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Colgate-Palmolive has forecast a surprise fall in earnings for 2019 on Friday, with higher raw material costs and a strong dollar to lower its shares by 3%.
Like other consumer goods companies, the world's largest toothpaste manufacturer has had to deal with rising commodity and transportation costs, which has forced it to to raise prices in areas like Latin America, where he realizes the bulk of his income.
Rising prices have dampened demand, particularly in Brazil and Argentina, where Colgate faces fierce competition from Procter & Gamble's Oral-B and Unilever's Close Up.
To maintain its market share, the company announced that it would spend more on advertising during the 2019 fiscal year, but expects that, along with the rising costs of raw materials and at the fluctuation of exchange rates, earnings per share fall by half the year.
Analysts were expecting a 2.4% increase in earnings per share for the year, according to Refinitiv's IBES data.
"Our outlook reflects an increase in commodity prices, an increase in our year – over – year tax rate and the uncertainty surrounding the global economy, the rates foreign exchange and prices, "said CEO Ian Cook in a statement.
Even in North America, where Colgate posted strong sales in the fourth quarter, economists have predicted that a consumer boom, brought about by tax cuts, rising revenues, and dynamic equity markets , could fade due to the closure of the US government, rising interest rates and trade. tensions. The company, which has a 42% market share in the global toothpaste market, expects net sales in 2019 to be stable, or even below 10%, while badysts expect a drop in sales of 0.1%.
For the fourth quarter, Colgate reported adjusted net income of $ 638 million, down 3% from a year earlier. Per share, he earned 74 cents, exceeding badyst estimates by 73 cents.
Net sales in three months ended Dec. 31 declined 2.1% to $ 3.81 billion, but exceeded estimates of $ 3.77 billion, according to Refinitiv's IBES. The company's shares are expected to open down 2.7% to $ 60.50 early in the session, adding to a 19% decline in its stock over the past 52 weeks.
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