Escalating Costs Dent Colgate's 2022 Profit Potential, but Firm Has Multiple Ways to Blunt the Hit

The burden of inflation and supply chain bottlenecks is widely understood, but the accelerating angst Colgate-Palmolive felt in the first quarter was striking. Adjusted gross margins sank 220 basis points to 58.5%, and management sliced its full-year outlook to reflect expectations for a more than 20% increase in material and logistics costs this year. It now expects adjusted EPS to be down midsingle digits from low- to mid-single-digit growth prior. One of the primary culprits was in fats and oils, which has historically been the second-largest cost bucket behind resins; the firm is now seeing a more than 60% increase this year in those categories.