Personal care companies beat soaring costs with price rises

By Simon Pitman

- Last updated on GMT

Related tags: Price, Profit

Leading personal care companies, including Colgate-Palmolive,
Proctor & Gamble and Alberto Culver, have released quarterly
results that show they are weathering current challenging
conditions surprisingly well.

The effects of hurricane Katrina have hit personal care companies especially hard in recent months, disrupting distrubtion, production and impacting costs.

The resulting loss in oil production from the storm sent prices of oil-based products shooting through the roof, affecting production costs as well as the prices of the many oil-based ingredients that are commonly used in cosmetic and toiletry product formulation.

But in response to the price rises, the big personal care players have been raising prices and cutting other costs in a bid to keep up with the rising production costs - a policy that has largely been successful.

P&G​ said that profit for its third quarter increased by 4 per cent to $2.03 billion, compared to $1.94 billion for the same period last year, whereas sales for the first nine months of the year were up 9 per cent to reach $14.79 billion.

The company, which is also a dominant player in the household and pet care segments, said that its strongest performing division was once again the beauty and wellness division, where sales for the nine month period were up 7 per cent to reach $4.99 billion and profits were up an impressive 16 per cent to reach $783 million.

Colgate-Palmolive​ said that its quarterly results had been boosted by particularly strong earnings in the oral care segment, which was also boosted by higher volume and selling prices, combined with cost savings from an on-going restructuring program.

Colgate reported net profits for the quarter up six per cent to $347.2 million, whiles sales for the quarter rose 8 per cent to $2.91 billion - a figure that was largely ahead of market expectations.

Unit volume for the company's oral care division was up in every geographic region, and rose 10 per cent worldwide.

Colgate CEO Mark Rueben said of the results, "We are especially encouraged that global pricing was positive for the first time in two year despite difficult cost and competitive environments.

"Gross profit margin before restructuring charges expanded during the quarter, despite sharply rising energy costs, as a result of our ongoing cost-saving initiatives and improving pricing trends for our products."

Meanwhile, Alberto-Culver​, whose brands include the St.Ives body care and hair care range, announced that its fourth quarter profits rose by 23 per cent on the back of lower interest payments and higher sales.

The Illinois-based company said net profits rose to $59 million for the quarter, on the back of sales there were up 6 per cent to $900.7 million.

"In spite of challenging conditions during the quarter and fiscal year, including the loss of sales and sales force disruption within the Beauty Systems Group resulting from certain full service product line distribution changes in the United States, rising raw material and fuel costs, severe hurricane weather factors and a highly competitive market, the company was able to deliver another reasonable quarter and fine year for its shareholders,"​ said Howard Bernick, president and chief executive.

Related topics: Business & Financial

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