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International Growth Boosts Colgate Profit

By Reuters
Published | Updated

CHICAGO – Colgate-Palmolive Co. (CL) on Wednesday posted a 4 percent rise in second-quarter profit as growth in its international businesses and cost cuts helped offset sluggishness in North America and rising raw material prices.

The maker of Colgate (search) toothpaste, Irish Spring (search) soap and Simply White (search) tooth-whitening products said earnings rose to $373.9 million, or 66 cents a share, from $359.8 million, or 62 cents share, a year earlier.

Analysts on average forecast 67 cents a share, according to Reuters Estimates. The average was 66 cents a share, according to Thomson First Call.

Sales rose 4.5 percent to $2.57 billion. Analysts had on average forecast $2.58 billion. Sales were up 5.5 percent, excluding divestments, and unit volume rose 5 percent on the same basis.

"Second-quarter unit volume growth in the U.S., excluding Simply White gel, is the strongest in three years, and this momentum is expected to continue for the balance of the year and into 2005," Colgate Chief Executive Reuben Mark said in a statement.

"The current pace of the business in third quarter is strong and national market shares, particularly for toothpaste, are up," he said.

Volume in North America was up slightly, better than the company had expected, but sales fell 2.5 percent. Toothpaste volume in the United States, a key category for Colgate, was up 9 percent

Lower prices, coupons and incentives to retailers cut sales in North America by 3 percent.

"Pricing was off 3 percent, which indicates what we've know all along, that North America is a very competitive market. Procter is still out there lurking," Joseph Altobello, analyst at CIBC World Markets, said. Altobello rates the stock "sector performer."

For the past several months, New York-based Colgate has been trying to improve its North American business, which has suffered from intense competition from Procter & Gamble Co.'s (PG) Crest toothpastes and weakness in Colgate's Simply White tooth-whitening products.

In Europe, sales rose 11.5 percent and volume rose 7.5 percent, excluding divestments. Volume rose 5 percent in Latin America, with sales up 1.5 percent. Sales rose 13 percent and volume rose 11 percent in Asia/Africa, excluding divestitures.