CL - Earnings call transcript Q3 2019 | Colgate-Palmolive Company

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Operator

Good day, and welcome to today's Colgate-Palmolive Company Third Quarter 2019 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, Paula. to quarter welcome call. release and Morning, our earnings third conference Good is President Vice Faucher, Investor This Senior for John Relations.

the from for XX-K actual the of factors statements. Today's statements. could cause conference XXXX Form with refer the these SEC our recent all Actual discussion forward-looking release and Annual to Report Please results available could SEC, our call differ materially filings will a filings, most to earnings press include these differ materially and including results subsequent on on statements. Colgate's website that from

conference discussion in measures, press release This included call of A non-GAAP will available and corresponding is X and to a also the identified is Colgate's of GAAP those reconciliation the press website. measures release. include full in including earnings X on earnings financial tables the financial

before President Joining Chief on Officer. will me session. begin and with Chief for guidance. Noel's it Executive Q&A up Officer; performance our Noel morning thoughts Financial are Henning Jakobsen, We'll then I discussing this some open updated XXXX Wallace, and our

growth growth core our our and marked we these faster channels. focused in sales levels consumer-facing the are further higher innovating step of growth. return markets adjacent in are spending, expanding our strategies to and our third quarter availability off around sustainable The Throughout to driving a across XXXX, business, broad-based segments growth plan on organic of in in Along with businesses. paying

every pricing we positive and a growth basis. except pricing division, Volume up marked organic quarter QX row division, was one. of combination on the third and volume both every a in delivered in for in an where was

on pricing strategies focus we revenue driving are premium management growth Our as growth innovation.

our saw growth we basis, six organic of sales geographic a divisions. five in On

our a plus of Care category delivering sales X.X%; from growth delivered again growth, a and emerging Care, combination organic Importantly, organic in market businesses: to the Pacific, Nutrition. all region. China Oral drove sales and growth growth in good X%. market sales Care, We of growth, developed Greater organic across including Personal standpoint, Asia Pet And we four we returned plus Home

continue quarter. to order our advertising the a in of I drive invest to would In in spending marketing growth, past In where Total purpose-driven sales growth. particular, up spending been was this a significant driver nicely has few point to behind businesses. the Hill's over years key the organic increase our we behind

were Filorga's we transaction through our portfolio our We expansion pleased and included our results XXth, of that of operations were on results. QX Care also continuing immaterial were the not point Filorga Personal out acquisition from although results in to the health, skin to the end date close September into quarter

received from the industry in On Noel time. in the for the September, the sustainability Back recognition front, sector Worldwide Dow taking recyclable our lead Index, our discussed new Sustainability we tube. Jones first toothpaste

in in it are and Tom's will shelf be We on the production November. currently under brand

Moving to QX our results.

exchange X% impact and basis, quarter. net was gross grew pricing. This volume X.X%. foreign offset GAAP partially X.X% a with the Our X% was favorable We of XXXX. QX our unit organic in X.X% sales with growth, growth by even delivered minus On sales margin

positive third quarter, was point our benefit. while was exchange the was it in transaction raw This -- XXX our by from foreign point trend a and Pricing materials inflation, productivity drove point costs. impact Program, drag margin Growth XX which basis offset basis programs gross points the a foreign included down XX XXX to basis year-over-year. Global Excluding Efficiency impact a of basis

Other, primarily unfavorable basis mix by was XX points.

pressure On X% business on was basis, Our year-over-year. put our gross some emerging relative margin. stronger up our advertising to markets in markets absolute growth an slight developed investment

year-over-year. points On was up advertising basis, percent of basis XX sales a

advertising expenses we basis, spending, able percent but and charges Excluding sales, were the quarter Efficiency productivity an year-over-year as and in up resulting a from our savings our costs our of from as were programs. third absolute and offset SG&A down to Program Global with on other compensation Growth higher

earnings share On GAAP year-over-year XX% diluted were of $X.XX basis, QX. in up per a

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

$X.X cash flow XXXX nine which was versus the prior free Our up billion, of first year. months X% was through

the quarter. at the by pricing X.X% grew look the quick FX sales a impact was net growth no in X% quarter, America growth. X.X% There divisions. driven Taking and in North volume

Our other we partially offset food growth see retail. by in declines was continue performance to e-commerce strong and share in where non-measured channels,

We also Elta MD performance and health of the remain businesses, very Skin. our skin PCA pleased with

America Our innovation. portfolio North in our to on Care be focus of Oral the continues premiumization through

and posted with Colgate sales, Total Colgate to Optic in drove innovation Total organic minus a X%. Northern quarters, in was Colgate decline have where by in further the pricing to our come brands, the weakness few growth of and Europe, and Western we retail behind difficult. be sales the the relaunch flat Europe Europe continues SF particularly offset on Growth Optic net foreign White whitening X% in exchange quarter, and next White. environment in

going of premium first have significant naturals innovation drive half As we to full XXXX. America, innovation improved of as a mix with forward, North we calendar the in expect price

America volume offset X%, net up X.X% negative as exchange. only X% X.X% by and pricing were sales were foreign partially Latin

broad-based, third growth growth the organic in sales hub row. X% every organic we Our for saw in sales a quarter as was

While the by Colgate and driven remains benefited some pricing nicely, like year and the the Brazil up was products Protex ago strike, XX. Face business premium comparison, included Total which solid from impact from underlying trucker

grew Organic up X% X%, Pacific result Volume growth was positive exchange minus were while of Pricing first quarters. Net X%. in X.X%. our sales was in growth Asia X.X%. six foreign was sales

the Importantly, in we in region organic improvements pricing. volume Greater driven growth the sales and delivered by China quarter, in both

of business sustainable return growth profitable expectations, ahead quarter go-to-market the improved innovation brand marketing. While through we improved and was remain capabilities, our to executing third on our the to China the China-specific laser-focused improvement plan in

toothpaste. and Asia-Pacific particularly growth toothpaste, naturals anti-cavity was by our led Colgate portfolio

strong was quarter, and to all X% X% discounters paying growth. growth sales organic a net its with result of delivered Organic on growth in sales sales focus the while on FX net is several particularly was consistent X% pleased in we Nigeria in years. a net benefit organic across in where the growth joint and The in channels division quarter our volume X% Eurasia like volume hubs off. in X% Africa/Eurasia drag performance and our growth faster consisted are growth. growth, sales Africa/Eurasia The growth our X% was of venture pricing sales established best newly

growth their our on business was sales best minus X.X%. Pricing XX% as QX, negative since at XXXX. net Momentum Hill’s' while continued results was growth at food and growth. pet X.X%, foreign was in X.X% Hill's sales positive X.X% volume exchange organic delivered

North Diet strategy robust growth in relaunch beginning and globe. pay the around to Our the as continues now core deliver to innovation internationally America off rollout is Science we

helped on Hill's adopted of the strong In Clear U.S. year's XX% the campaign in annual adoption versus year's in August, pets partnered program. ever, earned course the campaign, most over the campaign Pet Shelters was XXX,XXX which an of drive the with volume successful over increase NBCUniversal's X,XXX Hill's displays, its last growth the over U.S. This quarter.

guidance. to on Moving

be to sales to up We continue to flat low-single-digits. net expect

the be full-year rate in We a fairly GAAP year-to-date target a and on and plus in XX.X%, our year-to-date We of expect rate consistent with expect be raised the be the items to referenced fourth We items with between year the to earnings growth X% both excluding press quarter. down release. We both with level. XX% in sales now gross advertising organic up excluding sales expect X%, growth roughly our expect to the be referenced non-GAAP our a percent line margin now the XXXX slightly and basis margin on on release. have would full-year do and for GAAP both to to full the the basis in growth. GAAP earnings year-over-year gross press full-year a basis tax We to as

change XX% in for previous Our includes in reduction the This taxes India. XX%. recent to was guidance corporate

activity leverage spot As a down mentioned to ratio share quarters Based return line to our transaction. with order call, the will for share earnings next the expect be the in QX low-single-digits rates, Filorga moderate repurchase we on current year. our more to the the in ratio per before on for several we GAAP

items the year. in referenced release, per still for mid-single-digits expect earnings Excluding the we decline earnings share press the to

Paula? And Noel the it over for Q&A. I'll with that, turn to

Operator

Instructions]. [Operator

go First, with Strycula to UBS. we'll Steve

Steve Strycula

and into sequentially anything, think the the on gross the do year? How gross for you. question weakness Thank drive in QX quarter we and about from what in Noel, what margin well. positive inflection the QX last to John if as in So, caused margin changes, next and

Noel Wallace

Sure. Thanks, Steve.

sales A disappointed on couple margin the which So coming on gross business, with as the that weren't frankly softening margin the Obviously, more line. a had in quarter. things Hill's happened we growth emerging that with significant were quarter. markets the This impact that. John the slightly Raw than quarter, than more mix, the was saw the we prescription were exchange, outlined, materials expecting growth with yes, bit. we're third margin expecting. the worse mix Diet we into was extraordinary. went were a Obviously, as we We're very expecting the we as pleased Science versus into worse diet, we foreign about compressed toward as went slightly obviously, quite

the that came through. We're quarter, the attention on on the We're through we'll accelerating, half growth fourth And focus obviously, the the surprises So focused right getting our across -- through focused overall, that's couple quarter. funding me. back the a where going premiumization. the fourth into mix and regions excuse

we So, year. fourth quarter the we're confident rebound as see out margins we'll finish

Operator

Lauren And with next, go we'll to Barclays. Lieberman

Lauren Lieberman

bit tell But you still your seeing Nielsen it much North than quarter, more heavy we're I does Oral data Care full feels in price-mix like a clearly then I the could the results know curious about very business. talk Thank heavy. was this Okay. not little you. trends America. picture volume And if of

So -- little a Thanks. and progressing? pricing Total bit has talk bit if the terms you brand? is too that you're far on maybe thought it a repeat, seeing that possibly in of how about that now little What a gone relaunch can if

Noel Wallace

let Total. Lauren. really with relaunch. talk me Colgate Yeah, Thanks, broadly the Obviously, pleased on we're

basis pre-launch. were up they where are a on shares global versus Our

took that as the elasticity some As that a we you a increase seen we relates business There it XX% Particularly through. increase price to U.S., been price business. come has took know, we've on globally. on XX% that

of get ensure started to bit that accelerate of about flat up. in corrected investment we Our share We're a is it expected looking where the midst share were our we messaging and versus little behind at continue be moving forward. three-tenths we that we point the to to A we relaunch. before as down disappointing, business

more as but the some down, given But see But go-to-market we'd in the significance as importantly, price increase more the that slightly and we pleased marketing the plans year. of around globally, the of of pleased, balance get turn like of the to I as behind that were the a fact sharp move year we've the that And increase a mentioned, real balance half the we'll the we're put continue investment of and that is of growing to us. progress for share gotten next first this year. and XX% through into business we some

It's core strategy our we'll businesses our get to relaunch other in with some core consistent XXXX. moving look to the businesses with -- and

move We that we press start the will release. into outline quarter first as to

more that excitement we're and come premiumizations. with Colgate overall. innovation think would Total of coming Some some pricing with as you on that down will pleased of I All-in-all, the more that, expect the we have

were bit non-tracked the channels continue a a more. a tough U.S. this U.S. It's promotional The to second XXXX. specifically right not we We very for so expecting lumpy bump do the move been well in had Other into sure. the quarter we quarter, environment on was but channels, a in well, premium and regard. in as getting as as U.S., that innovation in We're bit focused that little

of gross XXXX quite we Our to as commercial across to back place. through the come that start revenue that margins we we're we'll move premiumization see see improve that. embed shares see And discipline entire principles the as and management we'll the strategy the optimistic in behind we're continue we the starting growth put to balance organization, coming

Operator

And moving we'll Powers to on, go with Steve Deutsche Bank.

Steve Powers

more pet compare does -- again and your guess in So for question top that in to influence of it going is forward? think inflection performance line how all, your in with does compare if the see you I you the me does at top-line do when quarter. profit momentum? to plan how that how commensurate business, might this coming Relatedly, thinking, a that tremendous

fourth that, hear you realistic Strycula influence looking quarter in on your Steve's a just could as the open. And might I finish objectives on to also the effectively on represents, XXXX years this thinking the has puts follow-on into the if see I five in the margin time quarter. I on gross margin takes fourth Because come think, on material into Colgate pressures. only to follow-up targeting a there then that time recurring the gross year your trend. flattish question And I tack I gross about And margin get -- a year. how at But or down is But XXXX? the improvement macro and about in

kind how XXXX just and course overreaching of So in being having correct you midyear? do protect again against to Thanks.

Noel Wallace

Steve. Thanks,

through in midst out relaunch, rest quarter is first. world. get Obviously, largely extraordinary -- which the U.S. The now, the Hill's the we're an Hill's me address by rolling the the of Science Let for that driven Diet of business. right

about that moving quarter, Science Diet. will excited bring behind had But just quite exceptional we're forward. what an U.S. particularly So, the

talking I new that pricing getting think driving we've distribution in core, right. the advertising, channel the terms about that been getting the everything the increase right go-to-market business, and of in on

In the and in a feed quarter we were these of focus emerging farm result on some channels. XX% is increased just of and fact, in up that

share shares of e-commerce point. Our a grew eight-tenths

Our of pet a specialty share share grew point. eight-tenths

of growth growth the in see sustainable all moving We for well So, forward. the continued category. pet bodes this

higher see XXXX, That a for through amount a has diet play innovation Prescription continue and significant business. plays the business. coming to out of in in much we'll obviously the that margin

The move we on and margins the build that to the both business margin of quarter. gross order agricultural the price forward. business the as bit, the has quarter, business the products vitamins beginning the gross that Diet gross improve increases were behind and material We a surprised raw will prescription on forward. recover the Science taken at in again, increases margins moving we So in and diet and saw other

diet. the It's It's good terms SD And broad-based. of prescription So good got we've coming sustainable. on of international in innovation Hill's, coming expansion pleased. some very and on news

bodes So well all there.

pleased is sensitivity to segments business products question, On innovation, channel we're which and your price skin bring businesses core we growth going the adjacencies up the will ingredients, and obviously, with index. Obviously, core our significant the strategy, adjacent around into, over around very margin with increases right. world business. margin will getting of well, we're coming health pharmacies natural driving to and how will that back the portfolio The our the that around shaping bring with our in gum long-term accretion to is the that where bode around particularly particularly expansion into the under

improved Likewise, expansion we margin which will moving gross that significant in drive channel, forward. opportunities have

know So our gross history has about We listen, been improvement. margin disappointed. consistent we're

grow, as year. to the delivering forward. on through continue make top-line laser-focused been the are the moving that P&L throughout to I We And think productivity happen this on which see, you focused we've

that as come gross margins You're we going behind move see the to through XXXX.

Operator

Sachs our next question. Goldman with English Jason And has

Jason English

in. out products I'd the movement, wake appreciate pet. concerns real is of to that. does you incredibly on you're seeing the its comment It to and love strong of of coming off your I'm the the as folks. some Nestle away market DCM it. also offerings points, of those we're back I quick legacy from both that, a question broader U.S. if out brand whether grain-free there? particularly pivoting not of beg could congrats for the and build numbers or in well. offering Hey. it, me on premium numbers Nestle I going see Good see morning, slotting on I on Thanks strong

easy there the hear delve looking cost understand margin when there leaves if you nonetheless at. Inflation on surprised lot margins the gross And love deeper more better to your a I'm Despite we North confounded. could then curves up to I so broader a it, basis margin components, and but really it we delve real gross quick. me lot, see coming just we're an And XXX points and sequentially what's a into you sort compression. illuminate market. that I America mix pressure which back it? can of defy in seems eroded happening to bit comp, of And frankly, stepped

Noel Wallace

Jason. Sure.

I me to growth. moving I years an Let And you've our as there credibility created had a question the Hill's the to particularly tremendous advertising has I behind we Obviously, lot which a seen great products pet that trust purpose-driven brand. DCM John into has our like has very impact. and first. are consumer think mentioned, with advertising really that take resonates the owners. translate return mean, been over ours, there’s And and the science-based built think and more

differentiate premium of also We afforded very an you obviously, ourselves, business is, long-term forward. they're moving which The the think And for the some us broader pipeline, as robust. to competitors the sustainability And I on priced. opportunity more to bold pricing. we're rich is Obviously, innovation grocery. think see which continue into that's and move mentioned, market, talks I to for that

I continue well very us. perform So, will that to business -- be expect for

category specifically our North channel really and America from against quarter. margins, in a on Mix standpoint. volume obviously, below the and with both a a standpoint, pricing sizing Both quarter, happened the very Now us standpoint disappointed worked from in expectations. was little from what a

So, all need we the that. against we address had moving us three to and in quarter

we'll move turned has Manufacturing higher. for that. costs, the that address XXXX. the for ensuring into quarter all we surprise. was we plans team we plans fourth address were budget and and the likewise, move bit place into the That around in And over get that put little to a as that, that as XXXX, We're

channels terms see seen in out we'll headwinds There some to up we've sorted the sizes be are America. continued likewise, we get the that North of improve in will margins be But as expect we the across total as the business QX business. I where see quarter. the and We think, in fourth

on we're the continue environment where we believe in translate to an The lifts competitive are with faster. back other smaller I promotion going particularly more the brands as some gain, see to not in accelerate Obviously, digital advantage, spending, areas, delivering brands can we're category. hopefully, slightly we seeing think to our a that, we expected. what bigger of And growing I

We're as not We're bode the go it. North those that the for it. accelerate as continue to we So, term. are America skin with all business, components. the pleased at And into we over on margins well likewise, will longer

Operator

And moving to we'll of Wendy Nicholson go Citi. on,

Wendy Nicholson

Hi.

Just on that. following up

be on them. First, you of there? business, sounds where kind can of the with fell each pleased of sort skin any you're got like comment businesses? are care It different three three that appetite further feel want you Do like different to you've It sounds niche. like those in on each with skin But acquisitions. you of kind a you

just bigger new then year, you follow-up. Hill's talked sort or relaunch initiative categories question of bigger and really program first, have this But my My into like about next the Total some with is, maybe a you expanding question year.

So much care plan more I'm spend to up care about marketing? margin you. about bottom year? on you how I gross operating margin. line, less will go wondering Thank next I

Noel Wallace

on question, guide second the into going your first on quarter. we get yet Yes, XXXX Wendy. as we're Thanks, to not

you we're that take you in about we we've historically, deep can margins. thinking would moving direction. all I like right interpret of overall, in We terms see But operating give obviously how the to and those where will margins if transparency think you been

from welcoming meeting both people, I said, skincare, really of and family China. into as around world two-week Filorga Colgate the some you the returned them the on pleased. Specifically, with in a Europe in just trip we're the

talent in They're they business. where plans win they we focused the and the we gross have quality from I excited areas what they have believe from the and from margins in Filorga the on place, on those are in a deeply was that can solid. I that they can businesses. growth of The are saw believe And terms they win standpoint, from plans in of delivering significant

the to focused online trying out, They're on their not into they’re themselves stretch pleased areas. pharmacy is travel very building different channel. focused are on I'm They business exciting. obviously and So, retail very which

terrific. business we Obviously, lot now the plans quarter have PCA, margins On the we terrific be businesses, in Elta looking the how those terms growth of a the again, we're to want the allow growth flexibility at move to in for in more and expand us which the exciting. looks XXXX forward as and and will category

overall, top-line we're growth continue say we what focus from have. those but the never, and So a pleased on our bottom-line businesses to to is with standpoint. a accelerate Never quite

Operator

go Robert And next, to with Ottenstein ISI. we'll Evercore

Robert Ottenstein

Care. can Great. I we Thank much. you very return to wondering if Oral was

how markets How a on Total mentioned up you're they've that pleased of give the therapeutics? and India? detail you China, have You perhaps are franchise? opportunities first, was doing? those in and that much global that then in sales been little issues kind And and with more you much are and very touch are how up? Russia, for then traction Colgate Thank go sense were of there if And countries gaining bit naturals, Meridol into relaunch. been What in wondering, maybe I us a you. doing with can particularly on how globally Elmex

Noel Wallace

we significant sales We the rollout was the the in terrific success those I organic Total toothpaste saw highest growth largest accelerate on two we that had numbers. across our markets. quarters, Colgate Total which six we've specifically America. on is Brazil, growth we've Latin comment roll us. tell you will of the Yes, markets, obviously the as and Mexico for quarter had the won't in in

toothpaste segment of Our both premium in Mexico Brazil share is and the up.

X.X. about on Colgate in about in are The Brazil up X.X, shares Total Mexico

driving, remember into to what you part premium of space. your Robert? terrific Colgate good look Relative shares our me, what obviously, Overall, seeing. the pricing, we're on pleased we're question second look on can't they the the business and I of asked with -- the and So, more Total pricing

Robert Ottenstein

the Meridol, and and On then naturals? also on Elmex

Noel Wallace

That you've in pharmacy as it seeing in are heard the previously, launched well. doing it bit Brazil. Elmex, has on been in we Latin toothpaste, seeing Yes, washes, is business growth channel America, both toothpaste, really you. and good launched We growth toothbrushes. toothbrushes on Mouthwash across soft. specifically Thank a mouth you. Thank great

generated number online, China six-tenths Likewise, do the share is in which good to brands given in We've online. that for it well. business, a Northern of a us. region. we the about And launched that Africa in on launched point a region, China result of NAMET the continues And that we

was The in I taking Turkey in market we second Turkey are other Meridol, leadership the we think of and with business which with to both the had area is talked that success quarter -- performance about Meridol we've bit Colgate. the that with a little business pleased how taking in us behind the call

overall, about midst the we'll the we're with in thinking and XXXX. of markets in pleased that we're key expand So

Operator

Next, go to Ali with we'll Dibadj Bernstein.

Ali Dibadj

guys. Hey,

you peers of But So, ago. and -- pretty allowing particularly of just year Sensodyne's that the difficulty kind years. seen is that couple enough kind previously ROIs next Colgate? different investment saying to this whether competitive a should little with example, far year, a Is guess, for into among about with Why kind of investing kind mentioned have for promotional you've taking with competitive XXXX to increase of taking are that phase big year. dynamic, going multi-year the parent one gives anomaly you I And done reinvestment to little the a And is? broad dynamic? do a your past assertion have adamant you're take we difficulty have and on that in even going at commodities prices. you Total in related a Thanks. than underlying anything And have you I to moment -- XXXX? you think isn't that, reinvestment category was multi-year tougher of again, you the public guess of further than reinvestment rollout others. a the category there rather the such so spend, Anything company been you've Does For innovation particularly it certainly been the on see a bit. question, relative bit all pause pricing, that I one step back

Noel Wallace

me take let question Ali. So, the first, pricing

world really are to through environment that, get on working which pricing think for that us. today, but on we've not the prices continued had with four the around and be that we is two-year on it business, strategy compete certainly pleased the an of increased delivering we've through -- moving on to believe value only a pricing, is pricing terrific. a looks -- into had that in And so I very The franchises forward. We on quarters sequential stack, competitive in the growth terrific across consumers Colgate real Total bringing focus our trade core is and we will the

we continue across relaunches a our coming. innovation of got core to getting We've We're on we robust obviously, point We've continue will pipeline second continue growth share the that. investing got to Your where we to business how are to that's big drive we'll the to accelerate that advertising and productivity and support to look the to But how the we'll investment, need terms need of that support. laser-focused And we listen, the standpoint going we P&L gross behind world. need using operating the [BO] margin, margin top-line. is the fund to P&L both construct and margin now. right for advertising help gross on across going in from and at coming continued a XXXX

Operator

of America. we'll on, Bank Olivia go with Tong Moving to

Olivia Tong

morning. Great. Thanks. Good

smaller North imagine would Optic America. White that's innovation First, Total that relaunch. the on I than the just

higher help And So, other can follow-up talk offset market about the things you the on the advertising. base? that then do you're just to in to planning a

Organic have you and taken but growth said spend But -- going were are has Hill's advertising has you your brands like improve and you for to going or improve you increasing American off have because been growth decelerated. spend quarters on you been in improving. You've that four to China and some consecutive really where steadily now return how markets now. like did, then North

more even from is a aggressively So, the going there improve ROI potentially investment to what's you. Thank that? increase or need to on here

Noel Wallace

Olivia. Thanks, Sure.

in So they've great America pipeline innovation White include premiumization. on question, which a the behind got North some of Optic of the will coming, terms

can we'll you be imagine premiumization world looking at likewise, that, As on around Optic the White.

give of have UK the fact, a how of a of strategies. premiumization we toothpaste behind White XX-pound the in some In boldness sense we're thinking introduced about you to Optic

trend North be as Tom's in our the step as ingredients America we obviously in business we're around on see you'll more Likewise, premiumization important across of share will well, in growth back advertising and need organization. the U.S., world, the embed and trying across the the across that business when expansions you of pricing which Maine to to come commercial driving management listen, terms a Relative world, more revenue Colgate to and take growth. the towards driving natural think me portfolio how the we let up in what

talked the it taking a commercial by about fact I that on But bit. encouraged We I'm ownership. more travel, getting as it's deep

of the marketing that take organization. out we historically, So pricing and the directive for would came

just for folks. our commercial moving GM across delivering opportunities pricing Now, holding accountable the we're marketing enterprise entire and the taking everyone forward, not

for ultimately the the really think, to spending And after ASP, around which have. fund we need So, continue this that bode shared the go responsibility I the to to how will margin. is going drive we'll we that be to world opportunities well,

through lot we around. give XXXX, first putting get to how you ability The you things. in in ROI where the in which behind best come to going the turned move about need businesses, as space a lot analytics, on investment, will that's to really support obviously and to we on investment, get forward. continue will working, more data have coming not. really core a we're advertising we we're more quarter dynamics cultivate P&L focus return the particularly of we terms on these see the that our and on where And improve on we'll return thinking digital as big what's clarity And to back learning the we what's for the So,

Operator

Kevin question. next with has our Grundy And Jefferies,

Kevin Grundy

the and America North on competitive looking question currently forward. Noel, and specifically environment

and into rational relatively industry fall. starts this your, cycle a and that over with your for and is thoughts consensus they in on industry it been, great a was to detriment XX So participants in promotional pricing would environment promotion get headwinds from pool. months onerous of pricing been profit now than put that the the context with specifically intensity less the commodity But perspective updated a overall, the as the competitive place view the to pick past have have the there up potential to pricing be potentially,

would there So, Thank any thoughts helpful? you. be

Noel Wallace

in seen sense. it that more would competitors I seen and the to we've need doesn't North our of environment exception make looking do. lot think it is together need need around dollars be trade, ensure our are value. America, a I regard. in to any been to categories, obviously, some everyone -- with particularly category what We premium. rational, which where we the driving But Yes, working be say has that in odd sure, would America. to North We as specifically, drive where ensure wins world, the Brazil And is we've that's everyone innovation some one just the relates is the to pricing that's category to that of

certainly the six little the of picking those over and nine seen months trade up pushing bit brands, some pickup a to some the those. smaller We've in of of months last

to data-driven view in on the for consumers. as increase digital, And the we the continue they more get is smaller with key dialed in against that's opportunities brands, long-term, big brands in compete you'll as brands. of on the these dialed residents my marketing, we have get how they more what's the that some relatability they see to big So and do

from rational brands. competition little competitive a environment, bit more smaller a overall, So

be. lifts, a high not -- see used the they to as I as You promotion see sales But increasing, news. good which is a promotional don't on

the be the to get North need and the we right So, America and off to in races. premiumization right we'll innovation

Operator

on, with Moving we'll to Chappell . go SunTrust Bill

Bill Chappell

some from Just some a particular, all certainly multinationals but and of little your bit that slowing LatAm. of peers follow-up on in there. heard is Mexico there We've

market? year And in rest price next line And today -- as with seeing with your mind? go -- the so, into to for what we I maybe then guess, that take the ability also all key of you're in questions the

Noel Wallace

Sure.

in obviously, versus the consumer but markets, let big up were third two Brazil there. Brazil, continues So, take slowdown quarter a to last where Brazil the and first. take the Mexico. me pretty I'll little a be we robust year,

double was look in last good business America, quarter quite that versus quarter. Brazil, quarter and But comp slightly in easier us second good as with up were a the Latin again, of we volume, Our at Obviously, year. the the I frankly, trucker digits the XXXX. partially third pricing good following in where pricing, we strike, took which third hit

saw that looks for America, pricing, Brazil bodes nicely specifically across very after we think So we come And the the of good. underlying pretty aggressive back Latin health region. volume really well

hand, We the seen a other the little in saw of the on softness softer. in quarter first little half what versus year. we've a Mexico, the

some going and in there. politically where I terms think are is uncertainty of economically there things

the Our We're premiumization. same. strategy on focused is

that mentioned exceptionally that We're seen I total as market. the well. to As into premium as We've well a earlier, natural the performing in ingredients the is market. naturals, business significant portfolio pushing ASP

market. are sensitivity that in We pushing

We have on growth that as seen well. some nice

So the specifically will overall, But up. slow, the strategy some see it's premiumization markets dial across of that we a as region. Mexico, we

Operator

J.P. go Morgan. Teixeira we'll Andrea to next, with And

Andrea Teixeira

Thank squeezing Hi. in. for you me

that you you. on and Pac showed inflected -- according speak sequential call can kind you improvement out destocking can you headline the into the volumes bit you second to you'd Is Is you -- not and we that see? Asia of the called that in read but there stack. Is a that China on think a about related to Anything If Pac, plan? improvement in accelerated. China I volumes, particular? the it or two-year half? Asia Thank how the on on particularly little you on But the

Noel Wallace

Sure. journey to online and in Andrea. will get that feel was working growth portfolio starting a momentum our out structural we price. China. first in saw that was every changes, we're particular the we terms we positive volume it's the continue. We ahead as environments, we've deliver And Thanks, of hubs. expectations. we made Yes, of as the across our and of a organic that of Asia, put all place terms of our It across off, we're retail the pleased. XXXX. we how to The in its mentioned, particularly Obviously, with and organization pay one and changes go-to-market strategies strong feel are Asia changes, our China Obviously, here, different in saw broad-based QX John call little have across since

business we to we continue look it's we the in we'll the and So get XXXX to again, at hope there, place while very a that growth as good feel we're competitors a but continuing a would see China, we so in of realize to of significant growth our work. starting to well that this the that continue and see getting grow. put out our we've lot We are that been move to as plans, we into certainly quarter see and that business to are strategies place accelerate accelerate fourth bodes

Operator

Moving on, Astrachan go with to Mark Stifel. we'll

Mark Astrachan

you're and there new fill particular thinking sustainability? launches was the any about how from guess. incremental Two about in is product benefit just Maybe questions, kind One in of of you're about the Hill's. that? talk Maybe just from how thinking channel I some U.S. on

gross to a margin, back then I'm guess I little surprised. And

in what the at happened quarter. surprised You're

some category the about had America Hill's was had some that the pressure there. -- there of so quarter, that backyard. You the It talked your was going North taking kind had most you idea seems pricing early in in the pressure. on that geography to be

on XQ we have much that of you point this you and kind do in phone July, did So, the at mean, I this were to improvement then at of What point? end us you when forward? expect know tell of visibility, that how the at going

Noel Wallace

sustainability about about Obviously, business all on presence the first, our right the in again. The trade margins and in Hill's, I quarter. is sees on just pricing sell-ins then that taken brand not benefits with think pricing the itself, talk the the me how brand and we're now. expanding we'll They're terms business Hill's that. in hitting the pricing mentioned, let the the store, of in The So, is talk messaging quarter. cylinders second in it and you and that how come fourth to the Mark, stuck. pricing of was important consumers We've because has the positioning

diet So end Science at on additional both Diet took as well prescription we September, business. the our of as pricing round of Hill's business the

indications that into seen midst moving Science see started in P&L. business as the so sustainability out for bodes through rolling forward. we've the So, are that quarter, benefits Asia as U.S., of of business moving well in more the hit will It's us globally. We've seen as Europe. early that in And the we coming America. the fourth the in Japan, Diet the like that well Latin we've of in We're

the we're the certainly in have that, What business growth move I well as will going to and continue not And XXXX but diet XXXX. see our confident or which also unfold that to strong as drive start plans was innovation to going suggesting quarter we're business, results. Obviously, we good up exceptional. as in I'm to really margin of is mentioned earlier into XXXX. we quarter on we see the expansion fourth part good double-digit the are dialed is that focused prescription see those you'll is, growth

mix issue, the surprise Mark. us, on for Listen, it was

historically, We We we that look or impact in we quarter we've If no we anticipate relative through category always issues. discussion. didn't had some you saw and some to business. moved geographic in mix back saw as the the -- positive second as on moved quarter our issues

looked moved As quarter, we fine. the into it

we challenging. it a more As little the bit quarter, got went the of through balance

that. we're And on so

packing materials forward. that bit are We, is up raw that expected strong had today. mix that benign and some surprise hopeful the more last rates and came environment saw well. are little news spot the rates was as the a we're But we we quarter. all through a that will us. hold. addressing hits surprise And a with have coming we that come than FX, were back good given the earlier, picked the the obviously, The year, That that there back right hopeful the would P&L, moving more that's as that see through I the we that P&L We mentioned We FX-ed was of as discussions well. teams spot to see both and and FX in those dropped

Operator

to to turn additional it presenters our for like comments. any back closing I'd And or

Noel Wallace

thanks. gross margin we'll through our moving the terrific Obviously, the We're business. categories, emerging forward. for as It's markets. looks all XX the that of get No, the developed days discussion. Again, the appreciate growth and on questions. as addressed well sequential across I both quarter, broad-based top-line

we first the come to look quarter, we of guidance in terms with, more for will As specificity obviously, back lot you a XXXX. to

to terrific. to Colgate into worked in so quarter thank that me so looks deliver P&L, look move hard first Let XX,XXX call. the sequential continue which we forward the people fourth we much. And have discussions Thanks growth who the quarter and again as

Operator

everyone it We would does for thank conference. their And conclude like to today’s participation.

may now disconnect. You

Colgate-Palmolive (CL) 1 Nov 192019 Q3 Earnings call transcript