Toothpaste maker Colgate-Palmolive has reported third-quarter profits down on higher advertising spend, despite net sales rising 3% to $3,974m with global unit volume up 1.5%.
The company said selling, general and administrative expenses were 36.0% of net sales in third quarter 2017 versus 34.2% in third quarter 2016.
“Selling, general and administrative expenses increased by 140 basis points to 35.4% of net sales in third quarter 2017 as a result of increased advertising investment. Worldwide advertising investment increased 19% to $405m versus $339m in the year ago quarter,” it said.
Highlights 2017 (2016)
- Net sales $3,974m ($3,867m)
- Cost of sales $1,591m ($1,543m)
- Gross profit $2,383m ($2,324m)
- Gross profit margin 60.0% (60.1%)
- Selling, general and administrative expenses $1,429m ($1,322)
- Operating profit $927m ($1,071 )
- Operating profit margin 23.3% (27.7%)
- Income before income taxes $900m ($1,046)
- Net income attributable to Colgate-Palmolive Company $607m ($702m)
Earnings per common share
- Basic $ 0.69 ($ 0.79)
- Diluted $0.68 ($0.78)
The company claimed its Global Growth and Efficiency Program had eaten into profits. “Gross profit margin was 60.0% in third quarter 2017 versus 60.1% in third quarter 2016. Excluding charges resulting from the Global Growth and Efficiency Program in both periods, gross profit margin was 60.4% in third quarter 2017, even with the year ago quarter,” it said.
It also said cost savings from the company's funding-the-growth initiatives were offset by higher raw and packaging material costs.
Operating profit fell more than 13% to $927m. But the company said Q3 21016 profits included a gain on the sale of land in Mexico and a charge for a previously disclosed litigation matter. Excluding these operating profit was $985m in third quarter 2017, a decrease of 4% versus third quarter 2016.