Colgate and P&G report sluggish sales

 
Steve Dinneen
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Procter & Gamble (P&G) and smaller rival Colgate-Palmolive were both hurt by sluggish sales in the US and Western Europe.

P&G says it remains confident and expects shoppers to buy new, higher-priced products as the year progresses. Chief executive Bob McDonald said: “We believe that we’re in the midst of a recovery”.

Profits at both companies topped Wall Street’s expectations, propped up by lower tax rates. However, sales at both companies came in weaker than analysts expected.

P&G’s sales climbed two per cent to $21.3bn (£13.4bn), while analysts were looking for $21.58bn. The volume of goods sold rose six per cent. Organic sales, which strip out the impact of acquisitions, divestitures and foreign exchange fluctuations, rose three per cent, at the low end of the firm’s forecast.

Colgate earned $624m in the fourth quarter, compared with $631m a year earlier. Its sales fell 2.5 per cent to $3.98bn. Analysts forecasted $4.06bn. The toothpaste manufacturer’s organic sales rose one per cent.

Household product makers are banking on growth in developing markets such as India and China, as growth in developed markets such as the US and Western Europe has stagnated.

However, P&G says it is gaining market share at home and abroad and maintained its sales and profit expectations for the year. Demand for high-end items has bounced back strongly, with P&G struggling to meet demand for items including its Gillette Fusion ProGlide razors.

Tim Hoyle, director of research at Haverford Investments said: “I would call this a low-quality quarter.

“They’re in a tough spot, really, to grow earnings anywhere close to what most investors would want to give them a premium valuation.”