Colgate-Palmolive Co. (NYSE:CL)

The data reveals notable trends in both current and deferred income tax expenses over the five-year period from 2018 to 2022.

Current Tax Provision

The current tax provision shows fluctuations throughout the period. It decreased from 853 million USD in 2018 to 755 million USD in 2019, then increased significantly to 930 million USD in 2020. The amount subsequently declined to 786 million USD in 2021 before rising again to 856 million USD in 2022. Overall, the current tax provision does not exhibit a consistent upward or downward trend but reflects a pattern of variability with a peak in 2020.

Deferred Tax Provision (Benefit)

The deferred tax provision displays a contrasting trend compared to the current tax provision. It started with a benefit of 53 million USD in 2018, decreased sharply to 19 million USD in 2019, and then turned into significant negative values in subsequent years: -143 million USD in 2020, -37 million USD in 2021, and -163 million USD in 2022. This progression indicates an increasing deferred tax benefit impact, especially pronounced in 2020 and 2022, suggesting changes in the timing or recognition of deferred tax liabilities or assets.

Provision for Income Taxes

The total provision for income taxes, the sum of current and deferred tax provisions, exhibited a gradual decline across the period. Starting at 906 million USD in 2018, it dropped to 774 million USD in 2019, then marginally increased to 787 million USD in 2020 before decreasing further to 749 million USD in 2021 and reaching 693 million USD in 2022. This overall downward trend suggests a reduction in total income tax expense, driven primarily by the increasing deferred tax benefits offsetting the current tax provisions.

In summary, while the current tax provisions experienced fluctuations without a clear trend, the deferred tax benefits have grown substantially in the latter years, leading to a consistent decrease in the total income tax provision by 2022 relative to 2018. This shift may reflect significant deferred tax adjustments influencing the company's effective tax expense over the analyzed period.

The analysis of the tax-related financial data for the periods ending December 31, 2018 through December 31, 2022 reveals several noteworthy trends and fluctuations in the effective tax rate and its components.

United States Statutory Tax Rate

The statutory tax rate remained consistent at 21% across all reported years, indicating a stable baseline for federal corporate taxation.

State Income Taxes, Net of Federal Benefit

The state income tax percentage relative to the effective rate showed modest variation, starting at 1% in 2018, dipping to 0.6% in 2019, and fluctuating modestly thereafter, ending at 0.8% in 2022. This suggests minor impacts from state-level tax changes or benefits over the period.

Earnings Taxed at Rates Other than the U.S. Statutory Rate

This component declined from 5.6% in 2018 to 2.7% in 2021, indicating reducing earnings subject to non-U.S. tax rates, but then increased to 5.4% in 2022, signaling a potential shift in the geographic earnings mix or changes in foreign tax jurisdictions affecting overall tax burden.

Foreign Tax Credit Carryback

This item was recorded only in 2018 at -1.7%, with no subsequent data, suggesting a one-off benefit from foreign tax credits in that year.

Benefit for Foreign Tax Matters

The benefit rose negatively from -0.4% in 2018 to -2% in 2020 before disappearing from reported data, indicating increased foreign tax benefits initially, which later ceased or were absorbed into other tax components.

Non-Deductible Goodwill Impairment Charges

This appeared in 2021 and 2022 at 2.2% and 1.9% respectively, reflecting impairments that increased the effective tax rate during these years by introducing non-deductible expenses.

Foreign-Derived Intangible Income Benefit

There was a clear trend of increasing benefit over time, growing more negative from -1.1% in 2018 to -2.6% in 2022. This trend indicates progressively larger benefits being realized from foreign-derived intangible income provisions, thereby reducing the effective tax rate.

Other, Net

This category stayed relatively stable around minor negative values between -0.1% and -0.6%, indicating small but consistent other tax effects on the overall rate.

Effective Tax Rate Before U.S. Tax Reform Charge

The effective tax rate before the charge for U.S. tax reform exhibited fluctuation over the period: it started at 23.9% in 2018, decreased to 21.6% in 2020, rose to 24.3% in 2021, and further increased to 26.1% in 2022. This indicates varying tax impacts over time, reflecting changes in earnings composition, tax benefits, and charges.

Charge for U.S. Tax Reform

This was recorded only in 2018 at 2.3%, contributing to a higher overall effective tax rate that year. Its absence thereafter suggests that the charge was a one-time event related to changes in U.S. tax legislation.

Overall Effective Tax Rate

The overall effective tax rate decreased from a high of 26.2% in 2018, driven by the tax reform charge, to 21.6% in 2020. Subsequently, it rose again to 24.3% in 2021 and further to 26.1% in 2022. This pattern suggests that while initial post-reform years benefited from tax rate reductions or credits, later years experienced upward pressure on the effective rate, potentially from increased non-deductible charges and shifts in taxed income composition.

The data reveals several notable trends across the various financial items over the five-year period.

Pension and Other Retiree Benefits

This liability showed an initial increase from 354 million US dollars in 2018 to a peak of 404 million in 2020, followed by a significant decline to 214 million by 2022, suggesting beneficial changes in obligations or funding status.

Tax Credits and Tax Loss Carryforwards

Values remained relatively stable around 89-93 million from 2018 to 2019, then experienced a drop to 42 million in 2020. Afterwards, they increased substantially to 169 million by 2022, indicating improved tax position or utilization of losses and credits.

Lease Liabilities

First reported in 2019 at 152 million, these liabilities gradually declined each year to 125 million in 2022, reflecting either lease payments, terminations, or renegotiations reducing obligations.

Accrued Liabilities

These liabilities rose from 180 million in 2018 to a peak of 250 million in 2020, then decreased steadily to 218 million in 2022, possibly due to changes in expense recognition or settlement of obligations.

Stock-Based Compensation

A downward trend is noticeable from 95 million in 2018 to 73 million in 2020, with minor fluctuations thereafter, indicating a reduction or stabilization in expense related to equity compensation.

Research and Experimentation Capitalization

This item appears only in 2022 at 58 million, which could imply a strategic change in accounting treatment or an increase in capitalized research expenditures during this year.

Other (Liabilities or Assets)

The reported "Other" category fluctuated significantly, with a sharp decrease from 164 million in 2018 to 52 million in 2022, following inconsistent intermediate values, indicating possible reclassification or reduction in miscellaneous balances.

Deferred Tax Assets

Displayed an upward trend from 882 million in 2018 to 1038 million in 2020, with a slight decline to 909 million by 2022, suggesting relatively stable future tax benefits with some minor reductions.

Valuation Allowance

This contra account improved markedly from -54 million in 2018 to -11 million in 2020, then reversed sharply to -129 million by 2022. This suggests a reassessment of realizability of deferred tax assets, increasing the allowance substantially in recent years.

Net Deferred Tax Assets

After climbing from 828 million in 2018 to a peak of 1027 million in 2020, this figure declined to 780 million in 2022, mainly driven by movements in valuation allowances and deferred tax asset values.

Goodwill and Intangible Assets

Reported as negative values (likely indicating accumulated impairment or contra accounts), these declined from -344 million in 2018 to -405 million in 2022, with some volatility in between, signaling ongoing amortization or impairment of intangible assets.

Property, Plant and Equipment (PP&E)

Also reported negatively, PP&E showed a slight decrease until 2020, followed by an increase in negative balance to -375 million by 2022, suggesting growing depreciation or asset disposals exceeding additions.

Right-of-Use Assets

First recorded in 2019 at -135 million, these assets steadily decreased in magnitude to -118 million in 2022, aligning with the trend in lease liabilities and possibly reflecting amortization of leased assets.

Deferred Withholding Tax

This liability deepened from -181 million in 2018 to -207 million in 2019 but generally declined thereafter to -103 million in 2022, indicating reduced withholding tax obligations or changes in tax policy application.

Other Deferred Tax Liabilities

This category decreased consistently from -75 million in 2018 to -27 million in 2022, suggesting diminishing deferred tax liabilities under other classifications.

Deferred Tax Liabilities

Overall, these liabilities increased sharply from -911 million in 2018 to a peak of -1289 million in 2019, then gradually decreased to -1028 million by 2022, reflecting adjustments in taxable temporary differences or tax rates.

Net Deferred Income Taxes

This figure exhibited pronounced fluctuations, declining from -83 million in 2018 to -330 million in 2019, partially recovering to -135 million in 2020, and then worsening again to -248 million in 2022, indicating variability in net deferred tax obligations over the period.

The financial data over the five-year period reveals notable trends in deferred tax assets and liabilities.

Deferred Tax Assets

The deferred tax assets increased significantly from 152 million US dollars in 2018 to 291 million US dollars in 2020, representing nearly a doubling over two years. However, this upward trend did not continue through to 2022; instead, there was a decline to 193 million in 2021 and a further drop to 135 million in 2022. This indicates a peak in 2020 followed by a substantial reduction, suggesting possible changes in the company's tax position or adjustments in the recognition of deferred tax assets.

Deferred Tax Liabilities

The deferred tax liabilities exhibited a different pattern. Starting at 235 million US dollars in 2018, they markedly increased to 507 million in 2019, more than doubling in one year. This was followed by a decrease over the next three years, arriving at 383 million in 2022. The initial sharp rise followed by a moderate decline implies fluctuations in timing differences of taxable income recognition or changes in tax rates or tax laws impacting liabilities during this period.

Comparative Analysis

Throughout the period, deferred tax liabilities consistently exceeded deferred tax assets. Both accounts peaked at different times—assets peaked in 2020, liabilities in 2019. The subsequent declines in both figures after their respective peaks signify possible reconciliation efforts or operational changes affecting deferred tax balances.

The financial data over the five-year period demonstrates several notable trends in the company's assets, liabilities, shareholders' equity, and net income, both on a reported and adjusted basis.

Total Assets

Reported total assets increased from 12,161 million US dollars in 2018 to a peak of 15,920 million in 2020, followed by a slight decrease to 15,040 million in 2021, and then a recovery to 15,731 million in 2022. Adjusted total assets follow a very similar pattern, rising from 12,009 million in 2018 to 15,629 million in 2020, dipping in 2021 to 14,847 million, and increasing again in 2022 to 15,596 million. Overall, the asset base expanded notably between 2018 and 2020, with a minor contraction and subsequent recovery in the last two years.

Total Liabilities

Reported liabilities trend upward from 11,964 million in 2018 to a high of 14,819 million in 2020, then decline to 14,069 million in 2021 before rising again to 14,925 million in 2022. Adjusted liabilities exhibit a similar path, increasing from 11,729 million to 14,393 million between 2018 and 2020, then decreasing to 13,674 million and rising to 14,542 million in the final year. This pattern suggests the company has managed liabilities in a manner consistent with fluctuations in asset levels, maintaining a relatively stable level after the peak in 2020.

Shareholders’ Equity

Reported shareholders’ equity shows significant volatility, starting from a negative position of -102 million in 2018, shifting to positive 117 million in 2019, and climbing to a high of 743 million in 2020. It then decreases to 609 million in 2021 and further down to 401 million in 2022. Adjusted equity follows a similar but generally higher pattern, starting slightly negative at -19 million in 2018, then 447 million in 2019, peaking at 878 million in 2020, followed by decreases to 811 million and 649 million in the subsequent years. The equity position improved markedly between 2018 and 2020 but faced a declining trend thereafter, indicating possible pressures on residual interest after debt obligations.

Net Income

The reported net income attributable to the company shows a peak in 2020 at 2,695 million, having decreased slightly from 2,400 million in 2018 to 2,367 million in 2019. After 2020, net income declines steadily to 2,166 million in 2021 and further down to 1,785 million in 2022. Adjusted net income closely mirrors this trend, with a peak in 2020 at 2,552 million, followed by decreases to 2,129 million and 1,622 million in the last two years. This downward trend post-2020 suggests challenges or changes in earnings capacity or operational conditions impacting profitability toward the end of the observed period.

In summary, the company experienced growth in assets and liabilities up to 2020, accompanied by an improvement in shareholders’ equity and net income. However, the subsequent years show a contraction in equity and net income, despite a relatively stable asset and liability base. The adjusted figures consistently parallel the reported values, confirming the trends are robust to income tax adjustments.

Net Profit Margin Trends

The reported net profit margin exhibited a declining trend from 15.44% in 2018 to 9.93% in 2022, with a notable decrease between 2020 and 2021. The adjusted net profit margin similarly decreased from 15.78% in 2018 to 9.03% in 2022, maintaining a close relationship to the reported margin but consistently showing slightly lower values in later years.

Total Asset Turnover Trends

The reported total asset turnover ratio decreased sharply from 1.28 in 2018 to 1.04 in 2019, followed by a slight further decline to 1.03 in 2020. A moderate recovery was observed in 2021 and 2022, rising to 1.16 and 1.14 respectively. Adjusted total asset turnover figures tracked closely with reported values, showing marginally higher turnover in most years and following the same overall pattern.

Financial Leverage Trends

Reported financial leverage data for 2018 is missing; however, from 2019 onwards, the ratio shows considerable volatility with a very high value of 128.5 in 2019 that sharply declines to 21.43 in 2020, then fluctuates moderately to 24.7 in 2021 before increasing again to 39.23 in 2022. Adjusted financial leverage ratios present a more moderate range over the same period, starting from 33.24 in 2019 and declining to 17.8 in 2020, followed by a slight increase to 18.31 in 2021 and a further rise to 24.03 by 2022.

Return on Equity (ROE) Analysis

Beginning in 2019, reported ROE figures displayed exceptionally high and volatile values, peaking at 445.14% in 2022 after a low of 355.67% in 2021. Adjusted ROE values were lower but similarly volatile, decreasing steadily from 533.78% in 2019 to 249.92% in 2022. The sharp divergence between reported and adjusted ROE highlights significant effects arising from the annual reported and deferred income tax adjustments.

Return on Assets (ROA) Trends

The reported ROA decreased from 19.74% in 2018 to 11.35% in 2022, with the largest drop occurring between 2020 and 2022. Adjusted ROA followed this downward trend more gradually, decreasing from 20.43% in 2018 to 10.4% in 2022. Both reported and adjusted ROA maintained a reasonably close relationship throughout the period, reflecting a consistent decline in asset profitability.

Overall Observations

The data indicates an overall decline in profitability ratios (net profit margin and ROA) over the five-year period. Asset turnover ratios experienced an initial decline followed by partial recovery. Financial leverage ratios exhibit notable volatility, with reported figures showing extraordinary peaks compared to adjusted ones. This volatility appears to substantially influence ROE measures, causing pronounced fluctuations in reported values relative to adjusted ones. The adjustments for deferred income taxes appear to moderate these fluctuations, providing a more conservative representation of financial leverage and equity returns.

Net Income Trends

The reported net income attributable to the company exhibited a fluctuating pattern over the five-year period. It began at 2400 million US dollars in 2018 and marginally declined to 2367 million in 2019. There was a notable increase in 2020, reaching 2695 million, followed by a decrease in the subsequent years, dropping to 2166 million in 2021 and further declining to 1785 million in 2022. The adjusted net income similarly followed this trajectory, starting at 2453 million in 2018, slightly decreasing to 2386 million in 2019, rising again to 2552 million in 2020, then falling to 2129 million in 2021 and decreasing more sharply to 1622 million in 2022.

Net Profit Margin Analysis

The reported net profit margin showed a general downward trend across the period. It started at 15.44% in 2018 and slightly reduced to 15.08% in 2019. It rebounded to 16.36% in 2020 but diminished substantially in the subsequent years, reaching 12.43% in 2021 and declining further to 9.93% in 2022. The adjusted net profit margin displayed a somewhat consistent pattern with reported margins but at slightly different levels. It was 15.78% in 2018, slowly decreased to 15.20% in 2019, then noticeably decreased to 15.49% in 2020, followed by declines to 12.22% in 2021 and 9.03% in 2022.

Overall Financial Insights

The data indicates that both reported and adjusted net income and profit margins experienced peak values around 2020, followed by a downward trend through 2021 and 2022. This suggests that the company faced challenges reducing profitability during this period. The adjustments to net income and profit margin slightly moderated the reported figures but retained the same overall trend. The decline in net profit margins from above 15% to below 10% over five years points to increasing costs or decreasing operational efficiency relative to revenue, which may warrant further operational review and strategic response.

The data presents a consistent overview of total assets and asset turnover ratios over a five-year period.

Total Assets

Reported total assets increased from US$12,161 million in 2018 to a peak of US$15,920 million in 2020, representing steady growth over the first three years. However, there was a decline in 2021 to US$15,040 million before a moderate recovery in 2022 to US$15,731 million.

Adjusted total assets follow a very similar pattern, starting at US$12,009 million in 2018, rising to US$15,629 million in 2020, declining slightly in 2021 to US$14,847 million, and then increasing modestly to US$15,596 million in 2022.

The slight difference between reported and adjusted total assets remains consistently small across all periods, indicating minimal adjustments related to deferred income tax considerations.

Total Asset Turnover Ratios

Reported total asset turnover ratio shows a decreasing trend from 1.28 in 2018 to a low of 1.03 in 2020, indicating a reduction in efficiency in generating revenue from assets during this period. This is followed by a rebound to 1.16 in 2021 and a marginal decrease to 1.14 in 2022.

Adjusted total asset turnover ratios closely mirror the reported ratios, starting at 1.29 in 2018 and following the same downward trend to 1.05 in 2020. The recovery pattern is also similar, reaching 1.17 in 2021 and decreasing slightly to 1.15 in 2022.

The minimal differences between reported and adjusted turnover ratios suggest that the tax deferred adjustments have limited impact on asset utilization measures.

Overall, the data indicates a phase of growth in asset base up to 2020, followed by a modest contraction and stabilization thereafter. Asset efficiency showed a decline through 2020 but experienced recovery in subsequent years. The consistency between reported and adjusted figures supports the reliability of these observations despite income tax adjustments.

The data reveals several notable trends regarding the financial position and leverage of the company over the five-year period.

Total Assets

Both reported and adjusted total assets exhibit a rising trend from 2018 through 2020, increasing from roughly 12,000 million US dollars to around 15,900 million US dollars. However, in 2021, both measures experience a slight decline before recovering moderately in 2022. This indicates overall asset growth with some fluctuations, possibly reflecting changes in asset composition or economic conditions.

Shareholders’ Equity

Reported shareholders’ equity starts at a negative value in 2018 and turns positive in 2019, increasing substantially in 2020. Nonetheless, a decline is noted in subsequent years, with equity decreasing each year through 2022. Adjusted shareholders’ equity follows a similar pattern but consistently reports higher positive values, suggesting adjustments have increased equity values. The declining trend after 2020 merits attention, as it may indicate pressures on retained earnings or other equity components.

Financial Leverage

Financial leverage ratios demonstrate significant variation. The reported financial leverage is unavailable for 2018 but spikes dramatically to 128.5 in 2019, then sharply declines in 2020 and increases gradually in the following years, reaching 39.23 by 2022. In contrast, adjusted financial leverage starts at 33.24 in 2019 and shows a steady downward trend until 2020, followed by slight increases thereafter, culminating at 24.03 in 2022. The disparity between reported and adjusted leverage values suggests that adjustments reduce perceived financial risk. Overall, leverage remains elevated but shows some stabilization after 2019.

In summary, the asset base has generally grown over the period with minor fluctuations, while shareholders’ equity improved markedly by 2020 but then declined. Financial leverage experienced sharp swings, with adjusted figures indicating relatively lower leverage compared to reported ones. These trends should be monitored to understand the underlying causes and their implications for financial stability.

The analysis of the annual financial data reveals several important trends relating to net income, shareholders' equity, and return on equity (ROE) for Colgate-Palmolive Co. over the period from 2018 to 2022.

Net Income Trends

Reported net income exhibited a fluctuating but overall declining trend over the analyzed period. After peaking at 2,695 million US dollars in 2020, reported net income dropped significantly to 2,166 million in 2021, followed by a further decline to 1,785 million in 2022. Adjusted net income mirrored this pattern, with a peak of 2,552 million in 2020 and successive decreases to 2,129 million in 2021 and 1,622 million in 2022. The adjusted figures are consistently slightly higher than reported net income, indicating some level of positive adjustments in the reported results.

Shareholders’ Equity Trends

Shareholders’ equity showed substantial variability with notable increases followed by declines from 2018 through 2022. Reported shareholders’ equity started with a negative balance of -102 million in 2018, then rose markedly to positive 743 million by 2020. This was followed by a decrease to 609 million in 2021 and a further drop to 401 million in 2022. Adjusted shareholders’ equity follows a similar pattern but consistently shows higher values than the reported data, starting from -19 million in 2018 and reaching a peak of 878 million in 2020 before declining to 649 million in 2022. The movement suggests some record adjustments improve equity on an ongoing basis but overall equity levels decreased after 2020.

Return on Equity (ROE) Trends

ROE displayed extreme volatility across the period. Reported ROE values, available from 2019 onwards, initially surged dramatically to 2023.08% in 2019, followed by sustained high but slightly varying values above 350% in the subsequent years, peaking at 445.14% in 2022. Adjusted ROE followed a somewhat different trajectory: a highly elevated 533.78% in 2019 dropped progressively to 249.92% in 2022. These extraordinary ROE figures are atypical and suggest that both numerator and denominator values could have atypical characteristics, such as low equity bases or one-time adjustments impacting net income or equity.

Overall, the data depict a company that experienced peak profitability and equity levels around 2020, followed by noticeable declines thereafter. Both reported and adjusted figures confirm these trends, with adjustments somewhat smoothing the fluctuations but not altering the general pattern. The extremely high ROE figures reflect significant volatility possibly driven by low or fluctuating equity values rather than proportional changes in profitability alone. These patterns may warrant further investigation into balance sheet composition, accounting policies, or extraordinary items affecting these metrics during the period.

The financial data reveals several notable trends in profitability and asset management over the period from 2018 to 2022. Both reported and adjusted net incomes attributable to the company have shown a general decline after peaking in 2020. Reported net income increased from 2400 million USD in 2018 to 2695 million USD in 2020, then decreased steadily to 1785 million USD by 2022. Adjusted net income followed a similar pattern, rising to 2552 million USD in 2020 before dropping to 1622 million USD in 2022.

Total assets, whether reported or adjusted, exhibit growth between 2018 and 2020, with reported total assets growing from 12161 million USD in 2018 to 15920 million USD in 2020. However, asset levels then slightly declined in 2021 and showed a moderate recovery in 2022, ending at 15731 million USD reported and 15596 million USD adjusted. Adjusted total assets consistently track just below reported values, indicating adjustments have a relatively small impact on asset valuation.

Return on assets (ROA) demonstrates a downward trend across both reported and adjusted measures. Reported ROA declined from 19.74% in 2018 to 11.35% in 2022, while adjusted ROA showed a similar decline from 20.43% to 10.4% over the same period. This decrease in ROA suggests a reduction in efficiency in generating income from the asset base. The sharper decline in adjusted ROA in 2022 relative to earlier years may highlight the growing impact of adjustments on profitability measures.

Net Income Trends

Both reported and adjusted net income peaked in 2020, followed by a sustained decline through 2022, indicating a potential erosion in overall profitability after 2020.

Asset Trends

Total assets increased notably until 2020, then experienced slight contraction in 2021 and mild recovery in 2022, suggesting some volatility or strategic shifts in asset holdings.

Return on Assets (ROA)

ROA showed a clear declining trend over five years in both reported and adjusted forms, pointing to diminishing returns on the company’s asset investments and a potential need to enhance asset utilization efficiency.

Adjustment Impacts

Adjustments to net income and assets produce modest differences that remain fairly consistent over the years; adjusted metrics are generally slightly lower than reported, reflecting conservative financial adjustments.

Overall, the data indicates a period of strong financial performance up to 2020, followed by lesser net income generation and decreasing asset efficiency in subsequent years. The company might need to investigate underlying causes for these declines and consider strategies to improve asset productivity and profitability going forward.