Will Colgate’s Innovation Lead to a Revenue Beat in 1Q16?

Will Colgate’s Innovation Lead to a Revenue Beat in 1Q16?

4Q15 revenue highlights

Colgate-Palmolive (or Colgate) (CL) is set to release its fiscal 1Q16 earnings during Market hours on April 28, 2016. The quarter ended March 31, 2016. In 4Q15, Colgate came in ahead of consensus Wall Street estimates on earnings but missed on revenue for the second consecutive quarter.

Colgate’s 4Q15 revenue declined 7.5% to $3.9 billion. The reported revenue was negatively impacted by foreign exchange, with an 11.5% decline, and divestitures. However, excluding divested businesses, unit volume increased 1.0%, and pricing increased 4.0%.

Wall Street analyst expectations

For fiscal 1Q16, which ended March 31, 2016, the Wall Street analyst consensus revenue estimate is $3.7 billion. That’s an 8.1% decline from the revenue in the same quarter last year.

However, Colgate’s 4Q15 organic sales increased 5%, benefiting from pricing and unit volume increases. Organic sales growth was led by emerging markets, where organic sales increased a robust 6.5% despite economic challenges in certain countries.

Organic sales for 4Q15 for Kimberly-Clark (KMB), Church & Dwight (CHD), and Procter & Gamble (PG) increased 5%, 3.6%, and 2%, respectively. However, Clorox’s (CLX) organic sales fell flat in 4Q15. P&G’s organic sales increased, benefiting from a 3% rise in price that more than offset a 2% reduction in organic shipment volume in fiscal 2Q16.

Will innovation help in coming quarters?

Colgate-Palmolive’s aim is to strengthen its brand portfolio through innovation across all geographies in all product categories. The company is launching Colgate Total Deep Clean in Europe in the next quarter. It features high-cleaning prophy-silica, the same ingredient dentists use for in-office cleaning. This is unique among the current variants in the Colgate Total portfolio and could help increase market share as well as its top line in the coming quarters.

Colgate makes up 2.9% of the iShares US Consumer Goods (IYK).

In the next part, we’ll highlight Colgate’s 4Q15 earnings and 1Q16 earnings expectation.

Continue to Next Part

Browse this series on Market Realist:

• Part 2 - Venezuela’s Discontinuation: What Impact on Colgate’s Earnings?

• Part 3 - Will Colgate’s Geographic Segments See Improvement in 1Q16?

• Part 4 - Price Increases and Colgate’s 1Q16 Operating Margins