The operator introduces the Colgate-Palmolive Fourth Quarter and Full Year 2023 Earnings Conference Call and hands it over to Chief Investor Relations Officer and Executive Vice President, M&A, John Faucher. Faucher reminds listeners of the possibility of differing actual results and discusses the use of non-GAAP financial measures. Chairman, President, and CEO Noel Wallace and CFO Stan Sutula will also be joining the call to discuss the strong finish to the year and positive outlook for 2024, with a focus on sustaining organic sales growth, rebuilding margins, and improving cash flow performance.

In 2023, the company achieved its goals of organic sales growth, balanced growth in all divisions and categories, and improved market share momentum. They also invested in advertising and building capabilities for future growth. Despite challenges such as geopolitical unrest and a challenged consumer, the company saw growth in volume and increased their dividend for the 61st consecutive year. 2024 is expected to bring similar challenges, including foreign exchange headwinds and political elections.

The company is entering 2024 with strong momentum and plans to deliver consistent, compounded EPS growth. They will invest in high-quality, balanced organic sales growth and use productivity to fund this investment while also growing earnings per share. The company is confident in their continued growth and will discuss their 2024 plans in detail at an upcoming conference. They are also focused on maintaining their strong market share in oral care and pet categories, despite potential industry pressure points.

The company is seeing positive volume growth in various regions and categories, which gives them confidence in their pricing strategy. Oral care had a strong quarter with double-digit growth and increased market share, driven by their core business strategy, increased advertising, and strong innovation pipeline. Market share is expected to continue growing in 2024, despite potential challenges in the market. This growth is seen across all divisions, particularly in Latin America. Overall, the company is well positioned for continued growth.

The speaker discusses the importance of their pet strategy and how it differs from the market. They mention their strong advertising and focus on increasing reach, awareness, and conversion for their Hill's brand. They also highlight their professional endorsements and efforts to educate consumers about the benefits of therapeutic nutrition. Despite overall category softness, the company is seeing growth in their principal retail environments and helping their partners increase category dollars.

The company's penetration in the US market has increased by 10%, despite a softer category. The company has implemented successful strategies to continue growth. During a conference call, a question was asked about the company's approach to Argentina due to a recent currency crisis. The company has been operating in Argentina for almost 100 years and has a capable management team experienced in managing hyperinflationary environments. The company has a history of successfully navigating through devaluations in the country.

The speaker discusses their experience in managing volatility in the Argentinian market and their long-term investment in the country. They mention their ability to import products and adapt to price controls. They also mention the devaluation and their team's experience in dealing with economic conditions. The CFO for Latin America, who was also the Finance Director in Argentina in 2002, is praised for their proactive approach.

The speaker discusses their regular conversations with a colleague about changing market conditions and their proactive approach to dealing with them. They mention operating in a hyperinflationary environment and taking necessary actions, resulting in improved productivity, margin expansion, and cash flow. The impact of devaluation on their business is not significant and they anticipate continued growth. They also mention increased marketing investments and a normalization of promotional activity, as well as changes in supply chain leadership and their position in light of recent disruptions.

The company has been consistent in their strategy of building brands through effective communication and innovation. Despite increased advertising spending, they have still met their profit objectives. They are focused on efficiency and ROI in their advertising efforts and plan to continue accelerating advertising in the future. The promotional environment is currently positive and the company will be selective in increasing promotions in certain markets. Their goal is to drive category and volume growth through advertising.

The speaker discusses the transformation of the supply chain under Luciano's leadership, with a focus on automation, data analytics, and network optimization. They mention a shift in spending towards efficiency and savings, as well as digitizing the supply chain. The team has done a great job preparing for further optimization. They also address potential disruptions in the Red Sea and mention stable supply chain operations. The next question is about Hill's, which saw high single-digit growth in the quarter. The speaker expects more balanced volume and price in 2024 and mentions potential cost headwinds in the cultural and protein side of the business.

The speaker discusses the increase in brand spending and its positive impact on competitive performance and growth. They are also asked about other investment areas such as R&D, CapEx, and infrastructure, and the speaker explains their current status and importance in relation to brand spending.

Noel Wallace, CEO of a company, discusses the importance of investing in capabilities and digital transformation for long-term success. He also mentions the company's focus on optimizing their manufacturing facilities and data architecture. Stan Sutula, another executive, adds that resource allocation is a key aspect of their job.

The company has been reallocating resources to support their analytics, digital, data, and S/4 HANA capabilities, which has resulted in strong cash flow and increased flexibility for investments. Gross margin was strong in the quarter due to pricing, cost, and foreign exchange factors, and the company expects this trend to continue into 2024. The supply chain settling down has also allowed for increased funding to growth and the company has been aggressive with pricing in the last six quarters.

The company expects pricing to be more balanced in the future, with inflationary raw materials but at a more moderate level. Gross profit improved in 2023 due to innovation and productivity, but there will be some impact on margins from Argentina. Latin America volume has been growing for three consecutive quarters.

The speaker discusses the impressive growth of the company in Latin America, attributing it to both category growth and share performance. They believe that this growth will continue in the future, with a focus on innovation and advertising. Brazil and Mexico were specifically highlighted as strong markets for the company.

Stan Sutula, the company's CFO, responded to a question about raw material packaging inflation by stating that they expect modest inflation in 2024, with some areas like fish oil seeing significant increases. However, overall, they do not expect a major impact on their margins due to their Funding the Growth program and their ability to drive productivity. When asked about proteins specifically in relation to Hill's, Stan stated that they have not seen a significant impact and that they are confident in their ability to continue expanding margins through productivity and innovation.

Chris Carey from Wells Fargo asks about productivity at the regional level and notes that this quarter had the best productivity in the model in the last 20 years. He asks if there was anything abnormal about this quarter or if productivity is continuing to improve. Noel Wallace responds that it is a combination of factors, including inflation and the company's focus on efficiency and funding growth projects. He also mentions that the company's culture and initiatives have helped to reduce costs. However, he cautions against using this quarter as a benchmark for the future.

The company is confident in their ability to fund growth and generate strong margins due to their successful execution of the GPI initiative. They expect a moderate pricing environment and plan to continue delivering consistent earnings growth. They have good momentum heading into the next fiscal year and have flexibility in their P&L and balance sheet for future success.

The speaker discusses the current state of the company's business in China, stating that there has been a slowdown in the market. However, the company has performed well in Greater China, with business down low to mid-single digits, which is in line with the overall decline in the category.

The speaker discusses the decline in skin health categories and the impact it has had on their business. They mention that the market fundamentals remain intact but it will take time for the market to recover. They also talk about their strong position in the market and their focus on building share and being prudent with investments until the market improves. In response to a question about North America, they mention positive volume growth in oral care, bar soap, liquid hand soap, and cleaners, and attribute it to more balanced promotions. They are unable to discuss specific innovation plans for 2024 but mention a focus on stabilizing and regaining share in the hand dish business.

The speaker discusses the strong pipeline and balanced pipeline across all of their businesses, as well as the acceleration in advertising to support their North American businesses. They mention reinjecting operating profit back into the business and being in a good position for continued growth and market share. They also mention a more balanced cadence of promotions and opportunities to accelerate in select accounts and parts of the country. The speaker is happy with the health of the P&L and the advertising investment, and there may be a correlation between advertising and volume performance in the US.

Noel Wallace, CEO of Colgate-Palmolive, discusses the company's investment strategy in North America and their focus on the pet specialty channel for their Hill's brand. They believe their differentiated and unique product drives premium nutrition and have no plans to expand distribution in other channels. They are seeing growth in non-tracked channels and believe their investment will lead to long-term success in the North American market.

The company is pleased with the growth and brand penetration in their channels. They have no plans to expand distribution, but will selectively consider market expansion for their Hill's business. The company is also excited about the potential in the Indian market and has seen strong results there. They expect the rural segment to continue to drive volume in the future. There was a $0.07 impact on other income due to asset sales and a value-added tax refund.

The speaker discusses strong innovation plans for India and is pleased with the team's execution. They also mention other income and expenses, which includes start-up costs and one-time events. In response to a question about pricing in Europe, the speaker notes that they have learned a lot and are working closely with retail partners to drive value in their categories.

The speaker discusses the impact of inflation on pricing and volume in the marketplace over the last six or seven quarters. They express confidence in their teams and their ability to balance pricing and volume as inflation declines in 2024. The speaker also mentions the success of relaunching their brands and the potential for continued growth in the business. They thank their employees for their hard work and dedication and express optimism for future results.

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