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COLGATE PALMOLIVE CO (CL)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient fundamentals despite FX: net sales $4.944B (-0.1% YoY), organic sales +4.3%, and GAAP diluted EPS $0.90 (+3% YoY). Gross margin was 60.3% (+70 bps YoY) and operating margin 21.5% (-20 bps YoY) .
  • Mix and productivity offset FX; Base Business EPS was $0.91 (+5% YoY), and management reiterated gross margin discipline and continued brand investment (advertising $648M in Q4) .
  • 2025 outlook: net sales roughly flat (mid‑single‑digit FX headwind), organic sales +3–5% including the planned exit from private‑label pet nutrition, GAAP EPS up mid‑single‑digits; Base Business EPS up low‑to‑mid single digits; advertising flat to up slightly as $ and % of sales; gross margin expansion on both GAAP and Base Business .
  • Potential stock catalysts: sustained margin expansion and Hill’s margin inflection, the global relaunch of Colgate Total, disciplined revenue growth management (RGM 2.0), and clarity on tariff risks (not included in guidance) .

What Went Well and What Went Wrong

What Went Well

  • Gross margin strength and mix: Q4 gross margin rose 70 bps to 60.3%, with management citing pricing, productivity, and planned mix tailwinds (Hill’s, Oral Care, less private label) into 2025. “We did all 4 quarters above 60%... up 70 basis points in the fourth quarter… pricing, strong productivity… mix benefit [Hill’s, Oral Care, less private label]” .
  • Hill’s momentum and margin inflection: Q4 Hill’s operating profit +19% YoY; OP margin 24.1% (+340 bps), with strong execution, prescription diet recovery, and innovation driving mix and profit .
  • Innovation and brand investment: Company-wide innovation (e.g., Colgate Total relaunch) and sustained A&M support (advertising up 15% in 2024) supporting share gains and penetration. “We will deliver another year of strong innovation led by the relaunch of Colgate Total…”; “advertising spending… up 15% in 2024, following a 19% increase in 2023” .

What Went Wrong

  • FX headwinds and LatAm as-reported declines: Despite +9.2% organic in LatAm, as‑reported net sales fell 7.2% (FX -16.4%); transactional FX also pressured gross margin exit rate in Q4 .
  • North America softness vs prior year: North America sales -1.0% as‑reported (organic -0.7%), with promotional normalization and skin health headwinds in China impacting consolidated reporting; segment OP margin down 220 bps YoY to 19.9% .
  • Skin Health and China headwinds: Ongoing weakness in skin health volumes and pricing (notably China) weighed on related segments, though Colgate brand China posted high single-digit organic growth; management remains cautious on China’s near-term backdrop .

Financial Results

Consolidated performance vs prior quarters (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($B)$5.058 $5.033 $4.944
Organic Sales Growth (%)+9.0% +6.8% +4.3%
Diluted EPS (GAAP, $)$0.89 $0.90 $0.90
Base Business EPS (Non‑GAAP, $)$0.91 $0.91 $0.91
Gross Profit Margin (%)60.6% 61.1% 60.3%
Operating Margin (%)21.6% 21.2% 21.5%
Advertising ($MM)$706 $694 $648
Net Sales YoY (%)+4.9% +2.4% -0.1%
EPS YoY (%)+48% +5% +3%
vs S&P Global ConsensusN/A (unavailable; see Estimates Context)N/A (unavailable)N/A (unavailable)

Notes and adjustments:

  • Non‑GAAP (Base Business) EPS excludes 2022 Global Productivity Initiative items (Q4 EPS uplift of $0.01 in 2024) .
  • Management noted Q4 organic sales were “almost 5%” excluding private label pet nutrition drag (official OSG reported +4.3%) .

Segment snapshot – Q4 2024

Net Sales by division ($MM) and As‑reported YoY change

DivisionQ4 2023 Sales ($MM)Q4 2024 Sales ($MM)As‑Reported Sales Change YoY
North America$1,047 $1,036 -1.0%
Latin America$1,192 $1,106 -7.2%
Europe$637 $668 +4.9%
Asia Pacific$698 $724 +3.7%
Africa/Eurasia$262 $269 +2.8%
Hill’s (Pet Nutrition)$1,114 $1,140 +2.3%
Total Company$4,950 $4,944 -0.1%

Operating Profit by division (Q4 2024)

DivisionOP ($MM)YoY %OP Margin (%)YoY bps
North America$206 -11% 19.9 -220
Latin America$339 -8% 30.6 -10
Europe$155 +3% 23.3 -40
Asia Pacific$211 +4% 29.1 +10
Africa/Eurasia$58 -1% 21.5 -80
Hill’s$275 +19% 24.1 +340
Total Company (GAAP)$1,064 -1% 21.5 -20
Total Company (Base)$1,071 — 21.7 —

Selected KPIs (Q4/FY context)

  • Market share: Toothpaste 41.4% YTD; Manual toothbrush 32.2% YTD .
  • Q4 gross profit dollars: $2,982MM .
  • FY 2024 free cash flow before dividends: $3,546MM .
  • FY 2024 “Debt less cash & marketable securities”: $6,693MM; Working capital % of sales: -5.2% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (reported)FY 2025N/ARoughly flat; includes mid‑single‑digit negative FX impact New
Organic Sales GrowthFY 2025N/A3%–5%, including planned exit from private‑label pet nutrition New
Gross Profit MarginFY 2025N/AExpansion on GAAP and Base Business New
Advertising InvestmentFY 2025N/AFlat to up slightly as $ and % of sales New
GAAP EPS GrowthFY 2025N/AMid‑single‑digit growth New
Base Business EPS GrowthFY 2025N/ALow‑to‑mid single-digit growth New
TariffsFY 2025N/ANot included in guidance New (risk disclosure)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI/Data & RGM 2.0Scaling analytics/AI to optimize media and RGM; improving ROI on A&M RGM 2.0 highlighted as margin/top-line lever; more precise pricing/promo via analytics Improving execution, broader deployment
Supply Chain ResilienceCapacity additions (Hill’s), optimizing network, moderating commodities Local manufacturing strategy; $2B+ US investment over 5 years; flexibility for tariffs; Tonganoxie ramp Strengthening flexibility
Tariffs/MacroCautious stance; FX inflation pockets (LatAm); category stabilization in Europe No tariffs in 2025 guide; mitigation plans across raw/finished goods; multiple scenarios Risk monitored; not in outlook
Product/InnovationBroad innovation, premiumization (whitening, elmex/meridol), A&M up mid-teens Global relaunch of Colgate Total underway; innovation-led growth emphasis Scaling flagship relaunches
Regional TrendsQ2/Q3: LatAm and Europe strength; NA promo normalization; China Colgate strong; Darlie weak LatAm organic strong but FX heavy; Europe +vol/+price; NA sequentially improved exit; China Colgate high-single-digit Mixed: Europe resilient; FX pressure in EM
Hill’s (Pet)Strong shares; capacity/Prescription Diet mix; wet expansion OP margin inflection; private‑label wind‑down a 2025 tailwind; steady innovation Positive mix, margin tailwinds

Management Commentary

  • “We are pleased to have delivered another quarter and full year of strong organic sales growth along with increases in gross profit, gross profit margin, net income, earnings per share and cash flow.” – Noel Wallace, CEO .
  • “We utilized our strong gross profit growth in 2023 and 2024 to invest ahead of the curve in capabilities… while delivering bottom-line growth.” .
  • “Our investments in data, analytics and AI will also be key to driving pricing growth in 2025.” .
  • “We have not included any potential incremental tariffs in our ’25 guidance… we’ve invested meaningfully in our U.S. supply chain… increased the number of our U.S.-based manufacturing facilities by more than 40% over that time.” – CFO Stan Sutula .

Q&A Highlights

  • Guidance confidence and organic growth cadence: Management comfortable with 3–5% OSG for 2025; Q4 OSG “almost 5%” ex private‑label pet; volume to increasingly drive OSG as pricing normalizes; pricing moves in LatAm/Africa to offset FX .
  • Gross margin trajectory: Q4 GM +70 bps YoY; sequential moderation due to transactional FX; 2025 expansion underpinned by mix (Hill’s/Oral Care), productivity (Funding the Growth), and RGM 2.0 .
  • North America dynamics: Pricing negative in 2H24 given tough comps; promo normalization and selective reinvestment; sequential improvement exiting Q4; skin health softness weighed .
  • Tariffs: Not in FY25 guide; diversified/localized manufacturing and alternative sourcing create flexibility; scenario planning underway .
  • Hill’s outlook: Margin inflection underway; innovation, prescription diet/wet expansion, private‑label exit support 2025 growth and profitability .

Estimates Context

  • We attempted to retrieve S&P Global consensus for revenue and EPS for Q4 2024 and prior quarters, but the request was not fulfilled due to provider rate limits. As a result, consensus estimates and beat/miss analysis versus S&P Global are unavailable for this recap. We will update when access permits.
  • Where “vs estimates” appears as N/A in tables, this reflects unavailable S&P Global consensus at this time.

Key Takeaways for Investors

  • Mix-led and productivity-led margin expansion looks durable into 2025, aided by Hill’s and Oral Care and the planned exit from low‑margin private‑label pet nutrition .
  • FX remains the principal headwind: LatAm’s strong organic growth is translating into reported declines; management is taking surgical pricing where needed and leaning on RGM 2.0 .
  • The relaunch of Colgate Total provides a multi‑quarter innovation catalyst across toothpaste, manual brushes, and mouthwash with early traction in Latin America .
  • Tariff risk is a watch item but not in guidance; network flexibility and increased U.S. manufacturing reduce potential impact .
  • Capital returns supported by strong cash flow (FY24 FCF before dividends $3.55B) and lower net debt vs 2023; continued A&M investment should sustain share/penetration momentum .
  • Near term, sequential gross margin progress and Hill’s margin mix are likely key stock drivers; medium term, sustained OSG within 3–5%, disciplined RGM, and innovation execution underpin EPS compounding .
Non‑GAAP note: Base Business metrics exclude items such as charges related to an ERISA litigation matter, foreign tax matter, the 2022 Global Productivity Initiative, and product recall costs, as reconciled in the company’s tables **[21665_0000021665-25-000005_a4q2024pressreleasetables.htm:13]** **[21665_0000021665-25-000005_a4q2024pressreleasetables.htm:15]**.