Q1 2022 Danone SA Corporate Sales Call

April 20, 2022

Welcome to <unk> Conference call. Please continue to stand by your conference will begin shortly.

[music].

Okay.

Good day and thank you for standing by welcome to the town in first quarter 2022 sales conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you in its press star one on your telephone please be advised that today's conference is being.

Recorded if you require any sort of assistance. Please press star zero I would now like to hand, the conference over to your first speaker today Mattel's culture head of Investor Relations. Please go ahead.

Yeah.

Thank you good morning, everyone matches, what you're speaking head of Investor Relations at Xenon. Thank you for being with US. This morning for Dennis Q1 sounds cool I'm here with our CFO .

So some prepared remarks before taking your question mistaken stuff.

And before we start I'd really retention on the disclaimer on page two related to them.

Statements and the definition of financial indicators that he's got to during the presentation and with that let me handover to yoga. Thank.

Thank you you too.

And good morning, everyone and welcome to our Q1 results call also.

That's it from my side, I hope, you're all well and safe.

So only a few weeks ago that we shared our new strategic plan called the venue Danone and today's Q1 really is very much in line and consistent with what we discussed with you at the end of March and if you're making this year year 2022, a foundational year for our company.

You will see as a guide you through the details of the Q1 design at the financial disclosure is no first time adapted to a new organization.

And therefore, our reporting structure by geographic my close all the while we are maintaining the category reporting to provide maximum comfort there and scale up their phones.

Is that a little introduction, let's get started on page two.

The concrete key figures of our Q1 performance.

It's great to report that we had a good start into the year 2020 to be delivered plus seven 1% sales growth on a like for like basis.

There is a contribution from both price, but also from volume and mix as expected our growth was more price led adding as much as plus four 9% in this quarter.

At the same moment volume and mix had also combined positive contribution of plus two 2% this quarter with resilient volumes across geographies and the strong contribution from product as well as from country mix.

Our teams did a remarkable job, bringing those Q1 results home, despite the particularly challenging operating environment.

First and foremost with the direct and indirect consequences of the terrible war in Ukraine, but also with the continued supply chain challenges across geographies and more recently with the impacts of Covid related Lockdowns in China.

In this complex environment input cost inflation remains obviously, a key point of focus global commodity indexes have continued to be extremely volatile with lots of ups and downs over the recent days and weeks, yet so far not changing our full year estimates not changing the guidance on inflation that we shared at <unk>.

Just a few weeks ago.

Going deeper into this Q1 performance of plus seven 1% net sales growth on slide number three.

We'll see that all zones in all categories contributed to these results. Let me remind you that you will find in the appendix of this presentation deferred growth matrix of geographies time schedule is.

Why do you have a very granular reading of our top line dynamics.

Looking at it through the lens of our multiple zones, both Europe as well as North America delivered another quarter of strong mid single digit growth.

Maintaining the solid momentum, which they have now shown since many quarters.

Our China and North Asia Zone delivered an exceptional plus 15, 3% growth in the quarter driven by another strong competitive performance in specialized nutrition in China.

Something I will come back to in a few minutes and final need the rest of the World Zone that group plus 7% in the quarter, notably driven by another strong quarter in Latin America and Southeast Asia.

From a category perspective, edp is consistently delivering quarter by quarter with 336% growth in this Q1.

<unk> is the dairy segment as well as the plant based segment growing solidly.

Can report strong market share performance is especially for some of our star brands like activated yieldco cause our international delight.

But this quarter has also confirmed that we have clear opportunities to step up competitiveness and other brands, namely as active as.

As we are not yet delivering as it has good potential.

Specialized nutrition grew plus nine 5%.

And it's worth noting that all subcategories with contributing to its growth from core mix.

The ethylene specialties to that nutrition.

Market shares are globally, well oriented, notably driven by our platforms in China, but also Indonesia, and particularly by our ophthalmic brands, which continues to drive strong competitive performances and finally, our waters category delivered plus $15, 9% growth this quarter driven by a further recovery in Europe and <unk>.

Celebrated consumption rebounds in Latin America and Indonesia.

<unk> are winning in the marketplace, especially in Europe is if you're on <unk>, while my zone confirmed the stabilization of its market shares also in this first quarter of the year.

Moving onto the next slide.

In order to address the heavy inflation on our cost of goods sold.

<unk> been activating the <unk> playbook of mitigation actions over the last couple of weeks and months.

It starts with revenue growth management and pricing that had the plus four 9% positive contribution this quarter.

As of today, we have past price increases across all our categories in all our geographies in some geographies, we even past already several subsequent price increases.

For Europe , we closed commercial negotiations with most price increases hitting our P&L from the end of Q1 onwards.

We are continuously monitoring the situation and are preparing ourselves to possibly go for further pricing runs.

Should we need it.

Beyond pricing will continue to drive product mix to the Max pushing the winners in our portfolio, but we are also rolling out our most <unk> premium innovations with speed and discipline.

Q1 has clearly demonstrated the opportunity ahead of us with product mix contributing positively in each of the three categories.

And last but not least.

Obviously, putting a lot of effort to deliver another year of record high productivity as we shared a few weeks ago at our capital market event. The ambition is to deliver higher productivity than in year 2021.

The enhancement of productivity applications in formulation for optimization of our go to market and supply chains as well as by driving more efficiency in sourcing and manufacturing.

I'm happy to report that our team is in charge of operations are doing a fantastic job and they're delivering on their commitment means we are well on track to deliver upon our full year productivity target.

Let's have a look at the performance of aegis zone in more detail, starting with our largest zone and it saved Europe on slide number five.

You hope with just the strong start to the year, reaching plus five 7% in Q1 was a contribution from volume mix up three 1% and price up plus two 6%.

The category perspective. This strong performance was led by specialized nutrition, which produced at high single digit growth, thanks to an increasing level of demand from customers and consumers.

Also benefiting from a relatively low base of last year.

The water category grew again double digit also in this quarter confirming its sequential recovery with great market share performances, especially of the <unk>, but also the big brands.

While edp delivered a softer Q1 with plant based growing low single digit in dairy and flattish territory on.

The elevated demand basis of Q1 2020 in 2021, while being exposed to continued supply chain challenges.

From a country perspective worth, noting that France delivered a good quarter led by double digit growth in several brands, including active <unk> and <unk>, but also by up to a million AVR with market share gains across the board.

The UK business also posted strong growth in Q1, driven by up to 40 million specialized nutrition, but also with strong performances in Activision activated and finally.

The growth dynamic was a bit softer in Spain, good momentum in specialized nutrition waters and plant based was offset by a weaker performance in dairy and this Q1.

Net net.

Good start of the European zone into the year.

Moving to slide six.

And to North America.

We delivered another strong quarter of growth with revenues up plus five 5% on their like for like basis.

I would like to particularly highlight the quality of the growth with the team delivered this quarter, we achieved a plus five 5% growth with positive contribution from volume mix as well as price.

Our brands and categories are enjoying robust consumer demand building on the strong deployment of our growth strategy.

Thanks to further enhanced excellence in execution from core brand growth and innovation to our revenue growth management and finally improved in store execution.

Yes, especially in North America, we are still facing supply chain challenges.

Although the situation seems to start stabilizing our service levels have been improving for the quarter, bringing us sequentially back to a more competitive situations.

Looking at the growth composition of this Q1, it was driven by all categories.

In your growth. It was led by Greek was quite close to good probiotics with Activision and Keith its Daniel.

In plant based growth was driven by our adjacencies like yogurt seamless and cheese.

While our plant based beverages, we have seen an improved momentum in both growth and competitiveness.

Both almond and soy delivered good growth and gained market shares in their respective segments, while <unk> delivered strong double digit growth.

And finally cream loss that delivered a particularly strong quarter driven by international delight.

Let's now move onto page seven to discuss the performance of our China and North Asia.

Like for like growth reached here, plus 15, 3% almost entirely driven by volume and mix that were positive at plus 32.

In China infant nutrition has obviously been a strong contributor to that performance growing mid teens on a low base of year 2021.

Double clicking on this IMS performance by channel, we have seen following dynamics first.

Domestic channels with our China labors posted again strong quarter going well in the mid teens range.

Second our international Labor sourcing controllers.

Border E Commerce platforms delivered again, a very strong quarter of growth.

And third.

The performance of before mentioned control E Commerce platforms. This largely offset the further decline of our uncontrolled indirect sales realized today goes in friends and family.

Importantly, and to sum up.

We closed the quarter with another strong market share performance on both China and international levels.

Which bodes well for the resilience of our Chinese infant nutrition platform moving forward.

Outside infant milk formula.

Pediatric solutions and that nutrition portfolio has delivered a strong quarter of growth.

Both well into double digit territory and the head of the gross numbers of comics.

And finally, my zone that closed the quarter slightly negative compared to last year.

Our market shares in fundamental consumer and distribution kpis continue to be well oriented the growth in this Q1 was impacted by city Lockdowns.

Meeting temporarily our ability to produce and ship our product in some areas of China.

Let's now move onto slide eight through the rest of the World zone that delivered plus 7% like for like.

In this quarter.

I could not start to review the performance of this zone without mentioning the terrible one Ukraine, obviously, we operate there in the highly disrupted environment.

We do everything we can to support our colleagues impacted underground.

From a business perspective, our platforms in <unk> double digit net sales growth in the quarter. Yet this was entirely driven by price.

While our volumes are significantly down.

More concretely in Russia. The volume decline is a consequence of the fact that we operate under restricted conditions as we announced several weeks ago combined with a very challenging macroeconomic context.

In the Asia, Indonesia delivered high single digit growth this quarter led by the recovery of mobility that benefited our aqua water brands.

Latin America also delivered strong mid single digit growth in the quarter led by Mexico, where edp delivered strong mid single digit growth with stable volumes and where waters grew double digits.

And finally platforms in Africa, and Middle East delivered mid single digit growth with a strong contribution from edp.

Specialized nutrition, which is just a soft Q1 on a very high base of last year.

To sum it up let's now take a look at our Q1 net sales of bleach and turning to the next slide slide number nine.

Let's start with the composition of our plus seven 1% like for like growth.

As mentioned growth was led by price up plus four 9% in the context of global pricing initiatives all around the world.

At the same time, our volume and mix component remains resilient.

A positive contribution of plus two 2%.

Thanks to a solid contribution from product and country mix.

Volumes were slightly negative this quarter.

Outside of the like for like currency and other had a positive impact of plus three 4%, mostly driven by plus two 2% tailwind from currency effects.

This reflects the appreciation of several currencies against the U, notably U K and U S and Asia and in Latin America.

Next to the currency scope had a slightly negative effect of minus 2%, mainly resulting from the combined effect of the integration of follow your heart.

And the disposal of the bigger brands.

All in all our reported growth stood at plus 10, 2% for the quarter.

Bringing our quarterly net sales to roughly $6 2 billion up from $5 7 billion in Q1 last year.

Moving on to the next slide Slide 10, and looking at the remainder of the year. We continue to expect like for like growth within the 3% to 5% range.

And recurring operating margin to be above 12%.

<unk> been rather precise on the different moving parts just a few weeks ago at the occasion of our capital market event and they remained very much the same.

We continue to see input cost inflation of around mid teens levels with broad based inflation for Mig and other ingredients packaging, the Tvs manufacturing and transportation costs.

Against that backdrop, we are preparing ourselves to deliver productivity on our cost of goods sold above last year.

Above 5%, while aiming to deliver strong pricing contributions ahead of what we saw already in Q4 last year.

And importantly, we are confirming that we are starting our investment journey.

Aiming to reinvest 100% of the <unk> savings in the spirit of the strategy Unvalued at the scene.

I will close my prepared remarks with chartering them by 11.

Our strategic plan within Danone is no emotion in the whole company is set to making this year 2022, the foundation a year it ought to be for Dylan.

Bringing our company back towards sustainable profitable growth moderate to sustainable value creation.

While we have been starting well into this year, we are focusing with Antoine and the whole executive committee on the implementation of our strategic roadmap she.

Shifting the gears in managing our portfolio and the most value creative Minto.

Boosting our venous as much as we can.

Accelerating the call while fixing our underperformers with determination.

This is supported by the start of our reinvestment program. Thanks to the savings generated by local effects.

We're obviously mindful of the particularly challenging environment as we navigate through that.

We also feel very <unk>.

<unk> by our plans, which provide a great north start to deliver on our targets.

And with that let me hand, it over back to material to start the Q&A session.

Thank you. Thank you again, so we'll start the Q&A session.

Celine <unk> from Jpmorgan.

Thank you good morning yoga.

Hello.

My two questions.

You too.

Can you talk about.

And just how you think that that's what we got to keep I would like to let me deconstruct that.

Yeah.

And what I would call a one off.

He can put might change.

Talk about that but that's well and what have you seen in terms of.

And how big was the contribution to from Russia.

When you get people uniques and Im sorry, another one is.

And are you starting to see a benefit.

Well, yeah, if you could help us understand how this route as we move into Q1.

What may not give me everyone. We look into the remainder of the year.

And I sure.

Second question is on them.

Well.

What stops me Bob maybe.

Supply chain as well.

Emerging markets specialized nutrition, which was only flat in the quarter if you could explain.

What has been behind that and again, how should we look at diesel going forward. Thank you.

Good morning Celine.

Yes, so let's.

Let's start with that.

First of all I think we can say that.

<unk> has been delivering very solid Q1.

Plus the three 6% in consistency with what we have seen over the last couple of quarters and within EEP. There. It has been growing low to mid single digits. While plant based grew mid single digits. So I think a very good performance.

Think confirming what we were discussing in terms of perspective for the future for this category.

When we decompose a bit this performance North America.

A bit more than plus 5%.

I think very strong performance in volume.

Mix and price or else. We expected is why I was saying that we are particularly.

Happy with the quality of that growth in this part of the world.

And this is broad based within dairy so it's a it is about iqos winning again in the marketplace is about Activision are winning in the marketplace is very strong performance of coffee Creamers and why we have been doing those several rounds of pricing and we see also the volumes are holding very well, obviously, so I think a very good bye.

<unk> performance in this in this part of the World.

Hmm.

Rest of the world very solid dynamics, overall, especially driven by Africa and Mexico.

Where we saw volumes contributing positively on the other side of course.

There is a number of markets, where our pricing initiative had some impact on volumes as expected I would say it here, particularly speaking of boats.

A market like Russia, you're speaking about markets like Turkey, all parts of the year, where the macroeconomic environment is the most complex.

And lastly, you walk, where we had a softer Q1.

Currently.

In volumes and in value in Edp clearly here.

We had a number of supply chain that changes in the middleware in a moment, where we were in the middle of the commercial negotiations with our customers.

The situation on the supply chain has been has been sequentially improving including in Spain over the last couple of weeks, we saw customer service levels coming back.

Pretty good competitive performance of active here and also our highest quality in the ranges in this part of the world.

This was a good.

Stellar performance.

The other side, we can still be happy with a few other elements, including including Activia and we know that you still have a job to do but overall I would say volumes holding well in Europe , and North America mix contributing very because we see that benefit less products in dairy.

Pulling the growth.

And price is delivering and pilot there being a cost across all the geographies in EP, so very solid performance.

When it comes to our specialized nutrition and the rest of the world.

It is true that we had the slower start of the year, but this is really mostly driven by the very high base of comps from last year.

We expect the first half we expect the performance to normalize as of next quarter.

As our competitiveness remains very strong and as the markets remain to be gross or I think we can be very positive on the outlook. As we are very positive on the outlook of course, the other piece of this category.

Can I just I can't on.

Thank you Paul.

Comprehensive answer.

Yes.

Is it possible for you to tell us what was the volume impact from Russia.

So when we talk more about Russia, the volumes have been declining significantly.

As I was saying this has been over compensated by price and by our decision to ring fence promotional activities and so the net net of this is positive and even double digit positive. So they face a growing double digit OIBDA in Russia.

But volumes are clearly clearly are significantly down.

Alright, thank you.

Yes.

Thank you said into the next question from Ian <unk> from UBS.

Thank you Martin good morning, all.

Two questions from me.

First one is on your outlook because you had a very strong start to the year.

But you'll have not changed your like for like sales growth guidance for 2022.

My first question is.

Being conservative, which is probably a good thing given how volatile the environment is or does your 3% to 5% guide and signal some.

We expect it to slow down in a couple of divisions, particularly waters early life nutrition.

You begin lapping a more normal basis of comparison from Q2 or Q3 indications of that yet.

China.

And then my second question is going back to <unk>, but zooming in on plant based products. I mean, it seems Q1 2022 was one of the weakest quarters in plant based since you acquired lightweight.

Just wondering if you could shed a little bit more light on this softness is it all down to supply chain challenges.

Any other important factors, we should be aware off the charts a slowdown in category growth may be still a few challenging countries from a market share standpoint, maybe some share losses Julien.

Thank you.

Yeah. Good morning, good morning Hugh.

You are absolutely right. When you are saying that we are maintaining our guidance on the top line three to five 3% to 5% and I think the good start in the year.

Firming. This this guidance as you say very important to keep in mind that the.

Q1 of this year was the last quarter, we were running against a low base of Covid impacted base.

So from Q2 onwards, the base will be much more demanding and much more comparable and this is true for <unk>.

All the categories, we are playing in.

Entering into the Q2, we see however, goodman robust dynamics across the categories and so we expect to be in growth between Q2, and this is true for the categories in order so I.

I think key points for the year to go as you were mentioning is indeed volume elasticity as we have done a number also.

Pricings in the.

In the different geographies in Europe , we just implemented is just hitting the shave and so it's true that the key point of attention for US you need to manage volume elasticity is moving forward. So we think that the 3% to 5% guidance makes a makes a lot of sense moving to moving on to plan.

<unk>.

I would say a very different picture geography by geography.

So good.

I'd say acceleration in North America, where the supply chain challenges of at least a little data.

We immediately saw the benefits of it are the benefits in terms of net sales growth, but also the benefits in terms of competitiveness because we have been growing shares.

In the different sub segments. So I would say a pretty good picture in Europe , It's a more of a mixed bag in Europe .

Again constrained by a number of supply chain challenges, which didnt have the performance. It's also true that our Q1 2022 is running on a very high base of comparison versus Q1, 2021, which makes that the category is also a bit softer than what we used to see in the in the previous quarter and lastpass.

And you can talk about competitive performance I think we can be happy in a number of countries with our competitive performance, but there is a still a job to do and others, namely in the U K. So a mixed bag overall, which does not change what we have been discussing at the capital market event, which is that we are very confident of the prospects on the perspective of this.

Category moving forward.

SBR, believing it would be a fantastic assets to capture the growth of this category is offered to us.

Thank you very for Jim.

Thank you the.

The next question.

Keith.

Yeah. Thanks, good morning, guys.

A couple of questions for you the first one really.

Just following on from Celine.

What's going on with the volume.

Trying to strip out the volume impact.

Jerry from that situation.

In the Ukraine, and Russia Ncis.

But rest of the World segment, the volume mix is down two 3%.

I assume that last year in that segment.

<unk> would be about 10%.

That overall business may be slightly lower but somewhere around there.

You seem to be saying, it's down substantially the volume I'm, just wondering how much I guess, it would be something like 10% or 12% or even more than that so then if we strip that out you can obviously see volume mix in that segment would be positive excluding what's happening in the C. I guess that's the first question is just a quick question.

Just really on strategy and on what you.

We're up to you, saying going on with the strategy, but we've not seen much in terms of portfolio reshaping yet or much to that effect. However, there are quite a few reports in the French press. This morning.

Like tell us may be interested in parts of the business I Wonder if you can sort of just discuss where you are on strategy on that and in terms of the portfolio review specifically in the sort of like more commoditized parts of the dairy segment. Thank you.

Yes, good morning, John .

First on the rest of the world.

And the volume.

You are absolutely right that as Russia has a significant weight within that zone and these western volumes declining significantly the way you look on the total reported numbers.

Thats why I was mentioning that in the vast majority of our geographies and this includes the rest of the world volumes are holding very well we have a few exceptions in India, Russia.

And Brazil, where volumes are going down but in the vast majority of our countries. We don't see that we see that volumes are particularly a particularly robust. So I think that's a good sign.

We are very vigilant.

Monitoring the situation moving forward.

Well I'd say that Q1 is very much in line with the strategy this year.

I think that when you look at.

The growth and the way we have been focusing our resources.

It's extremely consistent because we have been focusing on boosting the Venus.

Inc.

Laying out very well for us.

It's demonstrated in the fact that the mix has contributed very strongly and by the way we license where they talk about mix I speak really both product mix, which has been the main.

The main driver in here product mix is contributing positive in each of the categories in each of the zones. So there is not only one zone or one category, which is pulling products really across across the board and it is.

So I think because we are refocusing our resources, where they have the biggest impact.

At the same moment, where we are.

Obviously working very actively on.

Fixing the underperformers have been discussing that at length.

A couple of weeks ago, obviously, we take the necessary time.

In order to find the right solutions fixing the business models of finding alternative solutions and we will update you as soon as there should be something new to say.

Thank you.

Next question.

In <unk> from Barclays.

Yes.

Morning kind of material <unk> Barclays.

Couple as well first one can you talk about inflation on Cogs, you say in your slides mid teens, but can you break that out I mean dairy prices.

In recent weeks plastic hedging I think has rolled over for you, but you're not changing the mid teens guidance compensating and then related to that can you discuss the moving parts the margin phasing H one H two.

Was it seems consensus is quite even each one but I thought it would be more unbalanced.

One versus eight so can you help us a little bit on the moving parts and then secondly can we dig into China infant nutrition. I mean, this is the third consecutive quarter of double digit growth, which is very impressive.

How much of that is due to kind of channel mix benefits moving away from diet do versus underlying share gains and you are taking share where is that share coming from and how long can you keep growing double digit in China.

And then if I can just squeeze in a third one quickly just some supply chain challenges are you able to say that the issue has dropped in Q1.

Indicators do you have visibility do you have that is the case. Thank you.

Good morning.

Let me start with with inflation you are absolutely right that we continue to expect the cost inflation at mid teens level. When we were together.

Three four weeks ago, and if you obviously said in the call window between.

Low to mid teens, but at the higher end of this call and yes, we confirm basically that we are at the higher end of disclosure at mid teens level.

We have seen a lot of volatility in the market in global commodity markets a lot of ups and downs when you look where the U S. Dollar has been at the moment of the capital market and I think it was more than $120 today. They are below one that with Intel venues.

When you see how the SMT. So we'll look for the <unk>.

<unk> events.

Totally up right. After we had been discussing as you know the adult executives to the level of four weeks ago. So volatility is extremely extremely high yet net net at the moment, we see our expectation is exactly the same as the expectations. We had a couple of weeks ago highest pressure continues to come from material cost.

He especially for Mig.

From some of the specific ingredients like starch and as you say from packaging of its plastics, but also from the aluminum in paper based packaging, but I would say, there's not a lot of news on that front.

When it comes to.

Two margin.

Evolution H one H two.

Luke.

We do not guide on the Peninsula H, one margin for what we know today.

A few elements or there's probably two elements, which are important one we have on one side the tailwind from a positive category mix and you saw that.

Very strong performance of specialized nutrition in Q1, which is which will have on the other side, we have a clear headwind.

Is it progressively increasing pricing effect.

Basically because of your offer where the pricing is just hitting our P&L basically from Q2 onwards net net.

Operating operating margin could be a little bit more skewed towards <unk> is what we know today. So I think that's where we are that's where we are today.

On your question on China.

I would say indeed, there is total performance and a very strong performance.

The two channels, we are we are focusing on.

Which is the China labor.

We are growing double digits and we are we are winning in market share and very strong continuing key to what we have seen the last couple of quarters.

Also a very good performance in.

In the control centers on E Commerce for international Labor.

Which is and this was offsetting the further decline of the <unk>.

Information is.

Which is getting.

To a smaller and smaller weight in our total net sales in China is now below 20% and as we've been discussing at several occasions, we would expect that further.

Decrease.

So net net we are winning on China labels, we are winning on international labor.

We are reinvesting to making sure that the upcoming brand remains one of the key leading brands in the in the market.

When it comes to your last point, which is on the supply chain challenges.

Look that's something where the recent weeks have been growing better in melanin going better I think that we are back to a more competitive situation, especially in North America. However.

Situation remains extremely tense, which is true on the some availability of materials, but also on transport. The recent city Lockdowns in China may not have needs or the look at the global supply chain. So we are monitoring that with a lot of.

Calle.

And I would expect that the next couple of weeks with.

There's a number of ups and downs are.

All right very helpful. Thank you.

Thank you and the next question from Millennium.

King.

Hi, good morning.

My first one youre going to material is about the sort of pricing in Europe , which is still much below the other ones are two six well below where you would expect it to be a clearly commodity started raising a year ago in March last year, and so somehow your ability to pass through pricing in Europe seems to be.

Well delayed and no pricing contracts are different in Europe , but still we are now already sort of April 2022, more than a year behind the commodity increases.

Is it simply has something changed in Europe that simply makes it so slow.

Pass through pricing is there any change to what it would have been years ago are they simply refusing more because there is more private label embedded discounts in Europe can you just sort of comment a bit more whether it is the level of play and positive price in Europe .

What is causing that and whether that's changed over time. My second question is you did I think you did say someone had during your prepared remarks.

Europe is off to a good start obviously at around zero percent organic growth.

I wonder what a bad start would have been in cell.

Given where the U S as in Edp Europe emphasis GDP in Europe , what would be the timeline you think you would need for your innovation.

Our restructuring plan to work to get Europe sort of out of the percent organic growth despite having all the inflationary potential tailwind.

Tailwind into thank you.

Yes, good morning.

Let's start with your first question on pricing in Europe , It's true that in Europe , we material materialize the pricing over 2.5% for Q1.

Being that this does not yet really reflect the price increase the price increases we implemented in the course of this quarter as I said most of the price increases we just hit the P&L from Q2 onward to that extent it is not.

Surprised that we are below what we've seen is a terrific and that we are for example below what we see in North America, because in North America, we implemented our price increases already.

And of the last quarter. So I would say we are very much in line with our internal expectations on price increase in Europe , what is I think.

Important to note on top of the price increases that we are making very good progress on driving the mix in the right direction and it is what we are seeing in all the categories in Europe and as we are investing into our window as we see it as a market share of evolving the regulators. So I think there's a number of elements, which go in the right direction.

Yes.

A lot of elements to do India, obviously very.

Careful and mindful of the competition from private label.

When you look at the year to date performance of private label Interestingly in private label is not winning.

In the market with most of the European market, nor in North America as much as inflation is a topic for the industry, it's a topic for private label.

What level is usually running at very tiny margins.

They have even more need of increasing their prices than branded products manufacturers.

On your on your second question on Edp.

Indeed, we are.

After a good start in Europe , but not in Edp Europe .

I would not dare to say that with flattish performance in.

So here I think it's really a mixed bag. This is what I was mentioning I think there is a number of good elements, we are making good progress.

On boosting our number of our business, including active and including especially our high quality in our products, which are really here.

Again, a stellar performance, but at the same levels, we still have our homework to do and this is not surprising as what we discuss it with me on the on.

Our intelligence platforms and on the TV and.

In the year.

<unk> working.

The mix is in order to make sure that we can accelerate.

As we grow as we go through the year.

Thank you.

Thank you next question from James Jones.

Thanks, Michele good morning, Evan.

How do you how do you assess the reputational risk that youre running probably continue to do business in Russia.

Secondly, could you can you quantify the mix.

Give us some idea of the contribution of mix in Q1, and how that compares with recent years.

Actually if I can just sleepiness slip in a third one cheeky, we surprised the strength of Q1's performance, especially the volume performance.

Okay.

Good morning, James.

I think that we are.

Going in the reverse order.

Q1 volumes.

I think it's confirming especially for Europe , and North America that we have very strong brands.

Categories, which are relevant to the consumer also had at that moment.

We are increasing the price.

Very important that we are reinvesting into our brands. So that is what we have started in Q1 in order to make sure that we maintain and we get to a product superiority and that we are.

Supporting our brands and categories in these very inflationary environment. So I think indeed, a good start into the year also from a volume standpoint.

When it comes to mix.

When we are saying that volume mix is.

<unk> was up by two 2% in Q1.

These volumes slightly down the biggest mix contributor was product mix.

And I think that is indeed, an element, which is delivering well as we speak and while in the past.

It was more.

Country centric a lot about China and I think it's a good element of Q1 is that we see mix coming really broad based.

In all categories of zones in specialized nutrition, a lot from the specialty pediatrics.

I would say in Delhi.

Benefit less product like Humira.

And in water loss through the recovery of small format. So it's really a broad based mix contribution and is also what we want to focus on as we previously with the remainder of the year by reinvesting in our business and reinvesting into our scalable premium.

Elevations.

It comes to Russia, Theres not a lot to say on top of what has what we what we stated already over the last few weeks.

Above all this is a tragedy.

If you would hoped would never happen again in Europe than we are.

You are very clear that this only condemn the invasion of Ukraine, or Russia, or there's no ambiguity.

Our statement of our position is unchanged.

Vis vis what you have seen in today in the press release, we are also confirming that and I think you have also seen that we have decided to.

So significantly adapt our operations in Russia.

Obviously, we monitor the situation very closely and we'll let you know.

As soon as there's something to say.

Thank you.

Thank you James for the next question from Susquehanna.

Yeah.

Yes, good morning, everyone.

And those elaborate.

Q1 2022 Danone SA Corporate Sales Call

Request a DemoDemo

DAN

Danone

Earnings