COLGATE PALMOLIVE Q1 FY26 earnings call CL

Organic sales growth accelerated from Q4, driven by improved volume performance, particularly in Asia Pacific. Excluding the private-label pet-food exit, Colgate grew both volume and pricing in all 4 categories and 4 of 5 divisions. Global category volumes remain sluggish, so management emphasized being 'particularly pleased' with the acceleration seen across almost all divisions and categories. Growth was led by emerging markets, where the company's global brands carry higher shares and scale advantages, and was described as broad-based by geography, category and by volume and pricing.

Management moved full-year gross margin guidance from up to down year-over-year. Since the Q4 call, an additional ~$300M of raw material and logistics cost was identified (roughly 2/3 raw materials, 1/3 logistics), on an assumed ~$110 oil price for the remainder of the year. Oil byproducts, resins, petrochemicals and fats & oils are now expected up more than 20% YoY, and logistics up nearly 10% across ocean and land freight — with logistics landing in SG&A rather than gross margin. Offsets come from RGM, productivity across the P&L, premium innovation-led pricing, price-pack architecture and mix. EPS guidance of low-to-mid single digits was maintained.

Asia Pacific was the largest driver of the volume acceleration, connected to its two largest markets, China and India (India numbers not yet officially announced). Hawley & Hazel is improving on strategic interventions — accelerated dual-tooth technology innovation and better omnichannel execution including Douyin — though management said they are 'not out of the woods yet' with a still flat-to-declining China category. The Colgate brand in China delivered mid-single-digit growth in a flat-to-declining market. Philippines, Thailand and Malaysia performed well; Australia was softer than anticipated.

Latin America continued to execute well with mid-single-digit growth led by Mexico and Brazil, supported by best-in-class RGM, omni-demand generation, AI use and strong in-store execution/distribution across adjacency categories. Innovation is being stepped up across all price points — the 'Purple' launch carried from Asia into Latin America is performing well, alongside a Home Care launch and the relaunch of the core Suavitel business. Management expects emerging markets to keep driving growth, with the biggest strategic opportunity at the premium end.

North America lagged in volume/mix in Q1. Volume was dampened by later-than-expected shelf resets and delayed new-product shipments, which began to accelerate as the quarter exited. A strategy reset led by John and Shane includes brand interventions, accelerated innovation, more RGM, better execution and improved promotion strategy with key retailers. The competitive environment is described as quite competitive, with a competitor spending more on couponing. Gross margins were significantly pressured by tariffs (North America incurs the vast majority) lapping a prior-year quarter with minimal tariffs, plus higher raw materials; the tariff year-on-year impact is expected to lessen going forward^⏳.

Hill's delivered organic growth of 4.8% ex private label (US +5%) against a roughly flat market, with volume ex private label up 1%. Science Diet and especially Prescription Diet grew strongly, with double-digit growth in targeted indications. Growth was broad-based across wet, cat and small-paws segments; the main soft spot is dry dog food, where the category continues to slip. Hill's is gaining share across almost every channel and gaining shelf space. The private-label exit was a 260 bps drag in Q1, tapering to 20-30 bps total-company in Q2 and neutral by the back half. Supply chain performance remains strong, giving P&L flexibility. Hill's competes at the super-premium end, anchored by science and vet endorsement that justifies premium pricing.

Despite cost inflation, management plans to sustain and elevate brand spend, funded by the flexibility built into the P&L, strong funding-the-growth, RGM and productivity. Advertising is being increased at higher ROI, with more spend moving into digital, social and 'genetic' commerce and omni-demand generation. Management stressed the increase is thematic brand-building, explicitly not shifting into promotion. Hill's was cited as a business where advertising is driving real momentum and strong returns.