By Jessica Wohl
April 25 Colgate-Palmolive Co's profit
matched Wall Street expectations and sales were better than
expected, easing concerns a day after rival Procter & Gamble Co
appeared to be under pressure.
Shares of Colgate were up 2 percent to $120.34 on Thursday
after falling nearly 3 percent Wednesday, when P&G reported
lighter-than-anticipated sales and said profit would fall more
than analysts estimated this quarter.
Robert Campagnino, managing director at Hedgeye Risk
Management, said a bit of a "relief" rally was to be expected
after Colgate's strong sales and in-line profit. Still, Colgate
shares already trade at a high multiple and good news appeared
to be factored into the stock price, he added.
Analysts expressed concerns about declines in sales, volume
and operating profit at its Hill's pet food business. Colgate
has said it wants to improve the operation with some higher-end
Colgate, best known for its namesake toothpaste, said it
raised some prices and spent more to advertise new products
while cutting costs.
Colgate goes head-to-head against P&G in toothpaste,
toothbrushes and soaps. It also competes against Europe's
Unilever , which posted weaker-than-expected
first-quarter growth on Thursday.
February's devaluation of the Venezuelan bolivar led Colgate
to take a hefty charge in the quarter and to plan for additional
charges later in the year. For U.S. companies that do business
in the country, the devaluation meant their earnings in bolivars
were worth less when converted back to dollars.
In February, Venezuela devalued the bolivar by 32 percent,
requiring Colgate to adjust its balance sheet to the new rate.
The New York-based company had already warned the revaluation
would cut earnings by as much as 7 cents per share per quarter.
On Thursday, it said it expected the impact of the currency
devaluation to be 5 cents to 7 cents per quarter.
The company affirmed its forecast of 2013 earnings-per-share
growth of 5.5 percent to 6.5 percent on a dollar basis. That
equates to earnings of roughly $5.65 to $5.71 per share, while
analysts were looking for $5.70, according to Thomson Reuters
Excluding aftertax charges of $111 million from Venezuela
and $55 million from restructuring, Colgate earned $626 million,
or $1.32 per share, matching the average analyst target.
On a net basis, first-quarter profit fell to $460 million,
or 97 cents per share, from $593 million, or $1.23 per share, a
Sales rose 2.5 percent to $4.32 billion, topping the
analysts' estimate of $4.29 billion. The volume of goods sold
rose 4 percent, and pricing was up 1.5 percent.
Organic sales, which strip out the effects of foreign
exchange fluctuations, acquisitions and divestitures, rose 6
Sales in Latin America, Colgate's biggest market, were up 1
percent on a net basis and 9 percent on an organic basis.