uploads///CL Sales

How Colgate-Palmolive Topped Sales Estimates for 3Q17

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Oct. 30 2017, Published 1:50 p.m. ET

Sales versus analyst estimates

Colgate-Palmolive’s (CL) 3Q17 sales of ~$4.0 billion came in marginally ahead of the analyst estimate of ~$3.9 billion and increased 3.0% YoY (year-over-year). Improved volumes (+1.5%) and favorable currency rates (+1.5%) drove the company’s top-line growth.

CL’s organic sales increased 1.5%, driven by increased volumes. However, its pricing remained flat on a YoY basis.

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Global challenges

Notably, macroeconomic challenges in the Middle East, volatility in India, and volume declines in Australia subdued Colgate-Palmolive’s (CL) growth. However, the company witnessed improved trends in key markets such as the US (SPY), Europe, and Brazil.

The company’s Hill’s Pet Nutrition segment saw a 2.0% increase in its net sales, reflecting increased volumes and pricing. This segment marked improved volume performance in the US and Western Europe, which was partially offset by declines in Japan.

Peer comparisons

However, most of Colgate-Palmolive’s peers reported improved sales results during their recent results, thanks to the slight improvement in volumes and favorable currency movements.

Procter & Gamble’s (PG) fiscal 1Q18 sales increased 1.1% YoY, reflecting improved volumes. Meanwhile, Kimberly-Clark’s (KMB) 3Q17 top line returned to a growth trajectory, driven by a 1.0% increase in volumes.

Clorox (CLX), which is set to report its fiscal 1Q18 results on November 1, 2017, is expected to report higher sales on the back of increased volumes and pricing. However, challenging retail trends and tough market conditions still pressure the top-line growth of consumer product companies in the US.

Outlook

Colgate-Palmolive (CL) reiterated its top-line guidance, and it expected its net and organic sales to improve in the low single-digits. Improving market trends in key markets are expected to drive the company’s top-line growth.

However, moderating category growth globally and challenges in markets such as the Middle East, Sub-Saharan Africa, and Australia are expected to subdue its growth.

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