Lauren Lieberman

Lauren Lieberman noted that the free cash flow guidance was better than expected, implying growth ahead of EBITDA, and asked about the specific opportunities driving this performance.

Answer

David Haas, CFO, explained that the improved free cash flow was largely due to working capital enhancements. He cited benefits from bringing together payable teams and procurement arrangements, as well as a smoother collection process and improved accounts receivable (AR) from direct delivery customers due to less service disruption. Haas also mentioned the stabilization of credits, which previously impacted sales, as a contributing factor.

Lauren Lieberman from Barclays questioned the better-than-expected free cash flow guidance, which implies growth ahead of EBITDA, and asked about the specific opportunities the company plans to pursue to achieve this.

Answer

CFO David Hass attributed the improved free cash flow outlook to working capital enhancements, a focus not prioritized in the initial merger year. He anticipates benefits from harmonizing payable teams, optimizing procurement arrangements, and achieving a smoother collection process with direct delivery customers due to reduced service disruptions, which should improve accounts receivable and stabilize credits. He confirmed that base capital expenditures remain consistent, with integration and Hawkins-related repairs being added back.

Lauren Lieberman of Barclays asked a wrap-up question about management's degree of confidence in achieving the revised $1.5 billion EBITDA target, especially since previous timelines for resolving integration issues had been extended.

Answer

CFO David Hass expressed strong confidence in the revised guidance, stating that it serves as a reset based on a full understanding of the issues encountered. He emphasized that the company is now approaching future integration waves more prudently, with enhanced training and inventory planning, to ensure the new targets are met and provide a reliable base for 2026.

Lauren Lieberman sought confirmation of a significant ramp in underlying KDP EPS growth in the back half of 2026. She also requested an update on the leadership search for the Global Coffee Co. CEO, including the desired profile and the process being followed. Finally, she asked for KDP's thoughts on free cash flow for 2026, acknowledging the complexity of combining two companies.

Answer

CFO Anthony DiSilvestro confirmed accelerating EPS growth for base KDP in the back half, primarily due to moderating coffee costs and JDE Peet's accretion. He projected KDP's standalone free cash flow to increase to approximately $2 billion in 2026, noting both KDP and JDE Peet's are highly cash-generative. CEO Tim Cofer stated the search for Global Coffee Co. CEO is in its final stages, with an announcement planned by deal close, led by the KDP board.

Lauren Lieberman sought confirmation on the implied significant ramp-up in EPS growth for underlying KDP in the back half of the year. She also requested an update on the leadership search for Global Coffee Co. and the board's profile requirements, and finally, KDP's free cash flow outlook for 2026.

Answer

Chief Financial Officer Anthony DiSilvestro confirmed accelerating EPS growth for base KDP, driven by coffee cost sequencing and JDE Peet's accretion, and projected standalone KDP free cash flow to increase to $2 billion in 2026. CEO Timothy Cofer stated that the search for Global Coffee Co.'s CEO is in its final stages, led by the KDP board, with an announcement expected by deal close, aiming for a leader with the right capabilities for long-term success.

Lauren Lieberman sought confirmation on the implied significant ramp in EPS growth for underlying KDP in the back half of the year. She also requested an update on the leadership search for Global Coffee Co. and the board's profile expectations, and finally, KDP's thoughts on free cash flow for 2026.

Answer

Chief Financial Officer Anthony DiSilvestro confirmed accelerating EPS growth for base KDP through the year, driven by coffee costs/tariffs sequencing and JDE Peet's accretion from Q2-Q4. He reported $1.5 billion in free cash flow for 2025, forecasting $2 billion for 2026, attributing the improvement to lapping GHOST payments, EBITDA growth, and better working capital. CEO Timothy Cofer stated that the search for Global Coffee Co.'s CEO is in its final stages, with a public announcement planned by deal close, led by the KDP board, and expressed confidence in appointing a capable leader.

Lauren Lieberman sought confirmation on the implied significant ramp-up in underlying Keurig Dr Pepper's EPS growth in the back half of 2026 to meet full-year guidance. She also requested an update on the leadership search for Global Coffee Co.'s CEO, including the board's profile requirements and leadership of the search. Finally, she asked for insights into the 2026 free cash flow outlook.

Answer

Chief Financial Officer Anthony DiSilvestro confirmed accelerating EPS growth for the base KDP business through the year, primarily driven by the sequencing of coffee costs and tariff impacts, along with JDE Peet's accretion being back-half weighted. He reported $1.5 billion in free cash flow for 2025, forecasting $2 billion for 2026, noting significant improvement from EBITDA growth and better working capital. Chief Executive Officer Tim Cofer stated that the Global Coffee Co. CEO search is in its final stages, led by the KDP board, with a public announcement planned by deal close, expressing confidence in appointing a capable leader.

Lauren Lieberman sought clarification on the separation timeline, specifically if 'ready to separate by year-end 2026' implies a firm date or a milestone-based approach. She also asked about the determining factors for a slower separation pace and the specific changes or benefits for the Beverage Co. going forward.

Answer

CEO Tim Cofer clarified that the timeline remains similar to previous announcements (mid-2026 close, year-end 2026 readiness for separation), but with a crucial nuance: it will be milestone-based, not a hard date. Key milestones include continued strong business performance, appropriate capital structures, world-class independent boards and leadership teams, and conducive market conditions. President of U.S. Refreshment Beverages Eric Gorli emphasized that the biggest benefit for BevCo will be enhanced focus and a distinct culture, allowing the management team to amplify its successful playbook. Tim Cofer added that a standalone BevCo would also gain enhanced strategic optionality for future growth levers.

Lauren Lieberman sought clarification on a potential timeline change for separation (from 'by year-end 2026' to 'ready to go by year-end 2026'), asking about determining factors for pace and benefits of a slower approach. She also inquired about changes for BevCo given the focus on coffee.

Answer

CEO Tim Cofer clarified that the broad timeline remains similar (close mid-next year, ready to separate year-end), but the approach is now milestone-based, not tied to a hard date. Milestones include business performance, capital structures, independent boards/leadership, and market conditions. President of U.S. Refreshment Beverages Eric Gorli stated that BevCo will benefit from increased management focus and a distinct culture, with enhanced strategic optionality as a standalone entity.

Lauren Lieberman inquired about coffee category elasticity, particularly how Keurig Dr Pepper is managing consumer affordability and its strategy as the industry becomes more coordinated on pricing to offset green coffee inflation.

Answer

Chief Executive Officer Timothy Cofer explained that KDP's two priorities for coffee are mitigating inflation and advancing long-term growth in cold and premium offerings. He acknowledged that a lag in competitor pricing created short-term volume pressure in Q1 but expects this to ease. To address affordability, Cofer stated the company is focusing on appropriate price-pack architecture and emphasizing the value of at-home coffee consumption compared to more expensive coffee shop alternatives.

Lauren Lieberman sought clarification on Indonesia's guidance for 2026, specifically whether an improvement is built in, given the double-digit volume decline in 2025. She also asked if the balance of revenue build (one-third each from volume, price, and mix) achieved in H2 2025 represents the desired equilibrium and if 2026 aims for a slight improvement across all fronts.

Answer

CEO Damian Gammell confirmed that an improvement is built into Indonesia's 2026 plan, expecting single-digit volume turnaround and growth off a new cost base, though with larger long-term ambitions. CFO Ed Walker reiterated Indonesia's small materiality to CCEP's overall profit and revenue. Gammell affirmed that the H2 2025 balance of pricing, mix, and volume reflects the desired model, with 2026 focusing on pricing that reflects macros, mix driven by innovation and premiumization, and continued volume growth.

Lauren Lieberman sought clarification on Indonesia's guidance, specifically regarding expected growth versus previous double-digit declines. She also asked for an assessment of the H2 2025 revenue balance (volume, price, mix) and expectations for 2026, particularly concerning the focus on volume.

Answer

CEO Damian Gammell clarified that an improvement is built into Indonesia's 2026 plan, expecting a single-digit volume turnaround, which is a significant improvement from double-digit declines, though not yet a major driver for CCEP's overall long-term algorithm. CFO Ed Walker added that Indonesia's revenue impact on CCEP overall was small (0.2% decline in 2025). Damian confirmed that H2 2025's balance of pricing, mix, and volume served as a good model, with 2026 continuing this approach, focusing on pricing reflecting macros, mix from innovation and premiumization, and volume from category growth.

Lauren Lieberman asked about the performance of Trademark Coke, specifically the encouraging trend of Diet Coke moving to flat with growth in GB and Australia, and its potential to achieve mid-single-digit growth in other key markets. She also inquired about the acceleration of Coke Zero Sugar's growth this year, asking what specific execution strategies or differences contributed to this improvement.

Answer

CEO Damian Gammell expressed satisfaction with Coke Zero Sugar's growth, attributing it to product taste, promotional strategy, pack pricing, flavor innovation, and cooler rollout, though he believes there's potential for even faster growth. For Diet Coke, he noted that dedicated campaigns in GB and Australia are working, and while it's early to consider other markets, the focus is on returning it to growth in GB. Gammell also mentioned challenges for Coke Original Taste due to German promotional pricing, French sugar tax, and Philippines flooding, but highlighted upcoming flavor innovation for Coke Original Taste in 2026.

Lauren Lieberman inquired about the performance of trademark Coke, focusing on Diet Coke's trend line in key markets like GB and Australia, its potential to achieve mid-single-digit growth, and the factors driving the acceleration of Coke Zero Sugar, including specific execution strategies.

Answer

CEO Damian Gammell expressed satisfaction with Zero Sugar's growth due to product taste, promo strategy, pack pricing, and flavor innovation, but noted discontent, believing it could grow faster. For Diet Coke, he highlighted dedicated campaigns working in GB and Australia, with future consideration for other markets. He also addressed challenges for Coke Original Taste from Germany's promotional pricing, France's sugar tax, and Philippines' issues.

Lauren Lieberman of Barclays sought clarification on commentary about market competitiveness and the company's 'multiyear view' on pricing, asking if there were any new competitive flare-ups.

Answer

CEO Damian Gammell stated that while the market remains highly competitive, especially in energy, the dynamic is not significantly different from previous years. He noted that a long-term view on value creation sometimes leads to delayed commercial agreements, which can temporarily affect promo intensity.

Lauren Lieberman of Barclays inquired about the commentary on market competitiveness and the 'multiyear view' on promotions, asking if there were any new or unusual competitive pressures in specific markets.

Answer

CEO Damian Gammell responded that the competitive environment is not significantly different from prior periods. He explained that the company manages promotional intensity through commercial negotiations and takes a long-term view to ensure sustainable value. He acknowledged some aggressive pricing by competitors in Great Britain but characterized it as a familiar dynamic.

Lauren Lieberman of Barclays asked about the flagged away-from-home weakness in Europe and the company's plans to support this channel in the coming year amid a stretched consumer backdrop.

Answer

CEO Damian Gammell outlined a four-pronged strategy: 1) targeted brand innovation for the channel, 2) moderated pricing to ensure relevance, 3) increased cooler investments, and 4) digital-led campaigns to drive traffic. He expressed confidence that 2025 would be a better year for the away-from-home channel in Europe.

Lauren Lieberman asked about the company's plans to support the away-from-home channel in Europe, noting its recent weakness and the challenging consumer environment.

Answer

CEO Damian Gammell outlined a four-pronged strategy: 1) driving excitement through brand innovation, 2) ensuring price relevance with moderated pricing, 3) stepping up cooler investments, and 4) using digital campaigns to drive traffic. He expressed confidence that these initiatives, along with new business wins, would lead to a better year for the channel in 2025.

Asked for an update on the discount channel in Europe, including its volume contribution, category expansion opportunities, pack size strategies, and how learnings are applied to mainstream retail amidst consumer pressure.

Answer

The discount channel is a key, long-standing growth partner, particularly for Sparkling and Energy categories. CCEP uses tailored pack sizes (e.g., 1.25L) and is trialing coolers to drive mix. Affordability insights from this channel are leveraged across all retail partners. The focus on premiumization continues alongside affordability, even within discounters.

Lauren Lieberman asked about current customer demand for reformulation, particularly concerning ingredient profiles and health and wellness, how well IFF's portfolio is equipped to meet these demands, and its integration into the innovation and R&D plan.

Answer

CEO Erik Fyrwald noted ongoing reformulation efforts, which he views as positive opportunities for IFF, whether for lower sugar, salt, fat, or cleaner labels. He emphasized IFF's collaboration with customers to create healthier, great-tasting, and more sustainable products, aligning with consumer desires and CPG innovation drivers.

Lauren Lieberman asked about reformulation opportunities, customer demand related to ingredient profiles and health/wellness, how well IFF's portfolio is equipped to meet these demands, and their integration into innovation and R&D plans.

Answer

CEO Erik Fyrwald noted continued reformulation, which presents positive upside for IFF (e.g., lower sugar, cleaner label). He emphasized IFF's role in helping customers create healthier, great-tasting, and more sustainable products, leveraging innovation to meet consumer desires and drive profitable growth.

Lauren Lieberman inquired about the favorable net pricing in the Taste segment, asking if it's comparable to peers and expressing surprise at positive pricing in the current environment. She also sought observations on the growth of multinationals versus local and regional customers, and pipeline activity for both subsets.

Answer

CFO Michael DeVeau explained that favorable net pricing in Taste was due to the team's effective management of tariff inflation, strong productivity, and raw material cost exposure. CEO Erik Fyrwald noted that regional and local customers are growing faster, and IFF has increased its emphasis on growing with them and accelerating pipelines. He clarified that IFF is not decreasing emphasis on global key accounts, which remain critically important with strong and robust pipelines, but is increasing focus on regional and local players.

Lauren Lieberman had two questions: first, on the favorable net pricing in the Taste segment, asking if it's comparable to peers and surprising in the current environment; second, for observations on growth of multinationals versus local and regional customers, and pipeline activity from these subsets.

Answer

CFO Michael DeVeau explained that favorable net pricing in Taste was due to the team's success in offsetting tariff inflation and driving productivity to manage low single-digit inflation in 2025. He couldn't speak to competitors but affirmed the team's strong execution. CEO Erik Fyrwald observed that regional and local customers are growing faster, leading IFF to increase emphasis and accelerate pipelines with them, while still maintaining strong focus and robust pipelines with critically important global key accounts.

Lauren Lieberman inquired about any differences in performance and optimism IFF is seeing between its global multinational customers versus smaller local and regional players.

Answer

CEO J. Erik Fyrwald noted that while global companies are focused on innovation, they are increasingly challenged by agile local players, especially in developing markets. He stated that IFF is well-positioned across customer sizes but is increasing its emphasis on mid- and small-sized customers in high-growth markets, viewing it as a key opportunity.

Lauren Lieberman of Barclays questioned the stability of IFF's order book, pointing to cautious commentary and destocking from CPG customers, and asked why this potential slowdown isn't factored into the company's outlook.

Answer

CEO Erik Fyrwald acknowledged the concerns and said the team is energized by the challenges. He attributed IFF's resilience to its diverse customer and geographic base, which the company is leveraging to find growth. While mentioning a possible minor pre-buy effect from tariffs, he concluded that based on current reasonable scenarios, the company is maintaining its guidance.

Lauren Lieberman of Barclays asked about reinvestment rates, noting the Q4 EBITDA guide was driven by incentive comp, not reinvestment as some thought. She inquired about the reinvestment needs for 2025 to build back R&D and set the stage for a stronger pipeline in 2026.

Answer

CFO Glenn Richter clarified the 2024 reinvestment is $20 million, split between Q3 and Q4, which will annualize next year. CEO Jon Erik Fyrwald added that the plan is to continue growing the top line, allowing for investment at a consistent percentage of sales. He described a virtuous cycle where innovation drives sales growth, which funds more innovation, while productivity gains improve margins and also enable further investment.

Lauren Lieberman asked about the North America operating margin expansion, which reached 30% for the first time, questioning if this is an appropriate long-term level, if more expansion is possible, or if incremental reinvestment is needed.

Answer

John Murphy, President and CFO, stated that the company has averaged about 60 basis points of operating margin expansion annually over the last eight years, driven by supply chain, marketing, and operational levers. He confirmed North America has been a star performer and expects continued leadership in margin expansion, implying modest expansion going forward.

Lauren Lieberman inquired about North America's profitability, noting another strong year with operating margins reaching 30%. She asked if this margin level is sustainable, if more reinvestment is needed, or if there's further expansion potential.

Answer

President and CFO John Murphy stated that the operating margin expansion, averaging 60 basis points annually over the last eight years, is structural, not a fluke. He highlighted North America as a top performer in leveraging supply chain, marketing, and operational efficiencies, expecting it to continue leading as there's still significant opportunity for improvement. The long-term algorithm implies modest ongoing expansion.

Lauren Lieberman from Barclays asked for clarification on the repeated use of the term 'pivot' in prepared remarks, questioning if it signals a tougher operating environment or simply reflects shifts between different markets.

Answer

Chairman and CEO James Quincey explained that the 'pivot' commentary refers to the increased agility required by their 'all-weather strategy' to navigate rapid market-specific shifts. He contrasted Q1 weakness in the U.S. and Europe with Q2 challenges in Mexico and India, stating the company must adapt quickly to these changing dynamics to deliver on its targets.

Lauren Lieberman inquired about the specific actions being taken in the U.S. to manage consumer softness and address the pointed anti-brand sentiment that had circulated.

Answer

Chairman and CEO James Quincey explained that a combination of factors impacted U.S. performance, including the Easter shift, weaker Hispanic consumer traffic, and a false video that circulated. He noted that while Coke Zero and Fairlife continue to grow, the system is focused on winning back Hispanic consumers and reinforcing affordability options to get back on track.

Lauren Lieberman asked for perspective on the global consumer environment, particularly in developed markets like the U.S. and Western Europe, where sentiment has been mixed.

Answer

CEO James Quincey stated that the overall consumer environment is stable with broad-based economic growth. He acknowledged that lower-income segments in the U.S. and Western Europe are under pressure, but the rest of the consumer base shows strong, sustained demand. He noted that emerging markets also show robust demand, citing rebounds in India and improvements in China, and expressed confidence in the company's ability to use its affordability and premiumization strategies to capture this demand in 2025.

Lauren Lieberman of Barclays requested more tangible examples of the 'adapted-quickly' initiatives that drove sequential improvement in Q3 and also asked for management's current view on the macro environment.

Answer

Chairman and CEO James Quincey described the global macro environment as 'relatively resilient' in aggregate. As for tangible actions, he cited pressing harder on affordable options, accelerating investments in cold drink equipment ahead of the Southern Hemisphere's summer, and using their agile marketing model to tweak messaging for local consumer relevance.

Lauren Lieberman from Barclays asked about the conservatism factored into Newell Brands' 2026 plans, specifically regarding potential delays in innovation flow-through and shelf resets, similar to what was observed in H2 2025 with Yankee Candle. She also inquired about the long-term structural growth rate of Newell's categories and what factors are needed for them to return to stable growth over the next five years.

Answer

Chris Peterson, President and CEO, stated that the 2026 forecast assumes categories remain challenged (-2% decline) and does not assume everything goes perfectly, allowing for potential upside. He differentiated the nature of shelf resets for other businesses compared to Yankee Candle's more complex omnichannel reset. For long-term category growth, he cited a historical 0-1% rate, aiming for 2-3% core sales growth. Key drivers for stabilization include real income growth, the waning impact of COVID-era durable goods purchases, and Newell's role in driving category premiumization through innovation.

Lauren Lieberman inquired about the conservatism embedded in Newell Brands' 2026 plans, specifically regarding potential delays in innovation flow-through and distribution wins, drawing parallels to the slower-than-anticipated ramp-up of the Yankee Candle relaunch in the second half of 2025.

Answer

Chris Peterson, President and CEO of Newell Brands, stated that the company's forecast prudently assumes categories will continue to decline by 2% in 2026, not assuming everything will go perfectly right, and that the nature of resets in other businesses differs from Yankee Candle's omnichannel complexity. In a follow-up, Ms. Lieberman asked about the long-term structural growth rate of Newell Brands' categories and the factors needed to return to stable growth. Mr. Peterson outlined that historical category growth is 0-1%, with Newell Brands targeting 2-3% core sales growth by outperforming categories. He identified key drivers for category improvement as real income growth, the waning impact of COVID-era durable goods purchases, and the company's role as a branded player in driving premiumization and trade-up.

Lauren Lieberman sought clarification on plans to utilize excess U.S. manufacturing capacity, asking if Newell would consider private label manufacturing, and confirmed the rationale for lowering the core sales outlook.

Answer

CEO Christopher Peterson clarified that the company is not pursuing private label manufacturing. Instead, it is actively encouraging retailers to replace their China-sourced private label and competitor products with Newell's tariff-advantaged branded items, like Oster blenders. He confirmed the reduced category growth forecast is a prudent step to de-risk inventory and cash flow, not a reaction to observed consumer weakness.

Lauren Lieberman inquired about the potential long-term net impact of tariffs, asking if they could be a net positive for Newell Brands given its U.S. manufacturing base. She also asked for more detail on the drivers behind the steeper-than-expected core sales decline guided for Q1 2025.

Answer

CEO Christopher Peterson acknowledged that tariffs could be a net positive over the medium term due to Newell's significant and competitively advantaged U.S. manufacturing footprint, which could attract retailers looking to de-risk from China. Regarding Q1, he noted it's the company's smallest seasonal quarter and the guidance still represents an improvement over the prior year. CFO Mark Erceg added that a significant currency dislocation is creating a temporary headwind in Q1, which pricing actions will remediate over the full year.

Lauren Lieberman from Barclays questioned the wide guidance range for fourth-quarter core sales, asking if it signaled concerns about retailer inventory destocking. She also asked if a change in language regarding the 2025 sales inflection point was due to slower progress in the Outdoor segment.

Answer

CEO Christopher Peterson clarified that the Q4 guidance range reflects the timing of retailer shipping windows, not inventory destocking, as retailer inventories are in a good position. Regarding 2025, he expressed confidence in an improved innovation pipeline and sales growth but noted caution due to macro uncertainties, stating formal guidance would come in February.

Lauren Lieberman from Barclays inquired about Energizer's broad outlook for the fiscal year, specifically focusing on the consumer backdrop, current category trends, any observed uptick in private label activity, and the company's confidence in achieving its back-half-weighted financial ramp.

Answer

Mark LaVigne, President and CEO of Energizer, explained that Q1 2026 was a transitional period with softening consumer trends in October/November, lapping prior hurricane demand, and managing elevated tariff pressures. He noted that consumer demand has since stabilized, with a strong rebound in December volumes in the U.S. and positive January volume due to winter storms. LaVigne expressed confidence in the back-half acceleration driven by strengthened distribution, cost structure repositioning, and increased tax credits, expecting the battery category to remain stable for the year.

Lauren Lieberman from Barclays inquired about Energizer's broad outlook for fiscal year 2026, specifically focusing on the consumer backdrop, evolving category trends, any observed uptick in private label activity, and the company's confidence in achieving its back-half-weighted financial ramp.

Answer

Mark LaVigne, President and CEO of Energizer, explained that the year's plan anticipated a transitional start with softening consumer trends and elevated tariff pressures. He noted stabilized consumer demand, a strong rebound in December U.S. volumes, and strengthened in-store presence. LaVigne expressed confidence in the back-half acceleration driven by cost structure repositioning, inventory cycling, and mitigation efforts, including increased production and tax credits. He confirmed the battery category is expected to be stable for the balance of the year.

Lauren Lieberman inquired about changes in the consumer slowdown and softening since August, and Energizer's perspective on the consumer and cost environment going forward.

Answer

Mark LaVigne, President and CEO, noted that gross margin projections were largely as expected, with transitory costs impacting Q4 and Q1 2026, but plans are in place to mitigate them. He identified softening consumer sentiment as the biggest change, observed from August into October, impacting battery category data. While some recent improvement is seen, the company's outlook assumes a down 3-4% category in Q1, stabilizing and improving as the year progresses due to easier comps.

Lauren Lieberman asked for a broader perspective on the consumer slowdown and softening, inquiring what has changed since August and the company's outlook on the consumer and cost environment going forward.

Answer

Mark LaVigne, President and CEO, stated that gross margin projections were largely as expected, with Q4 and Q1 experiencing transitory costs. He identified softening consumer sentiment as the biggest change observed from August through October, impacting battery category data. While noting some recent improvements, he emphasized that the long-term outlook for the battery category remains bullish, expecting low single-digit growth despite current disruptions. He clarified that the category is assumed to be down 3-4% in Q1, with stabilization expected later in the year due to easier comparisons.

Lauren Lieberman from Barclays asked for a breakdown of the fundamental drivers of organic sales and profitability for Q3 and Q4, separate from the new production credits. She also requested clarification on the origin, timing, and maintenance requirements for these credits.

Answer

President and CEO Mark LaVigne highlighted strong organic growth and margin improvement in Q3, setting up for continued growth. EVP and CFO John Drabik detailed that strong battery sales drove organic growth, with EPS at $0.78 excluding credits. He explained the production credits stem from being a domestic manufacturer, are filed with tax returns, and require continued production, not new investment, to generate $35-40 million annually.

Lauren Lieberman from Barclays questioned whether retailer destocking was a factor in the revised back-half guidance and sought more strategic details on the recent APS acquisition, including its manufacturing assets and the integration of the Panasonic brand.

Answer

Executive Mark LaVigne confirmed that recent softening in consumer sales has led to a slight, natural increase in retailer inventory, which is factored into the Q3/Q4 forecast. Regarding the APS acquisition, LaVigne highlighted its benefits: increased scale in key European markets (Germany, UK, Poland, Spain) and a new manufacturing facility in Poland supporting their 'in-region, for-region' strategy. He also stated that the Panasonic brand will be transitioned to the Energizer family of brands over the next eight months.

Lauren Lieberman inquired about Energizer's long-term gross margin trajectory beyond the pre-pandemic recovery and asked for details on potential tariff risks, particularly concerning the company's global supply chain and China sourcing.

Answer

John Drabik, Executive Vice President and CFO, explained that after the expected 50 basis point improvement in fiscal 2025, gross margins should return to an 'algorithmic growth' of about 25+ basis points annually. He also stated that Project Momentum has increased in-market production, minimizing tariff exposure, with less than 5% of global cost of goods sold being subject to U.S. tariffs from China.

Lauren Lieberman from Barclays asked about the China market, specifically the promotional intensity around 11.11, expectations for Chinese New Year, and strategies to foster consistent 'everyday' performance and consumer excitement beyond major holiday shopping events.

Answer

Stéphane de La Faverie, President and CEO, confirmed strong performance in China, with four consecutive quarters of market share growth across all categories. He noted that while 11.11 and 6.18 are promotional, Estée Lauder brands achieved top prestige rankings on Tmall and Douyin during 11.11. For Chinese New Year, the focus is on gifting and experiential retail to reduce reliance on promotions. Strategies include VVIP outreach, accelerating freestanding store openings for experiential engagement, and balancing the year with consumer-facing investments. Akhil Shrivastava, EVP and CFO, added that discount levels in China are decreasing while growth and profitability improve.

Lauren Lieberman inquired about the promotional environment in China, particularly around 11.11, expectations for Chinese New Year, and the company's strategies to drive consistent 'everyday performance' and consumer excitement outside of major holiday shopping periods.

Answer

Stéphane de La Faverie, President and CEO, confirmed strong performance and market share gains in China, with key brands leading during 11.11. He noted that Chinese New Year is less promotional, focusing on gifting and experiential retail. He emphasized efforts to balance the year by creating VVIP experiences and expanding freestanding stores to reduce reliance on high-promotional moments. Akhil Shrivastava, EVP and CFO, added that discount levels in China are decreasing while sales and profitability improve.

Lauren Rae Lieberman inquired about the company's volume trends versus price mix, specifically asking for management's perspective on the importance of driving volume over time as part of their growth algorithm, given recent distribution gains and comparisons.

Answer

President and CEO Stéphane de La Faverie highlighted significant unit share gains in the U.S., driven by strategic price adjustments on new launches (e.g., M.A.C's Still Fix, Clinique in the U.K.) and increased demand at the entry of prestige beauty (The Ordinary, M.A.C rebound). He also noted strong unit growth in the perfume category due to innovation and smaller sizing. EVP and CFO Akhil Shrivastava confirmed the strategy to win more consumers and drive unit growth, stating that with 3% organic sales growth and sub-2% pricing, they expect unit growth, and confirmed a return to unit growth this quarter.

Lauren Rae Lieberman asked about the company's volume trends versus price mix, and the strategic importance of driving unit volume growth as part of the overall business algorithm.

Answer

President and CEO Stéphane de La Faverie explained that significant unit share gains in the U.S. were driven by strategic price adjustments on new launches and a focus on bringing new consumers to the brands, especially at the entry level of prestige beauty. Executive Vice President and CFO Akhil Shrivastava added that with 3% organic sales growth and sub-2% pricing, the company expects unit growth, confirming a return to unit growth this quarter.

Lauren Lieberman from Barclays focused on North America, asking about the strategy for balancing distribution channels given the challenges in department stores and whether the company would consider more aggressive actions to reduce its exposure to this channel.

Answer

President and CEO Stéphane de La Faverie highlighted North America's improving performance and recent market share gains, driven by expanded consumer coverage, particularly through 11 brands on Amazon. He noted that while department stores require more work, they are a shrinking part of the business. EVP and CFO Akhil Shrivastava added that department stores now represent less than one-third of the North American business, which is now more diversified across DTC, Amazon, and specialty-multi channels, with further growth opportunities in the latter.

Lauren Lieberman from Barclays asked for more perspective on the tariff situation, specifically the timeline to reduce U.S.-bound products sourced from China to below 10% and the origin of the other 25% of products sold in the U.S.

Answer

President and CEO Stephane de la Faverie stated they are confident in getting U.S.-sourced products for the China market to around 10% by the end of the fiscal year, leveraging their new factory in Japan. He clarified that the majority of the 25% of non-domestic products for the U.S. market come from Europe, with minimal sourcing from China. EVP and CFO Akhil Shrivastava added that their supply chain network minimizes tariffable value and they are actively working on mitigation scenarios.

Lauren Lieberman requested more details on the company's strategy to mitigate tariffs, including timelines for reducing sourcing from China for the U.S. and vice versa.

Answer

President & CEO Stephane de la Faverie explained they are confident in reducing U.S.-sourced products for China to sub-10% by fiscal year-end by ramping up their new Japan facility. He clarified that U.S. imports from China are minimal, with most non-North American products coming from Europe. He noted they have already mitigated over 40% of the initial tariff impact. EVP & CFO Akhil Shrivastava added that their supply chain is being actively regionalized to minimize exposure.

Lauren Lieberman questioned the strategy around the pace of reinvestment, seeking to understand the difference between past 'investing ahead of growth' and the current plan of 'investing to drive growth.'

Answer

CEO Stephane de la Faverie clarified that past investments were in fixed capabilities like manufacturing, whereas future investments will be in variable, consumer-facing activities like advertising and promotions to reignite retail sales. CFO Akhil Shrivastava added that this shift allows for faster learning and pivoting, unlike being stuck with large, fixed-cost bets.

Lauren Lieberman questioned the timing and messaging of the dividend cut, asking why it wasn't done earlier and what it signals about the earnings recovery timeline and reinvestment needs, given the company's strong balance sheet.

Answer

EVP and CFO Tracey Travis explained the decision was driven by the worsening Q2 outlook and increased full-year uncertainty, which prompted the withdrawal of guidance. She clarified the cut is not a reflection on long-term growth but a prudent measure to 'rightsize' the payout, protect cash for PRGP actions, and fund growth investments, thereby optimizing total shareholder return.

Lauren Lieberman asked for clarification on SG&A trends, specifically the impact of delayering, advertising optimization, and variable compensation, and whether the Q1-Q3 run rate was sustainable compared to Q4 adjustments. She also inquired about the expected commodity cost inflation headwind to gross margin for the current year and how pricing will flow through.

Answer

Nathan Lowe, CFO, explained that 2025 SG&A actions focused on optimizing advertising ROIs, not excessive cuts, and that increased SG&A in 2026 will support innovation launches, while delayering is a structural change. He confirmed variable compensation was a significant factor in the lower Q4 SG&A. For 2026, he projected 2-3 points of cost headwinds, with similar pricing to offset, roughly half being carryover from 2025. He noted that flat EBITDA, despite expected retail sales volume declines and increased SG&A, implies profitability improvement, even as pricing dilutes margin percentages.

Lauren Lieberman asked for clarification on SG&A trends, specifically the impact of delayering versus short-term advertising adjustments, and whether the Q1-Q3 run rate was sustainable. She also inquired about the expected commodity cost inflation headwind to gross margin and how pricing would flow through in 2026.

Answer

Nathan Lowe, CFO, explained that SG&A actions in 2025 focused on optimizing advertising ROIs, with 2026 investments targeting innovation launches. Delayering is structural, and variable compensation contributed to Q4 SG&A. For commodities, he projected 2-3 points of cost headwinds and similar pricing to offset, with roughly half being carryover from 2025, implying profitability improvement despite a dilutive impact on margin percentages from pricing.

Lauren Lieberman from Barclays inquired about the performance of Reynolds Consumer Products' tableware business, specifically its decline and the outlook for stabilization. She sought clarity on the current impact of foam products and whether the tableware segment's weight on overall company performance is expected to diminish over the next 12 months.

Answer

President and CEO Scott Huckins attributed 80% of the tableware decline to foam headwinds, with the remainder from non-foam discretionary items. He highlighted effective management, noting that despite volume declines, tableware profits increased by approximately 10%. Huckins anticipates foam products will be a lesser headwind next year, largely due to lapping the California foam ban.

Lauren Lieberman inquired about the tableware business, specifically seeking line of sight to stabilization, the current size and impact of foam products, and how its performance might weigh on the overall company in the next 12 months.

Answer

Scott Huckins, President and CEO, stated that tableware declines were 80% due to foam headwinds and 20% from non-foam discretionary items. Despite volume declines, profits increased by about 10%, indicating effective management. He expects foam to be a lesser headwind next year, primarily due to lapping the impact of California's foam ban.

Lauren Lieberman sought specifics on the sources of tariff pressure, including direct vs. indirect impacts, and asked for the rationale behind the new segment reporting for the international business.

Answer

CFO Nathan Lowe clarified that direct tariff exposure is a single-digit percentage of COGS, with the $100M-$200M annualized headwind including significant indirect impacts from commodities like aluminum. Regarding the reporting change, he explained that since the international business has grown beyond its original Cooking & Baking core, aligning products with their respective domestic categories is intended to accelerate growth.

Lauren Lieberman inquired about the most significant changes implied by the new strategic program, particularly regarding culture and accountability, as well as the input cost expectations for the upcoming year and the competitive promotional environment in the trash bag category.

Answer

President and CEO Scott Huckins explained the new program involves a more targeted, top-down approach to growth and a holistic view of cost savings, rather than focusing on individual projects. CFO Nathan Lowe added that the company's stronger balance sheet provides more flexibility for investment. Lowe also noted that commodities are expected to be a headwind, but the company has tools to offset this. Regarding promotions, management stated the environment is similar to pre-pandemic levels and that pricing in the Waste & Storage segment was flat, indicating a stable environment.

Lauren Lieberman questioned the implication of advertising spending being down year-over-year in the back half, despite reiterated guidance of 11% of sales for the full year and significant innovation, and asked if more investment was shifting to trade promotion for innovation trial, specifically inquiring about a potential price reset in litter with its relaunch.

Answer

Luc Bellet (VP and CFO of the Health and Hygiene division) clarified that advertising investments are planned at the business unit level, balancing advertising and trade promotions, and that investment levels behind innovation are considered adequate and strong, implying a shift to both. Linda Rendle (Chairman and CEO) confirmed that the litter relaunch includes price pack architecture work and pricing adjustments to address consumer trends and differentiate value tiers (Fresh Step vs. Scoop Away vs. competitors).

Lauren Lieberman asked about the implication of advertising still targeted at 11% of sales for the year, given 11.5% in the first half, suggesting a mid-single digit decline in back-half spending, and questioned if this timing made sense with significant innovation coming. She also followed up on litter, asking if the relaunch included a reset on price pack architecture and pricing.

Answer

Luc Bellet, VP and CFO, clarified that advertising investments are planned at the SBU level, balancing advertising and trade promotions to support innovation. He stated that while there might be some shifts, the investment level behind innovations is adequate and strong, implying more could be in trade promotion. Linda Rendle, Chairman and CEO, confirmed that the litter relaunch absolutely includes price pack architecture work, with adjustments to sizing lineup and pricing to address consumer trends and differentiate value tiers (Fresh Step vs. ScoopAway vs. competitors).

Lauren Lieberman of Barclays asked about the significant year-over-year decline in advertising spending during the fourth quarter and inquired about the expected gross margin benefit from the conclusion of the Glad joint venture agreement.

Answer

CEO Linda Rendle explained the Q4 ad spend was down because it was lapping an unusually high spend in the prior-year quarter related to post-cyberattack recovery efforts; she noted the full-year spend was on target at 11%. CFO Luc Bellet detailed that buying back P&G's 20% interest in the Glad JV will provide an annual gross margin benefit of about 50 basis points, with a 20-25 basis point impact in fiscal 2026 due to the January timing.

Lauren Lieberman of Barclays asked for an explanation for the significant volume decline in the Household segment, given the strength in Kingsford. She also questioned why Q4 gross margins were expected to decline year-over-year despite a positive absorption benefit from the ERP shipment.

Answer

CFO Kevin Jacobsen explained the Household segment's volume decline was in line with other segments, as they were all lapping a period of significant retailer restocking in the prior year. Regarding Q4 gross margin, he noted the company is facing a difficult comparison against an unusually high margin (nearly 47%) in the prior-year quarter, which was driven by favorable mix. The costs and benefits of the ERP shift are expected to be neutral to margin.

Lauren Lieberman asked for more detail on the sources of the top-line surprise in the quarter, with a specific focus on what drove the better-than-expected performance in the international business.

Answer

CEO Linda Rendle attributed the strong international performance to solid execution of fundamentals across the board, including effective innovation and marketing plans. She also noted that the business is benefiting from increased stability following the divestiture of the volatile Argentina business, which has removed significant foreign exchange headwinds.

Lauren Lieberman noted a double-digit, $500 million decline in advertising spend in 2025 from the 10-K, asking about the drivers for this reduction and the outlook for 2026 advertising spend.

Answer

Steve Schmitt, CFO, confirmed the reduction was due to efficiency gains in both working and non-working advertising lines in 2025. He stated that advertising spend is expected to increase in 2026, as PepsiCo will be growth-minded and invest in sales growth.

Lauren Lieberman noted that advertising spend was down double-digits, approximately $500 million, in 2025 and asked what drove this decline. She also inquired about expectations for 2026, assuming advertising would increase.

Answer

EVP and CFO Steve Schmitt confirmed that advertising spend decreased in 2025 due to efficiency gains from both working and non-working advertising lines. He agreed that advertising is expected to increase in 2026, noting that the 2025 decline was a cost-to-sale benefit not anticipated to repeat. He stated that PepsiCo will be growth-minded, investing in sales growth for the current year, focusing on value and innovation messaging.

Lauren Lieberman asked about the cost implications and margin structure associated with PepsiCo's innovation strategy, particularly the shift towards protein, better-for-you, and cleaner labels, and how the company plans to ensure sufficient brand support for these relaunches into 2026 while managing costs.

Answer

Chairman and CEO Ramon Laguarta stated that the company expects overall margin improvement going forward, driven by attacking cost structures, particularly in Frito-Lay's delivery and go-to-market. He noted international business is accretive, PBNA margins are expanding (despite Q3 tariff impact), and North American foods are bending the curve after fixed cost interventions. He emphasized that innovation should be accretive, and cost savings will be reallocated to A&M to accelerate growth.

Lauren Lieberman questioned the cost implications of PepsiCo's extensive innovation pipeline, particularly for protein, better-for-you, and cleaner label products, which she suggested might come with higher costs of goods. She asked about the expected margin structure, the role of cost savings, and how the company plans to ensure sufficient brand support for these relaunches into 2026.

Answer

Chairman and CEO Ramon Laguarta stated that the overall company expects to continue improving margins, driven by aggressive cost structure attacks, particularly in Frito-Lay's delivery and go-to-market costs. He noted that international business is accretive and scaling profitability, and PBNA is expected to expand margins, recovering from Q3 tariff impacts. Laguarta also mentioned Frito-Lay's North America food business starting to "bend the curve" after fixed cost structure interventions. He emphasized that innovation is expected to be accretive due to higher pricing, and cost savings will be reallocated to A&M (advertising and marketing) to accelerate growth.

Lauren Lieberman from Barclays asked about portfolio transformation, focusing on the consumer uptake of the Simply brand restage and the potential risk of diluting brand equity by extending core brands into functional areas like protein and fiber.

Answer

Chairman and CEO Ramon Laguarta noted that the permissible snacks portfolio is already a $2 billion business. He explained that the Simply brand's previous bottleneck was availability and affordability, which are now being addressed to drive trial. Regarding brand extensions, he stated that consumer testing has been 'positively surprising,' showing that core brands have credibility to expand into functional spaces.

Lauren Lieberman asked about the company's strategy for managing new legislation around ingredients and colors, whether associated costs are in the outlook, and for perspective on the business's sensitivity or exposure to changes in SNAP benefits.

Answer

Chairman and CEO Ramon Laguarta stated that PepsiCo has been leading industry transformation for years and that over 60% of its U.S. food portfolio is already free of artificial colors, with a plan to migrate the entire portfolio over the next couple of years. Regarding SNAP, he commented that while some categories could be exposed to restrictions, the company currently calculates the potential impact to be very limited, though there are still many unknowns.

Lauren Lieberman from Barclays questioned the return on investment for Frito-Lay's significant Q4 reinvestments, pointing out that despite increased spending funded by a one-time gain, volumes decelerated sequentially.

Answer

CFO Jamie Caulfield acknowledged the need to regain momentum in the Frito business and the broader salty category, stating the investments are intended to set up a strong start for 2025. CEO Ramon Laguarta added that the category is showing signs of volume growth again. He framed the Q4 spending as building infrastructure to capture future opportunities, particularly in the underdeveloped Away-From-Home channel.

Lauren Lieberman inquired about the key drivers for returning the Frito-Lay business to volume growth, asking for a breakdown of the expected contributions from core Lay's, multicultural and value offerings, and the premium 'Positive Choice' segment.

Answer

Chairman and CEO Ramon Laguarta expressed long-term optimism for the U.S. food business, citing favorable Gen Z snacking trends. He explained that after a period of normalization, growth will be driven by a multi-tier strategy for key brands like Lay's, offering everything from value options to premium experiences like Miss Vickie's to capture a wide range of consumer occasions and needs.

Lauren Lieberman requested an update on the India market, specifically addressing the impact of GST changes, overall market volatility, and trends in consumer demand.

Answer

Chairman, President, and CEO Noel Wallace confirmed that India's organic sales were up in Q4, sequentially improving from Q3 and exceeding expectations. He noted underlying demand softness, particularly among low-income urban consumers. The strategy focuses on premiumization in urban markets with new product introductions like Colgate Total, Colgate PerioGard, and Optic White Purple, while managing the implications of GST changes. He expressed long-term optimism for India, with a strong plan for 2026.

Lauren Lieberman requested an update on Colgate-Palmolive's India business, considering the GST changes and overall market volatility, and its impact on demand and consumer trends.

Answer

Noel Wallace, Chairman, President, and CEO, confirmed India's organic growth was up in Q4, sequentially better than Q3 and expectations. He noted underlying demand remains soft, particularly among low-income urban consumers. The strategy focuses on growing the premium urban market with aggressive new product introductions (Colgate Total, PerioGard, Optic White Purple). He stated they are mostly through GST changes and expect improved execution in 2026, remaining optimistic about India long-term.

Lauren Lieberman of Barclays asked about the strategy of 'sharpening offerings' for value, questioning which markets are the focus. She also inquired how this is balanced with the need to drive incremental pricing through RGM in a low-inflation environment.

Answer

Chairman, CEO & President Noel Wallace explained that adjusting price-pack architecture is a global effort, with a particular focus on opening price points in emerging markets like India. He stated this is balanced by a simultaneous push for premiumization through innovation, such as the Colgate Total relaunch, which commands higher prices. This dual approach allows the company to capture value across the entire price spectrum.

Lauren Lieberman from Barclays PLC asked for an update on competitive activity in emerging markets like Turkey and South Africa, noting that in APAC and Africa/Eurasia, pricing inflected positively while volumes declined sequentially.

Answer

Noel Wallace, Chairman, President and CEO, attributed the softness to a few specific markets: China (Holly and Hazel business), Turkey, and South Africa. He noted that other markets in Asia and Africa performed well with balanced growth. He mentioned some pricing and promotion adjustments on the Holly and Hazel business in China during the quarter but anticipates that will stabilize. He also reiterated that the urban market in India remains soft.

Lauren Lieberman asked about the company's long-term strategy beyond 2025, inquiring if a new '2030 strategy' would be announced and what its key focus areas might be.

Answer

CEO Noel Wallace enthusiastically confirmed that the company is on the verge of announcing its 2030 strategy. He emphasized that it will be built on the consistent principles of the 2025 plan, such as a growth mindset, innovation, and brand health. Key areas that will be sharpened and dialed up include driving more incremental innovation, leveraging data and AI for growth and efficiency, and enhancing the health and science orientation of their products, backed by professional endorsements.

Lauren Lieberman inquired about the company's philosophy on advertising and reinvestment, asking how high spending can go before hitting diminishing returns and how the company ensures continued ROI on its investments.

Answer

Noel Wallace, Chairman, President and CEO, explained that the primary benchmark for advertising effectiveness is sustained, broad-based volume growth and household penetration. He stated the company is getting better at assessing ROI geographically and is focused on improving analytical capabilities, including using AI, to enhance media buy efficiency and make more fluid, intelligent decisions on spending.

Lauren Lieberman inquired about the deceleration of price and persistently negative mix in North America, particularly after pricing was up in Q3, seeking clarification on the impact of price investments mentioned in the earnings release.

Answer

Senior Customer Logistics Analyst Brent Hickman attributed the price-mix dynamics to three factors: rephased promotional activity for innovation from Q3 to Q4, a shift to club channels impacting price per unit, and strategic investments in pack sizes to align value propositions. He emphasized that in-market promotional activity remains below category and 2019 levels, with a long-term focus on profitable volume and mix growth led by innovation.

Lauren Lieberman inquired about the deceleration of price and persistently negative mix in North America during Q4 2025, seeking clarification on the factors contributing to this trend despite previous price increases and recent price investments.

Answer

President and COO Russ Torres attributed the price-mix dynamics to three factors: rephased promotional activity for innovation into Q4, a shift in consumer channels towards club stores (larger pack sizes at lower unit prices), and strategic investments in pack sizes to align value ladders. Chairman and CEO Mike Hsu emphasized the focus on maintaining pricing discipline while growing volume and mix profitably through innovation.

Lauren Lieberman asked for insights into the projected shape of Kimberly-Clark's P&L for 2026 and 2027, particularly concerning momentum into the next year and the anticipated dilution from the IFB transaction.

Answer

CEO Mike Hsu indicated it was premature for full details. CFO Nelson Urdaneta outlined targets for organic growth ahead of categories and constant currency operating profit growth in line with the long-term algorithm, including mitigating stranded costs from the IFB transaction (expected mid-2026 close). He reiterated goals of at least 40% gross margin and 18-20% operating profit by the end of the decade. Urdaneta differentiated between EPS from continuing operations (expecting a step-up in growth in 2026 due to increased income from equity companies and share buybacks) and adjusted EPS attributable to total KC (more muted growth in 2026/2027 as discontinued operations income phases out).

Lauren Lieberman from Barclays sought clarity on Kimberly-Clark's P&L outlook for 2026 and 2027, specifically addressing the anticipated impact of the IFB transaction's dilution and the company's progress towards long-term financial targets.

Answer

CFO Nelson Urdaneta, supported by CEO Mike Hsu, outlined the company's commitment to organic growth ahead of categories and achieving gross margin of at least 40% and operating profit of 18-20% by decade-end. He detailed the expected differential impacts on EPS from continuing operations versus total Kimberly-Clark EPS post-IFB transaction, anticipating a step-up in continuing EPS growth from mid-2026 due to increased equity income and share buybacks.

Lauren Lieberman asked for a reconciliation between the company's strong reported North American performance and scanner data, and also inquired about the expected sales pacing for the second half of the year, considering last year's volatility.

Answer

CFO Nelson Urdaneta provided a detailed reconciliation, explaining that Q2 shipments were ahead of consumption due to lapping prior-year destocking and new innovation pipeline fills. For the second half, he noted Q3 has easier year-over-year comparisons while Q4 faces tougher comps from prior-year events like hurricanes and port strikes. CEO Mike Hsu added that underlying consumption was strong at 4.5%, driven by innovation and execution.

Lauren Lieberman asked for an explanation of the discrepancy between strong scanner data and weaker reported organic growth in North America, and for the key drivers behind the expected global organic growth acceleration for the remainder of the year.

Answer

An executive, likely CFO Nelson Urdaneta, attributed the Q1 North America gap to one less shipping day (a 100 bps impact), lower private label shipments, and strategic pricing investments. He noted Q2 offers an easier comparison due to prior-year destocking. CEO Michael Hsu added that a strong slate of innovation, such as the recently launched Huggies products, is expected to drive the volume and mix acceleration in subsequent quarters.

Lauren Lieberman asked about the company's plans to broaden its sources of volume growth beyond the U.S. and China, and whether there were any signs of changing competitive dynamics.

Answer

CEO Michael Hsu acknowledged the successful strategic focus on the U.S. and China but highlighted broader progress, citing significant market share gains in the U.K., Australia, Indonesia, and South Korea. He explained that the new operating model is specifically designed to scale these successes and global technologies across all markets more rapidly.

Lauren Lieberman asked about the ongoing volatility from retail inventory reductions, current service levels, and potential shelf space changes. She also inquired about any consumer stock-up behavior related to hurricanes or port strikes and its potential impact on Q4.

Answer

CEO Michael Hsu explained that the inventory reductions were localized and a result of lapping last year's restocking after a major supply disruption. He stated that retail inventories are now at historical levels. CFO Nelson Urdaneta added that transitory factors, including inventory shifts and a hurricane, accounted for about two-thirds of the Q3 shipment shortfall in North America, creating a headwind of 280 basis points in Personal Care and 350 basis points in Consumer Tissue.

Lauren Lieberman inquired about the confidence in P&G's near-term acceleration and what specifically excites CEO Shailesh Jejurikar regarding the longer-term 'reinvention' of the company.

Answer

CFO Andre Schulten highlighted strong performance outside the U.S. (Latin America, Europe, China), the absence of base period headwinds in the U.S., and the implementation of successful innovation and commercial strategies in the U.S. CEO Shailesh Jejurikar expressed excitement over growth opportunities in segments like personal care and Tide Evo, and the unique chance to leverage shifts in media, retail, technology, and consumer preferences using P&G's strengths in consumer data and R&D.

Lauren Lieberman asked about the confidence in near-term acceleration, distinguishing between base period dynamics and fundamental improvement, and what excites management about the longer-term 'reinvention' of P&G.

Answer

CFO Andre Schulten highlighted strong performance outside the U.S. (Latin America, Europe, China, AMEA) driven by innovation and execution, and anticipated U.S. improvement from reduced base period headwinds and the implementation of successful strategies seen elsewhere. CEO Shailesh Jejurikar expressed excitement about growth opportunities, leveraging shifts in the landscape, P&G's unique strengths in consumer data, R&D, and technology platforms, and the integration of existing capabilities.

Lauren Lieberman asked for insights into Procter & Gamble's global market share trends, particularly the decline in aggregate share and the low number of category-country combinations holding or gaining share, seeking to identify specific hotspots and underlying causes.

Answer

CFO Andre Schulten acknowledged the global aggregate share decline but noted sequential improvement in U.S. absolute share despite a strong base period and increased competitive promotion in key categories. He highlighted similar competitive intensity in Europe but pointed to strong progress in China (SK-II, baby care, fabric care, hair care, Olay) and Latin America (7% growth) as successful examples of integrated superiority strategies.

Lauren Lieberman questioned the global market share decline of 30 basis points and the low number of category-country combinations holding or gaining share, seeking insights into specific 'hotspots' and the role of macro factors, affordability, or future innovation.

Answer

Andre Schulten, CFO, explained that while global aggregate share was down, U.S. absolute share was improving sequentially. He identified the U.S. (baby care, fabric care, oral care) and Europe (Germany fabric care) as hotspots with increased competitive promotion. He contrasted this with strong progress in China and Latin America, attributing success to earlier interventions in innovation and go-to-market capabilities.

Lauren Lieberman of Barclays questioned why the performance gap between P&G and its categories has narrowed, particularly in North America, despite consistent innovation and reinvestment, and asked what needs to change to widen that gap.

Answer

President, CEO & Chairman Jon Moeller attributed the narrowing gap to slower category growth, retailer inventory reductions, and specific instances where P&G lost product superiority. CFO Andre Schulten added that they are actively addressing these gaps with targeted innovation in areas like Baby Care and Olay, funded by the new restructuring program.

Lauren Lieberman of Barclays inquired about consumer behavior in the U.S. and Europe, noting retail inventory destocking and a slowdown in consumer takeaway, and asked what Procter & Gamble plans to do to support revenue and market share.

Answer

Executive Andre Schulten acknowledged a consumer "pause" due to economic volatility, which has slowed market value growth from ~3% to ~1% in both the U.S. and Europe. He stated that P&G is holding or growing share while private label share declines, reinforcing the company's strategy to "double down" on brand superiority, innovation, and productivity with a long-term investment perspective.

Lauren Lieberman of Barclays asked for an update on consumer behavior and dynamics in the U.S. and Europe, beyond P&G's specific performance, referencing a potential consumer softening mentioned in December.

Answer

Andre Schulten, an executive, described the consumer in P&G's non-discretionary categories as stable in both the U.S. and Europe, with market growth around 4%. Jon Moeller, Chairman, President and CEO, added that flat to declining private label shares in both regions reinforce the view of a stable consumer.

Lauren Lieberman followed up on the 85/15 business split, asking about the risk of a slowdown in the stronger 85% of the portfolio, noting that other multinationals have reported worsening consumer trends in Europe and Latin America.

Answer

Executive Andre Schulten explained that P&G's daily-use categories, where performance is critical, encourage consumers to continue trading up to their brands, evidenced by consistent share gains. He acknowledged the unpredictability of China and the Middle East but stated the company is focused on strengthening fundamentals like innovation and go-to-market strategies to drive improvement.

Lauren Lieberman asked about the launch plans for METHODIQ, specifically drawing comparisons to SpoiledChild's launch, including the use of billboards and the scale of TikTok activations. She also inquired about the expected duration of these large-scale TikTok campaigns to build brand awareness.

Answer

Oran Holtzman, Co-founder and CEO of ODDITY, confirmed that similar offline activations, such as billboards, have been used for all three brand launches. He stated that METHODIQ's TikTok campaign is the largest to date and is planned to continue until the end of Q1.

Lauren Rae Lieberman asked about Methodic's launch plans, drawing comparisons to SpoiledChild's launch, specifically regarding offline activations like billboards and the scale and duration of its TikTok campaign for brand awareness.

Answer

Oran Holtzman, Co-founder and CEO, ODDITY, confirmed similar offline activations for Methodic, including billboards in New York City, consistent with previous brand launches. He stated that the current TikTok campaign is the largest to date and is planned to continue until the end of Q1.

Lauren Lieberman of Barclays asked if strong performance from Brand 3 would lead Oddity to constrain growth in its existing brands to maintain its 20% long-term growth algorithm. She also questioned the Brand 3 launch timeline, noting a shift from a Q3 soft launch to a Q4 official launch.

Answer

CEO Oran Holtzman explained that a Q3 'soft launch' involves smaller-scale testing, with the official launch and significant spending planned for Q4 and Q1 2026. CFO Lindsay Drucker Mann confirmed that Oddity actively manages its growth rate to ensure it can consistently compound at its 20/20 algorithm for the long term, rather than pulling growth forward unnecessarily.

Lauren Lieberman of Barclays asked for commentary on the consumer environment, questioning why Oddity's business appears so resilient to macro pressures. She also requested quantification of the customer cross-selling between IL MAKIAGE and SpoiledChild.

Answer

Global CFO Lindsay Drucker Mann attributed the company's resilience to the strong secular shift to online channels and a superior value proposition that attracts a broad demographic. CEO Oran Holtzman added that product diversification also helps. Regarding cross-selling, Lindsay Drucker Mann noted that while about half of SpoiledChild's revenue initially came from the IL MAKIAGE user base, the brands increasingly stand on their own as they scale.

Lauren Lieberman asked CEO Rahul Goyal for clarification on his remarks about deploying marketing based on specific market dynamics and portfolio priorities, seeking to understand how this approach differs from previous practices and what changes are necessary.

Answer

CEO Rahul Goyal explained that the new approach involves reacting faster to external market dynamics, recognizing regional differences in brand roles and market share. The changes focus on enhancing accountability, bringing decision-making closer to markets, and strategically shifting both personnel and financial resources to align with regional performance variations, especially for economy brands in specific geographies.

Lauren Lieberman asked for clarification on how the new commercial changes, specifically deploying marketing based on market dynamics and portfolio priorities, differ from previous approaches, as it sounds like standard practice.

Answer

CEO Rahul Goyal explained that the changes aim to react faster to external market dynamics, acknowledging regional differences in brand performance and market share. The focus is on stronger deployment of internal resources, driving decision-making and accountability closer to the markets, and shifting people and dollar resources more effectively to address the evolving category landscape, particularly for regionally strong economy brands.

Lauren Lieberman from Barclays asked for more detail on the softer U.S. market share performance, including any specific regional weaknesses, and inquired about plans to defend share beyond marketing, such as potential pricing actions.

Answer

President and CEO Gavin Hattersley focused his response on areas of brand momentum, such as Coors Banquet and Peroni, and the company's non-alcoholic portfolio. He stated the company will continue to invest behind its brands to ensure they are well-positioned for a market recovery, outlining marketing plans for Miller Lite and Coors Light, but did not indicate any impending changes to pricing strategy.

Lauren Lieberman requested more specific details about the types of projects being postponed as part of the downward adjustment to the full-year capital expenditure guidance.

Answer

CFO Tracey Joubert clarified that the company is postponing capital projects that do not relate to significant cost savings or critical growth initiatives. She emphasized that investments in core areas like health and safety, as well as projects that do drive cost savings and support growth, will continue to be prioritized.

Lauren Lieberman of Barclays inquired about the current competitive environment in the U.S. beer market, specifically asking if Molson Coors was observing an increase in promotional activity.

Answer

CEO Gavin Hattersley stated that they have not seen anything unusual or irrational from a promotional standpoint. He acknowledged that some level of promotion is common, especially in the summer, but characterized the current environment as normal. He affirmed the company will continue to take a strategic and brand-appropriate approach to competitive actions.

Lauren Lieberman expressed surprise at the volume decline in the EMEA & APAC segment and asked for a deeper explanation of the drivers, particularly in the U.K.'s competitive environment, and for an update on recent trends.

Answer

CEO Gavin Hattersley attributed the U.K. softness to poor weather offsetting a tournament lift and high promotional intensity in the market. He stated that Molson Coors is pursuing a 'value over volume' strategy for Carling and did not participate in the heavy promotions. He noted that Madri continues to perform well, and a resilient U.K. consumer could benefit from falling inflation.

Lauren Lieberman inquired about the timeline for Kenvue's turnaround, asking if the immediate focus is on optimizing the biggest brands and markets, while the broader strategic review addresses long-tail complexity.

Answer

Interim CEO Kirk Perry confirmed the immediate focus is on core brands, countries, and initiatives to reduce 'self-induced complexity.' He highlighted e-commerce, core brand support, and media ROI as key areas for rapid executional improvement. Perry stressed that operational enhancements and the comprehensive strategic review are being conducted in parallel.

Lauren Lieberman asked about the timeframe for executing immediate operational goals, such as focusing on the biggest brands and markets, relative to the ongoing, broader strategic review of the company's complexity and tail brands.

Answer

Interim CEO & Director Kirk Perry confirmed the immediate focus is on the biggest brands, countries, and initiatives to reduce self-induced complexity. He highlighted key areas for rapid executional improvement, including e-commerce, strengthening core brand support alongside innovation, and optimizing media ROI. Perry emphasized that the operational improvements and the strategic review are being conducted in parallel, not sequentially.

Lauren Lieberman sought clarification on the Skin Health & Beauty segment's Q4 growth components and asked for a detailed explanation of the go-to-market distributor model in China for Essential Health and other categories, and how it is being changed.

Answer

CEO Thibaut Mongon confirmed the strong regional growth in Skin Health. He detailed that in China, Self Care uses a specialized distributor network for hospitals, while Essential Health and Skin Health use a tiered system. The current disruption involved liquidity issues with lower-tier distributors. The fix involves replacing these distributors and having Kenvue's own teams reclaim direct responsibility for brand activation with key local retailers to improve execution and visibility.

Lauren Lieberman of Barclays revisited the topic of promotions, specifically asking about the liquid laundry category. She questioned if the company was leveraging promotions more heavily given consumer pressure and inquired about the depth of promotions, not just the frequency.

Answer

President and CEO Rick Dierker reiterated that promotional activity in laundry remains within historical norms, around 31-33% of volume sold on deal. He stated that the depth of promotion has not changed and that the company focuses on price-pack architecture to hit key promotional price points. CFO Lee McChesney added that the negative price impact in Q2 was nominal and mostly related to a product recall, supporting the view of a stable promotional environment.

Lauren Lieberman asked for a clarification on how analysts should model the exclusion of the businesses being divested. She questioned whether the results would be moved to a structural line or if the historical base would be restated for comparison.

Answer

Executive Richard Dierker explained that for modeling purposes, the company's organic sales outlook and adjusted EPS will exclude the results of the divested businesses from April 1 onward. He noted that reported results on other P&L lines will still contain them, and the company will aim to provide clear delineation to bridge the gap.

Lauren Lieberman asked about the promotional environment in laundry for Q4 and inquired about the long-term potential and profitability of the new POWER SHEETS innovation compared to the successful Deep Clean launch.

Answer

CEO Matthew Farrell confirmed that while they cut unprofitable promotions last year, Q4 investments will now support new products. He positioned Deep Clean as a key part of their 'good, better, best' strategy in the growing mid-tier. He expressed significant excitement for POWER SHEETS, viewing it as a major opportunity to grow share in the unit dose sub-category with a first-to-market, efficacious, and sustainable new form factor.

Lauren Lieberman asked if the growth deceleration for THERABREATH and HERO is due to the law of large numbers or category slowdowns. She also questioned if the company's data confirms softer aggregate market share trends seen in Nielsen data for June and July.

Answer

Matthew Farrell (executive) noted the acne category remains steady, and while growth rates for HERO and THERABREATH will naturally moderate, strong double-digit growth is still expected. Richard Dierker (CFO and Head of Business Operations) refuted the idea of a market share slowdown, stating their data shows consistent share gains, with 9 or 10 out of 14 power brands gaining share recently.

Lauren Lieberman from Barclays inquired about the company's marketing cadence, competitive positioning against brands like Michelob Ultra, and any shifts in brand targeting.

Answer

President & CEO Bill Newlands explained that Q1 marketing spend is seasonally higher and that Modelo and Corona maintain the top two shares of voice in beer advertising. He reiterated the strategy of investing in high-impact live events like football and baseball to maintain strong brand health and capture demand when consumer behavior recovers.

Lauren Lieberman inquired about the marketing cadence for the year, the increasingly competitive landscape with brands like Michelob Ultra, and any shifts in marketing strategy or consumer targeting.

Answer

CEO Bill Newlands noted that Q1 marketing spend is seasonally higher and that Modelo and Corona maintain the top two shares of voice in beer. He affirmed the strategy of investing in high-impact platforms like live sports to maintain strong brand health and be positioned to win as consumer behavior normalizes.

Lauren Lieberman asked for clarification on the impact of tariffs, specifically whether the beer business is USMCA certified, and inquired about the long-term forecast for beer industry growth.

Answer

CEO William Newlands confirmed that Constellation Brands has been and remains USMCA compliant. CFO Garth Hankinson added that guidance incorporates announced tariffs on aluminum cans for beer and on wine from New Zealand/Italy and to Canada. Newlands also noted that long-term beer growth headwinds are viewed as non-structural and tied to socioeconomic pressures on the Hispanic consumer, which are expected to normalize over time.

Lauren Lieberman pointed to the ongoing negative revision cycle in the Wine and Spirits business and asked for more detail on what aspects of the turnaround plan have not worked as expected and what adjustments are being considered.

Answer

CEO William Newlands acknowledged the challenges, particularly at the lower end of the portfolio, but highlighted positive signs of recovery in key premium brands. He noted that Meiomi and Kim Crawford grew 7% and the craft spirits portfolio grew 9%. He positioned the recent divestiture of SVEDKA as a key strategic move to focus the business on the higher-end, higher-margin segments.

Lauren Lieberman asked for a more detailed breakdown of the tariff impact, requesting the relative size of the impact from raw materials, finished goods, and exports to Canada, to better model the potential impact for fiscal 2026.

Answer

COO Daniel Sullivan clarified the in-year fiscal 2025 impact is estimated at $3-4 million, mostly hitting in Q4. He explained the annualized exposure is 3-4% of COGS, which translates to roughly 1.5-2 points of margin pressure before mitigation. Sullivan noted that while the company is actively pursuing offsets through procurement and manufacturing adjustments, it was too early to quantify those benefits.

Lauren Lieberman asked for a more fulsome explanation of OLAPLEX's pricing strategy, particularly the move away from its historical single-price-point model, and inquired about the implementation process and any early customer reactions.

Answer

CEO Amanda Baldwin explained that the pricing strategy is now based on the competitive landscape and the need to maintain gross margins while incorporating advanced technology into new products. When asked about a broader reset, she indicated that the pricing currently visible in the market reflects the company's strategy at this time, suggesting a gradual evolution rather than a one-time overhaul.

Lauren Lieberman requested a 'postmortem' on marketing efforts that have not worked as expected, contrasting them with the successful Leave-In Conditioner launch, to better understand why a broader sales lift has not yet occurred.

Answer

CEO Amanda Baldwin focused on the positive learnings, emphasizing that the brand resonates when marketing execution improves. She pointed to the success of the creator-led approach and experiential events as proof points. She explained that the company is getting better at communicating its science and that these successful tactics will be applied more broadly over time as the marketing muscle is built.

Inquired about the underperformance of the Kosta Browne brand, the reasons for the wide Q4 organic net sales guidance, and the status of the distributor network integration by the end of the fiscal year.

Answer

The Kosta Browne softness is attributed to shifting post-pandemic consumer purchasing behaviors rather than a decline in brand equity. The wide Q4 guidance range is due to industry volatility and unpredictability from the ongoing distributor network realignment. This volatility might extend into Q1 but is expected to normalize by Q2.

Inquired about the on-premise vs. off-premise assumptions in the FY24 guidance, consumer trade-down trends, and the strategy for promotions in the coming year.

Answer

The FY24 guidance assumes continued account growth in both on- and off-premise channels. Consumer demand is relatively stable across price points with no significant trade-down observed. Promotions will return to a more normalized level in FY24 after being significantly reduced in H2 FY23, but will not reach the high levels of FY22.