Toothpaste maker Colgate-Palmolive forecast annual sales below Wall Street expectations after missing quarterly sales estimates on Friday, hurt by weak demand in North America and Latin America for its household products.
Why is it important?
The company has seen its organic sales growth slow this year due to repeated price hikes which deterred consumer spending on its daily essential products such as toothpaste as well as pet nutrition.
Consumers have been switching to cheaper private label brands to limit expenses amid lingering inflationary concerns.
Context
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Colgate-Palmolive has had to ramp up product innovation and investments in advertising and marketing to contend with heightened competition.
The company has also been battling lower sales in Latin America, which includes regions such as Argentina, Mexico and Brazil, hurt by an uncertain economy.
Peers Procter & Gamble and Kimberly-Clark, on the other hand, saw a rise in sales driven by recovery in demand.
Key Quote
"Our (sales) guidance includes the impact of the planned exit from private label pet nutrition over the course of 2025," said Colgate-Palmolive CEO Noel Wallace.
On potential tariffs under President Donald Trump, the company said it will work to assess and mitigate any impact where possible.
Market reaction
Shares of the New York-based company, which rose about 14 per cent in 2024, fell about 2 per cent in premarket trading.
By the numbers
The company projects annual sales growth to be flat, compared with analysts' estimates of a 1.3 per cent rise as per data compiled by LSEG.
The company posted net sales of $4.94 billion for the fourth quarter, compared with analysts' average estimate of $4.97 billion.
Its overall prices rose 1.8 per cent, while volume was up 2.5 per cent in the quarter ended Dec. 31.
The company's net sales in Latin America, a major revenue contributing region, fell 7.2 per cent and dropped 1 per cent in North America.
On an adjusted basis, its profit of 91 cents per share beat estimates of 89 cents.
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