Colgate-Palmolive Co

Company Overview

Business Model: Colgate-Palmolive Company is an innovative growth company focused on reimagining a healthier future for people, pets, and the planet. The Company aims to drive organic sales growth, deliver consistent earnings per share growth, achieve operational efficiencies, and generate strong free cash flow through the efficient use of its balance sheet. This is accomplished by leveraging the global reach of its brands, building on science-based innovation, utilizing an agile supply chain, excelling in omni-channel demand generation, leading in data, analytics, and artificial intelligence (AI) capabilities, and fostering an inclusive culture. The Company operates in two primary product segments: Oral, Personal and Home Care, and Pet Nutrition. Products are sold globally to a diverse customer base including retailers, wholesalers, distributors, dentists, skin health professionals, veterinarians, and eCommerce retailers, with some direct-to-consumer sales.

Market Position: Colgate-Palmolive Company holds global leadership positions in several key categories. It is a leader in Oral Care, with a 41.3% global market share in toothpaste and a 32.4% global market share in manual toothbrushes for the full year 2025. The Company also leads in many Personal Care categories, including global leadership in liquid hand soap. Through its Hill’s Pet Nutrition segment, it is a leader in specialty pet nutrition products for dogs and cats. The Company's products are marketed in over 200 countries and territories, with approximately two-thirds of its Net sales originating outside the United States and 45% from emerging markets. Sales to Walmart, Inc. and its affiliates represented approximately 11% of Net sales in 2025.

Recent Strategic Developments: The Company concluded its 2025 strategic plan, achieving improved organic sales growth, consistent dollar-based earnings per share growth, and enhanced capabilities in science-led innovation, digital, data, analytics, and AI. On July 31, 2025, the Board approved a new three-year "Strategic Growth and Productivity Program" to support its 2030 strategy, focusing on organizational alignment, global supply chain optimization, and overhead cost reduction, with estimated cumulative pre-tax charges of $200 million to $300 million. In April 2025, the Company acquired Care TopCo Pty Ltd, owner of the Prime100 pet food business, for approximately $301 million, marking an entry into Australia's fresh pet food category. In the fourth quarter of 2025, the Company recorded a non-cash, after-tax impairment charge of $794 million ($919 million pre-tax) related to goodwill and intangible assets of its skin health business, primarily Filorga, due to a revised outlook for category growth rates and performance.

Geographic Footprint: Colgate-Palmolive Company operates in over 200 countries and territories worldwide. Approximately two-thirds of its Net sales are generated from markets outside the United States, with emerging markets contributing about 45% of total Net sales. The Company maintains a global workforce of approximately 33,600 employees across more than 100 countries, with over 84% located outside the United States. Major manufacturing, warehousing, distribution, and research and development facilities are strategically located across all regions, including the United States, Australia, Brazil, China, Czech Republic, Colombia, France, Greece, Guatemala, India, Italy, Mexico, Netherlands, Poland, South Africa, Thailand, Türkiye, and Vietnam. Oral Care is a significant part of the business in Asia Pacific.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 60.1% (2025), a decrease of 50 basis points from 60.6% in 2024. This decline was primarily driven by significantly higher raw and packaging material costs (420 bps), partially offset by cost savings from funding-the-growth initiatives (260 bps), higher pricing (80 bps), and favorable mix (30 bps).
• Operating Margin: 21.3% (2025), a decrease of 40 basis points from 21.7% in 2024. This was primarily due to the decrease in Gross profit (50 bps), partially offset by a decrease in Selling, general and administrative expenses (10 bps), both as a percentage of Net sales.
• Net Margin: 14.7% (2025) compared to 14.7% (2024).

Investment in Growth:

• R&D Expenditure: $366 million in 2025, representing 1.8% of revenue, compared to $355 million in 2024.
• Capital Expenditures: $564 million in 2025, an increase from $561 million in 2024. Capital expenditures for 2026 are expected to be approximately 3.0% of Net sales.
• Strategic Investments: The Company acquired the Prime100 pet food business for approximately $301 million in 2025. The new Strategic Growth and Productivity Program is estimated to incur cumulative pre-tax charges of $200 million to $300 million by December 31, 2028.

Business Segment Analysis

Oral, Personal and Home Care

Financial Performance:

• Revenue: $15,769 million (+1.0% YoY)
• Organic Sales Growth: +1.5% YoY
• Operating Margin: 25.7% (calculated as sum of regional operating profits divided by total segment revenue)
• Key Growth Drivers: The increase in organic sales was primarily due to growth in Oral Care, particularly in the toothpaste and manual toothbrush categories.

Product Portfolio:

• Oral Care: Brands include Colgate, Darlie, elmex, hello, meridol, Sorriso, and Tom’s of Maine toothpastes; Colgate, Darlie, elmex, and meridol toothbrushes; and Colgate, elmex, and meridol mouthwashes. This segment also includes pharmaceutical products for oral health professionals.
• Personal Care: Key brands include Palmolive, Protex, and Softsoap liquid hand soaps; Irish Spring, Palmolive, and Protex bar soaps; Irish Spring, Palmolive, Sanex, and Softsoap shower gels; Lady Speed Stick, Sanex, Speed Stick, and Tom’s of Maine deodorants and antiperspirants; EltaMD, Filorga, and PCA SKIN skin health products; and Palmolive shampoos and conditioners.
• Home Care: Products include Ajax, Axion, and Palmolive dishwashing liquids; Ajax, Fabuloso, and Murphy household cleaners; and Suavitel, Soupline, Fluffy, and Cuddly fabric conditioners.

Market Dynamics: The segment maintains global leadership in toothpaste and manual toothbrushes and liquid hand soap. Growth is increasingly dependent on the ability to generate consumer demand across the omni-channel ecosystem, including traditional retail, eCommerce, social media, and digital platforms.

North America

Financial Performance:

• Revenue: $4,045 million (-1.6% YoY)
• Operating Margin: 19.4% (down 100 bps YoY)
• Key Growth Drivers: Organic sales decreased by 1.6%, driven by declines in Personal Care (skin health, body wash, underarm protection) and Home Care (hand dish), partially offset by growth in Oral Care (manual toothbrush). The decrease in Operating profit margin was primarily due to a 110 bps decrease in Gross profit, influenced by higher raw and packaging material costs.

Latin America

Financial Performance:

• Revenue: $4,776 million (-0.1% YoY)
• Operating Margin: 29.6% (down 230 bps YoY)
• Key Growth Drivers: Organic sales increased by 3.9%, led by Mexico, Argentina, and Brazil, driven by growth in Oral Care (toothpaste, manual toothbrush) and Home Care (surface cleaner, fabric softener). The decrease in Operating profit margin was primarily due to a 370 bps decrease in Gross profit, impacted by significantly higher raw and packaging material costs, partially offset by decreased advertising investment.

Europe

Financial Performance:

• Revenue: $2,962 million (+6.9% YoY)
• Operating Margin: 25.3% (up 160 bps YoY)
• Key Growth Drivers: Organic sales increased by 2.6%, led by the United Kingdom, Germany, and France, primarily due to growth in Oral Care (toothpaste). The increase in Operating profit margin was driven by an 80 bps increase in Gross profit, benefiting from funding-the-growth initiatives and higher pricing, and a 50 bps decrease in Selling, general and administrative expenses due to reduced advertising investment.

Asia Pacific

Financial Performance:

• Revenue: $2,814 million (-1.5% YoY)
• Operating Margin: 27.0% (down 140 bps YoY)
• Key Growth Drivers: Organic sales decreased by 1.0%, primarily in the Greater China region and India, with declines in Oral Care (toothpaste) and Personal Care (bar soap), partially offset by Oral Care growth (manual toothbrush). The decrease in Operating profit margin was due to a 20 bps decrease in Gross profit and a 110 bps increase in Selling, general and administrative expenses, reflecting higher overheads and increased advertising.

Africa/Eurasia

Financial Performance:

• Revenue: $1,172 million (+7.0% YoY)
• Operating Margin: 21.8% (down 130 bps YoY)
• Key Growth Drivers: Organic sales increased by 6.5%, led by Türkiye and the North Africa/Middle East region, primarily due to growth in Oral Care (toothpaste, manual toothbrush). The decrease in Operating profit margin was due to a 20 bps decrease in Gross profit and a 120 bps increase in Selling, general and administrative expenses, mainly from higher overheads.

Hill’s Pet Nutrition

Financial Performance:

• Revenue: $4,613 million (+2.9% YoY)
• Organic Sales Growth: +1.2% YoY (despite a 320 bps negative impact from lower private label sales)
• Operating Margin: 23.1% (up 160 bps YoY)
• Key Growth Drivers: Organic sales growth was led by the United States (excluding private label), Europe, and Asia, driven by growth in the therapeutic and wellness categories. The increase in Operating profit margin was primarily due to a 230 bps increase in Gross profit, benefiting from funding-the-growth initiatives, higher pricing, and favorable mix, partially offset by higher raw and packaging material costs.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The Company repurchased $1,210 million of its common stock in 2025, comprising approximately 13.7 million shares under the 2025 Program and 0.6 million shares for compensation and benefit plans. This compares to $1,739 million in 2024.
• Dividend Payments: Total dividend payments were $1,823 million in 2025, up from $1,789 million in 2024. Dividends paid per share increased to $2.06 in 2025 from $1.98 in 2024. In the first quarter of 2025, the quarterly common stock dividend was increased to $0.52 per share from $0.50 per share, effective in the second quarter of 2025.
• Future Capital Return Commitments: The Board authorized a new share repurchase program on March 20, 2025, for up to $5 billion, replacing a previously authorized program.

Balance Sheet Position:

• Cash and Equivalents: $1,288 million as of December 31, 2025, up from $1,096 million in 2024.
• Total Debt: $7,988 million as of December 31, 2025, compared to $7,949 million in 2024.
• Net Cash Position: The Company held a net debt position of $6,700 million as of December 31, 2025.
• Debt Maturity Profile: Scheduled maturities of long-term debt (excluding commercial paper) include $1,115 million in 2026, $523 million in 2027, $615 million in 2028, $591 million in 2029, $500 million in 2030, and $4,495 million thereafter. Commercial paper outstanding was $147 million in 2025. The Company issued $500 million of five-year Senior Notes at 4.20% and €600 million of ten-year Senior Notes at 3.25% in 2025.

Cash Flow Generation:

• Operating Cash Flow: Increased by 2% to $4,198 million in 2025 from $4,107 million in 2024.
• Free Cash Flow: $3,634 million in 2025, up from $3,546 million in 2024.
• Cash Conversion Metrics: Working capital as a percentage of Net sales was (7.0)% in 2025, compared to (5.2)% in 2024.

Operational Excellence

Production & Service Model: Colgate-Palmolive Company is globally engaged in the manufacture and sourcing of products and materials. Its operational philosophy emphasizes continuous, company-wide "funding-the-growth initiatives" to reduce costs and increase effective asset utilization. These initiatives include raw material substitution, reduction of packaging materials, supplier consolidation to leverage volumes, and increasing manufacturing efficiency through SKU reductions and formulation simplification. The recently approved Strategic Growth and Productivity Program further aims to optimize the global supply chain for agility and efficiencies.

Supply Chain Architecture: Key Suppliers & Partners: The majority of raw and packaging materials are purchased from multiple sources. However, certain key raw and packaging materials are sourced from single-source or a limited number of suppliers. New suppliers must undergo qualification under industry, governmental, and Colgate-Palmolive Company standards, which can be a lengthy process. The Company relies on a network of third parties, including suppliers, contract manufacturers, distributors, manufacturing logistics providers, financial service providers, and cloud-based software providers, to support various aspects of its business.

Facility Network: The Company owns or leases approximately 325 properties globally, encompassing manufacturing, distribution, research and development (R&D), and office facilities.

• Manufacturing: Major U.S. facilities for Oral, Personal and Home Care are in Ohio, South Carolina, and Tennessee, while Pet Nutrition facilities are in Indiana, Kansas, Kentucky, Ohio, and Oklahoma. Overseas, Oral, Personal and Home Care facilities are in Australia, Brazil, China, Colombia, France, Greece, Guatemala, India, Italy, Mexico, Poland, South Africa, Thailand, Türkiye, and Vietnam. Pet Nutrition facilities abroad are in Australia, Czech Republic, Italy, and the Netherlands.
• Research & Development: The primary R&D center for Oral Care and Personal Care products is in New Jersey, for Home Care products in Mexico, and for Pet Nutrition products in Kansas.
• Distribution: The Company maintains major warehousing facilities and distribution centers in every region worldwide.
• Shared Business Service Centers: Located in India, Mexico, and Poland.
• Global Data Center: Located in New Jersey.

Operational Metrics: The Company's funding-the-growth initiatives and Strategic Growth and Productivity Program are designed to drive operational efficiencies, including manufacturing efficiency through SKU reductions and formulation simplification.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: Colgate-Palmolive Company employs a comprehensive go-to-market strategy utilizing various distribution channels. This includes a direct sales force at individual operating subsidiaries or business units, as well as partnerships with distributors or brokers. The Company's products are sold to a wide array of customers, including large-format retailers, discounters, and eCommerce retailers. There is an increasing emphasis on digital platforms, social commerce, and direct-to-consumer sales to generate demand across the omni-channel ecosystem.

Customer Portfolio: Enterprise Customers: Sales to Walmart, Inc. and its affiliates represented approximately 11% of the Company's Net sales in 2025, indicating a notable customer concentration. No other single customer accounted for more than 10% of Net sales. The Company acknowledges increasing dependence on certain key retailers who may exert greater bargaining strength, including exclusive access to valuable first-party consumer data and analytics.

Geographic Revenue Distribution: Approximately two-thirds of the Company's Net sales are generated from markets outside the United States. Emerging markets, which include Latin America, Asia (excluding Japan), Africa/Eurasia, and Central Europe, contribute approximately 45% of total Net sales. In 2025, Net sales in the United States for Oral, Personal and Home Care were $3,596 million, and for Pet Nutrition were $3,062 million. The Eurasia region constituted approximately 1% of consolidated net sales in 2025.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Colgate-Palmolive Company operates within a highly competitive global omni-channel marketplace. This market is increasingly characterized by the integration of traditional and digital retail operations, evolving consumer purchasing behaviors (including online, social commerce, and AI-assisted shopping), and the emergence of alternative retail channels such as subscription services and direct-to-consumer businesses. Raw and packaging material commodities are subject to market price variations, adding a layer of cost volatility to the industry.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The Company faces vigorous competition worldwide from multinational and local competitors, including private label brands offered by retailers. The growth of eCommerce and the use of AI have also encouraged the entry of new direct-to-consumer competitors. Competition spans various aspects, including pricing, promotional activities, new product introductions, and expansion into new geographies and channels. Some competitors may possess greater resources or exhibit more agility.

Competitive Response Strategy: Colgate-Palmolive Company's strategy to maintain its competitive advantage includes building on superior, science-based innovation, ensuring an agile and resilient supply chain, harnessing best-in-class omni-channel demand generation, leading in data, analytics, and AI capabilities, and evolving its high-impact, inclusive culture. The Company also actively enforces and defends its intellectual property rights, including patents, trademarks, copyrights, trade secrets, and trade dress rights.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company faces risks from changing macroeconomic conditions, including inflationary pressures, economic slowdowns, and volatile commodity prices. The rapidly changing retail landscape, driven by omni-channel integration and evolving consumer preferences, poses a risk if the Company fails to adapt. Dependence on key retailers, such as Walmart, Inc. (11% of Net sales), creates concentration risk. Geopolitical events, wars (e.g., Ukraine, Middle East, Venezuela), and shifts in trade relations (tariffs, sanctions) can impact consumer sentiment, supply chains, and costs. Technology Disruption: The Company's growth depends on successful innovation, and failure to develop and launch new products or adapt to evolving consumer preferences and regulatory requirements could hinder growth. The increasing use of AI also presents risks, including potential for false or biased outputs and intellectual property infringement claims. Reputational Risk: Negative publicity related to brands, products, supply chain, ingredients, packaging, sustainability practices, or employees, especially amplified by digital and social media, could damage brand equity and business. Counterfeit products also pose a risk to brand image. Acquisitions & Divestitures: Risks include failure to realize expected benefits or synergies, integration challenges, diversion of management attention, and potential for substantial additional debt or impairment charges, as seen with the skin health business impairment in 2025.

Operational & Execution Risks

Supply Chain Vulnerabilities: Disruptions from geopolitical events, health emergencies, labor disputes, logistics challenges, loss of key manufacturing/distribution sites, raw/packaging material availability/quality issues, and reliance on single-source suppliers can interrupt product supply. Cost Volatility: Increases in commodity, energy, and logistics costs, exacerbated by macroeconomic and geopolitical tensions, may adversely impact profit margins if mitigation efforts (pricing, cost efficiencies) are insufficient. Cost Reduction Programs: There is no guarantee that ongoing "funding-the-growth initiatives" or the "Strategic Growth and Productivity Program" will achieve anticipated savings or benefits on schedule. Cybersecurity Incident & IT Systems Failure: Extensive reliance on IT/OT systems, including third-party providers, exposes the Company to cyberattacks, data incidents, and system failures. Such events could disrupt operations, lead to data loss, reputational harm, significant costs, and legal liabilities.

Financial & Regulatory Risks

Market & Financial Risks: Uncertain global macroeconomic conditions, including inflation and high interest rates, may lead to reduced consumer spending, shifts to lower-priced products, and financial difficulties for customers or suppliers. Foreign currency fluctuations, particularly in hyper-inflationary economies, can impact revenues and profits. Disruptions in credit markets or changes to credit ratings could affect funding availability and cost. Regulatory & Compliance Risks: The Company is subject to extensive legal and regulatory requirements globally, covering product development, ingredients, manufacturing, labeling, advertising, and environmental impact. New or more stringent regulations, or changes in ingredient reviews (e.g., PFAS), could increase compliance costs or impact product portfolios. Anti-corruption, anti-bribery, trade regulations, and data privacy laws also pose compliance risks. Legal Proceedings: The Company is routinely involved in various legal claims, including intellectual property, product liability (e.g., talcum powder litigation with 454 cases pending as of December 31, 2025), and pension/benefits (e.g., ERISA litigation matter). The aggregate range of reasonably possible losses in excess of accrued liabilities is estimated at $0 to approximately $225 million.

Geopolitical & External Risks

Geopolitical Exposure: Operations in over 200 countries expose the Company to political instability, trade tensions, sanctions, and export controls, which can impact business operations and financial results. Climate Change & Sustainability: Climate change poses physical risks to facilities and supply chains and transition risks from evolving legal and regulatory requirements (e.g., emissions targets, extended producer responsibility). Failure to meet sustainability targets or negative stakeholder perceptions could harm reputation and financial performance.

Innovation & Technology Leadership

Research & Development Focus: Colgate-Palmolive Company's innovation strategy is centered on science-led core and premium innovation. The Company is actively building capabilities in digital, data, analytics, and artificial intelligence (AI) to drive future growth. Its primary research and development centers are located in New Jersey for Oral Care and Personal Care products, in Mexico for Home Care products, and in Kansas for Pet Nutrition products. In 2025, the Company's R&D expenditure was $366 million.

Intellectual Property Portfolio: The Company maintains an active portfolio of patents, though no single patent is considered significant to the business as a whole. Its trademark strategy involves seeking protection globally for its principal brands, which include Colgate, Palmolive, Darlie, elmex, hello, meridol, Sorriso, Tom’s of Maine, EltaMD, Filorga, Irish Spring, Lady Speed Stick, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Murphy, Soupline, Suavitel, Hill’s Science Diet, Hill’s Prescription Diet, and Prime100. These trademark rights endure as long as they are used and/or registered. The Company faces risks from intellectual property infringement claims, which could increase costs and delay new product launches.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company maintains a rigorous succession planning process, led by its Global Human Resources function, with extensive oversight from the Board of Directors, particularly for CEO succession. This process involves reviewing potential successors, their capabilities, and appropriate developmental assignments. Executive officers hold their positions until successors are chosen and qualified, or until resignation, retirement, or removal by a majority vote of the Board. There are no family relationships among the executive officers.

Board Composition: The Board of Directors is actively involved in cybersecurity oversight, with specific responsibility delegated to the Audit Committee. The Nominating, Governance and Corporate Responsibility Committee considers experience in overseeing and managing risk management processes, including cybersecurity, as a crucial quality for effective and diverse Board composition.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, Colgate-Palmolive Company had approximately 33,600 employees based in over 100 countries. A significant majority, over 84%, of its employees are located outside the United States. The geographic distribution of the workforce includes 33% in Asia Pacific, 31% in Latin America, 17% in North America, 15% in Europe, and 4% in Africa/Eurasia. The global workforce spans a broad range of functions, from manufacturing to management, with some employees represented by unions or works councils.

Talent Management: Acquisition & Retention: The Company prioritizes recruiting, developing, and retaining strong talent with diverse backgrounds and perspectives, recognizing their crucial role in business success. Compensation is viewed as a key tool for motivating leaders across the organization. Diversity & Development: Fostering an inclusive culture where all employees can reach their full potential is a key focus of the Company's 2030 business strategy. The Company is committed to having a workforce that reflects the communities it serves globally, believing this enhances its ability to market brands authentically and increase household penetration. Core corporate values include Caring, Inclusive, and Courageous, underpinned by a commitment to high ethical standards and a Code of Conduct. The Company supports employee growth and development through a robust learning culture and monitors evolution through regular employee engagement surveys.

Environmental & Social Impact

Environmental Commitments: Sustainability is integral to Colgate-Palmolive Company's overall business and growth strategy, serving as a key enabler for value creation. The Company's 2030 sustainability strategy focuses on three key ambitions: Preserving our Environment, Helping Millions of Homes, and Driving Social Impact. This strategy adopts a science-based, pragmatic, and value-driven approach to build resilience and value across the business. The Company acknowledges that achieving its sustainability targets will require significant effort, capital investment, additional expense, and the development of new technologies.

Supply Chain Sustainability: There is an increased focus from stakeholders on various sustainability matters within the supply chain, including responsible sourcing, deforestation, animal welfare, labor and human rights, ingredients of interest, the use of plastic, energy and water management, and the recyclability or recoverability of packaging. The Company also notes a growing demand for natural or organic products and greater ingredient transparency, such as for palm oil.

Social Impact Initiatives: The Company's 2030 strategy includes ambitions for "Helping Millions of Homes" and "Driving Social Impact." It is committed to fostering a sense of belonging and valuing the contributions of all its employees, promoting a collaborative spirit known as "The Power of WE."

Regulatory Environment & Compliance

Regulatory Framework: Colgate-Palmolive Company is subject to extensive governmental regulations in the United States and internationally, covering nearly all aspects of its products, from development and ingredients to manufacturing, packaging, labeling, distribution, advertising, and environmental impact. Key U.S. federal authorities include the U.S. Food and Drug Administration, Federal Trade Commission, Consumer Product Safety Commission, Occupational, Safety and Health Administration, and Environmental Protection Agency, with comparable authorities overseas. The Company's selling practices are also regulated by competition law authorities. There is increasing regulatory scrutiny on ingredients such as fluoride, titanium dioxide, synthetic colors, and per- and polyfluoroalkyl (PFAS).

Trade & Export Controls: The Company is subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, and laws prohibiting commercial bribery. It also complies with U.S. laws and sanctions (e.g., those imposed by the U.S. Treasury Department’s Office of Foreign Asset Control) and other jurisdictions that may restrict business in certain countries or types of trade. Customs and trade laws, regulations, and international trade agreements, including those related to tariffs, export controls, and import restrictions, also apply.

Legal Proceedings: The Company is routinely involved in a wide variety of legal claims and proceedings.

• Talcum Powder Matters: As of December 31, 2025, 454 individual cases were pending against the Company in U.S. state and federal courts, alleging asbestos contamination and/or causing mesothelioma and other cancers. The Company believes it has strong legal grounds to contest these cases.
• ERISA Matter: A lawsuit regarding the improper calculation of residual annuity payments for participants in the Colgate-Palmolive Company Employees’ Retirement Income Plan resulted in a settlement agreement for $332 million in 2025, including $99 million for plaintiffs’ attorneys’ fees and costs to be paid by the Company.
• Brazilian Matters: Ongoing tax and civil proceedings related to the 1995 acquisition of the Kolynos oral care business, with tax assessments, interest, and penalties totaling approximately $97 million. The Company believes it has strong legal grounds to contest these matters. The aggregate range of reasonably possible losses in excess of accrued liabilities for all legal matters is estimated at $0 to approximately $225 million.

Tax Strategy & Considerations

Tax Profile: The Company's effective income tax rate was 26.1% in 2025 (GAAP) and 23.1% (non-GAAP), compared to 22.9% (GAAP) and 22.7% (non-GAAP) in 2024. The Company benefits from tax planning associated with its global business initiatives.

• Geographic Tax Planning: International tax norms are evolving due to multilateral projects like the Base Erosion and Profit Shifting Project (BEPS Project) and Pillar II, which establish new principles for jurisdictional taxation rights and a global minimum tax. Pillar II did not have a material impact on the Company's Consolidated Financial Statements for 2025 and is not expected to going forward, aside from compliance time and resources. The "Side-by-Side Package," effective January 1, 2026, modifies Pillar II and is expected to reduce compliance costs.
• Tax Reform Impact: The "One Big Beautiful Bill Act" (OBBBA), signed July 4, 2025, makes permanent many 2017 U.S. tax provisions and introduces changes to U.S. corporate tax provisions effective January 1, 2026. The OBBBA did not materially affect 2025 financial statements and is not expected to have a material future impact. The Inflation Reduction Act of 2022 (IRA) implements a 15% minimum tax on book income for certain large corporations, effective after December 31, 2022, but is not expected to materially impact the Company's financial statements.
• Tax Audits: The Company has ongoing federal, state, and international income tax audits. It is appealing limited matters from IRS audits for 2010-2013 and is under audit for 2014-2018 regarding imputed income on international operations, with an estimated $165 million in tax plus interest at issue, which the Company believes is without merit. An IRS audit for 2019-2021 is ongoing.
• Unrecognized Tax Benefits: As of December 31, 2025, unrecognized tax benefits totaled $332 million, with approximately $308 million potentially impacting the effective tax rate if recognized. Accrued interest and penalties related to these benefits were $95 million.

Insurance & Risk Transfer

Risk Management Framework: Colgate-Palmolive Company employs a systematic and thorough risk management process to identify, assess, prioritize, and mitigate risks. The Enterprise Risk Management (ERM) Committee, led by the Chairman, President and Chief Executive Officer, monitors current and emerging risks, including cybersecurity, which is identified as a critical risk. Cybersecurity oversight is specifically delegated to the Audit Committee of the Board. The Chief Information Security Officer (CISO), who reports to the Chief Information Officer, leads a dedicated information security organization responsible for assessing and managing cybersecurity threats. This organization implements best practices, new technologies, vendor due diligence, security policies, and conducts regular response planning and testing, adhering to frameworks like the National Institute of Standards and Technology (NIST).

Insurance Coverage: The Company maintains a cybersecurity insurance policy to address costs associated with certain aspects of cybersecurity incidents, data incidents, and IT/OT system failures. Additionally, a portion of the costs incurred in defending and resolving talcum powder litigation claims has been, and is expected to continue to be, covered by insurance policies, subject to policy terms and conditions.

Risk Transfer Mechanisms: The Company manages market risks from foreign currency exchange rates, interest rates, and commodity price fluctuations on a global basis. This includes working capital management, selling price increases, selective borrowings in local currencies, and the use of derivative instruments (forward and swap contracts for foreign currency, interest rate swaps for debt, and futures contracts for commodity hedging, primarily in Hill's Pet Nutrition). The Company's treasury and risk management policies prohibit the use of derivatives for speculative purposes. Credit risk from financial instrument counterparties is mitigated by contracting with diverse, credit-worthy entities.