Earnings call transcript Q2 2023

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Operator

Good morning. Welcome to today's Colgate-Palmolive 2023 Second Quarter Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com.

Now for opening remarks, I'd like to turn this call over to Chief Investor Relations Officer and Executive Vice President, M&A, John Faucher.

John Faucher

Thank you, Allison. to quarter welcome conference earnings and call. morning, our XXXX second release Good Faucher. is This John call conference forward-looking Today's include will statements. Actual results statements. could differ materially from these materially refer results SEC most discussion that XXXX these prepared QX annual for report from SEC, to a release XX-K XXXX to available Please related and could on Form and website subsequent including earnings our factors materials all filings cause of recent press our differ the on actual with filings, the statements. and the Colgate's

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

the President Chairman, will and Chief you it on for QX on Noel me Stan and up then Officer. our Chief call with Noel this Noel? are Sutula, and Officer; Q&A. we will XXXX provide outlook, and thoughts Financial morning Wallace, open Joining some our Executive results

Noel Wallace

Well, thanks, good John, everyone. and morning,

clearly So with outlook this quick on and our a the quarter top and line growth we few improved of provided. XXXX morning bottom strong thoughts along

also and call, productivity the on revenue sales the our year, growth growth cash highlighted to On driving delivering quarter flow you'll on improving three our management first brand organic comparisons, earnings tougher as I recall, priorities while investment, executing performance. for targets, we and fund face

delivered sales portfolio accelerating grew or organic strongest organic of in volume categories XXXX, growth sales our a each We strength showed on QX all in organic on QX, quarterly delivered with growth digits higher. the since basis divisions made six in two-year progress stack On growth three its our two-year basis. of and a as pricing all and both on of the in without these. QX challenges, we we not our global stack While growth, strong mid-single

We are on and as returning balanced organic support to efforts, give to investments our and year-over-year. we we funding progress combined gross improvement and revenue sales in with forward making, easier growth of profit path increased our are the while leverage strength The comparisons, growth. growth the going volume margin management a laser-focused with improved both brand we combined believe growth, innovation on growth delivering drove still our sequentially us

the leverage productivity costs spending benefits including Our lower Base SG&A gross even quarter. XX operating Combined growth, Business the basis in with initiative we strong and drove as increased was global our XXXX our logistics down sales XX%. advertising points A of by expansion higher margin items, basis points the impact delivered line margin operating pressure deliver enabled XX expectations from tax. versus continued interest below expansion, us in the in rates and the This of to despite quarter we quarter. of upside the

also balance heard management, strong just quarter's which it's investments you've revenue for across future. it virtuous growth into lays and capabilities building combination say, of quality year of leverage, me drove drive to the the results. We cost performance As containment in and brand groundwork the our the this productivity of believe the and driven growth

and below particularly performance than XX% inventories XX% quarter, cash up year-to-date net up strong more helping -- the up is and income in and headwinds. more working the offset our pleasingly, capital growth performance than was continued the flow which of some in more payables. than cash is flow improved us finally, Free and these in And quarter through line

uncertainty ahead of with aware pleased I'm challenges how we the well year, started the of but So I'm also us. and

footprint top growth and I believe brands, And and to high the Colgate-Palmolive to deliver to drive consistent, quality global is deliver. has value. Our compounded shareholder the line bottom the goal people

Q&A. the to over it turn I'll that, with So

Operator

Thank you.

question-and-answer We Our Dara ahead. question of [Operator will Please now today And begin go will Morgan session. Stanley. from the Mohsenian first come Instructions]

Dara Mohsenian

guys. Hey. Good morning,

Noel Wallace

(ph). Dara Hi,

Dara Mohsenian

of organic as driven entirely. we're the we're basis, than impressive And going higher And pricing obviously, another into more by So period multiyear from sales it you accelerated growth. quarter where but mentioned, was on CAGR a here, pricing. is a cycling

can how Care question performance going forward, come maybe the about, the sales conceptually also, quarter just back visibilities just in within and would at the on if Oral that that drops going be balance pricing also. forward, as you Thanks. So And level off? of could share touch global volume growth prospects you think and a talk the can of about level, high you organic that helpful

Noel Wallace

Sure. Dara. Thanks,

for go comments and trying quality to compounded the puts time. in the we're talk talking So quite my work back really how best in made been about statement of of let position top bottom me improve which I us some P&L, drive about the growth long-term we've to opening to what which the a to is balanced and couple line,

what coming the has environment in raw of know, you out been As we're decades. worst material

the consistent sustain very gross and you capabilities our brands that's which the gross of we the of out to still in particularly brand we're revenue exit pricing the across we're hole discipline grow fund company growth, We sales want we margins future, this the investment which clearly with and restore difficult our need that's can structurally is gross a to to the demonstrating. been combination behind margin We a believe that in So in if of saw putting certainly to margin, management a and that going talked focus. dig organic our in lower building, you yourself we plan and while the that the because the type quarter. productivity, key about margins in environment you're with more and the wealth investing area, be

and And now of purposeful. an you needs be margin in it as that simply can't and one of on consistent key been at look and there are teams we depth in because has overall, issue where that We we P&L. ground the with inflation slowing inflation pressure. round we're do The experiencing to do this pricing cost the deliberate focused places and certainly see to pricing. still It getting the is area our duration cost

shift So pricing, we and we a couple an on examples. joint is that our to improve in & had in profitability on order and good investments example. Maybe to impact additional course, to of has necessary Hawley the innovation taken a a this to e-commerce. -- China of Hazel premium venture volume. in take the drive the need We've required digital, pricing market continued long-term

restoring the to hasn't short we're is as consistent through in more But on And I'd and shifting improve new line market our and on not North that's the expansion. margins improve are very to as brand health long-term a into from more problematic. margin And term, revenue take an working to market. health of business our brands volume This impact -- promotions as had will we look well, and difficult P&L. that support our go to to which obviously the pricing where implications America wholesaler through brands the know, lower pricing. of our net China above our the in you of the set in inventories

and promotions we've in is see the grow way out short adjusted the we our can good news forward a We're was In the to P&L, business. it seeing from the the it play healthy non-promoted adjust is, volume was. term, as which growing, this reduced is share, which opportunities provide more expected? Yes, we strengthened themselves. than the we've But moving we impact

the in brand we're profit a along support both the middle in business. with increases growth sales to So P&L, drive it's clearly way and delivering of the while healthier

I down look Hill's year-over-year. about are If first we're business, the you've of still and the gross quarter as us talk still cost seeing high at levels inflation, margins heard in

in taken of or to our business, for structure is to time emerging of had. news in the the get margin the changes Hill's The EMEA Europe we decline shipments we've we for quarter strong, pricing So additional markets the much as is or were and due that business volume good this there the long-term. go-to-market right Much particularly the was

sure seen. And you've and focused slightly down a this innovation quarter with to increases a quarter want well to responds advertising. volume well driven strong that that gross the advertising difficult in growth in investment. that saw in biggest We you make comparison in is to it's the funded we're that against the as and to business science way. getting back Hill's saw U.S. were But very very on right expansion through volumes up and continue the margin This teens. only fuel building brand pricing will Hill's the

gross sets that growth understand we've our through a ability with brands. do to means management restoring profitable up we importance good about, you on to So volume as that and advertising been market talking growth. are. margin that We we're But that asked. innovation the and you said, as as well-funded the previous towards bringing we're focused leverage to levels growth, drive and operating the to for structurally want strong know a and That that healthier the in visibility gaining way I I productivity all long-term of us revenue

gross where we lot overheads positively. by first and a people, finished of half we trending XX%. have logistics increased by with We Colgate margin, great just So work the advertising

We have in place. put additional pricing

points. are innovation strong we comps XXX have about second and categories. easier half the And have that divisions across We basis volume all by

we're feel positioned. we well So very

to the with other So turn let over questions. that, it me

Operator

question will from Please come go ahead. next Our Citi. of Falorni Filippo

Filippo Falorni

Good Hey. morning. morning, Good everyone.

Noel. follow-up a prior Just the on question,

taking incremental increases? give far, us like which price category, the and you. you are bit mentioned has response more relative prior to more the country the magnitude Can so pricing. take the been combination pricing? What need to color you little You Thank a generally,

Noel Wallace

Sure.

America as shares. a America, shares go market asked in Let our Dara, the in seen obviously up North global me market back the come Latin obviously on as are toothpaste back about market addressing softness just good. scanner in Dara's point. on around finish a you've He so Europe, we're quick that growth And world. shares share we into -- Strong to look half. data. little the

flat there. We're look the Asia XX Africa read shares good. in markets look shares up really all shares really, we where strong. or

oral overall, shares pretty good. toothpaste are So

Filippo, and took the the take the in in of see in impact the see pricing quarter some focused year. the pricing, have the Take deliberate of Pakistan in the around some the half Turkey, on markets, probably America. world. your still margin other question quarter. second back pricing But We and take areas on with higher certainly North regarding had volume of some Argentina, pricing where Obviously, we inflationary that very inflationary we will pressure. higher in we'll

business, into ag through clearly, Hill's accelerate the prices we've XXXX 'XX. and seen On

as pricing you through isolated price XX% in it will the is from pricing the with But taking So half. a back in pricing increases us more year. the the P&L move About And bigger about, heard that the this be are in into last XXXX. of targeted commensurate we're lot year flow as talk P&L. we took we and of

have little but is still P&L already. bit in So to we a it most go, the of

Operator

America. Our next of Spillane go question will from Bank Please come Bryan ahead. of

Bryan Spillane

looks SG&A good be everyone. you've results, to acceleration. been through kind to Europe Noel. gained Good back Hey, to question. on Maybe this share. maybe remarks, Hey. pretty morning, and volume in like, talked operator. basis, guess, Europe, in in North would a just as like sales ties prepared it I we -- it tying the And -- Thanks, percentage up But of America, back of you look support Hill's about the it's Dara's

you investment, read like, in Europe get where it impact can, investment? of do you of terms to some is relative Just North America? that you're geographies to if those – it color and maybe progressed catch-up on Is some each right context, that. So an having the want still much to has some that for of in have how to in

Noel Wallace

with Colgate Absolutely. investment our response Thanks, Europe. seeing the brand. elmex terrific investment and particularly there there, Bryan. brands we've likewise, we've we're increased where on start I'll Yeah. to and the elevated meridol but Obviously,

we've had share on whitening out So incremental that to played a drive in the Europe. of have efforts premium lot

is business that playing So that across out. certainly investment

in is Care. than importantly, Europe Oral But broader investment the just based

big on a We're we're the We underway business that's wonderful relaunched we've our Soupline relaunch Sanex, And Europe. We investment that. business putting investment behind Hearts, us. a -- Soupline in for the launched behind have Suavitel which putting is France, that. across which

array of back So giving a flexibility support in margins operating us Europe. lot I to is important to growth, think wide particularly with more it's a what's brands,

And in America, seen that would we've obviously in where exchange. little be Latin a the case pickup likewise

our we're world. point fact So that with getting advertising across more that targeted digital And on more skills we're a basis, the efficient local and the we're implementing currency with getting I'd our some advertising. also to of

it's more North bit little time. a taking America,

on my health the reflection of brand. at our of in I seen the of the have growing. support a the if Dara, is And the brand mentioned fall equity. and we're comments America, attributes fact as of off. North volume But increased that's seeing we've building certainly measure that is in to the promoted Colgate share the health share in non-promoted thing the important look You good the movements And brand, we the you how of particularly terms clear

good So news there.

Asia, Care with likewise, Darlie Advertising our quarters respond the where increase. business more on couldn't be quarters similarly after we due seeing support price consistent We've the fall-off takes It we've growth. that But happy very, we're seeing. the business, added the well. of obviously Colgate Africa more in very we're Oral immediately. is increase the response. business is good elevated doesn't with seen a progress And to on which biggest overall, responding

And to clearly us the what’s brands obviously increase that In that’s because that saw to And the long strategy term, the quality sustain of the advertising of important, advertising. over best. P&L, consistent out quality back is the the us play quarter, it is, the you for allows where with it levels this it. P&L of

Operator

go question JPMorgan. ahead. of comes Please Andrea Teixeira next Our from

Andrea Teixeira

And of to should And we to been terms in Thank brand takes there talk a and line of you. volumes. green understand see North volume you global customers? balanced pricing, Good shoots some more some the of has rebound. to as obviously, like you your morning. I talk about mentioned also share see America Eurasia. in course, drag and time, the But you do that volume main mentioned on the above obviously, Africa you that? elaborate see and it to Can support improvement see when in impressive you Noel, the

your then margins And want still basis mentioned I of to a get you in also raw impact. remarks, sorry question, through. and but part came your at quarter understand the you ahead looking negative in second material points to of Even packaging, the rebound XXX impressive prepared

cadence how here? want comment puts this we would what you the thinking takes from then be you inflation, expect I'm So the up, you. P&L, about I know if to just and can the there? reiterated and can I to but of margins that see Thank

Noel Wallace

Andrea and Sure. Thanks, good morning.

expenses, One, when environment. recovering obviously, or cost you're increases, So and environment you reallocation and dollars in pricing pricing market the promotional either reasons. taking on list of a taking of get inflation price involves in above the implementation an that the line revenue and two through when your want of consistency to list that you're you prices growth management, retail around see for ensure it you

of the that we So part important North an second America. was in pricing quarter took

unprofitable. volumes. need your was you that, promotional promotional of are do those volumes That of on one, To to some done, because some back pull

are share we taking brand with on back reliance through the promotions getting building simply growth and to some of health and and focused consistent earlier, -- in I mentioned innovation as delivery of very away. simply America advertising So North on

ensure the to maintain half. categories But same But to you in that I the we all share little we to pull North we we're grow at we Did and that back be very back very relative we're to how a forward time. margins how too margins we America approach on to ensure P&L. bit happens obviously perhaps? grow put will tell moving going that, going much back we continue the ensure be grocery on can thoughtful thoughtful promotions into net to business in But that the the the

the the we've think volume. around had consistent world, back easier comps we above on little easier line bit quite were pricing harder about were price list the increases. on with in on as We we a but And have managing where We'll I talked -- the comps half, pricing promotions.

I upfront. a we pricing see our through year, half we'll the back I growth still better a So organic through, see of we'll but little as the balance mentioned, think moving of between bit move as

line, our level level. the logistics pleased the operating On margin both and the And and we're remind very everyone the cost profit does gross of margin progress making at profit that include not gross that clearly, I with goods.

to strong obviously, take you in if profit XX% was fact relative acceleration. SG&A that had implemented logistics, we So we a gross a quarter -- we a increase And very took our despite the down XX% advertising.

give phasing over little the color balance He half. raw turn Stan. bit about of of you to can on a through materials we're the it how out me thinking second Let

Stan Sutula

Noel. Thanks,

second as half, actually are materials, these towards going they're will predominantly, But So moderate. we are that the up, impacting there we and pockets raw look see Hill's.

to ag those So proteins, and around escalate. continue

on of a off while will half, the first basis, So be still the a the they of headwind year-on-year will moderate slightly in coming these half second year.

done the will well. to funding half Now the as savings. back continue that we of drive carry and through teams we the The a that nice job driving growth productivity on really have year

do So well momentum. bit. here around as as we pressure at as in expect continue to the countries going second in Africa, particular, then Asia-Pacific. that improve obviously, half Eurasia And just we've in bounce and seen And we a FX, margin to it's look

do of margins the improve we the year. to in back expect overall, So half

Operator

Tong of Please Our Raymond ahead. next question Olivia is from James. go

Olivia Tong

Thank Great. you.

planning logistics to on you can so what your just driven First, on mean, the the can what's some about I -- you could U.S., elaborate you other or some reinstating some talked And that of we relaxation of with peers? the about of the to is forward? we the then just could kind bit about U.S. challenges specifically the path take But impact you talk volume. terms for you're a of compare little just second of pullback promotion the Thank you're the in half, take actions so it's you. perhaps that far the planning to and in the respect talk terms to whether of actions

Noel Wallace

ask in on Sure. you're morning. more detail obviously Thanks, There's to if good afterwards. with lot not Olivia you on reference up I'd Stan finding you logistics. details a the John And and and there. need, follow Q what

as cadence, But the half. very look much how the we're as comps think that, creation you despite to be going back volume I half, in deliberate volume the we at the easier. get back On in certainly, about mentioned,

mentioned, we absolutely as volume. We’re going long-term we keep not for of is think P&L, be we’ll of accelerating, believe I simply unprofitable that advertising which chasing company. imperative can the the to sustainability the the thoughtful, structure on P&L to continuing and keep margin in the focus the the gross We

going focused we’re be that. to So on very

said, back slightly promotional the do we being That heightened expect half. a in environment

level tend cost I the more out, promotional bit elevated promotions. to say we will an around world environment. little probably today, not As a we’ll seen have that see

volume more recently sold are the market. to promotions see promotions We being or depth the promotions there on not starting frequency of but the of in

that’s aspect. an So important

in But believe advertising put innovation But more in is way healthiest more very think far, brands see through we’re longer promotional to grow term. constructive. to the and cadence we continue to been needs probably quite so about rest will pushing be competitive it’s And – where business the top and how we the going back money our But world be in bit little the the very the U.S. half, we a targeted deliberate to the of there.

Operator

ahead. Sachs. Our from go Please Jason next of Goldman question English will come

Jason English

is we down new getting How morning, in folks. also this into margin them expect mean, margins? it's elevated normalized for the in. Thanks level profitability swapping me we still what where lot the of that's Good the inflation Stan of were. impact, moderation basis to a but there? for on mentioned translate should right see quarter. Hey. to earlier What the But is increases. to I the from business price good continuing to a that expansion and gross we're pathway degree

Noel Wallace

Jason. Thanks, Yeah.

business, see pricing to we seen through you've on continue taking are the inflationary aggressive we ag across prices. the quarters prices as again, recent some Hill's So and

we'll pricing but Is we this continue Now this to very No. opportunities to and we're particularly a want We continue pricing assure continue 'XX? there the to to do way. see more back P&L that's a at want do both that. real we through we see in cost gross into of think thoughtful that in recover We Unlikely, healthy and a flow out, operating margin hopefully grow way benign number Hill's to to continue half given profit year moving quarter-to-quarter going the to targeting? a the to that take environment.

We and of a mixed get the opportunities running we very wet and we're mix. we little margin that up as also allow Tonganoxie that new on wet on the -- get and bit accretion focused building capacity will have

We're more that. with pleased the through we're productivity operating So getting the plants efficiently.

private as business profit obviously, So comes and be see gross we'll at profit will organic the off, natural to a the that. And label operating both accretion that end.

see to aspects – as projecting the good So business we over time.

We’re market. we’re that going to in competitive pricing the to ensure relative

we to saw there which going advertising continue Hill’s keep ensure to you levels the quarter. business, on the We’re the that in high of

So we about profit forward. pretty of the phasing feel moving accretion gross good overall,

Operator

Our Please Steve of Deutsche ahead. next go Powers question come will from Bank.

Stephen Powers

question see Hey. ask Thanks wanted as more the I the morning. of general a it. advertising industry on and of you state good to

into guess efficacy with efficacy dollar as that just making you investment is is increased increases, efficacy that XX% you is inflation dynamics quarter. cutting with other as just plan environment left up the this increase the today the believe the the I or of you how or ahead? You the commensurate I'm talked advertising. question obviously Do seeing you're there

Noel Wallace

digital advertising and a the in measure higher have Steve ROI, we Eve how much past. a ability to than you morning. we and the good I'll take digital presented our effectively CAGNY, on more is analytically (ph) of have lot the our much advancement and yielding ultimately back digital Thanks, focus to transformation that Yeah. when

Our better. copy much effectiveness is getting

effective, earlier. there more obviously the and spending across data. targeted us talked We're the personalized media So get look and through we're on health more That I to delivered holistically first-party money that's efficacy market been about the more obviously allows seeing which terrific. brand generating has that more measures

clearly volume mentioned for that And as is share us share. because non-promoted the a U.S. I that indicates is advertising non-promoted in the driving more upfront, our big metric

So excellent. that's what we and basis were we points That's up in non-promoted about want. exactly XXX share

on have promotion, get balance I may back, we move right we'll Now pulled as but a the we the much mentioned, as too little forward.

the support very the across And some market efficacy in So had overall, where we're brands. that, pleased. demonstrated to the performances share we of around -- some particularly elevated non-Colgate that's as have advertising world, clearly we've of the brands

Sanex I the Axion is business mentioned supported. in in Europe. talked Suavitel the business Mexico, obviously which and about We well

growth. we a overall, to this of see So balance over across time, is to sustainable And more categories. going healthy lead more advertising our

Operator

Our from next of ISI. ahead. Ottenstein question will Please go Evercore come Robert

Robert Ottenstein

see digital now? and ago, certainly of years out in Great. follow-up. be, just down, other of is, your question U.S.? that's particularly it purchase quick you. China. more fully being So yourself Where have or to that Do a that are and you unsatisfied follow-up of a you and investments of postponing globally few gone main competitive where volumes believe the where to the they're and competitors question. be panning you're orders in kind kind A lot Thank or function then need you is made to you e-commerce were then And particularly and in digital in postponed? of Has my consumers my a e-commerce. Arguably,

Noel Wallace

good Thanks, and Rob Yeah. morning.

their saw they volume, the obviously, promotions a not promoted back typically is in across have responds pricing. established categories already, -- And to as couple as it's competitors, of promotions, saw the to I bit clearly, on consumer Where whether a pulled we But the fall-off share levels mentioned we our we or of on of some the U.S., in back migration of therefore, some to of as on particularly new U.S., the gone little it's and the couponing some otherwise. much. So multitude where pulled that a them. promotional our

want we back much to moving back, to want we a to that And -- get they're not consumers but forward. difficult those get healthier get in way

pretty P&L obviously consumer So that pull improves consistent driven the going value of you're U.S. you value, forward. highly have that need structure at providing to back ensure world. that overall looks the When that's moving promotions, the and to on you you're and a pricing and around

So we'll get the balance right.

to -- Our we needed our good in were to Diana we're goal where talked capabilities. advance place become Prabha I the peer go. yet, we are BCG, lot of vis-a-vis we are three to peer would and our the we've room group. got We that. be. And below assesses we're say Today, study ago, their we've group are on to units with weren't above very, yeah, operating a years plans all And more the absolutely that, group. to is peer and continue three years very And And ago, got digital very which and And digital where we’ve we we focused not feel best-in-class so all we do Brigitte and external pleased transformation, best-in-class. this, today. about our on feel with digital an we

Operator

Lauren Next ahead. Please is from Barclays. question go of Lieberman

Lauren Lieberman

hoping place. I it's in significant some the there's was little talk And morning. a lot to about markets. particularly Good America. inflation Latin market a strategy, bit part you've Thanks. Care. in It's I of premium of know putting yet Oral core been a Great. been maybe innovation where a in

what reported a on Thanks. pricing dynamics update was So are of the of trends kind of from just but I ladder. ends of the be premiumization terms how in curious environment you're there may what outside you're affordability, two the standpoint for and seeing consumer consumer results, versus an those managing

Noel Wallace

Lauren Yeah. morning. good Thanks, and

that America. Latin sales volume think the So and we is come volume will for organic this markets proxy a really resilient pricing the quite a of It's in pricing, quarters accustomed back. you advertising, They're I ultimately we coupling good for five pricing. other with saw saw growth think in as strong inflationary results, about And America. strong to Latin consumer. another pleasingly, And after improve double-digit

their brand continuing a important support, as see to the category. out volume stronger tougher long you collection come of of and as you’re with which brands, times innovation But is vitally return bringing to these strong

So that both also quarter very the Mexico and the fact given they strong Brazil growth both organically took delivered volume and in growth had pricing.

So what turns we we’re America. and overall, seeing in really seeing markets. than more given the pleased with those velocity pressures some anticipated improve the likewise, And Latin of the in inflationary we’re

as be in the we’re to carefully the we shall shape, seems continues P&Ls the market. Now quite it and in to watch the But good overall, to that responsive mount. and very pricing putting structurally inflation are the the consumer innovation

overall, in good place. a So we we’re very feel

Operator

Question is Stifel. Please from Astrachan Mark ahead. go of

Mark Astrachan

Hill's Yeah. to and a than Again, question business. on Wanted the just morning. your category about maybe thinking business. good ask Thanks

that So standpoint? are you weaker. How overall category that can how volumes -- bit much about thinking curious you you it the world or observing obviously little data, the but around of see are think We somewhat how competitors U.S. are from what a couple reflection the there just over and last of just the your adoption are is growth of of category taking? within -- some pricing pause years a levels? after and the that sort the really you of all Is of strong

that are? the does how goes little you term, do and margins Jason's to maybe longer improving relative over we to mix then to you a question where about -- contribution for bit, price do how time? this Thanks. think to think and volumes how and but contribute about And And that business

Noel Wallace

Mark. Thanks, Yeah.

despite growth growth in Hill's, remind another organic that strong sales XX% lapping. clearly, period. ago we're year the And for I everyone lapping So double-digit quarter

ago stack, was quarter. volume, really And obviously, a quarter. quarter digit a we So up. so And the two-year mid-single ultimately, on good were a a strong year

I towards -- me, quite looking softened the the the mean, little bit excuse end quarter. strong. of Categories category end So of a the

forward around the we’ll because of specialty that all that three or pricing But gone continues that a as pricing into over You the despite quarters. that that’s pet more sluggishness than last we overall, bit been to only would will see little very given amount categories, of food. anticipate Europe the discretionary taken. move the very in expect of We the that’s in be four U.S., comps. But items strong. high strong be

quite with quite stores don’t nutritional recently, market, you they CEOs of particularly walked the seems Nutrition relative bullish and premium of the the seem the and some the pet okay. I of big to segment to trade going specialty a be we’re been retailers to in have particularly where diets, prescription of category. watch on that But when terms off elasticity to because see carefully lot of consumers going a pricing live the that’s there’s side. of our into

real Emerging America focus to opportunities, in we growth for on to for us. opportunity continue certain small Asia, Latin extent. to us right need those particularly and a but markets be a now, to in continues Southeast It’s

us the have see there. But continue moving those don’t robust, you’ll we have growth space high emerging markets overall, particularly head on forward. be given to quite we penetration categories in headwind given focus the growth So that –

to us that be P&L drive structured maintain to important right, getting So very to volume high in category overall, good, the that how ultimately we critical in are those the the the standpoint continues of evolve quarters feel categories. pretty we on couple lot will we’re from pricing getting levels margin again, cautious see next for penetration a a gross category. but so But as of over going advertising consistently up

Operator

Our go next question Fargo from Securities. Wells Please is of Chris Carey ahead.

Chris Carey

Hi. Good morning, everyone.

couple me. a just for quick So follow-ups

This that to the for volumes Could you adjustments some made. more a about P&L. North and in, time apologies going total more America that, bit making expectations are see back sustainable bit And we question. Just asking strategy focusing But little know you for but some a sure of and perhaps come more. a get how to a still about smooth really you're until bit of by promotions beyond out a start -- lap the on this pressure set is think volume forward. we these

characterizing correctly? I that am So

freight. just or second, follow-up. a then question Olivia a about asked clarification quick And

on I think that in QX So the those just the to XX-Q you trend items. low quarter? X.X% change. says and of year. through the expected two you said Dan, rest thanks of sales Xs Did it the for the number so much come in freight was the year-over-year had

Noel Wallace

Stan the back your Let me -- North to American I'll question, answer question. then logistics get

Stan Sutula

Yeah.

expected And will previous expect the second from we half. the playing and also that, So out that continue quarter. logistics improved is like we slightly in improvement

Noel Wallace

it's we're health. of the to improve very so inherent Again, -- that said America, there mean, improve looking brand is it forward. we the North I on well. deliberately move as Chris, objective I you structure P&L to think

fund we advertising. continue clearly to So will

at choiceful that recover of start promotions very will we look where some be We share. on to elevating to promotional

forward. need non-promoted is we share we're driving that focus But not pulling moving Our to be careful much back too there.

that So we'll forward. moving monitor

the to we quarter-to-quarter, to pricing out is that costs move as margin up. ability America the half see, drive the margin But line everyone little forward business level our a ultimately the ends North remind will volatility our relative feel gross business. of as be good XX% and about we mix I operating and we I we'll to about expansion. bit continue see where total HPC the -- And from there in think America of back North

business regions in around And that or need that the Asia, the America what certain our we from will have such of is North pull the ability fund we diversity Colgate the world around so as is business opportunities have nice to world. about to we

So we’re North we’ve focus back some and the regard. a that share loss and spending very plan their has good America And the the their we’ll for I on deliberate quarter. well that recovering on balanced of had in think in half be

Operator

of Our last question go UBS. Grom come Please will from Peter ahead.

Peter Grom

everyone. good operator morning, and Thanks,

of in the which the pricing. talk decent continue the or forward year? several end we just half stack the up end So investment And is to I slowdown, to this just organic as call revenue you that step And growth the wide mentioned throughout on higher range circle sequential move we that the as move improvement half start should back about a here? maybe into to for given lower times sense and you as line guidance top cycle wanted relatively to at which you Can put implies pieces just sales organic the back that growth, still would moving second maybe makes Thanks. expect a the of two-year the volume. we specifically, innovation, trend

Noel Wallace

Yeah.

nail So back half. the I category have in comps clearly, it end it's balance differ a down by from easier carefully. watch will very mean, the get exactly by going to the But geography. we'll and standpoint tough It's to up. how volume to

mention You me basis around points. heard XXX

pricing So us. that in move the for nice more obviously, comps we will back as on get a forward. a certainly half tailwind be challenging little And bit the

mentioned, that But the rather and world. we achieve feel very been good we be see we'll relative comfortable to to that guidance But the we the as promotionally. constructive consumer fickle But very categories that. continues around can behave, if how it's I provided the

pricing. North far, so America, particularly the had a resilience, of been closely. quite certain extent, to where America like very, good And a in taken Latin lot markets We'll watch very and Africa, we've

And the obviously, lot to Hill's. talk share growth, growth have on on and of of we drive most quarter terrific. They to I we which, very, as recipes, shares respond a business we which based share penetration Hill's with continue continue the well think didn't across continue hedge very in to is incidentally, our

take ends that that there's we'll So it. to structure we a and guidance responsible the we ultimately good is. continuing P&L way range it But the keep the we'll upside, Obviously, are we're about of it where if feel the good where we in up. is to in feel see

was -- or advertising, the question on second Relative your part of was on? Peter -- was on it to what

Peter Grom

just the was sequential a on improvement stack two-year basis. It No.

that does in the to it there Because seem nice imply? it could imply return some back of does would year? volume improvement actually in easier, growth two-year the recognizing the half the comps get if Just that what stack be improves, that improve to

Noel Wallace

And you said it exactly. Yeah, well.

see mentioned, the bit will think year. but stacks, as we've pricing to the expectation, volume that of to year. the see growth we'll this my a through back And bit that continued a I the I We'll through in move flow-through have mentioned a I moderate some we the start upfront we'll as two-year of year, -- have half accelerate. coming so last to have volumes The see we and still return as of that back to benefit you'd little improve. half, taken from probably

I back through think overall, year. more of a half we balanced move the we’ll as have So composition the

Operator

the of the concludes That Q&A portion call.

Noel Wallace

this for Great. questions thanks the Well, everyone, morning. thank you, and

a consistency efforts continue strategies and company. will the shareholder to our to in plans from do people interest your appreciate I the value. and We incredible growth focus to on of strategy allow world Clearly, increased couldn't all execution had strong Colgate delivery. to place this our of the we who profitable continue and are the us you without and there quarter agree, drive over consistent compounded that in We the deliver hope

quarter. to everyone So I the and forward to thank talking look third them I in

Operator

you for attending The thank presentation. conference has now We concluded. today's

now your lines. may disconnect You

Colgate-Palmolive (CL) 28 Jul 232023 Q2 Earnings call transcript