Consumers worldwide paid more for their favorite Colgate-Palmolive Co. products in the fourth quarter, helping boost profits at the maker of toothpaste, Irish Spring soap and other personal-care and cleaning products 20 percent higher than a year earlier.
Cost-cutting and the price hikes of about 7.5 percent offset a stronger dollar, which made the company's products more expensive overseas, where it does about 80 percent of its business.
Shares rose 2.2 percent to close at $65.22 after the company said it was "comfortable" with Wall Street analysts' forecast for its 2009 profit. Colgate-Palmolive did not offer specific guidance for its first quarter, which started Jan. 1, or for 2009 as a whole.
Analysts polled by Thomson Reuters expect a profit of $4.23 per share for the year, 9 percent more than in 2008.
Colgate-Palmolive's fourth-quarter profit rose to $497 million, or 94 cents per share, from $414.9 million, or 77 cents per share, a year earlier.
Excluding restructuring charges, it earned $1 per share. That topped analysts' average earnings estimate of 98 cents per share. Analysts' estimates typically exclude one-time items.
Quarterly sales edged up to $3.66 billion from $3.64 billion a year earlier, weighed down by the strengthening dollar.
The company said new products boosted sales in North America. Successful launches included Colgate 360 Sonic Power battery toothbrush, Irish Spring Moisture Blast, Irish Spring Reviving Mint body wash, Palmolive Pure & Clear dish liquid and Softsoap brand Body Butter Coconut Scrub moisturizing body wash.
Meanwhile, the company cut overhead costs by 0.9 percent to 33 percent of revenue in the quarter. That is the biggest reduction in three years.
Bina H. Thompson, Colgate-Palmolive's vice president of investor relations, said price increases worldwide also helped offset higher raw material costs and a stronger dollar.
Thompson said demand was particularly strong overseas, especially in Latin America, where sales are expected to grow by double digits in 2009. During the fourth quarter, sales rose nearly 6 percent in the region, which makes up 27 percent of the company's total revenue.
"We're very encouraged by the continued solid performance in this region," Thompson said on a conference call with analysts.
Deutsche Bank analyst Bill Schmitz, in a client note, said price increases have driven sales growth in Latin America, where the company maintains strong market share.
"Earnings are highly contingent on pricing and continued growth in Latin America," he said.
But Schmitz kept a hold rating on the stock, saying that shares are unlikely to move much higher from current levels.
Chief Executive Ian Cook said falling commodity costs should help the company in the first half of 2009.
"This, coupled with higher pricing and our ongoing aggressive savings programs, should offset the expected impact of the stronger dollar and indicates that gross profit margin for full year 2009 should be up nicely versus 2008," Cook said in a statement.
A stronger dollar hurts results by dampening revenue as foreign currencies are converted.
"Overall, despite the global economic slowdown, we are comfortable with external profit expectations for the first quarter and full year 2009," he said.
Profit for all of 2008 rose 13 percent to $1.96 billion, or $3.66 per share, from $1.74 billion, or $3.20 per share, in 2007. Revenue rose 11 percent to $15.33 billion from $13.79 billion, helped by volume growth, higher prices and favorable exchange rates.
Excluding one-time restructuring charges, the company earned $3.87 per share, beating a Wall Street estimate.
Analysts, who typically exclude one-time charges, had expected $3.85 per share and $15.38 billion in revenue.
Other brands made by New York-based Colgate include Tom's of Maine, Ajax and Softsoap.
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AP Business Writer Vinnee Tong in New York contributed to this report.
