Why Colgate-Palmolive’s Sales Are Likely to Remain Low



Recent performance

Colgate-Palmolive (CL) hasn’t impressed with its sales performance in the past couple of quarters. We expect its sales to remain the same in the coming quarters as well. Colgate-Palmolive’s top line fell 3.2% in the third quarter of 2018 and 2.1% in the fourth quarter. Currency volatility, weakness in China, and lower organic volumes in North America continue to hurt the company’s top line.

Colgate-Palmolive has managed to improve its organic sales thanks to its higher pricing. During the last reported quarter, its organic sales rose 2.0%. In comparison, Procter & Gamble (PG), Kimberly-Clark (KMB), the Clorox Company (CLX), and Church & Dwight (CHD) also posted improved organic sales driven by higher pricing.

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We expect Colgate-Palmolive’s top line to remain weak in the coming couple of quarters. Unfavorable currency rates are expected to take a toll on its sales. Also, the company’s increased pricing could hurt its volume growth, as it dealt with in the fourth quarter. Colgate-Palmolive’s volumes decreased in Latin America, the Asia-Pacific, and Africa and Eurasia. Its volumes improved in Europe, where pricing remained low.

However, CL’s net sales are expected to benefit from its skincare acquisitions in North America. Its organic sales are also expected to benefit from a higher net price realization.

Analysts expect Colgate-Palmolive’s top line to fall 3.5% in the first quarter of 2019. They expect its sales to decrease marginally in the second quarter.


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