Colgate-Palmolive Co. Earnings: Margins Shrink For Fifth Straight Quarter as Profit Falls

S&P 500 (NYSE:SPY) component Colgate-Palmolive Co. (NYSE:CL) reported its results for the fourth quarter. Colgate Palmolive manufactures and markets a number of oral, personal, home care, and pet nutrition products for customers around the world.

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Colgate-Palmolive Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the personal products company fell to $590 million ($1.21 per share) vs. $624 million ($1.24 per share) a year earlier. This is a decline of 5.4% from the year earlier quarter.

Revenue: Rose 4.9% to $4.17 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: CL reported adjusted net income of $1.30 per share. By that measure, the company was about in line with expectations as the mean analyst estimate was $1.29 per share. Analysts were expecting revenue of $4.19 billion.

Quoting Management: Ian Cook, Chairman, President and Chief Executive Officer, commented on the results and outlook excluding the 2011 and 2010 items noted above, “We are pleased to have finished the year with excellent top-line momentum and to have achieved our profit goals, despite continuing increases in material costs, an intense competitive environment and volatile macroeconomic conditions worldwide.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 1.7 percentage points to 57.4% from the year earlier quarter. Over that time, margins have contracted on average 1.5 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 11.2% to $4.38 billion in the third quarter. The figure rose 9.7% in the second quarter from the year earlier and climbed 4.3% in the first quarter from the year-ago quarter.

Last quarter’s profit decrease breaks a streak of three consecutive quarters of year-over-year profit increases. Net income rose 3.9% in the third quarter from the year earlier, while the figure rose 3.2% in the second quarter and 61.3% in the first quarter.

The company beat estimates last quarter after being in line with expectations in the third quarter with net income of $1.31 per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from $1.28 a share to $1.27 over the last ninety days. For the fiscal year, the average estimate has moved down from $5.06 a share to $5.02 over the last ninety days.

Competitors to Watch: The Procter & Gamble Co. (NYSE:PG), Church & Dwight Co., Inc. (NYSE:CHD), The Clorox Company (NYSE:CLX), CCA Industries, Inc. (AMEX:CAW), Unilever plc (NYSE:UL), Avon Products, Inc. (NYSE:AVP), Kimberly-Clark Corporation (NYSE:KMB), PC Group, Inc. (PCGR), and Alberto-Culver Company (NYSE:ACV).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com