• Net Sales: $20 billion in 2024, achieving strategic plan ambition one year early.
• Organic Sales Growth: High single-digit growth in 2024, consistent with the previous year.
• Advertising Spending: Increased by 15%, up 130 basis points as a percentage of sales.
• Gross and Operating Margin: Expanded despite foreign exchange headwinds and increased spending.
• Base Earnings Per Share Growth: Double-digit growth, exceeding initial guidance.
• Operating Cash and Free Cash Flow: Record levels achieved.
• Cash Returned to Shareholders: Record amounts returned.
• Return on Invested Capital: Continued improvement, maintaining top-tier status.

• Warning! GuruFocus has detected 3 Warning Sign with CL.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Colgate-Palmolive Co (NYSE:CL) achieved net sales of $20 billion in 2024, surpassing their strategic plan ambition a year early.
• The company delivered high single-digit organic growth for the second consecutive year, with volume growth in every division and category.
• Increased advertising spending by 15% in 2024, following a 19% increase in 2023, has significantly improved brand health.
• Colgate-Palmolive Co (NYSE:CL) achieved gross and operating margin expansion despite foreign exchange headwinds and increased spending.
• Record operating cash flow and free cash flow, along with record cash returned to shareholders, highlight strong financial performance.

Negative Points

• Foreign exchange headwinds negatively impacted net sales and gross margin, posing a challenge to earnings growth.
• The company faced softness in some parts of Europe and continued challenges in China, particularly in the skin health business.
• Pricing in North America was negative last year, and segment volumes did not benefit as expected in the back half of the year.
• The pet nutrition category experienced some volatility, with a slowdown in Europe and challenges in maintaining growth momentum.
• Competitive activity increased in certain markets, such as India and South Africa, leading to heightened promotional spending.

Q & A Highlights

Q: What gives you confidence in the 2025 EPS guidance despite FX impacts, and how do you view the organic sales growth (OSG) line? A: Noel Wallace, CEO, explained that Colgate-Palmolive is well-positioned for consistent compounded dollar earnings growth due to strong fundamentals and flexibility built into their plans. The company expects balanced growth in both volume and price, with a focus on household penetration and market share gains. Despite FX headwinds, they are confident in their ability to offset these through other areas of the P&L and maintain strong cash generation.

Q: Can you provide insights into the gross margin performance and expectations for 2025? A: Noel Wallace noted that gross margin was up 70 basis points year-over-year despite FX headwinds. The company expects margin expansion in 2025, driven by mix improvements, productivity programs, and revenue growth management. CFO Stan Sutula added that the company is leveraging new capabilities to enhance pricing strategies and expects continued margin expansion.

Q: How do you view the pricing and volume dynamics in North America for 2025? A: Noel Wallace stated that North America saw sequential improvement in both volume and price in Q4. The company expects pricing to improve in the back half of 2025, with a focus on strategic growth opportunities and new leadership driving strategic thinking. The promotional environment is expected to remain constructive.

Q: What are the expectations for the Hill's pet nutrition business in 2025? A: Noel Wallace highlighted that Hill's is executing well in a flat category, with strong market share growth and innovation in key segments like small pets and wet food. The company expects continued volume growth and margin expansion, supported by improved supply chain capabilities and strategic focus on growth segments.

Q: How is Colgate-Palmolive approaching advertising and marketing investments in 2025? A: Noel Wallace emphasized the focus on optimizing advertising spend through technology and data analytics to drive brand health and ROI. The company plans to maintain or slightly increase advertising as a percentage of sales, with a strategic focus on areas with the best growth opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.