04 May 1998 00:00 [Source: ICB Americas]The larger consumer products makers reported healthy earnings increases this quarter, though some felt the effects of unfavorable foreign currency exchange rates in their net sales. Church & Dwight Co. Inc., which sells primarily in North America (96 percent of sales revenues), posted a 17 percent increase in net sales this quarter relative to the same period in 1997. Earnings increased about 13 percent compared to last year's first quarter.
Colgate-Palmolive Company and Procter & Gamble Co. both showed increases in net earnings this quarter compared to the same quarter last year, 16 percent and 9 percent respectively. Net sales for the two giants, however, increased only about 1 percent, due in part to weak foreign currency exchange.
Church & Dwight's net income for the first quarter was $5.9 million, compared to $5.2 million for the first quarter of 1997, equivalent to basic earnings of 30 cents and 27 cents per share respectively.
The company's net sales were $152 million for the first quarter, up from $129.6 million for the same period a year ago. This quarter's 17 percent sales growth repeats the 17 percent increase of the fourth quarter of 1997 relative to the fourth quarter of 1996.
According to the company, strong sales reflect the acquisition of Brillo and other established household brands from Dial Corporation in late 1997, and the introduction of two new products: Arm & Hammer Super Scoop, a cat litter, and Arm and Hammer Dental Care, The Baking Soda Gum.
However, sales of dental products in general dipped. "The setback in the toothpaste category is not unexpected considering the extraordinary level of competitive activity," says Robert A. Davies, III, president and CEO.
The toothpaste market faced a shakeup late last year when Colgate-Palmolive introduced Colgate Total, which includes the antibacterial triclosan. "Total was a massive marketing campaign," says Larry Koslow, vice-president of marketing for Church & Dwight. "We chose to get out of the way this quarter."
Colgate-Palmolive's net income rose 16 percent relative to the first quarter of last year, reaching a record $196 million. Basic earnings per share were 65 cents, compared to 56 cents during the same period in 1997. Net sales were $2.16 billion, an increase of only 1 percent from the first quarter of last year.
According to the company, net sales would have increased 9 percent but were held back by a weak foreign currency translation. Sales outside of North America account for 78 percent of Colgate-Palmolive's business.
Within North America, new products fed growth: New Palmolive for pots & pans, Palmolive and Ajax antibacterial, and Total toothpaste. "Just four months after its introduction, Colgate Total is now the No.1 toothpaste variant in the country based on value market share," the company says. Total overtook the market leader, Crest, a Procter & Gamble product.
Procter & Gamble posted net earnings of $961 million this quarter, up $80 million from the same quarter last year. Net sales for the quarter were $8.9 billion, an increase of 1 percent relative to last year. Excluding the effect of weaker foreign currency exchange rates increases that figure to 6 percent, according to the company.
"We continue to achieve solid earnings growth despite economic issues in Asia and short-term volume softness following recent price increases in North America and Europe," says John E. Pepper, chairman and CEO.
"We continue laying the foundation for growth by investing in emerging markets and breakthrough products," adds Mr. Pepper. Febreze, introduced this quarter, is a new category of product, a spray specifically formulated to eliminate odors from fabrics. Dryel, currently in test marketing, is a home dry-cleaning kit.
Clorox Company posted record earnings for the quarter of $75.9 million, up 16 percent over the same quarter in 1997. Net sales were $680.5 million, an increase of 5 percent relative to last year (CMR, 4/27/98).
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