Q3 2024 Nestle SA Earnings Call

October 17, 2024

Operator: Good morning to everyone.

David Hancock: Good morning to everyone. This is David Hancock, Head of Investor Relations. Thank you for listening to Nestlé's nine-month sales prepared remarks. Joining me today are Nestlé's CEO, Laurent Freixe, and CFO, Anna Manz. Before we begin, I would ask you to please take careful notes of the disclaimer on page 2 of our presentation. Just to frame the agenda for today's presentation. First, we will focus on the nine-month sales and updated full year guidance. Laurent will cover the high-level key messages before handing over to Anna to take us through the detailed commentary. Finally, Laurent will share some of his perspectives after the first few weeks in his role since becoming CEO. We will then move to our Q&A session. With that, Laurent, I hand over to you.

Good morning to everyone. This is David Hancock head of Investor Relations.

David Hancock: This is David Hancock, Head of Investor Relations. Thank you for listening to Nestlé's nine-month sales prepared remarks.

Speaker Change: Thank you for listening to <unk> nine months sales prepared remarks, joining me today on the slide you see a little Fracs and CFO, Alabama.

David Hancock: Joining me today are Nestlé's CEO Laurent Frex and CFO Anna Mans. Before we begin, I would ask you to please take careful notes of the disclaimer on page two of our presentation.

Speaker Change: Before we begin I would ask you to please take careful notes with the disclaimer on page two of our presentation.

David Hancock: So, just to frame the agenda for today's presentation. First, we will focus on the nine-month sales and updated full-year guidance.

Speaker Change: So just to frame the agenda for today's presentation.

Speaker Change: First we will focus on the nine months sales and updated full year guidance.

David Hancock: Laurent will cover the high-level key messages before handing over to Anna to take us through the detailed commentary.

Speaker Change: There aren't will cover the high level key messages before handing over to Anna to take us through the detailed commentary.

David Hancock: Finally, Laurent will share some of his perspectives after the first few weeks in his role since becoming CEO. We will then move to our Q&A session.

Speaker Change: Finally, Laurel will share some of his perspectives. After the first few weeks in Israel since becoming CEO.

Speaker Change: We will then move to our Q&A session.

Laurent Frex: And with that, Laurent, I hand over to you. Thank you, David, and welcome to Nestle. This is in fact the first result school for both of us, and it's been a pleasure to work with you, Luca, and the Investor Relations team. I look forward to our ongoing collaboration as we share our progress with the markets over the coming quarters and years. As David mentioned, I will shortly share some initial perspectives after my first weeks as CEO. But I will first take you through the key high-level messages from the nine-month sales before handing over to Anna to cover them in more detail.

Speaker Change: And without Laurel I hand over to you.

Laurent Freixe: Thank you, David, and welcome to Nestlé. This is in fact the first results call for both of us, and it's been a pleasure to work with you, Luca, and the investor relations team. I look forward to our ongoing collaboration as we share our progress with the markets over the coming quarters and years. As David mentioned, I will shortly share some initial perspectives after my first weeks as CEO. I will first take you through the key high-level messages from the nine-month sales before I hand over to Anna to cover them in more detail. Let me start off by putting our organic growth delivery in context. In an environment characterized by softening consumer demand, we delivered steady organic sales growth with positive, real internal growth. Consumer demand has been subdued across many of our regions.

Laurel: Thank you, David and they will come to Netflix.

Laurel: This is in fact, the first reason school for both of US and it's been a pleasure.

Laurel: To work with you Luca and the Investor Relations team.

Laurel: I look forward to our ongoing collaboration as we show progress excuse the markets.

Over the coming quarters and years.

Speaker Change: As David mentioned I will shortly share some initial perspectives. After my first weeks as CEO.

Speaker Change: But I will first take you through the key high level messages from the nine months since before I hand over to Anna.

To cover them in more detail.

Laurent Frex: Let me start off by putting our organic growth delivery in context. In an environment characterized by softening consumer demand, we delivered steady organic sales growth with positive real internal growth. Consumer demand has been subdued across many of our regions. In a third quarter, we saw softening demand and actions to reduce customer inventory levels. Another key factor shaping our organic growth this year has been the normalization of pricing, following unprecedented increases over the prior two years. Our growth over the nine months was driven by coffee, pet care, and confectionery. And I'm pleased to see Nestlé's health science recovery going to plan, with growth reaching a double-digit base in the third quarter.

Speaker Change: Let me start off by putting our Guinea grew its delivery in context.

Speaker Change: In an environment characterized by softening consumer demand.

We delivered steady organic sales growth was positive.

Speaker Change: Internal growth.

Speaker Change: Consumer demand has been subdued across many of our regions.

Laurent Freixe: In Q3, we saw softening demand and actions to reduce customer inventory levels. Another key factor shaping our organic growth this year has been the normalization of pricing following unprecedented increases over the prior two years. Our growth over the nine months was driven by coffee, pet care, and confectionery. I'm pleased to see Nestlé Health Science recovery going to plan with growth reaching a double-digit pace in Q3. While market shares for billion brands improved, overall market share for the total group was broadly in line with the first half. More work needs to be done to drive improvement here, and this is going to be one of my key priorities going forward. Given the consumer environment and our further actions to reduce customer inventories in Q4, we have revised our full year guidance.

Speaker Change: In the first quarter, we saw softening demand and actions to reduce customer inventory levels.

Speaker Change: And as a key factor shaping go all Guinea grew this year has been the normalization of pricing following unprecedented increases over the prior two years.

Speaker Change: Our gross over the nine months was driven by coffee Petcare and confectionery.

Speaker Change: And I am pleased to see Nestle health science recovery going to plan with gross reaching a double digit pace in this third quarter.

Laurent Frex: While market shares for billionaire brands improved, overall market share for the total group was broadly in line with the first half. More work needs to be done to drive improvement here. And it is going to be one of my key priorities going forward. Given the consumer environment and our further actions to reduce customer inventories in the fourth quarter, we have revised our fuller guidance. We now expect our fuller organic growth to be around 2% in line with current trading, and our underlying trading operating profit margin to be around 17%. Underlying EPS growth in constant currency is expected to be broadified flat here on here.

Speaker Change: While market shares four billionaire brands improved overall market share for the total group was broadly in line with the first half.

Speaker Change: More work needs to be done to drive improvement here.

Speaker Change: And she's going to be one of my key priorities going forward.

Speaker Change: Given the consumer environment, and our further actions to reduce customer inventories in the fourth quarter, we have revised our full year guidance.

Laurent Freixe: We now expect our full year organic growth to be around 2% in line with current trading, and our underlying trading operating profit margin to be around 17%. Underlying EPS growth in constant currency is expected to be broadly flat year-over-year. Let me now hand over to Anna to take you through the performance in more detail. Anna?

Speaker Change: We now expect our full year organic growth to be around 2% in line with current trading.

Speaker Change: And how underlying trading operating profit margin to be around 17%.

Speaker Change: Underlying EPS growth in constant currency is expected to be broadly flat year on year.

Anna Mans: Let me now hand over to Anna to take you through the performance in more detail. Thanks, Laurent. Let me begin by giving a brief overview of our 9-month sales. We delivered 2% organic growth with half a percent rig and 1.6% pricing. Net divestitures reduced sales by 0.3%, and these largely related to the joint venture for Nestlé's frozen pizza business in Europe. For an exchange, impacted sales by 4.1%, reflecting the continued strengthening of the Swiss franc. Factoring all of these elements together, the group's total reported sales were 67.1 billion Swiss francs. This next slide shows the trend in rig and pricing since the 1st quarter of 2023.

Speaker Change: And let me know handle that why not to take you through the performance in more detail.

Anna Manz: Thanks, Laurent. Let me begin by giving a brief overview of our nine-month sales. We delivered 2% organic growth with 0.5% RIG and 1.6% pricing. Net divestitures reduced sales by 0.3%, and these largely related to the joint venture for Nestlé's frozen pizza business in Europe. Foreign exchange impacted sales by 4.1%, reflecting the continued strengthening of the Swiss franc. Factoring all of these elements together, the group's total reported sales were CHF 67.1 billion. This next slide shows the trend in RIG and pricing since Q1 2023. In Q2 this year, we moved from price-led growth to RIG-led growth, and we said at the time that this transition would not be linear.

Thanks Sarah.

Speaker Change: Let me begin by giving a three five if you have a nine month sales.

Speaker Change: We delivered 2% organic rice with half a percent rig and 1.6% pricing.

Speaker Change: Net divestitures reduced sales by not playing straight to sense and there is largely related to the joint venture for Neste is frozen pizza business in Europe.

Speaker Change: Foreign exchange impacted sales by a full 0.1%.

Speaker Change: It's actually a continued strengthening of the Swiss franc.

Speaker Change: Factoring all of these elements together the great title reported sales of 67.1 billion Swiss francs.

This next slide shows the trend in rig and pricing since the first quarter of 2023.

Anna Mans: In the 2nd quarter this year, we moved from price-led growth to rig-led growth, and we said at the time that this transition would not be linear. In the 3rd quarter, we maintained positive rig, albeit at a lower level than in the 2nd quarter. The rig trajectory was influenced by softening consumer demand, particularly in the Americas and Europe, and actions to reduce customer inventory, particularly in the Americas, with an approximate impact of 60 basis points on the group in the quarter. At the same time, pricing has continued to normalize across most categories following 2 years of significant pricing increases.

Speaker Change: And the second course of this year, we made from price flat Grace to break glass price and we said at the time that this transaction would not be linear.

Anna Manz: In Q3, we maintained positive RIG, albeit at a lower level than in Q2. The RIG trajectory was influenced by softening consumer demand, particularly in Zone Americas and Zone Europe, and actions to reduce customer inventory, particularly in the Zone Americas, with an approximate impact of 60 basis points on the group in the quarter. At the same time, pricing has continued to normalize across most categories following two years of significant price increases. In Q3, there were decreases in pet care and dairy, as well as increases in confectionery and coffee linked to higher input costs. Turning next to the performance by zone. In Q3, Zone North America continued to see soft consumer demand and negative pricing, particularly in pet care, frozen food, and coffee creamers.

Speaker Change: In the third quarter, we maintained positive rack, albeit at a lower level than in the second quarter.

Speaker Change: The rate trajectory was influenced by softening consumer demand, particularly in the Americas, and Europe and actions to reduce customer inventory, particularly in the Americas with an approximate impact of 60 basis points on the group in the quarter.

Speaker Change: At the same time pricing has continued to normalize across most categories. Following two years of significant price increases.

Anna Mans: In the 3rd quarter, there were decreases in impact care and dairy, as well as increases in confectionery and coffee linked to higher impact cost.

Speaker Change: In the third quarter, there were decreases in pet cat and dairy as well as increases in confectionery and coffee linked to higher input costs.

Anna Mans: Turning next to the performance by zone. In the 3rd quarter, zone North America continued to see soft consumer demand and negative pricing, particularly in impact care, frozen food, and coffee creamers. Rig remained positive at 0.3%, but was lower than the 2.8% in the 2nd quarter. As we flagged at the half-year results, rig has been impacted by the phasing of customer inventory related to promotional campaigns. This positively impacted the 2nd quarter and negatively impacted the 3rd quarter by approximately a hundred basis points. Adjusting for that phasing, 3rd quarter rig is only slightly below the 2nd quarter.

Speaker Change: Turning now to the performance by saying.

Speaker Change: In the third quarter Zane North America continued to see soft consumer demand and negative pricing, particularly in pet care frozen food and coffee creamers.

Anna Manz: RIG remained positive at 0.3%, but was lower than the 2.8% in Q2. As we flagged at the half-year results, RIG has been impacted by the phasing of customer inventory related to promotional campaigns. This positively impacted Q2 and negatively impacted Q3 by approximately 100 basis points. Adjusting for that phasing, Q3 RIG is only slightly below Q2. Quarter-on-quarter, pet care slowed due to increased promotional intensity, but along with coffee continued to drive growth in the zone. Both pet care and coffee delivered positive RIG and gained market share. On the other hand, our frozen food and coffee creamer businesses continue to be challenged by increased price competition and a value-seeking consumer. Across the zone, we're focusing on meeting consumer needs through price competitiveness, innovation, and marketing.

Speaker Change: Rick remained positive at no, 0.3% that was lower than the 2.8% in the second quarter.

Speaker Change: As we flagged at the half year results, Rick has been impacted by the phasing of customer inventory related to promotional campaigns. This positively impacted the second quarter and negatively impacted the third quarter by approximately 100 basis points.

Speaker Change: Adjusting for that facing third quarter rig is only slightly below the second quarter.

Anna Mans: Quarter on quarter, pet care slowed due to increase promotional intensity, but along with coffee, continue to drive growth in the zone. Both pet care and coffee delivered positive rig and gained market share. On the other hand, our frozen food and coffee creamer businesses continue to be challenged by increased price competition and a value-seeking consumer. Across the zone, we're focusing on meeting consumer needs through price competitiveness, innovation, and marketing. We continue to bring new products across categories with good traction in pet care, coffee, and water. In frozen food, some key product launches, including vital pursuits, started to hit the market at the end of the third quarter.

Speaker Change: Quarter on quarter Pet cashless H G to increase promotional intensity.

Speaker Change: But along with coffee continued to drive growth and design.

Speaker Change: Pet cat and coffee delivered positive rig and gained market share.

Speaker Change: On the other hand, our fragrance aging coffee creamer businesses continue to be challenged by increased price competition and the value seeking consumer.

Speaker Change: Across design with focusing on meeting consumer needs through price competitiveness innovation and Marc Cheng.

Anna Manz: We continue to bring new products across categories with good traction in pet care, coffee, and water. In frozen food, some key product launches, including Vital Pursuit, started to hit the market at the end of Q3. In Europe, consumers are becoming increasingly cautious and are prioritizing affordability. This was particularly noticeable in Turkey, where there was a marked slowdown in our growth. In this context, retailer negotiations are tougher and we've experienced some temporary delistings in Q3, affecting several categories with an impact of about 50 basis points on RIG. Quarter-on-quarter, growth slowed, particularly in confectionery and culinary. In the quarter, while slowing, the main contributors to growth were coffee and pet care. Executionally, we're staying nimble and managing price gaps while focusing investment on our key brands, particularly Nescafé, KitKat, and Purina.

Speaker Change: We continue to bring new products across categories with good traction in Petcare coffee and water and.

Speaker Change: And for instance, say two key product launches, including vital appreciates started to hit the market at the end of the third quarter.

Anna Mans: In Europe, consumers are becoming increasingly cautious and are prioritising affordability. This was particularly noticeable in Turkey, where there was a marked slowdown in our growth. In this context, retail and negotiations are tougher, and we've experienced some temporary delistings in the third quarter affecting several categories, with an impact of about 50 basis points on rig. Quarter-on-quarter growth slowed, particularly in confectionery and culinary. In the quarter, while slowing, the main contributors to growth were coffee and pet care. Executiony with a nimble and managing price gaps while focusing investment on our key brands, particularly Nest Cafe, Kit Kat, and Purina.

Speaker Change: In Europe consumers are becoming increasingly cautious and are prioritizing affordability. This was particularly nights, but in Turkey, but there was a marked slowdown at all right.

Speaker Change: In this context retailer negotiations are tougher and we've experienced some temporary de listings in the quarter affecting several categories with an impact of about 50 basis points on rack.

Speaker Change: Quarter on quarter, gross sledge, particularly in confectionery and culinary.

In the quarter, while slowing the main contributors to Christ with coffee and pet cat.

Speaker Change: Execution, English staying nimble and managing price gaps, while focusing investment on our key brands, particularly NES Cafe Kitkat Purina.

Anna Mans: In the third quarter, zone AOA continue to generate solid growth with acceleration in Central and West Africa as well as Oceania. This solid growth was despite pressure on global brands linked to geopolitical tensions affecting some markets, as well as further economic slowdown in India and Pakistan. Most categories delivered robust growth that improved quarter on quarter, offsetting a slowdown in dairy. Within coffee, growth was driven by new product launches and geographic expansion, particularly through ready-to-drink formats. In culinary, growth was driven by Maggie. In pet care, increased supply and competitive pricing supported in acceleration. And in dairy, the slowdown that we saw was exacerbated by the introduction of a new sales tax in Pakistan.

Anna Manz: In Q3, Zone AOA continued to generate solid growth with acceleration in Central and West Africa, as well as Oceania. This solid growth was despite pressure on global brands linked to geopolitical tensions affecting some markets, as well as further economic slowdown in India and Pakistan. Most categories delivered robust growth that improved quarter-over-quarter, offsetting a slowdown in dairy. Within coffee, growth was driven by new product launches and geographic expansion, particularly through ready-to-drink formats. In culinary, growth was driven by Maggi. In pet care, increased supply and competitive pricing supported an acceleration. In dairy, the slowdown that we saw was exacerbated by the introduction of a new sales tax in Pakistan. The zone has continued to focus on affordable offerings, which grew high single digits in Q3. In our LatAm business, growth in Q3 was impacted by softer consumer demand.

Speaker Change: In the third quarter zone, AOA continue to generate solid price, where the acceleration in central and West Africa as well as Oceania.

Speaker Change: This solid growth was despite pressure on global brands linked to geopolitical tensions affecting some markets.

Speaker Change: As well as further economic slowdown in India and Pakistan.

Speaker Change: Nice categories deliver drive bus crisis improved quarter on quarter offsetting a slowdown in dairy.

Speaker Change: Within coffee gross was driven by new product launches and geographic expansion, particularly three ready to drink formats, Inc.

Speaker Change: And Cousinry Grace was driven by Mackie.

Speaker Change: In pet care increased supply and competitive pricing supported an acceleration.

Speaker Change: And then dairy the slowdown that we saw was exacerbated by the introduction of a knee sales tax in Pakistan.

Anna Mans: The zones continued to focus on affordable offerings, which grew high single digits in the third quarter. In our Latin business, growth in the third quarter was impacted by softer consumer demand. In addition, the zone was affected by customer inventory reductions, which reduced rig by approximately 130 basis points. Quarter on quarter, core markets, Brazil and Mexico, slowed a little, but they continue to deliver solid growth. In aggregate, the other markets were flat to down. Confectionary, nested professional and coffee continued to lead growth, while our dairy and infant nutrition businesses saw a slowdown, largely linked to Niño.

Speaker Change: Zane has continued to focus on affordable offerings, which grew high single digits in the third quarter.

Speaker Change: In our lifestyle business Grace in the third quarter was impacted by softer consumer demand.

Anna Manz: In addition, the zone was affected by customer inventory reductions, which reduced RIG by approximately 130 basis points. quarter-over-quarter, our core markets, Brazil and Mexico, slowed a little, but they continued to deliver solid growth. In aggregate, the other markets were flat to down. Confectionery, Nestlé Professional, and coffee continued to lead growth, while our dairy and infant nutrition businesses saw a slowdown, largely linked to NAN. In a difficult economic environment, the zone is generating improved market share trends across most categories, particularly soluble coffee. In Q3, Zone Greater China continued to deliver solid growth in the face of ongoing difficult macro conditions. Consumer sentiment remained subdued, and this particularly impacted our out-of-home businesses. quarter-over-quarter, the RIG improvement was driven by infant nutrition. NAN maintained its double-digit growth momentum, while sales growth for illuma improved against easier comps.

Speaker Change: In addition, the Zane was affected by customer inventory reductions, which reduced the rate by approximately 130 basis points.

Speaker Change: Quarter on quarter, our core markets, Brazil, and Mexico slowed your last fall, but they continue to deliver solid crisis.

Speaker Change: In aggregate the other markets are flat to down.

Speaker Change: Confectionery, NASDAQ professional and coffee continued to leach Grace well are Jerry and infant nutrition businesses saw a slowdown largely linked to anemia.

Anna Mans: In a difficult economic environment, the zone is generating improved market share trends across most categories, particularly soluble coffee.

Speaker Change: In a difficult economic environment design is generating improved market share trends across most categories, particularly soluble coffee.

Anna Mans: In the third quarter, Zone Greater China continued to deliver solid growth in the face of ongoing difficult macro conditions. Consumer sentiment remains subdued, and this particularly impacted our out-of-home businesses. Quarter-on-quarter, the rig improvement was driven by infant nutrition. Now and maintained its double-digit growth momentum, while sales growth for Illuma improved against easier comps. The slowdown in out-of-home consumption impacted our food and professional businesses. Coffee and confectionery also contributed significantly to growth, supported by recent product launches in ready-to-drink and snacking formats. Our dairy business continues to be a drag due to heightened competitive pressures in the category.

Speaker Change: In the third quarter, Zane Greater China continued to deliver solid grace in the face of ongoing difficult macro conditions.

Speaker Change: Consumer sentiment remains of GH, and this particularly impacted our out of home businesses.

Speaker Change: Quarter on quarter, the rig improvement was driven by infant nutrition.

Speaker Change: Non maintained its double digit growth momentum, while sales Christ Lima improved against easier comps.

Anna Manz: The slowdown in out-of-home consumption impacted our food and professional businesses. Coffee and confectionery also contributed significantly to growth, supported by recent product launches in ready-to-drink and snacking formats. Our dairy business continued to be a drag due to heightened competitive pressures in the category. Turning next to Nestlé Health Science. The turnaround is on track. We saw strong growth in Q3, driven by RIG, with increased pricing. Our VMS business is delivering to plan and is now growing at double-digit as we get back on the shelf. Market shares are also stabilizing and improving month-on-month. The category is growing at a high single-digit rate. Our active nutrition business is delivering positive growth, with continued strong sales momentum for gain, driven by new product launches. Our medical nutrition business delivered double-digit growth, strengthening quarter-on-quarter, particularly in adult medical care products.

Speaker Change: The slowdown in out of home consumption impacted our food and professional businesses.

Speaker Change: Coffee and confectionery also contributed significantly to grace supported by recent product launches and ready to drink and snacking formats.

Speaker Change: Dairy business continued to be a drag due to heightened competitive pressures in the category.

Anna Mans: Turning next to Nestlé Health Science, the turnaround is on track. We saw strong growth in the third quarter driven by a rig with increased pricing. Our VMS business is delivering to plan and is now growing at double digit as we get back on the shelf. Market shares are also stabilising and improving month on month. The category is growing at a high single-digit rate. Our active nutrition business is delivering positive growth with continued strong sales momentum for again driven by new product launches. And our medical nutrition business delivers double-digit growth, strengthening quarter on quarter, particularly in adult medical care products.

Speaker Change: Turning next to necessary health science.

Speaker Change: The turnaround is on track we saw strong growth in the third quarter driven by rig with increased pricing.

Speaker Change: Our Vms businesses delivering to plan and is now growing at double digit as we got back on the shelf.

Speaker Change: Market shares are also stabilizing and improving month on month.

Speaker Change: The category is growing at a high single digit right.

Speaker Change: Our active nutrition business is delivering positive grace with continued strong sales momentum until again driven by new product launches.

Speaker Change: And our medical nutrition business delivered double digit grace strengthening quarter on quarter, particularly in adult medical cat product.

Anna Mans: Nespresso delivered positive rig lead growth, supported by continued momentum for Virtue and the out of home channels. The US continues to be the key geographic driver delivering mid-single-digit growth. In Europe, sales decrease slightly in a competitive environment. In this competitive environment, we continue to leverage the broad Nespresso ecosystem, which includes Starbucks, Bynus, Bresso, and other brands. In the third quarter, globally, this ecosystem delivered a further 130 basis points of growth.

Anna Manz: Nespresso delivered positive RIG-led growth, supported by continued momentum of Vertuo and the out-of-home channels. The US continues to be the key geographic driver, delivering mid-single-digit growth. In Europe, sales decreased slightly in a competitive environment. In this competitive environment, we continue to leverage the broader Nespresso ecosystem, which includes Starbucks by Nespresso and other brands. In Q3, globally, this ecosystem delivered a further 130 basis points of growth. Let's turn to a breakdown of our growth by category. Starting with powdered and liquid beverages. Let me focus on coffee, which represents 85% of category sales here and was the largest contributor over the first nine months of the year. Sales grew by 3.8%, with improved trends across most segments, particularly for soluble and ready-to-drink format. Quarter-over-quarter, growth in coffee was broadly similar.

Speaker Change: <unk> delivered positive Rick alleged price supported by continued momentum does that yeah, and the out of home channels.

Speaker Change: The U S continues to be the key geographic driver delivering mid single digit right.

Speaker Change: In Europe sales decreased slightly in a competitive environment.

Speaker Change: In this competitive environment, we continue to leverage the broad and espresso ecosystem, which includes Starbucks spine espresso and other brands.

Speaker Change: In the third quarter globally. This ecosystem delivered a further 130 basis points of Grace.

Anna Mans: Let's turn to a breakdown of our growth by category, starting with powdered and liquid beverages. Let me focus on coffee, which represents 85% of category sales here and was the largest contributor over the first nine months of the year. Sales grew by 3.8% with improved trends across most segments, particularly for So Looble and ready to drink format. Quarter-on-quarter, growth in coffee was broadly similar. Petcare posted 3% organic growth, driven by continued momentum for science-based premium brands. We saw continued rig momentum, particularly in our cap segments as we increased supply. Quarter on quarter, growth decelerated with a negative contribution from pricing, although we continue to outperform the category and gain market share.

Speaker Change: Let's turn to a breakdown of our growth by category.

Speaker Change: <unk> with powdered and liquid beverages.

Let me focus on coffee, which represents 85% of category sales head and was the largest contributor over the first nine months of the year.

Speaker Change: Sales grew by three 8% with improved trends across most segments, particularly for soluble and ready to drink format.

Speaker Change: Quarter on quarter growth in coffee was broadly similar.

Anna Manz: Pet care posted 3% organic growth, driven by continued momentum for science-based premium brands. We saw continued RIG momentum, particularly in our cat segments, as we increased supply. quarter-on-quarter, growth decelerated with a negative contribution from pricing. Although we continued to outperform the category and gain market share. Nutrition and health science delivered low single-digit growth. We've already covered health science, so let me focus on infant nutrition. It delivered low single-digit growth, driven by NAN, our affordable offering, Lactogen, and our human milk oligosaccharide products. Prepared dishes and cooking aids reported negative growth. Within the category, we saw robust growth for Maggi, which was more than offset by the sales decline for frozen food in North America. quarter-on-quarter, growth slowed, mainly due to frozen food and temporary delistings in Europe for Maggi.

Speaker Change: Pet Caf posted 3% organic rice driven.

Speaker Change: Driven by continued momentum for science based premium brands we.

Speaker Change: We saw continued rig momentum, particularly in our cat segment as we increase supply.

Speaker Change: Quarter on quarter, Grace decelerated with a negative contribution from pricing, although we continue to outperform the category and gain market share.

Anna Mans: Nutrition and health science delivered low single-digit growth.

Speaker Change: Nutrition and health Science delivered low single digit Grace, we've already covered health science, So let me focus on infant nutrition.

Anna Mans: We've already covered health science, so let me focus on infant nutrition. It delivered low single-digit growth, driven by NAN, our affordable offering Lactogen and our human milk oligosaccharide products. Prepared dishes and cooking aids reported negative growth. Within the category, we saw robust growth for Maggie, which was more than offset by the sales decline for frozen food in North America. Quarter-on-quarter, growth slowed, mainly due to frozen food and temporary delistings in Europe for Maggie. Milk products and ice cream delivered negative growth, as the sales decline in coffee creamers and ambient dairy offset a robust performance for dairy culinary solutions.

Speaker Change: <unk> delivered low single digit growth driven by NAND or affordable offering lactogen and our human milk oligosaccharide products.

Speaker Change: Prepared dishes and cooking AIDS reported negative crash.

Anna Manz: Within the category, we saw robust growth for Maggi, which was more than offset by the sales decline for frozen food in North America. quarter-on-quarter, growth slowed, mainly due to frozen food and temporary delistings in Europe for Maggi. Milk products and ice cream delivered negative growth as a sales decline in coffee creamers and ambient dairy offset a robust performance for dairy culinary solutions. Quarter-over-quarter, growth slowed due to ambient dairy products in emerging markets. Growth in confectionery was mid-single-digit, with sustained broad-based growth for KitKat and key local brands.

Speaker Change: Within the category, we saw robust growth for marquee, which was more than offset by the sales decline for phased in food in North America.

Quarter on quarter growth slide mainly due to frozen food and temporary de listings in Europe for Mackie.

Anna Manz: Milk products and ice cream delivered negative growth as a sales decline in coffee creamers and ambient dairy offset a robust performance for dairy culinary solutions. Quarter-over-quarter, growth slowed due to ambient dairy products in emerging markets. Growth in confectionery was mid-single-digit, with sustained broad-based growth for KitKat and key local brands. Quarter-over-quarter, growth decelerated, primarily due to temporary delistings in Europe. Finally, sales in water delivered low single-digit growth, underpinned by continued momentum for S.Pellegrino and a rebound in Perrier, supported by the rollout of Maison Perrier. Quarter-over-quarter growth moderated as we're still facing some supply constraints. Turning to full-year guidance. In the context of softening consumer demand and further actions to reduce customer inventory in Q4, we've revised our full-year guidance.

Milk products and ice cream delivered negative Grace is the sales decline in coffee creamers and ambient dairy off such a robust performance for diary Cullen race of nations.

Anna Mans: Quarter on quarter, growth slowed due to ambient dairy products in emerging markets. Growth in confectionery was mid-single-digit with sustained broad-based growth for Kit-Kat and key local brands. Quarter-on-quarter, growth decelerated primarily due to temporary dealistings in Europe. And finally, sales in water delivered low-single-digit growth underpinned by continued momentum for San Pellegrino and a rebrand in Perrier, supported by the roll-out of Maison Perrier. Quarter-on-quarter growth moderated as we're still facing some supply constraints.

Quarter on quarter gross slippage due to ambient dairy products in emerging markets.

Great and confection rave is mid single digit, but sustained broad based growth for kitkat and key local brands Cortez.

Anna Manz: Quarter-over-quarter, growth decelerated, primarily due to temporary delistings in Europe. Finally, sales in water delivered low single-digit growth, underpinned by continued momentum for S.Pellegrino and a rebound in Perrier, supported by the rollout of Maison Perrier. Quarter-over-quarter growth moderated as we're still facing some supply constraints. Turning to full-year guidance. In the context of softening consumer demand and further actions to reduce customer inventory in Q4, we've revised our full-year guidance.

Speaker Change: Quarter on quarter growth deceleration, primarily D. G H, a temporary de listings in Europe.

And finally sales in water delivered low single digit growth underpinned by continued momentum for San Pellegrino and a rebound in Perry I suppose it by the rollout of myself Perry I.

Speaker Change: Of course, we're on course your growth moderated as we're still facing some supply constraints.

Anna Mans: Turning to full-year guidance. In the context of softening consumer demand and further actions to reduce customer inventory in the fourth quarter, we've revised our full-year guidance. We've delivered 2% organic growth in the first nine months, and we now expect full-year organic growth to also be around 2%. As a result, our underlying trading operating profit margin is expected to be down slightly year-on-year, at around 17%. Underlying EPS in constant currency is expected to be broadly flat year-on-year. Please also note, based on where exchange rates were at the end of September, FX is likely to have a negative effect for the full-year 2024 of around 4% on group sales.

Speaker Change: Turning to full year guidance.

Speaker Change: In the context of softening consumer demand and further actions to reduce customer inventory in the fourth quarter. We've revised our full year guidance, we've delivered 2% organic growth in the first nine months and we now expect full year organic growth to also be around 2%.

Anna Manz: We've delivered 2% organic growth in the first nine months, and we now expect full-year organic growth to also be around 2%. As a result, our underlying trading operating profit margin is expected to be down slightly year on year at around 17%. Underlying EPS in constant currency is expected to be broadly flat year on year. Please also note, based on where exchange rates were at the end of September, FX is likely to have a negative effect for the full year 2024 of around 4% on group sales. As previously mentioned, we'll provide guidance for 2025 at the full year results in February. With that, I'll hand back to Laurent.

As a result, our underlying trading operating profit margin is expected to be down slightly year on year at around 17%.

Speaker Change: Underlying EPS in constant currency is expected to be broadly flat year on year.

Speaker Change: Please I'll say night based on where exchange rates were at the end of September FX is likely to have a negative effect for the full year 2020 full of around 4% on group sales.

Anna Mans: As previously mentioned, we'll provide guidance for 2025 at the full-year results in February.

Speaker Change: As previously mentioned, we will provide guidance for 2025 at the full year results in February.

Laurent Frex: And with that, I'll hand back to Laurel.

Speaker Change: And with that I'll hand back to normal thank.

Laurent Frex: Thank you, Dana. Coming into the CEO role in the fortunate position that I already know the Nestlé business in depth. I joined 38 years ago, and in my time I've been marketed for Hungary and for Iberia, and then CEO of the Europe, of the Americas, and of Latin America. I've been on the executive board for 16 years and led some important transversal initiatives with a strong focus on productivity. Starting from this position of deep knowledge of the business means that I have been able to move forward at pace since taking the role of CEO. In the last 46 days, I've spent my time into three main areas: engaging intensively with a wide range of stakeholders, sharpening our strategy and developing an action plan, and then starting to put the action into that action plan.

Laurent Freixe: Thank you, Anna. Coming into the CEO role, I'm in the fortunate position that I already know the Nestlé business in depth. I joined 38 years ago, and in my time, I've been marketer for Hungary and for Iberia, and then CEO of Zone Europe, of Zone Americas, and of Zone Latin America. I've been on the executive board for 16 years and led some important transversal initiatives with a strong focus on productivity. Starting from this position of deep knowledge of the business means that I have been able to move forward at pace since taking the role of CEO. In the last 46 days, I've spent my time into three main areas: engaging intensively with a wide range of stakeholders, sharpening our strategy and developing an action plan, and then starting to put the action into that action plan.

Speaker Change: Thank you Dino coming into this new rule.

Speaker Change: The fortunate position that they already know the initially business in depth.

I joined so two years ago and in my time I've been marketed for Hungary, and for Iberia, and then see you soon Europe, <unk> Americas and affliction Emily Jim.

Speaker Change: I've been on the executive Board for 16 years, and led some important transversal initiatives.

Speaker Change: Strong focus on productivity.

Speaker Change: Starting from this position of deep knowledge of the business means that I've been able to move forward that piece since taking the role of CEO.

Speaker Change: In the last 46 days I've spent my time into three main areas.

Speaker Change: Engaging intensively with a wide range of stakeholders.

Speaker Change: Shopping Ingalls strategy and developing an action plan.

Speaker Change: And then starting to put the actions in.

Speaker Change: That action plan is.

Laurent Frex: Interacting with colleagues and with external stakeholders is one of the most rewarding parts of my work. One of the many greater assets of Nestle, I would actually say our greatest strength is our people. The intensive engagement in the last weeks has been a reminder of what the privilege it is to lead this great company. It has also allowed me to listen to a wide range of voices across the business, from those in the heart of the center, here in Vive, to the ones operating in the first spots of the globe. There is strong support for me and for my message, which is a great starting point.

Laurent Freixe: Interacting with colleagues and with external stakeholders is one of the most rewarding parts of my work. One of the many great assets of Nestlé, I would actually say, our greatest strength is our people. The intensive engagement in the last weeks has been a reminder of what a privilege it is to lead this great company. It has also allowed me to listen to a wide range of voices across the business, from those in the heart of the center here in Vevey to the ones operating in the furthest parts of the globe. There is strong support for me and for my message, which is a great starting point. The teams are together with me.

Speaker Change: Our team with colleagues and with external stakeholders is one of the most rewarding parts of my work.

Speaker Change: One of the many great I've said since nicely I would actually say Oh greatest strength is our people.

Speaker Change: The intensive engagements in the last weeks has been a reminder of what a privilege. It is to lead this great company.

Speaker Change: It has also allowed me to listen to a wide range of voices across the business.

Speaker Change: From those in the heart of the center during the movie to the ones.

Speaker Change: Our aging in the sales of sports over the globe.

Speaker Change: There is strong support for me and for my message, which is a great starting point. The teams are together with me.

Laurent Frex: The teams are together with me. I've also been very keen to hear from voices outside of the company and have spent time with multiple stakeholders, including the CEOs of some of our larger partners and political leadership at the highest level in Kima. It is impossible to overestimate the power of listening. These inputs have been crucial to helping refine both the what and how of our way forward. During my interactions, all of the things you see on this slide were confirmed as strengths of Nestlé. At the top here is People and culture because it is so foundational at Nestlé.

Laurent Freixe: I've also been very keen to hear from voices outside of the company, and I've spent time with multiple stakeholders, including the CEOs of some of our largest partners and political leadership at the highest level in key markets. It is impossible to overestimate the power of listening. These inputs have been crucial to helping refine both the what and the how of our way forward. During my interactions, all of the things you see on this slide were confirmed as strengths of Nestlé. At the top here is people and culture because it is so foundational at Nestlé. I said when we announced the CEO change that I'm deeply committed to Nestlé, our purpose and values. This commitment is something I've heard consistently shared in the last weeks.

I've also been very keen to hear from voices outside of the company and I've spent time with multiple stakeholders, including this use of some of our largest partners and political leadership.

Speaker Change: Highest level in key markets.

It is impossible to overestimate the power of you soon.

Speaker Change: These inputs have been crucial to helping refined boost to what and the how before where forward. During my interactions all of the things you see on this slide were confirmed as the strengths of mislead.

Speaker Change: At the top here is people and culture, because it is so foundational ethnicities.

Laurent Frex: I said when we announced the CO change that I'm deeply committed to Nestle, our purpose and values, and this commitment is something I've heard consistently shared in the last weeks. As the leading global food, beverage, and nutrition company, we strive to be the best in everything we do with a long-term perspective. We have an unmatched category and geography mix. Very strong portfolio of iconic brands and unique competitive advantages in our R&D, our manufacturing, and our route to market. We have an incredible engagement with consumers, connecting with people every day and in every stage of their lives.

Speaker Change: I said, when we announced this huge change that I'm deeply committed to initially our purpose and values.

Speaker Change: And this commitment is something I've heard consistently shared in the last weeks.

Laurent Freixe: As the leading global food, beverage, and nutrition company, we strive to be the best in everything we do with a long-term perspective. We have an unmatched category and geography mix, a very strong portfolio of iconic brands and unique competitive advantages in our R&D, our manufacturing, and our route to market. We have an incredible engagement with consumers, connecting with people every day and in every stage of their lives. I'm proud of our leadership position in many areas, including sustainability. For me, what is exciting about where we are today is that we have an enormous opportunity to build on these foundations and accelerate performance. This is going to be a key focus of our Capital Markets Day in November. I'm just going to give you a taste here, but more to come in a few weeks time.

Speaker Change: As the leading global food beverage and nutrition company, we strive to be the best in everything we do with a long term perspective.

Speaker Change: We have an unmatched category and geographic mix.

Speaker Change: Very strong portfolio of iconic brands and unique competitive advantages, you know R&D or manufacturing and our route to market.

Speaker Change: We have an incredible engagement with consumers connecting with people every day and in every stage of their lives.

Laurent Frex: And I'm proud of our leadership position in many areas, including sustainability. For me, what is exciting about where we are today is that we have an enormous opportunity to build on these foundations and accelerate performance. This is going to be a key focus of our Capital Markets Day in November. So I'm just going to give you a taste here, but more to come in a few weeks' time.

Speaker Change: And I'm proud of our leadership position in many areas, including sustainability for me what is exciting about where we are today is that we have an enormous opportunity to build on these foundations and accelerate performance.

Speaker Change: This is going to be a key focus of our capital markets day in November.

Speaker Change: So I'm just going to give you a taste here, but more to come in a few weeks' time.

Laurent Frex: So what do I see as our biggest opportunities? One is consumer and customer centricity. Moving forward, we need to keep consumers and customers at the heart of everything we do. Related to this is innovation. Nestlé has industry leading R&D capabilities. We need to ensure that what we develop and how we develop it is linked to consumer needs and consumer journey. And we need to focus. My mantra on innovation is fewer, bigger, better. Another priority is investment. To drive growth, we need to restore our investment. This includes, but is not limited to, investing in marketing to support our brands.

Laurent Freixe: What do I see as our biggest opportunities? One is consumer and customer centricity. Moving forward, we need to keep consumers and customers at the heart of everything we do. Related to this is innovation. Nestlé has industry leading R&D capabilities. We need to ensure that what we develop and how we develop it is linked to consumer needs and the consumer journey. We need to focus. My mantra on innovation is fewer, bigger, better. Another priority is investment. To drive growth, we need to restore our investment. This includes, but is not limited to, investing in marketing to support our brands. Importantly, that must not come at the expense of profitability. We need to enable investment for growth through unlocking efficiency savings and better resource allocation. Having led some of our productivity initiatives in the past, I'm convinced there is a lot more we can go for.

Speaker Change: So what do I see as our biggest opportunities.

Speaker Change: One is consumer and customer centricity.

Speaker Change: Moving forward, we need to keep consumers and customers at the heart of everything we do.

Speaker Change: Related to this is innovation.

Speaker Change: Initially has industry, leading R&D capabilities.

Speaker Change: We need to ensure that what we develop and how we develop it easily to consumer needs and consumer journey and.

Speaker Change: And we need to focus my mantra on innovation is sure bigger better.

And as a priority is investment to drive growth, we need to restore our investment. This includes but is not limited to <unk>.

Speaker Change: Investing in marketing to support our brands.

Laurent Frex: Importantly, that must not come at the expense of profitability. We need to enable investment for growth through unlocking efficiency savings and better resource allocation. Having led some of our productivity initiatives in the past, I'm convinced there is a lot more we can go for.

Speaker Change: Importantly that must not come at the expense of profitability we.

Speaker Change: We need to enable investment for growth through unlocking efficiency savings and better resource allocation.

Laurent Freixe: Having led some of our productivity initiatives in the past, I'm convinced there is a lot more we can go for. As well as accelerating performance, we need to transform Nestlé for the future. This has two components. First is digitalization, a critical enabler for many things. We will become a real-time, end-to-end connected, intelligent enterprise powered by data and AI. The second part of transformation concerns sustainability. We have one planet, and we need to be mindful of natural resources.

Speaker Change: Having led some of our productivity initiatives in the past I'm convinced there is a lot more we can go forth as well as accelerating performance, we need to transform knisley for the future. This has two components first is digitalization.

Laurent Frex: As well as accelerating performance, we need to transform Nestle for the future. This has two components. First is digitalization, a critical enabler for many things. We will become real time and to unconnected intelligent enterprise powered by data and AI. The second part of transformation concerns sustainability. We have one planet, and we need to be mindful of natural resources. We must make sure our actions and investment have a meaningful impact. This was just a test of what you might call the diagnosis of our opportunities. This will be the major focus of what I talk about at the CMD.

Laurent Freixe: As well as accelerating performance, we need to transform Nestlé for the future. This has two components. First is digitalization, a critical enabler for many things. We will become a real-time, end-to-end connected, intelligent enterprise powered by data and AI. The second part of transformation concerns sustainability. We have one planet, and we need to be mindful of natural resources. We must make sure our actions and investment have a meaningful impact. This was just a taste of what you might call the diagnosis of our opportunities. This will be the major focus of what I talk about at the CMD. You will have to wait a few weeks to get more details. In fact, we are not waiting to start putting things into action. I wanted to highlight three areas where we have already started to make progress.

Speaker Change: Critical enabler for many things.

Speaker Change: We will become real time end to end connected intelligent enterprise powered by data and AI.

Speaker Change: The second part of the transformation concerns sustainability, we have one planet.

Speaker Change: And we need to be mindful of natural resources.

Laurent Freixe: We must make sure our actions and investment have a meaningful impact. This was just a taste of what you might call the diagnosis of our opportunities. This will be the major focus of what I talk about at the CMD. You will have to wait a few weeks to get more details. In fact, we are not waiting to start putting things into action. I wanted to highlight three areas where we have already started to make progress.

Speaker Change: Just make sure our actions and investment having a meaningful impact.

Speaker Change: This was just a taste of what you might call the diagnosis of a rope alternatives.

Speaker Change: This will be the major focus of what they talk about the the chimney.

Laurent Frex: So you will have to wait a few weeks to get more details. But, in fact, we are not waiting to start putting things into action.

Speaker Change: So we will have to wait a few weeks to get more details, but in fact, we are not waiting to start putting sinks interaction.

Laurent Frex: I wanted to highlight three areas where we have already started to make progress. First is on alignment of the organization around the strategic goals. One of the benefits of fully engagement over the last weeks is that we have been able to get these strong alignments. We have had extremely productive executive team and both sessions to collaborate together on this. The level of engagement and energy, and the readiness to move forward, have been truly impressive.

Speaker Change: I wanted to highlight three areas, where we have already started to make progress.

Laurent Freixe: First is on alignment of the organization around the strategic goals. One of the benefits of all the engagement over the last weeks is that we have been able to get the strong alignment. We have had extremely productive executive team and board sessions to collaborate together on this. The level of engagement and energy, and the readiness to move forward have been truly impressive. Second, we have kicked off several projects around efficiency and productivity. These will help us to unlock the savings we need to fund the increased investments. Third, we have designed and announced some important changes to the organization that will bring simplicity and focus, and increase agility and accountability. As you will see from today's separate announcement, we are making several changes to the organization. I will highlight four of them here. First, on the zones, we will reduce from five zones to three zones.

Speaker Change: First is on the alignment of the organization around our strategy goes well.

Speaker Change: One of the benefits of all your engagement over the last weeks is that we have been able to get the strong alignment. We have had extremely productive executive team and board sessions to collaborate together on this the level of engagement and energy and the readiness to move forward.

Speaker Change: Have been truly impressive.

Laurent Frex: Second, we have kicked off several projects around efficiency and productivity. These will help us to unlock the savings we need to fund the increase investments.

Speaker Change: We have kicked off several projects around efficiency and productivity. These will help us to unlock the savings we need to fund the increase in investments.

Laurent Frex: And third, we have designed and announced some important changes to the organization that will bring simplicity and focus, and increase agility and accountability. As you will see from today's separate announcement, we are making several changes to the organization. I will highlight four of them here. First, on the zones, we will reduce from five zones to three zones. Zone Americas, zone Awe, and zone Europe. All three zone heads will be based in Weve, and co-location will strengthen the connections across the executive leadership and provide greater alignments. Second, for what we call the globally managed businesses or GMBs, both leaders will sit on the executive board and report to me as CEO.

Speaker Change: Third we have designed and announced some important changes to the organization that we bring simplicity and focus and increase agility and accountability.

How did you will see from todays separate announcement, we are making several changes to the organization.

Speaker Change: I'll highlight four of them here.

Speaker Change: First on the zones, we reduced from five zones to three zones zone Americas Zuni away things on Europe food.

Laurent Freixe: Zone Americas, Zone AOA, and Zone Europe. All three zone heads will be based in Vevey, and co-location will strengthen the connections across the executive leadership and provide greater alignment. Second, for what we call the globally managed businesses or GMBs, both leaders will sit on the executive board and report to me as CEO. This reflects the scale and importance of both businesses. Third, we are simplifying the structure for our coffee brands. This will bring greater alignment and remove duplication. Finally, the critical areas of digitalization and sustainability will both now report directly to me, given their strategic importance to Nestlé's future and our transformation agenda. With these organizational changes, all the leaders of key units driving our performance and transformation will now report directly to me. Taken together, the changes will give us a smaller, more effective executive board with clearer ownership and responsibility.

Speaker Change: Sweet Zona heads will be busy and vivid and colocation will strengthen the connections across the executive leadership and provide greater alignments.

Speaker Change: Second for what we call the globally managed businesses or Jim B's booths leaders will sit on the executive Board and report to me as CEO.

Laurent Frex: This reflects the scale and importance of both businesses. Third, we are simplifying the structure for our coffee brands. This will bring greater alignment and remove duplication. And finally, the critical areas of digitalization and sustainability will both now report directly to me, given their strategic importance to Nestlé's future and our transformation agenda. With these organizational changes, all the leaders of key units driving our performance and transformation will now report directly to me. Taken together, the changes will give us a smaller, more effective executive board with clearer ownership and responsibility.

Speaker Change: This reflects the scale and importance of both businesses.

Speaker Change: So we are simplifying the structure for our coffee brands this will bring greater alignment and remove duplication.

Speaker Change: And finally.

Speaker Change: The critical areas of digitalization and sustainability will boost now report directly to me.

Speaker Change: Given their strategic importance to Miss this future and I'll.

Speaker Change: Transformation agenda.

With these organizational changes all the leaders of key units driving outperformance and transformation will now report directly to me.

Speaker Change: Taken together the changes will give us the smaller more effective executive board with.

Speaker Change: Keira ownership and responsibility.

Laurent Frex: So, two wrappers for now. We delivered continued steady growth through the first nine months in an environment of softening consumer demand. We have achieved positive rig in a backdrop of flattening prices. We have updated our full year 2024 guidance to reflect current trading and revised expectations for Q4. and we are moving at pace to accelerate performance and transform nicely for the future.

Laurent Freixe: To wrap up for now, we delivered continued steady growth through the first nine months in an environment of softening consumer demand. We have achieved positive RIG in a backdrop of flattening prices. We have updated our full year 2024 guidance to reflect current trading and revised expectations for Q4. We are moving at pace to accelerate performance and transform Nestlé for the future. That concludes our presentation on the nine months results. In the coming days, weeks, and months, I'm very keen to engage with you to share our plans on how we will perform and transform, and of course, listen to your feedback. Thank you.

Speaker Change: So to wrap up for now.

Speaker Change: We delivered continued steady growth through the first nine months in an environment of softening consumer demand.

Speaker Change: We have achieved positive rig in a backdrop of flattening prices.

Speaker Change: We have updated our full year 2024 guidance to reflect current trading and revised expectations for Q4.

Speaker Change: Anyway, we're moving at pace to accelerate performance and transform this live for the future.

Laurent Frex: That concludes our presentation on the nine months results. In the coming days, weeks, and months, I'm very keen to engage with you to share our plans on how we will perform and transform, and of course, listen to your feedback.

Speaker Change: That concludes our presentation on the nine months results in.

Speaker Change: In the coming days weeks and months.

Speaker Change: I'm very keen to engage with you to share our plans on how we will perform and transform and of course listen to your feedback. Thank you.

Operator: Thank you.

David Hancock: Thank you, Laurel.

David Hancock: Thank you, Laurent. We will now move to the Q&A session. The line for questions from financial analysts is now open. Please remember to limit yourself to no more than two questions. We will take our first question from Guillaume Delmas from UBS. Go ahead, Guillaume.

Speaker Change: Thank you Laurel, we will now move to the Q&A session. The line for questions for financial financial analysts is now open. Please remember to limit yourself to no more than two questions.

David Hancock: We will now move to the Q&A session. The line for questions from financial analysts is now open. Please remember to limit yourself to no more than two questions. We will take our first question from Guillermo from UBS.

Speaker Change: We will take our first question from Guillermo <unk> from UBS go ahead Kim.

Guillermo: Go ahead, Guillermo. Thank you, David, and good morning, Laura and Anna. I've got two questions.

Guillaume Delmas: Thank you, David, and good morning, Laurent and Anna. I've got two questions. The first one is on your portfolio. Because Laurent, I don't think you mentioned in the press release or in your presentation this morning, Nestlé's aspiration to achieve 4% to 6% organic sales growth over the medium term. Wondering if it is because you are questioning the ability of your current portfolio to deliver that 4% to 6%. And if that were to be the case, given how critical 4% to 6% is to deliver the Nestlé Virtuous Model with moderate margin expansion, I mean, could you be signaling that more portfolio rotation, and here I mean more asset disposals, are required for you to be able to deliver that Virtuous Model?

Guillermo: Thank you, David and good morning, local and Oh no.

Guillermo: I've got two questions. The first one is on your portfolio.

Guillermo: The first one is on your portfolio, because Laura, I don't think you mentioned in the press release or in your presentation this morning, Nestle's aspiration to achieve 46% organic sales gross over the medium term. So, wondering if it is because you are questioning the ability of your current portfolio to believe that 46. If that were to be the case, given how critical 46 is to deliver the Nestle's futures model with moderate margin expansion, I mean, could you be signaling that more portfolio rotation, and here I mean more asset disposal, are required for you to be able to deliver that the futures model?

Guillermo: Because I don't think you've mentioned in the press release or in your presentation. This morning.

Guillermo: Les aspiration to achieve 4% to 6% organic sales growth over the medium term.

Guillermo: So wondering if it is because you are questioning the ability of your current portfolio to leave it at 46.

Guillermo: And you've got to work to be the case, given how critical four to six is to deliver the Netherlands your tourist model with moderate margin expansion.

Guillermo: Could you be signaling that more portfolio rotation and in here I mean more asset disposals are all required for you to be able to deliver that of your true model.

Guillaume Delmas: My second question is on your 17% operating margin guidance for this year. That seems to imply around 16.5% for the second half. I mean, maybe could you walk us through the key moving parts that you anticipate for the second half of this year? Gross margin down, I would assume advertising and marketing significantly up as a percentage of sales. Also any indications on when the benefit from your productivity savings should start coming through and help you offset the gross margin pressures and the necessary reinvestments. I guess, do you see 16.5% operating margin as trough margins? When would you expect the timing mismatch between investments and productivity savings to ease? Thank you very much.

Laurent Frex: And then my second question is on your 17% operating margin guidance for this year. So, that seems to imply around 16 and a half percent for the second half. I mean, maybe could you walk us through the key moving parts that you anticipate for the second half of this year? So, gross margin down, I would assume advertising and marketing significantly up as a percentage of sales. And also, any indications on when the benefit from your productivity savings should start coming through and help you offset the gross margin pressures and the necessary reinvestments? I guess, after is, do you see 16 and a half percent operating margin as thrust margins?

Speaker Change: And then my second question is on your 17% operating margin guidance for this year, so that seems to imply around 16, 5% for the second half.

Speaker Change: I mean, maybe could you walk us through the key moving parts are that you anticipate for the second half of this year. So gross margin down I would assume advertising and marketing significantly up as a percentage of sales.

Speaker Change: Also any indications on what the benefit from your productivity savings should start coming through and help you offset the gross margin pressures.

Speaker Change: The necessary reinvestments.

Speaker Change: Yes.

Speaker Change: After is do you see.

Speaker Change: 5% operating margin as crush margins and when would you expect the timing mismatch between investments and productivity savings trees. Thank you very much.

Laurent Frex: And when would you expect the timing mismatch between investments and productivity savings to ease?

Laurent Frex: Thank you very much. Thank you very much for the questions. Very clear. So, I'll key off and then hand over to Anna for more detail. On the portfolio, and we review permanently the portfolio, which we are doing at this point with the specific focus on the capital market there and 25 and beyond. I can confirm that the portfolio is very well positioned to outperform the food and beverage industry. We got confirmation from all our analysis, internal external. So, I'm pleased with the portfolio generally speaking, which doesn't mean that there is no room for improvement, and there with us for a few weeks until the capital market there.

Laurent Freixe: Thanks, Guillaume. Thanks very much for the questions. Very clear. I'll kick it off and then hand over to Anna for more detail. On the portfolio, and we review permanently the portfolio, which we are doing at this point, with a specific focus on the Capital Markets Day and 25 and beyond. I can confirm that the portfolio is very well positioned to outperform the food and beverage industry. We got confirmation from all our analysts, internal, external. I'm pleased with the portfolio, generally speaking, which doesn't mean that there is no room for improvement, and bear with us for a few weeks until the Capital Markets Day.

Speaker Change: Thank you thanks very much for the questions I'm very clear.

Speaker Change: So I'll kick it off and then handle the two and therefore for more detail.

Speaker Change: On the portfolio and.

Speaker Change: And we review them in and see the boat for you, which we're doing at this point with a specific focus on the capital.

Speaker Change: Market, the <unk> and <unk> and in 'twenty five and beyond.

Speaker Change: I can confirm that the portfolio.

Speaker Change: Is very well positioned to outperform the food and beverage industry.

Speaker Change: We got confirmation from our all our own analysis internal external.

Speaker Change: So I'm pleased with the portfolio generally speaking.

Speaker Change: Doesn't mean that there is no room for improvement in the bear with us for a few weeks until the capital market day, but the portfolio is strong.

Laurent Frex: But the portfolio is strong, offers ample opportunities either through the global categories, like pet food, pet care, or the overall area of nutrition. There are so many nutrition needs globally, around affordable nutrition, around healthy longevity, and around weight management. For instance, where we not only can play a role, we already play a role and can play a greater role going forward. So, on the portfolio, I'm strong. Again, we've reviewed that we can certainly keep strengthening, and I would like to mention as well, which we didn't do. And we would like to highlight that in the capital market there, the fact that next to the global leadership positions that we got with coffee, pet care, and nutrition, we got also local or regional pockets of excellence.

Laurent Freixe: The portfolio is strong, offers ample opportunities, either through the global categories like pet food, pet care, or the overall area of nutrition. There are so many nutrition needs globally around affordable nutrition, around healthy longevity, around weight management. For instance, where we not only can play a role, we already play a role and can play a greater role, going forward. On the portfolio, I'm strong, again with a view that we can certainly keep strengthening.

Speaker Change: The offers ample opportunities either.

Speaker Change: Through the global categories like pet food pet care or the overall area of nutrition, there so many nutrition needs globally.

Speaker Change: Around 40 about nutrition around healthy longevity around weight management.

Speaker Change: For instance, where we.

Speaker Change: Not only can play a role we already play a role and can play.

Greater role.

Speaker Change: Going forward.

Speaker Change: So on the portfolio are.

Speaker Change: Strong again with a view that we can certainly keep.

Speaker Change: Keep strengthening our and I would like to mention as well, we treat we didn't do and we would like to highlight that seem to capital market. The fact that next to the global leadership positions that we go to these coffee petcare and nutrition we.

Laurent Freixe: I would like to mention as well, which we didn't do, and we would like to highlight that in the Capital Markets Day, the fact that next to the global leadership positions that we got with coffee, pet care, and nutrition, we got also local or regional pockets of excellence. Those businesses we don't necessarily talk about with the required frequency that make Nestlé. Nestlé is both the global place where we have global leadership, but also excellent pockets of performance, regional and local. On the margin, the guidance is connected to the adjustment in the organic growth essentially. For more detail, let me, and I can confirm that indeed we want to invest.

Speaker Change: We go to Sue a local or regional pockets of excellence are those businesses. We've done this we talk about.

Laurent Frex: Those businesses, we don't necessarily talk about with the required frequency that mechanically. Nestly is both the global place, where we have globally the ship, but also excellent pockets of performance, regional and local.

Speaker Change: With the required frequency that make me sleep Nestle is what was the global place, where we have global leadership, but also excellent a pocket of pockets of performance regional and local.

Anna Mans: On the margin, the guidance is connected to the adjustment in the organic growth, essentially. But for more detail, let me, and I can confirm that indeed we want to invest. I believe that investing is critical to our growth, driving category growth, innovating, gaining market share, and we require investments, so we want to be very, very strong and not wait on that side. We want primarily to finance through productivity initiatives that we strengthened. We had many ongoing, but we launched a few additional. And beyond that, of course, there might be a timing question, but let me hand over to another formal details.

Speaker Change: On the on the margin the guidance is connected to the adjustment in the organic growth's essentially but.

Speaker Change: For more detail, let me and I can confirm that indeed, we want to invest a I believe that investing is critical to our growth driving category growth innovating gaining market share require investment. So we want to you know.

Laurent Freixe: I believe that investing is critical to our growth. Driving category growth, innovating, gaining market share require investment. We want to, you know, be very strong and not wait on that side. We want primarily to finance through productivity initiatives that we strengthen. We had many ongoing, but we launched a few additional and beyond that of course there might be a timing question, but let me hand over to Anna for more details.

Speaker Change: It would be very very strong and not wait on on that side, we wont primarily to finance through our productivity initiatives that we have.

Speaker Change: <unk> strengthened our we have many ongoing but we launched a shoe additional.

Speaker Change: And and end and beyond that of course, there might be the timing of it I mean.

Question, but let me hand over to Anna for four months.

Anna Mans: Sure. So I think there were two questions on gross margin. But one to help you understand how, well, how margins is a whole playout in 2024, and then a bigger question around, and how do we think about investment going forward?

Anna Manz: Sure. I think there were two questions on gross margin. One, to help you understand how margins as a whole play out in 2024. Then a bigger question around and how do we think about investment going forward. Maybe if I split those two and do them as two pieces. On the first one, Laurent said to you that the reduction in our guidance for 2024 margins from where we were previously to around seventeen is really a reflection of a lower top line growth. There's nothing else going on there. With respect to the moving parts underpinning our margin in 2024, it's very consistent with what I said to you at the first half results.

Speaker Change: So I'd say I think maybe two questions on gross margin.

Anna: To help you understand how well how margins as a whole play out in 'twenty 'twenty four and then a bigger question around and how do we think about investment going forward and maybe if I split those two in and do the Miss two pieces. So on the first one and I've always said she that the reduction in our guidance for 2012.

Anna Mans: So maybe if I split those two and do them as two pieces. So on the first one, and I'll also say to you that the reduction in our guidance for 2024 margins from where we were previously to around 17 is really a reflection of a lower top line growth. There's nothing else going on there. And we've respected the moving parts, and depending on margin in 2024, it's very consistent with what I said to you at the first half results. And just to remind you of that, what I said to you at the time was that the earlier margin would be up here on year, although we would see in the second half, some of those input cost increases coming through, so the second half margin would be down a little bit year on year.

Anna: For margins from where we were previously to around 17 is really a reflection of a lower top line growth, there's nothing else going on that and with respect to the moving parts underpinning our margin in 2024, it's very consistent with what I said to you.

Anna: Our first half results and just to remind you is that like I said to you at the time was that a full year margin, which be up year on year, Although we would see.

Anna Manz: Just to remind you of that, what I said to you at the time was that the full year margin would be up year on year. Although we would see in the second half some of those input cost increases coming through. The second half margin would be down a little bit year on year. At the time I was asked a question about whether guidance was correct and at the time I confirmed that. Nothing's really changed on those moving parts. Now, looking forward, the structural margins of our business and how we see them are unchanged. We've got strong areas of competitive advantage, and this is a business that should have the sorts of high margins that we have been seeing.

In the second half some of those input cost increases coming through the second half margin would be down a little bit year on year and at the time I was asked the question about what the guidance says correction and at the time I I can find that say nothing's really changed on those moving parts.

Anna Mans: And at the time, I was asked the question about whether guidance was correct, and at the time I confirmed that. So nothing's really changed on those moving parts.

Anna Mans: Now, looking forward, the structural margins of our business and how we see them are unchanged. We've got strong areas of competitive advantage, and this is a business that should have the sorts of high margins that we have been seeing. What you've heard, no longer say, is that we need to invest for growth, and that we will deliver efficiencies that fund that investment. However, the phasing of those two things will not be perfect. So, as we move into 2025, you will see us commencing the investment before we realize all of the benefits. And so that will likely lead to a slightly lower margin in 2025 versus 2024, as we move into that investment space.

Anna: Now looking for it.

Anna: The structural margins of our business and how we see them are unchanged. We've got strong areas of competitive advantage and this is a business that should have the sorts of high margins that we have been seeing.

Anna Manz: What you've heard Laurent just say is that we need to invest for growth, and that we will deliver efficiencies that fund that investment. However, the phasing of those two things will not be perfect. As we move into 2025, you will see us commencing the investment before we realize all of the benefits of the efficiency. That will likely lead to a slightly lower margin in 2025 versus 2024 as we move into that investment phase. That is a temporary reduction because of course we will see those efficiencies come through over time. Now, I've had a number of questions on this from investors.

Anna: What you've heard around just say is that we need to invest for grace.

Anna: And that we will deliver efficiencies that fund that investment.

Anna: However, the phasing of those two things will not be perfect. So as you move into 2025, you will see us commencing the investment before we realize all the benefits of the efficiency I'd say that we'll likely that well that will lead to a slightly lower margin in 2025 versus 2024.

Anna: We are moving into that investment space, but that is a temporary reduction because of course, we will see those efficiencies come through over time.

Anna Mans: But that is a temporary reduction, because of course we will see those efficiencies come through over time.

Anna Mans: Now, I've had a number of questions on this from investors, and so maybe just to kind of help you a little bit with how to think about it. I've been asked whether that will be a sort of 100 to 200 basis point margin reduction versus 2024. No, it will not be if that order of magnitude. It will be of a lower order of magnitude. We will come back with more detail at the CMD on our specific plans, and then we will give you 2025 guidance in February.

Anna: I've had a number of questions on this fen phen investors I'd say, maybe just to kind of help you a little bit with how to think about church I I've been asked whether that would be a sort of 100 to 200 basis point margin reduction versus 2024, no. It will not be at that order of magnitude.

Anna Manz: Maybe just to kind of help you a little bit with how to think about it, I've been asked whether that will be a sort of 100 to 200 basis point margin reduction versus 2024. No, it will not be of that order of magnitude. It'll be of a lower order of magnitude. We will come back with more detail at the CMD on our specific plans, and then we will give you 2025 guidance in February.

Anna: So they have a lower order of magnitude.

Anna: We will come back with more detailed at the C. M. D. On our specific plans and then we will give you 20 to 25 guidance in February.

Anna Mans: Thank you very much. Thank you.

Laurent Freixe: Thank you very much.

Guillaume Delmas: Thank you very much.

Anna: Thank you very much.

David Hancock: Thank you. We'll take our next question from Warren Ackerman at Barclays. Go ahead, Warren.

Speaker Change: Thank you we'll take our next question from Warren Ackerman at Barclays Go ahead Warren.

Warren Ackerman: We'll play our next question from Warren Ackerman at Barclays. Go ahead, Warren. Yeah, money, everybody. So Warren here at Barclays. Got a couple as well. The first one is for Laurent. When you look at your market share picture, Laurent, what is your assessment? How much of this is market share versus how much is the wider category stowed down? I'm just interested in what is the weighted food and beverage category. You talk about market share on billionaire brands, but what's the market share on the entire Nestlé portfolio? If you can maybe sort of disaggregate those two moving pieces.

Warren Ackerman: Yeah. Morning, everybody. It's Warren here at Barclays. I've got a couple as well. The first one is for Laurent. When you look at your market share picture, Laurent, what is your assessment? How much of this is market share versus how much is the wider category slowdown? I'm just interested in what is the weighted food and beverage category, and, you know, you talk about market share on billionaire brands, but what's the market share on the, you know, the entire Nestlé portfolio? If you can maybe sort of disaggregate those two moving pieces. Then secondly, on Europe, European RIG was negative in Q3. It stepped down from Q2. You called out Turkey was a big call-out. How big is Turkey? How much was it down in Q3? And what is driving this caution of the Western European consumers?

Warren Ackerman: Yeah morning, everybody said Warren here at Barclays. A couple as well first one is for Lora. When you look at your market share picture Lora is your assessments.

Warren Ackerman: How much of this is market share of US is how much is the why the category slowdown I'm just interested.

Warren Ackerman: And what is the weighted food and beverage category.

Warren Ackerman: And you talked about market share on billionaire brands, but what's the market share when the you know the entire Nestle portfolio. If you could maybe sort of disaggregate those two moving pieces and then secondly on Europe European break was negative in Q3, a step down from Q2.

Warren Ackerman: And then secondly on Europe, European rig was negative in Q3. It stepped down from Q2. You called out Turkey. It was a big call out. How big is Turkey? How much was it down in Q3? And what is driving this caution of the Western European consumers? Any countries that you can call out, and do you expect this slowdown in Europe to be as prolonged as we've seen in the US? And then just finally on the inventory reductions in Q3. What categories are we seeing those reductions in? And do you think that continues into Q4? And if so, at the same rate, or higher, or lower?

Warren Ackerman: Called out Turkey was a big call out how big is Turkey, how much was it down in Q3.

Warren Ackerman: And what is driving this caution of the western European consumers any countries.

Warren Ackerman: Any countries that you can call out? Do you expect this slowdown in Europe to be as prolonged as we've seen in the US? Just finally on the inventory reductions in Q3, what categories are we seeing those reductions in? Do you think that continues into Q4? If so, at the same rate, higher or lower? Does Nestlé Health Science's 10% RIG include inventory rebuild? Just trying to understand those numbers that you've given. You've talked about reductions, but I imagine there's a rebuild in health science. Thank you.

Warren Ackerman: That you can call out and do you expect the slowdown in Europe to be as prolonged as we've seen in the U S. And then just finally on the inventory reductions in Q3, what categories are we seeing those reductions in.

Warren Ackerman: And do you think that continues into Q.

Warren Ackerman: Q4, and if so at the same rate, Ohio Aloha.

Warren Ackerman: And then does Nestle Health Sciences the 10% rig? Does that include inventory rebuild? You can't understand those numbers that you've given. You've talked about reductions. I imagine there's a rebuild in health sciences. Thank you. Well, don't worry.

Warren Ackerman: And then does Nestle health Science is the 10 does that rig does that include inventory rebuild just trying to understand those numbers that you've given you've talked about reductions by I imagine is a rebuild in health sciences. Thank you.

Laurent Freixe: Well done, Warren. You managed to put 4 questions in the 2 question slot. Those are obviously very, very relevant questions, and we understand where you come from. On the market shares, of course, a very, very critical question, how are we doing compared to our categories? I would say that this is the story of the glass half full or half empty. We are holding or gaining in more or less half of our categories, and we do marginally better on the billionaire brands. Is it good enough? No, it's not good enough. Am I happy with that? No, I'm not happy with that. I believe that we need to raise our game.

Speaker Change: Well don't worry and you manage to put four questions.

Laurent Frex: You managed to put four questions in the two questions slot. But those are obviously very, very relevant questions, and we understand where you come from. On the market shares, of course, very, very critical question. How are we doing compared to our categories? I would say that this is the story of the glass half full or half empty. So we are holding or gaining in more or less half of our categories, and we do marginally better on the billionaire brands. Is it good enough? No, it's not good enough. I'm happy with that. No, I'm not happy with that.

Speaker Change: [laughter] too.

Speaker Change: A question slot them, but those are obviously very very relevant question and we understand.

Speaker Change: Where where you come from on the market shares are.

Speaker Change: Of course, very very critical question how are we doing.

Speaker Change: Compared to our categories.

Speaker Change: I would say that the dishes are the story of the glass half full or half empty.

Speaker Change: So we.

Speaker Change: Holding or gaining in mall as house.

Speaker Change: All categories, and we do marginally better on the billionaire brands.

Speaker Change: Is it good enough snow is not good enough I'm happy with the no I'm not happy with that and I believe that we need to raise our game, we need to clearly gain in a majority of our businesses and this requires investment. So we come back to the same story, if you want to gain share gain share and drive category.

Laurent Frex: And I believe that we need to raise our game. We need to clearly gain in a majority of our business sales, and this requires investment. So we come back to the same story. If you want to gain share and drive category growth, we need to invest. The call for investment is compelling. We need to restore investments and be very choiceful. So where we put those investments, core categories, core innovations. So you will hear a lot of talking about focusing on the core and making sure that we make an impact at scale. For the Western European consumer, what I can say is that I think it's the same assessment more or less everywhere.

Laurent Freixe: We need to clearly gain in a majority of our business sales, and this requires investment. We come back to the same story. If we want to gain share and drive category growth, we need to invest. The call for investment is compelling. We need to restore investments and be very choiceful about where we put those investments, core categories, core innovations. You will hear a lot of talking about focusing on the core and making sure that we make an impact at scale. For the Western European consumer, and what I can say is that, and I think it's the same assessment more or less everywhere. First, economic growth is not buoyant. Second, yes, price inflation has kind of normalized.

Speaker Change: We need to invest.

Speaker Change: The call for investment is compelling and we need to restart investments and be very choice Fujitsu, So where we put those investments core categories core innovations to will you will you will hear a lot of talking about focusing on the call and then making sure that we are making impact that scale.

Speaker Change: For the Western European consumer.

Speaker Change: And.

Speaker Change: What I can say is that and I think it's same assessment more or less everywhere.

Laurent Frex: First, economy grows is not buoyant. Second, yes, prices have kind of price inflation as kind of normalize, but we'd never forget that even if it's 1% and 2%, it's coming on top of a very long period or a relatively long period of high inflation. So those 1%, 2% are coming on top of a series of price increases, and the perception for the European consumer, and it's not only the European consumer again, is that food prices are higher. And of course there is pressure from other components of the household budget. There is a cost of money, mortgage, and so on and so forth, so there is lots of pressure on the consumer wallet and this perception that food prices are high.

Speaker Change: First you couldnt be gross is not buoyant sick.

Speaker Change: Second.

Speaker Change: Yes prices of kind of price inflation as kind of normalized there should never forget that even if it's 1% 2% is coming on top of.

Laurent Freixe: We should never forget that even if it's 1%, 2%, it's coming on top of a very long period or relatively long period of high inflation. Those 1, 2% are coming on top of a series of price increases. The perception for the European consumer, and it's not only the European consumer again, is that food prices are high. Of course, there is pressure from other components of their household budget, the cost of money, mortgages and so on and so forth. They say there's a lot of pressure on the consumer wallet and this perception that food prices are high. That explains largely the softness.

Speaker Change: A very long period or rich you didn't pay out of high inflation. So there's one 2% coming on top of a series of price increases and the perception for the European consumer and it's not only the European consumer again is that food prices are higher.

Speaker Change: And and of course, there is pressure from Oh.

Speaker Change: A component of their household budget.

Speaker Change: Cost of money mortgages, and so on and so forth. So there's lots of pressure.

Speaker Change: On the consumer wallet and disposition that food prices are high.

Laurent Frex: That explains the largely the softness, and then you can have a few specifics like promotional activities, destocking, or related to the negotiations, some temporary delistings that can explain the softness in Q3.

Speaker Change: That explains the largely the softness and then you can have a few specifics like promotional activities destocking.

Laurent Freixe: You can have a few specifics like promotional activities, destocking, or related to the negotiations, some temporary delistings that can explain the softness in Q3. I will maybe leave the rest of the questions to Anna, and maybe she will complement those two. Anna?

Speaker Change: All are related to the negotiations some temporary the listings that can explain the softness.

Speaker Change: In Q3.

Anna Mans: I will maybe leave the rest of the questions to Anna; maybe she will complement those two. Anna.

Speaker Change: I will maybe leave the rest of the questions two of them, maybe she will complement to those two.

Anna Mans: Sure, so question three was customer inventory reductions that we've seen in Q3 and which categories and how to think about Q4. So just to remind you of the context here, so what we've said in Q3 is we've had a 60 basis point impact in the quarter associative with customer reductions in customer inventory. 30 basis of points of that, you know about him that we flagged at Q2, that the timing of promotions in the US would have a Q2, Q3 impact. The other 30 basis points we saw predominantly in Latin America as we've seen a week of consumer environs, and there's the cost of money has increased there.

Anna Manz: Sure. Question three was inventory, customer inventory reductions that we've seen in Q3 and which categories and how to think about Q4. You know, just to remind you of the context here. What we've said in Q3 is we've had a 60 basis point impact in the quarter associated with some reductions in customer inventory. 30 basis points of that you know about and that we flagged at Q2, that the timing of promotions in the US would have a Q2/Q3 impact. The other 30 basis points we saw predominantly in Latin America as we've seen a weaker consumer environment and as the cost of money has increased there. These are impacts across all categories. There isn't a specific category to call out here.

Speaker Change: Sure. So say question three was inventory and customer inventory reductions that we've seen in Q3 and in which categories and how to think about Q4.

I'd say you know just just to remind you of the context here. So what we said in Q3 as we've had a 60 basis point impact in the quarter associated with some reductions in customer inventory 30 basis points of that you know about him that we flagged at Q2 and that the timing of promotions in the U S. What wed have a Q to Q.

Speaker Change: Three impact the other 30 basis points, we saw predominantly in Latin America, as we seen a weak consumer environment as the cost of money has increased that.

Speaker Change:

Anna Mans: These are impacts across all categories.

Speaker Change: These.

Speaker Change: That's across all categories. So there isn't a specific category to call out here. This is more about our relationship with retailers and making sure that we have a rainy good healthy end to end model in terms of Q4, I would think about it at a similar level as as Q3.

Anna Mans: There isn't a specific category to call out here.

Anna Mans: This is more about our relationship with retailers and making sure that we have a really good, healthy end-to-end model. In terms of Q4, I would think about it at a similar level as Q3, as a way of framing it.

Anna Manz: This is more about our relationship with retailers and making sure that we have a really good, healthy end-to-end model. In terms of Q4, I would think about it at a similar level as Q3 as a way of framing it. Your last question was around the degree to which the strength in Nestlé Health Science is around rebuild of stock rather than underlying performance. What I'd say there, so we've seen double-digit growth around 10% growth in Nestlé Health Science in the quarter. We're getting back on shelf, and we're seeing, in recent weeks, we're seeing share gain again. We're starting to see the level of momentum that we would expect in that business, which is great.

Speaker Change: As a way of framing it.

Anna Mans: And then your last question was around the degree to which the strengths in essay health sciences around rebuild of stock rather than underlying performance. What I'd say there, so we've seen the double digit growth or terms of around 10% growth in essay health science in the quarter. And we're getting back on shelf, and we're seeing in recent weeks, we're seeing share gain again. We're starting to see the level of momentum that we would expect in that business, which is great. There is a little bit of stock rebuild, but actually, this is more about getting back on shelf and selling again.

Speaker Change: And then your last question was around the degree to which the strengths are and I say health sciences around rebuild of stock rather than.

Speaker Change: Underlying performance.

Speaker Change: I would say that so we've seen double digit right. So attempts at around 10% growth in let's say how science in the quarter.

Speaker Change: And we're guessing back on shelf and we're saying in recent.

Speaker Change: Weeks, we're seeing share gain again, we're starting to see the level of momentum that we would expect in that business, which is great. There is a level that you stopped rebuild but actually you know this is more about getting back on shelf and in selling again and I would point out that we're lapping relatively easier comps a year ago.

Anna Manz: There is a little bit of stock rebuild, but actually, you know, this is more about getting back on shelf and selling again. I would point out that we're lapping relatively easier comps a year ago. Really nice to see the VMS business on track.

Warren Ackerman: And I would point out that we're lapping relatively easier comps a year ago. But really nice to see the thank you, Warren.

Speaker Change: Really nice to see the Vms business on track.

Speaker Change: Okay.

Laurent Freixe: Thank you, Warren. Our next question comes from Patrik Schwendimann at ZKB. Your line's open, Patrick.

Speaker Change: Thank you Warren our next question comes from Patrick Shankman Zed Kb. Your line is open Patrick.

Patrick Shrenderman: Our next question comes from Patrick Shrenderman at ZKB. The line is open, Patrick. No, thank you, David. Good morning, Laura. Now a question for Laura.

Patrik Schwendimann: No, thank you, David. Good morning, Laurent and Anna. A question for Laurent. What is your biggest concern for 25 and midterm internally at Nestlé and regarding the consumer and retail environment? That's my first question. Second question, in terms of a marketing spend, what is really needed here in the future? I mean, in H1, you had 8.1% of sales. What do we have here in mind for 25 and midterm? Thank you.

Patrick: David Good morning, Laura on that now.

Patrick Shrenderman: What is your biggest concern for 25 and mid-term internally at Nestle and regarding the consumer and retail environment? That's my first question; second question in terms of a marketing spend. What is really needed here in the future? I mean in H1 you had 8.4% of sales. What do we have here in mind for 25 and the mid-term? Thank you. Yeah, thanks. Very good question, of course. More than being concerned facing the reality that the consumer is soft, that the economy grows and is speaking is not buoyant in most parts of the world. So that's, that's a reality.

For Laura what is your biggest concern for 25 and meets term internally at Nestle in regard to consumer and retail environment. That's my first question second question in terms of our marketing spend what is really needed here in the future I mean in a trial and you had 8.4% of sales Bob do we have here in my.

Patrick: <unk> 425 and in the midterm. Thank you.

Laurent Freixe: Yeah. Thanks. Very good question, of course. More than being concerned, facing the reality that the consumer is soft, that economic growth, generally speaking, is not buoyant in most parts of the world. That's a reality. I'm really focused now on putting the organization on its toes and making sure that we sharpen our pens with our critical initiatives on core brands and innovations, and that we resource the core brands and the core innovations with the right amount of investment. That's one aspect. The second aspect is the transformation, and I want to accelerate the digitalization and make sure that we make also the right investments with the right returns on the sustainability agenda. Those are my focus areas.

Speaker Change: Yeah. Thanks, very good question of course.

Patrick:

Speaker Change: More than being concerned hum.

Speaker Change: Facing the reality that the consumer is soft are the economy grows any speaking he's not buoyant in.

Speaker Change: Most parts of the world. So that's that's a reality.

Laurent Frex: And I'm really focused now on putting the organization on its toes and making sure that we sharpen our pants with our critical initiatives on core brands and innovations and that we resource the core brands and the core innovations with the right amount of investment. That's one aspect. The second aspect is the transformation, and I want to accelerate digitalization and make sure that we make also the right investment with the right returns on the sustainability agenda. So those are my focus areas. This is where I'm putting my energy. The environment is what it is. It's not the most supportive.

Speaker Change: And I'm really focused now on.

Speaker Change: Putting the.

Speaker Change: Organization.

Speaker Change: On its toes and making sure that we sharpen our pencil.

Speaker Change: With our critical initiatives on co brands and innovations and the three resource we resource the co brands.

Speaker Change: And the core innovations with the right amount of investment that's one aspect. The second aspect is a transformation and I want to accelerate or did utilization and make sure that we make the right investments.

Speaker Change: It was the right returns on the sustainability agenda. So those are my focus areas. This is where I'm, putting my energy and the environment is what it is it's it's not the most supportive but whatever the environment.

Laurent Freixe: This is where I'm putting my energy. The environment is what it is. It's not the most supportive, but whatever the environment, we can grow our categories, we can connect better with our consumers, we can innovate better, and ultimately we can gain market share. If I take the proxy or the image of the market being a pie, if the pie is not growing, we can always take a bigger share of the pie. This is what I and my teams are determined to do, and that requires, again, investment. We come back to the same story.

Laurent Frex: But whatever the environment, we can grow our categories. We can connect better with our consumers. We can innovate better, and ultimately we can gain market share. If the pie, if I take the proxy or the image of the market being a pie, if the pie is not growing, we can always take a bigger share of the pie. This is what I and my teams are determined to do. And that requires again investments. We came; we come back to the same to the same story. So maybe one element that we have in mind as well is that if prices have normalized, there is cocoa and coffee prices now back or even reaching historical highs.

Speaker Change: We can grow our categories, we can connect better with our consumers, we can innovate better and ultimately we can gain market share if the if the pie if it if I take the proxy or the image of the market being a buy if the pie is not growing we can always take a bigger share of the pie. This is what I and my teams are.

Speaker Change: At the mine to do and that requires again investment. So he came we come back to the same to the same story.

Laurent Freixe: Maybe one element that we have in mind as well is that if prices have normalized, there is cocoa and coffee prices now back or even reaching historical highs. I'm thinking of coffee or robusta, for instance. That's one of the things we will have to manage, mindful of two elements, our margins, and our market shares. It's not just one of the elements that we want to focus on. In terms of the timing and the degree of investment, I want to make sure that we restore in one go at the right levels of PFME. There is no time for procrastinating or for incremental increases. I have in mind that we need to make a big step now or the step required to restore to historical levels.

Speaker Change:

Speaker Change: No.

Speaker Change: Maybe one element that we have in mind as well is that if prices have normalized a that is a cocoa and coffee prices no back or even reaching historical highs I'm thinking of coffee or a booster for instance, so that's one of the things we will.

Laurent Frex: I'm thinking of coffee or booster, for instance. So that's one of the things we will have to manage, mindful of two elements: our margins and our market shares. It's not just one of the elements that we want to focus on.

Speaker Change: We love to manage a mindful of two elements of our margins and our market shares. It's not just one one of the elements that we want to focus on.

Laurent Frex: And in terms of the timing and the degree of investment, I want to make sure that we restore in one go at the right levels of PFME. There is no time for procrastinating or for incremental increases. I'm in mind that we need to make a big step now, or the step required to restore to historical levels. This means how much, and we'll come back in more detail at the capital market there. I've in mind pre-COVID level.

Speaker Change: The in terms of the timing and the degree of investment I want to make sure that we restore in one go at the right levels of gear for me. There is no time for procrastinating angle for incremental increases I'm I have in mind that we need to make a big step now I'll just step required to restore to historical levels.

Speaker Change: Yeah.

Patrik Schwendimann: This means how much then, historical?

Speaker Change: And this means Hamilton historically.

Laurent Freixe: We'll come back in more detail at the Capital Markets Day. Have in mind the pre-COVID levels. I hope this answers.

Speaker Change: Well, we'll come back in more detail at the capital market day I have in mind, the pre COVID-19 levels.

Speaker Change: I hope these sensors.

Speaker Change: Sure.

Patrick Shrenderman: Thank you, Patrick.

David Hancock: Thank you, Patrik. Our next question comes from Jon Cox at Kepler Cheuvreux. Jon, the line's open.

Speaker Change: Thank you Patrick our next question comes from Jon Cox Kepler Chevron.

John Cox: Our next question comes from John Cox at Kepler Chevrolet. Thanks, guys. John Cox with Kepler Chevrolet. A couple of questions where you see to maybe sort of duck in this four to six percent. Maybe I'll ask about it in a different way.

Speaker Change: Lines open.

Jon Cox: Yeah, thank you. Thanks, guys. Jon Cox with Kepler Cheuvreux. A couple of questions for you, Laurent. You seem to maybe sort of duck in this 4 to 6%. Maybe I'll ask about it in a different way. Do you think what we're gonna see for the next couple of years is more likely what we saw in that pre-COVID period, when clearly because of the very weak pricing, volume growth, sort of okay, you know, we should be really thinking about a midterm guidance of 3 to 5%, something like that, rather than 4 to 6%. The other question then is on this sort of like destock. How much are you in control of this destock? I.e., it's because you put product in and then you're promoting.

Speaker Change: Yes. Thank you thanks guys.

Speaker Change: Jon Cox with Kepler Chevron a couple of questions for you Laurent you see you see to maybe sort of DUC in this 4% to 6% maybe I'll ask about it in a different way do you think what we're going to see for the next couple of years is more likely what we saw in that pre COVID-19 periods.

John Cox: Do you think what we're going to see for the next couple of years is more likely what we saw in that pre-COVID period when clearly, because of the very weak pricing volume growth, sort of okay, you know, we should be really thinking about a midterm guidance of three to five percent, something like that rather than four to six. The other question then is on the this sort of like destock, how much are you in control of this destock? It's because you put product in and then you're promoting, and also I get the impression you're trying to clear your own products that are in, you know, warehouses of retail. And maybe in Latin America it's slightly different that actually is Latin American retailers who were basically not ordering because they were worried about weak sales, and you saw a destocking there. And I'm just going to go for a sneaky ad trying to copy Warren just on the price weakness in the US.

Speaker Change: When clearly because of the very weak pricing volume growth sort of okay.

Speaker Change: We should be really thinking about our midterm guidance.

Speaker Change: It's a 3% to 5% something like that rather than.

Speaker Change: Four to four to six the other question then is on the this sort of like destock.

Speaker Change: How much are you in control of the steel stone is because you put product in and that you're promoting.

Jon Cox: I get the impression you're trying to clear your own products that are in, you know, warehouses or retail. Maybe in Latin America, it's slightly different, that actually it was Latin American retailers who were basically not ordering because they're worried about weak sales, and you saw a destocking there. I'm just gonna go for a sneaky add, trying to copy Warren. Just on the price weakness in the US. I understand it's to do with the pet care and you know, you've got a new facility, you're ramping that up, but it seems now you're chasing lower, you know, lower price points.

Speaker Change: And also I get the impression you were trying to clear your own products that are in.

Speaker Change: You know warehouses of retail and then maybe in Latin America, it's slightly different different that actually is Latin American retailers, who were basically not ordering because they're worried about weak sales and you saw a destocking.

Speaker Change: And I'm just going to go for a sneaky ads.

Speaker Change: I'm trying to copy our Warren.

Speaker Change: Just on the price weakness in the U S.

John Cox: I understand it's to do with the pet care, and you know you've got a new facility; you're ramping that up, but it seems now you're chasing lower, you know, lower price points.

Warren Ackerman: I understand has to do with the pet care and you you've got a new facility, you're ramping that up but it seems now you're chasing lower a lower price points is that a strategy. We should think about you lawn going forwards rather than you know they sort of focus on premium amortization we've seen.

Jon Cox: Is that a strategy we should think about, you, Laurent, going forward rather than, you know, this sort of focus on premiumization we've seen under the management team for the last decade or so? Thank you.

John Cox: Is that a strategy we should think about, you Lauren, going forwards rather than, you know, this sort of focus on premiumization we've seen under the management team for the last decade or so. Thank you.

Speaker Change: Under the under the management team for the last decade or so thank you.

Laurent Frex: Wow, that does a sharp and, of course, very relevant question. So thanks, John. You know, on the gross profile of the portfolio view is unchanged. We'll come back in more detail at the capital market there. This will be the focus. We'll give you a broad view on the portfolio, not just the global categories like once again, coffee, pet care, and the broader nutrition space, but give you a flavor also for those local and regional pockets of excellence. So the message there is that the current portfolio, which can always be improved, of course, has the potential to outgrow the food and beverage category by your margin.

Laurent Freixe: Wow. Those are a sharp and, of course, very relevant question. Thanks, Jon. Sure. On the growth profile of the portfolio view is unchanged. We'll come back in more detail at the Capital Markets Day. This will be the focus. We'll give you a broad view on the portfolio, not just the global categories, like the, once again, coffee, pet care, and the broader nutrition space, but give you a flavor also for those local and regional pockets of excellence. The message there is that the current portfolio, which can always be improved, of course, has the potential to outgrow the food and beverage category by a margin. All the data points are pointing out to that.

Speaker Change: Well those are.

Speaker Change: A shop and the and of course they were live in question. So thanks John.

Speaker Change: Sure.

Speaker Change: On the gross profile.

Speaker Change: Of the portfolio view is unchanged, we will come back in more detail at the capital market day. This will be the focus will give you a broad view on the portfolio not just the global categories like.

Speaker Change: The once again coffee petcare and the brother and nutrition space, but give you a flavor also for those local and regional pockets of excellence.

Speaker Change: So the message there is that.

Speaker Change: The.

Speaker Change: Current portfolio, which can always be improved of course.

Speaker Change: <unk> has the potential to outgrow the food and beverage category by Bayou Mountain all the data points are pointing out to to that so bear.

Laurent Frex: All the data points are pointing out to that. So we'll bear with us.

Laurent Freixe: Bear with us, we'll come back in more detail. That we are entering now a period of lower inflation like pre-COVID, after a period of very high inflation. It's a good question. I think the overall scenario is probably, if I'm thinking economic scenario, a period of stagflation, maybe, as we see some prices still continuing to grow. But give us a little bit of time and we'll come back in detail Capital Markets Day in early 2025. On the destocking, there are two elements there. One is our own concerted actions to try to balance out the sell-in and the sell-out.

Laurent Frex: We'll come back in more detail.

Speaker Change: Bear with US, we'll we'll come back in more detail.

Laurent Frex: That we are entering now a period of lower inflation like pre-COVID; that's a period of very, very high inflation. It's a good question, Mark. I think the overall scenario is probably if I'm thinking economic scenario a period of stack inflation maybe as we see some some prices still continuing to grow.

Speaker Change: But are we entering a period of lower inflation like like pre COVID-19 as to tell you the very very high inflation.

Speaker Change: Good question, Mark I think the erosion I always probably if I'm thinking economic scenario appeared of speculation.

Speaker Change: Maybe as we see some some prices still continuing to grow so but.

Laurent Frex: So, but give us a little bit of time, and we'll come back in detail capital market there in early 2025.

Speaker Change: Give us a little bit of time, and we will come back in detail capital market and nearly 2025 on the Destocking.

Anna Mans: On the destocking there are two elements there: one is our own concerted actions to try to balance out the cell in and the cell out. What the cell out is what the consumer, the consumer of take what do they buy from the retail outlets, and the cell in is what we sell to the customers. It's always important to keep that in balance. It's not good, it's not healthy to have too much inventory in the trade; the products are aging. We are mindful of the freshness. If we think of quality, fresher products will always sell better, so that's one element of the equation. And in a context where there is a bit of a slowdown or softness, let's say we need to be mindful of that. Then the other component of the destocking is the retailer's action. You know that money as a cost didn't have a cost for a while; now money as a cost, there's a high cost in emerging markets due to high interest rates. Some of the banking sector has been very reluctant to finance working capital at the retailers, and the retailers are focused on their cash flow. So logically, they have been mindful and more than mindful, active at managing their stocks and reducing their stock. So that's one of the fundamentals that we have seen on pricing. Generally speaking, we have two things in mind: of course we want to primalize. We believe that primalization is a tremendous opportunity across categories, offering better products, more services, more convenience, better taste. That's a big source of the innovation drive, but we are also mindful of affordability. I think affordable nutrition, affordable diets is a big topic. We see the polarization in the society continuing; it's even more acute in times of crisis. So good people that are ready to spend on food and eager to find or to get customized experiences, so we want to get her for that, of course. But the overall top pick of affordability is also so important. You know, you can have the best product; if it's overpriced, it will not sell. So we are mindful of that element of the equation. And any additional comments? Maybe I'll just comment on us podcast specifically, maybe just put this one in context for you. So over the last couple of years, it has been the best part of 25-percent price inflation impact care in the US. So what you're seeing this year is somewhat a normalization of the category, but we haven't seen the same level of input cost increase. You see retailers with challenged margins, and we're seeing promotions come back to the level that they were at in the category pre-COVID, lapping a period where there was no promotion. And on top of that, you've got new capacity coming into the market from all players, and that means that there's a greater range of skews, including some of the premium skews coming back into the market. So it's a bit of a moment in time where you've got a sort of tough component, and consumers able to buy on promotion and also move back into some of those skews that weren't available when there were capacity constraints in the market. So I wouldn't look at it as any change in strategy; it's just a moment in time for the category. Actually, from a consumer perspective, the propensity to treat pets as a member of the family is absolutely unchanged and is actually stronger in the younger generation coming through who are more likely to own pets as well. So we should continue to see that strong premiumization trend coming through the category looking forward. Thank you. Thank you.

There are two elements. There one is all on a concerted actions to try to balance out the.

Speaker Change: The sell in and sell out what the sell out is what the consumer the consumer offtake when do they buy.

Laurent Freixe: What the sell-out is what the consumer takes, what do they buy from the retail outlets, and the sell-in is what we sell to the customers. It's always important to keep that in balance. It's not good, it's not healthy to have too much inventory in the trade. The products are aging. We are mindful of the freshness. If we think of quality, fresher products will always sell better. That's one element of the equation. In a context where there is a bit of a slowdown or softness, let's say, we need to be mindful of that. The other component of the destocking is the retailer's action. You know that money has a cost. Didn't have a cost for a while. Now money has a cost.

Speaker Change: From the retail outlets and celanese, what we sell to the customers. It's always important to keep that imbalance. It's not good its not healthy to have too much inventory in the trade that the products are aging we are mindful of the freshness, you're freezing of quality fresher products will always sell better. So that's one element of the equipment.

Speaker Change: And in a context, where there is a bit of a slowdown or softness, let's say, we need to be mindful of that.

Speaker Change: Then the the user component of the Destocking is the retailers action.

Speaker Change: You know that money is of course a dinner.

Speaker Change: Cause for a while now money is of course, that's a high cost in emerging markets due to high interest rates.

Laurent Freixe: There's a high cost in emerging markets, due to high interest rates. The banking sector has been very reluctant to finance working capital at the retailers, and the retailers are focused also on their cash flow. Logically, they have been mindful and more than mindful, active at managing their stocks and reducing their stocks. That's one of the fundamentals that we have seen. On pricing, generally speaking, we have two things in mind. Of course, we want to premiumize. We believe that premiumization is a tremendous opportunity across categories, offering better products, more services, more convenience, better taste. That's a big source of the innovation drive. We are also mindful of affordability. I think affordable nutrition, affordable diets is a big topic.

Speaker Change: Some are the banking sector has been very reluctant to finance working capital.

Speaker Change: At the retailers and the retailers are focused also on the cash flow.

Speaker Change: So logically they had been mindful and modern mindful active at managing their stocks and reducing their stock. So that's one of the phenomenons that we have seen on pricing generally speaking.

Speaker Change: We have to sinks in mind of course, we want to premium items, we believe that pre amortization is a tremendous opportunity across categories are offering better products more services.

Speaker Change: More convenience better taste, that's a big source of the innovation.

Speaker Change: Drive.

Speaker Change: But we're also mindful of affordability I think affordable nutrition affordable diets is a big is a big topic.

Laurent Freixe: We see the polarization in the society continuing. It's even more acute in times of crisis. You've got people that are ready to spend on food and are eager to find or to get customized experiences. We want to cater for that, of course. The overall topic of affordability is also so important. You know, you can have the best product. If it's overpriced, it will not sell. We are mindful of that element of the equation. Anna, any additional comments?

Speaker Change: We see the polarization in the society, continuing it's even more acute in times of crisis. So good people that are ready to spend on food and are eager to find or to get customized experiences. So we want to get it for that of course.

Speaker Change: But the overall Topeka for affordability is also so important. So you know you can have the best product if it's a a priced.

Speaker Change: It will not sell so we are mindful of that element of the equation.

Speaker Change: And are any initial comments, maybe I'll just comment on the U S pet care specific okay, and maybe just to put this one in context for you. So over the last couple of years has been the best process, 25% price inflation in pet care in the U S. So what you're seeing this year is somewhat a normalization of the cats.

Anna Manz: Maybe I'll just comment on US pet care specifically.

Laurent Freixe: Yeah.

Anna Manz: Maybe just to put this one in context for you. Over the last couple of years, there's been the best part of 25% price inflation in pet care in the US. What you're seeing this year is somewhat a normalization of the category, but we haven't seen the same level of input cost increase. You see, retailers with challenged margins, and we're seeing promotions come back to the level that they were at in the category pre-COVID, lapping a period where there was no promotion. On top of that, you've got new capacity coming into the market from all players. That means that there's a greater range of SKUs, including some of the premium SKUs coming back into the market.

Speaker Change: Right now we haven't seen the same level of impact cost increase you see retired as a challenge margins and were saying formations come back to the level that they were asked in the category.

Speaker Change: Pre COVID-19 lapping a period, where there was no promotion and on top of that you've got new capacity coming into the market from Oh, Oh players and that means that there's a greater range of skus, including some of the premium skus coming back into the market. So it's a bit of a momentum.

Anna Manz: It's a bit of a moment in time where you've got a sort of tough comp and consumers able to buy on promotion, and also move back into some of those SKUs that weren't available, when there were capacity constraints in the market. I wouldn't look at it as any change in strategy. It's just a moment in time for the category. Actually, from a consumer perspective, the propensity to treat pets as a member of the family is absolutely unchanged and is actually stronger in the younger generation coming through, who are more likely to own pets as well. We should continue to see that strong premiumization trend coming through the category looking forward.

Speaker Change: Time, where you've got to instead of tough comp panna and end consumers able to buy them formation and I'll say move back into some of those skus that weren't available whenever capacity constraints in the market. So I wouldn't look at it as any change in strategy. It's just a moment in time for the category.

Actually from a can see them at the stature of the.

Speaker Change: The propensity to treat pets as a member of his family is absolutely unchanged and is actually stronger than the younger generation coming through her more likely impacts as well. So we should continue to see that strong premium amortization trend coming through the category looking forward.

Laurent Freixe: Thank you.

Jon Cox: Thank you.

Speaker Change: Thank you.

David Hancock: Thank you. The next question comes from David Hayes at Jefferies. David, over to you.

Speaker Change: Thank you. The next question comes from David Hayes at Jefferies, David over to you.

David Hayes: The next question comes from David Hayes at Jeffers. David, over to you. Thanks, David. Good morning also. I'm going to use one of my lives just to follow up and then one question. So on the follow-ups, you keep talking about the category growth and our performing the category growth. But can you just tell us what you think the food and beverages category growth is in the medium term? And then also you talked briefly about portfolio review, but just to be clear, it's the action plan that you've started that you talked about in the pre-prepared remarks.

David Hayes: Thanks, David. Good morning, also. I'm gonna use one of my lines just to follow up and then one question. On the follow-ups, you keep talking about the category growth and outperforming the category growth, but can you just tell us what you think the food and beverages category growth is in the medium term? Then also you talked briefly about portfolio review, but just to be clear, is the action plan that you've started, that you talked about in the prepared remarks is part of that, a new portfolio review, and that we might expect to hear more from that, either at the CMD or into next year? The real question is, I guess this is for Anna.

David Hayes: Thanks, Dave and good morning, all so again he is one of my life just to follow up on that one question. So on the follow ups you talked about the category growth and outperforming the category growth, but could you just tell us what you think the food and beverages.

David Hayes: The growth is in the medium term and then also you talked briefly about portfolio review, but just to be clear. It is the action plan that you've stopped you talked about the pre prepared remarks.

David Hayes: It is part of that. I know a new portfolio review, and that we might expect to hear more from that either at the CMD or into next year. And the real question is, I guess just around, on the 22nd of August, I think it was when we had the Chairman-hosted call. You felt there wasn't a need to change guidance for the full year from a sales perspective. I guess the question, therefore, is there was September deteriorating much more than you were seeing at the end of August, particularly the delistings that they kind of happen late in the year?

David Hayes: As part of that or a new portfolio review are that we might expect to hear more from that CMT or into next year and the real question is I guess, Brian on the 22nd of all because I think it was when we had the chairman I usually call you felt there wasn't a need to change guidance for the for the full year.

David Hayes: Anna, on the 22nd of August, I think it was, when we had the chairman hosted call, you felt there wasn't a need to change guidance for the full year from a sales perspective. I guess the question therefore is, you know, was September deteriorating much more than you were seeing at the end of August, particularly the delistings, did they kind of happen later in the year? Or is there maybe a question around management information systems? Is that something that as you've joined the company, you'd like to see clearer, more detail, quicker data about how the company's performing in different geographies, different categories? Thank you so much.

David Hayes: From a sales perspective I guess the question therefore is that what September.

David Hayes: I think much more than you were seeing at the end of August, particularly of them, particularly the de listings that they could have happened later in the year or is there maybe a question around management information systems is that something that as you've joined the company.

David Hayes: Or is there maybe a question around Management Information Systems? Is that something that, as you've joined the company, you'd like to see clearer or more detailed, quicker data about how the company's performing in different geographies, different categories? Thank you so much. Thanks, David. As regards the growth profile, what we have seen in the last years and continuing this year is that the growth has been very much connected with pricing. In periods of high inflation, we have seen in the last couple of years high single-digit growth at the time of normalization of prices, of flattening of prices, of pricing increases because prices remain high.

David Hayes: To see clearer more detail quick.

David Hayes: Data about how the company's performing in different geographies different categories. Thank you so much.

Laurent Freixe: Yeah. Thanks, David. As regards the growth profile, what we have seen in the last years and continuing this year is that the growth has been very much connected with pricing. In periods of high inflation, we have seen in the last couple of years high single digit growth. In the time of normalization of prices or flattening of prices of price increases, because prices remain high, we see more low single digit growth. The truth is probably in the middle and will depend on the pricing environment. This was the previous question was pointing to that.

Speaker Change: Yeah. Thanks, David.

As regards the gross profile, which we have seen in the last years and the continuing this year is that the growth has been very much connected with our pricing.

Speaker Change: In periods of high inflation, we have seen in the last couple of years.

<unk> high single digit growth in the <unk>.

Speaker Change: At the time of a normalization of prices of flattening of prices of price increases because prices remain high and we see a more low single digit growth. The truth is probably in the middle and will depend on the pricing environment. It was the previous question was pointing to that it's a very very.

Laurent Frex: We see more low single-digit growth. The truth is probably in the middle and will depend on the pricing environment. This was the previous question. It was pointing to that. It's a very, very relevant observation. So we'll come back to that in due time, of course, but we believe that there is potential for growth across the portfolio, as I was pointing out to it. When it comes to the portfolio, I'm just highlighting that we have a very strong portfolio. We have excellent pockets of leadership, either global, regional, or local. This is what matters in the right categories.

Laurent Freixe: It's a very, very relevant observation. We'll come back to that in due time, of course, but we believe that there is potential for growth across the portfolio as I was pointing out to it. When it comes to the portfolio, I'm just highlighting that we have a very strong portfolio. We have excellent pockets of leadership, either global, regional, or local. This is what matters in the right categories. But as always, you know, there might be parts which are weaker or offering maybe less opportunities for the future. I'm just pointing out that, yes, I'm broadly privileged to have such a portfolio, but that there are parts which need a review, reshape, or maybe finding another course, and we'll come back to that.

Relevant observation, so we will come back to that in due time of course, but we believe that there is potential for growth across the portfolio.

Speaker Change: As I was pointing out to it when it comes to the portfolio I'm, just highlighting that we of the very strong portfolio of.

Speaker Change: Excellent pockets of leadership, either global regional Luca she is what matters in the right categories.

Laurent Frex: But, as always, there might be parts which are weaker or offering maybe less opportunities for the future. So I'm just pointing out that, yes, I'm broadly privileged to have such a portfolio, but that there are parts which need a review, reshape, or maybe finding another course. And we'll come back to that totally part of the capital markets, the presentations.

Speaker Change: But as always you know there might be a part a which are weaker or offering maybe.

Speaker Change: There are less opportunities for the future. So I'm, just pointing out that yes I'm broadly.

Speaker Change:

Speaker Change: Privileged to have such a portfolio, but they are parts, which.

Speaker Change: Neither review reshape Oh, maybe finding.

Speaker Change: As a course, AR and AR and we'll come back to that the three part of the capital markets day presentations.

Laurent Freixe: That will be part of the Capital Markets presentations. Anna, you want to come in?

Speaker Change: Presentations.

Anna Mans: Anna, do you want to go blue? Yes, sure. So, at the half year, when we gave guidance, we said that we, to deliver on it, would need to execute on our plans and we would need the consumer environment to remain unchanged. when we were together in August, we had July data, and at the time we were talking about a strategic leadership change. What I would say we have, and at that point we didn't have enough data to be clear on the trends in the categories. But I guess what I would say is we have seen a slowdown in the US, particularly in PET.

Speaker Change: I know you want to complain yeah sure say at the half year, when we gave them.

Anna Manz: Yeah, sure. At the half year, when we gave guidance, we said that to deliver on it, we would need to execute on our plans, and we would need the consumer environment to remain unchanged. When we were together in August, we had July data, and at the time, we were talking about a strategic leadership change. At that point, we didn't have enough data to be clear on the trends in the categories. I guess what I would say is we have seen a slowdown in the US, particularly in pet, and some of the concerns around the elections are playing out. We have also seen that slowdown play through to LATAM, and that has accelerated through the quarter.

Speaker Change: Guidance, we said that we to deliver on it we would need to execute on our plans and we would need the consumer environment to just to remain unchanged.

Speaker Change: When we were together in August and we had July data and at the time, we were talking about his strategic leadership change.

Speaker Change: <unk>.

Speaker Change: What I would say we have at that point, we didn't have and.

Speaker Change: Enough data to be clear on the trends in the categories, but I guess, what I would say is we have seen a slowdown in the U S, particularly in pets and some of the concerns around the elections are playing out.

Anna Mans: And some of the concerns around the elections are playing out. We have also seen that slowdown play through to Latin, and that has accelerated through the quarter. And I think there's two other things we've also seen that we expect to continue into Q4 that impact our view on guidance. One is the temporary delistings in Europe. We're seeing a much more challenging environment to get price increases through. And that's causing some of this sort of disruption that we're seeing. And then I think the other piece is the inventory, where it's a combination of the cost of money in Latin.

Speaker Change: We have also seen that that slowdown play through to Latam and that has accelerated through the quarter.

Anna Manz: I think there's two other things we've also seen that we expect to continue into Q4, that impact our view on guidance. One is the temporary delistings in Europe. We're seeing a much more challenging environment to get price increases through. That's causing some of this sort of disruption that we're seeing. I think the other piece is the inventory, where it's a combination of the cost of money in LATAM, but actually actions we are taking and will take in Q4 to make sure that we have a healthy end-to-end sort of supply chain through to retail. Those are the things that have changed since that point in time and why we think the right guidance is the guidance that we give today.

Speaker Change: And I think there's two other things. We've also seen that we expect to continue into Q4.

Speaker Change: That.

Speaker Change: <unk> view on guidance one is the temporary D listings in Europe, we're seeing a much more challenging environment to get price increases through them and that's causing some of this sort of disruption that we're seeing and then I think the other piece is the inventory.

Speaker Change: Well, it's a combination of.

Speaker Change: The cost of money and in Latam, but actually actions, we are taking and will take in Q4 to make sure that we have a healthy end to end to end supply chain free to reach out. So that is all the things that have changed since that point in time and why we think the right guidance is the guidance that we gave today.

Anna Mans: But actually, actions we are taking and we'll take in Q4 to make sure that we have a healthy end to supply chain through to retail. So those are the things that have changed since that point in time. And why we think the right guidance is the guidance that we give today. Thanks.

Laurent Freixe: Thank you. Thanks.

David Hayes: Thank you. Thanks.

Speaker Change: Thank you.

Anna Mans: Thanks, David.

David Hancock: Thanks, David. We'll take the next question from Sarah Simon at Morgan Stanley. Go ahead, Sarah.

David Hayes: Thanks, David.

Sarah Simon: We'll take the next question from Sarah Simon at Morgan Stanley. Go ahead, Sarah. Yes, thanks.

Speaker Change: I'll take the next question from Sarah Simon Morgan Stanley Go ahead, Sir.

Sarah Simon: Yes, thanks. I have two questions. Just to follow up, Anna, you said earlier that we should assume a similar-sized inventory impact in Q4 as in Q3. I mean, obviously, you won't have the spillover from the Q2 point. I'm just wondering, does that mean you think that the inventory actions are kind of bigger on an underlying basis in Q4 than in Q3? Then the second question was just on sort of stepping up the investment, just to clarify, are you not doing any of that in Q4, right? This is sort of kickoff in fiscal 2025. Thanks.

Sarah Simon: Yes. Thanks, I have two questions. So just to follow up I know you said earlier that we should see a similar sized inventory impacting Q4 and Q3. So does that I mean, obviously you won't have the spillover from the Q2 point I'm. Just wondering so does that mean you think that the.

Sarah Simon: I have two questions. So just to follow up, Anna, you said earlier that we should assume a similar sized inventory impacting Q4 is in Q3. So does that mean obviously you won't have to spill over from the Q2 point. I'm just wondering, so does that mean you think that the inventory actions are kind of bigger on an underlying base in Q4 than in Q3.

Sarah Simon: The inventory actions are kind of on an underlying basis in Q4 than in Q3.

Anna Mans: And then the second question was just on sort of stepping up the investment, just to clarify. Are you not doing any of that in Q4, right? This is sort of kickoff in Fiscal 25. Thanks.

Sarah Simon: And then the second question was just on sort of stepping up the investment just to clarify.

Speaker Change: Are you not doing any of that in Q4 right. This is sort of kickoff.

Speaker Change: Fiscal 'twenty five.

Anna Mans: Yeah, I can take the letter one, Sarah. It's for 2024 we keep our plans, and as you know and as you will see, we will have increased our marketing investments in the end of brands. So we are steady with that.

Laurent Freixe: Yeah. I can take the latter one, Sarah. It's for 2024, we keep our plans. As you know and as you will see, we will have increased our marketing investments behind the brands. We are steady with that. We keep it as planned. As from 2025, we want to raise our game and bring back the historical level of investment behind our brands and not wait and not do it incrementally, but do it in one go. That's the spirit, and that's the plan.

Speaker Change: Yes, I can take the the latter one this huh.

Speaker Change: It's it's fall 'twenty 'twenty four we keep our plants and our as you know and as you will see we will have increased though.

Speaker Change: The marketing investments and then just moving on to Brian. So we are steady was that we would keep it as planned and as from 2025, we want to raise our game.

Anna Mans: We keep it as planned, and as from 2025 we want to raise our game and bring back the historical level of investments beyond our brands and not quit and not do it incrementally but do it in one go. So that's that's a spirit and that's that's a plan.

Speaker Change: And bring back the historical level of investment to be in a branch and not wait and they'll do it incrementally but do it in one go so that's that's the spirit and that's that discipline.

Anna Mans: Yeah, so on inventory, Sarah, you're absolutely right. The underlying customer inventory reduction in Q4 is bigger because it will be of a similar size in aggregate to what we're seeing in Q3, and in Q3 about half of it was quarter on quarter. So yes, you are correct in that assumption, and then just on Q4 investment. I think our focus in Q4 is really embedding some of those execution metrics in the business that help us really ensure that we are investing. in the right way to deliver the maximum return so that we really have the execution we wanted to be before we then start step-up investment.

Anna Manz: Yeah. On inventory, Sarah, you're absolutely right. The underlying customer inventory reduction in Q4 is bigger because it'll be of a similar size in aggregate to what we've seen in Q3. In Q3, about half of it was quarter-on-quarter. Yes, you are correct in that assumption. Then just on Q4 investment, I think our focus in Q4 is really embedding some of those executional metrics in the business that help us really ensure that we are investing in the right ways to deliver the maximum return, so that we really have the execution where we want it to be before we then start to step up investment.

Speaker Change: Yeah, so on inventory, sorry, I'd say, you're right the underlying.

Speaker Change: Our customer.

Speaker Change: Accustomed to our inventory reduction in Q4.

Speaker Change: Is baker because it'll there that are of similar size in aggregate. So what we've seen in Q3 and in Q3 about half of it was quarter on quarter. So yes, you are correct in that assumption and then just on.

Speaker Change: On Q4 investment I think I'll focus in Q4 is there any embedding some of it is execution on metrics in the business that helped us really ensure that we are investing.

Speaker Change: In the right ways to deliver the maximum return so that we really have the education, where we want it to be before we then start to step up investment.

Operator: Thank you for taking my question. Maybe one quick follow-up, Johan. You said that you want to step up A&P1 go to the level it was pre-COVID.

Sarah Simon: Thanks.

David Hancock: Thanks. We'll take the next question from Celine Pannuti at J.P. Morgan. Go ahead, Celine.

Speaker Change: The next question from Celine <unk> Jpmorgan go ahead Celine.

Celine Pannuti: All right. Good morning. Thank you for taking my questions. Maybe one quick follow-up. Laurent, you said that you want to step up A&P in one go to the level it was pre-COVID. Could you tell us what was the level pre-COVID, please? My two questions. First, in terms of gross margin, Anna, you mentioned that the ballpark of what you had guided at H1 remains, so I presume you were happy with, at the time, 46.7% gross margin for fiscal year 2024. Could you talk about what kind of COGS inflation you are seeing in H2? Given your hedging policy, am I right to believe that you will see COGS inflation in 2025?

Speaker Change: Hi, Good morning, Thank you for taking my questions, maybe one quick follow up.

Speaker Change: You said that you want to stick with A&P, one go to deliberately correct pre COVID-19.

Anna Mans: Could you tell us what was the level pre-COVID please? And then my two questions. So, in terms of growth margin, Ana, you mentioned that the bullpark of what you had guided at H1 remains. So I presume you were happy with at the time for the 6.7% growth margin for its COLIO 24. Could you talk about what kind of COGS inflation you are seeing in H2 and, given your hygiene policy, am I right to believe that she would see COGS inflation in 25 and should we expect, as we've seen in the past, that this would lead to growth margin pressure for 25.

Celine: Could you tell us what.

Speaker Change: Particularly key.

Speaker Change: And then my two questions.

Speaker Change: Since Tim in terms of gross margin I know you.

Speaker Change: You mentioned that the ballpark of what you had guided at each one we made five <unk> at the time for this is for 7% gross margin for fiscal year 'twenty four.

Speaker Change: You took about what kind of Uh huh.

Speaker Change: Inflation, you are seeing in age and.

Speaker Change: And Danielle Haitian pretty see am I right to believe that Chile as he comes in station in 'twenty five and.

Celine Pannuti: Shall we expect, as we've seen in the past, that this could lead to gross margin pressure for 25?

Speaker Change: Should we expect as we've seen in the past that this could lead to gross margin pressure for <unk>.

Tom Sykes: My second question, which is basically a follow-up on that one, how you expect to manage that COGS inflation with pricing and RIG, given that you mentioned that the pricing environment has become tougher. I wonder whether, you know, could that lead to maybe a more margin pressure, gross margin pressure than we have seen in the past if you are unable to recover all the inflation? Thank you.

Anna Mans: And then the second question, which is basically a follow-up on that one, how are we expecting to how you expect to manage that COGS inflation with pricing and rate given that you mentioned that the pricing environment has become tougher. I wonder whether you know put that lead to maybe a more margin pressure, growth margin pressure than we have seen in the past if you're unable to recover all the inflation.

Speaker Change: And then the question for my second question, which is basically a follow up on that one.

Speaker Change: How are we expecting to have.

Speaker Change: Do you expect to manage that concentration.

Speaker Change: Pricing in <unk>, given that you mentioned that the pricing environment.

Speaker Change: Tushar I wonder whether you know.

Speaker Change: Andy.

Speaker Change: Just to maybe add more margin pressure gross margin pressure than we have seen the past if you're unable to because that will do that.

Anna Mans: Thank you.

Speaker Change: Thank you.

Laurent Freixe: Yeah. Let me start, and I will comment. Hi, Celine. On the pressure points, I want to highlight that by the way, investment is not just A&P. We want to make sure that we invest in all the dimensions of the value equation and achieve superiority at every step and every level. That requires investments across the board, plus invest in the transformation. That's the reason why we raised our game, and we give more detail at the Capital Markets Day on productivity initiatives. Bear with us a little bit so that we can walk you through in more detail the steps that we are taking, the magnitude of the impact that we are expecting, and how this will phase out over time.

Laurent Frex: Yeah, so let me start, and I will compliment HiSelling. On the pressure points, and I want to highlight that, by the way, investment is not just a NP. We want to make sure that we invest in all the dimensions of the value equation and achieve superiority at every step and every level. So that requires investments across the board plus invests in the transformation. That's the reason why we raised our game and will give more detail at the capital market there on productivity initiatives. So bear with us a little bit so that we can walk you through in more detail on the steps that we are taking and the magnitude of the impact that we are expecting and how this will phase out over time.

Speaker Change: Yeah.

Speaker Change: So let me.

Speaker Change: I'll start and I will complement.

Speaker Change: I sit in.

On the Ah <unk>.

Speaker Change: Pressure points and I want to highlight that by the way of investments. He is not just the N. P. A we want to make sure that we invest.

Speaker Change: In all the dimensions of the value equation and achieve superiority at every step and every level. So it does require investment because the bolt plus invest in the transformation.

Speaker Change: That's the reason why we raised our game and they will give more detail at the capital market day on our productivity.

Speaker Change: Productivity initiatives, so bear with us a little bit so that he can walk you through.

Speaker Change: Through in more detail on the steps that we are taking and the Dominion should have the impact that we are expecting and how this will phase out.

Overtime.

Laurent Freixe: On the investment, I gave high level guidance. Same, bear with us a little bit, be patient, but the message is that we are determined to reinvest at historical levels in all the critical dimensions of the value equation to achieve consumer preference. This consumer focus and customer centricity will be front and center, everything we do. We'll make sure that, again, it's not just a question of A&P investments, a question of achieving superiority at every step of the value proposition, at every step of the value chain. That's where we are putting the energy, the focus, the emphasis to make our brands even more compelling and make sure that we set ourselves to win in the marketplace. Anna?

Anna Mans: On the investments, I give high-level guidance; same bear with us a little bit, be patient, but the message is that we are determined to reinvest at historical levels in all the critical dimensions of the value equation to achieve consumer preference. These consumer focus and customer centricity will be front and center; everything we do, and we'll make sure that again, it's not just a question of NP investment, a question of achieving superiority at every step of the value proposition, at every step of the value chain. So that's where we are putting the energy, the focus, the emphasis to make our brands even more compelling and make sure that we set ourselves to win in the marketplace.

Speaker Change: On the investment Ah I give high level guidance same bear with us Atlanta D. B patients, but the message is that we are determined to reinvest.

Speaker Change: Reinvest at historical levels.

In all the critical dimensions of the value accretion to achieve a consumer preference.

Speaker Change: These consumer focus and the customer Centricity will be front and center everything we do.

Speaker Change: And and we'll make sure that again, it's not just a question of E&P investments secretion of achieving severity at every step of the value proposition that every step or do they do change so that that's where we are putting energy the folks with the emphasis to.

Speaker Change: Make L brands are even more comp.

Speaker Change: Compelling and make sure that we set ourselves a two.

Speaker Change: To win in the marketplace.

Speaker Change: Hello.

Anna Mans: So yeah, so on gross margins.

Anna Manz: Yeah. On gross margins. You're absolutely right that since we were last together, we've seen further input cost change in particularly coffee. Those numbers move around day by day, so I'm not gonna try and give you guidance on input cost on gross margins, because at the moment it changes one week to the next. Just to recap what I said on 2024, and I'm largely going to say what I've said to you before, yes, we will see further cost come through, input costs come through in the second half. That's why we would expect the gross margin to be down half on half, but overall, the full year margin to be up for 2024.

Speaker Change: Yeah. So.

Speaker Change: On gross margins.

Anna Mans: So you're absolutely right that since we've been last together, we've seen further input cost change in particularly coffee, and those numbers move around day by day.

Speaker Change: So you're absolutely right that since we were last together we've seen further input cost change in particular the coffee.

Speaker Change: And those numbers move around day by day, so I'm not going to try and give you guidance on input cost on gross margins because that's the name of CIT changes one way to the next but just to recap what I said on trying to transfer and unless you're going to say, what I've said to you before.

Anna Mans: So I'm not going to try and give you guidance on input cost on gross margins because at the moment it changes one week to the next. But just to recap what I said on 2024. And I'm largely going to say what I've said to you before. Yes, we will see further cost come through input cost come through in the second half. And that's why we would expect the gross margin to be down half on half, but overall the fully margin to be up for 2024.

Speaker Change: Yes, we will see further cost come through input costs come through in the second half.

Speaker Change: And that's why we would expect the gross margin to be down half on half, but overall the full year margin to be up.

For 2020 for now as I look forward to 2025.

Anna Mans: Now, as I look forward to 2025, you're absolutely right that in periods of input cost going up, there's often a lag between those costs coming through and our ability to take price, given that the certain pricing cycles that retailers work to. And so, you know, that can lead to a short-term depression in gross margin because of that sort of timing difference. You will see us at take prices as input cost go up and then we'll evaluate how the consumer responds and make sure that we're monitoring that. And if we have pockets where the consumer finds those price increases hard, then we will do what you see us doing already, which is reducing prices to make sure that we're staying within reach of the consumer, but innovating to make sure that we have an offering an appropriate margin that then delivers on that consumer need.

Anna Manz: Now, as I look forward to 2025, you're absolutely right that in periods of input costs going up, there's often a lag between those costs coming through and our ability to take price, given that, there's certain pricing cycles that retailers work to. You know, that can lead to a short-term depression in gross margin, because of that sort of timing difference. You will see us apt to take prices as input costs go up, and then we'll evaluate how the consumer responds, and make sure that we're monitoring that.

Speaker Change: You're absolutely right that in periods of input costs going up there's often a lag between those costs coming through in our ability to take price given that the sudden pricing psychosis that Reid retired as what T. And so you know that that can lead to a short term depression and gross margin.

Speaker Change: And because of that sort of timing difference you will see us apps type prices as input costs go up and then we'll evaluate how the consumer responds.

Speaker Change: And make sure that our what we're monitoring that and if we have pockets where the consumer finds those price increases hard than we will do what you see us doing already which is reducing prices to make sure that we're staying within reach of the consumer but innovating to make sure that we have an offering a nice surprise.

Anna Manz: If we have pockets where the consumer finds those price increases hard, then we will do what you see us doing already, which is reducing prices to make sure that we're staying within reach of the consumer, but innovating to make sure that we have an offering, and at appropriate margin that then delivers on that consumer need. You know, wrapped together, that's the total picture.

Speaker Change: March and then delivers on that consumer need and so you know wrapped together.

Anna Mans: So, you know, wrapped together. That's the total picture.

Speaker Change: That's the total picture.

Operator: Thank you.

David Hancock: Thank you. We'll take the next question from Tom Sykes at Deutsche Bank. Go ahead, Tom.

Speaker Change: Thank you we'll take the next question from Tom Sykes Deutsche Bank.

Tom Sykes: We'll take the next question from Tom Sykes at Deutsche Bank. Yeah, thank you. Morning everybody. Just firstly on the nature of how you expect to guide going forward, obviously, the guidance has sort of been top-sliced over the course of this year.

Tom Sykes: Morning. Thank you. Morning, everybody. Just firstly on the nature of how you expect to guide going forward. Obviously, the guidance has sort of been top sliced over the course of this year. How by nature, how conservative do you expect to be? Will there be a bit of a difference between 2025, where you may be a bit more explicit about where particularly the margin would go, and then maybe a little bit vaguer and broader from 2026 onwards? Then also just on accounting now that you, sorry, Anna, that you've been there longer, do you expect any changes in accounting policy or interpretation of any policies to affect the margin in 2025, please, or indeed 2024?

Speaker Change: Yes, yes.

Tom Sykes: Yes. Thank you good morning, everybody I'm.

Tom Sykes: Just firstly on the nature of how you expect to guide.

Tom Sykes: Going forward, obviously, the guidance is sort of being top sliced the courses.

Tom Sykes: This year, so how by nature how conservative.

Laurent Frex: So, how by nature, how conservative do you expect to be and will there be a bit of a difference between 25 where you may be a bit more explicit about where particularly the margin would go and then maybe a little bit vague and broader from 26 onwards. And then also just on accounting now that you, sorry, I know that you've been there longer. Do you expect any changes in accounting policy or interpretation of any policy to affect the margin in 25, please? Or indeed, 24? Thanks, Tom. On forecasting and not the guidance, what I would say is that we want to be realistic.

Tom Sykes: Do you expect to be and will there be a bit of a difference between <unk>.

Tom Sykes: 25, where you may be a bit more explicit about where particularly the margin would go.

Tom Sykes: And then maybe a little bit vague and broader from 'twenty six onwards.

Tom Sykes: And then also just on.

Tom Sykes: The accounting now that you saw.

Tom Sykes: Ive been.

Tom Sykes: Longer do you expect any changes in accounting policy or interpretation of any policy to affect the margin in 'twenty five please or $2 24.

Laurent Freixe: Thanks, Tom. On forecasting and on the guidance, I would say is that we want to be realistic. That will be the guiding principle. We want to be realistic, face the reality, and give you a guidance that we believe is achievable, and hopefully beatable, being realistic with what are the facts, what are the trends, and how do we see the business developing. That would be my comment on that, and you will see how this unfolds over the next quarters and years and on the more specific regarding accounting. Anna.

Speaker Change: Thanks, Tom on forecasting another guidance, what I would say is that.

Tom Sykes: We want to be realistic.

Laurent Frex: That will be the guiding principle. We want to be realistic. Face the reality and give you a guidance that we believe is achievable and hopefully beatable, being realistic with what are the facts, what are the trends, and how do we see the business developing. So that would be my comment on that, and you will see how these unfolds over the next.

That will be the guiding principle, we want to be really seek face the reality.

Tom Sykes: And give you guidance that we believe is achievable Ah and and hopefully beatable.

Tom Sykes: But being realistic with what other facts what are the trends and how how do we see the business developing so that it would be.

Tom Sykes: My comment on that and you will see how how decent falls over the next.

Anna Mans: and the most on the most specific regarding accounting, and I have to say I whole heartedly agree with your realistic guidance point. Unaccounting no no specific changes in accounting policy it it's all robust and actually I'm very focused on driving business performance rather than changes in accounting policy impacting margins.

Tom Sykes: Waters in years and in the most on the more specific regarding our accounting.

Anna Manz: I have to say, I wholeheartedly agree with your realistic guidance point. On accounting, no specific changes in accounting policy. It's all robust. Actually I'm very focused on driving business performance rather than changes in accounting policy impacting margins.

Speaker Change: And I have to say I wholeheartedly agree with you a realistic guidance point.

Speaker Change: And on accounting ne no specific changes in accounting policy. It it's alright bust and actually I'm very focused on driving business performance rather than changes in accounting policy.

Patsy margin.

Speaker Change: Okay.

Tom Sykes: Thank you, Tom.

David Hancock: Thank you, Tom. We have time to take one final question. We'll take next from Jeff Stent at Exane. Go ahead, Jeff.

Speaker Change: Thank you Tom we have time to take one final question, we'll take next from Jeff Stent at Exxon go ahead, Jeff.

Jeff Stent: We have time to take one final question. We'll take next from Jeff Stent at Exam. Go ahead, Jeff. Jeff. Go ahead. Your line should be open. Can you hear me? Yes. Not anymore.

Speaker Change: Yeah.

Laurent Freixe: Jeff is on mute.

David Hancock: Jeff, go ahead. Your line should be open.

Go ahead your line should be open.

Jeff Stent: Can you hear me?

Speaker Change: Can you hear me.

Anna Manz: Yes.

Laurent Freixe: Yeah.

David Hancock: Yes.

Jeff Stent: Yes, yes.

Laurent Freixe: Not anymore.

Speaker Change: Not any more.

Jeremy: Jeff, we might need to follow up with you afterwards. We'll take the final question then from Jeremy from HSK. Hi. Good morning. Hope you couldn't hear me. Thanks for squeezing me in. Just a couple of business areas that you haven't commented on. I just be interested to hear about it. So first of all, China and milk formula are actually quite a good result there. So perhaps talk about what's going on in the market, these over dynamics that you're seeing there. And then another point that you've made mainly in AOA is this point about hesitancy towards Western brands.

David Hancock: Jeff, we might need to follow up with you afterwards. We'll take the final question then from Jeremy from HSBC.

Speaker Change: Then, Jeff we might need to follow up with you afterwards, we'll take the final question then from Jeremy.

Speaker Change: HSBC.

[Analyst] (HSBC): Hi, good morning. Hope you can hear me. Thanks for squeezing me in. Yeah, just a couple of business areas that you haven't commented on. I'd just be interested to hear about it. First of all, China and milk formula, actually quite a good result there. Perhaps talk about what's going on in the market, the sort of overall dynamics that you're seeing there. And then another point that you've made mainly in AOA is this point about hesitancy towards Western brands. Is there any way, you know, either you can give some sort of a quantification as to, you know, what the rough impact of that might be?

Speaker Change: Hi, Good morning Hope you can hear me and thanks for squeezing me in just a couple of business areas.

Jeremy: You Havent commented on I'd, just be interested to hear about the vegetable China and milk formula actually quite a good result that say, perhaps talk about what's going on in the market the dynamics.

Speaker Change: Dynamics that.

Speaker Change: Youll see that and then another point that you've made maybe in a L. A at this point about hesitancy towards western brands.

Jeremy: Is there any way either you can give some sort of a quantification as to what the rough impact that might be, and then also what do you think that that will be effectively, even if it doesn't reverse, what do you think it might be sort of reflected in the base so that it doesn't act to the drag on your performance anymore. Thanks.

Speaker Change: Is there any way you argue that you can give some sort of quantification as to what the rough impact that might be and then we will say what do you think that that will be effectively even if it doesn't meet this.

[Analyst] (HSBC): when you think that will be effectively, even if it doesn't reverse, when you think it might be sort of reflected in the base so that it doesn't act to drag on your performance anymore. Thanks.

Speaker Change: What do you think it might be sort of reflected in the base. So it doesn't drag on your performance anymore. Thanks.

Laurent Freixe: Yeah. On the last part of your question regarding AOA, there is nothing really new there, or there is nothing really worsening. We are just pointing out that what we saw in the last quarters continued in the Q3 and is likely to continue. On the impact and on China, Anna.

Laurent Frex: On the last part of your question regarding AOA, there is nothing really new there, or there is nothing really worsening. We are just pointing out that what we saw in the last quarter continues continued in the Q3 and is likely to continue on the impact and on China. Sure. So maybe just to finish on that one first. So, as we come to the end of this year, we start to lap the impact. So you know that will make things easier going forward. And I think what we've said around this is AOA should be a mid single-digit business, and that's a way to think about things.

Speaker Change: Yeah on the on the last part of your question regarding Gateway.

Speaker Change: There is nothing really new there or there is nothing really worsening we are just pointing out that what we saw in the last quarters continues continued in the in the Q3 and is likely to continue.

Speaker Change: On the <unk>.

Speaker Change: Impact and on China, I don't know.

Anna Manz: Sure. Maybe just to finish on that one first. As we come to the end of this year, we start to lap the impact. You know, that will make things easier going forward. I think what we've said around this is AOA should be a mid-single digit business, and that's the way to think about things. With respect to China, yeah, good performance in the quarter on infant nutrition. What we've seen is, NAN continued to do very well with strong science-led solutions for babies which have specific allergies or challenges, and so ongoing very strong performance there. We're also seeing good improvement in the illuma brand as we continue to kind of work on driving that brand across China.

Speaker Change: Should say, maybe just to finish on that one first.

Speaker Change: So.

Speaker Change: As we come to the end of this year, we start to lap them. They the impact say, yeah that will make things easier going forward and I think what we've said around that says hey, I should be a mid single digit business and that's the way to think about things with respect to China.

Anna Mans: With respect to China, good performance in the quarter on infant nutrition. What we've seen is none continue to do very well with strong science-led solutions for babies which have specific allergies or challenges, and so ongoing very strong performance there. And we're also seeing good improvement in the Alluma brand as we continue to kind of work on driving that brand across China.

Speaker Change:

Speaker Change: Yeah, it's a good performance in the quarter on infant nutrition, what we've seen is a non continued to do very well with with strong science legislations for babies, which has specific allergies or challenges and say ongoing very strong performance there and we're also seeing.

Speaker Change: Improvement in the Aleem that brand as S way and continue to kind of work on driving that brand across China, I would point out, though that the concert that'll abate easier T.

Anna Mans: I would point out, though, that the comps are a little bit easier too. Thank you.

Anna Manz: I would point out, though, that the comps are a little bit easier too.

David Hancock: Thank you. That concludes our Q&A session for today. The investor relations team will be available for follow-ups during the course of the day, and I'll pass to Laurent for any closing comments.

David Hayes: Thank you that concludes our Q&A session for today on the Investor Relations team will be available for follow ups. During the course of the day and I'll pass the law for any closing comments, thanks, David and thanks Anna.

David Hancock: That concludes our Q&A session for today. The investor relations team will be available for follow-ups during the course of the day.

Laurent Frex: And I'll pass the law on for any closing comments. Thanks, David, and thanks, Ana. As I said at the end of the prepared remarks, thanks for joining us and for the valuable dialogue. I look forward to speaking with you in the coming days or again shortly at the capital market in November. Thank you.

Laurent Freixe: Thanks, David, and thanks, Anna. As I said at the end of the prepared remarks, thanks for joining us and for the valuable dialogue. I look forward to speaking with you in the coming days or again shortly at the Capital Markets Day in November. Thank you.

Speaker Change: As I said at the end of the prepared remarks, thanks for joining us and for the valuable dialogue.

Speaker Change: I look forward to speaking with you in the coming days or again shortly at the capital market day in November. Thank you.

Speaker Change: Yes.

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