UPDATE 1-Colgate quarterly profit rises, forecast maintained

Thu Jul 26, 2012 7:37am EDT

* Q2 EPS $1.33 excluding items; analyst view $1.33

* Sales $4.27 bln vs analyst view $4.25 bln

* Maintains 2012 forecast, forex likely to pressure EPS

July 26 (Reuters) - Colgate-Palmolive Co posted a higher quarterly profit on Thursday as the toothpaste maker increased advertising and cut costs to mitigate the impact of having the bulk of its business overseas in a difficult economic climate.

Colgate said it still expected double-digit growth in earnings per share this year on a currency-neutral basis, though at current rates foreign exchange would eat into those gains.

Second-quarter profit rose to $627 million, or $1.30 per share, from $622 million, or $1.26 per share, a year earlier. Excluding items, Colgate earned $1.33 per share.

Analysts, on average, expected Colgate to earn $1.33 per share, according to Thomson Reuters I/B/E/S.

Sales rose 2 percent to $4.27 billion, ahead of the analysts' forecast of $4.25 billion.

Organic sales, which strip out the impact of foreign exchange, acquisitions and divestitures, rose 8 percent, the strongest gain Colgate has seen in eight quarters. The volume of goods sold rose 5 percent, and pricing increased 3.5 percent.

New York-based Colgate gets most of its revenue from outside the United States. Growth in Latin America, its largest market, along with a range of emerging markets has helped offset weaker economies in North America and Europe.

Organic sales grew 13 percent in emerging markets and just 2.5 percent in developed markets, Chief Executive Ian Cook said in a statement.

In Latin America, which accounts for 29 percent of sales, the volume of goods sold rose 6.5 percent, or 9.5 percent excluding a divested detergent business.

In North America, which makes up 18 percent of sales, the volume of goods sold slid 0.5 percent.

Colgate continues to be hurt by foreign exchange rates. If average exchange rates were to remain at current spot rates for the rest of the year, currency translation would cut its 2012 earnings per share growth by about 6 percent to 7 percent, Cook said.

Advertising spending rose 4 percent to $457 million. The level of spending should be even higher during the second half of the year, when Colgate promotes new products, Cook said.