Colgate-Palmolive shares fall ahead of market as company says tough cost environment continues to weigh on earnings


Colgate-Palmolive Co. shares CL,
slid 4% premarket on Friday after first-quarter profits fell and the company warned of continued pressure from inflation and geopolitical concerns. The consumer goods giant posted net income of $559 million, or 66 cents per share, for the quarter, compared with $681 million, or 80 cents per share, a year earlier. Adjusted earnings per share were 74 cents, in line with the FactSet consensus. Sales rose slightly to $4.399 billion from $4.344 billion, beating the FactSet consensus of $4.398 billion. The company said its gross profit margin and core gross profit margin fell 220 basis points. “While our revenue growth has continued, our profitability has been impacted by significant increases in raw material and logistics costs around the world, and we expect the cost environment difficult will continue over the next few quarters,” chief executive Noel Wallace said in a statement. “We remain strongly focused on managing our revenue growth, including incremental pricing and funding for growth and other productivity initiatives.” Wallace also cited uncertainty resulting from Russia’s invasion of Ukraine, the COVID pandemic, supply chain disruptions, and volatility in consumer and currency demand as pressures on the business. The company now expects full-year sales growth to be in the upper end of its guidance of 1% to 4%. He expects lower gross profit margins, higher ad spend and double-digit EPS growth. Adjusted EPS, however, is expected to be down in the mid-figures. Stocks are down about 5% since the start of the year, while the S&P 500 SPX,
fell 10%.

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