Colgate-Palmolive increases oral care dominance

By Simon Pitman

- Last updated on GMT

Related tags: Cent, Colgate-palmolive

Dental care and toiletries giant Colgate-Palmolive has announced a
big rise in net profits for its fourth quarter off the back of
strong sales driven by a particularly big rise in both the European
and Latin American markets.

Sales during the period grew 10.5 per cent to reach $3.2bn, with volume sales growing by 7 per cent, whilst organic sales, which exclude divestments, grew by 11.5 per cent

Gross profits, which exclude restructuring charges came in at $436.9m, an increase of 15 per cent, whereas net income came in at $401.2m, compared to $361.2m for the same period last year.

The sales results came off the back of a 1 per cent increase in global pricing and a 2.5 per cent increase from foreign currencies.

A double-digit increase in worldwide advertising spend also helped to push sales, a factor that was stressed as being a major contributory to the results by company chairman, Mark Reuben.

"The combination of extraordinary top-line growth, higher margins, increased spending and significantly higher net profit during the quarter is an indication that the basics of our business are strong and getting stronger,"​ he said.

"We expect the positive gross profit momentum to continue into 2007 as a result of our ongoing savings programs, the growing benefits from restructuring and the continuing shift toward higher margin products. Also, most of the benefits from our worldwide drive to increase promotional efficiency is yet to come."

Although the company reported that every one of its divisions had increased market share, toothpaste gains were reported in all the major markets, while the worldwide share of manual toothbrushes also increased.

On a regional basis, the competitive nature of the US market and the continued slow retail market meant that sales in the North American region, which currently account for 21 per cent of the total, increased by 7 per cent, as the company extended its lead in the toothpaste segment.

Currently AC Nielsen estimates that its market share in the region is approximately 37.3 per cent. This figure was booted by successful new launches, including Luminious Mint Twist Toothpaste, Softsoap Brand liquid hand soap and Irish Spring MoistureBlast bar soap.

In Latin America, which is now the company's largest market, accounting for 25 per cent of its total sales, fourth quarter figures grew 14 per cent, boosted by the fact that it now has a toothpaste market share of 73.8 per cent in the region.

Besides toothpaste, top-selling cosmetic and toiletry products were Palmolive Nutri-Milk, Protex Propolis soap and Lady Speed deodorant.

In Europe, which accounts for 24 per cent of sales, the company reported an increase of 12.5 per cent on volume gains in the UK, Denmark, Hungary, Romania, Spain and Italy, which was said to have offset a volume decline in German, where retail sales have continued to be slow.

The company currently has oral care leadership in this market too, boosted by the launch of new brands such as BodYoghurt shower gels and Colgate Plax Whitening mouth rinse.

In the Greater Asia and Africa region, where sales account for 16 per cent, the figure was up 5.5 per cent on the back of strong gains in Malaysia, Thailand, Philippines, Vietnam, India and Russia.

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