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How Macro Factors Impacted Colgate-Palmolive’s 4Q16 Sales

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Declining performance

Colgate-Palmolive (CL) reported sales of $3.7 billion for 4Q16. It missed consensus analysts’ sales estimate by 3.8%. In the last 12 quarters, the company has surpassed analysts’ expectations only three times.

The company’s sales fell 4.6% in 4Q16, marking the ninth consecutive quarter of declining sales. Sales fell 3.3% in 3Q16 and 7.6% in 4Q15.

Sales in 4Q16 and 2016

Colgate-Palmolive reported 4Q16 net sales of $3.7 billion, a fall of 4.6% compared to 4Q15. The fall was due to the adverse impact of foreign exchange, the deconsolidation of its Venezuela business, and lower volumes. However, the fall was partially offset by higher pricing.

The company also faced challenges due to demonetization in India, tough macro conditions, and some distribution issues in the African market.

The company’s organic sales, which exclude the impact of currency fluctuations and the deconsolidation of its Venezuela business, rose 1.5%, primarily due to higher pricing.

In 2016, Colgate-Palmolive’s net sales fell 5.2% to $15.2 billion due to lower volumes and the negative impact of foreign exchange fluctuations, partially offset by higher pricing. It was the third consecutive year in which the company’s top line has fallen. Its organic sales rose 4.0% in 2016.

Comparison with peers

Most of Colgate-Palmolive’s peers have declared results for the quarter that ended on December 31, 2016.

Procter & Gamble’s (PG) net sales remained flat at $16.9 billion in fiscal 2Q17. Higher volumes were offset by the negative impact of foreign exchange fluctuations.

Kimberly-Clark’s (KMB) net sales remained flat at $4.5 billion in fiscal 4Q16. Higher volumes were offset by unfavorable changes in net selling prices and product mix as well as currency headwinds.

For Clorox (CLX), analysts are expecting net sales of $1.4 billion for fiscal 2Q17, which reflects a rise of 4.4% on a year-over-year basis.

The company’s expectations

Colgate-Palmolive expects organic sales growth at the lower end of 4.0%–7.0% for fiscal 2017. Sales growth is expected to be supported by product innovation, advertisement, e-commerce, and other growth initiatives.

In the next part of this series, we’ll take a close look at Colgate-Palmolive’s segments.

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