Q3 2023 IPG Photonics Corporation Earnings Call

Speaker 1: The first one is on the consumer environment. Some of your peers have called out in some markets, mainly in Europe and Asia.

The first one is on the consumer environment I mean, some of your peers have called out in some markets, mainly in Europe and Asia. Some deterioration in recent months not time seems to be quite well Fannie resilience for now so I wonder if you could provide a quick assessment in terms of what you're seeing.

Speaker 1: from deterioration in recent months. LAKAM seems to be quite fairly resilient for now. So I wonder if you could provide a quick assessment in terms of what you're seeing consumer environment in your main markets around the region and whether you have seen any change since the last update at Q2.

Tumor environment in your main markets around the region and whether you have seen any change since the last update in Q2.

Speaker 1: And the second question, please is on your S-GNA in North America, which increased 2.5%. Now, there's clearly various buckets within your S-GNA. I imagine distribution costs will be declining.

And then the second question. Please is on your SG&A in North America, which increased two and a half a percent now there's clearly various buckets within your SG&A I imagine distribution costs will be declining support to wholesalers going up but in terms of your media media spend.

Speaker 1: support to wholesalers going up. But in terms of your media spend, a couple of quarters ago, you said that this year it would be very focused on the summer months, so they'd be a step up through the summer months. So I was wondering whether that has taken place or whether maybe...

And a couple of quarters ago, you had you'd said, but this year it would be very focused on the summer months, so that'd be a step up through the summer months. So I was wondering whether that has taken place whether it may be.

Speaker 1: of the last few months, your plans have evolved a bit. Maybe you're waiting for the dust to settle before really stepping up media spend in the US. Thank you.

The last few months you Youre your plans evolved debate may be or waiting for the dust to settle before already stepping up media spend in the U S. Thank you.

Yeah.

Right.

Okay.

Speaker 2: And we have, thank you for the questions. I'll take both here. In terms of the consumer environment, I'll follow the sequence of your questions, starting with you.

And thank you for the questions I'll take both here.

In terms of nickel so many environment I'll follow the sequence of your question starting with Europe.

Speaker 2: I think that the categories, I think, dollar-wise remains resilient.

Think that the Cathay, but what is your thinking dollar wise remains resilient.

Speaker 2: And most importantly for us, consumer underlying consumer demands for our brands is going very well. So if we look at the volumes,

And most importantly for the us coal similar underlying consumer demand for our brands.

Uh huh.

Is going very well.

So if we look at the volumes.

In this quarter, because we saw a decline.

High single digits.

Speaker 2: And a lot of that was

And a lot of that was.

Weather related.

Speaker 2: And it's interesting because the south of Europe was very hot.

And it's interesting because the south of Europe.

It was very hot.

Speaker 2: But our footprints is Morco Centrait on the center, northern part of Europe . That was very cold, very wet. And we saw July , August to very bad, with some improvements in September and further improvement in the early readings of October , so...

But our footprint is more concentrate on the center northern part of Europe that was very cold.

<unk> yeah.

We saw July August that are bad we have some improvement.

Timber and Florida improvement and they'll learn it reboots October so.

Speaker 2: This could to precisely say how much was weather, how much is consuming environment, but was more on the weather, less on the consuming environment, and the consuming environment, of course, has inflation and prices up in solidities.

Difficult to precisely say, how much was that how much is still some environment, but was more on the ladder laszlo nickel. So many environment and of course when environment of course has inflation and prices up.

Solid desktop catching up so as you see the disposable income.

Speaker 2: So as you see the disposable income, September also marked the point where the disposable income because of the salaries increase, is now at party and recovery versus inflation.

But also market the point, where disposable income because of the salary increase is now at a party.

And the recovery, that's just inflation. So I think that that is a mean to distinct combination of bad weather more disposable income as we say so quarter three two questions for.

Speaker 2: So I think that there is an interesting combination of better weather, more disposable income, as we face so quarterly to quarter four. In China,

In China, we saw similarly.

Speaker 2: Similarly, complicated industry, mostly impacted by weather. So there are linear hate, the South China and the South China as well. I just came from China two weeks ago, spent a lot of time there, 12 days in the region. The

A complicated industry.

Mostly impacted by weather so that would mean you hit the south China and the southeast China as well I just came from China. Two weeks ago spent a lot of times the 12 days in the region.

Yeah.

Speaker 2: Consumption you see that is thriving

Consumption, you'll see that is thriving.

Speaker 2: The market is open, consumers are coming back. The beer category is resilient, overall, other than the weathering time.

The market is often consumers are coming back the beer category resilient over at all other than the weather impact.

Speaker 2: And most importantly, for output for all your criminalization remains a very important trend. I think that the overall environment in China is a one of recovery with GDP recovery, activity recovery. You see that some structural issues.

And most importantly for our portfolio of premium amortization remains.

That important trend I think that the overall environment in China is a one off recovery with it shouldn't it be recovering activity recovering.

See that some structural issues.

Speaker 2: in the real space, which is not our business, but of course, impacts the overall economy and under a more satical in exports, but this does not change the long term.

In the real estate, which is not toward a business, but of course in fact spill over at all.

The economy, and a little bit more cyclical and exports, but this does not change the long term.

Speaker 2: prospects for China, for our business in particular, because both the industry remains very resilient and the most important thing, which is premiumization, where our portfolio is performing very well, continues to move in the right direction.

Prospects for China put out of business and particularly.

Because both the industry remains very resilient.

And the most important thing which is premium musician, what our portfolio is performing very well continues to move in the right direction.

Speaker 2: In Latin America, I think that we are seeing this strength that continues.

In Latin America, I think that a we are seeing.

These strengths.

The strength that <unk> team has too many fast.

Speaker 2: across majority of the markets. Of course, you have impact here and there. So there's a little climate to just solve this big event in Mexico and a capoco region.

Across the majority of the markets of course, who have in fact get them. There. So they'll Nina climate, who just saw the big advancing Mexico Poker region.

Speaker 2: But you are also seeing a strength across other markets, Colombia, Brazil, the R, where inflation is more under control. Real salaries are moving correct. And the strength of output for you is delivering the numbers that they need to deliver. So I think that this is like a big consolidation of how I see the industry and the consumer environment.

But you are also seeing strength across all their markets, Colombia, Brazil D. R where inflation is more under control real solid as they're moving correct and the strength of our portfolio is delivering.

Number is that they need to them. So I think that this is like a big cultural and additional haulage sedans physical sort of environment.

Speaker 1: Yeah, on the market taking an immediate spend in the US and the SG&A.

Yeah on the marketing on the media spend and are in the U S and the SG&A.

Speaker 2: I'm sorry, I forgot the technical questions. Sorry about that. In short, we are managing very tight as usual overheads. And we've been investing as...

I'm, sorry, I forgot the second question sorry about that.

In short we are managing very tightly as usual wall and overheads.

And we've been investing is this ads b.

Speaker 2: behind our brands to the low term. And we didn't change on investment plans for the summer. We continue to ask and we'll continue to make the right investments and choices to low term. destination.

Behind our brands to the long term and we didn't change any investment plans for the summer.

We continue to move fast and we will continue to make the right assets and choices to Alton.

Yeah.

Thank you.

<unk>.

Right.

Speaker 3: Thank you. This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Mr. Michelle Ducarus for closing remarks.

Thank you. This was the final question is your question has not been answered please feel free to contact the Investor Relations team I will now turn the floor back over to Mr. Michel just Paris for closing remarks.

Speaker 2: Thank you, Jesse. Thank you all for your time today and for your ongoing partnership and support for business.

Thank you Jesse.

Thank you all for your time today and for your ongoing partnership and support of our business Stacey.

Speaker 2: Stay safe and well, and we will see you on our quarter five. Thank you.

Stay safe and well and we will see you will not quantify thank you.

Speaker 3: Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines and have a wonderful day.

Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines and have a wonderful day.

Unknown Executive: The first one is on the consumer environment. I mean, some of your peers have called out in some markets mainly in Europe and Asia some deterioration in recent months. Luckham seems to be quite fairly resilient for now, so I wonder if you could provide a quick assessment in terms of what you're seeing consumer environment in your main markets around the region and whether you have seen any change since the last update at Q2.

Unknown Executive: And the second question, please is on your S-GNA in North America, which increased two and a half percent. Now they've clearly various buckets within your S-GNA. I imagine distribution costs will be declining support to wholesalers going up. But in terms of your media spend a couple of quarters ago, you said that this year it would be very focused on the summer months. So they'd be a step up through the summer months.

Unknown Executive: So I was wondering whether that has taken place or whether maybe of the last few months you've your plans have evolved a bit, maybe you're waiting for the dust to settle before really stepping up media spend in the US.

Unknown Executive: Thank you.

Unknown Executive: And thank you for the questions. I'll take both here. In terms of the consumer environment, I'll follow the sequence of your questions starting with Europe. I think that the categories, I think, dollar-wise remains resilient and most importantly for us consumer underlying consumer demands for our brands is going very well. So if you look at the volumes in this quarter, we saw a decline like high single digits. And a lot of that was weather-related.

Unknown Executive: And it's interesting because the south of Europe was very hot but our footprint is more concentrated on the center, northern part of Europe. That was very cold, very wet and we saw July, August, very bad with some improvement in September and further improvement in the early readings of October. So this could precisely say how much was weather, how much is consumer environment, but was more on the weather, less on the consumer environment.

Unknown Executive: And the consumer environment, of course, has inflation and prices up and salaries that are catching up. So as you see the disposable income, September also marked the point where disposable income because of the salaries increase is now at parties and recovery versus inflation.

Unknown Executive: So I think that there is an interesting combination of better weather, more disposable income as we face no quarter-three to quarter-four.

Unknown Executive: In China, we saw... Similarly, a complicated industry mostly impacted by weather, so there are linear heat, the South China and the South China as well. I just came from China two weeks ago, spent a lot of time there 12 days in the region. The consumption you see that is thriving. The consumers are coming back, the beer category resilient overall, other than the weather impact, and most importantly for output for all your criminalization remains a very important trend.

Unknown Executive: I think that the overall environment in China is a one-off recovery, with GDP recovering, activity recovering, you see that some structural issues in the real state, which is not our business, but of course impacts the overall economy and a little more cyclical in exports, but these does not change the long-term prospects for China. For our business in particular, because both the industry remains very resilient, and the most important thing, which is criminalization, when our portfolio is performing very well, continues to move in the right direction.

Unknown Executive: In Latin America, I think that we are seeing this strength that continues to manifest across the majority of the markets. Of course, you have impact here and there. So, there are many climate, we just saw this big event in Mexico in a typical region, but you are also seeing strength across other markets, Colombia, Brazil, DR, where inflation is more under control, real salaries are moving correct, and the strength of output for you is delivering the numbers that you need to deliver. So, I think that this is right that a big consolidation of how it's hitting the industry and the consumer environment.

Unknown Executive: Yeah, on the market, taking on the media spend in the US and the SG&A.

Unknown Executive: I'm sorry, I forgot that technical question, sorry about that. In short, we are managing very tight as usual overheads, and we've been investing, as we said, behind our brands to the long-term, and we didn't change our investment plans for the summer. We continue to invest, and we'll continue to make the right investments and choices to long-term.

Unknown Executive: Thank you.

Unknown Executive: This was the final question. If your question has not been answered, please feel free to contact the investor relations team.

Michelle Ducarus: I will now turn the floor back over to Mr. Michelle Ducarus for closing remarks. Thank you, Jesse. Thank you all for your time today, and for your ongoing partnership in support of our business. James, Stay safe and well and we will see you on our platform. Thank you.

Unknown Executive: This concludes today's earnings conference call and webcast. Please disconnect your lines and have a wonderful day.