Colgate-Palmolive(US:CL)2025-10-31 13:34Sales Performance - Approximately two-thirds of Colgate-Palmolive's net sales are generated from markets outside the U.S., with about 45% coming from emerging markets[105]. - Worldwide net sales for Colgate-Palmolive Company were $5,131 million in Q3 2025, up 2.0% from Q3 2024, driven by net selling price increases of 2.3% and positive foreign exchange of 1.2%[129]. - Organic sales increased by 0.4% in Q3 2025, excluding the impact of foreign exchange, acquisitions, and divestments[129]. - In the Oral, Personal and Home Care segment, net sales were $3,989 million, up 2.1% from Q3 2024, with organic sales increasing by 0.9%[130]. - In the Hill's Pet Nutrition segment, net sales were $1,142 million, up 1.4% from Q3 2024, but organic sales decreased by 1.3%[132]. - North America net sales decreased 0.4% to $999 million, with operating profit down 8% to $190 million, representing 19.0% of net sales[151]. - Latin America net sales increased 2.0% to $1,178 million, while operating profit decreased 8% to $337 million, accounting for 28.6% of net sales[154]. - Europe net sales rose 7.6% to $801 million, with operating profit increasing 16% to $209 million, representing 26.1% of net sales[158]. - Asia Pacific net sales fell 1.5% to $714 million, and operating profit decreased 6% to $188 million, accounting for 26.2% of net sales[161]. - Africa/Eurasia net sales increased 6.8% to $297 million, with operating profit rising 5% to $68 million, representing 23.0% of net sales[165]. - Pet Nutrition net sales increased by 2.2% in the first nine months of 2025, with an impact from the acquisition of the Prime100 pet food business contributing 0.9% to reported volume[178]. - Total company net sales growth for the three months ended September 30, 2025, was 2.0%, with organic sales growth at 0.4%[221]. - In the nine months ended September 30, 2025, total company net sales growth was flat at 0.0%, while organic sales growth was 1.2%[223]. Financial Performance - Gross profit decreased to $3,049 million in Q3 2025 from $3,074 million in Q3 2024, with a gross profit margin of 59.4%, down from 61.1%[133][134]. - Operating profit decreased by 1% to $1,059 million in Q3 2025, with an operating profit margin of 20.6%, down from 21.2% in Q3 2024[141][142]. - Net income attributable to Colgate-Palmolive Company was $735 million in Q3 2025, a slight decrease from $737 million in Q3 2024, while diluted earnings per share increased to $0.91[147][148]. - Operating profit increased to $3,214 million in the first nine months of 2025 from $3,205 million in 2024, marking a 0.3% increase[188]. - Gross profit decreased to $9,105 million in the first nine months of 2025 from $9,179 million in 2024, primarily due to a lower gross profit margin of 60.1% compared to 60.6% in the prior year[179][180]. - The effective income tax rate for the first nine months of 2025 was 23.2%, a slight decrease from 23.4% in the same period of 2024[197]. - Interest expense decreased to $203 million in the first nine months of 2025 from $226 million in 2024, while interest income increased to $56 million from $51 million[194][195]. - The effective income tax rate for the three months ended September 30, 2025, was 22.8%, compared to 21.3% for the same period in 2024[204]. - In the first nine months of 2025, net income attributable to Colgate-Palmolive Company increased to $2,169 million from $2,150 million in the comparable 2024 period, with diluted earnings per share rising to $2.67 from $2.61[207]. - Excluding certain charges, net income attributable to Colgate-Palmolive Company in the first nine months of 2025 increased to $2,228 million from $2,217 million in the first nine months of 2024, with diluted earnings per share increasing 2% to $2.74 from $2.69[208]. Costs and Expenses - The company expects incremental gross costs of approximately $75 million in 2025 due to tariffs imposed by the United States and other countries[121]. - Colgate-Palmolive continues to experience higher raw and packaging material costs, which may adversely affect future results[124]. - The decrease in gross profit margins across segments was primarily due to significantly higher raw and packaging material costs, partially offset by cost savings initiatives[153][157][160][164][167]. - Selling, general and administrative expenses decreased to $1,971 million in Q3 2025 from $1,979 million in Q3 2024, with a percentage of net sales decreasing by 90 basis points to 38.4%[136][137]. - Selling, general and administrative expenses remained flat at $5,833 million for both periods, but decreased to $5,817 million when excluding specific charges[182][184]. - Non-service related postretirement costs increased to $116 million in the first nine months of 2025 from $67 million in 2024, primarily due to charges related to the ERISA litigation matter[192]. Strategic Initiatives - The Strategic Growth and Productivity Program is estimated to result in cumulative pre-tax charges totaling between $200 million and $300 million, with most charges expected to be incurred by December 31, 2028[116]. - The company aims to achieve consistent organic sales growth through science-led innovation and expansion into faster-growing markets and channels[128]. - The Prime100 acquisition contributed 1.6% to volume in Hill's Pet Nutrition, despite a decline in private label volume impacting organic sales[175]. - The company is focused on driving organic sales growth and operational efficiencies to achieve consistent compounded earnings per share growth[114]. Market Conditions - The company has faced challenges from heightened competitive activity, including aggressive product claims and increased promotional spending[125]. - The ongoing geopolitical tensions, including the war in Ukraine and conflicts in the Middle East, have created uncertainties impacting the company's operations[127]. - The company has ongoing federal, state, and international income tax audits, with an estimated tax plus interest for the years 2010 through 2018 amounting to approximately $162 million[203]. Cash Flow and Investments - Net cash provided by operations decreased by 3% to $2,745 million in the first nine months of 2025 compared to $2,838 million in the same period of 2024[226]. - Investing activities used $714 million in cash during the first nine months of 2025, an increase from $454 million in the same period of 2024[227]. - Capital expenditures for the first nine months of 2025 were $387 million, expected to be approximately 3.0% of net sales[228]. - Total debt increased to $8,419 million as of September 30, 2025, from $7,949 million as of December 31, 2024[230]. - Cash and cash equivalents increased by $183 million to $1,279 million as of September 30, 2025, compared to $1,096 million at December 31, 2024[235]. Tax and Regulatory Matters - The IRS has issued temporary relief from certain tax regulations, allowing taxpayers to defer the application of these regulations through the end of 2023[200]. - The company believes that the Pillar II minimum tax regime will not have a material impact on its consolidated financial statements going forward[202]. - The company continues to evaluate the impact of proposed IRS regulations related to the 15% minimum tax on book income, which is expected to have no significant effect if finalized in their current form[201]. Internal Controls - The Company is upgrading its enterprise IT system and transitioning to cloud infrastructure, which is not expected to materially impact internal controls over financial reporting[245]. - There were no changes in the Company's internal control over financial reporting during the most recent fiscal quarter that materially affected or are likely to affect it[246].