The operator introduces the Colgate-Palmolive Third Quarter 2023 Earnings Conference Call and turns it over to Chief Investor Relations Officer and Executive Vice President, M&A, John Faucher. Faucher discusses forward-looking statements and non-GAAP financial measures. Chairman, President, and CEO Noel Wallace then shares thoughts on the company's strong quarter and raised 2023 outlook, highlighting the success of their strategy.

The company believes that their current strategies will lead to balanced organic sales growth in all divisions and categories, with both volume and pricing growth. They have already seen improvement in organic volume performance and expect to return to volume growth. This, combined with their global productivity initiative and cost containment efforts, will result in consistent operating profit and earnings growth. The company's Q3 results reflect this momentum, with increased gross margin and decreased overheads leading to double-digit operating profit growth and increased advertising. While some markets may still face challenges, the company is leveraging their strong brands, science-based innovation, and digital marketing to drive growth and create value for stakeholders. The speaker then opens up for questions from analysts.

The speaker, Noel Wallace, responds to a question about the company's performance and explains that excluding a specific business, the company's volume has improved in the current quarter. They are pleased with the sequential improvement and are seeing positive volume in emerging markets. The speaker also mentions that the category dynamics are not necessarily linear and that they are taking pricing across the pet food business due to high agricultural prices. They intend to continue driving balanced organic growth in the short and long term. In response to another question, the speaker discusses the company's full-year guidance, which was raised but still implies a deceleration in the fourth quarter. They mention some factors, such as anniversarying an acquisition and a reduction in third-party manufacturing for private label, that may contribute to this deceleration.

Noel Wallace, CEO of Colgate-Palmolive, addressed the company's performance in North America and globally in the third quarter. He stated that North America is on track with their expected sequential improvement and that they anticipate continued improvement in the fourth quarter due to implementing promotional opportunities. The oral care business in North America saw high single-digit growth and positive volume growth. While scanner shares are still not ideal, non-promoted volume is increasing, which reflects the company's strong advertising efforts. Overall, volume is improving strategically across the world.

The company's shares have increased globally, with a 100 basis point increase in toothpaste shares. This is driven by strong performance in Europe, where the company has seen record high shares due to their strategy of promoting higher-end therapeutic brands and strong innovation in whitening products.

The company is pleased with its performance in Africa, Middle East, and Latin America where market shares are stable or growing. In the US, promotional volumes are starting to come back and the company is being deliberate in buying back shares. In Asia, shares are strong, and in India, the company has done good work on its core business. The Hill’s business has also shown strong volume and value share growth in pet specialty and neighborhood pets. The company is addressing softness in its home care business in the US. Despite a challenging category, the company has returned to solid volume growth and results at Hill’s.

Noel Wallace, CEO of Hill's, commented on the company's strong performance in the past quarter with balanced pricing and volume growth across the world. However, he acknowledged the category's slowdown due to sustained pricing and high agricultural prices. The company's growth has been driven by a shift from wet to dry food and strong performance in non-science brands, but they are not immune to the challenges in the category. Despite this, Hill's continues to gain market share and sees opportunities for growth through innovation and aggressive advertising.

The speaker is discussing the performance of the pet nutrition segment, specifically focusing on gross margins which have decreased by 360 basis points this quarter and 900 basis points over the past two years. They mention factors such as acquisitions, plant startup expenses, and inflation as contributing to this pressure, but expect these to subside in the future. They are unsure when the benefits of these dynamics will be seen, but are focused on improving efficiency and increasing price to offset input cost pressure.

Noel Wallace, CEO of a company, was asked about the recovery of their business. He stated that things are moving in the right direction and operating profit and EBIT are improving. They are investing heavily in advertising to increase their market penetration. They expect gross margins to improve as aggregate prices stabilize. They also have costs associated with new facilities, but they are confident in the long-term trajectory of operating margins. In North America, pricing has accelerated due to promotions and advertising has increased by 25%. The ROI and timing of the impact of higher advertising was not specified.

Noel Wallace, CEO of Company X, expresses satisfaction with the progress made in increasing advertising spending and improving the health of their brands and P&L. They have adjusted their promotional cadence and are seeing positive results in terms of volume and share. While Hill's continues to receive the most advertising investment, North America is also a strategic market for long-term investment. The company has also seen improvement in operating margins due to a more prudent approach to pricing and promotions. In response to a question about ad spend, Wallace emphasizes the importance of return on investment rather than a specific percentage of sales.

The company has seen strong organic growth and increased market share due to their deliberate advertising strategies. They are focused on optimizing their investments and improving ROI through programmatic buying and personalization. The company expects improvements in volume in North America and Asia Pacific, but is also working on improving volume in Europe. They have had success in driving margin improvement this year and are confident in their ability to continue doing so in order to support future investments.

The speaker discusses the current state of volumes in the market, which have been down due to aggressive pricing. However, they predict that volumes will return to a more normalized level as pricing moderates. The focus is now on driving margins, and the company has a lot of levers to do so. The speaker hands it over to another speaker to discuss the specific strategies being used to drive margin.

The company has seen improvement in its oral care toothpaste business in North America and has increased advertising spending by 25% in the region. Most of the advertising is focused on oral care, but the company is also supporting its home and personal care businesses. The company plans to improve its share profitability in the US and continue supporting all its businesses in the region. The skin health business in the US is also receiving good levels of advertising.

Noel Wallace is confident in Colgate's ability to continue profit growth despite currency headwinds and raw material costs. The company has multiple levers at its disposal, such as pricing and productivity, to offset these challenges. While foreign exchange has had a negative impact in the quarter, the company's P&L levers are better than they have been in a long time, and they are starting to see volume growth over the longer term.

The company is focused on improving efficiencies in their plants and is seeing success in funding growth and driving productivity. They are also addressing foreign exchange challenges and driving flexibility in their P&L. The company's portfolio and innovation strategy is not specifically focused on product superiority, but they are adjusting R&D spending accordingly. The issues with the H&H business in China may be related to price increases without corresponding innovation.

The company's strategy is focused on innovating across their core products and expanding into new areas and channels. This is supported by science-based innovation, which has been a key factor in their historical success. The company has seen growth in the whitening segment and has expanded into new areas such as pens and the professional market. Science also plays a role in other areas of the business, such as oral care, pediatrician products, and skin health. The company has also seen success with their home care innovations, such as concentrates and tablets. However, the Hawley & Hazel business has faced challenges due to pricing changes and a slowdown in the Chinese market, but there are signs of improvement in the third quarter.

The innovation behind Hawley & Hazel is strong and will be implemented in the first half of the year. The Colgate business in China is also performing well due to premium innovation and science-based structures. In the US, the non-track channels are leading growth, while the scanner data remains soft. The company will continue to invest in these channels and sees a healthier business in the future.

The speaker discusses the company's positioning in the US and its ability to leverage growth from resilient consumers. They mention a constructive promotional environment and a slight pickup in some categories, but overall still below pre-COVID levels. The company is focused on driving non-track sales and expects to bring that back to a healthier share. The last question is about inflation, and the speaker mentions that they still expect several hundred million dollars of inflation for the year, with some shifts in raw materials.

The company has seen a slight decrease in the prices of certain commodities, but overall, their basket of commodities has remained steady. The energy market and some specialty raw materials have been more volatile, but the company's teams have been able to mitigate inflation through productivity and pricing strategies. This has resulted in a 140 basis point increase in gross profit for the company. They expect this trend to continue through the end of the year and are confident in their ability to sustain high margins in their categories.

The speaker expresses gratitude for the listener's interest in the company and believes they have the strategies and plans to drive profitable growth for shareholders. They also thank Colgate employees for a strong quarter and end by thanking participants for attending the call. The operator then ends the conference.

This summary was generated with AI and may contain some inaccuracies.