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What to Expect from Colgate-Palmolive’s 2Q17 Earnings

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Part 2
What to Expect from Colgate-Palmolive’s 2Q17 Earnings PART 2 OF 6

Colgate-Palmolive’s Sales in 2Q17: What Analysts Expect

Sales to remain soft

As we saw in the first part of this series, consumer product companies are witnessing moderating category growth. Lower volumes in developed markets, primarily the United States (SPX-INDEX), will most likely remain a drag on these companies’ sales. As for Colgate-Palmolive (CL), analysts expect it to report sales of $3.9 billion in 2Q17, a YoY (year-over-year) rise of 1.4%. The company has missed analysts’ sales estimates for the past four quarters.

Colgate-Palmolive’s Sales in 2Q17: What Analysts Expect

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In the last reported quarter, Colgate-Palmolive’s sales remained flat but missed Wall Street’s consensus estimate. A greater-than-expected fall in revenue in the United States, a challenging environment in Europe and China, and currency headwinds restricted the company’s top-line growth. The decline in volumes offset the company’s higher pricing.

Digging deeper

Colgate-Palmolive’s top line is expected to benefit from a strong performance in the Latin American market. However, adverse currency fluctuations might dent its financials. The company is witnessing lower sales in North America, Europe, and China (FXI), which is expected to offset the positives stemming from its good performance in Latin America.

In comparison, its peers Procter & Gamble (PG) and Kimberly-Clark (KMB) are also struggling on the home turf due to lower volumes. In contrast, Clorox (CLX) and Church & Dwight (CHD) are witnessing industry-leading volume growth in the United States, driven by innovative product offerings and balanced portfolios of premium and value products.

Colgate-Palmolive’s management remains upbeat and expects sequential improvement in sales, driven by innovation-led premium products, improvement across regions, and efficient promotional techniques.

However, a greater-than-expected decline in the North American market driven by retailers destocking and adverse currency movements could hurt the company’s top-line performance.

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