Friday, April 25, 2014

Colgate Palmolive Q1 2014 Earnings Release

Colgate Palmolive, ticker symbol CL, reported earnings today that were in line with analyst expectations.  The global sales for the company remained flat at roughly 4.3 Billion with unit volume increasing by 5% and wholesale prices growing by 1.5%.  Unfortunately these were coupled with a negative 6.5% currency conversion effect due to fluctuations in the Venezuelan currency.  The end result is a 3% adjust earnings growth to $0.68 per share.

In terms of organic sales growth, Colgate saw 6.5% organic sales growth on the global level with 10% organic growth in key emerging markets.  Revenue was higher than expectations, particularly in North America, Europe, and in the South Pacific-Asia region.  Unfortunately sales in Latin America were lackluster, falling 5%.  This has a rather profound impact on the company as Latin American sales constitute 27% of overall sales.

Going forward, the company is looking to maintain high spending via advertising for the rest of 2014, in plans to expand into key markets.  Colgate expects diluted earnings to expand at a double-digit percentage for 2014.  Analysts expect 5.6% full year non-GAAP growth for 2014 and so far, investors have responded well to the earnings release.  The price target of $75 remains sufficient with the investment thesis remaining intact.

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