Colgate-Palmolive cuts annual sales forecast on signs of sluggish demand

Toothpaste maker Colgate-Palmolive cut its annual sales forecast on Friday (solidcolours / Istock.com)

Toothpaste maker Colgate-Palmolive cut its annual sales forecast on Friday, in a sign that rising economic uncertainty is squeezing consumer appetite to spend on higher-priced items even in essential categories.

The oral and hygiene products maker, similar to peers in the broader retail industry, has been raising product prices in most of its markets to counter the impact of U.S. President Donald Trump administration’s unpredictable trade policies.

This, in turn, has been pushing budget-conscious shoppers further towards lower-priced alternatives, hurting sales of companies such as Colgate.

While prices rose 2.3 per cent during the third quarter, volumes fell 1.9 per cent, compared to a year ago.

Colgate said it continues to expect an impact of about US$75 million from tariff-related costs.

The company imports raw materials such as vitamins and amino acids and makes toothpaste for the U.S. market in Mexico.

To fend off stiff competition from cheaper private-label brands, Colgate has ramped up its advertising and marketing efforts.

The company’s margins also took a hit from soaring costs related to raw and packaging materials despite aggressive price hikes taken over the past quarters.

Its quarterly adjusted gross profit margin decreased 190 basis points to 59.4 per cent.

Peer Procter & Gamble reported an upbeat quarter as consumers continued to pay higher prices for its beauty and hair-care products.

Colgate now expects annual organic sales growth to be one per cent to two per cent, after estimating it to be at the low end of a two per cent to four per cent rise.

It posted quarterly net sales of US$5.13 billion, in line with analysts’ estimates, as per data compiled by LSEG.

Its quarterly adjusted profit of 91 cents per share came in above estimates of 89 cents per share.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Vijay Kishore)