colgate-palmolive co (cl) earnings report: q3 2015 ... · of colgate's website, at . just a...

CompanyName:Colgate-PalmoliveCoCompanyTicker:CLSector:ConsumerGoodsIndustry:ConsumerNon-Durables

EventDescription:Q32015EarningsCallMarketCapasofEventDate:62.32BPriceasofEventDate:66.35

COLGATE-PALMOLIVECO(CL)EarningsReport:Q32015ConferenceCallTranscriptThefollowingCOLGATE-PALMOLIVECOconferencecalltookplaceonOctober30,2015,11:00AMET.Thisisatranscriptofthatearningscall:

CompanyPart icipants

BinaThompson;Colgate-Palmolive;SVPofIRIanCook;Colgate-Palmolive;President,ChairmanandCEO

OtherPart icipants

DaraMohsenian;MorganStanley;AnalystWendyNicholson;Citigroup;AnalystCarolineLevy;CLSALimited;AnalystAliDibadj;Bernstein;AnalystBillSchmitz;DeutscheBank;AnalystJasonEnglish;GoldmanSachs;AnalystOliviaTong;BofAMerrillLynch;AnalystStevePowers;UBS;AnalystChrisFerrara;WellsFargoSecurities;AnalystJavierEscalante;ConsumerEdgeResearch;AnalystJoeAltobello;RaymondJames;AnalystLaurenLieberman;BarclaysCapital;AnalystJohnFaucher;JPMorgan;AnalystAlexPaterson;AGI;AnalystMarkAstrachan;StifelNicolaus;Analyst

MANAGEMENTDISCUSSIONSECTION

Operator :

Goodday,everyone,andwelcometotoday'sColgate-PalmoliveCompanyThirdQuarter2015Earningsconferencecall.Thiscallisbeingrecorded,andisbeingsimulcastliveatwww.colgatepalmolive.com.Today'sconferencewillincludeforward-lookingstatements.ThesestatementsaremadeonthebasisoftheCompany'sviewsandassumptionsasofthistime,andarenotguaranteesoffutureperformance.Actualeventsorresultsmaydiffermateriallyfromthesestatements.

Soforinformationaboutcertainfactorsthatcouldcausesuchdifferences,investorsshouldconsulttheCompany'sreportsfiledwiththeSecuritiesandExchangeCommission,andavailableonColgate'swebsite,includingtheinformationsetforthunderthecaptionsRiskFactorsandCautionaryStatementonforward-lookingstatements.

Thisconferencecallwillalsoincludeadiscussionofnon-GAAPfinancialmeasures,whichdifferfromtheCompany'sresultspreparedinaccordancewithGAAP.Colgatewilldiscussorganicsalesgrowth,whichisnetsalesgrowth,excludingforeignexchange,acquisitionsanddivestitures.

TheCompanywillalsodiscussgrossprofit,grossprofitmargin,SG&A,SG&Aasapercentofnetsales,operatingprofit,operatingprofitmargin,netincomeandearningspershareonadilutedbasis,

excludingtheimpactoftheitemsdescribedinthepressrelease.AfullreconciliationofthecorrespondingGAAPmeasuresisincludedinthepressrelease,andispostedintheForInvestorssectionofColgate'swebsite,atwww.colgatepalmolive.com.

Justareminder,theremaybeaslightdelaybeforethequestion-and-answersessionbegins,duetothewebsimulcast.

Now,foropeningremarks,IwouldliketoturnthecallovertotheSeniorVicePresidentofInvestorRelations,BinaThompson.Pleasegoahead,Bina.

BinaT hompson (SVPofIR):

Thankyou,[Kelly],andgoodmorningeverybody,andwelcometoourthirdquarter2015earningsconferencecall.WithmethismorningareIanCook,President,ChairmanandCEO;DennisHickey,CFO;VictoriaDolan,CorporateController;andElainePaik,Treasurer.We'repleasedwiththecontinuedsolidorganicsalesgrowth.Ofcourse,negativeforeignexchangecontinuestobeamajorchallenge.Butasyou'llhear,ourmarketsharesarestrongandgrowing,oneofthebestindicationsofthehealthofabusiness.

Happily,grossprofitmarginincreasedinthequarterasaresultofourfundingthegrowthinitiatives,pricingactions,andourglobalgrowthandefficiencyprogram.Worldwide,ouroverheadcostsaredownonadollarbasis.Nowwhilereportedadvertisingwasdownonadollarbasis,wethinkwe'regettinggoodresultsfromthedollarswespend,bothin-storeandout.Digitaladvertisingisgrowing.Infact,asanexample,inLatinAmerica,weareincreasingourinvestmentindigitaltobetterreachouryoungeraudiences,aswellastodriveengagement.

AndaswefocusedondevelopingstrategiccollaborationswithpartnerssuchasGoogleandFacebook,we'rebetterabletomeasuretheresultsofourinvestment.MarketingmixedmodelstudiesfromseveralcountriesacrossLatinAmericashowanROIfordigitalinvestmentthatis3to4timeshigherthanTV,confirmingthisshiftisrighttodriveourbusiness.Ourbalancesheetremainssolid,andwe'remakingverygoodprogressonworkingcapital.Solet'sgetrightintothedivisions,startingwithNorthAmerica.

InnovationcontinuestofueloursuccessinNorthAmerica.Asmentionedinthepressrelease,ourmarketsharesareupyeartodatetoothpaste,manualtoothbrushes,mouthwash,liquidhandsoap,bodywashandfabricconditioners.Andthiswastrueonaquarter-over-quartercomparison,aswell.Atthesametime,we'veseenadeclineinprivatelabelsharesinmanyofourcategories,indicatingtheconsumer'spreferenceforbrandedproductsandthestrengthofourequities.

Inthetoothpastecategory,thelaunchofColgateTotalDailyRepair,supportedbyanengagingmediacampaignandstrongin-storeshoppermaterials,hasaddedincrementalsharetothebaselineproducts.Inthewhiteningsegment,weofferafullrangeofproducts,toothpaste,toothbrushesandmouthwash.OurColgateOpticWhitetoothpastehasgrownsharefrom2.4%inthethirdquarterof2011toa5.7%shareinthemostrecentquarter.ColgateEnamelHealthhasalsoseengoodgrowthmomentum,increasingafullsharepoint,quarteroverquarter.

Anotherexcitingopportunityisthesensitivitysegment,wherewearestronganumbertwoplayer.Thatsegmenthasseenacompoundgrowthof7.7%overthelastfouryears,versus2.8%fortoothpasteoverall.Inthemouthwashcategory,whereourshareisupyeartodate20basispoints,bothColgateTotalforgumhealthandColgateEnamelHealthmouthwasharepickingupmomentum.OurColgateTotalforgumhealthvariantisthenumberonenewiteminaleadingretailer,andreceivingfullsupportin-store.

Inliquidhandsoaps,ouryear-to-dateshareisupalmostafullpoint,toaleading30.6%,whileprivatelabelproductshavedeclinedalmosttwofullpointsyeartodate,thelowestlevelinatleastfiveyears.

PremiumofferingssuchasSoftSoapfragrantfoamingcollectionanddecorcollectionfoaminghandsoap,offerdistinctivebenefits.Similarly,SoftSoapFresh&Glowbodywash,withrealextracts,withauniqueformulagivingyouhealthylookingskinthatglows,launchedearlierthisyear,hasincreasedourshareinthatcategorybyalmostafullpoint,yeartodate.

Fabricconditionerhasalsocontinuedtoperformwell.Suavitelfragrancepearlsin-washscentboosters,whichprovidefivetimeslonger-lastingfragranceversusdetergentalone,whichwetoldyouaboutlastquarter,hashelpedincreaseournationalsharealmostafullpointyeartodate,nowapproaching20%ofthemarket.Moretrial-focusedprogramsareexpectedtodrivefurthergrowthinthefourthquarter.Nowasyouwouldexpect,ournewproductgridiswellpopulated,andwewillsharewithyousomemoreexcitinginnovationsslatedforearly2016onfuturecalls.

TurningthentoEurope/SouthPacific.Ourbusinessthereisshowingencouragingsignsofrecovery,withinnovationplayingacriticalrole.Ourmarketsharesareupyeartodateintoothpaste,manualtoothbrushes,bodywash,showergels,underarmprotectionandfabricconditioners.Intoothpaste,we'reveryexcitedabouttheearlysuccessesofourlaunchofColgateMaxWhiteExpertWhitetoothpaste,thelatestpremiumofferinginthisfast-growingsegment.LaunchedintheUKinJune,itachieveda2.7%shareinAugust,andwasnamedthebestnewtoiletrieslaunchfor2015byoneofourlargerdrugretailers.

TwoproductsundertheElmexbrand,developedspecificallyforthepharmacychannel,ElmexSensitiveProfessionalandElmexAnti-CavitiesProfessional,havedrivenourpharmacyshareinFrancetoaleadershippositionof26.3%,yeartodate.Andnowaheadofthenearestcompetitorby150basispoints.Inmanualtoothbrushes,ourleadingmarketshareinEuropeisup130basispointsyeartodate,to24.6%,withournearestcompetitordownto17.4%.

DrivingtheseexcellentresultshasbeentherelaunchacrosstheregionofourColgate360Degreemanualtoothbrushline.Pricedatthesuper-premiumtier,thesebrushesdeliversuperiorcleaning,forawhole-mouthclean,andhavebeensupportedbyafullshopperprogram.We'realsoveryencouragedbyourlaunchofSanexAdvancedrangeofbodywashes,underarmprotectionandbodyandhandlotion.Thisinnovationbringsdermatologicalexpertiseforskin-specificneedstoathirdgrowthpillarforSanex,leadingthebrandtowardsamoreprofessionalapproachenmasse.

Earlyresultsareexcellent.Sincelaunch,Sanexisthefastestgrowingbrandinbothbodywashesandunderarm.AndinourtopmarketsofFrance,SpainandtheUK,ourmarketsharesareupinbothcategories.Infabricconditioners,ourmarketsharesareup20basispointsyeartodate,to24%,acrosstheEuropeanregion,withthemostrecentreadat24.5%.ContributingtothissuccessisSouplineFruitySensations,withastrikinglookandfeel,andnew,differentandlong-lastingfragrances.

Moreinnovationasplannedacrossourcategoriesfortherestofthisyearandinto2016.Specifically,inoralcare,wewillbelaunchingtheColgateexpertWhitetoothbrushandbuilt-inwhiteningpen.Asyouknow,thatproductformhashelpeddriveourmanualtoothbrushsharetorecordhighshereintheUS.Intoothpaste,wewillbelaunchingColgateTotalProof.Thisinnovationusesbreakthroughcolorchangetechnologythatturnsthewhitepasteintoabluefoamwhilebrushing,givingconsumerstheconfidenceoftheultimatecleanfeeling.

TurningthentoLatinAmerica,businessacrosstheregionissolid,andaselsewhere,innovationhasdrivenmarketshareincreases.Ourregionalmarketsharesareupyeartodateintoothpaste,manualtoothbrushes,mouthwash,toiletsoap,liquidsoap,shampoo,hand,dishandliquidcleaners.AndeveninthefaceofsomeeconomicuncertaintiesincountriessuchasBrazil,ourcategorystillshowssolidlocalcurrencygrowth.Ourregionaltoothpasteshareisup2fullpointsyeartodate,to78.2%.InBrazil,ourmarketshareisup50basispointsyeartodate,to72%,thehighestshareinover20years,andinthefaceofcontinuedheightenedcompetitiveactivity.

ColgateTotal12re-launchedinAugust,withapositioningof,protects100%ofthesurfacesofthemouth,nowhasan18.5%shareinthemostrecentperiod.InMexico,ourshareisup1pointyeartodate,to81.3%,withthemostrecentreadat81.6%,whileourmajorcompetitorshowscontinuedsharedecline.Contributingtothissuccessisourpremium-pricedLuminousWhiteAdvanced,Colgate'smostadvancedwhiteningtoothpaste,formulatedtointensifythewhitenessofyourteethbythreeshades.

Inmanualtoothbrushes,ourmarketshareisup230basispointsyeartodate,to45.4%,withthemostrecentreadat49.8%.InMexico,werecentlyre-introducedourColgate360Degreeline,withanewpackagingstructure,withpremiumfinishingandimprovedbenefitcommunication.Wholemouthclean,with151%morebadbreathbacteriaremoval.Asaresult,theColgate360Degreeequityisup110basispointsyeartodate,reachingarecord11.1%share.

Ourleadingyeartodatebarsoapshareisat30.8%,withthemostrecentreadat32%.RecordhighshareswereachievedinMexico,ColombiaandGuatemala.Andourtwoequities,ProtexandPalmolive,continuetoholdthenumberoneandtwopositionsacrosstheregion.InMexico,wherewehaveastronghomecarebusiness,ourresultsareexcellentacrossthethreesub-categories,handdish,liquidcleanersandfabricconditioners.Ourmarketsharesareup,onayeartodatebasis,230,40and150basispointsrespectively,to52.6%,33.5%and48.4%.

Solookingahead,tofurtherboostourleadingmanualtoothbrushshare,wearenowintheprocessoflaunchingColgateSlimSoftWhite,with17timesslimmertipspiralbristles,whichprovidebothwhiteninganddeepyegentlecleaning.AninnovationlaunchingnowinfabricconditionersisSuavitelGoodbyeRinse,themarket-leadingSuavitel,withanimprovedno-rinseformula.Andasyouwouldexpect,moreinnovationisplannedfor2016,tocontinuethemomentuminthisregion.

TurningthentoAsia,we'repleasedwiththestrengthofthebusiness,particularlyinourtwolargestmarkets,ChinaandIndia,whichbothdeliveredgoodvolumegrowth.Categorygrowthratesremainmid-single-digitinChina,whileinIndia,ourcategoriesaregrowing,aswell.InIndia,ouryear-to-datetoothpasteshareisatalmost55%onanationalbasis,andcloseto59%inruralmarkets.Ourmarket-leadingmanualtoothbrushshareis43.6%yeartodate,andourlaunchofColgateSensitiveProReliefenamelrepairtoothpaste,whileinitsearlydays,isdoingwell.

OurColgate360DegreeCharcoalBoldtoothbrush,launchedearlierinotherAsianmarkets,isnowcontributingtotheresultsinIndia.Thissuccessfulinnovation,withantibacterialbristles,provideawholemouthclean,andhasachievedstrongsharesacrosstheregioninthemostrecentperiod.1.4%inHongKong,2.5%inthePhilippines,1.3%inTaiwan,andalmost1%inMalaysia,andhasbeenincrementalineachmarket.Moreinnovationisslatedforthisquarterandbeyond.InChina,we'llbelaunchingtwonewproductsdevelopedtoappealtolocalconsumerpreferences.

ColgatePowerWhiteLemonSalttoothpaste,forfreshnessandwhiteningexperiencewithalemonandseasaltflavor,andColgate360DegreeGoldGinsenggumcaretoothpaste,whichcontainsginsengessence,andenhancesthegums'powerofdefense.TwopopularColgateTotalvariants,CharcoalDeepCleanandProGum,willnowbeavailableinagelformat,inadditiontothepaste.AndinThailand,inthepersonalcarecategory,we'relaunchingproductsforbothmenandwomen.Formen,ProtexMen3-in-1,anall-in-onebodycleansingsolutionwithantibacterialprotection.Andforwomen,ProtexIntimate,withantibacterialprotectionforlong-lastingfreshnessandawell-beingsensationeveryday.

Africa/Eurasia.Asyouknow,severalofourlargermarketsintheAfrica/Eurasiaregionhavebeenfacingmajorcurrencyheadwinds.Despitethepricingactionswe'vetakentocombatthecurrencyheadwinds,ourorganicsalesgrowthisholdingatmid-singledigits.Marketsharesareincreasing,andsuccessfulinnovationisfuelingourgrowth.Ourregionaltoothpasteshareisupafullpointyeartodate,toalmost33%.InRussia,ourshareisup230basispointsyeartodate,to34.2%,hittingarecordshareof35.1%in

themostrecentperiod.

WerecentlylaunchedColgateMaximumCavityProtectionwithsugaracidneutralizer,whichhasalreadyreacheda0.7%shareyeartodate,andcontributedtothesharegain.InSouthAfrica,oursharegrew150basispointyeartodate,to50.2%,drivenbyanewmarketingcampaignbehindColgateTotal.Intoothbrushes,oursharedeclinedinonlyonecountry,andwasupinthemajorityofourmarkets.InRussia,whereweachievedincrementallistingsinRussia'snumberoneretailer,ourtoothbrushsharegrew270basispointsyeartodate,to48.1%,withthemostrecentreadat49.4%.

AndinTurkey,oursharegrewtenbasispointsyeartodate,to28.6%,withthemostrecentreadat29.7%.AndinSouthAfrica,oursharewasup30basispointsyeartodate,to38.2%,withthemostrecentreadat38.6%.Ourbarsoapbusinesscontinuedwithstrongmomentuminourtwobiggestmarkets,RussiaandSouthAfrica.TherecentintroductionofProtexManPowercontributedtoaregionalsharegainof150basispointsyeartodate,toalmost24%.Moreinnovationisslatedforthisquarter.

Acrosstheregion,wewillbere-launchingourbaseColgateSensitivetoothpaste,andourlineofPlaxmouthwash.Inthepersonalcarecategory,wewillbelaunchingabodywashoccupyingthenewenergizingsegmentformen'sbodywash,PalmoliveMen'sCitrusCrush.Itinvitestheconsumertoexperienceanintense,invigoratingshower,withbergamotandgrapefruitingredients,sourcedfromthepurestsubstancesofnature,andthesparklingcitrusfragrancetospoilthesenses.

AndHill's.Hill'sdeliveredanothersolidquarteroforganicsalesgrowth,withagoodbalanceofvolumeandprice.HereintheUS,super-storeretailconsumptionshowedagoodincrease.InnovationacrossHill'sPrescriptionDietandHill'sScienceDiet,aswellasvolumegrowthinourIdealBalancebrand,contributedtoourgoodresults.OurPrescriptionDietMetabolicCanineandFelinefoodscontinuedtogainsharearoundtheworld.Ournewstewsformhasacceleratedourgrowthinthewetsegment.

Wecontinuetoreceiveendorsementfromkeythoughtleaders.AndtheglobalrolloutthisyearofPrescriptionDietMetabolicPlusbreakthroughdualefficacyfood,withnutritionclinicallyproventoaddressobesityandconcurrentconditions,hasaddedtothemomentumofthebusiness.Itisnowsellingin38countries,andhasbenefitedfromextensivesamplingtodriveawarenessandtrial.Ourongoingglobalintegratedmarketingcampaignincludesprofessionalprint,onlinemedia,in-clinicseminars,andrecommendationtoolsandtestimonialvideos,toshowcaseefficacy.

Inourwellnessbusiness,oneofournewerlaunches,Hill'sScienceDietUrinaryandHairballControl,ismeetingwithexcellentresults.Theonlywellnessfoodthataddressesthetwomostcommonconditionsinhealthycats,itwasamongthetopthreewetvariantsintheUSmarketduringthefirstthreemonthsafteritslaunch,andhasaveryhighstarratingonAmazon.com.IthasbeentheproductfocusforournutritionalconsultantsatPetSmartandPetco,andhasreceivedgoodin-storeactivationfeedback.BuildingonoursuccessintheUS,ithasjustbeenlaunchedinEurope.Andaswelookinto2016,there'smoreexcitinginnovationnews,whichwewilldiscusswithyouonfuturecalls.

Soinsummary,we'repleasedwiththecontinuedsolidorganicsalesgrowthandmarketsharegainsaroundtheworld.Ourinnovationpipelineisasfullasever,andoursavingsprogramsareontrack.Colgatepeoplearoundtheworldcontinuetofocusonourfourstrategicinitiatives,deliveringconsistentresults.Sowelookforwardtosharingourresultswithyou,aswefinishtheyear.Andnow,Kelly,Ishouldliketoturnitoverforquestions.

QUESTIONS&ANSWERS

Operator :

Thankyou.Today'squestion-and-answersessionwillbeconductedelectronicallyforthetelephone

audience.

(OperatorInstructions)

DaraMohsenian,MorganStanley.

DaraMohsenian (Analyst-MorganStanley):

Goodmorning,guys.

IanCook(President,ChairmanandCEO):

Hey,Dara.

Sofirst,Ian,justadetailquestion.Ithinklastquarter,youhadindicatedlocalcurrencyadvertisingwouldberoughlyflat,yearoveryear,asapercentofsalesin2015.Isthatstillthecase?Howareyouthinkingaboutthatlineitem?

Andthentherealquestiononthatfrontis,it'snowbeensixquartersinarowwhereA&Phasbeendownsubstantiallyasapercentofsales.Iknowyou'veindicatedbeforeit'sbeenfunneledbackintopromotion,whichhasbeeneffective,giventhemarketshareperformance.ButthelevelofpullbackinA&Pinreallystriking,relativetoyourtraditional--traditionally,thewayyou'verunthebusiness.SoIguesswhatgivesyouconfidencethiswon'tcomebacktobiteyouinthelongrun,intermsoflowerdemandgoingforward,particularlygiventhemacrosituationoutthererightnow?

Yes,thanks,Dara.Asyoumightimagine,notanunexpectedquestion.Andinansweringit,asyoudid,let'stakealittlebitbroaderperspective,andthencomebacktoyourspecificquestion.Sotheworldwe'redealingintoday,intermsofourcategories--soI'mtalkingColgatebusinessesnow,inthecategoriesinwhichwedobusiness,notthemacroeconomicscene.Wehaveaworldwhereourcategoriesaregrowingbetween0%and2%inthedevelopedworld,inEurope,atthelowendofthat,andintheUSattheupperendofthat0%to2%growth.

Intheemergingmarkets,throughthiscall,thegrowthratesinourcategoriescontinuetobemid-single-digits,generally.Andourobjective,businessobjective,inthatarenahasbeentohaveasustainablerateofgrowthorganically,inthat4%to7%rangethatwementionedatthebeginningoftheyear,whichwethinkwecontinueintothethirdquarter.Andwecontinuetotalkabout4%to7%fortheyear.Andindeed,aswethinkabout2016,webeganourbudgetingprocesswiththesameambitionnextyear.Andthewayyougetthatconsistentrateofgrowthisbybuildingyourbrands.

Andyoubuildyourbrands,asmeasuredinmarketshare.Andaswechooseinvestmentvehiclestobuildthosebrands,you'refocusingontrialandrepeatpurchaseofournewinnovationandourexistingbusinesses.Anddon'tforget,inmanyoftheseemergingmarkets,consumerbehaviorischallengedbylocalcategoryconditionsinthosemarkets,andin-storeengagementcanbemorepersuasivethanwhatwewerealleducatedasbeingproperadvertisinginvestment.

Sowebalance,andliketothinkweinvestsmartlyintraditionalmedia,thetraditionaltelevision,magazine,radiosamplingdevicesthatwouldbeinthatadvertisingnumber.Withanincreasingshift,asBinapointedout,todigital,digitalbeingbothlowercostandabetterrateofreturn.Andfrankly,IthinkLatinAmerica,wheremillennialsarenowthepredominantparentgeneration,abetterwayofengagingwiththattargetgroup.Andthenasyouindicated,Dara,thein-storeworkthatwedo,thatinthese

volatiletimes,canbeparticularlypowerful.

Nowallofthatsaid,aswethinkaboutgoingforward,andwebeginourprocessforthebudgetin2016,eventhoughwehaven'tyetfullybegunthatprocess,ifwelookatthearrayofinnovationwehaveoverthenextthreeyears,startingin2016,Ithinkitwouldbesafetosaythatourexpectationwouldbethatourtraditionaladvertisingratioswouldbeupin2016.

Okay.Andisthatonalocalcurrencybasis,orthat'soverallCompany?Andalso,canyougiveusasenseofwhereyoulead2015,intermsoftheadratio?

Theadratiowillbe--accordingtoourcurrentplansfor2015,willbeup,quarteronquarter,forthebalanceoftheyear.AndnowI'mtalkingincomestatement,soI'mtalkingdollar.Andifyouthinkabout2016,Ithinkatthisstage,theexpectationwouldbedollar.Andofcourse,therefore,localcurrency,givenwhatIthinkmostbelievewillbeanimproving--oratleastalessbadforeign-exchangeenvironment.

Okay,thankyou.

Thankyou.

Operator :

WendyNicholson,Citigroup.

WendyNicholson (Analyst-Citigroup):

Hi.Firstofall,Bina,youtalkedabouttheBraziliancompetitiveenvironmentasstillbeingfairlyintense.Butcanyoutalkalittlemorequalitatively?Isthatmoreprice-basedcompetition?Istheremoreadvertising?Istheremoreinnovation?Justfightingforshelfonspace?Orjust--Iknowyoursharesaregood,butdirectionally,whatareyouseeingthere?Andthenjustseparately,housekeepingonHill's.Canyoureminduswhatthesplitis,USversusinternationalsalesnow,forHill's?Andmaybeinthequarter,howsalesperformancedifferedbyregion?Thankyou.

Yes.TheBrazil--Idon'tactuallyrecallBina'slanguage.Butfrankly,theBrazilianenvironmenthasn'tbecomeparticularlymorecompetitivethanhistorically.Itcontinuestobeacompetitivemarketplace,tobesure.Butagain,backtomyanswertoDara,we--withtheprogramswehaveandtheinnovationwehave,weseeourmarketshareiscontinuingtogrow.Andat72,asBinasaid,it'sthehighestinthelast20years,withourprincipalcompetitorsbothdown.

Sofrankly,atthisstage,whateverthethreatsareinthemarketplace,weseemtobemeetingthem.Ifweturntoyoursecondquestion,whichwasaroundHill's,Ithinkitwouldbefairtosay,inbroadterms,thatHill'sisabouta50/50US/domesticinternationalbusinesssplit.

AndthetrendsinternationallyversusintheUS,intermsofgrowthforHill's,similar?

Similar.Yes.TheinnovationmovesfromtheUSaroundtheworld.AndI'mpleasedtosay,thingslikeMetabolicandMetabolicplusarehavingsimilarimpactswhereverwetakethem.Soyes.

Terrific,thankyou.

Thankyou.

Operator :

CarolineLevy,CLSA.

CarolineLevy(Analyst-CLSALimited):

Great,andI'msorry,Ihoppedonalittlelate.ButI'mwonderingifyouaddressedVenezuela,andthedecisionnottotakeittoworst-casescenariointheearnings?UnlessImissedsomethingthere?

No,youdidn't,Caroline.AndI'msuremanyofyouhavenotyethadthechancetogettoourQ,whichwaspostedearlierthismorning.Butasyouwellknowfromthefinancialliterature,andthedecisionsthatonemakesinthisspace,anydecisionthatwewouldtaketode-consolidatewouldbedrivenbyourinability,onanongoingbasis,togetdollars.Orifwefacedadditionalrestrictionsonourabilitytomakelocaloperatingdecisionsontheground.

Clearly,thesearethingsthatwerevisit,quarteruponquarter.Andwedulydidsoforthisquarter,Caroline.Butbasedonourfactsandcircumstances,andtheassessmentwemade,wehavechosentokeepreportingVenezuelathisquarter.Andofcourse,thatisasubjectthatwewillrevisit,periodasperiod,astimegoeson.

Andofthe12%pricinginLatinAmerica,then,canyousayhowmuchisVenezuela?

Remember,thegovernment-approvedpricingthatwegotinVenezuela,whichIthinkwasaround70%plus,74%,ifIremembercorrectly,thatwasinthefourthquarteroflastyear.Soobviously,youhavetherollovereffect.Thereissomepricing,obviously,wegetforthenon-regulatedbusinesses.ButIwouldtellyouthatwearegettingpricing,acrossLatinAmerica,fromMexicodowntoArgentina.

Thankyouverymuch.

Operator :

AliDibadj,Bernstein.

AliDibadj(Analyst-Bernstein):

Heyguys.

HeyAli.

Hey.Iwantedtoaskagainaboutwhyyouareconfidentyouarestrikingtherightbalance,intermsofvolumeversusmargins,forthelong-term?Andso,take--maybeintwodimensions.One,takeasthemovemoreandmoretoin-storepromotions,in-storedisplays.Doesn'tthatsuggestthattheconsumerismakingmoreandmoredecisionsattheshelf?Andthathasbeenatrendgoingonforawhile?Itseemslikeit'saccelerating.Sodoesthatreduceyou--essentially,competitiveadvantageoverthelong-term?

Becauseit's--Ithinkit'stoughtoreallydifferentiateyourselfasmuchinstoreasonecouldtodothroughtraditionalmediaasanexample.Perhapsonline,althoughIwouldsaythattheROIthereisstillprettyiffy,becausethere'snolong-termhistory.Sohowdoyoubalancethat?Isthat--areyousettingyourselfupinatoughersituationbypushingmoreinstoreforthelong-term,givenyouaretryingtodifferentiateyourbrand?

Verygoodanddeepquestion,Ali,asusual.Theansweris,it'snoteither/or.AndIthinkifyouweretogobackto,again,thedayswhenmanyofusmadeourmarketingbones,in-storeactivitywasprettyrudimentary.Therewasacardboarddisplaystuckattheendoftheshelf,withthe$0.99offflagonit,hardlybrandbuildinginnature.Andthatiswhyeverybodyhasthisaversion,ifyouwill,toin-storeinvestment,versusthesupposedqualityoftheengagementwegetfromthetraditionalmedia.Understandingthatthatworldtodayissofragmentedthatitislessprecisethanperhapsmanyofusbelievedhistorically.

Sono,obviously,youdon'tfindyourselfinaplacewhereallofyourengagementwithconsumerhappensattheretaillevel.Butwiththedataavailabletoustoday,withthetechniquesavailabletoustoday,withsomeofthein-storeengagementmaterialsavailabletoustoday,whicharebrandandbenefitandtherapy,openbrackets.Colgate-specific,including,sometimes,thecoloringoftheshelvesthathouseoralcareproductsatretail,thatisawonderfulenvironmenttogetconsumerstomakethatfinaldecision,particularlyiftheyareinastressed,highlydevaluedgeography.

Youstillhavetheadvertising--andwecandebatetraditionalversusdigital--thatismakingtheawarenessconnection,andseekingtoprovokethetrial.Butyoumisseverything,ifyoudon'tengagewiththeconsumerwhentheycometothatstore,tomakesurethetrialengenderedisforyourproduct.Soyes,itisabalance.Soitisnotajourneytoeverythingatretail,butIthinkthathistoricalperceptionsofwhatyoucandoatretail,andfranklyaprejudicethatsayswhatyoudodoatretailisbydefinitionnotbrandbuilding,I'mafraidisalittlebitold-school.

SobesidesthatIamold,andIamold-school,doyou--

AsamI,bytheway.

Butdoyouthink--SoIunderstandengagingatshelf.Youguyshaveseenit,youguyshavedoneitverywell.TheBrazilianside--slideyouallshow.Istrugglewiththatbeingnot--thatbeingdifferentiated.So

feelingthatthat'sprobablyeasiertocopy,withalittlebitofspendin-store,withalittlebitofmorediscussionwiththemerchantin-store,thanreallygoodcopy,right?Andwhetherthatbedigitalornot.Anditsoundslikeyoudon'teventhinkthat'sthecase.It'snotascopy-ablein-store?

No,Ali,again,takeLatinAmerica.Thinkaboutourmarketshare,andthinkabouthowmuchofthatshelfwehave.ThenthinkaboutRed,thenthinkaboutaprogramthatmaytakealocaldentist,withanincentivetogotoastoreandbuyColgate,thatishittingyouinthefacewithatherapeutichealthmessage.Soyou'recominginprovokedbythedentist,andColgateisengagingyouatshelf.Acompetitorcanspendmoremoney.They'renotgoingtogetthatpresenceatretail.

SoIwouldargueitisdifferentiating,andthepresenceyouhaveatretail,withthemarketshareswehaveinourspecificcategories,comebacktothemorefragmentedmediamarket,youcanargue,whichismorelikelytogettheconsumer'sattention.Havingsaidthat,Iamstillold-school.AndIagreewithyou,goodcopyisaveryimportantpartofourmarketingmix.Butit'samarketingmix,Iwouldargue.Itisnotsimplymoreofthestore,buteverythingonmedia.Thingsaremuchmorebalanced.

Okay,thanks.

Operator :

BillSchmitz,DeutscheBank.

BillSchmitz (Analyst-DeutscheBank):

Hi,Ian,andgoodmorning.

Hey,Bill.

Haveyouthoughtaboutdoingsomethinginorganic?It'sbeenawhilesinceyouguyshavelookedatacquisitions,anditseemsliketheindustryisclearlychangingveryrapidly.There'sobviouslyalotofactivistinterest,thereisthisbigfocusofcostcutting.Anditseemslikeyou'reprettydeeplypenetrated,especiallyinoralcare.Soisthereanythingouttherethatyouguyswouldthinkabout,atthisjuncture,thatwouldmaybebetterleveragesomeofyourdistributioninfrastructure?

Yes,it'sclearlyaverygoodquestion,Bill.Andobviously,wereItoanswerit,Iwouldhavetokillyou.SoIthinktheheadlinewouldbe,Ithinkwe'reverythoughtful,andwe'reverystrategicaboutacquisition.Youhaveseenthat,Ithink,inthosethingsthatwehaveacquired.We'realwaysstrategicallyopentotherightacquisitionattherighttime.Asyouknow,thesethingsarealittlebitaprocessofserendipity,howevermuchyouwooandpursue.Andthenwearealsoverydisciplinedonvaluation.

Youhavetolivewithwhatyoubuy,forthebettermentoftheCompanyoverthelonghaul.SoIthinkmyanswerwouldbe,we'reasinterestedinacquisitionsaswewereinSanexandGerberandTom's,andtheLaserbrandinMyanmar.Andifmoreweretobecomeavailable,andthepricewasright,you'dseeusasinterestedgoingforwardaswehavebeenoverourrecentpast.ButIwouldn'tmakeitatiltingpoint,nowversuspreviously.

Okay,great.CanIjustaskafollow-up?

Youmay.

Okay,thankyou.I'maskingyoutoreadthetealeaveshere.Butarethereanysignsthatwe'rebottominginemergingmarkets?Iknowthecategorygrowthratesarestillfairlyhealthy,butalmostallofitisdrivenbypriceandmix.Ifyoulookatsomeofthe--likethescanvolumedata,it'sflattoupveryslightly.Somostofthat'sinflationarypricing,withtheabsenceofalocalcompetitor.Sodoyouhaveanythoughtsonwhenwereallystarttoseeconsumptioncomeback?

Ithink,intermsofcriticalconsumption,firstofall,someofthesemarketsaregrowinginvolumeterms,soit'snoteverywhere.Butyou'reright.Whenpricingisveryaggressive,needsasmustfromadollarpointofview,thattendstodepressvolumeintheshorthaul.Sowithoutbeingglib,Ithinkmyanswerwouldbe,oncethenecessarywaveofpricingisbehindusandeverybodyelsethat'stakingpricing,Ithinkyoucanexpectthebalancebetweenpriceandvolumetomovebackmoreontothevolumesideoftheequation.Whenexactlythatwillbeisdifficulttotell.Iwouldcertainlysayitwillbenoearlierthannextyear.

Okay,great.Thankssomuch.

Operator :

JasonEnglish,GoldmanSachs.

Hey,Jason.

JasonEnglish (Analyst-GoldmanSachs):

Hey,goodmorning.Thankyouforthequestion.Iwanttocomebacktotheinvestmentquestionsagainsttheconsumer.You're--soatwo-partquestion.One,itsoundslikeyoubelievewe'reinanenvironmentwhereshiftingmoretotrademakessense,giventheshoppermarketingcomponents,andthewaysofengagingtheconsumerthere.Anddigital,ofcourse,isplayingalargerrole.Withthatsaid,isitfairtoassumethatthemeasurableA&Plineinyourincomestatement,weshouldexpectthatratiotosalestoremainlowerthanithasbeenhistorically?

Andsecondly,asyoumovetotrade,andyoumovetoessentiallyacontra-revenuelineitemthatwecan'tseeintheP&L,itbecomesalittlehardtomeasure,forustosee.Socanyougiveusasenseof,ifwewereabletogroupbothtradeandmeasurableA&Ptogether,andlookatthatasapercentageofsales,howthatmaybechanging,yeartodate,versusprioryear?

Yes.Thelatterisdifficulttodo,Jason,becauseonecomesoffgross,andtheotherismeasuredagainstnet.SowhatIcantellyouisthatwhatyouarecallingtradespendingisupthisyear.Buttocomebacktoyoumorefundamentalquestion,afewthings.Numberone,thisnotionofshoppermarketingisnotathird

quarter2015comment.Wehavebeentryingtomakethispointunsuccessfullyforthelasttwotothreeyears,forthereasonsIdetailedalittlebitearlier.Webelieve,welldone,itispartofbuildingbrands.

Numbertwo,you'reright,digital,Ithink,willbecomeanimportantwaytotargetandreachdifferentconsumergroups,goingforward.Andthatcarrieswithitadifferentdollartothetraditionalmedia.Butno,Iwouldnottakethenotionthatforever,goingforward,ourtraditionalmediatosalespercentage,theoneyoudosee,willbelowerandstaylower.That,asIsaidearlier,inresponsetoaquestion,Ithinkwillbedrivenbytheinnovationspreadthatwehave.AndasIsaidearlier,eventhoughwehaven'tfinishedthebudgetprocess--actually,wehaven'tevenstartedthebudgetprocess.

Butwhenyoulookatourinnovationgridforthenextthreeyears,startingin2016,Ithink,myexpectationwouldbe,thatyouwillseethatratiohadheadbackupalittlebitin2016.Soitwillmovearound,I'mjusttryingtoassertthatthere'snogoodandbad,it'sallinthemarketingmix.Andtheyarealllegitimatewaysofengagingwithconsumers.Andparticularlyinvolatiletimes,withhighdevaluations,thatclosure,ifyouwill,withtheconsumeronsale,inthosehighlyde-val'demergingmarkets,happensinthatretailenvironment.

Thankyou.Socanyouhelpmeunderstandwhyitishardtogiveusasenseofthetradespendnumber?Youknowthenumber.Insteadofdividingitbygross,youcouldjustdivideitbynet,togiveustheratio.AmIoversimplifyingit,bythinkingaboutitthatway?

No,noyouarenot.Wehaven'tdonethat.Letusthinkaboutthat.Wecoulddothat.Itisthenacreatednumber.

Sure.Okay,thankyouverymuch.

Operator :

O liviaTong,BankofAmericaMerrillLynch.

OliviaT ong (Analyst-BofAMerrillLynch):

Great,thanks.

Hi,O livia.

Howareyou?Sojustonadvertising,youmentioneditshouldgoupnextyear.Butdoyouthinkthislevelwasabnormallylow,andyou'llseeabigmoveupwardsnextyear?Oristheplanforup,butnotmateriallyso,in2016?Andwhatareyouseeingintermsofthe--adecisiononpromoversusadvertisingfromyourmajorcompetitors?BecauseIaskinthecontextofProctorshiftingsomeoftheir--tryingtorealizemoremargin,potentially,atthedetrimentofsalesinsomecases?Thanks.

Firstofall,Ihavetriedtoexplainthethirdquarterthisyear.Itisaquarter;Iwouldn'tobsessaboutit.I

don'tthinkit'sabnormallylow,andtherefore,asweapproachour2016budget,we'resaying,weneedtogetitbackuptoXorYlevel.Idobelieve,wedobelieve,thatwiththerichnessofinnovationwehave,theexpectationwillbethatitwillbeup.Howmuchitwillbeup?Wewillknowwhenwefinishourbudgetedprocess.

Now,asyoulookaroundtheworld--andsomethingIelectednottosay,lestonesoundsdefensive.Butasyougoaroundtheworld,inmanypartsoftheworld,youcontinuetoseemanyofourmultinationalcompetitorspullbackontraditionaladvertisingquitesubstantially.Andinmanyofourkeymarkets,evenifyoutaketheold-fashionedmeasureofshareofvoice,weremain,justonthefaceofit,quitecompetitive.Now,wehaveseensomecorroboratingsignalsofcertainbusinessesexitedbycompetitors,inordertorealizeprice.

YouseethatpublicinformationinIndia,andyouseethatinthemarketplace.Butifwetakethebreadthofourbusiness,there'snothingIwouldpointto,tosaytheshapeofthepromotionalenvironmentthatwe'reinhasmeaningfullychanged.

Gotit.IfIcanjustmovetorestructuring?Areyoupushingharderontheinitiativesyou'vealreadyoutlined?Orthesenewareasthatyou'llbeexploring?Andwillthisresultinmoresavingstartingin2016?Orisitjustanextensiontoanotheryearofsavings?Andasyouthinkaboutreinvestmentversusdroppingtothebottomline,arethereanyshiftsthere,intermsofhowyouthinkaboutthisnewtrancheofrestructuringsavings?

Solet'stakeastepback,O livia.Clearly,whenwebeganthisprogram,which,bytheway,isalotshorterthanmanyofourcompetitors.Butwhenwebegantheprogram,wehadthreekeyareas.Andwesaid,atthebeginning,thatitwasaglobalgrowthandefficiencyprogram,andthatitwasajourney.Sowewereestablishinghubs,andwewereestablishingbusinessservicecenters.Andweweretransferring--liftingandshifting,ifyouwill--capabilitiestothenewstructurethatwewerebuilding,thatwassupportedbySAPacrossourCompany.

Sothisgivesustheopportunitytotransform,alittlebit,whatwearedoingwiththenewstructurethatwearecreating,anddoitinatime-boundwindowof2017,ratherthanextendingitoveralongerperiod.Soitisverydefinitelystillwithinthethreeareasthatwedefinedatthebeginningoftherestructuring,nonewareas.Itisdefinitelyonemoreyear.Andaswesaidintherelease,we'llbecomingbacktoyou,earlyinthenewyear,withfleshed-outrangesofcostsfortheprogramandsavings.Soonthatone,we'llbebacktoyouintheNewYear.

Thankyou.

Operator :

StevePowers,UBS.

StevePowers (Analyst-UBS):

Great,thanks.Iguesstwocleanups,ontopicsalreadydiscussed.Ian,onVenezuela,acknowledgingeverysituationisdifferent,isitfairtoassessatleastthelikelihoodofde-consolidationrisingonthemargin?Itfeelsthatwayfromtheoutside,justwanttogetyourperspectiveonthat.

Andthensecond,backtotherestructuringthatOliviaaskedabout.Isthere--shouldwebethinkingaboutmoreopportunityinthisnextwavebuildingonthehubbingthread,sharedservices?Orthe--isthereafocusarea,withinthethree,thatisgoingtobeofaddedweight?Ormaybe--I'mjusttryingtogetasenseforwheretheincrementalfocuswillgo,intermsoffocusstreamorgeography?Thanks.

Yes.OnyourVenezuelacomment,allIcansay,Steve,isthatthisissomethingwerevisitquarterbyquarter,basedonthefactsandcircumstancesthatpresentthemselvesineachofthequarters.Andwewillcontinuetodothat.SoIreallyandspecificallydonotwanttoshadehowwearethinkingaboutit.Wewillberesolutelyobjective,andmakewhateverdecisionswethinkareappropriate,basedonthefactsandcircumstancesatthetime.

Nowwhenyouturntotherestructuring,Iwouldsaysimplistically--andwewillbebackwithrichercommentarynextyear.Iwouldsay,specificallywhatwe'retalkingaboutareactivitiesthatwillbemoretransformationalinhowweusethehubswehavecreated,andhowweusetheservicecenterswehavecreated,morefulsomely.AndI'dholditthere,atthisstage.Soitisgreaterutilizationaroundthebasicstructuresthatwewillhavefullyestablishedbynextyear.

StevePowers (Analyst-UBS):

Okay,great.Weshallstaytuned.Thankyou.

Operator :

ChrisFerrara,WellsFargo.

Chris?

Operator :

Pleasecheckyourmutebutton.

ChrisFerrara(Analyst-WellsFargoSecurities):

Sorryaboutthat.

IthoughtitwassomethingIsaid.

No.TheSG&A,excludingadvertisinginthequarter,lookslikeitpickedupmaybeby100basispoints,yearonyear,orso.Canyougothroughalittlebitwhatmighthavedriventhat?Isthatsomeoftheshiftinstore?Aretherecertainpromotionalactivitiesgoingon?

No,no,Chris,thatisstraightforwardleverage.Ouroverheads,ourdollaroverheads,wereactuallydownyearonyear,withthebenefitswe'regettingfromtherestructuringprogram.Butthereisalotofoverheadthatisdollar-denominated.Andwhenyouhavethedownwardpressureof13%foreignexchangeonthetopline,youendupwithaleveragenegative,anditisentirelytraceabletothatnegativeleverage.

Okay.Iguess,then,thefollow-uptothatwouldbe,whydidn'tweseeitnearlytothatextentlastquarter,whenitwasprobablyaprettysimilardynamicaroundthetoplinedrivers?

Idon'tknow.Theonlyothermixinitisthemixofcountries.Soitmayhavebeenacountrymixissue.We'llhavetogetbacktoyouonthat.Idon'thavetheansweratmyfingertips.

Okay,thankyou.

Operator :

JavierEscalante,ConsumerEdgeResearch.

JavierEscalante (Analyst-ConsumerEdgeResearch):

Goodmorning,everyone.Actually,myclarificationhastodowithChris'.Becauseitseemslikeheadquarteredexpensesrunthehighest,sincethe[2009].AndIwassurprised,becauseofthehubbing.IsthisForEx?Orsomethingelsegoingoninthatline?AndIdohaveaquestionwithregardstocommercialspendingandcategorygrowth,ifIcan?Thankyou.

The--whatdoyoucallit--corporateoverheadisflat.SoasIansweredbefore,onthisquarter,it'sdefinitelyleverage.Andyourquestiononspendingis?

Iknowbasicallyinthepast,andweknowthatthefactthatthemarketsharesareupacrosstheboardinoralcare,itshouldn'tbeahugechange.Butessentiallyinthepast,whenadvertisinghasbeendown,therehavebeencommentaryregardingaggregatecommercialspending,whichincludestradespending.Andtradespendingistypicallyamagnitude2to3timesadvertising.Socouldyoutelluswhethertheaggregateofcommercialspendingisupornot?

Andinthecaseofcategory,youmentionedthatthecategoryhaslikebottomedout--thisisinreferencetoBillSchmitz'squestion.Somy--couldyouclarifywhether--isitthatthecategory,we'reseeingnegativemixbecauseofthepriceincreases?Oractualvolumeshavesloweddown?Becauseitseemsit's,consideringthatallthemarketsharegains,allthepricingthatyouaretakinginoralcare,thatorganicsalescouldhavebeenbetter.Sosorryforthetoomanyquestions.Thankyou.

TheoralcareorganicsaleswerebetterthantheCompanyaverage,numberone.Numbertwo,intermsoftotalspending,you'reright.Thetradespendingasaratioisamultipleofover3timesthetraditionaladvertisingspending.Andrelativetothecategorygrowthrates,Bill'squestionwastodowithvolume.Andmyanswertothequestion,thisbalancebetweenvolumeandprice.

Andhewasaskingwhetherthevolumewasbottomingout,andwouldcomeback.AndIthinktheanswer

wegavewas,youwouldexpectthatbalancetocomeback,oncethehigherpricingthathasbeentakenhadworkeditswaythrough,andthatwedidn'texpectthattobeearlierthan2016.

ButifImay,sothequestionthatIhaveis,basedonyourassessment,areyouseeing,whenyoutalkaboutvolumes,thereisthisinterplaybetweenmixandactualtonnage,ifyouwill?Somyquestioniswhether,becauseofthepriceincreases,youareseeingnegativemixwithinColgate'sportfolio?Thankyou.

Andtheansweris,we'renotgoingtogetintothatlevelofdetail.

Operator :

JoeAltobello,RaymondJames.

JoeAltobello (Analyst-RaymondJames):

Thanks,hey,goodmorning,Ian.

Hey,Joe.

JusthadaquestiononpricinginLatinAmerica.Itsoundslike,inyouranswertoJavier,thatyouarewaitingonsomeofyourcompetitorstomatchonthepriceincreasesyouguyshavetaken.I'mjustcurious,whenyoutalkaboutyourcompetitorsinLatinAmerica,aretheymostlylocalcompetitorswhodon'thavethesamecurrencyheadwindsthatyouguysarefacingrightnow?Oraretheymoremulti-nationalswhodohavethesamecurrencyheadwinds?

Wehaveboth.Thelocaltendtobemorecountryspecific,ColumbiaandMexico.Sotheytendtobeboth.AndifIsaidit,thenIapologize,Ididn'tmeantosayit.We'renotwaitingonanybody.

WehavebeentakingpricinginLatinAmerica.AndIwouldfurthersay,whenyoulookatthebreakdownofrawmaterialsintoday'sworld,manyofthoserawmaterialsaredollar-denominated.Soeventhelocalcompetitorisgoingtobehitwiththelocalcurrencytransactionimpactofrawmaterialscomingintothecountry.SoIwouldsaythattheincentivetopriceisfairlyelevated,acrosstheboard.

Okay,thatwasmyquestion,yes.Iwastryingtogettowhentheywouldfollowyourlead,essentially,onthepricingside.So--andthenonthefollow-up,intermsofadvertisingspending--Iknowwe'vebeatingthistodeathalittlebithere.ButcanyougiveusasenseforwhatUSadvertisingdidinthequarter,yearoveryear?Thanks.

No,wedon't--again,we'renotgoingtogetintothatlevelofcountry-by-countrydetail.

Okay.Thankyou.

Operator :

LaurenLieberman,Barclays.

LaurenLieberman (Analyst-BarclaysCapital):

Thanks,goodmorning.IwashopingyoucouldtalkalittlebitaboutEurope.Actually,thisis--withorganicsalesbeingdownthisquarter,itisactuallythefirsttimewe'veseenthatinquiteawhile.Sobigdecelerationinvolume.Andmyunderstandingis,therehasbeenquiteabitofpremium-basedinnovationgoingintomarkets--surprisedtoseevolume,whichweknowisvolumeandmix,besolight.SoifyoucouldtalkalittlebitaboutEurope,itwouldbegreat.Thankyou.

Yes,IthinkwhenyoulookattheEuropeanenvironment,obviously,itisourlowest-growthareaoftheworld.Ithinkthegoodnewsisthat,althoughpricinghasbeenconsistentlynegativeinEurope,ifyoulookatthethreequartersthisyear,ithasbecomepositivelylessnegative.Unfortunately,wehadthevolumenegativeinthethirdquarter.AndIwouldsay,wewouldsaythatthatisgoingtocomeback.Andwe'recertainlyplanningforpositive,organicgrowth,goingforward.

Werethereanyparticularbigbucketsofproductlaunchdisappointment?It'saprettysignificantchangeintrend,onvolume.

Yes,theonlythingIwouldcommentto,Lauren,isthatwehadasituationinourEuropeWestgrouping,whichisessentiallyourGermanicgrouping.Whichhadtodowiththetransfertoanewdistributioncenter,whichdisruptedtheshipmentsofthatoperationspecificallyinthequarter.SoIthink--IknowEuropewasinpartaffectedbythat,onthevolumeside,whichweseeA,isaone-time,andB,alreadycorrectedandcomingbackinthefourthquarter.ButitdidhaveaneffectbeyondtheusualmarkettravailsinEurope.

Okay,that'shelpful.AndthenjustsimilarlyonLatinAmerica,it'sprettyraretoseevolumegonegative.Look,Iunderstandthepricingenvironment,obviously,andthevolumeshavebeenlight.Butitisraretoseevolumegonegative.Sojustthoughtsonwhatcomesnextthere?Understandingshareshavebeensolid,andmarketgrowth,yousaid,isstuckinthemid-single-digits?

Yes,I--again,you'reright,ithastodowiththepricing.Youcanseethatthepricing,ofcourse,ismoreelevatedthanthepriortwoquartersinLatinAmerica.AndwetookstrongpricinginBrazil,whichhadanimpactonvolume.Andusuallythewaythatworksisthat,asIsaidearlier,oncethepricingworksitswaythrough,thenthevolumecomesback.Thecategoriesarestillgrowingmid-single-digits,sowehopethingsstaytothenormalcycleofevents.

Okay,thankyou.Andthenjustsothecalldoesn'tendwithoutanyoneasking,couldyousharethegrossmarginbridgeforthequarter?Itwouldbegreat.

Thenmymodelbreaksdown.

The--okay,sothirdquarter,theprior-yeargrossprofitwas58.6%.Wegot140basispointspositivefrompricing.Betweenourfunding,thegrowthsavingsandtherestructuring,wegotfavorable270basispoints.Sofundingthegrowth,continuingtodoverywellonmaterialpricing,therewasaheadwindof390basispoints.Andsotheoffsetoftheresulting120basispointsnegative,tothe140onpricing,getsyoutheplus20.Andmeaningfully,overhalfofthe390basispointsnegativewastodowiththetransactionimpactofforeignexchange.

Okay,thankyousomuch.

Operator :

JohnFaucher,JPMorgan.

HeyJohn.

JohnFaucher (Analyst-JPMorgan):

Goodmorning,Ian--orIguessit'safternoonnow,soIwilltrytokeepthisquick.Oneclarification,whichis,IthinkyousaidthatVenezuelapricingwasup74%.AndifIlookatthat,thatwouldbeprettymuchalloftheLatinAmericapricing.

No,John,sorry.WhatIsaidwas,theofficialpriceincreasethatweweregrantedwas74%inthefourthquarteroflastyear.So--onsomebusinesses.Sothatis(multiplespeakers).

Okay,some--okay.

Gotit,okay.ThatiswhatIthought;Ijustwantedtomakesure.Andthen,aswelookout--andIknowyouguysdon'twanttogetintoquarterlystuffhere.Butaswelookatit,isitmoredifficultcomparison,aswe

lookintothefourthquarter.Justsequentially,doyoufeellikemoreofthepricingflowsthrough?Oragain,notlookingforspecificguidance.Butitseemslikethelowerendofyour4%to7%rangeisprobablytherightwaytobe,forthefourthquarter.Isthattherightwaytothinkaboutit?

I'mnotsureIwouldgoallthewaythere,John.Ithinkwe'recomfortablewiththe4%to7%range.Ithinkyoursenseofpricingisright.Westillhavearecoverytomovethegrossmargin.Becausetogettoflatontheyear,wehavetobe,asyouwillcalculatefromthesqueeze,wehavetobeuponthequarter.Soitwillbewithinourrange.Ithinkwe'rethinking,ifyoutaketheninemonths,itwouldbearoundthere.

Okay.Excellent.Thankyouverymuch.

Operator :

AlexPaterson,AGI.

Hey,Alex.

AlexPaterson (Analyst-AGI):

Hi,Ian.Sojustacoupleofquickones.Inthe--especiallypetchannel,haveyouseenmuchinthewayofadeflationaryimpact,duetolowercommoditycosts,whichseemtobeimpactingthemasschannel?Hasthatflowedintothatchannelforyou?Andthensecondly,justcuriousaboutthecashyou'vebeenbuilding,andthecashsources.Areyouabletorepatriate,likeyou'vebeingabletodointhepast,thecashgeneration,especiallyinemergingmarkets,backtotheUS?Orismostofthatlockedintothosemarkets?

Onthefirst,againwithoutbeingglib,theanswerisasimpleno.Particularlyinoursegmentofthepetnutritionbusiness,whichtendstobethemorepremiumend.Sowehavenotseenitcreepintospeciality.Cashrepatriation,VenezuelaisVenezuela.AbsentVenezuela,it'sthesameasithasalwaysbeen.Sowehavetheabilitytorepatriate.Sometimestimingisvariable,countrybycountry,butnochangefromprior.

AlexPaterson (Analyst-AGI):

Okay,great.Thankyou.

Operator :

MarkAstrachan,Stifel.

Hello,Mark.

MarkAstrachan (Analyst-StifelNicolaus):

Hello,Ian.Sogoingbacktotheadvertising,Iguesstheeffectivenessofdigitalwouldseemtovarybycategory,forvariousreasons.SoI'mcurious,assumingiftheresometruthtothat,aretherespecificcategoriesinwhichadspendisstillup,yearonyear?Orupgreaterthanitappearstobe?Andmaybetalkdirectionallyaboutit,categorybycategory,ifyoucan?

Yes.Iprobablycould,butI'mnotgoingto,Idon'tthink,Mark,becausewe'renotgoingtogetintothatlevelofdetail.Iwouldsaytoyourgeneralpointondigital,it'slesscategoryspecific,althoughthecategorymaybelinkedtotheuser.It'smore,whichuseryou'retryingtogetto,andhowtheyaccess.Wejustwentthroughanextensivereview,forexample,inLatinAmerica.Themajorityofviewers,millennials,theyhappentobeagrowingmajorityofparents.

TheyhappentodoanawfullotonFacebook,andtheyhappentobeavidviewersofYouTubevideos.Soifyouwanttoconnectwiththatgroup,thenthebestwaytogetyouradvertisingmessagetothatgroupisYouTubevideos,andtodosoinawaythatispurpose-driven.SoifyouweretoGoogleallofthat,youwouldseesomeprettyinterestingwork,fromourpointofview.Butittendstobemoredrivenbytheviewerthanitdoesbythecategory.

MarkAstrachan (Analyst-StifelNicolaus):

Gotit.Thankyou.

Okay.Good--sorry,isthatit?

Operator :

Thatis.

Okay,thenthankyouallforyourquestions.AndthankstoalltheColgatepeoplearoundtheworldthatdelivertheresults.Thankyou,everybody.

Operator :

Thatdoesconcludetoday'sconference.Wethankyouforyourparticipation.

Pleasefeelfreetoquoteupto200wordspertranscript.Anyquoteshouldbeaccompaniedby"ProvidedbyTheStreet"andalinktothecompletetranscriptandwww.thestreet.com.Anyotheruseormethodofdistributionisstrictlyprohibited.

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