Colgate-Palmolive Co. Presents at DbAccess 10th Annual Global Consumer Conference, Jun-11-2013 02:00 PM

| About: Colgate-Palmolive Co. (CL)

Colgate-Palmolive Co. (NYSE:CL)

June 11, 2013 8:00 am ET

Executives

Nigel B. Burton - Chief Marketing Officer

Analysts

William Schmitz - Deutsche Bank AG, Research Division

William Schmitz - Deutsche Bank AG, Research Division

Everybody brushed their teeth after lunch? We're going to get started with Colgate. Colgate has been [ph] a very loyal customer of the Deutsche Bank conference. I think Colgate's has been in every year since we've done it. So I'm going to introduce Nigel Burton, the Colgate Chief Marketing Officer. Thanks, Nigel.

Nigel B. Burton

Thank you, Bill. Good afternoon, everybody. Thank you for the invitation to speak and present on behalf of Colgate. We feel that we are well positioned for continued growth, and in the time that we have available, I'd like to show you why we think that is the case.

First of all and as background and many of you know, we think we have a well-positioned global footprint, and we have, as a second component, a very tight focus on 4 key categories. First of all, that global footprint, 223 countries and counting. I actually didn't know we had all of these 223, but apparently, that's the count. And what's more important beyond the spread of countries and number of countries is the deep roots that we have in many of those countries and particularly, key countries here as an example, Brazil. And as a consequence of that long time in many geographies around the world, although 47% of our sales are still in the developed markets, here indicated in yellow, importantly, we already face 53% of the world defined as these emerging markets.

The second component of our position is tight focus on categories. So the $17 billion in turnover is spread just on these 4 categories. So where we compete, although broad in geographic scope, it's incredibly focused and tightly focused on winning in these 4 categories. And as a factor of that, we delivered what we think are consistent and good financial results.

This chart gives you 10 years of our compound growth over that period of time, 5 years compound growth from 2002 to 2006 and then each individual year through 2012, including our latest results in the first quarter and as you can see by eyeballing the organic growth figure across a 10-year period, including the latest quarter, consistently at or around 6% growth. And as a consequence of that, our return to the shareholder has been good compared to the S&P and to the peer group, whether we look at a 20-year, 15-year or, as this chart shows, a 5-year comparison or, indeed, the whole of 2012 compared to the peer group. In this particular period of time, although our growth was good at 16% in terms of return, the S&P was catching up on, obviously, some prior year weaker performance and delivered at 16% as well.

Another dimension of our performance beyond the financial returns and the growth is, of course, how that confers in the marketplace. And we particularly have solid and growing shares in our Oral Care business. This is the worldwide toothpaste shares, showing continued growth and it's moving above 45%, and this is using year-to-date figure. So you can see the consistent growth in that leadership position compared to the nearest 3 global competitors.

In manual toothbrush, the second leg of the oral care business that we compete in, you can see the strong growth of our business overtaking the second player in the market who had just completed a major acquisition. And since that acquisition and since that period in 2006, our leadership position has further grown in this particular category, and this is now replicated in many of the key markets around the world.

And the third and increasingly important leg of our Oral Care business is the mouthwash business. Here, you can see steady growth, as we have chosen to focus in the last 5 years on this business from an investment point of view. We like the mouthwash business in terms of the potential it offers us. It's incremental in terms of growth. It will not cannibalize the toothpaste or toothbrush business. It's higher margin. And we think with the Colgate equity, we have seen and can deliver good results and deliver increasing market share.

The Colgate name, in fact, is such a strength that, that we feel can not only achieve a lot for us in mouthwash, but when we look at these most recent data that we received from Kantar Research, it shows the real power of the Colgate name. Just to briefly explain the chart and then to indicate the importance of the number I've highlighted, what this research did was to measure through Kantar's household panel data the presence of brands in households around the world. So penetration is over a 12-month period, what penetration, what percentage of households had the product and then the frequency with which those households consumed that product. And that essentially gave the consumer reach points. So although Coca-Cola, as you can see, very strong from the total number of reach points, the important figure here for -- from the Colgate perspective is the absolute strength of that Colgate brand name. In nearly 2/3 of households in the world, that brand name is found. We think that's an incredible equity position from which to continue to grow not only the toothpaste and toothbrush business but the rest of our Oral Care business.

So based off of that, we have had, for many years, some very strong and effective strategic initiatives. We engage the consumer to build our brands. We have a strong and consistent innovation pipeline. We work through our, particularly our trade -- our well-known Funding the Growth margin initiative. We have a strong and consistent drive on effectiveness and efficiency, which is supplemented as it is at the moment from time to time with restructuring. But on an ongoing basis, we've always had a focus on margin and delivering effectiveness and efficiency and of course, managing and leading to win.

But on top of that, we feel that on top of those strategic initiatives, we've built enduring and emerging capabilities in our commercial operations. First and foremost is the innovation pipeline that I had just referred to. We think that we are doing a good job at strengthening this pipeline and making it relevant around the world in each of the regions and for each of those key markets that we compete in. Our innovation is essentially driven by deep consumer understanding and then taking that consumer insight and linking it to a strong R&D capability that we think delivers competitive products into the marketplace. But our innovation isn't just the new product with technology, it also is being innovative in terms of bringing new claims to the market and increasingly, the importance and power of innovative packaging.

We believe now we have a healthy plan of both internal technology that's developed by ourselves at our main R&D center in New Jersey but is also supplemented with external technology, a good example being the recent addition to our portfolio of the Colgate Pro-Relief Sensitive with the arginine ingredient brought in from external technology. And importantly, our innovation is both short term, building the business over 1- to 2-year cycle, but also, we have healthy amount of resource dedicated to what we call long-term innovation, the desire to look at innovation that would change the nature of the category and the share projections 3 to 5 years out. And of course, all of that done through our global network with strong teamwork.

I want to show you a few examples of what's in the current pipeline delivering results in the year to date, but importantly, some of these initiatives will deliver strong growth, of course, in the balance of the year. Optic White continues to be a very strong part of our business from a growth perspective. And in this, the dual action, we're bringing powerful new claims on top of the existing product in the market, and this will roll out around the world starting in the U.S.

Here in Europe, we're just underway on building a further component of the strong Colgate Total business that we have here in Europe and indeed, around the world, and this Interdental -- Pro-Interdental product designed to -- for the consumer to help fight plaque even between teeth, delivering a healthy amount. I referenced to sensitivity earlier on in that important arginine technology, and we continue to drive hard in the sensitivity segment using this technology not just for sensitivity but as part of enamel repair as well that you can see in the slide.

Moving to toothbrush. We've made further advances with our key 360° business. This is the Advanced Floss Tip launching in the U.S., and again, this will move around other key markets around the world. But importantly, our innovation, as I referenced earlier on, is relevant to the markets in which we choose to compete. And recently, coming out of the Asian markets, we have developed and launched what's known as the Colgate Slim Soft. And the idea here in this is that each brush is --- each bristle is specifically tapered into an ultra-fine, ultra-thin tip, which gives the consumer a very deep and gentle clean between the teeth and along the gum line. That started in Asia with great success and is now, in the balance of the year, going to move around the rest of the world, including a launch in North America.

Alongside manual toothbrush and I showed you the strength of brand in the manual toothbrush business. I showed you those shares earlier on. But we're taking the power of the Colgate name and excuse the weak pun on the term power, which none of you got anyway, and then taking our toothbrush into the electric power toothbrush segment. This, again, referring to outside technology. This is in partnership with the Omron company in Japan. And this brush is our first entry into the rechargeable segment, beginning here, in fact, in Europe, in the U.K. and in Germany, under the elmex name. So that is an interesting addition to our portfolio.

But importantly, also mouthwash. I referenced this as a great growth opportunity for us, primarily around the world with the Colgate Plax name, and this extends that into a complete care, a multi-benefit proposition in mouthwash. But importantly and significantly because that chart I showed you earlier was our referencing our mouthwash shares outside of the U.S., we are now choosing and right now, have just launched into the U.S. We are extending our mouthwash footprint into the U.S. The U.S. is by far the biggest mouthwash market, accounting for nearly 50% of the worldwide market. And this, obviously, using the Colgate name but the Colgate Total name, is our entry point into the U.S. And the way we're choosing to do that is build on the increasing relevance of regimen, putting an oral care system together. And here, although that's a relevant benefit for a range of consumers, we think from a manufacturer's point of view, Colgate has a distinct advantage with the power of the Colgate name that I referenced earlier on to be uniquely one of the manufacturers who can capitalize truly on the regimen. Here, the mouthwash is joined by the toothpaste and toothbrush to deliver a strong claim that each of the individual products by themselves cannot reach. So that's how we're entering the mouthwash market in the U.S.

Moving to Personal Care, important category for us. Recently in Europe, we completed, as you know, a couple of years ago, the acquisition of Sanex, which added weight, substantial weight, to our Personal Care business here in Europe. And we're building on our main equity as well with Palmolive, as you can see, with this important introduction.

Outside of the developed markets in Personal Care, one of our fastest-growing brand and indeed, one of the fastest-growing personal care brand in the emerging markets for any of the manufacturers is Protex. We believe that Protex has the potential, in a few years, to be a $1 billion dollar brand. As I say, given its emerging market focus, it may not be familiar to many of you, so it's important that we recognize some of the new productivity occurring on that brand as we continue to build and strengthen its profile. Here, we take the basic Protex proposition, which is an antibacterial health protection positioning and move it across to Protex for Men.

Our underarm business is an important and key part of our Personal Care business around the world. This is an example of innovation being brought to the lady's side of the business. And here, you can see the new product that we are bringing to the men's side of the business on Speed Stick. It's actually called DNA, and in Spanish, that reverses itself into ADN. And it's -- the concept here is protection that adapts to you. So using innovative fragrance technology gives the consumer the sense of it adjusting to their needs as they are called upon during a day.

In our Home Care business, the Palmolive dish business is important to us in the U.S. We are, at the moment, in the U.S. returning to a strong advertising investment behind this brand to show its importance to us in the North American market, and this is the new product against which that advertising will help support. And we also continue to support our leadership fabric conditioner business that we have in a number of key geographies around the world.

Here in Europe, our Home Care business on the Ajax name, which is still a very strong and powerful business, is using biodegradable fibers to help boost this Ajax wipes product, as well as still providing the efficacy that consumers want.

And finally and not last but important, the Hill's business. Here, this is the great packaging and product that is being used by us right now in the U.S. market against the natural segment with natural ingredients brought together with the correct balance. And this is Hill's Ideal Balance currently, as I say, shipping and available in the U.S. against that very key segment that opened up in the naturals area. And we think this product is extremely well targeted to that particular and important segment that the U.S. consumers are moving toward.

But alongside that, the key part of the Hill's business is its Prescription Diet business. The Prescription Diet business is really the foundation of what Hill's was based on given strong the veterinary recommendation. And this metabolic diet is proving incredibly successful not just in the U.S. but around the world because it's been launched in a number of key markets around the world. And this is providing clinically proven weight loss. And what we mean by the real world is that it's actually evidenced by pet parents as they use this diet for their cat and available also for both cat and dog. So this is doing extremely well on Prescription Diet for us.

Related to -- I mentioned the vet, in both our Oral Care and our Hill's business, we rely on the strong relationship with the profession, and we have built up, over the years, very specific and very clear strategies for investment against the profession. And these are the key 5 areas on which we invest aggressively for our Oral Care and for our Pet Nutrition business. And this is the benefit that, that yields. This is in our Oral Care business, there recommendations that flow from that investment. And we think this is a very significant competitive advantage for us in that nearly half of the world's dentists are recommending our toothpaste relative to competition.

But additionally, in terms of new capabilities and building on existing capabilities, one of the important areas for us in particularly, of course, the emerging markets, is building deep distribution in high-growth markets. And I'd like to show you an example of what we're doing right now in India to continue to build our already formidable distribution in India. It's important because a large percentage of the population live in rural as supposed to urban. And penetration, as a consequence, is still relatively low, so the per capita opportunity is significant. It's only half of what we see in urban India. So the opportunity, of course, is to use distribution as one of the tools to drive that per capita consumption in rural and by getting directly to the mom-and-pop stores. So we've changed the way we go to market in order to exploit that new opportunity. We've looked at how we can directly reach more of those small stores with a van distribution model. And we think this has the potential based on the early results to double our coverage in those markets, and we'll be looking further to those results and investing in them. But as a way of just putting that into perspective, this is the strength that we have in rural India compared to the nearest competition on both toothpaste and toothbrush. You can see the strong position and leadership that we have. But let me now show you the video to explain more about how we're building this capability.

[Presentation]

Nigel B. Burton

So hopefully, that gave you a sense of how an already strong capability is further being built. That's currently in India. And we are assessing, as I say, the results on how we would scale up investment, and we think it has applicability of, course, beyond India. So that's a new capability we are strongly looking at.

Moving on, we also want to increase our investment in what we call integrated marketing communications, IMC, both increasing our spend, as well as our capabilities. Obviously, we want to increase what we call total commercial investment, not just the A&P, not just the traditional advertising but all components of commercial investment all the way through to the in-store activation and the in-store investment, looking at that total envelope of spending and ensuring that we increase it but importantly, increase it in effective spending.

On the component to do with advertising, this is the increasing role that digital is playing in our spend. Over 15% last year of what we would title as advertising spending now moving into digital media, and that's a global figure. So it's an average. In some markets, like North America, for instance, that figure would be higher, and also, on some categories such as, let's say, Hill's, which has a much more interactive relationship with its consumer, that figure would be higher. So that's a global average and increasing strongly. And we're investing in new capabilities to further enhance that.

Moving to India because digital capability has obviously affect the totality of our business in all of our geographies, and in particular, we're seeing in emerging market, as we all know, the importance of mobile as essentially the key touch point for many, many consumers, particularly in rural, which are essentially media dark, no overt and direct TV, a traditional media communication to the consumer and as I say, mobile becoming an increasingly the touch point that consumers have access to. So in this example, we used the mobile and automated focus to be able to deliver a brand offered through to the consumer. And that's in the emerging markets, an example of how we can reach using digital capabilities many more consumers.

But of course, as I mentioned, both North America and Hill's are much more developed and sophisticated in the amount of digital that they use compared to that global average of 15.7%. So on Hill's, in the U.S., you'd see, as you would expect, a totality of digital touch points bringing the consumer the type of information search and buying capability that they would want.

But importantly, beyond digital as a advertising touch point, we're seeing increasingly the power of digital marketing from a data point of view to deliver important analytics. We're seeing with new capability and a new program something that's allowing us to not only observe and analyze consumer interaction with our digital marketing assets but helping us further understand motivations and their needs that we can then develop insights against and further target our spending. This is an example I referenced earlier on, the launch of the Colgate ProClinical rechargeable brush in the U.K. And just by tracking the data assets, we were able, and this is just one example, to show the importance of review content and how that specifically changed likelihood to purchase. So obviously, what we do in this instance, as an example, is drive many more of those reviews and from that, drive much more purchase intent. And so we drive those submissions and then further can target those specific readers who touch that digital asset with the right offer.

I mentioned total commercial investments. So it's really not just A&P, it's also the amount of activity that goes into brand investment in superior execution in-store, whether this be something dramatic as this sort of almost Sephora-like presentation of Optic White in the U.S. all to itself but also focusing that in-store activation on the relevant retail environment, whether it be hypermarkets where we can invest not just in the product and the display but the demonstrations of unique benefits, all the way through to, again, referencing the emerging markets and the mom and pops of having the right environment, the right material for the environment in the indirect trade.

I wanted, as a final emerging capability that we work on as a marketing organization, to talk about what we're seeing in terms of analytics and pricing as not just important capabilities but potential competitive advantages. We think analytics has the potential for it to become, as I say, a strategic and tactical competency, as well as a competitive advantage because it's aligned to key business priorities and will drive both growth, as well as the efficiency of how we spend our money because of the capability for real-time decision making. And we think the competitive advantage is because from the top of the company down to the bottom of the company, we have extreme focus, which is how I began the presentation. So we can take those important learnings on just 4 categories and for example, on such a big brand as Colgate and apply those throughout the organization with immense amount of sharpness and speed to execute. I think that gives us the competitive advantage. Even if all other things in terms of analytic capability are the same with competitors, I think our leverage point is the fact that if we turn that into a decision, we could get that executed across our global footprint and across that tight focus of categories much more rapidly.

So an indication of what we're doing in a world of analytics is with marketing mix modeling. We've spent quite a bit of money and time investing in this particular analytics tool in a number of key markets and starting precisely with Oral Care. And it's enabled us to develop both growth opportunities, as well as take those learnings where applicable to other markets and other categories where we see them relevant. But in addition, we are investing this year and we'll continue to invest further on the other key categories and the other 3 categories in our business. So this is an area of investment and significant investment, as you can see, building by 30%.

On pricing, which also has an analytic component to it, what we see is important about pricing is building that discipline not only to drive profitable growth because, clearly, $1 on the pricing line flows all the way through the P&L, but we see -- also see pricing as something that helps develop brand health. The right pricing strategy is important as part of the brand positioning. So we're using analytics, as I mentioned, to help much more with our precision in pricing, analyzing by customer all the way down to the SKU level. That's helping us forecast better. It's helping us look across elasticities and the impact relative to competitive price changes using the right promotional tools and analyzing the impact of those price points merchandising and even down to where we would have key retailer weeks to have activity. So when we talk about increasing pricing capability, it can look like a very generic and obvious statement, but I think what's important are the new tools coming from data and from analytics that are helping us to really bring that into some level of granularity that drives results and the P&L.

Talking about driving results in the P&L, it's important that beyond our Funding the Growth that drives our ongoing efforts to grow margin that we have, as you know, put in place a proactive Global Growth and Efficiency Program, a restructuring program. And I want to just briefly to update you on what that is about and where we are with that since it's important as part of delivering investment opportunities from the P&L back into our business. It's a 4-year program, which we're well underway on, and there are 3 key components: commercial hubbing, the streamlined business services, as well as a third area related to supply chain. You can see the targeted range savings that we're aiming at over the 4-year period.

As I say, the program components, our commercial hubs, the business services and the supply chain, first of all, on commercial hubs, what that means is delivering faster and smarter decision making, greater support for the business and of course, at the end of it, improved cost structure. The reason being that it reduces the number of single country subsidiaries, clustering them more effectively and efficiently, strengthening the resources, this is what delivered the better decision making and results and then streamlining commercial structures. This is not new for Colgate, so this is not a leap of faith. It's not a leap into the dark. We've had this in place in a number of key geographies. This happens to be Southern Cone that went from those 4 individual subsidiaries with the structure that goes with them into 1 hub as you can see. And similarly, in Central Europe and this is the first one that's underway right now in Central Europe, quite a complex level of number of countries with structures all moving into one hub to organization.

Alongside that in Europe, we begin with the extending the shared business services. The idea here, these are multifunctional, as global as possible, as local as necessary to service the business and delivering, as we say, a network of shared services based on activity-based understanding. So here, the benefits are standardized service, the value-added support, focusing the local subsidiaries on their role in the commercial organization, which enable them to reduce cost and enhance efficiency. So we're underway right now, as I said, in Europe, and then this will extend into 2 other shared business services servicing the rest of the Colgate world.

And finally, in the supply chain, there's been progress on this, as you know, over the -- over many, many years for Colgate. This is the number of facilities in where we would look to reduce further by 2016. And obviously, the benefits from that are very apparent. So here, we've begun that process here in Europe as you can see from this slide, and we expect to complete this component of the program by the end of 2015. So we think that, that program will help keep us winning on the ground. And importantly, by winning on the ground, what we mean is being able to recycle that, that restructuring back into investment opportunities. And I bucketed them here into 4 key areas where we think we would reinvest, obviously, increasing our enabling technologies and specifically, analytics that I talked about earlier on, our level of digital engagement that we referenced, investing -- reinvesting further into the emerging markets, an example being the distribution that I showed you, and of course, making sure we have the right innovation pipeline for building our brands further.

So Colgate has the leadership and the values. These are well ingrained throughout the organization in terms of what it drives us, as well as the way in which we do our business, and we think that will lead to a smiling, happy world. So thank you for your attention.

So I think we've left sufficient time for a couple of questions if there are any.

Question-and-Answer Session

Unknown Analyst

I understand that Proctor & Gamble about launch, for the first time in India, Crest. How are you going to react to that? You've had a sort of clear run at it for a long time with a big market share. How are you going to adapt your strategy in the coming few years?

Nigel B. Burton

Well, we don't exactly know what they have planned. And you referenced Crest, so we don't know if its Crest or more likely, Oral B. I understand that -- I think they're here at the conference tomorrow, so maybe you'll get some clarification on what their plans are and as far as India is concerned. And it really depends on what they come with would -- we would then calibrate the appropriate response as it relates to whatever their activity is. But notwithstanding P&G, we think India is still an area of great opportunity for ourselves, as I say, not even withstanding what they do or don't do in India. I referenced our strong market shares, but the important fact that the penetration and the per capita consumption in India are still well below global averages. In the example I showed you, I was actually just making a point between rural India and urban India. If you take that as a country as whole, that per capita is significantly lower than the rest of the world. So as I say, P&G to one side, I think it's easy to get very sidetracked by something that at this stage we still don't know definitively about. So what we'd focus on is our own position, which is a strong brand share, great capabilities in terms of deep distribution, which we are further investing in. And I suspect that will become a increasing competitive advantage, a brand name, which is second to none. I referenced that Kantar Research, which was on a global basis, if we take the Colgate name in India, it is actually in India the most trusted brand name. That's a survey, I think, from the Reader's Digest that is conducted annually in India. So Colgate is the most trusted brand in India. So we think, as I say, notwithstanding competition that we have a great opportunity in India for further growth.

Unknown Analyst

So obviously, a very strong oral franchise, but despite that, margins today are still lower than they were in 2009. So do you want to talk about when the business expects to get a margin structure that's above where it was at previous peak in 2009?

Nigel B. Burton

Yes, I think that we've begun to rebuild the issue, of course, in that particular the year that you pointed out was the significant headwinds that we all faced on commodity costs. Since that time, we've been rebuilding them, and the patent has been at the levels that we were historically able to do. So I think we are bullish, and we are optimistic to answer your question in terms of being able to drive, continue to drive the margin. On an ongoing basis, that's achieved by the Funding the Growth initiatives, which are important component in our business and an annual component. We also think we're building into that, which has historically been a strength of Colgate's. We're driving stronger capabilities in pricing. Last year in pricing, we delivered just almost 3% in price. Our first quarter results were just above 1.5% on price. So the reason I went through that explanation on pricing is the importance that, that can have to the margin line beyond the Funding the Growth initiatives we historically had. And then, of course, over a 4-year period, we've -- there are -- a big part of that restructuring program will come back into the margin line as well.

Unknown Analyst

[indiscernible] so is that a -- [indiscernible] hear all that. But is that an indication that you expect the gross and EBIT margins to be higher in 2014 than then they were in 2009?

Nigel B. Burton

Well, we haven't yet given specific guidance on 2014. We'll get to that soon. But no, we would be profitable [ph] about it, yes.

Unknown Analyst

You mentioned that there are 4 key categories that you're focused on, but when you look at most of the emerging markets, it's largely in Oral Care business. So what -- it will be useful for us to understand what are the sort of things that you look at before you take the decision of launching some of your other products, particularly in the Personal Care and Home Care space.

Nigel B. Burton

Sure. Yes, good question. Just as a piece of a background, in reality, our Latin American business and indeed, our Africa and Eurasia business, so Russia, Turkey, Africa, Latin America, has a very strong Personal Care profile in addition to Oral Care, and in many markets, Latin America, again, in particular, a very strong Home Care business. So the conversation about -- sorry, your question is actually as it relates to some of the key markets in Asia where it is Oral Care focused, China and India in particular. And what we've we done for many, many years is have a very well-articulated category strategy in terms of priorities, and it begins with Oral Care. And we still see immense opportunities in both of those markets to continue to build the Colgate brand and the Oral Care business. We talked about India and the opportunities we see in India still for continued growth, and I think, in China, it applies the same. And the reason that, for example, right now in India, we feel that we are in good shape from a opportunity and from a proactive point of view to be able to further grow our business in India is because of the time we spent focusing on one core category. I think if we had chosen a few years ago to begin to spread out and build other brands and a direct investment to other brands, I think of our shareholders both in India and our shareholders on a global basis would not necessarily be as optimistic going into a competitive battle. So our first priority always is to build an extremely strong Colgate business, which means an Oral Care business and then look at further opportunities from there. But to be clear, in many markets, emerging markets not just the developed markets, we already have those other components. So it's really an Asia and very specifically, a China or an India composition. And those countries are so large and the opportunity's so big that, I think, again, we go back to the choice fullness of focus before you build brand.

William Schmitz - Deutsche Bank AG, Research Division

Nigel, can you just give us a progress report on the Southern Cone? It got diced in December with the strike and the disruptions. I mean, so how much pricing you think you continue to take down there? And then any sort of fill-through from Venezuela to Argentina and then maybe just a general state of the Brazilian business?

Nigel B. Burton

Okay, so first of all, Southern Cone in Argentina. We've actually got a reasonably strong manufacturing footprint in Argentina, and that gives us in the context of how the government are looking at pricing and their focus, of course, on reducing importations and using pricing as a control mechanism for that. That strong footprint is giving us a capability to offset to a reasonable amount some of the pressures in Argentina. So probably still more to come in Argentina, but at this stage, we seem to be coping okay. Our Brazil business goes from strength to strength. We've had in some of the one-to-one conversations we've already had a lot of questions about the emerging markets, Brazil in particular, on whether there's been a slowdown, but at this stage, we don't yet see that. Our Oral Care business remains incredibly strong. We're building a very strong PCP business, which is incremental for us. So Brazil remains strong. Of course, there are always going to be, in any market, bumps in the road. But overall, we would remain quite bullish on Brazil.

William Schmitz - Deutsche Bank AG, Research Division

Brand [ph] In Venezuela, you've -- don't you have like a 99% market share in Venezuela? Am I right in that number?

Nigel B. Burton

Yes, we're going to stop when it gets to 100%. But yes, Venezuela, obviously, will continue to be complex, and we're -- I think a highlight for us and going back to one of the points on our culture and leading to win, we couldn't be prouder than we are of our leadership team in Venezuela. Despite all of the difficulties, they continue to manage the business in a way that is really hard to believe but is a statement of the incredible capability and dedication of them. So it's tough in Venezuela, but we are doing as well as anybody could do in that type of environment as I said [ph] .

William Schmitz - Deutsche Bank AG, Research Division

Bina is going to get mad at me for following up on this one. But is most of the margin compression in Latin America from Venezuela and Argentina?

Nigel B. Burton

I think Venezuela is a large component of that. We -- other than when we made the specific announcement about Venezuela in the last quarter, we didn't necessarily dissect it completely, but it's a large component. And in fact, the truth, as I say, if you take out Venezuela, as we say, those big markets in Latin America are in good health.

William Schmitz - Deutsche Bank AG, Research Division

And from sales and margin side?

Nigel B. Burton

Yes, good health.

William Schmitz - Deutsche Bank AG, Research Division

I think we're done. Thank you, Nigel, I appreciate you coming out.

Nigel B. Burton

Thank you. Yes.

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