Colgate-Palmolive Co.'s third-quarter net income rose 4.9 percent and the company issued a cautious outlook for 2011, saying it would increase advertising spending to boost sales.
Because of that spending, the company expects earnings per share to grow by a percentage in the mid-single digits for 2011, slower than this year's double-digit pace.
CEO Ian Cook talked about the planned increase and its effect on the business during a conference call Thursday with investors.
QUESTION: You have not starved your brands. Your advertising spending is up about 11 percent this year, and you have good volume growth. As we look past 2011, is there a chance that now, companies in the industry have to spend beyond 10 percent or 11 percent on advertising to really drive the mid-single-digit volume growth?
RESPONSE: To accelerate our top line and further strengthen our brands ... we are prepared to, and want to, increase our advertising. ... And ... if you are projecting forward, what one could foresee happening is that maybe the pricing (competition) will lessen over time.
(This version corrects percentage change in quarterly net income to an increase of 4.9 percent.)