Colgate-Palmolive hard hit by currency headwinds, but organic sales are up

By Simon Pitman

- Last updated on GMT

Colgate-Palmolive hard hit by currency headwinds, but organic sales are up

Related tags Organic sales Revenue

Colgate-Palmolive joined a long list of cosmetic and personal care companies to report that currency headwinds are impacting its results, but the underlying results show a more positive story.

The oral, personal and home care giant said that net sales for the first quarter of 2015 were $4.07bn, a fall of 6% compared to the corresponding period last year.

The figure was negatively impacted by a significant 10% from international currency translations, but without that, organic sales grew by a much healthier 4.0%.

Income up on higher pricing

Net income was also up from $248m in the corresponding quarter last year, to reach $388m, a figure that reflected higher profitability as a percentage of sales, commented CEO Ian Cook.

"The 4.0% organic sales growth worldwide was led by emerging markets where organic sales grew a strong 6.5%, despite economic challenges in certain countries,”​ he said.

In North America, which accounts for 20% of total business, sales were up 0.5%, mainly on the back of higher retail prices and sales of personal care lines such as Softsoap Fragrant Foaming collection and Irish Spring Signature for Men body wash

In Latin America, which accounts for 27% of sales, the figure was down 5.5% as currency translations hit hard, but up on 9% in organic terms, with personal care lines such as Axion Goodbye Odors and Royal Jelly bar soaps proving popular.

In Europe/South Pacific, which accounts for 18% of sales, the figures was down 14.5% and up 1.0% in organic sales, with Sanex Advanced line shower gels proving popular.

The Asia Pacific region, which accounts for 16% of total sales, was the only one where underlying results did not look stronger, with net sales decreased 1.5%, while there was a drop in organic sales of 0.5%.

Outlook: volatility will hit bottom line

In summing up the quarterly results, Cook said that, despite anticipated gains in organic sales for the rest of the financial year, macroeconomic conditions and foreign exchange volatility are expected to hit the bottom line.

“We are planning for a year of gross margin expansion, however, based on current spot rates, we now expect a low-single-digit earnings per share decline on a dollar basis, excluding charges related to the 2012 Restructuring Program."

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