Colgate-Palmolive 2Q Net Up 3% As Overseas Sales Rise

Colgate-Palmolive Co.'s (CL) second-quarter earnings rose 3%, with sales up in each business division except North America, while margins continued to be pressured by higher costs.

Earnings and revenues were slightly ahead of Wall Street expectations, and Colgate also backed its outlook for mid-single digit earnings growth for the year, excluding last year's charge related to the Venezuelan currency.

Colgate shares were unchanged premarket at $85.49 and have gained 6.4% this year.

In North America, net sales fell 3% in the quarter, as volume fell, even as the company slashed prices to try to lure customers. Overseas, where Colgate derives most of its sales, results looked better, with net sales up 17% in Latin America, 11.5% in the Europe and South Pacific region, and 20% in the Greater Asia and Africa division.

Colgate, the world's largest toothpaste maker by revenue and market share, has faced a challenging consumer environment, with shopper remaining frugal, especially in developed market like the U.S. and Europe. Meanwhile, cost for oil, resin and other products used to make, ship and package products are rising rapidly, forcing the company to raise prices and slash costs.

Colgate said it has not been able to offset the higher costs entirely, and still expects gross margins to decline for the year. In the latest quarter, gross margins fell to 57.4% from 58.8% last year.

Colgate reported a second-quarter profit of $622 million, or $1.26 a share, up from $603 million, or $1.17 a share, a year earlier.

Revenue increased 9.5% to $4.19 billion as organic sales, which excludes currency effects, acquisitions and divestitures, rose 3.5%.

Analysts polled by Thomson Reuters most recently forecast earnings of $1.25 a share on revenue of $4.18 billion.

Volume rose 3% while prices we up slightly.

Colgate also said the $130 million after-tax gain from the sale of its laundry detergent brands in Columbia to Unilever NV (UL) will be used to fund various business realignment and cost-savings plans. Colgate is selling the business as part of its recent acquisition of the Sanex personal care business from Unilever.

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

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