“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. Asia Pacific 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%. Further, Colgate continues to make progress on its restructuring scheme.