The paragraph is the introductory section of Colgate-Palmolive's 2024 Fourth Quarter and Year End Earnings Conference Call. The call is hosted by Chief Investor Relations Officer John Faucher and includes forward-looking statements subject to risks and uncertainties. Participants are referred to official documents for details. The call involves non-GAAP financial measures with reconciliations available online. Joining Faucher are Noel Wallace, CEO, and Stan Sutula, CFO. Noel Wallace will discuss the 2024 results and 2025 outlook, followed by a Q&A session.

In 2024, Colgate achieved impressive results, surpassing initial financial goals with $20 billion in net sales, a year ahead of their strategic plan. This success was driven by six consecutive years of organic sales growth, high-single-digit growth, and increases in both pricing and volume across all quarters. The company focused on household penetration, boosted advertising spending by 15%, and enhanced brand health. Colgate saw its third consecutive year of global toothpaste category value share growth, driven by innovation contributing 45% more to sales from 2021 to 2024. Despite foreign exchange challenges and increased spending, Colgate expanded its gross and operating margins and achieved double-digit earnings per share growth, exceeding guidance.

The paragraph outlines a company's strategic plans and achievements as it transitions into 2025. It highlights record levels of operating cash, free cash flow, and shareholder returns, alongside improvements in return on invested capital. The strategy emphasizes investing in future growth, enhancing brand health, and driving volume through household penetration, supported by advertising, innovation, and AI. The company plans to re-launch Colgate Total with new products and leverage its strong cash flow and gross profit growth to fund investments and control expenses, aiming for sustained EPS growth and total shareholder returns. The company expresses confidence in its strategy and guidance for 2025.

In the paragraph, Dara Mohsenian from Morgan Stanley questions Noel Wallace about the confidence behind the strong EPS growth guidance for 2025, despite challenging foreign exchange impacts and weaker Q4 OSG performance. Noel Wallace responds by expressing confidence in their consistent and compounded dollar earnings growth due to the company's strong fundamentals and flexible planning strategies initiated in 2020. He emphasizes a balanced growth focus on both volume and price, which has been consistently demonstrated and is expected to continue in 2025.

The paragraph discusses the company's positive performance, highlighting growth in volume and pricing across categories, leading to a strong business health and market share improvements. The company successfully invested in capabilities to support consistent top-line growth and focused on dollar earnings growth while managing foreign exchange headwinds. Strong cash generation and reduced working capital are emphasized as key factors providing financial flexibility. In terms of organic growth, the company achieved a 4.3% increase, nearly 5% in the fourth quarter, excluding private label. They are optimistic about sustaining and developing future growth opportunities.

The paragraph discusses the company's performance, focusing on volume growth, pricing, and market conditions. Volume growth was nearly 3%, excluding private labels, with some softness in parts of Europe and China, particularly in the skin health sector. The company is shifting from pricing growth to more volume growth and experienced reduced pricing impact from Argentina, though positive pricing remains, with plans to offset foreign exchange headwinds in Latin America. The company expresses confidence in its strong P&L flexibility and improved brand health, with positive market shares and category stabilization, anticipating growth by 2025. Additionally, Peter Grom from UBS asks about gross margin performance in the quarter and its future trajectory, noting the absence of expected sequential progress for the first time in years.

In the paragraph, Noel Wallace and Stanley Sutula discuss the company's performance and strategy for 2024 and 2025. Despite facing foreign exchange challenges, they report a 70 basis point increase in margins and a strong year overall, driven by pricing and productivity improvements. To counter exchange rate issues, price increases were implemented in Latin America. Looking ahead to 2025, they expect gross margin growth, aided by a favorable product mix with the expansion of Hill's and Oral Care, as well as a reduction in low-margin private labels. Additionally, their well-established funding-the-growth program continues to support productivity and cost-efficiency improvements.

The paragraph discusses the company's strategies for revenue growth and margin expansion. Joel highlights investments in new capabilities, specifically "revenue growth management 2.0," and mentions a robust innovation pipeline. There is optimism about expanding margins in 2025, despite the gradual reduction of private label products. Noel Wallace adds that the raw material environment is stabilizing, with improved visibility compared to 2024. In response to Bonnie Herzog's question about pricing and volume in the North American market, Wallace explains that previous price adjustments have strengthened business health and volume performance, although these effects will diminish by late 2025.

In the fourth quarter, both volume and price improved sequentially in North America as the company exited the year. The skin health business in North America was included in the segmentation from the third quarter, while the skin business in China continued to experience softness in both volume and price. Overall, Oral, Personal, and Home Care performed well in North America, with strong volume performance excluding skin health. The company is revising its market strategies and investments in the U.S., viewing it as a strategic growth area with new leadership in place. They observed positive trends, particularly in toothpaste, liquid hand soap, and dishwashing categories. Pricing is expected to improve, especially in the latter half of 2025.

In the paragraph, Noel Wallace discusses the company's pricing and volume strategies for the coming years. He mentions plans to increase pricing in regions like Latin America and Africa to offset foreign exchange challenges, while maintaining a value-oriented pricing strategy in Europe focused on innovation-driven value enhancement. This approach, effective since 2023, will continue through 2024. Wallace emphasizes the importance of innovation in driving growth and improving margins. The company aims for balanced volume growth, seeing positive potential particularly in products like Hill's and Colgate Total.

The paragraph discusses a shift from a pricing-driven to a more volume-driven algorithm for organic growth, which is happening consistently across the company's divisions. There is some softness in the Hill's category, but consumption is improving as 2025 begins, and they expect it to turn positive as the year progresses. Asia, Africa, Latin America, and North America are all contributing to volume growth, and the company is pleased with its positive volume shares, owing to brand penetration initiatives. The company's underlying brand health has improved over the past five years due to increased business support. Following this discussion, Kaumil Gajrawala from Jefferies asks for more details about Hill's, particularly concerning volumes in Europe and any cyclical factors, as well as about RGM 2.0 and its differences from previous RGM strategies.

In the paragraph, Noel Wallace discusses the progress and strategies of Hill's, highlighting strong volume growth and market share gains despite challenges from private labels. He emphasizes the brand's success across various channels, including e-commerce and prescription diets. Wallace mentions segment growth opportunities in small pets, cats, and wet foods, and notes improved supply chain efficiency with the Tonganoxie facility ramp-up. Although the European market is softer, he expresses confidence in strategies and innovations to capture growth opportunities in underperforming segments.

In the paragraph, Stanley Sutula discusses the company's strong performance in comparison to competitors and its positive outlook as they approach 2025. He highlights the importance of their RGM 2.0 initiative, which focuses on investing in analytics, digital, and data capabilities to enhance pricing and promotion strategies. This approach has yielded positive customer feedback and strong returns. Sutula emphasizes that these new capabilities empower their workforce and, combined with innovation, significantly impact their market effectiveness. Kevin Grundy from BNP then questions Noel Wallace about the company's advertising and marketing spending, noting that while past increases were supported by gross margin growth, the company now expects these expenditures to remain flat as a percentage of sales despite slowing conditions.

In the paragraph, Noel Wallace discusses the company's strategic focus on optimizing advertising and marketing (A&M) spend to drive top-line growth and market share. He highlights their use of tech platforms, data analytics, and programmatic media to enhance personalization and spending precision. As a result, the company has improved brand health metrics globally, achieved better ROI, and continues to make deliberate, data-driven decisions on where to allocate marketing resources for maximum impact. Wallace emphasizes their digital transformation's role in enhancing efficiency and boosting returns on investment.

The paragraph discusses the company's strategy for 2025, focusing on optimizing growth and spending through efficiency and technology to achieve the best return on investment. Bryan Spillane from Bank of America asks about the 3% to 5% organic sales growth forecast in relation to category growth rates as 2024 ends and seeks insights into how tariffs might affect their model. Noel Wallace responds by acknowledging category growth stabilization and mentions Stan, who will address strategic supply chain optimization for resilience against disruptions.

The paragraph discusses the company's strategic response to inflationary pricing and tariffs. It notes stabilization in product categories, which are now growing at 2% to 4%, allowing the company to potentially outpace this growth with its organic targets of 3% to 5%. Key strategies include local manufacturing to mitigate shipping costs and increased flexibility in its global supply chain by optimizing existing capacity and standardizing operations. Specific to the U.S., the company has invested around $2 billion over five years to enhance its supply chain capabilities, including expanding manufacturing facilities by 40% and opening a new pet food facility. This investment aims to boost efficiency and effectiveness in meeting market demands.

In the paragraph, the company discusses its increased flexibility in manufacturing manual toothbrushes and toothpaste outside of China. Although their overall production capacity remains the same, they can now produce more SKUs at more plants, which helps meet more customer needs from various locations and prepares them for potential higher tariffs. They currently manufacture some products like toothpaste for the U.S. in Mexico and are working on plans to mitigate potential tariff impacts on raw materials and finished products. The company imports limited specialty raw materials and is considering multiple scenarios due to possible retaliatory tariffs. They are strategizing both short-term and long-term actions but have not included these in their guidance yet. The operator then takes a question from Olivia Tong about the impact of planned pricing changes on volumes, particularly in Latin America, and the company's strategies regarding advertising and promotion.

The paragraph discusses the company's promotional spending and competitive activities, highlighting increased competition in India and South Africa and steady conditions in the US. The overall promotional environment is as expected, with potential shifts from pricing to volume strategies anticipated in 2025. In Latin America, the company is adjusting pricing in response to foreign exchange challenges, notably in Argentina, where they successfully grew dollar earnings despite currency issues. In Europe, the focus is shifting from price increases to innovation to create value and improve margins.

The paragraph features a discussion during a Q&A session with Sergio Matsumoto from TD Cowen asking about the impact of macroeconomic headwinds, such as inflation, on demand in Latin America and the effect of the new US administration on local operations. Noel Wallace responds, emphasizing the company's long-standing presence and success in Latin America, particularly in Mexico and Brazil. Despite facing economic and political volatility, the company has managed to maintain strong performance through innovation and execution. Although there was a slight slowdown in the fourth quarter due to prior pricing dynamics in Argentina, market shares in Mexico and Brazil remain strong with increases in both volume and value.

In the Latin American market, the company is performing well, with 8 out of 10 countries either maintaining or increasing their market share, and most markets showing stable or growing volumes. Despite a slight slowdown in Mexico during the third quarter, the situation has stabilized as they move into 2025. The company remains optimistic about its overall position but acknowledges challenges such as foreign exchange volatility. They plan to focus on business fundamentals and flexibility. In response to a question about global market competition, Noel Wallace mentions increased competitive activity, particularly in India, where local competitors are aggressively discounting in the urban and modern trade sectors to drive volume. The company's strategy is to selectively address competitive pressures while protecting brand health.

The paragraph discusses the company's strategy and outlook for dealing with competitive activity in various markets, including India, Turkey, South Africa, and Europe. The company plans to use innovation and retail strategies to maintain market share and growth. While challenges exist, the company is optimistic about its performance and highlights strong prospects, especially in Oral Care. Stephen Powers from Deutsche Bank asks about the company's profit and loss (P&L) expectations for 2025, particularly regarding the contributions of gross margin improvements versus SG&A (Selling, General and Administrative expenses) reductions. He also inquires about the company's ability to maintain investment in other areas amidst a possible increased focus on SG&A efficiencies.

In the paragraph, Noel Wallace discusses the company's commitment to ongoing investment in innovation, particularly in digital, data analytics, and AI, even after substantial investments in 2023 and 2024. He emphasizes the importance of maintaining flexibility in the P&L to target growth opportunities and drive shareholder value, aligning with their 2025 strategy. Wallace notes that while there will be variances in different business areas, the company's financial health and brand strength allow it to capitalize on opportunities and continue enhancing its capabilities.

The paragraph discusses the company's strategic approach to driving long-term growth by flexibly managing the profit and loss statement (P&L) and balance sheet. Stanley Sutula explains how their budgeting process focuses on resource allocation to enhance business performance, affecting all aspects of the P&L. Their efforts include improving payment terms and net working capital efficiency, which supports debt reduction and business investment. Noel Wallace emphasizes the importance of return on invested capital (ROIC) as a measure of success, indicating a 35-36% ROIC as evidence of targeted spending for optimal returns. The operator introduces Lauren Lieberman from Barclays, who inquires about the company's strategy for 2025 and potential developments for 2030. Wallace acknowledges her question without providing specific details in this excerpt.

The paragraph discusses the anticipation and preparation for announcing a new 2030 strategy, emphasizing the importance of strategic planning and consistency with past strategies like the 2025 plan. The company aims to maintain focus on key areas such as growth mindset, innovation, productivity, and margin expansion. A significant emphasis is placed on innovation, with an intention to drive incremental sales and ensure that new products contribute positively to overall growth. The paragraph also highlights the alignment of incentive systems to encourage meaningful innovation.

The paragraph discusses a company's focus on optimizing growth and efficiency through data and AI investments. It highlights a commitment to health-oriented products and leveraging endorsements to drive brand loyalty. During a Q&A session, Robert Ottenstein from Evercore ISI inquires about price competition in China and a product relaunch. Noel Wallace clarifies that price competition is primarily in India, not China, where the pricing environment is stable. He notes positive organic growth for Colgate in China and mentions addressing softness in the Darlie business.

In the fourth quarter, Colgate's organic business in China achieved high single-digit growth, outperforming many competitors due to a strategy implemented three years ago, despite challenges with the Darlie brand. While China is expected to grow slowly in the short to medium-term, it is viewed as a strategic long-term opportunity alongside India, with significant growth in middle-class consumers anticipated by 2030. The Colgate Total product, launched in Latin America during the fourth quarter and currently expanding globally, has led to significant market share gains. This product upgrade focuses on prevention, aligning with consumer trends in toothpaste preferences.

The paragraph discusses Colgate's emphasis on improving the formula of its oral care products, including toothpaste, toothbrushes, and mouthwash, and its success with these improvements in Latin America, with plans to expand globally. The conversation then shifts to Korinne Wolfmeyer from Piper Sandler asking about the pet nutrition business for 2025. Noel Wallace responds, indicating that the fundamentals of the business are strong despite a slowdown in the category that has since stabilized. He mentions strong growth and market share gains, particularly in the small dog segment and wet food market, and the need for sustained growth in Europe. The overall performance of the business is positive, with a focus on segment growth opportunities.

The paragraph discusses a company's optimistic outlook for its Hill's business, which is performing well in North America and is poised for future growth. Despite a flat category, the business is expected to improve through new innovations, phasing out private labels, and market expansion, both domestically and internationally. Participation in a large veterinary conference highlighted Hill's innovation and value. Significant investments in pet nutrition and science are expected to support future product development. Overall, there is a positive margin trend not solely linked to the private label mix but the underlying business as well.

In the paragraph, Mark Astrachan from Stifel inquires about the volatility in the pet food category, specifically in the Hill's business. He questions potential causes for the volatility, such as pricing or changes in pet food usage, and seeks insights on the performance of the Hill's business across different geographies like the US and international markets. He also asks about the competitive landscape, with niche categories becoming more mainstream. Noel Wallace responds by emphasizing their focus on science-based premium pet nutrition, noting that this segment is the fastest growing in the category, and they are outperforming the market, thereby adding value for retail partners.

The paragraph discusses the company's focus on innovation in scientific and therapeutic areas to provide value to pet owners. Despite the current stabilization and flat growth in the category, the company anticipates positive growth by late 2025 and sees significant opportunities in preferred segments for increased volume, pricing, and profitability. The business has improved its P&L fundamentals and remains strategically focused on growth opportunities. Additionally, a conversation with Filippo Falorni from Citi touches on building flexibility in the P&L and balance sheet, as well as considerations for capital allocation, share buybacks, and strategic areas for mergers and acquisitions (M&A).

The paragraph discusses the company's strategic focus on generating strong returns on invested capital through business reinvestment and shareholder rewards, such as share repurchases and dividends. It highlights the emphasis on top-line growth, savings, and shareholder returns through earnings growth and dividend policies. Stanley Sutula adds that their approach centers on growth, margin, and cash management, with a record operating cash flow of $4.1 billion, enabling resource allocation for business investment, shareholder returns, and strategic M&A. The company has increased share buybacks, returning over 20% more to shareholders year-over-year, and maintains a competitive dividend.

The paragraph discusses a company's positive performance in Europe for 2024, highlighting both volume and price growth. Edward Lewis from Redburn Atlantic questions how marketing investments have supported this growth. Noel Wallace responds, praising Europe's strong fourth-quarter results and organic growth across regions. Despite inflationary pressures, the company achieved balanced pricing and volume growth, credited to effective RGM analytics and promotional spending. A robust innovation pipeline for 2024 and 2025, along with value-oriented strategies, are cited as drivers of growth. The company also experienced good operating profit and margin performance, with advertising spending increasing by 220 basis points, improving brand health metrics.

The paragraph highlights Colgate's impressive market share growth in Europe, particularly in its Oral Care segment with brands like Colgate and Elmex, achieving a 300 basis point increase since 2016. The company's record market share in key geographies and the ability to drive organic growth and operating profit is attributed to innovation and sustained advertising. CEO Noel Wallace expresses gratitude to the Colgate team for achieving over $20 billion in sales for the first time in the company's history, crediting the organization's resilience and effectiveness amidst a volatile global market. The paragraph concludes with a note of thanks and a mention of an upcoming event in Florida.

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