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Colgate Q4 Earnings Beat, Strong Volume and Pricing Drive Results
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Colgate-Palmolive Company (CL - Free Report) reported fourth-quarter 2024 results, wherein the top line declined year over year and missed the Zacks Consensus Estimate. The bottom line improved year over year and beat the consensus mark. Results benefited from organic sales growth, robust volume and pricing performance, and gross profit margin expansion. The company is focused on investing in scaling its capabilities in key areas such as digital, data and analytics to enhance competitive advantages and drive profitability. With these initiatives in place, management is well-positioned to achieve consistent, compounded earnings per share (EPS) growth in 2025 and beyond.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
On a Base Business basis (non-GAAP basis), earnings were 91 cents per share, up 5% from the prior-year period. The bottom line surpassed the Zacks Consensus Estimate of 89 cents.
Net sales of $4,944 million inched down 0.1% from $4,950 million reported in the year-ago quarter and missed the Zacks Consensus Estimate of $4,987 million. On an organic basis, the company’s sales advanced 4.3%, which includes a 0.5% unfavorable impact from reduced private-label pet volume.
Colgate-Palmolive Company Price, Consensus and EPS Surprise
Colgate's organic sales saw 4.3% growth, driven by a 2.5% increase in volume and a 1.8% improvement in pricing. We estimated organic sales growth of 6.5% for the fourth quarter, with a 2.5% rise in pricing and a 4% increase in volume.
In the earnings release, management highlighted that the company maintained its leadership in the toothpaste market, holding a 41.4% global market share year to date. In addition, Colgate continued to lead the manual toothbrush market with a 32.2% global market share year to date.
The gross profit of $2,982 million increased from $2,950 million reported in the year-ago quarter. The company’s fourth-quarter gross profit margin and Base Business gross profit margin expanded by 70 basis points (bps), reaching 60.3%.
Selling, general and administrative (SG&A) expenses totaled $1,895 million, an increase from $1,803 million in the same quarter of the previous year.
The company’s operating profit of $1,064 million dropped from $1,072 million reported in the year-ago quarter. The operating profit margin contracted 20 bps year over year to 21.5%. We expected the operating margin to expand 30 bps to 22% for the fourth quarter.
A Peek Into CL’s Segmental Discussion
North America’s net sales (21% of total sales) dipped 1% year over year on a reported basis and 0.7% on an organic basis. The sales decline was led by a 2.7% decrease in pricing, offset by a 1.9% increase in volume.
Latin America’s net sales (22.4% of the total sales) declined 7.2% year over year as 8.3% pricing gains and a 0.9% increase in volume was more than offset by a 16.4% unfavorable currency impact. On an organic basis, regional sales rose 9.2%.
Europe’s net sales (13.5% of the total sales) increased 4.9% year over year on a reported basis and 4.5% on an organic basis. Sales growth was driven by a 1.7% rise in volume, a 2.7% pricing gain and a 0.4% favorable currency impact.
The Asia Pacific segment’s net sales (14.6% of the total sales) improved 3.7% year over year, reflecting a 5.8% increase in volume, offset by a 2% decline in pricing. Regional organic sales advanced 3.8%.
Africa/Eurasia’s net sales (5.4% of the total sales) rose 2.8% year over year due to an 11.5% increase in volume, offset by a 2.1% decline in pricing and a 6.6% unfavorable currency impact. Organic sales for the segment advanced 9.4%.
Hill’s Pet Nutrition’s net sales (23.1% of the total sales) improved 2.3% from the year-ago quarter on a reported basis and 2.9% on an organic basis. Results gained from a 0.8% increase in volume and a 2% rise in pricing, offset by a 0.5% negative currency impact.
CL's Other Financial Information
This Zacks Rank #3 (Hold) company ended fourth-quarter 2024 with cash and cash equivalents of $1,096 million and a total debt of $7,949 million. Net cash provided by operating activities was $4,107 million for the 12 months ended Dec. 31, 2024. The free cash flow before dividends was $3,546 million during this time.
The company returned $3.4 billion in cash to its shareholders via dividends and share repurchases during 2024.
Image Source: Zacks Investment Research
Colgate's 2025 Outlook
Colgate expects 2025 net sales to remain relatively flat, with a mid-single-digit negative impact from unfavorable currency exchange rates. The company projects organic sales growth within its long-term target range of 3% to 5%, factoring in the planned exit from private-label pet nutrition throughout 2025.
Colgate anticipates gross profit margin expansion, with advertising investment expected to remain flat or increase slightly both in dollar terms and as a percentage of sales for the year. Management forecasts a mid-single-digit growth in Base Business EPS for 2025.
On an adjusted (Base Business) basis, Colgate foresees gross profit margin expansion, with advertising investment expected to remain stable or increase slightly in both dollar terms and as a percentage of sales. The company also projects low to mid-single-digit growth in Base Business adjusted EPS for 2025.
The company's shares have dropped 2.6% in the past three months compared with the industry’s decline of 1.2%.
Top-Ranked Stocks
We have highlighted some top-ranked stocks from the broader Consumer Staples space, namely Energizer (ENR - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) and Helen of Troy (HELE - Free Report) .
Energizer is one of the world’s leading manufacturers and distributors of batteries and lighting products. It currently has a Zacks Rank #2 (Buy). ENR has a trailing four-quarter earnings surprise of 8.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Energizer’s current financial-year sales and EPS suggests growth of 1.3% and 7.8%, respectively, from the year-ago reported numbers. The consensus mark for ENR’s EPS has been unchanged in the past 30 days.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank #2. OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial year’s sales and EPS suggests growth of 8.3% and 13.1%, respectively, from the year-ago reported numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank #2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and earnings suggests declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s reported figures.
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Colgate Q4 Earnings Beat, Strong Volume and Pricing Drive Results
Colgate-Palmolive Company (CL - Free Report) reported fourth-quarter 2024 results, wherein the top line declined year over year and missed the Zacks Consensus Estimate. The bottom line improved year over year and beat the consensus mark. Results benefited from organic sales growth, robust volume and pricing performance, and gross profit margin expansion. The company is focused on investing in scaling its capabilities in key areas such as digital, data and analytics to enhance competitive advantages and drive profitability. With these initiatives in place, management is well-positioned to achieve consistent, compounded earnings per share (EPS) growth in 2025 and beyond.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
On a Base Business basis (non-GAAP basis), earnings were 91 cents per share, up 5% from the prior-year period. The bottom line surpassed the Zacks Consensus Estimate of 89 cents.
Net sales of $4,944 million inched down 0.1% from $4,950 million reported in the year-ago quarter and missed the Zacks Consensus Estimate of $4,987 million. On an organic basis, the company’s sales advanced 4.3%, which includes a 0.5% unfavorable impact from reduced private-label pet volume.
Colgate-Palmolive Company Price, Consensus and EPS Surprise
Colgate-Palmolive Company price-consensus-eps-surprise-chart | Colgate-Palmolive Company Quote
A Detailed Picture of CL's Q4 Results
Colgate's organic sales saw 4.3% growth, driven by a 2.5% increase in volume and a 1.8% improvement in pricing. We estimated organic sales growth of 6.5% for the fourth quarter, with a 2.5% rise in pricing and a 4% increase in volume.
In the earnings release, management highlighted that the company maintained its leadership in the toothpaste market, holding a 41.4% global market share year to date. In addition, Colgate continued to lead the manual toothbrush market with a 32.2% global market share year to date.
The gross profit of $2,982 million increased from $2,950 million reported in the year-ago quarter. The company’s fourth-quarter gross profit margin and Base Business gross profit margin expanded by 70 basis points (bps), reaching 60.3%.
Selling, general and administrative (SG&A) expenses totaled $1,895 million, an increase from $1,803 million in the same quarter of the previous year.
The company’s operating profit of $1,064 million dropped from $1,072 million reported in the year-ago quarter. The operating profit margin contracted 20 bps year over year to 21.5%. We expected the operating margin to expand 30 bps to 22% for the fourth quarter.
A Peek Into CL’s Segmental Discussion
North America’s net sales (21% of total sales) dipped 1% year over year on a reported basis and 0.7% on an organic basis. The sales decline was led by a 2.7% decrease in pricing, offset by a 1.9% increase in volume.
Latin America’s net sales (22.4% of the total sales) declined 7.2% year over year as 8.3% pricing gains and a 0.9% increase in volume was more than offset by a 16.4% unfavorable currency impact. On an organic basis, regional sales rose 9.2%.
Europe’s net sales (13.5% of the total sales) increased 4.9% year over year on a reported basis and 4.5% on an organic basis. Sales growth was driven by a 1.7% rise in volume, a 2.7% pricing gain and a 0.4% favorable currency impact.
The Asia Pacific segment’s net sales (14.6% of the total sales) improved 3.7% year over year, reflecting a 5.8% increase in volume, offset by a 2% decline in pricing. Regional organic sales advanced 3.8%.
Africa/Eurasia’s net sales (5.4% of the total sales) rose 2.8% year over year due to an 11.5% increase in volume, offset by a 2.1% decline in pricing and a 6.6% unfavorable currency impact. Organic sales for the segment advanced 9.4%.
Hill’s Pet Nutrition’s net sales (23.1% of the total sales) improved 2.3% from the year-ago quarter on a reported basis and 2.9% on an organic basis. Results gained from a 0.8% increase in volume and a 2% rise in pricing, offset by a 0.5% negative currency impact.
CL's Other Financial Information
This Zacks Rank #3 (Hold) company ended fourth-quarter 2024 with cash and cash equivalents of $1,096 million and a total debt of $7,949 million. Net cash provided by operating activities was $4,107 million for the 12 months ended Dec. 31, 2024. The free cash flow before dividends was $3,546 million during this time.
The company returned $3.4 billion in cash to its shareholders via dividends and share repurchases during 2024.
Image Source: Zacks Investment Research
Colgate's 2025 Outlook
Colgate expects 2025 net sales to remain relatively flat, with a mid-single-digit negative impact from unfavorable currency exchange rates. The company projects organic sales growth within its long-term target range of 3% to 5%, factoring in the planned exit from private-label pet nutrition throughout 2025.
Colgate anticipates gross profit margin expansion, with advertising investment expected to remain flat or increase slightly both in dollar terms and as a percentage of sales for the year. Management forecasts a mid-single-digit growth in Base Business EPS for 2025.
On an adjusted (Base Business) basis, Colgate foresees gross profit margin expansion, with advertising investment expected to remain stable or increase slightly in both dollar terms and as a percentage of sales. The company also projects low to mid-single-digit growth in Base Business adjusted EPS for 2025.
The company's shares have dropped 2.6% in the past three months compared with the industry’s decline of 1.2%.
Top-Ranked Stocks
We have highlighted some top-ranked stocks from the broader Consumer Staples space, namely Energizer (ENR - Free Report) and Ollie's Bargain Outlet (OLLI - Free Report) and Helen of Troy (HELE - Free Report) .
Energizer is one of the world’s leading manufacturers and distributors of batteries and lighting products. It currently has a Zacks Rank #2 (Buy). ENR has a trailing four-quarter earnings surprise of 8.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Energizer’s current financial-year sales and EPS suggests growth of 1.3% and 7.8%, respectively, from the year-ago reported numbers. The consensus mark for ENR’s EPS has been unchanged in the past 30 days.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank #2. OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial year’s sales and EPS suggests growth of 8.3% and 13.1%, respectively, from the year-ago reported numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank #2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and earnings suggests declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s reported figures.