Colgate’s Africa Segment Saw Its Net Revenue Fall 16.4% in 4Q15



Africa/Eurasia’s 4Q15 revenue

Colgate’s (CL) Africa/Eurasia segment’s net revenue fell 16.4% to $0.2 billion in 4Q15. The unit volume fell 1.5% with 8.0% higher pricing while foreign exchange was -23.0%.

Volume declines in Russia and the Central Caucasus region were partially offset by volume gains in South Africa and the Sub-Saharan Africa region. Organic sales for Africa/Eurasia rose 6.5%.

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Operating and gross profit

Operating income rose 13.8% and increased 60 basis points to 20.5% as a percentage of net sales. The increase was due to a decrease in SG&A expenses due to decreased advertising, which was partially offset by a decrease in gross profit.

The Africa/Eurasia segment’s gross profit fell due to higher costs, which included higher raw and packaging material costs from higher foreign exchange transaction costs. The decline was partially offset by cost savings from the company’s funding-the-growth initiatives and higher pricing.

Market share gains in Russia

Colgate continued its toothpaste leadership in Africa/Eurasia, driven by market share gains in Israel, Jordan, Kenya, Kuwait, Qatar, Russia, South Africa, Saudi Arabia, Uganda, Ukraine, Algeria, and Tunisia. For example, the recent launch of Colgate Maximum Cavity Protection with Sugar Acid Neutralizer in Russia and South Africa increased market shares to 35.2% and 49.6%, respectively, year-to-date.

Other products that contributed to the growth of this region include Colgate Total, Colgate Optic White Instant, Colgate Slim Soft Charcoal, Colgate Natural Extracts, Colgate Zig Zag manual toothbrushes, Palmolive Men Citrus Crush shower gels, and Protex Complete 12 bar soaps.

Differentiated packaging

Like Procter & Gamble (PG), Unilever (UL), and Kimberly-Clark (KMB), Colgate aims to strengthen in-store innovation and execution. The company plans to launch Colgate Total Pro Breath Health toothpaste across the region with differentiated packaging. This will help consumers identify the benefits like unique breath freshening technology.

Colgate makes up 1.4%[1. Updated on February 1, 2016] of the iShares Morningstar Large-Cap ETF (JKD).

Apart from oral care and personal care, CL also has a presence in pet nutrition. We will focus on Hill’s pet nutrition results in the next part of the series.


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