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What Drove Colgate-Palmolive’s Sales in Emerging Markets?

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Jul. 25 2017, Updated 8:10 a.m. ET

Latin America continues to remain strong

Colgate-Palmolive’s (CL) overall sales are driven by its strong performance in emerging markets. During 2Q17, the company’s net and organic sales improved 2.5% in emerging markets, mainly due to higher sales in Latin America. Net sales in Latin America rose 7.0%, reflecting increased volumes (+2.5%) and higher pricing (+4.5%). Organic sales also rose 7.0% during the quarter, driven by volume gains in Brazil, Argentina, and the Andean regions. The company continued to maintain its leadership position in the toothpaste category in Latin America. Its market share improved in Peru, Mexico, Paraguay, Puerto Rico, and the Dominican Republic.

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Asia-Pacific remains a drag

Consumer product companies such as Colgate-Palmolive, Procter & Gamble (PG), and Kimberly-Clark (KMB) continue to face challenges in the Asia-Pacific region. Volatility in India due to demonetization and now the rollout of GST (Goods and Services Tax) and the softness in China (FXI) remain a drag.

Colgate-Palmolive’s net sales in the region fell 5.0% due to lower volumes and pricing. Volumes fell 2.0% during the quarter, reflecting weaknesses in India, Greater China, Australia, and Thailand. Organic sales fell 3.5%, primarily due to inventory reductions by wholesalers in India due to the rollout of the new Goods and Services Tax. Increased competition in Australia and Thailand also lowered the company’s volumes growth.

What drove Africa/Eurasia sales?

Colgate-Palmolive’s 2Q17 sales in Africa/Eurasia benefited from favorable currency movements and higher pricing. Net sales rose 1.0% as lower volumes (-7.5%) were more than offset by increased pricing (+4.5%) and the positive impact of currency fluctuations (+4.0%).

The company’s organic sales fell 3.0% due to volume declines in Turkey, South Africa, and the Sub-Saharan Africa region. Volume gains in Russia partially offset the decline. The company maintained its market leader position in the region with market share gains in Saudi Arabia, Qatar, the United Arab Emirates, Kenya, Jordan, Lebanon, and Turkey.

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