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Why Colgate’s Oral Care Business Is a Global Market Leader

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Jul. 30 2015, Updated 10:06 a.m. ET

Oral care operating profit

Colgate’s (CL) oral, personal, and home care segment is the company’s largest segment, accounting for 86.9% of sales or $15 billion in 2014.

The total operating profit for this segment for 2014[1. Year ending December 31, 2014] was $4.1 billion, contributing to 87.3% of the company’s total operating profit.

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Geographical trends in product demand

The oral, personal, and home care segment is further divided into five geographic segments.

North America contributed to 18.1% of the total company sales, with revenue coming in at $3.1 billion in 2014. Unit volume increased 3.5%, but pricing was lower by 1% due to increased promotional activities. In the US, new product launches have contributed to volume growth. For example, the launch of Colgate Enamel Health toothpaste and toothbrushes in the second half of 2014 resulted in 1.4% higher market share for Colgate’s toothpaste.

Latin America contributed to 27.6% or $4.7 billion of the company’s total sales in 2014. Unit volume increased 2.5% with 7% higher average pricing.

Personal care and home care market shares also increased across the region due to innovation in Palmolive and Protex bar soaps and Suavital fabric conditioners.

The Europe/South Pacific region contributed to 19.7%, or $3.4 billion, of the total company sales. The unit volume increased 3.5%. But the average pricing fell by 2.5% due to increased promotional activities. Volume gains were led by Germany and the United Kingdom due to the recent launch of Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer. Volumes also benefited from innovation in other product categories like the Sanex Dermo Protector.

Asia contributed to 14.6%, or $2.5 billion, of total company sales. Unit volume increased 3.5% with 1.0% higher pricing.

Africa/Eurasia contributed to 7% or $1.2 billion of the total company sales. The unit volume increased 6.0% with 1% higher pricing.

CL along with peers Clorox (CLX) and Kimberly-Clark (KMB) together make up 2.7% of the SPDR S&P Dividend ETF (SDY) and 0.6%[2. Updated as on July 9, 2015] of the iShares Core S&P 500 ETF (IVV).

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