CL - Earnings call transcript Q1 2018 | Colgate-Palmolive Company

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Operator

Good day and welcome to today's Colgate-Palmolive Company First Quarter 2018 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com.

Now for opening remarks, I would like to turn the call over to the Senior Vice President of Investor Relations, John Faucher. Please go ahead, John.

John Faucher

Thanks, Elysia. to quarter welcome call. release and morning, our earnings first conference Good is President Vice Faucher, Investor This Senior for John Relations.

on and on Henning Joining Colgate's Cook, include me Treasurer. Actual Vice of non-GAAP differ Today's of to CFO; materially Xa factors forward-looking will Web from earnings President Chairman, Ian and President Jakobsen, those financial reconciliation statements. these filings full to measures, a President is Form and conference that discussion in including XXXX Paik, this release and the Tables press CEO; conference could materially to discussion Dennis differ included earnings our release identified also and morning financial SEC subsequent from Colgate's X results the and Vice Corporate site. including press could in statements. most on cause XX-K will Controller; and results are, include for GAAP the Elaine site, these and with recent release. actual earnings This filings, available a the Web measures press Annual SEC, statements. Report A call Please refer the Hickey, of available the corresponding is our all call

Ian Cook

expected Thanks we this XXXX us all XXXX. to morning. likely John and challenging challenging I of call than that thanks be joining on At February, the to you for mentioned CAGNY less in of

cash increasing and challenging delay effectiveness and costs, we not I activity harder been volatile would [growth] where with and find. growth remain the XXXX heightened agility has around focused that this as say markets in better material world. one slow in just some to far, case environment is logistics down this [ph] to a response, our as So quarter on was visualizing all the as competitive in

XXXX. our creative, four line I've innovation a as Advertising behind down fundamentals address. areas call progress past challenges of and And impactful on and markets where our made like second, developed bottom profitable we more particularly the priorities year. I'd the today, and we're two drive business growth face in toothpaste These in and statement. partners particularly we growth. focus e-commerce, accelerate productivity course, in on up continuing to think to highlighted working developing topics; top to few remain past and of with focus retail maximizing But across new some with working on our over the quarters, first, income our to where we our Over look markets the that focus naturals we've

the positive in market in the You only year posted and by our share first to retail sales increased environments Europe our in our of continues North shares drive quarter of to Hill's sales growth, the the sales and has see is may continuation share both sales sales in our Soupline in in were In volume back market the quarter. in growth first last declined returned divisions despite fabric elmex category. driving declines the In remember European of organic the to for we identifying up personal is that channel. a will in category and Sanex second the a to spend in advertising in gaining quarter pricing row are American we that committed toothpaste the market it's broad based and in focus on softener more. growth was fourth was in flat we growth the growth since and and XXXX, some deliver six then first half share specialty in quarter. the our driven positive growth weakness this to in one performance. categories and while to In are to back of premium the half and and and In This are growth have we returned quarter portfolio, of to we and categories improvement the in U.S., our growth challenges care organic categories growth first seeing share one share in U.S. with categories. gained XXXX, began volume segments

markets e-commerce Our Hill's growth developed in the XX% business in saw a quarter.

momentum. so deliver remain this quarter we this continuing simple on developed and terms focused And markets in sharply recent

forward markets, rates emerging to slowed back, bit to in going first reaccelerate these of going markets Latin levels in lower repricing the there to step more do of quarter our took like inflation Argentina to and are are a a America seeing Turning in emerging we we so due what growth markets. what markets and growth importantly Brazil. category

and see cycle growth to activity not some which sequentially concerns volume match. last the Mexico we balance by macro slowed activity some in While year. we the as chose to helped of some and that's in we promotional trend Latin cases a continue quarter competitive comparisons level increases behind expect year in America, our improved heightened this over pricing easier In

We we foresee expect wages GDP inflation increasing costs. do and rising to inflation remain given growth below historical modest commodity levels, but

in of terms of the volume in we do place Latin have for growth the In a America, year. plan reaccelerating robust balance

discuss performance very significant growth a channel. innovation in the premium active pharmacy Brazilian including his strong high in innovation will John And Brazil market section. have all our in calendar We care share

rolled in we largest push beginning to lot out the to shares In the space from improved naturals In toothpaste aggressive markets. in personal soaps do. in naturals Asia, geographies trade the sequentially in Asia, we we our two now care, destocking. line quarter for where in the a and the quarters, four less In Mexico of five volume our across innovation the benefits expect impact we're Protex to quarter where has see an been market of are see down the we into work of our bar space. have of we the have line last know first Palmolive from the For in but still fourth

brand, sales share we toothbrushes, the China of need restaging our as shares this growing, elmex performance we expanding launching are and are improve we improved of Colgate exclusive in our what our to and in but are In introducing in an quarter. we of in was Vedshakti fact markets. India, points. call biggest are the we our reach top our and geographic in brand. range which Total Australia Asia-Pacific broadening XXX our by a China, e-commerce naturals wider driver we While is Colgate all In organic sequentially weakness platform price five

by shares. the begin will in that in the to naturals also year. in market and speak of market There some line been downward has market that's We and an increase Australia in have activity retailer putting dynamics been pressure we some which on competitive balance lap impacted QX. difficult some easier with to Colgate is this the pricing as over lead entering along improvement comparisons The we an should

impact strong and to to our plans to John. progress the we which with in us continuing we real to exposure on Uber accelerate to developing markets, material would finally, year sharp provider as us developed like focused compliment raw new in our and get markets, needs understanding to freight the from results. limited the the our limit like in growth momentum specific offset And are United growth which States XPL productivity a focus programs solid of achieved the and back vast start we on have majority on flexible and to enable a rates. done in our helped our And the team saw inflation. a And spot of increase market standpoint. clear from for So logistics funding our We freight now logistics higher I results what a

John Faucher

I Ian. divisional will of now the commentary some including brief quarter further overview Thanks, provide performance. a on

growth in discussed profit while slight sales sales a basis, Ian net organic a our earnings progress growth QX took back. on reported As step operating represented and

focused sequential demonstrate and plans the through in focus. Ian are the sale on that of We highlighted year driving improvement the balance organic

sales Flat from since X% was quarter Our the was exchange. and growth growth from of benefit net highest our acquisitions. pricing by coming driven foreign in with growth in sales skincare the third XXXX. X.X% X.X% the Net X.X% professional quarter volume

GAAP a On of our by and offset XX points inflation. we margin down pricing pricing was basis as expect points improved our efficiency our get basis materials still gross for was year XX down year-over-year. the to excluding basis, positive and pricing we XXX and program plan it easier raw to profit sequentially global impact help year-over-year basis pricing points growth Our take comparisons the performance additional some

decline offset a we was but quarter year-over-year points slightly basis efficiency basis completely margin as basis XX ratio. of QX our On to operating lead gross unable in a point QX, sales strong mentioned, down our advertising our percentage the was program, in a higher was Ian our initiatives of up our year-over-year On As margin points SG&A in basis in growth the basis, spending productivity investment was lapped sales offset XX they XXXX. and growth profit are the excluding dollar was operating down by to was X% XX profit margin global raw decrease a up on material basis costs. funding GAAP impact savings our as highest in

up a both primarily share be a impact SG&A our year-over-year and release percentage behind in growth Ian the growth our we to XXXX in our offset logistics of sales program was in in On and As earnings basis basis diluted advertising are GAAP as year diluted was efficiency XX the at of efficiency a growth United expense up excluding share expect down year-over-year $X.XX. of on a remainder the up States press from as and the sales global $X.XX by the of per was freedom dollar the costs percentage and and per our in was basis. to continuing earnings full of QX spend for increase brands mentioned funding savings our global program still XX% we XX% The moderate initiatives. points

will America. the start off to divisions with moving North Now we

trends balance of double-digit QX we sales net half turnaround North QX by growth toothpaste showed through delivered positive of the combination XXXX. Maine the we naturals continued the Tom's of our Net As Ian growth. in second and in to also America mentioned from benefiting which was category. volume began saw strong a in improvement driven in in sales the further see growth continuing pricing business

the across delivered the was the volume and America on the flat growth and was of care Canadian Latin sales X.X% up as growth pricing net Our important covered most Ian care. net with Latin as personal business home quarter care, delivered well sales strong America. in oral quarter growth in details X.X%.

exchange Foreign flat. was

toothbrushes in during performance points our in points point very Brazil mentioned, behind Colgate share and we launch toothpaste in share strong, of QX in XX X.X two market the year-over-year mouthwash Ian mouthwash. almost share one was gained Total As share

Moving QX to Europe. our Europe sales in performance was decline of X% growth delivered and by X.X%. pricing of with solid broad-based partially growth by XX% volume offset growth driven categories. sales a organic Net geographies across

Foreign XX.X%. exchange was by favorable

market share new the be a benefits Complete Coalgate in with will Switzerland proven be White for across our U.K., we Colgate are quarter that White second the addresses to an sales variant to unmet Our market. X% saw expanding the of line Germany, moisturization and widespread with line a division continues flat. toothpaste in launching drive extracts the with gains to currency new line up the during new Asia to which be We products launched I market Lotion. quarter. well. incremental growth in add X% has need discussed other sales gain naturals simply France, Sanex we incremental Asia-Pacific Coalgate Sanex the the were in so organic chemical as in fewer Europe behind from launch all The share Max to Denmark. are Max through share Greece, in continues Pacific, This Austria of charcoal increase continues and which nicely also And We Expert in as coming Net Ian quarter few the will sales ingredients. comments. X.X% from share

volume, of was whitening we a pricing market shares in China QX saw in X.X% and The our expected positive Eurasia in in strong than and growth net reported have brick While Africa division more market business decline as offset than in China in foreign e-commerce and growth the Colgate driven was weaker mortar by sales exchange while up was expect e-commerce. were difficult toothpaste boost leadership segment Whitening mentioned where low-single along margin weakness we primarily we with In The the digit. a in we of South the region. had lapping underdeveloped is volume recent comparison. Coalgate which launch Africa Safe before shares market expand high which Russia and naturals to

pleased particularly over in usage. our retail a We performance Kenya. of sachet are equivalent point Kenyan price package to Africa XX XX gram US$X.XX has shillings in of US$X.XX This per just also very with or the

emerging change strategy to usage So Futures in their consumers Along Bright can program, in growth was purchase part the is it with Hill's. this quarter. up markets. led X.X% they our was with with long-term United And our States, up X%. we'll X.X% the Volume Smiles, delivered pockets. while growth increase sales have Hill's by of finish and first the pricing in penetration net Bright at

in advertising at campaign States Foreign by U.S. the being is Science exchange science were continued biology rapid nutrition. growth prescription We The the at was on about we posting heart our channel. driven volume of base brand growth diet in CAGNY. strength United business the focuses excited Diet was plus on X%. also as new online highlighted which in our which

Now outlook for we'll XXXX. updated to our turn

we As our stated to press in mid-single sales expect release, XXXX. in increase digits growth net

XX revised points the we Greater in basis in now GAAP impact efficiency of excluding digits for sequential XX up increase expect the Given low year of program, to versus XXX improvement margin and we guidance. with raw the basis are be driver expect start primary mid-single we expect our expected balance be our of to XXXX global the to the growth a costs in gross to gross than material in slower up organic basis, sales to up On growth points increases the to digits low sales year previously. margin organic single the to year.

lower half last of the some mentioned their does Ian on year trends assume current in forecast raw this our As conference our call, including that from second levels. materials oil

material initiatives FTG much year, Our to we are of inflation. the offset strong anticipate off raw a help start funding us growth will this the

to to to should represent mentioned of our remain also a consistent We we pricing a program, tax and advertising growth previously, media digital in and the our to impact committed the modest we positive gross which of still to XX% I provide balance global year our from XX% spending rate year. be expect of we benefit on basis XXXX. As expect in the the Both year in and range expect margin. GAAP XX% this about efficiency excluding across the

for earnings We at expect share year. be the per GAAP to digits double

and the open resulting around share from Excluding the charges charge one XX%. And reform, we efficiency tax up time and related still to we'll that, provisional the earnings global U.S. program for questions. growth expect per it be growth with to

Operator

electronically Today's from Andrea to [Operator question-and-answer our be go session audience. will Instructions] We'll telephone question Teixeira first conducted JPMorgan. from for the

Andrea Teixeira

back-end be Thank explain you the just year that of the see in given Ian, prices if you. to going markets? I'd in how in embedded terms price guidance, elasticity to in developed Thank raise like increases you can the you. of we so to the you're able

Ian Cook

we of of that it will the in We know and the a consumer Latin we little cost and we that markets some thought pricing think we category about think the we same pressure mentioned we have manufacturers call. slowing last over potential commodity talked promotional a as there emerging in did are clearly with seen bit everybody. is destructive markets, can Andrea Clearly and pressure we with. about economically our we I And of in take underlying we do was there guess world with we pressures pricing resulted growth faced we underlying puts some other I from on cost and Yes. the the affects commodity this remarks in, that in point as America call as pie where participate. are faced price to pricing. cases try last prepared my get the year. more the that inflation is instances back And in pressure promotional has with some the of to other modestly think is around heightened believe said that But activity that and space view and activity smaller in on not that a the come balance

premium pressures, is in of our over we're business the for in gives benefit year. expected On renovation which John build the balance a a term I of prices I much say for grid. the pricing much at seeing we naturals underlying the and and top by commodity gives cases mentioned combination promotional have some activity inflation not elevated of a you constructive the technically the an So the and very an margin that think lessening which to the way way, premium increase expansion would price in category that price of of the inherent innovation the medium which of obviously potential not while of is modest

Andrea Teixeira

helpful, That's Ian.

So the able for promotional in a last get price at the we competition the the Is less those of on just of perspective? way price read you on will you pricing in balance of and least XXXX it list of the year lapping kind increases? you as the or the least like terms probably quarter spending and being Mexico lap or is if the into in look that or U.S. that should fourth to at better at pricing couponing markets key in

Ian Cook

America. to The same saw the the American I environment, Both, both. the improvement North you quarter fairly from our terms first in of think fourth In substantial in quarter Latin pricing.

which will top taking of underlying progress the to though And is to So measure drive more we flow that price innovation value the continue. on end of And increases that world basically inflation. be our offset margin. it commodity we and in to price premium of X at is And negative some this parts will flat the quarter-on-quarter. went from we expect in

Andrea Teixeira

Ian. great. Thank you, That's

Operator

Morgan Stanley. Mohsenian We will of next go to Dara

Dara Mohsenian

Hey, good morning.

Ian Cook

Dara. Hey

Dara Mohsenian

step I I'm the question your if emerging something quarter going to has last clearly the strong looks from did basically pressure organization on The really you seen missing I last has consistently than year, of in same step growth ask history the own emerging despite And like markets. So, And in category of your back the of back the naturals and in a a appreciate here take taking some focus feel some not boost market weaker your share a expectations. half is again, positioning it there's not such changed specific odd change standpoint which it's But Europe an years, in sort traction this because we've is, strategy pretty competitive under markets, quarter, does just ad of like country couple tweaks. your comments over seen it's other the commentary, back more to of Ian, weakness. broader the last from markets. overall in in sales a organic emerging pronounced

we of greater hoping of cropping in that clearly that's you just sort what's a I'm of So sort should you how Why competitive versus position. on prosper union the the environment? to competition pressuring up extent and of manage Thanks. for timeframe local believe that the high in the level state differently their context at can a

Ian Cook

to into the few we're stepping had to issue coming and Well, to world. and across we developed things this all the last our year broader say in was year a taking discussing of often view, the weakness that. Again, back address

rather the our And particularly now growth moving talking less with of than one quite parts that or categories as we those so, into range are have the a we world is before. X% actually of the we the back made progress about were pleased in there

weakening demonstrate key I our a emerging we the fact through of good to notion of markets, in going as share try markets. that's In challenge think by good, we progress. the So very some

in mentioned emerging it engineered of beginning the elected promotional sequential In markets something with XX couple but to see Latin key a are not We those countries. I in compete in we cases, progress America, like activity to share carried gross margin. those

of go and volume think that it's don't economically market rational can You business. kind see share, we chasing to

have effect be have that going our effective was time markets. emerging and our ducked making that our competitors. market price naturals being because of the in are in those brands the was and choices offerings local marketplace. having to while the an is naturals where naturals And by some never share of said was all the now the emerging in fact advanced the response we a categories. we what you're way in positioned that to with Emerging markets our those at So We've significantly premium markets

an e-commerce an had in phenomenal I in remember business companies think John up growth when share been China and the our way continue category. teeth. bring Latin with fundamental categories was lot absence as new pricing America largely on, Asia, particularly the that, in of yes are of slowed invest just where first do of all work And And of is issue the pricing people the The quarter to XX%. in by for the their Latin building into driven. and one in the growth you America our all term to was near said, the awful we number destocking behind of rational because some the brush to we people some and e-commerce continuing and answer you'll

and sequentially terms these with straight And markets gets call So markets is they pricing have are category it's rate growth we continue the line. X.X% seem building the developed meanwhile, all said and and of in itself it. to as while on putting come underlying a But to the advertising interestingly we things emerging innovation in slowed more behind in the up to. expect are first growth rational. last moved in category those as we behind we wish about pick back I our quarter unfortunately, it share don't We the

the same will and are and think that think effective. is and don't focus be model deploying we tools broken However, we the activity we

Operator

Nicholson Research. our question next from take Wendy We'll of Citi

Wendy Nicholson

with U.S. has question My market. morning. do Good the Hi. to

U.S. your potential cetera. second been it cetera of innovation in has the sounds any an there ride] makes question And the quarter really X% in inventory First or the driven growth levels is like meaningful the like is your et there sales the that mean is as opposed it sequential that, spending the toothpaste feels trade but is, saw, [ph] second we in [optic U.S. by or your business then, read that. like or in et of sell has growth really it a a driven slowdown breakthrough any pipeline for that in all, that total been something or headline more innovation. increased of ad nothing I that's a the to recovery like like in good or kind big fill

And just so is can you voice, just Thank say you. something the of advertising it particularly share you it more making is about there advertising, anything more are specific it is doing is impactful? there dollars, to more digital, that's the

Ian Cook

Wendy. Thanks

weak say would a North the product category. here sharp suffered of where the first of I cycling from obviously destocking America the slowdown quarter we First, and is

category innovation and its judge if it's we growth activity. up would earlier would in good we judge, of that book. share the build is as we in final the of the the I the said is terms I because end, the about goes comparison inventory we which arbiter and say are can in in the investment certainly So strengthening the market North business consumer growth behind is I however, rate putting the X%. underlying the And rate say benefited America year-on-year it want from an there with my in nothing and But categories. innovation to

America, year. that underlying balance the the performance over on North but the disadvantaged story be the of says So would nothing that's really business

innovation, advertising Indeed have not purpose you is think when of what a before about to brand. side, advertising stands we brand is advertising it said things the sometimes the a is the we on brand have benefits as but basic advertising what advertising call Now it which just about the for. these holistically is

And of has is which you a the terms would increasing. we a glamorous is is have persuasive So we how we to this advertising gives shift consumers journey the look they having got have very subjects the completed information and playing lot you that in year have it's And on a between we as like address more run subjects future consumers. which sound say which a but role emotionally making something we simple, over consumer media into we what in then XX%. of smile at actually markets basic what made a and finally, I then, about the equity this talking in And which we more media we years and believe extremely money amount the very the you spend people can on seen I connection not emotional XX%, that the will to digital course us we like to that education, emerging conservation advertising call non-working three call with our reduce advertising may directed working by call balance benefit money is we've sorry Certainly on connection basic like effective anti-cavity advertising wildly of which different, I'm can what think and water XX% to that consumers our gets the with advertising is come rational of quality is see. well. that

away same a of from non-working ratio, money to in So sales the working. shift you have into advertising

the the for using advertising, that the So of I and well. benefit advertising vehicles we're type it's innovation. But you the as additional think get that it's alongside

So it's making that sure with in focus it money. not doing an just throwing a vehicles with money, is advertising way have quality intelligent we it on

Operator

next We'll of take Bank. Deutsche question our from Powers Stephen

Stephen Powers

start suggested today. that had that quick seen we started-off better or Two than XXXX you to just mentioned to that saying guess, were Ian, presentation you at of in as you me slightly you fairly outset, I off if terms CAGNY first growth Great, seeing could. a the like improving the thanks. and saw we're year to I the ones, top line

it there representative improvement disconnect guess see I might a explain then, margin think cooperate. up the quarter reversal I spending without of is And assuming points to in the from outlook model the gross if just a investment flexibility some something this you late the seems I first question the year sequential that just oil because said did commodities of if XX happen or that basis foresee don't you this do the expected And could, here. much So is in you bit question how into of you there? guess cutting on I Thanks.

Ian Cook

category, was Frankly, developed as from we actually the the pricing growth pretty led much out to respond? quarter markets the terms Yes. and or take markets did not respond slowdown played value a we have That we in sea unfolded to emerging we expected. the would in and changes, stepped would CAGNY position up activity the rate we Steve in would which way which It which of took out it was the the had really the of category. this of, pricing

it good a I the flexibility course yes, did now very of earlier. have off year. to the global pricing mentioned a after program efficiency of unfold about growth disappointment. program which terms we and the we development of CAGNY growth Look growth, year, this the and last that and start usual, year new remaining we our and on have So the Six funding very fundamental areas beyond are the tracking strong in to funding

advertising the because because get to increasing most all in have give of have quality the across the the commodity the be as we internal expect release, way working to the percent us can obviously as we not you out to of will committed angles pressing as expect it and So to the absolutely across we and we advertising our back in we pan our the unfolds sales quality But of portfolio. we half of of a progresses. said innovation vehicles we're of the of are the we areas year would how forecasting year, flexibility that to, that we're believe flexibility all does close the if give us

Operator

next Jason Sachs. our take We'll of English question from Goldman

Jason English

Hey, good morning folks.

Ian Cook

Jason. Hi,

Jason English

me for ask in I Thanks got try let will another a I've quick and follow-up one question. question to jam then and here.

pieces and for moving Blue a clearly from fiscal look developed you emerging could guys the question, And Yes, you lot it from look momentum of turbulence, really when pushed General Mills you a my just is with lot that you lot the data create put different with of on turbulence competitive are is your some is In P&G up two? that then? pet on know overall, what growth opportunities it we strength globally, your in to then, on what remarks the landscape [IEMs] last of reminiscent think do [ph] It's it's -- toothpastes were trying and you a lot this to turbulence, specialty First, you do into creates once seems did some that Hill's market share gave markets. markets. question shares his market where some How down guys the softening channel in U.S. disclosed back year-on-year. certainly for weakened that Ian second at in your assertion is a I 'XX. of and Buffalo about today. is, a of at your little like it talked pet those reason follow again you bit back believe we then. for of shifted But there where prepared landscape Dara's I of largest opportunities somewhat online

Ian Cook

come take then Well, --come and the let back second first. down to me the

us businesses have distribution On have know have the wellness over we a the our use prescription we two we general have of they're because business outlets business an to a and for limited the channel on and them anything of conditions all And we respond write prescription we health a absolutely And pet. choice. interestingly pet. specific their case to strategy fixated have to [ph] we [patent as] the Hill's in script of those consumers allow the from e-commerce you that make vet, advisers a you is for because as and that against for can model want did intelligent very perfect been have you in years there, course, a disciplined

best that discipline and with So quality can have that. given the we connection in of to the has as scientific predict advantage obviously opportunity landscape. clinically we maintaining the scientific One full take do level that that any that that to the been to of products, Hill's our hates hard will demonstrated given we very we benefits be doing given in working are

the flat globally, business our share of year-to-date share down terms is on is actually the modestly the volume shares market yes dollar effectively year-on-year. In

mentioned the we seeing And two X some in the we from Because up away to in in places in up that five of sequentially some that we had largest talked I activity Latin about it are fourth and emerging America. that quarter. the from and markets think now what pressure traces of walked I promotional toothbrushes fact four all markets

we the the making putting of the are behind progress will driving think plans and year. the So we're over that keep again, balance business we

Operator

from our Wells next Bonnie question of take Fargo. Herzog We'll

Bonnie Herzog

Thank on few you. questions. just have I a follow

emerging how that's you in the markets you the means competitors, strong wondering working M&A the more considered effectively then you that realize more been morning. the ways think of some competing I with a these America given growth guys Thanks. in by driven quick a And all are more to North others. of mentioned you as we've via and you was of impact then just of to mixed And guys in the competition to realistically from quarter local have is being in going quarter how then, this on had innovate much but some local headwinds And competitive proactive the in sustainable be innovation volume and commentary First, question be left as enough. markets. with hearing

Ian Cook

Yes.

first in coming There's the with this the into which start mix different with nothing business of Let's North of substantively your is year. America. terms --

year had the the destocking last I the we inventory because of the as factors slow think attendant categories year-on-year down fundamental and comparison weak of retail. third are, where a quarter the two

because it's fourth share of the the fair innovation a benefits aside, time that interestingly e-commerce a with business. fair of offerings first nothing seeing we competitors of have the journey, is would got be over is say Germanic looking bundles the of there brand And sense broadest the have behind Elta what a to planning underlying the at business and Bonnie that at done regard. strategy would as the have were the elmex for rebound to quality which in advertising We think in about very these in of Darlie look in business brand vary that when market started business companies be reasonable emerging local terms said a think quarter And there not to have a relationship although reflect built kind it years care not of And local certainly the of had or our off year. is at rate. local We've in the building we bit view across the an bought even us Maine that some definition. naturals -- strong in if of plan which one a be the with interesting we not in that a growth about we assets another local we two in progress; quality brand naturals are every of a started this in in talking growth that world to and Certainly, Tom's markets over the X% a back and in year good in I strategy. strength is then, would terms we position got has a category would we we as have generic the premium quarter are you've China very point concerns underlying countries. So an we've now to price year-on-year of forward we that little dominant been the certainly be building Europe, -- would about actually going business. But shaped talk itself sense because quality but And innovation Tom's the and of That have is points. some market in The have of offerings that we comparisons, Asia those M&A personal it preferences. be are from say expenditure in overnight. in Gaba balance

imported with some addition China in direct them, to So skills are consumer interesting in we online businesses building product. learning with in

off completely the list not of Bonnie. So possibilities

Operator

next question our take of Kevin we'll Grundy And Jefferies. from

Kevin Grundy

Hey, good morning.

Ian Cook

Hi, Kevin.

Kevin Grundy

of business those in now you of And are growth so would have reference which number emerging us? the are industry a the organic broader a specific First, question, rates just markets Do comfortable the X.X% for in a sales levels question growth in oriented emerging a sort relative these that local move of margins you markets, higher, with quarter. slowing. have is detailed to indicate investment I in can say need markets, you to then, enjoyed in some the like in rate very just you to point your is the in investment regions the attractive higher and that growth some regions. to it the company of possible moving past that some some cost not of every of Colgate compete competition levels these with this it's to of return

So your helpful. there be would comments Thanks.

Ian Cook

mentioned the in category seen of range before Yes. into emerging markets have that had lower. rates historically but slowdown, X% as our see not Again, the growth in the one is I now how this been move would world, we say and -- I permanent a up understanding the Yes. we as our slowdown developed they

move to what So markets in that saw news. And the And driven that's promotional good something destocking then, in that largely, range. was kind X% that was mentioned. to In goes mid-single the down. because course most intensity we that have the down that with you markets of emerging I of X.X% digits of slow pricing

our mix you consumers at the markets and at our say, if X% let's stay usage categories were lift underlying will price market And will given value as those profile of world our the our underlying emerging of would look X.X%, markets growth the of to rate the opportunity world, move Now the X.X%. of to the underlying X%, back developed be strength still emerging expect if growth could world the come we you if interestingly, expect same. category and rate and that the have you around mix, geographic at category is category will because north our we the then if the those and

up. the mentioned of think advertising have we from point investment view, when bottom before, do it we as an from I about Now

we down product portfolio do ends our geography, ratio work statement. by we activity, a the so through that income it ratio, by in in and don't up by And the

it's to advertising it the higher those first build have we need and be highest with still think quarter on and you -- priority capitalize in point doing have around year the in certainly world need the average saying I view pleasing than is market and places to continue what view we're absolutely are I from offerings of than the premium we markets that to a markets. that. point level which off a investment emerging for engagement a believe an think underneath is happen of think adequacy basis building we higher you the But naturals this more The on e-commerce, now we these to more last imagine markets, our our slightly of of ratio was thing gives of at in we it's emerging investment dollar investment. last innovation And of much So the opportunity year. we in boy's need share of certainly and consumer can which a

Operator

from Ali Bernstein. question next Dibadj our from take We'll

Ali Dibadj

Guys. Hey

Ian Cook

Hey Ali.

Ali Dibadj

competitors blame clearly the what but little we're saying a and things a actually pretty are are the well the different. on not and is instead, And slightly different leaders. that kind something not consistently Despite prepared your category problem micro what in you we expected, you tough, the you growth, positives then in XX% starting of some of numbers you tell as seen confidence what the confused Colgate's of root the you about category is. remarks get series they're results guys can we've from some And as hear the to here when plus described certainly expected, CAGNY Hey. all I and what and guess I'm I conference still right? you conference,

things like Mexico like it lot decelerating, I up the to personally and and be doesn't of like It's So struggle, starting it it about bottom I Russia bit XX it's margin from and the to I are for should sounds think previous they're I was temporary a a a China to and commodities top-line you that's sales guys certainly FX that when advertising much. India, has bazooka, were here. last control our innovations hoping and thought frankly are the Gross XX might CAGNY as guess your in on pricing now you supposed of up tougher one-timer a tougher in blame be to aren't in are I advertising we'd of control. right? like where year. things a guess accelerate to is and It supposed term you down was the we that are be those up, help, XX helped actually expected. better guess shares But this help. I kind heard sounds challenging, not, guys but I And to gotten already. but have like discussions isn't Innovation at dodged were investors a dodged thing look would of coming it down. up but we already, year. was the say bazooka out sound continuing would I haven't remains We if because today, approach bullet, get that seeing think changed do stock U.K. actually already or they're was Top-line your comps get longer your I we from dollar little going to to is percent supposed gross margins.

-- still cause to of just scratching are. question, I the what guess I'm back I so, head And my core the the issues about going root

one-off I to root the causes. -- that but and with give And been getting generous so doubt far struggles things continue to investors about it's stock the why? the we're can of the You do should trying talk benefit

Ian Cook

it. Don't really. where That's start know to

think you to context. in everything in general in have I put business

in root environment. close are problems You spaces have space with others pretty this We make the assertion pay that attention the other operating in these to and company. pressures our the

was negative pricing to longer commentary model You no addition this could Would on be the with challenged margins, pricing of put question underlying and therefore, the negative. effective. pressure on being in quarter this the notion fourth and share the

explain the has this and in in leading quite to growth Faced that thought to the period take where short developed So of economically have short-term slowdown. spending heightened kept that increase we running the the the We on We And We keep up said to is a with everybody we tried chose and said hit up some we forward. over the our competitive to basis going when volume And done the And focused. hit. to that a to set a thought we We our structure is profit month quite for the Xst. would businesses you business But us better look going emerging category common activity statement. and those and markets which was the of you point chase on not the very progress same been ratio unviable world January on contained and price circumstances, have at we not see the that then, money take end we table which the share shape volume be going choices feel business. spending was some table we with thought if now XX through pricing balance spending is pricing. on had we underlying two space. was make make favorable the pleased and you we with think category decision. gross were flat in same we we and our to cases some the the pressing starting we term of industry build never income we that would liked have pressure

there. break manage many parts. underlying that you we in single that you class things this before medium still a growing there. line still unfortunately, straight moving consumer moving problem have solution to when simple markets growth down, these have silver bullet middle is I The said as So is is behavior potential term emerging the in the a And not have is no with there says

innovation an countries. strengthened in allow categories while us have to We have build developed profile share those we our to now market

we which for sound expected, first in and that still regard. And for were to think have we the us me year company consumer to we the have solid. are brand strength we to had plans committed seems compete. year deliver underlying quarter We reasonable and So, to progress we was what not the allow the it the the behaviors in that while

Operator

Tong We'll take Bank our of question next Olivia of from America.

Ian Cook

Olivia?

Olivia Tong

Hi. hear Can Hello? me? you

Ian Cook

I yes. but can couldn't I now,

Olivia Tong

obviously goes question had have North than quite and better My expected America certainly than bit perfect. back that better was Okay, because many data of implied. channel what us a to track would

flipping price So prior channel promotions North a were particularly normal there untracked tracked. question in the in retailers said particular back and would meaningful far given that following curious too off larger categories in and from better pricing on at both off, online other destock and last past And packs this obviously Because actually pricing is way now levels? they're and with more the American to be week American looked about your obviously restocking did drove then that, what particular in seeing end. Procter's North what on pretty Kress view here. just we're some the our checks premium And

just that. we Thank you. on commentary love your So

Ian Cook

rates and in year by Yes. largely category have developed Again, growth retailers the digits. up This year, moved range, the mid-single -- growth year-on-year were America underlying for the declining organic category into North we the influenced were destocking. world healthy comparison. the I X% categories is standards. think decline saw Last And their

are to the we to we do in we a one And put we've our said in in quarter in specific managed categories and six are have behind way. that. advertising flat to reacted in And that We shares pricing challenges building some have handle fourth balanced more. market we intelligently think we that -- category had

said way than first now when our North rate and Interestingly quest businesses business. American the more And is that were our an for down in North a decline. in the is inventory way view categories point more on in but underlying we modest we actually of to we to much quarter growth saw strength around efficiency participate don't in change earlier, still year from see we category in America quarter retailers or But last X%. underlying very there anything the inventory retailers of work continue as I So expect of for year-on-year the a regard. that measured with this re-established

Operator

Modi of Markets. question next our take Nik from RBC We'll Capital

Nik Modi

morning, Good Thanks. everyone. Yes.

Ian Cook

Hi, Nik.

Nik Modi

are capital to just are be - culture, relates question to wanted wanted very I allocation known a thoughtful how and in And been high that and hi, company the just to -- are historically I has well, working. Colgate that maybe doesn't was it ask it's business you. seem about mean like as strategy but returns business general ask environment to you conservative end. just on margins the high, is I a changing worked and as your dramatically usual

So as culture I think about thoughts and the was just you and tolerance how on CEO risk and this of curious your that company

Ian Cook

I carefully, be for this need an words, we guess world to other panic. in Well, In era is time. changing, we a not we our the is but We first urgency, realize but think managing the disciplined very answer. company think over is

with. in your the their everyday not of and the fundamentals throw people very to benefits easy use their to in of are product believe dress it's a usage of out products these I And fundamentals issues provides to and we still so window wellness kind much what the make work day, the all health the every of we're businesses products. And lot dealing where say important

to connection you bringing need the generation to need into find brands a of you and need So you find to and users the business. making of of next build ways ways

-- we do no doing would is that. communicate, lot to And those while we you would of that and disrupted sell, being our a in you all building think building brands how ways, end view value a quite on. with we're and how of areas in Now so

Now is, tolerance quite allocation I capital our risk in think balanced.

quality have space quite take I them bringing the track and company. building them over we of think record example, overall think and building the time into them assets building identifying for a demonstrated I the good M&A if good portfolio in you

we focused health and regard. very the like to of right allocation be capital of in say area not thing today, not that panicky to to to it in continue company, cavalier underlying the position our and may we be that the life, terms think in We take. straight in in fashionable move in do not it's a but That does be a choose much else of the line

a the and urgency we So we restructuring continue and back of and with changing to a a always than effect for but lot change and short-term. resist the lot we're we get the years to things started we have few the balance the this been And business. changing program of things, we are temptation to long-term panic make trying for work health rather long-term of with

Operator

next SunTrust. question of Bill We'll take from our Chappell

Bill Chappell

Good afternoon.

Ian Cook

Good Bill. yes. Hey, afternoon,

Bill Chappell

a in quite if some more for Ian, sequentially can I with that the retail guess been kind you've out little color of seen the a a the since through talking the weak about that's growth on you bit know year. bottoming of landscape. about emerging markets also move Australia. time the quarter, trends end I and just with maybe know little Didn't as rest talk maybe rebounding we of

intra know didn't it's quarter, next lapping of So move we the as we're something just more be or into if changes kind quarter. going changed to

Ian Cook

planning cycle a afraid say us will better all would we information see joint that's the basis and know on of started literally can business is, And but be marketplace. Australia and have offer second to we view category as disciplined I and for this shoppers there which of I trying I'm the has think from you I accommodative been case we In way point a retailers the click any two control two we a guess battle the And is has that of know a traces finally of the second them. end been I major a to of the lagged I there comment terms much hope that trends, simple of you as that has for by say saying of at quarter time. quarter. can't between

Operator

question We Edge. from will of take Consumer next Feeney Jonathan our

Jonathan Feeney

doing or e-commerce to the created It's broadly. in market like little and adoption what real that's particularly has does you've anything strategies better China that markets, Is tell that I of be bit there Are anything that a comment that have market worse it China. deployed e-com experiences know volume while versus of or about Thanks had there Thank high markets? and called been on very your wanted and tough an in about you. for you there? e-commerce in you I other been looks related to market. could morning. in Good other struck any indicator development performance was you And you a challenges maybe might much. for a you historically a I dig the decline me China if wondering

Ian Cook

to of say some lead made I of think have terms deploying the interesting an in this and of explosive China North in skills. as point say though China in share products. Number was view largely question, of been the part Good Jonathan. an in of the increases to up And and of we XX%. year. have developed other important believe in business even business Hill's e-commerce view, sequential do business from share quite progress modest, Colgate important can frankly e-commerce Alibaba in it go so Asia world to earlier our things We one, is market we mentioned I indeed very Tencent XX our interestingly the in which our part world, and are terms I Europe. imported But from this e-commerce has America growth business, after China, we month-on-month point it. two resource you working the business think I developed would In in China a against platforms a hard of and e-commerce far Yes. has and is e-commerce are very build traditional It's we been relatively with

to that pallet marketplace earlier have China. good just we like product, that So a toothbrush consumer I they very was the like China work people like have they with distributors to capabilities. to direct in have products, the elmex actually we that China mentioning have brought brought Gaba Elta where And

which pure exercise, other a the and lots brick your even businesses are focused as it we learn broadly transfer So an we're are question becomes to we learning the we course it bit there's It's to China it we about of quite is but right a the we mortar and the is well. sell of And business parts one in thinking world. important of in of of think those where thrust China. a lab doing that those and learnings beyond and as can building skills part

Operator

Lauren from from will our take next question Lieberman Barclays. We

Lauren Lieberman

you. Thank

Ian Cook

Hey, Lauren.

Lauren Lieberman

Hey.

in talk I great, yet don't talk in the about which that we of in perhaps and not home also we touched underlined wanted was of and wasn't some about a that I all? just kind performance share little personal which it then in? much broad those for to bit is on markets, thing to the those at talked wondering what haven't like changed participate just So strokes been the one category I about care guess when businesses care businesses competitive you Mexico chose emerging if you And environment guess activity one I is and has in competitive

Ian Cook

personal the care I shape. is Yes. would good business say in Well, relatively

We about Palmolive's. We talk have We talk brands. Sanex. about strong

We then softener two brand. primary different are have and brands have But dish And liquid. we the our categories. different in homecare, the Protex in fabric categories

one the in products from homecare but purchase oral Now competitive when was pure of care care at products. business, you other frequency because point was look than of frequency America, personal activity the homecare the Latin volume purchase is of then view, the a higher business

play. shorter promotion If you're is looking volume drive a to from term that

not promotional see again, and play if then homecare that the we did indeed play have. the flow businesses the will we don't. or up we we to that frankly we innovation activity And we destructive whether with decide And margin businesses. a is rebuild stepped So to on and the

in Latin a So factor America. that was

Operator

call turn to like would I any our time. this the at to questions for or further no over additional speakers have we closing And comments. back

Ian Cook

Thanks. is call. the Ian. And joining you look with Thank the This reconnecting forward quarter. for to second you after we

Operator

conclude for does for conference your today. thank our We you participation. That

disconnect. You may now

Colgate-Palmolive (CL) 27 Apr 182018 Q1 Earnings call transcript