Colgate Raises Earnings Outlook as Margin Recovery Extends
Gross margin expanded 140 basis points to 61.5% as profitability continued to recover.
Colgate-Palmolive (CL), the consumer-products maker, raised its 2026 Base Business earnings outlook after adjusted profit rose 8% to $0.99 a share in the second quarter.
The increase marked a fourth consecutive quarter of improving Base Business EPS growth, accelerating from 7% in the first quarter, while worldwide organic-volume growth improved sequentially for the third straight quarter. Organic sales growth eased to 2.4% from 2.9% in the prior period.
Net sales rose 4.9% to $5.361 billion, slowing from 8.4% growth in the first quarter. GAAP diluted EPS fell 5% to $0.86, and operating profit declined 6% to $1.016 billion.
The difference between reported and Base Business results reflected $129 million of charges tied to Colgate's Strategic Growth and Productivity Program, compared with $9 million of acquisition-related costs a year earlier. Base Business operating profit increased 5% to $1.145 billion, and its margin edged up 10 basis points to 21.4%.
Latin America led the geographic divisions, with net sales up 13.7% and organic sales up 5.3%, supported by higher volume and pricing. North American sales fell 3.0% as a 3.9% volume decline outweighed higher pricing, though the division's operating margin expanded 120 basis points to 21.6%.
Emerging-market organic sales grew 4.8%, compared with 0.5% in developed markets, where volume declined. Colgate also increased advertising spending 15% to $777 million, outpacing sales growth, while year-to-date toothpaste market share rose to 41.3%.
Colgate now expects Base Business EPS to grow at a mid-single-digit rate in 2026, up from its previous low- to mid-single-digit forecast. It continues to project net-sales growth of 2% to 6%, organic growth of 1% to 4% and double-digit GAAP EPS growth, while its gross-margin outlook improved to roughly flat from the decline forecast previously.
First-half operating cash flow increased 17% to $1.742 billion. Colgate bought $597 million of treasury shares during the period and reduced total debt to $7.857 billion, giving the company more financial capacity as it funded restructuring and higher brand spending.