Colgate-Palmolive reported slightly higher third-quarter earnings on Thursday as it spent more on advertising and posted strong sales growth in Latin America, yet failed to show robust growth at home. Its shares fell 2 percent in morning trading. The toothpaste maker still expects its annual profit to rise 4.5 percent to 5.5 percent, assuming foreign exchange rates remain fairly stable. It is targeting double-digit earnings-per- share growth for 2014, excluding restructuring charges.
In North America, organic sales rose just 1.5 percent, after rising 5 percent in the second quarter and 2.5 percent in the third quarter of 2012. Still, North American operating profit jumped 15 percent as the company continued its long-standing cost-cutting program and advertising spending decreased due to the timing of product launches. "The slowdown in North American sales raises questions," BMO Capital Markets analyst Connie Maneaty said, adding that Colgate was able to offset operating weakness in Latin America, its largest market, with profit growth in North America and Europe/South Pacific.
In Latin America, which accounts for 29 percent of Colgate's sales, organic sales rose 9.5 percent, a stronger showing than in the first two quarters of the year. Operating profit in Latin America declined 5 percent due to higher costs in Venezuela and elsewhere. Business in Venezuela has been hurt by February's devaluation of the nation's bolivar. Excluding restructuring charges, Colgate earned 73 cents per share, matching analysts' expectations.
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