Colgate-Palmolive (CL) reported a mixed start to 2025, with Q1 worldwide net sales of $4,911 million, marking a 3.1% decline year-over-year, primarily due to a 4.4% negative foreign exchange impact. Despite slightly lower volumes (down 0.1%), the company managed to grow organic sales by 1.4%, thanks to 1.5% in net pricing gains. Gross profit dipped modestly to $2,987 million, but improved margins reflect operational efficiency gains. Notably, the company raised its quarterly dividend to $0.52 per share, and boosted its cash position to $1,112 million by quarter-end.

In segment performance, Oral, Personal and Home Care (OPHC) saw net sales fall 4.3%, largely from FX headwinds, while organic sales rose 1.0%. Colgate retained a 40.9% global toothpaste market share, with gains in Europe and Africa/Eurasia offsetting declines in North America and Asia Pacific.

Hill’s Pet Nutrition stood out as a growth engine, posting net sales of $1,118 million (up 1.5%) and an impressive 30% increase in operating profit to $258 million, with margins climbing to 23.1%. Organic sales grew 2.9%, and the segment benefited from pricing, cost discipline, and a premium product mix. Hill’s ongoing exit from private label pet food, while temporarily pressuring volume, is enhancing margins and strategic focus.

Across regions, North America reported a 3.6% sales decline, with organic sales down 3.0% due to weaker volumes and pricing in Personal and Home Care. Operating profit dropped 8%, and margins compressed to 19.6%. Latin America saw a steeper 8.7% sales decline, though organic sales climbed 4.0%, led by 2.7% volume growth and pricing, despite FX challenges. Operating margins fell to 30.4%. In Europe, results were strong, with sales up 2.5% and operating profit increasing 12%, driven by premium innovation and brand investment. Asia Pacific posted a 5.0% drop in sales, with weakness in China and India dragging down performance despite resilient margins at 28.7%. Africa/Eurasia saw a modest 1.5% decline in sales, though organic growth was positive at 1.8%.

Management emphasized that global consumer softness, especially in February, weighed on results, but trends improved in March and April. Tariffs are expected to add a $200 million cost burden in 2025, which the company plans to absorb through operational levers rather than heavy price hikes. Investments in science-led innovation, AI and data analytics, and premiumization remain central to Colgate’s brand strategy. Advertising is at record levels, helping support new product launches such as Colgate Total and Hill’s Science Diet.

Looking ahead, the company expects low single-digit EPS growth for 2025, with margin preservation despite the tariff impact. Improvement is anticipated in key markets including North America, Asia, and Latin America, while Hill’s is projected to continue its strong trajectory. Risks remain from FX volatility and the broader macro environment, but management expressed confidence in Colgate’s resilience and flexibility.

Additionally, Colgate has agreed to acquire Care TopCo Pty Ltd, the owner of the Prime100 pet food brand, with the deal set to close in Q2. Capital expenditures totaled $124 million, in line with the prior year.

In summary, Colgate-Palmolive delivered solid underlying performance in Q1 2025, underpinned by organic growth, strong execution in premium categories, and notable margin expansion in strategic segments like Hill’s and Europe—setting a measured but optimistic tone for the rest of the year.