"As we look ahead, uncertainty in global markets and slowing category growth worldwide remain challenging," admitted Colgate CEO Ian Cook. "Based on current spot rates, we continue to expect a low-single-digit net sales increase for 2017, and given our slower than expected first half, we are now planning for low-single-digit organic sales growth for 2017."
Cook blamed weakness in North America and challenges in Asia Pacific for the decline. A-P sales fell 5% as volume declines in India, Thailand and Australia were partially offset by volume gains in the Philippines, Vietnam and New Zealand. North American sales decreased 3.5% as organic sales fell 3.5%, primarily due to market share losses in Colgate's dish liquid business in the US and a further slowdown in category growth in the US.
Q2 sales were just over $3.8 billion, the slight decline in sales came from a combination of a 1% drop in unit volume, negative 0.5% in foreign exchange and a 1% decline in global unit volume. Organic sales, net sales excluding the impact of foreign exchange, acquisitions and divestments, were even with the year ago period. Gross profit rose to 60.1% in the period, up from 59.9% a year ago.
There was some good news in the quarter. Colgate's leadership of the global toothpaste market rose to 43.6% and its leading manual toothbrush share climbed to 32.8%. Furthermore, the company continues to make progress on its restructuring scheme.
"We are pleased with the progress of our 2012 Restructuring Program, and, as we have previously said, we continue to pursue additional savings opportunities, especially given the current challenging environment," he said. "In the second quarter, we identified additional opportunities under our Program that take us to the upper end of our previously disclosed cost and savings ranges. As a result, on a GAAP basis, based on current spot rates, we are planning for a year of gross margin expansion and now expect a mid-single-digit earnings per share percentage decline on a dollar basis."
Cook added that he continues to plan for a year of strong operating cash flow, gross margin expansion, increased advertising investment and low-single-digit earnings per share growth on a dollar basis.