Colgate-Palmolive Co. (NYSE:CL) reported a decline in fourth quarter profits as it took a charge stemming from the US tax reform.
The toothpaste maker said net income fell to US$323mln, or 37 US cents a share, in the three months to December 31, from US$606mln, or 68 US cents per share, a year ago.
READ: Colgate-Palmolive Co shares ease premarket after company warns of increased charges
The earnings drop reflected a one-off US$275mln hit resulting from the new US tax law.
Sales rose 4.5% to US$3.9bn, driven by volume growth in Latin America, North America and Europe. However, this was a slight miss on analysts’ expectations of US$3.92bn.
Chief executive Ian Cook warned that growth in 2018 would be challenged but the company will maintain its focus on “brand building and increased productivity”.
“Based on current spot rates, we expect a mid-single-digit net sales increase and low to mid-single-digit organic sales growth in 2018, with improvement in organic sales growth versus the second half of 2017,” he said.
Year of increased operating cash flow
Following the changes to US tax law, the company expects its 2018 tax rate to be in the range of 26% to 27%.
Excluding the one-off charge for the US tax reform and the cost of its so-called ‘global growth and efficiency’ restructuring, the group expects “a year of increased operating cash flow, gross margin expansion, increased advertising investment and low double-digit earnings per share growth”.
Shares fell 4.9% to US$73.50 each in US pre-market.