What To Expect From Colgate-Palmolive’s Q3 Earnings

by Trefis Team
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Colgate Palmolive (NYSE: CL) is scheduled to announce its fiscal third quarter results on Friday, October 27. The company reported weaker-than-expected fiscal second quarter earnings, as its earnings per share came in line but revenue missed expectations. In Q2, the company’s net sales were down marginally, as 1% year-over-year ( y-o-y) pricing growth was offset by a 1% y-o-y volume decline and slightly negative foreign exchange effects. Despite flat organic sales, Colgate witnessed an increase in its gross margins in the previous quarter, primarily due to its new premium range products and successful cost savings from the “Funding the Growth” initiative.

Colgate derives more than 60% of its sales from developed markets such as North America and Europe. As evident from the results of Procter & Gamble (NYSE:PG), Unilever (NYSE: UL), and Kimberly-Clark (NYSE:KMB), global consumer demand around the world was fairly sluggish in the September quarter. Therefore, Colgate’s top line is likely to underperform in these regions in the third quarter. However, some of these declines can be offset by better conditions in Asia Pacific, mainly India, as well as Latin America. The key factors which could drive Colgate’s performance in the third quarter remain investments in R&D, advertising spend, and variations in consumer demand in North/South America and Europe. Reuters’ compiled analyst estimates forecast revenues of $3.9 billion and earnings of $0.73 per share for Q3 2017, implying growth of about 2% and 0%, respectively. Colgate also expects to grow its gross margin further in Q3, due to fewer impacts from raw material costs and greater benefits from the Funding the Growth initiative.

See our complete analysis for Colgate-Palmolive

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