Sales down for Colgate-Palmolive on weaker dollar

By Katie Bird

- Last updated on GMT

Related tags Percent Currency United states dollar Colgate-palmolive

Colgate-Palmolive has reported a slight drop in third quarter sales dragged down by the weakening dollar, although net income remains strong.

Worldwide sales stood at $3.9bn for the third quarter of 2010, a drop of 1.5 percent compared to the third quarter last year. However, volume sales were up 3 percent and the decrease in figures was down to the effects of foreign exchange rates, according to the company.

Net income increased by 5 percent compared to last year’s quarter to reach $619m from $590m in 2009.

The company noted that advertising and marketing spend went up during the quarter, and claimed that the strength of net income in light of this could be explained by cost savings.

“Our sharp focus on cost-savings initiatives…continues to pay off. Even after higher levels of commercial investment worldwide, operating profit and net income both increased during the quarter, both absolutely and as a percent to sales,”​ said Colgate CEO Ian Cook.

Currency effects

Latin American results, a region that makes up 27 percent of the company’s sales, were particularly affected by foreign exchange rates with sales dropping 6 percent during the quarter ($1.07bn in comparison to last year’s $1.14bn). According to the company, excluding currency effects would have seen sales grow 6 per cent.

Operating profit also dropped 4 percent for the region, which Colgate said was down to increased advertising and promotional spend along with the currency effects.

The Europe and South Pacific region accounted for 21 percent of the company’s turnover for the quarter and reported sales of $821m compared to last year’s $896m. Again, the company cited a negative effect of foreign currency exchange rates.

Greater Asia and Africa was the region to report the strongest sales, where organic sales increased 10 percent with a helping hand from currency effects of 2 percent. Sales for the quarter stood at $779m.

North American sales were up 2 percent in the quarter to $753m, with significant contributions from new product launches such as Colgate Triple Action and Colgate Max White.

The company also noted a major relaunch of Colgate Total toothpaste in North America which includes upgraded packaging and will be supported by a new marketing and communication campaign.

Increased advertising spend

The increased advertising spend of the third quarter of 2010 is likely to continue into 2011 in an attempt to support sakes, Cook said.

“As we turn to 2011, while our global budget process is still in its initial stages, we are planning to strengthen our volume and market share, driven by many new and existing Colgate products supported by increased advertising, and consequently we anticipate mid-single digit earnings per share growth for the year,”​ he said.

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