In the fourth quarter, Colgate-Palmolive Company (NYSE:CL) delivered a stronger-than-anticipated financial performance, propelled by consistent consumer demand in its core business areas. The company managed to outperform analyst expectations, with robust results that underscore its entrenched position in major categories such as oral care and pet nutrition.
The company announced adjusted earnings per share of 95 cents for the latest quarter, outperforming the consensus estimate of 91 cents. This earnings beat was complemented by quarterly sales totaling $5.23 billion, which also surpassed the forecasted $5.118 billion reported by market analysts.
On the top line, Colgate-Palmolive registered a 5.8% increase in net sales compared to the previous year. When isolating organic growth, which excludes effects from currency fluctuations and acquisitions, sales rose by 2.2%. However, this growth was partly offset by a 0.9% decline attributable to reduced private-label pet product volumes.
Colgate maintained its leadership in the oral care category globally, retaining a 41.3% share of the toothpaste market year-to-date. Additionally, the company sustained its dominant position in manual toothbrushes, commanding a 32.4% share during the same period.
Gross profit reached $3.146 billion for the quarter, marking an increase from $2.982 billion a year earlier. Despite this rise in gross profit, Colgate-Palmolive saw a slight contraction in gross profit margins under both Generally Accepted Accounting Principles (GAAP) and base business measurements, each decreasing by 10 basis points to 60.2%.
CEO Noel Wallace highlighted that net sales and organic sales expanded across all product categories in the quarter, with oral care and pet nutrition standing out as key drivers of growth, excluding private-label impacts.
Operating profit for the quarter contracted to $3.306 billion from $4.268 billion in the prior-year quarter. Correspondingly, operating margins narrowed from 21.2% to 16.2%. The lower profitability was influenced by a significant, non-cash, after-tax charge of $794 million associated with goodwill and intangible asset impairments linked to Colgate’s skin health division.
This impairment reflects reassessments stemming from lower-than-expected growth rates in relevant categories and subpar operational results, particularly in the Chinese market. The skin health business, especially the Filorga brand, has faced challenges that prompted a downward revision of its outlook.
At the close of the quarter, Colgate-Palmolive reported cash and cash equivalents totaling $1.288 billion, providing a solid liquidity position moving forward.
Looking ahead, the company projects fiscal year 2026 net sales to range between $20.79 billion and $21.61 billion. This guidance compares with an external analyst consensus estimate of $20.98 billion. CEO Wallace remarked that despite anticipating continued difficulties in the operating environment and decelerated category growth in the near term, the company's strong foundational position and strategic initiatives are expected to support sustained, compound earnings per share growth over time, ultimately enhancing shareholder value.
Following the earnings announcement, Colgate-Palmolive’s shares experienced positive market response, trading up by approximately 3.67% to $88.22 as of Friday's session.