Colgate-Palmolive Co (CL) Q3 2025 Earnings Call Highlights: Navigating Challenges with ...

This article first appeared on GuruFocus.

Organic Sales Growth: Commitment to delivering organic sales growth. Net Sales Growth: Focus on achieving net sales growth. Dollar-Based EPS Growth: Consistent annual growth in dollar-based EPS. Emerging Markets Exposure: Nearly 50% exposure to faster growth emerging markets. Cash Flow: Continued strong cash flow generation to invest in the business.

Warning! GuruFocus has detected 4 Warning Sign with CL. Is CL fairly valued? Test your thesis with our free DCF calculator.

Release Date: October 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Colgate-Palmolive Co (NYSE:CL) is executing its 2030 strategy to accelerate growth, focusing on innovation, omnichannel demand generation, and AI-driven efficiency. The company maintains strong market shares in growing categories and has a diverse global footprint, with nearly 50% exposure to faster-growing emerging markets. Colgate-Palmolive Co (NYSE:CL) continues to generate strong cash flow, enabling investments in business growth and shareholder returns. The company is leveraging AI and predictive analytics to enhance supply chain efficiency, improve service levels, and drive personalization at scale. Despite a challenging environment, Colgate-Palmolive Co (NYSE:CL) is committed to delivering organic sales growth, net sales growth, and dollar-based EPS growth.

Negative Points

Colgate-Palmolive Co (NYSE:CL) faces a volatile operating environment with consumer uncertainty, tariffs, and high cost inflation impacting sales and profit growth. The company experienced a decline in oral care sales in Latin America due to trade inventory replacement and formula changes, impacting gross margins. Colgate-Palmolive Co (NYSE:CL) is dealing with sluggish category growth in developed markets, with volumes remaining flat despite lower pricing. The company is facing challenges in the Asia Pacific region, particularly in China, where competitive pressures and a shift to e-commerce are impacting performance. Colgate-Palmolive Co (NYSE:CL) is experiencing increased promotional activity and couponing in the US market, which could pressure margins.

Q & A Highlights

Q: Can you provide perspective on the category softness in household products and your expectations for 2026? Also, could you update us on Hill's volume mix and market share performance? A: The market is volatile, with surprising month-to-month swings. We expect the sluggish environment to continue in the short term. Our 2030 strategy positions us well to navigate these challenges. Hill's performance remains strong despite a softer category, with robust innovation and market share gains in segments like cat and wet food. We anticipate continued growth in these areas despite current headwinds. - Noel Wallace, CEO

Story Continues

Q: Could you elaborate on the decline in oral care in Latin America due to trade inventory replacement and your growth expectations for the region? A: The decline was due to a formula change in Colgate Total, which led to consumer complaints. We adjusted the formula and are replacing impacted variants, which affected gross margins by 40-50 basis points. We expect shares to recover as the new product rolls out. Growth in Latin America has been low single-digit due to moderated pricing, but we see opportunities for improvement. - Noel Wallace, CEO

Q: What impact did the GST tax change have on your business in India, and what are your expectations for improvement? A: The GST tax on oral care products dropped from 18% to 5%, leading to price reductions and trade inventory disruptions. We managed these changes well and expect the GST reduction to benefit consumption in the long term. We anticipate better performance in Q4 and a return to growth in 2026. - Noel Wallace, CEO

Q: How are you addressing the challenges in the US drugstore channel, and what are your plans for the successful LMex brand in Europe? A: The drugstore channel is challenging, but we are working with retailers to drive traffic and improve category dynamics. LMex has been successful in Europe, and we are considering expanding it to other markets, leveraging our strong professional underpinning. - Noel Wallace, CEO

Q: Can you discuss the competitive promotional environment in the US and your strategy to address it? A: We've seen a slight uptick in promotional activity, but it's still constructive. Premium and super-premium segments are growing, while value and mid-price segments are struggling. Our 2030 strategy focuses on core innovation to stimulate demand across all segments, particularly at the lower end. - Noel Wallace, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View Comments