Colgate-Palmolive Company (CL) Q4 2025 earnings summary

Executive summary

• Achieved stronger-than-expected Q4 and 2025 results, with net sales and organic sales up 1.4% year-over-year, driven by oral care and pet nutrition, despite lower category growth, raw material inflation, and higher tariffs.

• Fourth quarter saw accelerated growth: net sales up 5.8%, organic sales up 2.2%, and Base Business EPS up 4% compared to Q3.

• Transitioned from the 2025 strategy, which added $5B in sales, to a new 2030 strategy focused on brand strength, innovation, omni-channel demand generation, digital/data/AI investments, supply chain optimization, and culture.

• Launched the Strategic Growth and Productivity Program (SGPP) to unlock organizational changes and funding for the new strategy, targeting $200–$300 million in pre-tax charges.

• Record operating cash flow of $4.2B and $2.9B returned to shareholders through dividends and share repurchases in 2025.

Financial highlights

• Net sales and organic sales increased 1.4% for 2025, with a 0.7% negative impact from exiting private label pet food.

• Q4 organic sales grew over 3% excluding private label and Prime100 acquisition impacts; Hill's segment posted over 5% organic sales growth (ex-private label).

• Base Business EPS rose 3% year-over-year; Q4 Base Business EPS up 4% sequentially.

• Free cash flow reached $3.5B–$3.6B in 2025.

• Global toothpaste market share up 10 basis points to 41.3% and manual toothbrush share up 60 basis points to 32.4% year-to-date.

Outlook and guidance

• 2026 net sales growth expected at 2% to 6%, with organic sales growth of 1% to 4% and a low-single-digit positive FX impact.

• Gross profit margin and advertising spend expected to increase; GAAP EPS projected to rise double digits, Base Business EPS up low to mid-single digits.

• Guidance includes a 20 basis point drag from exiting private label pet food.

• No major rebound assumed in the U.S.; trends expected to improve gradually.

• Focus on investing in brands, innovation, and capabilities, with flexibility to adjust spend as needed.