Colgate-Palmolive has reported a difficult quarter, with profits hit by economic troubles in Venezuela and revenues impacted by negative currency translations.
The company said that for its first quarter, revenues were even with the same period last year, at $4.32bn. Although global unit volumes grew by 5% and pricing increased by 1.5%, these gains were wiped out by negative currency translations of 6.5%.
Net income was down on the previous year, coming in at $388m, compared to $460m in the corresponding period last year.
Profits hit by aftertax charges and Venezuelan currency devaluation
The company said that its profits were impacted by a $174m charge that related to the remeasurement of its Venezuelan balance sheet as a result of a devaluation of the country’s currency introduced by the government.
Net income was further impacted by the company’s ongoing restructuring program, which primarily accounted for an aftertax charges of $74m that was also partly attributable to the sale of land in Mexico.
However, the company did also point out that, discounting the charges, pre-tax income was up on the same period last year by 2%, at $636m.
"We are very pleased to have started the year with strong organic sales growth, building on the momentum we saw in 2013. Operating profit, net income and diluted earnings per share all increased versus the year ago period,” said Ian Cook, Chairman, President and Chief Executive Officer.
Performance by geographic region
On a geographic basis, North American sales, which account for 18% of the company’s annual revenues, were up by 2.5%, with the increase being attributed to a raft of new product launches that included to personal care items that included mouthwash, as well as new Colgate and Tom of Maine product launches, as well as the Softsoap brand Décor Collection of liquid soaps.
In Latin America, which accounts for 27% of annual sales, net sales for the quarter rose by 5%, while organic sales were up 11%, with volume gains seen in Venezuela, Brazil, Mexico and Colombia.
The company said that Latin American sales were driven by gains from new Colgate oral care launches, together with Protex Men, Protex Vitamin E, Protex Omega 3 and Palmolive Naturals Olive and Aloe bar soaps, Palmolive Naturals Argan Oil hair care and Axion Oats dish soap.
In Europe/South Pacific, which makes up 20% of annual group revenues, net sales rose by 2%. Unit volumes were up by 3.5%, but this was counterbalanced by promotional activities and foreign exchange rates. Personal care products that showed gains in this market included Sanex Surgras and Palmolive Mediterranean Moments shower gels, Sanex Dermo No Perfume deodorant and Palmolive Hygiene-Plus liquid hand soap.
In Asia, which accounts for 15% of annual group sales, net sales increased by 2.5%, with unit volumes up 7%, a result that was also impacted significant by currency translations. , Personal care brands that sold well included Palmolive Care and Protex Men Power shower gels and Palmolive Naturals Beautifully Long shampoo.