Colgate-Palmolive 2nd-qtr net income climbs 7 percent but weak revenue, Venezuela take toll
By Ashley M. Heher, APThursday, July 29, 2010
Weak revenue, Venezuela hit Colgate’s 2Q
CHICAGO — Colgate-Palmolive Co.’s shares sank Thursday when the consumer product maker posted revenue below expectations and told investors that Venezuela’s currency devaluation would drag down its full-year results more than expected.
It’s the second straight quarter where news about Venezuela, one of Colgate’s largest markets in Latin America, has plagued the world’s largest toothpaste maker.
Colgate also recorded a hefty charge in its first quarter because of its business in Venezuela, which devalued its currency then and moved the Bolivar to a two-tier exchange structure.
Colgate executives said Thursday that Venezuela’s country’s currency devaluation would drag down its full-year profit by 10 cents per share to 15 cents per share — not by the 6 cents to 10 cents per share it previously expected.
Elsewhere, though, things looked better for the maker of Palmolive dishwashing liquid, Ajax cleanser and Colgate toothpaste. Sales of its name-brand products were steady even as shoppers traded down from many top sellers in the weak economy. It is also expanding in developing markets including South America and boosting advertising to keep people spending.
Still, Jefferies analyst Douglas Lane told investors Thursday’s results were “somewhat weak,” particularly the revenue Colgate reported, which fell short of forecasts.
New York-based Colgate said it earned $603 million, or $1.17 per share, in the three months ending in late June. That’s up from $562 million, or $1.07 per share, in the same quarter last year.
Revenue rose almost 2 percent to $3.81 billion, up from $3.75 billion last year.
Analysts surveyed by Thomson Reuters expected the New York company to earn $1.16 per share on revenue of $3.94 billion.
Volumes held up well, climbing 3 percent around the world, except in Colgate’s Hill’s pet food division, which accounts for 13 percent of company sales. There, volume fell 4 percent.
Prices rose half a percentage point overall but fell in North America and Europe. Some companies have been cutting prices and running promotions to keep people buying, but that means thinner profit margins.
“Overall, we are very pleased to have delivered solid results this quarter, despite heightened competitive activity and difficult economic conditions around the world,” Chairman, President and CEO Ian Cook said in a statement.
Colgate shares fell $6.17, or 7.4 percent, to $77.69 in midday trading Thursday.
Tags: Chicago, Latin America And Caribbean, North America, South America, United States, Venezuela