Colgate Q1 Earnings & Sales Beat Estimates, Organic Sales Rise 1.4%

Colgate-Palmolive Company CL reported first-quarter 2025 results, wherein the bottom and top lines beat the Zacks Consensus Estimate. Earnings improved year over year while sales fell. Results benefited from organic sales growth, robust volume and pricing performance, and gross profit margin expansion. The company is focused on investing in scaling its capabilities in key areas such as digital, data and analytics to enhance competitive advantages and drive profitability.On a Base Business basis (non-GAAP basis), earnings were 91 cents per share, up 6% from the prior-year period. The bottom line surpassed the Zacks Consensus Estimate of 86 cents.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Net sales of $4,911 million inched down 3.1% from the year-ago quarter but surpassed the Zacks Consensus Estimate of $4,855 million. On an organic basis, the company’s sales advanced 1.4%, which includes a 0.4% unfavorable impact from reduced private-label pet volume. Foreign exchange also hurt net sales by 4.4%.A Detailed Picture of CL's Q1 ResultsColgate's organic sales were driven by a 0.1% drop in volume and a 1.5% improvement in pricing. We estimated organic sales growth of 3.4% for the first quarter, with a 2.1% rise in pricing and a 1.3% increase in volume.Colgate-Palmolive Company Price, Consensus and EPS Surprise Colgate-Palmolive Company price-consensus-eps-surprise-chart | Colgate-Palmolive Company QuoteIn the earnings release, management highlighted that the company maintained its leadership in the toothpaste market, holding a 40.9% global market share year to date. In addition, Colgate continued to lead the manual toothbrush market with a 31.9% global market share year to date.The gross profit of $2,987 million decreased from $3,039 million reported in the year-ago quarter. The company’s first-quarter gross profit margin and Base Business gross profit margin expanded 80 basis points (bps), reaching 60.8%. We expected adjusted gross margin expansion of 130 bps to 61.3%.Selling, general and administrative (SG&A) expenses totaled $1,898 million, a decline from $1,916 million in the same quarter of the previous year.The company’s operating profit of $1,076 million jumped from $1,047 million reported in the year-ago quarter. The operating profit margin expanded 120 bps year over year to 21.9%. We expected the operating margin to expand 20 bps to 21.6% for the first quarter.A Peek Into CL’s Segmental DiscussionNorth America’s net sales (20% of total sales) dipped 3.6% year over year on a reported basis and 3% on an organic basis. The sales decline was led by a decrease of 0.7% in pricing and 2.3% in volume.Latin America’s net sales (23% of the total sales) declined 8.7% year over year as a 1.2% pricing gain and a 2.7% increase in volume were more than offset by a 12.7% unfavorable currency impact. On an organic basis, regional sales rose 4%.Europe’s net sales (14% of the total sales) increased 2.5% year over year on a reported basis and 5.4% on an organic basis. Sales growth was driven by a 3% rise in volume and a 2.4% pricing gain, offset by a 2.9% adverse currency impact.The Asia Pacific segment’s net sales (14% of the total sales) fell 5% year over year, reflecting a 3.4% drop in volume, offset by a 0.4% rise in pricing. Regional organic sales also slipped 3.1%.Africa/Eurasia’s net sales (6% of the total sales) dipped 1.5% year over year due to a 2.3% drop in volume and a 3.4% unfavorable currency impact, offset by a 4.1% jump in pricing. Organic sales for the segment advanced 1.8%.Hill’s Pet Nutrition’s net sales (23% of the total sales) improved 1.5% from the year-ago quarter on a reported basis and 2.9% on an organic basis. Results gained from a 3.2% rise in pricing, offset by a 0.3% drop in volume and a 1.4% negative currency impact.CL's Other Financial InformationThis Zacks Rank #3 (Hold) company ended first-quarter 2025 with cash and cash equivalents of $1,112 million and a total debt of $8,269 million. Net cash provided by operating activities was $600 million for the three months ended March 31, 2025. The free cash flow before dividends was $476 million during this time.The company returned $406 million in cash to its shareholders via dividends during first-quarter 2025.Colgate's 2025 OutlookMoving ahead, uncertainty and volatility across the global markets and the impact of tariffs have been challenging. Nevertheless, the company is confident of its strategic initiatives and will accomplish its 2025 financial goals.Based on the existing spot rates and reflecting the anticipated impact of tariffs announced and in effect as of April 24, management presently projects net sales to grow in low single digits, with a low-single-digit adverse impact of foreign exchange. Earlier, Colgate had estimated 2025 net sales to remain relatively flat, with a mid-single-digit negative impact from unfavorable currency exchange rates.The company now predicts an organic sales increase of 2-4% compared with 3-5% growth expected earlier. On a GAAP basis, management envisions both gross profit margin and advertising investment to stay roughly flat as a percentage of sales, and earnings per share (EPS) to increase low single digits.On a non-GAAP (Base Business) basis, the company expects both gross profit margin and advertising to be nearly flat as a percentage of sales, and EPS to grow low single digits. On an adjusted (Base Business) basis, Colgate had earlier forecasted gross profit margin expansion, with advertising investment expected to remain stable or increase slightly in both dollar terms and as a percentage of sales. The company had earlier projected low to mid-single-digit growth in Base Business adjusted EPS for 2025.The company's shares have risen 2.1% in the past three months against the industry’s decline of 1.9%.Here’s How Better-Ranked Stocks FaredUnited Natural Foods UNFI, which is a distributor of natural, organic and specialty food in the United States, currently carries a Zacks Rank #2 (Buy). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average. The Zacks Consensus Estimate for UNFI’s current financial-year sales and EPS indicates growth of 1.9% and 485.7%, respectively, from the year-ago numbers. Utz Brands UTZ manufactures salty snacks under popular brands and has a Zacks Rank of 2. UTZ delivered a trailing four-quarter average earnings surprise of 8.8%. The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.4% and 10.4%, respectively, from the year-ago numbers. Nomad Foods NOMD, which manufactures frozen foods, currently carries a Zacks Rank of 2. NOMD delivered a trailing four-quarter earnings surprise of 5%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial-year EPS indicates growth of 3.1% from the year-ago number. Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. 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