Financial Data and Key Metrics Changes - The company reported 2.4% organic growth in the second quarter, excluding the impact of private label products [3] - The company expects 2025 to be at the low end of the 2% to 4% organic growth range communicated earlier [5] - The company has seen sequential dollar earnings per share growth during the 2025 cycle [7] Business Line Data and Key Metrics Changes - The company has increased advertising investment over the last five years, which has improved brand penetration and health [6] - Elmex toothpaste has become one of the fastest-growing products in the European market, contributing to record market share [10] - The anti-cavity segment in India is a significant part of the franchise, with new technology introduced to strengthen teeth [11] Market Data and Key Metrics Changes - The company has seen growth in both North America and emerging markets, ensuring broad-based growth across all categories [5] - In South Africa, a new antibacterial product has resulted in a 450 basis point share growth since its introduction [12] - The Chinese market is highlighted as a significant opportunity, with 40% of the market being online and 80% of media being digital [30] Company Strategy and Development Direction - The 2025 strategy focused on consistent top-line growth and reinvesting in the business to accelerate growth [5][6] - The company is preparing to execute its 2030 strategy, which includes leveraging brand penetration and enhancing omni demand generation [27][28] - The company aims to invest more in key geographies and continue building capabilities in data and analytics [28] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer uncertainty is the primary driver for category vitality, affecting purchasing behavior [62] - The company is optimistic about its ability to drive top-line and bottom-line growth despite current market challenges [37] - Management emphasized the importance of innovation and strategic planning in navigating the current environment [41][42] Other Important Information - The company has announced a new productivity initiative to support its strategic plan and improve efficiency [3][49] - The restructuring is intended to optimize the supply chain for a more dynamic environment [54] - The Hill's pet food brand continues to outperform the category due to disciplined investment and brand differentiation [56] Q&A Session Summary Question: What areas of the 2025 strategic plan were most successful? - The focus on dollar top-line growth and building long-term capabilities, particularly in AI and digital innovation, has been key to success [39] Question: Why was omnichannel demand generation emphasized? - The complexity of the consumer journey necessitates a more integrated approach to media spending across online and offline channels [43][44] Question: What are the biggest changes transitioning to the new strategy? - Increased focus on innovation, resource allocation in key growth regions, and a consistent omni demand generation model are the main changes [46][47] Question: How does the company view the current category growth slowdown? - The slowdown is attributed to consumer caution and uncertainty, affecting purchasing behavior in both discretionary and nondiscretionary categories [62] Question: Is destocking affecting the company differently? - The company has observed that destocking is more prevalent in online retail environments rather than brick-and-mortar stores [68][69]

Financial Data and Key Metrics Changes - In Q2 2025, the company achieved growth in net sales, organic sales, and earnings per share despite facing significant raw material pressure and negative foreign exchange [5][6] - Organic sales growth accelerated by 60 basis points to 2.4% in Q2, driven by improvements in North America and AfricaEurasia [5][6] - Gross margin was down year over year due to greater than anticipated raw material inflation and tariffs, with guidance for gross margin remaining roughly flat for 2025 [41][42] Business Line Data and Key Metrics Changes - The company launched significant innovations across categories and closed the acquisition of Prime one hundred, a leading fresh pet food brand in Australia [5][6] - Hill's brand saw mid-single-digit organic growth across almost every hub, with a balanced contribution from volume and price [48][49] - The total relaunch of core brands was strong in Latin America, with good incremental share and growth [26][29] Market Data and Key Metrics Changes - North America showed improvement in volume, although the overall consumer sentiment remains cautious [20][21] - Latin America experienced a slight deceleration in categories, particularly in Brazil, while Mexico showed some improvement [28][29] - The Asia market faced softness, particularly in urban markets in India and challenges in the Holly and Hazel business in China [81][84] Company Strategy and Development Direction - The company remains committed to its long-term growth strategy, focusing on household penetration and brand health as key drivers of organic sales growth [9][10] - A productivity initiative was announced, aiming for $200 to $300 million in charges over three years, focusing on optimizing the supply chain and enhancing innovation capabilities [18][92] - The company is prioritizing innovation, particularly in premium products, and leveraging AI for revenue growth management [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the second half of 2025, expecting modest improvements in category growth and maintaining a strong innovation pipeline [90][91] - The company acknowledged the challenges posed by high raw material costs and tariffs but remains focused on driving value through innovation and pricing strategies [41][62] - Management highlighted the importance of balancing top-line growth with margin restoration, particularly in North America [106] Other Important Information - The company is actively leveraging price pack architecture to appeal to consumers seeking value, with a focus on both premium and entry-level products [7][100] - The company has stopped producing private label products as of July, which will impact the P&L in the second half of the year [52][78] Q&A Session Summary Question: Details on the restructuring program and U.S. category growth - Management discussed the productivity initiatives aimed at accelerating growth and optimizing resources, while acknowledging a cautious consumer environment in North America [14][20] Question: Assessment of the total relaunch and Latin America performance - The total relaunch has been strong in Latin America, with good growth and share gains, although some caution remains in Brazil [26][28] Question: Gross margin outlook and raw material cost drivers - Gross margin was impacted by raw material inflation, particularly in palm oil and fats, with guidance remaining flat for 2025 [41][42] Question: Performance of Hill's brand and private label impact - Hill's brand showed strong growth, particularly in therapeutic products, while the exit from private label production will affect future comparisons [49][78] Question: Sales run rate expectations and restructuring details - Management expects a modest improvement in sales run rate in the second half, driven by advertising and innovation, with restructuring focusing on optimizing resources [90][92] Question: Innovation strategy within the 2030 plan - The company plans to enhance innovation capabilities, focusing on breakthrough products and improving agility in bringing new products to market [65][68] Question: Category trends and market outlook - Management anticipates a modest improvement in category growth across markets, with some categories expected to recover more slowly than others [110]