Venezuelan currency devaluation hits Colgate
Venezuelan currency devaluation will cost Colgate-Palmolive $120 million
NEW YORK (AP) -- Venezuela's devaluation of its currency will cost Colgate-Palmolive $120 million this year.
The consumer products company, which makes Colgate toothpaste, SpeedStick deodorant and Irish Spring soap, said Monday that it will take the charge equivalent to 25 cents per share in the first quarter, and 5 cents to 7 cents per share in each quarter of 2013. That includes the cost of the devaluation itself plus Colgate's efforts to mitigate the devaluation and ongoing price control regulations in Venezuela. Colgate did not specify what those efforts will entail.
The devaluation is expected to take effect Wednesday.
Morgan Stanley estimates about 5 percent of Colgate-Palmolive's revenue comes from Venezuela.
Colgate said the devaluation will not affect 2012 results.
Venezuela, a country heavily reliant on imports, announced Friday that it would devalue the bolivar. The country relies on dollar-denominated oil sales and the government hopes to ease the amount of money that it must borrow to continue functioning.
The government initiated stringent currency exchange controls in 2003. People and businesses must apply to a government currency agency to receive dollars at the official rate, but a black market on currency is flourishing. The bolivar on that market began falling some time ago.
The value is now expected to be 6.3 bolivar to the dollar, from 4.3 to the dollar.
President Hugo Chavez remained out of sight in Cuba recovering from cancer surgery.
Shares of Colgate-Palmolive Co. fell 24 cents to $108.25.
