Colgate Announces Record 3rd Quarter Earnings, Exceeding Expectations.Company Expresses Comfort with 4Q and Full Year 2009 External Expectations NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Regulatory News: Colgate-Palmolive Company (NYSE NYSE See: New York Stock Exchange :CL) today reported record net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in third quarter 2009 of $590 million and $1.12, respectively. Third quarter 2008 reported net income and diluted earnings per share were $500 million and $.94, respectively, which included $31 million of aftertax charges ($.05 per diluted share) related to the 2004 Restructuring Program. Excluding restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. (which pertain per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. only to 2008), net income and diluted earnings per share increased 11% and 13%, respectively. Worldwide sales as reported were $3,998 million, even with the year ago quarter, and unit volume as reported increased 1.5%. Excluding divested businesses, worldwide sales grew 0.5% and unit volume increased 2.0%. Organic sales (excluding foreign exchange, acquisitions and divestments) grew 7.0%. Global pricing increased 5.0% while foreign exchange was negative 6.5%. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. as reported increased to 59.2% in third quarter 2009 from 56.1% in the year ago period. Excluding restructuring charges in 2008, gross profit margin increased 280 basis points to 59.2% in third quarter 2009 from 56.4% in third quarter 2008, reflecting the benefits of increased pricing and cost-savings programs, which more than offset the impact of negative foreign exchange. Selling, general and administrative expenses were 35.1% and 35.5% of net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight in third quarter 2009 and 2008, respectively. Excluding restructuring charges in 2008, selling, general and administrative expenses increased to 35.1% of net sales in third quarter 2009 from 35.0% of net sales in third quarter 2008. Worldwide advertising costs declined 30 basis points as a percentage to sales versus the year ago period from 11.0% to 10.7%, largely brought about by lower media rates in most areas of the world. Sequentially, advertising increased 20 basis points versus second quarter 2009. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $926 million in third quarter 2009 compared to $791 million as reported in third quarter 2008. Excluding restructuring charges in 2008, operating profit rose 11% to $926 million in third quarter 2009 from $837 million in third quarter 2008, increasing to 23.2% from 21.0% as a percent to sales. Net cash provided by operations year to date increased by 34% to $2,375 million. Working capital decreased to 0.7% of sales versus 2.6% in the comparable 2008 period. These results reflect the strength of the Company's overall balance sheet and key ratios as well as its tight focus on working capital. Ian Cook Ian Cook is Associate Professor of Geography at the University of Exeter in the UK, and formerly senior lecturer in geography at the University of Birmingham. After gaining a teaching position at University of Wales, Lampeter in 1994, Cook finally achieved his PhD in human , Chairman, President and Chief Executive Officer, commented on the results excluding restructuring charges, "We are delighted that our strong momentum continued this quarter with operating profit, net income and earnings per share all increasing double-digit and organic sales growing a healthy 7%, driven by positive volume and higher pricing. Pleasingly, this momentum was widespread with every operating division achieving operating profit increases, both absolutely and as a percent to sales, as well as positive organic sales growth. "We are very pleased that gross profit margin increased by 280 basis points allowing for another quarter of sequentially higher advertising spending behind Colgate's brands. As expected, with lower media rates, this spending level equated to a higher number of consumer impressions versus the year ago quarter, which helped to drive market share gains worldwide. "Colgate's global toothpaste toothpaste, n See dentifrice. leadership strengthened to 45.1% during the quarter with market share gains in key countries around the world including the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Mexico, Brazil, China, India and Russia. Colgate also strengthened its global leadership in manual toothbrushes, with its global market share in that category reaching a record 30.8% year to date, up 0.4 share points versus year ago." Mr. Cook continued, "Looking ahead, the excellent gross margin should continue in the balance of the year driven by easing raw and packaging material costs and continued benefit from both price increases already implemented and our ongoing aggressive savings programs. We expect gross profit margin should be at around the same level in the fourth quarter as it was this quarter. "Given the continued gross margin strength and our top-line momentum, we are comfortable with external profit expectations for both the fourth quarter and the year. While our 2010 budget process is still in its initial stages, we anticipate another year of double-digit earnings per share growth in 2010." At 11:00 a.m. ET today, Colgate will host a conference call to elaborate on third quarter results. To access this call as a webcast, please go to Colgate's web site at http://www.colgate.com. The following are comments about divisional performance. See attached Geographic Sales Analysis and Segment Information schedules for additional information on divisional sales and operating profit. North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. (19% of Company Sales) North America sales grew 3.0% in the third quarter. Unit volume increased 5.0% with 1.5% lower pricing and 0.5% negative foreign exchange. Organic sales grew 3.5% during the quarter. North America operating profit increased 32% during the quarter as increased advertising was more than offset by higher sales driven by new products, cost-savings programs and lower raw and packaging material costs. In the U.S., new product launches are contributing to market share gains across categories. Market share gains year to date were seen in toothpaste, manual toothbrushes, body washes, hand dish liquid, liquid cleaners, liquid hand soaps and fabric conditioners. Colgate's toothpaste market share reached 36.6% year to date, up 0.6 share points versus year ago. Colgate Total Enamel enamel, a siliceous substance fusible upon metal. It may be so compounded as to be transparent or opaque and with or without color, but it is usually employed to add decorative color. It was used to decorate jewelry in ancient Egypt, Greece, and Rome. Strength, Colgate Sensitive Enamel Protect, Colgate Max Fresh with Mouthwash mouthwash /mouth·wash/ (mouth´wosh) a solution for rinsing the mouth. mouth·wash n. A medicated liquid for cleaning the mouth and treating diseased mucous membranes. Beads and Colgate Max White with Mini Bright Strips toothpastes contributed to the share gains. Colgate's share of the manual toothbrush toothbrush, n a handheld device with an arrangement of bristles at one end, and a handle designed to reach effectively all exposed surfaces of the teeth and gingiva. market reached a record 31.7% year to date, up 4.1 share points versus year ago, including new Colgate Wisp mini-brush whose market share reached 4.5% year to date and 5.6% for the third quarter. Colgate 360x ActiFlex, Colgate Max Fresh and Colgate Max White manual toothbrushes also contributed to the share gains. Successful new products contributing to growth in the U.S. in other categories include Softsoap Nutri Serums, Softsoap Body Butter Apricot Scrub, Irish Spring Irish Spring is the name of a well-known deodorant soap, first marketed by the Colgate-Palmolive company in 1972. As the name would suggest, television advertisements are set in an "Irish village," with a male townsperson endorsing the product with such slogans as "Fresh and Hair and Body and Cool Relief body washes and Ajax Lime with Bleach Alternative dish liquid. Looking ahead, the innovation pipeline in the U.S. is very robust with an array of exciting introductions across categories planned for launch in early 2010 including new Wisp Plus Whitening whit·en·ing n. 1. An agent used to make something white or whiter. 2. The act or process of making white or whiter. Noun 1. mini-brush. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. (29% of Company Sales) Latin American sales grew 5.0% and unit volume increased 3.0%. Volume gains were achieved in most countries, led by a significant increase in Venezuela. Higher pricing added 13.0% while foreign exchange was negative 11.0%. Organic sales for Latin America grew 16.0% during the quarter. Latin America operating profit increased 11% during the quarter due to higher pricing, cost-saving initiatives and lower advertising costs, partially offset by negative foreign exchange. Colgate continues to build its strong leadership in oral care throughout Latin America with its regional toothpaste market share at a record high of 78.5% year to date, driven by market share gains in nearly every country. In Brazil, for example, Colgate's toothpaste market share reached 70.1% year to date, up 110 basis points versus year ago. Strong sales of premium-priced offerings such as Colgate Total Professional Sensitive, Colgate Total Professional Whitening and Colgate Max Fresh Night toothpastes drove share gains throughout the region. Colgate's leading share of the manual toothbrush market for the region is 40.1% year to date, up 60 basis points versus year ago. Strong sales of Colgate 360x Deep Clean and Colgate Max White manual toothbrushes throughout the region contributed to this success. In other product categories, Colgate Plax Complete Care mouthwash, Fabuloso Oxy liquid cleaner, Lady Speed Stick Depil Control and Speed Stick Waterproof deodorants, and Suavitel GoodBye Ironing and Suavitel Magic Moments fabric conditioners contributed to market share gains in the region. Europe/South Pacific (22% of Company Sales) As reported, Europe/South Pacific sales declined 5.5% and unit volume increased 2.5%. Excluding divested businesses, sales declined 5.0% and unit volume increased 3.0% led by France, Germany, the United Kingdom, Denmark, Greece, Portugal and the GABA GABA ?. GABA abbr. gamma-aminobutyric acid GABA (gamma-aminobutyric acid) A neurotransmitter that slows down the activity of nerve cells in the brain. business. Pricing was even versus the year ago quarter while foreign exchange was negative 8.0%. Organic sales for Europe/South Pacific grew 3.0%. Operating profit for the region increased 6% during the quarter due to lower raw and packaging material costs, cost-savings initiatives and lower advertising costs, partially offset by negative foreign exchange. Colgate maintained its oral care leadership in the Europe/South Pacific region with toothpaste share gains in Germany, Greece, United Kingdom, Austria, Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. and Slovakia. Successful premium products driving share gains include Colgate Sensitive Pro-Relief, Colgate Total Advanced Sensitive and Colgate Max Fresh with Mouthwash Beads toothpastes. In the manual toothbrush category, Colgate 360x ActiFlex, Colgate Max White and Colgate Zig Zag Zig Zag A technical analysis indicator that filters out changes in an underlying plot that are less than a specified amount. Notes: In other words, it helps to show only significant changes. See also: Indicator, Technical Analysis toothbrushes contributed to share gains in key countries throughout the region. Recent premium innovations contributing to growth in other product categories include Colgate Plax Alcohol Free and Colgate Plax Ice mouth rinses, Palmolive Aromatherapy aromatherapy Therapy using essential oils and water-based colloids extracted from plant materials to promote physical, emotional, and spiritual health and balance. Single or combined extracts may be diffused into inhaled air, used in massage oil, or added to bathwater. Morning Tonic and Palmolive Thermal Spa Beauty Soft shower gels shower gel shower n → gel m douche , Ajax Professional bucket dilutable and Ajax Professional glass cleaners, Lady Speed Stick Aloe spray deodorant deodorant /de·odor·ant/ (de-o´der-int) 1. masking offensive odors. 2. an agent that so acts. de·o·dor·ant n. and Soupline Magic Moments and Soupline Aroma Tranquility fabric conditioners. Greater Asia/Africa (17% of Company Sales) Greater Asia/Africa sales and unit volume declined 3.0% and 2.5%, respectively. Volume gains in India, Thailand and Turkey were more than offset by volume declines in Russia, Philippines, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. and Ukraine. Pricing increased 7.0% while foreign exchange was negative 7.5%. Organic sales for Greater Asia/Africa increased 4.5%. Operating profit for the region increased 17% during the quarter due to higher pricing and lower raw and packaging material costs, partially offset by negative foreign exchange. Colgate maintained its toothpaste leadership in Greater Asia with market share gains in key countries throughout the region including India, China, Russia, Turkey, Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , Philippines and Malaysia. Successful new products driving the share gains throughout the region include Colgate Total Professional Clean and Colgate Sensitive Enamel Protect toothpastes. New products contributing to growth in other categories in the region include Colgate 360x ActiFlex, Colgate Max Fresh and Colgate Extra Clean Gum Care manual toothbrushes, Colgate Plax Ice mouthwash, Protex hand sanitizer sanitizer a sanitizing product capable of cleaning and disinfecting; usually a formulation containing a disinfectant and a detergent. , Protex Clean and Pure shower cream and bar soap and Lady Speed Stick Cloud Freshness deodorant. Hill's (13% of Company Sales) Hill's sales grew 1.5% during the quarter as unit volume decreased 2.5%. Pricing increased 4.5% while foreign exchange was negative 0.5%. Hill's organic sales rose 2.0% during the quarter. Volume growth achieved in France, Mexico and Australia was more than offset by volume declines in the U.S. Operating profit increased 2% during the quarter due to higher pricing, cost-savings programs and lower raw and packaging material costs more than offsetting increased advertising. Innovative new products succeeding in the U.S. specialty channel A specialty channel (or speciality channel) is a television channel which consists of programming focused on a single type or targeted at a specific demographic. include Science Diet Culinary Creations Feline feline of, or pertaining to, members of the family Felidae. See also cat. feline agranulocytosis see feline panleukopenia (below). feline actinic dermatitis see solar dermatitis. and a significantly expanded line of Science Diet Simple Essentials Treats Canine. Available in seven varieties, the treats are formulated for a wide range of special needs including oral care, mobility, immunity support and healthy skin and coat. New pet food products contributing to international sales include Science Plan Simple Essentials Snacks Canine and Science Plan Healthy Mobility Canine, a wellness diet that promotes active mobility, supports joint flexibility and enhances ease of movement. * * * About Colgate-Palmolive: Colgate-Palmolive is a leading global consumer products company, tightly focused on Oral Care, Personal Care, Home 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, Elmex, Tom's of Maine Tom's of Maine is a maker of natural personal care products, such as toothpaste, soap and deodorant. Their products are made without artificial or animal ingredients and without animal testing. All products have been certified as Halal. , Ajax, Axion ax·i·on n. A hypothetical boson having no charge or spin and small mass, proposed to explain the existence of certain symmetries of the strong nuclear force. [axi(al) + -on1.] , Fabuloso, Soupline and Suavitel, as well as Hill's Science Diet and Hill's Prescription Diet. For more information about Colgate's global business, visit the Company's web site at http://www.colgate.com. Unless otherwise indicated, all market share data included in this press release is as measured by ACNielsen. Cautionary Statement on Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release and the related webcast (other than historical information) may contain forward-looking statements. Such statements may relate, for example, to sales or volume growth, organic sales growth, profit and profit margin growth, earnings growth, financial goals, cost-reduction plans, tax rates and new product introductions. These statements are made on the basis of our views and assumptions as of this time and we undertake no obligation to update these statements. We caution investors that any such forward-looking statements are not guarantees of future performance and that 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 captions "Risk Factors" and "Cautionary Statement on Forward-Looking Statements" in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2008) for information about certain factors that could cause such differences. Copies of these filings may be obtained upon request from the Company's Investor Relations Investor relations The process by which the corporation communicates with its investors. Department or the Company's web site at http://www.colgate.com. As required, the Company adopted the consolidation Topic of the FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). Codification The collection and systematic arrangement, usually by subject, of the laws of a state or country, or the statutory provisions, rules, and regulations that govern a specific area or subject of law or practice. on January 1, 2009 and as a result of the adoption, certain prior period amounts attributable to noncontrolling interests in less-than-wholly-owned subsidiaries were reclassified within the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Statements of Income, Balance Sheets and Cash Flows. While the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. had no impact on Net income or earnings per common share, it did impact the previously reported Operating profit and effective tax rate. A complete reconciliation to previously reported 2008 amounts is available on Colgate's web site. Non-GAAP Financial Measures The following provides information regarding the non-GAAP measures used in this earnings release: To supplement Colgate's condensed consolidated income statements consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. presented in accordance with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), the Company has disclosed non-GAAP measures of operating results that exclude certain items. Gross profit margin, selling, general and administrative expenses, operating profit, operating profit margin Operating profit margin The ratio of operating profit to net sales. , net income and earnings per share are discussed in this release both as reported (on a GAAP basis) and excluding the impact of restructuring charges related to the restructuring program that began in the fourth quarter of 2004 and was completed as of the end of 2008 (the "2004 Restructuring Program"). These restructuring charges include separation-related costs, incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. depreciation and asset write-downs, and other costs related to the implementation of the 2004 Restructuring Program. In light of their nature and magnitude, the Company believes these items should be presented separately to enhance an investor's overall understanding of its ongoing operations. Management believes these non-GAAP financial measures provide useful supplemental information to investors regarding the underlying business trends and performance of the Company's ongoing operations and are useful for period-over-period comparisons of such operations. See "Consolidated Income Statement and Supplemental Information -- Reconciliation Excluding the 2004 Restructuring Program" for the three and nine months ended September 30, 2009 and 2008 included with this release for a reconciliation of these financial measures to the related GAAP measures. Sales and unit volume growth, both worldwide and in relevant geographic divisions, are discussed in this release both as reported and excluding divestments. Management believes this provides useful supplemental information to investors as it allows comparisons of sales growth and volume growth from ongoing operations on a period-over-period basis. This release also discusses organic sales growth (excludes the impact of foreign exchange, acquisitions and divestments). Management believes this measure provides investors with useful supplemental information regarding the Company's underlying sales trends by presenting sales growth excluding the external factor of foreign exchange as well as the impact from acquisitions and divestments. See "Geographic Sales Analysis, Percentage Changes - Third Quarter 2009 vs. 2008" for a comparison of sales excluding divestments and organic sales to sales as reported in accordance with GAAP. The Company uses these financial measures internally in its budgeting process and as factors in determining compensation. While the Company believes that these financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies. The Company defines free cash flow before dividends as net cash provided by operations less capital expenditures. As management uses this measure to evaluate the Company's ability to satisfy current and future obligations, repurchase stock, pay dividends and fund future business opportunities, the Company believes that it provides useful information to investors. Free cash flow before dividends is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. Free cash flow before dividends is not a GAAP measurement and may not be comparable to similarly titled measures reported by other companies. See "Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2009 and 2008" for a comparison of free cash flow before dividends to net cash provided by operations as reported in accordance with GAAP. (See attached tables for third quarter results.) [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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