DBRS Confirms Colgate-Palmolive Company and Colgate-Palmolive Canada Inc. at AA (low) and R-1 (middle)

DBRS has today confirmed the ratings for Colgate-Palmolive Company and Colgate-Palmolive Canada Inc.’s (Colgate or the Company) Senior Debentures and Commercial Paper at AA (low) and R-1 (middle). The trend is Stable. Colgate’s credit risk profile remains on track for the ratings indicated above, as the Company maintains a strong earnings profile based on its solid portfolio of leading brands, excellent geographic diversification, and exceptional product innovation, providing substantial and consistent revenue growth. The Company continues to achieve above-average organic sales growth driven primarily by volume gains. Colgate continues to win market share through enhanced brand-building initiatives and new product innovation. Operating margins have remained stable as restructuring charges, rising input/energy costs and higher advertising expenditures are offset by improvements in product mix and savings from cost-reduction programs.

DBRS expects Colgate’s earnings profile to remain strong based on its already solid and improving market positions, stable operating margins and continued product innovation. DBRS believes that Colgate will continue to focus on innovation and new product development going forward, since currently, over 30% of the Company’s revenue comes from products introduced in the last five years. DBRS expects Colgate’s financial profile will improve slightly, within the context of the current rating category, due to increasing operating cash flow, a disciplined growth strategy and prudent financial policies. Colgate is expected to emphasize cash returns to shareholders, yet financial leverage should remain stable on a relative basis (i.e., cash flow-to-debt in the 40%-to-50% range). DBRS anticipates Colgate will remain highly selective and disciplined with regard to potential acquisitions. We are confident that Colgate is committed to maintaining its current strong credit ratings and believe it would temper share repurchase levels should circumstances warrant.

Note:
All figures are in U.S. dollars unless otherwise noted.