|
 |
| Colgate-Palmolive Co. on September 20, 2004
warned that second-half earnings will fall well short of Wall Street
forecasts due to higher marketing spending.
(Reuters) |
Colgate-Palmolive Co. on Monday issued its first formal profit warning
in almost a decade, citing higher marketing spending and raw-material
costs, sending its shares down 11 percent to a four-year low.
The warning's timing surprised financial analysts, who argued that the
impact of higher prices of resin , pet food ingredients and
other raw materials, as well as the increased marketing spending, should
have been apparent earlier.
"That's the question that has everybody scratching their head right
now," said William Chappell, analyst at SunTrust Robinson Humphrey. He
noted that Colgate had made a public presentation at an investor
conference 12 days ago without lowering its profit forecast.
The maker of Colgate toothpaste, Irish Spring soap and other products
has made clear in recent months that it would spend aggressively on
marketing and promotion to maintain or increase market share, with
cost-cutting programs helping fuel the accelerated marketing.
Colgate forecast earnings per share of 57 to 59 cents in both the third
and fourth quarters. Analysts' average forecasts are 67 cents per share
for the third quarter and 68 cents per share for the fourth quarter,
according to Reuters Estimates.
The company said last December it had lost its focus in the United
States oral-care market as it focused on introducing a tooth-whitening
product which had disappointing sales. The company has been in a fierce
battle with Procter & Gamble Co. in the U.S. toothpaste market.
"I think they (P&G) have been more aggressive on the marketing and
advertising in the past and Colgate is playing catch-up," Chappell said.
Chappell, who rates Colgate shares "buy," added: "We think there's
value for longer-term shareholders, but don't think there's any near-term
catalysts ."
(Agencies) | 
Updated: 2004-09-21 13:43