Colgate cuts sales, profit view as tariffs add $200-million cost

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Colgate-Palmolive Co. cut its growth and profit outlooks as tariffs are expected to add US$200 million in costs this year.

Organic sales are now expected to grow 2% to 4%, the toothpaste-maker said in a statement. Its previous long-term growth target was 3% to 5%. Analysts expected 3.4%.

“As we look ahead, uncertainty and volatility in global markets, including the impact of tariffs, remain challenging,” Chief Executive Officer Noel Wallace said.

Numerous corporate chiefs have warned this earnings season that tariffs will result in higher costs for everyday items, with companies passing on increased input expenses to shoppers. Higher costs could further dampen consumer demand. For Colgate, tariffs will drive raw and packaging materials costs higher as commodity prices increase, according to its presentation.

The gross margin, excluding some items, is expected to be little changed from the 60.6% Colgate reported last year. Previously, the company had seen it expanding, while advertising spending was steady as a percentage of sales. Analyst had forecast a minor expansion to almost 61%.

Those changes will result in low-single digit earnings growth, whereas it previously projected low- to mid-single digit expansion.

First-quarter organic sales growth fell short of analyst expectations as its North America business fell more than expected. Analysts has forecast the Asia Pacific division would grow 2.6%. It fell 3.1%.

Shares edged lower in premarket trading. The stock was up 2% this year through Thursday’s close.