Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net sales
of $4,332 million in third quarter 2012, a decrease of 1.0% versus third
quarter 2011. Global unit volume grew 2.0%, pricing increased 3.0% and
foreign exchange was negative 6.0%. Organic sales (Net sales excluding
foreign exchange, acquisitions and divestments) grew 5.0%.
Net income and Diluted earnings per share in third quarter 2012 were $654 million and $1.36, respectively. Net income and Diluted earnings per share in third quarter 2011 were $643 million and $1.31, respectively. Net income in third quarter 2012 and 2011 included $7 million ($0.02 per diluted share) and $133 million ($0.27 per diluted share), respectively, of aftertax charges resulting from the implementation of the previously disclosed business realignment and other cost-saving initiatives and costs associated with the sale of land in Mexico. Net income in third quarter 2011 also included an aftertax gain of $135 million ($0.27 per diluted share) from the sale of the Company's non-core laundry detergent business in Colombia.
Excluding the above noted items in both periods, Net income in third quarter 2012 was $661 million, an increase of 3% versus third quarter 2011, and Diluted earnings per share in third quarter 2012 was $1.38, an increase of 5% versus third quarter 2011.
Gross profit margin was 58.4% in third quarter 2012 versus 56.2% in the year ago quarter. Excluding the above noted items in both periods, Gross profit margin was 58.6% in third quarter 2012, an increase of 180 basis points versus the year ago quarter, as higher pricing and cost savings from the Company's funding-the-growth initiatives more than offset the impact of increases in raw and packaging material costs and negative foreign exchange transaction costs.
Selling, general and administrative expenses were 34.6% of Net sales in third quarter 2012 versus 34.0% in third quarter 2011, as worldwide advertising spending increased 1% versus the year ago quarter to $453 million. Advertising as a percent to sales increased 20 basis points to 10.5% from 10.3% in third quarter 2011.
Operating profit decreased 1% to $1,027 million in third quarter 2012 compared to $1,035 million in third quarter 2011. Excluding the above noted items in both periods, Operating profit increased 3% to $1,037 million.
Net cash provided by operations year to date was $2,133 million compared to $2,057 million in the comparable 2011 period. Net cash provided by operations for 2012 includes higher income tax payments, higher payments related to business realignment and other cost-saving initiatives and the payment for the previously disclosed competition law matter in France related to a divested detergent business, and lower voluntary benefit plan contributions. Working capital as a percentage of Net sales was 2.2%, up 160 basis points versus the year ago period. This increase was primarily due to the timing of income tax payments and higher accounts receivable.
Ian Cook, Chairman, President and Chief Executive Officer, commented on the results and outlook excluding the 2012 and 2011 items noted above and the costs of the Global Growth and Efficiency Program discussed below, "We are very pleased to have achieved another quarter of strong profitability with gross profit margin, operating profit margin and net income as a percent to sales all increasing versus year ago, despite an intense competitive environment and challenging macroeconomic conditions worldwide.
"Our growth momentum continued on the top line as well, with organic sales increasing a healthy 5.0% during the quarter, led by the emerging markets where organic sales grew a robust 9.5%.
"We are delighted that gross profit margin increased by 180 basis points during the quarter, the largest expansion we have seen in ten quarters. This allowed for higher advertising spending behind Colgate's brands both in absolute dollars and as a percent to sales, which drove market share gains around the world.
"Colgate's global market shares in toothpaste and manual toothbrushes are both at record highs year to date. Colgate's share of the global toothpaste market strengthened to 44.9% year to date, up 0.6 share points versus year ago. Our global leadership in manual toothbrushes also strengthened during the quarter with Colgate's global market share in that category reaching 32.7% year to date, up 0.8 share points versus year ago.
"Looking ahead, we continue to be sharply focused on our aggressive funding-the-growth programs and our strategic worldwide pricing initiatives. We anticipate that the combined benefits from those programs will continue to help us offset the impact of increases in raw and packaging material costs and the transaction impact of negative foreign exchange, and achieve gross margin expansion in 2012 within our targeted range of 75 to 125 basis points.
"Overall, we continue to expect diluted earnings per share for 2012 to grow at a double-digit rate, on a currency neutral basis. If average exchange rates in the balance of the year were to remain at current spot rates, currency translation would decrease full year diluted earnings per share growth by approximately 6-7%."
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