Consumer goods giant Colgate-Palmolive (NYSE:CL) Co. reported a robust Q3 net income of $708 million, or 86 cents per share, marking a significant increase from $618 million, or 74 cents per share, the previous year. The company's adjusted per-share earnings also stood at 86 cents, outperforming the expected 80 cents. This positive performance is primarily attributed to a global price hike of 9.5%, mirroring the strategy of rival firm Procter & Gamble (NYSE:PG), the maker of Crest toothpaste.
The company's sales rose to $4.915 billion from $4.455 billion a year ago, and the base business gross profit margin increased by 140 basis points to 58.6%. This growth occurred despite a negative impact of 50 basis points from private label sales. In addition, Colgate-Palmolive retained its leading position in the toothpaste and manual toothbrush market with shares of 41% and 31.5% respectively.
Sales growth varied across regions with North America reporting a 3.5% increase, Latin America growing by 20%, and Europe seeing a rise of 14.5%. However, there was a decline of 4% in Asia Pacific and 7.5% in Africa/Eurasia. The Hill's pet food division under Colgate-Palmolive experienced a substantial sales growth of 21.5%.
CEO Noel Wallace anticipates gross cost inflation in the hundreds of millions for 2023 due to shifting market trends. The sustained high prices in agriculture have primarily impacted Colgate's Hill’s pet food business, though some commodities have softened slightly providing relief. Energy costs and specialty commodities remain volatile.
The Q3 results marked Colgate's third consecutive improvement in gross profit margin and second successive quarter of double-digit operating profit growth. The company also reported a double-digit increase in advertising spending. As a result, the full-year sales growth forecast was revised upward to between 6% and 8%.
Despite a year-to-date decrease of 6%, the stock rose by 1.3% on Friday, while the S&P 500 gained 7.8%.
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