(Reuters) – Toothpaste maker Colgate-Palmolive raised its forecasts for annual profit and organic sales on Friday, after beating second-quarter estimates on resilient demand for its high-priced products.
WHY IT’S IMPORTANT
Organic sales in the Latin American segment – a major revenue-generating region – jumped 18.8% in the quarter, compared with a 16% rise a year earlier.
Increased investments in advertising also helped the company counter rising competition from lower-priced private labels.
CONTEXT
Consumer packaged goods companies such as Colgate-Palmolive and Kimberly-Clark have reported a rise in sales volumes on steady demand, despite consecutive price hikes.
Higher product prices also helped Colgate-Palmolive counter rising raw materials and packaging costs, expanding its gross profit margins by 280 basis points to 60.6% during the quarter.
KEY QUOTE
“The strong levels of investment should continue in the balance of the year as we focus on building brand health and scaling the capabilities needed to drive growth in both the short and long term,” said CEO Noel Wallace.
BY THE NUMBERS
Colgate-Palmolive expects annual profit growth between 8% and 11%, compared with its prior forecast of mid- to high-single-digits.
Full-year organic sales growth was projected to be between 6% and 8%, up from its previous expectations of 5% to 7%.
Colgate-Palmolive’s product prices rose 4.2% in the second quarter. Its organic volumes jumped 4.7%, after having dipped 3% in the year-ago quarter.
The company posted a quarterly adjusted profit of 91 cents per share, compared with analysts’ average estimate of 87 cents, according to LSEG data.
The company’s net sales of $5.06 billion beat estimate of $5.01 billion.
MARKET REACTION
Shares of the company rose about 1% in premarket trading.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shreya Biswas)
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