(Updates with analyst comment, adds detail)
Colgate-Palmolive Co.'s (CL) third-quarter earnings rose a
bigger-than-expected 4.9% as the company benefited from cost
savings, but its sales declined due to currency fluctuations.
Sales in the latest quarter came in below analyst expectations.
President and Chief Executive Ian Cook said the consumer products
company anticipates "mid-single digit earnings per share growth"
for next year as it plans to strengthen its volume and market
share. Analysts polled by Thomson Reuters recently expected
earnings growth of 9% to $5.25 a share.
Sales growth for the world's largest toothpaste maker by sales
and market share have recently started to slow as the company faces
more competitive pressures around the world.
At the same time, while U.S. consumers have increased spending a
bit this year, they remain cautious owing to concerns about the
strength of the economy and persistently high unemployment.
Colgate reported a profit of $619 million, or $1.21 a share, up
from $590 million, or $1.12 a share, a year earlier.
Revenue decreased 1.5% to $3.94 billion as organic sales--which
excludes the currency effects and the effects of acquisitions and
divestitures--grew 3% on volume growth of that amount.
Analysts most recently forecast earnings of $1.19 on revenue of
$4.03 billion.
Gross margin edged up to 59.4% from 59.2%, mostly driven by
prior cost cuts.
BMO Capital Markets analyst Connie Maneaty said in a research
note that Colgate's earnings projections for 2011 represents a
slowdown from the 12% growth it has averaged over the past five
years.
In Latin America, Colgate's largest region by revenue, total
sales fell 6% owing to currency impacts but were up by the same
percentage on an organic basis. Volume rose in nearly all its
markets, but was more than offset by a decline in Venezuela. Profit
fell 4%.
North American sales were up 2% on 3% volume growth, though
prices were down 1.5%. Profit rose 3% on higher sales and cost
cutting, partly offset by higher promotional and raw-materials
costs.
-By Tess Stynes and Anjali Cordeiro, Dow Jones Newswires;
212-416-2481; Tess.Stynes@dowjones.com