Colgate-Palmolive Misses Sales Estimates as Price Hikes Weigh on Demand

Local Market Commentary

The JSE Top 40 Index gained 0.42% to close at 77,801.99 points, while the broader All Share Index advanced 0.32% to 85,956.65 points. Eskom CEO Dan Marokane confirmed the return of stage 3 load shedding over the past weekend, with power disruptions expected to persist until Sunday. Truworths issued a profit warning, forecasting an up to 8% decline in half-year earnings due to weaker sales and margin pressures in its African operations. Meanwhile, South Africa’s military presence in the Democratic Republic of Congo faced significant setbacks, highlighting challenges in regional security efforts as M23 rebels seized control of Goma.

European Market Commentary

European equities ended the week at record highs, supported by strong corporate earnings, particularly in the technology sector, despite ongoing economic concerns. Germany’s labour market showed signs of strain as unemployment edged higher at the start of the year. Inflation in Germany remained at 2.8% in January, as expected, though core inflation dropped to 2.9% from 3.3%, reinforcing expectations of further rate cuts by the European Central Bank. On the political front, Germany is preparing for a snap election on February 23 following the collapse of Chancellor Olaf Scholz’s coalition government. In Russia, President Vladimir Putin approved the sale of Goldman Sachs’ Russian unit to Armenian investment fund Balchug Capital, marking another step in foreign banks’ exit from the Russian market amid tightened asset sale restrictions.

U.S. Market Commentary

Wall Street closed lower on Friday, as investor sentiment weakened following the White House's confirmation that tariffs of 25% on Canadian and Mexican imports, along with 10% on Chinese goods, would take effect. The session concluded a busy earnings week, with declining stocks outpacing advancers by a 2.3-to-1 ratio on the NYSE. Trading volume reached 15.78 billion shares, slightly above the 20-day average of 15.5 billion shares.

Asia Market Commentary

Asia-Pacific markets opened lower this morning, reflecting concerns over newly imposed U.S. tariffs on key trading partners. In Hong Kong, Alibaba shares surged over 5% following the release of its upgraded Qwen 2.5 AI model, which the company claims outperform the DeepSeek-V3 model. Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC) experienced losses as the market reopened after a selloff in AI-related stocks. The Bank of Japan’s latest policy discussions signalled the possibility of further rate hikes, citing inflationary pressures and the effects of a weaker yen.

Commodity Market Commentary

Gold prices retreated nearly 1% following a record high in the previous session, as a stronger U.S. dollar dampened demand. Oil prices initially spiked after the U.S. imposed tariffs on Canada, Mexico, and China, raising concerns over supply disruptions. However, gains were limited by demand uncertainties. The new tariffs will apply a 10% duty on Canadian energy exports and a full 25% charge on Mexican energy imports, potentially impacting U.S. refiners' margins.

Currency Market Commentary

The South African rand weakened against the U.S. dollar on Friday, weighed down by risk-off sentiment ahead of the U.S. tariff implementation. The dollar strengthened further, pushing the Canadian dollar and Mexican peso to multi-year lows, while China’s offshore yuan hit a record low. Cryptocurrencies also faced selling pressure, with bitcoin slipping to a three-week low and ether retreating to levels last seen in early September, as investors moved away from riskier assets amid escalating trade tensions.

Capitec Bank Holdings Limited (CPI) +0.90%
Capitec Bank Holdings has announced that for the year ending 28 February 2025, group headline earnings per share (HEPS) are expected to range between 11,739 cents and 12,106 cents, reflecting a 28% to 32% increase from the 9,171 cents reported for the prior year. Group earnings per share (EPS) are projected to be between 11,720 cents and 12,086 cents, also representing a 28% to 32% rise from the 9,156 cents recorded for the year ended 29 February 2024. This strong performance is driven by continued improvements in credit impairment charges and credit loss ratios (CLRs), a trend that started in the latter half of the 2024 financial year. Additionally, net transaction and commission income—including contributions from value-added services and Capitec Connect—was a key factor in driving growth. The expansion of active and fully banked client numbers, along with increased adoption of new and maturing products, further supported financial performance. The information in this trading statement has not been reviewed or audited, and full financial results for the year ending 28 February 2025 are expected to be released on SENS on or about 23 April 2025.

The SPAR Group Limited (SPP) -1.72%

The SPAR Group has confirmed that all conditions precedent outlined in the Sale and Purchase Agreement (SPA) for the disposal of its interests in SPAR Poland have been fulfilled, making the transaction wholly unconditional and effective as of 31 January 2025. This follows previous announcements on SENS on 4 September 2024, 21 November 2024, and 28 November 2024. In line with the SPA, the group will make a total estimated net recapitalisation payment of PLN590.7 million (R2 670.0 million, based on an average blended exchange rate of R4.52/PLN1). This amount remains subject to a standard audited completion accounts close-out process. The group has expressed its appreciation to employees, stakeholders, and all parties involved in successfully concluding this transaction.

Truworths International Limited (TRU) -3.51%
Truworths has reported a 2.4% increase in group retail sales to R12.5 billion for the first 26 weeks of the 2025 financial period compared to the prior year. Truworths Africa recorded a 1.1% decline in retail sales to R8.3 billion, while Office UK delivered strong growth, increasing 11.3% in Sterling terms to £180 million. Account sales comprised 47% of total retail sales, down slightly from 48% in December 2023, with cash sales rising 5.3% and account sales declining 0.9%. Truworths Africa’s online sales grew 38%, contributing 5.8% to total segment sales. Meanwhile, Office UK continued its momentum with a 9.9% increase in Rand terms to R4.2 billion, supported by store modernisation, a strong e-commerce presence, and robust brand partnerships. Despite overall sales growth, EPS and HEPS are expected to decline due to weaker sales performance and margin pressure in Truworths Africa. EPS is estimated to be between 473 and 494 cents, reflecting a decline of 7% to 11%, while HEPS is projected at 472 to 492 cents, down 4% to 8%. The difference between EPS and HEPS is due to a prior period reversal of right-of-use asset impairments. This statement is not an earnings forecast, and the financial information has not been reviewed or audited. Interim results are expected to be released on SENS on or about 27 February 2025.

Colgate-Palmolive Company (CL) -4.61%

Colgate-Palmolive missed Wall Street’s quarterly sales estimates as weak demand in North America and Latin America weighed on results, with organic sales growth slowing due to repeated price increases that discouraged consumer spending on essentials like toothpaste and pet nutrition. The company reported net sales of $4.94 billion, below analysts’ expectations of $4.97 billion, with Latin American sales dropping 7.2% and North American sales declining 1%, despite overall pricing increasing 1.8% and volume rising 2.5%. However, Colgate posted adjusted earnings per share (EPS) of $0.91, slightly exceeding estimates of $0.89, but projected flat annual sales growth, falling short of analysts’ expectations of a 1.3% increase, according to LSEG data.

Franklin Resources Inc. (BEN) +10.37

Franklin Resources the parent company of Franklin Templeton, posted better-than-expected first-quarter earnings as a stock market rally boosted investment management fees, ending the quarter with $1.58 trillion in assets under management (AUM), an 8% year-over-year increase. The company’s total investment management fees, its primary revenue driver, grew 9% to $1.8 billion, while adjusted profit stood at $320.5 million, or $0.59 per share, surpassing analyst estimates of $0.53 per share. Despite these gains, total net outflows widened to $50 billion, a sharp increase from $300 million a year ago, signalling persistent client redemptions even amid positive market momentum.

Exxon Mobil (XOM) -2.50%

Exxon Mobil reported mixed fourth-quarter results, with strong oil and gas production offsetting declines in refining and chemicals. The company posted an adjusted profit of $7.39 billion ($1.67 per share), exceeding analyst estimates, driven by higher oil and gas earnings from projects in the Permian Basin and Guyana. However, refining earnings fell sharply to $323 million from $3.2 billion last year, and chemical profits dropped 76% to $215 million. For the year, Exxon reported adjusted earnings of $33.46 billion, down from $38.57 billion in 2023, while continuing to prioritize shareholder returns with $36 billion in distributions and plans to repurchase $20 billion in shares annually through 2026.

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