Colgate-Palmolive Company
CL · NYSE
Next quarter
Reports Oct 30, 2026.
Consensus is $0.92 EPS for Sep 2026 across 9 estimates, ranging $0.89 to $0.94.
CL Jun 2026
- 4.21%
- -1.56%
- $0.95
- $0.99
- —
- $5.36B
Reported results
- $5.36B
- 61.48%
- $1.02B
- 18.95%
- $693.00M
- $0.86
Highlights
- Adjusted earnings: Base Business EPS was $0.99, up 8% from $0.92 a year ago and $0.04 above the $0.95 consensus; GAAP diluted EPS was $0.86 versus $0.91.
- Sales growth: Net sales rose 4.9% year over year to $5.361 billion, while organic sales increased 2.4% on 0.8% organic volume growth, 1.6% pricing and 2.4% foreign exchange.
- Margin recovery: Gross margin expanded 140 basis points to 61.5%; Base Business operating profit increased 5% to $1.145 billion and margin improved 10 basis points to 21.4%.
- Restructuring drag: The Strategic Growth and Productivity Program generated $129 million of pre-tax charges in the quarter, reducing GAAP operating profit to $1.016 billion, down 6% year over year.
- Regional mix: Latin America led the business with 5.3% organic sales growth and $418 million of operating profit, while Asia Pacific grew 5.2%; North America declined 3.0% organically.
- Hill’s pressure: Hill’s Pet Nutrition sales increased 3.4% to $1.195 billion, but organic sales grew only 2.1% as volume fell 1.8%, including a negative impact from lower private-label pet food sales.
- Higher brand investment: Advertising increased 15% to $777 million, or 14.5% of sales versus 13.3% a year ago, as Colgate invested behind its 2030 strategy.
- Cash generation: Six-month operating cash flow rose to $1.742 billion from $1.484 billion, and free cash flow before dividends increased to $1.476 billion from $1.252 billion.
- Outlook: Colgate maintained its 2026 sales guidance of 2% to 6% reported growth and 1% to 4% organic growth, but raised Base Business EPS growth guidance to mid-single digits from low- to mid-single digits.
Analysis
Colgate-Palmolive’s second quarter was an adjusted earnings beat with improving underlying margins, although reported earnings remained distorted by restructuring charges. Base Business EPS of $0.99 exceeded the $0.95 consensus by 4.21% and rose 8% from $0.92 a year ago. Net sales increased 4.9% to $5.361 billion from $5.110 billion, and organic sales grew 2.4%. Sequentially, sales increased from $5.32 billion in the first quarter, operating income rose to $1.016 billion from $964 million, net income increased to $693 million from $646 million, and GAAP diluted EPS improved to $0.86 from $0.80.
The print was defined by a broad but uneven recovery in the portfolio. Gross margin rose 140 basis points to 61.5% as cost savings and pricing more than offset raw-material and packaging inflation, lifting Base Business operating margin to 21.4%. Growth was strongest in Latin America and Asia Pacific, while North America remained weak and Hill’s faced volume pressure. At the same time, advertising rose 15% to $777 million, supporting future brand investment but contributing to higher selling expenses. The $129 million quarterly productivity-program charge drove GAAP operating profit down 6% to $1.016 billion. Management held sales guidance, raised adjusted EPS growth expectations, and now expects roughly flat full-year gross margins.
Underlying earnings and margins
The quarter’s earnings quality was stronger than the GAAP figures suggest. Base Business operating profit rose 5% to $1.145 billion from $1.089 billion, and Base Business EPS increased 8% to $0.99 from $0.92. GAAP operating profit fell 6% to $1.016 billion because the productivity program added $129 million of pre-tax charges, compared with $9 million of acquisition-related costs in the year-ago quarter. Gross margin expansion was the central offset: the 61.5% rate benefited from 280 basis points of funding-the-growth savings and 60 basis points of pricing, partly offset by 220 basis points of higher raw and packaging costs.
- Operating leverage: Base Business operating margin increased 10 basis points to 21.4%, as the 140-basis-point gross-margin gain more than offset a 120-basis-point increase in adjusted SG&A as a percentage of sales.
- Tax and shares: The GAAP effective tax rate rose to 24.3% from 23.2%, while diluted shares declined to 801.8 million from 813.3 million.
Regional sales performance
Colgate’s underlying sales momentum was concentrated outside North America. Organic sales grew in four of five divisions, with volume improving sequentially for the third consecutive quarter. Latin America and Asia Pacific combined growth with positive volume, while North America’s decline reflected weaker U.S. Oral Care and Personal Care demand.
- Latin America: Organic sales increased 5.3% on 2.6% volume growth and 2.8% pricing; reported sales rose 13.7% to $1.372 billion, and operating profit increased 14% to $418 million.
- Asia Pacific: Organic sales rose 5.2% on 4.1% volume growth; reported sales increased 4.9% to $782 million, while operating profit rose 3% to $209 million and margin contracted 40 basis points to 26.7%.
- EMEA: Organic sales grew 2.0% on 3.2% volume growth, lifting operating profit 9% to $263 million and margin 120 basis points to 23.4%.
- North America: Organic sales declined 3.0% as volume fell 3.9%; operating profit nevertheless rose 3% to $192 million as cost savings supported a 120-basis-point margin improvement to 21.6%.
Hill’s pet nutrition
Hill’s delivered reported growth but a softer underlying volume profile. Sales increased 3.4% to $1.195 billion, driven by 3.9% pricing and 0.6% foreign exchange, while volume declined 1.2% on a reported basis and 1.8% organically. The Prime100 acquisition contributed 0.6% to reported volume. Organic growth of 2.1% included a 200-basis-point headwind from lower private-label pet food sales, although therapeutic and wellness categories grew.
- Profitability: Operating profit increased 2% to $269 million, but margin fell 40 basis points to 22.5%. A 240-basis-point gross-margin benefit from savings, pricing and mix was outweighed by 260 basis points of higher SG&A, including a 230-basis-point increase in advertising investment.
- Acquisition accounting: Colgate finalized the $301 million Prime100 purchase-price allocation in the quarter, assigning $207 million of goodwill to Hill’s and $64 million to acquired intangible assets.
2030 investment and restructuring
Management is funding brand and capability investment while restructuring the organization. Advertising rose $99 million, or 15%, to $777 million and increased to 14.5% of sales from 13.3%. The company said investment would remain strong in the second half as it emphasizes premium, science-led innovation and omnichannel demand generation.
- Program charges: The Strategic Growth and Productivity Program produced $129 million of pre-tax charges in the quarter and $305 million in the first half; cumulative charges reached $318 million by June 30.
- Longer-term savings: The three-year program carries an estimated $350 million to $550 million of cumulative pre-tax charges and is expected to deliver $200 million to $300 million of annualized pre-tax savings once fully implemented.
- Corporate burden: Corporate operating loss widened to $335 million from $181 million, primarily reflecting the restructuring charge.
Cash flow and guidance
Cash generation improved despite continued investment and shareholder returns. Six-month operating cash flow reached $1.742 billion, up from $1.484 billion, while capital expenditures increased to $266 million from $232 million. Free cash flow before dividends rose to $1.476 billion from $1.252 billion.
- Capital allocation: Through six months, Colgate paid $879 million of dividends and repurchased $597 million of stock; debt less cash and marketable securities was $6.404 billion at June 30 versus $6.593 billion at year-end.
- 2026 outlook: Reported sales growth remains guided to 2% to 6%, including a low-single-digit foreign-exchange benefit, and organic sales growth remains 1% to 4%. Gross-margin guidance moved to roughly flat from previously down, while Base Business EPS growth was raised to mid-single digits from low- to mid-single digits.
