The paragraph details a Colgate-Palmolive conference call for their 2025 first quarter earnings release. John Faucher, the Chief Investor Relations Officer and Executive Vice President of M&A, introduces the call and mentions that it will include forward-looking statements that have risks and uncertainties. He advises checking the earnings press release and SEC filings for more details. The call will also discuss non-GAAP financial measures, with full reconciliation provided in the press release. Noel Wallace, the Chairman, President, and CEO, and Stan Sutula, the CFO, will join the discussion, with Noel Wallace providing insights into the company's results and outlook for 2025 before opening the floor for questions.

The company has built flexibility into its plans to navigate a challenging 2025, characterized by a weaker consumer and macroeconomic uncertainties affecting volume and category growth globally. Despite these challenges, the company focuses on selling daily use products, anticipating consumer return to these categories. They plan to encourage consumer loyalty through value-added innovations, such as the relaunch of Colgate Total and Hill's Science Diet with new technology. Additionally, the company faces a $200 million impact from newly announced tariffs and is monitoring the situation closely.

The paragraph outlines Colgate-Palmolive's strategic focus on leveraging their flexible supply chain, developed over the past several years, to adapt to market changes, including tariffs and economic uncertainties. The company has invested $2 billion in its U.S. supply chain, altered sourcing strategies, and is exploring alternative sourcing, formula simplification, and revenue growth management. Colgate-Palmolive is capitalizing on its global portfolio and brand strength to maintain consumer engagement across price tiers amid financial uncertainties. The company's strong P&L and balance sheet allow continued investment in brand health and capabilities, ensuring resilience and competitive edge despite market volatility, with a record high in advertising spending reported at the end of 2025.

The company is committed to investing in AI, data analytics, and innovation to navigate a volatile environment, supported by a strong balance sheet and low net debt. Despite first-quarter volatility, they achieved strong profit growth and are confident in meeting their 2025 goals while ensuring long-term growth and shareholder returns. The paragraph then transitions to a Q&A session, with Peter Grom from UBS asking Noel Wallace about consumer pressures and category consumption trends observed during the quarter and expectations for the future.

The paragraph discusses the company's strategic focus on driving household penetration and improving brand health for sustainable growth, despite a challenging operating environment. It notes that while the year started slower with reduced pricing due to prior hyperinflation, the company's shift towards volume growth has been met with challenges, as volume growth in their categories slowed early in the year. However, there have been signs of improvement and stability since March and into April, and the company anticipates a normalization and recovery towards the latter half of the year, with similar trends observed globally.

The paragraph discusses destocking of everyday-use categories and expectations for their recovery in the medium term despite ongoing economic uncertainties. The speaker anticipates a soft second quarter but notes early signs of recovery in April, suggesting categories may slowly rebound as economic conditions improve globally. Andrea Teixeira from JPMorgan asks about the situation in North America, mentioning a 3% decline in organic sales growth in the first quarter and inquiring about shipment and consumption trends. She also questions the company's flat gross margin and investments in innovation, particularly in oral and home care, and how these factors affect the competitive landscape through 2025. Noel Wallace responds, indicating consistency with other consumer packaged goods companies and highlighting a downturn in February.

The paragraph discusses adjustments in trade inventories due to slower consumer consumption, noting slight improvements from February to April. It highlights the company's efforts to align shipments with improving consumption trends and outlines strategic initiatives in North America, including enhancing innovation, pricing strategies, productivity, and advertising return on investment. The competitive environment is described as stable, with no excessive promotions. The focus remains on adding value and driving household penetration through innovation rather than relying on promotional activities.

In the paragraph, Filippo Falorni from Citi asks about the company's pricing strategy, particularly in relation to organic sales and offsetting tariff headwinds in developed markets. Noel Wallace responds by saying that pricing in Q1 was as expected and improved sequentially on a two-year basis. He mentions incremental pricing in Latin America, specifically in Mexico and Brazil, which aligns with their strategy. Despite inflation in Argentina, the market remains constructive, with the company gaining volume and value share. In the US, pricing has also improved sequentially, and adjustments made in late 2024 are expected to benefit the profit and loss statement in early 2025, with more improvements anticipated in the second half of the year.

The article discusses the company's positive performance in Europe, driven by a focus on premium innovation and improved product mix, leading to a strong quarter. Pricing is good in Africa, while Asia faces challenges, particularly with volume in China. The use of AI has enhanced the company's ability to predict and manage promotions and pricing. Despite challenging pricing environments, the company sees innovation as key to creating value amid tariffs. The paragraph concludes with an inquiry by Dara Mohsenian of Morgan Stanley about consumer dynamics in emerging markets, particularly noting a softening in India and requesting more detail on these changes.

In the paragraph, Noel Wallace discusses the market share performance and challenges faced in emerging markets during the quarter. He highlights positive volume growth, despite economic uncertainty, with strong market share in Latin America, Africa, and the Middle East. However, there is some softness in Turkey and South Africa. In Asia, particularly China, the market remains challenging, especially for the Hawley and Hazel business. Wallace mentions that they are implementing a revised strategy and focusing on innovation for improvement, while the core Colgate business continues to perform well.

In the paragraph, the Colgate business experienced mid-single-digit organic growth in both pricing and volume, though China remains a challenging market. The situation in India is pending further announcements, but urban markets there show continued softness. Bonnie Herzog from Goldman Sachs inquires about advertising spend and innovation strategies amidst market softness. Noel Wallace, responding, states there's no change in their innovation plans; rather, they are considering accelerating innovation to stimulate consumption across varying price points. The revision in advertising spend guidance is due to optimizing spending and balancing flexibility in the P&L amidst category softness.

The company is confident in its strategy, focusing on accelerated core innovation and premiumization, which they see as growth opportunities. They plan to invest in markets with the best growth prospects and expect strong local currency advertising. During a Q&A, Robert Moskow asks Noel Wallace about the Hill's brand and consumer behavior. Wallace clarifies that there has been some trading down from super premium to mid-tier toothpaste in North America, but not in private labels, which are flat or declining. He notes that this trading down is not highly concerning but will be monitored.

The paragraph discusses Hill's strong performance in the market, highlighting a 5% organic growth in a flat category, driven by success across all price tiers and product ranges, including wet, dry, treats, and both cat and dog food. This success, evident in increased market share and penetration in the US, is attributed to continued investment in the category, successful innovation, and targeting growth opportunities in low index areas like wet and cat foods. The brand's strategy is delivering value to retailers and increasing market share, alongside strong margin performance in the first quarter.

The paragraph discusses the company's efforts to drive efficiency and productivity, contributing to a healthy profit and loss (P&L) statement. This involves innovation in premium products, strategic pricing, and better facility operations. It also mentions plans to boost advertising in underrepresented segments. In response to a question from Kaumil Gajrawala about a slowdown in consumer activity and how global economic factors like oil prices might affect forecasts, Noel Wallace explains that global uncertainty makes consumers cautious. This is reflected in their spending, for example, in the travel industry.

The paragraph discusses consumer behavior in response to a volatile economic environment, highlighting a tendency to reduce purchases of both discretionary and nondiscretionary products. Although consumption in everyday categories has softened, it is expected to recover as consumer confidence improves over the upcoming years. The company plans to stimulate interest and encourage purchases through innovation and advertising. Additionally, they anticipate modest inflation in raw materials, noting specific fluctuations such as decreased oil prices but increased costs for palm and tallow.

The paragraph discusses strategies for managing modest inflation by focusing on productivity, formulation, and supply chain efficiencies to optimize gross margins. Robert Ottenstein from Evercore acknowledges the success of Hill's Science Diet, stating that his dog's health and his family's happiness have improved since switching to the brand. He inquires about the company's success in Europe, especially with the ELMEX strategy, and whether this success can be replicated in other markets. Noel Wallace responds positively, mentioning the success of a new campaign for Hill's that taps into pet owners' emotional connections with their pets, enhancing product appeal.

The paragraph highlights strong performance in Europe, with significant organic and volume growth, especially in the oral care market. Colgate, Elmex, and Meridol have gained market share, boosting margins and enabling increased advertising. Elmex is performing well in Europe, with strategic investments enhancing its presence in strong pharmacy markets. The brand's strategy of innovation, advertising, and professional endorsements is ongoing, with expansion efforts being cautious and long-term focused. The success in Brazil and encouraging developments in the Middle East suggest future growth opportunities, with an outlook extending into 2025 and 2026.

The paragraph discusses a company's approach to managing tariff exposure, focusing on a long-term perspective rather than seeking immediate gains. Kevin Grundy from B.N.C. inquires about the sources of tariff exposure, such as imports from China and retaliatory tariffs, and how the company plans to offset a $200 million impact. Stan Sutula responds, explaining that the company's guidance accounts for a $200 million gross impact from tariffs on raw materials and finished goods between the US and China, noted since their Q4 earnings release. He emphasizes the company's focus on productivity, revenue growth management, and sourcing as strategies rather than relying on pricing adjustments.

The company has been strategically enhancing its supply chain by reducing dependency on China and investing significantly in local manufacturing, particularly in the US, to mitigate high shipping costs and tariff impacts. Over the past several years, they have increased US-based manufacturing facilities by over 40% and invested nearly $2 billion in various businesses, including oral care, personal care, home care, and pet food. Their focus is on optimizing existing capacity and sourcing alternatives rather than merely expanding capacity. This strategy includes productivity enhancement, revenue growth management, and supply chain optimization to manage the costs associated with tariffs, with a primary aim to keep their gross profit margin stable.

The paragraph discusses the company's strategy to manage the impact of large tariffs by focusing on productivity to offset costs, funding growth opportunities, and enhancing innovation to drive premiumization and margin growth. It emphasizes the importance of revenue growth management and being proactive in protecting margins and advertising plans. The company is closely monitoring the market and is committed to quickly addressing challenges. Additionally, a question is posed by Chris Carey from Wells Fargo regarding which regions or product categories show the most promise for growth in the latter half of the year.

The paragraph discusses the expectation that macroeconomic conditions will slightly improve, but uncertainties will persist throughout the year. Noel Wallace expresses optimism about the company's performance, particularly in the oral care segment, due to strategic investments in brand equity and core innovation. He highlights a major relaunch and initiatives in emerging markets, which are expected to strengthen brand positioning and consumer engagement. Overall, there is confidence in the ability to outperform in specific areas despite potential volatility in category growth rates.

The paragraph discusses the business outlook for Hill's, highlighting their focus on segments with low market shares and their strategy to introduce innovative products to address economic uncertainty. Stan Sutula expresses optimism about revenue improvement in North America and Asia in the latter half of the year, despite tariff impacts, supported by strong performance in oral care and Hill's categories. Noel Wallace adds that they expect market improvements in Mexico and Brazil, anticipating positive outcomes as conditions stabilize in those regions. Overall, the company aims for steady margins and low single-digit earnings per share growth.

In the paragraph, Olivia Tong from Raymond James asks about market pressures in the US and Latin America. Specifically, she inquires why the middle market hasn't shifted downwards despite pressures on lower-end consumers, and she questions the company's confidence in returning to historical levels of inelasticity in Latin America despite challenges. Noel Wallace responds by noting that in North America, the issue has been a decline in volume due to factors like reduced store traffic and conversion rates. He anticipates improvements as market conditions stabilize and mentions plans to boost innovation and promotional efforts to increase volume later in the year. In Latin America, Wallace highlights the region as one of their strongest markets with very strong brands.

The paragraph discusses Colgate Total's successful relaunch in terms of increasing value and market share, backed by a solid innovation pipeline. The company plans to implement pricing changes, expecting market stabilization and continued strategic execution to drive brand penetration and category growth, particularly in Latin America. While global macroeconomic improvements would benefit the region, the company anticipates a return to market health in the medium to long term despite current softness. Bryan Spillane from Bank of America raises a question about the guidance related to Hill's pet nutrition and private label, seeking clarification on whether the impact of exiting private label operations will intensify post-Q1 and how it might affect organic sales growth for the remainder of the year.

The paragraph provides an update on a company's plan to exit its private label business by 2025, with expectations to be fully out by the third quarter of that year. Noel Wallace and Stan Sutula explain that the exit process has been transparent and consistent, with the impact on company volume already evident in quarterly results. This transition will slightly impact quarterly results, with more than a 40 basis point drag per quarter expected as they phase out private label production. However, this effect is incorporated into their organic sales growth guidance, ensuring transparency about the impact on company performance.

The paragraph is a discussion of a company's focus on its core branded business, separate from private label sales, which they do not control. Noel Wallace emphasizes the importance of assessing their performance without including private label impacts and expresses satisfaction with their first-quarter results excluding private label sales. The company plans to exit private label sales smoothly and efficiently. Following this, the operator introduces a question from Lauren Lieberman of Barclays, who inquires about competitive activities in emerging markets like India, Turkey, and South Africa. She notes a shift in pricing and volume dynamics in the APAC region and Africa, Eurasia, where pricing turned positive while volumes declined.

The paragraph discusses the performance of certain emerging markets, highlighting that China, Turkey, and South Africa have experienced some challenges. Despite these issues, other Asian markets like the Philippines and Thailand showed strong performance, as did most of Africa except South Africa and Turkey, with balanced growth in volume and price. There were specific pricing challenges related to the Hawley and Hazel business due to the Chinese New Year, which prompted some adjustments. Urban market performance in India remains soft, and there are no further details available on that market yet.

In the paragraph, Stan Sutula discusses the impact of announced tariffs, which amount to $200 million, on the company's financials and their efforts to mitigate this impact over the year. He explains that while the effect of these tariffs is distributed evenly across the quarters, the company is updating its guidance with the expectation of maintaining a flat gross profit margin for the year. Sutula also mentions that the company is conducting various scenario analyses to prepare for potential changes in tariff policies, though predicting exact outcomes remains challenging. An example given is the import of toothpaste from Mexico, which complies with the USMCA, thus avoiding certain tariffs. He emphasizes the ongoing evaluation of the situation as tariff implementations and adjustments occur.

The paragraph discusses the Hill's business and its efforts to optimize efficiency and asset utilization following capacity constraints, particularly after acquiring Red Collar. Noel Wallace highlights how the team has enhanced productivity by focusing on specific SKUs and diets, rather than a widespread strategy aimed merely at meeting demand. The overall goal is to drive efficiency within their facilities, ultimately providing a margin tailwind moving forward. Additionally, there is concern about macroeconomic factors and whether there is sufficient flexibility in the company's financial planning to protect the bottom line if consumer confidence remains weak.

The paragraph discusses the company's strategic planning regarding the cessation of private label operations and its impact on business guidance. The company anticipates maintaining productivity and absorbing changes through growth in market share and efficiency improvements in new focus areas. It highlights the flexibility built into the P&L (Profit & Loss) statement, allowing the company to adjust investments and offset economic challenges while pursuing global growth opportunities. Despite unpredictable conditions, the company remains confident in its ability to adapt and maintain stability, as demonstrated by managing $200 million in tariffs without affecting gross margins.

The company recognizes the quarter's challenges and plans to maintain their strategies for more flexibility in the profit and loss statement. Their varied geographic presence, product categories, and pricing help maintain stability. Mark Astrachan from Seaport inquires about market share amid shifts in North American channels, noting strong performance in mass, club, and e-commerce that contrasts with weaker results in drug and food channels. He mentions Hill's product availability online at Walmart but not in-store, questioning future expansion plans and market share implications. Noel Wallace explains their focus on brand integrity and using a third-party logistics distributor to manage unauthorized sellers. He acknowledges a shift towards big box retailers affecting market shares.

The paragraph discusses a shift in consumer preference towards club and mass retail environments, with e-commerce also gaining traction, although to a lesser extent. The company maintains strong market shares in these areas, while facing challenges in the drug class of trade. Food retail is performing adequately, and dollar stores are also strong for the company. The migration to club and mass environments is beneficial, as the company holds strong market shares and margins there. The team is praised for its adaptability and success in a volatile market, contributing to brand penetration, market share growth, and shareholder value. The speaker expresses appreciation for the team's efforts and looks forward to the next quarter.

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