Colgate-Palmolive NYSE: CL opened fiscal 2026 with what management described as “strong top and bottom line growth,” helped by an acceleration in organic sales growth and improved volume performance, particularly in Asia-Pacific. On the company’s first-quarter earnings call, Chairman, President and CEO Noel Wallace said results reflected broad-based progress across geographies and categories, while the company continued to increase investment behind brands and capabilities.
“Organic sales growth accelerated from the fourth quarter, driven by improved volume performance, particularly in Asia-Pacific,” Wallace said. He added that excluding the impact of the company’s private label pet food exit, Colgate grew both volume and pricing “in all four categories in four of five divisions,” and that emerging markets led growth.
Emerging markets and Asia-Pacific drive volume acceleration
Wallace said global category volumes remain “rather sluggish,” but Colgate was “particularly pleased” with the quarter’s volume acceleration versus the fourth quarter. He attributed the improvement to broad-based execution, with Asia-Pacific a major contributor and continued progress at Hawley & Hazel.
While noting the oral care category in China remains “pretty sluggish,” Wallace said Hawley & Hazel is executing better against intervention strategies and that recent moves are starting to take hold, including accelerated innovation and improved omni-channel execution. He highlighted “dual tube technology” innovation and better platform execution “including Douyin.”
Wallace also said the core Colgate business in China delivered “mid-single-digit growth in a flat to declining market,” and described results across the region as generally positive, with strong performance in the Philippines, Thailand, and Malaysia, while Australia was “a little softer than anticipated.”
When asked about India, Wallace said he could not provide detailed figures because the business had not “announced officially their numbers,” but indicated Asia-Pacific strength was tied to the region’s two largest markets, China and India.
North America interventions underway amid competitive pressure
North America continued to lag on volume/mix, but Wallace reiterated that improvement would take time and said the company is implementing a “strategy reset” that includes brand interventions, accelerated innovation, more revenue growth management (RGM), improved promotional execution with key retailers, and better in-store execution.
Wallace said some first-quarter volume was dampened because shelf resets and shipments of new products “came later” than expected, but he noted acceleration as the company exited the quarter. “We expect sequential improvement in North America moving forward,” Wallace said, adding that early signs from late-quarter innovation were encouraging, though “clearly a lot more work to do.”
On competitiveness in U.S. oral care, Wallace pointed to increased couponing activity from at least one competitor and said Colgate plans to “step up” investments in North America, calling toothpaste a “strategic growth opportunity.” He said the toothbrush business “continues to perform very well,” and highlighted a “much more aggressive stance on innovation” in home care and personal care, with early signs in home care described as encouraging.
Inflation and guidance: higher cost assumptions, lower gross margin outlook
Management said it maintained its full-year outlook for organic sales growth and EPS while reducing expectations for gross margin due to higher raw material and packaging costs. Wallace said the company built “significant increases” in these costs into its guidance, describing the move as prudent amid volatility.
Wallace said assumptions embedded in guidance include “$300 million of additional raw materials” and oil “roughly at around $110.” CFO Stan Sutula provided additional detail, saying the company’s updated gross profit margin assumptions include oil averaging about $110 for the remainder of the year and “an additional raw materials and logistics impact for the year of roughly $300 million” since the fourth-quarter call.
Sutula said roughly two-thirds of the incremental impact relates to raw materials and one-third to logistics. He cited oil byproducts, resins, petrochemicals, fats, and oils as key drivers, adding that spending in those areas is expected to be “up more than 20% year-on-year” for the full year. He also said logistics costs are up “nearly 10%,” affecting both ocean and land freight.
Wallace emphasized that logistics costs affect SG&A rather than gross margin. Despite the margin pressure, Sutula said offsetting actions include RGM and productivity “across the entire P&L,” which management said supports maintaining earnings guidance. Wallace said the company remains comfortable with its EPS outlook range of “low to mid-single digits,” while advising analysts to “reflect the lower gross margin” in their models.
On pricing, Wallace said Colgate will continue to take pricing “where we see the opportunities,” with more of it “innovation-led” through the balance of the year. He also said premium innovation, price-pack architecture, and mix opportunities are among the levers being considered.
Addressing North America margins specifically, Sutula said the division’s gross profit margin was pressured year-over-year by tariffs and higher raw material costs. He noted there were “minimal tariffs in the prior year,” while North America now incurs “the vast majority” of them. Sutula said the year-over-year tariff impact is expected to be “less going forward,” and that productivity initiatives should help improve margins as the year progresses.
Strategic Growth and Productivity Program updated; savings concentrated in 2027-2028
Wallace announced an update to the company’s Strategic Growth and Productivity Program (SGPP), including a new annualized savings target of $200 million to $300 million, with the majority of savings expected in 2027 and 2028. He said the initiative is intended to help fund investments tied to Colgate’s 2030 strategic plan and drive “consistent compounded dollar-based EPS growth,” while also reducing organizational complexity.
Both Wallace and Sutula stressed the SGPP timeline remains unchanged. “This is not an extension of the program, as we still expect the program to be completed by the end of 2028,” Wallace said. Sutula added that the program will still end by “December 31st, 2028.”
Sutula said stronger-than-expected execution and additional ideas from teams contributed to expanding the savings opportunity, with the program focused more methodically on organizational structure, including “spans and layers.” He said the company plans to allocate savings toward two main areas:
- Funding incremental investments to accelerate growth as part of the 2030 strategy
- Bottom-line contribution, balanced based on opportunities and market conditions
Hill’s posts growth in a flat pet food market; private label headwind tapering
Wallace also highlighted strength at Hill’s, calling it a “wonderful business” that had an “impressive quarter” in what he described as a tough market. He said Hill’s delivered “solid organic” growth, citing 4.8% organic growth excluding private label, with U.S. growth at 5% and performance “way outperforming the market,” which he said is “roughly flat right now.”
He noted private label represented a 260-basis-point negative impact and said that headwind will continue to taper, likely impacting the total company by 20 to 30 basis points in the second quarter, with the company expecting to be “out of that by the back half of the year.”
Wallace said Hill’s volume excluding private label was up 1%, and cited strength in Science Diet and Prescription Diet, with “double-digit growth” in certain targeted areas and an “exceptional quarter” for Prescription Diet. He said the category’s weakest area remains dry dog, which continues to slip, and acknowledged Hill’s growth in that segment was “not where we’d like it to be.”
On consumer sensitivity and inflation risks, Wallace said Hill’s competes at the “super premium” end of the market and continues to lean on “real value-added innovation,” particularly in Prescription Diet, where vet endorsement and product efficacy help support premium pricing. He said the company is not immune to inflationary pressures and will monitor consumer impacts closely.
In closing remarks, Wallace said the company believes it has built a model that can perform in a volatile environment while investing for long-term success, and thanked Colgate’s global workforce for delivering strong results in what he described as a difficult operating backdrop.
About Colgate-Palmolive NYSE: CL
Colgate-Palmolive Company is a global consumer products company with a long history in household and personal care categories. The business traces its roots to the early 19th century and has evolved into a multinational manufacturer and marketer of everyday consumer goods focused on health, hygiene and home care.
The company's core activities center on oral care, personal care, home care and pet nutrition. Its product portfolio includes toothpaste, toothbrushes and mouthwash in oral care; soaps, body washes and deodorants in personal care; dishwashing liquids, surface cleaners and other household products in home care; and scientifically formulated pet foods under its pet nutrition business.
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