CL Colgate Palmolive Co

By Sharon Terlep and Anne Steele 

Colgate-Palmolive Co. executives promised to ramp up advertising this year to combat lackluster sales, as the toothpaste and consumer-products maker battles weak demand at home and abroad.

On a conference call Friday afternoon, Colgate executives said they are now targeting the low end of their 4% to 7% range for 2017 organic sales growth, which excludes acquisitions and currency swings. Organic sales rose 1.5% in the fourth quarter.

Shares of the company slumped 5.6% in Friday afternoon trading.

Executives said fourth-quarter sales were hurt by a series of developments, including a disagreement with a retailer in France, India's decision to take bank notes out of circulation and weakness in its Hill's pet food business.

"As we move into 2017, I think it's safe to say that the uncertainty continues and indeed, there is likelihood of more events unpredicted occurring as the year unfolds," Chief Executive Ian Cook said.

However, Mr. Cook said the New York-based company would increase advertising, both in absolute dollars and as a percentage of sales, to help drive growth. "We are not going to reduce our investments in advertising to deliver a quarterly number," he said.

In 2016, Colgate spent $1.43 billion in advertising, or about 9.4% of net sales, compared with $1.49 billion the year before.

Rivals Procter & Gamble Co., Unilever PLC and Kimberly-Clark are also struggling to boost sales, as they battle fluctuating exchange rates and sluggish demand for household staples.

Mr. Cook said he didn't think the recent weakness was caused by an underlying change in consumer habits. "They don't go away from the he behavior of brushing their teeth," he said. "They will exhaust pantry inventory, which is to say, if people have more than one tube of toothpaste at home they may try and stretch that tube before they reload their own pantry. "

For the December quarter, Colgate-Palmolive reported a profit of $606 million, or 68 cents a share, compared with a loss of $458 million, or 51 cents, a year earlier.

Revenue fell 4.6% to $3.72 billion. Foreign-exchange rates hurt sales by 1.5% in the fourth quarter, while world-wide unit volume fell 5.5%.

North American sales were flat, while Latin American sales, the company's largest segment, slumped 11%. Sales in Europe and Asia slipped 7.5% and 4%, respectively, while sales in Africa and Eurasia edged 1.5% lower.

Write to Sharon Terlep at sharon.terlep@wsj.com and Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

January 27, 2017 16:10 ET (21:10 GMT)

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