Colgate-Palmolive raised its full-year adjusted earnings outlook after reporting stronger second-quarter profitability, as wider gross margins, favorable foreign exchange movements and growth across most of its international operations offset continued weakness in North America.

The New York-based consumer-products group said net sales increased 4.9% from a year earlier to $5.36 billion in the three months ended June 30. Organic sales, which exclude currency movements, acquisitions and divestitures, rose 2.4%. The organic result included a 0.4-percentage-point negative effect from lower private-label pet food sales as the company completed its exit from that business.

Adjusted, or “Base Business,” diluted earnings increased 8% to $0.99 per share from $0.92. The result exceeded the $0.95 consensus estimate compiled by FactSet and reported by The Wall Street Journal. Revenue was broadly in line with market expectations, placing the emphasis on the company’s margin performance and improved profit guidance rather than a material sales surprise.

Colgate’s GAAP results showed a different comparison because of restructuring and implementation expenses. Diluted GAAP earnings fell 5% to $0.86 per share, while net income attributable to the company declined to $693 million from $743 million. GAAP operating profit decreased 6% to $1.02 billion, and the reported operating margin contracted by 210 basis points to 19.0%.

The gap between reported and adjusted profitability largely reflected $129 million of second-quarter charges connected with Colgate’s Strategic Growth and Productivity Program. Excluding that program and other designated items, operating profit rose 5% to $1.15 billion. Adjusted operating margin increased by 10 basis points to 21.4%, despite a substantial increase in commercial spending.

The central feature of the quarter was the improvement in gross profitability. Both GAAP and adjusted gross margin increased to 61.5% from 60.1% a year earlier. Gross profit rose to approximately $3.30 billion from $3.07 billion, giving Colgate additional capacity to finance advertising, innovation and demand-generation programs without sacrificing underlying earnings growth.

The company increased advertising expenditure by 15% to $777 million from $678 million. Its earnings presentation said advertising reached a record 14.5% of quarterly sales. Management plans to maintain elevated investment during the second half as it focuses on premium products, science-based innovation and coordinated demand generation across physical stores, e-commerce platforms and other digital channels.

Chairman, President and Chief Executive Officer Noel Wallace said sales and organic sales grew in three of Colgate’s four core product categories and in four of its five reporting divisions. Worldwide organic volume growth improved sequentially for a third consecutive quarter, although the geographic data showed that the recovery remained uneven.

For the total company, organic volume increased 0.8%, while pricing contributed 1.6% to organic sales growth. Foreign exchange added 2.4 percentage points to reported sales. The combination produced reported growth that was substantially stronger than the underlying organic rate, underscoring the importance of currency movements to the headline revenue result.

Colgate maintained its full-year expectation for net sales to increase between 2% and 6%, including a low-single-digit positive contribution from foreign exchange at current spot rates. It also retained its forecast for organic sales growth of 1% to 4%, including the effect of leaving the private-label pet food business.

The company nevertheless raised its adjusted profit expectations. It now forecasts mid-single-digit growth in Base Business earnings per share, compared with its previous expectation for low- to mid-single-digit growth. Management also expects adjusted gross margin to be roughly flat for the full year, an improvement from its earlier forecast for a decline.

On a GAAP basis, Colgate similarly upgraded its gross-margin outlook to roughly flat from down. It continued to project double-digit GAAP earnings-per-share growth and said advertising should increase both in absolute dollars and as a percentage of net sales. The unchanged sales guidance combined with higher adjusted earnings guidance suggests that management expects improved profitability and operating execution to contribute more to the full-year result than an acceleration in revenue.

Latin America remained Colgate’s largest and fastest-growing geographic division during the quarter. The region represented 26% of company sales and reported a 13.7% increase in net sales. Organic sales rose 5.3%, comprising 2.6% volume growth and 2.8% pricing, while favorable foreign exchange contributed 8.4 percentage points to reported growth.

Latin American operating profit increased 14% to $418 million, giving the division an operating margin of 30.4%. The result reinforced the region’s role as an important source of growth and profitability, although the large currency contribution means reported sales growth was considerably higher than the underlying operational increase.

Asia Pacific also delivered a strong organic performance. Net sales increased 4.9%, while organic sales rose 5.2%. Organic volume advanced 4.1%, and pricing added 1.1%. Foreign exchange reduced reported growth by 0.3 percentage point. Operating profit increased 3% to $209 million, although operating margin declined by 40 basis points to 26.7%.

In Europe, the Middle East and Africa, net sales rose 3.5% and organic sales increased 2.0%. Volume growth of 3.2% more than offset a 1.2% reduction from pricing, coupons and trade incentives. Currency movements added 1.6 percentage points. Operating profit increased 9% to $263 million, and the regional operating margin expanded by 120 basis points to 23.4%.

North America was the clear weak point. The division, which accounted for 17% of total sales, recorded a 3.0% decline in both reported and organic sales. Organic volume fell 3.9%, while pricing provided a 0.9% benefit. Sales were $891 million, down from $919 million a year earlier.

Despite the sales decline, North American operating profit increased 3% to $192 million, and operating margin expanded by 120 basis points to 21.6%. That divergence between revenue and profit indicates that the business preserved profitability even as volumes weakened, an important consideration as consumer-products companies contend with cautious household spending and retailer pressure on pricing.

Hill’s Pet Nutrition generated net sales growth of 3.4% and organic growth of 2.1%. Pricing contributed 3.9%, while organic volume fell 1.8%. The volume comparison included the impact of lower private-label pet food sales following Colgate’s withdrawal from that nonstrategic activity. Foreign exchange added 0.6 percentage point to reported growth.

Hill’s operating profit rose 2% to $269 million, while operating margin decreased by 40 basis points to 22.5%. The Prime100 pet food acquisition added 0.6 percentage point to Hill’s reported volume and 0.1 percentage point to total-company reported volume during the quarter.

Across Colgate’s core oral, personal and home-care operations, quarterly sales increased to $4.17 billion from $3.95 billion. Hill’s sales rose to $1.20 billion from $1.16 billion. Operating profit for oral, personal and home care advanced to $1.08 billion from $997 million, while Hill’s operating profit increased to $269 million from $264 million.

Colgate said it retained a 41.3% year-to-date share of the global toothpaste market and a 32.7% share of the worldwide manual toothbrush market. Its earnings presentation indicated that global toothpaste value share increased by 20 basis points. Management uses those positions to support investment in higher-value oral-care products and science-led claims intended to differentiate the company from lower-priced competitors.

The company’s broader 2030 strategy calls for greater emphasis on premium innovation, data, analytics, artificial intelligence and omnichannel execution. Its productivity program includes initiatives to optimize the global supply chain and align the organizational structure with those priorities. The program is producing sizable near-term accounting charges, but management presents it as a mechanism for funding future growth and improving the allocation of resources.

Colgate’s cash generation strengthened in the first half. Net cash provided by operations increased to $1.74 billion from $1.48 billion. After $266 million of capital expenditure, free cash flow before dividends reached $1.48 billion, up 18% from $1.25 billion in the first six months of 2025.

The company paid $879 million in dividends and spent $597 million on treasury-share purchases during the half. It ended June with $1.37 billion in cash and cash equivalents and total debt of $7.86 billion. Debt less cash, cash equivalents and marketable securities stood at approximately $6.40 billion, down from $7.35 billion a year earlier.

First-half net sales increased to $10.69 billion from $10.02 billion. Gross margin for the six-month period rose to 61.0% from 60.4%. However, reported operating profit declined to $1.98 billion from $2.16 billion because corporate costs included $300 million of charges related to the strategic growth and productivity program.

Management cautioned that market conditions are likely to remain volatile through the rest of 2026. Risks cited in its disclosures include changing consumer demand, foreign exchange, tariffs, global trade developments, commodity and packaging costs, geopolitical tensions and the execution of restructuring measures. The maintained organic sales range reflects that uncertainty even as the profit outlook improves.

The second-quarter performance leaves Colgate with a clearer earnings path but several operational tests. It must sustain gross-margin gains while funding higher advertising, stabilize North American volumes and manage the transition away from private-label pet food. Currency was a meaningful benefit in the reported quarter, but exchange rates can also reverse and remain outside management’s control.

For investors, the raised adjusted earnings forecast is therefore less a signal of sharply stronger consumer demand than an indication that Colgate’s margin structure, geographic mix and productivity initiatives are performing better than previously expected. The company’s ability to convert those advantages into durable organic growth will determine whether the second-quarter improvement can extend beyond 2026.