Skip to main content

Updated from 8:57 a.m. EST

Colgate-Palmolive

(CL) - Get Colgate-Palmolive Company 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."

TheStreet Recommends

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.)