Colgate Taps Productivity Plan, Enhances Profits, Protects Margins
Colgate-Palmolive Company's CL productivity push leads to better efficiency and higher profits by offsetting the elevated input and operating costs. The company has been streamlining its global supply chain, adopting modernized manufacturing automation and optimizing the overhead structure, reaffirming its commitment to deliver greater efficiency and cost effectiveness.The productivity drive plays a pivotal role in Colgate's strategic execution and operational excellence. On a broader spectrum, CL's productivity initiatives extend beyond cost-cutting, focusing on operational excellence, innovation, sustainable value creation and overall growth. Its Global Productivity Initiative has helped the company reallocate resources to major growth areas, achieve higher operational efficiency and streamline the supply chain to reduce structural costs. CL advances its productivity agenda by leveraging digital tools, empowering the workforce and optimizing business functions. Amid an uncertain and volatile operating backdrop, productivity improvements, holistic margin-management efforts and innovation help the company expand margins and earnings. Colgate looks to navigate raw material inflation through key strategic methods, including productivity enhancements and bolstering supply-chain efficiencies. Additionally, CL is benefiting from strong pricing and revenue-growth management initiatives.In first-quarter 2025, Colgate's adjusted gross margin expanded 80 basis points (bps), while the operating margin expanded 120 bps year over year. Adjusted EPS advanced 6% from the prior-year period. Pricing improved 1.5% year over year in the reported quarter, backed by positive pricing across its most segmental divisions. Our model expects pricing gains of 2.5% in fiscal 2025.
Apart from Colgate, The Procter & Gamble Company PG, The Clorox Company CLX and Newell Brands Inc. NWL are key players actively pursuing productivity initiatives to streamline operations and enhance efficiency.Procter & Gamble places a strong emphasis on driving productivity to counter inflationary costs and currency volatility, reinforcing its commitment to sustained margin expansion. PG continues to accelerate productivity across all facets of operations to reinvest strategically and fuel enterprise-wide growth. Procter & Gamble seeks to gain greater visibility into cost-saving opportunities by leveraging globally scalable programs like Supply Chain 3.0, which focuses on optimizing supply-chain operations. Supply Chain 3.0 is helping the company efficiently deliver products to the retail partners, with the integration of automation, data synchronization and digitization.Clorox aims to drive higher productivity across the organization through its transformation efforts, including its enterprise resource planning (ERP) conversion. The ERP transition is a critical step in CLX's digital transformation, enabling quick, data-driven decisions and boosting capabilities to fuel growth and productivity. Its streamlined operating model is focused on simplifying operations, enhancing technology and delivering agile growth. Clorox has been making constant efforts to drive efficiency across manufacturing and logistics, as well as optimizing portfolio moves. Its IGNITE strategy is also progressing well.Newell is benefiting from productivity and pricing actions, which have been boosting margins. In first-quarter 2025, the gross margin expanded 150 bps, reflecting the seventh straight quarter of year-over-year increase. NWL has implemented a corporate strategy that prioritizes investments in innovation, brand-building and go-to-market excellence across its brands and markets. It is strengthening its commercial capabilities and improving organizational efficiency. Key pricing and productivity actions have mitigated inflation and currency translation impacts, contributing to Newell's core sales performance.
Shares of Colgate have lost 7.4% in the past year compared with the industry's drop of 0.7%.
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From a valuation standpoint, CL trades at a forward price-to-earnings ratio of 23.37X compared with the industry's average of 20.17X.
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The Zacks Consensus Estimate for CL's 2025 and 2026 EPS indicates year-over-year growth of 1.4% and 7.3%, respectively. The company's EPS estimate for 2025 has been stable, while the same for 2026 has been on the rise in the past 30 days.
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CL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Newell Brands Inc. (NWL) : Free Stock Analysis Report
Procter & Gamble Company (The) (PG) : Free Stock Analysis Report
Colgate-Palmolive Company (CL) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report
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