Operating Leverage and Margins
Q: Lauren Lieberman of Barclays asked if the margin improvement is structural or specific to the quarter.
A: Andre Schulten explained that leverage is increasing due to structural productivity, digitization, and headcount reductions, alongside specific quarter benefits like the EPA tariff refund and partial commodity cost flow-through.
Momentum Sustainability and Category Performance
Q: Steve Powers of Deutsche Bank asked about the sustainability of momentum and if any timing factors flattered the first quarter.
A: Andre Schulten stated the first quarter was a strong start across all categories, with a 3% organic sales growth target for the first half and acceleration expected in the second half.
Commodity Costs and Pricing Strategy
Q: Dara Mohsenian of Morgan Stanley asked how the company plans to offset $1.4 billion in commodity pressure given the difficult consumer environment.
A: Andre Schulten noted they will use record productivity, pricing with innovation, and time to recover costs without jeopardizing top-line momentum.
Competitive Environment and Affordability
Q: Robert Ottenstein of Evercore ISI asked about competitor reactions and managing affordability.
A: Andre Schulten emphasized growing categories through innovation and balanced portfolio execution, noting they have brands across different value tiers.
Baby Care Strategy
Q: Bonnie Herzog of Goldman Sachs asked about the strategy in Baby Care and the sustainability of recent improvements.
A: Andre Schulten explained they are fixing hygiene factors and trading consumers up with premium innovation like AMORE, which is a sustainable model.
U.S. Business and Inventory
Q: Filippo Falorni of Citi asked about the source of U.S. share growth and inventory dynamics.
A: Andre Schulten stated they are tailoring adjustments to retailer needs to reach 80% share growth by calendar year-end, noting that inventory volatility will persist.
Fiscal Q2 Outlook and Fabric Care
Q: Chris Carey of Wells Fargo asked if Q2 deceleration is due to consumer concerns and requested context on Fabric Care.
A: Andre Schulten confirmed they are being realistic about volatility like gas prices, while noting Fabric Care is growing due to innovation in Tide, Gain, and EVO.
China Performance
Q: Nik Modi of RBC Capital Markets asked why China is performing well despite macro volatility.
A: Andre Schulten credited the team's reinvention of the distributor network and social-first marketing, noting Baby Care is strong.
EPS Guidance Confidence
Q: Peter Galbo of Bank of America asked about confidence in the EPS midpoint given cost pressures.
A: Andre Schulten expressed confidence in the range but emphasized they need time to solidify top-line results and manage costs.
Inflation Phasing
Q: Peter Grom of UBS asked about the phasing of inflation and potential profit pressure.
A: Andre Schulten noted Q1 was a 5% headwind, with Q2 reflecting $100/barrel oil, and Q3/Q4 seeing more impact.
Pricing and Productivity Phasing
Q: Andrea Teixeira of JPMorgan asked about pricing negotiations and productivity phasing.
A: Andre Schulten declined to announce pricing but noted productivity will be heavier in the back half.
Industry Growth
Q: Kevin Grundy of BNP Paribas asked for a broad comment on industry growth across geographies.
A: Andre Schulten stated the consumer is resilient with 2.5% to 3% value growth globally, with U.S. acceleration and strong enterprise markets.
Q2 Deceleration
Q: Kaumil Gajrawala of Jefferies asked why there is a deceleration in Q2 despite positive momentum.
A: Andre Schulten cited consumer volatility and fuel prices as real risks, stating they want to be realistic rather than getting ahead of themselves.
Category Evolution and Interventions
Q: Olivia Tong of Raymond James asked how demand will evolve and how much is category vs. initiative-driven.
A: Andre Schulten expects 2.5% to 3% value growth and reiterated the focus on share growth in every category.
Thorne Acquisition
Q: Robert Moskow of TD Securities asked about the strategy for Thorne and talent retention.
A: Andre Schulten stated they will let the Thorne team lead, adding value through international expansion and scale.
International Structure Changes
Q: Edward Lewis of Rothschild & Co Redburn asked how much international structure changes helped performance.
A: Andre Schulten noted it is early, but the intentionality in enterprise markets and simplifying Europe is contributing to progress.
Mitigation Levers
Q: Michael Lavery of Piper Sandler asked what levers will be used to mitigate costs.
A: Andre Schulten stated everything is baked into the outlook, with flexibility in productivity and innovation timing.
