Colgate releases 3Q results, announces four-year restructuring program
NEW YORK — Colgate-Palmolive reported on Thursday a dip in third-quarter sales and unveiled a four-year restructuring program that involves a 6% reduction in its global employee workforce.
The program’s initiatives are expected to help Colgate ensure continued worldwide growth in unit volume, organic sales and earnings per share and enhance its global leadership positions in its core businesses, the company stated. Savings are projected to be in the range of $365 million to $435 million ($275 million to $325 million after tax) annually by the fourth year of the program.
Initiatives under the program will focus on the following three areas:
- Expanding Commercial Hubs – Building on this structure already implemented in several divisions, continue to cluster single-country subsidiaries into more efficient regional hubs, in order to drive smarter and faster decision making, strengthen capabilities available on the ground and improve cost structure.
- Extending Shared Business Services and Streamlining Global Functions – Implementing the company’s shared service organizational model, already implemented in Europe, in all regions of the world. Initially focused on finance and accounting, these shared services will be expanded to additional functional areas to streamline global functions.
- Optimizing Global Supply Chain and Facilities – Continuing to optimize manufacturing efficiencies, global warehouse networks and office locations for greater efficiency, lower cost and speed to bring innovation to market.
It is expected that by the end of 2016, the restructuring program will reduce the company’s global employee workforce by approximately 6% from the current level of 38,600, the company stated.
“As we look ahead to 2013, while our global budget process is still in its initial stages, based on the company’s current growth momentum, our confidence in this new efficiency program in addition to our ongoing funding-the-growth and strategic worldwide pricing efforts, we are planning for a return to our long-term target of double-digit earnings per share growth on a dollar basis and another year of gross margin expansion, excluding charges related to the 2012 restructuring program,” stated Ian Cook, chairman, president and CEO.
For the third quarter, the company posted worldwide net sales of $4.33 billion, a decrease of 1% compared with the year-ago period.
Net income and diluted earnings per share were $654 million and $1.36, respectively. Net income and diluted earnings per share in third quarter 2011 were $643 million and $1.31, respectively.
In North America, net sales rose 2.5%, and operating profit rose 3% during the quarter to $219 million, or 27.5% of net sales.
In the United States, Colgate’s toothpaste market share reached 36.2% year-to-date, up 1.2 share points versus a year ago, driven by strong sales of Colgate Optic White toothpaste. In manual toothbrushes, Colgate’s market share reached 37.3% year to date, up 1.8 share points versus a year ago, driven by the success of Colgate 360° Optic White, Colgate 360° Sensitive Pro-Relief, Colgate 360° Total Advanced and Colgate Extra Clean manual toothbrushes, the company stated.