Colgate Reports Strong 2nd Quarter
NEW YORK, July 22, 2003-- Colgate-Palmolive Company (NYSE: CL) achieved all-
time records in sales, operating profit, operating profit margin, net profit
margin, net income and earnings per share in the second quarter 2003. Worldwide
sales rose 7.0% during the quarter and global unit volume grew 4.5% with every
operating division participating in the volume gains. Operating profit reached
an all-time high in the second quarter, up 8% over a very strong performance in
the year ago period, reaching a record 22.7% to sales. Gross profit margin
increased 80 basis points to 55.0%. Net income rose 10% to a record $359.8
million and earnings per share rose 13% to $.62 vs. $.55 in the year ago
quarter. This is Colgate's 29th consecutive quarter of increased net income and
increased earnings per share.
Reuben Mark, Colgate's Chairman and CEO said, "It's great that the
combination of strong top-line growth and excellent gross margin improvement
during the quarter funded a very substantial increase in advertising worldwide
while still generating double-digit earnings per share growth.
"We are especially pleased with the continuing high quality of these
earnings as reflected throughout the P&L, balance sheet and cash flow
statement.
"Colgate's already strong balance sheet continues to strengthen. Net cash
provided by operations was up 13% to $730.3 million in the first half. After-
tax return on capital reached 35.9% for the first half, a 380 basis point
increase over the prior year and another all-time record. Worldwide working
capital was again reduced versus year ago and free cash flow before dividends
increased 15% to $609.1 million. Our consistently strong free cash flow
enabled us to increase the dividend rate by 33%, effective in the second
quarter, while simultaneously reducing debt levels.
"The Company's strong profitability, widespread unit volume gains and very
full new product pipeline indicates to me that 2003 should be our eighth
consecutive year of double-digit earnings per share growth."
At 11:00 a.m. eastern time today, Colgate will host a conference call to
further elaborate on second quarter results and to discuss the Company's
ongoing expectations. To access this call as a webcast, please go to
Colgate's website on the internet at www.colgate.com.
The following are comments about divisional performance:
North America (24% of Company Sales)
Positive growth momentum continued in North America fueled by new product
sales and market share gains. North American unit volume increased 7.5% in
the second quarter, with the U.S. up 9.0%. Sales reached a record high for
the quarter, up 7.5% versus the year ago period, and operating profit
increased 14%, also to a new record.
In the U.S., consumer takeaway of Colgate's products outpaced category
growth in the second quarter 2003. Colgate's leadership of the U.S. toothpaste
market expanded during the quarter with its national ACNielsen market share at
34.5% for the second quarter, up almost two full share points from the year
ago period. Colgate Total, the individual brand leader in the U.S.
toothpaste market, continues to advance achieving record shares in the first
half of 2003. New products driving growth include Colgate Simply White and
Colgate Simply White Night at-home tooth whitening gels, Colgate Total Plus
Whitening and Colgate Herbal White toothpastes, Softsoap Aromatherapy body
wash and liquid hand soap, Palmolive Aromatherapy dishwashing liquid and
Mennen Speed Stick 24/7 deodorant.
Latest introductions arriving on U.S. store shelves now are Palmolive Dish
Wipes, the first of its kind dish wipe in the category, and Colgate Total
Advanced Fresh toothpaste clinically proven to provide 12 hour fresh breath
protection along with all of the therapeutic benefits consumers expect from
Colgate Total.
Latin America (22% of Company Sales)
Latin American unit volume grew 2.0% in the second quarter, as expected,
despite macro-economic and currency problems throughout the region. Strong
volume gains in Chile, Ecuador, Mexico, Peru and Central America were
partially offset by volume declines in Argentina and Colombia due to economic
slowdowns in those countries. Dollar sales and dollar operating profit
declined 7.5% and 11%, respectively, reflecting currency weakness in the
region. Excluding foreign exchange, sales rose 10% and operating profit
increased 6%.
Colgate continues to expand its already strong Oral Care leadership in
Latin America with toothpaste shares for the region at an all-time high.
Recent introductions contributing to growth include Colgate Total Plus
Whitening, Colgate Fresh Confidence Extreme Gel, Colgate Triple Action and
Colgate Herbal White toothpastes, and Colgate Active Angle, Colgate Motion
Kids and Colgate Extra Clean toothbrushes. Colgate Simply White at-home tooth
whitening gel was recently launched in Mexico and Panama and early sales have
already exceeded expectations. Standouts driving growth in other categories
are Protex Herbal anti-bacterial soap, Caprice Color Protection and Caprice
Anti-dandruff shampoos, and Ajax Baking Soda and Citrus and Fabuloso Baby
Scent liquid cleaners.
Europe (24% of Company Sales)
Colgate Europe achieved 2.0% unit volume growth in the second quarter.
Greece, Nordic Group, Spain, United Kingdom, Hungary, Russia, Adria, Turkey
and Ukraine each contributed strong volume gains more than offsetting volume
declines in Germany, which experienced very poor economic conditions and
negative GDP growth in the period. Dollar sales in Europe rose 18.0%,
reflecting the combination of volume growth and favorable foreign exchange.
Dollar operating profit increased 29% and operating profit in local currencies
increased 11%.
In Western Europe, successful new products gaining market share include
Colgate Sensitive, Colgate Total Plus Whitening and Colgate Triple Action
toothpastes, Palmolive Aromatherapy Sensual scent shower gel and bath foam,
Palmolive Aromatherapy bar soap, Palmolive Oxygen dishwashing liquid, Ajax
Minerals all-purpose cleaners and Soupline Water Petals fabric conditioner.
New products driving growth throughout Central Europe and Russia include
Colgate Triple Action, Colgate Total Plus Whitening and Colgate Herbal White
toothpastes, Colgate Active Angle and Colgate Extra Clean toothbrushes, and
Palmolive Aromatherapy shower gel and bath foam.
Asia/Africa (17% of Company Sales)
Asia/Africa unit volume grew 6.0% in the second quarter. Healthy volume
increases were achieved by Australia, China, Hong Kong, Malaysia, Morocco, New
Zealand, Philippines, Senegal, South Africa, Thailand and Vietnam. Dollar
sales grew 11.5% in the second quarter and dollar operating profit increased
21% to an all-time record level. Excluding the impact of exchange, second
quarter sales rose 4% and operating profit increased 14%.
Successful new products driving Oral Care growth in the region include
Colgate Herbal and Colgate Herbal White toothpastes, Colgate Navigator Plus
and Colgate Premier Ultra toothbrushes and the continued rollout of Colgate
Simply White at-home tooth whitening gel in Hong Kong, the South Pacific and
now China, where it is scheduled to reach over 900 retail outlets during 3rd
quarter 2003. Other new products gaining market share in key categories are
Palmolive Aromatherapy shower gel and talc, Protex Herbal soap, Softlan
Jasmine scent fabric conditioner and Palmolive Naturals shampoo.
Hill's Pet Nutrition (13% of Company Sales)
Innovative new products and veterinary endorsements continue to drive
growth at Hill's, the world leader in premium pet food. Dollar sales
increased 11.5% and unit volume grew 4.5% in the second quarter. Hill's
achieved strong volume and market share gains during the quarter, both
domestically and internationally. Dollar operating profit increased 5% after
record levels of commercial and media investment during the quarter and on top
of a very strong performance in the year ago period. Excluding foreign
exchange, sales rose 7% and operating profit increased 1% in the quarter. In
the first half, Hill's sales and operating profit excluding exchange rose 8%
and 10%, respectively.
Hill's increased consumption of Science Diet and Prescription Diet in the
U.S. specialty retail channel, where its growth continues to outpace category
growth. Hill's Science Diet Nature's Best continues to contribute incremental
volume and market share gains, supported with targeted promotional and media
spending during the quarter. Other innovative new products recently announced
for launch in the second half 2003 are Science Diet Advanced Protection, a
diet shown to increase vitality and alertness in cats and dogs, and
Prescription Diet m/d, a low carbohydrate diet clinically proven to alter
metabolism for effective weight loss in cats.
Internationally, Australia, Belgium, France, Greece, Hong Kong, South
Korea, Spain, Switzerland and Russia each contributed strong volume gains in
the second quarter. The strong international results were driven by the
launch of Nature's Best across Europe, which was supported by heavy
promotional spending during the quarter including high quality merchandising
materials and effective in-store displays.
* * *
About Colgate-Palmolive: Colgate-Palmolive is a leading global consumer
products company, tightly focused on Oral Care, Personal Care, Household
Surface Care, Fabric 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, Ajax, Axion, Soupline, Suavitel and Fab, as well as
Hill's Science Diet and Hill's Prescription Diet pet foods. For more
information about Colgate's global business, visit the Company's website at
www.colgate.com.
This press release and the related webcast (other than historical
information) may contain forward-looking statements. 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 caption "Cautionary Statement on Forward-
Looking Statements" in the Company's Form 10-K for the year ended December 31,
2002) for information about factors that could cause such differences. Copies
of these filings may be obtained upon request from the Company's Investor
Relations Department or the Company's website on the internet at
www.colgate.com.
(See attached tables for second quarter results.)
Colgate-Palmolive Company Condensed Consolidated Statements of Income
For the three months and six months ended June 30, 2003 and 2002
(Dollars in Millions Except Per Share Amounts) (Unaudited)
Second Quarter First Half
2003 2002 2003 2002
Net Sales $2,458.6 $2,297.0 $4,807.0 $4,492.2
Cost of Sales 1,105.8 1,053.0 2,156.0 2,045.4
Gross Profit 1,352.8 1,244.0 2,651.0 2,446.8
Gross Profit Margin 55.0% 54.2% 55.1% 54.5%
Selling, General & Administrative
Expenses 795.3 726.2 1,583.0 1,468.3
Operating Profit 557.5 517.8 1,068.0 978.5
Operating Profit Margin 22.7% 22.5% 22.2% 21.8%
Net Interest Expense 31.3 37.1 65.3 72.0
Income Before Income Taxes 526.2 480.7 1,002.7 906.5
Provision for Income Taxes 166.4 153.7 318.9 289.8
Effective Tax Rate 31.6% 32.0% 31.8% 32.0%
Net Income 359.8 327.0 683.8 616.7
Net Earnings Per Common Share
Basic $.66 $.59 $1.25 $1.11
Diluted $.62 $.55 $1.18 $1.04
Average Common Shares Outstanding
Basic 538.0 545.0 537.6 547.1
Diluted 580.6 591.8 580.0 594.5
Colgate-Palmolive Company Condensed Consolidated Balance Sheets
As of June 30, 2003, December 31, 2002 and June 30, 2002
(Dollars in Millions Except Per Share Amounts) (Unaudited)
June 30, December 31, June 30,
2003 2002 2002
Cash and marketable securities $226.1 $177.5 $255.4
Accounts receivable, net 1,196.0 1,145.4 1,164.6
Inventories 770.9 671.7 713.5
Other current assets 250.0 233.5 224.1
Property, plant and equipment, net 2,517.5 2,491.3 2,456.7
Other assets, including goodwill
and intangibles 2,466.2 2,367.8 2,319.9
Total assets $7,426.7 $7,087.2 $7,134.2
Total debt 3,459.3 3,603.9 3,773.7
Other current liabilities 1,861.9 1,755.6 1,677.7
Other non-current liabilities 1,391.9 1,377.4 1,210.2
Total shareholders' equity 713.6 350.3 472.6
Total liabilities and
shareholders' equity $7,426.7 $7,087.2 $7,134.2
Supplemental Balance Sheet Information:
Debt less cash and marketable
securities $3,233.2 $3,426.4 $3,518.3
Working capital % of sales 3.6% 3.2% 4.6%
After-tax return on capital 35.9% 34.6% 32.1%
Colgate-Palmolive Company Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2003 and 2002
(Dollars in Millions Except Per Share Amounts) (Unaudited)
2003 2002
Operating Activities:
Net income $683.8 $616.7
Depreciation and amortization 153.6 145.2
Voluntary contributions to
benefit plans (63.1) (50.0)
Deferred income taxes (1.0) (14.6)
Changes in:
Accounts receivable (9.3) (5.0)
Inventories (73.1) (41.6)
Accounts payable and other accruals 8.2 12.9
Other non-current assets and
liabilities 31.2 (14.5)
Net cash provided by operations 730.3 649.1
Investing Activities:
Capital expenditures (121.2) (121.6)
Other investing activities 45.4 (21.8)
Net cash used in investing
activities (75.8) (143.4)
Financing Activities:
(Payments on) proceeds from
debt issuances (196.5) 390.5
Dividends paid (237.0) (207.8)
Purchases of treasury shares (235.8) (648.4)
Other 63.7 33.7
Net cash used in financing
activities (605.6) (432.0)
Effect of exchange rate changes on
cash and cash equivalents 2.4 1.0
Net increase in cash and cash
equivalents 51.3 74.7
Cash and cash equivalents at
beginning of period 167.9 172.7
Cash and cash equivalents at end of
period $219.2 $247.4
Supplemental Cash Flow Information:
Free cash flow before dividends (net
cash provided by operations less
capital expenditures) $609.1 $527.5
SOURCE Colgate-Palmolive Company
-0- 07/22/2003
/CONTACT: Bina Thompson, +1-212-310-3072, or Hope Spiller,
+1-212-310-2291, both of Colgate-Palmolive Company/
/Web site: http://www.colgate.com/
(CL)
END