Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Colgate-Palmolive Co., profitability ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Gross Profit Margin
- The gross profit margin exhibited a fluctuating but overall declining trend from 2018 to 2022. Starting at 59.39% in 2018, it remained relatively stable in 2019 at 59.42%, then increased to a peak of 60.82% in 2020. However, the margin declined thereafter, dropping to 59.55% in 2021 and further decreasing to 57.04% by 2022. This suggests some compression in the company's cost of goods sold or pricing pressures during the later years.
- Operating Profit Margin
- The operating profit margin followed a downward trajectory over the five-year span. Beginning at 23.76% in 2018, it decreased marginally to 22.65% in 2019, then experienced a slight recovery to 23.59% in 2020. A more pronounced decline occurred in the following years, with margins falling to 19.13% in 2021 and further to 16.1% in 2022. This decline indicates increasing operating costs or reduced operational efficiency impacting profitability.
- Net Profit Margin
- The net profit margin demonstrated a declining pattern similar to the operating margin, although with some initial improvement. It started at 15.44% in 2018, slightly dipped to 15.08% in 2019, then improved to 16.36% in 2020. From 2020 onwards, the margin dropped substantially to 12.43% in 2021 and further to 9.93% in 2022, reflecting increased expenses or other factors adversely affecting net profitability.
- Return on Equity (ROE)
- ROE data is available beginning in 2019 and shows extremely high values with substantial volatility. The figure is 2023.08% in 2019, then declines sharply to 362.72% in 2020 and slightly decreases again to 355.67% in 2021 before rising to 445.14% in 2022. These unusually high and fluctuating numbers likely indicate atypical accounting events, financial structure changes, or reporting anomalies rather than sustainable operational performance.
- Return on Assets (ROA)
- The ROA shows a declining pattern throughout the period. It starts at 19.74% in 2018, decreases to 15.74% in 2019, then slightly increases to 16.93% in 2020. After 2020, the ROA decreased steadily to 14.4% in 2021 and further to 11.35% in 2022. This trend points to diminishing effectiveness in the company’s use of its assets to generate profits.
Return on Sales
Return on Investment
Gross Profit Margin
Colgate-Palmolive Co., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 10,248) | 10,375) | 10,017) | 9,325) | 9,231) | |
| Net sales | 17,967) | 17,421) | 16,471) | 15,693) | 15,544) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 57.04% | 59.55% | 60.82% | 59.42% | 59.39% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Procter & Gamble Co. | 47.43% | 51.25% | 50.32% | 48.63% | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 10,248 ÷ 17,967 = 57.04%
2 Click competitor name to see calculations.
- Net Sales
- The net sales figures exhibit a consistent upward trend over the five-year period from 2018 to 2022. Starting at $15,544 million in 2018, net sales increased each year, reaching $17,967 million in 2022. This reflects a steady growth in revenue, with the most noticeable year-on-year increments occurring in 2021 and 2022.
- Gross Profit
- Gross profit also shows a generally positive trajectory, rising from $9,231 million in 2018 to a peak of $10,375 million in 2021. However, there is a slight decline in 2022 to $10,248 million, indicating a minor decrease in gross profit after several years of growth.
- Gross Profit Margin
- The gross profit margin percentage demonstrates some fluctuation during the period. It increased from 59.39% in 2018 to a high of 60.82% in 2020, suggesting improved efficiency or favorable cost conditions. Following this peak, the margin declined to 59.55% in 2021 and further decreased to 57.04% in 2022. This downward shift in the last two years points to increased cost pressures or changes in pricing strategy that affected the company’s profitability at the gross level.
- Summary of Trends
- Overall, the data reflects robust top-line growth throughout the entire span, with net sales rising steadily. Gross profit growth aligns closely with sales trends, though the slight reduction in 2022’s gross profit suggests emerging challenges. The declining gross profit margin in the last two years highlights a potential erosion in cost efficiency or margin compression, warranting further investigation into cost management and pricing dynamics.
Operating Profit Margin
Colgate-Palmolive Co., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating profit | 2,893) | 3,332) | 3,885) | 3,554) | 3,694) | |
| Net sales | 17,967) | 17,421) | 16,471) | 15,693) | 15,544) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 16.10% | 19.13% | 23.59% | 22.65% | 23.76% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Procter & Gamble Co. | 22.21% | 23.63% | 22.14% | 8.11% | — | |
| Operating Profit Margin, Industry | ||||||
| Consumer Staples | 8.44% | 8.48% | 8.17% | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Operating profit margin = 100 × Operating profit ÷ Net sales
= 100 × 2,893 ÷ 17,967 = 16.10%
2 Click competitor name to see calculations.
The financial data reflects several notable trends over the five-year period ending December 31, 2022.
- Net Sales
- Net sales exhibit a steady increase throughout the period, growing from approximately 15.5 billion US dollars in 2018 to nearly 18.0 billion US dollars in 2022. This upward trend indicates consistent revenue growth over the five years.
- Operating Profit
- Operating profit shows a different trajectory. After a slight decline from 3.7 billion in 2018 to 3.55 billion in 2019, it rises again to 3.89 billion in 2020. However, subsequent years experience a decline, falling to 3.33 billion in 2021 and further down to 2.89 billion in 2022. This pattern suggests challenges in maintaining profit levels despite growing sales.
- Operating Profit Margin
- The operating profit margin mirrors the trend seen in operating profit. It starts relatively strong at 23.76% in 2018 and declines moderately to 22.65% in 2019. There is a slight recovery to 23.59% in 2020, but a notable decrease follows, with margins dropping to 19.13% in 2021 and further to 16.1% in 2022. This indicates a decreasing efficiency in converting sales into operating profit over time, particularly marked in the most recent years.
In summary, while sales have increased consistently, operating profit and operating margin have declined since 2020. The divergence between growing sales and falling profitability margins suggests rising costs or other operational challenges affecting overall profitability in the latest years.
Net Profit Margin
Colgate-Palmolive Co., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Colgate-Palmolive Company | 1,785) | 2,166) | 2,695) | 2,367) | 2,400) | |
| Net sales | 17,967) | 17,421) | 16,471) | 15,693) | 15,544) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 9.93% | 12.43% | 16.36% | 15.08% | 15.44% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Procter & Gamble Co. | 18.38% | 18.79% | 18.36% | 5.76% | — | |
| Net Profit Margin, Industry | ||||||
| Consumer Staples | 6.11% | 6.21% | 6.22% | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net profit margin = 100 × Net income attributable to Colgate-Palmolive Company ÷ Net sales
= 100 × 1,785 ÷ 17,967 = 9.93%
2 Click competitor name to see calculations.
The annual financial data exhibits notable trends in key performance indicators over the five-year period from 2018 to 2022.
- Net Income Attributable to the Company
- The net income shows a fluctuating pattern with a peak in 2020 at 2,695 million US dollars. Subsequently, there is a consecutive decline in 2021 and 2022, reaching 1,785 million US dollars. The decline post-2020 suggests challenges affecting profitability in the latter years.
- Net Sales
- Net sales steadily increased throughout the period, rising from 15,544 million US dollars in 2018 to 17,967 million US dollars in 2022. This consistent growth reflects a positive trend in revenue generation despite the fluctuations in net income.
- Net Profit Margin
- The net profit margin mirrors the net income trend, with an increase peaking at 16.36% in 2020, followed by a marked decline to 9.93% in 2022. This indicates reduced efficiency or increased costs impacting profitability despite rising sales.
In summary, while the company experienced steady growth in net sales over these years, profitability indicators such as net income and net profit margin show a decline after 2020. This divergence suggests that the company faced increased cost pressures or other adverse factors that reduced profit margins and net income, even as sales volumes grew. The downward trend in profitability warrants further investigation into cost management and operational efficiency measures.
Return on Equity (ROE)
Colgate-Palmolive Co., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Colgate-Palmolive Company | 1,785) | 2,166) | 2,695) | 2,367) | 2,400) | |
| Total Colgate-Palmolive Company shareholders’ equity | 401) | 609) | 743) | 117) | (102) | |
| Profitability Ratio | ||||||
| ROE1 | 445.14% | 355.67% | 362.72% | 2,023.08% | — | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Procter & Gamble Co. | 31.64% | 30.85% | 28.00% | 8.26% | — | |
| ROE, Industry | ||||||
| Consumer Staples | 32.10% | 31.40% | 30.98% | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROE = 100 × Net income attributable to Colgate-Palmolive Company ÷ Total Colgate-Palmolive Company shareholders’ equity
= 100 × 1,785 ÷ 401 = 445.14%
2 Click competitor name to see calculations.
The financial data over the reviewed periods shows several notable trends and fluctuations in key financial metrics. The net income attributable to the company demonstrates an overall decline from 2018 through 2022. It started at approximately 2,400 million US dollars in 2018 and decreased to 1,785 million US dollars by 2022, reflecting a downturn of significant magnitude over these years.
Shareholders’ equity metrics exhibit irregular patterns with some volatility. Beginning with a negative balance in 2018 at -102 million US dollars, shareholders’ equity shifted positively to 117 million US dollars in 2019, then sharply increased to 743 million US dollars in 2020. However, this was followed by decreases to 609 million US dollars in 2021 and further down to 401 million US dollars in 2022. The equity values indicate considerable fluctuations, which could be associated with changes in company financing, asset revaluations, or dividend policies.
Return on equity (ROE) presents an unusual trend with extremely high percentages in all years from 2019 to 2022, starting at 2,023.08% in 2019 and rising to 445.14% by 2022. These ROE figures are exceptionally high compared to typical industry standards, suggesting that the denominator in the ROE calculation (shareholders’ equity) might be very low or near zero, which aligns with the earlier noted low and negative equity values. This indicates that profitability relative to equity is disproportionately large, but it may not accurately represent operational efficiency or sustainable profitability given the equity base's volatility and size.
Overall, the analysis points to a company experiencing declining net income and highly volatile shareholders’ equity, leading to extraordinarily high and potentially misleading ROE figures. These trends highlight potential risks related to capital structure and profitability stability, which warrant further detailed investigation.
- Net Income
- Declining trend from 2,400 million USD in 2018 to 1,785 million USD in 2022.
- Shareholders’ Equity
- Fluctuating values with negative equity in 2018, positive spikes in 2020, followed by decreases through 2022.
- Return on Equity (ROE)
- Exceptionally high percentages across periods due to low or negative shareholders’ equity, potentially skewing profitability interpretation.
Return on Assets (ROA)
Colgate-Palmolive Co., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Colgate-Palmolive Company | 1,785) | 2,166) | 2,695) | 2,367) | 2,400) | |
| Total assets | 15,731) | 15,040) | 15,920) | 15,034) | 12,161) | |
| Profitability Ratio | ||||||
| ROA1 | 11.35% | 14.40% | 16.93% | 15.74% | 19.74% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Procter & Gamble Co. | 12.58% | 11.99% | 10.79% | 3.39% | — | |
| ROA, Industry | ||||||
| Consumer Staples | 8.95% | 8.75% | 8.24% | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROA = 100 × Net income attributable to Colgate-Palmolive Company ÷ Total assets
= 100 × 1,785 ÷ 15,731 = 11.35%
2 Click competitor name to see calculations.
The financial data over the five-year period reveals notable trends in key performance indicators.
- Net Income
- Net income attributable to the company shows a fluctuating pattern with an initial decline from 2,400 million US dollars in 2018 to 2,367 million in 2019, followed by a peak at 2,695 million in 2020. Subsequently, there is a downward trend with decreases to 2,166 million in 2021 and further to 1,785 million in 2022. This indicates a significant reduction in profitability in the most recent years.
- Total Assets
- Total assets generally increased from 12,161 million US dollars at the end of 2018 to a high of 15,920 million in 2020. After 2020, total assets decreased moderately to 15,040 million in 2021 but then showed a slight recovery to 15,731 million in 2022. Overall, the asset base expanded over the period, albeit with some volatility.
- Return on Assets (ROA)
- ROA exhibited a declining trend across the years. Starting at 19.74% in 2018, it dropped to 15.74% in 2019 before a minor recovery to 16.93% in 2020. After 2020, the ratio consistently decreased to 14.4% in 2021 and further down to 11.35% in 2022. This decline reflects a reduction in efficiency in generating profit from the asset base.
In summary, while the company’s total assets expanded moderately, its net income and return on assets have decreased, particularly in the last two years. The decreasing profitability and ROA suggest challenges in maintaining earnings performance despite a generally stable asset size.