Colgate first quarter profits hit by Venezuelan currency devaluattion

By Simon Pitman

- Last updated on GMT

Related tags Percent Revenue Colgate-palmolive

Colgate-Palmolive has announced strong sales growth for its first quarter, driven by robust overseas sales, but tax charges relating to the Venezuelan currency devaluation hit profits.

Sales for the quarter grew by 9.5 percent to $3.83bn, a result that reflected a positive performance in every one of the company’s divisions. This figure represented volume growth of 6.0 percent, while organic sales growth was also 6.0 percent.

Net income for the period was $357m, down from $508m in the corresponding period for 2009, which represented a fall of almost 30 percent.

Net income hit by $271m charge

The company said that the net income was hit by aftertax charge of $271m which was related to 'hyperinflationary accounting in Venezuela' in January 2010, following the government’s decision to devalue the Bolivar currency.

The profits were also hit by a rise in advertising costs, which rose to 11.0 percent of total sales, compared to a figure of 9.1 percent in the corresponding period last year.

“Our focus on unit volume growth continues to pay off with global unit volume increasing sequentially in each of the last three quarters”​ said Ian Cook, CEO of Colgate-Palmolive.

Global share of toothpaste market continues to rise

Cook went on to underline that the company's global share of toothpaste and manual toothbrushes are both at record levels, driven by gains in developing markets including China, Mexico, India, Brazil and Russia.

This growth means that the company’s share of the global toothpaste market is now up to 44.4 percent.

On a global basis, sales in the US market accounted for 20 percent of the total sales, where the figure grew at 3.0 percent, representing a solid performance given the company's high penetration rate in such a developed market.

Latin America and Europe drive sales growth

In Latin America, which represents 26 percent of total sales, the figure was up 10.5 percent, while Europe and the South Pacific, representing 22 percent of the total, was up 14.5 percent and in the Greater Asia/Africa market, which represents 19 percent of the total, the figure was also up 14.5 percent.

But as well as its eponymous toothpaste brand, the company also markets a range of personal care brands, including Speedstick Deodorants and Irish Spring Soaps, which have been playing an increasingly important part in its performance in recent years.

Looking ahead to the full financial year, Cook said he believes that gross profit should continue to grow, while earnings per share should also continue to grow into double-digit figures.

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