Original Source: FD (FAIR DISCLOSURE) WIRE
AMY: So with that, I'm pleased to introduce Ian Cook, CEO elect of Colgate. As I'm sure you all know, Ian has been the President and COO of Colgate since 2005. And he'll be taking over as the CEO in July. Ian clearly has big shoes to fill, but we expect a very smooth transition, since he's been groomed for this spot for many years. I think it's particularly notable that he's already made a name for himself and is already very well known by the investment community, even while Rueben has remained the CEO, and I think we can probably all appreciate how difficult that must have been.
Before handing this over to Ian, I want to remind you that Colgate is our top pick with the HHPC space and it's rated "conviction buy." We're particularly excited about the impact that Colgate's business planning will have on the Company's results over the next several years and we believe that this plan will allow the current strong margin growth to continue for longer than many on the street currently believe. We also believe that there could have significant benefits to sales and volume growth that the street may not be fully appreciating.
Now here is Ian to tell us more about current developments at Colgate.
IAN COOK, PRESIDENT AND COO, COLGATE-PALMOLIVE: Good morning everyone and welcome to this delightfully early Colgate fireside chat. Before turning the floor open to questions, I will go through some brief introductory slides just to put everybody on the same page, talk about our results, where we are with our business building and restructuring program, and briefly highlight the strategy that we have been deploying over the last few years and we fully expect to us to our ten-year, 2010 goals.
In terms of business results, we are meeting the stated goals we have our business worldwide. In the year 2006 you can cast your eyes down the summary indicators of the sales growth driven by 7% volume, gross profit increase of 110 basis points for the year, and the operating profit leading to double-digit EPS growth. A performance rate we maintained in the first quarter of 2007 with results recently announced, volume here around 9%, the same increase in gross profit, and operating profit, again, leading to double-digit EPS growth. And these were the goals that we had, I think, fairly well communicated that we are operating against currently and for the next several years; that we will deliver volume in the five to eight range, which you will recall is up from our historical four to seven range; that we would expand gross margin between 75 and 125 basis points incrementally each year, again up from our previous goals of 50 to 100 basis points, the combination of that flowing through both advertising and profitability, continuing to deliver sustainable double-digit EPS growth.
And the market shares, which I guess are another way of indicating the health of the business, continues to be strong as well. On our flagship toothpaste business, our global market share, you can see, has been making steady progress over the last 12 years, edging towards 43% today. And, importantly for us, in the large manual toothbrush segment, which is three-quarters of the world toothbrush business, having moved ourselves to a leadership position against a lead competitor, which is combined Procter and Gillette business. So good share progress underpinning the volume growth and the share is driven by, we believe, good quality marketing, but also a strong pipeline of new products. Most recently here in the United States, but it is going around the world, another variant of Colgate Total Advanced Clean to maintain that just leaving the dentist feeling of clean, an interesting concept that we are testing in the UK and Australia, which is a weekly clean product from Colgate Total. You use it once a week on top of your regular toothpaste regimen, highly accretive from a margin point of view, premium price, professionally endorsed, patented product. We'll see how consumers change their behavior to adopt this additional regimen.
Taking the 360 degree toothbrush, which has been very successful for us, into the [high-growth] power segment, with Colgate 360 power. And in the personal care category and the most important skin cleansing segment, a patented line of body cleansing products, liquid hand soap, body wash, and bar soap, which is driving our number two global share position in this business.
So good financial fundamentals, continued expansion in gross profit, and new products, and marketing driving business building.
In terms of our structuring plan, these were the objectives that we set back in 2004, when we announced the restructuring; that we would accelerate our funding the growth programs to further increase gross profit; that we would increase organizational resources behind marketing, sales, and new products, particularly in those countries we designated as high potential. And often people have focused on the restructuring, less on the business building side, but we have definitely been deploying this program against both of those objectives. And very importantly, and as Amy mentioned in her introductory remarks, a real focus on increasing the effectiveness of our commercial investment, which is the Colgate business planning initiative. Where are we? Well, we're at the midpoint of a four-year program. We are on track to deliver the original program and I will remind you of what that was. But we have increased the program to capture some additional opportunities in the area of organization and facility rationalization within the same time frame. And if you go back, the original restructuring plan that we announced had after tax charges of between $550 and $650 million for after-tax savings in the 250 to 300 range. And with the additional programs that announced with our earnings release, that takes the range to now 675 to 775. In other words, an extra $125 million to deliver an extra $50 million of savings with the range now $300 to $350 million. And, very …