Colgate reports strong Q1 sales growth but profits hit by tax charges

Sales for the perod increased by 5.0 percent to $4.17bn, compared to the same period last year, while the impact of foreign exchange negatively impacted the result by 2 percent. Despite this, organic net sales still grew by 6.0 percent

Global unit volume increased by 4.0 percent, a figure that was positively impacted by the acquisition of the Sanex business, which helped to grow sales by approximately 1.5 percent and positively impacted organic sales growth.

Net income for the quarter was $590m, slipping from $624m in the corresponding quarter for 2010, but this figure was negatively impacted by a $44m aftertax charge resulting from restructuring.

Excluding the negative impact of the restructuring charges, the company said that the net income was $634m, representing an increase of 2 percent compared to the same period in 2010.

Selling and administrative expenses were level with last year’s figure at 34.6 percent of net sales revenues for the quarter.

Quarterly results by region...​

During the quarter net sales in North America accounted for 18 percent of the total and increased 3.5 percent compared to the same period last year, on the back of new product launches including Colgate Optic White and the relaunch of Colgate Total.

In Latin America net sales accounted for 28 percent of the total for the quarter and grew by 6.5 percent, led by performances in countries including Brazil, Venezuela, Central America and Peru, with strong sales of brands such as Colgate Total and Colgate Luminous White.

In Europe and Asia Pacific, net sales were 21 percent of the quarterly total and grew by 5.0 percent. The Sanex acquisition positively impacted this result by 6.5 percent, reflecting the fact that the underlying trend was down in the region on account of the weak European economy.

In Greater Asia and Africa, net sales were 20 percent of the quarterly total, up by 5.0 percent and driven by volume growth in India, Russia, Malaysia and Thailand, whereas on the product side, Colgate Sensitive Pro-Relief Whitening and Colgate Active Salt toothpaste were both earmarked as successful.

Full year 2011 results...​

For the full year 2011, the revenue generation looked even stronger, with net sales up 7.5 percent to $16.73bn and global unit volume growing 3.5 percent. Net income for the period was level with the previous year at $2.20bn.​

“We are pleased to have finished the year with excellent top-line momentum and to have achieved our profit goals, despite continuing increases in material costs, an intense competitive environment and volatile macroeconomic conditions worldwide,”​ said Ian Cook, Colgate CEO.

Looking ahead to the rest of 2012, Cook went on to state that, despite the challenging economic conditions, the company is still looking to improve its global market share, particularly through increased advertising support for existing and new product lines.

He added that both gross margins and diluted earnings per share are forecast to rise at a double-digit rate, providing that currency translations are neutral.