Battered by the ongoing foreign currency headwinds, Colgate-Palmolive Co. (CL – Analyst Report) reported dismal second-quarter 2015 results, wherein both the top and bottom lines fell short of expectations, and declined year over year.
The company's adjusted earnings of 70 cents per share missed the Zacks Consensus Estimate by a penny and dropped 4.1% year over year.
Colgate-Palmolive Company – Earnings Surprise | FindTheBest
Including one-time items, earnings came in at 63 cents per share, down 6% from 67 cents recorded in the year-ago quarter.
Deeper Insight
Total sales of $4,066 million decreased 6.6% from the year-ago figure of $4,352 million, as the benefits of 3% growth in volume and a 2.5% rise in prices were more than offset by a negative impact of 12% from currency fluctuations. Moreover, quarterly revenues missed the Zacks Consensus Estimate of $4,072.5 million.
On an organic basis (excluding foreign exchange, acquisitions and divestitures), the company recorded sales growth of 5.5%.
Adjusted gross profit margin was 58.3%, down 50 basis points (bps), owing to increased packaging and material expenses stemming from higher currency translation costs. This was partly offset by improved pricing along with benefits from cost-saving initiatives under the company's funding-the-growth and 2012 Restructuring Program.
In the reported quarter, adjusted operating profit of $1,000 million declined 5% from the year-ago quarter figure. However, the adjusted operating margin improved 30 bps to 24.6%, mainly benefiting from lower selling, general & administrative (“SG&A”) expenses as a percentage of revenues.
During the quarter, Colgate's market share of manual toothbrushes reached 34.1%, up 0.2 share points.
Segment Discussion for Q2
North America sales (19% of total sales) inched up 1.5% in the reported quarter, driven by a 3% improvement in unit volume, partly offset by 0.5% lower pricing and negative foreign exchange of 1%. On an organic basis, sales grew 2.5%.
The segment's operating profit decelerated 3% to $223 million, with the operating margin contracting 140 bps to 28.6%. This is attributable to higher SG&A expenses, as a percentage of net sales, partly compensated by enhanced gross margin.
