NEW YORK — Colgate-Palmolive’s Hill’s Pet Nutrition business continues to see growth amongst a challenging pricing environment, as shared in the company’s first quarter financials for the first three months ended March 31, 2025. For Colgate’s business overall, tariffs are a looming concern, prompting new supply chain strategies. 

Net sales for the first quarter for Hill’s Pet Nutrition were $1.17 billion, a 1.5% increase from $1.10 billion in 2024. As a percentage of Colgate-Palmolive’s total net sales, Hill’s represented 23.1%. Operating profit was reported at $258 million, a 30% increase year-over-year from $199 million. 

Organic sales increased 2.9%, which included a 2.1% drop from the Hill’s reduction of private-label volume as the company continues to exit private label. Volume dropped 0.3% and pricing was 3.2%. Excluding the impact of private label, volume growth was 1.7%, attributed to growth in Science Diet and Prescription Diet.

In the United States, Hill’s witnessed organic sales growth in mid-single digits, as well as growth in volume and pricing. Its Canadian business delivered double-digit organic sales growth. 

Noel Wallace, chairman of the board, president and chief executive officer of Colgate-Palmolive, attributed Hill’s Pet Nutrition’s continued growth to numerous initiatives, from new campaigns to enhanced product offerings. 

“We have launched a new campaign on Hill’s and a new brand positioning, which has been extremely well received in the marketplace, and it talks about the love that pet owners have for their dogs and the guilt they feel when they leave them at home,” he shared during the company’s earnings call on April 25. “And we feel like we've really anchored in on an incredible unique consumer insight that will leverage the wonderful product that we provide to our pet owners.”

The company has been revamping its Science Diet and Prescription portfolios to introduce enhanced recipes made with its ActiveBiome+ technology, including life-stage formulas and recipes that target specific bodily functions.  Additionally, the company is expanding its wet cat food portfolio, offering new flavors to meet demand from cat owners. The wet cat food expansion is relying on increased capacity from the company’s Tonganoxie, Kan., wet pet food facility.

In addition to supporting its capacity, the Tonganoxie facility also supports Colgate’s overall supply chain strategy to shift away from China as tariff costs rise. 

“Strategically, we aim to have local manufacturing as the cost of shipping many of our products, long distances can be very high. And over the last several years we’ve lowered our supply chain exposure to China as part of our overall supply chain strategy; we spent the past few years building more flexibility into our global supply chains,” said Stanley Sutula, chief financial officer of Colgate-Palmolive. “Not necessarily about building more capacity, it’s about making better use of that existing capacity and alternative sourcing.”

The company has invested nearly $2 billion in the United States during the past five years and has also reduced its reliance on single-source countries, as well as raw materials and products coming from China. 

“We’ve increased our number of US-based manufacturing facilities by more than 40% over this time,” Sutula detailed. “So, we’re working hard to mitigate the incremental costs from tariffs, but we’re going to do that through a combination of approaches of productivity, revenue growth management, formulation, sourcing and optimizing our supply chain.”

Net sales for Colgate overall were reported at $4.91 billion, a 3.1% decrease year-over-year from $5.07 billion. Organic sales increased 1.4%, including a 0.4% drop from lower private label pet food volume. Operating profit was $1.08 billion, a 3% increase year-over-year. Volume was down 0.1% and pricing was 1.5%. 

Gross profit margin was 60.8% in the first quarter, a slight increase from 60.8% year-over-year. Selling, general and administrative (SG&A) expenses were $1.90 billion, a decrease from $1.92 billion year-over-year. 

“Colgate-Palmolive people delivered another quarter of organic sales and earnings per share growth in the face of very difficult market conditions worldwide,” Wallace said. “The positive organic sales growth, in a period of slowing category growth in many markets, is a testament to the strength of our brands and our commitment to executing against our strategy.

“Our focus on building flexibility into our P&L enabled us to deliver year-over-year growth in operating profit, net income and earnings per share despite the volatile operating environment,” he added. “The leverage in our P&L also funded a 30 basis point increase in advertising to 13.6% to sales, as we continue to invest to drive brand health and increase household penetration.”

Looking ahead, tariffs remain a significant concern for Colgate, as the impact of tariffs is anticipated to have an incremental impact of about $200 million in 2025 for the company. 

“That’s why we remain focused on continuing to take advantage of and building on the flexibility we have built into our supply chain over the past several years,” Wallace shared. “We have changed many of our sourcing strategies and also invested approximately $2 billion in our supply chain in the United States over the past five years, which leaves us better positioned to adapt to this changing environment.”

To help alleviate the tariff issue, the company is developing several plans, from alternative ingredient sourcing and formula simplification to shifting production and revenue growth management.

“The pricing environment will continue to be challenging, in terms of where things go now. As tariffs take hold, everyone will be looking for ways to create value in the category. That will be principally driven in my view through innovation,” Wallace explained. “But there will be some pricing that will have to take place in certain markets around the world, and we’ll take that on a market and category basis as we move forward.”

Colgate updated its full year 2025 guidance, adding the estimated impact of tariffs. Net sales are now expected in low single digits, organic sales growth is expected between 2% to 4%. Gross profit margin and advertising spend are expected to remain flat as a percentage of net sales. Earnings per share are expected to be up low single digits. 

“As we look ahead, uncertainty and volatility in global markets, including the impact of tariffs, remain challenging,” Wallace said. “We are confident in our strategy and will continue to execute with focus and agility to mitigate these factors and achieve our revised 2025 financial targets.”

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