$CL earnings report

Colgate-Palmolive reported a solid third quarter, with net sales of $5,369, up 4.6 %, and organic sales growth of +3.6 %. Total Company growth reflected +1.7 % volume, +2.0 % pricing and +1.0 % foreign exchange. Management stated that net sales and organic sales increased in all four categories and in four of five divisions. The major exception was North America, where net sales declined (1.7) % and volume declined (3.7) %.

The regional mix was led by Latin America, where net sales increased 12.5 %, including 6.5 % from foreign exchange, while organic sales increased 6.0 %. Hill's Pet Nutrition grew net sales 5.6 % and organic sales 5.7 %, supported by 1.8 % volume and 3.9 % pricing. Europe, Middle East & Africa and Asia Pacific also delivered positive organic growth. North America remains the clear weak point: its operating profit declined 11% to $177 and its operating profit margin contracted 210 basis points to 19.5%.

Margins improved at the gross-profit level but not on a reported operating-margin basis. GAAP gross profit margin increased 80 basis points to 60.2 %, and Base Business gross profit margin increased 90 basis points to 60.3 %. Advertising rose to $775 from $674. GAAP operating profit increased 3% to $1,088, but GAAP operating profit margin declined 30 basis points to 20.3 % as selling, general and administrative expenses as a percentage of Net sales rose to 39.3 % from 38.4 %. Base Business operating profit increased 5% to $1,117 and Base Business operating profit margin increased 20 basis points to 20.8 %.

Third-quarter GAAP diluted EPS increased 3% to $0.94 and Base Business diluted EPS increased 7% to $0.97. For the nine months, sales were $16,055 versus $15,152, but GAAP operating profit was $3,069 versus $3,214 and GAAP diluted EPS was $2.61 versus $2.67. Strategic Growth and Productivity Program charges affected nine-month GAAP results, while nine-month non-GAAP operating profit increased 5% to $3,396 and non-GAAP diluted EPS was $2.94 versus $2.74.

Cash generation and shareholder distributions remained material. Net cash provided by operations was $2,913 for the first nine months, and free cash flow before dividends was $2,513. The Company paid $1,308 in dividends and purchased $927 of treasury shares. Cash and cash equivalents were $1,527 and total debt was $7,716 as of September 30, 2026.

The Company narrowed full-year net sales guidance to up 4% to 5% from 2% to 6%, raised its gross profit margin outlook from roughly flat to up on both a GAAP and Base Business basis, and raised Base Business EPS growth guidance to 5% to 7% from mid-single-digit growth. It retained an expectation for GAAP double-digit earnings per share growth. Execution in North America, delivery of margin expansion, the exit from private label pet food, and the contribution from foreign exchange are the principal reported variables to monitor.

Colgate-Palmolive reported second-quarter net sales of $5,361, up +4.9 %, while organic sales growth was +2.4 %. Pricing contributed +1.6% and organic volume contributed +0.8% at the Total Company level. Foreign exchange added +2.4% to net sales growth. The company stated that net sales and organic sales grew in three of four categories and in four of five divisions, while worldwide organic volume growth improved sequentially for the third consecutive quarter.

Regional performance was uneven. Latin America posted +13.7% net sales growth and +5.3% organic sales growth, while Asia Pacific posted +4.9% net sales growth and +5.2% organic sales growth. Europe, Middle East & Africa reported +3.5% net sales growth and +2.0% organic sales growth. North America was the key weak division, with net sales down -3.0% and both as reported and organic volume down -3.9%. Hill’s Pet Nutrition grew net sales +3.4% and organic sales +2.1%, but organic volume fell -1.8%; lower private label pet food sales had a 0.4% negative impact on total organic sales growth.

Profit measures show a distinction between reported and Base Business results. GAAP EPS declined -5 % to $0.86, while Base Business EPS increased +8 % to $0.99. GAAP gross profit margin and Base Business gross profit margin each increased 140 basis points to 61.5%. Total Company, As Reported operating profit was $1,016, down -6%, and its margin was 19.0%, down -210 basis points. Total Company, Base Business operating profit was $1,145, up 5%, and its margin was 21.4%, up +10 basis points.

The company continued to invest in demand generation, reporting a 15% increase in advertising during the quarter. It also reported net cash provided by operations of $1,742 million for the first six months of 2026, while stating that free cash flow increased year over year. Market-share indicators remained prominent, with global toothpaste market share at 41.3% year to date and global manual toothbrush market share at 32.7% year to date.

For full year 2026, Colgate maintained guidance for net sales to be up 2% to 6% and organic sales growth of 1% to 4%. It now expects GAAP and Base Business gross profit margin to be roughly flat, versus down previously. GAAP double-digit EPS growth guidance was maintained, while Base Business EPS growth guidance was raised to mid-single-digit growth from low- to mid-single-digit growth previously. Management also expects advertising to be up on both a dollar basis and as a percentage of net sales, while citing volatile market conditions for the balance of 2026.