Earnings Preview: Colgate-Palmolive 1Q helped by weak dollar
NEW YORK—Colgate-Palmolive Co. which makers products including its namesake toothpaste and dish soap, Speed Stick deodorant and Science Diet pet food, reports earnings for the first quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Home- and consumer-product makers are facing rising commodity and other costs, which they are offsetting by raising selling prices. International results are benefiting by the weakening dollar.
In February, Colgate raised its quarterly dividend 11 percent, to 40 cents from 36 cents, payable on May 15 to shareholders of record as of April 24.
BY THE NUMBERS: Analysts surveyed by Thomson Financial, on average, expect a profit of 88 cents per share on revenue of $3.56 billion. In the year-ago period, the New York-based company reported profit of 76 cents per share on sales of $3.41 billion.
ANALYST TAKE: Deutsche Bank analyst Bill Schmitz Jr. expects earnings a penny higher than consensus at 89 cents per share, helped by the benefit of a weaker dollar, offset by lower profit margins in North America due to higher commodity costs and competition.
"Latin America, Central and Eastern Europe and China should continue to show robust organic and currency-aided results," he wrote in a note to investors last week.
He said scanner trends in the U.S. have been "relatively decent," despite tougher competition and weakening consumer spending.
"The company has driven solid trade up over the last several years, especially in oral care, and there are few early signs that value brands or lower-priced variants like Colgate Big Red are swapping share with premium products like 360 toothbrush or Colgate Total and its numerous line extensions," Schmitz said.
WHATS AHEAD: In February, the company said its new product pipeline includes Colgate Total Advanced Whitening and Colgate Total Advanced Fresh toothpastes, the Colgate 360 degree Deep Clean manual toothbrush, Colgate 360 degree Sonic Power battery toothbrush and other products. Colgate's multiyear strategic plan is to grow its top-line and margins while increasing spending on advertising.
STOCK PERFORMANCE: Shares were flat during the first three months of the year, closing at $77.91 on March 31. Shares have fallen about 2.4 percent since then, ending Monday trading at $76.03.
