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Venezuela devalues its Bolivar; CPG firms adjust outlook

This article was originally published in The Rose Sheet

Executive Summary

U.S. companies with business in Latin America, where growth has continued despite the global recession, are likely to see reduced earnings in Venezuela as the value of the bolivar drops from approximately 2.15 to 2.6 per dollar for essential goods and 4.3 for non-essentials, in accordance with President Hugo Chavez's devaluation of the country's currency. Colgate-Palmolive expects its products to fall into the non-essential category, according to Jan. 11 release. The devaluation won't affect the firm's 2009 results or competitive position, Colgate says. In the first quarter of fiscal 2010, the firm anticipates recording a one-time gain of $60 mil. ($0.12 per share) and ongoing quarterly charges of $0.04 to $0.06 per share related to the devaluation. The Venezuelan market reportedly represents about 9 percent of Colgate's profits. Procter & Gamble, Avon Products and Burt's Bees owner Clorox Co. are also expected to be affected by the devaluation
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