Colgate Palmolive to Take Charge of $120 Million in Q1 (CL)
Colgate Palmolive Co. (NYSE: CL) said on Monday that it will take a charge of $120 million in the first quarter. The charge is linked to the Venezuelan Government’s decision to devalue its currency. After tax, this charge would translate into 25 cents a share.
The official exchange rate which was 4.30 bolivars per dollar earlier is now expected to drop to 6:30 bolivars a dollar.
When the Company announced its fiscal fourth-quarter results on 31st January, it said its bottom line was impacted due to volatile macroeconomic environment in Venezuela.
While addressing analyst, Colgate Palmolive’s Chairman and CEO Ian Cook had said that Venezuela, which accounts for nearly 5% of total sales, was reeling under macroeconomic uncertainty after the re-election of President Hugo Chavez In October. Cook said that feeble economic outlook was hurting its sales and margins in the country.
Although Cook declined to comment over to what extent Company’s sales were impacted due to prevalent economic situation in Venezuela, it is learnt that after excluding results from this market, global organic sales would have been up 5.5%.
However, at that moment, the Company said that issues concerning Venezuela were resolved and maintained its guidance of double digit earnings per share growth in fiscal 2013 and organic sales growth of as much as 7%.
The Company also said on Monday that the currency market overseen by the central bank that traded at 5.30 bolivars per dollar will be abolished. However, certain regulations in Venezuela did not let the company’s Venezuelan unit to access the currency market.
Colgate Palmolive said that EPS in each quarter of 2013 will be impacted by 5 cents to 7 cents mainly due to the conversion of the local financial statements at the new exchange rate.
Just last week, analysts at Bernstein placed Colgate and Avon Products Inc among those companies that had significant amount of exposure to Venezuela’s currency devaluation.
More Posts by this author
- Forex Market Update: Euro Slips Against Dollar
- Stocks End on a Mixed Note
- Gold Prices Settle Lower; Silver Prices also Slip
- Stocks Mixed in Late Trading
- Duke Energy Reports 51% Jump in Q4 Earnings (DUK)
- Trulia Shares Surge on Q4 Results (TRLA)
- U.S. Stocks Mixed, European Equities Close Higher
Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
|