NEW YORK — Hill’s Pet Nutrition saw the highest net sales growth in the second quarter compared to all other divisions owned by parent company Colgate-Palmolive. In addition, recent pet food acquisitions have inspired the company to raise its full-year net sales and organic growth guidance for 2023. The company shared its second-quarter earnings on July 28.
The company’s pet division clocked $1.06 billion in net sales in the second quarter ended June 30, up 16.2% from $909 million in the second quarter of 2022. For the six-month period ended June 30, which encompasses the first two quarters of 2023, Hill’s saw net sales of $2.12 billion, up 18.9% from $1.78 billion in the first six months of 2022.
Second-quarter operating profit for Hill’s was reported at $191 million, down just under 10% compared to year-ago. Six-month operating profit was $374 million, down 10.1% from $416 million year-ago.
Colgate-Palmolive reported 16% net sales growth for Hill’s in the second quarter, higher than any of its other operating segments over the same period. Organic growth was reported at 10.5% for the pet food division, while as-reported volume increased 4%, organic volume fell 3%, and pricing rose 13.5%.
The United States and European markets led organic sales growth for the pet food division in the second quarter, while organic sales declines were seen in Australia.
According to Colgate-Palmolive, notably higher costs for raw materials and packaging materials impacted operating profit as a percentage of net sales over the quarter, exacerbated by unfavorable mix and partially offset by cost savings and increased pricing. The pet food division accounted for 22% of Colgate-Palmolive’s total net sales over the three-month period.
Hill’s led the company in terms of net sales growth in the first six months of 2023 as well, according to the company. Net sales growth was up 19% and organic sales grew 12% over the first two quarters. As-reported volume was up 8% while organic volume fell 0.5%, and pricing rose 12.5% over the first six months of the year.
Recent capacity expansions for Hill’s include the purchase of three dry pet food plants formerly owned by Red Collar, the acqiusition of wet pet food manufacturing assets from Italy-based Nutriamo, and the upcoming opening of its wet pet food facility in Tonganoxie, Kan., which is expected to begin shipping product later this year.
The company noted it expects higher costs for raw and packaging materials later this year “by several hundred million dollars, primarily driven by agricultural costs at Hill’s and specialty chemicals,” but reported some decreases and stabilization in these costs in the second quarter. Across the company, logistics as a percentage of net sales declined in the second quarter, and the company expects the same for the full-year 2023.
Overall, Colgate-Palmolive reported net sales growth of 7.5% to $4.82 billion. Organic growth for the company reached 8%, supported by all business divisions and product categories. Diluted earnings per share was $0.60, down 17% from $0.72 in the second quarter of 2022.
Based on these results, the company raised its full-year guidance to reflect a positive impact from its recent pet food acquisitions. Colgate-Palmolive now expects net sales growth between 5% and 8% and organic sales growth between 5% and 7%.
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