Colgate's profit beats estimates due to cost cuts

Thu Jan 30, 2014 10:22am EST
 
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By Siddharth Cavale

(Reuters) - Colgate-Palmolive Co (CL.N: Quote), the world's largest toothpaste maker, reported a better-than-expected quarterly profit as cost cuts offset the negative impact of a stronger dollar.

Colgate shares rose as much as 4 percent on Thursday.

"The company continues to deliver solid results, despite macro challenges - which is impressive," JPMorgan analyst John Faucher wrote in a note.

Colgate's gross margins rose in the quarter ended December 31 as it cut costs by negotiating better lease terms with suppliers, using cheaper raw material and reducing packaging material in products.

Launch of higher-margin products, redesigning of some brands and introduction of successful regional products in other markets helped the company grow its sales.

Colgate, which controls about 45 percent of the global toothpaste market, said it expected gross margin expansion to continue and its 2014 adjusted earnings growth to be in line with analysts' estimates.

Analysts on average are expecting earnings of $3.08 per share in 2014, according to Thomson Reuters I/B/E/S.

Faucher said Colgate's guidance was "fine," as there were concerns that a stronger dollar would bite into its profits.   Continued...

 
A display of Colgate toothpaste is seen on a store shelf in Westminster, Colorado April 26, 2009 file photo. REUTERS/Rick Wilking