CL Colgate Palmolive Co

By Aisha Al-Muslim 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 27, 2018).

Colgate-Palmolive Co. posted weaker sales in the latest quarter despite higher prices as foreign-exchange pressures and emerging markets continue to weigh on the consumer-products company.

Net sales for the maker of Irish Spring soap, Ajax cleanser and Suavitel fabric softener dropped 3% from a year earlier to $3.85 billion. Organic sales, a closely watched metric that strips out currency moves, acquisitions and divestitures, fell 0.5% in the third quarter, primarily because of market volatility in Brazil and trade inventory reductions in China.

Colgate-Palmolive said pricing increased 1% from a year ago, but foreign exchange shaved off 4% of sales.

Colgate-Palmolive's profit fell 14% to $523 million, or 60 cents a share. Excluding costs related to restructuring and an adjustment related to U.S. tax-law changes, earnings were 72 cents a share, in line with what analysts polled by Refinitiv expected.

For the fourth quarter, Colgate-Palmolive expects sales to fall in the low-single digits as unfavorable foreign-exchange rates offset organic sales growth.

The company also revised its expectations on full-year earnings growth. Colgate now expects a 3%-to-4% rise in adjusted per-share earnings from 2017, compared with its prior forecast of mid-single-digit growth.

Shares fell 6.6% to $59.58 on Friday and are down more than 16% over the past 12 months.

Chief Executive Ian Cook in prepared remarks called the third quarter challenging and said that uncertainty in global markets and world-wide category growth remain an issue. He said the company still plans to increase advertising spending for the rest of the year to promote new products and its core brands.

In the third quarter, Colgate's North America and Hill's Pet Nutrition segments were bright spots for the company. North America net sales increased 8%, aided by a 6% contribution from the acquisition of professional skin-care brands. In January the company closed a roughly $730 million purchase of PCA Skin and EltaMD.

Sales for pet-food brand Hill's rose 1.5% on stronger volume and higher prices.

Latin America -- one of the company's largest segments -- posted the largest decline in sales, as fewer items were sold and foreign-exchange pressures hurt results.

The company is "sticking with [its] commitment to pricing," despite selling fewer items in the third quarter, Mr. Cook said during a conference call with analysts.

For the third quarter, commodity costs were up more than 8%, logistics expenses rose more than 5%, and oil surged 46%. The company expects inflation pressures to continue, making the price increases necessary, Mr. Cook said during the call.

Several consumer-products makers, including rival Procter & Gamble Co. and Kimberly-Clark Corp., have also raised prices on some of their products to offset foreign-exchange and commodity pressures. The companies have dealt with rising costs for commodities like pulp, which is the material used in tissues and toilet paper, polymer and other raw materials.

Earlier this week, Kimberly-Clark said it was switching chief executives in the midst of a restructuring program. The maker of Kleenex tissues, Scott toilet paper and Huggies said third-quarter sales fell 2% to $4.58 billion and cut its earnings guidance for the full year.

Last week, P&G booked its strongest quarterly sales gains in five years on increased demand in the U.S. and abroad. However it forecast overall sales for the full year would be down 2% due to foreign-exchange headwinds.

Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

October 27, 2018 02:47 ET (06:47 GMT)

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