Colgate-Palmolive Company (NYSE: CL) reported a 12% drop in earnings for the first quarter of 2019 due to higher raw and packaging material costs as well as increased advertising investment. However, the results exceeded analysts’ expectations. The company reaffirmed its sales and earnings growth guidance for the full year 2019.
Net income decreased by 12% to $560 million and earnings fell by 10% to $0.65 per share. Adjusted earnings declined by 9% to $0.67 per share.
Net sales declined by 3% to $3.88 billion, while organic sales, which excluded the impact of foreign exchange, acquisitions, and divestments, increased by 3%. Global unit volume rose 1%, pricing increased by 2% and foreign exchange was negative 6%.
Looking ahead into the full year 2019, Colgate continues to expect net sales to be flat to up low-single-digits, with organic sales growth of 2% to 4%. On a GAAP basis, based on current spot rates, the company still expects to see gross margin expansion and a low-single-digit decline in EPS. Adjusted EPS is still expected to decline in the mid-single-digit range.
For the first quarter, net sales from North America increased by 3% with a 2% rise in unit volume, a 1.5% increase in pricing and a negative 0.5% in foreign exchange. Latin America sales declined by 4.5% as the negative 10.5% in foreign exchange overshadowed a 2.5% rise in unit volume and a 3.5% increase in pricing.
Europe sales fell by 7% as the negative 7.5% in foreign exchange and a 1% decline in pricing outrun the 1.5% rise in unit volume. Asia Pacific sales dropped by 8% with a 2.5% decline in unit volume and a negative 5.5% in foreign exchange outrun the flat pricing. Africa/Eurasia sales decreased 6% as a 13% negative foreign exchange overshadowed the 7% rise in pricing and a flat unit volume.
Also read: Johnson & Johnson Q1 earnings results
In the US, Colgate maintained leadership in the toothpaste category during the quarter with its market share at 34.8% year to date. Successful products include Colgate Total, Colgate Optic White Stain Fighter, Colgate Optic White Stain-Less White and Tom’s of Maine toothpaste. In manual toothbrushes, Colgate maintained its brand market leadership in the US with its market share in that category at 41.6% year to date, supported by the success of Colgate Extra Clean and Colgate Gum Health manual toothbrushes.
Hill’s Pet Nutrition sales rose by 3% as volume gains in the US and Western Europe was partially offset by volume declines in South Africa and Russia. Unit volume in Hill’s Pet Nutrition increased 2.0%, pricing increased 4.0% and foreign exchange was negative 3.0%.
Shares of Colgate-Palmolive ended Thursday’s regular session down 0.25% at $68.69 on the NYSE. The stock has risen over 3% in the past year and over 11% in the past three months.