Colgate Posts Strong Profit on Growth in Emerging Markets

By Angela Chen 

Colgate-Palmolive Co. posted stronger-than-expected earnings in the fourth quarter, as higher pricing and growth in emerging markets helped offset the impact of the stronger dollar.

Chief Executive Ian Cook noted special strength in the core segment of toothpaste and manual toothbrushes, with market shares remaining steady at 44.5% and 33.4%, respectively. In addition, the company's market share for mouthwash edged up 0.1 points to 16.9%.

However, he warned the company isn't immune to foreign-exchange issues. Procter & Gamble Co., Kimberly-Clark Corp. and other consumer-product companies have already warned the markets of unprecedented forex headwinds this year.

"While our long term goal of double-digit annual earnings per share growth remains unchanged, we continue to see significant deterioration in foreign exchange rates," said Mr. Cook. Colgate is now planning for a year of low-single-digit per-share earnings growth, in line with the 3% growth rate projected by analysts.

The most recent quarter saw a foreign-currency impact of 9%, the company said. Organic sales growth, which excludes effects from foreign exchange, acquisitions and divestments, was 6%. Organic sales growth in emerging markets was 9.5%.

Overall, Colgate reported a profit of $628 million, or 68 cents a share, up from $564 million, or 60 cents a share, a year earlier. The latest period included $71 million tied to the implementation of the company's four-year global growth and efficiency program.

Excluding these items, per-share earnings were 76 cents, compared with 75 cents a year earlier.

Net sales edged down 3% to $4.22 billion. Global unit volume grew 2.5% as pricing increased 3.5%.

Analysts polled by Thomson Reuters had projected earnings of 74 cents a share and revenue of $4.22 billion.

Colgate's sales have improved in recent quarters, but costs for its restructuring efforts have been a drag on its bottom line of late.

With its biggest source of sales coming from oral care, Colgate is less diversified than some of its consumer-products peers like Procter & Gamble or Unilever PLC. Still, the company has been relaunching its Hill's Science Diet line of pet food as well as adding new products.

In October, it acquired Myanmar's Laser Brand Toothpaste, in one of the biggest acquisitions by a foreign company in the Southeast Asia nation.

Shares, which were inactive premarket, have risen 6% in the past 12 months through Wednesday's close.

Write to Angela Chen at [e-mail]

Access Investor Kit for Colgate-Palmolive Co.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1941621039

Access Investor Kit for Procter & Gamble Co.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US7427181091

Subscribe to WSJ: http://online.wsj.com?mod=djnwires