Colgate reports stronger organic sales on higher pricing

Net sales for the quarter came in at $3.9bn, compared to a figure of $4.2bn in the same period last year, representing a decrease of 7.5%.

However, the increase in organic sales reflected an average price increase of 4%, combined with a negative impact of 11.5% on foreign currency exchange rates against the strong dollar.

Colgate is the number one oral care player in the world, but also has a significant footing in the personal care arena, where it has a strong portfolio representing the hair care, soap and deodorant categories that make up approximately 25% of the group’s global sales.

Profits hit by problems in Venezuela​

Net income came in at a loss of $458m, a result that the company said was significantly impacted by a $1.06bn charge resulting from a change in accounting for its Venezuelan operations, as well as a $55m aftertax charge related to restructuring.

Excluding the charges, net income came in at $628m for the quarter, but was still down by 6% when compared to the corresponding period in 2014.

For the full year 2015 results, global net sales were $16.03bn, a fall of 7% compared to 2014, while net income was $1.38bn, compared to $2.18bn the previous year.

Emerging markets still lead the way​

“The 5.0% worldwide organic sales growth was led by emerging markets where organic sales grew a robust 6.5%, despite economic challenges in certain countries,”​ said Ian Cook, CEO of Colgate-Palmolive.

Breaking the quarterly sales down geographically, the North America market, which accounts for 20% of sales, saw net sales increase by 1%, while in Latin America, sales decreased by 12.0% and reflected a significant impact from currency exchange.

In the Asia Pacific region, which accounts for 18% of company sales, revenues fell by 14.5%, a figure that reflected 2.5% lower pricing and an 11.5% hit from currency exchange.

Outlook​

“As we look ahead, macroeconomic conditions and foreign exchange volatility remain challenging. Despite that, we anticipate another year of solid organic sales growth in 2016 driven by a full new product pipeline across all categories and geographies,”​ said Cook.

Predicting a low single digit decline in earnings per share for 2016, Cook also pointed out this outlook took into account the continued impact of currency translations, together with losses from the change in accounting for its Venezuela operations.