Text size
Colgate-Palmolive toothbrushes for sale at a Dollar Tree store in Louisville.
Luke Sharrett/Bloomberg
Shares of
Colgate-Palmolive
declined early Friday after announcing declines in earnings and gross profit margins from ongoing high raw material and logistics costs.
Colgate (ticker: CL), the consumer products manufacturer, fell 4.6% in premarket to $77.50. Coming into Friday, the stock has declined 4.8% year to date.
Colgate said in its first-quarter earnings report that GAAP gross profit margin and base business gross profit margin both decreased 220 basis points to 58.5%.
“While our growth continued on the top line, our profitability was impacted by significant increases in raw material and logistics costs worldwide, and we expect the difficult cost environment to continue for the next several quarters,” said CEO Noel Wallace in the company’s press release.
Colgate reported earnings of 66 cents a share in the first quarter, down from 80 cents a year earlier. Adjusted earnings of 74 cents a share matched Wall Street forecasts. Sales rose to nearly $4.4 billion from a year-earlier $4.34 billion.
“We remain sharply focused on our revenue growth management, including additional pricing, and funding-the-growth and other productivity initiatives,” Wallace added.
Colgate reported that it now expects full-year net sales growth to be at the higher end of 1% to 4%, including a low-single-digit negative impact from foreign exchange. Wall Street estimates growth of 4.7%, according to FactSet. Organic sales growth is expected within the range of 4% to 6%, Colgate said.
The company also anticipates a decline in gross profit margin in 2022, increased advertising investments and double-digit earnings-per-share growth.
According to FactSet data, analysts are hesitant on the stock, with an average rating of Hold. The average price target for Colgate is $86.06.
Write to Angela Palumbo at [email protected]
