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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.00pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.19pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.19pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
incidents+3
impairment+3
litigation+2
barriers+2
adversely+1
Positive rising
successful+3
successfully+1
effective+1
profitability+1
able+1
Risk Factors (Item 1A)
8,761 words
ITEM 1A. RISK FACTORS
In addition to the risks described elsewhere in this report, set forth below is a summary of the material risks to an investment in our securities. These risks, some of which have occurred and/or are occurring and any of which could occur in the future, are not the only ones we face. Additional risks not presently known to us or that we currently deem immaterial may also have an adverse effect on us. To the extent any of these risks actually occur, our business, results of operations, cash flows and financial condition could be materially and adversely impacted, which might cause the value of our securities to decline.
Business and Industry Risks
We face risks associated with significant international operations, including exposure to foreign currency fluctuations.
We operate on a global basis serving consumers in more than 200 countries and territories with approximately two-thirds of our Net sales originating in markets outside the United States. While geographic diversity helps to reduce our exposure to risks in any one country or part of the world, it also means that we face risks associated with significant international operations, including:
• changing macroeconomic conditions in our markets, including as a result of inflationary pressure, economic slowdown or , major developments in trade relations, commodity prices and increases and/or in the cost of raw and packaging materials, labor, energy and logistics;
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
restructuring+21
impairment+16
litigation+7
declines+5
decline+5
Positive rising
positive+3
leading+3
efficient+2
superior+2
best+2
MD&A (Item 7)
14,094 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Executive Overview
Business Organization
Colgate-Palmolive Company (together with its subsidiaries, “we,” “us,” “our,” the “Company” or “Colgate-Palmolive”) is a caring, innovative growth company united behind our purpose to reimagine a healthier future for all people, their pets and our planet. To achieve our business and financial objectives and deliver peer-leading performance and total shareholder return, we are focused on driving organic sales growth; delivering consistent, compounded earnings per share growth; achieving operational efficiencies; and driving growth in free cash flow along with the efficient use of our balance sheet.
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, long-term growth.
• changes in exchange rates for foreign currencies, which may reduce the U.S. dollar value of revenues, profits and cash flows from non-U.S. markets or increase our supply costs, as measured in U.S. dollars, in those markets;
• political instability or uncertainty, including as a result of elections, economic instability, geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela;
• changes to trade policies and agreements and other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax consequences or the imposition of and/or the increase in trade restrictions and/or tariffs, sanctions, price controls, labor laws, travel or immigration restrictions, profit controls or other government controls;
• environmental events, widespread health emergencies, such as pandemics or epidemics, natural disasters or social or labor unrest;
• exchange controls and other limits on our ability to import or export raw materials or finished product or to repatriate cash from overseas, including as a result of the war in Ukraine;
• lack of well-established, reliable and/or impartial legal systems in certain countries where we operate and difficulties in enforcing contractual, intellectual property or other legal rights; and
• foreign ownership and investment restrictions and the potential for nationalization or expropriation of property or other resources.
Any or all of the foregoing risks could have a significant impact on our ability to sell our products on a competitive basis in international markets and may adversely affect our business, results of operations, cash flows and financial condition. In addition, a number of these risks have adversely impacted and may continue to adversely impact consumer sentiment (including as it relates to the perception of U.S. brands internationally) and consumption, which has reduced and may continue to reduce sales volumes of our products or result in a shift in our product mix from higher margin to lower margin product offerings.
We face risks resulting from political and macroeconomic instability and geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela, which may also heighten other risks disclosed in this Annual Report on Form 10-K, any of which could have an adverse impact on our business, results of operations, cash flows or financial condition.
Uncertainties and risks remain as to the evolving situation in Venezuela. We have operations, including a manufacturing facility, in Venezuela; however, since December 31, 2015, the local operating results from our Venezuela operations have not been included in our Consolidated Financial Statements. Nonetheless, the situation in Venezuela could have ramifications for our business in Venezuela and the broader Latin American region and on geopolitical relations more generally. The situation may impact consumer sentiment and consumption and category growth rates in the Latin American region, supply chain and logistics, and the availability and cost of raw and packaging materials and commodities, such as oil.
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. We have no manufacturing facilities in Russia. For the year ended December 31, 2025, our business in the Eurasia region constituted approximately 1% of our consolidated net sales and approximately 2% 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 cost 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 to identify financial institutions and services to support our Russian operations and 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.
Major developments in trade relations, including the imposition of new or increased tariffs by the United States and/or other countries, such as China, including those threatened or imposed following the United States’ 2025 executive orders, retaliatory tariffs imposed by the United States’ trading partners or through the renegotiation of trade agreements, have contributed to and are expected to continue to contribute to inflationary pressures, geopolitical tensions, macroeconomic and market volatility and consumer uncertainty. These developments have also impacted and may continue to impact consumer sentiment, consumption, discretionary spending and/or purchasing patterns. In addition, they have impacted and may continue to impact the cost and/or availability of raw and packaging materials and the price of our products. While we have made and will continue to make efforts to mitigate the impact of these and any additional tariffs imposed by the United States and/or other countries or shifts in trade agreements, they or our mitigating actions could have a material effect on our business, results of operations, cash flows and financial condition.
In an effort to minimize the impact on earnings of foreign currency rate movements, we engage in a combination of selling price increases, where permitted, sourcing strategies, cost containment measures and selective hedging of foreign currency transactions. However, the impact of these measures has not and may not in the future fully offset any negative impact of foreign currency rate movements on our business, results of operations, cash flows and financial condition.
Significant competition in our industry could adversely affect our business.
We face vigorous competition worldwide, including from strong local competitors (including private label competition) and from other companies, some of which have greater resources than we do. In addition, the substantial growth in eCommerce and the use of AI have encouraged the entry of new competitors, some of which sell products direct-to-consumer.
We face competition in several aspects of our business, including pricing, promotional activities, new product introductions and expansion into new geographies and channels. Some of our competitors may spend more aggressively on or have more effective advertising and promotional activities than we do, introduce competing products more quickly and/or respond more effectively to business and economic conditions and changing consumer preferences, including by launching innovative new products or products with on-trend or novel ingredients. Such competition also extends to administrative and legal challenges of product claims and advertising. Our success is and will likely increasingly be dependent on our ability to excel at omni-channel demand generation, effectively leverage AI, data analytics and other existing and emerging digital technologies to gain new commercial insights and develop relevant products, marketing and advertising to reach customers and consumers. Our ability to compete also depends on the strength of our brands and products and on our ability to enforce and defend our intellectual property, including patent, trademark, copyright, trade secret and trade dress rights, againstinfringement and legal challenges by competitors.
We may be unable to anticipate the timing and scale of such initiatives or challenges by competitors or to successfully respond to them, which could harm our business and/or reputation. In addition, the cost of responding to such initiatives and challenges, including management time, out-of-pocket expenses and price reductions, may affect our performance. A failure to compete effectively could adversely affect our business, results of operations, cash flows and financial condition.
The rapidly changing retail landscape and changing consumer preferences may adversely affect our business.
Our products are sold in a highly competitive global omni-channel marketplace that is increasingly defined by the integration of traditional and digital retail operations and evolving consumer purchasing behaviors and preferences, as consumers continue to shop online and increasingly through social commerce and with the assistance of AI. The increased presence of alternative retail channels, such as subscription services and direct-to-customer businesses, has also intensified competition for consumer attention. While we continue to sell our products to a variety of customers, including large-format retailers, discounters and eCommerce retailers, our growth is increasingly dependent on our ability to generate consumer demand across key touchpoints in the omni-channel ecosystem whether through traditional retail, eCommerce, social media or digital. We are also increasingly dependent on certain key retailers, some of which exercise greater bargaining strength than we do, including the exclusive access to valuable first-party consumer data and analytics. They have demanded and may continue to demand higher trade discounts, allowances, slotting fees, significant investment (including through display media, paid search and co-op programs) or changes to product assortments, which have led to and could continue to lead to reduced sales or profitability in certain markets. Furthermore, the consolidation of retail customers globally may further increase our concentration risk. The loss of a key customer or distributor or a significant reduction in sales to a key customer or distributor could adversely affect our business, results of operations, cash flows and financial condition. For additional information regarding our customers, see “Distribution; Raw Materials; Competition; Trademarks and Patents” in Item 1 “Business.”
We also have been and may continue to be negatively affected by changes in the policies or practices of our customers, such as inventory destocking, automated fulfillment requirements, AI-aided category pricing pressures and algorithms, limitations on access to shelf space (including the digital shelf), delisting of our products or sustainability, supply chain or packaging standards or initiatives. For example, a determination by a key retailer that any of our ingredients should not be used in certain consumer products or that our packaging does not comply with certain requirements and standards could adversely impact our business, results of operations, cash flows and financial condition. In addition, “private label” products sold by our retail customers, which are typically sold at lower prices than branded products, are a source of competition for certain of our products.
If we are not successful in adapting or effectively reacting to the rapidly changing retail landscape, changes in consumer behavior, preferences or purchasing patterns and/or executing our 2030 business strategy which is, in part, focused on omni-channel demand generation, our business, results of operations, cash flows and financial condition could be adversely affected.
The growth of our business depends on the successful identification, development and launch of innovative new products.
Our growth depends on the continued success of existing products, the successful identification, development and launch of innovative new and differentiated products and the expansion into adjacent categories, channels of distribution or geographies. Our ability to launch new products, to sustain existing products and to expand into adjacent categories, channels of distribution or geographies is affected by whether we can successfully:
• identify, develop and fund technological innovations;
• obtain and maintain necessary intellectual property protection and avoid infringing intellectual property rights of others;
• obtain approvals and registrations of regulated products, including from the U.S. Food and Drug Administration (the “FDA”) and other regulatory bodies in the United States and abroad; and
• anticipate and quickly respond to the needs and preferences of consumers and customers.
The identification, development and introduction of innovative new products that drive incremental sales involves considerable costs and effort, and any new product may not generate sufficient customer and consumer interest and sales to become a profitable product or to cover the costs of its development and promotion. Our ability to achieve a successful launch of a new product could also be adversely affected by preemptive actions taken by competitors in response to the launch, such as increased promotional activities and advertising. In addition, new products may not be accepted quickly or significantly in the marketplace.
Our ability to quickly innovate to adapt and market our products and to adapt our packaging or the sustainability profile of our products to meet evolving consumer preferences and/or regulatory requirements is an essential part of our business strategy. The failure to develop and launch successful new products or to adapt our packaging, the sustainability profile of our products or supply chain to meet such preferences could hinder the growth of our business and any delay in the development or launch of a new product could result in us not being the first to market, which could compromise our competitive position and adversely affect our business, results of operations, cash flows and financial condition. In addition, our success in launching new products is dependent on our ability to deliver effective and efficient marketing in an evolving media landscape, which is subject to dynamic and increasingly restrictive privacy requirements and emerging regulations. Our ability to launch new products, including our ability to deliver effective and efficient marketing campaigns, is also impacted by our ability to successfully adopt and effectively leverage AI, including machine learning and generative AI, and other existing and emerging technologies.
If, in the course of identifying or developing new products, we are found to have infringed the trademark, trade secret, copyright, patent or other intellectual property rights of others, such a finding could adversely affect our ability to develop innovative new products and adversely affect our business, results of operations, cash flows and financial condition. Even if we are not found to infringe a third party’s intellectual property rights, claims of infringement could adversely affect us, including by increasing costs and by delaying the launch of new products.
Damage to our reputation could have an adverse effect on our business.
Maintaining our strong reputation with consumers and our trade partners globally is critical to selling our branded products. Accordingly, we devote significant time and resources to programs designed to protect and preserve our reputation, such as our ethics and compliance, sustainability, social impact, brand protection, product safety, regulatory and quality initiatives and our enterprise risk management program. Negative publicity about us, our brands, our products, our supply chain, our ingredients, our packaging or our sustainability or social impact practices, or our employees, whether or not deserved, could jeopardize our reputation. Such negative publicity could relate to, among other things, health or quality concerns, threatened or pending litigation or regulatory proceedings, animal welfare, labor and human rights and environmental impact (including responsible sourcing, deforestation, packaging, plastic, energy and water use and waste management) or where we operate. In addition, the proliferation of digital and social media has greatly increased the accessibility of information, the speed of its dissemination and the potential for negative publicity and misinformation.
Negative publicity, posts or comments on digital and social media (including those that are AI-generated), whether true or untrue, could damage our brands and our reputation. The success of our brands could also suffer if our marketing initiatives do not have the desired impact on a brand’s image or its ability to attract consumers.
In addition, the legal, regulatory and ethics landscape around the use of AI continues to rapidly evolve. Our ability to successfully adopt and leverage this emerging technology in an effective and ethical manner may impact our reputation and our ability to compete, as outputs from generative AI models could be, among other things, false, biased or inconsistent with our values or strategies. Further, the use of generative AI tools may compromise our confidential or sensitive information or put our intellectual property at risk or subject us to claims of intellectual property infringement, which could in turn damage our reputation.
Additionally, due to the scale and scope of our business, we must rely on relationships with third parties, including our suppliers, distributors, contract manufacturers, manufacturing logistics providers, joint venture partners, financial services providers and cloud-based service providers. While we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, compliance and sustainability practices, thereby potentially increasing our reputational and legal risk.
We have taken and, in the future may take, certain actions to safeguard our reputation and uphold our ethical values, such as changes to how and where we sell, advertise and invest behind our products and operations, which could adversely affect our business, results of operations, cash flows and financial condition.
In addition, third parties sell counterfeit versions of our products, which are inferior and may pose safety risks. While we take actions to identify and remove counterfeit versions of our products from the market, these actions may not be successful. Consumers of our brands could confuse our products with counterfeit products, which could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our business, results of operations, cash flows and financial condition.
Damage to our reputation or loss of consumer confidence in our products for these or any other reasons could adversely affect our business, results of operations, cash flows and financial condition, as well as require resources to rebuild our reputation.
Our success depends upon our ability to recruit, attract and retain key employees and the succession of senior management.
Our success largely depends on the performance of our management team and other key employees. If we are unable to recruit, attract and retain talented, highly qualified senior management and other key people, our business, results of operations, cash flows and financial condition could be adversely affected. Successfully executing organizational change, including management transitions at leadership levels of the Company, succession plans for senior management and the Strategic Growth and Productivity Program, is critical to our business success. While we follow a disciplined, ongoing succession planning process and have succession plans in place for senior management and other key executives, these do not guarantee that the services of qualified senior executives will continue to be available to us at particular moments in time. Further, changes in immigration laws and government policies and practices and developments in trade relations have made, in certain circumstances, and may continue to make it more difficult for us to recruit or relocate highly skilled technical, professional and management personnel to meet our business needs. We continue to embed new ways of working to adapt to a rapidly changing world, drive innovation and operational efficiency and adopt and leverage technologies such as AI. If we do not (or are perceived not to) successfully implement these initiatives and/or upskill our employees, our ability to recruit, attract and retain talent may be adversely impacted.
We have pursued and may continue to pursue acquisitions and divestitures, which could adversely impact our business.
We have pursued and may continue to pursue acquisitions of brands, businesses, assets or technologies from third parties. Acquisitions and their pursuit have involved, and can involve, numerous potential risks, including:
• realizing the full extent of the expected benefits or synergies as a result of a transaction, within the anticipated time frame, or at all;
• successfully integrating the operations, technologies, services, products and systems of the acquired brands, assets or businesses in an effective, timely and cost-efficient manner;
• receiving necessary consents, clearances and approvals in connection with a transaction;
• diverting management’s attention from other business priorities;
• successfully operating in new lines of business, channels of distribution or markets;
• achieving distribution expansion related to products, categories and markets;
• retaining key employees, partners, suppliers and customers of the acquired business;
• conforming standards, controls, procedures and policies of the acquired business with our own;
• developing or launching products with acquired technologies; and
• other unanticipatedproblems or liabilities.
Moreover, acquisitions have resulted in and could in the future result in substantial additional debt, the assumption of contingent liabilities, such as litigation or earn-out obligations, or transaction costs. In addition, to the extent that the economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired company or business is less robust than expected, we may be required to record additional impairments of intangible assets, including trademarks and goodwill. For example, in the fourth quarter of 2025, we took a non-cash, aftertax impairment charge of $794 to adjust the carrying values of goodwill and intangible assets related to the skin health business. For additional information regarding recent impairment charges, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Goodwill and Intangible Asset Impairment Charges.” Any of these risks could adversely impact our reputation and our business, results of operations, cash flows and financial condition.
We have divested and may in the future divest brands or businesses. These divestitures may adversely impact our business, results of operations, cash flows and financial condition if we are unable to offset the dilutive impacts from the loss of revenue associated with the divested brands or businesses, or otherwise achieve the anticipated benefits or cost savings from the divestitures. In addition, businesses under consideration for, or otherwise subject to, divestiture may be adversely impacted prior to the divestiture, which could negatively impact our business, results of operations, cash flows and financial condition. If any planned divestiture is not able to be completed, we may also incur negative business and financial results.
Operational Risks
Our business results are impacted by our ability to manage disruptions in our global supply chain and/or key office facilities.
We are engaged in the manufacture and sourcing of products and materials on a global scale. Our operations and those of our suppliers, contract manufacturers or logistics providers have been and may continue to be disrupted by a number of factors, including:
• geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela;
• widespread health emergencies, such as pandemics or epidemics;
• strikes and other labor disputes;
• disruptions in logistics;
• loss or impairment of key manufacturing or distribution sites;
• loss of key suppliers or contract manufacturers;
• capacity constraints;
• raw and packaging material and product availability and/or quality or safety issues;
• industrial accidents or other occupational health and safety issues;
• the impact on our suppliers of tighter credit or capital markets;
• the lack of availability of qualified personnel, such as truck drivers and production labor;
• governmental incentives, regulations and controls and actual and potential shifts in U.S. and foreign trade policy (including import restrictions and export controls, new or increased tariffs, new or revised trade agreements, sanctions, quotas, trade barriers or new or increased regulations related to Good Manufacturing Practices); and
• natural disasters, including climatic events (including any potential effects of climate change) and earthquakes, tornadoes, acts of war or terrorism, political unrest or uncertainty, fires or explosions, cybersecurity incidents and other external factors over which we have no control.
In addition, we purchase certain key raw and packaging materials from single-source suppliers or a limited number of suppliers and new suppliers may have to be qualified under industry, governmental and/or Colgate standards, which can require additional investment and take a significant period of time. If our existing or new suppliers fail to meet such standards or if we are unable to contract with suppliers on favorable terms, our business, results of operations, cash flows and financial condition could be adversely affected.
We believe that the supplies of raw and packaging materials needed to manufacture our products are adequate. In addition, we have business continuity and contingency plans in place for key manufacturing sites and contract manufacturers and the supply of raw and packaging materials. Nonetheless, a significant disruption to the manufacturing or sourcing of products or materials for any reason, including those mentioned above, have at times interrupted and could in the future interrupt product supply and, if not remedied, could have an adverse impact on our business, results of operations, cash flows and financial condition.
In addition, as a result of our global shared service organizational model, certain of our functions, such as finance and accounting, customer service and logistics, human resources, global information technology and data analytics are concentrated in key office facilities. A significant disruption to any of our key office facilities for any reason, including those mentioned above, could adversely affect our business, results of operations, cash flows and financial condition.
Volatility in material and other costs has in the past and may continue to adversely impact our profitability.
Raw and packaging material commodities, such as resins, essential oils, tropical oils, pulp, tallow, corn, poultry and
soybeans, are subject to market price variations. Increases in the costs of and/or a reduction in the availability of commodities, energy (including fuel prices), logistics (including trucks and containers) or other necessary services, including as a result of macroeconomic and geopolitical tensions, conflicts and uncertainty, such as in Ukraine, the Middle East and Venezuela, developments in trade relations (including new or increased tariffs, new or revised trade agreements, sanctions, export controls or import restrictions), widespread health emergencies, such as pandemics or epidemics, changes in supply and demand and/or the impact of climatic events have affected and, in some instances, are likely to continue to adversely affect our profit margins. We have taken and may continue to take actions to mitigate these cost increases in the form of price increases and efforts to achieve cost efficiencies in areas such as manufacturing and distribution, or otherwise manage the exposure through sourcing strategies, productivity initiatives, including our funding-the-growth initiatives and the Strategic Growth and Productivity Program, and the limited use of commodity hedging contracts. These actions may not, however, fully offset these higher costs and our business, results of operations, cash flows and financial condition have been and may continue to be adversely impacted.
In addition, even if we are able to increase the prices of our products in response to commodity and other cost increases, we may not be able to sustain the price increases. If such price increases are sustained, they may negatively impact our sales volume, which can in turn negatively impact our margins and profitability. If competitors do not adjust their prices or if consumers decide not to pay higher prices and forego purchasing certain of our products or switch to “private label” or lower-priced product offerings, sales declines, a deterioration in our profitability and loss of market share may occur which could adversely affect our business, results of operations, cash flows and financial condition. See “Our business results are impacted by our ability to manage disruptions in our global supply chain and/or key office facilities” above for additional information.
There is no guarantee that our ongoing efforts to reduce costs will be successful.
One way that we generate funds needed to support the growth of our business is through our continuous, Company-wide initiatives to lower costs and increase effective asset utilization, which we refer to as our funding-the-growth initiatives. These initiatives are designed to reduce costs associated with direct materials, indirect expenses, distribution and logistics, and advertising and promotional materials, among other things. The achievement of our funding-the-growth goals depends on our ability to successfully identify and realize additional savings opportunities. Events and circumstances, such as financial or strategic difficulties, delays and unexpected costs may occur that could result in our not realizing any or all of the anticipated benefits or our not realizing the anticipated benefits on our expected timetable. If we are unable to realize the anticipated savings of our funding-the-growth initiatives, our ability to fund other initiatives and achieve our profitability goals may be adversely affected. Any failure to implement our funding-the-growth initiatives in accordance with our expectations could adversely affect our business, results of operations, cash flows and financial condition. For additional information regarding our funding-the-growth initiatives, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Overview.”
We may not realize the benefits that we expect from our Strategic Growth and Productivity Program.
Our new three-year productivity program, which we refer to as the “Strategic Growth and Productivity Program,” was approved by the Board on July 31, 2025 in an effort to drive future growth and support the Company’s 2030 strategy. The program includes initiatives to better align our organizational structure to support our strategic initiatives, optimize our global supply chain to drive agility and efficiencies and simplify and streamline our organizational structure to reduce overhead costs. The successful implementation of the program may present significant organizational challenges and, in some cases, may require successful negotiations with third parties, including works councils and unions. As a result, we may not be able to realize the anticipated benefits from the Strategic Growth and Productivity Program. Events and circumstances, such as financial or strategic difficulties, delays and unexpected costs may occur that could result in our not realizing all of the anticipated benefits or our not realizing such benefits on our expected timetable. In addition, changes in foreign exchange rates or in tax, labor or immigration laws may result in our not achieving anticipated cost savings. If we are unable to realize the anticipated savings of the Strategic Growth and Productivity Program, our ability to fund other initiatives and enhanceprofitability may be adversely affected. Any failure to implement the Strategic Growth and Productivity Program in accordance with our expectations could adversely affect our business, results of operations, cash flows and financial condition. For additional information regarding the Strategic Growth and Productivity Program, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Significant Items Impacting Comparability” and “– Restructuring and Related Implementation Charges.”
A cybersecurity incident, data incident or a failure of key technology systems could adversely impact our business.
We rely extensively on information and operational technology systems (“IT/OT Systems”), some of which are managed, hosted, provided and/or used by third parties, including cloud-based service providers, and their vendors, in order to conduct our business. Our uses of these systems include, but are not limited to:
• communicating within our company and with other parties, including our customers, suppliers and consumers;
• ordering and managing materials from suppliers;
• converting materials to finished products;
• receiving and processing orders from, shipping products to and invoicing our customers, suppliers and consumers;
• marketing products to consumers;
• collecting, storing, transferring and/or processing customer, consumer, employee, vendor, investor and other stakeholder information and personal data, including such data from residents of states, countries and regions with comprehensive data protection laws and regulations;
• processing transactions, including employee payroll, employee and retiree benefits and payments to customers, suppliers and vendors;
• hosting, processing and sharing confidential and proprietary research, intellectual property, business plans and financial information;
• summarizing and reporting results of operations, including financial reporting;
• managing our banking and other cash liquidity systems and platforms;
• complying with legal, regulatory and tax requirements;
• providing data security; and
• handling other processes involved in managing our business.
Although we have a broad array of information and operational security measures in place, our IT/OT Systems, including those of third-party service providers with whom we have contracted, including cloud-based software providers and manufacturing logistics providers, have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyberattacks. Cyberattacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being made by different threat actors including groups, individuals and nation states with a wide range of expertise and motives. Such cyberattacks and cyber incidents can take many forms, including cyber extortion, social engineering, password theft or introduction of viruses or malware, such as ransomware. In addition, the techniques used in cyberattacks and cyber incidents continue to evolve and develop, including through the use of AI and other existing and emerging technologies.
We cannot guarantee that our security efforts will prevent breaches or breakdowns of our or our third-party service providers’ IT/OT Systems because the techniques used in these attacks change frequently and may be difficult to detect for periods of time. In addition, although we have policies and procedures in place to ensure that all personal information collected by us or our third-party service providers is securely maintained, data leakages due to human error or intentional or unintentional conduct by our employees or third parties have occurred and likely will occur again. Furthermore, we periodically upgrade our IT/OT Systems or adopt new technologies. If such an upgrade or new technology does not function as designed or does not go as planned or if an attacker identifies a vulnerability in our IT/OT Systems, then our exposure to a cyberattack or cyber incident may increase significantly.
A cyberattack or cyber incident may adversely impact our business, including our ability to ship products to customers, issue invoices and process payments or order raw and packaging materials. Although we have seen no material impact on our business operations from the cybersecurity incidents or data incidents we have experienced to date, if we suffer a significant loss or disclosure of confidential business or stakeholder information as a result of a breach of our IT/OT Systems, including those of third-party service providers with whom we have contracted, or otherwise, we may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which may adversely impact our business, results of operations, cash flows and financial condition. In addition, the rapid evolution and increased adoption of AI and other technologies will continue to intensify these risks. Further, while we currently maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of cybersecurity incidents, data incidents and IT/OT System failures, this insurance coverage may not, depending on the specific facts and circumstances surrounding an incident, cover all losses or all types of claims that arise from an incident, or the damage to our business, reputation or brands that may result from an incident. As the frequency and magnitude of such incidents increase globally, we may be unable to obtain the insurance coverage that we think is appropriate or necessary to offset the risk.
While we have disaster recovery and business continuity plans in place, if our or our third-party service providers’ IT/OT Systems are damaged, breached or cease to function properly for any reason, including the poor performance of, failure of or cyberattack on third-party service providers, catastrophic events, power outages, cybersecurity incidents, network outages, failed upgrades or other similar events and, if the disaster recovery and business continuity plans do not effectively resolve such issues on a timely basis, we may sufferinterruptions in our ability to manage or conduct business as well as reputational harm, and may be subject to governmental investigations and litigation, any of which may adversely impact our business, results of operations, cash flows and financial condition.
Climate change and other sustainability matters could have an adverse impact on our business and results of operations.
Climate change resulting in the increased frequency and severity of natural disasters and other extreme weather conditions may adversely impact our business, results of operations, cash flows and financial condition. Specifically, the predicted physical effects of climate change may pose physical risks to our facilities and those of our key suppliers, disrupt our global supply chain, impact demand for our products or exacerbatechallenges regarding the cost, quality and availability of raw and packaging materials and the availability and quality of water. In addition, concern over climate change has resulted and is likely to continue to result in transition risks, including additional legal and regulatory requirements intended to, among other things, reduce or mitigate the effects of climate change and have related and may relate to, among other things, greenhouse gas emissions (e.g., carbon pricing), alternative energy policy and additional disclosure obligations and extended producer responsibility obligations that relate to our product packaging. Such risks, including additional legal and regulatory requirements, may adversely affect our business, results of operations, cash flows and financial condition by increasing our compliance and manufacturing costs and/or negatively impacting our reputation if we are unable to, or are perceived (whether or not valid) not to, satisfy such requirements or expectations. Achieving our sustainability targets will require significant efforts from us and our stakeholders, such as our suppliers and other third parties. It will also require capital investment, additional expense (e.g., renewable energy costs) and the development of technology that may not currently exist. In addition, certain of our stakeholders have expressed negative sentiment regarding corporate sustainability initiatives. Our practices and efforts in this area may not align with the expectations of all stakeholders, which could negatively affect our relationships with certain stakeholders. Furthermore, our activities in this area could expose us to increased regulatory or legal scrutiny, potential product boycotts or other actions that may harm our reputation or adversely affect our reputation, business, results of operations, cash flows and financial condition. There is also increased focus by certain stakeholders on these and other sustainability matters, including responsible sourcing, deforestation, animal welfare, labor, employment and human rights, ingredients of interest, the use of plastic, energy and water, the recyclability or recoverability of packaging, including single-use and other plastic packaging. From certain stakeholders, there is also a growing demand for natural or organic products and ingredient transparency, such as sources of palm oil and palm kernel oil, and an increased focus on reducing our impact on nature. Failure to achieve our sustainability targets (including our net zero carbon target) or the perception (whether or not valid) that we have failed to act responsibly with respect to such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change or other sustainability matters could result in adverse publicity and increased litigation risk and adversely affect our reputation, business, results of operations, cash flows and financial condition.
Our reliance on third parties in many aspects of our business could have an adverse effect on our business and results of operations.
We use third parties, including suppliers, contract manufacturers, distributors, manufacturing logistics providers, financial service providers and cloud-based software providers, to support many aspects of our business including those that provide support across much of the lifespan of our products from the purchasing of ingredients up to and including the sale of our products to consumers. While we maintain robust policies and procedures to govern and manage our interactions with and requirements of these third parties, including building in redundancies and alternatives wherever possible, we inherently have a lesser degree of control over the business operations, governance and compliance of these unrelated entities. As a result, disruptions in these relationships or the failure of these third parties to meet their obligations to us could have an adverse effect on our reputation and our business, results of operations, cash flows and financial condition.
Legal and Regulatory Risks
Our business is subject to legal and regulatory risks in the United States and abroad.
Our business is subject to extensive legal and regulatory requirements in the United States and abroad. Such legal and regulatory requirements apply to most aspects of our products, including their development, ingredients, formulation, manufacture, packaging, labeling, storage, transportation, distribution, export, import, advertising, sale and environmental impact. U.S. federal authorities, including the FDA, the Federal Trade Commission, the Consumer Product Safety Commission, the Occupational Safety and Health Administration and the Environmental Protection Agency, regulate different aspects of our business, along with parallel authorities at the state and local levels and comparable authorities overseas. In addition, our selling practices are regulated by competition law authorities in the United States and abroad.
New or more stringent legal or regulatory requirements, or more restrictive interpretations of existing requirements, could adversely impact our business, results of operations, cash flows and financial condition. For example, regulatory authorities globally are increasingly reviewing ingredients or other substances in consumer products, such as fluoride, titanium dioxide, synthetic colors and per- and polyfluoroalkyl (PFAS). While we monitor and seek to mitigate the impact of any emerging regulations, a decision by a regulatory or governmental authority that any of these or other ingredients or other substances in our products should be restricted or should otherwise be newly regulated could adversely impact our business and reputation, as could negative reactions by our consumers, customers or non-governmental organizations to our current or prior use of such ingredients or other substances. Additionally, an inability to develop new or reformulated products containing alternative ingredients, to obtain regulatory approval of such products or ingredients on a timely basis or to effectively market and sell such products could likewise adversely affect our business.
Because of our extensive international operations, we could be adversely affected by violations of worldwide anti-bribery laws, including those that prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business, such as the U.S. Foreign Corrupt Practices Act, and laws that prohibit commercial bribery. We are also subject to laws, regulations or other government directives imposed by the United States (including those imposed by OFAC) and/or by other jurisdictions that impose tariffs, sanctions, import restrictions, export controls or other trade barriers, may prohibit us or certain of our affiliates from doing business in certain countries, or restrict the kind of business that may be conducted. While our policies mandate compliance with these laws, we cannot provide assurance that our internal control policies and procedures will always protect us from reckless or criminal acts committed by our employees, joint venture partners, agents or other third parties. Violations of these laws, or allegations of such violations, could disrupt our business and adversely affect our reputation and our business, results of operations, cash flows and financial condition.
While it is our policy and practice to comply with all legal and regulatory requirements applicable to our business, findings that we are in violation of, or out of compliance with, applicable laws or regulations have subjected us to, and could subject us to, civil remedies, including fines, damages, injunctions or product recalls, or criminal sanctions, any of which could adversely affect our business, results of operations, cash flows and financial condition. Even if a claim is unsuccessful, is without merit or is not fully pursued, the cost of responding to such a claim, including management time and out-of-pocket expenses, and the negative publicity surrounding such assertions regarding our products, processes or business practices could adversely affect our reputation, brand image and our business, results of operations, cash flows and financial condition. For information regarding our legal and regulatory matters, see Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the Consolidated Financial Statements.
Legal claims and proceedings could adversely impact our business.
As a global company serving consumers in more than 200 countries and territories, we are and may continue to be subject to a wide variety of legal claims and proceedings, including disputes relating to intellectual property, contracts, product liability, marketing, advertising, foreign exchange controls, antitrust and trade regulation, labor and employment, pension and benefits, data privacy and security, environmental and tax matters and consumer class actions. Regardless of their merit, these claims can require significant time and expense to investigate and defend, and since litigation, particularly product liability and consumer class action litigation in the United States, is inherently uncertain, there is no guarantee that we will be successful in these matters. In particular, the potential impact of talc-related litigation is highly uncertain, as outcomes in cases filed against manufacturers of talcum powder products have ranged from dismissals to defense verdicts to outsized jury awards of both compensatory and punitivedamages.
While we and our legal counsel believe that we have strong legal grounds to contest any claims brought against us and we are challenging them vigorously, our assessment of the materiality of these matters, including any reserves taken in connection with them, may not be consistent with the ultimate outcome of such matters. In addition, if one of our products, or an ingredient contained in our products, is perceived or found to be defective or unsafe or have a quality issue, we have had to and may in the future need to withdraw, recall or reformulate some of our products. Whether or not a legal claim or proceeding is successful, or a withdrawal, recall or reformulation is required or advisable, such assertions could have an adverse effect on our business, results of operations, cash flows and financial condition, and the negative publicity surrounding them could harm our reputation and brand image. The resolution of, or increase in the reserves taken in connection with, one or more of these matters in any reporting period could have a material adverse effect on our business, results of operations, cash flows and financial condition for that period. See Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the Consolidated Financial Statements for additional information on certain of our legal claims and proceedings.
Financial and Economic Risks
Uncertain or unfavorable global macroeconomic and geopolitical conditions may adversely affect our business.
Uncertain or unfavorable global macroeconomic conditions could adversely affect our business. Unfavorable global macroeconomic conditions, such as a recession, an economic slowdown, inflation, high interest rates and/or reduced category growth rates, including as a result of geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela, and developments in trade relations (including new or increased tariffs, sanctions, export controls, import restrictions or other trade barriers), have negatively impacted and/or could negatively impact our business and result in declining revenues, profitability and/or cash flows. Although we continue to devote significant resources to support our brands and market our products at multiple price points, during periods of uncertain or unfavorable macroeconomic or geopolitical conditions, consumers may have less consumer confidence, reduce consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to “private label,” or lower-priced product offerings. These changes have reduced and could continue to reduce demand for our products or result in a shift in our product mix, as consumers choose products that sell at lower prices. Additionally, our customers may be impacted and they may increase pressure on our selling prices or increase promotional activity for lower-priced or value offerings as they seek to maintain sales volumes and margins. Furthermore, economic conditions can cause our customers, suppliers, distributors, contract manufacturers, logistics providers or other third-party partners to suffer financial or operational difficulties, which may impact their ability to buy our products or provide us with or distribute finished product, raw and packaging materials and/or services in a timely manner or at all. In addition, we could face difficulty collecting or recovering accounts receivable from third parties facing financial or operational difficulties, including bankruptcies.
Disruptions in the credit markets or changes to our credit ratings may adversely affect our business.
While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, a disruption or volatility in the credit markets, interest rate increases or changes to our credit rating could negatively impact the availability or further increase the cost of funding. Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or significantly increase our cost of capital. In addition, if any financial institutions that hold our cash or other investments or that are parties to our undrawn revolving credit facility supporting our commercial paper programs or other financing arrangements, such as interest rate, foreign exchange or commodity hedging instruments, were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with us. This could leave us with reduced borrowing capacity or unhedged against certain interest rate, foreign currency or commodity price exposures. In addition, tighter or more volatile credit markets may lead to business disruptions for certain of our suppliers, contract manufacturers or trade customers which could, in turn, adversely impact our business, results of operations, cash flows and financial condition.
Tax matters, including changes in tax rates, disagreements with taxing authorities and imposition of new taxes could negatively impact our business.
We are subject to taxes in the United States and in the foreign jurisdictions where we do business. Due to economic and political conditions, tax rates in the United States and various foreign jurisdictions have been and may be subject to significant change. Changes in the mix of our earnings between countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities related to changes in tax rates, changes in tax laws, including how existing tax laws are interpreted or enforced, or contemplated changes in long-standing tax principles, if finalized and adopted, could adversely impact our future effective tax rate and business, results of operations, cash flows and financial condition. For example, long-standing international tax norms that determine each country’s jurisdiction to tax cross-border international trade are evolving as a result of a multilateral project, the Base Erosion and Profit Shifting Project (the “BEPS Project”), that has established new principles and reporting requirements for the member countries of the Organization for Economic Cooperation and Development (the “OECD”) and its Inclusive Framework (“IF”). In connection with the BEPS Project, companies are required to disclose more information to tax authorities and the public on operations around the world, which may lead to greater audit scrutiny of profits earned in countries outside of the United States. Many jurisdictions have already enacted legislation and adopted policies resulting from the BEPS Project. The OECD is also addressing the challenges of the digitization of the global economy with detailed guidance to redefine jurisdictional taxation rights in market countries and establish a global minimum tax. The European Union member states and other countries within the OECD’s IF have established minimum tax regulations (“Pillar II”) that provide for a minimum level of taxation for certain large corporations in every jurisdiction in which they operate.
Other than the significant additional time and resources required to comply with these regulations, Pillar II did not have a material impact as of December 31, 2025 and we do not believe it will have a material impact going forward on our business, results of operations, cash flows and financial condition. In January 2026, IF reached an agreement known as the “Side-by-Side Package” that modifies key aspects of Pillar II and is effective from January 1, 2026. The Company is currently evaluating the potential impact of the Side-by-Side Package on its future tax liability and compliance burden. As these and other tax laws and related regulations change, our business, results of operations, cash flows and financial condition could be materially impacted. For more information regarding recent legislation, refer to Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Income Taxes.”
Furthermore, we are seeing an increase in regular reviews, examinations and audits by the Internal Revenue Service and increasingly aggressive enforcement actions by other taxing authorities with respect to taxes outside of the United States. Although we believe our tax positions are sustainable, when a taxing authority disagrees with the positions we have taken, we have faced, and in the future may face, additional tax liabilities, including interest and penalties, in excess of reserves. The payment of such additional amounts upon final adjudication of any disputes could adversely impact our business, results of operations, cash flows and financial condition.
profitable
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 United States, 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 retailers, wholesalers, distributors, dentists and, in some geographies, 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 a 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, household penetration 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.
Global Trade Relations
Major developments in trade relations, including the imposition of new or increased tariffs by the United States and/or other countries, such as China, including those threatened or imposed following the United States’ 2025 executive orders, retaliatory tariffs imposed by the United States’ trading partners or through the renegotiation of trade agreements, such as the United States-Mexico-Canada Agreement, have contributed to and are expected to continue to contribute to inflationary pressures, geopolitical tensions, macroeconomic and market volatility. These developments have also impacted and may continue to impact consumer sentiment, consumption, discretionary spending and/or purchasing patterns. In addition, they have impacted and may continue to impact the cost and/or availability of raw and packaging materials and the price of our products. While we have made and will continue to make efforts to mitigate the impact of these and any additional tariffs imposed by the United States and/or other countries or shifts in trade agreements, they or our mitigating actions could have a material effect on our business, results of operations, cash flows and financial condition. For additional information, see “Outlook” below.
(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. We have no manufacturing facilities in Russia. For the year ended December 31, 2025, our business in the Eurasia region constituted approximately 1% of our consolidated net sales and approximately 2% of our consolidated operating profit. We 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 identify financial institutions and services to support our Russian operations 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.
For more information about factors that could impact our business, including as a result of developments in global trade relations and geopolitical events and tensions, wars and military conflicts, refer to Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K.
Business Strategy
We have concluded our 2025 strategic plan, delivering improved organic sales growth, consistent dollar-based earnings per share growth and increased capabilities in areas such as science-led core and premium innovation, digital, data, analytics and artificial intelligence (“AI”), despite macroeconomic and geopolitical challenges. Our 2030 strategy is intended to accelerate growth going forward through several key initiatives. These initiatives include leveraging the global reach and penetration of our brands; building the incremental benefit of superior, science-based innovation supported by an agile and resilient supply chain; harnessing the power of best-in-class omni-channel demand generation; leading in capabilities such as data, analytics and AI; and evolving our high-impact, inclusive culture.
Additionally, on July 31, 2025, our Board of Directors (the “Board”) approved a new three-year productivity program to drive future growth and support our 2030 strategy (the “Strategic Growth and Productivity Program”). The program includes initiatives to better align our organizational structure to support our strategic initiatives, optimize our global supply chain to drive agility and efficiencies and simplify and streamline our organizational structure to reduce overhead costs. The Strategic Growth and Productivity Program is estimated to result in cumulative pre-tax charges, once all initiatives are approved and implemented, of between $200 and $300. It is estimated that substantially all charges will be incurred by December 31, 2028. For more information regarding the Strategic Growth and Productivity Program, see “Restructuring and Related Implementation Charges” below.
The investments needed to drive growth are also 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.
We believe strong free cash flow performance is a key priority to drive future growth and superior total shareholder return. We achieve this through increasing net income, optimizing working capital and through high return capital expenditures focused on growth and profitability.
The efficient use of our balance sheet, including prudent management of our capital structure, is also critical. We continue to prioritize our investments in high growth and high margin segments within our Oral Care, Personal Care and Pet Nutrition businesses and to make careful decisions about our brand portfolio. Finally, we drive additional value to shareholders by returning cash through dividends and ongoing share repurchases.
(Dollars in Millions Except Per Share Amounts)
Significant Items Impacting Comparability
In the fourth quarter of 2025, we recorded a non-cash charge of $794 aftertax ($919 pretax) to adjust the carrying values of goodwill and intangible assets related to the skin health business. Given lower than expected category growth rates and weaker than expected performance, particularly in China, we have lowered our outlook for the skin health business, primarily Filorga. See Note 5, Goodwill and Other Intangible Assets to the Consolidated Financial Statements for further information.
On April 30, 2025, we acquired Care TopCo Pty Ltd, the owner of the Prime100 pet food business, for cash consideration of AU $471 (approximately $301). This acquisition provides our Hill’s Pet Nutrition segment with an entry into the fast-growing fresh pet food category in Australia. Refer to Note 3, Acquisitions to the Consolidated Financial Statements for additional information.
During the quarter ended March 31, 2025, we recorded a charge of $65 following a decision of the United States Court of Appeals for the Second Circuit affirming the ruling of the United States District Court for the Southern District of New York (the “District Court”) on certain calculation issues related to the District Court’s earlier 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. During the quarter ended December 31, 2025, we reclassified the plaintiffs’ attorneys’ fees and costs that will be paid by us from Non-service related postretirement costs to Selling, general and administrative expenses. See Note 13, Commitments and Contingencies to the Consolidated Financial Statements for additional information.
On July 31, 2025, our Board approved the Strategic Growth and Productivity Program. See “Restructuring and Related Implementation Charges” below and Note 4, Restructuring and Related Implementation Charges to the Consolidated Financial Statements for additional information.
Our prior targeted productivity program, known as the “2022 Global Productivity Initiative,” concluded on December 31, 2024. The 2022 Global Productivity Initiative resulted in the reallocation of resources towards our strategic priorities and faster growth businesses, efficiencies in our operations and the streamlining of our supply chain to reduce structural costs. For the year ended December 31, 2024, we incurred pretax costs of $85 (aftertax costs of $73) resulting from the 2022 Global Productivity Initiative. See “Restructuring and Related Implementation Charges” below and Note 4, Restructuring and Related Implementation Charges to the Consolidated Financial Statements for additional information.
Outlook
Looking forward, we expect global macroeconomic, geopolitical and market conditions to remain challenging, including as a result of inflation, high interest rates, foreign currency volatility and developments in trade relations.
We expect developments in trade relations, including the imposition of new or increased tariffs by the United States and/or other countries as well as the ongoing implementation and potential renegotiation of the United States-Mexico-Canada Agreement, to continue to contribute to inflationary pressures, geopolitical tensions, macroeconomic and market volatility. These developments have also impacted and may continue to impact consumer sentiment, consumption, discretionary spending and/or purchasing patterns. In addition, they have impacted and may continue to impact the cost and/or availability of raw and packaging materials and the price of our products. We are following the dynamic situation closely and continue to evaluate the impact on our business, results of operations, cash flows and financial condition.
In this uncertain and challenging geopolitical and macroeconomic environment, we anticipate consumers may forgo purchasing certain of our products or switch 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, demand for and sales volumes of our categories and/or our products may decline or shift from higher margin to lower margin product offerings. We expect the softness across our categories that we witnessed in 2025 to continue into 2026.
Given that approximately two-thirds of our Net sales originate in markets outside the United States, we have experienced and will likely continue to experience volatile foreign currency fluctuations. This is particularly acute in hyper-inflationary economies, including Argentina, Nigeria and Türkiye.
We continue to experience higher raw and packaging material costs, including the impact of transactional foreign exchange. We have taken, and will continue to take, measures to mitigate the effect of these conditions, such as our funding-the-growth and revenue growth management initiatives and the Strategic Growth and Productivity Program.
(Dollars in Millions Except Per Share Amounts)
However, in the current environment it may become increasingly difficult to implement certain of these mitigation strategies. Additionally, inflation has impacted the broader economy with consumers in many geographies around the world facing widespread rising prices as well as high interest rates. Should these conditions persist, they could adversely affect our future results.
We face vigorous competition worldwide, including from strong local competitors (including private label competitors), from other companies, some of which have greater resources than we do. In addition, the substantial growth of eCommerce and the emergence and adoption of social commerce and AI have encouraged the entry of new competitors, some of which sell products direct-to-consumer. We face competition in several aspects of our business, including pricing, promotional activities, new product introductions and expansion into new geographies and channels.
Our products are sold in a highly competitive omni-channel marketplace that is increasingly defined by the integration of traditional and digital retail operations and evolving consumer purchasing behavior and preferences, as consumers continue to shop online and increasingly through social commerce and with the assistance of AI. The increased presence of alternative retail channels, such as subscription services and direct-to-customer businesses, has also intensified competition for consumer attention. While we continue to sell our products to a variety of customers, including large-format retailers, discounters and eCommerce retailers, our growth is increasingly dependent on our ability to generate consumer demand across key touchpoints in the omni-channel ecosystem whether through traditional retail, eCommerce, social media or digital. We are also increasingly dependent upon certain key retailers, some of which exercise greater bargaining strength than we do, including the exclusive access to valuable first-party consumer data and analytics.
We continue to closely monitor the impact of geopolitical events and tensions, wars and military conflicts, developments in trade relations 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 this Annual Report on Form 10-K.
Looking forward, we believe our new 2030 business strategy and the Strategic Growth and Productivity Program will help ensure that we have the right capabilities and support to achieve our goals in the near term and deliver consistent compounded earnings per share growth over the long term. We believe our 2030 strategic priorities of leveraging the global reach and penetration of our brands; building the incremental benefit of superior, science-based innovation supported by an agile and resilient supply chain; harnessing the power of best-in-class omni-channel demand generation; leading in capabilities such as data, analytics and AI; and evolving our high-impact, inclusive culture are the keys to accelerating growth going forward. Our commitment to these priorities, the strength of our brands, our resilient global supply chain, 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.
(Dollars in Millions Except Per Share Amounts)
Results of Operations
This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Net Sales
Worldwide Net sales were $20,382 in 2025, up 1.4% from 2024, driven by net selling price increases of 2.1%, partially offset by volume declines of 0.4% and negative foreign exchange of 0.3%. The Prime100 acquisition contributed 0.3% to volume. Organic sales (Net sales excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, increased 1.4% in 2025. 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 $15,769 in 2025, up 1.0% from 2024, driven by net selling price increases of 1.8%, partially offset by negative foreign exchange of 0.5% and volume declines of 0.3%. Organic sales in the Oral, Personal and Home Care product segment increased 1.5% in 2025.
The increase in organic sales in 2025 versus 2024 was due to an increase in Oral Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste and manual toothbrush categories.
The Company’s share of the global toothpaste market was 41.3% for the full year 2025, down 0.4 share points from full year 2024, and its share of the global manual toothbrush market was 32.4% for the full year 2025, up 0.4 share points versus full year 2024. Full year 2025 market shares in toothpaste were up in Europe, flat in Asia Pacific and down in North America, Latin America and Africa/Eurasia versus full year 2024. In the manual toothbrush category, full year 2025 market shares were up in North America and Asia Pacific, flat in Europe and down in Latin America and Africa/Eurasia versus full year 2024. For additional information regarding the Company’s use of market share data and limitations of such data, see “Market Share Information” below.
Net sales in the Hill’s Pet Nutrition segment were $4,613 in 2025, up 2.9% from 2024, driven by net selling price increases of 3.0% and positive foreign exchange of 0.5%, partially offset by volume declines of 0.6%. The Prime100 acquisition contributed 1.1% to volume. Organic sales in the Hill’s Pet Nutrition segment increased 1.2% in 2025 despite a negative impact from lower private label sales (320 bps).
(Dollars in Millions Except Per Share Amounts)
Gross Profit/Margin
Worldwide Gross profit increased 1% to $12,251 in 2025 from $12,161 in 2024. Worldwide Gross profit in 2024 included charges resulting from the 2022 Global Productivity Initiative. Excluding these charges, Worldwide Gross profit increased to $12,251 in 2025 compared to $12,181 in 2024, reflecting an increase of $170 resulting from higher Net sales, partially offset by lower Gross profit margin of $100.
Worldwide Gross profit margin decreased to 60.1% in 2025 from 60.5% in 2024. Excluding charges resulting from the 2022 Global Productivity Initiative in 2024, Gross profit margin decreased to 60.1% in 2025 from 60.6% in 2024. This decrease in Gross profit margin was due to significantly higher raw and packaging material costs (420 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (260 bps), higher pricing (80 bps) and favorable mix (30 bps).
Gross profit, GAAP
Restructuring programs (1)
Gross profit, non-GAAP
Basis Point Change
Gross profit margin, GAAP
Restructuring programs
Gross profit margin, non-GAAP
(1) The charges resulting from the Restructuring programs relate to the Strategic Growth and Productivity Program in 2025 and the 2022 Global Productivity Initiative in 2024.
(Dollars in Millions Except Per Share Amounts)
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased 2% to $7,903 in 2025 from $7,729 in 2024. Selling, general and administrative expenses in 2025 included charges resulting from the ERISA litigation matter and the Strategic Growth and Productivity Program. Selling, general and administrative expenses in 2024 included charges resulting from the 2022 Global Productivity Initiative. Excluding these items in both periods, as applicable, Selling, general and administrative expenses increased to $7,797 in 2025 from $7,723 in 2024, reflecting higher overhead expenses of $91, partially offset by decreased advertising investment of $17.
Selling, general and administrative expenses as a percentage of Net sales increased by 30 bps to 38.8% in 2025 as compared to 38.5% in 2024. Excluding the items described above in both periods, as applicable, Selling, general and administrative expenses as a percentage of Net sales decreased by 10 bps to 38.3% in 2025 as compared to 38.4% in 2024. This decrease was due to decreased advertising investment (20 bps), partially offset by higher overhead expenses (10 bps), both as a percentage of Net sales. In 2025, advertising investment decreased as a percentage of Net sales to 13.3% from 13.5% in 2024, or 1% in absolute terms, to $2,703 as compared with $2,720 in 2024.
Selling, general and administrative expenses, GAAP
ERISA litigation matter
Restructuring programs
Selling, general and administrative expenses, non-GAAP
Note: Table may not sum due to rounding.
Basis Point Change
Selling, general and administrative expenses as a percentage of Net sales, GAAP
ERISA litigation matter
Restructuring programs
Selling, general and administrative expenses as a percentage of Net sales, non-GAAP
(Dollars in Millions Except Per Share Amounts)
Other (Income) Expense, Net
Other (income) expense, net was $123 and $164 in 2025 and 2024, respectively. Other (income) expense, net in 2025 included acquisition-related costs and charges resulting from the Strategic Growth and Productivity Program. Other (income) expense, net in 2024 included charges resulting from the 2022 Global Productivity Initiative.
Other (income) expense, net, GAAP
Acquisition-related costs
Restructuring programs
Other (income) expense, net, non-GAAP
Excluding the items described above in both periods, as applicable, Other (income) expense, net was $107 in 2025 and $105 in 2024, comprised of the following:
Amortization of intangible assets
Equity income
Losses (gains) from marketable securities and sale of other assets
Indirect tax payments (refunds)
Other, net
Total Other (income) expense, net, non-GAAP
Goodwill and Intangible Assets Impairment Charges
Given lower than expected category growth rates and weaker than expected performance, particularly in China, in the fourth quarter of 2025 the Company lowered its outlook for the skin health reporting unit, primarily Filorga. The Company concluded that the changes in circumstances in this reporting unit triggered the need for an interim impairment review of its goodwill and long-lived assets which consist primarily of trademarks and customer relationships. As a result of the interim impairment test, the Company concluded that the carrying value of the Filorga trademark and customer relationships exceeded their estimated fair values and recorded impairment charges of $244 and $93, respectively, reducing their combined carrying values to an immaterial amount as of December 31, 2025. After adjusting the carrying values of the Filorga trademark and customer relationship intangible assets, the Company completed a quantitative impairment test for goodwill and recorded a goodwill impairment charge of $582 in the skin health reporting unit, reducing the carrying value of goodwill to $51 as of December 31, 2025. The Company is taking the appropriate actions to improve performance and continues to believe in the growth prospects of the business. See Note 5, Goodwill and Other Intangible Assets to the Consolidated Financial Statements for further information.
(Dollars in Millions Except Per Share Amounts)
Operating Profit
Operating profit decreased 23% to $3,306 in 2025 from $4,268 in 2024. Operating profit in 2025 included goodwill and intangible assets impairment charges, charges resulting from the ERISA litigation matter and acquisition-related costs. Operating profit in 2025 and 2024 included charges resulting from the Restructuring programs. Excluding these items in both periods, as applicable, Operating profit was $4,347 in 2025 versus $4,353 in 2024 primarily due to an increase in Gross profit, more than offset by an increase in Selling, general and administrative expenses.
Operating profit margin was 16.2% in 2025, a decrease of 500 bps compared to 21.2% in 2024. Excluding the items described above in both periods, as applicable, Operating profit margin was 21.3% in 2025, a decrease of 40 bps from 21.7% in 2024, primarily due to a 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.
% Change
Operating profit, GAAP
Goodwill and intangible assets impairment charges
ERISA litigation matter
Restructuring programs
Acquisition-related costs
Operating profit, non-GAAP
Note: Table may not sum due to rounding.
Basis Point Change
Operating profit margin, GAAP
Goodwill and intangible assets impairment charges
ERISA litigation matter
Restructuring programs
Acquisition-related costs
Operating profit margin, non-GAAP
Non-Service Related Postretirement Costs
Non-service related postretirement costs were $55 in 2025 compared to $87 in 2024. In 2025, Non-service related postretirement costs included a net benefit resulting from the ERISA litigation matter reflecting the additional charge and increase in pension liability recorded following the adverse court decision in the quarter ended March 31, 2025, which was more than offset by a reclassification of the plaintiffs’ attorneys’ fees and costs that will be paid by the Company from Non-service related postretirement costs to Selling, general and administrative expenses following the court’s approval of the settlement agreement. Excluding the ERISA litigation matter in 2025, Non-service related postretirement costs were $90 in 2025 compared to $87 in 2024.
Non-service related postretirement costs, GAAP
ERISA litigation matter
Non-service related postretirement costs, non-GAAP
Note: Table may not sum due to rounding.
(Dollars in Millions Except Per Share Amounts)
Income Taxes
The effective income tax rate was 26.1% in 2025 and 22.9% in 2024. As reflected in the table below, the non-GAAP effective income tax rate was 23.1% in 2025 and 22.7% in 2024.
Income Before Income Taxes
Provision For Income Taxes (1)
Effective Income Tax Rate (2)
As Reported GAAP
Goodwill and intangible assets impairment charges
ERISA litigation matter
Restructuring programs
Acquisition-related costs
Non-GAAP
Note: Table may not sum due to rounding.
Income Before Income Taxes
Provision For Income Taxes (1)
Effective Income Tax Rate (2)
As Reported GAAP
Restructuring programs
Non-GAAP
(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.
The effective income tax rate in all years benefited from tax planning associated with the Company’s global business initiatives.
On July 4, 2025, U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”) which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, many of which are generally not effective until January 1, 2026. The OBBBA did not have a material effect on the Company’s Consolidated Financial Statements for the fiscal year ended December 31, 2025. The Company is currently evaluating the future impact of the OBBBA, but does not expect it will have a material impact on its Consolidated Financial Statements.
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.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “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. Subsequent to the IRA’s enactment, the U.S. Treasury Department and the IRS released proposed regulations relating principally to this 15% minimum tax. Based on the Company’s analysis, these proposed regulations have not had and, if finalized in their current form, are not expected to have an impact on its Consolidated Financial Statements. The IRS has announced its intent to partially withdraw and revise the proposed regulations. The Company will continue to evaluate any additional guidance and clarification that becomes available.
(Dollars in Millions Except Per Share Amounts)
On December 15, 2022, the 27 member states of the European Union (“EU”) reached an agreement to establish a minimum level of taxation for certain large corporations by paying a minimum corporate tax rate of 15% in every jurisdiction in which they operate. This agreement, which is part of the Pillar II Model Rules initiative (“Pillar II”) agreed by all members of the Organization for Economic Cooperation and Development (“OECD”) and its Inclusive Framework (“IF”), was transposed into the laws of most EU member states by December 31, 2023. Subsequently, many other jurisdictions outside the EU have enacted similar minimum tax regimes consistent with the policy of Pillar II.
Based on current legislation and available guidance, apart from the significant additional time and resources required to comply, Pillar II did not have a material impact to the Company’s Consolidated Financial Statements for the fiscal year ended December 31, 2025 and the Company does not believe it will have a material impact going forward on its business, results of operations, cash flows and financial condition.
On January 5, 2026, IF reached an agreement known as the “Side-by-Side Package” that modifies key aspects of Pillar II and is effective from January 1, 2026. The Company is currently evaluating the potential impact of the Side-by-Side Package on its future tax liability and compliance burden. The Side-by-Side Package introduces various new safe harbors that the Company is expected to be eligible for and that, when fully enacted, should result in a reduction of compliance costs of Pillar II, among other benefits. However, as these rules and related regulations are revised and implemented, the Company will evaluate the impact, if any, on its Consolidated Financial Statements.
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 two unrelated third parties on similar matters. In October 2025, in one of those cases, the relevant U.S. Court of Appeals reversed the U.S. Tax Court’s decision and ruled in favor of the taxpayer. The case involving the other third party is still pending. 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 $165, which is not included in the Company’s uncertain tax positions. In May 2024, the IRS initiated an audit for the years 2019 through 2021, which is still ongoing.
(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 was $2,132, or $2.63 per share on a diluted basis, in 2025, a decrease from $2,889, or $3.51 per share on a diluted basis, in 2024. In 2025, Net income attributable to Colgate-Palmolive Company included goodwill and intangible assets impairment charges, charges resulting from the ERISA litigation matter and acquisition-related costs. In 2025 and 2024, Net income attributable to Colgate-Palmolive Company included charges resulting from the Restructuring programs.
Excluding the items described above in both periods, as applicable, Net income attributable to Colgate-Palmolive Company increased 1% to $2,996 in 2025 from $2,962 in 2024, and Earnings per common share on a diluted basis increased 3% to $3.69 in 2025 from $3.60 in 2024.
Income Before Income Taxes
Provision For Income Taxes (1)
Net Income Including Noncontrolling Interests
Less: Income Attributable To Noncontrolling Interests
Net Income Attributable to Colgate-Palmolive Company
Diluted Earnings Per Share (2)
As Reported GAAP
Goodwill and intangible assets impairment charges
ERISA litigation matter
Restructuring programs
Acquisition-related costs
Non-GAAP
Note: Table may not sum due to rounding.
Income Before Income Taxes
Provision For Income Taxes (1)
Net Income Including Noncontrolling Interests
Less: Income Attributable To Noncontrolling Interests
Net Income Attributable to Colgate-Palmolive Company
Diluted Earnings Per Share (2)
As Reported GAAP
Restructuring programs
Non-GAAP
(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.
(Dollars in Millions Except Per Share Amounts)
Segment Results
The Company markets its products in over 200 countries and territories throughout the world in two product segments: Oral, Personal and Home Care; and Pet Nutrition. The Company uses Operating profit as a measure of the operating segment performance because it excludes the impact of corporate-driven decisions related to interest expense and income taxes.
Oral, Personal and Home Care
North America
% Change
Net sales
Operating profit
% of Net sales
bps
Net sales in North America decreased 1.6% in 2025 to $4,045, driven by volume declines of 1.4%, net selling price decreases of 0.2% and negative foreign exchange of 0.1%. Organic sales in North America decreased 1.6% in 2025. The organic sales decline was driven by the United States.
The decrease in organic sales in North America in 2025 versus 2024 was due to decreases in Personal Care and Home Care organic sales, partially offset by an increase in Oral Care organic sales. The decrease in Personal Care was primarily due to organic sales declines in the skin health, body wash and underarm protection categories. The decrease in Home Care was primarily due to an organic sales decline in the hand dish category, partially offset by organic sales growth in the surface cleaner category. The increase in Oral Care was primarily due to organic sales growth in the manual toothbrush category.
Operating profit in North America decreased 7% in 2025 to $784, or 100 bps to 19.4% as a percentage of Net Sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (110 bps). This decrease in Gross profit was due to significantly higher raw and packaging material costs (330 bps) and lower pricing, partially offset by cost savings from the Company’s funding-the-growth initiatives (200 bps) and favorable mix (20 bps).
(Dollars in Millions Except Per Share Amounts)
Latin America
% Change
Net sales
Operating profit
% of Net sales
bps
Net sales in Latin America decreased 0.1% in 2025 to $4,776, driven by negative foreign exchange of 4.0%, partially offset by volume growth of 0.9% and net selling price increases of 2.9%. Organic sales in Latin America increased 3.9% in 2025. Organic sales growth was led by Mexico, Argentina and Brazil.
The increase in organic sales in Latin America in 2025 versus 2024 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 toothpaste and manual toothbrush categories. The increase in Home Care was primarily due to organic sales growth in the surface cleaner and fabric softener categories.
Operating profit in Latin America decreased 8% in 2025 to $1,411, or 230 bps to 29.6% as a percentage of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (370 bps), partially offset by a decrease in Selling, general and administrative expenses (120 bps), both as a percentage of Net sales. This decrease in Gross profit was due to significantly higher raw and packaging material costs (760 bps) and unfavorable mix (10 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (280 bps) and higher pricing. This decrease in Selling, general and administrative expenses was due to decreased advertising investment (100 bps) and lower overhead expenses (20 bps).
(Dollars in Millions Except Per Share Amounts)
Europe
% Change
Net sales
Operating profit
% of Net sales
bps
Net sales in Europe increased 6.9% in 2025 to $2,962, driven by volume growth of 1.1%, net selling price increases of 1.5% and positive foreign exchange of 4.4%. Organic sales in Europe increased 2.6% in 2025. Organic sales growth was led by the United Kingdom, Germany and France.
The increase in organic sales in Europe in 2025 versus 2024 was primarily due to an increase in Oral Care organic sales, which was primarily due to organic sales growth in the toothpaste category.
Operating profit in Europe increased 14% in 2025 to $748, or 160 bps to 25.3% 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 (80 bps) and a decrease 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 (250 bps), higher pricing and favorable mix (20 bps), partially offset by significantly higher raw and packaging material costs (260 bps). This decrease in Selling, general and administrative expenses was due to decreased advertising investment (50 bps).
(Dollars in Millions Except Per Share Amounts)
Asia Pacific
% Change
Net sales
Operating profit
% of Net sales
bps
Net sales in Asia Pacific decreased 1.5% in 2025 to $2,814, driven by volume declines of 2.7% and negative foreign exchange of 0.5%, partially offset by net selling price increases of 1.7%. Organic sales in Asia Pacific decreased 1.0% in 2025. The organic sales decline was driven by the Greater China region and India, partially offset by organic sales growth in the remaining Asia Pacific geographies.
The decrease in organic sales in 2025 versus 2024 was primarily due to decreases in Oral Care and Personal Care organic sales. The decrease in Oral Care was primarily due to an organic sales decline in the toothpaste category, partially offset by organic sales growth in the manual toothbrush category. The decrease in Personal Care was primarily due to an organic sales decline in the bar soap category.
Operating profit in Asia Pacific decreased 6% in 2025 to $760, or 140 bps to 27.0% as a percentage of Net sales. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (20 bps) and an increase in Selling, general and administrative expenses (110 bps), both as a percentage of Net sales. This decrease in Gross profit was due to significantly higher raw and packaging material costs (410 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (310 bps) and higher pricing. This increase in Selling, general and administrative expenses was due to higher overhead expenses (60 bps) and increased advertising investment (50 bps).
(Dollars in Millions Except Per Share Amounts)
Africa/Eurasia
% Change
Net sales
Operating profit
% of Net sales
bps
Net sales in Africa/Eurasia increased 7.0% in 2025 to $1,172, driven by volume growth of 0.5%, net selling price increases of 6.0% and positive foreign exchange of 0.5%. Organic sales in Africa/Eurasia increased 6.5% in 2025. Organic sales growth was led by Türkiye and the North Africa/Middle East region.
The increase in organic sales in 2025 versus 2024 was primarily due to an increase in Oral Care organic sales, which was primarily due to organic sales growth in the toothpaste and manual toothbrush categories.
Operating profit in Africa/Eurasia increased 1% in 2025 to $255, while as a percentage of Net sales it decreased by 130 bps to 21.8%. This decrease in Operating profit as a percentage of Net sales was primarily due to a decrease in Gross profit (20 bps) and an increase in Selling, general and administrative expenses (120 bps), both as a percentage of Net sales. This decrease in Gross profit was due to significantly higher raw and packaging material costs (390 bps) and unfavorable mix (60 bps), partially offset by higher pricing and cost savings from the Company’s funding-the-growth initiatives (210 bps). This increase in Selling, general and administrative expenses was primarily due to higher overhead expenses (130 bps).
(Dollars in Millions Except Per Share Amounts)
Hill ’ s Pet Nutrition
% Change
Net sales
Operating profit
% of Net sales
bps
Net sales for Hill’s Pet Nutrition increased 2.9% in 2025 to $4,613, driven by net selling price increases of 3.0% and positive foreign exchange of 0.5%, partially offset by volume declines of 0.6%. The Prime100 acquisition contributed 1.1% to volume. Organic sales in Hill’s Pet Nutrition increased 1.2% in 2025 despite a negative impact from lower private label sales (320 bps). Organic sales growth was led by the United States (excluding private label), Europe and Asia.
The increase in organic sales in 2025 versus 2024 was due to organic sales growth in the therapeutic and wellness categories.
Operating profit in Hill’s Pet Nutrition increased 10% in 2025 to $1,064, or 160 bps to 23.1% 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 (230 bps), partially offset by an increase in Selling, general and administrative expenses (60 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 (140 bps), partially offset by significantly higher raw and packaging material costs (310 bps). This increase in Selling, general and administrative expenses was primarily due to increased advertising investment (50 bps).
(Dollars in Millions Except Per Share Amounts)
Corporate
% Change
Operating profit (loss)
Corporate operations include Corporate overhead costs, research and development costs, stock-based compensation expense related to stock options and restricted stock unit awards, restructuring and related implementation costs and gains and losses on sales of non-core product lines. The components of Operating profit (loss) for the Corporate segment are presented as follows:
Restructuring programs
Goodwill and intangible assets impairment charges
ERISA litigation matter
Acquisition-related costs
Corporate overhead costs and other, net
Total Corporate Operating profit (loss)
(Dollars in Millions Except Per Share Amounts)
Restructuring and Related Implementation Charges
Strategic Growth and Productivity Program
On July 31, 2025, the Board approved the Strategic Growth and Productivity Program. The program includes initiatives to better align the Company’s organizational structure to support its strategic initiatives, optimize the Company’s global supply chain to drive agility and efficiencies and simplify and streamline its organizational structure to reduce overhead costs.
The Strategic Growth and Productivity Program is estimated to result in cumulative pre-tax charges, once all initiatives are approved and implemented, totaling between $200 and $300, which is currently estimated to be comprised of the following: employee-related costs, including severance and other termination benefits (65% to 75%) and asset-related costs and other charges (25% to 35%), which include accelerated depreciation, asset write-downs, contract termination and other exit costs. It is estimated that approximately 75% to 85% of the charges will result in cash expenditures and substantially all charges resulting from the program will be incurred by December 31, 2028.
It is estimated that the cumulative pretax charges, once all projects are approved and implemented, will relate to initiatives undertaken in North America (15% to 20%), Latin America (15% to 20%), Europe (10% to 15%), Asia Pacific (10% to 15%), Africa/Eurasia (5% to 10%), Hill’s Pet Nutrition (10% to 15%) and Corporate (10% to 15%).
For the twelve months ended December 31, 2025, charges resulting from the Strategic Growth and Productivity Program are reflected in the income statement as follows:
Twelve months ended December 31, 2025
Selling, general and administrative expenses
Other (income) expense, net
Total Strategic Growth and Productivity Program charges, pretax
Total Strategic Growth and Productivity Program charges, aftertax
Restructuring and related implementation charges are 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.
Total charges incurred for the Strategic Growth and Productivity Program relate to initiatives undertaken by the following reportable operating segments:
Twelve months ended December 31, 2025
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Pet Nutrition
Corporate
Total
(Dollars in Millions Except Per Share Amounts)
The Company has incurred pretax charges of $13 ($11 aftertax) in connection with the implementation of various projects as follows:
Twelve months ended December 31, 2025
Employee-Related Costs
Asset-Related Costs and Other
Total
The following table summarizes the activity for the restructuring accrual:
Twelve months ended December 31, 2025
Employee-Related
Costs
Asset-Related Costs and Other
Total
Balance at December 31, 2024
Charges
Cash Payments
Balance at December 31, 2025
2022 Global Productivity Initiative
The Company’s prior targeted productivity program, the 2022 Global Productivity Initiative, concluded on December 31, 2024 and resulted in the reallocation of resources towards the Company’s strategic priorities and faster growth businesses, efficiencies in the Company’s operations and the streamlining of its supply chain to reduce structural costs. Over the course of the 2022 Global Productivity Initiative, the Company incurred total pretax charges of $228 ($186 aftertax). Total annualized pretax savings from the 2022 Global Productivity Initiative were approximately $125 ($100 aftertax).
For the twelve months ended December 31, 2024, charges resulting from the 2022 Global Productivity Initiative are reflected in the income statement as follows:
Twelve Months Ended December 31,
Gross Profit
Selling, general and administrative expenses
Other (income) expense, net
Total 2022 Global Productivity Initiative charges, pretax
Total 2022 Global Productivity Initiative charges, aftertax
(Dollars in Millions Except Per Share Amounts)
The following table summarizes the activity for the restructuring accrual:
Twelve months ended December 31, 2025
Employee-Related
Costs
Other
Total
Balance at December 31, 2024
Cash Payments
Foreign exchange
Balance at December 31, 2025
Restructuring and related implementation charges were recorded in the Corporate segment as these initiatives were predominantly centrally directed and controlled and were not included in internal measures of segment operating performance.
(Dollars in Millions Except Per Share Amounts)
Non-GAAP Financial Measures
This Annual Report on Form 10-K discusses certain financial measures on both a GAAP and a non-GAAP basis. The Company uses the non-GAAP financial measures described below internally in its budgeting process, to evaluate segment and overall operating performance and as a factor in determining compensation. The Company believes that these non-GAAP financial measures are useful in evaluating the Company’s underlying business performance and trends; however, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similar measures presented by other companies.
Net sales growth (GAAP) and organic sales growth (Net sales growth excluding the impact of foreign exchange, acquisitions and divestments) (non-GAAP) are discussed in this Annual Report on Form 10-K. Management believes the organic sales growth measure provides investors and analysts with useful supplemental information regarding the Company’s underlying sales trends by presenting sales growth excluding, the external factor of foreign exchange, as well as the impact of acquisitions and divestments, as applicable. A reconciliation of organic sales growth to Net sales growth for the years ended December 31, 2025 and 2024 is provided below.
Gross profit, Gross profit margin, Selling, general and administrative expenses, Selling, general and administrative expenses as a percentage of Net sales, Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, Effective income tax rate, Net income attributable to Colgate-Palmolive Company and Earnings per share on a diluted basis are discussed in this Annual Report on Form 10-K both on a GAAP basis and excluding, as applicable, goodwill and intangible assets impairment charges, charges resulting from Restructuring programs (the Strategic Growth and Productivity Program in 2025 and the 2022 Global Productivity Initiative in 2024) and the ERISA litigation matter and acquisition-related costs. These non-GAAP financial measures exclude items that, either by their nature or amount, management would not expect to occur as part of the Company’s normal business on a regular basis, such as restructuring charges, charges for certain litigation and tax matters, acquisition-related costs, gains and losses from certain divestitures and certain other unusual, non-recurring items. Investors and analysts use these financial measures in assessing the Company’s business performance, and management believes that presenting these financial measures on a non-GAAP basis provides them with useful supplemental information to enhance their understanding of the Company’s underlying business performance and trends. These non-GAAP financial measures also enhance the ability to compare period-to-period financial results. A reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures for the years ended December 31, 2025 and 2024 is presented within the applicable section of Results of Operations.
(Dollars in Millions Except Per Share Amounts)
The following tables provide a quantitative reconciliation of Net sales growth to organic sales growth for the years ended December 31, 2025 and 2024 versus the prior year:
Year ended December 31, 2025
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and Divestments
Impact
Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Company
Note: Table may not sum due to rounding.
Year ended December 31, 2024
Net Sales Growth
(GAAP)
Foreign
Exchange
Impact
Acquisitions and Divestments
Impact
Organic
Sales Growth
(Non-GAAP)
Oral, Personal and Home Care
North America
Latin America
Europe
Asia Pacific
Africa/Eurasia
Total Oral, Personal and Home Care
Pet Nutrition
Total Company
Note: Table may not sum due to rounding.
Market Share Information
Management uses market share information as a key indicator to monitor business health and performance. References to market share in this Annual Report on Form 10-K are based on a combination of consumption and market share data provided by third-party vendors, primarily Nielsen, and internal estimates. All market share references represent the percentage of the dollar value of sales of our products, relative to all product sales in the category in the countries in which the Company competes and purchases data (excluding Venezuela from all periods).
Market share data is subject to limitations on the availability of up-to-date information. In particular, market share data is currently not generally available for certain retail channels, such as eCommerce or certain discounters. The Company measures year-to-date market shares from January 1 of the relevant year through the most recent period for which market share data is available, which typically reflects a lag time of one or two months. The Company believes that the third-party vendors we use to provide data are reliable, but we have not verified the accuracy or completeness of the data or any assumptions underlying the data. In addition, market share information calculated by the Company may be different from market share information calculated by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors.
(Dollars in Millions Except Per Share Amounts)
Liquidity and Capital Resources
The Company expects cash flow from operations and debt issuances will be sufficient to meet foreseeable business operating and recurring cash needs (including for debt service, dividends, capital expenditures, share repurchases and acquisitions). The Company believes its strong cash generation and financial position should continue to allow it broad access to global credit and capital markets.
Cash Flow
Net cash provided by operations increased 2% to $4,198 in 2025 as compared to $4,107 in 2024. The Company’s working capital as a percentage of Net sales was (7.0)% in 2025 and (5.2)% in 2024. The Company defines working capital as the difference between current assets (excluding Cash and cash equivalents and marketable securities, the latter of which is reported in Other current assets) and current liabilities (excluding short-term debt).
Investing activities used $817 of cash in 2025 compared to $534 in 2024. Investing activities in 2025 included the Company’s acquisition of Care TopCo Pty Ltd, the owner of the Prime100 pet food business, as discussed in Note 3, Acquisitions to the Consolidated Financial Statements.
Capital expenditures in the year ended December 31, 2025 were $564, an increase from $561 in 2024. Capital expenditures for 2026 are expected to be approximately 3.0% of Net sales. The Company continues to focus its capital spending on projects that are expected to yield high aftertax returns.
Financing activities used $3,256 of cash during the year ended December 31, 2025 compared to $3,389 during 2024. The decrease in cash used was primarily due to higher proceeds from the issuance of debt partially offset by higher debt repayments.
Long-term debt, including the current portion, increased to $7,986 as of December 31, 2025, as compared to $7,941 as of December 31, 2024, and total debt increased to $7,988 as of December 31, 2025 as compared to $7,949 as of December 31, 2024. During the year ended December 31, 2025, the Company redeemed at maturity $130 of 30-year Medium-Term Notes with a fixed coupon of 7.60% and $500 of three-year Senior Notes with a fixed coupon of 3.10%. These redemptions were financed with commercial paper borrowings. During the year ended December 31, 2024, the Company redeemed at maturity $500 of ten-year Medium-Term Notes with a fixed coupon of 3.25%.
In April 2025, the Company issued $500 of five-year Senior Notes at a fixed coupon rate of 4.20%. In November 2025, the Company issued €600 of ten-year Senior Notes at a fixed coupon rate of 3.25%. The Company’s debt issuances support the Company’s capital structure objectives of funding its business and growth initiatives while minimizing its risk-adjusted cost of capital.
At December 31, 2025, the Company had access to unused domestic and foreign lines of credit of $3,641 (including under the facility discussed below) and could also issue long-term debt pursuant to an effective shelf registration statement.
In November 2022, the Company entered into an amended and restated $3,000 five-year revolving credit facility with a syndicate of banks for a five-year term expiring November 2027, which replaced, on substantially similar terms, the Company’s $3,000 revolving credit facility that was scheduled to expire in August 2026. The term of the revolving credit facility was subsequently extended by one year in each of November 2023, November 2024 and November 2025. The expiration date of the revolving credit facility is now November 2030. The credit facility serves as a backstop for the Company's commercial paper program. Commitment fees related to the credit facility are not material.
Domestic and foreign commercial paper outstanding was $147 and $936 as of December 31, 2025 and December 31, 2024, respectively. The average daily balances outstanding of commercial paper in 2025 and 2024 were $1,611 and $1,710, respectively. The Company classifies commercial paper and certain long-term debt that is subject to a put option as long-term when it has the intent and ability to refinance such obligations on a long-term basis, including, if necessary, by utilizing its available lines of credit (under the facilities discussed above).
(Dollars in Millions Except Per Share Amounts)
The following is a summary of the Company’s commercial paper as of December 31, 2025 and 2024:
Weighted Average Interest Rate
Maturities
Outstanding
Weighted Average
Interest Rate
Maturities
Outstanding
Commercial Paper
Certain of the agreements with respect to the Company’s bank borrowings contain financial and other covenants as well as cross-default provisions. Noncompliance with these requirements could ultimately result in the acceleration of amounts owed. The Company is in full compliance with all such requirements and believes the likelihood of noncompliance is remote. Refer to Note 6, Long-Term Debt and Credit Facilities to the Consolidated Financial Statements for further information about the Company’s long-term debt and credit facilities.
Dividend payments in 2025 were $1,823, an increase from $1,789 in 2024. Dividends paid increased to $2.06 per share in 2025 from $1.98 per share in 2024. In the first quarter of 2025, the Company increased the quarterly common stock dividend to $0.52 per share from $0.50 per share previously, effective in the second quarter of 2025.
The Company repurchases shares of its common stock in the open market and in private transactions to maintain its targeted capital structure and to fulfill certain requirements of its compensation and benefit plans. On March 20, 2025, the Board authorized the repurchase of shares of the Company’s common stock having an aggregate purchase price of up to $5 billion under a new share repurchase program (the “2025 Program”), which replaced a previously authorized share repurchase program (the “2022 Program”). The Board also has authorized share repurchases on an ongoing basis to fulfill certain requirements of the Company’s compensation and benefit programs. The shares are repurchased from time to time in open market or privately negotiated transactions at the Company’s discretion, subject to market conditions, customary blackout periods and other factors.
Aggregate share repurchases in 2025 consisted of approximately 13.7 million common shares under the 2022 Program and the 2025 Program and 0.6 million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of $1,210. Aggregate share repurchases in 2024 consisted of approximately 18.3 million common shares under the 2022 Program and 0.4 million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of $1,739. Share repurchases, net of proceeds from exercise of stock options, were $1,109 and $1,101 in 2025 and 2024, respectively.
Cash and cash equivalents increased $192 during 2025 to $1,288 at December 31, 2025, compared to $1,096 at December 31, 2024. Cash and cash equivalents held by the Company’s foreign subsidiaries was $1,234 and $1,059, respectively, at December 31, 2025 and 2024.
The following represents the scheduled maturities of the Company’s contractual obligations as of December 31, 2025:
Total
Thereafter
Long-term debt including current portion (1)
Net cash interest payments on long-term debt (2)
Operating Leases
Purchase obligations (3)
Total
(1) The Company classifies commercial paper and certain long-term debt that is subject to a put option as long-term debt when it has the intent and ability to refinance such obligations on a long-term basis. The amounts in this table exclude commercial paper.
(2) Includes the net interest payments on fixed and variable rate debt. Interest payments associated with floating rate instruments are based on management’s best estimate of projected interest rates for the remaining term of variable rate debt.
(3) The Company had outstanding contractual obligations with suppliers at the end of 2025 for the purchase of raw, packaging and other materials and services in the normal course of business. These purchase obligation amounts represent only those items which are based on agreements that are legally binding and that specify all significant terms including minimum quantity, price and term and do not represent total anticipated purchases.
(Dollars in Millions Except Per Share Amounts)
Long-term liabilities associated with the Company’s postretirement plans are excluded from the table above due to the uncertainty of the timing of these cash disbursements. The amount and timing of cash funding related to these benefit plans will generally depend on the variability of the market value of the assets, changes in the benefit obligations, local regulatory requirements, various economic assumptions (the most significant of which are detailed in “Critical Accounting Policies and Use of Estimates” below) and voluntary Company contributions. Based on current information, the Company is not required to make a mandatory contribution to its qualified U.S. pension plan in 2026. As of December 31, 2025, the Company expects to make contributions to its U.S. postretirement plans of $99 for the year ending December 31, 2026.
As more fully described in Note 13, Commitments and Contingencies to the Consolidated Financial Statements, the Company has commitments and contingencies with respect to lawsuits, environmental matters, taxes and other matters arising in the ordinary course of business.
(Dollars in Millions Except Per Share Amounts)
Off-Balance Sheet Arrangements
The Company does not have off-balance sheet financing or unconsolidated special purpose entities.
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, 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. The Company’s treasury and risk management policies prohibit the use of derivatives for speculative purposes and leveraged derivatives for any purpose.
See Note 2, Summary of Significant Accounting Policies and Note 7, Fair Value Measurements and Financial Instruments to the Consolidated Financial Statements for further discussion of derivatives and hedging policies and fair value measurements.
Foreign Exchange Risk
As the Company markets its products in over 200 countries and territories, it is exposed to currency fluctuations related to manufacturing and selling its products in currencies other than the U.S. dollar. The Company manages its foreign currency exposures through a combination of cost containment measures, sourcing strategies, selling price increases and the hedging of certain costs in an effort to minimize the impact on earnings of foreign currency rate movements. See “Results of Operations” above for a discussion of the foreign exchange impact on Net sales in each operating segment.
The assets and liabilities of foreign subsidiaries are translated into U.S. dollars at year-end exchange rates with resulting translation gains and losses accumulated in a separate component of shareholders’ equity. Income and expense items are translated into U.S. dollars at average rates of exchange prevailing during the year.
The Company primarily utilizes foreign currency contracts, including forward and swap contracts, foreign and local currency deposits and local currency borrowings to hedge portions of its exposures relating to foreign currency purchases, assets and liabilities created in the normal course of business and the net investment in certain foreign subsidiaries. The duration of foreign currency contracts generally does not exceed 12 months and the contracts are valued using observable market rates.
Interest Rate Risk
The Company manages its mix of fixed and floating rate debt against its target with debt issuances and by entering into interest rate swaps in order to mitigate fluctuations in earnings and cash flows that may result from interest rate volatility. The Company utilizes forward-starting interest rate swaps to mitigate the risk of variability in interest rates for future debt issuances. The notional amount, interest payment and maturity date of the swaps generally match the principal, interest payment and maturity date of the related debt, and the swaps are valued using observable benchmark rates.
Based on year-end 2025 variable rate debt levels, a 1% increase in interest rates would have increased Interest expense by $7 in 2025.
Commodity Price Risk
The Company is exposed to price volatility related to raw materials used in production, such as resins, essential oils, tropical oils, pulp, tallow, corn, poultry and soybeans. The Company manages its raw material exposures through a combination of cost containment measures, ongoing productivity initiatives and the limited use of commodity hedging contracts. Futures contracts are used on a limited basis, primarily in the Hill ’ s Pet Nutrition segment, to manage volatility related to anticipated raw material inventory purchases of certain traded commodities.
(Dollars in Millions Except Per Share Amounts)
Credit Risk
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 with diverse, credit-worthy counterparties based upon both strong credit ratings and other credit considerations.
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies to the Consolidated Financial Statements for a description of recent accounting pronouncements and their anticipated effects to the Consolidated Financial Statements.
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to use judgment and make estimates. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. Actual results could ultimately differ from those estimates. The accounting policies that are most critical in the preparation of the Company’s Consolidated Financial Statements are those that are both important to the presentation of the Consolidated Financial Statements and require significant or complex judgments and estimates on the part of management. The Company’s critical accounting policies are reviewed periodically with the Audit Committee of the Board.
In certain instances, accounting principles generally accepted in the United States of America allow for the selection of alternative accounting methods. The Company’s significant policies that involve the selection of alternative methods are accounting for inventories and shipping and handling costs.
▪ The Company accounts for inventories using both the first-in, first-out ( “ FIFO ” ) method (approximately 75% of inventories) and the last-in, first-out ( “ LIFO ” ) method (approximately 25% of inventories). There would have been no material impact on reported earnings for 2025 or 2024 had all inventories been accounted for under the FIFO method.
▪ Shipping and handling costs (also referred to as logistics costs) may be reported as either a component of Cost of sales or Selling, general and administrative expenses. The Company accounts for such costs, primarily related to warehousing and outbound freight, as fulfillment costs and reports them in the Consolidated Statements of Income as a component of Selling, general and administrative expenses. Accordingly, the Company’s Gross profit margin is not comparable with the Gross profit margin of those companies that include shipping and handling charges in Cost of sales. If such costs had been included as a component of Cost of sales, the Company’s Gross profit margin would have been lower by 880 bps in 2025 and 2024, and 910 bps in 2023, with no impact on reported earnings.
The areas of accounting that involve significant or complex judgments and estimates are pensions and other retiree benefit cost assumptions, stock-based compensation, asset impairments, uncertain tax positions, tax valuation allowances and legal and other contingency reserves.
▪ In accounting for pension and other postretirement benefit costs, the most significant actuarial assumptions are the discount rate and the expected long-term rate of return on plan assets. The discount rate used to measure the benefit obligation for U.S. defined benefit plans was 5.51% and 5.73% as of December 31, 2025 and 2024, respectively. The discount rate used to measure the benefit obligation for other U.S. postretirement plans was 5.56% and 5.74% as of December 31, 2025 and 2024, respectively. Discount rates used for the U.S. and international defined benefit and other postretirement plans are based on a yield curve constructed from a portfolio of high-quality bonds whose projected cash flows approximate the projected benefit payments of the plans. The assumed expected long-term rate of return on plan assets for U.S. plans was 6.50% as of December 31, 2025 and 2024. In determining the expected long-term rate of return, the Company considers the nature of the plans’ investments and the historical rate of return.
(Dollars in Millions Except Per Share Amounts)
Average annual rates of return for the U.S. plans for the most recent 1-year, 5-year, 10-year, 15-year and 25-year periods were 10%, 1%, 5%, 6% and 5%, respectively. In addition, the current assumed rate of return for the U.S. plans is based upon the nature of the plans’ investments with a target asset allocation of approximately 60% in fixed income securities, 26% in equity securities and 14% in other investments. A 1% change in the assumed rate of return on plan assets of the U.S. pension plans would impact future Net income attributable to Colgate-Palmolive Company by approximately $12. A 1% change in the discount rate for the U.S. pension plans and the other U.S. retiree benefit plan would impact future Net income attributable to Colgate-Palmolive Company by approximately $0 and $3, respectively. A third assumption is the long-term rate of compensation increase for the U.S. pension plans, a change in which would partially offset the impact of a change in either the discount rate or the expected long-term rate of return. This rate was 3.50% as of December 31, 2025 and 2024. Refer to Note 10, Retirement Plans and Other Retiree Benefits to the Consolidated Financial Statements for further discussion of the Company’s pension and other postretirement plans.
▪ The assumption requiring the most judgment in accounting for other postretirement benefits (other than the discount rate noted above) is the medical cost trend rate. The Company reviews external data and its own historical trends for health care costs to determine the medical cost trend rate. The assumed rate of increase for the U.S. postretirement benefit plans is 7.00% for 2026, declining to 5.00% by 2031 and remaining at 4.50% for the years thereafter. A 1% change in the assumed long-term medical cost trend rate would impact future Net income attributable to Colgate-Palmolive Company by $2.
▪ The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options and restricted stock units (both performance-based and time-vested), based on the fair value of those awards at the date of grant. The Company uses the Black-Scholes-Merton ( “ Black-Scholes ” ) option pricing model to estimate the fair value of stock option awards. The weighted-average estimated fair value of each stock option award granted in the year ended December 31, 2025 was $18.21. The Black-Scholes model uses various assumptions to estimate the fair value of stock option awards. These assumptions include the expected term of stock option awards, expected volatility rate, risk-free interest rate and expected dividend yield. While these assumptions do not require significant judgment, as the significant inputs are determined from historical experience or independent third-party sources, changes in these inputs could result in significant changes in the fair value of stock option awards. A one-year change in expected term would result in a change in fair value of approximately 7%. A 1% change in volatility would change fair value by approximately 4%. The Company uses a Monte-Carlo simulation to determine the fair value of performance-based restricted stock units at the date of grant. The Monte-Carlo simulation model uses substantially the same inputs as the Black-Scholes model.
▪ Goodwill and indefinite-life intangible assets, such as the Company’s global brands, are subject to impairment tests at least annually or when events or changes in circumstances indicate an asset may be impaired. In assessing impairment, the Company performs either a quantitative or a qualitative analysis.
Determining the fair value of the Company’s reporting units for goodwill and the fair value of its intangible assets requires significant estimates and judgments by management. When a quantitative analysis is performed, the Company generally uses the income approach, which requires several estimates, including future cash flows consistent with management’s strategic plans, sales growth rates, operating margins, customer attrition rate and the selection of royalty rates and discount rates. Estimating sales growth rates requires significant judgment by management in areas such as future economic conditions, category growth rates, product pricing, consumer tastes and preferences and future expansion expectations. In selecting an appropriate royalty rate, the Company considers the long-term profitability of the brand and recent market transactions for similar brands and products. In determining an appropriate discount rate, the Company considers the current interest rate environment and its estimated cost of capital. Other qualitative factors the Company considers, in addition to those quantitative measures discussed above, include assessments of general macroeconomic conditions, industry-specific considerations and historical financial performance. The Company generally engages a third-party valuation firm to assist it in determining the fair value of intangible assets acquired in business combinations.
(Dollars in Millions Except Per Share Amounts)
In determining the fair value of the Company’s reporting units, fair value is also generally determined using the market approach, which is generally derived from metrics of comparable publicly traded companies. As multiple valuation methodologies are used, the Company also performs a qualitative analysis comparing the fair value of a reporting unit under each method to assess its reasonableness and ensure consistency of results.
Determining the expected life of a brand requires management judgment and is based on an evaluation of several factors including market share, brand history, future expansion expectations, the level of in-market support anticipated by management, legal or regulatory restrictions and the economic environment in the countries in which the brand is sold.
Given lower than expected category growth rates and weaker than expected performance, particularly in China, in the fourth quarter of 2025 the Company lowered its outlook for the skin health reporting unit, primarily Filorga. The Company concluded that the changes in circumstances in this reporting unit triggered the need for an interim impairment review of its goodwill and long-lived assets which consist primarily of trademarks and customer relationships. As a result of the interim impairment test, the Company concluded that the carrying value of the Filorga trademark and customer relationships exceeded their estimated fair values and recorded impairment charges of $244 and $93, respectively, reducing their combined carrying values to an immaterial amount as of December 31, 2025. After adjusting the carrying values of the Filorga trademark and customer relationship intangible assets, the Company completed a quantitative impairment test for goodwill and recorded a goodwill impairment charge of $582 in the skin health reporting unit, reducing the carrying value of goodwill to $51 as of December 31, 2025.
Except for the skin health reporting unit described above, the estimated fair value of the Company’s remaining reporting units substantially exceeds their carrying value.
▪ The recognition and measurement of uncertain tax positions involves consideration of the amounts and probabilities of various outcomes that could be realized upon ultimate resolution.
▪ Tax valuation allowances are established to reduce deferred tax assets, such as tax loss carryforwards, to net realizable value. Factors considered in estimating net realizable value include historical results by tax jurisdiction, carryforward periods, income tax strategies and forecasted taxable income.
▪ Legal and other contingency reserves are based on management’s assessment of the risk of potential loss, which includes consultation with outside legal counsel and other advisors. Such assessments are reviewed each period and revised based on current facts and circumstances, if necessary. While it is possible that the Company’s cash flows and results of operations in a particular quarter or year could be materially affected by the impact of such contingencies, based on current knowledge it is the opinion of management that these matters will not have a material effect on the Company’s financial position, or its ongoing results of operations or cash flows. Refer to Note 13, Commitments and Contingencies to the Consolidated Financial Statements for further discussion of the Company’s contingencies.
The Company generates revenue through the sale of well-known consumer products to trade customers under established trading terms. While the recognition of revenue and receivables requires the use of estimates, there is a short time frame (typically less than 60 days) between the shipment of product and cash receipt, thereby reducing the level of uncertainty in these estimates. Refer to Note 2, Summary of Significant Accounting Policies to the Consolidated Financial Statements for further description of the Company’s significant accounting policies.
(Dollars in Millions Except Per Share Amounts)
Cautionary Statement on Forward-Looking Statements
This Annual Report on Form 10-K may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the SEC in its rules, regulations and releases) that set forth anticipated results based on management’s current plans and assumptions. Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin levels, earnings per share levels, financial goals, category growth rates, the impact of foreign exchange, the impact of developments in global trade relations and tariffs, the impact of geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela, cost-reduction plans (including the Strategic Growth and Productivity Program), tax rates, interest rates, new product introductions, digital capabilities, commercial investment levels, acquisitions, divestitures, share repurchases or legal or tax proceedings, among other matters. These statements are made on the basis of the Company’s views and assumptions as of February 23, 2026. The Company undertakes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, the Company does not, nor does any other person, assume responsibility for the accuracy and completeness of those statements. The Company cautions investors that any such forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from those statements. Actual events or results may differ materially because of factors that affect international businesses and global macroeconomic and geopolitical conditions, as well as matters specific to the Company and the markets it serves, including the uncertain macroeconomic and political environment in different countries, including as a result of inflation and high interest rates and their effect on consumer sentiment and spending, foreign currency rate fluctuations, exchange controls, import restrictions, tariffs, sanctions, price or profit controls, labor relations, changes in foreign or domestic laws or regulations or their interpretation, political and fiscal developments, including developments in trade relations and the negotiation of trade agreements, tax and immigration policies, significant competition and a highly competitive omni-channel marketplace, including as a result of the growth of eCommerce and the emergence of AI, a rapidly changing retail landscape and changes in the policies of retail trade customers, the ability to manage disruptions in our global supply chain and/or key office facilities, the ability to manage the availability and cost of raw and packaging materials and logistics costs, the ability to maintain or increase selling prices as needed, the emergence of alternative retail channels, the ability to develop innovative new products and successfully leverage AI and other new and emerging technologies, the ability to continue lowering costs and operate in an agile manner, the ability to successfully implement and realize the benefits of the Strategic Growth and Productivity Program, the ability to maintain the security of our information and operational technology systems from cybersecurity or data incidents, the ability to address the effects of climate change and implement our sustainability strategy and achieve our targets, the ability to complete acquisitions and divestitures as planned and successfully integrate acquired businesses, the ability to attract and retain key employees, the uncertainty of the outcome of legal proceedings, whether or not the Company believes they have merit, and the ability to address uncertain or unfavorable macroeconomic conditions, including inflation, disruptions in the credit markets and tax matters. For information about these and other factors that could impact the Company’s business and cause actual results to differ materially from forward-looking statements, refer to Part I, Item 1A “Risk Factors.”
