CL · Q3 2025 Earnings

Cautious

Colgate-Palmolive

Reported October 31, 2025

30-second summary

Colgate cut full-year organic sales growth guidance to 1-2% from "the low end of 2-4%" — a midpoint reduction of roughly 100bps that confirms the H2 reacceleration story is dead. Q3 organic growth was just 0.4% (volume -1.9%, price +2.3%), with Colgate Total's Latin America relaunch costing 150bps of organic and India's GST change adding another drag. Management is now pivoting the narrative from "2025 plan execution" to "2030 strategy transition," which is honest about the situation but does not change the fact that volumes are deteriorating while pricing carries an increasingly heavy load.

Headline numbers

EPS

Q3 FY2025

$0.91

Revenue

Q3 FY2025

$5.13B

+2.0% YoY

Gross margin

Q3 FY2025

59.4%

Operating margin

Q3 FY2025

20.6%

Key financials

Q3 FY2025

Metric	Q3 FY2025	YoY	Q2 FY2025	QoQ
Revenue	$5.13B	+2.0%	$5.11B	+0.4%
EPS	$0.91	—	$0.92	-1.1%
Gross margin	59.4%	—	60.1%	-70bps
Operating margin	20.6%	—	21.1%	-50bps

Guidance

Colgate Palmolive significantly lowered full-year organic sales growth guidance to 1%-2% from the prior 2%-4% range, signaling weaker market conditions, while raising gross margin expectations through improved pricing despite Q3's 0.4% organic growth deceleration.

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
Organic sales growth	FY 2025	at the low end of 2% to 4%	1% to 2%	lowered by ~1-2 percentage points at the midpoint	Lowered
Gross profit margin (GAAP)	FY 2025	roughly flat as a percentage of net sales	roughly in line with year-to-date gross profit margin of 60.1%	~60.1% vs. prior 'flat' assumption; Q3 actual 59.4% suggests modest upside vs. prior flat guidance	Raised
Gross profit margin (non-GAAP/Base Business)	FY 2025	roughly flat as a percentage of net sales	roughly in line with year-to-date gross profit margin of 60.1%	~60.1% vs. prior 'flat' assumption	Raised

Reaffirmed unchanged this quarter: Net sales growth (up low single digits), Advertising spending (roughly flat as a percentage of net sales)

Segment performance

Q3 FY2025

Segment	Q3 FY2025	YoY
Hill's Pet Nutrition	$1.142B	+1.4%
Oral, Personal and Home Care	$3.989B	+2.1%

Platform metrics

Q3 FY2025

Segment	Q3 FY2025
Organic Sales Growth	0.4%
Global Toothpaste Market Share (YTD)	41.2%
Global Manual Toothbrush Market Share (YTD)	32.4%
Net Sales Growth (As Reported)	2.0%
Volume Growth (Organic)	-1.9%
Pricing Growth (Organic)	2.3%

Profitability

Q3 FY2025

Segment	Q3 FY2025
Operating Margin	20.6%
Gross Margin	59.4%

Other KPIs

Q3 FY2025

Segment	Q3 FY2025	YoY
North America	$0.999B	-0.4%
Latin America	$1.178B	+2.0%
Europe	$0.801B	+7.6%
Asia Pacific	$0.714B	-1.5%
Africa/Eurasia	$0.297B	+6.8%

Management tone

Q4-24 customer/category caution → Q1-25 RGM-led pricing playbook → Q2-25 elasticity ceiling acknowledged + restructuring announced → Q3-25 reframing as "2030 strategy transition" amid global category slowdown.

The most consequential shift is the explicit acknowledgement that growth is no longer just a Colgate problem but a category problem. Last quarter management was still defending the 2-4% range and attributing softness to private label exit and Brazil deceleration. This quarter the diagnosis broadens substantially: "categories globally now ~2% growth vs. 4-5% exit run in 2024," with volumes "essentially flat" industry-wide. Management's verbatim framing — "we are well positioned to reaccelerate growth despite uncertainty in global markets and lower worldwide category growth" — moves the goalposts from "we can deliver 2-4%" to "we can outperform a slowing category." That is a meaningfully lower bar.

Two quarters ago the message was that 2025-plan execution was paying off; last quarter it became "executing through difficult conditions"; this quarter it is "the timing for us to be kicking off our 2030 strategy could not be better." Management's own line in Q&A — "This is not wholesale change, but rather we are working to accelerate the rate of change" — reads as a defense against the perception that a more aggressive intervention is required. The fact that the line needs to be said is itself the signal.

The pricing narrative has quietly shifted from offensive to defensive. Q2's "RGM strategies need to drive additional pricing… with lower levels of elasticity" was framed as a lever to pull. This quarter pricing is +2.3% but volume is -1.9% — the lever is now visibly costing volume, and management's tone on pricing actions has moved from confidence to acknowledgement that the consumer is pushing back, especially in developed markets and India.

The repeated insistence in Q&A that the company is "not waiting for recovery" and "executing changes now regardless of category recovery timing" (Kevin Grundy exchange) is the clearest indication that management itself does not expect a near-term category bounce. That is a notable concession from a company that two quarters ago was guiding to back-half acceleration.

Recurring themes management leaned on this quarter:

Strategic transition from 2025 plan to 2030 strategyManaging through volatile operating environment and category slowdownInnovation acceleration with AI and science-based product developmentEmerging markets as growth engine versus sluggish developed marketsOrganizational transformation and process disruptionRevenue growth management and pricing to offset inflation

Risks management surfaced:

Consumer uncertainty pressuring sales and profit growthTariffs impacting business performanceGeopolitical factors creating operational challengesHigh-cost inflation requiring pricing actionsGlobal category slowdown, particularly in developed markets

Q&A highlights

Dara Mosenian · Morgan Stanley

Category softness outlook for 2026, speed of impact from management's focus areas on organic sales growth, and Hill's Pet Nutrition volume/mix deterioration and PEC category trends.

Management expects continued short-term sluggishness but believes SGPP strategy will drive growth. North America improving sequentially ex-skin care. Hill's performing well with share gains ex-private label despite category softness; dog dry weak but cat strong. Management taking aggressive innovation and e-commerce steps.

August difficult, September shipments better but insufficientHill's organic growth 2.5% ex-private labelDog dry down, cat up within Hill'sGaining share across almost every strategic growth segment

Peter Grom · UBS

Latin America oral care decline due to Colgate Total formula change quantification and outlook for regional growth improvement beyond low single-digit range.

Colgate Total replacement had 150 basis points negative organic impact in Q3. Complaint/irritation issues in Latin America from new flavor addressed via formula adjustment. 40-50 bps gross margin hit. Good early indications of share recovery post-relaunch. Mexico and Brazil both up ~4%.

150 basis points negative organic impact from Colgate Total replacement40-50 basis points gross margin impactMexico up 4%, Brazil up 4%Majority of replacement costs incurred; minor further costs possible

Filippo Filorni · Citi

India GST tax change impact quantification and outlook for improvement; microeconomic conditions and local competition commentary.

GST reduction from 18% to 5% on oral care drove trade inventory disruption but expected to be net positive longer-term for consumption. Underlying urban demand sluggish; rural holding up. Comparisons ease in Q4 with plans for improvement. Management focused on premiumization and modern trade share gains.

GST reduction 18% to 5%India organic down mid-singles in Q3Comps get easier moving forwardExpect improvement in Q4 and return to growth in 2026

Robert Ottenstein · Evercore ISI

Colgate Total relaunch impact on market share and 2026 outlook; U.S. drugstore channel weakness and LMEX potential.

Colgate Total got off to strong start with share growth, paused due to formula adjustment, now recovering with relaunch underway in Brazil/Mexico with strong Q4 marketing plan. Drugstore channel challenged; company reengaging retailers on traffic. LMEX performing exceptionally in Europe with record shares; considering expansion to other pharmacy markets pending professional infrastructure.

Colgate Total shares recovering nicely post-relaunchLMEX driving record shares in EuropeStrong Q4 marketing plan for Colgate TotalEngaging drugstore retailers on category dynamics

Kevin Grundy · BNP Paribas

Cyclical vs. company-specific nature of 1% organic growth; global industry growth rate versus 3-5% historical; ability to address with stated strategy.

Categories globally now ~2% growth (vs. 4-5% exit run in 2024), driven by lower pricing impact but volumes not recovering. Management views as partially cyclical but below historical norms. Preparing strategy to drive faster top-line and EPS growth regardless of category recovery timing. Emphasizes intentional innovation to stimulate demand.

Global categories now ~2% growth vs. 3% H1 2024 and 4-5% exit runVolumes essentially flat with pricing also mutedBelow historical 10-year averages (implies 3-5% normal)Not waiting for recovery; executing changes now

Answers to last quarter's watch list

Whether Q3 organic growth accelerates above 2%. Failed decisively — Q3 organic was 0.4%, well below 2%. The H2 reacceleration thesis is dead and the FY guide has been cut to 1-2% as a direct consequence.

Resolved negatively

Hill's organic growth ex-private label. Stepped down from ~5% last quarter to 2.5% this quarter ex-private label per management. The underlying Hill's growth story is weaker than the prior print suggested, with dog dry softness offsetting cat strength.

Resolved negatively

Tariff carve-out resolution. Tariffs were cited in the risk discussion but no material reset to gross margin or EPS guidance was attributable to tariffs specifically. The "no material impact" claim has held for now but the issue did not get clean quantification on the print.

Continue monitoring

Brazil organic trajectory and Latin America pricing realization. Latin America revenue turned positive at +2.0% YoY (vs -4.8% in Q2), with Mexico and Brazil each +4%. The recovery is real but partially obscured by the 150bp Colgate Total relaunch drag concentrated in the region.

Resolved positively

Restructuring headcount disclosure. No headcount or phasing detail was provided on this print. Management continues to defer specifics on the $200-300M productivity program.

Continue monitoring

Volume vs price mix. Broke clearly to the downside — volume worsened from -0.2% to -1.9% while pricing held at +2.3%. The elasticity ceiling management itself flagged last quarter is now binding, and the volume cost of holding price is the central diagnostic of this print.

Resolved negatively

What to watch into next quarter

Whether Q4 organic growth hits at least 1.5% — required to land FY at the 1-2% midpoint of the new guide. Anything below 1% would force a second cut in two quarters and call into question management's H1-26 trajectory.

Volume trajectory. -1.9% organic volume is the worst print in recent memory. Watch whether Q4 narrows to flat/positive as Colgate Total relaunch tailwinds and easier India comps kick in, or whether volume deterioration broadens beyond Latin America and India.

Q4 gross margin recovery to ~60%+. To hit the new "in line with 60.1% YTD" FY guide, Q4 gross margin must offset Q3's 59.4%. Watch for explicit Q4 margin bridge with raw material and pricing flow-through quantification.

Hill's ex-private label growth. The step-down from 5% to 2.5% ex-PL is more concerning than the headline +1.4%. Watch whether Q4 ex-PL holds at or above 3%, or continues to decelerate as the category softens.

Colgate Total relaunch share recovery quantification. Management cited "early indications" of share recovery in Mexico and Brazil. Q4 should provide actual share data — if shares have not visibly recovered, the 150bp Q3 drag becomes structural rather than transitory.

2030 strategy quantification. Management has now publicly transitioned the narrative to 2030. Watch the Q4 call (typically the framework-setting print) for explicit medium-term organic, margin, and EPS algorithm — and whether the algorithm is below the historical 3-5% organic / mid-to-high-single-digit EPS framework.

Sources

Colgate-Palmolive Q3 2025 Press Release Tables, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/21665/000002166525000052/q32025pressreleasetables.htm
Colgate-Palmolive Q3 2025 earnings call commentary (management prepared remarks and Q&A)

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