India, China hit hard due to coronavirus, says Colgate global CEO

Both the countries reported a decline in sales in the March quarter

The global chairman and chief executive officer (CEO) of Colgate-Palmolive, Noel Wallace, on Friday said India and China were the firm’s worst-affected markets in the March quarter, reporting sales decline on account of the Covid-19 pandemic.
 

Colgate withdrew its financial guidance for 2020, citing “uncertainty and volatility”. While Colgate’s March quarter organic sales increased 7.5 per cent from a year ago — led by growth in most regions, including North America, Europe, Latin America, and Africa — Asia-Pacific, which includes India and China, bucked the trend, said Wallace.
 

Addressing investors in a conference call, Wallace said he remained uncertain regarding lifting of the lockdown in India and the return to normalcy in the market.
 

The lockdown in India has been extended by two more weeks. “I was on the phone speaking to my Asia team, and while manufacturing has improved since the first phase of the lockdown, there is still significant supply chain disruption, including on stock going into retail stores. The impact of this will be visible in the second quarter,” he said.

Colgate is the largest oral care company in India. The domestic unit is yet to declare its financial results for the January-March period. Wallace’s comments come at a time when most global firms arepointing to the scale of impact on Indian operations, due to the lockdown. On Wednesday, Mondelez — the owner of Cadbury and the largest chocolate maker in India — said the firm went “absolutely blank” when the lockdown began on March 25, with close to “zero sales” during the period.
 

“When the original lockdown was announced, it was impossible to get people into these units, given that we have multiple plants. As regards having people from distribution centres to supply to distributors, it was impossible to even get trucks,” he said.
 

On Thursday, Hindustan Unilever reported a volume decline of 7 per cent for the March quarter, which was more than the volume decline (of 4 per cent) it had reported during the quarter of demonetisation (October-December 2016).

Colgate joins a list of international firms that have revised their 2020 outlook, in recent weeks. Among them are Unilever, Coca-Cola, PepsiCo, Mondelez, Starbucks, McDonald’s, and Ford Motor. Proctor & Gamble, on the other hand, trimmed its sales forecast for the year, while Nestle said there was no change to its outlook for now.
 

“It is important not to get carried away by the strong organic growth in January-March, as the situation remains highly volatile, with significant ups and downs across categories and regions,” Mark Schneider, Nestlé’s global CEO said. Most company heads have said they see a gradual recovery, led by significant shifts in consumer behaviour.