Colgate-Palmolive (NYSE:CL) has reported strong Q3 2023 earnings and has raised its outlook for the year. The company's strategy is yielding results, with balanced organic sales growth expected across all divisions and categories. The company's improved organic volume performance in the quarter signals a return to volume growth, and it aims to deliver consistent operating profit and earnings growth through a variety of measures.
Key takeaways from the call include:
Colgate-Palmolive reported double-digit operating profit growth and a 23% increase in advertising.
* The company plans to continue growing its share and expanding internationally, despite some challenges in certain markets.
* The company is increasing advertising spend in oral care, home care, and personal care segments.
* The company expects pricing to return to normal levels and anticipates a shift from pricing-driven to volume-driven organic growth.
The company expects several hundred million dollars of raw material cost inflation for 2023, primarily driven by agriculture and energy costs.
Colgate-Palmolive's strategy involves leveraging balanced growth, global productivity initiatives, cost containment, and funding growth initiatives. Despite challenges in some markets, the company is capitalizing on the strength of its brands, science-based innovation, digital marketing, revenue growth management, and on-the-ground execution. The company reported strong volume growth and balanced pricing in its Hill business, even as the pet nutrition segment saw a dip in gross margins.
The company discussed its strategy for bringing innovation and increased advertising support into the business. They reported some softness in the home care business in the US, attributed to promotional cadence, which they plan to address in the fourth quarter. They have been investing heavily in advertising and expect to continue optimizing their ad spending for better ROI.
Colgate's earnings call also highlighted the company's plans for improving pricing and volume in the coming quarters. They are increasing advertising spend on oral care, while also supporting home care and personal care. The company also acknowledged the soft scanner data in the US but highlighted the strong performance in non-track channels.
In terms of inflation, the company expects several hundred million dollars of raw material cost inflation for 2023, with agriculture prices remaining high and some commodities softening. However, Colgate's focus on productivity and revenue growth management has helped mitigate some of the inflation impact. The company expressed optimism about sustaining high margins through innovation and favorable cost conditions in the medium term.
The company is focusing on non-track businesses, such as Club, discount, and e-commerce channels, which have been performing well and contributing to overall growth. They mentioned that non-track sales account for approximately 14% of total company sales and expressed confidence in their ability to increase their share in this segment.
Colgate-Palmolive (NYSE: CL) thanked its global workforce for delivering strong results in Q3 2023 and its shareholders for their continued support.
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