Download - Annual Strategic Decisions Conference
Bernstein 34th
Annual Strategic Decisions Conference June 1, 2018
June 2018
Notice for Investor Presentation
Our presentation and the related webcast contain non-GAAP financial measures, which differ from our reported results prepared
in accordance with U.S. generally accepted accounting principles (GAAP). These non-GAAP financial measures of operating
results, such as gross profit margin and operating profit, exclude items that, either by their nature or amount, management would
not expect to occur as part of the Company’s normal business on a regular basis, such as restructuring charges, charges for certain
litigation and tax matters, gains and losses from certain divestitures and certain unusual, non-recurring items. We may also refer to
organic sales growth, which is Net sales growth excluding the impact of foreign exchange, acquisitions and divestments, or to
free cash flow before dividends, which we define as Net cash provided by operations less Capital expenditures. A complete,
quantitative reconciliation between our reported results and these non-GAAP financial measures is available in the “Investor Center”
section of our website at https://www.colgatepalmolive.com.
Our presentation and the related webcast are integrally related and are intended to be presented and understood together.
In addition, they may contain forward-looking statements (as that term is defined in the U.S. Private Securities Litigation Reform Act
of 1995 or by the Securities and Exchange Commission (the SEC) in its rules, regulations and releases) that set forth anticipated
results based on management’s current plans and assumptions. These statements are made on the basis of our views and
assumptions as of this time and we undertake no obligation to update these statements whether as a result of new information,
future events or otherwise, except as required by law or by the rules and regulations of the SEC. Moreover, we do not, nor does
any other person, assume responsibility for the accuracy and completeness of those statements. We caution investors that forward-
looking statements are not guarantees of future performance and that actual events or results may differ materially from those
statements. For information about factors that could impact the Company’s business and cause actual results to differ materially
from forward-looking statements, refer to the Company’s filings with the SEC (including, but not limited to, the information set forth
under the captions “Risk Factors” and “Cautionary Statement on Forward-Looking Statement” in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2017 and subsequent Quarterly Reports on Form 10-Q). Copies of these filings are
available in the “Investor Center” section of our website at https://www.colgatepalmolive.com or may be obtained by request from
the Company’s Investor Relations Department.
Today
Our Focused Strategy
Home Care
Oral Care
Personal
Care
Pet
Nutrition
The Market Environment
2017
A difficult year
2018
Improving, but still challenging
2018 – Environment
Developed markets improving
Less inflation in emerging markets
Raw materials and logistics costs higher
Continued fragmentation in channels
Dollar has strengthened recently
Our Priorities
Driving Organic Sales Growth
Maximizing Productivity across the P&L
Effective Deployment of Cash Flow
Leading to Win
Our Priorities
Driving Organic Sales Growth
Maximizing Productivity across the P&L
Effective Deployment of Cash Flow
Leading to Win
Driving Organic Sales Growth
Growing market share through superior marketing
and brand engagement
Innovating across the business
Maximizing growth in e-Commerce
Working with our retail partners for profitable growth
Investing to drive penetration in growing populations
Driving Organic Sales Growth
Growing market share through superior marketing
and brand engagement
Innovating across the business
Maximizing growth in e-Commerce
Working with our retail partners for profitable growth
Investing to drive penetration in growing populations
BRAND SUMMIT 2017
Build Purpose-Driven
Brands that Enrich the
Lives of People, and
Drive Growth for Colgate
The Purpose of Purpose
Give people not just something to buy,
but something to buy into
Communication In Store
Communication On Pack
Delivering on Advertising Commitment
Increased advertising spend and consistency
Digital: 30% of global media spend
Driving Organic Sales Growth
Growing market share through superior marketing
and brand engagement
Innovating across the business
Maximizing growth in e-Commerce
Working with our retail partners for profitable growth
Investing to drive penetration in growing populations
Meaningful Innovation
Naturals Positioning
Distinctive to each region
Meaningful Innovation
Whitening
Meaningful Innovation
Artificial Intelligence Powered Toothbrush
Improved Brushing Habits
Users brushing longer
Average surface coverage increased
Awareness of missed areas
*after brushing for 15 weeks
Meaningful Innovation
New:
Anti-Pollution BW
New:
Compressed UAP
For Young and Older Consumers
Delicious new taste
to grow on
Designed for dogs and cats
with early kidney problems
Meaningful Innovation
New:
Anti-Pollution BW
New:
Compressed UAP
Sanex Zero% Relaunch
Meaningful Innovation
Fabuloso Complete – Entering New Segments
Highly incremental,
adding more than one share point
to overall share
Driving Organic Sales Growth
Growing market share through superior marketing and
brand engagement
Innovating across the business
Maximizing growth in e-Commerce
Working with our retail partners for profitable growth
Investing to drive penetration in growing populations
e-Commerce Sales
Have nearly tripled since 2014
U.S e-Commerce sales doubled
in 2017 alone
U.S.
#1 market share in toothpaste online
Source: 10/10 (Colgate Company)
China
28
Transparent
tube
Heart shape
strip
Personal comments
Express Yourself.
Dare to Love.
“Dare to Love” Performance
#1 selling SKU in the Colgate store for this
e-tailer on 11/11
Helping to drive our total sales up 55%
for this important event
Increasing total toothpaste market share
China
Established elmex partnership with Alibaba
Face-to-face and online
communication
– Switzerland experience
zone with sampling
China
Established elmex partnership with Alibaba
Face-to-face and online
communication
– “elmex landing”
Hill’s Global e-Commerce Net Sales
>+300%*
Hill’s U.S. Subscription
>50%
PurePlay e-Commerce only
*2017 vs. 2013
Hill’s
Hill’s
On site search Digital advertising
Hill’s
Increased home page placements
Hill’s Therapeutic Share e-Commerce
2015 – 2017
2015 2016 2017
+8.2 share pts5
Sensitive toothpaste
Paid Search
Giving People Solutions for Their Lives
Wisdom Teeth
How to Brush
Tooth Whitening
Giving People Solutions for Their Lives
Colgate content on 1st page of results
for >40K oral health search terms
Same number of search results
as WebMD
Mobile
Driving Organic Sales Growth
Growing market share through superior marketing and
brand engagement
Innovating across the business
Maximizing growth in e-Commerce
Working with our retail partners for profitable growth
Investing to drive penetration in growing populations
Profitable Growth
Customer engagement
Pricing
Revenue Growth Management
Profitable Growth
Customer engagement
Pricing
Revenue Growth Management
Increased Customer Engagement
Customers are seeking partners to help them profitably
grow their businesses
– Investment in their strategies and shoppers
– Insight-based actions
– Innovation
Increasingly important to engage all levels of customer
management… collaboratively
Customer Engagement Center
High-tech, collaborative environment
Distribution Analytics
Identifying opportunities
for incremental sales
Example: Brazil – Indirect Distribution Mapping
São Paulo
State
Example: Brazil – Indirect Distribution Mapping
Stores
selling
Colgate
Toothpaste
Example: Brazil – Indirect Distribution Mapping
…but not
Colgate
Toothbrushes
Profitable Growth
Customer engagement
Pricing
Revenue Growth Management
Pricing
Planning for pricing to increase in 2018
Consistent with our long-term commitment to pricing
Commitment to Pricing
0.5%
1.5% 1.2%
5.4%
6.0%
0.0%
1.3%
3.1%
0.8%
1.9%
3.1%
2.4%
0.5%
0.0%
2.0%
4.0%
6.0%
8.0%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Pricing
Planning for pricing to increase in 2018
Consistent with our long-term commitment to pricing
Aided by return to volume growth in developed markets
Inflation in emerging markets historically has provided
support
Example: Brazil Inflation Trend
6.5% 5.8% 5.9%
6.4%
10.7%
6.3%
2.9%
0.7%
0%
2%
4%
6%
8%
10%
12%
2011 2012 2013 2014 2015 2016 2017 2018Q1
Toothpaste Market Shares
Brazil
70.6 71.2 71.5 71.5 72.7 73.1 72.5 72.9
6.2
5.6 4.8
8.4
0
20
40
60
80
100
2011 2012 2013 2014 2015 2016 2017 2018YTD
Source: Nielsen March 2018
Cash and carry added to data 2015
Comp 1 Comp 2
Colgate
Manual Toothbrush Market Shares
Brazil
31.7 30.6
31.5 32.3
26.8 27.0 27.1
25.4
24
28
32
36
2015 2016 2017 2018YTD
Source: Nielsen March 2018
Cash and carry added to data 2015
Comp
Colgate
Mouthwash Market Shares
Brazil
33.1 34.7
36.1 38.1
44.1 42.7
41.9 41.5
30
35
40
45
50
2015 2016 2017 2018YTD
Source: Nielsen March 2018
Cash and carry added to data 2015
Comp
Colgate
Pricing
Planning for pricing to increase in 2018
Consistent with our long-term commitment to pricing
Aided by return to volume growth in developed markets
Inflation in emerging markets historically has provided
support
Raw materials inflation historically leads to pricing
Profitable Growth
Customer engagement
Pricing
Revenue Growth Management
Re-launched two entry-level products: Herbal and
Maximum Cavity Protection
To differentiate and separate our offerings within
this end of our portfolio
– Called out new ingredients on the pack
– Slightly increased prices
Created a new mid-tier price point
Tiering Our Base Business
Example: South Africa
Double-digit, profitable net sales growth for South Africa
in 2017
South Africa reached its highest toothpaste market share
in a decade
Base: > 65% in 2015 to < 20% in 2017
Mid-Tier: From 0% in 2015 to >55% in 2017
Tiering Our Base Business
Example: South Africa
Results
Elevating Premium Pricing
Example: North America Toothpaste
Significant pricing actions
– Optic White >25%
– Colgate Total Advanced >10%
Customer engagement focused on multi-year growth strategy
– Increased brand media investment
– Retail price and portfolio simplification
60
Elevating Premium Pricing
Example: North America Toothpaste
Category growth has accelerated
Led by Colgate premium segments
Driving healthier pricing/mix for Colgate and category
Results
Premiumizing and Shifting Mix
Example: UK Colgate Total Toothpaste
Significant relaunch of Colgate Total premium tier
to drive pricing and mix
Introduction of new variant, relaunch of two others
Results:
– Drove category growth
– Increased Colgate Total net sales and average
selling price while delivering record shares
62
Driving Organic Sales Growth
Growing market share through superior marketing
and brand engagement
Innovating across the business
Maximizing growth in e-Commerce
Working with our retail partners for profitable growth
Investing to drive penetration in growing populations
Toothpaste Growth Opportunity
Significant consumption
growth potential
Less than 1x per day
0 365 730
Toothpaste Growth Opportunity
Colgate
Share
Between 1x – 2x per day
*Markets where we do business
Grams
0 365 730
Less than 1x per day
Toothpaste Growth Opportunity
Grams
Colgate
Share
Between 1x – 2x per day
68% of population*
32% of population*
*Markets where we do business
Bright Smiles, Bright Futures
Worldwide Community Health Initiative
Provides children world-wide
with free dental screenings and
oral health education
One billion kids reached to date
Goal: 1.3 billion kids by 2020
BSBF Investment Drives Growth
100% 121%
318%
Media Professional BSBF
Brazil, Mexico, Malaysia and Thailand (2011-2015)
Relative ROI
Availability and Affordability
Our Priorities
Driving Organic Sales Growth
Maximizing Productivity across the P&L
Effective Deployment of Cash Flow
Leading to Win
Maximizing Productivity Across the P&L
Global Growth and Efficiency Program
Funding the Growth
Global Growth and Efficiency Program
Expand commercial hubs
Extend shared business services and
streamline global functions
Optimize Global Supply Chain and Facilities
Focus Areas
Global Growth and Efficiency Program
Savings are projected to be in the range
of $500–575MM after-tax, once all projects
are approved and implemented
Rate of return greater than 30%
Payback averaging 3–4 years
Global Growth and Efficiency Program
With Hubs and Colgate Business Services (CBS)
in place, now a platform to help us drive growth
Platform to Drive Global Growth
Analytics/Insights
Platform to Drive Global Growth
Analytics/Insights out of
Colgate Business Services (CBS) Mumbai
Analytics – CBS Mumbai
Cost-effective access to top analytic talent
Lower cost compared to external partners
Direct access to data on Colgate systems
Ability to leverage co-located IT solutions seamlessly
Driving Cost Savings, Speed, Agility
Platform to Drive Global Growth
Analytics/Insights
Faster speed to market
Example: Europe Hubbing
Five
Colgate Hubs
33
Countries
Faster Speed to Market
Roll-out of Colgate Max White Expert Complete
across Europe in 6 months
Platform to Drive Global Growth
Analytics/Insights
Faster speed to market
SKU productivity
Platform to Drive Global Growth
SKU productivity –
“Grow the Head, Cut the Tail”
Portfolio SKU Productivity (Hypothetical Case )
Weighted Distribution
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Head SKUs:
Higher
Productivity
Rate of Sales
€M/WD point per month
Tail SKUs:
Lower
Productivity
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Grow
the Head
24 SKUs
60% of sales
Average 85%
distribution
Weighted Distribution
Rate of Sales
€M/WD point per month
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Grow
the Head
Product “AA”
Weighted Distribution
Rate of Sales
€M/WD point per month
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Target 65%
Grow
the Head
Product “AA”
Weighted Distribution
Rate of Sales
€M/WD point per month
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Grow
the Head
+10%
distribution
Weighted Distribution
Rate of Sales
€M/WD point per month
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Grow
the Head
+10%
distribution
Weighted Distribution
Rate of Sales
€M/WD point per month
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Grow
the Head
Improve
promotions
and support
Weighted Distribution
Rate of Sales
€M/WD point per month
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Grow
the Head
Improve
promotions
and support
Weighted Distribution
Rate of Sales
€M/WD point per month
Starve the Tail
Cut unproductive
SKUs
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Weighted Distribution
Rate of Sales
€M/WD point per month
Tail SKUs:
Lower
Productivity
0.5
0.4
0.3
0.2
0.1
0.0
0 25 50 75 100%
Portfolio SKU Productivity
Starve the Tail
Cut unproductive
SKUs
Weighted Distribution
Rate of Sales
€M/WD point per month
Europe Simplification
Number of SKUs -3.3%
Sales/SKU +20.8%
Organic Sales/SKU +5.0%
Q1 2018
vs. Q1 2017
Note: SKU=Stock-Keeping Units
Maximizing Productivity Across the P&L
Global Growth and Efficiency Program
Funding the Growth
Funding the Growth Overview
Key component of Colgate’s financial strategy
Sustained global process with systematic tracking
of savings initiatives
Generates funds to reinvest in the business for growth
Deeply ingrained way of working that gives Colgate
a competitive advantage
Funding the Growth
Savings on land
Savings on Land
U.S. fuel purchasing program – savings: $3.3MM
Funding the Growth
Savings on land
Savings at sea
Savings at Sea
Global ocean freight – savings $19MM
Our Priorities
Driving Organic Sales Growth
Maximizing Productivity across the P&L
Effective Deployment of Cash Flow
Leading to Win
Effective Deployment of Cash Flow
Capital expenditure for growth and savings
3.2% 3.3%
3.8%
4.4% 4.3%
3.9% 3.6%
0%
5%
2011 2012 2013 2014 2015 2016 2017
Capital Expenditure
% to Sales
State-of-the-Art Toothbrush Lab
Image of Tech Center TB Lab (May 1)
High-Speed Manufacturing Lines
Cost-Saving Capital Spending
‟11 ‟12 ‟13 ‟14 „15 „16 „17
Cash
Capital
Spending
$537 $565 $670 $757 $691 $593 $553
% of
Savings
Projects
50% 49% 53% 58% 61% 51% 50%
($MM)
Cost-Saving Capital Spending
‟11 ‟12 ‟13 ‟14 „15 „16 „17
Cash
Capital
Spending
$537 $565 $670 $757 $691 $593 $553
% of
Savings
Projects
50% 49% 53% 58% 61% 51% 50%
After-Tax
IRR
69% 56% 71% 70% 52% 45% 64%
($MM)
Effective Deployment of Cash Flow
Capital expenditure for growth and savings
Mergers and acquisitions
– GABA (2004)
– Tom’s of Maine (2006)
– Sanex (2011)
6.7
10.1
3
4
5
6
7
8
9
10
11
12
'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
GABA Market Share
Nielsen: Includes TP, MTB and MW
1.3
2.7
0
1
2
3
'11 '12 '13 '14 '15 '16 '17
Tom’s Toothpaste Market Share
Nielsen: Total U.S. All Outlets XAOC
6.5
7.8 7.7
9.7
5
10
2012 2013 2014 2015 2016 2017
Sanex Market Shares
Underarm
Protection
Bodywash
Nielsen EU, Sanex Countries
Effective Deployment of Cash Flow
Capital expenditure for growth and savings
Mergers and acquisitions
Dividends
Dividends Paid
$0.24 $0.27 $0.28 $0.30 $0.32
$0.34 $0.36
$0.45 $0.48
$0.56
$0.63
$0.70
$0.78
$0.86
$1.02
$1.14
$1.22
$1.33
$1.42
$1.50 $1.55
$1.59
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17
Amounts adjusted for two-for-one stock split in 1997, 1999 and 2013
Increased for 55 consecutive years
Per Common Share
Effective Deployment of Cash Flow
Capital expenditure for growth and savings
Mergers and acquisitions
Dividends
Shareholder Return
+301% +309%
+509%
S&P Peer Group Colgate
Total Return 20 Years
12/31/97 – 12/29/17
+126% +125% +145%
S&P Peer Group Colgate
Total Return 10 Years
12/31/07 – 12/29/17
+108%
+81%
+61%
S&P Peer Group Colgate
Total Return 5 Years
12/31/12 – 12/29/17
+21.8%
+14.8%
+17.9%
S&P Peer Group Colgate
Total Return 2017
Our Priorities
Driving Organic Sales Growth
Maximizing Productivity across the P&L
Effective Deployment of Cash Flow
Leading to Win
Colgate Values
Caring
Global Teamwork
Continuous Improvement
www.colgatepalmolive.com
Colgate’s Sustainability Commitments 2015 –2020
Delighting Consumers and Sustaining Our World with Our
Brands
Making Every Drop
of Water Count
Reducing Our Impact on Climate
and the Environment
Contributing to the
Communities Where We Live
and Work
Helping Colgate
People and Their Families
Live Better
Performance People Planet
Colgate’s Sustainability Commitments 2015 –2020
Making Every Drop
of Water Count
Reducing Our Impact on Climate
and the Environment
Contributing to the
Communities Where We Live
and Work
Helping Colgate
People and Their Families
Live Better
Delighting Consumers and Sustaining Our World with Our
Brands
Performance People Planet
Making Every Drop of Water Count
Promote water conservation awareness
to all of our global consumers
2020 Goal
World Water Day
“A” score in both
WATER
Our Priorities
Driving Organic Sales Growth
Maximizing Productivity across the P&L
Effective Deployment of Cash Flow
Leading to Win