Q4 2024 Colgate Palmolive Co Earnings Call
Good morning, welcome to today's Colgate Palmolive, 'twenty 'twenty, four fourth quarter and year end earnings conference call.
This call is being recorded and is being simulcast live at Www Dot Colgate Palmolive stock.
Speaker Change: Now for opening remarks, I'd like to turn the call over to Chief Investor Relations Officer, and Executive Vice President M&A John Boucher.
Thanks Betsy.
Speaker Change: And welcome to our fourth quarter and full year 2024 earnings release Conference call. This is John.
Speaker Change: Today's conference call will include forward looking statements.
Speaker Change: Actual results could differ materially from these statements.
Speaker Change: Forward looking statements inherently involve risks and uncertainties and are made on the basis of our views and assumptions desktop.
Speaker Change: Please refer to our fourth quarter and full year 2024 earnings press release and related prepared materials and our most recent filings with the SEC, including our 2023 annual report on Form 10-K.
Speaker Change: 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 tables for 678 and nine of the earnings press release.
Speaker Change: A full reconciliation to the corresponding GAAP financial measures is included in the fourth quarter and full year 2024 earnings press release.
Speaker Change: Available on Colgate's website.
Noel Wallace: Joining me on the call. This morning are Noel Wallace, Chairman, President and Chief Executive Officer, and stands at Tulip Chief Financial Officer.
Noel Wallace: No. We will provide you with his thoughts on our results and our 2025 outlook and then we'll open it up for Q&A.
Noel Wallace: Great. Thanks, John and good morning, everyone and thank you all for joining US today as we discuss our 2020 core results as well as our outlook for 2025, let me make a few points on 2024 before I tell you why we continue to be very confident in our ability to deliver against our goals for this year.
Noel Wallace: I couldn't be prouder of the results of the Colgate team that.
Noel Wallace: They delivered in 2024, which drove strong growth and exceeded our initial financial guidance net sales of $20 billion in 2024, which is one year ahead of our strategic plan ambition. This was driven by our sixth consecutive year of organic sales growth either in line or ahead of our law.
Noel Wallace: Long term target of 3% to 5% we delivered high single digit organic growth in 2024 on top of high single digit growth in 2023.
Noel Wallace: We delivered pricing and volume growth in all four quarters for the year. We grew volume in every division and in every category. We're focused on driving household penetration, which we believe is the best way to deliver long term sustainable growth.
Noel Wallace: We had another year of increased advertising spending up 15% and up 130 basis points as a percentage of sales.
Noel Wallace: This increase which is on top of 19% increase in 2023 is driving significantly improved brand health.
Noel Wallace: Our third consecutive year of global toothpaste category value share growth highlights that our strategy of driving category growth in order to drive market share growth.
Noel Wallace: Our strategy to build and scale, our innovation capabilities is paying off as well as the incremental sales contribution from innovation has risen by 45% from 2021 to 2024.
Noel Wallace: We delivered gross and operating margin expansion, despite significant foreign exchange headwinds and the increased spending on advertising compensation and capabilities through another year of strong productivity, particularly for our funding the growth initiatives.
Noel Wallace: Double digit based earnings per share growth ahead of our initial guidance despite incremental foreign exchange headwinds on both the net sales line and in gross margin.
Noel Wallace: Record operating cash and free cash flow record cash returned to shareholders along with continued improvement in our top tier return on invested capital. So another very strong year, but let me now move on to 2025.
Noel Wallace: In 2025, we'll see many of the same challenges and opportunities all through 2024 I have been speaking to you about how our strategy was designed so that we could deliver in 2025 and beyond.
Noel Wallace: Investing in future growth.
Noel Wallace: Building more flexibility into our P&L and strengthening our balance sheet the.
Noel Wallace: Our strong investment levels behind advertising and innovation and the continued improvement in returns on that spending give us confidence in our ability to continue to drive volume through household penetration.
Noel Wallace: The increased investment is also improving brand health.
Noel Wallace: I will discuss at Cagny next month higher brand health is the key to our revenue growth management strategy, which will be key to sustaining pricing growth and a less inflationary environment.
Noel Wallace: We will deliver another year of strong innovation led by the relaunch of Colgate total with superior new offerings offerings in toothpaste manual toothbrushes and mouthwash.
Noel Wallace: Our investments in data analytics, and AI will also be key to driving pricing growth in 2025.
Noel Wallace: We utilized our strong gross profit growth in 'twenty, two 'twenty, three and 'twenty 'twenty four to invest ahead of the curve and capabilities, which also give us additional flexibility to control SG&A spending going forward.
Noel Wallace: Our strong cash flow gives us additional leverage for EPS growth through debt pay down to lower interest expense or share repurchases, even as we continue to invest in our business for growth and productivity.
Noel Wallace: So we enter 2025 confident in our strategy and in our ability to deliver consistent compounded grow to deliver on our guidance and drive strong total shareholder return so with that I'll hand, it over to you for questions.
Noel Wallace: Okay.
Noel Wallace: Yeah.
Noel Wallace: We will now begin the question and answer session.
Noel Wallace: Well that's a good question you May Press Star then one on you touched on film.
Noel Wallace: To withdraw your question. Please press Star then two.
Noel Wallace: Please limit yourself to one question.
Noel Wallace: If you have further questions you may re.
Noel Wallace: Enter the question queue.
Noel Wallace: Again, if you would like to ask a question. Please press Star then one.
Noel Wallace: Okay.
Speaker Change: The first question today comes from Dara <unk> with Morgan Stanley. Please go ahead.
Speaker Change: Hey, good morning, guys. So why don't I just want.
Speaker Change: A bit more clarity around the 2025 guidance relative to Q4 <unk>.
Speaker Change: E P S guidance for all in low single digit to mid single digit growth is pretty robust considering your onerous FX impact. So just what gives you confidence in such a strong implied local FX earnings growth number one and then two maybe we can drill down specifically into the U S. G line, obviously, that's a key dry.
Speaker Change: Ever of earnings growth Q4 is weaker than we've seen in recent quarters. If you just for Argentina, the pet private label drag probably somewhere in that close to 4% O S. G range slower than the prior pace. So you know just as we think about the three to five guidance for 2025, maybe highlight.
Speaker Change: Your level of confidence relative to that Q4 result, and maybe what the key points are of uncertainty are either either positive or negative.
Speaker Change: Yeah. Good morning, Dara. Thank you. So let me let me start off with the guidance as I said, you know I think I alluded to in my comments. We continue to believe we are very well positioned to continue delivering consistent compounded dollar earnings growth you've heard me talk about a lot about that over the last couple of years, that's reflected in our guidance and the strange quite frankly.
Speaker Change: Fundamentals that we as you go through our P&L as well as the balance sheet I've spoken many times to all of you about building flexibility into our plans and that was very much inherent as we looked at our 2025 strategy back in 2020, how do we get more flex into the P&L as we pivot to a much more.
Speaker Change: Growth mindset oriented organization and that's exactly what we've done so our topline focus will continue with balanced growth in both volume and price and you've seen that consistently throughout the year and 'twenty 'twenty. Four we believe will continue to deliver balanced growth in 2025, we saw volume and pricing growth across all of our <unk>.
Speaker Change: <unk> of this year, which is I think a terrific proxy for how we're building the health of those businesses moving forward. So in the context of 3% to 5% we feel really good about that we think it'll continue to be at the top end of our peer group and it's reflected in the comfort we have and the health of the business overall, you look at market shares consistent.
Speaker Change: And the up over the last couple of years, you look at the performance across multiple divisions being consistently up quarter to quarter. So the health of the business is there if I move down the P&L. We continue to invest as I mentioned ahead of dark capabilities. So we've put a lot of money in the last couple of years and building capabilities that we think will allow us.
Speaker Change: To sustain more consistent topline growth, we've reoriented the organization to really focus on dollar earnings growth and making sure that we're looking for ways to offset foreign exchange no question that we'll continue to be a headwind, but we believe we've got more opportunities to offset that with other areas within the P&L.
Speaker Change: The strong Jan strong cash generation is another area to look to we've been consistent about building more cash lowering our working capital to ensure that we have more flex across other areas below the operating margin line in the P&L. So overall I think the underlying health of the business is in a really good place now if I come back to Europe.
Speaker Change: Danny.
Danny: Question for three you look almost 5% in the first in the fourth quarter. If you exclude private label, which we think is a more honest way to look at our business given the underlying base business being quite strong and we think 5% in the current market environment is actually a really good number now we have plans to continue to develop the.
Danny: <unk> that we see ahead of us about 5% in the fourth quarter, we feel pretty good about particularly on the volume side, almost 3%, excluding private label a little bit softer than in some parts of Europe that we saw as we exited the quarter, particularly some of the softness we saw continued softness in China behind our skin health business, but.
Danny: Overall, good volume growth and we've been talking to you more about a normalization moving away from pricing growth in the P&L to more volume growth and that's consistent with what we've seen over the last couple of quarters. We did have less pricing from Argentina in the quarter, which we've talked about in our prepared comments. It was about 100 basis points less than we had in the first three quarters.
Danny: For the year, but we are still getting positive pricing and we've announced more pricing to offset some of the foreign exchange headwinds that we're seeing in Latin America already here in the first quarter. So if I come back to the underlying confidence that we have strong P&L flexibility good balance sheet. The health of the brands is in a much better place.
Danny: And that's been market shares continue to inflect positively for the for the business and overall, we're seeing a stabilization of the categories and hopefully we'll see the growth come back as we move through 2025.
Speaker Change: The next question comes from Peter Grom with UBS. Please go ahead.
Peter Grom: Thanks, operator, and good morning, everyone. So I was just hoping to get some color on the gross margin performance in the quarter and kind of the cadence from here.
Speaker Change: We weren't going to have sequential progress.
Peter Grom: But it was the first time in a couple of years, but that hasn't happened.
Speaker Change: I just would be curious how you know gross margin parent versus kind of your expectations and then just looking ahead you know I understand you expect another year of expansion, but just would be curious.
Speaker Change: If you could or would be helpful. If you can frame the path from here considering the eggs right and then just within that any color you can share on funding the growth just given what was a very strong year in 'twenty four.
Peter Grom: Yeah, Good morning, Peter Thanks.
Peter Grom: You know, let me just level set us here were up 70 basis points versus year ago with significant foreign exchange headwinds. So again, another quarter north of 60% and I think overall, we feel pretty good about that are slightly below where we were hoping given the the transactional impact that move through the P&L as we exited the quarter.
Peter Grom: But overall the underlying margin driven by pricing strong productivity to funding the growth continues to be very good. So we feel pretty good about where we ended up and as I mentioned earlier that we have taken some pricing in Latin America to begin to offset some of the foreign exchange headwinds, we've seen but let me turn it over to Stan.
Stan: He will give you a little bit more color on how we were thinking about the trajectory of gross margin and our confidence to be able to grow gross margin in 2025. Thanks al.
Peter Grom: Peter.
Peter Grom: Mentioned, we did all four quarters above 60% and we're up 70 basis points in fourth quarter. So we're happy with the margin expansion and as we look ahead. There are several items that I think will help us as we go to drive that margin expansion wanted it's simply going to be mix as we grow hills and we grow oral care you get a positive mix of those are.
Peter Grom: Two of our more profitable businesses. So you combine that with less private label, which has a very low margin you get a mix benefit going forward you mentioned our funding the growth program, our productivity program long established extraordinarily well run by the teams we've been planning on this for many months now heading in.
Peter Grom: 225, so I think we're off to a good start on funding the growth.
Peter Grom: What are the capabilities the old mentioned as we've made investments in is in some of our new capabilities and we have revenue growth manage verbal we called two dot O I as we go to drive better performance on our revenue growth management, we have good innovation pipelines across the business coming in and I think that combination of those.
Peter Grom: This will help us with expanding margin in 2025 now as private label slowly mixes off you'll see that go through the year, but we are confident in the ability to expand margin in 2025.
Peter Grom: And then one other add Peter would be that we've seen a more moderating raw material environment, we'll watch that carefully.
Peter Grom: But relative to how we entered 2024.
Peter Grom: Seem to have better visibility to where raw materials are going at this stage.
Peter Grom: Yeah.
Speaker Change: The next question comes from Bonnie Herzog with Goldman Sachs. Please go ahead.
Speaker Change: Alright, Thank you and good morning.
Speaker Change: Actually I had a question on your North American business, you know pricing was negative last year.
Segment volumes won't necessarily benefit I guess in the back half of the year. So as we think about this year.
How should we think about the contribution from price versus volume.
Speaker Change: You know in North America, and then is it reasonable to assume that price contribution remains negative and in that context could you touch on the promotional environment and I guess, how it compares valid.
Speaker Change: Across your different categories in the market. Thank you.
Speaker Change: Thanks, Brian and good morning, you know again as we talked about back in the second quarter and some of the price adjustments, we made to the business, which we think have helped improve the underlying health and certainly some of the strong volume performance. We've had in the U S continued to filter through the third and the fourth quarter, we'll see that kind of taper away as we move through the back half.
Speaker Change: A 2025, but those prices adjustments are there I would say that both volume and price sequentially improved in the fourth quarter.
Speaker Change: As we as we exited the year in North America.
Speaker Change: Remind everyone that the the segmentation that we have now includes the skin health business in North America.
Speaker Change: Adds up these third quarter that we added that in there and we did see a lot of softness in <unk>.
Speaker Change: Volume and price coming out of our skin business in China, which had been pretty consistent theme throughout the year, but overall North America. If you take the underlying business oral personal and home care performed quite well, we saw as I mentioned sequential improvement we.
Speaker Change: We saw some benefits from some of the shipment timing that we had this year versus last year and the volume performance ex skin was very strong across the north American business, but that being said, we do have more work to do we're still continuing to look at our go to market strategies.
Speaker Change: And our investment posture in the U S. We continue to believe it's a strategic growth opportunity for the company and we will continue to invest in that business, we have new leadership in place.
Speaker Change: We're excited about some of the strategic thinking that's coming from behind that the exiting of the year saw some green shoots, particularly in some of the categories, including toothpaste liquid hand soap and dish.
Speaker Change: Particularly in some of the Lauder categories, which had been a headwind to us in the first part of the year. So we feel good about where we are.
Speaker Change: From a from a strategic standpoint and from a gross standpoint, so overall pricing will improve particularly as we move through the back half of 2025.
Andrea: The next question comes from Andrea <unk> with Jpmorgan. Please go ahead.
Andrea: Hi, Good morning, I, just wanted to kind of like elaborate a little bit more if you can on the pricing front. What are you expecting no on the on the FX driven pricing you mentioned Latin America, you took pricing.
Andrea: And if you are seeing anything in regards to some of the places where you have FX as well in Europe.
Andrea: In terms of like how it fits into our guidance and then related to that also on the volume sorry, just to clarify if it's mostly driven the volume component side, you were seeing into 'twenty 25, wherein it's going to be there.
Andrea: I mean, the areas that you see the volume I'm kind of like being positive on them.
Andrea: The algorithm.
Andrea: The three to four to five what's gonna be the the green shoots you're seeing I'm, assuming Hughes and some of the.
Andrea: You were saying Colgate total as well and thank him.
Speaker Change: Great. Good morning, Andrea So let me let me take the pricing question first you know, obviously I talked about offsetting foreign exchange and we'll continue to see some opportunities across the world.
Speaker Change: You know, particularly in Latin America, but there are other markets across Africa that we will be taking pricing to offset some of the foreign exchange headwinds that we see moving into the year our.
Speaker Change: Europe on the other hand will continue its value oriented pricing strategy, which is very much driven by a significant improvement in our innovation and the quality of our innovation to drive more pricing and value back into the categories that was successfully deployed back in 2023 and throughout 2024.
Speaker Change: We'll continue to make sure that we're bringing pricing into the category through seven of the value oriented initiatives that we have and as Stan mentioned that will continue to be a key theme for all of our divisions as we increased our innovation you've heard me talk about the Incrementals City, we're getting from our innovation should we feel we're in a much more solid footing relative.
Speaker Change: To how we think about innovation in its ability to be accretive through our P&L, both from a gross standpoint as well as a margin standpoint.
Speaker Change: In terms of volume will continue to have balanced volume across the year now we've said that we expected a shift from a pricing driven algorithm and in an organic to a more volume driven organic.
Speaker Change: She had been more volume driven algorithm on organic and that's exactly what's what's happening we're seeing that consistently across all of our divisions.
Speaker Change: It'll softness on the hills category, but we've seen consumption start to improve as we enter 2025 on the categories. So that bodes well, but that's been a little softer, but we'll get into hills later, but an outstanding performance and a flat category and ultimately you will see that category hopefully inflect positive as we move through 2025, but volume will come across.
Speaker Change: The Board Asia will continue to be a good volume contributor Africa has been a great volume contributor and no question Latin America as.
Speaker Change: As well as North America, so it's going to be pretty broad based across the board. If you look if you take a step back for a moment and look at our volume shares and again, a testament to our focus on brand penetration our volume shares continue to inflect very positively across most of the region. So we feel very good about our ability to continue to drive penetration.
Speaker Change: Traces to some of the initiatives that we have and largely that's driven by the underlying health of the brand, but you're in a much better place than they were five years ago, given the support that we're putting behind the business.
Speaker Change: Okay.
Speaker Change: The next question comes from come out Gosh, a wallet with Jefferies. Please go ahead.
Speaker Change: Hey, everyone.
Speaker Change: No you've mentioned you would talk about hills later, maybe we can talk about it a bit now.
Speaker Change: You could just talk a bit about the what's going on with volumes, particularly in Europe.
Speaker Change: Something cyclical is there anything else changing any more details.
Speaker Change: <unk> would be useful and then on our G. M 2.0, perhaps just a little bit more on what that means what youre able to do now versus what you were doing with our gen. Four I think those would be helpful. Thanks.
Speaker Change: Yeah, great and good morning to intermodal. So you know again he'll just continues to really execute against.
Speaker Change: The strategy that we outlined the three or four years ago. So obviously the volume was impacted by the impact of private label. So about a 200 basis points impact from the drag on private label. So overall, a 3% volume growth on that business and a roughly flat category right. Now we think is very very strong start.
Speaker Change: Off with market shares on Hill's consistently one of the fastest growing brands in pet specialty we continue to see strong share growth across other channels, great ecommerce growth.
Speaker Change: Back to growth on prescription diet, which had been a drag on the business historically and that bodes well for mix and margin. So overall the business is in a very very good place in the fundamentals.
Speaker Change: Terms of how we're executing against some of our strategies, we've talked about the segment opportunities that we see in small pet we've talked about the segment growth opportunities we've seen in cat as well as wet we feel we're right on pace with where we expect it to be and see more opportunities to continue to execute those volume opportunities as we move forward and those are.
Speaker Change: More higher ASP opportunities, which will translate.
Speaker Change: Through the P&L as well.
Speaker Change: Supply chain is in a much better shape as well, we've talked about making sure that we really optimize our network and we're doing exactly that the tongue and oxy should ramp up which will be our most automated facility in the world continues to go as expected. So we're overall we're in we feel like we're in a good place the category was a little soft in Europe, we don't.
Speaker Change: Think it's anything unusual to be too worried about but obviously, we're very focused on make sharing that we go after those under index growth segments, where we're not getting our fair share where we now have strategies in place and the innovation in place to actually capture that growth and so that will help us offset so within the context of the overall category we are out.
Speaker Change: Performing most of our competitors and we feel very good about where the business is going and the trajectory of that as we move into 2025. So.
Speaker Change: So let me pick up on the second part of the question around our G. M. Two dot O and you've heard us talk over the last few years about investing in capabilities that is really what comes home to us to do and things like analytics and digital and data we leverage those skills in those new capabilities to come in to design our price.
Speaker Change: <unk> strategy of market by products, our promotion strategy and timing and we've seen some really great returns and customer feedback around those so it's really taking a already childhood, our workforce here, enabling them with new capabilities and new skills that allows us to be more effective when you can.
Speaker Change: Buying that with innovation that we bring to market, it's pretty powerful and market. So we're comfortable that our gm's going to continue to contribute to both the margin you have to top line.
Speaker Change: The next question comes from Kevin Grundy with E. M. P. Please go ahead.
Kevin Grundy: Great. Thanks, good morning, everyone.
Kevin Grundy: The comment on advertising levels broadly. So you guys have done an outstanding job here over the past couple of years of increasing A&M levels.
Kevin Grundy: That's been funded by gross margin increases, but now with things.
Kevin Grundy: Things slowing down a bit the expectation is that advertising marketing levels are going to be relatively flattish.
Kevin Grundy: Year over year, right, So said differently maintained.
Kevin Grundy: Sent a sales so how will you potentially weighing as you're putting the plans together further increasing A&M levels as a percent of sales to the extent you could accelerate topline growth further gained market share relative to margin and earnings growth expectations, just because of the returns you've been getting in recent years have been so strong and further increase.
Kevin Grundy: So broad context, I think on that front would be helpful. Thank you.
Kevin Grundy: Yeah, Great. Kevin you know I think that the topline comment here is that we are very focused with a lot of our tech platforms and the work that we're doing around programmatic media personalization.
Kevin Grundy: Through data to really optimize and continue to find ways to be more precise with our spending that we've obviously gotten in a much better place than we were years back as you mentioned are up 9% this quarter on top of 80% in the year ago. So we're in a much much healthier place and if you take all of the metrics that we use.
Kevin Grundy: Used to assess brand health, which ultimately is the most important proxy and whether your advertising is working or not and we continue to see very strong inflections on the strength of our brands around the world. We do have unique opportunities in.
Kevin Grundy: Certain parts of the world to continue to improve that but and on and on in general a much better place than we've been we're being far more deliberate with our advertising spend and what I mean by that there's more choice full the opportunities that we see.
Kevin Grundy: In terms of driving category growth and growth for the Colgate franchise, and so we've been I think quite successful in earmarking money to certain parts of the world and in certain categories, where we're seeing a much much better ROI I can't get into a lot of specifics, but you heard us back talk over the last couple of years on how we're using data.
Kevin Grundy: Analytics and our digital transformation has really unlocked a lot more efficiency in our spend and our R. R. O I's if continued to improve sequentially. So as we move into 2025, it's really about continuing to make sure we're optimizing the growth and the spending that we've had and be more.
Kevin Grundy: Precise and tactical with how we think about using that money on more strategic on how we use that money across the board so it'll be efficiency technology, and making sure we find ways to optimize that spend in the areas, where we're going to get the best return on investment.
Bryan Spillane: The next question comes from Bryan Spillane with Bank of America.
Speaker Change: Go ahead.
Bryan Spillane: Hi.
Bryan Spillane: Thanks, operator, good morning, everyone.
Speaker Change: So just I guess, we'd like to get your perspective on two quick things one.
Speaker Change: No and conscious trying to put the 3% to 5% organic sales growth.
Speaker Change: <unk> forecast for 25 in a context, where does that stand.
Speaker Change: Relative to kind of where category growth is as we're exiting <unk>. So one just just kind of your growth rate expectations relative to the category geography, and then the second just since because it's topical within the headline tariffs I think in the prepared remarks, you talked a bit about.
Speaker Change: You know evaluating once you know, but as we're thinking about tariffs just because we're all going to try to put some probabilities on it and run some things through our model just some some basics that we should be paying attention to as we're thinking about this topic just relative health size. It could be I don't know any any anything you can give us as an input would be helpful. Thank you.
Bryan Spillane: Yeah. Good morning, Brian Great I'll take the first part of the question and I'll, let Stan talk about a lot of the great strategic work that we've been doing over the last couple of years to truly optimize our supply chain for more resilience and potential disruption. So.
Speaker Change: If I take the category growth rates right now we've seen you know I think the good news is we've seen more of a stabilization we saw some falloff in the categories as we move through.
Speaker Change: The additive impacts of inflationary pricing over the last a year and a half, but we've seen a more stabilization of the categories and which is good news so categories in general the categories in which we compete are growing two to four so it relative to our organic algorithm of three to five we will.
Speaker Change: We will be outpacing the categories and hope to make continued to drive brand penetration and share growth. So I think the overarching comment is we've seen some stabilization stabilization in the categories based on some of the fall off so that we had seen in the third quarter and into the early part of the fourth quarter and we have we believe the <unk>.
Speaker Change: Right innovation, and the right pricing and the mechanisms in place to continue to outpace the category.
Speaker Change: Hey, good morning.
Speaker Change: Tariffs as you said in the commentary we've not included any potential incremental tariffs in our twenty-five guidance, but we've tried to put the tariffs in context of our long term supply chain strategy. So primarily we aim to have local manufacturing as the cost of shipping some of our products across long distances. It can be material we spent there.
Speaker Change: Last few years building a much more flexibility into our global supply chain, it's not necessarily about building more capacity, but rather making better use of the existing capacity and alternative sourcing as well as standardizing formularies.
Speaker Change: Cross the markets. So importantly, we invested meaningfully in our U S supply chain almost $2 billion over the last five years between investment and our oral personal home care business, along with the purchase of pet food capacity the opening of our target oxy wet pet food facility, we've increased the number.
Speaker Change: <unk> of our U S based manufacturing facilities by more than 40% over that time, so a material investment in the U S capabilities and let me give an example of some of our improved flexibility, while we had available machine.
Speaker Change: Oh toothbrush capacity outside of China in 'twenty, one we were limited in which Skus, we could actually produce in which plants.
Speaker Change: Can now produce more skus that plant at more play out. So we have the same amount of capacity, but we can meet more customer and consumer needs for more geographic locations and this philosophy gives us better flexibility as we enter a period with potentially higher tariffs and we also have additional co mail capacity to provide flexibility.
Speaker Change: <unk>.
Speaker Change: Now we do produce some of our products for the U S and Mexico, primarily toothpaste and we're working on potential mitigation plans, which could impact both raw materials and finished products.
Speaker Change: Materials, we import a limited amount of raw materials predominantly specialty type ingredients like vitamins and amino acids and as you would expect we're planning for multiple scenarios because it's not just the tariff that may be on Mexico, or Canada, or China is the impact of retaliatory tariffs that would also come into play on those <unk>.
Speaker Change: Fly chain. So we're looking at very tactical short term mid term and long term if necessary actions, but until we get more clarity we have not included anything in our guidance.
Speaker Change: The next question comes from Olivia Tong with Raymond James. Please go ahead.
Olivia Tong: Great. Thanks, Good morning, I wanted to talk through what you would expect to be the volume implications of the pricing you're planning to take keeping the T cell in volume in Q4, you know if you could just talk to your order of magnitude on the Latam pricing, whether you've already implemented this and if you're planning to price in other regions or whether the competitive or macro dynamics make that.
Speaker Change: Look I've got to push through and then just you talked about advertising and being up being flat to up what about promotion and your ability if necessary to pivot between advertising promotion. Thank you.
Speaker Change: Yeah. Good morning. Thank you. So let me take the latter part of the question first the.
Speaker Change: Promotional spending has been I think quite constructive we have seen some pockets of increased competitive activity.
Speaker Change: India was one where we saw heightened competition.
Speaker Change: Excuse me in spending in the fourth quarter.
Speaker Change: You probably saw that in the in the press release and in India results, we've seen some heightened competitive activity in South Africa as well.
Speaker Change: But more or less pretty constant across the quarter U S continues to be quite constructive no significant changes there. So on balance I would say that promotional environment continues to be as we would've expected with some isolated pockets of increased activity, which we addressed in our statements earlier so overall.
Speaker Change: We feel we're in a pretty good place, but my expectation as you continue to move from a pricing to a volume environment you may see more more promotion, but we plan for that in our guidance and plan for that in our plans for 2020.
Speaker Change: Five relative to Latin America, and pricing, though as I mentioned, we've announced some pricing already in Latin America relative to some of the foreign exchange headwinds and we'll continue to watch that very carefully we did not anticipate another significant devaluation in Argentina. This year in our guidance or in our numbers that may or may not happen we will.
Speaker Change: Adjust that accordingly, and I you know I think it's worth just saying that despite the significant foreign exchange headwinds we saw in Argentina. We did grow dollar earnings in Argentina, which I think is it is a great proxy to our ability to offset some of the transactional impact that we see as we move through foreign exchange as I mentioned earlier.
Speaker Change: Europe is a little bit more challenging to do that so we pivoted from price increases to really driving meaningful innovation that can drive value in the category and ultimately drive some accretion on the margin line in the pricing line and will continue to adopt that strategy overall.
Sergio Matsumoto: The next question comes from Sergio Matsumoto with E town.
Speaker Change: Cowen. Please go ahead.
Speaker Change: Oh, Hi, good morning, it's Sergio Matsumoto with a robust color scheme.
Speaker Change: Hi, no understand in Latin America, how does the current macroeconomic headwinds.
Speaker Change: Inflation is impacting the demand of the category and with.
Speaker Change: With the new administration in the U S.
Speaker Change: Does how does that.
Speaker Change: That change your operations in the local countries.
Speaker Change: In terms of.
Speaker Change: And the pricing.
Speaker Change: No.
Speaker Change: Then you might make or.
Speaker Change: Or innovation.
Speaker Change: Okay.
Speaker Change: Yeah, Good morning, Sergio and thanks for the question. So as you well know we've been in Latin America for 75, plus years in fact, I'll be going down to Mexico.
Speaker Change: In June to celebrate our 100 year anniversary in Mexico, which is a.
Speaker Change: Great milestone for us and for the Mexican company, which has been one of our most successful businesses in the world are.
Speaker Change: Given our long standing presence in those markets overall, we have dealt with a significant amount of volatility in Latin America over the last couple of decades, and so we're accustomed to obviously, both political and economic disruptions in our ability to offset that with meaningful innovation and execution against the fundamentals there.
Speaker Change: Ultimately drive category growth and our business, we've seen that consistently throughout this year. This year as well Latin America performance continues to be a very very strong it slowed a little bit in.
Speaker Change: In the fourth quarter, but that was more due to some of the pricing that I mentioned earlier.
Speaker Change: That was in the year ago number in Argentina are through the first three quarters that we didn't necessarily have in the four in the fourth quarter of this year, but if I take our two biggest markets and characterize those perhaps in terms of categories and how we're doing our Mexico and Brazil, we had a good good quarters for both of those businesses.
Speaker Change: With market shares market shares are absolutely terrific in both those markets volume and value shares are up overall in Latin America. We had eight of 10 countries offer flat in market share now.
Speaker Change: Nine or 10 of those markets are up or flat in volume. So overall the underlying health of the business continues to be very strong and we're outpacing the categories in terms of our consumption. So so from the perspective of categories. We saw a little slowdown as we talked about in the third quarter around Mexico.
Speaker Change: But that business seems to have stabilized and we've seen better consumption as we've entered 2025. So overall, we think we're in a good place, but we're not immune to obviously the continued volatility around foreign exchange and the movements in terms of statements that are made with various countries. So we'll continue to execute against what we can.
Speaker Change: Troll and that's the fundamentals of the business and making sure that we have flexibility through the P&L.
Speaker Change: Uh huh.
Speaker Change: The next question comes from Chris Terry with Wells Fargo. Please go ahead.
Speaker Change: Okay.
Speaker Change: Good morning, everyone you had mentioned some competitive activity.
Speaker Change: And different markets globally.
Speaker Change: On a joint venture or India Africa, Eurasia, you Didnt mentioned North America, but you know there's been some pricing investments can you expand a bit more on some of the end market.
Speaker Change: Competitive activity you're seeing.
Speaker Change: With some specificity on specific markets that you called out thanks, so much.
Chris Terry: Sure and going Chris you know, it's not unusual.
Chris Terry: In terms of the heightened competitive activity as some of the manufacturers, particularly local players are chasing more volume in their categories. We've been very selective on where we're going to address that and we'll be sure to make sure. We protect the health of the brands as we do that but it was very isolated.
Chris Terry: Isolated to a few markets around the World India was probably the most notable with a significant increase in competitive activity in the urban space, particularly.
Chris Terry: Particularly in the modern trade, where we saw a multitude of compare competitors discounting more to drive volume, we address some of that which was reflected in the quarter, but we anticipate India will stabilize and get more rational as we move through the balance of the year. We've got good innovation plans and good focus on really driving some some.
Chris Terry: The strategies that we think will allow us to offset some of that competitive activity and continue to drive share market and drive category growth.
Chris Terry: Turkey, and South Africa were more isolated to some competitive activity. There, we don't necessarily see that sustaining itself through the year, but we're well prepared as we mentioned in the guidance to address that if we need to so overall, there's nothing terribly unusual as I mentioned earlier, when we see a more constructive promotional environment.
Chris Terry: Europe would be an area, where you would might see heightened competitive activity, but we're seeing that be pretty consistent and we're growing significant market share in Europe as well. So we feel we're in a good place again, if you see more competitive promotional activity. The most important aspect for us is the underlying health of the business and the <unk>.
Chris Terry: We can continue to launch innovation to drive value and drive market share growth both in volume and in dollars and we're consistently seeing that particularly in our oral care business around the world.
Chris Terry: Yeah.
Speaker Change: The next question comes from Steve Powers with Deutsche Bank. Please go ahead.
Speaker Change: Okay, great and good morning, everybody.
Speaker Change: Just I guess I wanted to ask about.
Speaker Change: The base case shape of the P&L in 2025.
Speaker Change: To see the a call for another year of gross margin improvement and at least stable A&P investment, but I guess I'm curious as to how.
Speaker Change: How much of the expected.
Speaker Change: Underlying operating.
Speaker Change: Income improvement is going to be driven by that gross margin.
Speaker Change: Versus.
Speaker Change: SG&A reductions in SG&A efficiencies.
Speaker Change: And then within that sort of what I'm assuming is.
Speaker Change: <unk> focus on on SG&A.
Speaker Change: Do you think you're going to have enough flex to keep up other elements of investment you talked about innovation investments with digital data analytics talking about AI those have all been I think fruitful.
Speaker Change: So the investment the last couple of years can you keep that up in 2025. Thank you.
Yeah, Hey, good morning, Steve Thanks, So.
Speaker Change: Again, I think the top line comment here is yes.
Speaker Change: While we have front loaded a lot of that investment in 'twenty, three and 'twenty 'twenty four so we feel we're in a really good place not necessarily having to play catch up there's going to continue we're going to continue to raise the bar and ensure we find ways to invest for the long term health of the business, particularly around capabilities and we have some exciting things underway.
Speaker Change: In the data space in the technology space as well that will continue we believe drive more productivity through the P&L.
Speaker Change: But Steve I come back to what we've been talking about and what was anchored in our 2025 strategy. When we launched it six years ago and that was ultimately getting all line items in the P&L in a place to give us more flexibility.
Speaker Change: And we're going to continue to really focus on doing that there will be ebbs and flows and certain areas of the business that we have to address but we need to have flexibility to go after the growth and fund that through various line items in the P&L. So from a capital structure in terms of where we put money from a.
Speaker Change: Capability standpoint, it's really meant to go up and down the P&L as well as the balance sheet to ensure we have ways to continue to drive top tier shareholder value and we're going to do that with the consistency of performance in the health of the brands is an underpinning to that so overall, we feel pretty good about where we are across the P&L.
Speaker Change: Now there.
Speaker Change: There will be some ebbs and flows as we move through the year. It's a it's a it's a year is an artificial construct as we say we will continue to go after the opportunities as we see them, but in the absence of not having flexibility that becomes very very difficult to do and we've shown I think over the last couple of years that have been ways to flex certain ad.
Speaker Change: Aspects of the P&L and the balance sheet is the best way to drive long term sustained growth. The only thing I'd add there is as we look at the entire P&L and the balance sheet. While we drive productivity is not just a a cut for cut sake. We actually spent a lot of time in our budgeting process and resource allocation both dollars and people.
Speaker Change: And where do we want to reallocate to drive performance in the business and that has every line of the P&L and our balance sheet as we drive better payment terms better networking capital efficiency. We it gives us the ability to reduce debt invest back in the business, which when you look at that Holistically as a flex that we've talked about.
Speaker Change: And managing the day to day, but we're confident in our ability to deliver on our guidance for 25, and I think the best proxy for that at least.
Speaker Change: I I shout a lot from from here in New York as a return on invested capital and that's really ensuring that we're using shareholder money and ways to drive the best return and to have the ROIC back in the 35%, 36% I think is a good example of us being very selective as Dan says to drive <unk>.
Speaker Change: <unk>, where we're going to get the best return on that investment.
Speaker Change: Okay.
Speaker Change: The next question comes from Lauren Lieberman with Barclays. Please go ahead.
Lauren Lieberman: Great. Thanks, Good morning, I know since you referenced 2025 strategy. We're starting 2025. So I was curious if you could talk a little bit about I guess.
Lauren Lieberman: That's on the next lag will you be announcing a kind of 2030 strategy.
Lauren Lieberman: And maybe what are some of the areas that you think you would add.
Lauren Lieberman: Add to that list you know what are areas, where you still have opportunities to keep pushing on the things that have really been working thanks.
Lauren Lieberman: Great. Good morning, and thank you all I'm smiling here because we're on the eve of announcing our 2030 strategy that will be going to the organization with here in the next couple of months we've been working.
Lauren Lieberman: Tirelessly over the last year to really fine tune that we've taken the board through that.
Lauren Lieberman: So we're quite excited I think overall the discipline around strategic planning of the company and I give the team tremendous credit for the work around that has been excellent and making sure that we continue to remind ourselves on the opportunity spaces that we have and the potential for continued growth to be sure that we're investing.
Lauren Lieberman: <unk> ahead of the curve in order to get there and so that's exactly what we'll do as we unveiled the 2030 strategy now there's always a temptation to throw out what you've had in put something new and I think.
Lauren Lieberman: The line that I would leave you with is consistency is really important to us execution and focus is really important to us and the things that we've outlined as we launched our 2025 strategy about the growth mindset about better innovation productivity up and down the P&L about continued gross margin expansion button.
Lauren Lieberman: <unk> and the health of our brands and optimizing our spending efficiency all of that will be consistent as we move into the 2030 plan. There are areas that we think we can continue the dialogue and sharpen innovation will be one of those making sure that we continue to deliver the great instrumentality that we're getting.
Lauren Lieberman: Through the innovation, you've heard me talk about the 45% more incremental sales coming from new products than we had historically that's a big big driver. We you've heard me talk about in previous meetings, we reoriented, our incentive systems to get more after incremental innovation. So it's not just launching innovation for the sake of launching innovation.
Lauren Lieberman: It's making sure it's driving incremental <unk> to the category and to Colgate. So innovation will continue to be a big focus data and AI. We're excited about all the investments that we've made both in training our organization, but really on the business use cases, where we see the most.
Lauren Lieberman: The best ways to optimize growth and efficiency through the P&L that will be an interesting focus for us as well and ultimately as you look at the health orientation of our products. We will continue to rely heavily on our professional orientation and our ability to drive premium amortization and loyalty behind <unk>.
Lauren Lieberman: Strong endorsements and advocacy of our brands.
Lauren Lieberman: The next question comes from Robert <unk> with Evercore ISI. Please go ahead.
Robert: Great. Thank you very much first just a quick follow up you called out in your prepared remarks increased price competition in China. So I was wondering if you could elaborate on that and then my my My main question is on the total relaunch I'm wondering if first you can kind of see.
Size that compare to other relaunches, just so we have a sense of magnitude and importance.
Robert: How are you defining success on the relaunch maybe some early reads and Latin America.
Robert: And also perhaps what you may be doing differently on the marketing side to make it successful. Thank you.
Speaker Change: Good morning, Rob. Thank you, let me just clarify we Didnt I don't believe we mentioned anything about increased competitive pricing in China.
Speaker Change: Specifically, we talked about obviously, some softness perhaps on our Darlie business, which I'll address in just a moment, but the increased and heightened pricing is really in Asia was specifically related to India, and that's where we've seen most of the aggressive pricing overall, China I would say on balance that the pricing environment is pretty stable.
Speaker Change: And our performance there is quite frankly quite good we delivered positive organic growth in the quarter.
Speaker Change: And that is with the Colgate business because it continues to operate extremely well the Colgate business alone was up high single digit organic in China in the fourth quarter and as you see that in comparison to a lot of our peer group, we feel we're executing extremely well with the new strategy that we put in place three years ago now the Dara.
Speaker Change: The business continues to be a challenge, although we feel we're getting better we still have opportunities for some go to market changes in 2025, and we'll address that accordingly, but overall, we feel China will continue to be a slow growth, although we seem to be outpacing the category and our comp.
Speaker Change: Petition in many respects, but China continues to be difficult in the short to medium term, but long term.
Speaker Change: Again, we value, China, and India as strategic growth opportunities for the company, China will put more or less $300 million of incremental middle class consumers into the market by 2030, India will more than double that probably six to 700. So again real long term growth opportunities are important to keep the <unk>.
Speaker Change: <unk> of the business and the investment profile in a place that we can obviously leverage that as we are as we move forward.
Speaker Change: So it's a total on specifically on total Rob.
Speaker Change: We launched it in the fourth quarter in Latin America, and we're in the midst of rolling that around the World Latin America would be our best proxy. It is driving terrific share growth for Latin America, we've seen great performance across our core markets from the Latin America launch, we're rolling that out across Asia North America.
Speaker Change: Erica in Europe, as we speak it is a meaningful upgrade in our formula.
Speaker Change: Again intended to really speak to prevention and the importance of prevention, which is obviously a key a key or a key trend in the marketplace amongst consumers and looking for superior prevention and what they're asking for in the toothpaste and we'd really elevated the focus on the science aspects of it.
Speaker Change: Colgate total and getting a better formula into the market than we've had before across not only the toothpaste, but the toothbrush and mouthwash and creating real opportunities for category growth and regimen claims. So overall, we're very excited about the early signs that we're seeing in Latin America, and intend to overly translate that across the world.
Speaker Change: The next question comes from Chris Mandeville with Piper Sandler. Please go ahead.
Chris Mandeville: Hey, good morning, Thanks for taking the question I like to just get a little bit more color on the nutrition business for 2025.
Chris Mandeville: And kind of like the cadence over the next four quarters that we should expect from you know the.
Chris Mandeville: Following the rationalization innovation pricing et cetera, any color on that would be helpful. Thank you.
Speaker Change: Yes, good morning, I get in the hills as I mentioned earlier the fundamentals of the business are really really strong and we've seen obviously, we've talked about a little bit of slowdown in the category, but that's stabilized certainly not getting any worse and we continue to execute extremely well in that category environment with Mark.
Chris Mandeville: Sure is continuing to grow our Vale.
Chris Mandeville: Volume mix private label up nicely and we will continue to see that we believe.
Chris Mandeville: Trajectory as we move through the balance of 2025, I'll, let Stan talked a little bit about the private label impact as we think about 2025, but if I take just the underlying business again very focused on segment growth opportunities for the business I had mentioned, we obviously have a very strong dog and cat business, but we need to excel in small.
Chris Mandeville: And small paws or the small dog segment, which is the fastest growing part of the market we need to excel in the west segments, we have a real focus on that and we obviously you need to get back to more sustained growth in Europe, but overall the business continues to perform well, we operate a portfolio and a diverse mix of <unk>.
Chris Mandeville: <unk> around the world, we have the ability to pull down those markets I think our largest market North America continues to execute extremely well had a good quarter in the fourth quarter and we expect nothing unusual from the Hill's business as we move into 2025, Yeah look I think the Hill's business is really well positioned and is based on really good execution by the team.
Chris Mandeville: They have done really well in a flattish category that we think will slowly improve through time, but the new innovation that they have coming to market the wind down of private label.
Chris Mandeville: And the improved expansion, we think both will drive topline, but also importantly will drive margin expansion for that business and I think they are in a nice position, where they have enormous opportunities in numerous areas to go after to continue to expand and I was just down at the <unk> conference, which is that.
Chris Mandeville: Veterinary conference with the North America team and extraordinarily well received down there with nearly 30000 vet and vertex.
Chris Mandeville: Pending that conference and the Hills Booth was was very well attended with great innovation and explaining the value that we bring we've also invested over the last several years into our pet nutrition center and and the science behind our diets, which I think will continue to bring that innovation to market. So I think hills is real.
Chris Mandeville: Well positioned heading into 'twenty five we've got market expansion opportunities both in the U S and abroad, and a science based profession driven product set.
Chris Mandeville: If I can just add one more point is that we're seeing the margin inflection. There. So we can talk to us a lot over the past couple of years about margin performance at Hill's and what we've seen now is that margin has truly begun to inflect positively and thats not just the private label mix, that's really on the underlying business at some of the mix improvements that Noel has talked about in terms of that.
Chris Mandeville: Description diet et cetera, So it's Dan mentioned from a bottom line standpoint, the inflection is there and it really gives us the confidence that we can continue to invest back in this business.
Speaker Change: The next question comes from Mark Astrachan.
Speaker Change: Please go ahead.
Speaker Change: Thanks and morning, everybody wanted.
Speaker Change: Wanted to stay on the Hill's business, where for a minute.
Speaker Change: Broadly.
Speaker Change: It seems like there's been a bit more volatility in the pet food category that I think would be.
Speaker Change: People would have anticipated years ago, you talked a little bit about.
Speaker Change: Volatility.
Speaker Change: Further we.
Speaker Change: We saw a little bit about them kind of coming out as well.
Speaker Change: Koby comparisons, but whether it's pet adoption or decreased usage of pet food periodically, which doesn't seem to make a ton of sense.
Speaker Change: I guess could you just opine a bit on.
Speaker Change: What you think is adding to the category volatility is at all pricing that's been taken.
Speaker Change:
Speaker Change: It's just more of a broader comment, but I guess specific to the U S. Maybe you could also just elaborate on how you think about the performance of the Hill's business by geography, if you don't want to give specifics here and just broader strokes between U S and.
Speaker Change: International and then just talk a bit about competitive environment. There's clearly been some at least smaller kind of mid tier categories, becoming more mainstream and how do you think about the adoption of that and the impact on your business over time. Thank you.
Speaker Change: Yes, good morning, Mark. Thank you. So I think the importance of your staying in our swim lanes on this one.
Speaker Change: We see the fastest growing part of the category continued to be science based premium pet nutrition, and we're outpacing the category in that regard and helping to drive significantly more value into our retail partners. So the innovation that Stan talked about will continue to be focused on scientific therapeutic.
Speaker Change: Fran.
Speaker Change: Variance and innovation that continues to drive differentiation and real value orientation back to the pet owner.
Speaker Change: Moving forward, yes, there has been some stabilization in the category. The category is flat we mentioned that we're growing we still see it as we look at it yes, we'd like to see that start to inflect positive, which we expect will probably come towards the back half of 2025, but the segments that where we want to grow continue to affirm.
Speaker Change: <unk> had significant upside potential for our business and our ability to continue to drive volume and price and profitability through the P&L and I've talked about those segments. So we're very focused on that aspect a lot of noise in the category a lot of different things happening in the category, but strategically the growth spaces.
Speaker Change: The swim lane, so to speak where we want to compete we continue to see nice growth opportunities for the business and sustained profitability as we've improved as Stan mentioned standard John mentioned, the underlying fundamentals in the P&L are in much better shape than they were a years back.
Speaker Change: The last question today comes from Felipe Buffalo with Citi. Please go ahead.
Felipe Buffalo: Hi, Good morning, everyone. No you talked about building in flexibility not only on the P&L, but also on the balance sheet. So just curious on capital allocation and the.
Felipe Buffalo: Increase appetite potentially for share buybacks, considering the share level and then on M&A Big picture can you remind us kind of your.
Felipe Buffalo: Strategic areas of focus and our parameters for for M&A. Thank you.
Speaker Change: Yes, thanks, Filippo so again.
Speaker Change: Our prioritization around capital allocation is investing back behind the business to drive efficiency and growth and again I'll come back to the return on invested capital we're seeing a great return as we invest back in the business and our ability to drive.
Speaker Change: Top line growth and more savings through the P&L second is share repurchases and dividends you've seen the strong numbers I'll, let stand maybe talk to that in just a moment, but what you've seen obviously our focus on driving top tier T. S are not only through the growth of the earnings but our ability to continue.
Speaker Change: To find ways to reward our shareholders through our dividend policy et cetera. So overall, we will continue to focus on strong working capital cash generation to allow us to to buy shares where appropriate and to continue to invest in our dividend based on board approval, but overall, we feel like we're in a much.
Speaker Change: Or place to make sure we're providing different levers to drive shareholder return on a consistent basis.
Speaker Change: So when we go through our annual budgets and our execution, we haven't seen that underlies all of that and that's growth margin and cash. So cash is a fundamental part of how we run each of the businesses and you've seen that driving cash flow achieving $4 1 billion in operating cash flow a record for us but that.
Gives us the ability to allocate those resources and as we look at that that stayed the same as Noel said, which is invest back in the business that can come in multiple forms returned to shareholders and then M&A, where we see the right opportunity that's aligned to our strategic direction because that helps gives us the north star for where.
Speaker Change: We want to invest and maybe what parts of the portfolio that might be better off somewhere else to drive long term value for us and you saw this year.
Speaker Change: We actually did increase our share buybacks. We did 1 billion one net and returned to shareholders was up over 20% year to year and we have a long standing dividend that we believe is competitive and when we think about capital allocation. It starts with delivering the cash to enable that and we're pretty comfortable with where we are proud of the team for a great <unk>.
Speaker Change: <unk> C and the ability to drive that into 'twenty five.
Speaker Change: The last question today comes from Edward Lewis with Redburn Atlanta. Please go ahead.
Edward Lewis: Yes, thanks, very much just looking at the European performance over the balance of 2024.
Edward Lewis: We'll see you delivering both positive volume and positive price I. Appreciate the move is get into North American probably helps a bit but still like I thought that was quite a change from what we were accustomed to see.
Edward Lewis: And I know you didn't necessarily split splits that we the marketing spend is going but how much of the incremental marketing support is going into Europe.
Speaker Change: How much then does that give you the confidence to be able to sustain these accelerated growth trends.
Edward Lewis: As we go forward.
Edward Lewis: Yeah. Good morning, Ed Thanks, Thank you.
Speaker Change: Listen I'm glad you're finishing off with Europe, because what a terrific performance they've had in 2024 and another strong fourth quarter coming off of a strong year to date before that organic growth across all hubs for the quarter.
Speaker Change: Yes, we've seen some of the inflationary pricing, we see but we are gaining pricing as you mentioned balanced pricing and volume growth in the quarter I think a testament again to the real focus on our our GM analytics and how we are maximizing our promotional spend in those markets. Likewise, a really strong innovation pipeline of products and <unk>.
Speaker Change: Four and you'll see that again in 2025, and our ability to drive more value oriented back into the categories are more price orientation. So that drives our price in the category at the same time, good operating profit and margin performance is critical to sustain.
Speaker Change: The advertising our advertising sales was up about 220 basis points. So again driving a lot of the brand health measures that we have and I think what's most pleasing is the record market share performance, we saw in Europe, particularly behind our oral care business, both on Colgate and Amex, we're now.
Speaker Change: About 300 basis points in market share versus where we were in 2016 and the shares as we exited the fourth quarter were at a record high particularly in some of our key geographies. So we feel very good about our ability to continue to drive organic growth in that market.
Speaker Change: And drive operating profit growth given the health of the business and that will be driven by innovation and the sustained level of advertising across multiple categories in Europe.
Speaker Change: So with that thank you very much for your questions again, let me end, where I started which is.
Speaker Change: A profound thank you to the Colgate team.
Speaker Change: Surpassing $20 billion in sales for the first time in our 217 year history is an important milestone for the company. The continued health of the business and the continued improvements we've seen up and down the P&L and our balance sheet is a real testament to the incredible organization of people that we have working day in and day out and in.
Speaker Change: An extremely volatile world out there so I, thank them and I look forward to seeing everyone down in Florida at Cagny.
Speaker Change:
Speaker Change: The conference has now concluded. Thank you for attending today's call you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Yeah.