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Colgate-Palmolive 4Q earnings dip, sales decline

Colgate-Palmolive 4Q earnings dip, sales decline

Colgate-Palmolive Co.'s earnings and revenue declined in the fourth quarter, pressured by currency changes and rising costs.
While its earnings results beat Wall Street expectations, the maker of toothpaste, soap and other products said it will likely raise prices to keep pace with the increasing costs for materials that go into its products.
Its stock fell $2.01, or 2.5 percent, to $77.97 in Thursday afternoon trading. The shares have traded between $73.12 and $86.15 over the last year.
President and CEO Ian Cook said during a conference call that the New York company previously believed 2011 commodity costs would rise between 4 percent and 6 percent, but now expects them to increase 8 percent to 10 percent.
"What we see in the commodities market is an acceleration in pricing pressure that started in the third quarter," he explained.
Cook said Colgate-Palmolive's pricing will probably rise 1 percent to 2 percent overall this year and will be "appropriate" and "consistent with what is happening in the marketplace."
A similar sentiment was echoed by rival Procter & Gamble, which also indicated Thursday that increasing commodity costs were likely to lead to some higher prices. The company reported its second-quarter net income fell 28 percent, but said was up 10 percent when not counting the big gain last year from sale of its prescription drug business.
Colgate-Palmolive, which makes Colgate toothpaste, Palmolive soap and other products, earned $624 million, or $1.24 per share, for the period ended Dec. 31. That's down slightly from $631 million, or $1.21 per share, a year earlier.
The performance narrowly beat the $1.23 per share that analysts surveyed by FactSet predicted.
Colgate-Palmolive expects earnings per share to grow by a mid-single digit percentage in the current year.
Quarterly revenue slipped 3 percent to $3.98 billion from $4.08 billion as results softened across most regions. Wall Street expected a bit more, forecasting revenue of $4.07 billion.
The majority of the Colgate-Palmolive's revenue is generated overseas, so it is particularly exposed to foreign currency changes.
Revenue declined in North America, Latin America and Europe/South Pacific. Greater Asia/Africa revenue rose 11 percent, benefiting from the strength of products such as Colgate Plax Complete Care mouthwash and Mennen Speed Stick Breathe and Protect deodorants.
Colgate-Palmolive sells its products in more than 200 countries and territories globally and most of its sales come outside the U.S. The oral care segment in particular continues to strengthen, with the company's share of the world's toothpaste market at 44.2 percent, helped by gains in countries including Brazil, India and China. Its share of the manual toothbrush market was 31.6 percent.
Colgate-Palmolive said pricing was flat in the quarter, with currency changes cutting 3.5 percent from its results. Gross profit margin was down 40 basis points to 59.1 percent because of the currency fluctuations, higher material costs and more money spent on promotions.
Cook said there did not seem to be any pullback in discounts and other promotions among competitors during the quarter.
Douglas Lane of Jefferies & Co. said in a client note that he remains cautious on the company due to competitive pressures and cost inflation.
For the full year, Colgate-Palmolive's net income slipped to $2.2 billion, or $4.31 per share, from $2.29 billion, or $4.37 per share. Annual revenue rose 2 percent to $15.56 billion.


Updated : 2021-06-19 03:03 GMT+08:00