Colgate-Palmolive Company (NYSE:CL) Faced Volume Pressures In Q4

Colgate-Palmolive Company (NYSE:CL) Faced Volume Pressures In Q4


Colgate-Palmolive Company (NYSE:CL) delivered mixed results for the fourth quarter. While its adjusted EPS came in line with the estimates, revenue fell shy of expectations. The 2.5 percent increase in pricing failed to provide the necessary impetus to the top line.

Colgate-Palmolive indicated that its global unit volume dropped 5.5 percent. Though pricing improved foreign exchange hurt by 1.5 percent. On an adjusted basis too, volume dipped 1.0 percent despite organic sales recording 1.5 percent growth in the December quarter.

The FMCG company revealed its gross margin of 60.4 percent compared to 58.8 percent in the year-ago quarter. On an adjusted basis, gross margin improved by 1.8 percentage points fueled by cost savings from its funding-the-growth initiatives, as well as, the 2012 restructuring program. Its increase in pricing was partly offset by increase in raw and packaging material costs.

Colgate-Palmolive’s selling, general and administrative costs as a percent of sales were 33.7 percent compared to 33.0 percent in the year-ago period. Excluding charges, it would improved by 40 basis points to 32.9 percent.

While North America accounted for 21 percent of sales, Latin America contributed 24 percent to overall sales. Europe accounted for 16 percent of sales whereas Asia Pacific accounted for 18 percent of sales on a geographical basis. Africa/Eurasia’s contribution to the overall sales was 6 percent.

Colgate-Palmolive chairman, president and CEO, Ian Cook, reacted: “As we look ahead, uncertainty in global markets and foreign exchange volatility remain challenging, which sees us redoubling our focus on profitable growth. While based on current spot rates, we expect a low-single-digit net sales increase for 2017, we anticipate another year of solid organic sales growth driven by a full new product pipeline, engaging marketing programs and strong advertising support.

At time of writing this, the stock dropped 2.56 percent in the pre-market trading on Friday.