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Cost savings help lift Colgate’s earnings

/ Source: The Associated Press

Colgate-Palmolive Co., a top seller of toothpaste and other personal care products, reported Wednesday that first-quarter earnings grew 8 percent as cost savings, increased pricing and higher margin products helped boost results despite restructuring charges.

The New York-based company also expanded its share of the toothpaste market and its operating divisions posted higher volume.

Colgate, whose products also include Palmolive dishwashing liquid and Ajax cleanser, earned $324.5 million, or 59 cents per share, up from $300.1 million, or 53 cents per share a year ago. Excluding a loss per share of 9 cents for restructuring items and 2 cents for stock options expense, the company reported a profit of 70 cents per share in the latest quarter.

The company is in the midst of a four-year restructuring plan it unveiled in December 2004.

Sales rose 5 percent to $2.87 billion from $2.74 billion, with oral, personal and home care sales up 4 percent to $2.49 billion. The company’s pet nutrition segment revenue grew 7 percent to $385.3 million.

Colgate’s earnings were 68 cents per share including the 2 cents for stock options expense. Analysts polled by Thomson Financial expected earnings per share of 66 cents, including an estimated 1 cent stock option expense, on sales of $2.84 billion.

“We are very pleased to begin 2006 with excellent top and bottom line growth, exceeding expectations and building on the strong growth momentum we saw in 2005,” said Reuben Mark, chairman and chief executive, in a statement.

The company said oral care unit volume grew significantly in every geographic division, and rose 10 percent worldwide, as it continued to expand its share of the toothpaste and manual toothbrush markets. In the United States, its ACNielsen share of the toothpaste market reached 36.5 percent for the year to date, Colgate said.

“We are especially encouraged by the 110 basis point improvement in gross profit margin during the quarter, to an all-time record and the largest quarterly gross profit increase in over three years,” Mark said.

By region, the company’s oral, personal and home care sales edged up 1 percent to $617.6 million in North America, jumped 18 percent to $692.7 million in Latin America, and rose 4 percent in greater Asia and Africa. Those gains helped offset a 4 percent decline to $691.7 million in Europe and the South Pacific.

Colgate said it is still on track to post double-digit growth in full-year earnings per share, excluding restructuring and stock option expenses. Analysts expect the company to earn $2.86 per share for the year.

“Despite sharply rising energy costs, we expect our gross profit margin, before restructuring charges, to be up nicely for the year as a result of our ongoing cost-savings initiatives, improved pricing, restructuring and promotional savings,” Mark said.