Colgate-Palmolive Q1 2025 slides: Organic sales up 1.4% despite FX headwinds

Introduction & Market Context

Colgate-Palmolive Company (NYSE:CL) reported modest growth in its first quarter of 2025, as the consumer products giant navigates a challenging operating environment marked by foreign exchange pressures. The company’s stock was trading up 1.43% in premarket at $94.03 following the April 25 earnings presentation, suggesting investors were encouraged by the results despite mixed signals.

The $20.1 billion global consumer products company, which employs approximately 34,000 people serving over 200 countries and territories, continues to focus on its core categories while pushing innovation to drive growth.

Quarterly Performance Highlights

Colgate-Palmolive reported a 3.1% decrease in net sales for Q1 2025, heavily impacted by a 4.4% headwind from foreign exchange. However, organic sales increased by 1.4%, though this figure includes a 0.4% negative impact from lower private label pet volume.

The company achieved notable margin improvement, with both GAAP and Base Business gross profit margin increasing 80 basis points to 60.8%. Advertising investment remained strong, increasing 30 basis points to 13.6% of sales, while Base Business earnings per share grew 6%.

As shown in the following chart of organic sales growth over recent years, the company has maintained consistent performance, though 2025 guidance suggests more modest growth ahead:

The company’s Chairman, President, and CEO Noel Wallace highlighted the company’s performance in his statement: "We delivered solid results despite a challenging market environment, with continued organic sales and earnings per share growth. Our brands remain strong, and we’re committed to executing against our strategy."

Strategic Initiatives

Colgate-Palmolive continues to focus on four core categories: Oral Care, Pet Nutrition, Personal Care, and Home Care. The company’s presentation emphasized its tightly focused approach to these attractive market segments.

As illustrated in the following product portfolio overview, the company maintains a diverse range of brands across its core categories:

Innovation remains central to the company’s growth strategy, with significant emphasis on science-led product development. In the oral care segment, Colgate is expanding its whitening portfolio with premium offerings across different price points and usage occasions.

The company’s "Chair to Sink" whitening strategy encompasses products ranging from everyday items ($4-10) to professional treatments ($200-350), allowing it to capture consumer demand across price tiers:

A key innovation highlighted in the presentation is the next generation Optic White Overnight Pen, featuring improved design elements for better user experience:

In the skincare category, the company is leveraging its dermatologist-recommended EltaMD brand with new product innovations. The UV Skin Recovery product demonstrates the company’s focus on premium, clinically-proven solutions:

The pet nutrition segment continues to be a strategic focus, with the company relaunching its Science Diet Core Lifestage Portfolio with enhanced formulations:

Colgate-Palmolive is also expanding its wet cat food offerings to meet consumer demand for variety, leveraging increased production capacity from its new Tonganoxie plant:

Forward-Looking Statements

For 2025, Colgate-Palmolive provided guidance reflecting a more cautious outlook compared to previous years. The company expects:

• Net sales growth in low single digits, including a low-single-digit negative impact from foreign exchange
• Organic sales growth of 2% to 4%, including the impact of planned exit from private label pet nutrition
• Gross profit margin to be roughly flat
• Advertising to remain flat as a percentage of net sales
• Base Business EPS to increase in low single digits

The company noted that raw and packaging material costs are expected to increase modestly in 2025 due to higher commodity prices and transactional foreign exchange. Additionally, recently announced tariffs are expected to have an incremental gross impact of approximately $200 million to the cost of goods sold in 2025, which was not included in initial guidance.

To offset these challenges, management highlighted several initiatives:

• Revenue growth management to aid pricing as inflationary pricing recedes
• Strong funding-the-growth savings programs
• Focus on generating strong operating cash flow to fund dividends and share repurchases

Competitive Industry Position

Colgate-Palmolive continues to strengthen its market position across key categories and geographies. The company reported that its global toothpaste market share increased by 20 basis points on a volume basis in Q1 2025.

In Asia, the company is accelerating whitening adoption with its Purple Range, which is driving strong toothpaste share gains in key markets:

The company is also expanding its therapeutic pet nutrition offerings to address unmet needs:

In India, Colgate is relaunching its Strong Teeth brand, which is the #1 sub-brand in the market, with a new formulation featuring Calcium Boost + Arginine technology. In Germany, the elmex brand has achieved the #1 position for sensitivity toothpaste recommended by dentists.

These strategic initiatives across multiple markets and categories demonstrate Colgate-Palmolive’s continued focus on maintaining and growing its competitive position despite challenging market conditions.

Full presentation:

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