Colgate-Palmolive's first-quarter earnings beat estimates and company raises guidance

By Ciara Linnane

Colgate expects full-year sales to grow 2% to 5%, up from prior guidance of 1% to 4%

Colgate-Palmolive Co.'s stock gave back early gains to trade flat on Friday, after the consumer goods giant beat first-quarter earnings estimates and raised its guidance.

The company had net income of $683 million, or 83 cents a share, for the first quarter, up from $372 million, or 45 cents a share, in the year-earlier period.

Adjusted EPS came to 86 cents, ahead of the 81-cent FactSet consensus.

Sales rose to $5.065 billion from $4.770 billion a year ago and were also ahead of the $4.960 billion FactSet consensus.

"The strong gross and operating margin expansion in the quarter funded a 16% increase in advertising and we expect strong levels of brand investment over the balance of 2024," CEO Noel Wallace said in prepared remarks.

The company is confident its advertising is persuading consumers of the science behind some of its innovations to justify the price increases of the past years, Wallace told analysts on the company's earnings call. That's also driving trade-up as consumers see value in the company's products as the continue to shop in an inflationary environment.

By geography, North America sales rose 4% as the company raised pricing by 1.2% and volumes rose 2.9%. North America accounted for 20% of overall sales.

Latam sales rose 16.5% as prices rose 19.7% for volume growth of 6.2%. The price rise was mostly due to inflation in Argentina.

Europe sales rose 9.5% as pricing rose 4.1% and volume was up 3.1%.

Asia Pacific sales fell 1.5% and Africa/Eurasia sales fell 4.5%.

Sales of the company's Hill's pet food rose 3.9% and accounted for 22% of overall sales.

The company raised its full-year guidance and now expects sales to grow 2% to 5%, compared with prior guidance of 1% to 4%.

It expects double-digit EPS growth and expects gross profit margin expansion and increased ad investment. On an adjusted basis, it expects mid-to-high single-digit EPS growth. The FactSet consensus implies growth of 8.3%.

The stock has gained 12% in the year to date, while the S&P 500 has gained 5.8%.

-Ciara Linnane

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04-26-24 1046ET

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