In 2024, Hill’s Pet Nutrition is poised to gain advantages from a newly established facility, specifically tailored to drive innovation in wet pet food for its Science Diet and Prescription Diet brands. Despite forecasts of ongoing inflation in raw and packaging material costs, Colgate-Palmolive, the parent company, released its fourth-quarter and full-year results on January 26, outlining the current performance and forthcoming strategies for the pet nutrition segment.
During the fourth quarter, Hill’s Pet Nutrition achieved net sales of $1.11 billion, marking a 5.1% increase from the corresponding period in fiscal 2022. Operating profit for the segment in the fourth quarter amounted to $231 million, a marginal decrease from the $233 million recorded in fiscal 2022. Organic sales witnessed a 4.5% upswing, accompanied by an 8.5% increase in pricing, while organic volume experienced a 4% decline, attributed to lower private label pet food volumes.
For the entire year, Hill’s Pet Nutrition reported net sales of $4.29 billion, signifying a 15.5% increase from fiscal 2022. Operating profit for the full year amounted to $806 million, reflecting a 5.2% decrease from the previous year. Fiscal 2023 saw a 10.5% increase in organic sales for the segment, with pricing rising by 11%, while organic volume remained relatively flat.
Hill’s Pet Nutrition’s operating profit represented 20.7% of net sales in the fourth quarter, down 130 basis points year-over-year. Despite a slowdown in the pet food category, the company shared its ongoing market share growth in the pet specialty channel, crediting it to the robustness of their science-driven portfolio and increased investment in brand building.
Colgate-Palmolive noted that Hill’s Pet Nutrition contributed to 23% of the company’s total sales, with growth primarily driven by business in the United States and Europe. Elevated costs for raw and packaging materials had an impact, resulting in a decline in operating profit as a percentage of net sales.
Looking ahead to 2024, Colgate-Palmolive anticipates an increase in commodity prices in the latter half of the year. Startup costs linked with the new manufacturing facility in Tonganoxie, Kan., and amplified advertising investment also contributed to the decline in operating profit.
The company underscored its commitment to significant innovation for both Science Diet and Prescription Diet wet food portfolios, featuring diverse offerings such as stews, mousses, pouches, and multi-packs. These innovations, supported by the opening of the Tonganoxie plant last year, aim to secure additional shelf space in the pet specialty channel.
Colgate-Palmolive reported overall net and organic sales growth of 7.0% in the fourth quarter and 8.5% for the full fiscal year 2023. Noel Wallace, Chairman, CEO, and President of Colgate-Palmolive, emphasized the company’s dedication to sustaining organic sales growth, margin rebuilding, and improved cash flow performance over the past two years.
Building on its fiscal 2023 performance, the company provided guidance for the full year 2024, projecting net sales growth between 1% and 4%, and organic sales growth between 3% and 5%.
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