Colgate-Palmolive (Colgate-Palmolive (CL)) shares climbed Friday after the consumer products giant reported first-quarter results that beat Wall Street expectations. But the company also dropped a sobering warning: the ongoing conflict in the Middle East is driving up costs and could put a dent in consumer spending everywhere.

For the quarter, Colgate posted adjusted earnings of 97 cents per share, topping the 94-cent analyst consensus. Revenue came in at $5.324 billion, ahead of the $5.215 billion estimate. Net sales rose 8.4%, while organic sales—which strip out currency and acquisitions—grew 2.9%. That organic figure includes a 0.6% headwind from lower private-label pet food sales, a business Colgate is exiting.

The company continues to dominate the oral care aisle, holding a 41.1% share of the global toothpaste market and 32.6% of manual toothbrushes year to date. But regional performance was a mixed bag. North America net sales slipped 1.8%, and operating profit in the region tumbled 28% to $141 million. Latin America was a bright spot, with net sales up 14.8% and operating profit rising 15% to $401 million. The Europe, Middle East, and Africa region posted an 11.9% sales increase and a 20% jump in operating profit to $266 million.

CEO Noel Wallace struck a confident tone: “These results underscore the resilience of our business model as we are able to execute against our long-term strategy while delivering strong results in a difficult operating environment.”

But the numbers tell a more complicated story. Gross profit rose to $3.226 billion from $2.987 billion a year earlier, but gross margin edged down to 60.6% from 60.8%. Operating profit fell to $964 million from $1.076 billion, and operating margin narrowed to 18.1% from 21.9%. The company held $1.335 billion in cash and equivalents as of March 31.

Colgate’s board approved an expansion of its Strategic Growth and Productivity Program, which is designed to support long-term growth and the company’s 2030 strategy. The program now expects total pretax charges of $350 million to $550 million, up from earlier estimates, and projects annual pretax savings of $200 million to $300 million once fully implemented by 2028.

Looking ahead, Colgate reaffirmed its 2026 sales outlook of $20.79 billion to $21.605 billion, compared with the $21.294 billion analyst estimate. The company still expects net sales growth of 2% to 6%, including a low-single-digit positive impact from foreign exchange, and organic sales growth of 1% to 4%, reflecting the exit from private-label pet food.

But the profit picture is getting murkier. On a GAAP basis, Colgate now expects gross profit margin to decline, versus prior expectations for an increase. Advertising spending is still projected to rise both in dollar terms and as a percentage of net sales, alongside double-digit earnings per share growth. On a non-GAAP, or base business, basis, the company also expects gross margin to decline, with advertising increasing and earnings per share growth in the low- to mid-single-digit range.

The biggest wild card? Geopolitics. “The follow-on effects of the conflict in the Middle East are putting pressure on our raw and packaging material and logistics costs, and have the potential to impact consumer spending around the world,” the company said in a statement.

Wallace added: “While we expect volatile macroeconomic conditions and slower category growth to continue in 2026, we are aligned behind our 2030 strategy to deliver consistent, compounded earnings per share growth and drive long-term shareholder value.”

Investors seemed to focus on the earnings beat rather than the cautious outlook. Colgate shares were up 3.42% at $88.28 at the time of publication on Friday.