Half Year 2024 Danone SA Earnings Call
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Speaker Change: Champions for life.
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Speaker Change: Yes.
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Speaker Change: Being a champion means trying, succeeding, never giving up, it also means being afraid, going for it, fighting until the end, and succeeding. In fact, we all have a champion within us.
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Thomas: And then buzzing with excitement of it doubled to social Jerome.
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Thomas: Okay.
Speaker Change: Good day and thank you for standing by. Welcome to Dutton's first half 2024 results conference call. At this time, all participants are in a listen only
Speaker Change: Good day and thank you for standing by welcome to gotten in first half 'twenty 'twenty four results conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the <unk>.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: You asked a question during the session, you will need to press star 11 on your telephone.
Speaker Change: <unk> you will need to press star one one on your telephone you wouldn't hear an automated message advising yohan. This race to withdraw your question. Please press star one one again.
Speaker Change: You will then hear an automated message advising your hand is raised.
Speaker Change: to with all your questions.
Speaker Change: Press, Dahl 1, 1 again,
Speaker Change: We advise that today's conference is being recorded.
Speaker Change: Please be advised that today's conference is being recorded.
Speaker Change: It is now my pleasure to hand you over to Mathilde Rodie, Head of Investor Relations.
Speaker Change: It is now my pleasure to hand, you over to Mathilde Rodi head of Investor Relations. Please go ahead.
Speaker Change: Go ahead.
Speaker Change: Thank you. Good morning, everyone. Mathilde Rodie speaking, Head of Investor Relations. Thank you for being with us this morning for Danone's 2024 H1 Resource Call.
Mathilde Rodi: Thank you.
Good morning, everyone metal heard you speaking at a investor relations. Thank you for being with US. This morning for denim 2024, H, one regional call I'm here with our CEO when does not that's weekend for.
Speaker Change: I'm here with our CEO , Antoine de Saint-Afrique, and our CFO , Jorgen Esser, who will go through some prepared remarks before taking your questions.
Mathilde Rodi: Yoga Nessa, who will go through some prepared remarks before taking your questions.
Speaker Change: And before we start, I draw your attention to the disclaimer on slide 32 of the presentation related to forward-looking statements and the definition of financial indicators that we'll refer to during the presentation.
Mathilde Rodi: And before we start I draw your attention to the disclaimer on slide 32 of the presentation related to forward looking statements and the definition of financial indicators that will as you said during the presentation and with that let me hand, it over to Antoine.
Speaker Change: And with that, let me hand it over to Antoine.
Speaker Change: Thank you, Mathilde, and good morning, everyone. A warm welcome to our Healthier24 conference call. Juergen and I are pleased to be with you today to share what is, yet again, a strong, consistent, and broad-based set of quality results. And for this, I would like to start this call by thanking all the Danoners. They make it happen. Dane, day out.
Antoine: Thank you Matt.
Antoine: Good morning, everyone, a warm welcome to our half year 'twenty four conference call.
Speaker Change: Youre going on I R.
Antoine: Pleased to be with you today to share what is yet again.
Strong consistent and broad based set of quality results.
Antoine: And for this we would like to start this call.
Antoine: King.
Speaker Change: I don't know if they make it happen.
Jane: Jane day out.
Speaker Change: It has only been one month since we held our capital market event in Amsterdam and I'm very pleased that so many of you were able to join us at that event. Our progress in the first half of 24 has been very much in line with our new strategy and with what we shared in Amsterdam.
Speaker Change: It has only been one months since we held our capital markets event in Amsterdam, and I'm very pleased that so many of you were able to join us at that event all progress in the first half of 2004 has been very much in line with our new strategy and with what we shared in Amsterdam.
Speaker Change: As we have said, we have been on a journey of radical transformation over the past two years, leading a major cultural shift, forming a performance-oriented organization, rebuilding our distinctive capabilities, refocusing our strategy, and expanding our execution.
Speaker Change: As we said then we have been on a journey of radical transformation over the past two years driving a major cultural shift shaping a performance oriented to the organization rebuilding distinctive capabilities refocusing our strategy and sharpening our execution.
Speaker Change: It has been reflecting on the results of the last two years as we delivered consistently on strategy and our 24 H1 results show further progress in the right direction. So let me dive into the results starting with slide 3.
Speaker Change: It has been reflecting on the results of the last two years as we delivered consistently on strategy.
Speaker Change: 24, H one results show further progress in the right direction.
Speaker Change: So let me dive into the results starting with slide three.
Speaker Change: As you may have seen from the press release this morning, we close a strong first half of the year with like-for-like revenue up 4% and broad-based growth across geographies and categories.
As you may have seen from the press release. This morning, we closed a strong first half of the year with like for like revenue up 4% and broad based growth across geographies and categories.
Speaker Change: As we mentioned before, the volume mix is key to the resilience of a value creation model. And this semester, we have increased this contribution to more than 2.1%, showing progress for quarter 4.
As we have said before volume mix is key for the residents over value creation model and this semester, we have step up this contribution to plus two 1% showing cargos for the fourth consecutive quarter.
Speaker Change: The price contributed to a growth of more than 1.9% in sales in H1, normalizing, as expected, with the increase in inflation.
Speaker Change: Price contributed plus one 9% to net sales growth in each one normalizing as anticipated with inflation slowing down.
Speaker Change: Higher quality development, combined with consistent productivity and a focus on efficiency, allows us to better manage our assets and deliver an operational improvement margin of over 257 bits.
Speaker Change: Higher quality growth.
Speaker Change: With consistent productivity and a focus on efficiency.
Speaker Change: Is allowing us to leverage our assets better and.
Speaker Change: Deliver an improved margin from operation up close to 257 bps.
Speaker Change: And as we have done since the beginning of Renew Danone, we have reinvested in our brands, our product superiority, and our capabilities, driving our competitiveness while allowing a recurring operating margin to increase by 45 bps to 12.69%.
Speaker Change: And as we did since the beginning of the new Danone, we reinvested in our brands and product superiority of our capabilities driving our competitiveness, while lowering our recurring operating margin to improve by 45 bps to $12 69%.
Speaker Change: The result of this periphery, along with our continued strict management of CAPEX and our control over working capital, has allowed us to generate 1.2 billion euros in cash in H1, an increase of 11% over the same period in 2018.
Speaker Change: The results of this whole true.
Speaker Change: Along with our continued strict management of Capex and control over working capital as allowed us to deliver $1 2 billion in cash in each one of them.
Speaker Change: Improvement of 11% over the same period in 2003.
Speaker Change: Let's now move on to table 4. Our H1 performance demonstrates the results of our focus on the consistent deployment of our renovation model. We shared with the CME how we are winning, by leveraging our growth engine, but also by driving our body and taking care of our categorical growth.
Speaker Change: Moving now to slide four.
Speaker Change: Our H one performance demonstrates the results from focusing our efforts on consistently deploying a renewable model we shared at the CME, we are winning through shooting a growth engine, but also driving our core and taking ownership of what category growth.
Speaker Change: And here, let me confirm what I said in Amsterdam, there is growth in our categories. In fact, they continue to grow faster than the average for food and alcohol.
Speaker Change: And here, let me confirm while I told you in Amsterdam there.
Speaker Change: Growth in our categories as a matter of fact, they keep growing faster than the average of food and beverage.
Speaker Change: Our renewed focus on investment in science, delivering strong product superiority and differentiating technology, expressed in a consummate manner, continues to pay off.
Speaker Change: Our renewed focus on and investment in science, delivering strong product superiority and differentiating technology expressed in a consumer relevant way keeps staying off.
Speaker Change: At HiProtein, we continue to roll out a pregnancy model with discipline through YoPro and Oikos.
Speaker Change: In high protein, we keep deploying a gross model with discipline through Europe and oil cost more.
Speaker Change: Most recently, in Europe , we launched Geopro in Germany.
Most recently in Europe, we launched <unk> in Germany.
Speaker Change: While expanding our footprint, we keep a high pace in the markets where we are already present, leveraging our science around protein and nutrition to roll out more advanced variants, which further strengthen the claims we can make around performance and recovery.
Speaker Change: While expanding our footprint, we keep a high pace in the markets, where we are already present, leveraging our science around protein and nutrition.
Speaker Change: <unk> rollout more advanced volumes, which further strengthened the claims we can make our own performance and recovery.
Speaker Change: In medical nutrition, we have delivered very strong growth in both adult and pediatric segments across the world.
Speaker Change: In medical nutrition, we have delivered very strong growth in both adults and pediatrics across the globe.
Speaker Change: We play at scale and drive our global science and formulas to expand our research more and more, like in the post-discharge space in China, where adult oxygen grows very quickly.
Speaker Change: We are playing at scale and driving a global sensor and formulas to further expand our reach such as in the past discharge space in China.
Speaker Change: <unk> overall is growing very fast.
Speaker Change: and Coffee Creations, our sizable, profitable, and fast-growing platform in NOAM, continues to win and to grow share.
Speaker Change: And coffee creations are sizable profitable and fast growing platform in norm continues to win and to grow share.
Speaker Change: For those who attended the CME, you will have heard us speak of the continued success of our International Delight and Stoke brand.
For those who attended the CME you will have heard us speak of the continued success of our international delight and stock brands.
Speaker Change: The launch of our latest innovation called F.O.A.M. is showing promising early results with consumers, allowing them to take the coffeehouse experience home and recreate their favorite drinks. If you haven't tried it, please try it. It's worth it.
Speaker Change: The launch of our latest innovation cold foam is showing promising early results with consumers.
Speaker Change: Moving them to take the coffeehouse experience, whom and recreate their favorite drinks. If you haven't tried it please try it it's worth it.
Speaker Change: And as discussed in the CME, we keep broadening the way we reach out to consumers by further expanding our channel reach in a way for more.
And as discussed in the CME, we keep broadening the reach out to consumers by further expanding our channel reach in nowhere for a moment.
Speaker Change: We are consolidating our position in cafes and developing, where necessary, specific formats for the Away from Home channel.
Speaker Change: We are consolidating our position in coffee shops, and our developing where neither specific formats for the away from home channel.
Speaker Change: I hope you have seen what we did at Wimbledon, and here in Paris, we are fully committed to the Olympic and Paralympic Games, with our highly visible yogurt kiosks in the strategic venue and an active and visible participation in 13 million meals served to those competing in and attending the event. So we have good momentum overall.
Speaker Change: Our hope you have seen what we did in Wimbledon and here in Paris, We are full on with the Olympics and Paralympic games with our very visible yogurt, just encourage venue and active and visible involvement in 13 million meals served to those competing in an attempt.
Speaker Change: <unk>.
Speaker Change: The events.
Speaker Change: We have an overall good momentum.
Speaker Change: But we still have many things we can improve on. It goes back to the idea of constructive dissatisfaction that I mentioned in Amsterdam.
Speaker Change: We still have plenty of things on which we can do better.
Speaker Change: Back to the constructive dissatisfaction mindset I mentioned in Amsterdam.
Speaker Change: Let's move on to the fifth step. As I am sure you expected me to say, we have a mindset where we believe the work is never finished. As category leaders, we have the responsibility to continue to nurture the growth of our categories, ensuring they remain connected to consumers and exciting to clients, with a mix of our ongoing focus on fundamentals and related innovation. What has been done in the United States with yogurt, with the FDA-approved claims for the yogurt category related to diabetes, is an excellent example of category leadership in food. And as category leaders, we obviously benefit from this.
Speaker Change: Moving now to slide five.
Speaker Change: As I'm sure you would expect me to say, we have a mindset, where we think the job is never finished we have as category leaders the responsibility to quanta.
Speaker Change: Seniors can show the growth of our categories.
Speaker Change: Making sure they remain all of them to consumers and exciting to customers with a mix of our continuous focus on the core and all of <unk> inhibition.
Speaker Change: It was done in the U S on yogurt.
Speaker Change: The FDA accredited claims for yogurt category related to diabetes.
Speaker Change: A great example of nutrition category, all of Us and as category leaders, we obviously benefit from it.
Speaker Change: As I said before, there is no model for long-term value creation without systematically building capabilities for the future.
Speaker Change: As I have previously said there is no long term value creation model without systematically building future looking capabilities.
Speaker Change: This year, we announced two important partnerships, one with Microsoft on AI and the other with Michelin on precise fermentation.
Speaker Change: This year, we have announced two major partnerships one with Microsoft on AI.
Speaker Change: And another with our initial decisions fermentation.
Speaker Change: These partnerships, each in their own way, are propelling our company forward, making it future-ready.
These partnerships each in their own way.
Speaker Change: Projecting a company Ford, making it future ready.
Speaker Change: The same goes for DanSkills, a pioneering company-wide upskilling and reskilling program which we announced earlier this year.
Speaker Change: The same goes for Dan skills, a pioneering company was Upskilling and Reskilling program, which we announced earlier this year.
Speaker Change: And as always, there are a number of things that still do not work the way we wanted them to work. Here, we are going deep, we are going systematically, and we are going to make sure that we improve step by step.
Speaker Change: And as always there are a number of things that do not yet work the way we'd like them to work there. We go deep with real systematic and we make sure that we improve step by step.
Speaker Change: In the United Kingdom, we are making progress in turning around our planned food business. We took pricing actions earlier in the year and we are starting to see green shoots of recovery in competitiveness.
Speaker Change: In the U S. We are making progress with our turning around our plant based beverage business. We took some pricing actions earlier in the year and are starting to see some green shoots.
Speaker Change: Regaining competitiveness.
Speaker Change: As we have already shared with you, we are now focusing on managing differentiation and usage across occasions rather than on ingredients, which we believe will make a difference, as is the case for Alpro in Europe . So, there is progress, but obviously, there is still a lot of work to be done.
Speaker Change: As already shared with you, we now focus on driving differentiation and usage through locations rather than ingredients, which we believe will shift the needle as you test for alcohol in Europe. So some progress, but obviously still lots of work to be done.
Speaker Change: At the same time, we are making consistent and encouraging progress, and we have achieved significant transformations in places like Brazil and Morocco, where there is still work to be done to transform the development model of the dairy sector in the emerging market.
Speaker Change: Similarly, while we are making consistent and encouraging progress and have made significant transformation in places such as in pesos, such as more cool and Brazil are there is still work to be done in transforming the business model of dairy in emerging market.
Speaker Change: So, I am happy with the strong, consistent, and low performance.
Speaker Change: So.
Speaker Change: Overall.
Speaker Change: We used the strong consistent and broad based performance, but certainly not complex zones.
Speaker Change: but certainly not complacent, as we see more and more opportunities for progress.
Further opportunities to progress.
Speaker Change: With this, I am happy to give the floor to Jürgen to provide more details on the financial results. Jürgen, it's over to you. Thank you Antoine, and good morning everyone. Let's immediately move on to the financial review with table number 7 and our top-line performance for the second quarter of the year.
Yogesh: And with this I'm happy to hand over to yoga to provide more details on the financial results yoga over to you. Thank you Anton and good morning to all of you, let's get immediately into the financials revenue with slide number seven and our top line performance for the second quarter of the year.
Juergen Esser: We report a strong Q2 performance, posting a net growth of over 4% for Like4Like, with, once again, all our geographies and all our categories contributing positively.
We are reporting a strong Q2 performance posting like for like net sales growth of plus 4% with again all of our geographies and all our categories positively contributing.
Speaker Change: Before deep-diving into the performance by zone, just a few comments on the performance by category. The growth in the second quarter was broad-based and supported by the good contribution of our EDP category and plus 3.3% like-for-like sales growth. We are seeing strong volume-led growth in our functional segment, particularly in our high-protein and immunity platforms, while also coffee creations continue its market-share-winning growth journey.
Yoga Nessa: Before deep diving into the performance based soon just a few comments on the performance by category.
The growth in the second quarter was broad based and supported by the good contribution of our Edp category up three 3% like for like sales growth. We are seeing strong volume led growth in our functional segment, particularly in our high protein and immunity platforms. While also coffee creations continue its market share wins.
Yoga Nessa: Growth journey.
Speaker Change: It is interesting to mention that at the same time, we are restoring the plant-based growth dynamic in Europe , with our brand Alpro delivering competitive growth amidst single-digit growth in Q2.
Worth mentioning is we at the same moment restarting plant based growth dynamics in Europe.
Yoga Nessa: <unk> brands delivering competitive mid single digit growth in Q2.
Speaker Change: In parallel, our specialization in categories has supported its competitive and broad growth to more than 4.7%.
Yoga Nessa: In parallel our specialized nutrition category sustained its competitive and broad based growth at plus four 7%.
Speaker Change: which allow for continuous margin gains worldwide, including in China and the United Kingdom.
Led by continued market share gains across the world, including in China and in Europe.
Speaker Change: Our medical institution business is again posting double-digit growth.
Yoga Nessa: Our medical nutrition businesses again, posting double digit growth confirming the great growth potential, which we just discussed a few weeks ago in our capital market event and finally, our waters category that delivered another quarter of solid growth is plus four 4%.
Speaker Change: confirming the great growth potential which we just discussed a few weeks ago in our capital market event.
Speaker Change: And finally, our water category delivered another quarter of solid growth of more than 4.4%.
Speaker Change: the continuous momentum of our Maison brand in China and the resilient growth in Europe despite the poor conditions of the winter.
This continued momentum of our <unk> brand in China.
Yoga Nessa: <unk> growth in Europe, despite poor weather conditions at the beginning of the season.
Speaker Change: These Q2 results demonstrate that we are making good progress in building a powerful and at the same time resilient portfolio, which is probably best explained by looking at the next page, which is page number 8.
Yoga Nessa: <unk> Q2 results demonstrate that we are making good progress in building a powerful and at the same time were resilient portfolio, which is probably the best explained by looking at the next page, which is page number eight.
Speaker Change: And here, let me stress the sequential improvement of our volume delivery, reaching more than 2.9% this quarter.
Yoga Nessa: Let me stress, especially the sequentially improvement.
Yoga Nessa: Our volume mix delivery, reaching as much as plus two 9% in this quarter.
Speaker Change: This is not only our fourth quarter of sequential improvement but also our third consecutive quarter of positive volume growth.
It's not all your fourth quarter of sequential improvement, but also our third consecutive quarter of positive volume mix.
Speaker Change: And importantly, we can report good volume dynamics across all our categories, with an EDP of over 2.6%, our best performance in a long time.
Yoga Nessa: And importantly, we can report good volume mix dynamics across all our categories with Edp, a plus two 6% our best performance since a long time.
Speaker Change: It was Willis for Specialized, nutrition up by more than 3.6%.
Yoga Nessa: As well as for specialized nutrition up plus three 6%. What has also delivered a solid volume mix in the quarter at plus two 6%.
Speaker Change: Waters also delivered a solid volume mix in the quartile plus 2.6.
Speaker Change: I am sure you realize, these are strong top-line results that create solid entry points for the second half of the year.
Yoga Nessa: Im sure looking at that you will agree that these are strong topline results, which create a solid entry point for the coming second semester.
Speaker Change: And so I suggest we move on and get into our Q2 sales bridge with more details on slide number 9.
Yoga Nessa: And so I suggest we move on and get into our Q2 sales, which with more details on slide number nine please.
Speaker Change: As discussed, our Q2 for cell lines increased by more than 4%, composed of a volume mix effect of more than 2.9%, complemented by a sequential normalization price effect of more than 1%.
Yoga Nessa: As discussed our Q2 like for like net sales growth of plus 4% was composed of a volume mix effect of plus two 9% complemented by a sequentially normalizing pricing effect of plus 1%.
Speaker Change: Outside of the like-for-like, Forex had a negative effect of minus 2.4% as a result of a number of currencies depreciating against the euro, but this was partially offset by the impact of hyperinflation. And finally, SCOB effects that had a negative contribution of minus 7.2% due to the deconsolidation of EDP Russia, Horizon Organic, and the Michel and Augustin business.
Outside of the like for like Forex had a negative effect of minus two 4% as a result of a number of currencies.
Yoga Nessa: Appreciating against the Euro.
Speaker Change: This was partially offset by the impact of high inflation, and finally scope effects that had a negative contribution of minus seven 2% due to the deconsolidation of Edp, Russia Horizon organic and then Michelle any of this business.
Speaker Change: The effect of the deconsolidation of Russia is, with the closure of this first half of 2024 behind us,
Speaker Change: The deconsolidation effect of Russia is with the closing of this first semester 2024 behind us meaning.
Speaker Change: meaning it will report a significantly lower scope impact for the second half of the year.
Michelle Qi: Meaning are the reported significantly lower scope impact for the second half of the year.
Speaker Change: In total, the announced sales were less than 4% for the quarter, which brought our sales for the quarter to 6.9 billion euros.
In total reported sales were down 4% for the quarter, bringing our quarterly net sales to $6 9 billion.
Speaker Change: Let's now look at the performance of each zone in more detail, starting with Europe on slide number 10.
Michelle Qi: Let's now have a look at the performance of each zone in more detail starting with Europe on slide number 10.
Speaker Change: Europe delivered 0.7% more in the second quarter, with a positive mixed third quarter.
Michelle Qi: Europe delivered like for like sales growth of plus <unk> seven.
Michelle Qi: 7% in quarter, two was the third consecutive quarter of positive volume mix.
Speaker Change: by reflecting the progress we have made in transforming our European portfolio.
Michelle Qi: Reflecting the progress we have made in transforming our European portfolio.
Speaker Change: The reported results for this quarantine were impacted by negotiations between the sellers, which resulted in a short-term distribution slip.
The reported results for this quarter were impacted by retailer negotiations, resulting into short term delivery disruptions.
Speaker Change: These negotiations are now behind us, allowing us to be 100% focused again on working with our sales partners to improve our category.
Those negotiations are now behind US, making is again, 100% focused on working with our retail partners to grow our categories.
Speaker Change: At EDP, we are satisfied with the quality of our growth. Our mix continues to improve, and we see a strong correction for our more differentiated segments. We are particularly happy with the performance of brand platforms like Jopro and Actimel, but we also see promising dynamics in major brands like Activia and particularly for the Alpro segment, as already mentioned.
Speaker Change: In Edp, we are pleased with the underlying quality of our growth our mix continues to improve as we see strong traction for our more differentiated segments. We are particularly happy with the performance of brand platforms like your pool as well as <unk>.
Speaker Change: <unk> dynamics, and big brands, like Activia, and especially for this quarter as.
Speaker Change: As already mentioned.
Speaker Change: On the waters, we can report a solid performance, despite the poor winter conditions. With our brand Evian benefiting this quarter from a significant increase in visibility, as Antoine mentioned. As many of you have certainly seen during Wimbledon, but also during the Evian Golf Masters event.
Speaker Change: Our work on waters, we can report a solid underlying performance. Despite the poor weather conditions with our <unk> brands benefiting in this quarter from a great visibility boost and one was mentioning it is.
Speaker Change: Certainly you'll see many of you have seen during the Wimbledon, but also the glass must us event.
Speaker Change: Regarding the entire first week, Europe closed with a growth of more than 1.7% and a positive mix of volumes. The operating margin improved by more than 87 basis points compared to last year to reach 11.5% as a result of a strong increase in the growth margin, which reflects the quality of our growth.
Speaker Change: Looking at the entire first semester Europe closed with like for like sales growth of plus one 7% and positive volume mix. The recurring operating margin improved by plus 87 bps versus last year to reach 11, 5%.
Speaker Change: Result of strong gross margin improvement, reflecting the quality of our growth.
Speaker Change: Let's now move on to North America, on page number 11, please. North America delivered a very strong over 5% growth in operations in the second quarter, driven by a mix of volumes and supported by the resilience crisis.
Speaker Change: Let's now move on to North America.
Speaker Change: H number 11, please North America delivered a very strong plus 5% like for like sales growth in the second quarter led by volume mix and supported by resilient pricing.
Speaker Change: Growth in North America was notably driven by our yogurt business, with another stellar performance from the high-protein range under the Oikos brand. At the same time, our coffee creation business continued to see strong growth this quarter, with continued margin gains for both the International Delight and Stock brands.
Speaker Change: The growth in North America was notably led by our yogurt business with another stellar performance of the high protein range under the Iqos brand in parallel our coffee creations business is posting again strong growth in this quarter with continued market share gains for both brands international delight as well as Stoke.
Speaker Change: At that moment, we can also report a similar competitive momentum for our Waters business, with our Evian brand enjoying strong momentum during this quarantine.
Speaker Change: At the same moment, we can report a similar competitive momentum out of our waters business.
Speaker Change: If you're a brand enjoying a strong momentum in this quarter.
Speaker Change: In general, this brings a growth of more than 3.7% for our first semester, the margin of operation expansion continues to increase, and it is above 33 basis points compared to last year, driven by a strong margin expansion.
Speaker Change: Overall this brings our first semester like for like net sales goes to plus three 7% the recurring operating margin continues to expand.
Speaker Change: And it is up by 33 bps compared to last year, driven by strong gross margin expansion.
Speaker Change: Another demonstration that quality growth leads to value creation.
Speaker Change: Another demonstration that quality growth is driving value creation.
Speaker Change: which is actually a very good transition to the next page, page number 12, with our China, North Asia, and the Ocean.
Speaker Change: Which is actually a very good transition to the next page page number 12, with our China, North Asia and Oceania Zone.
Speaker Change: The area recorded a very strong increase of 8.4% in sales for the second quarter, driven by a volume mix of more than 9.4%.
There is also a very strong plus eight 4% like for like sales goes into the second quarter, driven by volume mix up plus nine 4%.
Speaker Change: We have seen continued competitive momentum in specialized food, particularly medical food, which continues its double-digit trajectory.
Speaker Change: We have seen continued competitive momentum in specialized nutrition with notably medical nutrition, continuing its double digit trajectory.
Speaker Change: by adults and pediatric caregivers.
Speaker Change: Driven by both NPD.
Speaker Change: And pediatric solutions.
Speaker Change: And at that moment, our company IMF gained more and more purchases in the market, also in the second quarter, and once again contributed positively to the growth of the area.
At the same moment, our IMF business further winning market shares also in the second quarter and is contributing again positively to the growth of the zone.
Speaker Change: In the waters, we have confirmed that corn had a strong start to the season, which increased its sales by about more than 10%, with continued market share gains.
In water, we confirm that <unk> had a strong start to the season growing net sales by plus 10% with continued market share gains.
Speaker Change: In Japan, our company EDP has now been on a strong growth trajectory for several quarters and is also in the second quartile, once again posting double-digit growth driven once again by the Oikos and Activia brands.
Speaker Change: In Japan, our Edp business is now since many quarters on a strong growth trajectory and is also in the second quarter again, posting double digit growth led again by the oil and activity upfront.
Speaker Change: Looking at the entire first week, the area recorded a growth of more than 8.6% in sales increase.
Speaker Change: Looking at the entire first semester <unk> that great like for like sales growth of as much as plus eight 6%.
Speaker Change: with deliberate investments behind this consistent and competitive growth that makes us confident for the next year.
Speaker Change: <unk> operating margins to the 36% with deliberate investments behind this consistent and competitive growth, making us confident for the coming quarters.
Speaker Change: Let me suggest to move on to slide number 13, reviewing together the results of Latin America.
Speaker Change: Let me suggest to move on to slide number 13.
Speaker Change: During together.
Speaker Change: The result of Latin America.
Speaker Change: Latin America registered a solid plus 5% for sales growth in Q2, with volume mix up plus 1.8% and price up plus 3.2%.
Speaker Change: And that America, <unk> had a solid plus 5% like for like sales growth in Q2 with volume mix up plus one 8% and price up plus three 2%.
Speaker Change: We are particularly satisfied with the strong performance of water in Mexico and specialized food in all areas.
Speaker Change: We are particularly pleased with the solid performance of waters in Mexico, as well as of specialized nutrition across all zones.
Speaker Change: We are also seeing a solid performance from the EDP which, as you know, is currently impacted by the layoff effect of the company Paulista Milk in Brazil.
Speaker Change: We also see a solid underlying performance of Edp, which as you know is currently impacted by the effect of licensing out of year power lifter make brands in Brazil.
Speaker Change: As we report first-semester P&L results, it's important to acknowledge that there is a disconnect between another semester of strong like-for-like profit margin expansion, which was momentarily overcompensated by a very negative hyperinflation and currency effect from the Argentinian peso. At like-for-like rates, profit margin of the zone would have increased by as much as 150 points.
Speaker Change: As we report first semester P&L results, it's important to acknowledge that there is a disconnect between another semester of strong like for like profit margin expansion, which was momentarily overcompensated by a very negative hyper inflation and currency effects from the Argentinian peso at like for like rates profit margin of the zone would have increased by.
Speaker Change: As much as 150 points compared to the reported margin decline of minus 62 bps. This one offer does appear over the next quarters as the underlying drivers of each other.
Speaker Change: in comparison with the announced margin decline of less than 62 bps, that decline will disappear over the next few quarters if the engines still balance.
Speaker Change: Finally, let's look at the rest of the world, the area of Africa, Asia of the Middle East, and East Asia, on table number 42.
Speaker Change: Finally, let's have a look at the rest of the words.
Zone made of Africa, Middle East Asia Ntis on slide number 14.
Speaker Change: As with sales, livestock farming in this area increased by more than 5.3% in the second quarter, with a positive volume mix of more than 1.8% and a price increase of more than 3.5%.
Speaker Change: Like for like sales growth of this zone increased by plus five 3% in the second quarter with positive volume mix of plus one 8% and price of plus three 5% looking.
Speaker Change: Looking at the neighborhood in more detail, the specialized food company has established a good presence across Asia and the Middle East in particular, because the area of our APFAMIL, but also of our Bibilac brands, has seen double-digit growth.
Speaker Change: Looking at the quarter, one detailed the specialized nutrition business posted a good quarter across Asia and the middle East in particular, the cost of the zone hour up to me, but also our <unk> brands saw double digit growth.
Speaker Change: In parallel, our food business in Africa continues to make good progress, contributing positively to quality growth, also during this second quarter.
Speaker Change: In parallel our dairy business in Africa continues to make good progress positively contributing to quality growth also during this second quarter.
Speaker Change: Looking at first semester performance of the zone, sales increased by plus 5.6% on a like-for-like basis. Recurring operating margins stood at 10.8%, increasing by plus 44 bps versus last year. Particularly driven by the progress we are making in our Africa transformation, but also by the solid growth of our accretive, specialized nutrition business in the region.
Speaker Change: Looking at first semester performance of the zone sales increased by plus five 6% on a like for like basis recurring operating margin stood at 10, 8%, increasing by plus 44 bps versus last year.
Speaker Change: Particularly driven by the progress we are making our Africa transformation, but also by the solid growth of our accretive specialized nutrition business in the region.
Speaker Change: I suggest that we finish the reviews of the area and move on to the margin brief for the first half of 2024.
Speaker Change: I suggest we concluded a zone reviews and move onto the margin bridge for the first semester of 2024 and slide 15.
Speaker Change: The operating margins collected were 12.69% in the first half of 2024, an improvement of more than 45 basis points compared to last year.
Speaker Change: Recurring operating margin stood at $12, 69% in the first semester of 2024, an improvement of plus 45 bps compared to last year.
Speaker Change: Our focus on quality growth, our focus on operating leverage, combined with above-industry average productivity.
Speaker Change: Our focus on quality growth our focus on operating leverage combined with above industry average productivity have been important drivers to get the margin from operations up by oil together plus 257 bps.
Speaker Change: have been important drivers to get the margin from operations up by altogether plus 257%.
Speaker Change: It is important to recognize that we benefited from the price effect last year, which gave more momentum to the margin increase for last year. With price normalization in the coming months, the effect on the margin increase will not be repeated with the same magnitude.
Speaker Change: Important to acknowledge that we were in this first semester benefiting from some final carryover effects of pricing from last year, which is given the cost margin even more momentum for the last period with pricing normalizing in the coming quarters. The effect on gross margin will not repeat the same magnitude.
Speaker Change: Second half.
Speaker Change: In a market environment that has seen intense competitive pressure, we have reinvested 169 basis points into what will drive our future growth, in A&P, in sales and marketing capabilities, in research and innovation, as well as in the digitalization of our market.
Speaker Change: In a market environment, which has seen intense competitive pressure, we have been reinvesting 169 bps into what will drive our growth in the future into A&P into sales and marketing capabilities to research and innovation as well as into Digitalized our supply chain.
Speaker Change: As mentioned during our capital market event, reinvestment and focus will now sequentially shift towards higher category leadership initiatives.
Speaker Change: As mentioned during our capital market event, the reinvestment focus will know sequentially move towards category leadership initiatives.
Speaker Change: Which also means that the need for additional investments will worsen in the coming quarters.
Speaker Change: It also means that the need for additional investments with soften in the coming quarters.
Speaker Change: Other effects reflect notably the positive impact of SCOPE, arising from the before-mentioned deconsolidation of dilutive businesses, which are more than offset by negative forex impact
Speaker Change: Other effects reflects notably the positive impact of scope.
Speaker Change: Rising from the before mentioned deconsolidation of dilutive businesses, which are more than offset by negative Forex impact.
Speaker Change: for a combined effect of minus 34.
Our combined effect of minus 30 bps.
Speaker Change: Let's now move on to the EPS bridge and the free cash flow on list number 16.
Speaker Change: Let's now move on to the EPS bridge and free cash flow on slide number 16.
Speaker Change: The recent EPS reached €1.80 in the first half of 2024, which is 2.6% more compared to last year.
Speaker Change: So kind of an EPS reached <unk> 80 in the first semester of 2024, which is a plus two 6% increase compared to last year.
Speaker Change: The main contributor to the EPS growth was the strong operational performance we just experienced at over 15.7%.
Speaker Change: The main contributor of recurring EPS growth was a strong operational performance. We just went through at plus 15, 7%.
Speaker Change: The scope effect has risen to less than 8.3% of the already discussed deconcentration of companies, while the depreciation of a number of currencies against the euro has had an impact of less than 10%.
Speaker Change: The scope effect amounted to minus eight 3% from the already discussed deconsolidation of businesses, while the depreciation of a number of currencies against the euro had an impact of minus 10%.
Speaker Change: Our focus on reducing our debt levels has contained the impact from financing to only a minus 0.3% impact, while tax and income from equity-accounted companies and minorities had an effect of plus 5.6%.
Speaker Change: Our focus on reducing our debt level is contained the impact from financing to only minus <unk>, 3% impact where it takes an income from equity accounted companies may notice had an effect of plus five 6%.
Speaker Change: You remember telling us that our ambition is to transform our company into a consistent value component.
Speaker Change: You will remember, saying that our ambition is to return our company into a consistent value compounded.
Speaker Change: With our earnings increasing in relative but also in absolute terms, and with continued focus on working capital improvements,
Speaker Change: With our earnings increasing in the relative but also in absolute terms and with continued focus on working capital improvement.
Speaker Change: We have been able to post another recording of the cash flow which reached 1.2 billion in the first half of 2024, an increase of 11% compared to last year.
Speaker Change: <unk> posted another record of free cash flow.
Speaker Change: As much as $1 2 billion in this first semester 2024, an increase of 11% compared to last year.
Speaker Change: Combine these good numbers with the fundamental dynamics of our categories and brands.
Speaker Change: Those good numbers combined with the underlying strong fundamental dynamics of our categories and brands make us confident to deliver on our future value creation ambition.
Speaker Change: allow us to confide in our future of value creation.
Speaker Change: Which brings me very naturally to my last page, page 17, which is our financial guide.
Speaker Change: It leaves me very naturally to my last slide slide number 17, as our financial guidance. This.
Speaker Change: The year 2024 is shaping up to be a strong year, where, despite numerous external challenges, our company is ready to deliver on its mid-term commitment.
Speaker Change: This year 2024 is shaping up to be a strong year, where despite many external challenges our company is set to deliver on its midterm commitments.
Speaker Change: a year where we are improving our company to an increasingly competitive level in dynamic markets.
Speaker Change: Where we are growing our business increasingly competitive in markets, which are dynamic.
Speaker Change: The superior growth of our categories in the food and nutrition sector proves that they are on trend, that they offer great growth opportunities, especially for committed category leaders like us.
Speaker Change: The superior growth of our categories within the food and beverage sector is proving that they are on trend that they offer great growth opportunities, especially for committed category leaders like us.
Speaker Change: Based on the strong results of the first half of 2024 and our confident outlook, we reiterate our guidance for the year 2024 with a sales growth increase of more than 3% to more than 5% and a moderate increase in profit margin.
Speaker Change: Based on the strong results of the first semester 2024, and our confident outlook. We are reiterating our full year 2020 for guidance.
Speaker Change: With plus three to plus 5% like for like net sales growth and moderate profit margin improvement.
Speaker Change: And with that, let me head back to Antoine for the conclusion. Thank you, Juergen. I suggest we move straight to slide 19. As said, we are obviously pleased with the results of the first half. I mean, these results are true to the Renew Strategic intent as we deliver a quality balance of volume mix versus price, which is, as Juergen said, enabling our investment, margin expansion, and ultimately good cash flow delivery. Also happy with the consistency of our delivery and the resilience it demonstrates over time.
Speaker Change: And with that let me hit the deck to Antoine for the conclusion. Thank you.
Antoine: I suggest we move straight to slide 19.
Antoine: Said, we are obviously pleased with the results of the first half I mean these results are true to the venues <unk> intent as we deliver a quality balance of volume mix versus price, which is as juergen third, enabling our investment margin expansion and ultimately good cash flow delivery.
Also happy with the <unk>.
Antoine: Assistance of our delivery.
Antoine: And the resilience demonstrated overtime.
Speaker Change: But we are also acutely aware that there are still things that remain to be done in an environment which will remain challenging and quite unpredictable.
Antoine: We're also acutely aware of that are the austere thinks that remains to be done.
Antoine: Internal environment, which are we will remain challenging and court unpredictable.
Speaker Change: as shared with you at the CME, the way forward for us is to keep executing on Renew Danone with discipline, continuously improving what needs to be improved while preparing the future, being true to what we believe to be a long-term value compounding model. And with that, let me hand over back to Mathilde to start the Q&A question. Mathilde, over to you.
Antoine: As shared with you at the same either way forward for us is to keep executing only knew that own risk discipline continuously improving what needs to be improved while preparing the future being true to what we believe to be a long term value compounding mode.
And with that let me hand over back to <unk> to start the Q&A question Mark over to you.
Mathilde Rodie: Thank you Antoine. So we will now open the Q&A session and we will start the session with questions from Guillaume Delmas, UBS.
Thank you we will now open the Q&A session and we will start the question.
Speaker Change: <unk> from <unk>.
Speaker Change: UBS.
Speaker Change: Goodbye.
Speaker Change: Okay.
Mathilde Rodie: Two questions for me please. The first one is on your pricing outlook for the second half of the year. I mean, not something that is Danone's pick.
Speaker Change: Okay.
Speaker Change: Two questions for me please.
Speaker Change: First one is on your pricing.
Speaker Change: Outlook for the second half of the year.
Speaker Change: Not something that is done.
Okay.
Speaker Change: Okay.
Guillaume Gerard Vincent Delmas: At breaking, Guillaume.
So breaking.
Speaker Change: Sorry, I'm breaking. You are breaking, so we, yeah. Can you hear me better now?
Speaker Change: Sorry.
Speaker Change: You are breaking so.
Speaker Change: Can you hear me better now.
Guillaume Gerard Vincent Delmas: Is it okay now? Okay, so let me try again. So I'll try to ask short questions. So the first one is on pricing and your pricing outlook, because across the board, we're seeing a fast normalization in price growth.
Speaker Change: Is it okay now okay.
Speaker Change: Try again.
Speaker Change: So I'll try to ask short questions.
Speaker Change: The first one is on pricing and your pricing outlook. It was across the board, we're seeing a fast normalization in price growth.
Speaker Change: So my question for you is, with most of your price negotiations for the year now behind you, particularly for Europe and North America,
So my question for you is with most of your price negotiations for the year now behind you, particularly for Europe, and North America do you have a relatively good visibility on your pricing for the second half and at this stage do you feel confident that across your three divisions.
Speaker Change: Do you have a relatively good visibility on your pricing for the second half? And at this stage, do you feel confident that across your three divisions, pricing will remain in positive territory? And then my second question is on specialized nutrition. It's another strong print for this profitable business.
Speaker Change: <unk> will remain in positive territory.
Speaker Change: And then my second question is on specialized nutrition. It's another strong print for this profitable business short term do you see any reasons for a sudden change in trajectory I mean, I would think the launch of new <unk> momentum in medical.
Speaker Change: So, in short term, do you see any reasons for a sudden change in trajectory? I mean, I would think the launch of new tourists, momentum in medical, should probably support some optimism here. And then longer term, since you said at the CMD that for M&A activities...
Speaker Change: Should probably support some optimism here.
Speaker Change: And then longer term.
Speaker Change: Since you said that the CMT that for M&A activities specialized nutrition would be the priority would it be fair to assume that your vision built around health through food implies that specialized nutrition.
Speaker Change: Specialized nutrition would be the priority. Would it be fair to assume that your vision built around health through food implies that specialized nutrition will effectively end up being your largest business in some years from now, not just on a profitability basis, but also on a sales basis? Thank you very much.
Speaker Change: Actively end up being your largest business in some years from now not just on a profitable on a profitability basis, but also on a sales basis. Thank you very much.
Speaker Change: Thank you Guillaume, we are going to do a duo with Jürgen. Let me start with the second question. I am sure Jürgen will take the first question. As you have seen, it is a very good spring for specialized nutrition, but what is very important is its consistent quality and growth in specialized nutrition. It is a business that is fundamental for us, it is an important business. It is not the only business, we like other categories, and as you have seen, we also provide quality and growth results. Can we continue to look at acquisition through the lens we have described, which is a strategic and financial responsibility? Yes. Is specialized nutrition a place where, if such an acquisition happens, we will look? Yes, it is not the only place. Are we confident in the trajectory of our specialized nutrition? We certainly are. But in the same way, we are very confident that the pivot we are making from food to mental health and proteins offers immense potential in our EDP category. It is not a path at the moment, if I may say so.
Speaker Change: Thanks, Sergio and we'll do we'll do address resort resort.
Speaker Change: Let me start with the second question.
Speaker Change: Im sure Youre going real quickly.
Speaker Change: The first question.
Speaker Change: As you've seen it's a very good print for specialized nutrition, but what is very important is it's consistent quality.
Speaker Change: Our growth in specialized nutrition.
Speaker Change: It is a business that is core to us it is an important business.
It is not the only business. So we love all the categories and as you've seen we are also delivering value.
Good quality and broad based <unk>.
Speaker Change: Our results. So we'll we keep looking at acquisitions through the lens that we have described.
Which is one of strategic fit and financial responsibility, yes, our specialized nutrition, a place where obviously if such acquisition come we will look.
Speaker Change: Yes, it's not.
Speaker Change: It's not the only.
Speaker Change: Place. So are we confident in lethargic toy, Australia specialized nutrition will definitely we definitely are.
Speaker Change: But in the same way and by the way we are very confident that the people that we are doing.
Speaker Change: <unk>.
Speaker Change: <unk> two <unk> is one that offers immense potential.
Speaker Change: In our edp categories. So it's not a one horse track if I may say.
Speaker Change: Guillaume, hello. Regarding the price, the price will remain positive in the second half of the year as well. Just to be very clear on that. There was a reason why in some cases, the negotiation took a bit longer than we all wished. Because the way we approach it is to ensure that we set a consumer price, where we have strong brands, brands that bring innovation to the market, and where we feel that we have the right and the role, moreover, to be the driver of market growth, but that also means a price increase in some cases. And there will be other occasions where we will invest in the price, to ensure that we receive our fair share of volume growth, but net, net, we also see a positive price for the second half going forward.
Speaker Change: Good good morning on pricing pricing will stay positive also in the second half of the year just to be very clear about this.
Speaker Change: There has been a reason why in some instances negotiation took took a little bit longer than we would all have wished.
Speaker Change: The way we are approaching is to ensure that we do consumer led pricing, where we have strong brands brands, which bring innovation into the market and where we feel that we have the right.
Speaker Change: And by the way too.
Speaker Change: The driver of the market's growth, but it means also increased price in certain instances and David the other occasions, where we will invest into price in order to make sure that we get our fair share of the volume growth, but net net is also positive pricing for the second semester.
David: Moving forward.
Speaker Change: Thank you very much.
David: Thank you very much.
Speaker Change: Thank you, Guillaume. The next question will be from John Kopp of Kepler Chevron.
David: Thank you. The next question will be from John.
Hum.
David: Keith.
Jon Cox: Yes, good morning guys. Congratulations on the numbers. Just two questions from me. One sort of on that broad margin equation, you're talking about the gross margin won't be the same improvement, that 257.
Keith: Yes, good morning, guys congratulations on the on the numbers.
Keith: Just two questions for me one sort of on that broad margin equation youre talking about the gross margin won't be the same improvement that 257.
Speaker Change: basis points in H1 into H2. At the same time, you're talking about the Latin America profitability potentially being 200 basis points above where you were amid these one-offs. And obviously, that business is...
Speaker Change: Basis points, an H one into H too at the same time, you're talking about the <unk>.
Speaker Change: In America.
Speaker Change: The ability potentially being 200 basis points above where you were amid these one offs and obviously that business is.
Speaker Change: I wish you a good 10% revenue, that is to say 20 basis points, which is better for the second half of the year. And you always talk about a moderate increase in margin this year, when you have made almost 50 basis points in H1.
A good 10% of revenue so that would be bad to 20 basis points better going into the second half of the year and you're still talking about only a moderate improvement in margin. This year when you've done almost 50 basis points and each one is 50 basis points. How you would define moderate that's the first question second question.
Speaker Change: how you would define moderate. That's the first question. Second question on North America. I wonder if you could just give us a bit more granularity on that. Some of your competitors are really struggling in that market. You talk about how proteins are leading. Maybe you can give us a bit more.
Speaker Change: On North America.
Speaker Change: I Wonder if you can just give us a bit more granularity on that some of your competitors are really struggling.
Speaker Change: That market you talk about high proteins, leading maybe you can give us some color on that but also at the other end of the scale of what you're seeing maybe from some of the entry level brands. What are you doing to offset maybe down trading in private label and then maybe just to add if you can on the plant base, you're saying you see signs of traction maybe you can talk a little bit more.
Speaker Change: color on that, but also at the other end of the scale, what you're seeing maybe for some of the entry level brands, what are you doing to offset maybe down trading and private label? And then maybe just to add, if you can, on the plant base, you're saying you see signs of traction. Maybe you can talk a little bit more about that. Thank you very much.
Speaker Change: More about that thank you very much.
Speaker Change: So, I guess, Jorgen, we'll take the first question, and I'll take the second. Yeah, look, on the first one, obviously, we are very pleased with the gross margin expansion of the first semester, which in a way, you know, shows that we are really working our business model, quality, top-line growth, driving operating leverage, and therefore driving very naturally gross margins up. What we see, what is a bit particular in that first semester is the fact that we came into that first semester with a good level of pricing, combined with record productivity levels, combined with a number of commodity indexes, which were quite beneficial to the equation. Moving forward, gross margin will definitely continue to expand. This is our business model we are aiming for, to allow for continued value creation over time, also including reinvestment, but it will not go at the same speed as we saw some of the commodity indexes rebounding a little bit. To your other point, John , on Latin America, you're right, there's a one-off here, and it's a quite mechanical one-off because there's a total disconnect between the level of inflation we see in Argentina and the absence of a devaluation, but this cannot take forever. At the same moment, we don't know when this is going to balance off.
Speaker Change: So I just showed you want me to take the first question I'll take the second yes look on the first one obviously, we are very pleased that the gross margin expansion of the first semester, which in a way and our shows that we are really working our business model quality top line growth driving operating leverage and therefore, driving very naturally cost margins up but.
Speaker Change: We see what is a bit particular in that first semester is the fact that we are.
Speaker Change: We came into the first semester with a good level of pricing comp.
Speaker Change: Combined with our record productivity levels combined with a number of commodity indexes, which.
Speaker Change: The quite beneficial to the equation moving forward gross margin difference.
Speaker Change: We continue to expand this is our business model, we are aiming for to allow for continued value creation over time also include investment, but it will not grow at the same speed as we saw some of the commodity indexes are rebounding.
Speaker Change: Funding a little bit.
John: As a point John on Latin America.
John: There is a one off here and it's quite mechanical one off because there is a total disconnect between the level of inflation, we see in Argentina in the absence of a devaluation, but this cannot take forever at the same moment, we don't know when this is going to balance off.
Speaker Change: In the second semester or later on. So, at some moment, we're going to benefit from that rebound. And to your third point, I think looking at the full year, you understand that we are looking at the full year with confidence. We are maintaining the guidance we issued at the beginning of the year. You will certainly not expect me to not guide to a very precise BIPS improvement. But what we can, however, share is that we are expecting a comparable composition of the margin progression as last year. Remember that we delivered last year a moderate organic margin expansion, enhanced by around 10 BIPS from scope effects, thanks to a portfolio rotation. And this year, we also have both drivers contributing with a similar size of contribution from scope as last.
John: That in the second semester or later on so at some point at some moment, we are going to benefit from.
John: <unk>.
Speaker Change: From that rebounds, and two the ought to your third point.
Speaker Change: Looking at the full year you understand that we are looking at the full year.
Speaker Change: This confidence we are maintaining the guidance we issued at the beginning of the year.
Speaker Change: Let me not expect me too so not the guide to a very precise bps improvement.
Speaker Change: But what we can however share that we are expecting a comparable the composition of the margin progression as last year.
Speaker Change: You'll remember that we delivered last year more moderate organic margin expansion.
Speaker Change: By around 10 bps from scope effects, thanks to our portfolio rotation and this year. We also have both drivers contributing with a similar size of contribution from scope as last year.
Speaker Change: So, on your second question, John , I think, I mean, the current performance in North America is, well, first, it's very competitive, it's very good. When you look at the external world, the team there did a very, very good job. It is a mix of a number of things. We have a number of ranges that are working extremely well. I mean, obviously, we keep driving our protein range. We have started expanding the expression with remix, which you have seen in Amsterdam. So, we keep bringing new news to our core segments. We have some local jewels around coffee creation that are doing very well. And there, too, it's a mix of our great focus on the core and innovation. I mean, the cold form is working extremely well. So, it's a good example of global mixers and your local mixers are putting at the same time with a focus.
Speaker Change: So on the on your on your second question, Jon I think.
Speaker Change: The performance in North America is more first is very competitive when you look at the.
Speaker Change: External world.
Speaker Change: The team there.
Sure.
Speaker Change: Good job.
Speaker Change: So it is a mix of a number of things.
Speaker Change: Sure.
The number of branches Thats, all working extremely well I mean, obviously, all we keep driving our protein range. We have started expanding the expression with remix which you have seen in Amsterdam. So we keep bringing new news to our core our core segments.
We have some local jewels around coffee creation are doing very well and there are two it's the mix of our great focus on the core and innovation I mean, the cold form is our is working extremely well. So it's a good example of our.
Speaker Change: <unk> and or your local mixers are putting at the same time with a focus on the quality of execution by the team in the market, which is quite remarkable which by the way has been acknowledged externally.
Speaker Change: on the quality of execution by the team in the market, which is quite remarkable, which by the way has been acknowledged externally.
Speaker Change: because the team is rated number 1 in its category in the customer rankings. There is also, and this is interesting, proof of the portfolio's resilience. Not everything is going well. We are still working on things like Danone, which was at the market entry price, to ensure not only that we are competitive in price, but also in mix. We have been working, and we have mentioned it, for several quarters on Silk. On Silk, by the way, we are seeing some green shoots. We see penetration starting to increase. We see the first signs of encouragement from what we are doing around the lunch occasion, around the coffee occasion. But it is only the beginning of the day, and there is still a lot to do. I don't know, Jorgen, if you want to add something. Yes, maybe just one element. You may recall the chart that Antoine showed during the CME, demonstrating that our categories have grown faster than the average food and nutrition. The food category, which is actually true in North America and Europe, is actually very dynamic, with consumers looking for categories that offer health benefits. And this is the trend we are currently seeing, the long-term trend.
Speaker Change: As Dr.
Speaker Change: The team is being ranked <unk> in customer rankings as our number one of its number one of its category.
Speaker Change: It is also and that is interesting the proof of the resilience of the portfolio not everything is our is going well.
Speaker Change: We are still working on things like <unk>, which was at the entry price of the of the market to make sure that not only we are price competitive but.
Speaker Change: Mixed competitive.
Speaker Change: We have been working and we've mentioned it for number of quarters now on sale shift by the way we see some green shoots so we see penetration starting to go up we see.
Speaker Change: I mean, the first encouraging signs of what we do around the bite first occasion around the cautionary occasion.
Only the start of the journey and there is lots of.
Speaker Change: Sure.
Speaker Change: To be done on that front I don't know, what youre going to show and to add something yes, maybe just one element you may remember a chart, which showed during this year demonstrating that our categories are growing faster than the average of food and beverage in the yogurt category, which is actually true in North America and Europe.
Speaker Change: Any dynamic.
With consumers looking for categories, which provides health benefits and this is what the trend. We are currently selling which we believe is a long term trend. So I think we are well positioned.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone keypad.
Speaker Change: Thank you.
Speaker Change: A reminder to ask a question. Please press star one on your telephone keypad.
Speaker Change: The next question is from Céline Fenty, J.P. Morgan.
Speaker Change: Thank you next question please.
JP Morgan: Thank you JP Morgan.
JP Morgan: Okay.
Speaker Change: Good morning, Céline. We don't hear you. Hello?
JP Morgan: Good morning, Simeon we don't hear you.
JP Morgan: Yes.
Speaker Change: Maybe there is a technical problem with Céline, so... Good evening, can you accompany me?
Speaker Change: Maybe diving technical issue with.
Simeon: Good morning can you hear me.
Celine Pannuti: Good evening, Sabine. I am sorry about that. Good evening, Antoine, Jürgen, and Mathilde. My first question is about... I would like Jürgen to go back to the slide where you show that magnificent volume, quarter-by-quarter progression, and I wonder if we should expect this ramp-up to continue as we enter the second half. I thought you were talking about the end of the delisting, so I was expecting, you know, better positive evidence of what you are doing in Europe to enter Q3 and Q4. So, I would just like to see if that would help at the group level, and also if we should continue to see this good development momentum in terms of volume in the ADP that continues in the next halves. My second question is about the specialized food margin. Werdam, can you give us a bit of insight into what led to that? Obviously, the China division did very well in terms of volume mix, but there was also a negative price mix. So, I would just like to know what led to that and if it is also related to specialized food.
Speaker Change: Good morning.
Speaker Change: I'm sorry go ahead.
Speaker Change: Good morning, Antoine Yoga and that is my first question is on I want to thank you again to come back on this slide where you show that nice margin progression quarter by quarter.
And I'm wondering what we should expect this ramp up to continue as we go into the second half I'm thinking you were talking about.
Speaker Change: And <unk>, so I would expect some.
Speaker Change: With a pretty cheap.
Speaker Change: And have you done some of what Youre doing in Europe coming into Q3 Q4. So just wanted to see with that would help at the group level and as well, whether we should continue to see that.
Speaker Change: Good growth momentum and if we can come in edp continuing in the next quarter.
Speaker Change: My second question is on the specialized nutrition margin.
Speaker Change: Can you please.
Speaker Change: Give us cbw's tier of what does Steven and.
I mean, obviously China.
Speaker Change: The China Division did very well in terms of really mix, but there was somewhat of a negative price mix I just want to know what drove that and whether maybe it's linked as well to your suspicion that nutrition margin. Thank you.
Speaker Change: Let me take the very last one and Jurgen will take care of the rest. In China, first let's start with that it's a stellar performance again. It's a stellar performance that is driven by great volume mix. As part of the performance, there is obviously the launch of a number of innovations in the market. As you launch innovations, you invest behind those innovations, be it in terms of listing, be it in terms of trial, be it in terms of promotion. The margin of our China business is at the right level and is maintained. The balance is linked to the flow of innovation and us doing what it takes to keep rolling at a fantastic pace in China with a real quality growth. Yeah, and just to compliment on that and good morning Celina, we were very clear that the ESN, the Specialized Nutrition Margin will stay ahead of 20%. This is what we said four weeks ago. That's totally irrelevant. You saw that we have been investing in that first semester into China because this is the year of innovation for China. We are launching innovation on medical nutrition as you have seen on the oral and the powders. You have seen us launching innovation in IMF and this will continue in the second half of the year as well as in my zone with the electrolyte version. So we are investing into that. You saw how much we are growing. I mean, a high single digit growth in this first semester. So I think that's a fantastic investment and ultimately it will be a key contributor to keep the Specialized Nutrition Margin well ahead of 20% for the coming semesters and years. On the second element of volume mix, we are obviously very happy with the volume mix of Q2. We are now, I mean, all what we have been doing over the last two years is yielding results. Now we will manage our portfolio and maximize the opportunities of our portfolio across the different regions. Antoine was saying this is a volatile world with things happening here and there. But as you hear us, we are confident that we are on the right path and this is also why we have been reinvesting to solidify the growth momentum for the second semester and the year to come.
Speaker Change: Let me, let me take the very.
Speaker Change: Very last one and yoga.
Speaker Change: In China first it starts restarts Interstate outperformance again, so and it's sustained outperformance that is all driven by great volume mix.
Speaker Change: As part of the performance are there is obviously the launch of a number of innovations in the market and as you launch.
Speaker Change: Insurance.
Invest.
Speaker Change: Those innovation beach in terms of listing beta in terms of trial, which in terms of our.
Speaker Change: Promotions so.
Speaker Change: I mean, the margin of our China business is at the right level and maintain the balance is linked to order flow of innovation and us are doing what it takes to keep rolling out.
A fantastic base in China, with a real quality growth.
Speaker Change: And then just to complement on that and good morning, Selena you were very clear that yes.
Selena: Yes, and the specialized nutrition margins to stay ahead of 20%.
Speaker Change: What we said four weeks ago.
Speaker Change: Totally relevant.
Speaker Change: We have been investing in that first semester into China. Because this is the year of innovation for China, We're launching innovation on medical nutrition and as you have seen on the aura and the power. The US you have seen us launching innovation in IMF and as we continue into the second half of the year as well as in milestone with the electrolyte version. So we are investing into.
Speaker Change: You saw how much we are growing I mean high single digit growth in the system itself.
Speaker Change: I think that is a fantastic investment and ultimately it will be a key contributor to keep especially proficient margins well ahead of 20% for the coming semesters and yes on the second element of volume because you're obviously very happy with the volume mix also in Q2.
Speaker Change: Now it's all about we have been doing over the last two years is yielding results now we will manage our portfolio and maximize the opportunities of our portfolio across the different regions and one was saying.
Speaker Change: A volatile world.
Speaker Change #100: Things happening here and there, but as you will hear US we are confident that the on the right path and that is also why we have been reinvesting.
Speaker Change #100: Solidify the growth momentum for the second semester in the year to come.
Thank you.
Speaker Change #100: Thank you.
Speaker Change: The next question comes from David Hayes, from Jeffrey.
Speaker Change #101: The next question is from David eight ton Jeffy.
Speaker Change #101: Sure.
Speaker Change: Thank you all and goodbye.
David Eighton: And limited good morning, Joe.
Speaker Change #103: Apologies, if I speak covered because I did miss the beginning but I'll ask my two anyway. So the FERC based both on margin first one on the gross margin the first half.
Speaker Change: I have two questions. The first is about the margin. The second is about the gross margin.
Speaker Change #104: Can you give that number I just wonder if you could give us what the gross margin more than what had changed.
Speaker Change #104: One year.
Speaker Change: in the Waters Margin.
Speaker Change #105: Specifically and then secondly on the water's margin to 90 basis points.
Speaker Change #106: It's very noticeable.
Speaker Change: It's a bit surprising, because we assume that the mix would perhaps be a bit less favorable than what you had ideally, due to the bad weather.
Speaker Change #107: We have a surprise to be honest, because we assume the mix is going to be.
Speaker Change #108: That was a bit less favorable than you would have ideally had because of the poor weather and therefore less out of homes. So just wondering whether there's anything specific in that number that's helping is it just the packaging costs coming off quite markedly or was there anything else thats changing that means that molecule will continue to improve it.
Speaker Change #107: Good.
Speaker Change: David, can you repeat your first question?
Speaker Change #107: You so much.
Speaker Change #109: David could you be kind to repeat your first question I'm not sure I got it yes.
Speaker Change: And of course, just on the gross margin, the actual specific gross...
David: On the gross margin that some.
David: Specific gross margin could you give us that gross margin level and what actually changed.
Speaker Change: and what has really changed year after year.
Speaker Change #110: Year on year basis points point thanks.
Speaker Change: What we said is that the operating margin increased by 257 Bps. What Jürgen said is that there is a price reimbursement, so we will see record productivity levels. We will see a bit of normalization, but we remain in positive territory.
David: No.
Speaker Change #111: The margin for <unk>.
From operations increased by 257.
Speaker Change #111: Bps.
Speaker Change #112: What's your what Youre going to say it is obviously you guys do.
Speaker Change #112: Carryover of.
Speaker Change #112: So we will see.
Speaker Change #113: I told levels of productivity.
Speaker Change #114: We will see moving forward a bit of normalization, but still remain in positive.
Speaker Change #113: Territory.
Speaker Change #100: Regarding the high margins, I don't know if, Jürgen, you want to comment on that. No, but look at what we are seeing and it's quite problematic. We are actually seeing high margins increase across many of our categories and many of our regions.
Speaker Change #115: And on the on waters, and what sort of gross margin I don't know, whether youre going to want to comment.
Speaker Change #115: Look what we are seeing in that and that is quite.
Speaker Change #115: Providing we see gross margin actually going up across many of our categories and many of our regions gross margins going up cause your gross margins going up across North America gross margins actually growing up in our China.
Speaker Change #101: Gross margins are increasing across Europe , North America, and our China, North Asia, and Oceania division. Things are also moving in the right direction when you look at the different categories. Specifically, our 'my zone' business is growing rapidly, delivering a very interesting mix for us. When we break down the profit and loss (PNL) evolution, we see good gross margin improvements within 'my zone' and in our other major business, Europe waters. It's true that the second quarter faced pressure in Europe due to weather-related issues, which are beyond our control, but Q3 is off to a good start. Overall, the underlying dynamics are quite positive, and we are confident in seeing good value creation for waters from both a top-line and bottom-line perspective. Additionally, it's important to note that our long-term business model focuses on driving quality growth, which includes a volume mix component.
Speaker Change #115: Asia Division and things.
Speaker Change #115: Going into right direction also when you look at the different categories in what is more precisely as you can imagine the fact that our minds on business is growing at the highest speed is delivering very interesting mix to us, but also when you decompose the water.
Speaker Change #115: P&L evolution, what we see is that good gross margin evolution with in <unk> and good gross margin evolution now as a big business off Europe waters now, it's where the second quarter has been under pressure in Europe because of weather related let's say.
Speaker Change #115: Pressure, which is something which is not under our control in Q3 eventually is up to a good start.
Speaker Change #115: But so overall I think the underlying underlying dynamics are quite well and so we are confident to see overall good value creation.
Speaker Change #115: Trajectory for waters from a topline and bottom line.
Speaker Change #116: Then maybe let me add a point because it's it's.
Speaker Change #116: It is important for us what we've said all along is our.
Speaker Change #116: Our business model and our long term business model as we drive quality growth through growth with volume mix component.
Speaker Change #102: which allows the distribution of large margins, which in turn allows the combination of two things, investment behind our brands, our categories, our capabilities, while increasing our profit on a regular basis. So, I think that the first half of the year, once again, because it's not the first time, once again, a demonstration of the working model.
Speaker Change #116: Which enables our delivery of gross margin, which enables in term the combination of two things reinvestments are behind our brands or categories or capabilities.
Speaker Change #116: While.
Speaker Change #116: Increasing our profit on a on a regular basis so.
Speaker Change #116: I think the first half of the year is yet again, because it's not.
Speaker Change #117: It's not the first time that again, a demonstration of the mobile network.
Speaker Change #103: and of the value that that model can create. I mean, you look at the way it drills down, I mean, supporting our brands, investing our capabilities, delivering profit, ultimately delivering cash. By the way, delivering a good EPS despite the scope effect. So this is our model at work. It's not the first time, but it's a great example of the model at work. And final comment, David, gross margin level, coming back to your first question, gross margin level has reached end of age 149.4%. So we are going very fast back to where we have been a number of years ago to the 50% mark. So great dynamics.
Speaker Change #117: And all the value that that model can create I mean, you look at the way drills down I mean, supporting our brands investing our capital capabilities delivering profit ultimately delivering.
Speaker Change #117: Cash.
Speaker Change #117: By the way are delivering a good EPS.
Speaker Change #117: Despite.
Speaker Change #117: The scope effect. So this is all model at work, it's not the first time, but it is a great example of the mobile network and final comment David.
David: Loss margin level coming back to your first question gross margin level is reached end of H 149, 4%. So we are.
Greg: Going very fast back to where the FDA number of years ago to the 50% Mark So Greg.
David: Dynamics.
Yes.
Speaker Change #103: Subtitling by Société Radio-Canada
Speaker Change #119: Follow up on the on the spending point I mean, ADP margin down 50 bps again, so it was a mix.
Speaker Change #104: What can find importance.
Speaker Change #120: Once youre doing I guess again.
Speaker Change #120: Brian maybe thats all of it back.
Speaker Change #121: Is that because there's quite a lot of <unk>.
Speaker Change #122: But going into the business that part of business. This first half to your point about reinvesting is there.
Speaker Change #121: Okay.
Speaker Change #105: In fact, margins will increase on ADP in Europe and North America. The outcome of the Latin American currency, unfortunately, distorts the writing of this first part, but once again, it's a small balance.
Speaker Change #121: <unk>.
Speaker Change #123: Margins are going up in on Edp in Europe, and in North America, The Latin American.
Speaker Change #123: Currency issue is unfortunate distorting the reading for the first half, but again rebalance of over the coming some missed us. So the underlying is strong and consistent with what we also see saw second semester of last year.
Speaker Change #106: over the next few weeks. So, the above is strong and consistent with what we saw in the second half of last year.
Speaker Change #124: You can be helpful. Thank you.
Speaker Change #107: Thank you, David.
David: Thank you David.
Speaker Change #107: We have the next question from Tom Sykes, Detroit.
Speaker Change #125: We have the next question.
David: Excellent.
Speaker Change #107: STOP!
David: Yes.
Speaker Change #108: Yeah, hi, morning. Just coming back to the
Speaker Change #126: Yes, hi, good morning.
Speaker Change #127: Coming back.
Speaker Change #109: Gross margin, please, just trying to reconcile a bit why it might not even be higher than.
Speaker Change #128: Gross margin. Please just trying to reconcile why don't.
Speaker Change #128: I'll even be higher.
Speaker Change #110: what you have reported, because if you achieve a recorded productivity...
Speaker Change #129: What you've reported because if you're coming in at record productivity, which.
Speaker Change #111: I think he guided last year to 5% more.
Speaker Change #130: I guess, you guided last year plus.
Speaker Change #112: Feels like it's probably more than that, or at least that level, plus you've got...
Speaker Change #129: Okay.
Speaker Change #131: Just like it's probably more than that.
Speaker Change #131: At least that level plus he's gone.
Speaker Change #112: 2.9% volume mix, which the incremental.
Speaker Change #131: Two 9%.
Speaker Change #132: The mix.
Speaker Change #132: Incremental.
Speaker Change #112: Gross margin on that is clearly going to be quite high, maybe 60%.
Speaker Change #132: Margin on that is can begin to be quite high may be 60% plus.
Speaker Change #113: It's difficult to see how this leads you to the significant margin improvements that you are seeing. But you say that the purchases are...
Speaker Change #133: It's difficult to see.
The gross margin if you will.
Speaker Change #134: And you're saying commodities.
Speaker Change #114: It's also a benefit. I just want to understand, what is your price?
Speaker Change #135: We're also benefit I'm, just trying to understand where does your pricing.
Speaker Change #115: relative to the commodity growth and if there's something else in the gross margin like I don't know trade spend
Speaker Change #135: Relative.
Speaker Change #136: Commodity grades and is there something else in the gross margin trade spend.
Speaker Change #115: something like that that is affecting it please.
Speaker Change #137: Something like that.
Speaker Change #115: and then just on the A&P.
Speaker Change #137: It needs.
Speaker Change #138: And then just on the A&P.
Speaker Change #115: What is your AMP during the intra-period? Depending on what happens on the gross margin, what percentage of your AMP can you discuss?
Speaker Change #138: How vulnerable payment is if your A&P and then.
Speaker Change #138: According to what happens on the gross margin percentages.
Speaker Change #138: E&P and downloads.
Speaker Change #115: So let me take the second one and Juergen will take the first one. Although, by the way, in the first one, we don't guide on productivity, just to be clear. We look at INP through two lenses.
Speaker Change #139: So let me take the let me take the second one in yoga and we will take the first one although by the way in the first one we don't guide on productivity just to be adjusted.
Just to be clear.
Speaker Change #139: We look at our we look at our E&P through two lenses.
Speaker Change #116: competitiveness, so what is necessary is to be competitive in our markets, what is necessary is to develop our categories. We look at the markets, we look at the promotional intensity, that's one dimension. We also look at it very systematically through the length of the return on capital investment.
Speaker Change #139: Lengths of.
Speaker Change #139: Competitiveness.
Speaker Change #139: Or what is needed to be competitive in our markets watches neither our two or grew our categories.
Speaker Change #139: So we look at non Szabo shelf markets, we look at promotional intensity.
Speaker Change #139: That's one dimension.
Speaker Change #140: We look at it also.
Speaker Change #140: Systematic way coolants or return on invested capital or return on investment.
Speaker Change #117: And there, we are extremely disciplined. The name of the game is the one where we support our pitchers in a very systematic way. And we are extraordinarily flexible on a day-to-day basis.
Speaker Change #140: We are extremely.
Speaker Change #140: We are extremely extremely.
Speaker Change #141: Discipline. So the name of the game is one.
Speaker Change #140: We support in a very systematic way.
Speaker Change #140: <unk> and we are extraordinary and flexible on the day to day basis to our AD where it needs to be added but also our claw back if we think that there are not a hopewell.
Speaker Change #118: To add where it needs to be added, but also a clawback if we think that there are not proper returns. Next to that, by the way, we keep doing work on what's the proportion of working versus non-working media. We increase the quality of our testing so that we qualify properly. So we keep a very strong eye on the return on investment. We are extremely picky about where we invest, so we have a certain degree of flexibility and we are not just set one way or the other. Yeah, and on the first point, let me first agree with you that we have it in our hand to continue growing our gross margin because we have a number of levers which make us confident for the second semester, but not only that, also as we go into 2025. The levers we discussed include pricing, which will remain positive, but we will benefit less from the carryover of last year. And pricing for us includes all the elements of pricing, obviously, including promotional activities and trade terms. So we are looking at the net consolidated figure. So we will continue to have a benefit from there, although probably at a lower level. We saw indeed a number of commodities going relatively low in the first semester and what we are seeing today, looking at the market and looking at the future, is that some of them are rebounding.
Speaker Change #140: <unk>.
Speaker Change #140: Returns are next to that by the way, we keep doing our work on what's the proportion of working versus Nonworking media all we increased.
Speaker Change #140: The quality of our testing so that we qualify properly. So we keep a very strong ROI on the on the return on investments.
Speaker Change #140: We are extremely well.
Speaker Change #140: We invest we have.
Speaker Change #140: Certain degree of flexibility.
Speaker Change #140: Flexibility and we are not just our sets.
Speaker Change #140: The other another.
Speaker Change #142: First on the first point, let me first agree with you that we have in our hand to continue growing our gross margin because we have a number of levels.
Speaker Change #142: Which make that we are confident for the second semester, but not only but also as we go into 2025.
Speaker Change #142: The levels, we discussed about this pricing, which will remain positive.
Speaker Change #142: But yes, we will benefit less from the carryover of late last year and pricing for US includes all the elements of pricing obviously that includes promotional activities.
Speaker Change #142: That includes two attempts so we're looking at the net net consolidated figures. So we will continue to have benefit from there, although probably at a lower.
Speaker Change #143: Lower level.
Speaker Change #143: We saw indeed, a number of commodities going relatively low in the first semester and what we are seeing today looking at the market and looking at the future of that some of them are rebounding.
Speaker Change #118: And this is the way we forecast the second semester, while staying very committed on getting the operating leverage from our volume.
Speaker Change #143: Yes.
Speaker Change #143: And this is the way we forecast the second semester, while staying very committed on getting the operating leverage from our volume mix.
Speaker Change #119: I invite you to remain very committed to continuing all the good things that Vikram and his team are doing on productivity. That is why we are confident about the coming semesters. That is why we are confident about the second semester, even though the increase in margins will not be of the same magnitude of expansion as yesterday.
Speaker Change #143: And by staying very committed to continue all the great things become and his team is doing on productivity. This is why we are confident.
Speaker Change #143: On the semester two countries, where we have confidence on the second semester either the gross margin may not be at the same magnitude of expansion is in the system.
Speaker Change #119: Thank you.
Speaker Change #144: Okay. Thank you.
Speaker Change #120: And so the next and last question is from Victoria Petrova.
Speaker Change #144: Okay.
Speaker Change #145: Next and last question.
Victoria Petrova: Victoria Petrova.
Victoria Petrova: Yes.
Victoria Petrova: Good morning and thank you very much. Congratulations on the results. I have two follow-up questions. First of all, are you seeing anything new in Retailers' Alliance of Behavior in Europe , which you have not seen before? Are they consolidating their efforts and negotiating?
Victoria Petrova: Good morning, and thank you very much congratulations on the results I have two follow up questions first of all are you seeing.
Victoria Petrova: In retail life online for behavior in Europe, which you have not seen before.
Speaker Change #147: Are they consolidating their effort and negotiating.
Speaker Change #122: on pricing or anything new in this process. And my second question is on product launches in China. Could you walk us through your IMF launches and specialized nutrition launches till the year end? Thank you very much.
Speaker Change #148: On pricing or anything new in this in this process and my second question is on product launches in China could you walk us through your through your IMF launches in specialized nutrition nutrition launches still beyond thank you very much.
Speaker Change #123: Good evening and thank you for the questions. I think I will take most of them with the capable help of Jürgen. Regarding vendor alliances, it's both new and not new. Vendors have been in conglomerates for a number of years. These alliances are changing. Some are forming, others are dissolving. The different alliances have different approaches. Some are just sales platforms, to get the best local conditions. Others are trying to harmonize at the European level.
Good morning, and thank you for the questions I think I'll take most of it all leverage the capable head of help of yoga or retailer alliances are.
Speaker Change #149: It's new and not do I mean.
Speaker Change #150: Retailers have been or <unk>.
Speaker Change #150: For a number of.
Speaker Change #150: A number of years.
Speaker Change #150: <unk> by the way are changing so some come in some.
Speaker Change #150: Come out the various alliances of different approaches. Some are just purchasing platform. So you want to have the best conditions locally some try to harmonize.
Speaker Change #150: Our European or level.
Speaker Change #124: What does that mean? Price negotiations have never been easy. I have been in this business for a long time, and I have not seen a year in Europe where it has been easy. It will continue to be challenging. I think what is important, and you have seen it, by the way, we have said that we have had difficult discussions with some of the allies, with the impact on H1, and despite that, we have delivered a very good set of results, which speaks to the resilience of our company, which speaks to our ability to continue delivering, despite external events. And there will be external events, because that is our life. So, the alliances will continue, they will continue to put pressure on people like us, which is why the name of the game for us is our number one offering of products that are loved by consumers and totally differentiated.
Speaker Change #150: Level.
Speaker Change #150: Does it very well.
Speaker Change #151: This negotiation I've never been in.
Speaker Change #152: Thats our business for a long long time, now and I don't know in.
Speaker Change #152: In Europe, where it has been or is it.
Speaker Change #152: It will continue to be challenging I think what is important and you've seen it by the way I mean, we said that we had difficult discussion with some of the <unk>.
Speaker Change #152: Our impact on our H, one and despite that we've printed a very good set of results, which speaks to the resilience of our company, which speaks to our.
Ability.
Speaker Change #152: Or to keep delivering dysport or external events and there will be or.
Speaker Change #152: There will be external events, because such is large so allowances will continue they will keep pushing our pressure on or people larger la <unk>, which is the name of the game for US is our number one offer products that are most by consumers.
Speaker Change #153: Totally differentiator.
Speaker Change #125: And the second thing is to continue doing what we are doing, which is to be strong outside the home, to be strong in pharmacies, to be strong in hospitals, and thus to continue building the resilience of our company. I mean, as you remember from Amsterdam, we have more than 50% of our business that is now outside of mass sales, so it's also a game of resilience.
Speaker Change #154: And the second thing is keeping doing what we're doing which is being strongly in away from home being strong in pharmacy being strong in hospital and therefore are keeping our building those units of our business. I mean, there is you remember former im still on.
Speaker Change #154: Over 50% of our business that is now out of mass retail. So it's also.
Speaker Change #154: Game of our residents.
Speaker Change #126: When it comes to specialized nutrition in China, well, a couple of things. You remember that we said, I think, nine months ago that at the time of the renewal of licenses in China, we obtained more licenses.
Speaker Change #154: When it comes to.
Speaker Change #154: Sure.
Speaker Change #154: When it comes to our specialized nutrition.
Speaker Change #154: In China.
Speaker Change #155: A couple of cents you remember that we said our six or nine months ago that are.
Speaker Change #155: At the time of the renewal of licenses in China, and we obtain more licenses.
Speaker Change #127: which opens up the opportunity for us to launch more products in the IMF. Some of our latest launches, like Axel Vessensis, are performing very well. Nurturist, as we mentioned, we will launch or introduce it on September 1st in Hong Kong and then expand it more and more. As we said, this will be progressive because we need to build credibility with healthcare professionals to ensure that consumers and doctors understand the difference between the products, which gives you a foundation for sustainable success. In terms of medical food, the first thing is to continue producing what we have, which is a very strong range of products. We have very strong market partnerships in tier 1 hospitals. We are expanding our reach. We are increasingly moving into powdered food. Our food brand is improving. As we mentioned, we are introducing FSMP in China. It's the same story, you do it in a methodical way. You convince the HCPs, you are where the patients are, and you go there. I think what we have done in China, in a very systematic way, is to be very focused.
Speaker Change #155: Opening us the opportunity to start launching more products are in.
Speaker Change #155: IMS.
Speaker Change #156: Some of our lost loan choose who are.
Speaker Change #156: So essence, all doing very well no choice as we said all we re launch or introduced in September our first in Hong Kong.
And then our extended further as we said as well is going to progress because you need to abuse the credibility with the health care professional so that.
To make sure that to.
Speaker Change #156: The consumables so the doctors understand the difference of the of the product, which then does your base to have long lasting.
<unk>.
Richard: Medical nutrition, while sourcing as Richard <unk> with <unk>, which is.
Richard: Our strong range of products, you know that on <unk>.
Richard: We have very strong market shares in all tier one hospital, we're obviously expanding our reach.
Richard: We are going further in.
Richard: Troop feeding and powder.
Richard: And they are all neutrally soon.
Richard: <unk> is moving.
Richard: Ford.
Richard: And as we said.
Richard: We are introducing our FSP.
Richard: In China through same store, you're reaching a mutually code where youre convinced dhcp's you all where the patients saw in here.
Hugo: Hugo I think what we have done in China.
Hugo: As Jim mentioned is our very focused.
Speaker Change #127: to be very deep in what we do, and then to be very consistent, consistent, consistent over time, which has also served us, and which has also served us, because, as we have said, I mean, the spring of China for H1 is quite remarkable.
Speaker Change #159: Our deep into what we do.
Speaker Change #159: And then BVI consistent consistent consistent over time, which has served us well any serving us well because as we said.
Speaker Change #160: The print of China for each one is.
Speaker Change #161: What's remarkable.
Speaker Change #128: Which means that today we have, I believe, an unparalleled portfolio in China.
Speaker Change #161: Yes.
Speaker Change #161: Makes them today.
Speaker Change #161: I believe an unparalleled portfolio in China.
Speaker Change #129: Medical Nutrition growing double-digit for many quarters in a row. MyZone back and you saw again a good and strong start into the year. And you see that we are winning super consistent in IMF quarter by quarter. So this is the power of a strong core, but also the power of, I believe, a very intentional management of innovation. So it's a really strong, really strong team.
Speaker Change #161: <unk> nutrition growing double digit for many quarters in a row meson Bacon you saw again, a good start into the year.
Speaker Change #161: And you see that we are winning super consistent.
Water by quarter. So is the power of this.
Speaker Change #161: <unk> call, but also the power of I believe a very intentional.
Speaker Change #161: <unk> of innovation, so really strong really strong activity seamless.
Speaker Change #161: Okay.
Speaker Change #129: Thank you very much.
Okay. Thank you very much.
Speaker Change #130: So with that, we come to the end of the Q&A.
Speaker Change #161: Thank you.
Speaker Change #162: So with that we come to the end of the Q&A.
Speaker Change #130: Thank you all for participating in this meeting. We will see several of you on the road in the coming days. Mathilde and the team.
Speaker Change #161: No.
Speaker Change #161: Many thanks again.
Speaker Change #161: To all of you for joining the call we will see a number of you on the road in the coming.
Speaker Change #163: There is obviously a massive and team.
Speaker Change #131: We are here to answer all your questions. I mean, as we said, we are happy, obviously, with the consistency, but also the board-based nature and the quality of our delivery. We are also systematically, constantly dissatisfied. I mean, there are still things that need to be worked on. So we'll keep driving, renew. We are on preparing or getting ready for the next chapter we've shared with you in Amsterdam. And we are working on that diligently. So see you all in the field.
Speaker Change #163: Our here too.
Speaker Change #163: And so all your question.
Speaker Change #163: I mean, as we said.
Speaker Change #163: We are we are happy.
Speaker Change #164: Obviously it was the consistency, but also the board business sure of and the quality of our delivery.
We also systematically construction such as far as I mean, you asked few things thats our needs to be worked on so we'll keep driving.
Speaker Change #165: Renew or we are on.
Speaker Change #165: Preparing or getting ready for the next chapter.
Speaker Change #165: Sure.
Speaker Change #165: And we are working on that diligently so IOL in the field.
Speaker Change #131: Thank you, bye.
Speaker Change #166: Thank you bye.
Speaker Change #132: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Speaker Change #165: Yes.
Speaker Change #167: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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