Colgate’s sales fall 5.5% in Q1

Colgate-Palmolive Company said worldwide sales declined 5.5% during the first quarter to $3,502.8 million and unit volume declined 0.5%.Excluding divested businesses, worldwide sales declined 5.0% and unit volume was flat with the year ago period. Organic sales (excluding foreign exchange, acquisitions and divestments) grew 8.0%. Global pricing increased 8.0% and foreign exchange was negative 13.0%.

Gross profit margin as reported increased to 57.5% in first quarter 2009 from 56.6% in first quarter 2008. Excluding restructuring charges in 2008, gross profit margin increased 20 basis points to 57.5% in first quarter 2009 from 57.3% in first quarter 2008, reflecting the benefits of increased pricing and aggressive cost-savings programs, which more than offset the impact of higher raw and packaging material costs.

“We are delighted to begin 2009 with continued strong top-line momentum with organic sales increasing 8.0%,” said Ian Cook, chairman, president and chief executive officer. “Also, our gross margin, operating margin and net profit as a percent to sales increased during the quarter, despite difficult economic conditions worldwide. Our cost-cutting and efficiency programs as well as increased pricing more than offset the impact during the quarter of higher raw and packaging material costs worldwide and the strengthening dollar.

“Value-added new products at various price points across categories continue to drive market share gains worldwide. Colgate maintained its global leadership share in toothpaste of 44.4% and strengthened its global leadership in manual toothbrushes with its global market share in that category reaching a record 30.8% year to date.”

Mr. Cook concluded, “Looking ahead, we have a very full new product pipeline for the balance of the year, which should contribute to positive unit volume growth in the second quarter and for the full year. We expect our strong organic sales growth to continue, driven by both positive volume and higher pricing.

“The benefits of recently easing commodity and oil prices have begun to flow through and should build as the year goes on. This, coupled with the higher pricing and our ongoing aggressive savings programs, should offset the expected impact of the stronger dollar on raw and packaging material costs, indicating that gross profit margin should increase as the year progresses and be up at least at the high end of our targeted range of 75 to 125 basis points for the full year 2009. Overall, we are comfortable with external profit expectations for both the second quarter and the year.”