Hill’s Pet Nutrition achieves 15% growth in net sales for 2023

USA- Hill’s Pet Nutrition, a key segment of Colgate-Palmolive, has reported a substantial increase in net sales for the fiscal year 2023, showcasing robust performance despite challenges in raw material costs and operating profit margins. 

The parent company disclosed the results on January 26, providing insights into Hill’s Pet Nutrition’s Q4 and full-year financial performance.

In the fourth quarter of 2023, Hill’s Pet Nutrition recorded net sales totaling US$1.11 billion, a notable 5.1% increase from US$1.06 billion in the same quarter of the previous fiscal year. Although the fourth-quarter operating profit for the segment slightly decreased to US$231 million from US$233 million in fiscal 2022, the overall performance remained strong.

Organic sales exhibited a growth of 4.5%, with pricing rising by 8.5%. However, organic volume experienced a 4% decline during the quarter. The decrease in volume was attributed to lower private-label pet food volumes.

For the full fiscal year 2023, Hill’s Pet Nutrition achieved net sales of US$4.29 billion, marking an impressive 15.5% increase from US$3.71 billion in fiscal 2022. Operating profit for the segment stood at US$806 million, showing a 5.2% decrease from the previous year. 

Organic sales for the fiscal year demonstrated a robust growth of 10.5%, with pricing rising by 11%. Despite this, organic volume remained relatively stable, experiencing a marginal decline of 0.5%.

Hill’s Pet Nutrition’s operating profit represented 20.7% of net sales in the fourth quarter, down 130 basis points year-over-year. The company acknowledged the challenges posed by elevated costs for raw and packaging materials, contributing to a decline in operating profit as a percentage of net sales.

Colgate-Palmolive highlighted that Hill’s Pet Nutrition accounted for 23% of the company’s total sales, with sales growth primarily driven by business in the United States and Europe.

Despite expectations of continued inflation for raw and packaging material costs in 2024, Hill’s Pet Nutrition remains optimistic about its future. The company highlighted a new manufacturing facility in Tonganoxie, Kan., expected to support innovation in wet pet food under its Science Diet and Prescription Diet brands. 

This includes plans for alternative forms and packages like stews, mousses, pouches, and multi-packs, securing additional shelf space in the pet specialty channel.

Noel Wallace, Chairman, CEO, and President of Colgate-Palmolive, shared the company’s strategic focus on sustaining organic sales growth, rebuilding margins, and improving cash flow performance. 

Based on the fiscal 2023 performance, the company guided 2024, projecting net sales growth between 1% and 4%, and organic sales growth between 3% and 5%. 

Overall, Colgate-Palmolive reported net and organic sales growth of 7.0% over the fourth quarter and 8.5% for the full fiscal year 2023.

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