Thursday, Colgate-Palmolive Co. (CL), a global consumer products company announced that its first-quarter net income increased nearly 9% from last year and topped analysts' estimate, as its cost-cutting measures and increased pricing, more than offset the impact of higher raw material costs and the strengthening dollar.
Colgate-Palmolive's net income in the first quarter of 2009 increased to $507.9 million or $0.97 from $466.5 million or $0.86 per share in the year-ago period. The year-ago quarterly result included aftertax charges of $21.2 million or $0.04 per share related to the 2004 Restructuring Program.
Excluding items, the year-ago quarterly net income was $487.7 million or $0.90 per share. On average, 16 analysts tracked by Thomson Reuters expected the company to earn $0.96 per share. Analysts' estimates typically exclude one-time items.
The company had embarked on a four-year restructuring and business-building plan in the fourth quarter of 2004 to enhance its global leadership position in its core businesses.
Colgate-Palmolive operates in two product segments: oral, personal and home care, and pet nutrition.
The oral care products include toothpaste, toothbrushes, oral rinses and dental floss, while personal care products include shower gels, shampoos, conditioners, bar soaps, deodorants, antiperspirants as well as liquid hand soaps. Home care products include dish washing liquids, household cleaners and fabric conditioners. The pet nutrition segment provides specialty nutrition products for dogs and cats.
The company's sales for the quarter declined to $3.50 billion from $3.71 billion in the year earlier quarter as unit volume declined 0.5%. Wall Street analysts had a consensus revenue estimate of $3.60 billion.
The oral, personal and home care segment generated quarterly sales of $2.99 billion, down from $3.1 billion in the year-ago quarter. The pet nutrition segment reported sales for the quarter of $506.4 million, compared to $503.2 million in the year-ago period.
The company's quarterly sales increased 3% to $729.7 million in North America while the other regions namely Latin America, Europe and Greater Asia/Africa recorded a drop in sales. In Latin America, the company's sales fell 3.6% to $911 million and in Europe sales were $719 million, down 20% from the year-ago quarter. In Asia, sales dropped 3% to $636.6 million.
Gross profit margin increased to 57.5% in first quarter of 2009 from 56.6% in the comparable quarter last year, reflecting the benefits of increased pricing and aggressive cost-savings programs. Excluding restructuring charges in 2008, gross profit margin was 57.3% in the first quarter of last year.
The company noted that its selling, general and administrative expenses were 33.9% and 36.3% of net sales in first quarter of 2009 and 2008, respectively.
Looking ahead, Colgate-Palmolive noted that the benefits of recently easing commodity and oil prices, coupled with the higher pricing and its ongoing aggressive savings programs, should offset the expected impact of the stronger dollar on raw and packaging material costs.
The company expects gross profit margin to reach the high end of its targeted range of 75 to 125 basis points for the full year of 2009.
CL closed Wednesday's trade at $59.71 on a volume of 3.7 million shares.
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