Colgate's quarterly sales fall short of estimates

[BENGALURU] Colgate-Palmolive Co reported lower-than-expected quarterly sales on Friday along with a drop in profit for a charge related to the new US tax law, driving shares of the world's largest toothpaste maker 4 per cent lower.

Colgate said it expects sales growth in 2018 but the forecast did nothing to shake the impression of stagnation that has dogged Colgate and other consumer goods producers in the past year.

While the S&P 500 has risen more than 50 percent in the past year, Colgate shares are up less than 15 per cent and it has missed sales estimates in five of the past six quarters.

Chief Executive Officer Ian Cook said the global market in the company's core dental-care business remained "challenging".

For 2018, Colgate said it expected mid-single-digit net sales growth and low- to mid-single-digit organic sales growth, along with double-digit earnings per share growth.

Sales rose 4.5 per cent to US$3.9 billion in the fourth quarter ended Dec 31, but analysts on average had expected sales of US$3.92 billion, according to Thomson Reuters I/B/E/S.

Net income fell to US$323 million, or 37 cents per share, from US$606 million, or 68 cents per share, largely due to a US$275 million charge from changes to the US tax code.

"Today's results once again show that Colgate remains vulnerable to macro uncertainty and operational challenges", Wells Fargo analyst Bonnie Herzog said in a note.

Profit, excluding charges, was 75 cents per share, in line with analysts' estimates.

Colgate said its worldwide advertising spend rose 24 per cent to US$369 million in the fourth quarter. The company added that it planned to increase ad spends even further in 2018.

Those increased outlays have taken a toll on operating profit, which was down nearly 3 per cent overall and in all of the company's global geographical segments with the exception of Europe.

REUTERS