Colgate-Palmolive (NYSE: CL) reported Q2 2026 net sales of $5.36 billion, up 4.9% year over year, while GAAP diluted EPS fell 5% to $0.86 from $0.91. Organic sales rose 2.4%, and gross margin expanded, but higher reported operating expenses pulled down GAAP profit; on a Base Business basis, diluted EPS increased 8% to $0.99.
Core earnings data
Reported sales growth included a 2.4% benefit from foreign exchange. Organic growth consisted of 0.8% organic volume growth and 1.6% pricing, with the exit from private-label pet food reducing organic sales growth by 0.4 percentage points.
Gross profit increased and gross margin expanded by 140 basis points. However, GAAP operating profit and net income declined, creating a clear gap between reported results and the company’s non-GAAP Base Business performance.
| Metric | Q2 2026 | Q2 2025 | Year-over-year change |
|---|---|---|---|
| Net sales | $5.361 billion | $5.110 billion | +4.9% |
| Organic sales growth | 2.4% | — | — |
| Gross profit | $3.296 billion | $3.069 billion | Approximately +7% |
| Gross margin | 61.5% | 60.1% | +140 bps |
| GAAP operating profit | $1.016 billion | $1.080 billion | -6% |
| GAAP operating margin | 19.0% | 21.1% | -210 bps |
| Net income attributable to Colgate-Palmolive | $693 million | $743 million | Approximately -7% |
| GAAP diluted EPS | $0.86 | $0.91 | -5% |
| Base Business diluted EPS | $0.99 | $0.92 | +8% |
Base Business results exclude applicable costs related to the Strategic Growth and Productivity Program, the ERISA litigation matter and acquisitions. They should therefore be considered separately from GAAP results.
Business and divisional performance
Four of Colgate-Palmolive’s five divisions generated organic sales growth. Latin America was the largest growth contributor, while North America was the only division reporting declines in both net and organic sales.
| Division | Share of company sales | Net sales growth | Organic sales growth | Operating profit growth |
|---|---|---|---|---|
| North America | 17% | -3.0% | -3.0% | +3% |
| Latin America | 26% | +13.7% | +5.3% | +14% |
| Europe, Middle East & Africa | 21% | +3.5% | +2.0% | +9% |
| Asia Pacific | 14% | +4.9% | +5.2% | +3% |
| Hill’s Pet Nutrition | 22% | +3.4% | +2.1% | +2% |
Latin America combined 2.6% organic volume growth with 2.8% pricing, while foreign exchange added 8.4% to reported sales. Asia Pacific’s 5.2% organic growth was led by 4.1% higher volume.
North America’s organic volume declined 3.9%, only partly offset by 0.9% pricing. At Hill’s Pet Nutrition, pricing increased 3.9%, but organic volume fell 1.8%; the acquisition of Prime100 added 0.6 percentage points to Hill’s reported volume. Lower private-label pet food sales also reduced companywide organic growth.
Colgate maintained year-to-date global market shares of 41.3% in toothpaste and 32.7% in manual toothbrushes.
Gross margin expanded, but reported expenses pulled GAAP profit lower
Colgate-Palmolive converted sales growth into a higher gross profit, with gross margin reaching 61.5%. That improvement did not flow through to GAAP operating profit because selling, general and administrative expenses rose to $2.13 billion from $1.96 billion, while other expense increased to $150 million from $26 million.
Advertising was an important part of the spending increase, rising approximately 15% to $777 million. As a result, GAAP operating margin fell 210 basis points even though gross margin improved by 140 basis points.
The underlying Base Business showed a different trend: operating profit increased 5% to $1.145 billion, operating margin edged up 10 basis points to 21.4%, and diluted EPS rose 8%. The contrast indicates that excluded program, litigation and acquisition-related items had a material effect on reported profitability during the quarter, although the release did not provide a complete item-by-item bridge in the supplied data.
Cash flow and balance sheet
Cash-flow figures were reported for the first six months of 2026 rather than for Q2 alone. Operating cash flow and free cash flow before dividends both improved despite lower six-month net income.
| Metric | First six months of 2026 | First six months of 2025 | Year-over-year change |
|---|---|---|---|
| Operating cash flow | $1.742 billion | $1.484 billion | Approximately +17% |
| Capital expenditures | $266 million | $232 million | Approximately +15% |
| Free cash flow before dividends | $1.476 billion | $1.252 billion | Approximately +18% |
| Cash and equivalents at June 30 | $1.370 billion | $1.215 billion | Approximately +13% |
| Total debt at June 30 | $7.857 billion | $8.758 billion | Approximately -10% |
| Debt less cash, equivalents and marketable securities | $6.404 billion | $7.346 billion | Approximately -13% |
Accounts payable and other working capital provided $124 million of cash, compared with a $248 million use a year earlier. This helped offset a combined $384 million use of cash from receivables and inventories. During the six-month period, the company also paid $879 million in dividends and spent $597 million on treasury-share purchases.
Full-year 2026 guidance
Colgate-Palmolive maintained its sales and GAAP EPS outlook while improving its expectations for gross margin and Base Business EPS. The guidance is based on current spot exchange rates.
| Metric | Latest 2026 guidance | Previous guidance | Change |
|---|---|---|---|
| Net sales growth | 2% to 6%, including a low-single-digit positive FX impact | 2% to 6% | Maintained |
| Organic sales growth | 1% to 4%, including the private-label pet food exit | 1% to 4% | Maintained |
| GAAP gross margin | Roughly flat | Down | Improved |
| GAAP diluted EPS | Double-digit growth | Double-digit growth | Maintained |
| Base Business gross margin | Roughly flat | Down | Improved |
| Base Business diluted EPS | Mid-single-digit growth | Low- to mid-single-digit growth | Raised |
| Advertising | Higher in dollars and as a percentage of sales | Same | Maintained |
The improved margin and Base Business EPS outlook suggests greater confidence in underlying profitability, even as management continues to fund higher advertising and faces volatile market conditions.
Management’s perspective
Chairman, President and CEO Noel Wallace said worldwide organic volume growth improved sequentially for a third consecutive quarter. Management intends to maintain elevated investment in the second half of 2026, focusing on premium, science-led innovation and omnichannel demand generation under its 2030 strategy.
Management also expects market volatility to continue through the remainder of the year. Its full-year outlook therefore balances continued brand investment with an improved gross-margin expectation.
Recent insider transactions
The supplied Yahoo Finance summary showed 501,179 shares categorized as insider purchases across 28 transactions during the prior six months, compared with 275,897 shares sold across nine transactions. The latest individual records were primarily stock awards; the only sale among the ten most recent entries was a $203,412 transaction by officer Gregory Malcolm.
| Date | Insider | Role | Transaction | Reported price | Reported value |
|---|---|---|---|---|---|
| Jul. 1, 2026 | Brian Newman | Director | Stock award | $89.45 | $18,695 |
| Jul. 1, 2026 | Lorrie M. Norrington | Director | Stock award | $89.45 | $26,209 |
| Jul. 1, 2026 | John P. Bilbrey | Director | Stock award | $89.45 | $23,704 |
| May 15, 2026 | Gregory Malcolm | Officer | Sale | $88.44 | $203,412 |
| May 11, 2026 | Kimberly A. Nelson | Director | Stock award | $0.00 | $0 |
| May 11, 2026 | Christopher S. Boerner | Director | Stock award | $0.00 | $0 |
| May 11, 2026 | Brian Newman | Director | Stock award | $0.00 | $0 |
| May 11, 2026 | C. Martin Harris | Director | Stock award | $0.00 | $0 |
| May 11, 2026 | Lorrie M. Norrington | Director | Stock award | $0.00 | $0 |
| May 11, 2026 | Lisa Marie Edwards | Director | Stock award | $0.00 | $0 |
These awards and the single reported sale do not, by themselves, establish insiders’ views regarding the company’s outlook.
Risks investors need to watch
- Modest underlying growth: Organic sales increased 2.4%, including only 0.8% organic volume growth. The private-label pet food exit reduced the organic growth rate by 0.4 percentage points.
- Weakness in North America and Hill’s volumes: North American organic sales fell 3.0%, while Hill’s organic volume declined 1.8%. Continued weakness could place more reliance on pricing and faster-growing international divisions.
- Expense pressure on GAAP profitability: Higher SG&A, advertising and other expenses outweighed gross-margin expansion, reducing GAAP operating margin and EPS.
- Foreign-exchange and market volatility: Currency added 2.4% to reported Q2 sales, and the full-year outlook is based on current spot rates. Changes in exchange rates could alter reported growth.
- Full-year GAAP EPS execution: Q2 GAAP EPS declined 5%, while the company retained guidance for double-digit full-year growth, making the trajectory of reported costs and excluded items important over the second half.
Summary
Colgate-Palmolive’s second quarter combined higher reported and organic sales with broader international growth and a meaningful increase in gross margin. However, increased advertising and other reported expenses caused GAAP operating profit and EPS to decline, even as Base Business earnings improved. The main points to monitor are North American and Hill’s volumes, the effect of continued marketing investment, and whether better underlying margins translate into the company’s raised Base Business EPS outlook and maintained GAAP guidance.
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