Colgate-Palmolive Co posted a better-than-expected quarterly profit, aided by growth in emerging markets and price increases, but indicated that profit this year may fall short of previous expectations. Colgate said on Thursday that it is comfortable with Wall Street profit forecasts for the first quarter and 2009.
But analysts, on average, expect Colgate's earnings per share to rise 9.3 percent this year, while Colgate predicted in late October double-digit earnings-per-share growth. "Colgate's financial control is impressive," BMO Capital Markets analyst Connie Maneaty said in a note to clients. "However, its lack of guidance signals the uncertainty of the environment."
Colgate and other household product makers have sought to keep up interest in their brands as shoppers opt for lower-priced items in the recession. Colgate said its namesake toothpaste gained market share in countries including the United States, Mexico, Brazil and China during the quarter. The company is bringing out new toothpastes, Speed Stick deodorants and other products to attract US shoppers.
The company also expects to start seeing the benefit of lower commodity and oil costs in the first and second quarters, helping to alleviate the pressure of a stronger US dollar, which lowers the value of international sales. Colgate, which also makes Irish Spring soap and Hill's pet food, said profit rose to $497 million, or 94 cents per share in the fourth quarter, from $414.9 million, or 77 cents per share, a year earlier.
Excluding restructuring charges, Colgate earned $1 per share, topping analysts' average forecast of 98 cents per share, according to Reuters Estimates. Sales rose 0.5 percent to $3.66 billion. Volume rose 1 percent. In Latin America, the company's largest unit, sales rose 5.5 percent and volume rose 5 percent. Maneaty said slowing unit growth was also a concern. Unit volume was up 1.5 percent, excluding divested businesses, below her 4 percent forecast.
After beginning a restructuring in late 2004, Colgate has continued to cut costs. Excluding restructuring charges, selling, general and administrative expenses fell to 33 percent of net sales in the quarter from 35.3 percent a year earlier.
Colgate said it also cut back on advertising spending in line with its competitors and got lower media rates in many markets around the world. Colgate is comfortable with analysts' profit expectations for the quarter and year, Chairman and Chief Executive Ian Cook said in a statement. Analysts, on average, expect Colgate to earn 97 cents per share in the first quarter and $4.23 per share this year.
Analysts' estimates for the year range from $4.08 to $4.35 per share. Colgate's shares have fallen about 6.8 percent so far this month while shares of larger rival Procter & Gamble Co have lost nearly 5.9 percent. P&G is expected to report its quarterly results on Friday.
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