Colgate-Palmolive Company (CL) Earnings Call Transcript & Summary

Good morning, everyone. I'm Dara Mohsenian, Morgan Stanley's Household Products, Beverage and Food Analyst. I'm pleased to welcome Colgate to Morgan Stanley's Global Consumer and Retail Conference. Just before we begin, a quick disclosures, please see the Morgan Stanley research website at www.morganstanley.com/researchdisclosures for our research disclosures. And if you have any questions, you can reach out to your Morgan Stanley representative. And with that, Colgate has implemented a number of strategic initiatives under the leadership of a new CEO, relatively new CEO, Noel Wallace, that appear to be driving a sizable recovery in organic sales growth recently. So joining us today, we have Panos Tsourapas, Colgate's Group President for Latin America, Asia Pacific and Africa, Eurasia. And John Faucher, who's the Head of Investor Relations. So thanks very much for joining us today, guys.

Thank you. Thanks for having us.

So maybe to start with the strategic changes from the last few years that I mentioned certainly appear to be driving a pickup in organic sales growth more recently. What do you think is driving sort of the biggest payback as you look at the changes that have been put in place? And I think most importantly, what gives you confidence that these drivers are leading to a more sustained pickup going forward as we look out longer-term as opposed to a more sort of temporary type of rebound as the changes were initially implemented.

Yes. Obviously, we are very pleased with the progress we are making and the results. And our objectives, as we stated, is to deliver sustainable, profitable growth. And we are deploying successfully the strategies that we have consistently communicated under Noel's leadership around revamping innovation, digitization, investing differently behind our brands and in a more expansive fashion. I think beyond this, if we look some of key drivers that particularly work well, I would say that the focus on the core business is paying off. Some examples, our efforts around relaunching our core anticavity business around the world, our initiative to relaunch Colgate Total around the world, the Total restage of our products franchise around the world are initiatives that are driving results. Our efforts behind premiumization. Total is a good example also. We're rolling out and the expansion in premium whitening segments like what we do with Optic Renewal here in the U.S. Thirdly, I would say we are far more expansive in adjacencies and new channels. Some examples, we are taking our products franchise in new areas like face cleansing. Now we are taking it to baby care in countries like Brazil, which is a huge market. We are bringing new brands around the world in pharmacies. We do very well with the expansion of elmex. We do very well with the expansion of meridol. We do very well in e-commerce with specific innovation there, particularly in China. And we are putting a lot of focus. And Noel has been very vocal and very consistent about our RGM initiatives. We have a very systematic and focused effort behind RGM that drives also pricing and premiumization. And I would say, if you take all this together with our go-to-market capability, which is in most of the places, I would say, not best-in-class, at least at par with the competition, I think personally, it gives me and gives us a lot of confidence that we will continue seeing strong results in the future.

Okay. And looking more short term in emerging markets performance, obviously, a very strong acceleration in Q3, 8.5% year-over-year organic sales growth. That was a pickup after 2.5% in Q2. How much of that is more just sort of timing of COVID, maybe some pent-up demand versus these more sort of enduring changes that have been positive in your mind? And I guess more importantly, looking out to next year, as we look out to 2021, how do you think about category growth potential versus a typical year versus what's a COVID-impacted base in 2020?

Okay. First of all, I wouldn't focus a lot in comparisons between Q2 and Q3. Q2 was in a typical quarter, was the first quarter that really COVID hit. So there were many one-offs that, in some instances, were positive; in some other instances, were negative. What we see in broad terms is that we see some categories, some of our categories being impacted very positively. Categories like liquid hand soap. Dish washing liquids consumption is increasing significantly, and to a lesser extent, cleaners and also bar soaps. The other core Oral Care categories, I would say, haven't been impacted significantly. In some places, there's some sort of pantry loading, but it's nothing major, I would say. Now moving forward in 2021, I think in categories like liquid hand soaps or dish washing liquid, we will see some elevated consumption probably not at the same level for obvious reasons. For instance, when people go back to work, they will wash their hands at the workplace. Or when they start going out to the restaurants, they will not have so many dishes. But I think, still, there will be elevated consumption. In the rest of the categories, I think there is going to be a steady -- the growth prospects are as steady as they were before, particularly in the core Oral Care business that we do have. We will see that the market will continue both in terms of per capita consumption and both in terms of premiumization. And if you look at our Hill's business, I think the increase of adoption of pets around the world probably will continue. So it's another business that it's going to continue to be -- to see benefits from these trends.

Right. Okay. And then we talked about some of the initiatives that have driven improvement in the business over the last couple of years. As you think about Colgate's market share, in particular, you seem to be making some more progress recently versus some of the share declines in recent years. Can you talk about your geographies? And what you're expecting going forward in terms of market share progression? I know some of the historical losses were due more to country mix, than underlying dynamics. But just on a more sort of underlying basis, as you think about the trajectory of Colgate's market share going forward, what are you expecting? And what have you seen recently post some of the strategies that have been implemented?

Yes. I think -- oh, my light went off. So I think the -- first of all, you are absolutely right, our average market share sometimes is impacted by the FX movements. For instance, in Latin America, we have huge market shares. We have 78% which are above average. If you have in some of these markets, 30% devaluation, it impacts your average. If you see the market shares on a constant dollar basis, they are, by and large, flat around the world. We are pleased with the trends, I would say, in the emerging markets, I'm some responsible for, but also in broader terms. If I talk about emerging markets, in Latin America, we do very well across the board. We do well in toothpaste. We do well in toothbrushes. We do well in Personal Care categories. On average and in the big markets like Mexico and Brazil, we see some improvements and some positive trends in Asia. In China, for instance, our e-commerce market share is growing, which is good. And our premium innovation is working there. Our Darlie market share is growing. And we are in a statistical tie for leadership in China with Yunnan Baiyao. We do very good progress in India. Very good progress in South Africa, in the big emerging markets. So overall, I think the trends are good. And they are pointing that in the quarters to come, we should see the that they will be reflected positively to our top line. And we have good trends also in the developed markets. The trends in the U.S. in toothpaste are good. Optic Renewal is doing very well. Our premium brands in Europe are doing well. So we see positive trends across the world, which gives us confidence that our strategies are working.

Maybe if I could just add to that. We talk a lot about growth in unmeasured channels, right? Because that's where the faster growth is happening now, whether it's e-commerce, Club, some of the Dollar stores, what have you. So the first step was to reestablish growth, which we've done. And then you do want to broaden it out, so these can deliver market share growth across all of the channel. And I think we're starting to see that in some of the developed markets like the U.S. where we've been delivering on e-commerce growth and delivering in cloud. And now as we ramp-up more innovation, raise the advertising level, you're starting to see that market share performance broaden out in measured channels as well.

That's helpful. And then more of a longer-term question Panos on the category to develop in emerging markets. Has anything changed post-COVID? Just your thoughts around higher per capita category consumption over time, whether it's greater usage or trade up potential? And some context for the longer-term trade up potential in emerging markets over time from a category perspective would be helpful.

Yes. I think, overall, if we take a medium-term view, the category development potential and the trade-up opportunities in emerging markets, I think it's very positive, and it's significant. We talked about some categories that we see benefits because of COVID, like liquid hand soaps, dish washing products, they will remain elevated, probably not at the same level, but some of these habits will stay there. If you take the core Oral Care business, I think we have significant potential both in terms of per capita consumption, there are still hundreds of millions of people around the world that they don't brush their teeth twice a day. They don't even brush their teeth once a day for many reasons. And we are very well positioned with our initiatives, with our product offerings, with our distribution and availability to capture this trend. And we have significant trade-up opportunity. Our index to the market, in most of the cases, is below 100, it's around 80, 90, depending on the country because of the broad business that we do have. So we have put together a very focused strategy behind premiumization. And some of these initiatives are already working like the Total relaunch in many countries that premiumizes our business, the rollup of elmex, the rollup of meridol in more countries, the premium innovation in China and many others. So I think there's great potential in all the spectrum of the market. And we have the right product offerings to capitalize on that. And I would say, by and large, if you talk about the other categories we operate, you could arrive to the same conclusion. It varies obviously by region, by a specific product category by penetration, usage, habits and other market parameters, but I think the potential is there.

Great. Okay. And then maybe we can shift to the competitive environment in a bit. First of all, you talked about your market share trends improving sequentially more recently. Is -- are you seeing a competitive reaction from competitors out there? How are they sort of approaching a reaction to your improved share performance? And then second, well, why don't we start there, and then we can delve back into pricing in general.

I think, yes, we do. I don't think that there is any period that competition is not very aggressive as we are aggressive. We see competition being extremely active in terms of product launches, in terms of pricing, in terms of promotion. I wouldn't say that we see any major initiative in the form of life-changing, if I would call it, product launches or something which is out of the normal. It's the normal competitive trends and fighting, which is the nature of our business. It's FMCG. You fight every day for the purchase of your products at every store, at every city, at every retail environment effectively at every aisle. And this is what is happening also today.

Right. Okay. And then you put some significant price increases into place in emerging markets post-COVID, particularly in Latin America. Maybe just take us back, A, what gave you the confidence to do that, right? That probably wasn't an easy decision. B, have competitors sort of followed? How quickly have they followed? And then C, maybe you could discuss just the demand elasticity you're seeing after that higher pricing?

Yes. We were very bold with pricing this year being one of the instigators of this strategy, and I think it's necessary when you are dealing with major foreign exchange challenges. I think we have discussed it before. If you are in a market and you have market share of 70%, 80% and you have a devaluation of 30%, 40%, you need to take bold pricing. You cannot balance your numbers without pricing. So we took the decision in the second quarter, and we put very strong pricing in the market. We are very experienced on how to do this and how to implement this without disruption. It's not the first time that we are facing these kind of challenges. We have the toolkit, we have the experience, and we have very seasoned teams on the ground, that they know how to implement commercially and operationally this price increases. And you see the benefit to our P&L and to our results. So we are very pleased with the decision, the implementation and the results. Competition, I would say, didn't follow immediately, and this is not unusual. I think many of our competitors do not have such a big dependency or such a big business in some of these emerging markets. So we have the luxury to wait for a few months until they follow. But I would say, by and large, everybody has followed. And we don't see a lot of irrational behavior out there in terms of pricing could be probably the exception. Okay, in some cases, some competitors in some categories in some countries are particularly aggressive, but this is mostly the exception rather than the norm. And in terms of elasticity, as you have seen in the results, we didn't see any significant volume drop so far. I think the pricing and the moderate increase in consumption, people going back to the stores, in some countries, helped by government programs, helps keep the consumption at the right level.

Okay. And is this sort of the success with pricing? Does it embolden you going forward, maybe to be more aggressive with price increases as you think about the future? How do you think about it from a longer-term perspective versus this sort of short-term success you've had here?

Yes, I think we need to be -- we will be, as always, very thoughtful with the pricing. I think you need to be very careful in this decision. As I said, we took these decisions because of foreign effects and what is happening and as we have done before. We're going to take more pricing, probably not at the same level. And we will assess all the parameters that are going to impact this decision. How foreign exchange is going to evolve? How the macro situation is going to be in the specific countries? How the inflation is going to evolve in emerging markets? How it's going to be the competitive environment? I think taking into consideration these parameters, it's going to define our pricing posture for next year quantitatively. We're going to take more pricing, the point is how much depending on these parameters.

And if I can just add to that. I mean I think the ramp-up in innovation we're seeing and that we've been talking about for the past 1.5 years that we've started to see more of that as we rolled it out, along with the increases in advertising and marketing support, that gives us the comfort that we can compete while we're premiumizing some of our brands. We don't necessarily have to use pricing to chase volume in the shorter term. If you can come out with great marketing plans on a brand like Sorriso, which we're doing in Brazil, which is our lower priced brand in Brazil, if you have the right innovation, the right marketing, et cetera, that's how we want to compete longer term as opposed to not taking the pricing and fighting it out, stack it high and let it fly, so to speak.

Right. Right. Okay. And maybe Latin America, in particular, obviously, you've had very strong pricing down there, including in Q3, but we also saw a pretty nice volume recovery. So perhaps you could comment more specifically on Latin America, the drivers of the volume improvement, if that's sort of sustainable as we look out going forward. And also maybe give us an update on a couple of the key markets down there in terms of Brazil and Mexico and what you're seeing from a category growth and market share standpoint.

Yes. Again, as I said before, Q2 and Q3 are -- it's a typical comparison in Q2. Particularly in Latin America, we focused a lot on availability. We focused a lot on putting the pricing into the market, adjusting our promotional plans accordingly. In third quarter, we went back with more promotions. Retailers also started activating more programs. Our innovation also helped us a lot, innovation that was preplanned and adjustments that we did in innovation because of the COVID situation. And all this is helping together with some increase in foot traffic after the COVID, the first shock of the COVID in the second quarter. I would say, if you talk about Brazil and Mexico specifically, in terms of category growth, it's very low in our categories. We all read how challenged macroeconomically both economies are. Particularly in Mexico, you see a lot of the level of recession and the fundamental problems the country is having. In Brazil, the government has a very expansive, and I would say, rather generous program to subsidize income for a big part of the population, tens of millions of households, and this obviously helps the consumption. Our business in both countries is doing very well, both in terms of sales growth, but also in terms of market share growth. To give you some examples, in Mexico, our toothpaste market share is above 80%. Our key competitor last year launched a second brand in the market. A year after, they have more or less the same market share that they had a year ago with one brand, but now with 2 brands, and we are above 80%. So we are very pleased with the results. Very strong market share growth in toothbrushes. Very good market share growth in Personal Care as well. In Brazil, we also do well both in terms of sales growth and market share. In toothpaste, Colgate brand market share is growing. Premium Colgate market share is growing. elmex and our pharmacy premium therapeutic bundles are growing. So we are premiumizing our business, which is core part of our strategy. Our second brand there, Sorriso is challenged in terms of market share. And I would say this is, to an extent, the strategic decision. Our key competitor in Brazil sells and activates at very low prices, prices that frankly speaking, are not willing to compete. It's volume that we are not willing to chase because it will endanger the financial health of our business. So we are very pleased with the performance. Toothbrushes are doing extremely well in Brazil. We have record high market shares. And we grow share also in our Personal Care categories with Protex and with Palmolive and in home care. So I think, overall, the outlook in Latin America is reflected also in the sales growth results is very good, very strong performance.

Okay. And you both talked about innovation and marketing spend is enabling some of the strong growth recently. So maybe let's start with innovation. Can you talk about how your processes have changed internally in the last couple of years to drive a greater amount of innovation and more impactful innovation? And you've had some pretty big successes in the last 12 to 18 months or so. So how sustainable do you think that ramp-up in innovation contribution is the top line as you look out longer term to 2021 and beyond?

Yes. I think we have talked that we have revamped our innovation process. We are focusing more on what we call breakthrough and transformational, more expansive innovation, rather than simple line extensions. So we have a far more balanced approach. We work on the core business, as we said, but we are far more expansive. And there are many examples. We did talk about Optic Renewal. We talked about the expansion of our brands. You see the new products that we are bringing in Hill's and the results that they do have. So -- and the organization is more focused on this breakthrough and incremental innovations that they are bringing, at the end of the day, higher incrementality. When you go to new channels, when you go to new categories, when you bring discontinuities in the market, when you bring offers in the market at significantly higher price points, this has obvious benefits. We talked about the expansion of our Protex franchise in new categories. The expansion of our premium toothpaste in new channels in new countries. The expansion of a premium Oral Care offerings in e-commerce. All these activities are working. And frankly speaking, I think we are at the beginning of all this. With what we do internally and the focus in these areas, we should see a sequential acceleration in the years to come behind this effort. So the benefits obviously, as long as our activities are of the high quality and as successful as in the past and hopefully more successful, will bring more results to the business in terms of sales growth and market shares.

Dara, if you look back at what Noel said in September, we have taken our price per ounce in e-commerce, in China, for example, up by nearly 50%. And that's through innovation. So you say we're going to focus less on some of these lower-priced products, and we're going to bring channel-specific innovation as talk about e-commerce-specific innovation, right, it's not just about selling the same stuff in a different channel, you have to come with the right products for that channel, and then you can charge a premium. And then the innovation cycle plays out differently from there. And you then maybe take those products into brick and mortar? But you have to innovate differently for each channel and for each country. And that's one of the things that we've been focused on, particularly in Asia. We talk about Asia as a monolith that you've got each individual country there is as big as certain component. And so you've got to think about innovating in those markets very differently.

Great. And then maybe in terms of marketing, obviously, there's been an increase in marketing spend and move back up as a percent of sales in recent periods. Do you sort of leave this year at the right base? Is there an assumption that it continues to move up over time? And can you talk about how you guys sort of measure the ROI and the effectiveness of that marketing spend and the advertising, particularly in this environment?

I'm smiling because you talk to the marketer. So never enough marketing spend. There is never enough advertising. There is always opportunity for spending more. No, seriously, I think we have increased our advertising spending across the board, across our businesses. Hill's is probably is the best example that we have increased our advertising spending significantly, and this is clearly reflected into the results. So you could argue that if we need more advertising, I would say, fundamentally, yes. I wouldn't say that in most of the businesses, we could require dramatically more higher levels of advertising spend. If I take markets like Latin America, for instance, where advertising to sales ratio hasn't increased dramatically, the absolute money and the absolute communication that we can buy is sufficient. So you can see it as a percent of sales, but also, you should see it on what your money are buying and where you stand versus the competition. So we are assessing all these parameters before we decide how and where to increase our advertising spending. It's not a blank or a simplistic idea you need to increase your ratio all the time. We spent also a lot on digital. We are focusing a lot on return on investment. We deploy analytic tools like marketing mix modeling to see which is the optimum mix of advertising that we should deploy in each country. The fact that we have successful innovation helped significantly the ROI of our advertising. It's obviously much better to spend money behind products which are successful, new products which are successful in the marketplace, and this helps a lot. So taking into consideration these parameters and with the help of analytics, we are constantly reviewing which are the optimum ratios, the optimum mix, and we are adjusting.

The only other thing I'd add to that is we have a greater focus on -- we've obviously accelerated organic sales but you need to grow that gross profit dollar amount in order to fund that spend. And so there's a situation where we're saying, look, if we can continue organic sales growth within that 3% to 5% range at least, which is our long-term target and deliver on our productivity measures, that's going to drive gross profit growth in dollars, which will fund this investment. So that's the plan. And we'll fund an increased investment on an [ ad to sales pace ]. So we're focused on that, but people know they need to drive the business with the spending, right? So if you get the ROI right, you get that increasing as Panos talked about. You find yourself in that virtual cycle.

Great. Okay. And Panos, I wanted to touch on China specifically, like we saw in the rest of emerging markets, a recovery in Q3 relative to Q2. You've talked about some of the dynamics that drove the quarterly volatility in general. But as you think about your business in China, it's obviously been a focus point for you over the last couple of years, particularly efforts from a market share front. So can you just give us an update on that market, where you stand today, your confidence that you've sort of sustainably turned around market share at this point as you look going forward?

Yes. Overall, we are making progress in China. I think we are building up our -- and we're improving significantly our e-commerce capability, digital marketing capabilities, our analytics capabilities. And this is reflected to the good results that we have in the overall e-commerce space that we grow share and we drive premium new products at significant premium versus the brick-and-mortar business that we have. So this is working, and we are very pleased. Our brick-and-mortar business, it's still challenged. We have still work to do there, has been stabilized, which is good. And our objective in the quarters to come is to put also this part of the business in positive trajectory. This is on the Colgate side. And on the Darlie side, we do well. Darlie is growing market share this year in China based on innovation and superior execution, which is very good. And we are in a statistical tie, neck to neck, on leadership with Yunnan Baiyao. So I think overall, when you see the components of the business, we do have very good progress. And I'm confident that we will address the challenges we have in the brick-and-mortar business in Colgate side, and we will see further improvement in the quarters to come.

Okay. And maybe that's a good segue, too, into e-commerce in general. Can you just review in your key geographies your market share levels in e-com relative to brick-and-mortar, your strategy to drive success there? And obviously, there's been a higher period of growth here during COVID. Do you see a bit of a short-term step back post-COVID? What's your view on the sustainability of that longer term?

Yes. I think, obviously, the big e-commerce businesses are Hill's, China and here in the U.S. and some European markets, but this is probably the exception. If you take the developing markets, the e-commerce business is booming, okay? The growth rates are extremely high. But still, as a percent of business, it's fairly low, okay? I would say, in most of the cases, it's low single digits depending on the country. What we do? We are investing ahead of the curve. We are putting together the right structures, the right staffing. We have very strong customer engagement to develop our categories. As a company, one of our strengths is the notion of global teamwork. So we are taking know-how from what we do with Hill's, from what we do in China, in the advanced e-commerce markets and we transfer this knowledge to the developing markets. We deploy constantly analytics. We are integrating our e-commerce and digital efforts. So we are -- we want to make sure that we are not going to be somehow disadvantaged with the growth of this environment. In terms of market shares, I would say, by and large, they are not fairly accurate. You don't have national shares. You have, in some cases, shares from customers or other type of data. I would say, by and large, in most of the cases, and this is what we are after, it's the key measure of success. Our market share is at par or higher than the brick-and-mortar market share. Because you can be misled by growth of 50%, 80%, 100% or 200% because the channel is growing. And this is, for us, the most important thing. So as this channel grows, it's not going to be dilutive to our market share. And I would say that in nearly all emerging markets, we are in very good place to this respect. Now to your question, is this growth going to continue? I think it will. To what extent? It is unknown, and it will depend country-by-country because you see in developing markets very different models being deployed. There are markets that you have good players, like Amazon type or Lazada, Shopee. You have other markets that they are more in the omnichannel camp. That is companies like Walmart try to dominate this area. You have models like disremediation like last-milers that are big also in some other regions. So it depends on how the market is going to evolve in the years to come effectively. But it's going to continue to grow. The question is how much and where it's going to land. That's why we make all this effort to make sure that we will maintain our relative shares and our competitive advantage in all markets.

Right. Okay. And then switching over to productivity. This has been a focus of Colgate for a long period of time, sort of ahead of the curve, ahead of the CPG curve to some extent. So as we think about productivity from here, are there key buckets left where there's a significant amount of productivity opportunity? And how do you think about the go-forward pace relative to the pace we've seen over the last few years?

Yes. Good question. I think the first thing that will help our income statement, as John alluded, is net sales, dollar sales growth. This has gone up. It helps a lot the ratios and the results we do have. When you look at productivity, I think as a company, for many years, we have a very robust process to drive effectiveness and efficiency and lower cost. This is under what we call Funding the Growth program that we have, which is a very well embedded process in the company across the board. So everybody gets the objectives. Everybody gets measured in global, regional and local level. And we are always working on ideas on how to do things more efficiently and at a lower cost. And I truly believe that there are still opportunities there as we have proven in the last years. Anecdotally, some years ago, I recall, our gross profit was 55%, okay? And we're saying that our aim is to go to 60%. And we have the same question. Have we more or less maxed out? Is it possible? Now we're at 61%. So it has been possible. Hopefully, in a few years, we are going to be to 65%, so we would have another discussion. But I think fundamentally and philosophically, running a business, there is always opportunities to do things more efficiently and to reduce costs. In our process, our objectives, our culture, the DNA on how we are thinking is such that produces constant continuous results in that area. And I'm confident that we will continue to do so as the history has proven.

And what do you think are the key buckets going forward as you look at your geographies? Can you give us a bit more detail on sort of the key buckets of productivity in those geographies going forward?

You have many areas. I will try to, top of mind, first of all, our technology is a major enabler. How we can utilize better technology. The investment we have done in S/4HANA, for instance, platform. We can get reporting. We can get accounting tasks. We can do CS&L tasks much more efficiently that will have obvious cost benefits. In the product format, there is still opportunity in efficiency in manufacturing. As I say, when I joined the company 29 years ago, we were making fabric softeners at around 80 bottles a minute, and this was considered a good number. Now we are at 400 bottles a minute. We have equipment that makes tubes close to 1,000 tubes per minute. In the past, we were doing 200. So there is a lot of opportunity in efficiency. There is opportunity in reducing cost, less plastic, different type of formulations, different type of packaging. All these areas that we have scrutinized every year, and we find a lot of opportunities. Those are just the 3 top of mind areas that we always look at.

Okay. And then maybe we can shift to capital allocation to end things here. You've had a few acquisitions recently on the skin care side. Obviously, a very high-growth category, high-margin category with barriers to entry too. So an attractive category, but that does tend to invite a lot of competition, and you've got a lot of larger companies that have been focused on that area. So just help us understand your sort of strategy and expanding in skin care and what gives Colgate the right to win there?

Yes. I think, first of all, our strategy is not to go and to become a mass skin care player, so to take head on all the major players in the area. We're far more thoughtful of doing this. We all know that focus is a core for our strategy. And I think this is reflected in the choices we made in these markets. As you said, this is a fast-growing market, and it's good to participate. And if you see the 3 companies we acquired, there are a lot of synergies and commonalities with our business model. If you take businesses like Elta and PCA, take Elta, for instance, it is a professional recommended business model as it is our Oral Care. So it's something that we understand and something that we can add value. PCA, a statistician recommended model, the same. Take Filorga, strong business in pharmacy that -- particularly in Europe that we have very strong businesses in Oral Care. So we pick these businesses, considering our know-how, considering the similarities and the proximity with our business model, and our ability to grow this business and to realize synergies because we are operating successfully under these business models in this environment. And this gives us confidence that we will be able to do so in the future. It's a very focused, targeted choice and strategy in a very high-growth category, which I think is going to be very complementary what we do in the portfolio of categories and brands that we do have.

Right. Okay. Well, great. That's a very helpful overview, gentlemen. We really appreciate both of your time, and great to see your faces in this environment. So with that, we're out of time, so we'll end things there. Stay safe, everyone, and thanks again for joining us, gentlemen.

Thank you very much, indeed. And hopefully, we will be able to do this in person next year.

Yes.

Thank you. Stay safe. Thanks, Dara.

Thank you.