tapebrief
CL · Q4 2025

CL · Q1 2026 Earnings

Cautious

Colgate-Palmolive

Reported May 1, 2026

30-second summary

Colgate held FY26 organic sales (1-4%) and non-GAAP EPS (low-to-mid-single-digit) guidance but conceded gross margin will now contract rather than expand — driven by ~$300M of incremental raw materials and logistics costs (~two-thirds raws, one-third logistics) at an assumed $110 oil. Q1 organic growth of 2.9% landed mid-range with broad-based volume (+1.1%) and pricing (+2.2%), and emerging markets (LatAm +14.8%, EMEA +11.9%, APAC +8.9%) carried the print while North America deteriorated further to -1.8%. The story is no longer whether the top line holds — it's whether RGM, the expanded SGPP program, and an unchanged A&P commitment can absorb the cost wall without breaking EPS.

Headline numbers

EPS

Q1 FY2026

$0.97

Revenue

Q1 FY2026

$5.32B

+8.4% YoY

Gross margin

Q1 FY2026

60.6%

Free cash flow

Q1 FY2026

$0.61B

Operating margin

Q1 FY2026

18.1%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$5.32B+8.4%$5.23B+1.8%
EPS$0.97—$0.95+2.1%
Gross margin60.6%—60.2%+40bps
Operating margin18.1%—1.8%+1630bps
Free cash flow$0.61B———

Guidance

Colgate maintained FY2026 revenue and non-GAAP EPS guidance but downgraded gross margin from expected expansion to contraction due to raw material and packaging cost inflation.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Organic sales growthQ1 FY20261% to 4%2.9%in-lineMet

New guidance

MetricPeriodGuideYoY
Earnings per share growth (GAAP)FY2026Double-digit growth—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Gross profit margin
FY2026
expansion expectedDown (revised from up previously)revised to contraction from expected expansionLowered

Reaffirmed unchanged this quarter: Earnings per share growth (non-GAAP) (low to mid-single-digit), Net sales growth (up 2% to 6%), Advertising spending (Up on dollar basis and as percentage of net sales)

Segment performance

Q1 FY2026
SegmentQ1 FY2026YoY
Hill's Pet Nutrition$1.194B+6.7%
Oral, Personal and Home Care$4.131B+8.9%

Platform metrics

Q1 FY2026
SegmentQ1 FY2026
Organic Sales Growth2.9%
Global Toothpaste Market Share41.1%
Global Manual Toothbrush Market Share32.6%
Advertising Spend$734M
Volume Growth (Organic)1.1%
Pricing Growth (Organic)2.2%

Profitability

Q1 FY2026
SegmentQ1 FY2026
Operating Profit Margin (Base Business)21.3%
Net Cash from Operations$747M

Other KPIs

Q1 FY2026
SegmentQ1 FY2026YoY
North America$0.888B-1.8%
Latin America$1.313B+14.8%
Europe, Middle East & Africa$1.126B+11.9%
Asia Pacific$0.804B+8.9%

Management tone

Customer optimization hangover (Q2-25) → 2030 strategy reframe (Q3-25) → wider-than-normal guide accepting low-category-growth (Q4-25) → margin compression conceded with constraint-focused defense (Q1-26).

Three quarters ago management was defending an unchanged 2-4% organic algorithm and arguing pricing could carry the load. Last quarter the diagnosis broadened to "stabilized but low" category growth and a deliberately wide FY26 range. This quarter the cost side of the equation has broken and management has openly conceded margin will compress, building $300M of raw material and logistics inflation directly into the plan rather than promising to absorb it: "significant increases in raw material and packaging costs we have built into our guidance to reduce our expectations for gross margin for the year." The shift from "absorb" to "build in" is the language of a company that no longer believes productivity can fully offset input cost inflation in the planning horizon.

The defensive flexibility narrative has hardened into the operating framework. Last quarter the 2030 strategy was framed as a long-term aspiration; this quarter it is the immediate justification for accepting near-term margin pressure: "It's the choices that we made in building this plan, along with the flexibility we've built into our P&L, that allow us to deliver short-term results in a volatile environment while simultaneously building for the long term." And in management's own words, "best-in-class companies need to do both — short-term results and long-term strategy." That is a pre-emptive defense against the criticism that EPS algebra is now too tight. The fact that the line needs to be said is the signal.

The enumeration of macro unknowns is unusually explicit. Management's verbatim: "There is still uncertainty in how the rest of 2026 will play out, where oil will be, what will happen with interest rates, how the consumers will respond." Colgate management rarely lists three external variables in a single sentence. The honesty is welcome but it is also a confidence signal — pegging the FY plan to $110 oil and a not-yet-observed consumer response means the high end of the EPS range requires multiple things to break favorably. The asymmetry is to the downside.

The SGPP productivity program has been quietly elevated from efficiency exercise to strategic capability funder. Management's framing — "the savings will enable us to fund investments and capabilities to deliver on the 2030 strategy, as well as to drive consistent, compounded dollar-based EPS growth" — combined with the expanded charge envelope ($350-550M) and $200-300M annualized savings target weighted toward 2027-28, indicates the program is now the central long-cycle P&L lever. Productivity is no longer optional offsetting; it is structurally required to make the 2030 plan work — though most of the savings arrive too late to plug FY26.

Recurring themes management leaned on this quarter:

Cost inflation management and margin compressionEmerging markets as primary growth engineOrganizational agility and complexity reductionVolume and pricing momentum in core categoriesAI and data analytics capabilities investmentShort-term execution amid long-term strategy alignment

Risks management surfaced:

Significant raw material and packaging cost increasesOil price volatilityInterest rate uncertaintyConsumer spending response uncertaintyPrivate label pet food exit headwind

Q&A highlights

Dara Mosenian · Morgan Stanley

How tangible are the payoffs from reallocating marketing spend to higher-growth areas, particularly in emerging markets? Is this showing up in Q1 results? How sustainable is emerging market volume strength post-Iran? What is the plan and realistic level of improvement for North America's lagging volume and mix?

Management highlighted broad-based volume acceleration across divisions, with emerging markets (Asia Pacific, Latin America, Africa/Middle East/Europe) showing strong results from marketing interventions, brand strength, and pricing discipline. North America requires more time with interventions in place including brand work, accelerated innovation, RGM, and promotion strategy resets. Some shelf resets and new product launches came later than expected but accelerated as Q1 ended.

Volume growth accelerated in Q1 versus Q4 across almost all divisionsAsia Pacific was a big driver of emerging market growthHolly and Hazel category remains sluggish in China but business execution improvingColgate business performing well; Latin America holding volume share

Filippo Falorni · Citi

What cost inflation is embedded in guidance? How much incremental cost inflation is assumed? What are the crude oil price assumptions? What are the potential offsets for the back half of the year and going forward?

Management disclosed $300 million of additional raw materials impact since Q4, assuming oil at ~$110 for remainder of year. Two-thirds is raw materials, one-third logistics. Oil byproducts, resins, petrochemicals, fats, and oils spending expected up >20% YoY. Logistics costs up ~10% (ocean and land freight). Offsets include RGM productivity across entire P&L. Logistics impact flows to SG&A, not gross margin.

$300 million incremental raw materials and logistics impact for the yearOil assumption: ~$110 average for remainder of yearRaw materials: ~$200 million of the $300 million impact; logistics: ~$100 millionOil byproducts, resins, petrochemicals, fats, oils spending up >20% YoY

Bonnie Herzog · Goldman Sachs

What are the key puts and takes on gross margin headwinds? Is there scope for incremental pricing? What flexibility exists to pull forward cost savings or productivity initiatives? Should EPS be expected closer to midpoint of guidance range or possibly below?

Management maintained organic sales growth guidance (1-4%) and EPS guidance (low to mid-single digits) despite gross margin pressure. Key offsets include RGM efforts, premium innovation, price-pack architecture changes, mixed opportunities, and SGPP program. Margins expected to be down YoY. Management reflected increased oil/commodity assumptions at $110/barrel into guidance. Teams executing regular productivity programs beyond SGPP impacting both cost and SG&A lines.

Organic sales growth guidance: 1-4% (maintained)EPS guidance: low to mid-single digits (maintained)Oil price assumption: $110 for balance of yearIncremental cost impact: $300 million including logistics

Peter Galbo · Bank of America

Can you provide more detail on Asia Pacific strength, particularly India? Is GST aiding the India business and what has been observed so far?

Management did not provide specific India numbers (citing lack of official announcement) but confirmed India is a major driver of APAC strength along with China. Holly and Hazel showing significant execution improvements from strategic interventions including accelerated innovation (dual tool technology), improved omnichannel execution including via Duyen platform, strong brand investment, and support from strong Colgate business delivering mid-single-digit growth in flat-to-declining market. Other APAC markets (Philippines, Thailand, Malaysia) performed well; Australia softer.

India identified as one of two largest markets driving APAC growth (alongside China)Holly and Hazel: accelerated innovation including dual tool technologyHolly and Hazel: improved omnichannel execution across platforms including DuyenColgate business in China: mid-single-digit growth in flat-to-declining market

Peter Grom · UBS

Can you provide context on category growth and market share performance in Latin America? Is momentum expected to continue with balanced volume and price going forward?

Management highlighted Latin America's strong execution of strategic capabilities including omni-demand generation, AI applications, best-in-class RGM, and in-store execution driving numeric and weighted distribution gains. Mid-single-digit growth driven by Mexico and Brazil. Innovation across multiple price points (lower, mid, premium) expected to support growth trajectory. Premium launches (purple launch from Asia to LatAm, home care, SuaveTel relaunch) performing well. Emerging markets expected to continue driving growth for rest of year.

Latin America: mid-single-digit growth, Mexico and Brazil-drivenOmni-demand generation and AI execution: excellentRGM: best in classInnovation strategy: stepping up across all price points (lower, mid, premium)

Answers to last quarter's watch list

Q1-26 organic growth and where it lands within the 1-4% range. Q1 organic printed 2.9%, comfortably above the 1.5% trigger and squarely mid-range. Volume turned positive at +1.1% with pricing moderating to +2.2% — a healthier composition than Q3-25's -1.9%/+2.3% mix. The FY guide was not narrowed; the 1-4% range remains intact.
Resolved positively
A&P quantification. Q1 A&P was $734M vs $668M in Q1-25 — a meaningful YoY step-up consistent with the "up on dollar and % of sales basis" FY26 commitment. Management did not disclose a FY26 total A&P figure or the bps step-up vs sales. The shape and magnitude are visible; the precise FY size remains undisclosed.
Continue monitoring
North America trajectory. Worsened to -1.8% from Q4's -1.5% and Q3's -0.4%. Management attributed the print to late shelf resets and new product launch timing accelerating at quarter-end, with brand work, RGM, and promotion strategy resets in place — but a third consecutive deceleration is no longer a noise pattern. The US is structurally underperforming.
Resolved negatively
Promotional intensity. Pricing held at +2.2% (vs +2.3% Q3, +2.0% Q2) with volume turning positive — meaning Colgate held price discipline while volumes rebuilt. No evidence yet of category-wide promotional escalation breaking the price/volume math. The Q4-25 concern that "stabilized-low growth could lead to higher promotion" did not materialize this quarter.
Resolved positively
Hill's underlying growth ex-private-label. Hill's reported +6.7% YoY revenue; management cited ex-private-label organic of 4.8% with US at 5% and volume up 1% ex-private-label. Therapeutic strength called out as a standout, with broad-based growth across wet, cat, and small paws; dry dog the lone soft segment. The private-label drag continues to lap with ~20-30bps total-company impact expected in Q2 before tapering.
Resolved positively
FX deployment evidence. Constant-currency vs reported EPS split was not isolated in the press release tables, and management did not quantify the FX contribution to Q1 explicitly. The 8.4% YoY revenue print vs 2.9% organic implies an ~5.5pt FX/acquisition tailwind — material — but with non-GAAP EPS guidance unchanged at low-to-mid-single-digit despite significant FX tailwind and the new $300M cost wall, the underlying constant-currency algorithm is almost certainly weaker than the headline guide.
Resolved negatively

What to watch into next quarter

Whether the FY26 gross margin contraction is sized. Management has flipped from "expansion" to "down" without giving a bps range. A 100-150bps compression scenario is mechanically very different from a 50bps compression for EPS math. Q2 should force quantification — if management still refuses to size it, the credibility of the unchanged EPS guide weakens further.

North America inflection or fourth consecutive decline. -1.8% Q1 makes Q2 binary: a return to flat/positive validates management's "late innovation/shelf reset" explanation; another negative print confirms structural US weakness and likely forces an EPS guide review.

SGPP in-year savings phasing. With annualized $200-300M savings weighted to 2027-28, the in-year FY26 contribution is the swing factor against the $300M cost wall. Watch for explicit FY26 in-period savings disclosure — the smaller the 2026 slice, the more RGM and pricing must carry.

Volume sustainability at or above +1%. Q1's +1.1% organic volume was the first positive print in three quarters. Watch whether Q2 holds — a return to negative volume with pricing also moderating would break the FY organic math and likely trigger a guide narrowing toward the 1-2% end.

Oil and the $110 assumption. Management explicitly enumerated oil as a key unknown and built the plan at $110. Each $10 above $110 adds incremental raw material pressure that is not yet in guidance — making this the single largest unhedged variable for FY26 EPS.

Sources

  1. Colgate-Palmolive Q1 2026 Press Release Tables, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/21665/000002166526000022/q12026pressreleasetables.htm
  2. Colgate-Palmolive Q1 2026 earnings call commentary (management prepared remarks and Q&A)

Get the next brief, free.

We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.

This is not investment advice.