Colgate Announces 3rd Quarter 2015 Results

Strong Worldwide Organic Sales Growth

NEW YORK–(BUSINESS WIRE)–Colgate-Palmolive Company (NYSE:CL) today reported worldwide Net sales
of $3,999 million in third quarter 2015, a decrease of 8.5% versus third
quarter 2014. Global unit volume grew 1.0%, pricing increased 3.5% and
foreign exchange was negative 13.0%. Divestments decreased volume by
0.5%. Organic sales (Net sales excluding foreign exchange, acquisitions
and divestments) grew 5.0%.

Net income and Diluted earnings per share in third quarter 2015 were
$726 million and $0.80, respectively. Net income in third quarter 2015
included an aftertax gain of $120 million ($0.13 per diluted share) from
the previously disclosed sale of the Company’s laundry detergent
business in the South Pacific and $47 million ($0.05 per diluted share)
of aftertax charges resulting from the implementation of the Company’s
four-year Global Growth and Efficiency Program (the “2012 Restructuring
Program”) and an effective devaluation in Venezuela.

Net income and Diluted earnings per share in third quarter 2014 were
$542 million and $0.59, respectively. Net income in third quarter 2014
included $159 million ($0.17 per diluted share) of aftertax charges
resulting from the items described in Table 8.

Excluding the above noted items in both periods, Net income in third
quarter 2015 was $653 million, a decrease of 7% versus third quarter
2014, and Diluted earnings per share in third quarter 2015 was $0.72, a
decrease of 5% versus third quarter 2014. On a currency-neutral basis
and excluding the above noted items in both periods, Diluted earnings
per share increased double digit.

Gross profit margin was 58.7% in third quarter 2015 versus 58.4% in
third quarter 2014. Excluding the above noted items in both periods,
Gross profit margin was 58.8% in third quarter 2015, an increase of 20
basis points versus the year ago quarter, primarily as a result of the
benefits from cost savings from the Company’s funding-the-growth
initiatives and the 2012 Restructuring Program and higher pricing,
partially offset by higher raw and packaging material costs, driven by
significant foreign exchange transaction costs.

Selling, general and administrative expenses were 33.7% of Net sales in
third quarter 2015 versus 34.2% of Net sales in third quarter 2014.
Excluding the above noted items in both periods, Selling, general and
administrative expenses decreased by 60 basis points to 33.3% of Net
sales in third quarter 2015, due to decreased advertising investment as
a percentage of Net sales, in part reflecting a shift in advertising
investment to in-store promotional activities. Worldwide advertising
investment decreased 23% to $328 million versus the year ago quarter,
largely reflecting the impact of negative foreign exchange.

Operating profit increased 20% to $1,136 million in third quarter 2015
compared to $948 million in third quarter 2014. Excluding the above
noted items in both periods, Operating profit decreased 6% to $1,013
million in third quarter 2015. Operating profit margin was 28.4% in
third quarter 2015 versus 21.6% in third quarter 2014. Excluding the
above noted items in both periods, Operating profit margin was 25.3% in
third quarter 2015, an increase of 70 basis points versus the year ago
quarter.

Net cash provided by operations year to date was $2,108 million compared
to $2,392 million in the comparable 2014 period, primarily due to lower
operating earnings and higher payments related to income taxes and a
previously disclosed European competition law matter. Working capital as
a percentage of Net sales was negative 1.3%, an improvement of 80 basis
points versus the year ago period primarily due to a decrease in
inventories and accounts receivable, reflecting the Company’s tight
focus on working capital.

Ian Cook, Chairman, President and Chief Executive Officer, commented on
the results and outlook excluding the 2015 and 2014 items noted above,
“In the face of challenging macroeconomic conditions worldwide, we are
pleased to have achieved another quarter of strong organic sales growth,
driven by positive unit volume growth and higher pricing.

“The 5.0% worldwide organic sales growth was led by emerging markets
where organic sales grew a robust 8.0%, despite economic challenges in
certain countries.

“Pleasingly, our profitability also strengthened during the quarter,
with gross profit margin, operating profit margin and net income as a
percent to sales all increasing versus the year ago period.

“Colgate’s leading share of the global toothpaste market increased to
44.7% year to date, up 0.7 share points versus the year ago period. Our
global leadership in manual toothbrushes also strengthened with
Colgate’s global market share in that category reaching 34.5% year to
date, up 0.7 share points versus the year ago period.”

Recognizing the macroeconomic challenges around the world and the
Company’s successful implementation of the 2012 Restructuring Program to
date, on October 29, 2015, the Company’s Board of Directors approved the
reinvestment of the funds from the sale of the Company’s laundry
detergent business in the South Pacific to expand the 2012 Restructuring
Program and extend it through December 31, 2017. Initiatives under the
expanded 2012 Restructuring Program will continue to fit within the
Program’s three focus areas of expanding commercial hubs, extending
shared business services and streamlining global functions and
optimizing the global supply chain and facilities. The Company expects
the initiatives under the expanded program to have a similar aftertax
rate of return to the existing program, which on average has been 30%.
The Company will update its disclosure to reflect the impact the
expansion will have on the range of estimated charges and savings for
the 2012 Restructuring Program when the additional initiatives under the
expanded Program are approved.

In closing, Mr. Cook commented, “As we look ahead, macroeconomic
conditions and foreign exchange volatility remain challenging. Despite
that, we anticipate another year of solid organic sales growth in 2015
driven by a full new product pipeline across all categories and
geographies. Based on current spot rates, we now plan for full year
gross profit margin to be even with the year ago level, and expect a low
to mid-single-digit earnings per share decline on a dollar basis,
excluding charges related to the 2012 Restructuring Program. This
earnings per share decline continues to reflect a double-digit increase
on a currency-neutral basis.

“Looking ahead to 2016, we continue to see deterioration in foreign
exchange rates. Given such volatility, providing guidance on a dollar
basis at this time would be premature. However, as we enter our global
budget process, we are planning for a year of gross margin expansion and
double-digit earnings per share growth on a currency-neutral basis,
excluding charges related to the 2012 Restructuring Program.”

At 11:00 a.m. ET today, Colgate will host a conference call to elaborate
on third quarter results. To access this call as a webcast, please go to
Colgate’s web site at http://www.colgatepalmolive.com.

The following are comments about divisional performance for third
quarter 2015 versus the year ago period. See attached Geographic Sales
Analysis Percentage Changes and Segment Information schedules for
additional information on divisional net sales and operating profit.

North America (20% of Company Sales)

North America Net sales increased 0.5% in third quarter 2015. Unit
volume increased 2.5% with 0.5% lower pricing, while foreign exchange
was negative 1.5%. Organic sales increased 2.0% during the quarter.

Operating profit in North America increased 8% in third quarter 2015 to
$258 million, or 220 basis points to 32.6% of Net sales. This increase
in Operating profit as a percentage of Net sales was primarily due to an
increase in Gross profit and a decrease in Selling, general and
administrative expenses, both as a percentage of Net sales. This
increase in Gross profit was primarily driven by cost savings from the
Company’s funding-the-growth initiatives, which were partially offset by
higher costs, which included higher raw and packaging material costs,
and lower pricing due to increased in-store promotional activities. This
decrease in Selling, general and administrative expenses was due to
decreased advertising investment, in part reflecting a shift in
advertising investment to in-store promotional activities.

In the U.S., new product launches are contributing to volume growth.
Market share gains year to date were seen in toothpaste, manual
toothbrushes, mouthwash, liquid hand soap, body wash and fabric
conditioners. Colgate’s share of the toothpaste market strengthened to
35.3% year to date, up 0.4 share points versus the year ago period,
driven by strong sales of Colgate Enamel Health, Colgate Optic White
Platinum Express White, Colgate Total Daily Repair and Tom’s of Maine
toothpastes. In manual toothbrushes, Colgate strengthened its brand
market leadership in the U.S. with its market share in that category at
41.4% year to date, up 0.7 share points versus the year ago period.
Strong sales of Colgate 360° Enamel Health and Colgate 360° Optic White
Platinum manual toothbrushes contributed to volume growth in the quarter.

Successful products driving volume growth in the U.S. in other
categories include Colgate Enamel Health and Colgate Kids mouthwashes,
Softsoap Fragrant Foaming Collection of liquid hand soaps, Softsoap
Fresh & Glow body washes, Irish Spring Signature For Men body wash,
Palmolive Soft Touch Almond Milk and Blueberry dish liquid and Suavitel
fabric conditioner.

Latin America (27% of Company Sales)

Latin America Net sales decreased 11.0% in third quarter 2015. Unit
volume decreased 1.0% with 12.0% higher pricing, while foreign exchange
was negative 22.0%. Volume declines in Venezuela and Brazil were
partially offset by volume gains in Mexico, Argentina and Colombia.
Organic sales for Latin America increased 11.0%.

Operating profit in Latin America decreased 9% in third quarter 2015 to
$300 million, while as a percentage of Net sales, it increased 60 basis
points to 28.2% of Net sales. This increase in Operating profit as a
percentage of Net sales was primarily due to a decrease in Selling,
general and administrative expenses, partially offset by a decrease in
Gross profit, both as a percentage of Net sales. This decrease in Gross
profit was due to higher raw and packaging material costs, driven by
foreign exchange transaction costs, partially offset by cost savings
from the Company’s funding-the-growth initiatives and the 2012
Restructuring Program and higher pricing. This decrease in Selling,
general and administrative expenses was primarily due to decreased
advertising investment.

Colgate strengthened its leadership in toothpaste throughout Latin
America during the quarter driven by market share gains in Mexico,
Brazil, Venezuela, Argentina, Chile, El Salvador, Honduras and
Nicaragua. Strong sales of Colgate Total 12, Colgate Luminous White
Instant, Colgate Total Professional Breath Health, Colgate Sensitive
Pro-Relief Enamel Repair and Colgate Maximum Cavity Protection plus
Neutrazucar toothpastes contributed to volume growth throughout the
region. Colgate’s leadership in the manual toothbrush category continued
throughout the region, driven by strong sales of Colgate 360° Surround
Whitening, Colgate 360° Interdental, Colgate Slim Soft and Colgate
Triple Action manual toothbrushes.

Products in other categories contributing to volume growth include
Colgate Plax Ice Infinity mouthwash, Protex Complete 12, Protex Omega 3,
Palmolive Men and Palmolive Naturals Berries and Coconut Water bar
soaps, Lady Speed Stick Powder Fresh and Speed Stick Xtreme Tech
deodorants, Suavitel Complete and Suavitel Aroma Intense fabric
conditioners, Axion Complete dish liquid and Fabuloso Pure & Clean
liquid cleaner.

Europe/South Pacific (18% of Company Sales)

Europe/South Pacific Net sales decreased 18.0% in third quarter 2015.
Unit volume decreased 1.0% with 2.0% lower pricing, while foreign
exchange was negative 15.0%. Excluding the impact of the divested
laundry detergent business in the South Pacific, volume increased 1.0%.
Volume gains in Poland, France and Australia were partially offset by
volume declines in Germany and Austria. Organic sales for Europe/South
Pacific decreased 1.0%.

Operating profit in Europe/South Pacific decreased 13% in third quarter
2015 to $206 million, while as a percentage of Net sales, it increased
160 basis points to 28.3% of Net sales. This increase in Operating
profit as a percentage of Net sales was primarily due to a decrease in
Selling, general and administrative expenses as a percentage of Net
sales. Gross profit as a percentage of Net sales was even with third
quarter 2014, as cost savings from the Company’s funding-the-growth
initiatives and the 2012 Restructuring Program were offset by higher raw
and packaging material costs, driven by foreign exchange transaction
costs, and lower pricing due to increased in-store promotional
activities. The decrease in Selling, general and administrative expenses
as a percentage of Net sales was due to lower advertising investment, in
part reflecting a shift in advertising investment to in-store
promotional activities, which was partially offset by higher overhead
expenses.

Colgate strengthened its oral care leadership in the Europe/South
Pacific region driven by toothpaste market share gains in France, Italy,
Spain, the Netherlands, Belgium, Hungary, Poland, Czech Republic and
Slovenia. Successful premium products driving market share gains include
Colgate Max White Expert White, elmex Sensitive Professional, Colgate
Total Daily Repair, Colgate Sensitive with Sensifoam and Colgate
Sensitive Pro-Relief Repair & Prevent toothpastes. In the manual
toothbrush category, Colgate Cavity Protection and Colgate Slim Soft
Charcoal manual toothbrushes contributed to market share gains across
the region.

Recent premium innovations contributing to volume growth in other
product categories include the Sanex Advanced line of shower gels,
deodorants, hand creams and body lotions, Palmolive Aroma Sensations and
Palmolive Gourmet shower gels, Ajax All Usage Gel liquid and wipe
cleaners, Ajax Anti Fog glass spray cleaner and Soupline Fruity
Sensations fabric conditioner.

Asia (15% of Company Sales)

Asia Net sales decreased 1.5% during third quarter 2015. Unit volume
increased 5.5% with 1.0% lower pricing, while foreign exchange was
negative 6.0%. Acquisitions contributed 0.5% to volume. Volume gains
were led by the Greater China region, India and the Philippines. Organic
sales for Asia increased 4.0%.

Operating profit in Asia increased 4% in third quarter 2015 to $195
million, or 180 basis points to 31.3% of Net sales. This increase in
Operating profit as a percentage of Net sales was due to an increase in
Gross profit and a decrease in Selling, general and administrative
expenses, both as a percentage of Net sales. This increase in Gross
profit was mainly driven by cost savings from the Company’s
funding-the-growth initiatives, which were partially offset by higher
costs, primarily driven by higher raw and packaging material costs,
which included foreign exchange transaction costs, and lower pricing due
to increased in-store promotional activities. This decrease in Selling,
general and administrative expenses was due to decreased advertising
investment, in part reflecting a shift in advertising investment to
in-store promotional activities.

Colgate continued its toothpaste leadership in Asia during the quarter.
Successful new products including Colgate 360° Pro Gum Health Whitening,
Colgate Optic White Plus Shine, Colgate Active Salt Neem, Colgate Power
White Bamboo Charcoal and Darlie All Shiny White Multicare toothpastes
contributed to volume growth in the region.

Successful products contributing to volume growth in other categories in
the region include Colgate Slim Soft Tri-Tip, Colgate 360° Charcoal Gold
and Darlie Charcoal manual toothbrushes, Colgate Plax Herbal Salt,
Colgate Plax Active Salt and Colgate Plax Bamboo Charcoal Mint
mouthwashes and Palmolive Naturals shampoo and conditioner.

Africa/Eurasia (6% of Company Sales)

Africa/Eurasia Net sales decreased 20.5% during third quarter 2015. Unit
volume decreased 3.0% with 7.5% higher pricing, while foreign exchange
was negative 25.0%. Divestments decreased volume by 0.5%. Volume
declines in the Central Asia/Caucasus region and Ukraine were partially
offset by volume gains in the Sub Saharan Africa region and South
Africa. Organic sales for Africa/Eurasia increased 5.0%.

Operating profit in Africa/Eurasia decreased 27% in third quarter 2015
to $44 million, or 150 basis points to 17.9% of Net sales. This decrease
in Operating profit as a percentage of Net sales was primarily due to a
decrease in Gross profit, partially offset by a decrease in Selling,
general and administrative expenses, both as a percentage of Net
sales. This decrease in Gross profit was primarily due to higher raw and
packaging material costs, driven by higher foreign exchange transaction
costs, partially offset by cost savings from the Company’s
funding-the-growth initiatives and higher pricing. This decrease in
Selling, general and administrative expenses was primarily due to
decreased advertising investment.

Colgate continued its toothpaste leadership in Africa/Eurasia, driven by
market share gains in nearly every country in the region. Successful
products contributing to growth in the region include Colgate Total,
Colgate Optic White Instant and Colgate Maximum Cavity Protection plus
Sugar Acid Neutralizer toothpastes, Colgate Slim Soft Charcoal, Colgate
Natural Extracts and Colgate Zig Zag manual toothbrushes, Colgate Total
mouthwash, Palmolive Gourmet Spa Mint Shake, Protex For Men and
Palmolive Men Taiga Freshness shower gels and Palmolive Altai Herbs and
Protex Complete 12 bar soaps.

Hill’s Pet Nutrition (14% of Company Sales)

Hill’s Net sales decreased 3.5% during third quarter 2015. Unit volume
increased 2.5% with 3.0% higher pricing, while foreign exchange was
negative 9.0%. Volume gains were led by the United States and Japan.
Hill’s organic sales increased 5.5%.

Hill’s Operating profit increased 5% in third quarter 2015 to $157
million, or 250 basis points to 28.8% of Net sales. This increase in
Operating profit as a percentage of Net sales was due to an increase in
Gross profit and a decrease in Selling, general and administrative
expenses, partially offset by an increase in Other (income) expense,
net, all as a percentage of Net sales. This increase in Gross profit was
primarily due to the Company’s funding-the-growth initiatives and higher
pricing, partially offset by higher raw and packaging material costs,
driven by higher foreign exchange transaction costs. This decrease in
Selling, general and administrative expenses was primarily due to
decreased advertising investment. This increase in Other (income)
expense, net was in part due to the expiration of a foreign sales tax
exemption.

New product introductions driving volume growth in the U.S. include
Hill’s Prescription Diet Metabolic Plus Mobility and Metabolic Plus
Urinary, Hill’s Prescription Diet stews, Hill’s Prescription Diet i/d
Stress and i/d Sensitive and Hill’s Science Diet Urinary Plus Hairball
Control. Hill’s Ideal Balance Slim & Healthy, Grain Free and Indoor Cat
also contributed to volume growth in the quarter.

New product introductions driving volume growth internationally include
Hill’s Ideal Balance, Hill’s Prescription Diet Metabolic Plus Mobility,
Metabolic Plus Urinary and c/d Multicare Urinary Stress and Hill’s
Science Diet Perfect Weight.

***

About Colgate-Palmolive: Colgate-Palmolive is a leading global consumer
products company, tightly focused on Oral Care, Personal Care, Home 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, Speed Stick, Lady Speed Stick, Softsoap,
Irish Spring, Protex, Sorriso, Kolynos, elmex, Tom’s of Maine, Sanex,
Ajax, Axion, Fabuloso, Soupline and Suavitel, as well as Hill’s Science
Diet, Hill’s Prescription Diet and Hill’s Ideal Balance. For more
information about Colgate’s global business, visit the Company’s web
site at http://www.colgatepalmolive.com.
To learn more about Colgate Bright Smiles, Bright Futures® oral health
education program, please visit http://www.colgatebsbf.com.
CL-E

Market Share Information

Management uses market share information as a key indicator to monitor
business health and performance. References to market share in this
press release are based on a combination of consumption and market share
data provided by third-party vendors, primarily Nielsen, and internal
estimates. All market share references represent the percentage of the
dollar value of sales of our products, relative to all product sales in
the category in the countries in which the Company competes and
purchases data. Market share data is subject to limitations on the
availability of up-to-date information. We believe that the third-party
vendors we use to provide data are reliable, but we have not verified
the accuracy or completeness of the data or any assumptions underlying
the data. In addition, market share information calculated by the
Company may be different from market share information calculated by
other companies due to differences in category definitions, the use of
data from different countries, internal estimates and other factors.

Explanatory Note Regarding Currency-Neutral
Calculations

Diluted earnings per share growth for third quarter 2015, on a
currency-neutral basis, eliminates from Diluted earnings per share
growth (GAAP) the impact of the items described in Table 8 and the
period-over-period changes in foreign exchange rates in the translation
of local currency results into U.S. dollars. Accordingly, for purposes
of calculating Diluted earnings per share growth for third quarter 2015,
on a currency-neutral basis, third quarter 2015 local currency results,
which include the impact of foreign currency transaction gains and
losses, are translated into U.S. dollars using average foreign exchange
rates for third quarter 2014.

Management’s estimate of earnings per share growth on a currency-neutral
basis for full year 2015 eliminates from earnings per share growth
(GAAP) the impact of the items described in Table 9, the 2012
Restructuring Program and period-over-period changes in foreign exchange
rates in the translation of local currency results into U.S. dollars.
Accordingly, for purposes of estimating earnings per share growth for
full year 2015, on a currency-neutral basis, estimated full year 2015
local currency results, which include the impact of estimated foreign
currency transaction gains and losses, are translated into U.S. dollars
using 2014 average foreign exchange rates by quarter.

Cautionary Statement on Forward-Looking Statements

This press release and the related webcast may contain forward-looking
statements. Such statements may relate, for example, to sales or volume
growth, organic sales growth, profit or profit margin growth, earnings
per share growth (including on a currency neutral basis), financial
goals, the impact of currency devaluations, exchange controls, price
controls and labor unrest, including in Venezuela, cost-reduction plans
including the 2012 Restructuring Program, tax rates, new product
introductions or commercial investment levels, among other matters.

Contacts

Colgate-Palmolive Company
Bina Thompson, 212-310-3072
Hope
Spiller, 212-310-2291

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