Colgate-Palmolive (CL.US) Q3 sales, EPS beat expectations; disappointing sales in North America
1min read Colgate-Palmolive (CL.US) reported better-than-expected third-quarter sales on Friday, driven by strong demand for its high-priced products, and raised the lower end of its annual sales and profit guidance.
The company reported third-quarter sales of $5.03 billion, topping the $5 billion market consensus; adjusted EPS of 91 cents, topping the 89 cents consensus.
Colgate expects net sales to grow 3% to 5% in 2024, up from the previous 2% to 5% forecast; adjusted profit growth of 10% to 11%, up from the previous 8% to 11% forecast.
As consumers prioritize spending on everyday essentials over discretionary items amid rising living costs, sales of packaged consumer goods companies such as Colgate have been boosted.
Despite multiple price hikes, demand for Colgate's oral care and hygiene products has been increasing.
The company's prices rose 3.1% in the third quarter, while organic volume grew 3.7%.
To cope with rising raw material and packaging costs, Colgate has raised prices consecutively, helping its third-quarter gross margin rise 260 basis points to 61.1%.
The company's performance contrasted with Kimberly-Clark (KMB.US), which on Tuesday lowered its annual sales forecast as consumers shifted to buying cheaper personal care products.
"We expect advertising investment to remain strong for the rest of the year as we focus on building brand health," Colgate CEO Noel Wallace said.
"We do have some concerns about the entire pet category, given the pressure on consumers and the major professional pet retailers wanting to provide more value to consumers. However, Colgate is less impacted than peers, and Hills continues to have distribution advantages," said RBC analyst Nik Modi.
It is worth noting that the poor performance in North America masks the overall good performance of Colgate.
Organic sales in North America, which accounts for 20% of the company's total sales, fell 1.9% and profit dropped 9%. In contrast, organic sales in Latin America grew 14.2%, Africa/Eurasia grew 10.8%, followed by Europe at 6.3% and Asia-Pacific at 6.1%.
As of writing, Colgate shares opened nearly 3% lower.
