Colgate-Palmolive’s Revenue Unlikely to Impress

What’s hurting Colgate-Palmolive’s sales?

Whereas Colgate-Palmolive’s (CL) top line beat analysts’ estimate in the first quarter, it has missed their estimates in four of the past five quarters. Moreover, its revenue has fallen YoY (year-over-year) in the past three quarters. Currency volatility, competition, and challenges in China have taken a toll on its revenue. However, its organic sales are improving thanks to higher net price realization.

Colgate-Palmolive’s Revenue Unlikely to Impress

Adverse currency rates have also impacted peers’ top lines, while price restructuring and innovation have supported their organic sales. For example, whereas Clorox’s (CLX) net sales improved YoY during its last reported quarter, the company was hindered by currency fluctuation, distribution losses, and promotions.

Outlook

We expect Colgate-Palmolive’s top line to continue to decline in the second quarter, dragged down by adverse currency rates and weakness in the US. In the second of the year, we expect the company’s top line to return to growth thanks to easier comps, and for improvement in China to support its sales. However, its revenue growth could stay low.

Wall Street expects Colgate-Palmolive’s revenue to fall marginally in the second quarter, and for its sales to grow by a low-single-digit percentage in the second half of the year.