Colgate sees profit growth slowing down

 
City A.M. Reporter
Colgate-Palmolive said 2011 earnings-per-share growth would slow to mid-single digits as it spends more on advertising and new product development to help lift sales volume and market share.

The maker of Colgate toothpaste and other personal-care items said third-quarter sales fell 1.4 per cent to $3.94bn (£2.47bn) as pricing was flat and the foreign exchange rates cut 4.5 percentage points from sales growth.

Consumer goods makers have faced greater competition from private-label store brands as shoppers remain budget-conscious. That has put pressure on prices even while costs for materials to make their products have risen.

Net income was $645m, or $1.21 a share, up from $617m, or $1.12 a share, a year earlier.

The company attributed higher profits to effective cost-cutting.

Larger rival Procter & Gamble also beat analyst estimates for its earnings on Wednesday on the strength of its new products and overseas sales.

Colgate said it expected 2011 earnings per share to rise at a mid-single-digit percentage rate, down from the double-digit increase it expects in 2010, which excludes a one-time charge. Colgate’s Latin American business, its largest region by revenues, saw total sales fall 6 per cent due to foreign exchange effects but were up by the same amount on an organic basis.

Volumes rose in almost all its other markets, while North American sales were up two per cent on volume growth or three per cent.

However, prices fell 1.5 per cent and profits rose 3 per cent on higher sales and cost cutting.

FAST FACTS | COLGATE-PALMOLIVE

The company was incorporated in 1923 and sells products in more than 200 countries.

Best known for its Colgate oral care products, the group sells toothpaste, brushes and floss to dentists and consumers.