Colgate-Palmolive Company

Colgate said it delivered "another quarter of strong top and bottom line growth." Organic sales grew in 4 of 5 divisions and 3 of 4 categories. Gross margin expanded 100 basis points in the quarter, with 90 basis points of that improvement versus the prior quarter. Free cash flow was up 18%, and the company returned $1.4 billion to shareholders. Hill's ex-private-label organic sales were 4%, and management said the U.S. pet category was more or less flat. In Latin America, organic sales were up about 5%, with pricing up 2.8% and volume up 2.6%; Brazil was up high single digits and Mexico mid-single digits. Management raised full-year gross margin guidance to roughly flat, from down previously, while saying Q3 is largely locked in and Q4 could be a bit lower than prior assumptions due to oil around the $90 range and higher raw materials and tariffs in the second half. The company kept full-year organic sales guidance prudent despite year-to-date growth of 2.6%.

Noel Wallace framed the quarter as evidence that Colgate's global model is working despite continued volatility. He emphasized broad-based execution, innovation, and market-share gains in emerging markets, Europe, and Hill's, while saying the U.S. business is not yet where management wants it to be. He was constructive on the company's ability to use pricing, revenue growth management, brand support, and AI-enabled productivity to drive both growth and profit over time.

Stan Sutula said Q2 margin performance was strong and multifaceted, driven by RGM, productivity, pricing, and mix, with some offset from higher raw materials and tariff refunds. He noted that Q3 is essentially "largely locked in" and in line with prior guidance, while Q4 may be somewhat lower than earlier assumptions due to oil in the $90 range and war-related uncertainty. He also said the company now expects full-year gross margin to be roughly flat, improved from prior expectations of down, because of strong execution in the quarter; he cautioned that higher raw materials and tariffs should be more pronounced in the second half.

Analysts focused on Hill's and the new Prime/Fresh launch, gross margin and inflation timing, the split between price and volume, China, Latin America, and why U.S. organic sales guidance was not raised higher. Management said Hill's is gaining share in cat, wet, small paws, and therapeutic, that Prime is being rolled out thoughtfully through veterinary channels with the goal of building the brand rather than near-term volume, and that the pet category may have bottomed but could stay pressured. On the U.S., Noel Wallace said the business faced category softness, heightened competition, retailer inventory reductions, and some price gaps at select retailers; he said Colgate will increase support and make selective pricing/promotion adjustments, but expects improvement to be sequential rather than linear.