Operating profit in Latin America increased 2% in the third quarter of 2012 to $371 million, or 29.8% of Net sales. This increase in Operating profit was due to an increase in Gross profit, which was partially offset by an increase in Selling, general and administrative expenses, both as a percentage of Net sales. This increase in Gross profit was driven by higher pricing and cost savings from the Company’s funding-the-growth initiatives, which were partially offset by higher raw and packaging material costs. This increase in Selling, general and administrative expenses was primarily due to higher overhead expenses, which were partially offset by lower advertising expenses. This increase in overhead expenses was mainly due to negative foreign exchange transaction costs and higher costs due to inflation in Venezuela.
Colgate’s strong leadership in oral care throughout Latin America continued during the quarter with toothpaste market share gains year to date led by Brazil, Central America, Chile and the Dominican Republic. Strong sales of Colgate Luminous White, Colgate Total Pro Gum Health and Colgate Triple Action Extra Whitening toothpastes contributed to growth throughout the region. Colgate strengthened its leadership of the manual toothbrush market throughout the region, driven by strong sales of Colgate 360° Surround, Colgate 360° Luminous White and Colgate Triple Action manual toothbrushes. In mouthwash, Colgate’s year-to-date market share is at a record high in the region with gains driven by Colgate Luminous White mouthwash and the relaunch of Colgate Plax mouthwash.
Products in other categories contributing to market share gains included Protex Vitamin E, Palmolive Naturals Coconut & Cotton and Palmolive Naturals Pomegranate bar soaps, Lady Speed Stick and Speed Stick Naturals & Protect deodorants and the relaunch of Suavitel Magic Moments fabric conditioner.
Europe/South Pacific (20% of Company Sales)Europe/South Pacific Net sales decreased 11.0% during third quarter 2012. Unit volume decreased 1.5% with 1.0% lower pricing and 8.5% negative foreign exchange. Volume gains in Australia were more than offset by volume declines in Western Europe. Organic sales for Europe/South Pacific decreased 2.5%.