Colgate-Palmolive Co. Chief Executive Officer Noel Wallace said the company is “pleased” with the categories it competes in, including the Hill’s Pet Nutrition business that activist Dan Loeb is pressuring him to sell.
(Bloomberg) — Colgate-Palmolive Co. Chief Executive Officer Noel Wallace said the company is “pleased” with the categories it competes in, including the Hill’s Pet Nutrition business that activist Dan Loeb is pressuring him to sell.
Loeb’s Third Point took a stake in Colgate late last year and urged the company to divest the pet-food unit. In a phone interview Tuesday, Wallace said management and the board “constantly evaluate” the company’s portfolio, adding the consumer-goods giant is “very pleased” with its businesses, including pet food.
“Hill’s is obviously a rapidly growing segment,” Wallace said. “We love that category just like we love the oral-care and skin-health categories that are rapidly growing for us.”
Colgate has shelled out more than $1 billion to expand capacity at Hill’s and has invested “significantly” in advertising as well, Wallace said. Hill’s allows the company to leverage its science-focused innovation strategy and its expertise with securing endorsements from professionals, he added.
Pet food has proved to be a resilient category, with Hill’s managing to notch unit sales growth in three of the last four quarters even as prices have climbed. The unit accounted for 23% of the company’s sales in the quarter ended Dec. 31.
Read more: Colgate Bets $1 Billion on Pet Food
Wallace said some portfolio “pruning” may be possible, but overall Colgate likes its strategy.
“It is any company’s responsibility and the board’s responsibility always to continue to assess the long-term value generation of those categories,” Wallace said. “And right now the categories that we have are generating great value, good topline growth.”
Shares of Colgate-Palmolive, which gets the bulk of its $18 billion in annual sales from oral-care, personal-hygiene and home-cleaning products, were little changed at $73.30 Tuesday in New York. The stock fell 7.7% last year, compared with a 19% decline for the S&P 500.
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