Colgate-Palmolive Co. (NYSE:CL)

The total debt carrying amount exhibited a general upward trajectory between 2018 and 2022, increasing from US$ 6,366 million to US$ 8,766 million. This overall growth was characterized by two significant expansionary phases in 2019 and 2022, separated by a period of gradual deleveraging between 2020 and 2021.

Aggregate Debt Trends

Total debt increased by approximately 23.3% in 2019, reaching US$ 7,847 million. Following this spike, a downward trend was observed over the next two years, with the balance contracting to US$ 7,601 million in 2020 and further to US$ 7,245 million in 2021. This trend reversed sharply in 2022, as total debt rose to its five-year peak of US$ 8,766 million, representing a 20.8% increase over the previous year.

Long-term Debt Composition

Long-term debt, excluding the current portion, serves as the primary driver of the total debt carrying amount. This component rose from US$ 6,354 million in 2018 to US$ 7,333 million in 2019, remained relatively stagnant through 2020, and experienced a slight decrease to US$ 7,194 million in 2021. The most significant expansion occurred in 2022, where long-term debt climbed to US$ 8,741 million, indicating a strategic shift toward longer-term financing.

Short-term Debt and Current Obligations

Notes and loans payable demonstrated significant volatility, increasing from US$ 12 million in 2018 to a peak of US$ 260 million in 2019, before retreating to US$ 11 million by 2022. The current portion of long-term debt followed a similar pattern, spiking to US$ 254 million in 2019 and subsequently stabilizing at low levels, ranging between US$ 9 million and US$ 14 million from 2020 to 2022. This suggests that the vast majority of the debt load is structured as long-term obligations rather than immediate liabilities.

The total interest incurred between 2018 and 2022 exhibits a non-linear trajectory, characterized by relative stability in the early period, a significant contraction in 2021, and a partial recovery in 2022.

Total Interest Incurred Patterns

Total interest costs remained stable from 2018 to 2020, moving from US$ 195 million to US$ 184 million. A sharp decline was observed in 2021, with costs falling to US$ 120 million, the lowest level in the five-year period. This was followed by a rebound in 2022, where costs increased to US$ 172 million.

Interest Expense Analysis

Interest expense constitutes the vast majority of the total interest burden. This figure mirrored the overall trend, decreasing slightly from US$ 193 million in 2018 to US$ 183 million in 2020, before dropping precipitously to US$ 117 million in 2021. The 2022 fiscal year saw a significant increase back to US$ 167 million.

Capitalized Interest Trends

Interest capitalized remained a marginal component of total interest costs throughout the period. After staying between US$ 1 million and US$ 2 million from 2018 to 2020, a gradual upward trend emerged, with capitalized interest rising to US$ 3 million in 2021 and US$ 5 million in 2022.

The analysis of interest coverage ratios from 2018 to 2022 reveals a period of overall solvency strength characterized by a significant peak in 2021 followed by a notable contraction in 2022. Both the standard and adjusted ratios remained consistently high throughout the period, indicating a robust capacity to meet interest obligations from operating profits.

Interest Coverage Ratio (Without Capitalized Interest)

This metric experienced a slight decrease from 18.95 in 2018 to 18.19 in 2019, followed by a steady upward trend. The ratio rose to 20.93 in 2020 and reached a five-year peak of 27.38 in 2021. A significant decline was observed in 2022, where the ratio dropped to 16.93, the lowest level recorded in the five-year sequence.

Adjusted Interest Coverage Ratio (With Capitalized Interest)

The adjusted ratio mirrored the trajectory of the non-adjusted metric, starting at 18.75 in 2018 and dipping slightly to 18.10 in 2019. It subsequently climbed to 20.82 in 2020 and peaked at 26.70 in 2021, before retreating to 16.44 in 2022.

Comparative Trend Analysis

The marginal difference between the coverage ratio without capitalized interest and the adjusted ratio indicates that capitalized interest has had a negligible impact on the overall debt service profile. While the sharp decrease in 2022 suggests a reduction in the margin of safety, the absolute values of both ratios remain well above critical thresholds, reflecting a continued ability to service debt comfortably.