UPDATE: Colgate-Palmolive Co. (CL) Reports In-Line Q3 EPS of 1.38; to Cut 6% of Workforce

(Updated - October 25, 2012 7:12 AM EDT)

Colgate-Palmolive Co. (NYSE: CL) reported Q3 EPS of $1.38, in-line with the analyst estimate of $1.38. Revenue for the quarter came in at $4.3 billion versus the consensus estimate of $4.38 billion.

Separately, the Company announced a four-year Global Growth and Efficiency Program (the “2012 Restructuring Program”) for sustained growth. The program’s initiatives are expected to help Colgate ensure continued solid worldwide growth in unit volume, organic sales and earnings per share and enhance its global leadership positions in its core businesses.

This four-year Global Growth and Efficiency Program is expected to produce significant benefits in the Company’s long-term business performance. The major objectives of the program include:

• Becoming even stronger on the ground through the continued evolution and expansion of proven global and regional commercial capabilities, which have already been successfully implemented in a number of the Company’s operations around the world.
  
  
• Simplifying and standardizing how work gets done by increasing technology enabled collaboration and taking advantage of global data and analytic capabilities, leading to smarter and faster decisions.
  
  
• Reducing structural costs to continue to increase the Company’s gross and operating profit.
  
  
• Building on Colgate’s current position of strength to enhance its leading market share positions worldwide and ensure sustained sales and earnings growth.

Implementation of the 2012 Restructuring Program is projected to result in cumulative pretax charges, once all phases are approved and implemented, totaling between $1,100 and $1,250 million ($775 and $875 million aftertax), beginning with approximately $110 to $120 million ($90 to $100 million aftertax) in fourth quarter 2012. Savings are projected to be in the range of $365 to $435 million ($275 to $325 million aftertax) annually by the fourth year of the program. The expected savings represent a three to four year cash payback, on average, with a targeted aftertax rate of return exceeding 30%.

Savings in 2013 should approximate $40 to $50 million ($30 to $40 million aftertax) effective in the latter part of the year. The anticipated charges for 2013 are expected to amount to approximately $260 to $310 million ($185 to $220 million aftertax.)

Initiatives under the program will focus on the following three areas:

• Expanding Commercial Hubs – Building on the success of 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 successful 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 2012 Restructuring Program will reduce the Company’s global employee workforce by approximately 6% from the current level of 38,600.

For earnings history and earnings-related data on Colgate-Palmolive Co. (CL) click here.

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