Colgate-Palmolive surpassed Wall Street’s expectations yesterday, as it reported a 26 per cent rise in fourth-quarter net income, boosted by stronger sales, particularly in Latin America.
The consumer products company, maker of the ubiquitous toothpaste, said net income rose to $361.2m, or 65 cents a share, for the final three months of last year from $285.7m, or 50 cents, in 2004.
Excluding $41.9m in restructuring charges and other one-off items, earnings for the quarter were $380.6m, up 14 per cent on the comparable figure last year.
Colgate in December 2004 announced plans to cut 12 per cent of its workforce and close one-third of its factories as part of a four-year restructuring programme.
The sale of its laundry detergents business in south-east Asia incurred an after-tax gain of $32.9m in the fourth quarter.
Sales rose 3.6 per cent to $2.9bn, on a 2.5 per cent increase in unit volume and 2 per cent higher prices
In Latin America, sales gained 16.5 per cent, while Europe was the only market to retreat, with sales slipping 7 per cent.
The company posted a better-than-expected 100 basis point improvement in its gross profit margin, which, excluding restructuring charges, was 56 per cent.
Reuben Mark, chairman and chief executive, said: “We expect our growth momentum to continue as we enter 2006,” adding that the company expected to see double-digit earnings per share growth from the first quarter of the year.
William Pecoriello, an analyst at Morgan Stanley, said in a note that the results, “provided evidence that restructuring savings have achieved critical mass as to balance the top and bottom lines.”
He added: “More importantly, Colgate is successfully correcting its recent over-reliance on promotions by increasing media while improving pricing.”
Colgate’s shares were trading up 3 per cent at $55.55 in early-afternoon trading.