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Why Colgate-Palmolive’s Sales Are Expected to Rise in 2018

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Dec. 29 2017, Updated 7:34 a.m. ET

Improving sales trend

Colgate-Palmolive’s (CL) sales were negatively impacted by a moderating category growth rate, primarily in the United States (SPY). Macroeconomic headwinds in the Middle East, volatility in India due to demonetization and GST (Goods and Services Tax), volume declines in Australia, and adverse currency movements further subdued the company’s top-line growth rate.

However, market conditions are slowly improving in key regions, including Europe, the United States (SPY), and Brazil, which should drive sales in 2018. Favorable currency rates should further support the company’s top-line growth.

Colgate-Palmolive has maintained its leadership position in the toothpaste and toothbrush category in most of its markets, thanks to innovative product launches and strength in its premium offerings. Its club and e-commerce channels have also remained strong.

The company’s category growth rates marked a sequential improvement in the United States during the last reported quarter. Most of its categories have registered a positive growth rate.

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Outlook

Colgate-Palmolive anticipates low single-digit growth in its organic and net sales in 2017. Improving trends across key markets should help drive the company’s top line. Favorable currency trends should further support its sales. Analysts estimate that sales will increase 1.9% in 2017. They also expect sales growth to improve in 2018.

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