Colgate-Palmolive sees "extraordinary losses" over devaluation in Venezuela
The company expects earnings per share to drop some USD 5-7 cents per quarter in 2013, because of the conversion of its financial statements to the new Venezuelan exchange rate
Multinational company Colgate-Palmolive said Monday that due to the devaluation of the Venezuelan currency, it will record extraordinary losses at USD 120 million, or USD 25 cents per share, in the first quarter of 2013.
Colgate expects a reduction in its earnings per share of some USD 5-7 cents per quarter in 2013, because of the conversion of the financial statements to the new Venezuelan exchange rate.
However, the devaluation will have no impact on the company's results or financial position in 2012, said the New York-based firm, according to Reuters.
Venezuela represents 5 percent of the total sales of Colgate.
From January 1, 2010, Colgate designated Venezuela as a hyperinflationary market and since then all the currency fluctuations are recorded in the income of the firm, the company said.
Monday's announcement comes after Colgate reported disappointing results in the fourth quarter in Latin America, mostly due to significant economic and labor problems in Venezuela.
An economic environment increasingly complicated in the Caribbean country hit both the turnover and gross profit of the company in the fourth quarter. The firm faced labor slowdown in its Venezuelan plant during the last quarter of 2012.
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.