Colgate Beats, Margins Lag On CostsZacks Investmentupdated Jan 26, 2012TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.Colgate-Palmolive Company (CL) posted fourth-quarter 2011 adjusted earnings of $1.30 per share, beating the Zacks Consensus Estimate by a penny. Adjusted earnings also surpassed the prior-year quarter level of $1.24 per share by approximately 5%. Global net sales increased nearly 5% year over year to $4,172 million based on a 3% surge in pricing and 4% upside in global unit volume, partially offset by a 2% negative impact from foreign exchange. On an organic basis (excluding foreign exchange, acquisitions and divestitures), sales increased 6% in the quarter. Global net sales, however, missed the Zacks Consensus Revenue Estimate of $4,215 million. Gross profit increased 1.8% to $2,393 million. However, gross profit margin declined 170 basis points year over year to 57.4%, as higher material and packaging costs hurt the cost savings benefits of the company’s funding-the-growth initiatives. Operating profit margin contracted 70 basis points year over year to 22.1%. Colgate-Palmolive stated that its share of the global toothpaste market has increased to 44.3% year to date, representing an increase of 0.3 share points from the year-ago period. Colgate’s market share in manual tooth brushes increased to 31.7%, representing an increase of 0.5 share point from a year ago.Segment DiscussionNorth America sales (18% of total sales) increased 3.5% in the quarter. The growth was primarily driven by 3% rise in unit volume and 0.5% upside in prices. On an organic basis, sales increased 3.5%. However, operating profit decreased 11% to $192 million due to lower gross profit and higher selling, general and administrative expenses as a percentage of net sales.Latin America sales (28% of total sales) grew 6.5% during the quarter as unit volume increased 3%, partially offset by negative foreign exchange impact of 5%. Volume gains were most prominent in Brazil, Colombia and Mexico. In addition, pricing contributed 8.5% to the growth. On an organic basis, sales increased 14.5%. Consequently, operating profit climbed 14% to $364 million from the prior-year quarter. Moreover, operating margin expanded 190 basis points to 30.2%, primarily due to a decline in selling, general and administrative expenses as a percentage of net sales that more than offset the lower gross profit as a percentage of net sales.Europe/South Pacific sales (21% of total sales) upped 5% as unit volume made a positive contribution of 7.5% while pricing had a 3% negative impact on growth. Sanex acquisition contributed 6.5% to sales during the quarter. Volume gains were primarily led by better performance in the United Kingdom, Spain and France. However, organic sales for Europe/South Pacific inched down 2%. Operating profit during the quarter declined 4% year over year to $164 million. Further, operating profit margin in the region contracted 170 basis points to 19.4%. The decline in operating profit margin was primarily attributable to lower gross profit margin and higher selling, general and administrative expenses as a percentage of net sales.Greater Asia/Africa sales (20% of total sales) climbed 5%, with 6% increase in volume, primarily led by volume gains in the India, Thailand, Russia and Malaysia, partially offset by volume decline in Greater China region. Pricing contributed 3.5% to the growth while Sanex acquisition added 1%. On an organic basis, sales grew 8.5%. Consequently, operating profit rose 5% to $203 million. However, operating profit margin remained flat year over year at 25.5%, as lower gross profit margin was fully offset by lower selling, general and administrative expenses as a percentage of net sales.Hill’s sales (13% of total sales) upped 2%. Unit volume decreased 1.5% due to lower volume in the U.S and Japan. On an organic basis, sales inched up 1.5% from the year-ago quarter. Operating profit increased by 4% to $152 million. Further, operating profit margin improved by 60 basis points to 27%, primarily due to decreased selling, general and administrative expenses, as a percentage of net sales that more than offset the negative impact of lower gross profit margin.Other Financial Details Colgate-Palmolive ended the fiscal year 2011 with cash and cash equivalents of $878 million, total debt of $4,810 million and shareholders’ equity of $2,375 million. Net cash provided by operating activities came in at $2,896 million. Colgate-Palmolive, which competes with Procter & Gamble Company (PG) and Church & Dwight Company Inc. (CHD), retains a Zacks #4 Rank, which translates into a short-term Sell rating. Our long-term recommendation on the stock remains Neutral. CHURCH & DWIGHT (CHD): Free Stock Analysis Report To read this article on Zacks.com click here. Editorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.