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What changed in Colgate-Palmolive's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Colgate-Palmolive's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+366 added−382 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-16)

Top changes in Colgate-Palmolive's 2023 10-K

366 paragraphs added · 382 removed · 302 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

55 edited+10 added−14 removed21 unchanged
Biggest changeA vital piece of our DE&I strategy has been ensuring that our succession planning process incorporates the advancement of women and people of all cultures, including underrepresented communities. To help further foster inclusiveness, we support employee resource groups for team members of many different identities, interests and backgrounds, including underrepresented communities.
Biggest changeWe are committed to providing all of our employees with an equitable and inclusive work environment, learning opportunities and promotion and growth opportunities. A vital piece of our DE&I strategy has been ensuring that our succession planning process incorporates the equal opportunity for advancement of women and people from underrepresented communities.
ITEM 1. BUSINESS (a) General Development of the Business Colgate-Palmolive Company (together with its subsidiaries, “we,” “us,” “our,” the “Company” or “Colgate”) is a caring, innovative growth company reimagining a healthier future for all people, their pets and our planet.
ITEM 1. BUSINESS General Development of the Business Colgate-Palmolive Company (together with its subsidiaries, “we,” “us,” “our,” the “Company” or “Colgate”) is a caring, innovative growth company reimagining a healthier future for all people, their pets and our planet.
Raw and packaging material commodities, such as essential oils, resins, tropical oils, pulp, tallow, corn, poultry and soybeans, are subject to market price variations.
Raw and packaging material commodities, such as resins, essential oils, tropical oils, pulp, tallow, corn, poultry and soybeans, are subject to market price variations.
Consistent with this strategy, we are working to implement policies, learning experiences and processes that promote awareness, empathy, advocacy and opportunity; become an ally for positive change for the underserved in communities in which we live and work; support minority and women-owned suppliers to enable success of diversity-owned businesses; and promote dialogue around DE&I to increase awareness and advance the culture change to achieve our vision.
Consistent with this strategy, we are working to implement policies, learning experiences and processes that promote awareness, 4 empathy, advocacy and opportunity; become an ally for positive change for the underserved in communities in which we live and work; support minority and women-owned suppliers to enable success of diversity-owned businesses; and promote dialogue around DE&I to increase awareness and advance the culture change to achieve our vision.
For further discussion of how global legal and regulatory requirements may impact our business, see Part I, Item 1A, “Risk Factors.” Product Development : Legal and regulatory requirements apply to most aspects of our products, including their development, ingredients, formulation, manufacture, packaging content, labeling, storage, transportation, distribution, export, import, advertising, sale and environmental impact. U.S. federal authorities, including the U.S.
For further discussion of how global legal and regulatory requirements may impact our business, see Part I, Item 1A, “Risk Factors.” Product Development : Legal and regulatory requirements apply to most aspects of our products, including their development, ingredients, formulation, manufacture, packaging, labeling, storage, transportation, distribution, export, import, advertising, sale and environmental impact. U.S. federal authorities, including the U.S.
Principal global and regional trademarks include Colgate, Palmolive, elmex, hello, meridol, Sorriso, Tom’s of Maine, EltaMD, Filorga, Irish Spring, Lady Speed Stick, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Murphy, Soupline and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet.
Principal global and regional trademarks include Colgate, Palmolive, Darlie, elmex, hello, meridol, Sorriso, Tom’s of Maine, EltaMD, Filorga, Irish Spring, Lady Speed Stick, PCA SKIN, Protex, Sanex, Softsoap, Speed Stick, Ajax, Axion, Fabuloso, Murphy, Soupline and Suavitel, as well as Hill’s Science Diet and Hill’s Prescription Diet.
There are no family relationships between any of our executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was elected. (e) Available Information Our website address is www.colgatepalmolive.com.
There are no family relationships between any of our executive officers, and there is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was elected. Available Information Our website address is www.colgatepalmolive.com.
Additional information about our sustainability targets and efforts, including our 2021 Sustainability and Social Impact Report, our 2022 Climate Transition & Net Zero Action Plan and our reports aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and Sustainability Accounting Standards Board (SASB) can be found in the Sustainability section of our website at https://www.colgatepalmolive.com/sustainability.
Additional information about our sustainability targets and efforts, including our 2022 Sustainability and Social Impact Report, our 2023 Climate Transition & Net Zero Action Plan and our reports aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and Sustainability Accounting Standards Board (SASB) can be found in the Sustainability section of our website at https://www.colgatepalmolive.com/sustainability.
Trade Compliance : We are subject to laws and sanctions imposed by the U.S., including, without limitation, those imposed by the U.S. Treasury Department’s Office of Foreign Asset Control (“OFAC”), and/or by other jurisdictions that may prohibit us or certain of our affiliates from doing business in certain countries or restrict the kind of business that may be conducted.
Trade Compliance : We are subject to laws and sanctions imposed by the U.S., including those imposed by the U.S. Treasury Department’s Office of Foreign Asset Control (“OFAC”) and/or by other jurisdictions that may prohibit us or certain of our affiliates from doing business in certain countries or restrict the kind of business that may be conducted.
We view compensation as an important tool to motivate leaders at all levels of the organization. For information regarding our compensation philosophy and executive compensation programs, please see our Proxy Statement to be filed with the United States Securities and Exchange Commission (the “SEC”) in connection with the 2023 Annual Meeting of Stockholders.
We view compensation as an important tool to motivate leaders at all levels of the organization. For information regarding our compensation philosophy and executive compensation programs, please see our Proxy Statement to be filed with the United States Securities and Exchange Commission (the “SEC”) in connection with the 2024 Annual Meeting of Stockholders.
We do this by developing and selling products globally that make people’s and their pets’ lives healthier and more enjoyable and by embracing our sustainability and social impact and diversity, equity and inclusion (“DE&I”) strategies across our organization. Our products are marketed in over 200 countries and territories throughout the world.
We do this by developing and selling science-led products globally that make people’s and their pets’ lives healthier and more enjoyable and by embracing our sustainability and social impact and diversity, equity and inclusion (“DE&I”) strategies across our organization. Our products are marketed in over 200 countries and territories throughout the world.
Also available on our website are the Company’s Code of Conduct and Board Guidelines on Significant Corporate Governance Issues, the charters of the Committees of the Board, Specialized Disclosure Reports on Form SD, reports under Section 16 of the Exchange Act of transactions in Company stock by directors and executive officers and our Proxy Statements. 7
Also available on our website are the Company’s Code of Conduct and Board Guidelines on Significant Corporate Governance Issues, the charters of the Committees of the Board, Specialized Disclosure Reports on Form SD, reports under Section 16 of the Exchange Act of transactions in Company stock by directors and executive officers and our Proxy Statements. 6
Malcolm 55 2022 Vice President and Controller Each of our executive officers listed above has served the Company or our subsidiaries in various executive capacities for the past five years with the exception of Stanley J. Sutula III, Chief Financial Officer. Prior to joining the company, Mr.
Malcolm 56 2022 Executive Vice President and Controller Each of our executive officers listed above has served the Company or our subsidiaries in various executive capacities for the past five years with the exception of Stanley J. Sutula III, Chief Financial Officer. Prior to joining the Company, Mr.
These ambitions are supported by actionable targets consistent with our continued commitment to building environmental and social consciousness into our decision-making. In 2022, we made progress on the targets set forth in our 2025 Sustainability & Social Impact Strategy.
These ambitions are supported by actionable targets consistent with our continued commitment to building environmental and social consciousness into our decision-making. In 2023, we made progress on the targets set forth in our 2025 Sustainability & Social Impact Strategy.
(c) Narrative Description of the Business We operate in two product segments: Oral, Personal and Home Care; and Pet Nutrition. We are a leader in Oral Care with global leadership in the toothpaste and manual toothbrush categories according to market share data.
Description of the Business We operate in two product segments: Oral, Personal and Home Care; and Pet Nutrition. We are a leader in Oral Care with global leadership in the toothpaste and manual toothbrush categories according to market share data.
The majority of raw and packaging materials used in our products are purchased from other companies and are available from several sources. No single raw or packaging material represents, and no single supplier provides, a significant portion of our total material requirements.
The majority of raw and packaging materials used in our products is purchased from other companies and is available from several sources. No single raw or packaging material represents, and no single supplier provides, a significant portion of our total material requirements.
For further information regarding the impact of changes in commodity prices, see Item 1A, “Risk Factors - Volatility in material and other costs could adversely impact our profitability” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our products are sold in a highly competitive global marketplace which has experienced increased retail trade concentration, the substantial growth of eCommerce, the integration of traditional and digital operations at key retailers and the growing presence of large-format retailers, discounters and eCommerce retailers.
For further information regarding the impact of changes in commodity prices, see Item 1A, “Risk Factors - Volatility in material and other costs has in the past and may continue to adversely impact our profitability” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our products are sold in a highly competitive global marketplace which has experienced increased retail trade concentration, the substantial growth of eCommerce, the integration of traditional and digital operations at key retailers and the growing presence of large-format retailers, discounters and eCommerce retailers.
For information regarding the impact of the war in Ukraine, refer to Part II, Item 7 “Management’s Discussions and Analysis of Financial Condition and Results of Operations - Executive Overview” 3 Human Capital Management Human capital matters at Colgate are managed by our Global Human Resources function, led by our Chief Human Resources Officer, with oversight from the Personnel and Organization Committee of our Board of Directors (the “Board”).
For information regarding the impact of the war in Ukraine, refer to Part II, Item 7 “Management’s Discussions and Analysis of Financial Condition and Results of Operations - Executive Overview.” Human Capital Management Human capital matters at Colgate are managed by our Global Human Resources function, led by our Chief Human Resources Officer, with oversight from the Personnel and Organization Committee of our Board of Directors (the “Board”).
Approximately 36% of our employees are based in Asia Pacific, 30% are based in Latin America, 15% are based in Europe, 14% are based in North America and 5% are based in Africa/Eurasia. Our global workforce covers a broad range of functions, from manufacturing employees to management personnel and certain of our employees are represented by unions or works councils.
Approximately 34% of our employees are based in Asia Pacific, 30% are based in Latin America, 14% are based in Europe, 17% are based in North America and 5% are based in Africa/Eurasia. Our global workforce covers a broad range of functions, from manufacturing employees to management personnel and certain of our employees are represented by unions or works councils.
In the U.S., on an employee self-reported basis, the racial/ethnic composition of our workforce was approximately 68% White, 12% Hispanic, 9% Asian, 9% Black, and 2% Other.
In the U.S., on an employee self-reported basis, the racial/ethnic composition of our workforce was approximately 67% White, 12% Hispanic, 10% Black, 9% Asian and 2% Other.
Through our Hill's Food, Shelter & Love program, we have helped over 13 million shelter pets find forever homes since 2002.
Through our Hill’s Food, Shelter & Love program, we have helped over 14 million shelter pets find forever homes since 2002.
We do, however, purchase certain key raw and packaging materials from single-source suppliers or a limited number of suppliers. For certain materials, new suppliers may have to be qualified under industry, governmental and/or Colgate standards, which can require additional investment and take a significant period of time.
We do, however, purchase certain key raw and packaging materials from single-source suppliers or a limited number of suppliers. For certain materials, new suppliers may have to be qualified under industry, governmental and/or Colgate standards (including those relating to responsible sourcing), which can require additional investment and/or take a significant period of time.
Hill’s Science Diet, which is called Hill’s Science Plan in Europe, is a range of products for everyday nutritional needs. Hill’s Prescription Diet is a range of therapeutic pet foods to help nutritionally support dogs and cats in various different stages of health. Sales of Pet Nutrition products accounted for 21% of our total worldwide Net sales in 2022.
Hill’s Science Diet, which is called Hill’s Science Plan in Europe, is a range of products for everyday nutritional needs. Hill’s Prescription Diet is a range of therapeutic pet foods to help nutritionally support dogs and cats in different stages of health. Sales of Pet Nutrition products accounted for 22% of our total worldwide Net sales in 2023.
Our 2025 Sustainability & Social Impact Strategy, which we announced in November 2020, is focused on three key ambitions - preserving our environment by accelerating action on climate change and reducing our environmental footprint; helping millions of homes by empowering people to develop healthier habits; and driving social impact with a commitment to helping to ensure the well-being of all people and their pets.
Our 2025 Sustainability & Social Impact Strategy is focused on three key ambitions - preserving our environment by accelerating action on climate change and reducing our environmental footprint; helping millions of homes by empowering people to develop healthier habits; and driving social impact with a commitment to helping to ensure the well-being of all people and their pets.
Products similar to those that we produce and sell are available from multinational and local competitors in the U.S. and around the world. Certain of our competitors are larger and have greater resources than we do. In addition, the substantial growth in eCommerce has encouraged the entry of new competitors and business models.
Products similar to ours are available from multinational and local competitors in the U.S. and around the world. Certain of our competitors are larger and have greater resources than we do. In addition, the substantial growth in eCommerce has encouraged the entry of new competitors and business models.
Pet Nutrition products are sold by authorized pet supply retailers, veterinarians and eCommerce retailers. Certain of our products are also sold direct-to-consumer. Our sales to Walmart, Inc. and its affiliates represent approximately 11% of our Net sales in 2022. No other customer represents more than 10% of our Net sales.
Pet Nutrition products are sold by authorized pet supply retailers, veterinarians and eCommerce retailers. Certain of our products are also sold direct-to-consumer. Our sales to Walmart, Inc. and its affiliates represented approximately 11% of our Net sales in 2023. No other customer represented more than 10% of our Net sales.
We continue to drive a learning culture and transform our learning strategy to better meet our evolving business needs. We provide our employees with learning experiences focused on building leadership skills and offer training programs that are closely aligned with our business strategy.
We continue to drive a learning culture and transform our learning strategy to better meet our evolving business needs. We provide our employees with learning experiences focused on building leadership skills and offer training programs that are closely aligned with our business strategy. We continue to embed digital capabilities across the organization.
Lead with Zero Waste Facilities: It is our goal to achieve TRUE Zero Waste certifications at 100% of our operations, which we define as our manufacturing facilities, owned and operated warehouses, global technology centers and strategic offices, by 2025. In 2022, six more of our sites achieved TRUE certification.
Lead with Zero Waste Facilities: It is our goal to achieve TRUE certification for zero waste at 100% of our operations, which we define as our manufacturing facilities, owned and operated warehouses, global technology centers and strategic 5 offices, by 2025. In 2023, four more of our sites achieved TRUE certification.
Women represented approximately 54% of our salaried and clerical employees, 44% of our people managers, 42% of Colgate’s executives and 36% of senior leadership. Measuring the race/ethnicity of our workforce is challenging to do on a global basis.
Women represented approximately 54% of our salaried and clerical employees, 46% of our people managers, 45% of Colgate’s executives and 38% of senior leadership. Measuring the race/ethnicity of our workforce is challenging to do on a global basis.
The racial/ethnic composition of our people managers was approximately 61% White, 16% Hispanic, 14% Asian and 9% Black; the composition of our executives was approximately 58% White, 19% Hispanic, 15% Asian, 7% Black, and 1% Other; and the composition of senior leadership was approximately 61% White, 15% Hispanic, 12% Asian and 12% Black.
The racial/ethnic composition of our people managers was approximately 61% White, 16% Hispanic, 14% Asian and 9% Black; the composition of our executives was approximately 56% White, 20% Hispanic, 16% Asian, 7% Black and 1% Other; and the composition of senior leadership was approximately 59% White, 17% Hispanic, 12% Asian and 12% Black.
We seek to deliver sustainable, profitable growth through science-led, core and premium innovation and superior shareholder returns, as well as provide Colgate people with an innovative and inclusive work environment.
We seek to deliver sustainable, profitable growth and superior shareholder returns, as well as provide Colgate people with an innovative and inclusive work environment.
Through our Hill’s Pet Nutrition segment (“Hill’s” or “Pet Nutrition”), we are a world leader in specialty pet nutrition products for dogs and cats with products marketed in over 80 countries and territories worldwide. Hill’s markets pet foods primarily under two brands.
Geographically, Oral Care is a substantial part of our business in Asia Pacific. Through our Hill’s Pet Nutrition segment (“Hill’s” or “Pet Nutrition”), we are a world leader in specialty pet nutrition products for dogs and cats with products marketed in over 80 countries and territories worldwide. Hill’s markets pet foods primarily under two brands.
As of December 31, 2022, we had approximately 33,800 employees based in over 100 countries. Approximately two-thirds of our revenues are generated from markets outside the U.S. and 86% of our employees are located outside the U.S.
As of December 31, 2023, we had approximately 34,000 employees based in over 100 countries. Approximately two-thirds of our revenues are generated from markets outside the U.S. and 84% of our employees are located outside the U.S.
We continue to share the tube technology and, as of December 31, 2022, we have shared it with third parties by holding approximately 70 sessions to encourage recyclability of all tubes in practice and at scale.
We continue to share the tube technology with third parties by holding approximately 80 sessions to encourage recyclability of all tubes in practice and at scale.
In 2022, compliance with these regulations did not have, and we do not expect such compliance in the future to have, a material adverse effect on our capital expenditures, earnings or competitive position.
It is our policy and practice to comply with all government regulations applicable to our business. In 2023, compliance with these regulations did not have, and we do not expect such compliance in the future to have, a material adverse effect on our capital expenditures, earnings or competitive position.
Reduce Plastic Waste: As a positive step toward achieving our targets to reduce the use of new plastic by a third and make our packaging 100% recyclable, reusable or compostable by 2025, we are implementing our first-of-its-kind recyclable toothpaste tube across our toothpaste portfolio.
Reduce Plastic Waste: As a positive step toward achieving our target to make all of our packaging recyclable, reusable or compostable by 2025, we continue to implement our first-of-its-kind recyclable toothpaste tube across our toothpaste portfolio.
In this section, “people managers” refers to employees with roles that have at least one direct report, “executives” refers to those employees who are eligible to participate in Colgate’s equity incentive compensation plans and “senior leadership” refers to employees who are Vice Presidents and above. 4 We are committed to providing all of our employees with an equitable and inclusive work environment, learning opportunities and promotion and growth opportunities.
In this section, “people managers” refers to employees with roles that have at least one direct report, “executives” refers to those employees who are eligible to participate in Colgate’s equity incentive compensation plans and “senior leadership” refers to employees who are Senior Vice Presidents and above.
Our global DE&I strategy aims to further advance our commitment to become an even more diverse, equitable and inclusive organization. The four pillars of our strategy are People, Community, Supplier Diversity and Communication.
We also partner with external organizations to develop an inclusive and supportive work environment. Our global DE&I strategy aims to further advance our commitment to become an even more diverse, equitable and inclusive organization through its four pillars of People, Community, Supplier Diversity and Communication.
Kooyman 58 2019 Chief of Staff Prabha Parameswaran 64 2019 Group President, Growth and Strategy Panagiotis Tsourapas 58 2019 Group President, Europe and Developing Markets Sally Massey 49 2020 Chief Human Resources Officer Gregory O.
Daniels 60 2014 Chief Legal Officer and Secretary John W. Kooyman 59 2019 Chief of Staff Prabha Parameswaran 65 2019 Group President, Growth and Strategy Panagiotis Tsourapas 59 2019 Group President, Europe and Developing Markets Sally Massey 50 2020 Chief Human Resources Officer Gregory O.
As a truly global company, we are working to ensure that our workforce reflects the diversity of the communities in which we live and work. As of December 31, 2022, our global workforce was approximately 59% male and 41% female.
Diversity, Equity & Inclusion As a truly global company, it is important that our employees reflect the diversity of the communities in which we live and work. As of December 31, 2023, our global workforce was approximately 59% male and 41% female.
To support our goal to become Net Zero carbon in our operations by 2040, we have built a global renewable energy master plan which includes roadmaps by division to cover our manufacturing facilities and owned warehouses, global technology centers and offices and have engaged our priority Tier 1 Suppliers in support of our goal to reduce their greenhouse gas emissions by 20% by 2025 (versus a 2020 baseline).
To support our target to become Net Zero carbon in our operations by 2040, we have built a global renewable energy master plan which includes roadmaps by division to cover our manufacturing facilities and owned warehouses, global technology centers and offices. Renewable energy agreements are a valuable part of this renewable energy master plan.
Sustainability We view sustainability as being critically important to our overall business and growth strategy.
Sustainability and Social Impact Sustainability is critically important to our overall business and growth strategy.
References to these reports and our website are for informational purposes only and neither the reports nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K. 6 Information about our Executive Officers The following is a list of our executive officers as of February 16, 2023: Name Age Date First Elected Officer Present Title Noel R.
References to these reports and our website are for informational purposes only and neither the reports nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K.
Diversity, Equity & Inclusion We believe our people are crucial to our ongoing business success and aim to recruit, develop and retain strong and diverse talent. We celebrate differences, promote an equitable and inclusive environment and value the contributions of all Colgate people. At Colgate, we are proud of our collaborative spirit – what we call The Power of WE.
Colgate’s Culture and Core Values Colgate’s purpose is to reimagine a healthier future for all people, their pets and our planet. We believe Colgate people are crucial to our ongoing business success and aim to recruit, develop and retain strong and diverse talent. We celebrate differences, promote an equitable and inclusive environment and value the contributions of all Colgate people.
We are committed to the success of Colgate Keep, our first-of-its-kind manual toothbrush with a replaceable head and a reusable aluminum handle for 80% less plastic waste compared to similarly sized Colgate toothbrushes. 5 Accelerate Action on Climate Change: Colgate is taking steps to accelerate action on climate change through science-based near-term, long-term and Net Zero 2040 emissions targets across our operations and supply chain, which have been approved by The Science Based Targets initiative.
Accelerate Action on Climate Change: We are taking steps to accelerate action on climate change through science-based near-term, long-term and Net Zero 2040 emissions targets across our operations and supply chain, which have been approved by The Science Based Targets initiative.
With these values, we work to maintain a strong culture based on integrity, ethical behavior and a commitment to doing the right thing. Underlying these values and our strong culture is the commitment of all Colgate people to maintain the highest ethical standards and demonstrate ethical leadership, including compliance with Colgate policies and our Code of Ethics.
Underlying these values and our strong culture is the commitment of all Colgate people to maintain the highest ethical standards and demonstrate ethical leadership, including compliance with Colgate policies and our Code of Conduct. 3 WE ARE CARING: We are united in making the world a better place. We believe everyone deserves a healthier life.
We manufacture and market a wide array of products for the Home Care market, including Ajax, Axion and Palmolive dishwashing liquids and Ajax, Fabuloso and Murphy household cleaners. We are a market leader in fabric conditioners with leading brands, including Suavitel in Latin America, Soupline in Europe, and Cuddly in the South Pacific, according to market share data.
We manufacture and market a wide array of products for the Home Care market, including Ajax, Axion and Palmolive dishwashing liquids, Ajax, Fabuloso and Murphy household cleaners and Suavitel, Soupline, Fluffy and Cuddly fabric conditioners. Sales of Oral, Personal and Home Care products accounted for 42%, 19% and 17%, respectively, of our total worldwide Net sales in 2023.
Each of these resource groups contributes to our inclusive work environment by developing and implementing programs to promote business and community involvement as well as cultural awareness. We also partner with external organizations to develop an inclusive and supportive work environment.
To help further foster inclusiveness, we support employee resource groups for team members of many different identities, interests and backgrounds, including underrepresented communities. Each of these resource groups contributes to our inclusive work environment by developing and implementing programs to promote business and community involvement as well as cultural awareness.
We follow a practice of seeking trademark protection in the U.S. and throughout the world where our products are sold.
We face competition in several aspects of our business, including pricing, promotional activities, new products and brand introductions and expansion into new geographies and channels. We consider trademarks to be material to our business. We follow a practice of seeking trademark protection in the U.S. and throughout the world where our products are sold.
We have rolled out a new “Fragrance & Flavors Share for Good” ingredient transparency program, which provides additional ingredient information. Social Impact: Colgate Bright Smiles, Bright Futures is our flagship oral health education and well-being initiative. Since the program was established in 1991, we have reached over 1.6 billion children and their families in more than 80 countries.
That brings the total number of TRUE certified sites to 36 across five continents in 21 countries, as of December 31, 2023. Social Impact: Colgate Bright Smiles, Bright Futures is our flagship oral health education and well-being initiative. Since the program was established in 1991, we have reached approximately 1.7 billion children and their families in more than 100 countries.
In 2022, approximately 14,000 Colgate people completed a new Data Literacy & Analytics Academy course we created with training experts. We are also committed to listening to our employees and seeing how the company is evolving and growing through regular employee engagement surveys.
Through our continuous learning program, our employees have the opportunity to enhance their knowledge of data analytics and digital skills. We are also committed to listening to our employees and seeing how the company is evolving and growing through regular employee engagement surveys.
Since introducing our first-of-its-kind recyclable toothpaste tube in 2019, as of December 31, 2022, we have transitioned over 70% of our toothpaste SKUs in North America to recyclable tubes.
We introduced this tube in 2019 and, as of December 31, 2023, we have transitioned approximately 60% of our toothpaste SKUs globally and approximately 90% of our toothpaste SKUs in North America to it. The recyclable toothpaste tube is now available in over 50 countries worldwide.
Wallace 58 2009 Chairman of the Board, President and Chief Executive Officer Stanley J. Sutula III 57 2020 Chief Financial Officer Jennifer M. Daniels 59 2014 Chief Legal Officer and Secretary John W.
Information about our Executive Officers The following is a list of our executive officers as of February 15, 2024: Name Age Date First Elected Executive Officer Present Title Noel R. Wallace 59 2009 Chairman of the Board, President and Chief Executive Officer Stanley J. Sutula III 58 2020 Chief Financial Officer Jennifer M.
Although we actively develop and maintain a portfolio of patents, no single patent is considered significant to the business as a whole. 2 COVID-19 The COVID-19 pandemic and government steps to reduce the spread and address the impact of COVID-19 have had and continue to have an impact on the way people live, work, interact and shop.
Although we actively develop and maintain a portfolio of patents, no single patent is considered significant to the business as a whole. 2 Government Regulations As a global company, we are subject to extensive governmental regulations, including environmental rules and regulations, in the U.S. and abroad. The most significant government regulations that impact our business are discussed below.
Colgate’s Culture and Core Values As we work to achieve Colgate’s purpose to reimagine a healthier future for all people, their pets and our planet, Colgate people, working around the world, share a commitment to our three core corporate values: Caring, Global Teamwork and Continuous Improvement.
At Colgate, we are proud of our collaborative spirit - what we call The Power of WE. Colgate people, working around the world, share a commitment to our three corporate values: We are Caring, We are Inclusive and We are Courageous.
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Sales of Oral, Personal and Home Care products accounted for 43%, 19% and 17%, respectively, of our total worldwide Net sales in 2022. Geographically, Oral Care is a significant part of our business in Asia Pacific, comprising approximately 82% of Net sales in that region for 2022.
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These evolved values, which were reimagined in 2023, represent who we are and inspire Colgate people to carry Colgate forward into the future. By encouraging Colgate people to be more caring, inclusive and courageous every day, our goal is to create a healthier future for ourselves and others.
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We face competition in several aspects of our business, including pricing, promotional activities, new products and brand introductions and expansion into new geographies and channels. Product quality, innovation, brand recognition, marketing capability and acceptance of new products and brands largely determine success in Colgate's operating segments. We consider trademarks to be of material importance to our business.
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We lead with empathy, respect and gratitude. We act with integrity, doing things the right way, for the right reasons no matter what. We support others by generously sharing our resources and talents. We work every day to earn the trust of all of our stakeholders.
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During the COVID-19 pandemic, many of the communities in which we manufacture, market and sell our products experienced and may in the future experience “stay at home” orders, travel or movement restrictions and other government actions to address the pandemic.
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WE ARE INCLUSIVE: We create a sense of belonging for all and cultivate an environment where people can be their authentic selves. We foster a culture of belonging where Colgate people feel valued, part of a global team, and empowered to do extraordinary things.
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While the impact of COVID-19 on our business has largely abated at this time, uncertainties continue, particularly in China where we have substantial manufacturing facilities and business, and in the travel retail channel, where we have experienced and may continue to experience disruptions particularly in our Filorga business.
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We design the best solutions by embracing the unique talents, perspectives and backgrounds of our diverse workforce. We form the strongest teams and create powerful pathways for our people and communities, to break through everyday barriers to equality of opportunity. WE ARE COURAGEOUS: We drive change and get things done.
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We have also experienced certain disruptions to our global supply chain due to COVID-19, which have impacted and may continue to impact sales of and consumer access to our products. In addition, we have witnessed changes in the purchasing patterns of our customers, including a shift in many markets to purchasing our products online.
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We are infinitely curious, constantly searching for better ways of working. We challenge each other and how we do things, unafraid to disrupt the status quo, boldly and intentionally innovating, exploring and reaching for what is possible.
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COVID-19 may continue to impact consumers’ behavior, shopping patterns and consumption preferences. While we currently expect to be able to continue operating our business as described above, uncertainty resulting from COVID-19 could result in unforeseen additional disruptions to our business, including our global supply chain and retailer network, and/or require us to incur additional operational costs.
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We recognize that to grow and thrive we must build on the power of our legacy, our scale and reach for good and for all. We are committed to getting better every day in all that we do, as individuals and as teams.
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For additional information regarding COVID-19’s impact on our business, see Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Overview.” Government Regulations As a global company, we are subject to extensive governmental regulations, including environmental rules and regulations, in the U.S. and abroad.
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We also recently launched a new leadership framework anchored in three core principles: cultivate trust, create the future and commit to impact. We believe these principles serve as a foundation to guide our ongoing transformation by defining the behaviors that Colgate people need to model.
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The most significant government regulations that impact our business are discussed below. It is our policy and practice to comply with all government regulations applicable to our business.
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We are also focused on working with recycling stakeholders and partnering with key third parties to drive tube acceptance and communicating that consumers should check with their local facilities to see if they accept the tubes for recycling.
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These values are reflected not only in the quality of our products and reputation, but also in our dedication to serving the communities where we live and work, as reflected in our sustainability and social impact and DE&I strategies.
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We also remain committed to reducing our use of new (virgin) plastic across our portfolio and continue to make progress toward our target to reduce new (virgin) plastic by one-third versus 2019. We are working towards this target with product design changes and by increasing recycled content in our packaging.
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CARING: We care about people - Colgate people, consumers, customers, stockholders, business partners and people in the communities where we live and work. We are committed to acting with compassion, integrity, honesty and high ethics in all situations and to providing our employees with an innovative and inclusive work environment.
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In 2023, we signed a long-term virtual power purchase agreement for a solar energy farm outside of Waco, Texas, which will be a long-term source of clean, renewable energy in the United States. Upon completion, the solar farm is expected to produce the equivalent of 100% of our U.S.-based operational electricity needs.
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GLOBAL TEAMWORK: All Colgate people are part of a global team, committed to working and collaborating together across functions and countries. Only by sharing ideas, technologies and talents can we achieve and sustain profitable growth. CONTINUOUS IMPROVEMENT: We are committed to getting better every day in all that we do, as individuals and as teams.
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Specifically, we continue to embed new ways of working and leadership principles to, among other things, instill a growth mindset to drive innovation with focus, empowerment, experimentation and digitalization. Colgate people are embracing data and analytics as part of their jobs, and we are scaling new capabilities worldwide.
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In addition, we continued mandatory allyship and unconscious bias training for all salaried and clerical employees at Colgate that was first introduced in 2021 to help our employees better understand DE&I concepts and embed allyship as a daily practice.
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That brings the total number of TRUE certified sites, as of December 31, 2022, to 32 across five continents in 19 countries. Ingredient Transparency: We continue to promote ingredient transparency and seek to follow the highest safety and efficacy standards as we formulate our products.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA pandemic, epidemic or similar widespread health concern could have, and COVID-19 has had and may continue to have, a variety of impacts on our business, results of operations, cash flows and financial condition, including: • our ability to continue to maintain and support the health, safety and well-being of our employees, including key employees; • disruptions to our global supply chain, including the closure of manufacturing and distribution facilities, due to, among other things, the lack of availability of raw and packaging materials or manufacturing components; a decrease in our workforce or in the efficiency of such workforce, including as a result of illness, travel restrictions, absenteeism or governmental regulations; transportation and logistics challenges, including as a result of port and border closures and other governmental restrictions or volume and capacity restraints; or the impact of a pandemic, epidemic or other health emergencies, such as the COVID-19 pandemic on our retailers, third party suppliers, contract manufacturers, logistics providers or distributors; • volatility in the demand for and availability of our products, which may be caused by the temporary inability of our consumers to purchase our products due to illness, financial hardship, quarantine, government actions mandating the closure of our facilities, distributors or retailers and/or imposing travel or movement restrictions, shifts in demand and consumption away from more discretionary or higher priced products to lower-priced products or pantry-loading activity; • changes in purchasing patterns of our consumers, including a shift to purchasing our products online and disruptions in certain channels; • significant volatility in demand for certain of our products, which may require us to increase our production capacity or acquire additional capacity at an additional cost and expense; • failure of third parties on which we rely, including our retailers, suppliers, contract manufacturers, logistics providers, customers, commercial banks, joint venture partners and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties; • significant changes in the economic and political conditions of the markets in which we operate, which could restrict our employees’ ability to work and travel, could mandate the closure of certain distributors or retailers, our offices, shared business service centers and/or operating and manufacturing facilities or otherwise could prevent us as well as our third-party partners, suppliers or customers from sufficiently staffing operations, including operations necessary for the manufacture, distribution, sale and support of our products; 11 • disruptions and volatility in the global capital markets, including rising interest rates, which may increase the cost of capital and adversely impact our access to capital; and/or • volatility in foreign exchange rates and increases in the cost and availability of raw and packaging materials and transportation and logistics costs.
Biggest changeA pandemic, epidemic or similar widespread health concern could have, and COVID-19 has had and may in the future have, a variety of impacts on our business, results of operations, cash flows and financial condition, including: • our ability to continue to maintain and support the health, safety and well-being of our employees, including key employees; • disruptions to our global supply chain, including transportation and logistics challenges; • a decrease in our workforce or in the efficiency of such workforce; • volatility in the demand for and availability of our products; • changes in purchasing patterns of our consumers; • significant volatility in demand for certain of our products, which may require us to increase our production capacity or acquire additional capacity at an additional cost and expense; • failure of third parties on which we rely to meet their obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties; • significant changes in the economic and political conditions of the markets in which we operate; • disruptions and volatility in the global capital markets, including rising interest rates, which may increase the cost of capital and adversely impact our access to capital; and/or • volatility in foreign exchange rates and increases in the cost and availability of raw and packaging materials and transportation and logistics costs.
Raw and packaging material commodities, such as essential oils, resins, tropical oils, pulp, tallow, corn, poultry and soybeans, are subject to market price variations.
Raw and packaging material commodities, such as resins, essential oils, tropical oils, pulp, tallow, corn, poultry and soybeans, are subject to market price variations.
Specifically, the predicted effects of climate change may exacerbate challenges regarding the availability and quality of water and the cost, quality and availability of raw and packaging materials, pose physical risks to our facilities and those of our key suppliers, disrupt our global supply chain or impact demand for our products.
Specifically, the predicted physical effects of climate change may exacerbate challenges regarding the availability and quality of water and the cost, quality and availability of raw and packaging materials, pose physical risks to our facilities and those of our key suppliers, disrupt our global supply chain or impact demand for our products.
Achieving our sustainability and social impact targets will require significant efforts from us and other stakeholders, such as our suppliers and other third parties. It will also require capital investment, additional expense (e.g., renewable energy costs) and the development of technology that may not currently exist.
Achieving our sustainability and social impact targets will require significant efforts from us and our stakeholders, such as our suppliers and other third parties. It will also require capital investment, additional expense (e.g., renewable energy costs) and the development of technology that may not currently exist.
Our uses of these systems include, but are not limited to: • communicating within our company and with other parties, including our customers and consumers; • ordering and managing materials from suppliers; • converting materials to finished products; • receiving and processing orders from, shipping products to and invoicing our customers and consumers; • marketing products to consumers; • collecting, storing, transferring and/or processing customer, consumer, employee, vendor, investor and other stakeholder information and personal data, including, but not limited to, such data from residents of states, countries and regions with important data protection laws and regulations; • processing transactions, including but not limited to employee payroll, employee and retiree benefits and payments to customers and vendors; • hosting, processing and sharing confidential and proprietary research, intellectual property, business plans and financial information; • summarizing and reporting results of operations, including financial reporting; • managing our banking and other cash liquidity systems and platforms; • complying with legal, regulatory and tax requirements; • providing data security; and • handling other processes involved in managing our business.
Our uses of these systems include, but are not limited to: • communicating within our company and with other parties, including our customers and consumers; • ordering and managing materials from suppliers; • converting materials to finished products; • receiving and processing orders from, shipping products to and invoicing our customers and consumers; 14 • marketing products to consumers; • collecting, storing, transferring and/or processing customer, consumer, employee, vendor, investor and other stakeholder information and personal data, including, but not limited to, such data from residents of states, countries and regions with important data protection laws and regulations; • processing transactions, including but not limited to employee payroll, employee and retiree benefits and payments to customers and vendors; • hosting, processing and sharing confidential and proprietary research, intellectual property, business plans and financial information; • summarizing and reporting results of operations, including financial reporting; • managing our banking and other cash liquidity systems and platforms; • complying with legal, regulatory and tax requirements; • providing data security; and • handling other processes involved in managing our business.
Further, consumer preferences continue to evolve due to a number of factors, including evolving consumer concerns or perceptions (whether or not valid) regarding environmental, social and governance (“ESG”) practices, including the sourcing and sustainability of packaging materials, a growing demand for natural or organic products and ingredients and ingredient transparency, evolving consumer concerns or perceptions regarding the effects of ingredients, changing consumer sentiment toward non-local products or sources and changing perceptions of and increased focus on labor and human rights and environmental impacts (including responsible sourcing, deforestation, packaging, plastic, energy and water use and waste management).
Further, consumer preferences continue to evolve due to a number of factors, including evolving consumer concerns or perceptions (whether or not valid) regarding environmental, social and governance (“ESG”) practices, including the sourcing and sustainability of raw and packaging materials, a growing demand for natural or organic products and ingredients and ingredient transparency, evolving consumer concerns or perceptions regarding the effects of ingredients, changing consumer sentiment toward non-local products or sources and changing perceptions of and increased focus on labor and human rights and environmental impacts (including responsible sourcing, deforestation, packaging, plastic, energy and water use and waste management).
Our ability to launch new products, to sustain existing products and to expand into adjacent categories, channels of distribution or geographies is affected by whether we can successfully: • identify, develop and fund technological innovations; • obtain and maintain necessary intellectual property protection and avoid infringing intellectual property rights of others; • obtain approvals and registrations of regulated products, including from the FDA and other regulatory bodies in the U.S. and abroad; and • anticipate and quickly respond to the needs and preferences of consumers and customers.
Our ability to launch new products, to sustain existing products and to expand into adjacent categories, channels of distribution or geographies is affected by whether we can successfully: • identify, develop and fund technological innovations; • obtain and maintain necessary intellectual property protection and avoid infringing intellectual property rights of others; 9 • obtain approvals and registrations of regulated products, including from the FDA and other regulatory bodies in the U.S. and abroad; and • anticipate and quickly respond to the needs and preferences of consumers and customers.
The failure to 10 develop and launch successful new products or to adapt our packaging, the sustainability profile of our products or supply chain to meet such preferences could hinder the growth of our business and any delay in the development or launch of a new product could result in us not being the first to market, which could compromise our competitive position and adversely affect our business, results of operations, cash flows and financial condition.
The failure to develop and launch successful new products or to adapt our packaging, the sustainability profile of our products or supply chain to meet such preferences could hinder the growth of our business and any delay in the development or launch of a new product could result in us not being the first to market, which could compromise our competitive position and adversely affect our business, results of operations, cash flows and financial condition.
Major developments in trade relations, including the imposition of new or increased tariffs by the United States and/or other countries, such as China, and any emerging nationalist trends in specific countries could alter the trade environment and consumer purchasing behavior which, in turn, could have a material effect on our business, results of operations, cash flows and financial condition.
Major developments in trade relations, including the imposition of new or increased tariffs by the United States and/or other countries, such as China, and any nationalist trends in specific countries could alter the trade environment and consumer purchasing behavior which, in turn, could have a material effect on our business, results of operations, cash flows and financial condition.
Nonetheless, a significant disruption to the manufacturing or sourcing of products or materials for any reason, including those mentioned above, have at times interrupted and could, in the future, interrupt product supply and, if not remedied, could have an adverse impact on our business, results of operations, cash flows and financial condition.
Nonetheless, a significant disruption to the manufacturing or sourcing of products or materials for any reason, including those mentioned above, have at times interrupted and could in 13 the future interrupt product supply and, if not remedied, could have an adverse impact on our business, results of operations, cash flows and financial condition.
If our existing or new suppliers fail to meet such 14 standards or if we are unable to contract with suppliers on favorable terms, our business, results of operations, cash flows and financial condition could be adversely affected. We believe that the supplies of raw and packaging materials needed to manufacture our products are adequate.
If our existing or new suppliers fail to meet such standards or if we are unable to contract with suppliers on favorable terms, our business, results of operations, cash flows and financial condition could be adversely affected. We believe that the supplies of raw and packaging materials needed to manufacture our products are adequate.
In connection with the BEPS Project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in countries outside of the U.S. Many jurisdictions have already enacted legislation and adopted policies resulting from the BEPS Project.
In connection with the BEPS Project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in countries outside of the U.S. Many jurisdictions have already enacted legislation and adopted policies 18 resulting from the BEPS Project.
Whether or not a legal claim or proceeding is successful, or a withdrawal, recall or reformulation is required or advisable, such assertions could have an adverse effect on our business, results of operations, cash flows and financial condition, and the negative publicity surrounding them could harm our reputation and brand image.
Whether or not a legal claim or proceeding is successful, or a 17 withdrawal, recall or reformulation is required or advisable, such assertions could have an adverse effect on our business, results of operations, cash flows and financial condition, and the negative publicity surrounding them could harm our reputation and brand image.
Our business is subject to extensive legal and regulatory requirements in the U.S. and abroad. Such legal and regulatory requirements apply to most aspects of our products, including their development, ingredients, formulation, manufacture, packaging content, labeling, storage, transportation, distribution, export, import, advertising, sale and environmental impact. U.S. federal authorities, including the U.S.
Our business is subject to extensive legal and regulatory requirements in the U.S. and abroad. Such legal and regulatory requirements apply to most aspects of our products, including their development, ingredients, formulation, manufacture, packaging, labeling, storage, transportation, distribution, export, import, advertising, sale and environmental impact. U.S. federal authorities, including the U.S.
They have used and may continue to use this leverage to demand higher trade discounts, allowances, slotting fees or increased investment, including through display media, paid search, preparation fees and co-op programs, which have led to and could continue to lead to reduced sales or profitability in certain markets.
They have used and may continue to use this leverage to demand higher trade discounts, allowances, slotting fees or increased investment, including through display media, paid search and co-op programs, which have led to and could continue to lead to reduced sales or profitability in certain markets.
In addition, to the extent that the economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired 13 company or business is less robust than expected, we may be required to record additional impairments of intangible assets, including trademarks and goodwill.
In addition, to the extent that the economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired company or business is less robust than expected, we may be required to record additional impairments of intangible assets, including trademarks and goodwill.
See Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the Consolidated Financial Statements for additional information on certain of our legal claims and proceedings. 18 Financial and Economic Risks Uncertain or unfavorable global economic conditions may adversely affect our business. Uncertain or unfavorable global economic conditions could adversely affect our business.
See Item 3 “Legal Proceedings” and Note 13, Commitments and Contingencies to the Consolidated Financial Statements for additional information on certain of our legal claims and proceedings. Financial and Economic Risks Uncertain or unfavorable global economic conditions may adversely affect our business. Uncertain or unfavorable global economic conditions could adversely affect our business.
In addition, the proliferation of digital and social media has greatly increased the accessibility of information and the speed of its dissemination and the potential for negative publicity. Negative publicity, posts or comments on digital and social media, whether true or untrue, could damage our brands and our reputation.
In addition, the proliferation of digital and social media has greatly increased the accessibility of information, the speed of its dissemination and the potential for negative publicity and misinformation. Negative publicity, posts or comments on digital and social media, whether true or untrue, could damage our brands and our reputation.
Food and Drug Administration (the “FDA”), the Federal Trade Commission, the Consumer Product Safety Commission, the Occupational Safety and Health Administration and the 17 Environmental Protection Agency, regulate different aspects of our business, along with parallel authorities at the state and local levels and comparable authorities overseas.
Food and Drug Administration (the “FDA”), the Federal Trade Commission, the Consumer Product Safety Commission, the Occupational Safety and Health Administration and the Environmental Protection Agency, regulate different aspects of our business, along with parallel authorities at the state and local levels and comparable authorities overseas.
While we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, compliance and ESG practices, thereby potentially increasing our reputational and legal risk.
While 10 we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, compliance and ESG practices, thereby potentially increasing our reputational and legal risk.
In addition, although we have policies and procedures in place to ensure that all personal information collected by us or our third-party service providers is securely maintained, data leakages due to human error or intentional or unintentional conduct have occurred and likely will continue 16 to occur. Furthermore, we periodically upgrade our IT Systems or adopt new technologies.
In addition, although we have policies and procedures in place to ensure that all personal information collected by us or our third-party service providers is securely maintained, data leakages due to human error or intentional or unintentional conduct have occurred and likely will continue to occur. Furthermore, we periodically upgrade our IT/OT Systems or adopt new technologies.
We may be unable to anticipate the timing and scale of such initiatives or challenges by competitors or to successfully respond to them, which could harm our business. In addition, the cost of responding to such initiatives and challenges, including management time, out-of-pocket expenses and price reductions, may affect our performance.
We may be unable to anticipate the timing and scale of such initiatives or challenges by competitors or to successfully respond to them, which could harm our business and/or reputation. In addition, the cost of responding to such initiatives 8 and challenges, including management time, out-of-pocket expenses and price reductions, may affect our performance.
Such negative publicity could relate to, among other things, health concerns, threatened or pending litigation or regulatory proceedings, labor and human rights and environmental impact (including responsible sourcing, deforestation, packaging, plastic, energy and water use and waste management) or our ESG practices.
Such negative publicity could relate to, among other things, health concerns, threatened or pending litigation or regulatory proceedings, animal welfare, labor and human rights and environmental impact (including responsible sourcing, deforestation, packaging, plastic, energy and water use and waste management) or our ESG practices.
However, the impact of these measures have not and may not in the future fully offset any negative impact of foreign currency rate movements on our business, results of operations, cash flows and financial condition. Significant competition in our industry could adversely affect our business.
However, the impact of these measures has not and may not in the future fully offset any negative impact of foreign currency rate movements on our business, results of operations, cash flows and financial condition. Significant competition in our industry could adversely affect our business.
Although we have seen no material impact on our business operations from the cyber-security incidents we have experienced to date, if we suffer a significant loss or disclosure of confidential business or stakeholder information as a result of a breach of our IT Systems, including those of third-party service providers with whom we have contracted, or otherwise, we may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which may adversely impact our business, results of operations, cash flows and financial condition.
Although we have seen no material impact on our business operations from the cybersecurity incidents we have experienced to date, if we suffer a significant loss or disclosure of confidential business or stakeholder information as a result of a breach of our IT/OT Systems, including those of third-party service providers with whom we have contracted, or otherwise, we may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which may adversely impact our business, results of operations, cash flows and financial condition.
In addition, our success in launching new products is also dependent on our ability to deliver effective and efficient marketing in an evolving media landscape (including digital), which is subject to dynamic and increasingly restrictive privacy requirements.
In addition, our success in launching new products is also dependent on our ability to deliver effective and efficient marketing in an evolving media landscape (including digital), which is subject to dynamic and increasingly restrictive privacy requirements and emerging regulations.
Any failure to achieve our sustainability and social impact targets or the perception (whether or not valid) that we have failed to act responsibly with respect to such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change or other sustainability matters, could result in adverse publicity and adversely affect our business and reputation.
Any failure to achieve our sustainability and social impact targets or the perception (whether or not valid) that we have failed to act responsibly with respect to such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change or other sustainability matters, could result in adverse publicity and increased litigation risk and adversely affect our business and reputation.
In addition, we could face difficulty collecting or recovering accounts receivables from third parties facing financial or operational difficulties. Disruptions in the credit markets or changes to our credit ratings may adversely affect our business.
In addition, we could face difficulty collecting or recovering accounts receivables from third parties facing financial or operational difficulties, including bankruptcies. Disruptions in the credit markets or changes to our credit ratings may adversely affect our business.
Although we believe our tax positions are reasonable, when a taxing authority disagrees with the positions we have taken, we have faced and in the future may face additional tax liabilities, including interest and penalties, in excess of reserves.
Although we believe our tax positions are sustainable, when a taxing authority disagrees with the positions we have taken, we have faced and in the future may face additional tax liabilities, including interest and penalties, in excess of reserves.
Our operations and those of our suppliers, contract manufacturers or logistics providers have been and may continue to be disrupted by a number of factors, including, but not limited to: • geopolitical events, wars and military conflicts, such as the war in Ukraine; • widespread health emergencies, such as COVID-19 or other pandemics or epidemics; • strikes and other labor disputes; • disruptions in logistics; • loss or impairment of key manufacturing or distribution sites; • loss of key suppliers or contract manufacturers; • capacity constraints; • raw material and product quality or safety issues; • industrial accidents or other occupational health and safety issues; • the impact on our suppliers of tighter credit or capital markets; • the lack of availability of qualified personnel, such as truck drivers and production labor; • governmental incentives and controls (including import and export restrictions, such as new or increased tariffs, sanctions, quotas or trade barriers); and • natural disasters, including climatic events (including any potential effects of climate change) and earthquakes, tornadoes, acts of war or terrorism, political unrest or uncertainty, fires or explosions, cyber-security incidents and other external factors over which we have no control.
Our operations and those of our suppliers, contract manufacturers or logistics providers have been and may continue to be disrupted by a number of factors, including, but not limited to: • geopolitical events, wars and military conflicts, such as the war in Ukraine and the Israel-Hamas war; • widespread health emergencies, such as pandemics or epidemics; • strikes and other labor disputes; • disruptions in logistics; • loss or impairment of key manufacturing or distribution sites; • loss of key suppliers or contract manufacturers; • capacity constraints; • raw material and product availability and/or quality or safety issues; • industrial accidents or other occupational health and safety issues; • the impact on our suppliers of tighter credit or capital markets; • the lack of availability of qualified personnel, such as truck drivers and production labor; • governmental incentives, regulations and controls (including import and export restrictions, such as new or increased tariffs, sanctions, quotas or trade barriers); and • natural disasters, including climatic events (including any potential effects of climate change) and earthquakes, tornadoes, acts of war or terrorism, political unrest or uncertainty, fires or explosions, cybersecurity incidents and other external factors over which we have no control.
Cyber-attacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being made by groups, individuals and nation states with a wide range of expertise and motives.
Cyberattacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being made by groups, individuals and nation states with a wide range of expertise and motives.
The loss of a key customer or a significant reduction in sales to a key customer could adversely affect our business, results of 9 operations, cash flows and financial condition.
The loss of a key customer or distributor or a significant reduction in sales to a key customer or distributor could adversely affect our business, results of operations, cash flows and financial condition.
We cannot guarantee that our security efforts will prevent breaches or breakdowns of our, or our third-party service providers’, IT Systems since the techniques used in these attacks change frequently and may be difficult to detect for periods of time.
We cannot guarantee that our security efforts will prevent breaches or breakdowns of our or our third-party service providers’ IT/OT Systems because the techniques used in these attacks change frequently and may be difficult to detect for periods of time.
Although we continue to devote significant resources to support our brands and market our products at multiple price points, during periods of economic uncertainty or unfavorable economic conditions, consumers may reduce consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to “private label,” or lower-priced product offerings.
Although we continue to devote significant resources to support our brands and market our products at multiple price points, during periods of economic uncertainty or unfavorable economic conditions, consumers may have less consumer confidence, reduce consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to “private label,” or lower-priced product offerings.
The payment of such additional amounts upon final adjudication of any disputes could adversely impact our business, results of operations, cash flows and financial condition. 20
The payment of such additional amounts upon final adjudication of any disputes could adversely impact our business, results of operations, cash flows and financial condition. 19
We rely extensively on information technology systems (“IT Systems”), including some which are managed, hosted, provided and/or used by third parties, including cloud-based service providers, and their vendors, in order to conduct our business.
We rely extensively on information and operational technology systems (“IT/OT Systems”), some of which are managed, hosted, provided and/or used by third parties, including cloud-based service providers, and their vendors, in order to conduct our business.
While geographic diversity helps to reduce our exposure to risks in any one country or part of the world, it also means that we face risks associated with significant international operations, including, but not limited to: • changing macroeconomic conditions in our markets, including as a result of inflation, the war in Ukraine, volatile commodity prices and increases in the cost of raw and packaging materials, labor, energy and logistics; • political or economic instability, geopolitical events, wars and military conflicts, such as the war in Ukraine, environmental events, widespread health emergencies, such as COVID-19 or other pandemics or epidemics, natural disasters or social or labor unrest; • changes in exchange rates for foreign currencies, which may reduce the U.S. dollar value of revenues, profits and cash flows from non-U.S. markets or increase our supply costs, as measured in U.S. dollars, in those markets; • exchange controls and other limits on our ability to import or export raw materials or finished product, including as a result of COVID-19, and the war in Ukraine, or to repatriate earnings from overseas; • lack of well-established, reliable and/or impartial legal systems in certain countries where we operate and difficulties in enforcing contractual, intellectual property or other legal rights; • foreign ownership and investment restrictions and the potential for nationalization or expropriation of property or other resources; and • changes to trade policies and agreements and other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax consequences or the imposition of and/or the increase in trade restrictions and/or tariffs, sanctions, price controls, labor laws, travel or immigration restrictions (including as a result of pandemics, epidemics or other widespread health emergencies, such as the COVID-19 pandemic), profit controls or other government controls, including as a result of the war in Ukraine.
While geographic diversity helps to reduce our exposure to risks in any one country or part of the world, it also means that we face risks associated with significant international operations, including, but not limited to: • changing macroeconomic conditions in our markets, including as a result of inflationary pressure, the war in Ukraine, the Israel-Hamas war, volatile commodity prices and increases and/or volatility in the cost of raw and packaging materials, labor, energy and logistics; • political instability or uncertainty, including as a result of elections, economic instability, geopolitical events and tensions, wars and military conflicts, such as the war in Ukraine, the Israel-Hamas war and tensions between China and Taiwan; • environmental events, widespread health emergencies, such as pandemics or epidemics, natural disasters or social or labor unrest; • changes in exchange rates for foreign currencies, which may reduce the U.S. dollar value of revenues, profits and cash flows from non-U.S. markets or increase our supply costs, as measured in U.S. dollars, in those markets; • exchange controls and other limits on our ability to import or export raw materials or finished product, including as a result of the war in Ukraine and the Israel-Hamas war, or to repatriate earnings from overseas; • lack of well-established, reliable and/or impartial legal systems in certain countries where we operate and difficulties in enforcing contractual, intellectual property or other legal rights; • foreign ownership and investment restrictions and the potential for nationalization or expropriation of property or other resources; and • changes to trade policies and agreements and other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax consequences or the imposition of and/or the increase in trade restrictions and/or tariffs, sanctions, price controls, labor laws, travel or immigration restrictions (including as a result of pandemics, epidemics or other widespread health emergencies), profit controls or other government controls, including as a result of the war in Ukraine and the Israel-Hamas war.
Maintaining our strong reputation with consumers and our trade partners globally is critical to selling our branded products. Accordingly, we devote significant time and resources to programs designed to protect and preserve our reputation, such as our ethics and compliance, ESG, brand protection and product safety, regulatory and quality initiatives.
Maintaining our strong reputation with consumers and our trade partners globally is critical to selling our branded products. Accordingly, we devote significant time and resources to programs designed to protect and preserve our reputation, such as our ethics and compliance, ESG, brand protection and product safety, regulatory and quality initiatives and our enterprise risk management program.
Furthermore, economic conditions can cause our suppliers, distributors, contract manufacturers, logistics providers or other third-party partners to suffer financial or operational difficulties, which may impact their inability to provide us with or distribute finished product, raw and packaging materials and/or services in a timely manner or at all.
Furthermore, economic conditions can cause our customers, suppliers, distributors, contract manufacturers, logistics providers or other third-party partners to suffer financial or operational difficulties, which may impact their ability to buy our products or provide us with or distribute finished product, raw and packaging materials and/or services in a timely manner or at all.
Although we have a broad array of information security measures in place, our IT Systems, including those of third-party service providers with whom we have contracted, have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyber-attacks.
Although we have a broad array of information and operational security measures in place, our IT/OT Systems, including those of third-party service providers with whom we have contracted, have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyberattacks.
Our ability to quickly innovate to adapt and market our products and to adapt our packaging and the sustainability profile of our products to meet evolving consumer preferences is an essential part of our business strategy.
Our ability to quickly innovate to adapt and market our products and to adapt our packaging or the sustainability profile of our products to meet evolving consumer preferences and/or regulatory requirements is an essential part of our business strategy.
We, 8 however, have experienced, and expect to continue to experience, risks related to the impact of the war in Ukraine, including increases in the cost and, in certain cases, limitations on the availability of raw and packaging materials and commodities (including oil and natural gas), supply chain and logistics challenges and foreign currency volatility.
We, however, have experienced, and expect to continue to experience, risks related to the impact of the war in Ukraine, including increases in the cost and, in certain cases, limitations on the availability of certain raw and packaging materials and commodities (including oil and natural gas), supply chain and logistics challenges, import restrictions, foreign currency volatility and reputational concerns.
Unfavorable global economic conditions, such as a recession, an economic slowdown, inflation, higher interest rates and/or reduced category growth rates, including as a result of the COVID-19 pandemic and/or the war in Ukraine, have negatively impacted and could negatively impact our business and result in declining revenues, profitability and/or cash flows.
Unfavorable global economic conditions, such as a recession, an economic slowdown, inflation, higher interest rates and/or reduced category growth rates, including as a result of the war in Ukraine and/or the Israel-Hamas war, have negatively impacted and/or could negatively impact our business and result in declining revenues, profitability and/or cash flows.
In addition, while we currently maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of cyber-security incidents and IT System failures, this insurance coverage may not, depending on the specific facts and circumstances surrounding an incident, cover all losses or all types of claims that arise from an incident, or the damage to our business, reputation or brands that may result from an incident.
Further, while we currently maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of cybersecurity incidents and IT/OT System failures, this insurance coverage may not, depending on the specific facts and circumstances surrounding an incident, cover all losses or all types of claims that arise from an incident, or the damage to our business, reputation or brands that may result from an incident.
In addition, the increased concern over climate change has resulted and is likely to continue to result in additional legal and regulatory requirements intended to, among other things, reduce or mitigate the effects of climate change and have related and may relate to, among other things, GHG emissions (e.g., carbon pricing), alternative energy policy and additional disclosure obligations.
In addition, the increased concern over climate change has resulted and is likely to continue to result in transition risks, including additional legal and regulatory requirements intended to, among other things, reduce or mitigate the effects of climate change and have related and may relate to, among other things, greenhouse gas emissions (e.g., carbon pricing), alternative energy policy and additional disclosure obligations.
A significant disruption to any of our key office facilities for any reason, including those mentioned above, could adversely affect our business, results of operations, cash flows and financial condition. Volatility in material and other costs could adversely impact our profitability.
A significant disruption to any of our key office facilities for any reason, including those mentioned above, could adversely affect our business, results of operations, cash flows and financial condition. Volatility in material and other costs has in the past and may continue to adversely impact our profitability.
We face various risks related to pandemics, epidemics or similar widespread public health concerns, which may have a material adverse effect on our business, results of operations, cash flows and financial condition. We face various risks related to pandemics, epidemics or similar widespread public health concerns, including the COVID-19 pandemic.
We face various risks related to pandemics, epidemics or similar widespread public health concerns, which may have a material adverse effect on our business, results of operations, cash flows and financial condition. We face various risks related to pandemics, epidemics or similar widespread public health concerns.
Further, changes in immigration laws and government policies, including related to the COVID-19 pandemic, have made, in certain circumstances, and may continue to make, it more difficult for us to recruit or relocate highly skilled technical, professional and management personnel to meet our business needs.
Further, changes in immigration laws and government policies have made, in certain circumstances, and may continue to make it more difficult for us to recruit or relocate highly skilled technical, professional and management personnel to meet our business needs.
The war in Ukraine may also heighten other risks disclosed in this Annual Report on Form 10-K, any of which could have an adverse impact on our business, results of operations, cash flows or financial condition.
These geopolitical conflicts and tensions may also heighten other risks disclosed in this Annual Report on Form 10-K, any of which could have an adverse impact on our business, results of operations, cash flows or financial condition.
There is also increased focus, including by governmental and non-governmental organizations, investors, customers, consumers, regulators, our employees and other stakeholders on these and other sustainability and social impact matters, including responsible sourcing and deforestation, the use of plastic, energy and water, the recyclability or recoverability of packaging, including single-use and other plastic packaging, and a growing demand for natural or organic products and ingredients and ingredient transparency.
There is also increased focus, including by governmental and non-governmental organizations, investors, customers, consumers, regulators, our employees and other stakeholders on these and other sustainability and social impact matters, including responsible sourcing, deforestation, animal welfare, labor, employment and human rights, the use of plastic, energy and water, the recyclability or recoverability of packaging, including single-use and other plastic packaging, and a growing demand for natural or organic products and ingredient transparency, such as sources of palm oil and palm kernel oil.
Even if we are not found to infringe a third party’s intellectual property rights, claims of infringement could adversely affect us, including by increasing costs and by delaying the launch of new products.
Even if we are not found to infringe a third party’s intellectual property rights, claims of infringement could adversely affect us, including by increasing costs and by delaying the launch of new products. Damage to our reputation could have an adverse effect on our business.
Increases in the costs of and/or a reduction in the availability of commodities, energy and logistics (including trucks and containers) and other necessary services, including as a result of COVID-19 and/or the war in Ukraine, have affected and are likely to continue to adversely affect our profit margins.
Increases in the costs of and/or a reduction in the availability of commodities, energy, logistics (including trucks and containers) or other necessary services, including as a result of geopolitical conflicts, such as the war in Ukraine and the Israel-Hamas war and/or the impact of climatic events have affected and are likely to continue to adversely affect our profit margins.
Furthermore, while we have disaster recovery and business continuity plans in place, if our IT Systems are damaged, breached or cease to function properly for any reason, including the poor performance of, failure of or cyber-attack on third-party service providers, catastrophic events, power outages, cyber-security breaches, network outages, failed upgrades or other similar events and, if the disaster recovery and business continuity plans do not effectively resolve such issues on a timely basis, we may suffer interruptions in our ability to manage or conduct business as well as reputational harm, and may be subject to governmental investigations and litigation, any of which may adversely impact our business, results of operations, cash flows and financial condition.
As the frequency and magnitude of cybersecurity incidents increase globally, we may be unable to obtain the insurance coverage that we think is appropriate or necessary to offset the risk. 15 While we have disaster recovery and business continuity plans in place, if our IT/OT Systems are damaged, breached or cease to function properly for any reason, including the poor performance of, failure of or cyberattack on third-party service providers, catastrophic events, power outages, cybersecurity breaches, network outages, failed upgrades or other similar events and, if the disaster recovery and business continuity plans do not effectively resolve such issues on a timely basis, we may suffer interruptions in our ability to manage or conduct business as well as reputational harm, and may be subject to governmental investigations and litigation, any of which may adversely impact our business, results of operations, cash flows and financial condition.
For more information regarding recent legislation, refer to Part II, Item 7 19 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Income Taxes." Furthermore, we are subject to regular reviews, examinations and audits by the Internal Revenue Service and other taxing authorities with respect to taxes inside and outside of the U.S.
For more information regarding recent legislation, refer to Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Income Taxes.” Furthermore, we are seeing an increase in regular reviews, examinations and audits by the Internal Revenue Service and increasingly aggressive enforcement actions by other taxing authorities with respect to taxes outside of the U.S.
In addition, we are evaluating the impact of recent legislation in the U.S., such as the Inflation Reduction Act of 2022 that, among other things, provides for a corporate alternative minimum tax, and in the European Union, such as the Minimum Tax Directive that provides for a minimum level of taxation for certain large corporations in every jurisdiction in which they operate.
In addition, we are evaluating the impact of recent legislation, such as the Minimum Tax Directive in the European Union that provides for a minimum level of taxation for certain large corporations in every jurisdiction in which they operate.
While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, a disruption or volatility in the credit markets, interest rate increases or changes to our credit rating or changes that may result from the continued implementation of new benchmark rates that are replacing the London Interbank Offered Rate (“LIBOR”) could negatively impact the availability or cost of funding.
While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, a disruption or volatility in the credit markets, interest rate increases or changes to our credit rating could negatively impact the availability or further increase the cost of funding.
As a result, consumers of our brands could confuse our products with these counterfeit products, which could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our business, results of operations, cash flows and financial condition. 12 Damage to our reputation or loss of consumer confidence in our products for these or any other reasons could adversely affect our business, results of operations, cash flows and financial condition, as well as require resources to rebuild our reputation.
As a result, consumers of our brands could confuse our products with these counterfeit products, which could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our business, results of operations, cash flows and financial condition.
Our success is increasingly dependent on our ability to effectively leverage digital technology and data analytics to gain new commercial insights and develop relevant marketing and advertising to reach customers and consumers.
Our success is and will likely increasingly be dependent on our ability to effectively leverage existing and emerging digital technologies, such as artificial intelligence and data analytics, to gain new commercial insights and develop relevant marketing and advertising to reach customers and consumers.
In addition, even if we are able to increase the prices of our products in response to commodity and other cost increases, we may not be able to sustain the price increases which may lead to declines in volume.
In addition, even if we are able to increase the prices of our products in response to commodity and other cost increases, we may not be able to sustain the price increases. If such price increases are sustained, they may negatively impact our sales volume, which can in turn negatively impact our margins and profitability.
As a result, we may not be able to fully realize all of the anticipated benefits from the 2022 Global Productivity Initiative. Events and circumstances, such as financial or strategic difficulties, delays and unexpected costs may occur that 15 could result in our not realizing all of the anticipated benefits or our not realizing such benefits on our expected timetable.
Events and circumstances, such as financial or strategic difficulties, delays and unexpected costs may occur that could result in our not realizing all of the anticipated benefits or our not realizing such benefits on our expected timetable.
For additional information regarding the 2022 Global Productivity Initiative, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Restructuring and Related Implementation Charges.” A cyber-security incident, data breach or a failure of a key information technology system could adversely impact our business.
For additional information regarding our funding-the-growth initiatives, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Overview.” A cybersecurity incident, data breach or a failure of key technology systems could adversely impact our business.
The success of our brands could also suffer if our marketing initiatives do not have the desired impact on a brand’s image or its ability to attract consumers.
The success of our brands could also suffer if our marketing initiatives do not have the desired impact on a brand’s image or its ability to attract consumers. In addition, the legal, regulatory and ethics landscape around the use of artificial intelligence, including generative artificial intelligence, is rapidly evolving.
Our reputation could be damaged if we do not (or are perceived not to) act responsibly with respect to sustainability matters, which could adversely affect our business, results of operations, cash flows and financial condition. Legal and Regulatory Risks Our business is subject to legal and regulatory risks in the U.S. and abroad.
Our reputation could be damaged if we do not (or are perceived not to) act responsibly with respect to sustainability matters, which could adversely affect our business, results of operations, cash flows and financial condition. We may not fully realize the benefits that we expect from our 2022 Global Productivity Initiative .
If we do not (or are perceived not to) successfully implement these initiatives, our ability to recruit, attract and retain talent may be adversely impacted. We have pursued and may continue to pursue acquisitions and divestitures, which could adversely impact our business. We have pursued and may continue to pursue acquisitions of brands, businesses, assets or technologies from third parties.
We have pursued and may continue to pursue acquisitions and divestitures, which could adversely impact our business. We have pursued and may continue to pursue acquisitions of brands, businesses, assets or technologies from third parties.
Inflationary pressures have also increased and may continue to increase the cost of such commodities and services.
While the prices of many commodities and services have started to stabilize or decline, inflationary pressures may continue to increase the cost of such commodities and services.
Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases (“GHG”) in the atmosphere and its impact on global temperatures, weather patterns and the frequency and severity of natural disasters and other extreme weather conditions may adversely impact our business, results of operations, cash flows and financial condition.
Climate change and other sustainability matters could have an adverse impact on our business and results of operations. Climate change resulting in the increased frequency and severity of natural disasters and other extreme weather conditions may adversely impact our business, results of operations, cash flows and financial condition.
If we are unable to recruit, attract and retain talented, highly qualified senior management and other key people, our business, results of operations, cash flows and financial condition could be adversely affected. Successfully executing organizational change, including management transitions at leadership levels of the Company and succession plans for senior management, is critical to our business success.
Our success largely depends on the performance of our management team and other key employees. If we are unable to recruit, attract and retain talented, highly qualified senior management and other key people, our business, results of operations, cash flows and financial condition could be adversely affected.
If such an upgrade or new technology does not function as designed, does not go as planned or increases our exposure to a cyber-attack or cyber incident, it may adversely impact our business, including our ability to ship products to customers, issue invoices and process payments or order raw and packaging materials.
A cyberattack or cyber incident may adversely impact our business, including our ability to ship products to customers, issue invoices and process payments or order raw and packaging materials.
Such cyber-attacks and cyber incidents can take many forms, including cyber extortion, social engineering, password theft or introduction of viruses or malware, such as ransomware through phishing emails.
Such cyberattacks and cyber incidents can take many forms, including cyber extortion, social engineering, password theft or introduction of viruses or malware, such as ransomware. In addition, the techniques used in cyberattacks and cyber incidents continue to evolve and develop, including through the use of emerging technologies, such as artificial intelligence.
We also continue to monitor the impact of the sanctions and export controls imposed in the response to the war in Ukraine.
We also face challenges to our ability to repatriate cash from Russia and find banking partners in Russia and may face challenges to our ability to protect our assets in Russia. We also continue to monitor the impact of the sanctions, export controls and import restrictions imposed in response to the war in Ukraine.
The situation continues to evolve and significant uncertainties regarding the full impact of the war in Ukraine or the related impacts on the global economy and geopolitical relations, in general and on our business in particular, remain and may be impacted by any or all of the foregoing risks.
These situations are evolving and 7 significant uncertainties regarding their full impact or their related impacts on the global economy and geopolitical relations in general and on our business in particular remain.
The program is intended to reallocate resources toward our strategic priorities and faster growth businesses, drive efficiencies in our operations and streamline our supply chain to reduce structural costs. The successful implementation of the program may present organizational challenges and, in some cases, may require successful negotiations with third parties.
On January 27, 2022, the Board approved a targeted productivity program (the “2022 Global Productivity Initiative”). The program is intended to reallocate resources toward our strategic priorities and faster growth businesses, drive efficiencies in our operations and streamline our supply chain to reduce structural costs.
For additional information regarding how COVID-19 has affected or is expected to affect our business, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Overview.” Damage to our reputation could have an adverse effect on our business.
For additional information regarding how COVID-19 continues to affect our business, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Overview.” 11 Our success depends upon our ability to recruit, attract and retain key employees, including through the implementation of diversity, equity and inclusion initiatives, and the succession of senior management.
For additional information regarding recent impairment charges, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Goodwill and Intangible Asset Impairment Charges.” Any of these risks could adversely impact our reputation and our business, results of operations, cash flows and financial condition.
For additional information regarding the 2022 Global Productivity Initiative, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Restructuring and Related Implementation Charges.” 16 Legal and Regulatory Risks Our business is subject to legal and regulatory risks in the U.S. and abroad.
We have divested and may in the future periodically divest brands or businesses.
Any of these risks could adversely impact our reputation and our business, results of operations, cash flows and financial condition. 12 We have divested and may in the future periodically divest brands or businesses.
We face risks resulting from political and macroeconomic instability and geopolitical events, such as the ongoing war in Ukraine and the related geopolitical tensions. We suspended the importation and sales of all products in Russia other than essential health and hygiene products for everyday use and ceased all capital investments and media activities in Russia.
We face risks resulting from political and macroeconomic instability and geopolitical events and tensions, such as the ongoing war in Ukraine, the Israel-Hamas war and tensions between China and Taiwan.
Uncertainty resulting from COVID-19 could result in an unforeseen additional disruption to our business, including our global supply chain and retailer network, and/or require us to incur additional operational costs. These and other risks related to COVID-19 have adversely affected and may continue to adversely affect our business, results of operations, cash flows and financial condition.
These and other risks impacted us during the COVID-19 pandemic. Other pandemics, epidemics or similar widespread public health concerns may adversely affect our business, results of operations, cash flows and financial condition in the future.
In addition, we continue to work to advance culture change through the implementation of DE&I initiatives throughout our organization. We continue to embed new ways of working throughout the organization to, among other things, instill a growth mindset to drive innovation with focus, empowerment, experimentation and digitization.
Our ability to attract and retain talent has been and may continue to be impacted by a number of factors, including challenges in the labor market. In addition, we continue to work to advance culture change through the implementation of DE&I initiatives and the launch of our evolved corporate values and new leadership framework throughout our organization.
Removed
While these actions have impacted our Eurasia business, they have not had a material impact on our business, results of operations, cash flow or financial condition. In 2022, our Eurasia business constituted approximately 2% of our consolidated net sales and approximately 3% of our consolidated operating profit (the majority of which was Russia).
Added
The war in Ukraine and the related geopolitical tensions have had and continue to have a significant impact on our operations in Ukraine and Russia, though it has not been material to our Consolidated Financial Statements. In Russia, we are importing and selling a reduced portfolio of health and hygiene products for everyday use.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Pet Nutrition segment has major manufacturing and warehousing facilities in the Czech Republic, Italy and the Netherlands. The primary research center for Oral Care and Personal Care products is located in New Jersey, the primary research center for Home Care products is located in Mexico and the primary research center for Pet Nutrition products is located in Kansas.
Biggest changeThe primary research and development center for Oral Care and Personal Care products is located in New Jersey, the primary research and development center for Home Care products is located in Mexico and the primary research and development center for Pet Nutrition products is located in Kansas. Our global data center is also located in New Jersey.
ITEM 2. PROPERTIES We own or lease approximately 320 properties, which include manufacturing, distribution, research and office facilities worldwide. Our corporate headquarters is located in a leased property at 300 Park Avenue, New York, New York. In the U.S., we operate in approximately 80 properties, of which 16 are owned.
ITEM 2. PROPERTIES We own or lease approximately 320 properties, which include manufacturing, distribution, research and development and office facilities worldwide. Our corporate headquarters is located in a leased property at 300 Park Avenue, New York, New York. In the U.S., we operate in approximately 85 properties, of which 17 are owned.
Overseas, we operate in approximately 240 properties, of which 58 are owned, in over 80 countries. Major overseas manufacturing and warehousing facilities used by the Oral, Personal and Home Care product segment of our business are located in Australia, Brazil, China, Colombia, France, Greece, Guatemala, India, Italy, Mexico, Poland, South Africa, Thailand, Turkiye, Venezuela and Vietnam.
Outside the U.S., we operate in approximately 235 properties, of which 58 are owned, in over 80 countries. Major overseas manufacturing and warehousing facilities used by the Oral, Personal and Home Care product segment of our business are located in Australia, Brazil, China, Colombia, France, Greece, Guatemala, India, Italy, Mexico, Poland, South Africa, Thailand, Turkiye and Vietnam.
Our global data center is also located in New Jersey. We have shared business service centers in India, Mexico and Poland, which are located in leased properties. All of the facilities we operate are well maintained and adequate for the purpose for which they are intended. 22
We have shared business service centers in India, Mexico and Poland, which are located in leased properties. All of the facilities we operate are well maintained and adequate for the purpose for which they are intended. 23
Added
The Pet Nutrition segment has major manufacturing and warehousing facilities in Czech Republic, Italy and the Netherlands.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table shows the share repurchase activity for the three months in the quarter ended December 31, 2022: Month Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (3) (in millions) October 1 through 31, 2022 2,911,468 $ 71.56 2,909,283 4,172 November 1 through 30, 2022 1,430,528 $ 74.88 1,426,840 4,065 December 1 through 31, 2022 985,497 $ 77.86 977,500 3,989 Total 5,327,493 $ 73.62 5,313,623 _______ (1) Includes share repurchases under the 2022 Program and those associated with certain employee elections under the Company’s compensation and benefit programs.
Biggest changeThe following table shows the share repurchase activity for the three months in the quarter ended December 31, 2023: Month Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (3) (in millions) October 1 through 31, 2023 791,784 $ 71.01 761,912 $ 3,041 November 1 through 30, 2023 385,842 $ 75.82 380,200 $ 3,012 December 1 through 31, 2023 1,707,326 $ 78.16 1,696,952 $ 2,879 Total 2,884,952 $ 75.89 2,839,064 _______ (1) Includes share repurchases under the 2022 Program and those associated with certain employee elections under the Company’s compensation and benefit programs.
(3) Includes approximate dollar value of shares that were available to be purchased under the publicly announced plans or programs that were in effect as of December 31, 2022.
(3) Includes approximate dollar value of shares that were available to be purchased under the publicly announced plans or programs that were in effect as of December 31, 2023.
(2) The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced plans or programs is 13,870 shares, which represents shares deemed surrendered to the Company to satisfy certain employee elections under the Company’s compensation and benefit programs.
(2) The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced plans or programs is 45,888 shares, which represents shares deemed surrendered to the Company to satisfy certain employee elections under the Company’s compensation and benefit programs.
For information regarding the securities authorized for issuance under our equity compensation plans, refer to “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” included in Part III, Item 12 of this report. As of December 31, 2022, the number of common shareholders of record was 17,468.
For information regarding the securities authorized for issuance under our equity compensation plans, refer to “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” included in Part III, Item 12 of this report. As of December 31, 2023, the number of common shareholders of record was 16,595.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTotal charges incurred for the 2022 Global Productivity Initiative relate to initiatives undertaken by the following reportable operating segments: Twelve Months Ended December 31, 2022 North America 11 % Latin America 18 % Europe 19 % Asia Pacific 8 % Africa/Eurasia 11 % Hill's Pet Nutrition 11 % Corporate 22 % Total 100 % 45 (Dollars in Millions Except Per Share Amounts) The following table summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals: Twelve Months Ended December 31, Employee-Related Costs Incremental Depreciation Asset Impairments Other Total Balance at December 31, 2021 $ — $ — $ — $ — $ — Charges 102 — 1 7 110 Cash Payments (53) — — (4) (57) Charges against assets (15) — — — (15) Foreign exchange (4) — — — (4) Balance at December 31, 2022 $ 30 $ — $ 1 $ 3 $ 34 Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, written severance policies, local statutory requirements and, in certain cases, voluntary termination arrangements.
Biggest changeFor the twelve months ended December 31, 2023 and 2022, charges resulting from the 2022 Global Productivity Initiative are reflected in the income statement as follows: Twelve Months Ended December 31, 2023 2022 Gross Profit $ 1 $ — Selling, general and administrative expenses 2 5 Other (income) expense, net 24 90 Non-service related postretirement costs 5 15 Total 2022 Global Productivity Initiative charges, pretax $ 32 $ 110 Total 2022 Global Productivity Initiative charges, aftertax $ 25 $ 87 Restructuring and related implementation charges in the preceding table are recorded in the Corporate segment as these initiatives are predominantly centrally directed and controlled and are not included in internal measures of segment operating performance. 45 (Dollars in Millions Except Per Share Amounts) Total charges incurred for the 2022 Global Productivity Initiative relate to initiatives undertaken by the following reportable operating segments: Twelve Months Ended December 31, Program-to-date Accumulated Charges 2023 2022 North America 15 % 11 % 12 % Latin America — % 18 % 14 % Europe 19 % 19 % 19 % Asia Pacific 20 % 8 % 11 % Africa/Eurasia 5 % 11 % 9 % Hill's Pet Nutrition 23 % 11 % 14 % Corporate 18 % 22 % 21 % Total 100 % 100 % 100 % Since the inception of the 2022 Global Productivity Initiative, the Company has incurred cumulative pretax charges of $142 ($112 aftertax) in connection with the implementation of various projects as follows: Cumulative Charges as of December 31, 2023 Employee-Related Costs $ 126 Incremental Depreciation — Asset Impairments 1 Other 15 Total $ 142 The following table summarizes the activity for the restructuring and related implementation charges discussed above and the related accruals: Twelve Months Ended December 31, Employee-Related Costs Incremental Depreciation Asset Impairments Other Total Balance at December 31, 2021 $ — $ — $ — $ — $ — Charges 102 — 1 7 110 Cash Payments (53) — — (4) (57) Charges against assets (15) — — — (15) Foreign exchange (4) — — — (4) Balance at December 31, 2022 $ 30 $ — $ 1 $ 3 $ 34 Charges 24 — — 8 32 Cash Payments (45) — — (10) (55) Charges against assets (5) — (1) — (6) Foreign exchange 6 — — — 6 Balance at December 31, 2023 $ 10 $ — $ — $ 1 $ 11 46 (Dollars in Millions Except Per Share Amounts) Employee-Related Costs primarily include severance and other termination benefits and are calculated based on long-standing benefit practices, written severance policies, local statutory requirements and, in certain cases, voluntary termination arrangements.
See Note 5, Goodwill and Other Intangible Assets to the Consolidated Financial Statements for further information. On September 30, 2022, the Company acquired a business for a purchase price, as adjusted, of $719, which operates three dry pet food manufacturing plants in the United States, from Red Collar Pet Foods Holdings, Inc. and Red Collar Pet Foods Holdings, L.P.
See Note 5, Goodwill and Other Intangible Assets to the Consolidated Financial Statements for further information. On September 30, 2022, the Company acquired a business, which operates three dry pet food manufacturing plants in the United States, for a purchase price, as adjusted, of $719, from Red Collar Pet Foods Holdings, Inc. and Red Collar Pet Foods Holdings, L.P.
(collectively, “Red Collar Pet Foods”) to further support the global growth of the Hill’s Pet Nutrition business. See Note 3, Acquisitions to the Consolidated Financial Statements for additional information. In July 2022, one of the Company’s subsidiaries in Asia Pacific completed the sale of land and recognized a pretax gain of $47 ($15 aftertax attributable to the Company).
(collectively, “Red Collar Pet Foods”) to further support the global growth of the Hill’s Pet Nutrition business. See Note 3, Acquisitions to the Consolidated Financial Statements for additional information. In July 2022, one of the Company’s subsidiaries in Asia Pacific completed a sale of land and recognized a pretax gain of $47 ($15 aftertax attributable to the Company).
The Oral, Personal and Home Care product segment is managed geographically in five reportable operating segments: North America, Latin America, Europe, Asia Pacific and Africa/Eurasia, all of which sell primarily to a variety of traditional and eCommerce retailers, wholesalers, distributors, dentists and skin health professionals.
The Oral, Personal and Home Care product segment is managed geographically in five reportable operating segments: North America, Latin America, Europe, Asia Pacific and Africa/Eurasia, all of which sell primarily to a variety of traditional and eCommerce retailers, wholesalers, distributors, dentists and, in some segments, skin health professionals.
While we have taken, and will continue to take, measures to mitigate the effects of these conditions, we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows and/or financial condition.
While we have taken, and will continue to take, measures to mitigate the effects of these events and conditions, we cannot estimate with certainty the full extent of their impact on our business, results of operations, cash flows and/or financial condition.
Refer to Note 2, Summary of Significant Accounting Policies to the Consolidated Financial Statements for further description of the Company’s significant accounting policies. 57 (Dollars in Millions Except Per Share Amounts) Cautionary Statement on Forward-Looking Statements This Annual Report on Form 10-K may contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the SEC in its rules, regulations and releases that set forth anticipated results based on management’s current plans and assumptions.
Refer to Note 2, Summary of Significant Accounting Policies to the Consolidated Financial Statements for further description of the Company’s significant accounting policies. 58 (Dollars in Millions Except Per Share Amounts) Cautionary Statement on Forward-Looking Statements This Annual Report on Form 10-K may contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the SEC in its rules, regulations and releases that set forth anticipated results based on management’s current plans and assumptions.
Aggregate share repurchases in 2022 consisted of approximately 13.4 million common shares under the 2022 Program, 3.4 million common shares under the 2018 Program and 0.3 million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of $1,308.
Aggregate repurchases in 2022 consisted of approximately 13.4 million common shares under the 2022 Program, 3.4 million common shares under the 2018 Program and 0.3 million common shares to fulfill the requirements of compensation and benefit plans, for a total purchase price of $1,308.
A 1% change in the discount rate for the U.S. pension plans and U.S. other retiree benefit plan would impact future Net income attributable to Colgate-Palmolive Company by approximately $2 and $1, respectively.
A 1% change in the discount rate for the U.S. pension plans and U.S. other retiree benefit plan would impact future Net income attributable to Colgate-Palmolive Company by approximately $0 and $2, respectively.
Our commitment to these priorities, the strength of our brands, the breadth of our global footprint and a commitment to profitability and driving efficiency in cash generation should position us well to manage through the challenges we face and increase shareholder value over time. 29 (Dollars in Millions Except Per Share Amounts) Results of Operations This section of this Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Our commitment to these priorities, the strength of our brands, the breadth of our global footprint and a commitment to profitability and driving efficiency in cash generation should position us well to manage through the challenges we face and increase shareholder value over time. 29 (Dollars in Millions Except Per Share Amounts) Results of Operations This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
In addition, market share information calculated by the Company may be different from market share information calculated by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors. 48 (Dollars in Millions Except Per Share Amounts) Liquidity and Capital Resources The Company expects cash flow from operations and debt issuances will be sufficient to meet foreseeable business operating and recurring cash needs (including for debt service, dividends, capital expenditures, share repurchases and acquisitions).
In addition, market share information calculated by the Company may be different from market share information calculated by other companies due to differences in category definitions, the use of data from different countries, internal estimates and other factors. 49 (Dollars in Millions Except Per Share Amounts) Liquidity and Capital Resources The Company expects cash flow from operations and debt issuances will be sufficient to meet foreseeable business operating and recurring cash needs (including for debt service, dividends, capital expenditures, share repurchases and acquisitions).
In light of this challenging environment, we expect increased volatility across all of our categories and it is therefore difficult to predict category growth rates in the near term. Given that approximately two-thirds of our Net sales originate in markets outside the U.S., we have experienced and will likely continue to experience volatile foreign currency fluctuations.
In light of this challenging environment, we expect continued volatility across all of our categories and it is therefore difficult to predict category growth rates in the near term. Given that approximately two-thirds of our Net sales originate in markets outside the U.S., we have experienced and will likely continue to experience volatile foreign currency fluctuations.
As more fully described in Note 13, Commitments and Contingencies to the Consolidated Financial Statements, the Company has commitments and contingencies with respect to lawsuits, environmental matters, taxes and other matters arising in the ordinary course of business. 51 (Dollars in Millions Except Per Share Amounts) Off-Balance Sheet Arrangements The Company does not have off-balance sheet financing or unconsolidated special purpose entities.
As more fully described in Note 13, Commitments and Contingencies to the Consolidated Financial Statements, the Company has commitments and contingencies with respect to lawsuits, environmental matters, taxes and other matters arising in the ordinary course of business. 52 (Dollars in Millions Except Per Share Amounts) Off-Balance Sheet Arrangements The Company does not have off-balance sheet financing or unconsolidated special purpose entities.
We do this by developing and selling products globally that make people’s and their pets’ lives healthier and more enjoyable and by embracing our sustainability and social impact and diversity, equity and inclusion (“DE&I”) strategies across our organization. We are tightly focused on two product segments: Oral, Personal and Home Care; and Pet Nutrition.
We do this by developing and selling science-led products globally that make people’s and their pets’ lives healthier and more enjoyable and by embracing our sustainability and social impact and diversity, equity and inclusion (“DE&I”) strategies across our organization. We are tightly focused on two product segments: Oral, Personal and Home Care; and Pet Nutrition.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
The Company’s debt issuances and redemptions support the Company’s capital structure objectives of funding its business and growth initiatives while minimizing its risk-adjusted cost of capital.
The Company’s debt issuances support the Company’s capital structure objectives of funding its business and growth initiatives while minimizing its risk-adjusted cost of capital.
In assessing impairment, the Company performs either a quantitative or a qualitative analysis. 55 (Dollars in Millions Except Per Share Amounts) Determining the fair value of the Company’s reporting units for goodwill and the fair value of its intangible assets requires significant estimates and judgments by management.
In assessing impairment, the Company performs either a quantitative or a qualitative analysis. 56 (Dollars in Millions Except Per Share Amounts) Determining the fair value of the Company’s reporting units for goodwill and the fair value of its intangible assets requires significant estimates and judgments by management.
We are strengthening and leveraging our capabilities in areas such as innovation, digital, eCommerce and data and analytics, enabling us to be more responsive in today’s rapidly changing world. In particular, we believe our digital transformation is of paramount importance to our success going forward.
We are strengthening and leveraging our capabilities in areas such as innovation, digital, artificial intelligence, eCommerce and data and analytics, enabling us to be more responsive in today’s rapidly changing world. In particular, we believe our digital transformation is of paramount importance to our success going forward.
We plan to continue to invest behind our digital and analytics capabilities and higher growth businesses. The substantial growth in eCommerce and the emergence of alternative retail channels have created and may continue to create pricing pressures and/or adversely affect our relationships with our key retailers.
We plan to continue to invest behind our data strategy, digital and analytics capabilities and higher growth businesses. The substantial growth in eCommerce and the emergence of alternative retail channels have created and may continue to create pricing pressures and/or adversely affect our relationships with our key retailers.
Such inflation and rising interest rates may negatively impact consumer consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to “private label” or lower-priced product offerings.
Such inflation and higher interest rates may negatively impact consumer consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to “private label” or to our lower-priced product offerings.
A reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures for the years ended December 31, 2022 and 2021 is presented within the applicable section of Results of Operations. 47 (Dollars in Millions Except Per Share Amounts) The following tables provide a quantitative reconciliation of Net sales growth to organic sales growth for the years ended December 31, 2022 and 2021 versus the prior year: Year ended December 31, 2022 Net Sales Growth (GAAP) Foreign Exchange Impact Acquisitions and Divestments Impact Organic Sales Growth (Non-GAAP) Oral, Personal and Home Care North America 3.5% —% —% 3.5% Latin America 8.5% (2.0)% —% 10.5% Europe (10.5)% (10.5)% —% —% Asia Pacific (1.5)% (6.5)% —% 5.0% Africa/Eurasia 3.5% (8.5)% —% 12.0% Total Oral, Personal and Home Care 1.0% (4.5)% —% 5.5% Pet Nutrition 12.0% (3.5)% 2.5% 13.0% Total Company 3.0% (4.5)% 0.5% 7.0% Year ended December 31, 2021 Net Sales Growth (GAAP) Foreign Exchange Impact Acquisitions and Divestments Impact Organic Sales Growth (Non-GAAP) Oral, Personal and Home Care North America (1.0)% 1.0% —% (2.0)% Latin America 7.0% (1.0)% —% 8.0% Europe 3.5% 4.0% —% (0.5)% Asia Pacific 6.0% 3.0% —% 3.0% Africa/Eurasia 6.5% (0.5)% —% 7.0% Total Oral, Personal and Home Care 4.0% 1.5% —% 2.5% Pet Nutrition 15.0% 1.5% —% 13.5% Total Company 6.0% 1.5% —% 4.5% Market Share Information Management uses market share information as a key indicator to monitor business health and performance.
A reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures for the years ended December 31, 2023 and 2022 is presented within the applicable section of Results of Operations. 48 (Dollars in Millions Except Per Share Amounts) The following tables provide a quantitative reconciliation of Net sales growth to organic sales growth for the years ended December 31, 2023 and 2022 versus the prior year: Year ended December 31, 2023 Net Sales Growth (GAAP) Foreign Exchange Impact Acquisitions and Divestments Impact Organic Sales Growth (Non-GAAP) Oral, Personal and Home Care North America 3.0% —% —% 3.0% Latin America 16.5% 1.0% —% 15.5% Europe 7.5% 2.5% —% 5.0% Asia Pacific (1.5)% (4.0)% —% 2.5% Africa/Eurasia —% (17.5)% —% 17.5% Total Oral, Personal and Home Care 6.5% (1.5)% —% 8.0% Pet Nutrition 15.5% (0.5)% 5.5% 10.5% Total Company 8.5% (1.0)% 1.0% 8.5% Year ended December 31, 2022 Net Sales Growth (GAAP) Foreign Exchange Impact Acquisitions and Divestments Impact Organic Sales Growth (Non-GAAP) Oral, Personal and Home Care North America 3.5% —% —% 3.5% Latin America 8.5% (2.0)% —% 10.5% Europe (10.5)% (10.5)% —% —% Asia Pacific (1.5)% (6.5)% —% 5.0% Africa/Eurasia 3.5% (8.5)% —% 12.0% Total Oral, Personal and Home Care 1.0% (4.5)% —% 5.5% Pet Nutrition 12.0% (3.5)% 2.5% 13.0% Total Company 3.0% (4.5)% 0.5% 7.0% Market Share Information Management uses market share information as a key indicator to monitor business health and performance.
Actual events or results may differ materially because of factors that affect international businesses and global economic conditions, as well as matters specific to the Company and the markets it serves, including the uncertain macroeconomic and political environment in different countries, including as a result of inflation and rising interest rates, and its effect on consumer spending habits, foreign currency rate fluctuations, exchange controls, tariffs, sanctions, price or profit controls, labor relations, changes in foreign or domestic laws or regulations or their interpretation, political and fiscal developments, including changes in trade, tax and immigration policies, increased competition and evolving competitive practices (including from the growth of eCommerce and the entry of new competitors and business models), the ability to operate and respond effectively during a pandemic, epidemic or widespread public health concern, including COVID-19, the ability to manage disruptions in our global supply chain and/or key office facilities, the ability to manage the availability and cost of raw and packaging materials and logistics costs, the ability to maintain or increase selling prices as needed, changes in the policies of retail trade customers, the emergence of alternative retail channels, the growth of eCommerce and the rapidly changing retail landscape (as consumers increasingly shop online), the ability to develop innovative new products, the ability to continue lowering costs and operate in an agile manner, the ability to maintain the security of our information technology systems from a cyber-security incident or data breach, the ability to address the effects of climate change and achieve our sustainability and social impact goals, the ability to complete acquisitions and divestitures as planned, the ability to successfully integrate acquired businesses, the ability to attract and retain key employees and integrate DE&I initiatives across our organization, the uncertainty of the outcome of legal proceedings, whether or not the Company believes they have merit, and the ability to address uncertain or unfavorable global economic conditions, including inflation, disruptions in the credit markets and tax matters.
Actual events or results may differ materially because of factors that affect international businesses and global economic conditions, as well as matters specific to the Company and the markets it serves, including the uncertain macroeconomic and political environment in different countries, including as a result of inflation and rising interest rates, and its effect on consumer confidence and spending, foreign currency rate fluctuations, exchange controls, import restrictions, tariffs, sanctions, price or profit controls, labor relations, changes in foreign or domestic laws or regulations or their interpretation, political and fiscal developments, including changes in trade, tax and immigration policies, increased competition and evolving competitive practices (including from the growth of eCommerce and the entry of new competitors and business models), the ability to operate and respond effectively during a pandemic, epidemic or widespread public health concern, the ability to manage disruptions in our global supply chain and/or key office facilities, the ability to manage the availability and cost of raw and packaging materials and logistics costs, the ability to maintain or increase selling prices as needed, changes in the policies of retail trade customers, the emergence of alternative retail channels, the growth of eCommerce and the rapidly changing retail landscape (as consumers increasingly shop online and through mobile applications), the ability to develop innovative new products, the ability to continue lowering costs and operate in an agile manner, the ability to maintain the security of our information and operational technology systems from a cybersecurity incident or data breach, the ability to address the effects of climate change and achieve our sustainability and social impact goals, the ability to complete acquisitions and divestitures as planned, the ability to successfully integrate acquired businesses, the ability to attract and retain key employees and integrate DE&I initiatives across our organization, the uncertainty of the outcome of legal proceedings, whether or not the Company believes they have merit, and the ability to address uncertain or unfavorable global economic conditions, including inflation, disruptions in the credit markets and tax matters.
Employee-Related Costs also include pension enhancements of $15 for the twelve months ended December 31, 2022, which are reflected as Charges against assets within Employee-Related Costs in the preceding tables as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension liabilities. 46 (Dollars in Millions Except Per Share Amounts) Non-GAAP Financial Measures This Annual Report on Form 10-K discusses certain financial measures on both a GAAP and a non-GAAP basis.
Employee-Related Costs also include pension enhancements of $5 for the twelve months ended December 31, 2023 and $15 for the twelve months ended December 31, 2022, which are reflected as Charges against assets within Employee-Related Costs in the preceding tables as the corresponding balance sheet amounts are reflected as a reduction of pension assets or an increase in pension liabilities. 47 (Dollars in Millions Except Per Share Amounts) Non-GAAP Financial Measures This Annual Report on Form 10-K discusses certain financial measures on both a GAAP and a non-GAAP basis.
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606).” This guidance is effective for the Company beginning on January 1, 2023 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.
In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606).” This guidance was effective for the Company beginning on January 1, 2023 and did not have a material impact on the Company’s Consolidated Financial Statements.
We are also seeking to maximize the impact of our environmental, social and governance programs and leading in the development of human capital, including our sustainability and social impact and DE&I strategies, which we are working to integrate across our organization.
We are also seeking to maximize the impact of our environmental, social and governance programs and to lead in the development of human capital, including our sustainability and social impact and DE&I strategies, which we are working to integrate across our organization.
Based on current information, the Company is not required to make a mandatory contribution to its qualified U.S. pension plan in 2023. The Company does not expect to make any voluntary contributions to its U.S. postretirement plans in 2023.
Based on current information, the Company is not required to make a mandatory contribution to its qualified U.S. pension plan in 2024. The Company does not expect to make any voluntary contributions to its U.S. postretirement plans in 2024.
A 1% change in the assumed rate of return on plan assets of the U.S. pension plans would impact future Net income attributable to Colgate-Palmolive Company by approximately $13.
A 1% change in the assumed rate of return on plan assets of the U.S. pension plans would impact future Net income attributable to Colgate-Palmolive Company by approximately $12.
As discussed above, we have also experienced higher raw and packaging material and logistics costs.
As discussed above, we have also experienced higher raw and packaging material costs.
These indicators include net sales (including volume, pricing and foreign exchange components), organic sales growth (net sales growth excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, and gross profit margin, operating profit, net income and earnings per share, in each case, on a GAAP and non-GAAP basis, as well as measures used to optimize the management of working capital, capital expenditures, cash flow and return on capital.
These indicators include net sales (including volume, pricing and foreign exchange components), organic sales growth (net sales growth excluding the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure, and gross profit margin, selling, general and administrative expenses, operating profit, net income and earnings per share, in each case, on a GAAP and a non-GAAP basis, as well as measures used to optimize the management of working capital, capital expenditures, cash flow and return on capital.
Full year 2022 market shares in toothpaste were up in Europe and were flat in North America, Latin America, Asia Pacific and Africa/Eurasia versus full year 2021. In the manual toothbrush category, full year 2022 market shares were up in North America, down in Latin America and were flat in Europe, Asia Pacific and Africa/Eurasia versus full year 2021.
Full year 2023 market shares in toothpaste were up in Europe, Asia Pacific and Africa/Eurasia, down in North America and flat in Latin America versus full year 2022. In the manual toothbrush category, full year 2023 market shares were up in Europe, down in North America, Asia Pacific and Africa/Eurasia and flat in Latin America versus full year 2022.
(3) The Company had outstanding contractual obligations with suppliers at the end of 2022 for the purchase of raw, packaging and other materials and services in the normal course of business.
(3) The Company had outstanding contractual obligations with suppliers at the end of 2023 for the purchase of raw, packaging and other materials and services in the normal course of business.
Average annual rates of return for the U.S. plans for the most recent 1-year, 5-year, 10-year, 15-year and 25-year periods were (18)%, 1%, 4%, 4% and 5%, respectively.
Average annual rates of return for the U.S. plans for the most recent 1-year, 5-year, 10-year, 15-year and 25-year periods were 10%, 5%, 4%, 6% and 5%, respectively.
When a quantitative analysis is performed, the Company generally uses the income approach, which requires several estimates, including future cash flows consistent with management’s strategic plans, sales growth rates, foreign exchange rates and the selection of royalty rates and a discount rate.
When a quantitative analysis is performed, the Company generally uses the income approach, which requires several estimates, including future cash flows consistent with management’s strategic plans, sales growth rates and the selection of royalty rates and discount rates.
A reconciliation of organic sales growth to Net sales growth for the years ended December 31, 2022 and 2021 is provided below.
A reconciliation of organic sales growth to Net sales growth for the years ended December 31, 2023 and 2022 is provided below.
This increase in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (210 bps) as a percentage of Net sales.
This increase in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (250 bps) as a percentage of Net sales.
The Company defines working capital as the difference between current assets (excluding Cash and cash equivalents and marketable securities, the latter of which is reported in Other current assets) and current liabilities (excluding short-term debt). Investing activities used $1,601 of cash in 2022 compared to $592 during 2021.
The Company defines working capital as the difference between current assets (excluding Cash and cash equivalents and marketable securities, the latter of which is reported in Other current assets) and current liabilities (excluding short-term debt). Investing activities used $742 of cash in 2023 compared to $1,601 during 2022.
If such costs had been included as a component of Cost of sales, the Company’s Gross profit margin would have been lower by 1,040 bps in 2022, by 970 bps in 2021, and 850 bps in 2020, with no impact on reported earnings. 54 (Dollars in Millions Except Per Share Amounts) The areas of accounting that involve significant or complex judgments and estimates are pensions and other retiree benefit cost assumptions, stock-based compensation, asset impairments, uncertain tax positions, tax valuation allowances, legal and other contingency reserves. ▪ In accounting for pension and other postretirement benefit costs, the most significant actuarial assumptions are the discount rate and the expected long-term rate of return on plan assets.
If such costs had been included as a component of Cost of sales, the Company’s Gross profit margin would have been lower by 910 bps in 2023, 1040 bps in 2022 and 970 bps in 2021, with no impact on reported earnings. 55 (Dollars in Millions Except Per Share Amounts) The areas of accounting that involve significant or complex judgments and estimates are pensions and other retiree benefit cost assumptions, stock-based compensation, asset impairments, uncertain tax positions, tax valuation allowances, legal and other contingency reserves. ▪ In accounting for pension and other postretirement benefit costs, the most significant actuarial assumptions are the discount rate and the expected long-term rate of return on plan assets.
The effect on the total of service cost and interest costs components of a 1% increase in the assumed long-term medical cost trend rate would impact future Net income attributable to Colgate-Palmolive Company by $2. ▪ The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options and restricted stock units (both performance-based and time-vested), based on the fair value of those awards at the date of grant.
A 1% increase in the assumed long-term medical cost trend rate would impact future Net income attributable to Colgate-Palmolive Company by $2. ▪ The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options and restricted stock units (both performance-based and time-vested), based on the fair value of those awards at the date of grant.
This decrease in Operating profit as a percentage of Net sales was due to a decrease in Gross profit (210 bps) and an increase in Selling, general and administrative expenses (120 bps), both as a percentage of Net sales.
This increase in Operating profit as a percentage of Net sales was primarily due to an increase in Gross profit (120 bps) and a decrease in Selling, general and administrative expenses (50 bps), both as a percentage of Net sales.
The Company uses the Black-Scholes-Merton ( “ Black-Scholes ” ) option pricing model to estimate the fair value of stock option awards. The weighted-average estimated fair value of each stock option award granted in the year ended December 31, 2022 was $14.71. The Black-Scholes model uses various assumptions to estimate the fair value of stock option awards.
The Company uses the Black-Scholes-Merton ( “ Black-Scholes ” ) option pricing model to estimate the fair value of stock option awards. The weighted-average estimated fair value of each stock option award granted in the year ended December 31, 2023 was $14.89. The Black-Scholes model uses various assumptions to estimate the fair value of stock option awards.
The Company’s significant policies that involve the selection of alternative methods are accounting for inventories and shipping and handling costs. ▪ The Company accounts for inventories using both the first-in, first-out ( “ FIFO ” ) method (80% of inventories) and the last-in, first-out ( “ LIFO ” ) method (20% of inventories).
The Company’s significant policies that involve the selection of alternative methods are accounting for inventories and shipping and handling costs. ▪ The Company accounts for inventories using both the first-in, first-out ( “ FIFO ” ) method (75% of inventories) and the last-in, first-out ( “ LIFO ” ) method (25% of inventories).
Significant Items Impacting Comparability During the fourth quarter of 2022, we recorded a non-cash charge of $721 pretax ($620 aftertax) to adjust the carrying values of goodwill and intangible assets related to the Filorga skin health business.
During the fourth quarter of 2022, we recorded a non-cash charge of $721 pretax ($620 aftertax) to adjust the carrying values of goodwill and intangible assets related to the Filorga skin health business.
The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables. This guidance is effective for the Company beginning on January 1, 2023 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.
The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables. This guidance was effective for the Company beginning on January 1, 2023 and did not have a material impact on the Company’s Consolidated Financial Statements.
Organic sales in Latin America increased 10.5% in 2022. Organic sales growth was led by Mexico, Brazil, Argentina and Colombia. The increase in organic sales in Latin America in 2022 versus 2021 was due to increases in Oral Care, Personal Care and Home Care organic sales.
Organic sales in Latin America increased 15.5% in 2023. Organic sales growth was led by Argentina, Mexico, Brazil and Colombia. The increase in organic sales in Latin America in 2023 versus 2022 was due to increases in Oral Care, Personal Care and Home Care organic sales.
For additional information regarding the Company’s use of market share data and limitations of such data, see “Market Share Information” below. Net sales for Hill’s Pet Nutrition were $3,713 in 2022, an increase of 12.0% from 2021, driven by volume growth of 4.0% and net selling price increases of 11.5%, partially offset by negative foreign exchange of 3.5%.
For additional information regarding the Company’s use of market share data and limitations of such data, see “Market Share Information” below. Net sales for Hill’s Pet Nutrition were $4,290 in 2023, an increase of 15.5% from 2022, driven by volume growth of 5.0% and net selling price increases of 11.0%, partially offset by negative foreign exchange of 0.5%.
A third assumption is the long-term rate of compensation increase, a change in which would partially offset the impact of a change in either the discount rate or the expected long-term rate of return. This rate was 3.50% as of December 31, 2022 and 2021.
A third assumption is the long-term rate of compensation increase for the pension plans, a change in which would partially offset the impact of a change in either the discount rate or the expected long-term rate of return. This rate was 3.50% as of December 31, 2023 and 2022.
There would have been no material impact on reported earnings for 2022 or 2021 had all inventories been accounted for under the FIFO method. ▪ Shipping and handling costs may be reported as either a component of Cost of sales or Selling, general and administrative expenses.
There would have been no material impact on reported earnings for 2023 or 2022 had all inventories been accounted for under the FIFO method. ▪ Shipping and handling costs (also referred to as logistics costs) may be reported as either a component of Cost of sales or Selling, general and administrative expenses.
Our strategy is based on driving organic sales growth and long-term profitable growth through science-led, core and premium innovation; pursuing higher-growth adjacent categories and segments, expanding in faster growing channels and markets and delivering margin expansion through operating leverage and efficiency.
Our strategy is based on driving organic sales growth and long-term profitable growth; pursuing higher-growth adjacent categories and segments, expanding in faster growing channels and markets and delivering margin expansion through operating leverage and efficiency.
The assumed expected long-term rate of return on plan assets for U.S. plans was 6.25% as of December 31, 2022 and 5.70% as of December 31, 2021. In determining the expected long-term rate of return, the Company considers the nature of the plans’ investments and the historical rate of return.
The assumed expected long-term rate of return on plan assets for U.S. plans was 6.50% as of December 31, 2023 and 6.25% as of December 31, 2022. In determining the expected long-term rate of return, the Company considers the nature of the plans’ investments and the historical rate of return.
The amount and timing of cash funding related to these benefit plans will generally depend on local regulatory requirements, various economic assumptions (the most significant of which are detailed in “Critical Accounting Policies and Use of Estimates” below) and voluntary Company contributions.
The amount and timing of cash funding related to these benefit plans will generally depend on the variability of the market value of the assets, changes in the benefit obligations, local regulatory requirements, various economic assumptions (the most significant of which are detailed in “Critical Accounting Policies and Use of Estimates” below) and voluntary Company contributions.
Annualized pretax savings are projected to be in the range of $90 to $110 ($70 to $85 aftertax), once all projects are approved and implemented. For more information regarding the 2022 Global Productivity Initiative, see “Restructuring and Related Implementation Charges” below.
Annualized pretax savings are projected to be in the range of $90 to $110 ($70 to $85 aftertax), once all projects are approved and implemented. Savings achieved since the implementation of the 2022 Global Productivity Initiative were approximately $100 pretax ($80 aftertax). For more information regarding the 2022 Global Productivity Initiative, see “Restructuring and Related Implementation Charges” below.
In addition, total benefit payments expected to be paid from the Company’s assets to participants in unfunded plans are estimated to be approximately $86 for the year ending December 31, 2023.
In addition, total benefit payments expected to be paid from the Company’s assets to participants in unfunded plans are estimated to be approximately $98 for the year ending December 31, 2024.
The Company’s open commodity derivative contracts that qualify for cash flow hedge accounting resulted in a net unrealized gain of $1 an d $2 at December 31, 2022 and 2021, respectively. At the end of 2022, an unfavorable 10% change in commodity futures prices would have resulted in a net unrealized loss of $1.
The Company’s open commodity derivative contracts that qualify for cash flow hedge accounting resulted in a net unrealized loss of $1 at December 31, 2023 versus a net unrealized gain of $1 in 2022. At the end of 2023, an unfavorable 10% change in commodity futures prices would have resulted in a net unrealized loss of $2.
All U.S. federal income tax returns through December 31, 2013 have been audited by the Internal Revenue Service (the “IRS”) and there are limited matters which the Company plans to appeal for years 2010 through 2013.
All U.S. federal income tax returns through December 31, 2013 have been audited by the IRS and there are limited matters which the Company plans to appeal for years 2010 through 2013.
This decrease in Gross profit was primarily due to higher raw and packaging material costs (770 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (310 bps) and higher pricing.
This increase in Gross profit was primarily due to higher pricing and cost savings from the Company’s funding-the-growth initiatives (310 bps), partially offset by significantly higher raw and packaging material costs (630 bps).
The duration of foreign currency contracts generally does not exceed 12 months and the contracts are valued using observable market rates. The Company’s foreign currency forward contracts that qualify for cash flow hedge accounting resulted in a net unrealized gain of $4 and $12 at December 31, 2022 and 2021, respectively.
The duration of foreign currency contracts generally does not exceed 12 months and the contracts are valued using observable market rates. The Company’s foreign currency forward contracts that qualify for cash flow hedge accounting resulted in a net unrealized loss of $13 at December 31, 2023 versus an unrealized gain of $4 at December 31, 2022.
The Company reviews external data and its own historical trends for health care costs to determine the medical cost trend rate. The assumed rate of increase for the U.S. postretirement benefit plans is 6.25% for 2023, declining to 4.50% by 2027 and remaining at 4.50% for the years thereafter.
The Company reviews external data and its own historical trends for health care costs to determine the medical cost trend rate. The assumed rate of increase for the U.S. postretirement benefit plans is 6.00% for 2024, declining to 4.88% by 2028 and remaining at 4.50% for the years thereafter.
Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin levels, earnings per share levels, financial goals, the impact of foreign exchange, the impact of COVID-19, the impact of the war in Ukraine, cost-reduction plans (including the 2022 Global Productivity Initiative), tax rates, interest rates, new product introductions, digital capabilities, commercial investment levels, acquisitions, divestitures, share repurchases or legal or tax proceedings, among other matters.
Such statements may relate, for example, to sales or volume growth, net selling price increases, organic sales growth, profit or profit margin levels, earnings per share levels, financial goals, the impact of foreign exchange, the impact of geopolitical conflicts and tensions, such as the war in Ukraine, the Israel-Hamas war and tensions between China and Taiwan, cost-reduction plans (including the 2022 Global Productivity Initiative), tax rates, interest rates, new product introductions, digital capabilities, commercial investment levels, acquisitions, divestitures, share repurchases or legal or tax proceedings, among other matters.
The Company believes its strong cash generation and financial position should continue to allow it broad access to global credit and capital markets. Cash Flow Net cash provided by operations decreased to $2,556 in 2022 as compared to $3,325 in 2021, primarily due to changes in working capital and lower net income.
The Company believes its strong cash generation and financial position should continue to allow it broad access to global credit and capital markets. Cash Flow Net cash provided by operations increased to $3,745 in 2023 as compared to $2,556 in 2022, primarily due to changes in working capital and higher net income.
These purchase obligation amounts represent only those items which are based on agreements that are legally binding and that specify all significant terms including minimum quantity, price and term and do not represent total anticipated purchases.
These purchase obligation amounts represent only those items which 51 (Dollars in Millions Except Per Share Amounts) are based on agreements that are legally binding and that specify all significant terms including minimum quantity, price and term and do not represent total anticipated purchases.
The Company evaluates segment performance based on several factors, including Operating profit. The Company uses Operating profit as a measure of the operating segment performance because it excludes the impact of corporate-driven decisions related to interest expense and income taxes.
The Company uses Operating profit as a measure of the operating segment performance because it excludes the impact of corporate-driven decisions related to interest expense and income taxes.
The increase in organic sales in 2022 versus 2021 was due to increases in Oral Care, Personal Care and Home Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste and manual toothbrush categories.
The increase in organic sales in 2023 versus 2022 was due to increases in Oral Care, Personal Care and Home Care organic sales. The increase in Oral Care was primarily due to organic sales growth in the toothpaste and mouthwash categories.
This increase in Operating profit as a percentage of Net sales was due to a decrease in Selling, general and administrative expenses (40 bps) and a decrease in Other (income) expense, net (140 bps), partially offset by a decrease in Gross profit (160 bps), all as a percentage of Net sales.
Operating profit was flat as a percentage of Net sales due to an increase in Gross profit (140 bps) and a decrease in Other (income) expense, net, (20 bps), offset by an increase in Selling, general and administrative expense (160 bps), all as a percentage of Net sales.
This guidance was effective for the Company beginning on January 1, 2022 and did not have a material impact on the Company’s Consolidated Financial Statements.
This guidance was effective for the Company beginning on January 1, 2023 and did not have an impact on the Company’s Consolidated Financial Statements.
Selling, general and administrative expenses, Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, Interest (income) expense, net, effective income tax rate, Net income attributable to Colgate-Palmolive Company and Earnings per share on a diluted basis are discussed in this Annual Report on Form 10-K both on a GAAP basis and excluding, as applicable, charges resulting from the 2022 Global Productivity Initiative, goodwill and intangible assets impairment charges, a gain on the sale of land in Asia Pacific, acquisition-related costs, a loss on the early extinguishment of debt and a benefit related to a value-added tax matter in Brazil.
Gross profit, Selling, general and administrative expenses, Selling, general and administrative expenses as a percentage of Net sales, Other (income) expense, net, Operating profit, Operating profit margin, Non-service related postretirement costs, effective income tax rate, Net income attributable to Colgate-Palmolive Company and Earnings per share on a diluted basis are discussed in this Annual Report on Form 10-K both on a GAAP basis and excluding, as applicable, charges resulting from the ERISA litigation matter, the foreign tax matter and the 2022 Global Productivity Initiative, product recall costs, goodwill and intangible assets impairment charges, a gain on the sale of land in Asia Pacific and acquisition-related costs.
Refer to Note 13, Commitments and Contingencies to the Consolidated Financial Statements for further discussion of the Company’s contingencies. The Company generates revenue through the sale of well-known consumer products to trade customers under established trading terms.
Refer to Note 13, Commitments and Contingencies to the Consolidated Financial Statements for further discussion of the Company’s contingencies. 57 (Dollars in Millions Except Per Share Amounts) The Company generates revenue through the sale of well-known consumer products to trade customers under established trading terms.
This decrease in Gross profit was primarily due to higher raw and packaging material costs (550 bps), partially offset by cost savings from the Company’s funding-the-growth initiatives (220 bps) and higher pricing.
This increase in Gross profit was primarily due to cost savings from the Company’s funding-the-growth initiatives (310 bps) and higher pricing, partially offset by significantly higher raw and packaging material costs (430 bps).
Organic sales (Net sales excluding, as applicable, the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure as discussed below, increased 7.0% in 2022.
Organic sales (Net sales excluding, as applicable, the impact of foreign exchange, acquisitions and divestments), a non-GAAP financial measure as discussed below, increased 8.5% in 2023.
In addition, the current assumed rate of return for the U.S. plans is based upon the nature of the plans’ investments with a target asset allocation of approximately 76% in fixed income securities, 21% in equity securities and 3% in real estate and other investments.
In addition, the current assumed rate of return for the U.S. plans is based upon the nature of the plans’ investments with a target asset allocation of approximately 60% in fixed income securities, 26% in equity securities and 14% in other investments.
While we have taken, and will continue to take, measures to mitigate the effect of these conditions, such as the 2022 Global Productivity Initiative and our funding-the-growth and revenue growth management initiatives, including additional pricing, in the current environment, it may become increasingly difficult to implement certain of these mitigation strategies.
While we have taken, and will continue to take, measures to mitigate the effect of these conditions, such as the 2022 Global Productivity Initiative and our funding-the-growth and revenue growth management initiatives, in the current environment, it may become increasingly difficult to implement certain of these mitigation strategies. Should these conditions persist, they could adversely affect our future results.
Other (income) expense, net in 2021 included a benefit related to a value-added tax matter in Brazil. 2022 2021 Other (income) expense, net, GAAP $ 69 $ 65 2022 Global Productivity Initiative (90) — Gain on the sale of land in Asia Pacific 47 — Acquisition-related costs (19) — Value-added tax matter in Brazil — 26 Other (income) expense, net, non-GAAP $ 7 $ 91 Excluding the items described above in both periods, as applicable, Other (income) expense, net was $7 in 2022 and $91 in 2021, comprised of the following: 2022 2021 Amortization of intangible assets $ 80 $ 89 Equity income (12) (12) Gains from marketable securities and other assets (22) (8) Indirect tax refunds (14) (5) Other, net (25) 27 Total Other (income) expense, net $ 7 $ 91 Goodwill and Intangible Assets Impairment Charges In the fourth quarter of 2022, the Company made revisions to the internal forecasts relating to its Filorga reporting unit due primarily to the continued impact of the COVID-19 pandemic, particularly in China, as a result of government restrictions and reduced consumer mobility, which negatively impacted consumption in the duty-free, travel retail and pharmacy channels.
Other (income) expense, net in 2022 included charges resulting from the 2022 Global Productivity Initiative, a gain on the sale of land in Asia Pacific and acquisition-related costs. 2023 2022 Other (income) expense, net, GAAP $ 191 $ 69 Product recall costs (25) — 2022 Global Productivity Initiative (24) (90) Gain on the sale of land in Asia Pacific — 47 Acquisition-related costs — (19) Other (income) expense, net, non-GAAP $ 142 $ 7 Excluding the items described above in both periods, as applicable, Other (income) expense, net was $142 in 2023 and $7 in 2022, comprised of the following: 2023 2022 Amortization of intangible assets $ 72 $ 80 Equity income (17) (12) Losses (gains) from marketable securities and other assets 11 (22) Indirect tax payments (refunds) 18 (14) Other, net 58 (25) Total Other (income) expense, net $ 142 $ 7 Goodwill and Intangible Assets Impairment Charges In the fourth quarter of 2022, the Company made revisions to the internal forecasts relating to its Filorga reporting unit due primarily to the continued impact of the COVID-19 pandemic, particularly in China, as a result of government restrictions and reduced consumer mobility, which negatively impacted consumption in the duty-free, travel retail and pharmacy channels.
The components of Operating profit (loss) for the Corporate segment are presented as follows: 2022 2021 Acquisition-related costs $ (19) $ — 2022 Global Productivity Initiative (95) — Gain on the sale of land in Asia Pacific 47 — Value-added tax matter in Brazil — 26 Goodwill and intangible assets impairment charges (721) (571) Corporate overhead costs and other, net (517) (519) Total Corporate Operating profit (loss) $ (1,305) $ (1,064) 44 (Dollars in Millions Except Per Share Amounts) Restructuring and Related Implementation Charges On January 27, 2022, the Board approved the 2022 Global Productivity Initiative.
The components of Operating profit (loss) for the Corporate segment are presented as follows: 2023 2022 2022 Global Productivity Initiative $ (27) $ (95) Product Recall Costs (25) — Acquisition-related costs — (19) Gain on the sale of land in Asia Pacific — 47 Goodwill and intangible assets impairment charges — (721) Corporate overhead costs and other, net (652) (517) Total Corporate Operating profit (loss) $ (704) $ (1,305) 44 (Dollars in Millions Except Per Share Amounts) Restructuring and Related Implementation Charges On January 27, 2022, the Board approved the 2022 Global Productivity Initiative.
Net sales in the Oral, Personal and Home Care product segment were $14,254 in 2022, up 1.0% from 2021, due to net selling price increases of 9.0%, partially offset by volume declines of 3.5%, and negative foreign exchange of 4.5%. Organic sales in the Oral, Personal and Home Care product segment increased 5.5% in 2022.
Net sales in the Oral, Personal and Home Care product segment were $15,167 in 2023, up 6.5% from 2022, due to net selling price increases of 9.5%, partially offset by volume declines of 1.5% and negative foreign exchange of 1.5%. Organic sales in the Oral, Personal and Home Care product segment increased 8.0% in 2023.
It is estimated that approximately 80% to 90% of the charges will result in cash expenditures. Annualized pre-tax savings are projected to be in the range of $90 to $110 ($70 to $85 aftertax), once all projects are approved and implemented.
It is estimated that approximately 80% to 90% of the charges will result in cash expenditures. Annualized pre-tax savings are projected to be in the range of $90 to $110 ($70 to $85 aftertax), once all projects are approved and implemented. Savings achieved since the implementation of the 2022 Global Productivity Initiative were approximately $100 pretax ($80 aftertax).
In 2022, advertising investment decreased as a percentage of Net sales to 11.1% from 11.6% in 2021 and decreased by 1.2% in absolute terms to $1,997 as compared with $2,021 in 2021. 2022 2021 Selling, general and administrative expenses, GAAP $ 6,565 $ 6,407 2022 Global Productivity Initiative (5) — Selling, general and administrative expenses, non-GAAP $ 6,560 $ 6,407 2022 2021 Basis Point Change Selling, general and administrative expenses as a percentage of Net sales 36.5 % 36.8 % (30) 32 (Dollars in Millions Except Per Share Amounts) Other (Income) Expense, Net Other (income) expense, net was $69 and $65 in 2022 and 2021, respectively.
In 2023, advertising investment increased as a percentage of Net sales to 12.2% from 11.1% in 2022 and increased by 18.7% in absolute terms to $2,371 as compared with $1,997 in 2022. 2023 2022 Selling, general and administrative expenses, GAAP $ 7,151 $ 6,565 2022 Global Productivity Initiative (2) (5) Selling, general and administrative expenses, non-GAAP $ 7,149 $ 6,560 2023 2022 Basis Point Change Selling, general and administrative expenses as a percentage of Net sales, GAAP 36.8 % 36.5 % 30 2022 Global Productivity Initiative (0.1) % — % Selling, general and administrative expenses as a percentage of Net sales, non-GAAP 36.7 % 36.5 % 20 32 (Dollars in Millions Except Per Share Amounts) Other (Income) Expense, Net Other (income) expense, net was $191 and $69 in 2023 and 2022, respectively.
After adjusting the carrying values of the trademark and customer relationship intangible assets, the Company completed a quantitative impairment test for goodwill and recorded a goodwill impairment charge of $332 in the Filorga reporting unit, reducing the carrying value of goodwill to $214 as of December 31, 2022.
After adjusting the carrying values of the trademark and customer relationship intangible assets, the Company completed a quantitative impairment test for goodwill and recorded a goodwill impairment charge of $332 in the Filorga reporting unit.
Dividend payments in 2022 were $1,691, an increase from $1,679 in 2021. Dividend payments increased to $1.86 per share in 2022 from $1.79 per share in 2021. In the first quarter of 2022, the Company increased the quarterly common stock dividend to $0.47 per share from $0.45 per share, effective in the second quarter of 2022.
Dividend payments in 2023 were $1,749, an increase from $1,691 in 2022. Dividend payments increased to $1.91 per share in 2023 from $1.86 per share in 2022. In the first quarter of 2023, the Company increased the quarterly common stock dividend to $0.48 per share from $0.47 per share, effective in the second quarter of 2023.
As a result of the interim impairment test, the Company concluded that the carrying value of the trademark and customer relationships exceeded their estimated fair value and recorded impairment charges of $300 and $89, respectively, reducing their carrying values to $257 and $118, respectively, as of December 31, 2022.
As a result of the interim impairment test, the Company concluded that the carrying value of the trademark and customer relationships exceeded their estimated fair value and recorded impairment charges of $300 and $89, respectively.
The discount rate used to measure the benefit obligation for U.S. defined benefit plans was 5.66% and 2.98% as of December 31, 2022 and 2021, respectively. The discount rate used to measure the benefit obligation for other U.S. postretirement plans was 5.67% and 3.06% as of December 31, 2022 and 2021, respectively.
The discount rate used to measure the benefit obligation for U.S. defined benefit plans was 5.40% and 5.66% as of December 31, 2023 and 2022, respectively. The discount rate used to measure the benefit obligation for other U.S. postretirement plans was 5.37% and 5.67% as of December 31, 2023 and 2022, respectively.
The increase in Oral Care was primarily due to organic sales growth in the toothpaste and manual toothbrush categories. The increase in Personal Care was primarily due to organic sales growth in the bar soap and underarm protection categories. The increase in Home Care was primarily due to organic sales growth in the surface cleaner and fabric softener categories.
The increase in Oral Care was primarily due to organic sales growth in the toothpaste, mouthwash and manual toothbrush categories. The increase in Personal Care was primarily due to organic sales growth in the bar soap, underarm protection and hair care categories.
Organic sales in Asia Pacific increased 5.0% in 2022. Organic sales growth was led by the Greater China region, Australia and the Philippines. The increase in organic sales in 2022 versus 2021 was primarily due to increases in Oral Care and Home Care organic sales.
Organic sales in Asia Pacific increased 2.5% in 2023. Organic sales growth was led by India, the Philippines and Australia, partially offset by organic sales declines in the Greater China region. The increase in organic sales in 2023 versus 2022 was primarily due to increases in Oral Care, Personal Care and Home Care organic sales.

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