CL · Q2 2026 Earnings

Neutral

Colgate-Palmolive

Reported July 31, 2026

30-second summary

Colgate raised FY26 Base Business EPS growth to mid-single-digit (from low-to-mid) and now expects FY26 gross margin roughly flat vs. the prior "down" guide — a meaningful reversal of the Q1 cost-wall narrative. Q2 organic printed 2.4% (volume +0.8%, price +1.6%) inside the reaffirmed 1-4% FY range, non-GAAP EPS of $0.99 beat consensus by 4.2%, and North America worsened again to -3.0% — the fourth consecutive quarter of decline. The story is that the $300M raw material/logistics wall management flagged in Q1 has softened enough to let the P&L breathe, but the US remains structurally broken and volume growth is moderating.

Headline numbers

EPS

Q2 FY2026

$0.99

+4.2% vs est.

Revenue

Q2 FY2026

$5.36B

+4.9% YoY

+0.0% vs est.

Gross margin

Q2 FY2026

61.5%

Operating margin

Q2 FY2026

21.4%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$5.36B	$5.11B	+4.9%	$5.32B	+0.7%
EPS	$0.99	$0.92	+7.6%	$0.97	+2.1%
Gross margin	61.5%	60.1%	+140bps	60.6%	+90bps
Operating margin	21.4%	21.1%	+30bps	18.1%	+330bps

Guidance

Colgate raised FY2026 base business EPS guidance and now expects flat gross margins (vs. prior decline), while reaffirming organic growth and total revenue targets.

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

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Gross profit margin (GAAP)	FY 2026	Down (revised from up previously)	Roughly flat	From expected decline to flat — meaningful margin stabilization	Raised
Gross profit margin (non-GAAP Base Business)	FY 2026	Down (revised from up previously)	Roughly flat	From expected decline to flat — meaningful margin stabilization	Raised
EPS growth (non-GAAP Base Business)	FY 2026	Low to mid-single-digit	Mid-single-digit growth	Raised from low-to-mid to mid single-digit	Raised

Reaffirmed unchanged this quarter: Organic sales growth (1% to 4%), Net sales growth (Up 2% to 6%), EPS growth (GAAP) (Double-digit growth)

Segment performance

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Hill's Pet Nutrition	$1.195B	—	+3.4%

Platform metrics

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Organic Sales Growth	2.4%	1.8%	—
Global Toothpaste Market Share (YTD)	41.3%	41.1%	—
Global Manual Toothbrush Market Share (YTD)	32.7%	32.4%	—
Advertising Spend	$777 million	—	—
Organic Volume Growth	0.8%	—	—
Pricing Growth	1.6%	—	—

Profitability

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Operating Margin (Base Business)	21.4%	—	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
North America	$0.891B	$1.027B	-13.2%
Latin America	$1.372B	$1.207B	+13.7%
Europe, Middle East & Africa	$1.121B	—	+3.5%
Asia Pacific	$0.782B	$0.687B	+13.8%

Management tone

Customer optimization hangover (Q2-25) → 2030 strategy reframe (Q3-25) → wider-than-normal guide (Q4-25) → margin compression conceded (Q1-26) → margin compression withdrawn and EPS narrowed upward (Q2-26).

Note: no earnings-call transcript was available for Q2-26; the tone read below is drawn from the press release qualitative statements and compared against transcript-derived commentary from prior quarters.

One quarter ago management's language on cost was defensive and specific: "significant increases in raw material and packaging costs we have built into our guidance to reduce our expectations for gross margin for the year." This quarter that framing is absent from the press release entirely — the cost-wall narrative has quietly disappeared without a formal debrief. What replaces it is the assertion that "the strength of our global portfolio and clear business strategy should enable us to deliver consistent, compounded earnings per share growth." The shift from "we've built the pressure in" to "the portfolio can carry the growth" is not subtle — but the absence of a bps-sized explanation for why margins are no longer compressing is the concerning half of the message.

The strategic framing has narrowed. Q4-25 guidance language emphasized "broad-based growth by geography, by category, and volume and pricing"; this quarter's press release sharpens to "premium, science-led innovation and omni-channel demand generation to drive brand health and category growth." That is a tighter, more defensible articulation — but it is also the language of a company that has stopped promising broad-based delivery and is instead betting on a narrower set of high-ROI programs. Given North America's fourth consecutive decline, this narrowing looks less like strategic focus and more like a portfolio triage: emerging markets and premium innovation carry the print while the US is left to its own multi-quarter workout.

The volatility acknowledgement remains but has softened in tone. Q1's enumeration of oil, interest rates, and consumer response as three explicit unknowns has become a more contained "we expect the volatile market conditions to continue in the balance of 2026, we are confident..." The pivot from "here are the specific things we don't know" (Q1) to "conditions are volatile but we're confident" (Q2) is a subtle but real shift back toward assured framing — which is congruent with a raised EPS guide, but leaves less transparency around the assumptions that drove the margin reversal.

Answers to last quarter's watch list

Whether the FY26 gross margin contraction is sized. Not just sized — reversed. Management flipped the guide from "down" to "roughly flat" without disclosing bps of magnitude or the specific drivers of the change (oil, RGM flow-through, SGPP timing). The credibility question raised last quarter is answered in the direction of raised guide, but the lack of attribution means investors don't know whether the improvement is durable (structural RGM/productivity) or transitory (favorable oil).

Resolved positively

North America inflection or fourth consecutive decline. Fourth consecutive decline, and worse: -3.0% vs Q1's -1.8%, Q4's -1.5%, Q3's -0.4%. The trajectory is unambiguous and the "late shelf resets" explanation from Q1 is now discredited. Notably, the EPS guide was still raised despite this — meaning the rest of the portfolio is more than covering the US drag.

Resolved negatively

SGPP in-year savings phasing. The press release did not quantify FY26 in-period SGPP savings. Given the majority of the $200-300M annualized savings is weighted to 2027-28, the in-year contribution to the margin reversal remains undisclosed.

Continue monitoring

Volume sustainability at or above +1%. Volume printed +0.8% — just below the +1% threshold and softer than Q1's +1.1%, but still positive for a second consecutive quarter. Pricing also moderated (1.6% vs Q1's 2.2%), so the price/volume mix is trending toward lower absolute organic growth even as composition remains healthier than late FY25.

Continue monitoring

Oil and the $110 assumption. Management did not disclose the current oil assumption or reset it in the press release. The fact that gross margin flipped from "down" to "flat" is circumstantial evidence that oil has moved favorably vs. the $110 baseline, but this is not confirmed.

Continue monitoring

What to watch into next quarter

Whether Q3 organic clears 2%. With Q2 at 2.4% and Q1 at 2.9%, YTD is trending mid-range of the 1-4% guide. A Q3 print below 2% would push FY toward the low end and put pressure on the reaffirmed range; above 2.5% and management could narrow the range upward on the Q3 print.

North America — return to flat or fifth consecutive decline. At -3.0% and worsening, this is now the most important geographic question at Colgate. A fifth negative quarter would force management to address the US as a structural rather than cyclical problem — potentially with SKU rationalization, promotional intensity increase, or organizational changes.

Gross margin attribution. Management flipped the guide from "down" to "flat" without sizing or explaining. Q3 should force a bps-level bridge — how much of the improvement is oil, how much is RGM/pricing flow-through, how much is early SGPP contribution. Without attribution, the durability of the raised EPS guide is unknowable.

EMEA deceleration to +3.5%. From +11.9% in Q1 to +3.5% in Q2 is an 8-point deceleration in one quarter with no press-release explanation. Watch whether Q3 clarifies whether this is FX-driven, category-driven, or a one-time comp/timing effect.

A&P as % of sales and where it's deployed. Q2 A&P at $777M is a meaningful step-up. Watch whether the % of sales delta widens further in H2 and which brands/geographies are receiving the incremental spend — a disproportionate share going to defend North America would signal management sees the US as needing sustained investment, not a quick fix.

Sources

Colgate-Palmolive Q2 2026 Press Release Tables, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/21665/000002166526000041/q22026pressreleasetables.htm
Colgate-Palmolive prior-quarter briefs (Q2-25 through Q1-26) for trend context

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