Colgate-Palmolive Co. expects to grow its gross margins over the next five years to the mid-60% range from an expected 60% for 2010, said President and CEO Ian Cook during the Sanford C. Bernstein conference in New York on June 2.
Part of the company's growth plan includes expansion in emerging markets. In Latin America, Colgate-Palmolive's sales grew 10.5% in the first quarter, the company said in its April 29 earnings report. The company's toothpaste market share in the region grew to 70.4%, up 50 basis points over the year-earlier period.
Growth in the region was strong despite a charge related to Venezuela devaluing its currency. Colgate-Palmolive incurred a charge of $271 million, or 52 cents per share, during the quarter. The charge contributed to profit falling to $357 million, or 69 cents per share, versus $508 million, or 97 cents per share, a year earlier.
At A Glance
New York, N.Y.
Primary Industry: Chemicals
Number of Employees: 38,100
2008 In Review
Revenue: $15.33 billion
Profit Margin: 12.77%
Sales Turnover: 1.54
Inventory Turnover: 5.66
Revenue Growth: 11.17%
Return On Assets: 19.36%
Return On Equity: 85.61%
In North America, which accounts for 20% of the company's sales, Colgate introduced several new products, including Colgate ProClinical and Colgate Triple Action toothpastes. The company also launched new products in the soaps category, including Softsoap Nutri Serums and Softsoap Body Butter.
Colgate-Palmolive's sales in North America grew 3% in the first quarter. Operating profit rose 13% due to higher sales and gross profit margins driven by new products, cost-savings initiatives and lower raw and packaging material costs.
Meanwhile, Cook noted in the June 2 conference that the company continues to seek selective acquisitions that don't pose significant long-term risk. He said the company views acquisition activity as a financial and strategic activity.
In addition, the company is trying to connect with consumers through shopper marketing programs and in some cases living with them, Cook said. He mentioned one instance in which a Colgate representative lived with families in different Indian villages. The situation provided the company with an opportunity to view consumer home-care and oral hygiene habits up close.
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