CL - Earnings call transcript Q4 2018 | Colgate-Palmolive Company

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Operator

Good day and welcome to today’s Colgate-Palmolive Company Fourth 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, Loren. to quarter welcome call. release and morning, our earnings fourth conference Good is President Vice Faucher, Investor This Senior for John Relations. Today’s statements. conference forward-looking call will include results from Actual materially differ these statements. could filings release refer factors Report Annual that of results Colgate’s XX-K filings, actual our Please website, earnings SEC Form SEC, to press could subsequent from available the most our cause to on these recent differ the all with and XXXX for the including discussion statements. and materially on a of discussion of a financial include release. also will call Tables X conference those including and in the non-GAAP identified This measures, press X earnings A corresponding and included is reconciliation financial release in Colgate’s on measures website. full is to the available press the earnings GAAP

and Officer. this Jakobsen, Ian Joining morning QX Chief I and Chief Ian Cook, Officer; are; XXXX Executive our cover and while will results their Chief thoughts, and and with Henning guidance. start Wallace, will off Financial me Chairman Operating Noel President Officer; Noel

Ian Cook

everyone. It's morning, Good Ian.

and a we Let started release. me where first let happy the comments all wish press belated start healthy introductory And you my me XXXX.

quarter was X% the two-year the different and sales will third with way, X% the organic on X% in year. stacked from XXXX, fourth improvement on the quarter. basis, quarter in quarter that to XXXX top quarter fourth the the in a in X% in the are of pleased of plus We fourth highest of quarter, that the plus recall in Said fourth X% a we you accelerated

So we entered with momentum. XXXX

is beginning off. expansions innovation, advertising product markets new intense in channels on our and pay focus sustained think I to and

news line ago accelerating the creates is sales builds business and growing X.X healthy share market big there and to continuing cycled our share on distribution by is markets fastest. other that doing to share. share of continued later growth. quicker; the U.S. growth from discussed positive Vedshakti through in posting a growth. faster, basis where of Brazil, better. which the drive sequential back building by and organic Diet will Diet India months to coming and trade the growth, our from best, other of distributor half months Hill's, trial, the national in helped growth, are is the now Science the focused seven are Latin to America biggest market four the growth support Hill's we and now is plan and recommendations And that several hear is continuous months We're are all the share obviously you as Africa/Eurasia, modern expectation high e-commerce. Vedshakti that now ones of Vedshakti, build And advertising on up saw strong distribution driven Mexico recall business, we're now improvement the On increase. we quarter of And which generally therefore back we is on and X.X% and innovation, up issues. which our You third shares, in a five in driven to growth Noel, and Prescription the XXXX. business and quarters continued backbone problem distribution businesses driving may XX in

heightened to pricing sequential we the market we the promotional Consumption is strategy growth said Mexico, of pricing. pricing that we still coming fine We and continues, have promotional and and category somewhat to slowly the had case to would necessary are continues mentioned we are business the taking growth consumers. Brazil, as is our so strategy. said, become with China; sticking still as the improvement look balance negative. back. way we before to activity underlying of is In in that Brazil, responding where In we the we sticking but need we modest taking less working category our and seen its but

improvement increasing premium in expect market the is brand the often of turn in the sequential are is finally driven in being see We year. Total to of And the the U.K. U.K. share to Total a growth that's first U.K. the impact this calls, in in discussed a by in in continued And where substantial these strong driven which XX-share U.K. And the re-launch business. half market return we seeing second growth half the our by business before and the

In organic we yellow However growth Jaunes affected vests. headwind by life called basis that European of a Europe fact we to disturbances by the markets is not the in XX perfect have some And had had points. specific Gilets the two and issues. was or

despite comment as awhile volume make for XXXX the But in the we biggest specific first yourselves expected bring And you XXXX laid been therefore down there to quarter the quarter have quarter shift in in And basis I'll preparing a points bit marketplace XXX North disturbances that category an during here the the impact. were that As XXXX. and see is the major the in they paying-off are was while the subdued America in inventory to from a the from on point into the are news, transition. mechanical terms saying and States, and pricing. We organic believe promotional on Total view a and XXXX was we shipments more still of from easy that in slowing the and little they And planned, were to first quarter. was final fourth of saw shelf we for is little we shift a that, growth. to of as than entirely make headwind working quarter later of a the it happened of very onetime activity fourth United

the on some what and in early reaction the pricing are say we how as see Mexico/Brazil to days markets We but is is. relevant evolve follow it has competitive competitors beginning to and case, is the contrast see will that one

So let's XXXX. turn to

in plans increase. on talk our XXXX. will intense our many to X% continues. strong, want advertising have X% detail to we and core to about of scale in products in organic is on in we Our talk innovation in Noel meaningful which This especially the growth The we our the area growth focus grid have to about I XXXX markets some that is opportunity for a that The And portfolio. is growth underlying transactional accelerate costs to channels our is and innovation and pricing foreign XXXX impact the the increase exchange. supported bringing offsetting uniquely including is new have two adjacencies the in for have particularly is some addition And businesses to our why guided we on second focus continued is of One and the reasons. on a premiumizing that continued portfolio. focus by

was In plan as In for told cost back X% XXXX it give you, underlying increase costs. if you was on X%. was commodity quarter, increase commodity fourth a business, underlying take it the quarter just the for step view So, I commodity X%. on third in the X% our overall and a the trends calls we our a and for XXXX, in underlying costs

John in as The will Now XXXX cost obviously first and higher his half given headwinds the the reaffirm XXXX. prepared will be of shape in of remarks.

X.X% for the to expect of the to for exchange underlying year, be commodity costs we the costs which Foreign XXXX top X% brings in transactional range. on the

we and our is Hill's pricing already the importantly as or Now significant of rollover and part either two-thirds from and business over pleasingly, pricing Science expect accepted to the of place. scenario words, pricing already in XX result Total re-launches points. accepted XXXX other of XXXX the Diet XX gross business. our In profit that of the is net XXXX increase that and And basis for

that calls framing would what in activity quarter were you like and response and of on in a confidence our And questions, plan. to reflect some we're So, those opportunity that the pleased we may recall, we topline. we third XXXX and the That's is building accelerate quality in unique put simply, that the in as have. are organic depth of emphasized growth we it I have the the plan and fact done to would second of we've XXXX a to remarks

growth. a Noel more So, here's to bit on little give you

Noel Wallace

everyone. Thanks Ian and good morning

mentioned priority is number to in one opening accelerate growth. sales our As organic Ian remarks, his

focus I'm discuss So, key to morning organic three going our improve sales beyond. of to areas this XXXX and for performance

me this CAGNY, more on want some but initial at from year provide you from to I to You'll today. thoughts

the core of business driving we're brand First, improved innovation and building. our to

third, new channels. using and segments. we're expanding markets new in adjacent to product distribution and products of And to the availability to our we're Second, innovation grow categories

start the me Let growing core. with

brands in the vital status to As and of consumer right key our world. you big of is driver and It the majority back growing penetrated messaging. core strong that businesses represent have to businesses we and keep the are support, sales marketing most innovation, these Colgate consumer core as one know of important the the

instant a You will great version innovation neutralization Colgate bring and benefits; to core trial, With history. for category formula Colgate It's in [Indiscernible] driving providing enamel news cooling against sensitivity introduction, Colgate XXXX new consumer technology seek breath, are biggest and The Total for easy this which previous Total protection, this agents inventing the the the see brand to improves the excited of than odors across brand relaunch and year. market is XX-year had new the its associated making all significant bad created. multi-benefit and a share. ability engagement, this bacteria we've this benefit fight including so anchor and breakthrough more freshness. including variants, in lasting to market we're our taking we We're that not upon new invigorating with several

over we record significant SKUs value to of brand-building U.S. business of U.S. the in first drive with we year. the particularly, shares would hitting is the also this U.S. support Brazil. of XXXX next globally in advertising like you'll the this added the not the in and displays benefits out that and XX awareness And from The rolling activity. also this and as Hill's stores allow our global in with marks only new see Science Colgate year's and Importantly, for to Bowl. increase should help increase which you pricing quarter trade with In Super the us core us rest higher, launch consumer take a would significant see months. expect, world developed relaunch key in number our in-store markets new we us specifically the Total advertising generate the Diet a And innovation activity. would a expect

and pet with this recipes purpose. shopping a and also e-commerce, on gains And XXXX. parents, a We're several allow us re-launch and cable completely way build that upgrading Diet Diet Science Science quarters Hill's redesigned packaging continued share momentum improving market to successes. the enhance We to our behind performance will over greater graphics the levels, in re-launch has strong give advertising spending improved re-launch and excited The provides includes Science accelerated understanding the sales believe us higher them the Our in we've Diet shakes. on distribution and brand their for past to very strength from build opportunity increase pricing. experience on recent

of So some most need continue includes growing it's adjacent innovate into to vital know to we we brands. segments. have and to a categories important Still, core, faster which healthy our

about us XXXX of in XX had You in toothpastes and countries. Naturals end we lot a the offerings have heard Naturals talk by

countries of Natural expand charcoal launch based our encouraging to offerings toothpaste early with on in results. continue many the insights local variant across We with

share Colgate Vedshakti's with Meridol health. strongest the that channel, gum straight improvement. we're As in our Ian share see share quarters to trade, key the the strong sequential therapeutic in the cure fourth X.X Naturals modern solid also focus ingredients quarter. heritage quarter. a India launch to about developed performance this mentioned, franchise and care. line which with continues combine We to a is excited home allows us In area of of Germany, seven of natural Vedshakti for Meridol a formula is personal achieved in improve In

new line X% be We line the pleased a Personal Vel into expanded in this brand a ingredients in of natural We're Ajax continue factor the performance under launching U.K. a we've lines handsoap are using Play Palmolive Palmolive Sanex variance Europe. driving brand key expanding soda Rositaä launching cleaner Latin and In oils, baking Home and essential we're and including wash in is our and growth across also to with with Care, citronella. Care number the like the America household body line

adjacent how core expanding we've So covered driving we're the and growing into segments.

and Now to are want our growth on I aggressively footprint more brands. channels of faster focus we into expanding pushing how geographic even

in professional Meridol strong and and Elmex where dermatologists businesses the PCA also and launching pharmacy growth. expanding in EltaMD we're are channel distribution skincare this our We markets We're spas Skin in the year. of new seeing

outcomes their is new One that a system higher Hill’s This Prescription home with prescriptions, compliance vet, The allows parents key allows their Hill's, to of providing for the appropriate their a partners program delivery category. platform crucial programs parents the us prescription leads delivery. importantly in in and the which and for for up that new also products initially in have through vet enters to launch parents ROI of while home we is place their that the e-commerce veterinarian pet a to year arrive relationship from our Hill's. most diet program to health it By maintain Diet this parents pets increased exciting pet the pet signs this between pet purchase we home, enrolling food for convenient to still subscription-based recommendation. directly for who better to

areas on our and to shave with we're Another Hubbell direct-to-consumer e-commerce business, which club our based partners consumer our us e-commerce digital, and offerings to allow relationships. capabilities of further strengthen direct our our in bond will build looking expand and and consumer

we For example, launched to China. whitening fourth platform quarter in in the our e-commerce kits at-home

new organic XXXX hope is and to new our this adjacencies markets. product plans beyond. understanding in the growing and to in better our you I focus. a and into priorities this growth expand So gives channels accelerate core, invest sales Drive segments and

John. to over it turn I'll Now

John Faucher

leave discuss Thanks, to simply some Noel. our time then order divisional Q&A, XXXX forgo normal review the the QX for I financials and and will In guidance.

sales net were X.X% from in favorable X% unit and offset negative pricing X% declined exchange. Our The QX. volume impact growth by foreign X.X%

Our down profit growth net Skin and EltaMD gross volume recently margin a acquired basis sales and was GAAP to our contributed unit the professional X% points quarter. On skincare PCA basis, XX in year-over-year. businesses

Growth down points our Excluding Global and Efficiency was year-over-year. the Program, it impact of XXX basis

material For of benefit the basis margin points were Raw XXX pricing point including exchange basis to provided drag on foreign costs, year-over-year. our point XXX gross quarter, XXX basis margin. costs, a transaction a gross

led point an QX, a benefit advertising year-over-year reductions Our On in initiatives, basis to Growth to gross by the our productivity up provided in was which year-over-year basis, with devaluation. Argentina by in XXX to investment Funding absolute across X% program, was margin. increases advertising foreign except up On division recent basis, in every impacted exchange America, Latin percent and sales QX. related spending the a was

our up from earnings productivity logistics sales, in our an The spending, a were on a and and expenses remainder Growth of Excluding our $X.XX our flat in basis, but XX% year-over-year overhead year-over-year absolute basis down to percentage costs and as benefiting of charges from programs. were by On Global an resulting Efficiency percent the Program QX. share diluted of increases GAAP as costs. driven a on sales, down advertising basis, continued in up QX were SG&A absolute per

charge diluted down resulting to reform Global Efficiency in $X.XX. share were at Growth earnings tax per charges the U.S. our Program and and XXXX, related from Excluding X%

Looking to XXXX.

our both full sales rates expect As based margin organic excluding press flat the current gross Growth Program. growth for digits foreign impact the Global and up related negative to stated be sales the be on in up charges on spot to Efficiency release, of on exchange. spot low we from X% Based year and basis current a year-over-year we single expect X% to rates, and GAAP to with net to

and exchange. of pricing the offset expect foreign transactional which material overall to impact costs, an the We raw of includes productivity our in programs benefits increase

support XXXX. meaningfully In advertising be order as we and to that prices are that versus material will both discussed, on increase We that absolute XXXX, of a Noel percent plan up from in current raw innovation levels. assuming an basis sales

We and by higher dollars greater of ROI effectiveness advertising will spending our in continue efforts media media into our the and our advertising drive expenditures. to non-working improving efficiency shifting advertising, reducing impact

this tax in on Program tax XXXX XX.X%, Efficiency a basis between our Global related to We to expect and our and and XXXX rate reform the benefit to on foreign XX.X% our rates, we versus year charges and down related On increase matter an in basis XXXX excluding earnings and GAAP be to current spot XXXX. and single-digits is tax be XXXX a both U.S. Based Growth tax full low from a charges per rate. non-GAAP expect for year. the share GAAP

related XXXX, we XXXX and to and decline to for charges U.S. digits related tax Program charges Efficiency the in per exchange. to translational matter reform which Growth the negative impact tax of a and share mid-single a expect the benefit XXXX Global year, and Excluding from earnings foreign the includes foreign in

I While as factor in is good environment. in uncertainty place material in had would about Noel raw prudent with global to be also economies, and exchange XXXX discussed, for and we highlight in year. turn And feel over Ian competitive that the I'll that, half exchange the for it it of we rates feel we expect the to we first Q&A. headwinds foreign to programs the higher

Operator

Instructions] first question [Operator take Dara from Mohsenian Stanley. our with We'll Morgan

Dara Mohsenian

Hi, good morning guys.

Ian Cook

Good Dara. morning,

Dara Mohsenian

So, in you large other on? strong see just that? from you're focused? than exactly guidance, a increase to geographies detail add And us in from large then part but it base come your well and this innovations numerous growth? times mainly And line the Can gives other payback the payback increase are how accelerated Thanks. product giving highlighted for Diet products. of you bigger innovation? the growth different answer, in a organic innovation us, did or XXXX Ian confidence the in pipeline from imagine categories And year? give year back you're behind top half XXXX you of terms a sales A&P to expecting in top be a in big with that what's we obviously, such help typical focused Noel where there as your confidence the last, of given Total all How and line the what that's Is obviously would going growth more XXXX quantify in the that much bit as innovations on the the is in a a assuming of Science higher and that spent the call you spending can magnitude or on

Ian Cook

Dara. Thanks question, for one the

scale me on let XXXX the typical is businesses. in So is the about Noel calling what core is take innovation What not them turn.

underway businesses XXXX. on from normal Naturals the hearing of array would Now before. that what had mentioned we broad On that the work the innovation had business. Hill's first a I before will Total cycles. which seven-share you'll Diet. mentioned of Science about the is traditional a the Diet quite time is is and said, on not nearly of is half only portfolio That Noel in mentioned we and across be Diet be as is say I the different we that, business top We have This And innovation global as Science call brand. scale Science these adjacent

advertising is to we an know think way this terrific the quantification is difference well. and scale -- the out difference core relaunches have with consumer scale Total, -- that big and a To So which make. your important second vehicles to point by the again, point I'm extraordinarily I in terrific big technology, acceptance, not business, going but and sense, -- now tested business break terrific

support maintaining talked we distractions you the equity to brand at need advertising means of is innovations are is last the lots XXXX, scaled couple behind investment In our things; need putting of relevance reasons advertising. the advertising of the these advertising the of the years maintain do and about continuous you behind two of over One to and that change. incremental we which with in brand the world sustaining

and that are support cycle maintaining So, we But scaled awareness then need advertising virtual repeat products continuous gets adding we trial a builds of are equity on and trial products. we're are the growth. to advertising which new into to of get and that drive

it's obviously the So, And advertising. to all within of have that you continued is shift digital. case the that of focus Hill's, the

which So, time the that we're for other share from products, a of confident we and create set the beyond the you said change long But big have sense on those market forward. intricacies. the view of growth bring we point have point a In executional the expectation the business will those on in taken of for approach. company to have And as that we an continue and going payback innovations of inflection together based is words of in XXXX. picture the have quality the will think growth

So, that's the confidence.

Operator

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

Jason English

on Its for folks because big to morning just good we early Year Total, as focal you Hey, New going of cover. clearly, ground I But lots point guess now. right well. to and Happy you belated could it's I'm a focus

talk skepticism a move and back of As step we whether really on or not to investors, there's as the some needle. degree this can

key New the big propositions the a categories gainers in needle It bundles distinct market move Total. winning many way. rather don't of universal platforms in the and are seems a than beneficial as such benefit improved like share usually

platform to the benefit that us call And the aperture this, the can you then from it removal on it maybe is you et specificity formula of could not you what it be what haven't because related too, may really or matter? you. cetera? So, give benefit. a with upgrade there community Thank as enthusiasm little comes be triclosan appreciating? to whether that investment of -- Is more and your us doesn't the -- really broadening Or markets, consumers of or mentioned drives part sense that give

Ian Cook

Noel have It improved. But we appeal which indeed flavor improved making claims came view in flavors Yes. better many and product. than with Jason biggest in has mentioned the there year improved. new the new the that like original the life in and a the see existing as frankly since been years of delivering this Total there's as new that and is we that barrage things the every and innovation breakthrough most in and terms say much has we labels And delivering of you in a we focused consumer have taste if the did has in the interestingly testing, be is of radar testing, of consumer reactivated will importantly, and about with our under why in market quality you all on. is of significantly that very product consumer to advertising the not well. just that business but because of testing something the no And the most response good. I quality advertising, at the point very higher the the pricing, And as is made but

So, it we product. do know we quality have a We see as breakthrough.

have motivating are retail with sort have in the in we advertising fourth relaunches. know is professionals we terms quarter since support We these the convey of the product. richness scale And sort trial in persuasive on customers. it and couple got of display from studies that's shelving now core And getting to to partners of dots off-shelf that, that the extraordinary improved. last is with top of This the our And working dental generate been blue and and and of through year not we of terms and of of we distinguishing I'm behind why call product. of the have new

bills investment, it's of the all a So now. big product time the over it's is new in a why incremental two trial for because the investing year is that period brand is it we are involved breakthrough a difference through which a stakeholders and so

triclosan stood of product happens different. new all to where the we time than September had were just Barclays great replace the we in a the we old to quite that product a relaunch product. we product scientific are a to. This today clear from point that's formula would spoke a and we be product that moving happens We that existing last that this formula with the better have are and about because be at Now And behind better that when view. was we triclosan contains

Operator

our Lauren question from next Lieberman take with We'll Barclays.

Lauren Lieberman

morning. good Thanks, Great.

Ian Cook

Good morning, Lauren.

Lauren Lieberman

biggest sort Good ago it in you maybe toothpaste morning. not consistently the last actual that over usage five been growth the were a thinking it's about about usage units market feel little versus sounds you highlighting what some you've coming maybe talking major talk that like of of sort markets. global I see could But hoping next category was the market premiumization. trend years bit comparing still that's penetration like been you drivers a Because also long five premiumization versus sort opportunity. of about of penetration your the I of

little your about could balancing five great? talk part forward about sort a you will bit of of If and thinking how the you're as years be the of strategy last looking that

Ian Cook

which value Lauren the great growth and Yes. marketplace accelerating more get the trend in not story. better, in question. brand is two marketplace Premiumization One an exclusive ways; thing. the Total It's good premiumization. that value happens of is is of the the creates is for because a more businesses one consumer receive value as

charcoal a smaller in earlier nicely, I brands continues the segments about of what pricing -- variance been a grow had in mention. could the quite again unique about about many category. talk at The Vedshakti. about And We to talk bit we Tom's second talked niche see We premium little is brand. Maine, which is could which

two we calls of is want Colgate premiumization. share; share higher we toothpaste physical to entry And then entered put are available was tubes one the planet markets. in than sure our out And the So, behind And that Bright we of that our Total. we it's we Bright portfolio markets, we tubes yes, one just are about the also reasons both the point But on the made and that price things. those emerging talk when that premiumization, toothpaste. talking our entry those of consumer before programs these still an the higher We're most find. we of our market volume users penetration Smiles, about could of of not that the because we Futures had also when have not have world. said product want rural the -- we volume volume is opportunity I forgetting the had in share on is

work also And we the been are the increasing important that behind talk are we're we behind about of on which an toothpaste think we putting the would the time about use doing just recently the yes, because of have we market We across average but repeat world. users substantially. is the our talked investment, based that investment has I aspect growth penetration when in over stepped-up around innovation, investment Africa and sustainable

not is mutually they're guess, the exclusive, So, I point.

on penetration. are XXXX. a does big that we means innovation driver reducing for have no by the focused mean We because building our that market on is But effort

Operator

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

Nik Modi

Good Yes, morning everyone. thanks.

Ian Cook

Good morning Nik.

Nik Modi

of Just that to of of distribution is opportunities? was I -- way thanks you where would focused. the perhaps relative waitings? when expectation be there any XXXX, about relaunches drivers some you helpful. category providing just bit a on X% for and to is perspective how Ian morning. those the can XXXX? white answer, Noel your of what X% the for give the around growth kind maybe would Like the important can Thanks. Noel just kind us for about little you and Good both the X% then what general And more space clarity Maybe opportunities think X% be you're for comments to

Ian Cook

see you X% and take Yes, X% the you categories you emerging growth underlying all see of markets in flat you it you category to When I in and north to together where North range. X%, Europe around X%, X.X% look the a that we're rates. you're about think talking place the world, take still see America if we X%,

of things of businesses to is Now of the that in underlying shape X% the a doing going X% we encouraging the drive entering us the business down come because we give the those to back to fourth X% the scale lot the are if I'm combination all on year that I what's But X% the X%, have. not it confidence of going smart of in versus is to to that particularly quarter. spread, other that break the

Operator

with Steve next Powers We'll question take Bank. Deutsche our from

Steve Powers

up touch go much bit on of into be the clear it advertising little new is or reinvestment if to just figure Great. the guess, there's things or but Thank reinvestment of you this very much. just into push? and is if a that Thank I amount A&P A versus in spread it's I'm for truly SG&A looking fair across e-commerce as I base A&P a implied implied to if not could. XXX% capabilities On considered question Because might more out there year, the may I'm level relates specificity digital that SG&A? in envisioned to that how and trying Naturals like guidance broader you.

Ian Cook

of elsewhere start breaking in SG&A A large is you're be is also to part the the large have reasonably get it in good A extent the our to year. we the picked continuous When if at out – when a will the fourth Steve. locations increase that up Yeah. that quarter SG&A And end of SG&A. same capabilities part level that of an might that down at you A&P that And this question, a logistics is look at has you're requiring see going component high it A&P. it and in topped SG&A. digital personnel you of and – right yes and

underlies in that been also areas. that putting have and comment about extending those Noel's place into We

in overhead a So little a A&P also you're space. see and then logistics going the the continued predominantly push our digital into to area bit supporting bit of

Operator

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

Bonnie Herzog

you. Thank Good morning.

Ian Cook

Good morning, Bonnie.

Bonnie Herzog

your new GAAP and higher the EPS year is help it spending target could growth guys guys few between margin questions guidance. the but on your capital contraction between the operating you a was to had I do this in also and to bridge you forecasting this and then And headwinds? be the hoping this this finally drive tax I higher growth rate contraction level I EPS less your anticipate guidance what's you long-term you FX And Hi. faster environment? necessary for year, than year? was for really norms spending you're a last guess

Ian Cook

the Again, question. Yes. single thank for you

from things I the to is business. progress XXXX kind point you is fourth cost term quarter. of of the accelerating a think longer most one encouraging say, happens and questions; important of view; in the doing to really And two think this two focus off continue an asked on is I what other return growth was

terms and what discussions going much of get with factors. raw foreign we're because in of let the other too break two. then now it's could about So me to and materials between into XXXX, kind uncertainty happen not And exchange,

lead our amount dictated talked in That drive to leave by the growth up of the well the core should enter And innovation will plan raw position as that is and quality good momentum. that X% which this lessen with year as Noel better growth the sequential XXXX And improvement foreign rate us into we in evolves X% and our this will on about. we spending a exchange if of our course level of us sales in that material and half for should the in beyond. way will activity opportunities beyond. have businesses earnings organic XXXX that pressures that an we to other will the range. Our bring believe a And in we support us improvement of and as XXXX are expecting, our set second as

the the flip this has say in volume more area that we and people drive and spending trade one business, it or it's is kind Now for categories what we pay cost of growth activity that well. challenging. the is growth the can past happen the crises back have in commented could way clear and think does willing been behind other is the and our And is several we you seen to if it more And build and have as simply for rather question that that sometimes competitive you that that been to than you this more you is from say years, growth observed can about doing of financial since when I step see brands. investment are happen and see challenging have

So spending innovation marketing because now. said, on are not we programs we spending have to we're have that but that and worth because more

set in is talked at our got of quarter. pricing time and the seen XXXX. aspect would you at question, this earlier fourth pricing Now over one have encouraging the talked Total we the in already say two-thirds rollover and I in pricing I is get to have better. said Hill's one an I response and I about should had thing that that pricing pricing about the to appears

hearing space the into thing environment win marketing I that commentary move above and then and a the similar price an and line net think we from out is will view line as you're for pricing competition many So, happens our in where promotion. if positive not future. good revenue not innovation we And in advertising the

Operator

Our next with from Bernstein. Ali question comes Dibadj

Ian Cook

Morning Ali.

Ali Dibadj

Morning and hear on Noel you nice the to call.

I'm need because your A look more XXXX, it but whether little on you it's ago So, I glad because you. to in want enough. got you behind filing doing do you -- you're stuff behind not said innovation, a to, investments bit but increasing push you et second cetera,

whether to So, markets, you you're X% on think I a losing growth, in still just to push market is global few share, because you're mentioned category want EM X% emerging you X.X%. particular, and ago, enough questions

Africa. launching and thing. to We kind usually like like brand in gains out. that's We It's you're, South of and a road. a Brazil, share India, means and geographies of not like at new channels Colgate but in there's Meridol gaining Elmex mission maybe If Mexico, you're look the market new the you're long tradition we a your Russia, losing when you that's and help the press and that kind And not innovation, or of fact, China, strategy. release type one-year

your back to previous XXX a certainly just to have XX%. a while. that will few it you'll for been think time, usually the all multi-year something so win XX% spend or a to one-time like it believe that And in XX% investments. there's not a so to that feels multi-year typically, maybe we've be -- -- basis A&P? XXXX. a a increase maybe the spending increase or be next with possibility this done on north for and these points because turnaround, might growth in usually in years. of We It's long It's observed that in And right? Do question over expect tying against together, ad and you Do answer you continue raising or you've industry continue won

hear on So, just you here? in terms enough? that a this Is this push of reinvestment we're is going all to

Ian Cook

usual a as Yes, well-framed very question.

build. be tried the has the capture think think because I we is way it difference innovation product. between would time the to plan frame that winning to believe niches bit I point very grow. and together the have put is I answer I pleased know have to We're we your time it's We a it do we the that answer little to previous in it; but Vedshakti, a to a question. that to in take with taking There is

patient we We and will will be be successful.

is to come I again, taking scale So, back difference the your businesses. here

we necessary growth. XXXX of be you progress rate point by get different to in and growth as that scale to back You're is and and it'll trial, businesses, through making virtual that significant generating these are and very and of a we shares of a on based relaunches very while a based market XXXX we’ll plate your place, driver planning quality good to your perceivable enter expect on cycle. market with repeat levels the activity reestablished, If our generate becomes then activity level consumer XXXX with Clearly better different, plan will businesses them share on a and about by us strong. growing out then XXXX for array been an a on that to stronger do, the But get be as has a product worked you elevated share, will says that investment. we be market in year, have the activity decide growth we our will you sees trial. the you activity and you When that what it investment with place focusing upon of driven driven data come

Operator

We'll take Kevin our next with Grundy Jefferies. question from

Kevin Grundy

everyone. morning good Thanks

Ian Cook

Hi Kevin.

Kevin Grundy

on Efficiency savings not cost a and Question it's up Global see as We in Growth cost or that stepped morning growth. an expansion the bit the in fund on kind Program lean know Ian. good we Hey some from uncommon step-up of see when but companies savings of structure, wasn’t of to we outlined see harder funding an the the effort expected EPS this didn't reinvestment reset to years, morning. and

comfort level already So there's presumably with words outlined. what mouth, want while has the certain in don't I company to your put of a

So savings? I plan can building like to a you be as consideration appreciate hurt going of what about topic, sensitivity XXX but looks was that points it's to provide with update were the cost on the to one, an basis the on this see on the on then front you two maybe just with perhaps how topic And respect in Thank that. year? you P&L that for opportunity

Ian Cook

thank No fair question. and you Yes.

in XXXX. the assured rest growth margin I gross go fourth XXX know growth you it did funding our John to forward, quarter quarter can the the our I You fourth but of basis funding were in compared points savings basis through first, general when actually points role take if in the XXX

established. little rest you suffice beyond to say we internationally as So goals can a assured have push and the goal we a challenging to in for that place we tend have XXXX

no more to on is focus there from trying funding So growth lack generate our of the program.

the Efficiency year. On way you Program Growth it will one extended remember and Global

can of in shared three steps we advantage certainly you the been find course, making And the to see train centers that add we which pursue hubbing, service forward is the and continuing new them will initiatives we facilities. those if the in we've to opportunities variety initiatives. we can not to We that already diligently and the in the them on looking if plan are the them. of And baked areas we new, yet rationalization are have major very working a certainly of take

absent. not So was it

not set are we we -- looking we but not have We plan aggressively. where have a are, stopping

Operator

with America Our of Lynch. Bank Olivia question comes next Merrill Tong from

Olivia Tong

process there's consumers. capture a curious and greater like My direct-to-consumer. while you. e-commerce the a investments to Because your development thought our spend is share around on I doesn't sound of is question in ton here, changing incremental of how it your Thank was

taking in already incremental you're where's But Home. that? changing bars sort So things Thank a around to that elaborate much Hill's post from et business? on And like direct-to-consumers initiatives, in you side big bit the packaging capabilities the more into And change a on mentioned -- then, focused other lowering the regular how what of like in you. that? the Hill's messaging your versus you can are little of is on parts online, here, your formulations you Hill's potentially cetera so is

Ian Cook

insight well me -- Okay, with of into give the one with. an can reasons Noel to the we Shave pondering and let in indeed Bombay these of we e-commerce and point us external from partnerships are view, reasons some it was that is areas, one experiment of the brought Hubble techniques with that

recommendation. different continue Hill's are direct-to-consumer, And go-to-market forward. going ways of vet product, exploring broaden of that will and of that the they and the a to is with we all you point online. shopping so of yeah, we that a indeed from seek there can further what are need view And certain group yet an And for often convenience you importance for but the experiment e-commerce of prescription of consumers recommendation

wool you're online. the your if shopper, can't vet you now local in a online from right get dyed that So

You get have it vet. to local that physically from

but that benefit the the better the of of modeling, gives quality actually subscription they our on full course in will diet health at the and delivered maintain in stay sense found of way vet the recipient give the capability we the So this the that Pats product. get want the and product provides engagement yet to they with of and product, the the have the

Noel Wallace

Olivia, increasing into little that. saw we're our we impact having add XXXX flavor spending -- digital. maybe to Obviously, as a an see think certainly and our digital substantive in on XXXX bit in I'll acceleration we a jump is pretty e-commerce which moving of in We a shares. couple in just

delta As category XX clearly our the toothpaste, our U.S. to one you five points of may are points. up shares in that e-commerce player In the basis seen a we number share in nearest have competitor. are with about

business brick-and-mortar to coming you XX a bring flat as are the that up year to market recall amount basis growth. our that how the in channel of looking that specifically our with which that in was view accelerate in shares basis of well that is generate XX happy in a area learning had biggest And Diet then using year in e-commerce business our Prescription be very, China up off only in that shares which superstore sequential and And e-commerce that as making competitive our medium year question certainly as progress highly see to significant of what innovations terms up in we'll is may shares XXXX advertising. and a you're they very e-commerce, both in They XXX% China digital are of this Hill's the points. were And and new channel Our throughout to well we're of pet is terrific aware which And team are points. as Hill's supporting our points. the basis were is business. are back business Diet XX we shares. our spend The success vet Science their which the behind paying business shares our

the So, into think how interacts well plays again, that and that focus we're digital spending constructed. the and we and learning our business is behind getting e-commerce

Operator

from Robert question next our take Evercore Ottenstein ISI. We'll with

Robert Ottenstein

could you some Wondering if China. business Thank very us into more give commercial your Great. and moment insights in you much.

to you comments expect I the said the see in opening you second improvement in think half.

Anymore touch Love progress that? and or also you. touch going how Elmex? to And Alibaba? perhaps are premiumization China maybe What with are Thank is program -- with So, seeing some Alibaba? then from And that? for what the you drivers in Dare on on initiatives

Ian Cook

we to improvement Alibaba okay. the to Share repeated areas in down expect is has up Robert. with and through on second and to product whilst to been that taken Alibaba holding okay. the share in pricing complicated yes, the expect as to thanks we new that team Consumption right, we of as to one Well, holding see substantial but was that very improvement, expect positive half. said made in -- earlier, to shelf. journey it's get we destocking we China, a And And and continued the important the over sequential be started news work the don't but first year, as growth we be said, with a Dare year, half Yes. sequential to Love pricing to will point. return is this was Elmex. the you're

And we'll good reasonably that. high-growth for in in with Noel slow-build we're as as to be mentioned, online going way And the offering same start a a therapeutic an pleased China. a area product. at-home that happens So, be well with whitening China quite

And lot the the have to a work of plans going So, place. have in patience to are through we just it.

Operator

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

Unidentified Analyst

Hi, [Indiscernible] this Bill. for is actually for the on taking Thanks question.

in particularly, on just and volume coming was emerging the question markets between Our year. balance pricing, this

I think that of to based thoughts color of, emerging be in start of that be volume pricing great? would that of markets middle the coming back actions to to year, year, you. able growth half this of see this the kind Thank the any understand but due past on of competitive volume any pricing in timing forward, kind year, drag working this kind on was that half back we the around

Ian Cook

we said you pricing always as volume. And that with impact on Yes, is there as you the we pleased an were rightly have taken. say,

a So, we fair at pricing for the volume of emerging the plan a it growth in you the spread as is and year. it between view, it think about be point from for but year, least is of a picture would balanced the component. to as markets say that across say volume there's we recovery next pricing-lead volume. big year, And is the have Said

Operator

Stifel. from with question Astrachan Mark next Our comes

Mark Astrachan

good and everybody. quick follow-up and question. Yeah, just afternoon thanks, another then One

pricing PAC China. you're piece in given wasn't that China the higher On of pricing I Asia surprised in was taking the degree

you like timing all skincare you And that could into the explain Is sounds small wanted professional then And look it So be learnings into at you I that successful work base. we've professional what or there's just curious that inventory look the would acquisitions obviously channels. may had skincare something lot is something so related And that that still But like going learnings come from some to take to And even actually on through pretty from been it that whether retail today focus maybe -- secondly, just the skincare they've beginning kind take with But potentially year. help you priority on this if professional it. on? from other at a a would some explore to numbers, if last given seems or great? that heard the know could of skincare to that? you've point? on you'd of so a

Ian Cook

first trying working to the you in thanks where for to working through you I was professional consumer, Frankly, we pricing answered by so questions. it complicated these but terms through, go going what were know are is as And destocking. own Well the skincare we Mark, imply was I work with delayed But question. your the didn't business Yes. inventory are of the that stocks that learning. our to the

would we have business. that geographies growth Noel obviously we strong I we the drive the in of that will we think said one thing portfolio that think which expanding as is continue the to say

you now top of Elta business. America this which that America comment the incremental growth stage in I would North a that XXXX and nice at to PCA of North other for effective is terms the be organic The that will will thing for line remember uptick

but thinking idea in a as and that. we rule year that step, would the first don't are are focus the at things this point I consider as that retail I take we portfolio locations the think is all of to I think products wouldn't would more in suggested year our But As given the you other the out be XXXX to time. on other model retail, expand likely we to a of

Operator

Jonathan Feeney comes Edge. question next from with Our Consumer

Jonathan Feeney

Good Thanks morning. much. very

much… how So,

Ian Cook

Jonathan. Hi,

Jonathan Feeney

Hi.

can in do light So, if even to numbers emerging of XXXX from think were share markets growth much macro below parse XXXX Thank way when roughly emerging think look better? what's average in secular little own bit helpful? be it least XXXX or a FOREX like There's in anyway a you trends what microenvironment about restrained market maybe you. would at because similar in how and the cyclical or your you what's

Ian Cook

Well, I'm macroeconomist. a not

given is curve. one that I the the So, conclusion inflation lines America price the would follow that of is beginning ahead six what the perhaps we same what the consumer saw have optimistic -- pressures an Latin guess Brazil. to think we vigilant will, on in was if view we Obviously, we commodity where the tend customary to be come Mexico to months is focus with you crossed, on of stay we lack we Brazil, underlying grown behavior. back. seems And see other while very which

Beyond enough that, way portfolio I wouldn't to enough Brazil tend products depending up are down and be fundamental any in the market to And our scale surprisingly make Those predictions. and that bandwidth products to have make. grows. scale usage These more comments our market I significant in we where has informed well. share the held only are the has suffered, the even think category I'm up

Operator

We'll take our next question from Andrea Teixeira with JPMorgan.

Andrea Teixeira

a on China. is Hi, thank follow-up question you. my Ian

down channels? direct Are its declining So, break there. But has in is volumes price in can high-teens that between direct normalized indirect? increase the inventory way China indirect if you performance and channel? sounded that still in working Colgate you And optimistic more like the channel and fundamental what's you both also also the about China more to actively could And generally considering the a commentary explain little lower the premiumizing. just driving question indirect seeking the about bit be price indirect out products the

on you. So, Thank would that helpful? any be color

Ian Cook

Yes, question Andrea. interesting

And enormously direct destocking, the fact than the last online, you people when complication trade indirect, talked whether ways the product quite become distribution and go-to-market is it's compounded the what direct, channel then offline. to do it's does I we that think, that call. about can had moves direct of the quickly the generally point channel. laid whether pricing complicated out made clearly it's the it a has the created And multiple now you think the than by with in I more indirect visibility the terms we we fact a whether indirect trade buy on that it's the have whether less with

channel, goes still outlets, trade channel supermarkets. to but indirect indirect remember the is China it modern So, in the

to to through. way work it's going So, that's its that have

Operator

final our question with Steve UBS. from take we'll And Strycula

Steven Strycula

Hi, been few call price good that a far increases two-thirds in referenced times have the afternoon. secured. Ian you the already so of

And where spectrum secure that do of operating you gross margin other EPS place basis if then expansion XX dollar chance since Thanks. the is, how will digits? the this your question year? by John purposes, be profit down do my not of the transfer guardrail So year points price for mid-single third intended XX to increases you of think about the full within would

Ian Cook

I'll for John. Yes. speak

of the two-thirds given to comment will of and we in the headwind is suggest now. than the operating the competitors In we that in raw that more know half terms pricing, all actually and of exchange -- pricing realize indeed point making it is confidence given was on terms And what foreign of already we see materials the first spaces. from in hear similar given and place what of

ability are XX was your to XX operating funding we So if year, margin, operating as pricing guide with the in comfortable we basis and pricing. the gross growth the the our we don't guide know, on terms deliver you confidence And you gross profit. And of margin. margin points to realize to ambitions to our the profit on and EPS. our point guide intention the in to hear unless gross our of We otherwise, convey

the I with we talking thank and April. joining So to I you forward look those questions. for the are of all believe in call you

Operator

conclude does We today's you participation. conference. thank for that your And

may now You disconnect.

Colgate-Palmolive (CL) 25 Jan 192018 Q4 Earnings call transcript