Can Colgate-Palmolive’s Revenue Push Past $16 Billion By 2020?

Colgate’s (NYSE: CL) total revenue has grown from $15.18 billion in 2016 to $15.6 billion in 2018, on the back of growing demand from emerging markets and we expect this trend to continue. By 2020, we expect revenue from Oral, Home and Personal Care to grow to about $13.57 billion, and Hill’s Pet Nutrition to add $2.53 billion to our total revenue estimate of $16.1 billion.
Both of Colgate’s segments have seen slow, but steady revenue growth, and with growing demand, this trend is expected to continue.

Takeaway

• Colgate’s Oral, Personal & Home Care division, is expected to contribute $13.24 billion to total revenue in 2019, making up almost 85% of Colgate’s $15.65 billion revenue estimate.
• The Oral, Personal & Home Care division brings in more than 5 times the amount of money than Hill’s Pet Nutrition, which is expected to bring in $2.41 billion in 2019.
• The Oral, Personal & Home Care business will provide $650 million, over 70% of the $920 million growth in Colgate’s revenue between 2016 and 2020.
• Despite this, Colgate’s share price has remained stagnant over this period, largely due to a drop in margins, and the PE multiple.
• In our interactive dashboard Colgate Revenue: How Does Colgate Make Money?, we discuss Colgate’s business model, followed by sections that review past performance and 2020 expectations for Colgate’s revenue, alongside competitive comparisons with Unilever and Procter & Gamble.

A look at Colgate’s segments and their contribution to total revenue

(A) Revenue from Oral, Personal and Home Care to grow to $13.57 billion by 2020 to make up about 84% of total revenue

• Colgate is a market leader in the toothpaste and toothbrush segment, and this, alongside its strong personal and home care product line, has helped drive revenue from $12.92 billion in 2016 to $13.21 billion in 2018.
• With growing emerging market demand, we expect revenue from this segment to grow to $13.57 billion by 2020.

(B) Revenue from Hill’s Pet Nutrition to add $140 million by 2020, and make up the remaining 16% of total revenue

• Hill’s Pet Nutrition is one of the leading brands in specialty pet nutrition products for dogs and cats, with products marketed in over 90 countries.
• Revenue from this segment has grown from $2.26 billion in 2016 to $2.39 billion in 2018.
• With Colgate continuously innovating in the pet nutrition department, we expect revenue to rise to $2.53 billion by 2020.

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