Colgate-Palmolive H1 2022 net sales up despite profit dip: 'We will watch the consumer really closely,' says CEO
Last week, Colgate-Palmolive reported worldwide net sales of €8.72bn ($8.88bn), up 3% on the previous year for the first half (H1) of 2022, along with second quarter (Q2) net sales of €4.4bn ($4.48bn), up 5.5% on Q2 2021. Total net profit for H1, however, was down 16% on the previous year at €1.13bn ($1.16bn).
Latin America strong net sales and growth
Globally, H1 and Q2 net sales in Latin America grew most significantly, up 9% and 12.5%, respectively, with organic sales growth led by Colombia, Brazil, Mexico and Argentina. This was followed by a 3% H1 net sales rise and 6% Q2 net sales rise in North America. Europe saw the biggest drop in net sales for H1 and Q2, down 9.5% and 10%, respectively.
A look at Colgate-Palmolive’s oral, personal and home care business, excluding its pet care division Hill’s, saw Latin America also generating the lion’s share of net sales for H1 and Q2, pulling in €1.93bn ($1.97bn) and €981m ($1bn), respectively. This was followed by North America with H1 net sales at €1.85bn ($1.89bn) and Q2 net sales at €947m ($965m); then Asia Pacific with €1.37bn ($1.4bn) in H1 and €682m ($696m) in Q2; followed by Europe with €1.26bn ($1.29bn) in H1 and €626m ($639m) in Q2; and Africa/Eurasia with €513m ($523m) in H1 and €251m ($256m) in Q2.
Noel Wallace, chairman, president and CEO of Colgate-Palmolive, said the results showed a “significant acceleration” versus the first quarter of the year, despite continued cost increases across raw materials, packaging and logistics.
“Our focus on premium innovation, brand building and digital capabilities drove broad-based organic sales growth, with growth in every division and all four of our categories, including double-digit organic sales growth in oral care and pet nutrition. We are especially encouraged by the increase in our global toothpaste market share year to date, led by share growth in the US where our focus on more premium innovation is driving share gains,” Wallace said.
The company had “acted boldly” on pricing to offset headwinds, he said, and would continue to bring price changes in over the rest of the year.
“Our solid results this quarter, despite significant headwinds from raw materials, foreign exchange and the broader macro environment, demonstrate that our strategies are working. We will continue to deliver impactful innovation that provides value to our customers and consumers as we work to offset these headwinds and deliver sustainable, profitable growth over the long-term.”
Speaking to analysts on the company’s earnings call, Wallace added: “Foreign exchange has become a bigger headwind since our first quarter earnings release – the euro has moved to parity with the dollar and most other currencies have weakened as well – but we will continue to invest in our brands.”
‘Pretty good vitality’ at consumer level
Discussing the potential for softening consumer demand and trade down behaviour amidst inflationary pressures, the CEO said there remained “pretty good vitality at the consumer level” across the globe, with emerging markets growing mid-single digits albeit with some slowdown in the developed world, notably sluggishness in some categories in Europe. So far, however, there had not been a lot of trade down, he said, though it remained “early days” and trade downs were to be expected moving forward.
In any case, Colgate-Palmolive would continue to innovate across its portfolio, at the high and low end of the market across all price points, he said, to ensure the company could capture any trade downs should they happen.
“It’s our responsibility to bring innovation across price points; our responsibility to work with the trade to drive volume back in the categories. We have big traffic builders. Our brands are strong around the world and we know our retailers rely on us to bring traffic into their stores and drive volume and basket. So, we will continue to focus on finding innovation to ensure that the volume aspect of the category is protected,” Wallace said.
“…We will watch the consumer really closely (…) We obviously have a lot of teams on the ground, looking at exactly where the elasticities are, but so far, elasticities are in line with what we expected, or slightly better,” he said.