New York/Mumbai: Global FMCG giant Colgate-Palmolive has revealed that new tariffs will increase its costs by $200 million (about Rs 1,680 crore) in 2025. The company has cut its full-year sales and profit outlook due to this increased cost. The announcement came along with the company's first quarter (Q1 2025) results on April 25, 2025, with the tariff impact being primarily on imports of raw materials and finished goods, especially between China and the US.
Tariff impact: Huge cost hike
Colgate-Palmolive said the additional burden of tariffs will be spread evenly from the second to the fourth quarter of 2025. According to the company, this cost increase is primarily due to duties imposed on raw materials imported into the US and finished goods coming from China. Toothpaste imported from Mexico will also be partially impacted. “Tariffs are putting pressure on our cost structure, but we are optimizing the supply chain to address this challenge,” said Noel Wallace, the company’s CEO.
Q1 2025 results: Mixed performance
Colgate-Palmolive reported revenue of $4.91 billion in Q1 2025, slightly higher than analysts’ estimates of $4.86 billion. Earnings per share on a non-GAAP basis stood at $0.91, better than estimates of $0.86. However, earnings per share on a GAAP basis were $0.85, marginally better than $0.83 last year. Total sales declined 3.1%, although organic sales grew 1.4%.
Sales and profit outlook cut
The company has lowered its organic sales growth forecast for 2025 to 2-4%, lower than previously estimated. Profit margins are also expected to be under pressure, as it will be difficult to fully transfer tariff costs to consumers. Analysts say the cut is due to uncertainty in global trade and rising costs.
Colgate-Palmolive performance in India
Colgate-Palmolive has shown strong performance in India in recent years. The company's net profit grew 20% to Rs 380 crore and revenue grew 10.4% to Rs 1,481 crore in the fourth quarter of FY24. Q2 FY25 also recorded a profit growth of 16% (Rs 395 crore) and sales growth of 10% (Rs 1,609 crore) in India. However, global tariffs may impact the company's costs in India, as some raw materials are import-dependent.
Consumer and investor reaction
Colgate-Palmolive shares fell 1% on Friday after the tariff announcement. Investors fear that the increased costs could impact the company's margins. For consumers, this could mean a slight increase in prices of toothpaste, soap and other products.
Company strategy
Colgate-Palmolive has taken several steps to control costs, including the 'Funding The Growth' program, which helped increase margins in India. The company is also focusing on reorganizing the supply chain and increasing local production. In India, Colgate has made innovations in the toothpaste and toothbrush portfolio, such as the new tooth-whitening booster in the Visible White range.
Impact on global trade
Experts say the impact of tariffs will not be limited to Colgate-Palmolive alone. Other companies in the FMCG sector are also facing rising costs. Uncertainty in global trade and protectionist policies are posing new challenges for companies.
Conclusion
2025 could be a challenging year for Colgate-Palmolive, as a $200 million cost increase due to tariffs and a weak outlook are concerns for investors and consumers. However, the company's strong brand presence and focus on innovation could help it overcome these challenges. Colgate's position remains strong in markets like India, but strategic changes will be necessary globally.
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