Colgate-Palmolive Co.: Still Smiling After 200 Years

Toothpaste maker battles competition with more face time and restructuring.

When William Colgate started his starch, soap and candle business in New York, Lewis and Clark were just finishing up their expedition and Thomas Jefferson was president.

Two hundred years later the Colgate-Palmolive Co., still based in New York, reports sales and profit increases in all five operating divisions: North America, Latin America, Europe, Asia/Africa and Hill's Pet Nutrition.

The company, one of IndustryWeek's IW 50 Best Manufacturers for 2006, also reported third-quarter sales and unit volume growth of 9.5% and 7% respectively.

Third quarter 2006 results include $58.5 million of after-tax charges related to the 2004 restructuring program. Gross profit margin was 55%. Excluding restructuring charges, gross profit margin was 56.5%, an all-time record and a 140-basis-point improvement versus the year-ago period.

"We are very pleased with the excellent top-and bottom-line growth, exceeding expectations and building on the strong growth momentum we saw in the first half," Reuben Mark, chairman and CEO, said in an Oct. 25 statement. "Colgate's fundamentals are strong and getting stronger.

"We are particularly pleased by the 140-basis-point improvement in gross profit margin, ex-restructuring charges, the largest quarterly gross profit increase in more than four years. The gross profit increase funded a record level of advertising spending behind Colgate brands worldwide while still generating an all-time record level of operating profit, ex-restructuring and stock-based compensation charges, with every division contributing to the strong results."

Colgate-Palmolive Co.
At A Glance

Colgate-Palmolive Co.
New York, N.Y.
Primary Industry: Chemicals
Number of employees: 35,800
2005 In Review
Revenue: $11.4 billion
Profit Margin: 11.86%
Sales Turnover: 1.34
Inventory Turnover: 6.10
Revenue Growth: 7.68%
Return On Assets: 15.58%
Return On Equity: 108.51%

Colgate-Palmolive is halfway through its $650 million restructuring plan, which was unveiled December 2004. The plan is aimed at lowering costs by $300 million annually. The objectives of the plan include accelerating innovative marketing and new products and maximizing the effectiveness of global advertising and commercial investment funds to build worldwide market shares.

Based on third-quarter 2006 results, the plan is moving ahead as anticipated.

"I'm delighted that our brand investment spending continues to pay off," said Ian Cook, President and COO. "Toothpaste market shares are at a record high here in the U.S. and continue to strengthen in other key countries around the world including Mexico, Brazil, the United Kingdom, Russia, Australia and India. Colgate's share of the manual toothbrush market worldwide also increased during the quarter to another record high."

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