ME conflict: Colgate-Palmolive warns of USD300m cost hit

WASHINGTON: Colgate-Palmolive on Friday said it expects about USD300 million in additional raw material and logistics expenses for the year, joining a host of global companies flagging significant cost pressures from the Middle East conflict.

Shares rose 3 percent in early trading after the company beat first-quarter sales and profit expectations.

Colgate joins rivals including Unilever and Procter & Gamble in warning of mounting cost pressures from the US-Iran conflict, which has disrupted supply chains and pushed up commodity prices, making everyday products dearer.

The maker of Colgate toothpastes and Palmolive soaps said rising raw material, packaging and logistics costs could also weigh on global consumer spending.

Colgate said its cost-savings program, aimed at simplifying operations by 2028, is expected to generate $200 million-USD300 million in savings, with most benefits from 2027. It is also set to continue to raise prices, mainly through new premium products, to protect margins.

“While (Colgate) continued to point to their full set of ‘tools’ to deal with the costs, they also sounded very cautious about raising prices at a time when consumers are highly value-conscious,” TD Cowen analysts said in a note.

The company reported quarterly net sales of $5.32 billion, exceeding average analysts’ expectations of USD5.22 billion according to data compiled by LSEG. Adjusted earnings per share of 97 cents surpassed estimates by 2 cents.

Demand for Colgate’s oral, personal care and household products remained steady despite price hikes, especially in its international and emerging markets segments. This has helped counter weak sales in the US as budget-conscious shoppers look to save by choosing lower-priced alternatives.

Volume at its North America segment fell 3.2 percent in the quarter, but overall volumes inched up 1.1 percent. Overall pricing increased 2.2 percent.

Colgate reaffirmed its annual sales and profit forecasts but warned that volatile macroeconomic conditions and slower category growth are likely to persist into 2026.