Colgate profits rise on lower costs despite fall in sales

By Simon Pitman

- Last updated on GMT

Related tags: Revenue

Lower costs boost second quarter profits for soap and toothpaste maker Colgate-Palmolive, despite the fact that global sales fell on the strength of the dollar.

Net earnings rose by 14 percent to $561.6m, a figure that was boosted by the fact that it had been hit by significant restructuring charges in the corresponding period last year.

Sales revenue fell by 5.5 percent to $3.75bn, a figure that was also below analysts’ expectations of $3.81bn, which the company said reflected a 1.5 percent dip in sales volumes.

The sales figure was also impacted by an 11.5 percent hit from international currency weakness against the dollar, which was partly counterbalanced by the fact that global pricing increased by 7.5 percent.

Sales in US remain steady, while Europe falls

Sales in the US grew by 2.5 percent during the quarter to $743.4m, boosted by new product launches including Sensitive Enamel Protect and Softsoap Body Butter Apricot Scrub.

In its mainstay Latin America market, attributing 28 percent of revenues, sales fell 1.5 percent due to an 18 percent hit from currency exchange. Unit volumes increased by 2.0 percent.

In Europe/South Pacific sales declined by 18 percent to cent $790.5m, with sales volumes slipped by 3. 0 percent, while in Greater Asia/Africa, sales declined 4.5 percent to $640.2m, with sales volumes declining by 1.5 percent.

Operating profits up

The company also highlighted the fact that operating profits had increased by 7 percent, excluding charges, to reach $887.1m, increasing from 20.9 percent of sales to 23.7 percent.

Company CEO Ian Cook also pointed out the business had managed to extend its global reach and its dominance in its mainstay global oral care segment to 44.8 percent of the market, with gains in the US, Mexico, Brazil, India and Russia.

Cook said that healthy gross margin levels would enable it to increase its advertising spend for the rest of year, leading him to reiterate his belief that the company was on course to achieve profit forecasts for both the third quarter and the full financial year

Related topics: Business & Financial

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