Colgate-Palmolive Just Beats Estimates - TheStreet

Updated from 8:57 a.m. EST

Colgate-Palmolive

(CL) - Get Report

, the No. 1 toothpaste maker in the U.S., reported earnings that beat Wall Street expectations by a penny on the back of gains in North America and Asia.

For the fourth quarter ended Dec. 31, net income rose to $260.6 million, or 41 cents a diluted share, from $234.2 million, or 36 cents a share, a year earlier. The consensus estimate of analysts polled by

First Call/Thomson Financial

was 40 cents.

Revenue rose to $2.34 billion from $2.29 billion a year ago.

"Colgate people are systematically reducing costs all along the supply chain," said Reuben Mark, chairman and chief executive, in a statement. "Our early investments in strategic re-engineering and enterprise-wide software continue to yield major savings for us and our customers."

The maker of Colgate toothpaste and Palmolive dish detergent also reported that gross profit margin climbed to 53.5% from 52.1%, while operating profit margin increased to 17.5% from 15.9%.

Unit volume growth accelerated to 7%, due to the introduction of new products, market share gains and increased advertising.

The North American division, which accounted for 23% of the company's sales, posted unit volume growth of 7% and revenue growth of 8% in the quarter. Much of the growth came from Colgate Total Fresh Stripe toothpaste and the Colgate Navigator toothbrush.

The Asia/Africa division, which accounted for 17% of the company's sales, posted unit volume growth of 9% and sales growth of 7% in the quarter, led by expansion in China, recovering economies in southeast Asia and growth in India.

Colgate's share of the dishwashing market also climbed to a high of over 40% by the end of 1999, on the success of the new Palmolive Spring Sensations dishwashing liquid.

The outlook for the coming year is a healthy one. "We look for continued strong mid single digit 5%-7% volume gains," said analyst Doug Christopher of

Crowell Weedon

. "We look for strong gross margins throughout the year and lower overhead." On the new product front, New York-based Colgate will launch the new Colgate Sensitive Maximum Strength toothpaste and toothbrush in the first quarter.

Christopher rates Colgate a buy and his firm has done no underwriting for the company.

"We look for Colgate continuing to click as a well-oiled machine," Christopher added. "Operationally, they're very sound." He cited the company's superior execution, the ability to leverage 5%-7% unit volume growth into 13%-15% earnings per share growth, declining overhead and reinvestment of the overhead into new products and advertising.

Colgate shares were down 11/16, or 1%, to 60 5/8. (Shares closed down 1 5/16, or 2.14%, at 60.)