How Is Colgate-Palmolive Likely To Grow In The Next Two Years?

by Trefis Team
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Colgate-Palmolive
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Colgate Palmolive (NYSE:CL) is a worldwide producer and distributor of household, healthcare and personal care products. It is a global leader in the oral care hygiene market, with a market share of 42.1% in the global toothpaste market and 32.3% in the manual toothbrush market. However, the company has had a relatively challenging fiscal 2018 so far, largely due to due to rising commodity costs and volatile exchange rates, in addition to weak category demand in many key markets. Despite this, the company’s net sales were up 4% year-over-year (y-o-y) while organic sales grew 1% y-o-y, largely driven by volume growth of 2% and flat pricing globally in the first half of fiscal 2018.

Going forward, we expect the company’s growth to be primarily driven by ongoing innovation in products such as toothpaste and soaps. Accordingly, we expect Colgate-Palmolive’s revenue to grow by nearly $830 million (2.6% CAGR) through fiscal 2019. To arrive at our fiscal 2019 net revenue estimates for Colgate-Palmolive, we have broken down the primary revenue streams and projected them separately. We have also created an interactive dashboard analysis which provides a detailed analysis of what will drive Colgate-Palmolive’s near-term growth. You can make changes to these variables to arrive at your own revenue estimates for the company. We have a $68 price estimate for Colgate-Palmolive, which is about in line with the current market price. We expect higher estimated freight and logistics costs, increased competitive activity and a slowdown in growth in some markets to impact the company. However, we expect the company’s Funding The Growth initiative to help offset some of the high raw material inflation. Further, we also expect Colgate’s revenues to be driven by population growth, particularly in emerging markets. The company still has room to grow in emerging markets such as China and India, primarily due to low penetration of its category products in these regions and the likely increase in the consumption of its products with economic development.

We expect Colgate-Palmolive to generate around 16.2 billion in revenues in 2019 and earnings of around $2.5 billion. Of the total expected revenues in 2019, we forecast $7.4 billion to come from the Colgate’s Oral Care business, nearly $3 billion for the Personal Care business, around $3.5 billion in the Home Care business, and nearly $2.4 billion for Hill’s Pet Nutrition.

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