Colgate-Palmolive Increases Profits By 19% Through Prices Increases

July 29, 2008 12:13 p.m. EST

New York, NY (AHN) -- Price increases more than offset increases in raw materials for consumer products maker Colgate-Palmolive, which announced Tuesday that its second quarter profit climbed 19 percent on strong sales worldwide.

Having increased its prices globally by 4.5 percent, Colgate, like other consumer products makers, did so in response to higher prices for commodities such as soy beans, corn and oil.

Excluding restructuring costs, Colgate's profit was $523.3 million, or 98 cents per share, in the second quarter quarter, thanks mainly to increased revenue of $3.96 billion from $3.41 billion. That's a 16 percent jump.

New York-based Colgate-Palmolive dealt with sharply rising raw materials and packaging costs not only by raising prices, but also through cost cutting and the addition of higher-margin products to "almost completely" offset sharply rising raw materials and packaging costs, Chief Executive Ian Cook said in a statement.

Colgate-Palmolive Co., which also makes Palmolive, Ajax and Irish Spring products, increased advertising spending by 18 percent to reach a record level for the company. It gained market share for toothpaste in the U.S., Mexico, Brazil, China and Russia.

Revenue in North America grew 6.5 percent with operating profits nearly keeping pace at 5 percent more. In Latin America, the numbers were even better, with revenues up by 23.5 percent and operating profits at a close 19 percent. An advertising campaign featuring Hollywood actress Brooke Shields helped Colgate increase its market share for Colgate Total toothpaste to 16.2 percent.