10-Q 1 cl-20240331.htm 10-Q cl-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM 10-Q
________________________
 (Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from________ to________ .
Commission File Number: 1-644
COLGATE-PALMOLIVE COMPANY
(Exact name of registrant as specified in its charter)
Delaware13-1815595
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
 
300 Park Avenue
New York,New York10022
(Address of principal executive offices)(Zip Code)
(212) 310-2000
(Registrant’s telephone number, including area code)
NO CHANGES
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $1.00 par valueCLNew York Stock Exchange
0.500% Notes due 2026CL26New York Stock Exchange
0.300% Notes due 2029CL29New York Stock Exchange
1.375% Notes due 2034CL34New York Stock Exchange
0.875% Notes due 2039CL39New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
ClassShares OutstandingDate
Common stock, $1.00 par value820,441,114March 31, 2024




PART I.    FINANCIAL INFORMATION


COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Income
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
 
 Three Months Ended
March 31,
20242023
Net sales$5,065 $4,770 
Cost of sales2,026 2,058 
Gross profit3,039 2,712 
Selling, general and administrative expenses1,916 1,758 
Other (income) expense, net76 45 
Operating profit1,047 909 
Non-service related postretirement costs22 294 
Interest (income) expense, net58 54 
Income before income taxes967 561 
Provision for income taxes238 147 
Net income including noncontrolling interests729 414 
Less: Net income attributable to noncontrolling interests46 42 
Net income attributable to Colgate-Palmolive Company$683 $372 
Earnings per common share, basic$0.83 $0.45 
Earnings per common share, diluted$0.83 $0.45 


See Notes to Condensed Consolidated Financial Statements.

2



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Comprehensive Income
(Dollars in Millions)
(Unaudited)

Three Months Ended
March 31,
20242023
Net income including noncontrolling interests$729 $414 
Other comprehensive income (loss), net of tax:
Cumulative translation adjustments(94)43 
Retirement plans and other retiree benefit adjustments4 7 
    Gains (losses) on cash flow hedges1 6 
Total Other comprehensive income (loss), net of tax(89)56 
Total Comprehensive income including noncontrolling interests640 470 
Less: Net income attributable to noncontrolling interests46 42 
Less: Cumulative translation adjustments attributable to noncontrolling interests(7)(16)
Total Comprehensive income attributable to noncontrolling interests39 26 
Total Comprehensive income attributable to Colgate-Palmolive Company$601 $444 
See Notes to Condensed Consolidated Financial Statements.

3



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Balance Sheets
(Dollars in Millions)
(Unaudited)
March 31,
2024
December 31,
2023
Assets
Current Assets
Cash and cash equivalents$1,079 $966 
Receivables (net of allowances of $85 and $80, respectively)
1,813 1,586 
Inventories1,914 1,934 
Other current assets834 793 
Total current assets5,640 5,279 
Property, plant and equipment:  
Cost10,261 10,286 
Less: Accumulated depreciation(5,764)(5,704)
 4,497 4,582 
Goodwill3,341 3,410 
Other intangible assets, net1,837 1,887 
Deferred income taxes222 214 
Other assets1,034 1,021 
Total assets$16,571 $16,393 
Liabilities and Shareholders’ Equity  
Current Liabilities  
Notes and loans payable$518 $310 
Current portion of long-term debt20 20 
Accounts payable1,646 1,698 
Accrued income taxes410 336 
Other accruals2,720 2,377 
Total current liabilities5,314 4,741 
Long-term debt8,151 8,219 
Deferred income taxes392 361 
Other liabilities2,097 2,115 
Total liabilities15,954 15,436 
Shareholders’ Equity  
Common stock, $1 par value (2,000,000,000 shares authorized, 1,465,706,360 shares issued)
1,466 1,466 
Additional paid-in capital3,962 3,808 
Retained earnings25,164 25,289 
Accumulated other comprehensive income (loss)(4,019)(3,937)
Treasury stock, at cost(26,343)(26,017)
Total Colgate-Palmolive Company shareholders’ equity230 609 
Noncontrolling interests387 348 
Total equity617 957 
Total liabilities and equity$16,571 $16,393 
See Notes to Condensed Consolidated Financial Statements.

4



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Cash Flows
(Dollars in Millions)
(Unaudited)
Three Months Ended
 March 31,
 20242023
Operating Activities  
Net income including noncontrolling interests$729 $414 
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operations:  
Depreciation and amortization150 128 
ERISA litigation matter 267 
Restructuring and termination benefits, net of cash30 (7)
Stock-based compensation expense19 14 
Deferred income taxes12 (20)
Cash effects of changes in:
Receivables(252)(57)
Inventories11 (24)
Accounts payable and other accruals8 (2)
Other non-current assets and liabilities(26)22 
Net cash provided by (used in) operations681 735 
Investing Activities  
Capital expenditures(126)(163)
Purchases of marketable securities and investments(139)(112)
Proceeds from sale of marketable securities and investments78 14 
Other investing activities(6)(3)
Net cash provided by (used in) investing activities(193)(264)
Financing Activities  
Short-term borrowing (repayment) less than 90 days, net728 (927)
Principal payments of debt(500)(500)
Proceeds from issuance of debt 1 1,495 
Dividends paid(394)(390)
Purchases of treasury shares(509)(180)
Proceeds from exercise of stock options336 122 
Other financing activities(23)5 
Net cash provided by (used in) financing activities(361)(375)
Effect of exchange rate changes on Cash and cash equivalents(14)(4)
Net increase (decrease) in Cash and cash equivalents113 92 
Cash and cash equivalents at beginning of the period966 775 
Cash and cash equivalents at end of the period$1,079 $867 
Supplemental Cash Flow Information  
Income taxes paid$150 $171 
Interest paid$123 $94 
See Notes to Condensed Consolidated Financial Statements.

5



COLGATE-PALMOLIVE COMPANY
Condensed Consolidated Statements of Changes in Shareholders Equity
(Dollars in Millions)
(Unaudited)

Three Months Ended March 31, 2024
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2023$1,466 $3,808 $ $(26,017)$25,289 $(3,937)$348 
Net income    683  46 
Other comprehensive income (loss), net of tax
     (82)(7)
Dividends ($0.98 per share)*
    (808)  
Stock-based compensation expense
 19      
Shares issued for stock options
 154  163    
Shares issued for restricted stock units
 (21) 21    
Treasury stock acquired
   (509)   
Other 2  (1)   
Balance, March 31, 2024
$1,466 $3,962 $ $(26,343)$25,164 $(4,019)$387 
Three Months Ended March 31, 2023
Colgate-Palmolive Company Shareholders’ Equity
Common
Stock
Additional
Paid-in
Capital
Unearned
Compensation
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)(1)
Noncontrolling
Interests
Balance, December 31, 2022$1,466 $3,546 $(1)$(25,128)$24,573 $(4,055)$405 
Net income— — — — 372 — 42 
Other comprehensive income (loss), net of tax
— — — — — 72 (16)
Dividends ($0.95 per share)*
— — — — (792)— — 
Stock-based compensation expense
— 14 — — — — — 
Shares issued for stock options
— 54 — 50 — — — 
Shares issued for restricted stock units
— (13)— 13 — — — 
Treasury stock acquired
— — — (180)— — — 
Other— 2 1 — — — — 
Balance, March 31, 2023
$1,466 $3,603 $ $(25,245)$24,153 $(3,983)$431 
(1) Accumulated other comprehensive income (loss) includes cumulative translation losses of $3,438 at March 31, 2024 ($3,431 at March 31, 2023) and $3,351 at December 31, 2023 ($3,491 at December 31, 2022), respectively, and unrecognized retirement plan and other retiree benefits costs of $643 at March 31, 2024 ($624 at March 31, 2023) and $647 at December 31, 2023 ($631 at December 31, 2022), respectively.
* Two dividends were declared in the first quarter of each of 2024 and 2023.






See Notes to Condensed Consolidated Financial Statements.

6


COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)

1.    Basis of Presentation

The Condensed Consolidated Financial Statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair statement of the results for interim periods. Results of operations for interim periods may not be representative of results to be expected for a full year. Colgate-Palmolive Company (together with its subsidiaries, the “Company” or “Colgate”) reclassifies certain prior year amounts, as applicable, to conform to the current year presentation.

For a complete set of financial statement notes, including the Company’s significant accounting policies, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”).

2.     Use of Estimates

Provisions for certain expenses, including income taxes, advertising and consumer promotion, are based on full year assumptions and are included in the accompanying Condensed Consolidated Financial Statements in proportion with estimated annual tax rates, the passage of time or estimated annual sales, as applicable.

3.    Recent Accounting Pronouncements and Disclosure Rules

In March 2024, the SEC finalized rules intended to enhance and standardize climate-related disclosures in registrants' registration statements and Annual Reports on Form 10-K. The new rules will require climate-related disclosures, including as they relate to governance, strategy, risk management, targets and goals and greenhouse gas emissions. In addition, the rules would require certain climate-related disclosure as it relates to severe weather events and other natural conditions and carbon offsets and renewable energy credits. While the SEC voluntarily stayed the rules due to pending judicial review, the rules in their current form would be effective for the Company beginning in fiscal year 2025. The Company is currently assessing the impact of these rules on the Company’s Consolidated Financial Statements.

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU improves the transparency of income tax disclosure by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. This guidance is effective for the Company for fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of this guidance on its income tax disclosures.

In December 2023, the FASB issued ASU No. 2023-08, “Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets.” This ASU improves the accounting for certain crypto assets by requiring companies to measure them at fair value for each reporting period with changes in fair value recognized in net income. This guidance is effective for the Company for fiscal years beginning after December 15, 2024 and is not expected to have an impact on the Company’s Consolidated Financial Statements.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU modified the disclosure and presentation requirements primarily through enhanced disclosures of significant segment expenses and other segment items. This guidance is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of this guidance on its disclosures.

In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements-Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. This guidance is effective for the Company no later than June 30, 2027 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.


7

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


In August 2023, the FASB issued ASU No. 2023-05, “Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.” This ASU requires a joint venture to initially measure all contributions received upon its formation at fair value. This guidance is applicable to joint ventures with a formation date on or after January 1, 2025 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In March 2023, the FASB issued ASU No. 2023-01, “Leases (Topic 842): Common Control Arrangements.” This ASU clarified the accounting for leasehold improvements for leases under common control. The guidance was effective for the Company beginning on January 1, 2024 and did not have a material impact on the Company’s Consolidated Financial Statements.

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires a buyer that uses supplier finance programs to make annual disclosures about the programs’ key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated roll-forward information. The Company adopted the guidance beginning on January 1, 2023, and with respect to the roll-forward information disclosure, beginning on January 1, 2024. See Note 12, Supplier Finance Program for additional information.

4.    Restructuring and Related Implementation Charges
    
On January 27, 2022, the Company’s Board of Directors (the “Board”) approved a targeted productivity program (the “2022 Global Productivity Initiative”). The program is intended to reallocate resources towards the Company’s strategic priorities and faster growth businesses, drive efficiencies in the Company’s operations and streamline the Company’s supply chain to reduce structural costs.

Implementation of the 2022 Global Productivity Initiative, which is expected to be substantially completed by mid-year 2024, is estimated to result in cumulative pretax charges, once all phases are approved and implemented, in the range of $200 to $240 ($170 to $200 aftertax), which is currently estimated to be comprised of the following: employee-related costs, including severance, pension and other termination benefits (80%); asset-related costs, primarily accelerated depreciation and asset write-downs (10%); and other charges (10%), which include contract termination costs, consisting primarily of implementation-related charges resulting directly from exit activities and the implementation of new strategies. It is estimated that approximately 80% to 90% of the charges will result in cash expenditures.

It is expected that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (5%), Latin America (10%), Europe (45%), Asia Pacific (5%), Africa/Eurasia (10%), Hill’s Pet Nutrition (10%) and Corporate (15%).

For the three months ended March 31, 2024, charges resulting from the 2022 Global Productivity Initiative were $36 pretax ($30 aftertax). For the three months ended March 31, 2023, charges resulting from the 2022 Global Productivity Initiative were $6 pretax ($5 aftertax).

Three Months Ended March 31,
20242023
Selling, general and administrative expenses$1 $ 
Other (income) expense, net35 5 
Non-service related postretirement costs 1 
Total 2022 Global Productivity Initiative charges, pretax$36 $6 
Total 2022 Global Productivity Initiative charges, aftertax$30 $5 

Restructuring and related implementation charges were recorded in the Corporate segment as these initiatives are predominantly centrally directed and controlled and are not included in internal measures of segment operating performance.



8

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



Total charges incurred for the 2022 Global Productivity Initiative relate to initiatives undertaken by the following reportable operating segments and Corporate:

Three Months Ended March 31,Program-to-date
Accumulated Charges
 20242023
North America %7 %9 %
Latin America  %11 %11 %
Europe 85 %15 %32 %
Asia Pacific %6 %9 %
Africa/Eurasia1 %13 %8 %
Hill's Pet Nutrition14 %16 %14 %
Corporate %32 %17 %
Total100 %100 %100 %

Since the inception of the 2022 Global Productivity Initiative, the Company has incurred cumulative pretax charges of $178 ($142 aftertax) in connection with the implementation of various projects as follows:
Cumulative Charges
 as of March 31, 2024
Employee-Related Costs$160 
Asset Impairments1 
Other17 
Total$178 

The following table summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals:


Three Months Ended March 31, 2024
 Employee-Related
Costs 
Incremental
Depreciation 
Asset
Impairments
OtherTotal
Balance at December 31, 2023
$10 $ $ $1 $11 
Charges 34   2 36 
Cash Payments (5)  (1)(6)
Charges against assets     
Foreign exchange     
Balance at March 31, 2024
$39 $ $ $2 $41 

Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, written severance policies, local statutory requirements and, in certain cases, voluntary termination arrangements. Employee-Related Costs also include pension enhancements which are reflected as Charges against assets within Employee-Related Costs in the preceding table as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension liabilities. For the three months ended March 31, 2024, there were no pension enhancements included in Charges against assets within Employee-Related Costs.



9

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


5.    Inventories

Inventories by major class were as follows:
March 31,
2024
December 31,
2023
Raw materials and supplies$619 $606 
Work-in-process43 46 
Finished goods1,396 1,411 
       Total Inventories, net$2,058 $2,063 
            Non-current inventory, net$(144)$(129)
              Current Inventories, net$1,914 $1,934 
6.    Earnings Per Share

For the three months ended March 31, 2024 and 2023, earnings per share were as follows:
 Three Months Ended
 March 31, 2024March 31, 2023
 Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Net income attributable to Colgate-Palmolive CompanyShares
(millions)
Per
Share
Basic EPS$683 822.8 $0.83 $372 831.4 $0.45 
Stock options and
restricted stock units
3.1   1.6  
Diluted EPS$683 825.9 $0.83 $372 833.0 $0.45 

For the three months ended March 31, 2024 and 2023, the average number of stock options and restricted stock units that were anti-dilutive and not included in diluted earnings per share calculations were 986,909 and 13,671,978, respectively.






















10

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



7.    Other Comprehensive Income (Loss)

Additions to and reclassifications out of Accumulated other comprehensive income (loss) attributable to the Company for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,
 20242023
Cumulative translation adjustments, pre-tax$(71)$49 
Tax amounts(16)10 
Cumulative translation adjustments, net of tax (87)59 
Pension and other benefits:
   Net actuarial gain (loss), prior service costs and settlements
   during the period
(1)1 
Amortization of net actuarial loss, transition and prior service costs(1)
8 8 
Retirement Plan and other retiree benefit adjustments, pre-tax7 9 
Tax amounts(3)(2)
Retirement Plan and other retiree benefit adjustments, net of tax 4 7 
Cash flow hedges:
   Unrealized gains (losses) on cash flow hedges 17 
Reclassification of (gains) losses into net earnings on cash flow hedges(2)
1 (9)
Gains (losses) on cash flow hedges, pre-tax1 8 
Tax amounts (2)
Gains (losses) on cash flow hedges, net of tax1 6 
Total Other comprehensive income (loss), net of tax$(82)$72 

(1) These components of Other comprehensive income (loss) are included in the computation of total pension cost. See Note 8, Retirement Plans and Other Retiree Benefits for additional details.
(2) These (gains) losses are reclassified into Cost of sales. See Note 11, Fair Value Measurements and Financial Instruments for additional details.

There were no tax impacts on Other comprehensive income (loss) (“OCI”) attributable to Noncontrolling interests.



















11

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


8.    Retirement Plans and Other Retiree Benefits

Components of Net periodic benefit cost for the three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended March 31,
 Pension BenefitsOther Retiree Benefits
 United StatesInternational  
 202420232024202320242023
Service cost$ $ $3 $3 $2 $2 
Interest cost23 23 8 8 9 11 
Expected return on plan assets(19)(20)(7)(4)  
Amortization of actuarial loss (gain)10 11 2 1 (4)(4)
Net periodic benefit cost$14 $14 $6 $8 $7 $9 
Other postretirement charges 1     
ERISA litigation matter 267     
Total pension cost$14 $282 $6 $8 $7 $9 

There were no other postretirement charges for the three months ended March 31, 2024. Other postretirement charges for the three months ended March 31, 2023 included pension and other charges of $1 incurred pursuant to the 2022 Global Productivity Initiative.

In the three months ended March 31, 2023, the Company recorded a charge of $267 as a result of a decision of the United States Court of Appeals for the Second Circuit (the “Second Circuit”) affirming a grant of summary judgment to the plaintiffs in a lawsuit under the Employee Retirement Income Security Act seeking the recalculation of benefits and other relief associated with a 2005 residual annuity amendment to the Colgate-Palmolive Company Employees’ Retirement Income Plan (the “Retirement Plan”). The decision resulted in an increase in the obligations of the Retirement Plan, which based on the current funded status of the Retirement Plan will require no immediate cash contribution by the Company. See Note 9, Contingencies for additional information.

For the three months ended March 31, 2024 and 2023, the Company made no voluntary contributions to its U.S. postretirement plans.

9.    Contingencies

As a global company serving consumers in more than 200 countries and territories, the Company is routinely subject to a wide variety of legal proceedings. These include disputes relating to intellectual property, contracts, product liability, marketing, advertising, foreign exchange controls, antitrust and trade regulation, as well as labor and employment, pension, data privacy and security, environmental and tax matters and consumer class actions. Management proactively reviews and monitors the Company’s exposure to, and the impact of, environmental matters. The Company is party to various environmental matters and, as such, may be responsible for all or a portion of the cleanup, restoration and post-closure monitoring of several sites.

The Company establishes accruals for loss contingencies when it has determined that a loss is probable and that the amount of loss, or range of loss, can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances.

The Company also determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that a loss is reasonably possible and it is able to determine such estimates. For those matters disclosed below for which the amount of any potential losses can be reasonably estimated, the Company currently estimates that the aggregate range of reasonably possible losses in excess of any accrued liabilities is $0 to approximately $300 (based on current exchange rates). The estimates included in this amount are based on the Company’s analysis of currently available information and, as new information is obtained, these estimates may change. Due to the inherent subjectivity of the assessments and the unpredictability of outcomes of legal proceedings, any amounts accrued or included in this aggregate range may not represent the ultimate loss to the Company. Thus, the Company’s
12

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


exposure and ultimate losses may be higher or lower, and possibly significantly so, than the amounts accrued or the range disclosed above.

Based on current knowledge, management does not believe that the ultimate resolution of loss contingencies arising from the matters discussed herein will have a material effect on the Company’s consolidated financial position or its ongoing results of operations or cash flows. However, in light of the inherent uncertainties noted above, an adverse outcome in one or more matters could be material to the Company’s results of operations or cash flows for any particular quarter or year.

Brazilian Matters

There are certain tax and civil proceedings outstanding, as described below, related to the Company’s 1995 acquisition of the Kolynos oral care business from Wyeth (the “Seller”).

The Brazilian internal revenue authority has disallowed interest deductions and foreign exchange losses taken by the Company’s Brazilian subsidiary for certain years in connection with the financing of the Kolynos acquisition. The tax assessments with interest, penalties and any court-mandated fees, at the current exchange rate, are approximately $129. This amount includes additional assessments received from the Brazilian internal revenue authority in April 2016 relating to net operating loss carryforwards used by the Company’s Brazilian subsidiary to offset taxable income that had also been deducted from the authority’s original assessments. The Company has been disputing the disallowances by appealing the assessments since October 2001.

In each of September 2015, February 2017, September 2018, April 2019 and August 2020, the Company lost an administrative appeal and subsequently challenged these assessments in the Brazilian federal courts. Currently, there are three lawsuits pending in the Lower Federal Court and two cases have progressed to the Federal Court of Appeals. Although there can be no assurances, management believes, based on the opinion of its Brazilian legal counsel, that the disallowances are without merit and that the Company should ultimately prevail. The Company is challenging these disallowances vigorously.
 
In July 2002, the Brazilian Federal Public Attorney filed a civil action against the federal government of Brazil, Laboratorios Wyeth-Whitehall Ltda. (the Brazilian subsidiary of the Seller) and the Company, as represented by its Brazilian subsidiary, in the 6th. Lower Federal Court in the City of São Paulo, seeking to annul an April 2000 decision by the Brazilian Board of Tax Appeals that found in favor of the Seller’s Brazilian subsidiary on the issue of whether it had incurred taxable capital gains as a result of the divestiture of Kolynos. The action seeks to make the Company’s Brazilian subsidiary jointly and severally liable for any tax due from the Seller’s Brazilian subsidiary. The case has been pending since 2002, and the Lower Federal Court has not issued a decision. Although there can be no assurances, management believes, based on the opinion of its Brazilian legal counsel, that the Company should ultimately prevail in this action. The Company is challenging this action vigorously.

In December 2005, the Brazilian internal revenue authority issued to the Company’s Brazilian subsidiary a tax assessment with interest, penalties and any court-mandated fees of approximately $57, at the current exchange rate, based on a claim that certain purchases of U.S. Treasury bills by the subsidiary and their subsequent disposition during the period 2000 to 2001 were subject to a tax on foreign exchange transactions. The Company had been disputing the assessment within the internal revenue authority’s administrative appeals process. However, in November 2015, the Superior Chamber of Administrative Tax Appeals denied the Company’s final administrative appeal, and the Company has filed a lawsuit in the Brazilian federal court. In the event the Company is unsuccessful in this lawsuit, further appeals are available within the Brazilian federal courts. Although there can be no assurances, management believes, based on the opinion of its Brazilian legal counsel, that the tax assessment is without merit and that the Company should ultimately prevail. The Company is challenging this assessment vigorously.

Competition Matter

Certain of the Company’s subsidiaries were historically subject to actions and, in some cases, fines, by governmental authorities in a number of countries related to alleged competition law violations. Substantially all of these matters also involved other consumer goods companies and/or retail customers. The Company’s policy is to comply with antitrust and competition laws and, if a violation of any such laws is found, to take appropriate remedial action and to cooperate fully with any related governmental inquiry. The status as of March 31, 2024 of such competition law matters pending against the Company during the three months ended March 31, 2024 is set forth below.
13

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)



In July 2014, the Greek competition law authority issued a statement of objections alleging a restriction of parallel imports into Greece. The Company responded to this statement of objections. In July 2017, the Company received the decision from the Greek competition law authority in which the Company was fined $11. The Company appealed the decision to the Greek courts. In April 2019, the Greek courts affirmed the judgment against the Company’s Greek subsidiary, but reduced the fine to $10.5 and dismissed the case against Colgate-Palmolive Company. The Company’s Greek subsidiary and the Greek competition authority appealed the decision to the Greek Supreme Court.

Talcum Powder Matters

The Company has been named as a defendant in civil actions alleging that certain talcum powder products that were sold prior to 1996 were contaminated with asbestos and/or caused mesothelioma and other cancers. Many of these actions involve a number of co-defendants from a variety of different industries, including suppliers of asbestos and manufacturers of products that, unlike the Company’s products, were designed to contain asbestos.

As of March 31, 2024, there were 285 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 279 cases as of December 31, 2023. During the three months ended March 31, 2024, 26 new cases were filed and 20 cases were resolved by voluntary dismissal, settlement or dismissal by the court. The value of the settlements in the period presented was not material, either individually or in the aggregate, to such period’s results of operations. During the three months ended March 31, 2024, one case resulted in a jury verdict in favor of the Company after a trial.

A significant portion of the Company’s costs incurred in defending and resolving these claims has been, and the Company believes that a portion of the costs will continue to be, covered by insurance policies issued by several primary, excess and umbrella insurance carriers, subject to deductibles, exclusions, retentions, policy limits and insurance carrier insolvencies.

While the Company and its legal counsel believe that these cases are without merit and intend to challenge them vigorously, there can be no assurances regarding the ultimate resolution of these matters.

ERISA Matter

In June 2016, a lawsuit was filed in the United States District Court for the Southern District of New York (the “District Court”) against the Retirement Plan, the Company and certain individuals (the “Company Defendants”) claiming that residual annuity payments associated with a 2005 residual annuity amendment to the Retirement Plan were improperly calculated for certain Retirement Plan participants in violation of the Employee Retirement Income Security Act (“ERISA”). The relief sought included recalculation of benefits, pre- and post-judgment interest and attorneys’ fees. This action was certified as a class action in July 2017. In July 2020, the Court dismissed certain claims, and in August 2020 granted the plaintiffs’ motion for summary judgment on the remaining claims. In September 2020, the Company appealed to the Second Circuit. In March 2023, the Second Circuit affirmed the grant of summary judgment to the plaintiffs.

In light of the Second Circuit decision, the Company recorded a charge to earnings of $267 in the quarter ended March 31, 2023, which is comprised of the recalculation of benefits and interest. Possible additional charges associated with this matter are expected to be immaterial and, where estimable, are reflected in the range of reasonably possible losses disclosed above. The decision resulted in an increase in the obligations of the Retirement Plan, which based on the current funded status of the Retirement Plan will require no immediate cash contribution by the Company. In June 2023, the Company filed a petition for certiorari to the United States Supreme Court requesting permission for an appeal to that court and that petition was denied in October 2023. Also, in June 2023, the plaintiffs filed a motion to enter a revised final judgment in the District Court to address certain unresolved calculation issues, which the Company opposed. In March 2024, the District Court granted the plaintiffs’ motion and found for the plaintiffs on the unresolved calculation issues. The Company intends to appeal that decision to the Second Circuit.






14

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


10.    Segment Information

The Company operates in two product segments: Oral, Personal and Home Care; and Pet Nutrition. 

The operations of the Oral, Personal and Home Care product segment are managed geographically in five reportable operating segments: North America, Latin America, Europe, Asia Pacific and Africa/Eurasia.

The Company evaluates segment performance based on several factors, including Operating profit. The Company uses Operating profit as a measure of operating segment performance because it excludes the impact of Corporate-driven decisions related to interest expense and income taxes.

The accounting policies of the operating segments are generally the same as those described in Note 2, Summary of Significant Accounting Policies to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Intercompany sales have been eliminated. Corporate operations include costs related to stock options and restricted stock units, research and development costs, Corporate overhead costs, restructuring and related implementation charges and gains and losses on sales of non-core product lines and assets. The Company reports these items within Corporate operations as they relate to Corporate-based responsibilities and decisions and are not included in the internal measures of segment operating performance used by the Company to measure the underlying performance of the operating segments.


Net sales by segment were as follows:
Three Months Ended
 March 31,
 20242023
Net sales  
Oral, Personal and Home Care  
North America$997 $958 
Latin America1,253 1,075 
Europe711 650 
Asia Pacific727 738 
Africa/Eurasia276 288 
Total Oral, Personal and Home Care3,963 3,709 
Pet Nutrition1,102 1,061 
Total Net sales$5,065 $4,770 
Note: Table may not sum due to rounding.

Approximately two-thirds of the Company’s Net sales are generated from markets outside the U.S., with approximately 45% of the Company’s Net sales coming from emerging markets (which consist of Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe).






15

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


The Company’s Net sales of Oral, Personal and Home Care and Pet Nutrition products accounted for the following percentages of the Company’s Net sales:
Three Months Ended
 March 31,
 20242023
Net sales
Oral Care43 %43 %
Personal Care18 %18 %
Home Care17 %17 %
Pet Nutrition22 %22 %
Total Net sales100 %100 %

Operating profit by segment was as follows:

Three Months Ended
 March 31,
 20242023
Operating profit  
Oral, Personal and Home Care  
North America$222 $193 
Latin America405 315 
Europe144 116 
Asia Pacific207 202 
Africa/Eurasia66 68 
Total Oral, Personal and Home Care1,044 894 
Pet Nutrition199 183 
Corporate(196)(168)
Total Operating profit$1,047 $909 


Corporate Operating profit (loss) for the three months ended March 31, 2024 included charges resulting from the 2022 Global Productivity Initiative of $36.

Corporate Operating profit (loss) for the three months ended March 31, 2023 included product recall costs of $25 and charges resulting from the 2022 Global Productivity Initiative of $5.

16

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


11. Fair Value Measurements and Financial Instruments

The Company uses available market information and other valuation methodologies in assessing the fair value of financial instruments. Judgment is required in interpreting market data to develop the estimates of fair value and, accordingly, changes in assumptions or the estimation methodologies may affect the fair value estimates. The Company is exposed to the risk of credit loss in the event of nonperformance by counterparties to financial instrument contracts; however, nonperformance is considered unlikely and any nonperformance is unlikely to be material, as it is the Company’s policy to contract only with diverse, credit-worthy counterparties based upon both strong credit ratings and other credit considerations.

The Company is exposed to market risk from foreign currency exchange rates, interest rates and commodity price fluctuations. Volatility relating to these exposures is managed on a global basis by utilizing a number of techniques, including working capital management, sourcing strategies, selling price increases, selective borrowings in local currencies and entering into selective derivative instrument transactions, issued with standard features, in accordance with the Company’s treasury and risk management policies, which prohibit the use of derivatives for speculative purposes and leveraged derivatives for any purpose. It is the Company’s policy to enter into derivative instrument contracts with terms that match the underlying exposure being hedged.

The Company’s derivative instruments include forward-starting interest rate swaps, foreign currency contracts and commodity contracts. The Company utilizes forward-starting interest rate swaps to mitigate the risk of variability in interest rate for future debt issuances and these swaps are valued using observable benchmark rates (Level 2 valuation). The Company utilizes foreign currency contracts, including forward and swap contracts, option contracts, local currency deposits and local currency borrowings to hedge portions of its foreign currency purchases, assets and liabilities arising in the normal course of business and the net investment in certain foreign subsidiaries. These contracts are valued using observable market rates (Level 2 valuation). Commodity futures contracts are utilized to hedge the purchases of raw materials used in production. These contracts are measured using quoted commodity exchange prices (Level 1 valuation). The duration of foreign currency and commodity contracts generally does not exceed 12 months.

The following table summarizes the fair value of the Company’s derivative instruments and other financial instruments which are carried at fair value in the Company’s Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023:


 AssetsLiabilities
  
Account
Fair ValueAccountFair Value
Designated derivative instrumentsMarch 31, 2024December 31, 2023 March 31, 2024December 31, 2023
Foreign currency contractsOther current assets$24 $19 Other accruals$22 $25 
Commodity contractsOther current assets  Other accruals2 1 
Total designated$24 $19  $24 $26 
Other financial instruments     
Marketable securitiesOther current assets$231 $179    
Total other financial instruments$231 $179    
17

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


The carrying amount of cash, cash equivalents, marketable securities, accounts receivable and short-term debt approximated fair value as of March 31, 2024 and December 31, 2023. The estimated fair value of the Company’s long-term debt, including the current portion, as of March 31, 2024 and December 31, 2023, was $7,684 and $7,862, respectively, and the related carrying value was $8,171 and $8,239, respectively. In March 2023, the Company issued $500 of three-year Senior Notes at a fixed coupon rate of 4.800%, $500 of five-year Senior Notes at a fixed coupon rate of 4.600% and $500 of ten-year Senior Notes at a fixed coupon rate of 4.600%. The estimated fair value of long-term debt was derived principally from quoted prices on the Company’s outstanding fixed-term notes (Level 2 valuation).

The following tables present the notional values as of:

 March 31, 2024
 Foreign Currency ContractsForeign Currency DebtCommodity Contracts 
Total
Fair Value Hedges $1,606 $ $ $1,606 
Cash Flow Hedges 898  37 935 
Net Investment Hedges288 4,345  4,633 

 December 31, 2023
 Foreign Currency ContractsForeign Currency DebtCommodity Contracts 
Total
Fair Value Hedges $1,625 $ $ $1,625 
Cash Flow Hedges 869  39 908 
Net Investment Hedges280 3,908  4,188 


The following table presents the location and amount of gain (loss) on fair value hedges recognized in the Company’s Condensed Consolidated Statements of Income:

Gain (Loss) Recognized in Income
Location of Gain (Loss) Recognized in IncomeThree Months Ended March 31,
20242023
Hedging instruments:
Foreign currency contractsSelling, general and administrative expenses$(21)$5 
Total gain (loss) on fair value hedges $(21)$5 












18

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)


The following tables present the amount of gain (loss) on cash flow hedges recognized in the Company’s Accumulated Other Comprehensive Income (AOCI) and reclassification from AOCI into the Condensed Consolidated Statements of Income:


Gain (Loss) Recognized in AOCIAmount Reclassified from AOCI Into Income
Three Months Ended March 31,Location of Gain (Loss) Recognized in IncomeThree Months Ended March 31,
2024202320242023
Hedging instruments:
Foreign currency contracts$4 $(1)Cost of Sales$(2)$4 
Commodity contracts(2)(1)Cost of Sales(1)3 
Forward Starting Swaps (2)19 Interest (income) expense, net2 2 
Total gain (loss) on cash flow hedges $ $17 $(1)$9 


The following table presents the amount of gain (loss) on net investment hedges recognized in the Company’s AOCI:


Gain (Loss) Recognized in AOCI
Three Months Ended March 31,
20242023
Hedging instruments:
Foreign currency contracts$2 $(8)
Foreign currency debt106 (73)
Total gain (loss) on net investment hedges$108 $(81)


12. Supplier Finance Program

The Company has agreements to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations of the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, elect to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. The outstanding payment obligations under the Company’s supplier finance programs are included in Accounts Payable in the Condensed Consolidated Balance Sheets and were not material as of March 31, 2024 or December 31, 2023.












19

COLGATE-PALMOLIVE COMPANY
 Notes to Condensed Consolidated Financial Statements (continued)
(Dollars in Millions Except Share and Per Share Amounts)
(Unaudited)




13. Income Taxes

The effective income tax rate was 24.6% for the first quarter of 2024 as compared to 26.2% for the first quarter of 2023. The quarterly provision for income taxes is determined based on the Company’s estimated full year effective income tax rate adjusted by the amount of tax attributable to infrequent or unusual items that are separately recognized on a discrete basis in the income tax provision in the quarter in which they occur. The Company’s current estimate of its full year effective income tax rate before discrete period items is 24.5%, as compared to 24.3% in the comparable period of 2023.

In the third quarter of 2023, the Internal Revenue Service (the “IRS”) issued a notice giving taxpayers temporary relief from the effects of certain U.S. tax regulations that were issued in December 2021, which place greater restrictions on foreign taxes that are creditable against U.S. taxes on foreign-source income. This notice allowed taxpayers to defer the application of these new regulations through the end of 2023. In December 2023, the IRS issued further guidance modifying this temporary relief period to the date that a notice or other guidance withdrawing or modifying the temporary relief is issued. The Company will recognize the impact, if any, in the period in which the temporary relief is withdrawn or modified.

The Company has ongoing federal, state and international income tax audits in various jurisdictions and evaluates uncertain tax positions that may be challenged by local tax authorities and not fully sustained. All U.S. federal income tax returns through December 31, 2013 have been audited by the IRS and there are limited matters which the Company plans to appeal for years 2010 through 2013. One such matter relates to the IRS assessment of taxes on the Company by imputing income on certain activities within one of our international operations, which is also under audit for the years 2014 through 2018. There were U.S. Tax Court rulings during 2023 in favor of the IRS against unrelated third parties on similar matters. Despite the U.S. Tax Court rulings, the Company continues to believe that the tax assessment against the Company is without merit. While there can be no assurances, the Company believes this matter will ultimately be decided in favor of the Company. The amount of tax plus interest for the years 2010 through 2018 is estimated to be approximately $145, which is not included in the Company’s uncertain tax positions.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted, which among other things, implements a 15% minimum tax on book income of certain large corporations effective for years beginning after December 31, 2022. Based on the Company’s analysis, as well as guidance published by the IRS, the IRA, and in particular the 15% minimum tax, did not have an impact on the Company’s Consolidated Financial Statements. The Company will continue to evaluate the potential impact of this law as additional guidance and clarification becomes available.

Additionally, on December 15, 2022, the 27 member states of the European Union (“EU”) reached an agreement on a minimum level of taxation for certain large corporations to pay a minimum corporate tax rate of 15% in every jurisdiction in which they operate. This agreement, which is known as the Minimum Tax Directive (part of the “Pillar II Model Rules”), was supposed to be transposed into the laws of all EU member states by December 31, 2023. Most member states complied, while some were granted extensions of time. In addition, many other jurisdictions outside the EU have also committed to implement this Directive while others have implemented a similar minimum tax regime consistent with the policy of the Pillar II Model Rules. This Directive does not have a material impact on the Company's Consolidated Financial Statements.
20

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Executive Overview

Business Organization

Colgate-Palmolive Company (together with its subsidiaries, “we,” “us,” “our,” the “Company” or “Colgate”) is a caring, innovative growth company reimagining a healthier future for all people, their pets and our planet. We seek to deliver sustainable, profitable growth and superior shareholder returns, as well as to provide Colgate people with an innovative and inclusive work environment. We do this by developing and selling science-led products globally that make people’s and their pets’ lives healthier and more enjoyable and by embracing our sustainability and social impact and diversity, equity and inclusion (“DE&I”) strategies across our organization.

We are tightly focused on two product segments: Oral, Personal and Home Care; and Pet Nutrition. Within these segments, we follow a closely defined business strategy to grow our key product categories and increase our overall market share. Within the categories in which we compete, we prioritize our efforts based on their capacity to maximize the use of the organization’s core competencies and strong global equities and to deliver sustainable, profitable long-term growth.

Operationally, we are organized along geographic lines with management teams having responsibility for the business and financial results in each region. We compete in more than 200 countries and territories worldwide with established businesses in all regions contributing to our sales and profitability. Approximately two-thirds of our Net sales are generated from markets outside the U.S., with approximately 45% of our Net sales coming from emerging markets (which consist of Latin America, Asia (excluding Japan), Africa/Eurasia and Central Europe). This geographic diversity and balance help to reduce our exposure to business and other risks in any one country or part of the world.

The Oral, Personal and Home Care product segment is managed geographically in five reportable operating segments: North America, Latin America, Europe, Asia Pacific and Africa/Eurasia, all of which sell primarily to a variety of traditional and eCommerce retailers, wholesalers, distributors, dentists and, in some segments, skin health professionals. Through Hill’s Pet Nutrition, we also compete on a worldwide basis in the pet nutrition market, selling products principally through authorized pet supply retailers, veterinarians and eCommerce retailers. We also sell certain of our products direct-to-consumer. We are engaged in manufacturing and sourcing of products and materials on a global scale and have major manufacturing facilities, warehousing facilities and distribution centers in every region around the world.

On an ongoing basis, management focuses on a variety of key indicators to monitor business health and performance. These indicators include net sales (including volume, pricing and foreign exchange components), organic sales growth (net sales growth excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, and gross profit margin, selling, general and administrative expenses, operating profit, net income and earnings per share, in each case, on a GAAP and non-GAAP basis, as well as measures used to optimize the management of working capital, capital expenditures, cash flow and return on capital. In addition, we review market share and other data to assess how our brands are performing within their categories on a global and regional basis. The monitoring of these indicators and our Code of Conduct and corporate governance practices help to maintain business health and strong internal controls. For additional information regarding non-GAAP financial measures and the Company’s use of market share data and the limitations of such data, see “Non-GAAP Financial Measures” and “Market Share Information” below.















21

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

The War in Ukraine

The war in Ukraine, and the related geopolitical tensions, have had and continue to have a significant impact on our operations in Ukraine and Russia, though it has not been material to our Consolidated Financial Statements. While our ability to do business in Ukraine has been significantly impacted, we remain committed to providing access to our products to people in the region. In Russia, we are importing and selling a reduced portfolio of health and hygiene products for everyday use. We have no manufacturing facilities in Russia and have ceased all capital investments and media activities in Russia. For the three months ended March 31, 2024, our business in the Eurasia region constituted approximately 2% of our consolidated net sales and approximately 3% of our consolidated operating profit. We, however, have experienced, and expect to continue to experience, risks related to the impact of the war in Ukraine, including increases in the costs and, in certain cases, limitations on the availability of certain raw and packaging materials and commodities (including oil and natural gas), supply chain and logistics challenges, import restrictions, foreign currency volatility and reputational concerns. We also have faced and continue to face challenges to our ability to repatriate cash from Russia and find banking partners in Russia and we may face challenges to our ability to protect our assets in Russia. We also continue to monitor the impact of sanctions, export controls and import restrictions imposed in response to the war in Ukraine.


The Israel-Hamas War

The Israel-Hamas war has not had a material impact on our Consolidated Financial Statements. Uncertainties and risks remain as to the duration of the war and its impact on geopolitical relations and stability in North Africa, the Middle East and nearby regions. The war has impacted and may continue to impact, among other things, supply chain and logistics, the availability and price of raw and packaging materials and commodities, such as oil, consumer sentiment and consumption and category growth rates in the region.

For more information about factors that could impact our business, including due to geopolitical conflicts, such as the war in Ukraine and the Israel-Hamas war, refer to Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023.































22

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Business Strategy

To achieve our business and financial objectives, we are focused on driving organic sales growth and consistent compounded earnings per share growth through science-led, core and premium innovation, pursuing higher-growth adjacent categories and segments, expanding in faster-growing channels and markets and delivering margin expansion through operating leverage and efficiency. We continue to prioritize our investments in high growth segments within our Oral Care, Personal Care and Pet Nutrition businesses. We are also seeking to lead in the development of human capital and to maximize the impact of our sustainability and social impact and DE&I strategies. We are strengthening and leveraging our capabilities in areas such as innovation, digital, artificial intelligence, eCommerce and data and analytics, enabling us to be more responsive in today’s rapidly changing world. We continue to invest behind our brands, including through advertising, and to develop initiatives to build strong relationships with consumers, dental, veterinary and skin health professionals and traditional and eCommerce retailers. We continue to believe that growth opportunities are greater in those areas of the world in which economic development and rising consumer incomes expand the size and number of markets for our products.

The investments needed to drive growth are supported through continuous, Company-wide initiatives to lower costs and increase effective asset utilization. Through these initiatives, which are referred to as our funding-the-growth initiatives, we seek to become even more effective and efficient throughout our businesses. These initiatives are designed to reduce costs associated with direct materials, indirect expenses, distribution and logistics and advertising and promotional materials, among other things, and encompass a wide range of projects, examples of which include raw material substitution, reduction of packaging materials, consolidating suppliers to leverage volumes and increasing manufacturing efficiency through SKU reductions and formulation simplification.

Significant Items Impacting Comparability

During the quarter ended March 31, 2023, we recorded a charge of $267 as a result of a decision of the United States Court of Appeals for the Second Circuit (the “Second Circuit”) affirming a grant of summary judgment to the plaintiffs in a lawsuit under the Employee Retirement Income Security Act seeking the recalculation of benefits and other relief associated with a 2005 residual annuity amendment to the Colgate-Palmolive Company Employees’ Retirement Income Plan (the “Retirement Plan”). The decision resulted in an increase in the obligations of the Retirement Plan, which based on the current funded status of the Retirement Plan will require no immediate cash contribution by the Company. In June 2023, the Company filed a petition for certiorari to the United States Supreme Court requesting permission for an appeal to that court and that petition was denied in October 2023. Also, in June 2023, the plaintiffs filed a motion to enter a revised final judgment in the United States District Court for the Southern District of New York (the “District Court”) to address certain unresolved calculation issues, which the Company opposed. In March 2024, the District Court granted the plaintiffs’ motion and found for the plaintiffs on the unresolved calculation issues. The Company intends to appeal that decision to the Second Circuit. See Note 9, Contingencies to the Condensed Consolidated Financial Statements for additional information.

During the quarter ended March 31, 2023, we announced a voluntary recall of select Fabuloso multi-purpose cleaner products sold in the United States and Canada. The costs associated with the voluntary recall had a $25 impact on our Operating profit in the quarter ended March 31, 2023.

On January 27, 2022, the Company’s Board of Directors (the “Board”) approved a targeted productivity program (the “2022 Global Productivity Initiative”). The program is intended to reallocate resources towards our strategic priorities and faster growth businesses, drive efficiencies in our operations and streamline our supply chain to reduce structural costs. Implementation of the 2022 Global Productivity Initiative, which is expected to be substantially completed by mid-year 2024, is estimated to result in cumulative pretax charges, once all phases are approved and implemented, in the range of $200 to $240 ($170 to $200 aftertax). Annualized pretax savings are projected to be in the range of $90 to $110 ($70 to $85 aftertax), once all projects are approved and implemented. Savings achieved since the implementation of the 2022 Global Productivity Initiative were approximately $107 pretax ($84 aftertax). For more information regarding the 2022 Global Productivity Initiative, see “Restructuring and Related Implementation Charges” below.

In the three months ended March 31, 2024 and 2023, we incurred pretax costs of $36 (aftertax costs of $30) and $6 (aftertax costs of $5), respectively, resulting from the 2022 Global Productivity Initiative.


23

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Outlook

Looking forward, we expect global macroeconomic, political and market conditions to remain challenging, including as a result of inflation, higher interest rates and foreign currency volatility. During the three months ended March 31, 2024, most of our divisions experienced higher raw and packaging material costs. We have taken and are taking additional pricing to try to offset these increases in raw and packaging material costs. This has negatively impacted and may continue to negatively impact consumer demand for our products. Additionally, inflation is impacting the broader economy with consumers around the world facing widespread rising prices as well as higher interest rates resulting from measures to address inflation. Such inflation and higher interest rates may negatively impact consumer consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to “private label” or to our lower-priced product offerings. Although we continue to devote significant resources to support our brands and market our products at multiple price points, these changes could reduce demand for and sales volumes of our products or result in a shift in our product mix from higher margin to lower margin product offerings. In light of this challenging environment, we expect continued volatility across all of our categories and it is therefore difficult to predict category growth rates in the near term.

Given that approximately two-thirds of our Net sales originate in markets outside the U.S., we have experienced and will likely continue to experience volatile foreign currency fluctuations, particularly in Argentina and Türkiye, which are considered hyper-inflationary economies. As discussed above, we have also experienced higher raw and packaging material costs. While we have taken, and will continue to take, measures to mitigate the effect of these conditions, such as the 2022 Global Productivity Initiative and our funding-the-growth and revenue growth management initiatives, in the current environment, it may become increasingly difficult to implement certain of these mitigation strategies. Should these conditions persist, they could adversely affect our future results.

While the global marketplace in which we operate has always been highly competitive, we continue to experience heightened competitive activity in certain markets from strong local competitors, from other large multinational companies, some of which have greater resources than we do, and from new entrants into the market in many of our categories. Such activities have included more aggressive product claims and marketing challenges, as well as increased promotional spending and geographic expansion.

We have been negatively affected by changes in the policies and practices of our trade customers in key markets, such as inventory destocking, fulfillment requirements, limitations on access to shelf space, delisting of our products and certain sustainability, supply chain and packaging standards or initiatives. In addition, the retail landscape in many of our markets continues to evolve as a result of the continued growth of eCommerce, changing consumer preferences (as consumers increasingly shop online and via mobile and social applications) and the increased presence of alternative retail channels, such as subscription services and direct-to-consumer businesses. We plan to continue to invest behind our data strategy, digital and analytics capabilities and higher growth businesses. The substantial growth in eCommerce and the emergence of alternative retail channels have created and may continue to create pricing pressures and/or adversely affect our relationships with our key retailers.

We continue to closely monitor the impact of geopolitical events and tensions, such as the war in Ukraine, the Israel-Hamas war and tensions between China and Taiwan and the challenging market conditions discussed above, on our business and the related uncertainties and risks. While we have taken, and will continue to take, measures to mitigate the effects of these events and conditions, we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows and/or financial condition. For more information about factors that could impact our business, see “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

We believe that we are well prepared to meet the challenges ahead due to our strong financial condition, experience operating in challenging environments, resilient global supply chain, dedicated and diverse global team and focused business strategy. Our strategy is based on driving organic sales growth and consistent compounded earnings per share growth through science-led, core and premium innovation, pursuing higher-growth adjacent categories and segments, expanding in faster-growing channels and markets and delivering margin expansion through operating leverage and efficiency. We are also seeking to lead in the development of human capital and to maximize our sustainability and social impact and DE&I strategies. Our commitment to these priorities, the strength of our brands, the breadth of our global footprint and a commitment to profitability and driving efficiency in cash generation should position us well to manage through the challenges we face and increase shareholder value over time.
24

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Results of Operations

Three Months

Worldwide Net sales were $5,065 in the first quarter of 2024, up 6.2% from the first quarter of 2023, due to volume growth of 1.3% and net selling price increases of 8.5%, partially offset by negative foreign exchange of 3.6%. Organic sales (Net sales excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, increased 9.8% in the first quarter of 2024. A reconciliation of net sales growth to organic sales growth is provided under “Non-GAAP Financial Measures” below.

Net sales in the Oral, Personal and Home Care product segment were $3,963 in the first quarter of 2024, up 6.8% from the first quarter of 2023, due to volume growth of 2.8% and net selling price increases of 8.6%, partially offset by negative foreign exchange of 4.5%. Organic sales in the Oral, Personal and Home Care product segment increased 11.4% in the first quarter of 2024.

The Company’s share of the global toothpaste market was 41.3% on a year-to-date basis, up 1.0 share points from the year ago period, and its share of the global manual toothbrush market was 31.7% on a year-to-date basis, up 1.4 share points from the year ago period. Year-to-date market shares in toothpaste were up in Latin America, Europe, Asia Pacific and Africa/Eurasia and down in North America versus the comparable 2023 period. In the manual toothbrush category, year-to-date market shares were up in North America and Asia/Pacific, flat in Latin America and Europe and down in Africa/Eurasia versus the comparable 2023 period. For additional information regarding market shares, see “Market Share Information” below.

Net sales in the Hill’s Pet Nutrition segment were $1,102 in the first quarter of 2024, up 3.9% from the first quarter of 2023, due to net selling price increases of 8.2%, partially offset by volume declines of 3.9% and negative foreign exchange of 0.3%. Organic sales in the Hill’s Pet Nutrition segment increased 4.2% in the first quarter of 2024.
25

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Gross Profit/Margin

Worldwide Gross profit increased to $3,039 in the first quarter of 2024 compared to $2,712 in the first quarter of 2023, reflecting an increase of $168 resulting from higher Net sales and an increase of $159 resulting from higher Gross profit margin.

Worldwide Gross profit margin increased to 60.0% in the first quarter of 2024 from 56.9% in the first quarter of 2023. This increase in Gross profit margin was primarily due to higher pricing (330 bps) and cost savings from the Company’s funding-the-growth initiatives (250 bps), partially offset by significantly higher raw and packaging material costs (270 bps), which included foreign exchange transaction costs.
Three Months Ended March 31,
20242023
Gross profit$3,039 $2,712 
Three Months Ended March 31,
20242023Basis Point Change
Gross profit margin60.0 %56.9 %310 
26

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 9% to $1,916 in the first quarter of 2024 compared to $1,758 in the first quarter of 2023. Selling, general and administrative expenses in the first quarter of 2024 included charges resulting from the 2022 Global Productivity Initiative. Excluding the charges resulting from the 2022 Global Productivity Initiative in the first quarter of 2024, Selling, general and administrative expenses increased 9% to $1,915 in the first quarter of 2024 compared to $1,758 in the first quarter of 2023, reflecting increased advertising investment of $93 and higher overhead expenses of $64.

Selling, general and administrative expenses as a percentage of Net sales increased by 90 bps to 37.8% in the first quarter of 2024 as compared to 36.9% in the first quarter of 2023. This increase was due to increased advertising investment (120 bps), partially offset by lower overhead expenses (30 bps), both as a percentage of Net sales. In the first quarter of 2024, advertising investment increased as a percentage of Net sales to 13.3% from 12.1% in the first quarter of 2023, or 16% in absolute terms, to $672 as compared with $579 in the first quarter of 2023.
Three Months Ended March 31,
20242023
Selling, general and administrative expense, GAAP$1,916 $1,758 
2022 Global Productivity Initiative
(1)— 
Selling, general and administrative expenses, non-GAAP$1,915 $1,758 
Three Months Ended March 31,
20242023Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales37.8 %36.9 %90 
Other (Income) Expense, Net
Other (income) expense, net was $76 and $45 in the first quarter of 2024 and 2023, respectively. Other (income) expense, net in the first quarter of 2024 included charges resulting from the 2022 Global Productivity Initiative. Other (income) expense, net in the first quarter of 2023 included product recall costs and charges resulting from the 2022 Global Productivity Initiative. Excluding the items described above in both periods, as applicable, Other (income) expense, net was $41 and $15 in the first quarter of 2024 and 2023, respectively.

Three Months Ended March 31,
20242023
Other (income) expense, net, GAAP$76 $45 
2022 Global Productivity Initiative
(35)(5)
Product recall costs— (25)
Other (income) expense, net, non-GAAP$41 $15 
27

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Operating Profit

Operating profit increased 15% to $1,047 in the first quarter of 2024 from $909 in the first quarter of 2023. Operating profit in the first quarter of 2024 included charges resulting from the 2022 Global Productivity Initiative. Operating profit in the first quarter of 2023 included product recall costs and charges resulting from the 2022 Global Productivity Initiative. Excluding the items described above in both periods, as applicable, Operating profit increased 15% to $1,083 in the first quarter of 2024 from $939 in the first quarter of 2023.

Operating profit margin was 20.7% in the first quarter of 2024, an increase of 160 bps compared to 19.1% in the first quarter of 2023. Excluding the items described above in both periods, as applicable, Operating profit margin was 21.4% in the first quarter of 2024, an increase of 170 bps compared to 19.7% in the first quarter of 2023. This increase in Operating profit margin was due to an increase in Gross profit (310 bps), partially offset by an increase in Selling, general and administrative expenses (90 bps) and an increase in Other (income) expense, net (50 bps), all as a percentage of Net sales.

Three Months Ended March 31,
20242023% Change
Operating profit, GAAP$1,047 $909 15 %
2022 Global Productivity Initiative
36 
Product recall costs— 25 
Operating profit, non-GAAP$1,083 $939 15 %
Three Months Ended March 31,
20242023Basis Point Change
Operating profit margin, GAAP20.7 %19.1 %160 
2022 Global Productivity Initiative
0.7 %0.1 %
Product recall costs— %0.5 %
Operating profit margin, non-GAAP21.4 %19.7 %170 

Non-Service Related Postretirement Costs

Non-service related postretirement costs were $22 in the first quarter of 2024 as compared to $294 in the first quarter of 2023. Non-service related postretirement costs in the first quarter of 2023 included charges related to the ERISA litigation matter and charges related to the 2022 Global Productivity Initiative. Excluding these charges in the first quarter of 2023, Non-service related postretirement costs were $22 in the first quarter of 2024 and $26 in the first quarter of 2023.
Three Months Ended March 31,
20242023
Non-service related postretirement costs, GAAP$22 $294 
ERISA litigation matter— (267)
2022 Global Productivity Initiative
— (1)
Non-service related postretirement costs, non-GAAP$22 $26 
Interest (Income) Expense, Net

Interest (income) expense, net was $58 in the first quarter of 2024 as compared to $54 in the first quarter of 2023.


28

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Income Taxes

The effective income tax rate was 24.6% for the first quarter of 2024 as compared to 26.2% for the first quarter of 2023. As reflected in the table below, the non-GAAP effective income tax rate was 24.3% for the first three months of 2024 and 2023.

The quarterly provision for income taxes is determined based on the Companys estimated full year effective income tax rate adjusted by the amount of tax attributable to infrequent or unusual items that are separately recognized on a discrete basis in the income tax provision in the quarter in which they occur. The Companys current estimate of its full year effective income tax rate before discrete period items is 24.5%, compared to 24.3% in 2023.
In the third quarter of 2023, the Internal Revenue Service (the “IRS”) issued a notice giving taxpayers temporary relief from the effects of certain U.S. tax regulations that were issued in December 2021, which place greater restrictions on foreign taxes that are creditable against U.S. taxes on foreign-source income. This notice allowed taxpayers to defer the application of these new regulations through the end of 2023. In December 2023, the IRS issued further guidance modifying this temporary relief period to the date that a notice or other guidance withdrawing or modifying the temporary relief is issued. The Company will recognize the impact, if any, in the period in which the temporary relief is withdrawn or modified.
The Company has ongoing federal, state and international income tax audits in various jurisdictions and evaluates uncertain tax positions that may be challenged by local tax authorities and not fully sustained. All U.S. federal income tax returns through December 31, 2013 have been audited by the IRS and there are limited matters which the Company plans to appeal for years 2010 through 2013. One such matter relates to the IRS assessment of taxes on the Company by imputing income on certain activities within one of our international operations, which is also under audit for the years 2014 through 2018. There were U.S. Tax Court rulings during 2023 in favor of the IRS against unrelated third parties on similar matters. Despite the U.S. Tax Court rulings, the Company continues to believe that the tax assessment against the Company is without merit. While there can be no assurances, the Company believes this matter will ultimately be decided in favor of the Company. The amount of tax plus interest for the years 2010 through 2018 is estimated to be approximately $145, which is not included in the Company’s uncertain tax positions.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted, which among other things, implements a 15% minimum tax on book income of certain large corporations effective for years beginning after December 31, 2022. Based on the Company’s analysis, as well as guidance published by the IRS, the IRA, and in particular the 15% minimum tax, did not have an impact on the Company’s Consolidated Financial Statements. The Company will continue to evaluate the potential impact of this law as additional guidance and clarification becomes available.
Additionally, on December 15, 2022, the 27 member states of the European Union (“EU”) reached an agreement on a minimum level of taxation for certain large corporations to pay a minimum corporate tax rate of 15% in every jurisdiction in which they operate. This agreement, which is known as the Minimum Tax Directive (part of the “Pillar II Model Rules”), was supposed to be transposed into the laws of all EU member states by December 31, 2023. Most member states complied while some were granted extensions of time. In addition, many other jurisdictions outside the EU have also committed to implement this Directive while others have implemented a similar minimum tax regime consistent with the policy of the Pillar II Model Rules. This Directive does not have a material impact on the Company's Consolidated Financial Statements.


29

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Three Months Ended March 31,
20242023
Income Before Income Taxes
Provision For Income Taxes(1)
Effective Income Tax Rate(2)
Income Before Income Taxes
Provision For Income Taxes(1)
Effective Income Tax Rate(2)
As Reported GAAP$967 $238 24.6 %$561 $147 26.2 %
2022 Global Productivity Initiative36 (0.3)(0.1)
ERISA litigation matter— — — 267 55 (1.8)
Product recall costs— — — 25 — 
Non-GAAP$1,003 $244 24.3 %$859 $209 24.3 %

(1) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.
(2) The impact of non-GAAP items on the Company’s effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment on Income before income taxes and Provision for income taxes.





































30

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Net Income Attributable to Colgate-Palmolive Company and Earnings Per Share

Net income attributable to Colgate-Palmolive Company in the first quarter of 2024 increased to $683 from $372 in the first quarter of 2023, and Earnings per common share on a diluted basis increased to $0.83 per share in the first quarter of 2024 from $0.45 in the first quarter of 2023. Net Income attributable to Colgate-Palmolive Company in the first quarter of 2024 included charges resulting from the 2022 Global Productivity Initiative. Net Income attributable to Colgate-Palmolive Company in the first quarter of 2023 included charges resulting from the ERISA litigation matter, product recall costs and charges resulting from the 2022 Global Productivity Initiative.

Excluding the items described above in both periods, as applicable, Net income attributable to Colgate-Palmolive Company in the first quarter of 2024 increased 17% to $713 from $608 in the first quarter of 2023, and Earnings per common share on a diluted basis increased 18% to $0.86 in the first quarter of 2024 from $0.73 in the first quarter of 2023.
Three Months Ended March 31, 2024
Income Before Income Taxes
Provision For Income Taxes(1)
Net Income Including Noncontrolling InterestsLess: Income Attributable to Noncontrolling InterestsNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$967 $238 $729 $46 $683 $0.83 
2022 Global Productivity Initiative36 30 — 30 0.03 
Non-GAAP$1,003 $244 $759 $46 $713 $0.86 
Three Months Ended March 31, 2023
Income Before Income Taxes
Provision For Income Taxes(1)
Net Income Including Noncontrolling InterestsLess: Income Attributable to Noncontrolling InterestsNet Income Attributable To Colgate-Palmolive Company
Diluted Earnings Per Share(2)
As Reported GAAP$561 $147 $414 $42 $372 $0.45 
ERISA litigation matter267 55 212 — 212 0.25 
Product recall costs25 19 — 19 0.02 
2022 Global Productivity Initiative
— 0.01 
Non-GAAP$859 $209 $650 $42 $608 $0.73 
(1) The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.    
(2) The impact of non-GAAP adjustments on diluted earnings per share may not necessarily equal the difference between “GAAP” and “non-GAAP” as a result of rounding.
31

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Net Sales and Operating Profit by Segment

Oral, Personal and Home Care

North America
Three Months Ended March 31,
 20242023Change
Net sales$997 $958 4.0 %
Operating profit$222 $193 15 %
% of Net sales22.3 %20.1 %220 bps
Net sales in North America increased 4.0% in the first quarter of 2024 to $997, driven by volume growth of 2.9% and net selling price increases of 1.2%, while foreign exchange was flat. Organic sales in North America increased 4.0% in the first quarter of 2024. Organic sales growth was led by the United States.

The increase in organic sales in North America in the first quarter of 2024 versus the first quarter of 2023 was primarily due to increases in Oral Care and Home Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the manual toothbrush category. The increase in Home Care was primarily due to organic sales growth in the surface cleaners category, partially offset by organic sales declines in the hand dish category.

Operating profit in North America increased 15% in the first quarter of 2024 to $222, or 220 bps to 22.3% as a percentage of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (260 bps) as a percentage of Net sales. This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (190 bps), higher pricing and lower raw and packaging material costs (30 bps).































32

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)

Latin America
Three Months Ended March 31,
 20242023Change
Net sales$1,253 $1,075 16.5 %
Operating profit$405 $315 29 %
% of Net sales32.3 %29.3 %300 bps
Net sales in Latin America increased 16.5% in the first quarter of 2024 to $1,253, driven by volume growth of 6.2% and net selling price increases of 19.7%, partially offset by negative foreign exchange of 9.4%. Organic sales in Latin America increased 25.9% in the first quarter of 2024. Organic sales growth was led by Argentina, Mexico and Brazil.

The increase in organic sales in Latin America in the first quarter of 2024 versus the first quarter of 2023 was due to increases in Oral Care, Personal Care and Home Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste, manual toothbrush and mouthwash categories. The increase in Personal Care was primarily due to organic sales growth in the underarm protection and bar soap categories. The increase in Home Care was primarily due to organic sales growth in the surface cleaner, fabric softener and hand dish categories.

Operating profit in Latin America increased 29% in the first quarter of 2024 to $405, or 300 bps to 32.3% as a percentage of Net sales. This increase in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (420 bps), partially offset by an increase in Other (income) expense, net (100 bps), both as a percentage of Net sales. This increase in Gross profit was due to higher pricing and cost savings from the Company’s funding-the-growth initiatives (230 bps), partially offset by significantly higher raw and packaging material costs (480 bps), which included foreign exchange transaction costs. This increase in Other (income) expense, net was primarily due to losses on investments.

Europe
 Three Months Ended March 31,
 20242023Change
Net sales$711 $650 9.5 %
Operating profit$144 $116 24 %
% of Net sales20.3 %17.8 %250 bps

Net sales in Europe increased 9.5% in the first quarter of 2024 to $711, driven by volume growth of 3.1%, net selling price increases of 4.1% and positive foreign exchange of 2.3%. Organic sales in Europe increased 7.2% in the first quarter of 2024. Organic sales growth was led by the United Kingdom, Germany and France.

The increase in organic sales in Europe in the first quarter of 2024 versus the first quarter of 2023 was primarily due to an increase in Oral Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste category.

Operating profit in Europe increased 24% in the first quarter of 2024 to $144, or 250 bps to 20.3% as a percentage of Net sales. This increase in Operating profit as a percentage of Net sales was due to an increase in Gross profit (340 bps), partially offset by an increase in Selling, general and administrative expenses (50 bps), both as a percentage of Net sales. This increase in Gross profit was due to cost savings from the Company’s funding-the-growth initiatives (270 bps), higher pricing and favorable mix (120 bps), partially offset by higher raw and packaging material costs (200 bps). This increase in Selling, general and administrative expenses was due to increased advertising investment (110 bps), partially offset by lower overhead expenses (60 bps).






33

COLGATE-PALMOLIVE COMPANY
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in Millions Except Per Share Amounts)


Asia Pacific
 Three Months Ended March 31,
 20242023Change
Net sales$727