Good day and welcome to today's Colgate-Palmolive Company First Quarter 2018 Earnings Conference Call. This call is being recorded and is being simulcast live at www.colgatepalmolive.com. Now for opening remarks, I would like to turn the call over to the Senior Vice President of Investor Relations, John Faucher. Please go ahead, John.

Thanks, Elysia. Good morning, and welcome to our first quarter earnings release conference call. This is John Faucher, Senior Vice President for Investor Relations. Joining me this morning are, Ian Cook, Chairman, President and CEO; Dennis Hickey, CFO; Henning Jakobsen, Vice President and Corporate Controller; and Elaine Paik, Vice President and Treasurer. Today's conference call will include forward-looking statements. Actual results could differ materially from these statements. Please refer to the earnings press release and our most recent filings with the SEC, including our 2017 Annual Report on Form 10-K and subsequent SEC filings, all available on Colgate's Web site, for a discussion of the factors that could cause actual results to differ materially from these statements. This conference call will also include a discussion of non-GAAP financial measures, including those identified in Tables 6 and 6a of the earnings press release. A full reconciliation to the corresponding GAAP financial measures is included in the earnings press release and is available on Colgate's Web site.

Thanks John and thanks to all of you for joining us on the call this morning. At CAGNY in February, I mentioned that we expected 2018 to be challenging of likely less challenging than 2017. So far, this has not been the case as quarter one was just as challenging as 2017 visualizing all material and logistics costs, heightened competitive activity and a slow down in cash [growth] [ph] in some markets around the world. I would say that in response, we remain focused on increasing our effectiveness and agility to better delay with this volatile environment where growth is harder to find. Over the past few quarters, I've highlighted four areas of focus as we look to accelerate top and bottom line growth. Advertising behind more impactful creative, innovation across our business particularly in toothpaste and particularly in naturals working with our retail partners to drive profitable growth with a focus on e-commerce, and of course, maximizing productivity up and down the income statement. These fundamentals remain our priorities in 2018. But on the call today, I'd like to focus on two topics; first, our developed markets where we think we've made progress over the past year. And second, our developing markets where we face some new and continuing challenges that we're working to address. You may remember in the first half of 2017, our North American and European divisions posted declines in organic sales and some weakness in market share since then it's driven by the increased advertising spend that we committed to and to focus on identifying the category segments and retail environments that will deliver growth, we have returned to organic sales growth and are back to positive market share performance. In the U.S., in the first half of last year our categories declined and we…

Thanks, Ian. I will now provide a brief overview of the quarter including some further commentary on divisional performance. As Ian discussed while Q1 represented progress in net sales operating profit and earnings growth on a reported basis, our organic sales growth took a slight step back. We are focused on driving sequential improvement in organic sale through the balance of the year and the plans Ian highlighted demonstrate that focus. Our net sales growth of 6.5% in the quarter was the highest since the third quarter 2011. Net sales growth was driven by 2% growth in volume with 0.5% coming from our professional skincare acquisitions. Flat pricing and 4.5% benefit from foreign exchange. Our pricing performance improved sequentially by 100 basis points and we still expect positive pricing for the year as our pricing comparisons get easier and we plan to take some additional pricing to help offset raw materials inflation. On a GAAP basis, our gross profit margin was down 10 basis points year-over-year excluding the impact of our global growth and efficiency program it was down 40 basis points year-over-year. As Ian mentioned, our strong productivity savings lead they are funding the growth initiatives was unable to completely offset higher raw material costs. On a GAAP basis, our operating profit margin was up 40 basis points year-over-year in Q1 excluding the impact of our global growth and efficiency program, our operating profit margin was down 20 basis points as the decline in gross margin was offset by a 30 basis point decrease in our SG&A to sales ratio. On a dollar basis advertising investment was up 4% year-over-year in Q1, but was down slightly on a percentage of sales basis as we lapped our highest spending quarter in 2017. As Ian mentioned in the press release we…

Today's question-and-answer session will be conducted electronically for the telephone audience. [Operator Instructions] We'll go to our first question from Andrea Teixeira from JPMorgan.

Thank you. Ian, I'd like to just in terms of the price increases that you embedded in guidance, so if you can explain how in the back-end of the year you're going to be able to raise prices given the elasticity we see in developed markets? Thank you.

Yes. I guess as we think about pricing Andrea and we talked about this a little bit on our last call. Clearly there is underlying commodity cost pressure that affects everybody. And clearly we have seen a slowing of category growth in some markets around the world and that has resulted in, in some cases is heightened promotional activity price space to try and get more of that smaller pie and that puts pressure on pricing. But as we said in the last call with the underlying commodity pressure with the inflation that we think will come back modestly in Latin America and other emerging markets, we believe there is the potential to take pricing over the balance of the year. We know we can do it from a consumer point of view and we think that other manufacturers are faced with the same cost pressures that we are faced with. And as I mentioned in my prepared remarks in some instances where we thought the promotional activity was economically destructive we did not participate. So I think a combination of the underlying commodity price pressures, modest inflation and I would say an expected lessening and we're seeing that in some cases of promotional activity which is not a constructive way to build the business for medium term gives the potential for pricing over the balance of the year. On top of which by the way, we have John mentioned the naturals expansion much of that renovation while not technically an increase in prices is very much at a premium and of the category which obviously gives you the margin benefit of the elevated premium price inherent in our innovation grid.

That's helpful, Ian. So just on the U.S. and probably like as you lap the price competition in Mexico is that a read into those key markets for you in terms of the pricing or the promotional spending kind of at least lapping in the fourth quarter of last year and being able to get in the balance of 2018 or better at least less couponing if you will on the pricing perspective? Is that the way we should look at it or list price increases?

Both, both. In the North American environment, I think you saw fairly substantial improvement from the fourth quarter to the first quarter in terms of our pricing. The same in Latin America. So we went from basically negative 1 to flat quarter-on-quarter. And we expect that progress to continue. And we will be taking some of this price increases in parts of the world to offset that underlying commodity inflation. And on top of though it is in the price measure our innovation flow is more at the premium end which will drive value and margin.

That's great. Thank you, Ian.

We will go next to Dara Mohsenian of Morgan Stanley.

Hey, good morning.

Hey Dara.

So, Ian, I'm basically going to ask the same question I did last quarter which is, if you take a step back in emerging markets, has something really changed here because clearly your market share looks like it's under pressure despite the ad boost from the back half of last year, the naturals focus and your other strategy tweaks. And it's sort of odd to such a strong organization has not seen more traction in Europe consistently missing your own expectations. The organic sales growth is weaker than we've seen in history in emerging markets. And I appreciate some of the country specific commentary, some of the comments on category weakness. But again, taking a step back from an overall broader standpoint over the last couple of years, not just this quarter, it does feel like there's a pretty pronounced change in your competitive positioning in emerging markets. So I'm just hoping for sort of a state of the union at the high level on what's pressuring their competitive position. Why we should believe you can prosper versus the local competition that's clearly cropping up to a greater extent in that timeframe and how you sort of manage differently in the context of that environment? Thanks.

Well, a few things to say to all of that. Again, stepping back and taking the broader view, the issue we had to address and we're discussing often across last year coming into this year was the weakness in our developed world. And so, we are actually quite pleased with the progress we have made there particularly as the growth of our categories in those parts of the world is now moving back into a 2% range rather than the one or less that we were talking about before. So we think that's a very good, good progress. In the emerging markets, I challenge the notion of share weakening in fact as we try to demonstrate by going through some of our key markets. We are beginning to see sequential share progress in the key markets in those emerging countries. In a couple of cases, I mentioned in Latin America, we elected not to compete with promotional activity but those engineered it carried something like 11 gross margin. You can see volume and market share, we don't think it's economically rational to go chasing that kind of business. So you're making choices all of the time in those emerging markets. Emerging markets by the way where our market share is significantly advanced of our competitors. We've never ducked the fact that the local brands are having an effect in the emerging markets and we have said to some while that our response was going to be with naturals and naturals at a premium price because that was what was being effective in the marketplace. And we have now positioned our naturals offerings in those categories. I think the fundamental issue in the first quarter was the categories just slowed largely in Latin America because of an absence of pricing and…

We'll take our next question from Wendy Nicholson of Citi Research.

Hi. Good morning. My question has to do with the U.S. market. First of all, the 5% sales growth that we saw, is it your read that there is any pipeline fill in that, is there any sell in that makes for a potential sequential slowdown in the second quarter inventory levels of trade et cetera et cetera. And then, the second question is, it feels like or it sounds like the growth in the U.S. has been driven or the recovery in your business in the U.S. has been driven more by your increased ad spending as opposed to really breakthrough or really meaningful innovation. I mean good innovation but nothing that's kind of like a total toothpaste or an [optic ride] [ph] or something like a big headline like that. And so can you just say is there anything specific to the advertising, is it just more dollars, is it more share of voice, are you doing more digital, is there something about the advertising that's making it particularly impactful? Thank you.

Thanks Wendy. First, I would say North America obviously is cycling a weak first quarter of the product here where we suffered from destocking and the sharp slowdown of the category. So I would say we benefited from that underlying category growth rate in North America is about 2%. But there is certainly nothing in terms of an inventory build because of the activity. I would say it's year-on-year comparison and the strengthening growth rate in the categories. And as I said earlier with the investment we are putting behind the business and the innovation which we can judge, however, we want to judge it in the end, the consumer is the final arbiter and if the market share goes up its good innovation in my book. So that's really the story on North America, but nothing that says the underlying business performance would be disadvantaged over the balance of the year. Now on the advertising side, you have to think about these things holistically when the advertising as we have said before is not just about advertising the innovation, but it is advertising the basic benefits of a brand. Indeed it is sometimes advertising what we call brand purpose which is what a brand stands for. So we can run advertising that we call equity advertising that is very simple, very basic in the emerging markets talking to people having a future they can smile about on subjects like education, on subjects like water conservation on a basic anti-cavity benefit which may not sound glamorous and wildly different, but it's extremely emotionally persuasive and I think what we have come to which we believe is making our advertising more effective is that we've got this balance between the emotional connection with the consumer and the rational connection with the consumers. Certainly the quality of our advertising is increasing. And then, you look at the shift we have made to digital which gives you a lot more information in terms of how you address consumers and that is playing a role as well. And finally, I would say this year we will have completed a journey over three years which has seen us reduce the amount of money we spend in what we call non-working media by something like 15%, I'm sorry 25% to 30%. And of course that money then gets directed into what we call working media which is advertising consumers actually see. So in the same advertising to sales ratio, you have a shift of money away from non-working into working. So you get that additional benefit as well. But I think it's the type of advertising, it's the vehicles we're using for the advertising and that alongside the innovation. So it's not just throwing money, it is doing it in an intelligent way with a focus on making sure we have quality advertising vehicles with that money.

We'll take our next question from Stephen Powers of Deutsche Bank.

Great, thanks. Two fairly quick ones, if I could. I guess, the first as you mentioned at the outset, Ian, you started-off like CAGNY presentation saying that you had seen or you saw improving 2018 in terms of top line growth and that just suggested to me that we were off to a slightly better start to the year than we're seeing today. So I guess the first question just did you see something happen late in the quarter that might explain that or is this representative of the improvement you expected because it seems just a bit of a disconnect there? And then, on the gross margin outlook if I could, I think you said up to 50 basis points assuming some sequential reversal of oil from here. And I guess the question there is without cutting into investment spending how much flexibility do you foresee in the model this year if commodities don't cooperate. Thanks.

Yes. Frankly, Steve which we did from CAGNY sea changes, actually the developed markets played out pretty much the way we would have expected. It was really in the emerging markets and it was this pricing activity which stepped up as the quarter unfolded and we had to take a position in terms of, would we respond or would we not respond? That took pricing out of the category, which led to the slowdown in the value growth rate of the category. So yes, it did unfold after CAGNY to our disappointment. Look in terms of flexibility on the year, we have the last year about global growth and efficiency program remaining and we have a very strong funding the growth program off to a very good start this year. Six new areas of fundamental development and funding the growth, which we are now tracking beyond the usual, and of course the pricing that I mentioned earlier. So we're working all of the internal angles to give us flexibility across the back half of the year, if our commodity forecasting does not pan out the way we expect it to, will obviously be close to how that unfolds as the year progresses. But we're pressing in all of the areas you would expect to give us the most flexibility we can get because as we said in the release, we are committed to increasing our advertising absolutely and as a percent of sales because of the quality of innovation we have and we believe the quality of advertising vehicles that we have across the portfolio.

We'll take our next question from Jason English of Goldman Sachs.

Hey, good morning folks.

Hi, Jason.

Thanks for let me ask a question. I've got one quick follow-up and then another question and I will try to jam in here. First, follow up on Dara's question, I think you pushed back Ian on his assertion that your market shares were softening somewhat in emerging markets. In your prepared remarks you certainly talked about the momentum and strength in some of your largest developed markets. Yes, when we look at your market share data that you guys disclosed and just look at toothpastes globally, it's down year-on-year. It's weakened from where you are -- what you last gave for fiscal '17. How do we put those two? And then, my second question is on Hill's overall, a lot of moving pieces in the U.S. pet landscape a lot of competitive turbulence, a lot of channel turbulence, a lot of it seems really reminiscent of P&G and [IEMs] [ph] with what General Mills is trying to do with Blue Buffalo that clearly creates some opportunities for you guys then. I know the landscape is a little bit different where the growth is, it shifted from pet specialty into online today. But is there reason to believe that some of this turbulence could once again create opportunities for you like it did back then?

Well, let me take the second and then come down --come back to the first. On the Hill's strategy and model we have been very disciplined over the years as you know we have two businesses there, we have a wellness business for general use and we have a prescription business against specific conditions in pet. And we have limited our distribution to those outlets that have advisers for the consumers that allow them to make an intelligent choice. And of course, in the case of prescription respond to a script from a vet, interestingly e-commerce is a perfect channel for us because you can write anything you want and [patent as] [ph] we did all because they're absolutely fixated on the health of their pet. So given the scientific quality of the Hill's products, given the scientific benefits that has been demonstrated clinically and given the discipline we have in maintaining that connection with that we obviously are working very hard to take full advantage as we can of any opportunity in that landscape. One hates to predict that we will be doing our level best to do that. In terms of the market shares globally, yes the dollar share is down modestly actually the volume share on our business is effectively flat year-to-date year-on-year. And some of that pressure traces to Latin America. Because I mentioned that we had walked away from some promotional activity and what we are now seeing in the emerging markets I think we talked about it in fact that sequentially two places up in four of the five largest markets and toothbrushes up in all 5 from the fourth quarter. So again, we think the plans we're putting behind the business are making progress and we will keep driving that over the balance of the year.

We'll take our next question from Bonnie Herzog of Wells Fargo.

Thank you. I just have a few follow on questions. First, in North America wondering how much of the volume left in the quarter was driven by mixed impact via innovation and then realistically how sustainable is the strong growth that you had in the quarter given all the headwinds you mentioned this morning. And then commentary we've been hearing from others. And then, just a quick question on local competition in emerging markets and I realize you guys are working to innovate as a means of competing more effectively with some of the local competitors, but you guys think that's going to be enough. And have you considered being more proactive with M&A as ways to be more competitive in some of these markets. Thanks.

Yes. Let's start with your first which is -- with North America. There's nothing substantively different in terms of the mix of the business coming into this year. I think the two fundamental factors are, the year-on-year comparison where we had a weak third quarter last year because of the slow down of the categories and the attendant inventory destocking as retail. So you've got a rebound in category growth which started in the fourth quarter and is now at a reasonable 2% underlying growth rate. We've got good quality innovation as we plan to have every year and we are building market share because of that innovation and because of the expenditure behind quality advertising in the business. But it would be fair to say that the first quarter itself benefits from year-on-year comparisons, but looking forward there is nothing about the underlying strength of the business that concerns us for our planning point of view over the balance of the year. And then, in terms of local competitors in emerging markets this is a journey, we have said when we started talking about naturals some time back that these offerings were at a premium price points. We think we have shaped some very interesting bundles although we talk about naturals in kind of a generic sense actually the offerings we have vary across the world to reflect local market preferences. And we are seeing progress; it's not going to be overnight. And I think it would be fair to say in the broadest sense Bonnie in terms of M&A look at what we have done over the years with Tom's of Maine or even the elmex brand in Europe, which had a dominant position in the Germanic countries. Certainly, if there are quality assets Tom's and the Gaba would have been a local brand in that definition. The relationship we have with Darlie in Asia is another local brand in that regard. That would certainly not be of a strategy in -- that would certainly not be off strategy. And interestingly a little bit of an aside, the Elta business one of those two personal care companies that we've bought is building -- has built a very strong business in China as an e-commerce business. So in addition with them, we are learning some interesting skills in building direct to consumer businesses online in China with imported product. So not completely off the list of possibilities Bonnie.

And we'll take our next question from Kevin Grundy of Jefferies.

Hey, good morning.

Hi, Kevin.

First, a detailed oriented question, so the industry growth rates now in emerging markets which you indicate are slowing. Do you have a specific number for us? I just would like a sort of a point of reference relative to the 0.5% organic sales growth in the quarter. And then, the broader question in emerging markets, are you comfortable with your investment levels in those markets, you have very attractive margins not every company can say that in some of these regions and is it possible that the cost of business is moving higher, investment levels need to move higher to compete with some of this local competition just to return Colgate to some of the growth rate that it's enjoyed in the past in some of these regions. So your comments there would be helpful. Thanks.

Yes. Yes. Again, our -- how would I say our understanding of the slowdown in the emerging markets is not that we see this as a permanent slowdown, but as I mentioned before in the developed world, we have now seen category growth rates move up into the 2% range historically they had been one and lower. So that's good news. In the emerging markets what we saw was mid-single digits move down to something in the 2.5% to 3% range. And then, of course you have the destocking that goes with that kind of slow down. And largely, that was in most markets pricing driven because of that promotional intensity that I mentioned. Now the underlying usage of consumers is the same. And interestingly, if you profile our categories around the world and our geographic mix, if those emerging markets were to stay at 3% let's say, and the developed world at 2%, if you look at our mix of the world, our underlying category growth rate would still be 2.5%, if as we expect those emerging markets come back because we will have the opportunity to price and given our strength and the category that will lift the value of the category then you could expect the underlying market growth rate will move north of 2.5%. Now from an investment point of view, when we think about advertising as I have mentioned before, we do it from the bottom up. And so we do it by geography, by activity, by product in our portfolio and that ends up in a ratio, we don't work the ratio down through the income statement. So our first quarter advertising was slightly off the highest of last year on a ratio basis happen to be higher than the average of last year. And you can imagine in our priority markets, it is higher still and we think and believe certainly from a share of boy's point of view and a consumer engagement point of view we have an adequacy certainly of investment in those market places we need to capitalize on e-commerce, which I think we're saying we are doing and we need to continue to build these naturals offerings around the world in the emerging markets. But I think it's more building what we have than the need for absolutely more dollar investment. The pleasing thing with much of this innovation in the emerging markets now is that -- it's at a premium level which gives you investment opportunity underneath that.

We'll take our next question from Ali Dibadj from Bernstein.

Hey Guys.

Hey Ali.

Hey. I guess I'm still a little confused about what Colgate's on a root problem is. Despite all the micro positives you described in the prepared remarks and some confidence here and certainly some conference, the CAGNY conference results are clearly not what you expected, not what we expected, they're pretty tough, right? And I get that you can blame the category growth, but consistently as you tell your competitors as well when you are 40% plus of the category and in the series of leaders. And instead, we're actually starting to hear kind of different things from you guys saying something and then what we've seen the numbers is slightly different. So advertising I guess we were seeing for the year. I do when I get the bottom up approach but advertising was supposed to be up as a percent of sales already, right? It's not, it's actually down. Gross margin is 50 to 75 that it was now up to 50 and commodities frankly from CAGNY haven't changed that much. FX has gotten better and should have helped you on gross margins. We thought top-line certainly from our previous discussions would accelerate already. Top-line is decelerating, pricing those supposed to be up, remains challenging, your comps get tougher here. Innovation was already supposed to help, but dollar shares are actually down in India, China and U.K. and Russia and Mexico where we were hoping innovations would help. And this isn't kind of a temporary thing it sounds like it doesn't sound like they're one-timer or like we'd heard about last year. It sounds like it might be tougher longer term and that's a struggle, personally if I look at the stock today, I guess I think you guys dodged a bazooka, I was going to say bullet, but I think you guys dodged the bazooka a little bit because investors are starting to I guess they're continuing to blame the things that are out of your control. But a lot of things are in your control aren't coming in like we expected. And so, I guess going back to the core question, I just -- I'm still scratching my head about what the root cause of the issues are. You can talk about one-off things that we're trying to do but I struggles with the root causes. And should investors continue to give the stock -- the generous benefit of the doubt it's been getting so far and why?

That's it. Don't know where to start really. I think in business in general you have to put everything in context. You make the assertion that these are root problems with the company. We pay pretty close attention to the pressures others in our space and other spaces have in this operating environment. You challenged on the fourth quarter this notion of pricing being negative and the underlying question was with pricing negative. Would this put pressure on margins, and therefore, in addition to the share commentary the model could no longer be effective. So we have tried to explain that the pressure point was the developed world which is where everybody has been focused. We feel quite pleased with the progress over the 18 month period and we think those two businesses and the underlying category growth is favorable for us going forward. And then, we end up with this heightened activity in some emerging markets pressing price and leading to category slowdown. And you make some choices that in some cases we chose short term not to chase economically we thought unviable volume and you take a short-term share hit and you take a volume hit. Faced with the same set of circumstances, we would on balance make the same decision. And when we look at the shape of the structure of our business we see pricing now flat which is not common in our industry space. We thought the gross profit we would have liked to have done better if we had pricing. But we thought that was quite contained and we kept very competitive spending on the table running through the income statement. We never said that the spending was going to be up on a ratio basis starting January 1st. We said we were going to increase our spending and keep that money on the table to build the business. So when you break these things down, unfortunately, there is no simple single silver bullet that says problem solution you have to manage many moving parts. And as I have said before this is not moving in a straight line that the underlying consumer behavior is still there. The medium term growth potential we have with a growing middle class in the emerging markets is still there. We have an innovation profile to allow us to build market share in those categories while we now have strengthened our developed countries. So, while the first quarter was not what we expected, which it seems to me we were in reasonable company in that regard. We think the plans we had for the year allow us to deliver the progress that we have committed to for the year and the underlying consumer behaviors are still sound and solid. And we have brand strength to compete.

We'll take our next question from Olivia Tong of Bank of America.

Olivia?

Hi. Can you hear me? Hello?

I couldn't but I can now, yes.

Okay, perfect. My question goes back to North America because obviously that was quite a bit better than many of us had expected and certainly better than what track channel data would have implied. So were there particular categories that drove this particular more off obviously in untracked and tracked. And flipping a prior question in the other way did retailers destock too far in the past and now they're actually restocking back to normal levels? And then following on that, North American pricing looked obviously better and given what Procter's said about Kress last week would be curious what your view is on North American pricing from here. Because just in our channel checks both online and off, we're seeing some pretty meaningful price promotions particularly with larger packs at the premium end. So we just love your commentary on that. Thank you.

Yes. Again, I think North America is largely influenced by the year-on-year comparison. Last year the categories were declining and retailers were destocking. And we saw in their organic growth decline mid-single digits. This year, the category -- the underlying category growth rates have moved up into the 2% range, healthy for developed world standards. We are building our market shares in six categories are flat in one more. And we have put advertising behind that to do that. And we have -- we said in the fourth quarter we had reacted to some pricing in category specific challenges and we've managed intelligently to we think handle that in a balanced way. So the underlying category growth rate in North America is around 2%. And as I said earlier, we don't expect anything to change that underlying strength of our now re-established North American business. Interestingly from an inventory point of view we continue to see retailers work down inventory but on our businesses for this quarter in a more measured way or a more modest way than we saw in the first quarter of last year when the categories were actually in decline. But the quest for efficiency is still very much there and we participate year-on-year with retailers in that regard.

We'll take our next question from Nik Modi of RBC Capital Markets.

Yes. Thanks. Good morning, everyone.

Hi, Nik.

I just wanted to ask you - hi, how are you. I just wanted to ask a question about culture, I mean Colgate has historically been known to be a very thoughtful company as it relates to capital allocation and just business strategy in general maybe on the conservative end. And that was -- that worked well, your returns are high and margins are high, but the environment is changing dramatically and business as usual doesn't seem like it's working. So I was just curious on your thoughts as the CEO of this company and culture and risk tolerance and how you think about that

Well, very carefully, I guess is the first answer. We realize the world is changing, but we think we need to be disciplined in managing our company over time. In other words, we think this is an era for urgency, but not a panic. And so it's easy to throw out a lot of what I say make work to window dress the issues we're all dealing with. And we still very much believe in the fundamentals and in the fundamentals of these kind of businesses where people use your products every day, the benefits the product provides are important to their health and wellness not their everyday usage of products. So you need to build brands and you need to find ways of making a connection and you need to find ways of bringing the next generation of users into the business. Now that is being disrupted in no end of ways, how would you communicate, how would you sell, and so on. And we think -- we're doing quite a lot in all of those areas with a view to building our brands and building value while we do that. Now our risk tolerance in capital allocation is, I think quite balanced. I think we have demonstrated if you take the M&A space for example, I think quite a good track record of identifying good quality assets bringing them into the portfolio and building them over time and in building them building the overall company. We continue to be very focused in that area like much else in life, it does not move in a straight line and we do not choose to be cavalier and panicky in the allocation of our capital in that regard. That may not be a fashionable thing to say today, but we think in terms of the underlying health of the company, it's the right position to take. So urgency we get and we are changing and have been changing a lot of things with this restructuring program we started a few years back and we continue to change a lot of things, but we resist the temptation to panic and make work for effect rather than for the long-term health of the business. And we're always trying to balance the long-term with the short-term.

We'll take our next question from Bill Chappell of SunTrust.

Good afternoon.

Hey, Bill. Good afternoon, yes.

Ian, can you just talk a little bit maybe about trends since the end of the quarter, I guess talking about growth rebounding as we move sequentially through the rest of the year. Didn't know if you've seen a bottoming out kind of in emerging markets and also maybe with that a little more color on Australia. I know that's been weak for quite some time with the retail landscape. So didn't know if something changed intra quarter, or it's more we're just going to be lapping kind of the changes as we move into next quarter.

I'm afraid Australia has been a case literally of as you know the two major retailers there control much of the marketplace. And there has been I would say a battle for shoppers between two of them. And we have from a joint business planning point of view trying to be accommodative but disciplined and we think we will finally cycle that by the end of the second quarter. I guess that's the simple way of saying that In terms of trends, all I can say is, the second quarter has started a better click for us and that I hope traces to category information which is as you know we see on a lagged basis and I can't offer any comment at this time.

We will take our next question from Jonathan Feeney of Consumer Edge.

Good morning. Thanks very much. I wanted to dig in on China. It's been a little bit of a tough market for a while and particularly called the volume decline and it struck me that I know China historically has been a real high e-commerce adoption market. And I was wondering if you could comment about your performance in e-commerce in China versus the market broadly. Are you doing better or worse there? Is there anything related to that that's created challenges for you and does that tell you anything about any other markets, maybe strategies you've deployed there or experiences you have had that might be an indicator of what e-com development looks like in other markets? Thank you.

Yes. Good question, Jonathan. It's interesting in our Hill's business e-commerce is an important part of the business in the developed world, North America and Europe. In the traditional Colgate business, the growth of e-commerce has been relatively modest, I would say in the developed world so far even though we are deploying resource against it. But in China, it has been quite explosive as you have Alibaba and Tencent and frankly 80 other platforms in China to go after from an e-commerce point of view, I think I mentioned earlier our Asia e-commerce business which is largely China was up some 67%. We lead from a market share point of view e-commerce and indeed have made sequential progress month-on-month in terms of share increases this year. And I think interestingly two things to say in terms of skills. Number one, we believe we can and we are working very hard to do this build a very important part of our business in China with imported products. So marketplace direct to consumer like the Gaba products, elmex that we have just brought to China like a pallet toothbrush that we have brought to China. And like the Elta product, I was mentioning earlier where actually they have people they work with distributors in China that have very good capabilities. So the thrust of your question is the right one which is that we think there's lots to learn in China. It's an important part of where we are focused and we are thinking about it quite broadly beyond even the businesses we sell pure brick and mortar in China and we're doing it as a business building exercise, but of course it becomes a bit of a learning lab as well. And we can transfer those learnings and those skills to other parts of the world.

We will take our next question from Lauren Lieberman from Barclays.

Thank you.

Hey, Lauren.

Hey. So it wasn't great, I wanted to just talk one thing we haven't touched on yet which is and we don't talk about much which is the personal care and home care businesses and I just been wondering a little bit perhaps about I guess one kind of broad strokes like share performance in those businesses in emerging markets, if the competitive environment has changed for those at all? And then I guess also underlined that in Mexico when you talked about some of the competitive activity you chose not to participate in what category that was in?

Yes. Well, I would say the personal care business is in relatively good shape. We have strong brands. We talk about Sanex. We talk about Palmolive's. We have the Protex brand. And then in homecare, we have different brands in different categories. But our primary two categories are fabric softener and the dish liquid. Now when you look at the competitive activity in Latin America, oral care was one business, but then homecare was the other business because from a pure volume point of view, the purchase frequency of homecare products is higher than the purchase frequency of personal care products. If you're looking to drive volume from promotion that is a shorter term play. So we indeed did see a stepped up promotional activity on the homecare businesses. And again, we decide whether to play or not to play and if the margin is destructive and then frankly we don't. And we will rebuild the businesses with the innovation flow that we that we have. So that was a factor in Latin America.

And we have no further questions at this time. I would like to turn the call back over to our speakers for any additional or closing comments.

This is Ian. Thank you for joining the call. And we look forward to reconnecting with you after the second quarter. Thanks.

That does conclude our conference for today. We thank you for your participation. You may now disconnect.