Colgate reports strong results, bucking industry trend

By Simon Pitman

- Last updated on GMT

Colgate has reported higher sales and profits, beating disappointing quarterly results from major competitors such as Unilever and Procter & Gamble.

Worldwide sales for the third quarter were up 13 percent to reach $3.98bn, while sales unit volumes were up 3 percent, reflecting favorable currency exchange rates and increased retail prices.

This meant that net profit for the quarter increased from $420.1m to $499.9m, a rise of 19 per cent, and one that easily beats any of the recent financial results of its major rivals.

Bucking the trend

Many of the leading US personal care players have been hit by currency exchange, falling sales in North America and Europe, with some still claiming that rising costs are hampering results.

Bucking this trend, Colgate actually stated in its financial report for the quarter that the falling price of oil had positively impacted its costs during the quarter, whereas retail price increases and further production cost cuts had also driven profits.

What has also struck many industry experts and financial analysts is the fact that Colgate has been upbeat about its financial outlook for the forthcoming and final quarter.

Confident outlook

Contrary to lower expectations from Procter & Gamble and L’Oreal, Colgate says that it is confident it will be able to improve its gross profit margin, which in turn should help to counteract any weakness that might occur in the US dollar exchange rates.

“While significant increases in raw material costs worldwide impacted gross profit margin in the quarter, we are forecasting less of a decline in the fourth quarter,”​ said Ian Cook, Colgate CEO.

“As the benefits of recent easing of commodity and oil prices begin to flow through in the first quarter 2009, coupled with higher pricing and our aggressive savings programs, we are optimistic that gross profit margin for full year 2009 will be up solidly on 2008.”

Double-digit growth for all divisions

The company said that all of its business divisions reported double-digit sales increases, citing a 6 percent increase in advertising spend and a 6.5 percent increase in retail prices as being crucial factors for this result.

Looking ahead to the next quarter, it is also expecting results to be further boosted by a full line up of new product launches, which will include Colgate MaxFresh with mouthwash beads.

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