Colgate-Palmolive Co.

The stable outlook reflects our expectation that Colgate will sustain leverage below 2.0x. Despite some foreign exchange headwinds, we believe the company will generate strong profitability in 2020, as it benefits from significant growth of its household and pet food products and steady demand in developed markets for its oral care products. We could lower the rating if we believe debt to EBITDA will weaken and be sustained above 2x. This could occur if the company makes incremental debt-financed acquisitions without moderating share repurchase activity, signaling a more aggressive financial policy. We could also lower the rating if we revise our view of Colgate's business risk, potentially due to weakening profitability. This could occur if organic growth stagnates, emerging market

...Tailwinds related to the coronavirus pandemic will continue to drive significant demand for some of Colgate-Palmolive Co.'s previously slow growing categories, though some others remain challenged. Demand for soaps and household cleaning products has surged globally, leading to strong consumption for Colgate's home care products. S&P Global Ratings believes demand for soaps and cleaners will remain elevated through 2021 as consumers remain more hygiene conscious. The company is also delivering high- single-digit organic sales growth of its pet food products, benefiting from pet food diet trends (away from grain-free, where Colgate does not focus), but also leveraging its strong e-commerce platforms amid the pandemic. At the same time, the virus has had negative implications for some of Colgate's personal care products, such as deodorant, as consumers have spent more time at home. The company was also hurt in the second quarter of 2020 by strict retail lockdowns in many developing markets,...

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