Colgate-Palmolive Forecasts Upbeat Annual Sales as Essentials Spending Holds Firm

Reuters01-30 21:02

Jan 30 (Reuters) - Toothpaste maker Colgate-Palmolive forecast annual sales above Wall Street estimates on Friday, benefiting from steady demand for essential household staples in markets such as Latin America and Europe.

WHY IT'S IMPORTANT?

Spending among higher-income households have supported demand for branded oral care and hygiene products at companies such as Colgate and Kimberly-Clark while middle- to low-income shoppers pivot to private label brands in the hunt for cheaper alternatives.

CONTEXT

Consumer goods makers have slowed the pace of price increases and stepped up marketing spend in a bid to revive sales after months of subdued demand from price-sensitive customers in key markets such as North America.

Colgate-Palmolive has benefited from steady demand for toothpaste and manual toothbrush as well as household cleaning products even in the face of price hikes, which has helped boost margins and offset the impact of higher tariffs and raw material costs.

Its Hill's Pet Nutrition business has also rebounded during the quarter, after a difficult third quarter owing to its exit from the private label pet food business.

KEY QUOTE

"While we expect the difficult operating environment and slower category growth to continue in the short term, we are operating from a position of strength," CEO Noel Wallace said.

BY THE NUMBERS

The company's prices rose 2.7% in the fourth quarter, while volumes remained flat from the prior year.

Its North America organic sales fell 1.8%, driven by a 2.3% drop in volumes and a 0.5% rise in prices in the quarter.

Net sales for the quarter ended December 31 came in at $5.23 billion, beating analysts' average estimate of $5.12 billion, according to data compiled by LSEG.

It posted an adjusted profit of 95 cents per share in the quarter, compared with expectations of 91 cents.

The company expects 2026 net sales growth in the range of 2% to 6%, accounting for tariffs announced as of January 28 by all countries. The mid-point of the range is above analysts' expectations of a 3.5% growth.

MARKET REACTION

Shares of the company were up about 2% in premarket trading.

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