Saturday, January 31, 2015

Colgate-Palmolive Q4 2014 Earnings

Earnings for Colgate-Palmolive were released Thursday morning, January 29th.  

With Net Revenue of $4.22 billion for the fourth quarter, there was a decrease of 3% yoy.  Meanwhile, global unit volume grew 2.5% and pricing increased 3.5%.  Adversely, foreign exchange was down 9.0%.  The emphasis for this quarter should be focused on organic sales, which grew 6% for the quarter.

Adjusted earnings were reported at .76 cents per share, which beat analyst estimates by a penny.  As a result, the stock was up over 5% during intraday trading and finished with a solid end to the day up ~3%.

The net income for the fourth quarter of 2014 was $628 million, which is an 11% increase from the same quarter in the previous year.  The fourth quarter of 2014 had a diluted EPS of $0.68.  This includes after-tax charges of $71 million ($0.08 per diluted share) that were due to the company’s four-year global growth and efficiency program (2012 restructuring program), and another one-time charge.  The restructuring program is clearly benefiting the company’s efficiency.  This is evident by the SG&A expenses that were reduced by 100 bps, and the operating profit margin which consequently increased by 100 bps.

On a geographic basis, the company saw solid organic growth in all divisions for the quarter.  South America was the leader amidst a 12% gain, with the Europe/South Pacific division bringing up the rear with only a 1% increase.  Our thesis of looking for growth in emerging markets is supported with these organic sales, which grew by a total of 9.5% in specific emerging regions.  

With the dollar strengthening and foreign exchange volatility, earnings have been relatively suppressed.  This trend can be expected to continue during 2015.  While it will be something to keep an eye on moving forward, there is an overall positive outlook for the company.  Thanks to many new product pipelines spread across the globe, we can count on the momentum of organic sales growth for the coming year.  We can also look to increasing margins as a result of the continuation of the restructuring program.

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