Colgate-Palmolive Company (CL) Q1 2026 earnings summary

Executive summary

• Net sales rose 8.4% year-over-year to $5,324 million in Q1 2026, with organic sales up 2.9% and strong growth in emerging markets, especially Asia-Pacific and Latin America, despite a 0.6% drag from the exit of private label pet food.

• Adjusted EPS increased 7% to $0.97, while GAAP EPS declined 6% to $0.80 due to $176 million in pre-tax charges from the expanded Strategic Growth and Productivity Program.

• Free cash flow rose 28% year-over-year to $747 million, with working capital improvements and record cash generation.

• Investments in advertising, innovation, digital, and AI are driving brand strength, market share gains, and long-term strategy.

• The company completed the acquisition of Prime 100, expanding its pet nutrition segment in Australia.

Financial highlights

• Gross profit increased to $3,226 million, but gross margin slipped to 60.6% from 60.8% due to higher raw and packaging material costs.

• Operating profit (GAAP) fell 10% to $964 million, while Base Business operating profit rose 4% to $1,134 million; operating profit margin dropped to 18.1% (GAAP), with adjusted margin at 21.3%.

• Free cash flow before dividends increased to $609 million from $476 million year-over-year.

• Advertising spending increased to $734 million from $668 million year-over-year.

• Hill’s Pet Nutrition delivered 4.8% organic growth (ex-private label), with strong performance in Science Diet and Prescription Diet.

Outlook and guidance

• Full-year 2026 net sales expected to grow 2%–6%, with organic sales growth guidance at 1%–4% and a low-single-digit FX benefit.

• Gross profit margin now expected to decline for the year due to $300 million in additional raw material and logistics costs, assuming oil at $110/barrel.

• Double-digit GAAP EPS growth and low-to-mid single-digit Base Business EPS growth anticipated.

• Advertising spend to increase as a percentage of net sales and in absolute terms.

• Flexibility in cost savings, productivity, and potential incremental pricing to offset inflationary pressures.