Colgate Earnings: Stepped-Up Advertising Spending Buoys Sales, With More Investments in the Cards

Despite facing muted levels of consumer spending around the world and geopolitical volatility, wide-moat Colgate evidenced its brand prowess in the fourth quarter, chalking up 7% organic sales growth (on top of 9% growth a year ago) and a 400-basis-point spike in gross margin to 59.6%. Impressively, Colgate was able to build on its already leading position in the global toothpaste aisle, with its market share expanding to 41% (as cited by the firm), up from around 40% a year ago. And even in its largest market, Latin America, where it generates nearly one quarter of its total sales base, Colgate drove a whopping 16.5% increase in organic sales on a near-balanced contribution from price (up 8.5%) and volume (8%). In our view, this gives credence to its stout brand positioning.