UPDATE: Colgate-Palmolive 4Q Profit Slides 1.1%; Revenue Misses Views

Colgate-Palmolive Co. (CL) expects greater pressure from commodities this year, with costs expected to rise 8% to 10%.

The forecast, made after the company reported a 1.1% decline in fourth-quarter earnings, is up from a prediction of a 4%-to-6% increase last quarter.

The swing underscores a recent spike in commodity costs worldwide that is putting pressure on companies in a number of industries. Procter & Gamble Co. (PG), the world's largest consumer products company, on Thursday also forecast more pain from rising commodities, saying it expected rising costs will be a $1 billion headwind for earnings on the year, twice what they expected several months back.

Consumer product companies, facing weak demand in the U.S. and other developed markets, are being put in the tough position of raising prices to offset costs.

Despite the higher costs, Colgate plans to be able to improve margins though a combination of raising prices and cutting costs. The maker of toothpaste has already begun to raise prices in some emerging markets, but overall, the price increase is expected to be a modest 1% to 2% for the year.

The price increases "will be consistent with what we see happening in the marketplace," Colgate Chief Executive Ian Cook said on Thursday's conference call with analysts.

Colgate's shares were recently down 2.5% in recent trading to $78.01, after the company reported disappointing fourth-quarter results.

The world's largest toothpaste maker by sales and market share has reported slowing sales of late as it faces more competitive pressures around the world. At the same time, U.S. consumers remain cautious about the overall strength of the economy and increased spending only slightly last year.

Colgate's fourth-quarter profit fell to $624 million, or $1.24 a share, compared with $631 million, or $1.21 a share, a year earlier.

Revenue fell 2.5% to $3.98 billion as organic sales--which excludes the currency effects and the effects of acquisitions and divestitures--grew 1%.

Analysts polled by Thomson Reuters most recently projected earnings of $1.23 on revenue of $4.06 billion.

Gross profit margin fell to 59.1% from 59.5% on higher material costs, negative foreign exchange effects and increased promotional investments.

Revenue from Latin America, Colgate's biggest market by sales, dropped 7.5% as volume losses in Brazil and Venezuela offset gains elsewhere. In North America, sales rose fell 2%.

-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com

--Drew FitzGerald contributed to this article.

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