UPDATE 2-Colgate-Palmolive quarterly profit edges higher
By Jessica Wohl
Oct 24 (Reuters) - Colgate-Palmolive reported slightly higher third-quarter earnings on Thursday as it spent more on advertising and posted strong sales growth in Latin America, yet failed to show robust growth at home.
Its shares fell 2 percent in morning trading.
The toothpaste maker still expects its annual profit to rise 4.5 percent to 5.5 percent, assuming foreign exchange rates remain fairly stable. It is targeting double-digit earnings-per- share growth for 2014, excluding restructuring charges.
"Colgate continues to execute well on a number of fronts, though this seems to be reflected in the shares," Oppenheimer analyst Joseph Altobello said.
Growth in the latest quarter met Wall Street's expectations with some help from a lower-than-anticipated tax rate and stock repurchases.
Shares of New York-based Colgate were down about 1 percent at $62.86 in morning trading after falling to $61.95.
Its sales rose 1.5 percent to $4.4 billion, short of analysts' expectations, while Wall Street's target was $4.46 billion, according to Thomson Reuters I/B/E/S. Organic sales, which strip out the impact of acquisitions, divestitures and foreign exchange, were up 6 percent.
In North America, organic sales rose just 1.5 percent, after rising 5 percent in the second quarter and 2.5 percent in the third quarter of 2012. Still, North American operating profit jumped 15 percent as the company continued its long-standing cost-cutting program and advertising spending decreased due to the timing of product launches.
"The slowdown in North American sales raises questions," BMO Capital Markets analyst Connie Maneaty said, adding that Colgate was able to offset operating weakness in Latin America, its largest market, with profit growth in North America and Europe/South Pacific.
In Latin America, which accounts for 29 percent of Colgate's sales, organic sales rose 9.5 percent, a stronger showing than in the first two quarters of the year. Operating profit in Latin America declined 5 percent due to higher costs in Venezuela and elsewhere. Business in Venezuela has been hurt by February's devaluation of the nation's bolivar.
Advertising spending rose 6 percent from a year earlier, and Colgate said it planned to keep spending for the rest of the year. It is promoting new products such as Colgate Optic White toothpaste and Hill's Prescription Diet Metabolic pet food around the world.
Colgate said it had earned $656 million, or 70 cents per share, up slightly from $654 million, or 68 cents per share, a year earlier.
Excluding restructuring charges, Colgate earned 73 cents per share, matching analysts' expectations.
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