Leadership

2016 Annual Report

Dear Colgate Shareholders

Ian Cook Chairman, President and Chief Executive Officer

In the face of challenging macroeconomic conditions worldwide, significant foreign exchange volatility and slowing category growth, we are pleased to have achieved another year of solid results in 2016. While net sales declined 5.0%, organic sales, or net sales excluding foreign exchange, acquisitions, divestments and the impact of the deconsolidation of the Company’s Venezuelan operations, grew 4.0%. This growth was led by emerging markets where organic sales grew a strong 6.5%. Gross profit margin, operating profit margin and net income as a percent to sales all increased in 2016. Diluted earnings per share were flat on a dollar basis but increased double digit on a currency-neutral basis, after also excluding Venezuela’s results in both periods. *

We maintained our strong balance sheet and cash flow, which, along with the Company’s consistent organic sales growth, led the Board of Directors to authorize a 3% increase in the quarterly cash dividend, effective in the second quarter of 2016. This represents our 54th consecutive year of dividend increases and our 121st consecutive year of paying a dividend.

Our market shares remain strong around the world with Colgate’s leading share of the global toothpaste market at 44.0% for the year. As referenced in the title of this year’s annual report, Powerful Strategies Driving Global Growth, we continue to drive our growth with clear strategies that provide the agility needed to meet the headwinds that come in any given year. We remain sharply focused on our four strategic initiatives, Engaging To Build Our Brands, Innovation For Growth, Effectiveness And Efficiency and Leading To Win, in order to deliver sustained profitable growth.

Strengthening Engagement To Build Our Brands

Engaging consumers everywhere with integrated marketing campaigns that deliver our brand messages has long been a cornerstone of our growth strategy. Now, we are strengthening that engagement by increasing our use of digital media across the board from websites to social media to mobile. On a global basis, digital media now accounts for 20% to 25% of our working media expenditure, up ten-fold in the last decade and continuing to rise. In some of our businesses, like Hill’s, nearly our entire media budget is in digital, as we work to influence the consumer when they first begin to explore the category.

We are engaging with consumers more deeply online by connecting emotionally with messaging that is more brand-purpose driven. Our research tells us that this type of messaging has a strong impact on consumers and drives greater return on investment. While consumers want to learn about the benefits that products provide, they also value an emotional connection with their favorite brands. For the Hill’s brand, this insight led us to create a video described as a special Mother’s Day message to all pet moms. The video shows a number of dogs and cats “saying thank you” to their human moms. The video, posted to the Hill’s Facebook page, received 13.5 million views and 71 million organic impressions.

Hill’s Mother’s Day Message

Another terrific example is a social media video campaign for the Tom’s of Maine brand in the United States. In a series of videos, women share their personal stories about when and why they made the decision to switch to Tom’s natural deodorant. These powerful ads helped grow sales for the Tom’s of Maine brand by over 12% in 2016.

Why I Switched to Tom’s of Maine

We have also established a number of Consumer Engagement Centers in Colgate locations around the world where Colgate people can listen and engage with consumers and track media activity in realtime. Through these centers, our teams are getting closer to consumers and having more relevant communications with them. This interaction also helps us identify influencers and trending topics and allows us to track overall consumer sentiment for our brands.

We are strengthening our engagement with the profession as well, with new capabilities. Hill’s representatives are using technology on their mobile tablets to design a “Perfect Vet Clinic,” which lets pet care professionals visualize how recommended Hill’s displays will look in their offices.

Technology is also helping us engage with young dental professionals across Europe, where we hosted our first virtual dental conference in 2016. Branded #ColgateTalks, the one-day conference included educational sessions, live chats and virtual networking. Over 1,600 young dental professionals attended the live event and over 16,000 professionals visited the virtual conference website during the four months that followed.

Innovating For Growth

Innovation is key to driving growth at Colgate and has long been embedded in our culture. Today, more than ever, our approach to innovation is insight driven. We are competing better locally by tapping into insights market-by-market and leveraging trends across regions. In China, the insight that consumers value natural local ingredients rooted in their culture led to the launch of Colgate Naturals toothpaste with twin lotus flower for soothing gums. Similarly, in India, Colgate Cibaca Vedshakti toothpaste was developed based on the learning that consumers in that country believe in the power of natural ingredients in preventing dental problems.

We are also gaining an even deeper understanding of our consumers by immersing ourselves in their daily lives. These immersions include deep dives by country, by consumer group, such as low-income consumers or millennials, and by topic, such as skin care. In Europe, for example, we learned that consumers feel their skin is very demanding and they look for products that can help improve it, are widely available and are not too expensive. This led to the launch of the Sanex Advanced line of shower gels, deodorants, hand creams and body lotions which delivers skin expertise for specific skin needs.

Implementing Powerful Commercial Strategies

Colgate’s powerful commercial strategies support our longstanding commitment to superior go-to-market execution. We are advancing these strategies to assure that our products continue to be available, visible and irresistible wherever consumers shop. That means online as well as in traditional retail stores. While e-commerce is still relatively small in our product categories, our intent is to invest ahead of the growth curve, especially in must-win areas, such as in China and with our Hill’s business. The objective is to be market leaders online just as we are in brick-and-mortar stores.

In addition to our brand-specific research, we are investing to understand the general thinking and behavior of online shoppers and we are optimizing our page and content design based on analytics and other testing. This work is already paying off in the United States, where Colgate is now the market leading manufacturer online in toothpaste and manual toothbrushes.

In Europe, we are taking customer engagement to the next level. In 2016, over a week’s time, we hosted a full-day interactive innovation summit for each of our five largest retail customers. We presented strategies for Colgate’s most important brands and held workshops to brainstorm collaboratively on marketing innovations, including ideas for in-store displays and other launch support, to drive growth together.

Enhancing Customer Engagement in Europe

Increasing Effectiveness And Efficiency Everywhere

We believe deeply that business simplification and operational efficiencies increase our agility so we can be smarter and faster. Colgate people around the world are more focused than ever on generating savings to fund increased investment for growth.

One major initiative is using advanced analytics in our supply chain. For example, we have rolled out a demand-sensing application that has improved our short-term production forecast by more than 10%. We are also using advanced modeling to design our end-to-end supply chain, allowing us to better allocate capacity and to optimize our warehouse locations and materials sourcing. This initiative delivered more than $7 million in savings in 2016.

We are also leveraging our SAP enterprise-wide planning system to standardize and automate our business processes. We are developing a new platform to review our operating divisions that we call the “Business Review of the Future.” Standardized reports populated with real-time data will allow us to review any business at any time we choose. While still in its early days, we are working towards a faster review in real time that allows us to get right to the issues and spend more time discussing business opportunities.

Our ongoing funding-the-growth cost-saving initiatives continue to generate savings across all areas of our business. Our Energy Treasure Hunt program, for example, now conducted at 75% of our sites, has identified more than 1,500 projects and $20 million in potential savings since the program began. During this three-day event, a team of Colgate’s global energy experts work with plant personnel from all areas of operations to “hunt” for savings ideas. Over 600 Colgate people have participated in this hands-on, fun event which helps sites strengthen their energy culture and reduce CO2 emissions.

Leading To Win

Critical to developing strong, effective leaders and to the personal growth of all Colgate people is establishing a culture that reinforces our values of Caring, Continuous Improvement and Global Teamwork. One recent initiative encourages all Colgate people to participate in strengthening internal coaching through a series of podcasts and videos that provide guidance on how to enhance coaching skills to further build one’s personal leadership capabilities.

Colgate also demonstrates strong leadership and caring as a member of the global community through our sustainability efforts. As part of our Making Every Drop of Water Count commitment, on World Water Day in March 2016, Colgate implemented a global marketing campaign in more than 60 countries, partnering with over 15 retailers, which significantly enhanced awareness for Colgate and its water conservation message. Colgate remains fully committed to improving the health and well-being of our communities, making our products more sustainable and helping to conserve the planet’s vital resources.

Protex-Little Heroes Promoting Water Conservation

Leadership at Colgate also extends to our strong corporate governance principles. Our Board of Directors receives regular updates on the performance of our strategies by region and category, and on how we are strengthening the most important capabilities needed for success.

Outlook

Looking to 2017, we believe the macroeconomic challenges, foreign exchange volatility and slowing category growth we saw at the end of 2016 will continue. In light of this, our overarching priority and objective for 2017 is to focus on profitable growth. Our new product pipeline is as full as ever and will be supported with engaging marketing programs and strong advertising investment. To fund this investment, we will be relentless in our focus on delivering cost savings on all lines of the P&L and on reducing our overall cost structure.

Over the long run, our discipline and focus on the fundamentals have served us well and will continue to serve us well. We feel confident that our business strategies, which we have been deploying for over a decade, will provide us the agility we need to continue winning on the ground despite any headwinds we may face as the year unfolds.

As we move ahead together, I wish to thank all Colgate people worldwide for their personal commitment to achieving our goals with the highest ethical standards, and express appreciation for the support of our consumers, customers, suppliers, shareholders and directors.

Signature

Ian Cook

Chairman, President and Chief Executive Officer

*The Company’s results are discussed excluding a charge resulting from the deconsolidation of the Company’s Venezuelan operations, charges related to the 2012 Restructuring Program and certain other items. A complete reconciliation between reported results (GAAP) and results excluding these items (Non-GAAP), including a description of such items, is available on Colgate’s website and on the Non-GAAP Reconciliation page of this report. Diluted earnings per share growth for full year 2016, on a currency-neutral basis, eliminates from diluted earnings per share growth (GAAP) the impact of the items described above and the period-over-period changes in foreign exchange rates in the translation of local currency results into U.S. dollars. Accordingly, for purposes of calculating diluted earnings per share growth for full year 2016, on a currency-neutral basis, full year 2016 local currency results, which include the impact of foreign currency transaction gains and losses, are translated into U.S. dollars using 2015 average foreign exchange rates by quarter.

  • Ian Cook

    Chairman, President and Chief Executive Officer of Colgate-Palmolive Company

    Mr. Cook joined Colgate in the United Kingdom in 1976 and progressed through a series of senior management roles around the world.
    He became Chief Operating Officer in 2004, with responsibility for operations in North America, Europe, Central Europe, Asia and Africa. In 2005, Mr. Cook was promoted to President and Chief Operating Officer, responsible for all Colgate operations worldwide, and was promoted to Chief Executive Officer in 2007. Elected director in 2007 and Chairman in 2009. Age 64


  • Charles A. Bancroft

    Independent Director, Welcome

    Executive Vice President, Chief Financial Officer and Global Business Operations of Bristol-Myers Squibb Company

    Mr. Bancroft joined Bristol-Myers Squibb in 1984 and held a series of positions of increasing responsibility within Bristol-Myers Squibb’s finance organization, including international assignments, as well as senior leadership positions in the global pharmaceutical business. He became Chief Financial Officer in 2010 and has served in his current role since 2016. Elected director in 2017. Age 57

  • John P. Bilbrey

    Independent Director

    Non-Executive Chairman of The Hershey Company

    Mr. Bilbrey has been Non-Executive Chairman of Hershey since March 2017. He previously served as President and Chief Executive Officer of Hershey from 2011 and Chairman from 2015 until his retirement in March 2017. Mr. Bilbrey joined the management team of Hershey as Senior Vice President, President Hershey International in 2003, serving as Senior Vice President, President Hershey North America from 2007 to 2010 and as Executive Vice President and Chief Operating Officer from 2010 to 2011. He previously spent 22 years at The Procter & Gamble Company. Elected director in 2015. Age 60

  • John T. Cahill

    Independent Director

    Vice Chairman of The Kraft Heinz Company

    Mr. Cahill has been Vice Chairman of The Kraft Heinz Company since 2015. He previously served as Chairman and Chief Executive Officer of Kraft Foods Group from 2014 to 2015 and Chairman from 2012 to 2014. Prior to joining Kraft Foods, Mr. Cahill was an industrial partner at Ripplewood Holdings LLC from 2008 to 2011. Mr. Cahill was CEO of The Pepsi Bottling Group, Inc. from 2001 to 2003, Chairman and CEO from 2003 to 2006, and Executive Chairman from 2006 to 2007. Elected director in 2005. Age 59

  • Helene D. Gayle

    Independent Director

    Chief Executive Officer of McKinsey Social Initiative

    Prior to joining McKinsey Social Initiative in 2015, Dr. Gayle was President and Chief Executive Officer of CARE USA from 2006 to 2015. Prior to that, Dr. Gayle was an executive in the Global Health program at the Bill and Melinda Gates Foundation from 2001 to 2006. She previously held multiple key positions at the U.S. Centers for Disease Control. Elected director in 2010. Age 61

  • Ellen M. Hancock

    Independent Director

    Former President of Jazz Technologies, Inc. (formerly Acquicor Technology), 2005-2007

    Mrs. Hancock previously was Chairman and Chief Executive Officer of Exodus Communications, Inc., Executive Vice President and Chief Operating Officer at National Semiconductor and Senior Vice President at IBM. Elected director in 1988. Age 73

  • C. Martin Harris

    Independent Director

    Associate Vice President of the Health Enterprise and Chief Business Officer of the Dell Medical School at the University of Texas at Austin

    Dr. Harris has been Associate Vice President of the Health Enterprise and Chief Business Officer of the Dell Medical School at The University of Texas at Austin since December 2016. Previously, he was CIO and Chairman of the Information Technology Division of The Cleveland Clinic Foundation and a Staff Physician for The Cleveland Clinic Hospital and The Cleveland Clinic Foundation Department of General Internal Medicine from 1996 to 2016. Elected director in 2016. Age 60

  • Richard J. Kogan

    Independent Director, Retiring

    Former President and Chief Executive Officer of Schering-Plough Corporation, 1996-2003

    Mr. Kogan was also Chairman of Schering-Plough Corporation from 1998 to 2002. Elected director in 1996. We sincerely thank Mr. Kogan for two decades of distinguished service to Colgate and extend our best wishes for his retirement. Age 75

  • Lorrie M. Norrington

    Independent Director

    Operating Partner of Lead Edge Capital LLC

    Prior to joining Lead Edge in 2013, Ms. Norrington held several senior management roles at eBay from 2005 to 2010, including President of Global eBay Marketplaces, Chief Operating Officer of eBay Marketplaces, President of eBay International and CEO of Shopping.com. Previously, she held senior roles at Intuit, Inc. and General Electric Company. Elected director in 2015. Age 57

  • Michael B. Polk

    Independent Director

    Chief Executive Officer of Newell Brands Inc.

    Mr. Polk was also President and Chief Executive Officer of Newell Rubbermaid Inc. from 2011 to 2016. Prior to joining Newell Rubbermaid in 2011, Mr. Polk held a series of key positions at Unilever from 2003 to 2011, including President, Global Foods, Home and Personal Care. He previously spent 16 years at Kraft Foods. Elected director in 2014. Age 56

  • Stephen I. Sadove

    Independent Director

    Founding Partner, JW Levin Management Partners LLC

    Prior to joining JW Levin Management Partners LLC, a private equity firm, in 2015, Mr. Sadove was Chief Executive Officer of Saks Incorporated from 2006 to 2013 and Chairman of Saks Incorporated from 2007 to 2013. Mr. Sadove joined the management team of Saks as Vice Chairman in 2002, serving as Chief Operating Officer from 2004 to 2006. He previously held a series of key positions at Bristol-Myers Squibb. Elected director in 2007. Age 65

More information about Colgate’s Corporate Governance Commitment is available on Colgate’s Governance website.

..................................................*Ian CookChairman, President and Chief Executive Officer

..................................................*Franck J. MoisonVice Chairman

..................................................*Dennis Hickey Chief Financial Officer

..................................................*Jennifer M. DanielsChief Legal Officer and Secretary

..................................................*P. Justin SkalaChief Operating Officer, North America, Europe, Africa/Eurasia and Global Sustainability

..................................................*Noel WallaceChief Operating Officer, Global Innovation & Growth and Hill’s Pet Nutrition

Biographical information for the above executives is available on
Colgate's Governance website.

..................................................Issam BachaalaniVP & GM, Colgate-India & South Asia

..................................................Daniel BagleyVP, Global R&D

..................................................Don BeattyVP, Hill’sPet Nutrition

..................................................Angel Dario BelalcazarVP, Global R&D

..................................................Andrea BernardVP, Global Legal

..................................................Joseph M. BertoliniVP, Global Finance

..................................................Yves BriantaisVP, Global Packaging & Design

..................................................*Peter Brons-PoulsenPresident & CEO, Hill’s Pet Nutrition

..................................................Marsha ButlerVP, Global Oral Care

..................................................Scott CainVP, Global Finance

..................................................Burc CankatVP & GM, Colgate-Russia & Central Asia

..................................................James CapraroVP, Global Information Technology

..................................................Rosario CarlinoVP, Colgate-Africa/Eurasia

..................................................Antonio CaroPresident & GM, Hill’s Pet Nutrition-Europe & Russia

..................................................Maria Elisa CarvajalVP, Global Marketing Communications

..................................................Natasha ChenVP & GM, Colgate-Southern Europe

..................................................Constantina ChristopoulouVP, Global R&D

..................................................Martin J. CollinsVP, Hill’s Pet Nutrition

..................................................*Michael A. CorboChief Supply Chain Officer

..................................................Mike CroweChief Information Officer

..................................................Rich CuprysVP, Global R&D

..................................................Marianne DeLorenzoVP, Global Information Technology

..................................................*Mukul DeorasChief Marketing Officer

..................................................William DeVizioChief Dental Officer

..................................................Robert W. Dietz VP, Global Facilities

..................................................Catherine DillaneVP, Colgate-Latin America

..................................................Julie DillonVP & GM, Colgate-North America

..................................................*Victoria DolanChief Transformation Officer & Corporate Controller

..................................................Gordon DumesichVP & GM, Hill’s Pet Nutrition-Japan

..................................................Philip DurocherVP & GM, Colgate-UK & Ireland

..................................................*John FaucherSVP, Investor Relations

..................................................*Jean-Luc FischerPresident, Colgate-Africa/Eurasia

..................................................Betsy FishboneVP, Global Legal

..................................................Laura FlavinVP, Global Human Resources

..................................................Nadine FlynnVP, Global Legal

..................................................David FosterVP, Global Information Technology

..................................................Scott GeldartVP & GM, Colgate-North Africa & Middle East

..................................................Diana GeofroyVP, Colgate-Mexico

..................................................Derek GordonVP & GM, Colgate-Canada

..................................................Taylor GordyVP, Colgate-North America

..................................................Peter GraylinVP, Global Legal

..................................................*Thomas GreeneChief Information & Business Services Officer

..................................................Jan GuifarroVP, Corporate Communications & Community Giving

..................................................Elise HalvorsonVP, Enterprise Risk Management

..................................................*Suzan F. HarrisonPresident, Global Oral Care

..................................................John Hazlin VP & GM, Global Personal Care

..................................................Raymond HoVP, Colgate-Asia Pacific

..................................................Robert HofmannVP, Colgate-Asia Pacific

..................................................Bob HollandVP, Ethics & Compliance

..................................................Henry HuVP, Colgate-Asia Pacific

..................................................Nina HuffmanVP, Global Legal

..................................................Traci Hughes-VelezVP, Colgate-Europe

..................................................*John J. HustonSVP, Chief of Staff

..................................................Henning JakobsenVP & GM, Colgate-Nordic

..................................................N. Jay JayaramanVP, Global Technology

..................................................Elyse KaneVP, Colgate-North America

..................................................Eugene KellyVP, Global Diversity & Inclusion

..................................................Iain KieltyVP, Colgate-Asia Pacific

..................................................Charalabos KladosVP, Global Legal

..................................................Raj KohliVP, Global R&D

..................................................Kostas KontopanosPresident, Hill’s Pet Nutrition, North America

..................................................John KooymanVP, Colgate-North America

..................................................Wojciech KrolVP & GM, Colgate-Central Europe East

..................................................Andrea LagioiaVP & GM, Colgate-Brazil

..................................................Stephen LauVP & GM, Colgate-Greater China

..................................................*Al LeeChief Ethics & Compliance Officer

..................................................Adriana LeiteVP & GM, Colgate-Southern Cone

..................................................Stephane LionnetVP, Colgate-North America

..................................................Javier LlinasVP, Global Information Technology

..................................................Diane LoiselleVP, Hill’s Pet Nutrition

..................................................Moira LotenVP, Global Oral Care

..................................................Gregory MalcolmVP, Corporate Audit

..................................................*Daniel B. MarsiliChief Human Resources Officer

..................................................Pablo MascoloVP, Colgate-Latin America

..................................................Sally MasseyVP, Global Human Resources

..................................................Lisa MatherVP, Global Legal

..................................................Paul McGarryVP, Global Information Technology

..................................................Lori MichelinVP, Global Sustainability & Environmental, Health & Safety

..................................................Thomas MintelVP, Global Toothbrush

..................................................Pascal MontilusVP, Colgate-North America

..................................................Anne-Marie MotteVP & GM, Colgate-North America

..................................................Francisco MuñozVP & GM, Colgate-Venezuela

..................................................Josue M. MuñozVP, Global Supply Chain

..................................................*Vinod NambiarPresident, Colgate-Asia Pacific

..................................................Debra NicholsVP, Hill’s Pet Nutrition

..................................................Eddie NiemVP & GM, Hawley & Hazel

..................................................Jesper NordengaardVP, Hill’s Pet Nutrition

..................................................Godfrey NthunziVP, Colgate-Africa/Eurasia

..................................................Edward OblonVP, Hill’s Pet Nutrition

..................................................*Elaine Paik VP & Corporate Treasurer

..................................................Nancy PakVP & GM, Tom’s of Maine

..................................................*Prabha ParameswaranPresident, Colgate-Europe

..................................................Terrell ParteeVP, Global R&D

..................................................Chris E. PedersenVP & GM, Colgate-South Pacific

..................................................Hector PedrazaVP & GM, Colgate-Andina

..................................................Brent PetersonVP, Global Human Resources

..................................................Robert C. PierceVP, Global R&D

..................................................Spencer PingelVP, Global Analytics

..................................................Massimo PoliVP, Colgate-Latin America

..................................................Warren PruittVP, Global Supply Chain

..................................................Ricardo RamosPresident, Colgate-Mexico

..................................................Christopher RectorVP & GM, Global Toothbrush

..................................................Riccardo RicciVP, Colgate-Europe

..................................................Lauren RichardsonChief Procurement Officer

..................................................Michele RossVP, Colgate-Africa/Eurasia

..................................................Paolo RossettoVP, Colgate-Europe

..................................................Debashish RoyVP, Colgate-Africa/Eurasia

..................................................Caroline RuddVP, Global Oral Care

..................................................Bernal SaborioVP & GM, Colgate-Caribbean

..................................................Arvind SachdevVP & GM, Colgate-Philippines

..................................................Ivan SandovalVP, Global Legal

..................................................David ScharfVP & GM, Colgate-Central America

..................................................Dany SchmidtVP & GM, Colgate-Central Europe West

..................................................Sara ScrittoreVP, Hill’s Pet Nutrition

..................................................Julio SemanateVP, Colgate-Latin America

..................................................Alain Semeneri Chief Customer Officer

..................................................Jose Fernando SerranoVP, Colgate-Latin America

..................................................Andrew ShepardVP & GM, Colgate-Western Europe

..................................................Philip ShottsVP, Global Finance

..................................................Rick SpannVP, Global Supply Chain

..................................................Vangelis SpyridakosVP, Colgate-Europe

..................................................Neil StoutVP, Global Toothbrush

..................................................Lynne TapperVP, Global Human Resources

..................................................Orlando TenorioVP, Colgate-South Africa

..................................................Richard ThorogoodVP, Global Insights

..................................................Linda ToppingVP, Global Supply Chain

..................................................Ann TracyVP, Colgate-Europe

..................................................*Panagiotis TsourapasPresident, Colgate-Latin America

..................................................Bill Van de GraafVP & GM, Colgate-North America

..................................................*Patricia VerduinChief Technology Officer

..................................................Lucie Claire VincentVP & GM, Global Home Care

..................................................Cliff WilkinsVP, Global Legal

..................................................Alan WolpertVP & GM, Colgate-North America

..................................................Ruben YoungVP & GM, Colgate-Greater Indo-China

..................................................*Juan Pablo ZamoranoPresident, Colgate-North America

..................................................Alberico ZenzolaVP, Global Supply Chain

*Corporate Officer

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