Colgate-Palmolive Surpasses Expectations, Projects Increased Advertising Investment in 2024
Consumer Products Giant Delivers Solid Q4 and Full-Year Results, Aims for Continued Growth
Earnings Report Highlights:
Fourth-Quarter Performance:
Colgate-Palmolive (CL) shares experienced a premarket surge on Friday, January 26, 2024, following the release of its impressive fourth-quarter earnings report. The consumer products giant reported earnings per share (EPS) of $0.87, exceeding analyst estimates by $0.02. Revenue for the quarter reached $4.95 billion, reflecting a solid 7% year-over-year growth and surpassing consensus estimates of $4.89 billion.
Full-Year Performance:
CL’s full-year net sales witnessed a notable 8.5% year-over-year increase, reaching a remarkable $19.87 billion. The company’s full-year EPS stood at $2.77, demonstrating a steady growth trajectory.
Management’s Perspective:
Noel Wallace, CEO of CL, expressed satisfaction with the company’s robust financial performance, citing strong top and bottom line results. He highlighted the 7.0% net and organic sales growth, improved organic volume performance, gross and operating profit margin expansion, and double-digit earnings-per-share growth. Wallace attributed these achievements to the company’s unwavering commitment to innovation, brand building, and operational excellence.
Outlook for 2024:
CL anticipates net sales growth of 1% to 4% in 2024, with a potential low-single-digit negative impact from foreign exchange fluctuations. Organic sales growth is expected to remain within the company’s long-term target range of 3% to 5%. The company aims for gross profit margin expansion, increased advertising investment, and double-digit earnings-per-share growth, reflecting its continued focus on driving sustainable, profitable growth.
Analyst Reaction:
Analysts at Jefferies expressed optimism about CL’s strong finish to 2023, noting that fourth-quarter organic sales and margins exceeded estimates. They emphasized the sequential improvement in volumes and oral care market share gains, indicating the effectiveness of the multi-year turnaround plan. Jefferies analysts also highlighted the company’s plans for increased advertising spending in 2023, indicating an offensive strategy to further bolster its market position. They viewed the initial 2024 guidance as achievable and potentially beatable, given the company’s track record of delivering consistent results.
Conclusion:
Colgate-Palmolive’s robust fourth-quarter and full-year 2023 results, coupled with a positive outlook for 2024, signaled the company’s continued strength and commitment to growth. Investors responded positively to the news, driving the company’s stock higher in premarket trading. CL’s focus on innovation, brand building, and operational excellence positions it well to navigate challenges and capitalize on opportunities in the dynamic consumer products landscape.