If you want insight into the global consumer, Thursday was a big day.
Unilever , Procter & Gamble and Colgate-Palmolive all reported earnings.
The theme throughout is that the global recovery continues, but the most impressive growth is in emerging markets.
Let’s start with the biggest, P&G.
The maker of Pampers, Tide, Gillette and a slew of ubiquitous brands saw global sales grow 7 percent. The company has not seen volume growth this large since well before the recession.
“By our standards this was a good quarter, and we are going to continue to follow the same strategies,” CEO Bob McDonald said on the company’s conference call.
Some of those strategies translated growth into lower profit on a year-over-year basis, which is why the stock traded lower.
The company paid more in taxes and also took a 5 cent per share charge related to the new health care legislation. But the major pressure on profit came from pricing. P&G cut prices in order to gain market share and that was a definite drag on earnings.
Also dragging down the stock was light guidance. Procter & Gamble projects earnings of 68-74 cents in the current quarter, which is below the consensus of 76 cents.
In terms of trends, CFO Jon Moeller said branded products made up 88 percent market share in its U.S. market.
“Private label shares have been down for the last four to five months,” he said on the conference call.
Moeller said there is still demand for people looking for less expensive alternatives; it’s simply happening within branded products and less within the private-label space.
That’s a net positive for brand-focused companies like P&G, Unilever and Colgate.
Unilever, Europe’s largest consumer-goods company and the global No. 2 behind P&G, showed strong gains in its share price after the $80 billion company reported net profit jumped 33 percent.
In contrast to P&G, which saw pricing drop, Unilever’s pricing was closer to flat.
Then, there’s Colgate-Palmolive, which showed something similar to P&G: Revenue was up but profit was down. That’s basically a reversal of the recession trend of profit growth through cost-cutting.
Revenue rose more than 9 percent, yet profit dropped from $508 million in the same quarter last year to $357 million.
How does that happen? For Colgate investors, blame Venezuela.
The company took a hefty charge because the South American nation devalued its currency and is dealing with serious inflation problems.
Looking inside the company’s numbers, the trends remain in place: strong volume growth, especially in emerging markets, and pricing pressure over competition in the developed world.
If the companies can get some pricing power back, most analysts think forward earnings could be even stronger, because markets like China, Brazil and India do not seem to be slowing down.
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