--- title: "Colgate-Palmolive Q2 2026 Earnings: Gross Margin Expands as GAAP EPS Falls" type: "News" locale: "en" url: "https://longbridge.com/en/news/294918242.md" description: "Colgate-Palmolive reported Q2 2026 net sales of $5.36 billion, up 4.9% YoY, with gross margin expanding to 61.5%. However, GAAP diluted EPS fell 5% to $0.86 due to higher operating expenses, while Base Business diluted EPS rose 8% to $0.99. Latin America drove growth, whereas North America declined. The company maintained its full-year guidance, improving outlooks for gross margin and Base Business EPS." datetime: "2026-08-05T06:12:41.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294918242.md) - [en](https://longbridge.com/en/news/294918242.md) - [zh-HK](https://longbridge.com/zh-HK/news/294918242.md) --- # Colgate-Palmolive Q2 2026 Earnings: Gross Margin Expands as GAAP EPS Falls Colgate-Palmolive (NYSE: CL) reported Q2 2026 net sales of $5.36 billion, up 4.9% year over year, while GAAP diluted EPS fell 5% to $0.86 from $0.91. Organic sales rose 2.4%, and gross margin expanded, but higher reported operating expenses pulled down GAAP profit; on a Base Business basis, diluted EPS increased 8% to $0.99. ## Core earnings data Reported sales growth included a 2.4% benefit from foreign exchange. Organic growth consisted of 0.8% organic volume growth and 1.6% pricing, with the exit from private-label pet food reducing organic sales growth by 0.4 percentage points. Gross profit increased and gross margin expanded by 140 basis points. However, GAAP operating profit and net income declined, creating a clear gap between reported results and the company’s non-GAAP Base Business performance. Metric Q2 2026 Q2 2025 Year-over-year change Net sales $5.361 billion $5.110 billion +4.9% Organic sales growth 2.4% — — Gross profit $3.296 billion $3.069 billion Approximately +7% Gross margin 61.5% 60.1% +140 bps GAAP operating profit $1.016 billion $1.080 billion \-6% GAAP operating margin 19.0% 21.1% \-210 bps Net income attributable to Colgate-Palmolive $693 million $743 million Approximately -7% GAAP diluted EPS $0.86 $0.91 \-5% Base Business diluted EPS $0.99 $0.92 +8% Base Business results exclude applicable costs related to the Strategic Growth and Productivity Program, the ERISA litigation matter and acquisitions. They should therefore be considered separately from GAAP results. ## Business and divisional performance Four of Colgate-Palmolive’s five divisions generated organic sales growth. Latin America was the largest growth contributor, while North America was the only division reporting declines in both net and organic sales. Division Share of company sales Net sales growth Organic sales growth Operating profit growth North America 17% \-3.0% \-3.0% +3% Latin America 26% +13.7% +5.3% +14% Europe, Middle East & Africa 21% +3.5% +2.0% +9% Asia Pacific 14% +4.9% +5.2% +3% Hill’s Pet Nutrition 22% +3.4% +2.1% +2% Latin America combined 2.6% organic volume growth with 2.8% pricing, while foreign exchange added 8.4% to reported sales. Asia Pacific’s 5.2% organic growth was led by 4.1% higher volume. North America’s organic volume declined 3.9%, only partly offset by 0.9% pricing. At Hill’s Pet Nutrition, pricing increased 3.9%, but organic volume fell 1.8%; the acquisition of Prime100 added 0.6 percentage points to Hill’s reported volume. Lower private-label pet food sales also reduced companywide organic growth. Colgate maintained year-to-date global market shares of 41.3% in toothpaste and 32.7% in manual toothbrushes. ## Gross margin expanded, but reported expenses pulled GAAP profit lower Colgate-Palmolive converted sales growth into a higher gross profit, with gross margin reaching 61.5%. That improvement did not flow through to GAAP operating profit because selling, general and administrative expenses rose to $2.13 billion from $1.96 billion, while other expense increased to $150 million from $26 million. Advertising was an important part of the spending increase, rising approximately 15% to $777 million. As a result, GAAP operating margin fell 210 basis points even though gross margin improved by 140 basis points. The underlying Base Business showed a different trend: operating profit increased 5% to $1.145 billion, operating margin edged up 10 basis points to 21.4%, and diluted EPS rose 8%. The contrast indicates that excluded program, litigation and acquisition-related items had a material effect on reported profitability during the quarter, although the release did not provide a complete item-by-item bridge in the supplied data. ## Cash flow and balance sheet Cash-flow figures were reported for the first six months of 2026 rather than for Q2 alone. Operating cash flow and free cash flow before dividends both improved despite lower six-month net income. Metric First six months of 2026 First six months of 2025 Year-over-year change Operating cash flow $1.742 billion $1.484 billion Approximately +17% Capital expenditures $266 million $232 million Approximately +15% Free cash flow before dividends $1.476 billion $1.252 billion Approximately +18% Cash and equivalents at June 30 $1.370 billion $1.215 billion Approximately +13% Total debt at June 30 $7.857 billion $8.758 billion Approximately -10% Debt less cash, equivalents and marketable securities $6.404 billion $7.346 billion Approximately -13% Accounts payable and other working capital provided $124 million of cash, compared with a $248 million use a year earlier. This helped offset a combined $384 million use of cash from receivables and inventories. During the six-month period, the company also paid $879 million in dividends and spent $597 million on treasury-share purchases. ## Full-year 2026 guidance Colgate-Palmolive maintained its sales and GAAP EPS outlook while improving its expectations for gross margin and Base Business EPS. The guidance is based on current spot exchange rates. Metric Latest 2026 guidance Previous guidance Change Net sales growth 2% to 6%, including a low-single-digit positive FX impact 2% to 6% Maintained Organic sales growth 1% to 4%, including the private-label pet food exit 1% to 4% Maintained GAAP gross margin Roughly flat Down Improved GAAP diluted EPS Double-digit growth Double-digit growth Maintained Base Business gross margin Roughly flat Down Improved Base Business diluted EPS Mid-single-digit growth Low- to mid-single-digit growth Raised Advertising Higher in dollars and as a percentage of sales Same Maintained The improved margin and Base Business EPS outlook suggests greater confidence in underlying profitability, even as management continues to fund higher advertising and faces volatile market conditions. ## Management’s perspective Chairman, President and CEO Noel Wallace said worldwide organic volume growth improved sequentially for a third consecutive quarter. Management intends to maintain elevated investment in the second half of 2026, focusing on premium, science-led innovation and omnichannel demand generation under its 2030 strategy. Management also expects market volatility to continue through the remainder of the year. Its full-year outlook therefore balances continued brand investment with an improved gross-margin expectation. ## Recent insider transactions The supplied Yahoo Finance summary showed 501,179 shares categorized as insider purchases across 28 transactions during the prior six months, compared with 275,897 shares sold across nine transactions. The latest individual records were primarily stock awards; the only sale among the ten most recent entries was a $203,412 transaction by officer Gregory Malcolm. Date Insider Role Transaction Reported price Reported value Jul. 1, 2026 Brian Newman Director Stock award $89.45 $18,695 Jul. 1, 2026 Lorrie M. Norrington Director Stock award $89.45 $26,209 Jul. 1, 2026 John P. Bilbrey Director Stock award $89.45 $23,704 May 15, 2026 Gregory Malcolm Officer Sale $88.44 $203,412 May 11, 2026 Kimberly A. Nelson Director Stock award $0.00 $0 May 11, 2026 Christopher S. Boerner Director Stock award $0.00 $0 May 11, 2026 Brian Newman Director Stock award $0.00 $0 May 11, 2026 C. Martin Harris Director Stock award $0.00 $0 May 11, 2026 Lorrie M. Norrington Director Stock award $0.00 $0 May 11, 2026 Lisa Marie Edwards Director Stock award $0.00 $0 These awards and the single reported sale do not, by themselves, establish insiders’ views regarding the company’s outlook. ## Risks investors need to watch - **Modest underlying growth:** Organic sales increased 2.4%, including only 0.8% organic volume growth. The private-label pet food exit reduced the organic growth rate by 0.4 percentage points. - **Weakness in North America and Hill’s volumes:** North American organic sales fell 3.0%, while Hill’s organic volume declined 1.8%. Continued weakness could place more reliance on pricing and faster-growing international divisions. - **Expense pressure on GAAP profitability:** Higher SG&A, advertising and other expenses outweighed gross-margin expansion, reducing GAAP operating margin and EPS. - **Foreign-exchange and market volatility:** Currency added 2.4% to reported Q2 sales, and the full-year outlook is based on current spot rates. Changes in exchange rates could alter reported growth. - **Full-year GAAP EPS execution:** Q2 GAAP EPS declined 5%, while the company retained guidance for double-digit full-year growth, making the trajectory of reported costs and excluded items important over the second half. ## Summary Colgate-Palmolive’s second quarter combined higher reported and organic sales with broader international growth and a meaningful increase in gross margin. However, increased advertising and other reported expenses caused GAAP operating profit and EPS to decline, even as Base Business earnings improved. The main points to monitor are North American and Hill’s volumes, the effect of continued marketing investment, and whether better underlying margins translate into the company’s raised Base Business EPS outlook and maintained GAAP guidance. Find out more ### Related Stocks - [CL.US](https://longbridge.com/en/quote/CL.US.md) ## Related News & Research - [Danica Pension Livsforsikringsaktieselskab Sells 100,763 Shares of Colgate-Palmolive Company $CL](https://longbridge.com/en/news/296323247.md) - [Colgate-Palmolive announces Q3 2026 distribution of R$ 0.26 per unit](https://longbridge.com/en/news/296100448.md) - [Cel-Sci GAAP EPS of -$0.47](https://longbridge.com/en/news/296114461.md) - [Lufax Holding GAAP EPADS of -$0.04](https://longbridge.com/en/news/296274582.md) - [XP Non GAAP EPS of R$2.67, revenue of R$4.88B](https://longbridge.com/en/news/296141910.md)