The rest of the world is going to help U.S. consumer product manufacturers next year. Look for international growth to push the likes of Colgate-Palmolive (CL), Avon (AVP) and Clorox (CLX) higher in 2010, according to Fitch Ratings. In an interview with Reuters, a director gave the Fitch's outlook for consumer goods.
The household and personal care segments increased revenue every year from 2003 to 2008. So, 2009 was but a bump in the road. Even in a recession, you need toilet paper and shampoo, so expect the spending to come back.
Grace Barnett, a director at Fitch Ratings, told Reuters, "Next year this industry will finally go back to normal, which is to have positive top line growth."
Revenue gains of at least 5% are likely for Colgate, Avon and Clorox -- not to mention Kimberly-Clark (KMB) and Procter & Gamble (PG). A weak dollar could make the situation even better since Colgate and Avon, among others, pick up most of their sales outside the U.S. Says Barnett, "Those two companies certainly will get the big benefit as it kind of turns around."
Look for Brazil, Russia, India and China to drive growth for household and personal care companies, according to Fitch, with the "BRIC" countries delivering GDP growth of 6.5% next year, up from 3.7% in 2009.
Finally, Fitch doesn't expect a lot of major M&A next year. There will be some tactical deals, but no blockbusters. Instead, the major challenge will be competitive, as brand manufacturers such as Kimberly-Clark and Clorox will need to meet the still growing threat from private label companies.
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