Colgate-Palmolive confident for the year ahead

By Katie Bird

- Last updated on GMT

Related tags Gross profit margin Generally accepted accounting principles Colgate-palmolive

Amid a struggling global economy, Colgate-Palmolive has posted strong fourth quarter results and looks forward to higher profit margins in 2009.

Net income for the quarter was $497.0m, up from $414.9m in the same quarter last year.

Worldwide sales grew 0.5 percent to reach $3.66bn. Unit sales increased 1 percent which, added to 7.5 percent increase in global pricing, led to 8.5 percent growth. Negative foreign exchange effects then brought this figure down 8 percent.

However, gross profit margin for the quarter suffered slightly dropping 120 basis points from the previous year’s quarter to 56.0 percent.

According to the company, the slight dip in the margin is due to the negative currency effects and a lag between rising costs and the price increases introduced to accommodate them.

Although the impact of a stronger dollar is likely to continue to negatively impact the company, Colgate-Palmolive feels relatively confident about the coming year.

“The benefits of recently easing commodity and oil prices should begin to flow through during the first and second quarter of 2009. This, coupled with higher pricing and our ongoing aggressive savings program, should offset the expected impact of the stronger dollar and indicates that gross profit margin for full year 2009 should be up nicely versus 2008,”​ said CEO Ian Cook.

Americas perform strongly

R​egarding the performance of geographical regions, Europe/South Pacific was the only business segment that didn’t report an increase in operating profit.

US sales stood up well growing 1.5 percent, leading to gains in operating profit of 5 percent.

Latin America was the jewel in the company crown, with sales growing 5.5 percent, including 5 percent volume growth. The operating profit increased 11 percent for the quarter.

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