Hill’s Pet Nutrition saw net sales and profits both increase during its first quarter in 2023; however, profits declined accordingly – similar to their final quarter 2022 results. Overall, Hill’s Pet Nutrition sales represented 22% of Colgate-Palmolive’s US$909 million revenue for the quarter ending March 31.
“This decrease is attributable to significantly higher raw and packaging material costs, an unfavorable mix primarily due to private label sales from previously disclosed acquisitions of pet food businesses, increased advertising investments and higher pricing with lower overhead expenses as part of funding-the-growth initiatives,” stated executives in a press release.
Hill’s organic sales growth was driven by North America and Europe in 2023’s first quarter. Net sales hit US$1,061 million – an increase of 17.2% year-on-year when sales had previously totaled US$872 million; operating profit during Q1 2023 totalled US$183 million, marking a decrease from 2022’s first quarter operating profit figures of US$189 million.
Colgate-Palmolive executives reported in a press release: “Hill’s achieved double-digit net and organic sales growth despite a difficult comparison, with organic volume growth accelerating to 2.5% as capacity additions from our recently acquired pet food businesses took effect; led by mid single digit volume gains here.”
Pricing increased 11.5% year-on-year as we looked to offset higher raw and packaging material costs, and operating margin at Hill’s continued to suffer due to acquired pet food businesses, cost increases impacting Hill’s gross margin, and double digit advertising support growth.”
Hill’s Pet Nutrition Acquisitions Affect Profitablitat In May 2022, Hill’s Pet Nutrition completed the acquisition of Nutriamo’s manufacturing facility located in Italy as their inaugural canine pet food manufacturer in Europe. This marked Hill’s inaugural European facility.
Colgate-Palmolive unveiled plans in August 2022 to acquire three dry pet food manufacturing facilities from Red Collar Pet Foods for US$700 Million in order to support global expansion of Hill’s Pet Nutrition business.
“To take full advantage of our expanded capacity – both through acquired facilities and our new wet food manufacturing plant set to open later this quarter in the U.S. – we are investing to drive further volume growth.”
“We anticipate raw and packaging material costs will rise by several hundred million dollars by 2023, driven by rising agricultural expenses at Hill’s and specialty chemicals,” states a statement released by Hill’s.