Colgate 3Q Profit Grows Despite Cost Pressures

Despite sharp increases in material costs and deteriorating economic conditions, Colgate-Palmolive (NYSE:CL) reported on Thursday a stronger-than-expected third-quarter profit on improved worldwide volumes and higher prices.

The New York-based consumer products giant known for products such as Colgate toothpaste, Speed Stick deodorant and Ajax said it earned $643 million during the period, or $1.31 a share, which is up from $619 million, or $1.21 a share, in the same quarter last year.

The results were just ahead of average analyst estimates polled by Thomson Reuters of $1.30 a share.

Revenue for the three-month period was up to $4.38 billion from $4.94 billion a year ago, narrowly beating the Street’s view of $4.37 billion. In developed markets, the company returned to positive organic sales growth for the first time in six quarters.

The company attributed the growth to 4.5% increase in global volumes and higher prices, which were partially offset by much stronger material costs and increasing competition.

“This strong top-line momentum should continue in the balance of the year fueled by new products across all categories and in all geographies,” Colgate said in a statement.

The company said its global market shares in toothpaste and toothbrushes continued to grow during the quarter and reached record highs year-to-date, with toothpaste strengthening to 44.4% and toothbrushes climbing to 31.8% so far this year.

However, costs are expected to continue placing pressures on the company and the dollar is slated to continue strengthening. Colgate warned its profit margin for the year could decline by between 150 and 170 basis points versus the same period in 2010.

Colgate said it is looking toward aggressive cost-cutting measures and strategic pricing measures as a way to offset some of the cost pressures heading forward.