Colgate-Palmolive Company (CL) Q4 2023 earnings summary

Executive summary

• Q4 net and organic sales grew 7.0%; FY 2023 net and organic sales grew 8.5%, with growth across every division and category.

• FY Base Business EPS rose 9% to $3.23; GAAP EPS increased 30% to $2.77, partly reflecting the prior-year impairment charge.

• Gross and operating profit margins, net income, EPS and free cash flow increased YoY for both Q4 and FY; Q4 Base Business operating profit growth was double digit.

• Improved organic volume performance and 2023 results supported confidence in consistent, compounded EPS growth in 2024 and beyond.

Financial highlights

• Q4 net sales were $4,950M, up 7.0%; GAAP diluted EPS was $0.87 versus $0.01, while Base Business EPS rose 13% to $0.87.

• FY net sales were $19,457M, up 8.5%; GAAP diluted EPS was $2.77 versus $2.13, and Base Business EPS rose 9% to $3.23.

• FY net income was $2,300M versus $1,785M; Q4 net income was $718M versus $5M.

• FY gross margin was 58.2% versus 57.0%; Q4 GAAP and Base Business gross margin both increased 400 bps to 59.6%.

Outlook and guidance

• 2024 net sales growth guidance is 1%–4%, including a low-single-digit negative FX impact based on current spot rates; organic sales growth is expected within the 3%–5% long-term target range.

• 2024 GAAP EPS growth is expected to be double digit; Base Business EPS growth is expected in the mid-to-high single digits.

• Gross margin expansion and higher advertising are expected in 2024; advertising is expected to rise in dollars and as a percent of sales.

• Higher brand investment is expected in 2024 following a 19% increase in advertising spending in 2023.