(Reuters) -Colgate-Palmolive reported quarterly results that beat Wall Street estimates and raised its annual sales forecast on Friday, banking on moderate price hikes and higher advertising spending to boost demand for its oral and personal care products.
WHY IT’S IMPORTANT
The company plans further price hikes to counter higher costs and the effect of tariffs, as it looks to shield its margins from increased advertising and marketing expenses.
Like other consumer goods companies, Colgate has been working to mitigate the impact of tariffs on raw materials and its toothpastes made in Mexico for the U.S. market.
Tariffs are now expected to increase the company’s cost of goods sold in 2025 by about $200 million, following the new levies announced by the U.S. and China.
Procter & Gamble and Kimberly-Clark provided dour annual profit forecasts due to tariff uncertainty.
KEY QUOTE
“As we look ahead, uncertainty and volatility in global markets, including the impact of tariffs, remain challenging,” CEO Noel Wallace said.
BY THE NUMBERS
Taking into account the estimated impact of tariffs, Colgate forecast low-single-digits percentage growth for annual sales, compared with its prior expectation of flat sales.
The company’s total organic sales rose 1.4% in the first quarter, while prices rose 1.5%.
On an adjusted basis, Colgate earned 91 cents per share, compared with the average analyst estimate of 86 cents, according to data compiled by LSEG.
The company reported net sales of $4.91 billion in the first quarter, beating estimates of $4.87 billion.
Its gross profit margin rose 80 basis points to 60.8% in the quarter ended March 31.
Colgate now expects annual organic sales growth between 2% and 4%, compared with its prior forecast of 3% to 5% increase.
MARKET REACTION
The company’s shares rose about 1% to $94.20 in premarket trading.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shounak Dasgupta)
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