Analyst Note| Erin Lash, CFA |
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.