Colgate-Palmolive Co. (CL) on Wednesday said quarterly profit topped analysts' expectations for the first time in two years, as it reaped the benefits of its restructuring program and price increases, sending its shares up 3.6 percent.

Colgate, which makes its namesake toothpaste and cleansers along with other products, said sales and operating profit grew in each region except for Europe, which posted declines.

New York-based Colgate unveiled a restructuring plan in late 2004 that included cutting 12 percent of its work force and closing one-third of its factories. The company has also been raising prices on some products to help offset higher costs for raw materials such as resins.

Net income jumped 26 percent to $361.2 million, or 65 cents per share, from $285.7 million, or 50 cents per share, in the year ago period.

Excluding items, profit rose 14 percent to $380.6 million, or 69 cents per share, from $333.7 million, or 59 cents per share, a year earlier. On that basis, analysts' average profit forecast was 68 cents per share, according to Reuters Estimates.

"Four quarters into its restructuring, Colgate has been able to spend more on advertising, improve its top line, and beat Street estimates. These numbers support the view that Colgate is successfully following the consumer restructuring playbook," Bear Stearns analyst Justin Hott wrote in a note to clients. Colgate is the only company he rates "outperform."

Sales rose 3.6 percent to $2.9 billion, but were slightly below analysts' average revenue forecast of $2.96 billion.

DOUBLE DIGIT EPS GROWTH SEEN IN 2006

Colgate said it expects to post double-digit earnings per share growth on a percentage basis in 2006, starting in the first quarter, excluding restructuring charges and accounting changes for stock-based compensation. The forecast is slightly ahead of Wall Street estimates.

Excluding restructuring charges, gross profit margin - a key metric for Colgate - rose to a record 56 percent from 55 percent a year earlier. On a reported basis, gross profit margin was 54.6 percent, down from 54.8 percent.

The gross margin expectation "was a big wild-card for 2006, and there should be more comfort now," said JP Morgan analyst John Faucher, who has an "overweight" rating on Colgate.

A large part of the margin growth came from price increases and a new program to make promotions more efficient, chairman and chief executive Reuben Mark said during a conference call.

Mark, who has led Colgate for two decades, was not the only executive to make comments on Wednesday. For the first time, president and chief operating officer Ian Cook had a statement in the earnings press release and also gave a brief reply to a question during the call. Cook is seen as Mark's heir apparent by many industry watchers.

Colgate sold its heavy-duty laundry detergent brands in Southeast Asia at the end of the quarter for an after-tax gain of $32.9 million. The company said that gain was more than offset by $41.9 million in after-tax charges related to its restructuring plan and $10.4 million of incremental income taxes related to the American Jobs Creation Act, as well as a one-time, noncash international post-retirement charge.

Mark said that Colgate took $145 million in restructuring charges in 2005 and reaped savings of about $35 million. The company expects charges of about $228 million this year, with savings of $70 or more; for 2007, there should be about $110 million in charges and $90 million in savings, he said.

Deustche Bank analyst Bill Schmitz said that while the restructuring program is producing short-term results, "long-term concerns remain, and at current valuation, we maintain our hold rating."

Colgate trades at 20.4 times this year's estimated earnings, while Kimberly-Clark Corp. (KMB), another consumer products maker just a few months into its own restructuring, trades at about 15.5 its estimated 2006 profit, according to Reuters data.

Shares of Colgate fell 2.2 percent from the start of the year through Tuesday, when they closed at $53.75. The shares traded as high as $55.71 on Wednesday and were last up $1.76, or 3.3 percent, at $55.51.