Colgate Q4 sales hit by currency exchange and tough market conditions

By Simon Pitman

- Last updated on GMT

Colgate Q4 sales hit by currency exchange and tough market conditions

Related tags United states dollar

Colgate-Palmolive announced a significant dip in its turnover for the fourth quarter, although net profit was up on account of gains from restructuring.

The oral and personal care player revealed that net sales for the period were $4.22bn, a decrease of 3.0% compared to the same period last year and a figure that represented the second consecutive quarter of falling revenues.

The turnover for the period was highlighted by a 2.5% increase in global volumes and a 3.5% increase in pricing, but was counterbalanced by headwinds from foreign exchange, which impacted the results negatively by 9.0%.

Colgate is the latest big international personal care player to see its revenues impacted by negative currency, as the US dollar continues to see strong gains against global currencies on the back of positive data for the US economy.

Revenues lower in Latin America, Africa and Europe

The revenues also reflected weaker earnings in Brazil, as the economy there continues to slow, as well as continued challenges in Europe, reflecting the economic woes there.

Net sales were down by 6% in its biggest market, Latin America, down 6.5% in Europe and 10% in Africa, whereas the brighter spots were Asia, where sales rose by 4.5%, and North America, where revenues were up 1%.

On the personal care side, the company said it saw specific gains from the Protex Men brand and Palmolive soaps in Latin America, Sanex Dermo Protector and Palmolive Natural shower gels in Europe, and the Palmolive Naturals hair care range in Asia.

Organic sales up on pricing and volume gains

However, the company also pointed out that organic sales, which do not take into account the negative impact of currency, were up 6% during the quarter, a figure that spurred investors to make a push on the company’s shares, pushing the value up by 3% in premarket trading.

Net income for the fourth quarter was up from $564m in the corresponding period last year, to reach $628m, a figure that reflected both expenses attributable to the company’s restructuring program, as well as some significant gains.

For the full year 2014, revenues decreased by 1.0% to reach $17.28bn, reflecting a 3.0% increase in volumes and a 2.0% increase in pricing, while foreign exchange negatively impacted the result by 6.0%. Organic sales grew by 5.0%.

Earnings growth expected to be low in 2015

“As we enter 2015, macroeconomic conditions and foreign exchange volatility remain challenging​,” said Ian Cook, CEO, chairman and president of Colgate-Palmolive.

“Despite that, we anticipate another year of solid organic sales growth driven by a full new product pipeline across all categories and geographies. While our long term goal of double-digit annual earnings per share growth remains unchanged, we continue to see significant deterioration in foreign exchange rates.”

Looking ahead to the full financial year, the company said it is expecting to see a low single digit rise in earnings based on exchange rates and expenses related to its restructuring program.

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