Q4 2021 Colgate-Palmolive Co Earnings Call

You are currently on hold for this Colgate Palmolive Company fourth quarter 2021 earnings Conference call. At this time, we are assembling today's audience and do plan to be underway. Shortly we appreciate your patience and please remain on the line.

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Good day and welcome to today's Colgate Palmolive Company fourth quarter 2021 earnings Conference call. Today's call is being recorded and is being simulcast live at Www Dot Colgate Palmolive Dot com now for opening remarks, I would like to turn the call over to Chief Investor Relations Officer, John Boucher. Please.

Go ahead John .

Thanks Orlando.

Good morning, and welcome to our 2021 full year and fourth quarter earnings release Conference call.

Jonathan.

Today's conference call will include forward looking statements.

Actual results could differ materially from these statements.

Please refer to the earnings press release, and our most recent filings with the SEC, including our 2020 annual report on Form 10-K , and subsequent SEC filings all available on Colgate's website for a discussion of the factors that could cause actual results to differ materially from these statements.

This conference call will also include a discussion of non-GAAP financial measures, including those identified in table eight and nine of the earnings press release.

A full reconciliation to the corresponding GAAP financial measures is included in the earnings press release and is available on Colgate's website.

Joining me on the call. This morning are Noel Wallace, Chairman, President and Chief Executive Officer, and Stan So to Chief Financial Officer.

I will provide commentary on our full year and Q4 performance as well as our outlook for 2022 before turning it over to Noel for his comments. We will then open it up for Q&A.

We delivered solid results in 2021, despite a very challenging operating environment, which we believe provide further proof that our strategy is working for the full year. We grew net sales, 6%, adding nearly $1 billion in revenue.

Grew organic sales four 5% at the higher end of our 3% to 5% in 2021 guidance range despite difficult comparisons.

Importantly, our organic sales growth. This year was led by our two most important categories.

Oral care, which delivered organic sales growth at the high end of mid single digits, and pet nutrition, which delivered organic sales growth in the teens.

Our second consecutive year with double digit organic sales growth for health.

Both of these categories saw an acceleration in organic sales growth in 2021, which we think bodes well for 2022.

Personal care and home care organic sales growth were both down in the year as they lap very difficult comparisons driven by Covid related demand, but we anticipate both categories well return to growth in 2022.

But on a compounded basis over the past three years, we've delivered organic sales growth across every division and every category with growth in both volume and price.

And we are confident that our growth will continue into 2020 two our innovation pipeline is strong as we continue to shift our focus to more breakthrough and transformational innovation. We have raised our level of brand support including increased advertising spending that is driving improved brand equity.

Our digital transformation is paying off with e-commerce market shares growing in key markets and strong ecommerce sales growth across all of our categories.

Including pet nutrition and within personal care premium Scott.

That said the operating environment remains volatile.

But it's still very much impacting our business unprecedented raw material inflation and supply chain disruptions.

Noel discussed we believe our 2022 plans and our long term strategic choices will allow us to continue to grow and improve our profitability as we move through the year.

This includes significant pricing increased advertising breakthrough and transformational innovation and stepped up productivity.

Our net sales grew 2% in the quarter, driven by 3% organic sales growth and a 1% negative impact from foreign exchange.

Our organic sales growth in the fourth quarter was driven by pet nutrition and oral care.

While personal care was down slightly and home care was flat due to COVID-19 comparisons.

Organic sales growth in the quarter was negatively impacted by the factory closures related to COVID-19, Lockdowns, we mentioned on the third quarter call.

As you have seen across many companies and industries raw material pressure worsened in the fourth quarter, putting further pressure on our gross margins.

Our gross margin was down 300 basis points in the quarter on both a GAAP and base business basis.

Pricing was 120 basis point benefit to gross margin.

Well raw materials were a 670 basis point headwind.

Productivity was favorable by 250 basis points.

On a GAAP and base business basis, our SG&A was down 150 basis points on a percent of sales basis.

By lower advertising spending lapping record levels in the year ago quarter, as well as lower lower overhead excluding logistics.

Our combination of net sales growth and productivity drove our overheads, excluding logistics down meaningfully, which helped us offset a large increase in logistics costs.

On a dollar basis and a percentage of sales basis.

For the fourth quarter on a GAAP basis, we delivered earnings per share of <unk> 18 cents. Our GAAP earnings per share includes a $518 million after tax charge for impairment on our <unk> skin health business.

We completed the Florida, attracting transaction right before at the beginning of the COVID-19 pandemic.

The pandemic has had a significant impact on key channels in which the longer competes include.

Including travel retail and duty free in China and.

In pharmacies in Europe .

Well, we had been unable to offset the continued weakness in these channels versus our projections when we announced the acquisition we have full confidence in the Florida brand and are forecasting double digit growth going forward.

Two other skin health brands, PCA skin, and <unk> are performing well and should continue to deliver strong growth.

On a base business basis, our earnings per share was <unk> 79 for the quarter up 3%.

Our full year base business earnings per share was within our 2021 guidance range of up mid to high single digits.

In order to accelerate changes to our operating structure that will allow us to reallocate resources to our strategic priorities and faster growth businesses and channels.

Five efficiencies in the company's operations.

And streamline our supply chain to reduce structural costs.

This morning, we also announced the global productivity initiatives.

We intend to execute the majority of the productivity program in the current calendar year.

And once the projects are implemented and finalize.

It is expected to result in cumulative pre tax charges totaling between 202 hundred $40 million in annualized pre tax savings in the range of $90 million to $110 million.

We would expect the benefits to begin to flow through in the second half of 2022, and then accelerate into 2023.

We returned $3 billion to shareholders in 2021, with our net share repurchase up almost 50% year over year.

A few comments on our divisional performance.

North America net sales declined 1% in the fourth quarter with organic sales down one 5%.

As the division lapped high single digit growth in the year ago period.

With liquid hand soap providing a greater than three percentage point headwind in the quarter.

In toothpaste. Our consumption was ahead of shipments as are all outlet market share was up 50 basis points in the quarter.

We have announced significant pricing across all of our categories in North America, which will be implemented throughout Q1 and into Q2.

Latin America net sales were up three 5% with 6% organic sales growth orally.

Oral care grew high single digits, while personal care and home care grew mid single digits.

Brazil led the growth in the quarter behind strong pricing and premium innovation across widening and naturals.

Europe net sales declined 6% in the quarter.

With organic sales minus three 5%.

Lapping four 5% growth in the year ago quarter, and a two 5% foreign exchange headwind.

While the pricing environment in Europe is normally very difficult, we expect to see pricing across the portfolio.

We gained market share in Europe in Q4, with particular strength behind El Max and we have significant innovation plan for 2022.

Asia Pacific net sales grew <unk>, 5% and organic sales grew one 5% in the quarter with volume and pricing up slightly and a modest negative impact from foreign exchange.

Our Asia E Commerce business continued its strong growth in Q4 and for the year. We gained nearly 400 basis points of toothpaste market share in E Commerce in China in 2021, combined on our Colgate and HMH businesses.

Africa Eurasia net sales grew 2% in the quarter as organic sales growth of 3% was partially offset by negative foreign exchange.

The organic sales growth was driven by oral care despite impacts from the supply chain disruption from COVID-19 restrictions I mentioned previously.

Volumes were also negatively impacted by political volatility in Eurasia.

Ill finish to another great year with a strong fourth quarter net sales grew 12% and organic sales grew 13% for the quarter.

The U S continued to lead Hales growth performance with strength across the gamut of brick and mortar and E Commerce retail partners.

We expect another strong year for hills in 2022 with strong levels of advertising support best in class ecommerce execution innovation and pricing growth.

And now for guidance.

We expect organic sales growth for the year to be within our 3% to 5% long term target range driven primarily by continued growth in oral care in pet nutrition.

Using current spot rates, we expect foreign exchange to be a low single digit headwind to revenues operating profit and earnings growth for the year.

All in we expect net sales to be up 1% to 4%.

We expect gross margin to be up for the year, but we highlight that just as we saw in 2021, there will be significant swings in year over year performance as we go through the year.

The biggest raw material headwinds year over year or in the first quarter and we expect that they will moderate as we go through the year.

On top of the productivity program I mentioned above we will continue to take additional steps to mitigate the impact of logistics and raw material cost headwinds, including additional pricing optimizing trade spending accelerating at PG, where available and many others.

Advertising is expected to be up on both a dollar basis and a percentage of sales basis.

Given the issues surrounding logistics networks on a global basis, our logistics costs will continue to be a headwind, particularly in the U S and Africa Eurasia.

Our tax rate is expected to be between 23% and 24% for 2022 on both a GAAP and base business basis at.

At this point, we have not incorporated any proposed changes to U S corporate tax rates.

We expect double digit earnings per share growth on a GAAP basis on a base business basis, we expect earnings per share growth in the low to mid single digits.

Speaker 1: We expect earnings per share growth in the low to mid single digits.

Speaker 1: Here are a few factors that will determine where we fall in that range.

Here are a few factors that will determine where we fall in that range.

We had budgeted we budgeted modest sequential declines in some raw material prices as we go through the year, if those raw materials stay at current levels. This will be above what we're currently budgeting.

Speaker 1: We have budgeted modest sequential declines in some raw material prices as we go through the year. If those raw materials stay at current levels, this will be above what we're currently budgeting.

Speaker 1: For an exchange, the dollar has been trending higher recently. If that continues, it will be an additional heavy.

Foreign exchange the dollar has been trending higher recently, if that continues it will be an additional headwind.

Speaker 1: We assume that raw materials and logistics cost increases are not unique to us.

We assume that raw materials and logistics cost increases are not unique to us.

Speaker 1: And our plans do not include significant manufacturing downtime due to COVID-related lockdowns.

Our plans do not include significant manufacturing downtime due to COVID-19 related lockdowns.

And with that I'll turn it over to know well, thanks, John and good morning, everyone.

Speaker 2: And with that, I'll turn it over to Noel. Thanks, John , and good morning, everyone. Before I get into my remarks, I want to wish all of you a safe and happy new year.

Before I get into my remarks, I want to wish all of you a safe and happy new year.

Speaker 2: Of course, I'll be speaking to you all again in just a few weeks for CAGNY, and I'm very much looking forward to that.

Of course I'll be speaking to you all again, just a few weeks or cagny and I'm very much looking forward to that.

Speaker 2: Over the last three years, we have revitalized our core businesses, innovated in adjacent categories, and expanded our availability in faster growth markets and channels.

Over the last three years, we have revitalized our core businesses innovated in adjacent categories and expanded our availability in faster growth markets and channels.

Speaker 2: All these efforts have helped us deliver three straight years of organic sales growth in or above a long-term targeted range of three to five percent.

All of these efforts have helped us deliver three straight years of organic sales growth and or above our long term targeted range of 3% to 5%.

Speaker 2: I believe our company is well positioned to continue our momentum and drive shareholder value in this year and beyond despite the difficult operating environment.

I believe our company is well positioned to continue our momentum and drive shareholder value in this year and beyond despite the difficult operating environment.

Speaker 2: We compete in growing categories with high purchase frequency, daily usage, and high levels of brand loyalty. We have strong brands that are well positioned to take advantage of these category dynamics.

We compete in growing categories with high purchase frequency daily usage and high levels of brand loyalty and we have strong brands that are well positioned to take advantage of these category dynamics.

Speaker 2: Colgate is the most penetrated consumer brand in the world with strength across emerging and developed markets.

Colgate has the most penetrated consumer brand in the world with strength across emerging and developed markets pillars prescription diet and Hill's science diet have strong health credentials with vets and pet parents.

Speaker 2: Those prescription diet and his science diet have strong health credentials with vets and pet parents.

Speaker 2: Elmecs and Merida are leading premium brands in therapeutics in the market in which they compete.

And married all our leading premium brands in therapeutics in the markets in which they compete in other brands like Irish spring protects Swabi Telecom will also all deliver tremendous value to consumers and our retail partners. This also includes our skin health businesses alter N D PCA skin and Florida.

Speaker 2: and other brands like Irish Spring, Protech, Swabital, and Pabuloso all deliver tremendous value to consumers and our retail partners. This also includes our skin health businesses, Elta MD, PCA Skin, and Filorga.

Speaker 2: John discussed the impact of COVID-19 on fallora, which resulted in performance below our target.

John discussed the impact of COVID-19 onto lager, which resulted in performance below our targets. We have plans in place to revitalize our Florida business in those key channels, along with building out distribution and other growth channels and accelerating innovation. We are confident that with all of that will be a strong contributor to future top and bottom line growth.

Speaker 2: We have plans in place to revitalize our philogue of business in those key channels, along with building out distribution in other growth channels and accelerating innovation. We are confident that philogue will be a strong contributor to future top and bottom line growth. Trends on L2MD and PCH skin remain very strong.

<unk> MD and PCA skin remains very strong.

Speaker 2: We have an our building capabilities that will allow us to compete in all types of markets and champs.

We have and are building capabilities that will allow us to compete in all types of markets and channels.

Speaker 2: Our global operating model, including our supply chain, allows us to operate effectively and proactively in more than 200 countries and territories around the world.

Our global operating model, including our supply chain allows us to operate effectively and profitably and more than 200 countries and territories around the world.

Our transition to our new innovation strategy has enabled us to deliver a better mixture of global and local innovation, including increased levels of breakthrough and transformational innovation.

Speaker 2: Our transition to our new innovation strategy has enabled us to deliver a better mixture of global and local innovation, including increased levels of breakthrough and transformational innovation.

Speaker 2: This has had a direct impact on accelerating our growth, particularly in oral care. Are we bound to Chinese comments, for example, and accelerated growth in pet nutrition?

This has had a direct impact on accelerating our growth, particularly in oral care, our rebound in China E. Commerce for example, and accelerated growth in pet nutrition.

Our digital transformation, which will be an important topic. When we present to you at Cagny has allowed us to accelerate our e-commerce efforts across all of our markets. We delivered another year of robust e-commerce growth and grew share in all six of our largest ecommerce toothpaste markets in 2021.

Speaker 2: Our digital transformation, which will be an important topic when we present to you a Cagney, has allowed us to accelerate our e-commerce efforts across all of our markets.

Speaker 2: We delivered another year robust e-commerce growth and grew share in all six of our largest e-commerce toothpaste markets in 2021.

Speaker 2: And we are truly integrating ESG into our business strategy in ways that drive value. Bright smile is bright future, not only teaches children and underserved markets how to brush their teeth, but also will help drive for capital consumption over time. And our recyclable toothpaste tube, which we shared the technology with our competitors, is helping to drive the entire category to be more sustainable, which is a requirement for any category to deliver growth in.

And we are truly integrate ESG into our business strategy in ways that drive value bright smiles bright future not only teaches children in underserved markets how to brush their teeth, but also help drive per capita consumption over time, and a recyclable toothpaste tube, which we shared the technology with our competitors is helping to drive the entire category.

To be more sustainable, which is a requirement for any category to deliver growth in the future.

Speaker 2: We also issued our first sustainability bond in the fourth quarter. We will use the funds to invest in our sustainability and social impact strategies while benefiting from a lower interest.

We also issued our first sustainability bond in the fourth quarter, we will use the funds to invest in our sustainability and social impact strategies, while benefiting from a lower interest rate.

Speaker 2: So I firmly believe we are well positioned to live a long term, sustainable, profitable growth to our shareholders and all of our stakeholders.

So I firmly believe we are all we are well positioned to deliver long term sustainable profitable growth to our shareholders and all of our stakeholders.

Speaker 2: But we also need to balance managing through the teeth of a very difficult operating environment while still delivering on that long-term strategy. If we say committed to our strategy, we will emerge from the next few quarters with sustained, organic sales growth, and structurally more efficient company that will allow us to grow profits while still investing in our brand.

But we also need to balance managing through the teeth of a very difficult operating environment, while still delivering on that long term strategy.

Stayed committed to our strategy, we will emerge from the next few quarters with sustained organic sales growth in a structurally more efficient company that will allow us to grow profits, while still investing in our brands.

Speaker 2: Obviously, you all know about the headwoods that companies are facing in today's operating environment in terms of raw materials. COVID and higher costs are putting significant pressure on supply chains, including unprecedented impacts on logistics, both in terms of efficiency and cost. And recently, the dollar has strengthened.

Obviously, you all know about the headwinds that companies are facing in today's operating environment in terms of raw materials, COVID-19 and higher cost of putting significant pressure on supply chains, including unprecedented impacts on logistics, both in terms of efficiency and costs and recently the dollar has strengthened.

Speaker 2: The key for us to deliver against our targets in the shorter term is to continue to execute on pricing and revenue growth management.

Key for us to deliver against our targets in the shorter term is to continue to execute on pricing and revenue growth management.

Speaker 2: We have already taken pricing in many markets and we will have further significant pricing plan for the first half of this year, including moving some pricing that we anticipated for later in the year in 2022 into the first half.

We have already we've already taken pricing in many markets and we will have further significant pricing plan for the first half of this year, including moving some pricing that we anticipated for later in the year in 'twenty to 'twenty two into the first half.

You all know our funding the growth as well ingrained and a key component of offsetting rising raw material costs. We have put together a new cross functional teams that are focused on ensuring we are bringing additional opportunities to our funding the growth and that we're executing them as rapidly as possible.

Speaker 2: We all know our funding to growth is well-engrained and a key component of offsetting rising raw material costs. We have put together new cross-functional teams that are focused on ensuring we are bringing additional opportunities to our funding to growth and that we are executing them as rapidly as possible.

Speaker 2: So we're accelerating short-term actions to drive improved profitability, but we know the key to shareholder value creation is to remain committed to the long-term.

We're accelerating short term actions to drive improved profitability, but we know the key to shareholder value creation is to remain committed to the long term.

Speaker 2: To that end, we will continue to invest in brand building. As I said a few minutes ago, it all starts with strong brands. We have turned our growth trajectory around over the past few years, and a key component of this has been additional advertising.

And we will continue to invest in brand building as I said, a few minutes ago. It all starts with strong brands, we have turned our growth trajectory around over the past few years and a key component of this has been additional advertising spend our guidance for 2022 includes an increase in advertising to make sure. We are able to sustained volume growth as we exited a period.

Speaker 2: Our guidance for 2022 includes an increase in advertising to make sure we are able to sustain volume growth as we exit a period of very strong pricing. At Cagney, you'll hear even more about how we've increased the return on marketing spend through our digital transfer.

A very strong pricing at Cagny, you'll hear me, even more about how we've increased the return on marketing spend through our digital transformation.

Speaker 2: We will continue to focus on innovation, providing added value to our consumers through innovation that supports increased pricing. Our innovation pipeline is very strong for the year and heading into next. We have innovation across our categories, with a particular focus on premium innovation that brings new benefits and forms to our brand.

We will continue to focus on innovation, providing added value to our consumers through innovation that supports increased pricing.

Innovation pipeline is very strong for the year and heading into next we have innovation across our categories with a particular focus on premium innovation that brings new benefits and forms through our brands.

We're also investing in capacity or Capex rose in 2021, primarily because we're investing in incremental capacity for growth along with investments to advance our sustainability efforts our need to build capacity across the business, mostly in pet nutrition shows that the rebound in organic sales growth is real and when we.

Speaker 2: We're also investing in capacity. Our CAPEX rose in 2021, primarily because we're investing in incremental capacity for growth, along with investments to advance our sustainability.

Speaker 2: Our need to build capacity across the business, mostly in pet nutrition, shows that the rebound in organic sales growth is real, and what we expect to continue.

To continue.

Speaker 2: This investment won't preclude us from continuing to repurring cash to shareholders to share repurchases and dividends.

This investment wont preclude us from continuing to return cash to shareholders through share repurchases and dividends.

Speaker 2: And finally today we announced the productivity initiative that is focused on aligning our costs and investments with our long-term straddle.

And finally today, we announced the productivity initiative that is focused on aligning our costs and investments with our long term strategies. This program is designed to deliver savings that can both be reinvested for growth and apply to the bottom line.

Speaker 2: This program is designed to deliver savings that can both be reinvested for growth and applied to the bottom line. Importantly, this program, along with the pricing and funding you'd grow, should allow us to exit this inflationary cycle with more leverage to drive growth and profitability and keep our strategy on track.

Accordingly, this program along with the pricing and funding the growth should allow us to exit this inflationary cycle with more leverage to drive growth and profitability and keep our strategy on track.

Speaker 2: So 2022 will be another volatile year with all the headlines you heard me describe. But we intend to execute to deliver growth and drive shareholder value, all with delivering against our long-term strategies, which makes me very excited about the future for our company. And with that, I'll open it up to your question.

So 2022 will be another volatile year with all the headwinds you heard me describe but we intend to execute to deliver growth and drive shareholder value all with delivering against our long term strategies, which makes me very excited about the future for our company and with that I'll open it up to your questions.

Thank you and if you for today's question and answer session will be conducted electronically for the telephone audience. If you would like to ask a question you may do so by pressing the star or Astra's key followed by the digit one on your Touchtone telephone.

Speaker 3: Thank you. And if you, for today's question and answer session, we'll be conducted electronically for the telephone audience. If you would like to ask a question, you may do so by pressing the star or asterisk key followed by the digit one on your touchtone telephone.

Speaker 3: We also ask that if you are listening to the conference on the internet, that you please turn down the volume on your computer speakers when asking a question. Once again, if you would like to ask a question, press star one.

We also ask that if you are listening to the conference on the Internet that you. Please turn down the volume on your computer speakers when asking a question. Once again, if you would like to ask a question press star one.

And our first question will come from Dara <unk> with Morgan Stanley . Please go ahead.

Speaker 3: And our first question will come from Adara Mosinian with Morgan Stanley , please go ahead.

Good morning, guys.

Morning Dara.

Speaker 4: So it's just hoping for an update on the oral care business. The full year is often a good time to take stock of where you stand. So can you discuss your market share performance in oral care in 2021? Trends as you progress through the year, probably most productive to talk about on a regional basis, but as we look forward.

So was just hoping for an update on the oral care business. The full year results and a good time to take stock of where you stand. So can you discuss your market share performance in oral care in 2021 trends as you progress through the year, probably most productive to talk about it on a regional basis, but.

As we look forward.

No well after the strategic changes under your leadership. The last few years are you satisfied with where you stand and how do you think that business is positioned for 2022.

Speaker 4: No, I'll have to the strategic changes under your leadership the last few years. Are you satisfied with where you stand and how do you think that business is positioned for 2022? Thanks. Yeah, thanks.

<unk>.

Yes, Thanks Dara so.

Speaker 2: You heard in some of the prepared comments, oral care accelerated in 2021. In fact, it was double the growth rate that we had in 2020.

As you heard in some of the prepared comments oral care accelerated in 2021 in fact, it was double the growth rate that we had in 2020, our consumption exceeded shipments in most markets and that was a function of some of the supply chain challenges that we incurred particularly here in North America as well as in Asia. So if I walk around the world.

Speaker 2: Our consumption exceeded shipments in most markets, and that was a function of some of the supply chain.

Speaker 2: challenges that we incurred, particularly here in North America, as well as in Asia.

Speaker 2: So if I walk around the world, really strong back half performance in Europe , in fact, with record shares.

Really strong back half performance in Europe . In fact, we're at record shares on the toothpaste business exited in the fourth quarter there.

Speaker 2: on the toothpaste business exiting the fourth quarter there. You heard John mention the strong growth we're seeing in China, which was obviously a key market for us to get turned around in the last couple of years. Our e-commerce shares are up.

John mentioned, the strong growth, we're seeing in China, which was obviously a key a key market for us to get turned around in the last couple of years, our E Commerce shares are up.

Speaker 2: very, very strongly. They're close to 400 basis points in the past.

Very very strongly there close to 400 basis points in the fastest consumer brand in the market our brick and motor mortar shares are holding so overall, we're delivering share growth there Latin America holding you know as we've talked about we've been very much on driving revenue growth management in those markets and had some great success, particularly in markets like Brazil, and we are.

Speaker 2: consumer brand in the market. Our brick and mortar shares are holding, so overall with delivering share growth there. Latin America holding, you know, as we talked about, we've been very much on driving revenue growth management in those markets and had some great success, particularly in markets like Brazil. And we're trying to resist just chasing some of the promotional volume at the lower end of the market, which has lost some of our volume share, but overall we feel very good about where we are, particularly around the premiumization.

Trying to resist just chasing some of the promotional volume at the lower end of the market.

Which has lost some of our volume share, but overall, we feel very good about where we are particularly around the premium position north.

Speaker 2: North America while we exited strong we're still not satisfied with the performance there. Clearly we believe we have significant opportunities there. The innovation plans we have in place for 2022 we flex.

In North America, while we exited strong we're still not satisfied with the performance. There clearly we believe we have significant opportunities there. The innovation plans, we have in place for 2020 to reflect our commitment to that market as well as the increased advertising support, particularly around the premium position strategy and we expect to see shares rebuilt nicely in <unk>.

Speaker 2: Our commitment to that market as well as the increased advertising support, particularly around the premiumization strategy, and we expect to see shares rebuild nicely in 2022, but satisfied at least at the fourth quarter and some of the back half activities that we put in place to be more competitive.

2022, but satisfied at least at the fourth quarter and some of the back half of activities that we've put in place to be more competitive have certainly stabilized the share and now it's about growing as we mentioned some of our untracked channels continue to perform very well in oral care in the U S, particularly the club channel as well as E Commerce.

Speaker 2: have certainly stabilized the share, and now it's about growing. As we mentioned, some of our untracked channels continue to perform very well in oil care in the US, particularly the club channels.

Speaker 2: We don't talk a lot about toothbrushes, but that business had a really good year for share growth is up in toothpaste as Excuse me in toothbrushes across most markets

We don't talk a lot about toothbrushes, but that business had a really good year for share growth is up in toothpaste excuse me in toothbrushes across most markets.

Speaker 2: and some good innovation likewise coming on that. That will be coupled obviously with strong pricing. I'm sure we'll get into a lot of discussing on that. But we have taken pricing in emerging markets. We are rolling aggressive pricing in developed markets.

And some good innovation likewise coming on that.

That will be coupled obviously with strong pricing I'm sure we'll get into a lot of discussion on that but we have taken pricing in emerging markets. We are rolling aggressive pricing in developed markets and that will continue to bolster share and our ability to support the brands moving forward.

Speaker 2: and that will continue to bolster share and our ability to support the brand moving forward. So overall, we're

We're all we're pleased with Royal character.

Speaker 3: And our next question will come from Peter Grom with UBS. Please go ahead.

And our next question will come from Peter Grom with UBS. Please go ahead.

Hey, good morning, guys.

Hey, Peter.

So I just wanted to ask around the guidance for gross margin expansion just in the context of what we're seeing right. Now can you maybe help us understand some of the underlying drivers behind that I know John mentioned it embed some moderation in raw material raw material cost. So could you maybe provide more detailed there or maybe where you expect that.

Speaker 5: So, I just wanted to ask around the guidance for gross margin expansion, you know, just in the context of what we're seeing right now. You know, can you maybe, you know, help us understand some of the underlying drivers behind that? And I know John mentioned it in some moderation in raw material costs. So, could you maybe provide more detail there or maybe where you expect that moderation? And then maybe just more broadly, like how should we think about the phasing of gross margin expansion and ultimately how that impacts, you know, earnings cadence as we move through the year? Thanks.

Iteration, and then maybe just more broadly like how should we think about the phasing of gross margin expansion.

Ultimately how that impacts earnings cadence as we move through the year. Thanks.

Sure.

Speaker 2: So I guess let's start with raw materials there. Obviously we saw a significant acceleration of raw material prices following the first quarter in 2021.

So I guess, let's start with raw materials. There, obviously, we saw a significant acceleration in raw material prices following the first quarter in 2021.

Speaker 2: That continued escalators we went through the year and certainly based on where we thought we were in the third quarter We saw significant increases moving into the fourth quarter in fact residents up more or less 50% our taller prices up 30 to 40% in the fourth quarter So all of that is now built into how we're thinking about 22 and we expect raw materials quite frankly to To peak in the first quarter we have developed our plans based on spot rates today

That continued to escalate as we went through the year and certainly based on where we thought we were in the third quarter. We saw significant increases moving into the fourth quarter in fact resins up more or less 50%, our tallow prices up 30% to 40% in the fourth quarter. So all of that is now built into how we're thinking about 'twenty two we expect raw materials quite.

Frankly two.

To peak in the first quarter, we have developed our plans based on spot rates today, and we expect to spot rates to hold and begin to moderate towards the back half of 2022. So you see raw materials potentially peak in the first quarter, and then stabilize and begin to potentially moderate in the back.

Speaker 2: And we expect the spot rates to hold and begin to moderate towards the back half of 2022. So you see raw materials potentially peak in the first quarter and then stabilize and begin to potentially moderate in the back half. You layer on top of that our pricing strategies for the year. We took some pricing in the fourth quarter in emerging markets.

Have you layer on top of that our pricing strategies for the year, we took some pricing in the fourth quarter in emerging markets.

Speaker 2: We took more pricing in the develop markets in the first quarter, which will mostly take effect as we exit the first quarter into second quarter.

Took more pricing in the developed markets in the first quarter, which will mostly take effect as we exit the first quarter into second quarter.

Speaker 2: We've got, obviously, the additional productivity programs that we talked about this morning. That will be very back, half-weighted, more in the end of the third quarter, early fourth quarter, and into 23, so we won't see much benefit this year.

We've got obviously the additional productivity programs that we talked about this morning that will be very back half weighted more in the in the end of the third quarter early fourth quarter and into 'twenty. Three so we won't see much benefit this year.

Speaker 2: particularly in the first half. So, and you combine that, likewise, with an innovation plan that is weighted more towards the premium side, particularly in North America in the first quarter. And all that will help us lead to growing margins as we go through the year and exiting the year with margins up.

Particularly in the first half so and you combine that likewise with a an innovation plan that is weighted more towards the premium side, particularly in North America in the first quarter and all of that will help us lead to growing margins as we go through the year and exiting the year with margins up.

Yes.

Speaker 3: And our next question will come from Lauren and Lieberman with Barclays. Please go ahead.

And our next question will come from Lauren Lieberman with Barclays. Please go ahead.

Great. Thanks, good morning.

Speaker 6: Thanks. Good morning. Hey, Lauren. Hey. I was curious if you could talk a little bit more about the restructuring because I feel like it's rare to see a program that's, you know, only one year in nature.

Hey, I was curious if you could talk a little bit more about the restructuring because I feel like it's rare to see a program that's only one year in nature.

So kind of.

Speaker 6: So, kind of, are these projects or programs that would have been on the to-do list but were accelerated? Are they opportunities that you proactively sought out and, you know, looked for ways to accelerate what would typically be funding the growth because of the environment? And then, also, I feel like in the last 12-plus months, there have been a couple of things that have come up.

Projects or programs that we have been on the to do list, but we're accelerating our the opportunities that you proactively sought out and look for ways to accelerate what would typically be funding the growth because of the environment.

And then also I feel like in the last 12 plus months have been a couple of things that have come up.

Speaker 6: know, regionally with sort of operating surprises, you know, whether it's a supply chain hiccup in one market or another. So, to what degree also does this program maybe look at factors that impacted some of that less consistent operating performance that you've had over the last year or so? Thanks.

Regionally, we sort.

Operating surprises you know, whether it's the supply chain hiccup in in one market or another so to what degree also does this program maybe look at factors that impacted some of that less consistent operating performance.

Over the last over the last year or so.

Yeah, Thanks, Lauren I think.

Speaker 2: The key word you use is really trying to be proactive. I mean, we came into this year after the first quarter noticing obviously an environment that was becoming more challenging, particularly around COVID and disruptions associated with that.

The key word you use just really trying to be proactive I mean, we came into this year. After the first quarter noticing obviously, an environment that was becoming more challenging, particularly around COVID-19 and disruptions associated with that.

Speaker 2: as it then obviously led into a significant inflationary environment, and we got out ahead of this as quickly as we could.

Then obviously lead into a significant inflationary environment and we got out ahead of this as quickly as we could to start thinking about our 2025 strategy and ultimately what we're trying to achieve and how we wanted to accelerate it we've seen a lot of great progress in our digital transformation. We've seen a lot of great progress is as we've restructured our innovation groups.

Speaker 2: start thinking about our 2025 strategy and ultimately what we were trying to achieve and how we wanted to accelerate it. We've seen a lot of great progress in our digital transformation. We've seen a lot of great progress as we structured our innovation group.

Speaker 2: around the world towards breakthrough and transformation and innovation and the benefits we're seeing coming out of that.

Around the world towards breakthrough and transformational innovation and the benefits, we're seeing coming out of that and we decided that we really wanted to accelerate that transformation and make sure that we get that savings into the business as quickly as possible as well as the benefits of how we structure ourselves to be more agile and fast.

Speaker 2: And we decided we really wanted to accelerate that transformation and make sure that we get that savings into the business as quickly as possible, as well as the benefits of how we structure ourselves to be more agile and faster market. The benefits we get out of increased resources in the digital space.

The market the benefits, we get out of increased resources in the digital space.

Speaker 2: as well as the innovation. Now bear in mind as you heard from John , we had a really good year around controlling our overheads and we have been constantly looking at ways to mitigate the inflationary pricing we're seeing in the market, our overheads were down on the year, down considerably in the fourth quarter, and I think that's just good business. We're constantly looking for ways to optimize how we operate on top of that, we wanna look at how we structure ourselves to really continue to accelerate the growth momentum that we have.

As well as the innovation now bear in mind as you heard from John We had a really good year around controlling our overheads and we have been constantly looking at ways to mitigate the inflationary pricing we're seeing in the market. Our overheads were down on the year down considerably in the fourth quarter and I think that's just good business, we're constantly looking for ways to optimize how we.

Operate on top of that we want to look at how we structure ourselves to really continue to accelerate the growth momentum that we have so as we as we move throughout the year. We will exit this program as you said, it's a it's a one year program with the savings really falling into the back half of 2022 and two.

Speaker 2: So, as we move throughout the year, this program, as you said, it's a one-year program with the savings really falling into the back half of 2022 and into the first half of 2023. It allowed us to really...

The first half of 'twenty three it allowed us to really fine tune, where we wanted to focus and allowed us to do that in a 12 month period, and we think that's ultimately right for the business to ensure that we don't have ongoing distractions across the organization and we get all with trying to accomplish what we set out to do for the year and into 'twenty three.

Speaker 2: Find tune where we wanted to focus and allow us to do this in the 12 month period and we think that's ultimately right for the business to ensure that we don't have ongoing distractions across the organization and we get on with trying to accomplish what we've set out to do for the year and into 23.

On the regional up the point that you were you were mentioning Lauren listen as <unk> heard from everyone the supply chain challenges.

Speaker 2: On the regional point that you were mentioning, Lauren, listen, as you've heard from everyone, the supply chain challenges everyone faces are quite significant, and it really...

Challenge is everyone faces are quite significant and it really is to certain extent depends on the structure and composition of your supply chain. We've had as you know one of the most efficient supply chains in the world in terms of how we've optimized our global sourcing all around the world and how we put capital into ensuring that we have extremely low.

Speaker 2: certain extent depends on the structure and composition of your supply chain. We have had, as you know, one of the most efficient supply chains in the world in terms of how we've optimized our global sourcing all around the world and how we put capital into ensuring that we have extremely low cost plants. We will benefit from that long term to be...

Cost plants, we will benefit from that long term to be sure.

Speaker 2: in the short term, given some of the structures that we've seen, both in Asia, as well as here in North America, we've had to deal with that.

The short term given some of the disruptions that we've seen both in Asia as well as here in North America, we've had to deal with that and that has brought some additional cost and obviously as you heard some disruption to the top line of the business as well Likewise no question into the market shares. So we've we're moving to.

Speaker 2: And that has brought some additional costs and obviously as you heard some disruption to the top line of the business as well Likewise, no question into the market shares. So we were moving to get through those as we as we go into 22 We feel very confident in where we are with our supply chain and the changes that we're making particularly in the productivity initiative to continue to optimize that moving forward

To get through those as we as we go into 'twenty, two and we feel very confident in where we are with our supply chain and the changes that we're making particularly in the productivity initiatives continue to optimize that moving forward.

And up next we'll hear from Steve powers with Deutsche Bank. Please go ahead.

Speaker 3: And up next we'll hear from Steve Powers with Deutsche Bank. Please go ahead.

Speaker 1: Hey, thanks very much and good morning. Morning David, maybe morning. So maybe rounding out there is a initial question.

Hey, thanks, very much and good morning.

David maybe good morning, So maybe rounding out there is initial question just could you talk a little bit about how oral care performance globally in the fourth quarter from an organic growth perspective.

Speaker 7: talk a little bit about how oil care performed globally in the fourth quarter from an organic growth perspective. And then looking ahead, I guess I'm wondering if you can provide just some more detail around the composition of the 3 to 5% growth you've called for 22, both by product segment or okay versus pet and presumably some normalization home and personal care. But also by price versus volume. Because obviously you're putting in a lot of price. So I'm assuming it's gonna be mostly price led.

And then looking ahead I guess I'm wondering if you can provide just some more detail around the composition of the the 3% to 5% growth you've called for 'twenty two.

Both by product segment oral care versus pet and presumably some normalization home and personal care.

But also by price versus volume.

Because obviously you are putting in a lot of price. So I'm, assuming it's going to be mostly price led.

Speaker 7: But I guess I was a little surprised in the quarters to see Latin American volumes get negative in response to the sequential acceleration and price there. So just curious as to how you're thinking about that, thinking about elasticity as 22 progresses. Thanks.

But I guess I was a little surprised in the quarter to see Latin American volumes.

Dip negative in response to the sequential acceleration in price there. So just curious as to how.

Youre thinking about that thinking about elasticity as it was 22 progresses. Thank you.

Speaker 2: Sure, so let me talk a little bit about oral care. Obviously, in the prepared remarks, you saw that the fourth quarter was driven by oral care and pet nutrition. So overall, quite pleased. And that was despite.

Sure. So let me talk a little bit about oral care. Obviously is in the prepared remarks, you saw that the fourth quarter was driven by oral care in pet nutrition. So overall.

Quite pleased and that was despite some.

Speaker 2: Some disruptions that we saw in the quarter the shutdowns that we talked about in the third quarter

And disruptions that we saw in the quarter.

Cut downs that we've talked about in the third quarter had a more material impact in the fourth quarter.

Speaker 2: had a more material impact in the fourth quarter uh... that was about sixty basis points of growth to uh... to the total company in the fourth quarter and all of that would have been in oral care so to speak so uh... we are at we're moving behind those

That was about 60 basis points of growth to the total company in the fourth quarter and all of that would've been in oral care. So to speak so we're at we're moving behind those.

Speaker 2: We will see a little bit more disruption in the first quarter, but we have a pretty good line of sight that by the second quarter and throughout the balance of the year we will be back to where we need to be on that. So overall, okay, it was good. I mentioned the strong exiting of market shares in Europe , which were very, very strong. We stabilized the shares in North America and actually saw some all outlet growth in the fourth quarter driven by untracked channels, which was terrific.

We see a little bit more disruption in the first quarter, but we have a pretty good line of sight that by the second quarter and throughout the balance of the year.

I'll be back to where we need to get to be on Thats. All of our oral care was good I mentioned, the strong exiting the market shares and in Europe , which were very very strong.

We stabilized the shares in North America, and actually saw some are all outlet growth in the fourth quarter, driven by our untracked channels, which was terrific and we're particularly pleased with the reception to our new products in 2022 that we've introduced as well as the acceptance of the pricing.

Speaker 2: and we're particularly pleased with the reception to our new products in 2022.

Speaker 2: that we've introduced as well as the acceptance of the pricing across North America. So we're quite confident in terms of how we're setting ourselves up for continued growth.

<unk> North America. So we're quite confident in terms of where we're how we're setting ourselves up for continued growth.

22, you.

Speaker 2: You had a question on price volume, you know, and I'll address the Latin America question within that. You know, obviously there's going to be more price in our organic growth in 22 versus volume given the significant increases that we're taking across the world. And as I mentioned, we began taking pricing at the end of the fourth quarter. We have implemented and announced pricing across the emerging markets here in the first quarter, which will take effect.

You had a question on price volume.

Ill address the Latin American question within that obviously theres going to be more price in our organic growth in 'twenty two.

<unk> volume given the significant increases that we're taking across the world and as I mentioned, we began taking pricing at the end of the fourth quarter.

We have implemented and announced pricing across the emerging markets here in the first quarter, which will take effect.

Speaker 2: as I mentioned earlier in the early part of the second quarter.

As I mentioned earlier in the early part of the second quarter, but no question given the size of the pricing that we're taking around the world and you're seeing that from ourselves as well as competitors in other categories. You will see a falloff in volume and we were accustomed to that relative to how we think about our promotional cadence and how we think.

Speaker 2: But no question given the size of the pricing that we're taking around the world, and you're seeing that from ourselves.

Speaker 2: as well as competitors in other categories, you will see a fall off in volume and we're accustomed to that relative to how we think about our promotional cadence and how we think about our innovation plans as well to ensure that we continue to build volume through the balance of the year. So the makeup of the organic growth this year, no question, will be driven.

About renovation plans as well to ensure that we continue to build up volume through the balance of the year. So the makeup of the organic growth. This year. No question will be driven more by price then by volume, which is a little bit different than what we've seen in historical years.

Speaker 2: more by price than by volume, which is a little bit different than what we've seen in historical years.

Speaker 2: you know, I'll say that both rise in this environment in the sense that everyone is impacted by the inflationary environment shows a result. You're going to see pricing up pretty consistently across all categories.

I'll say that.

All boats rise in this environment in the sense that everyone is impacted by the inflationary environment shows result, youre going to see pricing up pretty consistently across all categories that plays as you've heard from others and to elasticity that youre not seeing one competitor move youre seeing the category move so elasticities tends to be a little bit less.

Speaker 2: that plays as you've heard from others and to elasticity that you're not seeing one competitor move, you're seeing the category move. So elasticity tends to be a little bit less. We will see, it's early days now, but our experience, as you well know, Steve, of taking pricing quite significantly to offset for an exchange in markets around the world, we have been able to balance that elasticity impact with good innovation and good promotional cadence, understanding how to ensure we're innovating across the price tiers.

We will see it's early days now, but our experience as you well know, Steve taking pricing quite significantly to offset foreign exchange and markets around the world, we have been able to balance that elasticity impact with with good innovation and good promotional cadence understanding how to ensure we're innovating across the price tiers.

Speaker 2: and making sure that we're protecting the consumer and the category growth at the same time you know latin america had a really strong quarter you know bear in mind they had a strong comp

And making sure that we're protecting the consumer and the category growth at the same time, you know Latin America had a really strong quarter, you know bear in mind, they had a strong comp.

Speaker 2: uh... that they were dealing with so they're they're they're two-year stack looks terrific i think it was about sixteen percent if i remember correctly uh... and obviously six on top of uh... eleven percent year ago and largely driven by pricing so a little bit soft in the volume line as we took some pricing but we fully expected that will recover itself

They were dealing with so they're the two year stack looks terrific I think it was about 16% if I remember correctly.

And obviously six on top of a 11% year ago, largely driven by pricing so a little bit soft in the volume line as we took some pricing, but we fully expected that will recover itself categories continue to be quite healthy in Latin America mid to mid single digit growth and the consumer seems to be responding to the at least in the.

Speaker 2: Categories continue to be quite healthy in Latin America, mid single-digit growth, and the consumer seems to be responding to at least in the short term, but we'll watch that carefully as we move to 22.

A short term, but we'll watch that carefully as we move through 'twenty two.

Speaker 3: And up next we'll take a question from Andrea Tishero with JP Morgan. Please go ahead.

And up next we'll take a question from Andrea Teixeira with Jpmorgan. Please go ahead.

Thank you good morning.

Speaker 8: Thank you, good morning. I just hear Mitchell Confumption has made and greater than children.

I don't know you made so called Sunshine has been greater than shipments can.

Speaker 8: Can you update us on the service level in the US where I understand your stupid feelings and for you mentioned that in the first quarter you're going to be impacted by that, by some of the disruptions. Can you elaborate on that? And then on the Latin American comment that you answered just now, I was just wondering if, when you think about the volume shortfall, is it coming from...

Can you update us on the surface level in the U S, where you are and just I understand you're still be building inventory and you mentioned that in before the first quarter as to what has to be impacted.

Impacted by by that Pfizer.

Disruption. So can you elaborate on that and then on the Latin American comment that you are answered just Steve.

Just now I was just wondering if when you think about the volume shortfall is it coming from.

Speaker 8: mostly from oral care or is it coming from on care or even some of the personal care items that were that had a lot of strong demand last year. Thank you.

Mostly oil.

Oral care or is it coming from home care or even some of the personal care items that we're.

They had a lot of strong demand last year. Thank you.

Sure.

Speaker 2: Andrew, let me take your second question first, because I think to certain extent it addresses some of the earlier commentary on the quarter.

Andrew Let me take your second question first because I think to a certain extent it addresses some of the earlier commentary on the quarter.

Speaker 2: You know, bear in mind that we had strong growth in oral care and pet nutrition. We were laughing, you know, significant category growth in personal care and home care that obviously apparel out our growth last year, given some of the impacts of COVID. You know, liquid hand soap as a category in 21 was down roughly 25%.

Bear in mind that we had strong growth in oral care in pet nutrition, we were lapping a <unk>.

<unk> category growth in personal care and home care.

Obviously paralleled our growth last year, given some of the impacts of Covid liquid hand soap as a category in 'twenty, one was down roughly 25%. Likewise, you saw that level of growth as a category in the fourth quarter as well some of our home products are cleaning products were down 15% to 20% as a category as well.

Speaker 2: Likewise, you saw that level of growth as a category in the fourth quarter as well. Some of our home products, our cleaning products were down 15 to 20 percent as a category as well. So, no question that had an impact in the quarter, but we've seen that kind of starting to stabilize and our senses as we move into 22, those categories have hopefully bottomed out relative to

So no question that had an impact in the quarter, but we've seen that kind of starting to stabilize and our sense is as we move into 'twenty two of those categories have hopefully bottomed out relative to consumption.

Speaker 2: John mentioned that we shift above consumption was above shipments and that was due to a certain extent to the continued constraints around logistics.

John mentioned that we shipped we shipped above consumption was above shipments and that was due to a certain extent to the continued constraints around logistics the challenge of getting trailers.

Speaker 2: the challenge of getting trailers not only around the country but across borders, either from Mexico or otherwise.

Not only around the country, but across borders either up for Mexico, or otherwise some of the challenges that we had and the shutdowns in plants across Asia that we mentioned earlier that obviously had an impact on the on the North American number as well, but as I said, we're moving through those we think will be out of that by the end of the quarter.

Speaker 2: some of the challenges that we had in the shutdowns and plants across Asia that we mentioned earlier, that obviously had an impact.

Speaker 2: uh... on uh... on the north american number as well but as i said we're moving through those we think will be out of that by the end of the quarter

Speaker 2: We're taking the necessary steps, as I mentioned earlier, to ensure that our supply chain continues to operate as efficiently as possible.

We're taking the necessary steps as I mentioned earlier to ensure that our supply chain continues to operate as efficiently as possible I will make a couple of changes relative to sourcing that has obviously created a little headwind in terms of costs, but overall, we feel good about the at least the plan in place to address some of the short term issues that we faced will see the benefit of that as well.

Speaker 2: We'll make a couple of changes relative to sourcing that is obviously created in a little headwind in terms of cost.

Speaker 2: But overall we feel good about at least the plan in place to address some of the short term issues that we face. We'll see the benefit of that as we refill the pipelines to a certain extent moving through the back half of the year.

Phil.

The pipelines are to a certain extent moving through the back half of the year.

Speaker 3: And up next we'll take a question from Kamu Gajarawala with Credit Sweets. Please go ahead.

And up next we'll take a question from combo <unk> with credit Suisse. Please go ahead.

Hi, good morning.

Speaker 5: Good morning. Question I suppose on inflation's impact on the consumer. Most of what we've heard so far, particularly in developed markets is we haven't seen a lot of impact. I guess you guys have probably a better sense than most given how much inflation you've dealt with around the world and then how this is likely to unfold. So if you could just talk about maybe the state of the consumer today and where you expect it to be in developed markets as it relates to how they might be impacted by inflation.

Question I suppose on inflation impact on the consumer most of what we've heard so far particularly in developed markets is we haven't seen a lot of impact I guess, you guys have probably a better sense than most given how.

How much inflation, you've dealt with around the world and then how this is likely to unfold. So if you could just talk about maybe the state of the consumer today, and where you expect it to be.

In developed markets as it relates to.

How they might be impacted by inflation.

Yeah. Thanks early days, obviously as you mentioned, we've had a lot of experience taking quite significant price increases around the world, particularly as we went through periods of significant foreign exchange headwinds.

Speaker 2: Yeah, thanks. Early days, obviously, as you mentioned, we've had a lot of experience taking quite significant price increases around the world, particularly as we went through periods of significant foreign exchange headwinds. As I mentioned earlier, I think the big difference here is that the price increases are coming across the entire market in all categories. And as a result, you tend to see a little less elasticity when that happens.

As I mentioned earlier I think the big difference here is that the price increases are coming.

<unk> the entire market in all categories.

And as a result, you tend to see a little less elasticity when that happens.

Speaker 2: but we're very prepared for that. As I mentioned earlier, very cognizant of our promotional cadence in terms of how to balance that, very cognizant of our need to bring value to our innovations to ensure that the pricing is executed successfully. But we feel pretty good about this, what we've seen in early days again relative to elasticity, time will tell.

But we're very prepared for that as I mentioned earlier very cognizant of our promotional cadence in terms of how to balance that very cognizant of our need to bring value to our innovations to ensure that the pricing is executed successfully but.

But we feel pretty good about at least what we've seen in early days again relative to elasticity time will tell.

Speaker 2: But my sense is we'll be able to weather this quite well given the whole market is moving and we have a strong innovation and promotional

But my sense is we'll be able to weather this quite well given the whole market is moving and we have a strong innovation and promotional.

Speaker 2: strategy in place to continue to ensure the consumer is

Strategy in place to continue to ensure the consumer has is valued.

Next we'll take a question from Chris Carey with Wells Fargo Securities. Please go ahead.

Speaker 3: Up next we'll take a question from Chris Carey with Wells Fargo Securities. Please go ahead.

Okay.

Hi, Hi, good morning.

Speaker 9: Hi, hi, good morning. Can you just expand a bit on the pricing actions in North America? I know it's been asked, but perhaps in the context of the margin for the business in the quarter, obviously remains under pressure. And maybe loop into there how the productivity program for 2022.

Can you just expand a bit on.

The pricing actions in North America, I know, it's been asked but perhaps in the context of the <unk>.

The margin for the business in the quarter, obviously remains under pressure.

And maybe loop into there how the productivity program for 2022.

Speaker 9: can potentially help that business. Do you think that, you know, with pricing coming, with productivity coming, with expectations around, you know, inflation getting a little bit better in the back half of the year, that division from a margin standpoint can also improve along with the organic sales as some of the comps that have normalized and pricing builds.

Can potentially help that business.

Do you think that with pricing coming with productivity coming with expectations around.

Inflation getting a little bit better in the back half of the year that that division from a margin standpoint can also improve along with the organic sales of some of the comps have normalized and pricing builds.

Sure, So we announced pricing in some of our personal care categories.

Speaker 2: Sure, so we announced pricing in some of our personal care categories late last year, which took effect in the middle of this quarter.

Late last year, which took effect in.

In the middle of this quarter.

Speaker 2: The balance of our categories have been announced and will take effect.

Balance of our categories have been announced and will take effect as we move into the second quarter. So that's clearly the cadence that we see relative to pricing the pricing funding of growth relative to the North American business is typically pretty.

Speaker 2: as we move into the second quarter. So that's clearly the cadence that we see relative to price.

Speaker 2: funding to grow through relative to the North American business is typically pretty uh... pretty directional across every quarter uh... as i mentioned uh... we have mobilized specific teams in north america and in other regions to accelerate some of our funding to grow to initiative bear in mind that is where

Pretty directional across every quarter as I mentioned, we have mobilized specific teams in North America and in other regions to accelerate some of our funding the growth initiatives bear in mind, it is where we.

Speaker 2: We're dealing with the challenges around the supply chain.

We're dealing with.

The challenges around the supply chain that we wanted to ensure that we're finding time dedicated time to deliver funding the growth when we produce against the demand that we have we obviously don't want to shut our lines down to test funding the growth initiatives that we're finding alternative ways to do that on top of that as you mentioned the productivity initiative, which will.

Speaker 2: that we want to ensure that we're finding time, dedicated time to deliver funding to growth. When we produce against the demand that we have, we obviously don't want to share our lines down to test funding to growth initiatives. So we're finding alternative ways to do that. On top of that, as you mentioned, the productivity initiative, which will be a global initiative.

A global initiative will impact across more regions, there's not one specific region that we're targeting specifically on that all the regions will be contributing based on the opportunities that we've identified so you'll see pricing move through in the second quarter funding the growth and consistent across the year and we believe.

Speaker 2: will impact across more regions. There's not one specific region that we're targeting, specifically on that. All the regions will be contributing.

Speaker 2: based on the opportunities that we've identified. So you'll see pricing move through in the second quarter, funding the growth consistent across the year. And we

<unk>.

Speaker 2: quite confident that margins will begin to accelerate as we move into the back half of the 20.

Confident that margins will begin to accelerate as we move into the back half of 'twenty two.

Speaker 3: Our next question will come from Jason English with Goldman Sachs. Please go ahead.

Our next question will come from Jason English with Goldman Sachs. Please go ahead.

Hey, good morning folks thanks for Slotting me.

Speaker 7: Hey, good morning folks, thanks for slot me in. Hi, Dave. And congrats on your successes here at Celery and Oral Care and delivering another rock solid.

And congrats congrats on your successes youre accelerating in oral care and delivering another rock solid year in pet care.

Speaker 7: But they still results in what we see in the market and where we hear you spend your time in energy and calls like this It feels like you may be neglecting the pomalas

But based on results and what we see in the market and where we hear you spend your time and energy on calls like this it feels like you may be neglecting the palmolive side of the Colgate Palmolive business will P&G is out there clearly spending a lot on advertising are innovating a lot at least can be executing quite well.

Speaker 7: will pg's out there clearly spending a lot of advertising they're in the middle of

Speaker 7: First, do you think I'm being too harsh here or do you see some truth in this? And second, I guess either way, can you share some of your initiatives and investments you've got planned for this business this year and how they make them pair or could trust what you've been doing.

First do you think I'm being too harsh here or do you see some truth in this and second and I guess either way can.

Can you share some of your initiatives and investments you've got plan for this business this year and how they may compare or contrast to what you've been doing the last couple of years. Thank you.

Yeah. Thanks, Jason So listen we had obviously really strong performance in 'twenty, one excuse me in 'twenty across our liquid hand soap bars, our personal care categories, which include palmolive overseas as well as our home care categories here in North America, obviously that those categories as I mentioned earlier falling off quite significantly.

Speaker 2: Yeah, thanks Jason. So listen, we had obviously really strong performance in 21, excuse me, in 20 across our liquid hand soap, our personal care categories.

Speaker 2: which include Pamol over her seas, as well as our home care categories here in North America.

Speaker 2: Obviously, those categories, as I mentioned earlier, are following off quite significantly, but we believe have stabilized and will provide more continuity as we move forward. We had some challenges, obviously, getting some of the innovation executed, what we wanted to do. Obviously, that's had a short-term impact, but we feel very good about the plans we have in place.

But we believe have stabilized and will provide more continuity as we move forward. We had some challenges obviously, you're getting some of the innovation executed what we wanted to do I'll. Obviously, that's had a short term impact, but we feel very good about the plans we have in place.

Speaker 2: uh... in terms of not only getting the pricing through the category making sure that we continue to uh... deliver an entrepreneurial approach to these businesses because we have isolated pockets of strength north america being one latin america being another where we find the opportunities on the ground that we can execute again so overall we feel good about it we know our some of our competitors are spending significant money in these categories

In terms of not only getting the pricing through the category, we're making sure that we continue to deliver an entrepreneurial.

To these businesses because we have isolated pockets of strike North America being one Latin America being another where we find the opportunities on the ground that we can execute against so overall, we feel good about it we know some of our competitors are spending significant money in these categories as we talked about earlier, we've increased advertising into 'twenty two plans.

Speaker 2: As we talked about earlier, we've increased advertising into 22 plans that will support all of our key priorities, mainly oral care as well as hills, but we will look subactively in similar core markets.

That will support all of our key priorities, mainly oral care as well as hills, but we will look selectively in some of our core markets to ensure that we have competitive spending our spending levels to address.

Speaker 2: to ensure that we have competitive spending levels to address.

Speaker 2: some of the softness that we saw this year coming out of a very robust 2020.

Some of the softness that we saw this year coming out of a very robust 2020.

Speaker 3: Next we'll take a question from Kevin Grundy with Jeffries. Please go ahead.

Next we'll take a question from Kevin Grundy with Jefferies. Please go ahead.

Great. Thanks, good morning, everyone.

Speaker 10: Great, thanks. Good morning, everyone. I have a follow-up question on Morning Null, on pricing. Two areas, please, on the elasticity, which I think Steve spoke to, and then on pricing ladders specifically. So number one, on the elasticity, no, just to drill down a little bit, because I think the general view would be that the elasticity has been better than expected, at least so far.

I have a follow up question on the Moreno.

On pricing to two areas. Please on the elasticities, which I think speaks spoke to and then and then on.

Pricing ladders, specifically, so number one on the U S. These they'll just to drill down a little bit because I think the general view would be that U S business had been better than expected.

So far so if we do see a mean reversion on elasticities because that represent downside potentially do to your outlook or have you already sort of reflected that so I think additional commentary there would be helpful.

Speaker 10: So if we do see a mean reversion on the last disease, could that represent downside potentially to your outlook or have you already sort of reflected that? So I think additional commentary there would be helpful.

Speaker 10: And then also to an earlier question, just on the state of the consumer, my question is on, so you're pricing ladders, I guess at this point, and the potential for consumer trade down to mid-tier value brands or even private label, have you included some element of that, or not really, and that's just something that the company will have to react to and could potentially result in some negative mixed implications, whether this was around lower price brands or additional promo, et cetera. So just maybe drilling down on those two areas would be helpful. Thank you for that. Sure.

And then also to an earlier question just on the state of the consumer My question is on your pricing ladders I guess at this point and the potential for consumer trade down to mid tier value brands or even private label have you included some element of that or not really and thats just something that the company will have to react to and could potentially result in some.

Negative mix implications, whether this is around lower price brands or additional promo etcetera. So just maybe drilling down on those two areas would be helpful. Thank you for that.

Sure Kevin.

So again, let's let's let's talk to pricing elasticity. It's early days right now as I mentioned.

Speaker 2: Let's talk to pricing elasticity. It's early days right now, as I mentioned.

Speaker 2: but we expect that we will not see as much pricing elasticity in our business, specifically our own business, as we've seen in the past given that everyone is taking pricing. It seems pretty consistently across all of our categories and across the world.

But we expect that we will not see as much pricing elasticity in our business specifically our own business as we've seen in the past given that everyone is taking pricing.

Seems pretty consistently across all of our categories and across the world, but time will tell on that clearly the elasticity assumptions that we built into the P&L are quite conservative I mean, we wanted to be very careful there to ensure that we were able to adjust and have enough flex in the P&L based on how we saw the consumers react. So my sense is we're covered there.

Speaker 2: a time we'll tell on that clearly. The elasticity assumptions that we built into P&L are quite conservative. I mean, we wanted to be very careful there to ensure that we were able to adjust and have enough flex in the P&L based on how we saw the consumers react.

Speaker 2: So my senses were covered there, but we shall watch this carefully to ensure that our assumptions are accurate. And we will pivot as necessary as we see what's happening in the marketplace. As I mentioned earlier, it's not only just taking pricing, it's how we go about executing that in the market, relative to our promotional cadence, relative to our new product cadence.

We shall watch this carefully to ensure that our assumptions are accurate and we will we will pivot as necessary as we see what's happening in the marketplace as I mentioned earlier, it's not only just taking pricing. It's how we go about executing that in the market relative to our promotional cadence relative to our new product cadence.

Speaker 2: And that really fits into the second part of your question, which is the pricing ladder. One of the aspects of our business that we feel very good about is how we have clear distinction at price tiers and value add across the multiple price tiers in which we compete.

And that really fits into the second part of your question, which is the pricing ladder you know one of the aspects of our business that we feel very good about is how we have clear distinction that price tiers and value add across the multiple price tiers in which we compete and we have innovation planned across all those price tiers innovation that will not only get.

Speaker 2: and we have innovation planned across all those price tiers. Innovation that will not only get us pricing, but brings value added to the consumer, should there be any temptation to trade down, particularly in the premium side of the business. But the important piece there is that we're looking to innovate across all of our price tiers.

There's pricing, but brings value add to the consumer should there be any temptation to trade down, particularly in the premium side of the business, but the asset the important piece. There is that we're looking to innovate across all of our price tiers to ensure that we continue to bring value to those consumers as they address a and obviously I'm a.

Speaker 2: to ensure that we continue to bring value to those consumers as they address an obviously a significant headwind around inflation in their mark.

<unk> headwind around inflation and they're in their markets.

We will now hear from Wendy Nicholson with Citi. Please go ahead.

Speaker 3: We'll now hear from Wendy Nicholson with City. Please go ahead.

Speaker 11: Hi, I wanted to go back and revisit the Productivity Initiative a little bit.

Hi, I wanted to go back and revisit the productivity initiative, a little bit on kind of just taking a bigger step back I know no. Obviously when you came in as CEO . There was a little bit of a margin reset as you decided you needed to reinvest in the business and that's worked really well because the top line has come in for.

Speaker 11: Kind of just taking a bigger step back. I know, no, obviously when you came in as CEO , there was a little bit of a margin reset as you decided you needed to reinvest in the business and that's worked really well because the top line has come in. For the last few years, you know, in line with your goals.

For the last few years in line with your your golf.

Speaker 11: But we've seen margins under pressure and I know there's COVID and currency and obviously commodities and logistics and all of that, but just kind of longer term. I guess my question is, how do you feel about the kind of...

But we've seen margins under pressure and I know, there's COVID-19 in currency and and obviously commodities and logistics and all of that but just kind of longer term I guess my question is how do you feel about the kind of 22% to 23% operating margin level for the company is that the right level you know how much of the <unk>.

Speaker 11: 22 23% operating margin level for the company. Is that the right level?

Speaker 11: How much of the global productivity initiative savings this year are going to be reinvested versus drop to the bottom line and give us a margin expansion?

Mobile productivity initiative savings this year are going to be reinvested versus dropped to the bottom line and give us some margin expansion.

Speaker 11: and kind of all related to that. And I'm sorry for the long question. Again, that's a Lawrence point. It's really unusual for us to see just a one year initiative. And I think that's probably good news because it's not that disruptive to the organization.

And kind of all related to that and I'm sorry for the long question.

Again, that's a lauren's point, it's really unusual for us to see just a one year initiative and I think that's probably good news because it's not that disruptive to the organization.

Speaker 11: But bad news if you have to have multiple of these. And so I'm wondering is this really just a one offer? Do you sort of say, oh, we might have more in 23, we might have more in 24, just a little bit more color to sort of say, you know, what's the goal here? Is this margin expansion or is this cost of business has gone up and we just need to keep reinvesting? Thank you.

But bad news if you have to have multiple of these and so I'm wondering is this really just a one off or do you sort of say Oh, we might have more than 23, we might have more than 24, just a little bit more color to sort of say you know.

What's the goal here is this margin expansion or is this cost of business has gone up and we just need to keep reinvesting. Thank you.

Sure.

Speaker 2: sure uh... let me uh... let me take a step back for for a moment you obviously we came out of

Kind of all of the above but let me let me take a step back for a moment you know obviously, we came out of a pretty significant restructuring program that ended in 2019 at the better part of five years to six years of that and as we have obviously started to think about our 2025 strategic plan. It's only good business to continue to.

Speaker 2: a pretty significant restructuring program that ended in 2019.

Speaker 2: the better part of five to six years of that. And as we have obviously started to think about our 2025 strategic plan.

Speaker 2: It's only good business to continue to look for ways to optimize. We've made a lot of changes in the organization around our structure, around innovation, our digital transformation, our back office centers, how we're thinking about SAP S4HANA, how we're thinking about our manufacturing footprint and our manufacturing strategy moving forward.

Look for ways to optimize we've made a lot of changes in the organization around around our structure around innovation, our digital transformation our back office centers, how we're thinking about SAP four Hana, how we're thinking about our manufacturing footprint and our manufacturing strategy moving forward.

Speaker 2: All of those are the right things to do to continue to drive efficiency across the business and ensure that we continue to execute against our strategy.

All of those are the right things to do to continue to drive efficiency across the business and ensure that we continue to execute against our strategies. So this is a very focused program, we believe I mean.

It was in response to what we needed to deliver for our 2025 planned to get ahead of this even faster.

And earlier, our overhead structure is pretty pretty well managed right now you saw overheads down our fixed costs down in 2021.

Speaker 2: You saw them down quite considerably in the fourth quarter that boathed well for us as we move into 22 but we need to continue to optimize and we allocate resources into the key growth priorities we have across the company.

You saw them down quite considerably in the fourth quarter that bodes well for us as we move into 'twenty, two but we need to continue to optimize and reallocate resources into the key growth priorities, we have across the company and you've seen some of those growth priorities and obviously the advertising piece has been a key driver of our topline sustained momentum in our <unk>.

Speaker 2: And you've seen some of those good priorities. Obviously, the advertising piece has been a key driver of our top line sustained momentum, and our intention is we laid out in 22 was to accelerate that advertising. Now they cross the oral care and pet nutrition business, but our skin health and some of the other categories that I mentioned earlier in the discussion. So again, we intend to reinvest most of this money, but we wanna have levers.

Tension as we laid out in 'twenty two was to accelerate that advertising now that across our oral care and and pet nutrition business, but our skin health and some of the other categories that I mentioned earlier.

The discussion so again in.

We intend to reinvest most of this money, but we want to have levers available to us as we go through through the year. We brought stand in a big purpose of bringing standing was not only his technology background to help us with our transformation, but to help us think about where we can optimize our structure going forward. So why don't I turn it over to Stan let him.

Speaker 2: available to us as we go through through the year. We brought stand-in, a big purpose of bringing stand-in was not only technology background help us with our transformation, but to help us think about where we can optimize our structure going forward. So why don't I turn it over to Stan and let him share a couple of his thoughts on this.

A couple of his thoughts on this.

Speaker 9: So, first of all, thanks for the question. As we look at CrosProp, last year, certainly a great year benefited from COVID-driven categories, but where we landed in 2021 on a full year, I think it's important for a little bit of context. That's equal to where we were pre-p...

First of all thanks for the question as we look at gross profit last year, certainly a great year benefited from Covid driven categories, but where we landed in 2021 on a full year I think it's important for a little bit of context.

Equal to where we were pre pandemic. So it hasnt fallen off from those levels. There's obviously, a big mix impact from the categories that drive that but this productivity program will help us accelerate our actions through our 2025 strategy. We think they are in the right places again there'll be timing here of these.

Speaker 9: So it hasn't fallen off from those levels. There's obviously a big mixed impact from the categories that drive that.

Speaker 9: But this productivity program will help us accelerate our actions through our 2025 strategy. We think they're in the right places. Again, there will be timing here of these will start to benefit us in the back half of the year. And on annualized rate, you know, 9,200 and 10 million is a meaningful number.

We will start to benefit us in the back half of the year at an annualized rate of 90 to 110 million is a meaningful a meaningful number now behind that split.

Speaker 9: Now, behind that, you know, on the split of what goes to the bottom line versus what goes back into the business, we have some flexibility there. But part of this is gonna get invested back into the business.

<unk> of what goes to the bottom line versus what goes back into the business. We have some flexibility there, but part of this is going to get investors back into the business. As we've said we want to continue to drive the long term health of these categories and our long term health of the business. So the margin as we went through the year, obviously, we wrapped on it.

Speaker 9: As we said, we want to continue to drive the long term health of these categories and long term health with this.

Speaker 9: So the margin as we went through the year, obviously we wrapped on a very difficult compare, but we are confident in our ability to drive margin expansion in 2022.

Difficult compare but we are confident in our ability to drive margin expansion in 2022.

Thanks Wendy.

Up next we'll take a question for Mark Astrachan with Stifel. Please go ahead.

Speaker 3: Up next we'll take a question from Mark Gastrichan with Steepholt, please go ahead.

Speaker 7: Yeah, thanks and good morning everyone. So I wanted to follow up on that question.

Yeah, Thanks, and good morning, everyone.

I wanted to follow up on that question.

Can you hear me.

Speaker 3: Yeah, I can. Go ahead. Absolutely great. Sorry. So I wanted to follow up on that question and just think about it on a longer term basis. What is the right level of even margin for the business?

I cannot go ahead sorry.

Alright.

So I wanted to follow up on that question and just think about it on a longer term basis. What is the right level of EBIT margin for the business over time, you take a look over the last decade, it's roughly flat I get the puts and takes on <unk>.

Speaker 10: Over time you take a look over the last decade. This is roughly flat. I get the puts and takes on

Speaker 10: Impro cost, FX, et cetera. But in absolute, should investors expect it to increase over time, given what you said about increasing investment, there's less balance growth. Especially if you look at if you're with pet driving majority of growth.

Cost of it.

Et cetera, but you know in absolute should investors expect it to increase over time, given what you said about increasing investment.

Yeah, Theres less balanced growth, especially if you look this year with pet driving majority of growth.

Speaker 10: You cut ad spend in the fourth quarter as an example, and obviously we see increasing competition coming from standalone consumer healthcare companies like GSK and J and J. So you know, just conceptually, how do we think about this? How do you think about it if we look after your 2025 targets? Obviously not having specific targets there, but can you be margins grow over time? And how should we all think about that?

You cut AD spend in the fourth quarter as an example, and obviously, we see increasing competition coming from Standalone consumer health care companies like GSK or J J. So just conceptually how do we think about this or how do you think about it if we look out to your 2025 targets obviously not.

Having specific targets there.

EBIT margins grow over time, and you know how how should we all think about that.

Yeah listen all ultimately our goal is to continue to drive EBIT margins up and if you think about what we're trying to execute what we've executed over the last couple of years, notwithstanding obviously some of the setbacks related to Covid, it's accelerating our priority categories. It's the oral care acceleration will grow EBIT margins over time accelerating.

Speaker 2: Yeah, listen, ultimately our goal is to continue to drive a bit margins up. And if you think about what we're trying to execute and what we've executed over the last couple of years, notwithstanding obviously some of the setbacks related to COVID, it's accelerating our priority categories. It's the oral care acceleration. We'll grow a bit margins over time. Accelerating pet care, premium pet nutrition, likewise.

Petcare premium pet nutrition likewise, the skin health business as we continue to be very committed to those all margin accretive to the bottom line of the company. So obviously driving improved mix and getting those three categories continuing to drive the top line of the company will ultimately deliver more EBIT margin, but we have to be proactive I mean, what <unk>.

Speaker 2: The skin health businesses we continue to be very committed to those all margin accretive to the bottom line of the company.

Speaker 2: So obviously driving an improved mix and getting those three categories continuing to drive the top line of the company will ultimately deliver more more lead

Speaker 2: But we have to be proactive. I mean, we're proactive in taking obviously the pricing we just discussed. We have to be proactive in ensuring that we have the resources internally to optimize our media spend. We'll talk a little bit about that at Cagney, some of the great work that we're doing around driving ROI more efficiently across our advertising spend. Now, that may allow us to spend more against some of the opportunities we see or optimize our spending as we move forward.

Active in taking obviously the pricing we just discussed we have to be proactive and ensuring that we have the resources internally to optimize our media spend will talk a little bit about that at Cagny. Some of the great work that we're doing around driving ROI more efficiently across our advertising spend now that may allow us to spend more against some of the opportunities. We see are optimize our spur.

Ending as we move forward Likewise as we talked about early most of the call today is the pricing aspect of this and we will continue to be bold and ambitious with our pricing because we believe getting the gross margin in the P&L ultimately the EBIT up is all is the way to continue to fuel the investment that we need to sustain the top line growth. So ultimately the goal is to drive.

Speaker 2: you know likewise as we talked about early most of the call today is the pricing aspect of this and we will continue to be bold and ambitious with our pricing.

Speaker 2: because we believe getting the gross margin in the PN ultimately to ebit up is the way to continue the fuel the investment that we need to sustain the top line growth. So ultimately the goal is to drive ebit margins, obviously some challenges in the short term that we've seen.

EBIT margins, obviously some challenges in the short term that we've seen but we think as we execute against our 2025 strategy. The category that we compete in today the pricing the innovation that we have in place all will contribute to that.

Speaker 2: But we think as we execute against our 2025 strategy

Speaker 2: The category that we compete in today, the pricing, the innovation that we have in place, all will contribute to that. The program that we announced is all part of that.

A program that we announced is all part of that obviously looking at ways to optimize our structure to ensure that we find ways to improve the profitability through the income statement.

Speaker 2: looking at ways to optimize our structure to ensure that we find ways to improve the profitability through the income.

And our last question today comes from Robert <unk> with Evercore. Please go ahead.

Speaker 3: And our last question today comes from Robert Ottenstein with Evercore. Please go ahead.

Speaker 12: Great, thank you very much. First, just a couple of follow-ups and then my real question, suggest on the U.S. oral care business.

Great. Thank you very much first just a couple of follow ups and then my real question. So just on the U S oral care business.

Speaker 12: Can you talk, can you dimensionalize kind of what the gap was between chipmints and retail and what that impact you know was you know maybe as a percentage and then I guess you're related give us a sense of how much the US oral care market grew in 2021.

Can you talk can you dimensionalize kind of what the gap was between shipments and retail and what that impact was maybe as a percentage and then I guess related maybe give us a sense of how much the U S. Oral care market grew in 2021.

Speaker 12: And then can you also maybe put a little finer point on terms of the magnitude of the US pricing?

And then can you also maybe put a little finer point on terms of the magnitude of the U S pricing.

Speaker 12: that you're putting in. You know a lot of adjectives around it but are we talking mid-single digit, healthy mid-single digit, high single digit, double digit, just kind of, you know, a little bit of sense on that. So those are just the follow-ups.

That you are putting in a.

A lot of adjectives around it.

But are we talking mid single digit healthy mid single digit high single digit double digit just kind of a little bit of sense on that so those are just the follow ups and then the <unk>.

Speaker 12: And then the real question is really, you know, can you go into China a little bit? We haven't talked about that much today. In prior calls, there was some discussion of some disruptions that happened in some of the distribution tiers. Love to understand a little bit how that developed in the quarter. Thank you.

Real question is really can you can you go into China, a little bit we havent talked about that much today.

In prior calls there were some discussion of some disruptions that happened in some of the distribution tiers love to understand a little bit how that developed in the quarter. Thank you.

Speaker 2: Okay, thanks Robin good morning. Listen, on the pricing, I can't be really any more specific than what I provided you earlier. Obviously we've announced pricing.

Okay. Thanks, Rob and good morning listen on the pricing I can't be really any more specific than what I provided you earlier, obviously, we've announced pricing in some categories in the fourth quarter in North America, we're taking the bulk of our categories were announced it will be effective in the in the second quarter.

Speaker 2: some categories in the fourth quarter in North America or taking the bulk of our categories were announced and will be effective.

Speaker 2: in the second quarter and you know, consistent with where we see inflation and our needs to continue to grow gross margins, that really dictates the level of pricing that we take. And where we think.

And consistent with where we see inflation in our niche to continue to grow gross margins that really dictates what level of pricing that we take and where we think we can take it with list prices and how do we do it through our revenue growth management initiatives and how do we do it through our innovation strategy. So it's a.

Speaker 2: We can take it with list prices and how do we do it through our Rivery Ghost Management initiatives and how do we do it through our innovation strategy. So it's a well thought through approach to ensuring that we're getting the right pricing across the price tiers.

It's a well thought through approach to ensuring that we're getting the right pricing across the price tiers.

Speaker 2: able to drive value to the consumer through our innovation and making sure that we balance that with our promotional cadence.

To drive value to the consumer through our innovation and making sure that we balance that with our promotional cadence and ultimately we will see we have.

Speaker 2: And ultimately we'll see we have, you know, we, we don't obviously want to visibility to where our competitors are taking pricing. We do this in isolation and we do it based on what we think is right for our business and we adjust accordingly moving forward. On China specifically, I,

We.

Obviously, you don't have visibility to where our competitors are taking pricing. We do this in isolation and we do it based on what we think is right for our business and we adjust accordingly, moving forward on China specifically.

Great success in China and in fact, I think we're still in the early days of that we saw the Colgate business respond really nicely to a very.

Speaker 2: Success in China in fact, and I think we're still in the early days of that that we saw

Speaker 2: The co-gate business respond really nicely to a very distinct change in our strategy in that market.

Distinct change in our strategy in that market not only our go to market approach, but more importantly, our innovation approach to really go after the premium side of the market and E. Commerce E. Commerce is now 25% to 30% of the category and we're the fastest growing brand in E. Commerce right now and that is all at a index of about two and a half.

Speaker 2: Not only our go-to-market approach, but more importantly, our innovation approach to really go after the premium side of the market in e-commerce. e-commerce is now 25% to 30% of the category, and we're the fastest growing brand in e-commerce right now. And that is all at a index of about two and a half times to the market average. So it really is premium innovation that's driving...

Times to the market average so it really is premium innovation, that's driving our success. There. We've got more work to do we've got some opportunities in the brick and mortar environment, we've seen that share stabilize and so the incremental growth is mainly come through through online and we see as we think about our distribution model moving forward some ways to optimize.

Speaker 2: our success there. We've got more work to do. We've got some opportunities in the brick and mortar environment. We've seen that share of stabilized.

Speaker 2: And so the incremental growth has mainly come through online and we see as we think about our distribution model moving forward some ways to optimize that.

<unk> that we're taking an important step with our Holly in Haynesville brand in 2022 with Darlie, We've got good innovation and good support levels for that business to continue to accelerate that so we feel pretty good about China now China. Obviously, the category has been quite sluggish I mean, the brick and mortar category was actually down whereas e-commerce was up.

Speaker 2: We're taking important step with our Holly and Hazel brand in 2022 with Darlie.

Speaker 2: We've got good innovation and good support levels for that business to continue to accelerate that so we feel pretty good about China now

Speaker 2: Trying to obviously the catawoi has been quite smuggish. I mean the brick and mortar catawoi was actually down.

Speaker 2: Whereas e-commerce was out, this was really driven by the lack of mobility in the marketplace.

This was really driven by the lack of mobility in the marketplace.

Speaker 2: that we've seen over the last year and the lockdowns that we've seen across that market in different provinces and that has certainly had an impact on consumption so things have slowed a bit but I think as we move into 22 and knock on wood that COVID continues to to moderate we'll see obviously that category we bound nicely and we're we believe in a much stronger position to capitalize on that than we were before.

That we've seen over the last year and the Lockdowns that we've seen across that market and different provinces and that has certainly had an impact on consumption. So things have slowed a bit but I think as we move into 'twenty, two and knock on wood that COVID-19 continues to to moderate we'll see obviously that category will rebound nicely in.

We believe in a much stronger position to capitalize on that than we were before.

Okay.

And that is all the questions. We have in the queue I'll turn the conference back to the speakers for additional or closing remarks.

Speaker 3: And that's all the questions we have in the queue. I'll turn the conference back to the speakers for additional closing remarks.

Speaker 2: Right, well thanks everyone. So, you know, let me close by extending my deepest gratitude to all the Colgate people that are listening today and those that aren't.

Alright, well, thanks to everyone. So let me close by extending my deepest gratitude to all the Colgate people that are listening today and those that arent.

Speaker 2: There are resilience and their care and managing through just an extraordinary environment in 2021, which was obviously continued to be disrupted by the challenges of COVID are nothing but impressive. For staying so focused on the innovation, our revenue growth management initiatives, as well as the brand building plans that have accelerated and sustained top line growth for the company and continued to deliver strong results. So my gratitude and appreciation to all the Colgate people and thanks everyone, I'll see you again.

Their resilience and their care and managing through just an extraordinary environment in 2021, which obviously continue to be disrupted by the challenges of Covid are nothing but impressive.

For staying so focused on the innovation revenue growth management initiatives as well as the brand building plans at an accelerated and sustained top line growth of the company and continue to deliver strong results. So my my gratitude and appreciation to all the Colgate people and thanks, everyone I'll see you at Cagny.

Speaker 13: And this concludes today's call. We do thank you for your participation. You may now disconnect. I'd like a comment to... ...and I'd like a comment to... ...and I'd like a comment to... ...and I'd like a comment to...

And this concludes today's call. We do thank you for your participation you may now disconnect.

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