Colgate-Palmolive's net income during its latest quarter rose 19 percent to $493.8 million with strong sales worldwide and increased pricing to help offset rising raw and packaging materials costs.

The New York-based company raised prices 4.5 percent during the April-June period, but also delivered "solid volume growth within our ongoing targeted range" of 5 percent to 8 percent, VP-Investor Relations Bina Thompson said July 29 during the firm's fiscal 2008 second-quarter earnings call.

Colgate has "expectation that such growth will continue for the balance of the year," Thompson said.

According to Thompson, the firm's ongoing restructuring and cost-cutting measures enabled it to increase advertising spending by 18 percent, which contributed to double-digit sales growth.

Worldwide sales for the quarter grew 16.5 percent to $3.96 billion. North American sales were up 6.5 percent, driven by product launches at the super-premium price level, Colgate notes.

The firm says the U.S. marketing campaign for Colgate Total Advanced Clean and Colgate Total Advanced Whitening, featuring Brooke Shields, and a professional sampling program were integral to the toothpaste line reaching its "highest quarterly share ever" - 16.2 percent.

Colgate also continues to expand the Colgate Max toothpaste line with the launch of Colgate Max White.

Colgate plans to introduce several products in its third quarter. "Our new product pipeline is full and we plan to support our strong momentum with continued high levels of advertising worldwide," Colgate CEO Ian Cook states in the release.

Thompson said Colgate Max Fresh toothpaste with mouthwash beads is innovative on three fronts: In addition to being the first with mouthwash beads, it will be the only toothpaste sold in a clear tube and the carton will have a die-cut to showcase material inside the tube.

The toothpaste, along with a new Max Fresh manual toothbrush "with a mint-scented brush handle and tongue freshener," Thompson said, "will help to expand the Max Fresh portfolio in the important fresh breath segment."

Total and Max product launches also helped boost U.S. sales for Colgate by 7 percent during its first quarter, when the firm also faced rising costs (¹ Also see "Colgate Oral Care, Soap Strengthen North American First-Quarter Sales" - Pink Sheet, 5 May, 2008., p. 18).

On the personal-care side, the firm will launch a premium-priced high-efficacy deodorant - Lady Speed Stick Clinical Proof - to compete directly with Procter & Gamble's Secret Clinical Strength antiperspirant product.

Thompson said commodity costs and other effects of the slumping economy continue to pose challenges.

"Our performance in North America is particularly encouraging given the current concerns about the economy and its related effects on consumer purchasing habits," he said.

The company says it also gained market share for toothpaste in Mexico, Brazil, China and Russia.

Additionally, "the strong momentum we have seen in the fast-growing areas of the world - Latin America and Greater Asia/Africa - continues and we see no signs of a significant slowdown in either one," Thompson said.

Latin America accounts for 27 percent of Colgate's sales and achieved a 23.5 percent sales increase for the quarter "on top of double-digit sales and volume growth" in 2007, the firm says.

Sales in Greater Asia/Africa increased by 17.5 percent, driven by growth in China.

Colgate increased its market share in China to 30.7 percent with the success of product launches including Colgate Total Professional Clean, Darlie Salt White toothpastes and Plax Overnight Herbal Sensations mouthwash.

"We expect that our strong top-line and excellent savings initiatives will result in solid, good quality, mid-teens earnings-per-share growth in 2008, and while we have not yet begun our 2009 budget process, we anticipate another year of solid, double-digit earnings-per-share growth in 2009 with gross profit margin up versus 2008," Cook states.

- Jessica Lake (j.lake@elsevier.com)

Product Launches Shelter Colgate From Higher Costs, Troubled Economy

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