Colgate Narrows Sales Growth Outlook to 4%-5% as Third-Quarter Profit Rises
Key Facts
Colgate-Palmolive said on October 30 that third-quarter 2026 net sales rose 4.6% to $5.369 billion, from $5.131 billion a year earlier, and narrowed its full-year sales growth outlook to 4%-5% from a previous range of 2% to 6%. Net income attributable to the company was $751 million, compared with $735 million in the same period of 2025, while diluted earnings per share under U.S. GAAP rose to $0.94 from $0.91, an increase of 3%. On a base business basis, a non-GAAP measure, diluted earnings per share was $0.97, up 7% from $0.91. The company said its net sales outlook includes a low-single-digit positive impact from foreign exchange. The results combine sales and profit growth with weaker North American volume, as management raised its outlook for gross margin and base business earnings per share.
The company's organic sales growth was 3.6%, supported by volume growth of 1.7% and pricing of 2.0%, while foreign exchange added 1.0% to net sales growth. Organic sales were negatively affected by 0.2 percentage points from lower private-label pet food sales, an impact the company said is also included in its 2026 organic sales growth guidance. Colgate expects organic growth for the year to be "broadly in line" with its performance in the first nine months, compared with previous guidance of 1% to 4%. The new guidance does not specify a numerical range for organic growth and includes the impact of exiting the private-label pet food business. Commenting on the results, Chief Executive Noel Wallace said net sales and organic sales increased in all four categories and in four of the five divisions. He added that the company had achieved its "fourth consecutive quarter of sequential improvement in global volume growth."
By region, organic sales in North America fell 1.6% as volume declined 3.7%, while higher pricing of 2.2% partly offset the impact of lower quantities. In contrast, organic sales rose 6.0% in Latin America, 2.7% in Europe, the Middle East and Africa, and 4.6% in Asia Pacific. Hill's Pet Nutrition posted organic growth of 5.7%. Wallace attributed growth in emerging markets to India, Brazil and China, and said emerging markets posted mid-single-digit growth, with strong contributions from European markets. Management also said Hill's delivered a strong quarter in its therapeutic and wellness businesses. The company's global year-to-date market share was 41.4% in toothpaste and 33.1% in manual toothbrushes.
The company raised its 2026 base business earnings-per-share growth outlook to 5%-7%, from previous mid-single-digit growth, and also raised its outlook for U.S. GAAP earnings-per-share growth to more than 10%. Its gross margin outlook, on both a U.S. GAAP and base business basis, shifted from roughly flat to an increase. In the third quarter, gross margin under U.S. GAAP was 60.2%, compared with 59.4% a year earlier, an increase of 80 basis points. Base business gross margin was 60.3%, up 90 basis points. The company said raw-material costs pressured base business margin by 300 basis points. This was partly offset by a 290-basis-point impact from growth and efficiency initiatives, along with positive contributions of 80 basis points from pricing and 20 basis points from mix.
Company data show advertising spending of $775 million in the third quarter, compared with $674 million a year earlier. Net cash provided by operations was $2.913 billion in the first nine months of 2026. In the market, the company's shares rose 2.8% in premarket trading on the day results were announced, according to an Investing.com report. Colgate closed at $93.16 on October 29, according to daily pricing data cited in the news materials. As a result, actual sales and base business earnings per share exceeded the estimates cited in the report.
Wallace said on the earnings call that the company would not provide its 2027 guidance until the first quarter of next year. He added that the high-cost environment was expected to continue through the fourth quarter and into the start of the following year. That points to raw-material costs as a key factor for markets to watch, after third-quarter results showed margins rising despite their negative impact. At the same time, the company maintained its U.S. GAAP earnings-per-share growth outlook at more than 10% and raised its base business earnings-per-share growth outlook to 5%-7%. The company's guidance indicates that expected 2026 organic sales growth remains broadly in line with performance in the first nine months. Management is scheduled to present its guidance for the following year in the first quarter of 2027.