Tags: US | Earns | Colgate | Palmolive

Venezuela Charge Hurts Colgate-Palmolive 1Q Profit

Thursday, 29 Apr 2010 08:06 AM

Colgate-Palmolive Co.'s first-quarter earnings fell 30 percent even as sales improved worldwide because of a big charge related to Venezuela's currency devaluation.

The maker of Palmolive dishwashing liquid, Ajax cleanser and Colgate toothpaste earned $357 million, or 69 cents per share, in the three months ending March 31. That's down from $508 million, or 97 cents per share, in the same quarter last year.

Revenue rose 9.3 percent to $3.83 billion.

Excluding the Venezuela charge, earnings were $1.21 per share. Analysts expected the company to earn $1.19 per share on revenue of $3.89 billion, according to Thomson Reuters. Analysts typically exclude one-time charges from their estimates.

Colgate-Palmolive has significant business in the South American nation that earlier this year devalued its currency and moved its Bolivar to a two-tier exchange structure. Last week Huggies diapers maker Kimberly-Clark Corp. took a similar charge.

But Colgate made gains in South America, its biggest sales market, and elsewhere around the world, with global volume growing 6 percent while pricing held steady. The effect of currency translation increased revenue by 3.5 percent. A fluctuating U.S. dollar can impact the value of a company's international sales once they are translated back into U.S. dollars.

CEO Ian Cook said the company has been focusing on increasing global volume and the strategy is paying off.

The company's share of the global toothpaste market is now 44.4 percent so far this year, Cook said, noting share gains in Brazil, India, China, Venezuela, Greece, Russia and Mexico. The company's share of the manual toothbrush market finished the quarter at 31.5 percent, up 1.3 percentage points from the prior year.

In North America — which accounts for 20 percent of sales -- unit volume grew 5 percent while revenue edged up 3 percent to $753 million. Prices, however, fell 3.5 percent. Colgate and other consumer products makers have been taking promotions to keep people spending even as they worry about the economy.

In South America — which at 26 percent of sales is the company's biggest unit — sales grew 10.5 percent to $1 billion, while volume gained 8 percent. Higher prices helped sales by 6.5 percent, though the effect of currency translation hurt results by 4 percent.

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Colgate-Palmolive Co.'s first-quarter earnings fell 30 percent even as sales improved worldwide because of a big charge related to Venezuela's currency devaluation. The maker of Palmolive dishwashing liquid, Ajax cleanser and Colgate toothpaste earned $357 million, or 69...
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2010-06-29
Thursday, 29 Apr 2010 08:06 AM
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