Colgate reports strong Q1 as oral care domination grows

By Simon Pitman

- Last updated on GMT

Related tags: Cent, Colgate-palmolive

The Cologate-Palmolive Company has reported particularly strong
results as it continues to dominate in the oral care sector, backed
up by favorable global pricing and currency exchange rates, all
driven by a 20 per cent increase in ad spend.

The company said that worldwide sales grew by 12 per cent to $3.21bn, while unit volume grew by 8 per cent. Likewise, net income increased 13 per cent to reach $486.6m, compared to the corresponding quarter in 2006. The company recently divested its bleach business in South America, which accounted for a gain of almost $30m together with a $79.3m tax benefit, which positively impacted the results. Operating profit increased 26 per cent versus first quarter 2006, and by 13 per cent taking into account restructuring charges, figures that caused operating profit margin to increase very slightly to 20.6 per cent. Company chief executive Reuben Mark pointed out that he was particularly pleased with the company's 8.5 per cent global unit volume growth, which is one of the highest quarterly growth rates for the company in the past decade. Likewise he also pointed out that every geographic region had contributed to the increased growth, reflecting a 'meaningful' increase in advertising spend. Reuben also announced that he is retiring from the company as of July 1st, to be replaced by the company's current CEO and president Ian Cook - an appointment that is expected to be confirmed by the company's executive board. Speaking about the company's results, Cook said: "Our global toothpaste leadership continues to expand with market shares at record highs in many countries around the world." "As we look to the balance of the year we are confident that the strong top-line growth will continue, driven by our very full new product pipeline, both here in the U.S.and abroad,"​ he added. The company added that its continuing restructuring program was also likely to a continuation of the strong performance experienced in the first quarter throughout the financial year in 2007, expecting total savings from the program to be as high as $650m by the end of 2008. The company said that on a geographical basis, the North American market accounted for 21 per cent of sales, which grew by a total of 7.5 per cent, and the recently acquired Tom of Maine business contributing 1.5 per cent of that total. Likewise, the company said that a new campaign to promote its Colgate Total toothpaste, featuring Brooke Shields, had helped to drive its market share in the toothpaste category by 0.6 per cent - deemed to be a significant margin in such an ultra competitive and developed segment. Likewise positive momentum is expected to continue in the US throughout the year, with a raft of new product launches, including Irish Spring Body wash and Softsoap brand Nutra-Oil all hitting store shelves. In Latin America, which now accounts for 25 per cent of total sales, volume and sales grew by 13.5 per cent and 14 per cent respectively, with every market contributing positively to the result, led by Mexico and Brazil. In Europe and the South Pacific region, which accounts for 24 per cent of total sales, unit volumes increased 4.5 per cent and sales increased 13 per cent, driven by strong gains in France, Germany, Italy and Spain. Finally, in the Greater Asia/Africa region, which accounts for 17 per cent of total sales, increased sales volume by 9.0 per cent and sales volume by 13.5 per cent, driven by strong gains, in Malaysia, Thailand, Russia and South Africa.

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