UPDATE 3-Colgate reports rise in key sales metric, sees margins improving

Thu Jan 29, 2015 12:27pm EST
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(Adds company comments from conference call, details, updates shares)

By Nandita Bose and Yashaswini Swamynathan

Jan 29 (Reuters) - Colgate-Palmolive Co on Thursday reported a rise in an important sales metric, sending its shares up 6 percent as investors shrugged off a lowered earnings forecast.

The consumer products maker, which controls nearly 45 percent of the global toothpaste business, said fourth-quarter organic sales, which exclude the effects of foreign exchange, acquisitions and divestments, rose 6 percent because of higher volumes and better pricing.

Chief Executive Officer Ian Cook said on a conference call that sales volumes increased in all emerging markets despite the price hikes Colgate took to offset a strengthening dollar.

Cook also said Colgate expected gross profit margins to increase by 50 to 100 basis points in 2015 as it benefits from lower prices for oil and other commodities.

In the fourth quarter, gross margin fell 30 basis points to 58.8 percent from a year earlier due to higher raw material and packaging costs stemming in large part from unfavorable currency fluctuations.

Net sales suffered because of the strong dollar and weak demand in markets such as Brazil and Europe.

Net sales in Latin America, Colgate's biggest market, fell 6 percent. Sales were down 7.5 percent in Europe and 10 percent in Africa but rose 4.5 percent in Asia.   Continued...