Hill’s Pet Nutrition boosts Colgate’s bottom line with 30% profit surge amid tariff challenges

USA – In a volatile pricing environment marked by global uncertainty and looming tariffs, Colgate-Palmolive’s Hill’s Pet Nutrition business has emerged as a strong performer, delivering a 30% year-over-year increase in operating profit for the first quarter ended March 31, 2025.

Hill’s reported net sales of US$1.17 billion, up 1.5% from US$1.10 billion in the same quarter last year. Operating profit rose sharply to US$258 million from US$199 million in 2024, making Hill’s responsible for 23.1% of Colgate’s total net sales. 

The growth came despite a strategic reduction in private-label volume, which trimmed overall organic sales by 2.1%. 

Excluding that impact, Hill’s saw 1.7% volume growth, largely driven by strong performance in its Science Diet and Prescription Diet lines.

Hill’s organic sales grew 2.9%, with pricing contributing 3.2% and volume slipping by just 0.3%. 

In the U.S., Hill’s achieved mid-single-digit organic sales growth with gains in both volume and pricing. Its Canadian business posted even more impressive results, recording double-digit organic growth.

“Our new campaign and brand positioning for Hill’s have been extremely well received,” said Noel Wallace, chairman, president and CEO of Colgate-Palmolive, during the company’s earnings call. 

“It talks about the love pet owners have for their dogs and the guilt they feel when they leave them at home. We’ve anchored in on an incredible, unique consumer insight.”

Strategic innovation fuels growth 

Hill’s continued product innovation played a key role in its success. The company has updated its Science Diet and Prescription Diet offerings with ActiveBiome+ technology, enhancing formulas based on life stages and targeting specific health needs. 

Additionally, Hill’s is expanding its wet cat food line with new flavours, a move supported by increased capacity at its Tonganoxie, Kansas, manufacturing facility.

That same facility is also critical to Colgate-Palmolive’s broader strategy to reduce reliance on China amid rising tariff costs. 

“Strategically, we aim to have local manufacturing as the cost of shipping many of our products long distances can be very high,” explained Stanley Sutula, chief financial officer. “We’ve lowered our supply chain exposure to China and built more flexibility into our global operations.”

Colgate has invested nearly US$2 billion in its U.S. supply chain over the past five years and increased the number of its U.S.-based manufacturing sites by over 40%. 

Sutula emphasised that the company is optimising existing capacity rather than simply expanding it. 

“It’s about productivity, revenue growth management, formulation, sourcing, and supply chain optimisation,” he said.

Colgate’s net sales decline 

Despite Hill’s strong quarter, Colgate-Palmolive as a whole reported a 3.1% decline in net sales to US$4.91 billion, down from US$5.07 billion in Q1 2024. 

However, organic sales rose 1.4%, and overall operating profit edged up 3% to US$1.08 billion. 

Gross profit margin held steady at 60.8%, while SG&A expenses declined slightly to US$1.90 billion.

Wallace credited Colgate’s resilient performance to disciplined strategy execution. “Our focus on building flexibility into our P&L enabled us to deliver growth in operating profit, net income, and earnings per share despite a volatile environment,” he said.

The company also increased its advertising spend by 30 basis points to 13.6% of net sales to strengthen brand penetration.

Full year earnings revised down 

Looking ahead, Colgate anticipates an additional US$200 million in tariff-related costs in 2025, prompting further adjustments to its supply chain and sourcing strategies. 

The company has revised its full-year guidance, now expecting low single-digit net sales growth and 2% to 4% organic sales growth. 

Gross margins and advertising spend are projected to remain flat as a percentage of net sales, while earnings per share are expected to increase in the low single digits.

“Uncertainty and volatility in global markets, including the impact of tariffs, remain challenging,” Wallace said. “But we are confident in our strategy and will continue to execute with focus and agility to meet our revised 2025 targets.”

Sign up HERE to receive our email newsletters with the latest news updates and insights from Africa and the World, and follow us on our WhatsApp channel for updates.