Colgate-Palmolive Company (CL) reported that its fourth-quarter Base Business gross profit margin decreased 250 basis points to 55.6%, including a negative 90 basis point impact from private label sales resulting from the acquisitions of pet food businesses. On a Base Business basis, EPS declined 2.5%. On a GAAP basis, EPS declined 94% year-over-year, driven by goodwill and intangible assets impairment charges related to the Filorga skin health business. Net sales were up 5.0% in the fourth quarter, and organic sales grew 8.5%, as pet nutrition returned to double-digit organic sales growth and oral care delivered another quarter of high-single-digit organic sales growth. Home care grew organic sales mid-single digits and personal care grew organic sales low-single digits in the quarter.
For full year 2022, on a Base Business basis, EPS declined 7%, in line with the company’s guidance. On a GAAP basis, EPS declined 16%, driven by goodwill and intangible assets impairment charges in the fourth quarter related to the Filorga skin health business. Full year net sales increased 3.0%, while organic sales rose 7.0%. The company noted that 2022 is fourth consecutive year delivering organic sales growth at or above 3% to 5% long-term targeted range.
For 2023, on a non-GAAP or Base Business basis, the company expects gross profit margin expansion, increased advertising investment and low to mid-single-digit earnings-per-share growth. On a GAAP basis, the company expects gross profit margin expansion, increased advertising investment and double-digit earnings-per-share growth. The company expects net sales growth to be 2% to 5% in 2023. The company expects organic sales growth to be towards the high end of its long-term targeted range of 3% to 5%.
Fourth quarter Base Business EPS was $0.77 compared to $0.79, prior year. Analysts on average had expected the company to earn $0.76 per share, according to figures compiled by Thomson Reuters. Analysts’ estimates typically exclude special items.
Fourth quarter net income was $5 million, or $0.01 per share compared to $148 million, or $0.18 per share, a year ago. During the fourth quarter, the company took a non-cash, after-tax charge of $620 million to adjust the carrying values of goodwill and intangible assets related to the Filorga skin health business.
Fourth quarter revenue was $4.63 billion compared to $4.40 billion last year. Analysts on average had estimated $4.59 billion in revenue.
Shares of Colgate-Palmolive are down 3% in pre-market trade on Friday.
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