Colgate-Palmolive Co (NYSE:CL) has cut its full-year earnings outlook, citing the impact of tariffs and currency headwinds, even as it posted first-quarter earnings that topped Wall Street expectations thanks to improved margins.
The consumer goods maker now expects full-year organic sales growth of 2% to 4%, down from a prior forecast of 3% to 5%. It also sees earnings per share growing in the low-single-digit range, compared with a previous view of low- to mid-single-digit growth.
First-quarter adjusted earnings per share rose 6% year-over-year to $0.91, surpassing analysts’ estimates of $0.86. Revenue fell 3.1% to $4.91 billion, slightly ahead of expectations for $4.89 billion. Organic sales increased 1.4%, missing the Street’s forecast of 1.8%.
Colgate reported strong margin improvement, with gross margin rising 80 basis points to 60.8%, aided by cost discipline and pricing actions. Advertising investment also increased, reaching 13.6% of sales, up 30 basis points from a year earlier.
By region, organic sales declined 3% in North America, while Europe and Latin America posted gains of 5.4% and 4.0%, respectively. Hill’s Pet Nutrition, one of the company’s key growth engines, delivered 2.9% organic sales growth.
While foreign exchange is expected to remain a low-single-digit drag on results, the outlook is slightly more favorable than earlier in the year, providing a potential upside if market conditions stabilize, Jefferies analysts noted.
Shares of Colgate rose 1.3% in early Friday trading.