Colgate-Palmolive Co posted a slightly better-than-expected quarterly profit on January 26 as sales growth in markets such as Latin America and India helped it overcome some weakness in businesses such as US pet food.
The toothpaste maker sees macroeconomic conditions and the volatility of foreign exchange rates as increasing challenges, Chairman and Chief Executive Ian Cook said in a statement. Colgate is responding by stepping up advertising for new and existing products to drive sales growth and continuing to cut costs where it can in order to expand gross margin and grow earnings at a faster clip.
The company previously said it expected to return to double-digit earnings per share growth in 2012 after profit rose at a mid-single-digit percentage rate in 2011. While it still expects double-digit growth in 2012, it added the caveat that such growth would be on a currency-neutral basis. At current spot rates, it said, currency translation would cut 2012 earnings per share growth by about 4 percent.
Colgate earned $590 million, or $1.21 per share, in the fourth quarter, compared with a profit of $624 million, or $1.24 per share, a year earlier. Excluding 9 cents in charges related to initiatives including cost cutting, the sale of land in Mexico and a legal matter in France related to a divested business, Colgate earned $634 million, or $1.30 per share, in the latest quarter. On that basis, analysts' average forecast was $1.29.
Sales rose 5 percent to $4.17 billion, with the volume of goods sold up 4 percent. Analysts, on average, expected $4.18 billion, according to Thomson Reuters I/B/E/S. In Latin America, Colgate's largest market with 28 percent of total sales, sales rose 6.5 percent and operating profit rose 14 percent, with volume growth led by Brazil, Mexico and Colombia.
In North America, which accounts for 18 percent of total sales, sales rose 3.5 percent and operating profit fell 11 percent due to higher commodity costs and advertising spending.
At the Hill's pet food business, which is separated from the geographic units and accounts for 13 percent of sales, sales rose 2 percent and operating profit was up 4 percent. Volume declined in the United States and Japan, and was down 1.5 percent overall at the unit.