Colgate-Palmolive Co. Q4 FY2024 earnings call

• 2024 results: Net sales reached $20B, one year ahead of strategic plan; sixth consecutive year of organic sales growth; high-single-digit organic growth in 2024; volume growth in all divisions and categories; advertising spending up 15% and 130 basis points as % of sales; third consecutive year of global toothpaste category value share growth; innovation contribution rose 45% from 2021-2024; gross and operating margin expansion despite FX headwinds. • 2025 outlook: Focus on balanced growth in volume and price; continued investment in innovation, including Colgate Total relaunch; use of data, analytics, and AI to drive pricing and growth; flexibility in P&L and balance sheet to offset FX headwinds; confidence in delivering 3%-5% organic sales growth in 2025.

In 2024, Colgate-Palmolive achieved net sales of $20 billion. Organic sales growth was high-single-digit, with volume and pricing growth across all quarters and divisions. Key segments included Oral Care, where the Colgate Total relaunch is underway; Personal Care; Home Care; and Hill's Pet Nutrition. Hill's Pet Nutrition saw volume growth in a flat category, with market share growth, e-commerce growth, and improvements in prescription diet and supply chain.

• Expect 3% to 5% organic sales growth in 2025. • Anticipate gross margin expansion for another year. • Plan to offset foreign exchange headwinds through balanced volume and pricing, and flexibility in P&L. • Continue investment in innovation and capabilities to drive growth.

• Foreign exchange headwinds remaining a challenge. • Competitive pricing in some markets, including India, South Africa, and potential increased activity in Europe. • Macroeconomic volatility in regions like Latin America, including potential devaluation in Argentina. • Uncertainty around tariffs and their impact on supply chains.

Q: Provide clarity on 2025 guidance and organic sales growth, especially relative to FX impact and Q4 results.

A: Noel Wallace stated confidence in delivering 3%-5% organic growth, citing balanced volume and pricing, P&L flexibility, strong cash generation, and brand health. Excluding private label, Q4 organic growth was near 5%, with good volume growth despite some softness in Europe and China skin health.

Q: Elaborate on gross margin performance in Q4 and outlook for 2025.

A: Stan Sutula mentioned Q4 gross margin up 70 basis points despite FX headwinds. 2025 gross margin expansion expected due to mix benefits (Hill's, Oral Care), funding-the-growth productivity, innovation pipelines, and moderating raw material environment.

Q: Color on North America business, pricing, and volume mix.

A: Noel Wallace noted North America saw sequential improvement in pricing and volume in Q4, with skin health business in China impacting volume. Pricing expected to improve in back half of 2025, with focus on go-to-market strategies and investment in the US.

Q: Details on pricing, volume, and innovation in various regions.

A: Noel Wallace discussed pricing to offset FX in Latin America and Africa, value-oriented pricing in Europe driven by innovation. Volume expected to be broad-based across regions, with focus on brand penetration and innovation to drive growth.

Q: Hill's business performance, volumes, and RGM 2.0.

A: Noel Wallace said Hill's saw volume growth in a flat category, market share growth, and improvements in prescription diet and supply chain. RGM 2.0 leverages analytics, digital, and data to optimize pricing and promotion strategies for better returns.

Q: Advertising, promotion, and tariffs impact.

A: Noel Wallace mentioned promotional spending constructive with isolated competitive activity. Tariffs and supply chain risks discussed, with no inclusion in 2025 guidance yet, but focus on supply chain flexibility and mitigation plans.

Q: 2030 strategy and future focus areas.

A: Noel Wallace stated 2030 strategy to be unveiled, continuing focus on innovation, data/AI, premiumization, and health orientation of products while maintaining consistency with 2025 strategy.

Q: Pet nutrition business, category volatility, and competitive environment.

A: Noel Wallace and Stan Sutula discussed Hill's Pet Nutrition's strong fundamentals, stabilized category, margin inflection, and focus on segment growth opportunities, innovation, and science-based products.

Q: Capital allocation, share buybacks, and M&A strategy.

A: Noel Wallace and Stan Sutula mentioned capital allocation focused on investing in the business, share repurchases, and dividends. M&A focus on opportunities aligned with strategic direction to drive long-term value.