UPDATE:Colgate-Palmolive 4Q Net Falls 5.4% On Higher Costs

Colgate-Palmolive Co.'s (CL) fourth-quarter profit fell 5.4% as higher prices and savings were unable to fully offset higher costs, while its core sales grew at the highest rate in over a year due to strength overseas markets like Latin America and Asia.

The toothpaste giant backed plans to return to double-digit earnings growth in 2012 after slower growth in the last year, but said it would now do so only on a currency neutral basis. Based on current spot rates, Colgate expects the stronger U.S. dollar to hurt earnings by 4% this year, effectively lowering guidance for the year.

"We view this as a reduction of its guidance by two to three percentage points," JP Morgan analyst John Faucher said in a research note.

Colgate shares fell 1.1% in premarket trading to $88.50.

Colgate and other makers of consumer products are hoping for some relief from rising commodity costs, which have pressured results over the past year. Colgate expects ongoing cost savings programs and higher prices, many of which have already been implemented, to help the company grow gross margins in the coming year, after seeing it contract in 2011.

In the meantime, Colgate is showing steady growth worldwide in most business. Its global organic sales, which excludes foreign exchange, acquisition and divestitures, rose 6%, the best results in six quarters, as the company continued to see robust growth in emerging markets, where organic sales rose 12%. Latin America posted organic sales growth of 14.5 and Greater Asia/Africa saw organic sales up 8.5%.

In North America, organic sales rose 3.5%, which included a 0.5% boost from higher prices.

It was the first time in nine-quarter's that Colgate saw prices increase close to home, a promising sign that could mean fewer discounts are needed to entice customers to buy their products.

However, North America's profit still struggled, falling 11%, due both to higher input costs and an increase in advertising to support new products, like new Optic White and Sensitive Pro-Relief toothpaste.

Those investments to back new products could help lay the groundwork for stronger growth in 2012. "2011 was a year of investment and in 2012, hopefully they'll reap some of the benefits from that," Edward Jones analyst Jack Russo said.

Globally, Colgate saw volume rise 4% while prices increased 3%.

For the quarter, Colgate-Palmolive reported a profit of $590 million, or $1.21 a share, down from $624 million, or $1.24, a year earlier. Excluding business realignment costs and other items, earnings rose to $1.30 from $1.24.

Revenue jumped 4.9% to $4.17 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of $1.29 on revenue of $4.18 billion.

Gross margin fell to 57.4% from 59.1%.

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

--Melodie Warner contributed to this story.

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