Colgate-Palmolive 3Q profit rises 18 percent

By BETSY VERECKEY

posted: 28 DAYS 19 HOURS AGO

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CHICAGO -Colgate-Palmolive Co.'s higher prices have continued to stick, helping the consumer products company post an 18 percent higher third-quarter profit.

Many consumer products companies, like Colgate, raised prices in the past year to cover higher ingredient costs, but some analysts say that won't be the case in coming months.

"The good news for consumers is that's now behind us for the most part," said Edward Jones analyst Jack Russo. "For the next couple quarters, you won't see price increases like you have in the past."

Colgate's brands are essential staples, such as its namesake toothpaste and soap. Rival Procter & Gamble makes consumer staples, but it also sells discretionary items, such as fragrances, which shoppers are less likely to buy right now. Earlier Thursday, P&G posted a 1 percent decline in profit, but that was still better than analysts expected.

Colgate-Palmolive also ramped up advertising, especially for new products, which boosted volume, revenue and market share.

The maker of toothpaste, dish soap and Ajax cleanser said Thursday that it earned $590 million, or $1.12 per share, in the quarter that ended in September. A year ago, Colgate earned $500 million, or 94 cents per share.

Revenue rose to $4 billion from $3.99 billion, helped by a 5 percent rise in prices worldwide.

Analysts polled by Thomson Reuters expected $1.11 per share and lower revenue of $3.94 billion.

The amount of products sold rose 1.5 percent as consumers appeared willing to spend more for their products.

To entice shoppers trading down to cheaper items, Colgate has stepped up advertising on its brands every quarter this year and plans to do so in the fourth quarter. CEO Ian Cook said advertising rates have declined, and rivals aren't spending as much to advertise their products.

"We are getting relatively more exposure than our competitors in key markets," Cook said on a conference call with analysts.

Colgate, which is based in New York, gained market share in its namesake toothpaste in the U.S., Mexico, Brazil, China, India and Russia.

Sales rose 3 percent in North America, which represents 19 percent of Colgate's total revenue. The company rolled out new products, such as Softsoap body butter apricot scrub and Ajax lime with bleach alternative dish soap.

Revenue rose 5 percent in Latin America, where the company maintained nearly 79 percent of the market for oral care products.

But sales declined 5.5 percent in Europe and the South Pacific because of the effect of foreign currency.

Sales from Hill's Science Diet pet food rose 1.5 percent as the company raised prices 4.5 percent.

Colgate didn't give a detailed outlook but forecast double-digit earnings-per-share growth in 2010.

Shares rose $1.09 to $78.77 in trading.

2009-10-29 13:35:27