Restructuring helps to further boost Colgate profits

By Simon Pitman

- Last updated on GMT

Related tags Percent Percentage point Us

Personal care and oral care player Colgate-Palmolive has announced
a further increase in quarterly profits on the back of cost cuts
and sales increases in key categories, including toothpaste and
shower gel.

The company said that fourth quarter net profit was $419.9m, compared to $401.2m for the same period a year earlier, a jump of 3.4 percent. This figure also reflected a $75.8m restructuring charge relating to the company's 2004 Restructuring Program - an initiative that has helped to peg back costs significantly and bring the company back into profitability. Sales increased by 13.5 percent to $3.64bn, helped significantly by weakness in the US dollar against other foreign currencies, which boosted the result by 6.5 percentage points. Increase in sales volume lower​ On a volume only basis the sales were up 5 percent, a figure that also reflected the benefit of the weak US dollar in the final sales result. "The 90 basis point improvement in gross profit margin worldwide and other savings programs allowed for strong levels of advertising investment behind our global brands while still generating higher than expected operating profit, net profit and earning per share for the quarter,"​ said CEO Ian Cook. Cook added that new premium priced products are also helping to drive market share gains on a global basis, while shares in toothpaste, manual tooth brushes, mouth rinse, soap bars and shower gels also helped to drive growth. On a regional basis sales in the US, which currently account for 19 percent of the total sales, were up 6.5 percent, boosted by new launches in the super-premium level oral care category. Overseas markets benefit from weak dollar​ In Latin America, which accounts for 26 percent of group's turnover, sales were up 15.5 percent, significantly boosted by currency gains. Indeed, volume sales were only up 5 percent in the region, where the Brazil, Argentina and Venezeula markets performed particulalry well. There was a similar story in the Europe and South Pacific region. Accounting for 24 percent of the turnover, sales increased by 16 percent, whereas volumes were up 7 percent - with gains attributed to strong performances in the UK, France, Denmark, Poland, Greece, Spain, Switzerland and Australia. In the Greater Asia and Africa region, which accounts for 17 percent of turnover, sales were up 18.5 percent and 6.5 percent in volume - led by gains in India, Greater China, Malaysia, CIS countries, Russia, South Africa and the Gulf States. Looking ahead to the 2008 financial year, the company says that a full new product pipeline, together with further gains from restructuring and a continued shift towards higher-margin products should help achieve gross profit margin growth of between 75 and 125 basis points. This is likely to translate into double-digit earnings per share growth.

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