SOURCE Colgate-Palmolive Company
-0- 10/23/2003
/CONTACT: Bina Thompson, +1-212-310-3072, Hope Spiller, +1-212-310-2291,
both of Colgate-Palmolive/
/Web site: http://www.colgate.com/
(CL)
END