NEW YORK — A new facility is expected to benefit Hill’s Pet Nutrition in 2024, specifically supporting innovation in wet pet food under its Science Diet and Prescription Diet brands, despite expectations of continued inflation for raw and packaging material costs in the coming year.
Parent company Colgate-Palmolive shared Jan. 26 its fourth-quarter and full-year results for the three- and 12-month periods ended Dec. 31, 2023, including its recent performance and future plans for the pet nutrition segment.
Net sales for Hill’s Pet Nutrition in the fourth quarter totaled $1.11 billion, up 5.1% from $1.06 billion in the fourth quarter of fiscal 2022. Fourth-quarter operating profit was $231 million for the segment, down slightly from $233 million in fiscal 2022.
Organic sales were up 4.5%, pricing rose 8.5%, and organic volume fell 4% over the quarter. Declines in volume in the fourth quarter were impacted by lower private label pet food volumes, the company explained.
For the full year, Hill’s Pet Nutrition clocked net sales at $4.29 billion, up 15.5% from $3.71 billion in fiscal 2022. Operating profit was $806 million, down 5.2% from $850 million year-over-year. Organic sales for the segment were up 10.5% for fiscal 2023, pricing rose 11%, and organic volume was down 0.5% or flat.
Operating profit for the Hill’s Pet Nutrition segment represented 20.7% of net sales in the fourth quarter, down 130 basis points year-over-year.
“While the pet food category has slowed, we are still gaining share in the pet specialty channel behind the strength of our science-driven portfolio and our investment behind brand building, with advertising spending at Hill’s up more than 100 basis points on a percent-to-sales basis for both the fourth quarter and the year,” the company shared.
According to Colgate-Palmolive, Hill’s Pet Nutrition accounted for 23% of the company’s total sales. Sales growth was largely led by business in the United States and Europe. The company continues to be impacted by elevated costs for raw and packaging materials, which in part contributed to a decline in operating profit as a percentage of net sales, the company stated.
In 2024, the company expects commodity prices to increase in the last six months of the year.
Startup costs associated with the company’s new manufacturing facility in Tonganoxie, Kan., as well as increased advertising investment, also contributed to a decline in operating profit.
“With the opening of our Tonganoxie plant last year, we have significant innovation planned for both our Science Diet and Prescription Diet wet food portfolios,” the company shared. “Our enhanced science-based offerings include alternate forms and packages like stews, mousses, pouches and multi-packs that have secured additional shelf space in the pet specialty channel.”
Overall, Colgate-Palmolive reported net and organic sales growth of 7.0% over the fourth quarter and 8.5% in the full fiscal year 2023.
“Over the past two years, we have been particularly focused on sustaining our strong organic sales growth, while rebuilding our margins and improving our cash flow performance,” said Noel Wallace, chairman, chief executive officer and president of Colgate-Palmolive, in the company’s fourth-quarter and full-year earnings call on Jan. 26. “We delivered on all three of those goals this year while still investing behind advertising to strengthen our brands and building and scaling capabilities to deliver future growth.”
Based on its fiscal 2023 performance, the company shared guidance for the full year 2024, including net sales growth between 1% and 4%, and organic sales growth between 3% and 5%.
Read more recent news from Hill’s Pet Nutrition here.
