Colgate-Palmolive's Q4 2024 Earnings: A Strong Performance Amidst Headwinds

Colgate-Palmolive Company (NYSE: CL) reported its fourth quarter and full-year 2024 earnings on January 31, 2025, showcasing a robust performance despite macroeconomic challenges. The company 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. This article will delve into the key aspects of Colgate-Palmolive's Q4 2024 earnings call, highlighting the company's strategic initiatives and financial performance.

Financial Performance

Colgate-Palmolive's net sales for the full year 2024 reached an unprecedented $20.1 billion, marking the first time the company surpassed the $20 billion milestone. Organic sales growth for the year was 7.4%, with organic sales growth in every division and category. The company's GAAP EPS increased 27% to $3.51, while base business EPS grew 11% to $3.60. Net cash provided by operations was $4,107 for the full year, up 10% versus 2023, and the company returned $3.4 billion in cash to shareholders through dividends and share repurchases.

For the fourth quarter, net sales decreased 0.1% compared to the prior-year quarter, with organic sales growth of 4.3%. GAAP EPS increased 3% to $0.90, while base business EPS grew 5% to $0.91. Colgate's leadership in toothpaste and manual toothbrushes continued, with global market shares of 41.4% and 32.2% year to date, respectively.



Strategic Initiatives

Colgate-Palmolive's strong financial performance can be attributed to several strategic initiatives:

1. Investment in Brand Health and Innovation: The company increased advertising spending by 15% in 2024, following a 19% increase in 2023, to drive brand health and support innovation. This investment has contributed to the company's market leadership in categories like toothpaste and manual toothbrushes.
2. Operating Leverage: Colgate-Palmolive's operating leverage drove strong bottom-line performance, with net income and earnings per share both increasing double digits versus 2023. This was achieved despite macroeconomic headwinds, demonstrating the company's operational efficiency and cost management.
3. Flexibility in Income Statement: The company has built flexibility into its income statement, enabling it to continue investing in key areas like digital and data analytics while delivering bottom-line growth. This strategy has allowed Colgate-Palmolive to mitigate the impact of foreign exchange rates and other macroeconomic risks.

Future Outlook

For the full year 2025, Colgate-Palmolive expects net sales to be roughly flat, including a mid-single-digit negative impact from foreign exchange. The company expects organic sales growth to be within its long-term targeted range of 3% to 5%, including the impact of the planned exit from private label pet nutrition over the course of 2025. On a GAAP basis, the company expects gross profit margin expansion with advertising investment flat to up slightly on both a dollar basis and as a percent to sales, and mid-single-digit earnings-per-share growth. On a non-GAAP (base business) basis, the company expects gross profit margin expansion with advertising investment flat to up slightly, and low-to-mid-single-digit earnings-per-share growth.

In conclusion, Colgate-Palmolive's Q4 2024 earnings call demonstrated the company's ability to deliver strong financial performance amidst macroeconomic headwinds. The company's strategic initiatives, including investment in brand health and innovation, operating leverage, and flexibility in its income statement, have contributed to its success. Looking ahead, Colgate-Palmolive is well-positioned to deliver consistent, compounded earnings per share growth in 2025 and beyond.