Colgate predicts lower profits in 2019 as strong dollar bites

Colgate-Palmolive gave a sombre outlook for 2019, saying it expects profits to decline this year as the strong dollar continues to exacerbate its emerging markets sales woes and add to the drag from higher input and logistics costs.

The world’s biggest toothpaste maker warned on Friday that it now expects earnings per share for 2019 to fall by “low-single-digit” levels, confounding analysts’ expectations for a modest rise. Net sales meanwhile are likely to be “flat or modestly higher” compared to 2018, it said.

Colgate shares fell 3.2 per cent in pre-market trading.

Like many big consumer goods companies, Colgate, whose brands also include Sanex and Lady Speed Stick, is being hit on all fronts. On one hand, higher freight, packaging and ingredient costs are squeezing margins, while shifting consumer tastes - particularly in North America - mean established big household brands have been steadily losing ground to smaller and more health-conscious or eco-friendly start-ups.

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But for Colgate, which generates nearly 75 per cent of its consumer goods sales outside of North America, the strong greenback is heaping additional pain by making the company’s products more expensive overseas and diminishing revenues earned abroad once they are repatriated and converted back into dollars.

The company said on Friday foreign exchange headwinds shaved 5 per cent off its fourth quarter sales.

– Copyright The Financial Times Limited 2019