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Household Industry

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Submitted By kartikanindya
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The results of global home- and personal-care peers could be tested further this year by currency volatility, the emerging-markets slowdown and inflation. Sales reported by the group are expected to fall 1% in 2015, based on consensus, due to the strong-dollar drag on revenue reported by U.S. companies operating abroad. Yet a weaker euro supported European peers' sales, and a stronger yuan in 1H led to higher Chinese-visitor purchases boosting the sales of Japanese and South Korean beauty and cosmetics peers.
Companies Impacted: P&G, Kimberly-Clark and Colgate are among peers whose 2015 sales may have fallen the most. Sales of Amorepacific, Fancl, Kose and L'Oreal may have risen the most. Organic sales, excluding forex translations and M&A impacts, are the growth benchmark in personal and home care.
Modest price rises, 2015 cost savings and lower oil costs may ease currency-inflated expenses, curbing margin declines for home- and personal-care peers. Higher pricing, if linked to innovation while ensuring affordability in low and mid tiers, is vital for cushioning volume and gaining market share, especially as currency depreciation and inflation persist in slowing developing markets, like Russia and Brazil. Unilever's 4Q emerging-market volume fell to 2% vs. 3% in the first nine months. (Corrects timeframe.)
Peer Comparison: Unilever has the most emerging-market sales exposure among BI personal- and home-care peers, with 58% of group sales in these areas. Colgate has more than 50% of sales in these countries. L'Oreal, Procter & Gamble and Kimberly-Clark have more than 30% of sales in developing and emerging markets.
Home and personal care companies will have to ensure they get pricing right for each product and channel, while continuing to invest in innovation to differentiate their offerings to attract demand. This is key to gaining market share amid persistent

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