Q3 2024 Danone SA Earnings Call

October 24, 2024

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Speaker Change: Because he must before taking your questions and before we start I draw your attention to the disclaimer on slide 21 of the presentation related to forward looking statements and the definition of financial indicators that we will refer to during the presentation.

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Speaker Change: And with that let me hand, it over to Julian.

Simon.

Julian: Thank you <unk> and good morning, everyone and a very warm welcome to our Q3 sales quarter I suggest we go straight into the presentation is this is a busy day for all of you. So.

Champions for life.

Yeah.

Yes.

Julian: So let me start with page number two.

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And as you will have seen already from the press release. This morning, we are sharing with you today. Another strong set of numbers with like for like sales up plus four 2% for the third quarter of this year.

Yes.

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Julian: This represents yet another quarter of broad based growth with consistent overall deliveries.

I mean.

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Julian: Demonstrating the resilience we have built into our company over the last three years.

Okay.

Julian: Which is giving us the ability to deliver on our commitments even within the soft consumer environment.

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Julian: Our Q3 performance was again supported by growth across all our geographies with particularly strong performances in the North America, as well as India, China, and North Asia and Oceania region.

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Julian: For going into the details of each zone, let us turn to the next slide slide number three.

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Julian: To put these results into perspective.

Julian: Since the start of our renewed done on strategy, we have been very clear about the business model, we are striving for.

Julian: Model, which is based on competitive growth oncology growth.

Yes.

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Julian: And we are delivering against this ambition is the quality of our growth does indeed improve quarter by quarter.

Yeah.

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Julian: Our volume mix contribution for quarter, three has reached a new highest of three 6%.

Yes.

Okay.

Julian: With a resilient pricing at plus seven.

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Julian: 7%.

Julian: As you can see on this slide that is now the fifth consecutive quarter of volume mix acceleration, a testament to the effectiveness of our investment strategy.

Okay.

Uh huh.

Okay.

Julian: Turning to the next slide slide number four you will see that this quality growth is broad based.

Uh huh.

Right.

Okay.

Julian: Being reflected across all our categories.

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Julian: Our focus on dynamic health oriented categories is paying off as we delivered once again positive volume mix as well as positive pricing across all categories.

Yeah.

Julian: From Edp, two specialized nutrition and waters.

Julian: Edp closed up plus four 1% like for like sales with growth in volume mix accelerating two plus three 8% in Q3 with particularly strong performances in North America and Japan.

Julian: And the competitive performance in Europe.

Julian: The dairy category is keeping its momentum and by doing so growing faster than the overall food and beverage market, which is offering us great growth opportunities, especially for our more differentiated portfolio.

Julian: In specialized nutrition.

Julian: Like for like sales were up plus five 2% with strong growth in volume mix at plus four 1% at.

Julian: We continue to see our <unk> strategy winning in IMF.

Julian: Medical nutrition continues to perform strongly.

Julian: Supported by positive macro trends and enabled by capacity expansion across the network.

Julian: And in water us, we see like for like sales growth of plus three 2% with solid mix.

Julian: Volume mix up plus two 3% despite.

Julian: Rather mixed weather conditions around the globe.

Julian: The growth continues to be driven by milestone in China, and our <unk> brand across the regions.

Julian: Let's move on to the traditional sales.

Julian: Which on slide number five before we talk in more detail about our geographies.

Julian: As we said like for like sales were up plus four 2% during Q3, and we delivered plus 6% was mixed by pricing continued to normalize the contribution of seven.

Julian: 7%.

Julian: Outside of the like for like we had a minus two 3% impact from currency <unk>.

Julian: <unk> and other <unk>.

Julian: Mainly the devaluation of emerging market currencies again.

Julian: The scope effect is still negative at minus three 1% yet sequentially using.

Julian: This is mainly due to the disposal of our horizon organic business in Q1 of this year.

Julian: Altogether. This gives us net sales for quarter three of around $6 8 billion down minus one 2% on a reported basis.

Julian: Let's now move onto slide number six.

Julian: So look in more detail our jewelry.

Julian: And here, let me start with Europe, where we delivered in Q3 like for like Physicals.

Julian: One 4%.

Julian: By as much as plus two 4% and volume.

Julian: Is volume mix growth was actually the strongest level, we have seen a division for some time.

Julian: For instance, we are becoming more competitive that our investments into brand equity and selective price initiatives are yielding results.

Julian: The volume mix growth acceleration is led by Edp, where we see a strong momentum of our functional platforms.

Julian: Our high quality in range performed against strong double digit growth also in Q3.

Julian: We have given this last quarter successfully extended its distribution to the German and Polish markets and see all across Europe strong consumer demand.

Julian: In parallel <unk> as well as airport also delivered very strong performances growing mid to high single digits.

Julian: While pushing hard our existing leading platforms. We also launched a new key fear proposition under the Activision brands in.

Julian: In countries like France and in the UK.

Julian: We're very much looking forward to the impact of this new range will have in the coming quarters.

Julian: In parallel to ADP, we can repurpose resilient performances in specialized nutrition as well as in what us despite mixed weather conditions in the quarter.

Julian: And with that let's turn to North America on slide number seven please.

Julian: In North America, we delivered what I would call a stellar performance with like for like sales up plus five 8%.

Julian: Led by another very strong quarter of volume mix growth up plus four 9% in the positive pricing of plus <unk>, 9%.

Julian: Our coffee creations platform is growing from strength to strength.

Julian: Our core portfolio as well as our innovation selling extremely well, enabling consumers to trade down from coffee houses replicating the experience in the comfort of their own homes.

Julian: We also see a very good performance in the fast growing yogurt category, where our high protein products continue to post strong double digit growth.

Julian: The rest of our yogurt portfolio is also showing an accelerated momentum, including our TV brand.

Julian: Sequentially, increasing its contribution to the performance of our yogurt business.

Julian: Next to our dairy business, we are working hard on the exploration plan for our plant based portfolio leveraging the learnings from the successful relaunch of our <unk> brand in Europe, which is now delivering superior competitive growth.

Julian: And last comment on waters.

Julian: As our <unk> brand is posting another quarter of strong growth with further market share gains.

Julian: With that let's move onto our China, North Asia, and Oceania region on slide number eight.

Julian: This region delivered another very strong performance in Q3 as like for like sales growth of plus 8%.

Reflecting broad based growth across the region.

Julian: Growth was driven by a very strong volume mix contribution of modern plus 10%.

Julian: In specialized nutrition. The momentum continues as we are consistently delivering strong and competitive growth with double digit volume mix.

Julian: We are very pleased with the ongoing performance of both the IMF and medical businesses, which continue to win share in their respective segments.

Julian: In IMF, particularly our strategy of premium amortization is paying off.

Julian: Ophthalmic brands delivering strong growth in quarter three.

Julian: <unk> also supported by the recent launch of our senses innovation platform.

Julian: Slightly down this quarter by minus <unk>, 7% due to poor weather conditions impacting our large <unk> business in Mexico.

Julian: At the same moment, we are delighted to see our specialized nutrition business continuing to grow strongly.

Julian: Winning market share in its category.

Julian: And edp, excluding the impact from licensing out of our polyester medical business, we saw good growth momentum.

Julian: Especially of the Diamond brands and the high protein platform.

Julian: Let's turn to the next slide to discuss the performance of what we call externally the rest of the World region on slide number 10.

Julian: Our Asia Middle East and Africa business saw a strong plus 6% like for like sales growth with volume mix at plus one 2%.

Julian: And price at plus four 7%.

Julian: In specialized nutrition, we had a strong competitive performance in both IMF and pediatric specialties.

Julian: With double digit growth across Asia, India, Middle East and Africa, our hero brands uptime yield and new Kate are driving most of this growth.

Julian: In Edp, we are increasingly benefiting from our ongoing transformation in Africa.

Julian: As the quality of our growth is sequentially improving.

Speaker Change: You mentioned, you're particularly our business in more core which posted strong quality growth in the third quarter.

Speaker Change: Driven by a more and more differentiated but also locally relevant portfolio.

Speaker Change: It is making us commercially win in the market. While we are building at the same time resilience into our supply chain.

Speaker Change: We are investing into high impact sustainability initiatives supporting our farmer transitioned to regenerate agricultural practices.

Speaker Change: Which among many other benefits with secure our access to high quality make also in the future.

Speaker Change: And finally onto the last slide slide 11 to discuss our financial guidance for year 2024.

Speaker Change: We are very pleased with our performance in the first nine months of the year is the fact that the quality of our growth is increasing from quarter to quarter.

Speaker Change: This consistent delivery makes us today confirm this confidence our guidance for year 2024.

Speaker Change: Like for like sales growth of between plus three and plus 5% and a moderate improvement in recurring operating margin.

Speaker Change: Question is on European pricing, which was a negative territory in the quarter.

Speaker Change: Could you maybe shed some light on which divisions and countries were the main reasons behind this negative development and would you expect some further deterioration over the coming quarter.

Speaker Change: And I guess, what I'm trying to get to is.

Speaker Change: Input cost inflation seems to be returning.

I mean, how confident are you that you will be able to implement new pricing actions late this year or early next year. Thank you very much.

Speaker Change: Yes. Good morning Gill first you are absolutely right that we have.

Very happy with the ongoing performance of our business in China, and North Asia and Oceania.

Speaker Change: I think what is reassuring.

Speaker Change: The outlook of this region is the fact that we are not depending on one or two engines, but all our engines.

Speaker Change: Farming.

Speaker Change: <unk>.

Speaker Change: Medical nutrition, which is benefiting from strong macro trends is winning in the market.

Speaker Change: Meson as you say is going from strength to strength.

Speaker Change: And I think on <unk>.

Speaker Change: If the new news is that we are seeing some first green shots on the category, which we have not seen for quite long, we're doing well in market shares.

Speaker Change: As you said things to a lot of impactful innovations, but we also see that stage, one formula which is basically the NP formula for babies has started to turn green in Q3 of this year.

Speaker Change: Too early to celebrate that this category is now stabilized and returned to growth, but it can give us confidence on our ability to perform in this category moving forward I made the comment on Japan, because Japan is also now delivering since many many quarters.

Speaker Change: Very strong growth, we have been putting new capacity in place in order to make sure that we can continuously and consistently deliver on it.

And before we start I draw your attention to the disclaimer on slide 21 of the presentations related to forward looking statements and the definition of financial indicators that we will refer to during the presentation.

And with that let me anecdote to Julian.

Thank you and good morning, everyone and a very warm welcome to our Q3 sales quarter I suggest we go straight into the presentation is this is a busy day for all of you. So.

So let me start with page number two.

This represents yet another quarter of broad based growth with consistent overall deliveries.

Demonstrating the resilience we have built into our company over the last three years.

Speaker Change: We can leverage so finding the right balance between volume mix and price was important and I believe that we are fully on track.

It is giving us the ability to deliver on our commitments even within the soft consumer environment.

Speaker Change: Thank you very much.

Speaker Change: Thank you next question from Warren Ackerman Barclays.

Our Q3 performance was again supported by growth across all our geographies.

Particularly strong performances in North America, as well as India, China, and North Asia and Oceania region.

Warren Ackerman: Yes, good morning, everybody. It's Warren here at Barclays I've also got two yes.

Warren Ackerman: And then can you maybe dig into.

Before going into the details of each zone, let us turn to the next slide slide number three.

Warren Ackerman: The U S edp performance in a bit more detail, obviously, the coffee creations pace, which is doing well, but on the core the core ADP. It looks like is accelerated from Q2 into Q3, maybe what's your outlook.

To put these results into perspective.

Since the start of our renewed done on strategy, we have been very clear about the business model, we are striving for.

Warren Ackerman: Into Q4 any update on the plant based in the U S still.

Model, which is based on competitive growth on quality growth.

We are delivering against this ambition is the quality of our growth does indeed improve quarter by quarter.

Speaker Change: Do you still think you can keep growing double digit in coffee creation. So just to.

Speaker Change: On the moving pieces around the U S would be would be Super and then secondly.

Our volume mix contribution for quarter, three has reached a new height of plus three 6%.

Speaker Change: I'm just interested a little bit on your comments about disproportionate leverage from the volume.

With a resilient pricing at plus seven.

7%.

Speaker Change: <unk> said before Youre under utilized in in in factories in Europe, any kind of comments around that.

As you can see on this slide it is now the fifth consecutive quarter of volume mix acceleration, a testament to the effectiveness of our investment strategy.

Speaker Change: The volume leverage that you are talking about through to margin and then sort of inter linked to that any comments around cogs.

Turning to the next slide slide number four you will see that this quality growth is broad based.

Speaker Change: Margins noticing for example, the milk prices are starting to.

Being reflected across all our categories.

Speaker Change: Tick up just to kind of help us a little bit.

Speaker Change: Thinking through the back half.

Our focus on dynamic health oriented categories is paying off as we delivered once again positive volume mix as well as positive pricing across all categories.

Speaker Change: Thanks.

Speaker Change: Yes, good morning, good morning Gordon.

Speaker Change: Very good results in North America extra.

Speaker Change: Setting up further with a very good start of the year Q3, even as an even stronger performance.

From Edp, two specialized nutrition and waters.

IDP closed up plus four 1% like for like sales with growth in volume mix accelerating two plus three 8% in Q3 with particularly strong performances in North America and Japan.

Speaker Change: You're absolutely right that coffee creamers is pulling a lot of that growth is growing again double digits.

Speaker Change: Again competitive winning share in its market and what does the reassuring and comforting US. This is not only linked to the innovations we have been putting into the market.

And the competitive performance in Europe.

Speaker Change: The dairy category is keeping its momentum and by doing so growing faster than the overall food and beverage market, which is offering us great growth opportunities, especially for our more differentiated portfolio.

So the core portfolio is winning so we are quite confident that.

Speaker Change: If you really are strong assets, which we can offer them.

Speaker Change: May go in the coming quarters.

Speaker Change: In specialized nutrition.

Speaker Change: Like for like sales were up plus five 2% with strong growth in volume mix at plus four 1%.

Speaker Change: To see our <unk> strategy winning in IMF.

Medical nutrition continues to perform strongly.

Speaker Change: Supported by positive macro trends and enabled by capacity expansion across the network.

Speaker Change: And in water us with.

Speaker Change: Like for like sales growth of plus three 2% with solid mix.

Speaker Change: Volume mix up plus two 3% despite.

Speaker Change: Rather mixed weather conditions around the globe.

Speaker Change: The growth continues to be driven by milestone in China, and our <unk> brand across the regions.

Speaker Change: Let's move on to the traditional sales.

Speaker Change: The bridge on slide number five before we talk in more detail about our geographies.

Speaker Change: As we said like for like sales were up plus four 2% during Q3, and we delivered 6% volume mix by pricing continued to normalize the contribution of.

7%.

Speaker Change: Outside of the like for like we had a minus two 3% impact from currency.

Speaker Change: Inflation and other.

Speaker Change: Reflecting mainly the devaluation of emerging market currencies again.

The scope effect is still negative at minus three 1% yet sequentially reducing expected.

Speaker Change: This is mainly due to the disposal of our horizon organic business in Q1.

Speaker Change: Yes.

Speaker Change: Altogether. This gives us net sales for quarter three of around 6 billion down minus one 2% on a reported basis.

Speaker Change: Let's now move on to slide number six.

Speaker Change: So look in more detail at our jewelry.

Speaker Change: And here, let me start with Europe, where we delivered in Q3 like for like Phase one.

Speaker Change: One 4%.

Speaker Change: Driven by as much as plus two 4% in volume.

Speaker Change: Is volume mix growth was actually the strongest level, we have seen in the region for some time.

Speaker Change: Roof points that we are becoming more competitive.

Speaker Change: Our investments into brand equity and selective price initiatives are yielding results.

Speaker Change: The volume mix growth acceleration is led by Edp, where we see a strong momentum of our functional platforms.

Speaker Change: Our high quality in range performed against strong double digit growth also in Q3.

Speaker Change: We have given this last quarter successfully extended its distribution to the German and Polish markets and see all across Europe strong consumer demand.

Speaker Change: While delivering strong productivity moving forward will be for us the recipe to continue increasing our gross margins for Europe and for the company and we are beyond trachea.

Speaker Change: In parallel <unk> as well as airport.

Speaker Change: Also delivered very strong performances growing mid to high single digits.

Speaker Change: Okay.

Thank you next question from Sterling Auty Jpmorgan.

Speaker Change: We're pushing hard our existing winning platforms. We also launched a new key fee proposition under the Activision brands and.

Speaker Change: Alright, good morning, Mike.

Speaker Change: In countries like France and in the UK.

Sterling auty: My first question and I'm, sorry, if I have missed if you verde answer that would be on them.

We're very much looking forward to the impact of this new range will have in the coming quarters.

Speaker Change: In parallel to ADP, we can repurpose resilient performances in specialized nutrition as well as in waters, despite mixed weather conditions in the quarter.

Speaker Change: On the understanding.

Speaker Change: The pricing dynamic in Europe, and in China, because it was up to regions, where pricing is sequentially a weekend. So maybe if you could took.

Speaker Change: And with that let's turn to North America on slide number seven please.

Speaker Change: Took about those two regions.

Speaker Change: Regions.

Speaker Change: In North America, we delivered what I would call a stellar performance with like for like sales up plus five 8%.

And in terms of whether you expect this to continue or whether that would be there were some temporary issues.

Speaker Change: Led by another very strong quarter of volume mix growth up plus four 9% in the positive pricing of plus <unk>, 9%.

Speaker Change: Then my second point, which maybe you have either a follow up on the same subject.

Speaker Change: In terms of cost inflation can you remind us what you expect for the full year and whether this has changed and what you think 2025 stripping like and the ability you may have to raise prices.

Speaker Change: Our coffee creations platform is growing from strength to strength.

Our core portfolio as well as our innovation selling extremely well, enabling consumers to trade down from coffeehouses replicating the experience in the comfort of their own homes.

Speaker Change: In developed market, we heard from one of your competitor that are when they tried to raise prices. They got delisted. So is the environment to be more challenging. Thank you.

Speaker Change: We also see a very good performance in the fast growing yogurt category, where our high protein products continue to post strong double digit growth.

Speaker Change: Yes, good morning Luke.

Speaker Change: The rest of our yogurt portfolio is also showing an accelerated momentum, including our TV brand.

Speaker Change: And when we look at pricing of the third quarter at company level, plus 0.7%, we clearly see that we are back to a more normalized level.

Speaker Change: Sequentially, increasing its contribution to the performance of our yogurt business.

Speaker Change: I said three months ago is that we were confident to remain positive in terms of pricing for the company and I confirm what I said.

Next to our dairy business, we are working hard on the acceleration plan for our plant based portfolio leveraging the learnings from the successful relaunch of our <unk> brand in Europe, which is now delivering superior competitive growth and.

Speaker Change: The double click on Europe and China.

China you saw that we have.

Speaker Change: And last comment on waters.

Speaker Change: As our <unk> brand is posting another quarter of strong growth with further market share gains.

Speaker Change: With that let's move onto our China, North Asia, and Oceania region on slide number eight.

Speaker Change: This region delivered another very strong performance in Q3 as like for like sales growth of plus 8%.

Speaker Change: Reflecting broad based growth across the region.

Speaker Change: The growth was driven by a very strong volume mix contribution of modern plus 10%.

Speaker Change: In specialized nutrition. The momentum continues as we are consistently delivering strong and competitive growth with double digit volume mix.

Speaker Change: We are very pleased with the ongoing performance of both the IMF and medical businesses, which continue to win share in their respective segments.

Speaker Change: In IMF, particularly our strategy of premium amortization is paying off.

Speaker Change: Ophthalmic brands delivering strong growth in quarter three.

Speaker Change: Also supported by the recent launch of our defenses innovation platform.

Speaker Change: While we are happy with this competitive performance. We do also see first signs of growth recovery of the total IMF market.

Speaker Change: With the segment of Formula for young babies called stage, one formula recently returning to growth.

Speaker Change: In water optimize on brand has performed well in the second half of the summer season.

Speaker Change: Despite lapping some even stronger comparables.

Speaker Change: Growth is very much supported by our successful repositioning of the call.

As well as by the electrolyte innovation.

Speaker Change: Which makes us win market share in this very vibrant category.

Speaker Change: And in Edp.

Cause and Activision brands continued to grow very strongly in Japan and moving forward. This will be supported by the new capacity coming online very soon at our local effectively.

Speaker Change: Our continued strong growth in Japan is a testament to the investment we put behind our products to make them differentiated and value added <unk>.

Speaker Change: Attracting more and more consumers to our products in this very large Japanese dairy market.

Speaker Change: Onto Latin America on slide number nine.

In Latin America, we had a solid quarter of plus two 7% like for like sales growth led by price of plus three 5%.

Speaker Change: Volume mix was slightly down this quarter by minus <unk>, 7% due to poor weather conditions impacting our large <unk> business in Mexico.

Speaker Change: At the same moment, we are delighted to see our specialized nutrition business continuing to grow strongly.

Speaker Change: Winning market share in its category.

Speaker Change: In edp, excluding the impact from licensing out of our police our medical business, we saw good growth momentum.

Speaker Change: Especially of the Diamond brands and the high protein platform.

Speaker Change: Let's turn to the next slide to discuss the performance of what we call externally the rest of the World region on slide number 10.

Speaker Change: We seem to support.

Speaker Change: Our Asia Middle East and Africa business saw a strong plus 6% like for like sales growth with volume mix at plus one 2%.

Speaker Change: Line growth. That's my first question and then the second one was just on Edp Europe.

Speaker Change: Could you maybe just give an update on activia, what youre seeing there in the market and how some of your recent focuses on gut health and cyber are performing thank you.

Speaker Change: And price at plus four 7%.

Speaker Change: In specialized nutrition, we had a strong competitive performance in both IMF and pediatric specialties.

Speaker Change: Good morning, Charlie.

With double digit growth across Asia, India, Middle East and Africa, our hero brands uptime yield and new market are driving most of this growth.

Speaker Change: On the guidance look we have not been delivering a three good quarters and year 2020 for each of them at the onset of plus 4% with actually a good mix as you as you are.

Speaker Change: In Edp, we are increasingly benefiting from our ongoing transformation in Africa.

Speaker Change: What is very important for us is to bid this sustainable growth path as we have been discussing in the capital market even in Amsterdam, we want to invest into true category leadership. When you look today at our categories. They are performing extremely well.

Speaker Change: As the quality of our growth is sequentially improving.

Speaker Change: As we mentioned in our particularly our business in more core which posted strong quality growth in the third quarter.

Speaker Change: Driven by a more and more differentiated but also locally relevant portfolio.

Speaker Change: Better than the average of the food and beverage market and it is because those are categories.

Speaker Change: It is making us commercially win in the market why we are building at the same time resilience into our supply chain.

Speaker Change: Which are invested into and they are invested into also by us as a category leader in many of the regions. We're operating.

Speaker Change: We are investing into high impact sustainability initiatives supporting our farmer transitioned to regenerate agricultural practices.

Speaker Change: Which among many other benefits with secure our access to high quality make also in the future.

Speaker Change: And finally onto the last slide slide 11 to discuss our financial guidance for year 2024.

Speaker Change: We are to date confirming the guidance in terms of growth, but also in terms of moderate margin progression for the year 2024.

Speaker Change: We are very pleased with our performance in the first nine months of the year is the fact that the quality of our growth is increasing from quarter to quarter.

Speaker Change: When it comes to our Edp and yogurt portfolio and more importantly, the Activision portfolio, we're making very good progress can confirm what we also said in Amsterdam that the repositioning of the brand going back to a very clear position on gas health.

Speaker Change: This consistent delivery makes us today confirm this confidence our guidance for year 2024.

Speaker Change: Like for like sales growth of between plus three and plus 5% and a moderate improvement in recurring operating margin.

Speaker Change: Very clear positioning on health benefits is working for us it's working for us in Europe as well.

Speaker Change: Moving forward, we will continue to drive our business model, which focuses on our science based and consumer centric approach the investing for even stronger category leadership for not only winning where we play but also taking care of our categories keeping our category is growing faster than the average of the food and beverage market within a soft consumer.

Speaker Change: <unk> environment.

Our ambition is more than ever to support our consumers and patients by addressing their needs.

Speaker Change: Leveraging the relevance of our categories, our strong brand equities as well as our increasing product superiority.

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

Matilda: Thank you again.

Matilda: Now we are opening the Q&A first question Guillaume Delmas.

Matilda: Yes.

Matilda: Okay.

Guillaume Delmas: Matilda good morning, good morning, all.

Guillaume Delmas: I've got two questions. The first one is on your China, North Asia and Oceania region.

Guillaume Delmas: You've been reporting now seven consecutive quarters of like for like sales growth in the high single digit percentages or even better.

This has been mostly fully mix led.

Guillaume Delmas: My question here is how long do you think you can sustain that run rates or or I guess, maybe to ask it differently I mean, what would cause a sudden deceleration given that you are seeing first signs of recovery in IMS, you've got plenty of new innovations, including neutral rates.

Guillaume Delmas: And it seems MISO has a very strong momentum so any color on the outlook for the region would be great.

Speaker Change: And then my second question is on European pricing, which was a negative territory in the quarter.

Speaker Change: And I guess, what I'm trying to get to his input.

Speaker Change: Input cost inflation seems to be returning.

Speaker Change: I mean, how confident are you that you will be able to implement new pricing actions late this year or early next year. Thank you very much.

Speaker Change: Yes, good morning Gill.

Speaker Change: First you are absolutely right that we are very.

Speaker Change: Really happy with the ongoing performance of our business in China, and North Asia and Oceania.

Speaker Change: I think what is reassuring.

Speaker Change: On the outlook of this region is the fact that we are not depending on one or two engines, but that all of our engines.

Speaker Change: Performing.

Speaker Change: Medical nutrition, which is benefiting as we all know from strong macro trends is winning.

Speaker Change: Market.

Speaker Change: Meson as you say is going from strength to strength and I think on IMF.

Speaker Change: New news is that we are seeing some first green shots on the category, which we have not seen for quite long, we are doing well in market shares as.

Speaker Change: As you said things to a lot of impactful innovations, but we also see that stage, one formula which is basically the entry formula for babies has started to turn green in Q3 of this year.

Too early to celebrate that this category is now stabilized and returned to growth, but it can give us confidence on our ability to perform in this category moving forward I made the comment on Japan, because Japan is also now delivering since many many quarters very strong growth.

Speaker Change: We have been putting new capacity in place in order to make sure that we can continuously and consistently deliver on it.

Speaker Change: So when it comes to the sustainability of our <unk>.

Ability to deliver sustainably dose quality resides we are quite confident obviously the name of the game is staying on the ball and executing is excellent and we know and the team just doing a very very good job.

Speaker Change: In Europe.

Speaker Change: Actually we're pretty happy with the results of Q3.

Speaker Change: Growing plus one 4% volume mix up plus two 4%, yes, we have been investing into.

Speaker Change: Into making the volumes more dynamic and it's working for us, which I believe is very good news.

Speaker Change: The acceleration of volume mix has actually led by ETP, which is on one side confirming that there is a growth category and secondly that we are making progress on our competitive.

Speaker Change: And so.

Speaker Change: I believe that moving forward, we stayed with the approach we had so far which is a consumer led pricing, which means that we're going to increase price.

Speaker Change: When we on the next round of negotiations, which will be early next year.

Speaker Change: The more differentiated product formats.

Speaker Change: High protein to name, while we do manage prices more smartly and promotions more smartly for the for the less differentiated products.

Speaker Change: I am confident that we are able to manage price in the height corridor.

Speaker Change: And then also convinced that mix can be protected, particularly strong driver of growth in the in Europe, and you think about the rollout of our high protein ranges, which is working very well when you think about the launch of our key field ranges. We just started when you think about the fact that.

Speaker Change: Way from home becomes a bigger and bigger.

Speaker Change: Part of our business, especially in Edp in Europe. All of this is coming with higher price points.

Speaker Change: And this is what we are focusing on to drive quality growth in Europe, and maybe a last comment sorry forgive the long is that you remember what we said at the CME in Amsterdam that we have still either capacity, especially in Europe, so bringing volumes back into our factories is obviously driving a disproportionate operating leverage so finding the right <unk>.

Speaker Change: Between volume mix and price was important and I believe that we are fully on track.

Speaker Change: Thank you very much.

Speaker Change: Thank you Liam.

Speaker Change: Question from Warren Ackerman badly.

Warren Ackerman: Yes. Good morning, everybody is Warren here at Barclays I've also got two.

Warren Ackerman: You have been can you maybe dig into.

Warren Ackerman: The U S edp performance in a bit more detail obviously the <unk>.

Warren Ackerman: Creations pace, which is doing well, but on the core the.

Core ADP looks like he has accelerated from Q2 into Q3, maybe what's your outlook.

Warren Ackerman: Into Q4 any update on the plant based in the U S.

Warren Ackerman: Phil.

Warren Ackerman: Do you still think you can keep growing double digit in coffee creation. So just the moving pieces.

Warren Ackerman: PC is around the U S would be would be Super and then secondly.

Warren Ackerman: Interested a little bit on your comments about disproportionate leverage from the volume.

You've said before Youre under utilized in.

Warren Ackerman: In factories in Europe, any kind of comments around that.

Warren Ackerman: Volume leverage that you're talking about through to margin and then sort of inter linked to that any comments around cogs.

Warren Ackerman: In our margins noticing for example, the milk prices are starting to.

Warren Ackerman: Comp just to kind of help us a little bit.

Thinking through the back half.

Warren Ackerman: Thanks.

Speaker Change: Yes, good morning, good morning Gordon.

Speaker Change: Very good results in North America actually.

Speaker Change: Stepping up further with a very good start of the year Q3, even with an even stronger performance.

Speaker Change: And you're absolutely right that coffee creamers is pulling a lot of that growth growing again double digit growing again competitive winning share in its market and what is the reassuring and comforting as this is not only linked to the innovations we have been putting into the market are easier, but that's also the core portfolio is winning.

Speaker Change: So we are quite confident that we have here really strong assets, which we cannot make grow in the coming quarters.

Speaker Change: What is truly accelerating as you walked you are absolutely right, we are pretty happy with our high protein range.

Cause Blake, but what we are seeing now that that also to remain as a part of our yogurt portfolio.

Speaker Change: Is getting into a better momentum, especially akiva within a category, which is very dynamic.

Speaker Change: <unk> way of yogurt in the U S is going very very fast consumers understand more and more that this is contributing to a healthy diet and so today, we are winning in that in that segment.

Speaker Change: Plant based we are we are still not where we want to be let's be very clear.

Speaker Change: We are working hard to get this.

Speaker Change: Part of our business back to solid growth I think the blueprint of <unk> in Europe.

Speaker Change: Very helpful for Us <unk>, who is now since the beginning of year accelerating very strong performance in Europe on the back of the fact that.

Speaker Change: That we have been investing in a very intentional manner.

Speaker Change: Into going into away from home, making our barista ranges more visible, but also have more occasion based approach with driving out on one side and element as the right.

Speaker Change: Ingredient with serious on the other side, that's working for us extremely well in Europe make that also had been in the same way in the in the U S and we know that's not that's not.

Speaker Change: Being sourced from one quarter to the next.

Speaker Change: But you would take the time to make it happen and are confident we can do so.

Speaker Change: When it comes to the volume leverage of Europe. This is very important as you say because we are still sitting on idle capacity, although we have been taking out some of it.

Speaker Change: Over the last over the last years and this is particularly true for yogurt.

Speaker Change: So far us getting our yogurt category in Europe back to growth and you saw the dynamics of the third quarter, which are really.

Speaker Change: Encouraging is important for us in a moment as you say that.

Speaker Change: Some of the commodity prices have probably touch the lowest points and so I can confirm what I told you three months ago.

We also see I would say.

Some inflation on our material cost moving forward, so having the right balance between driving strong volume and mix maintaining the pricing within the REIT corridor getting the volume leverage while delivering strong productivity moving forward will be for us the recipe.

Speaker Change: To continue increasing our gross margins for Europe and for the company and we are beyond trachea.

Speaker Change: Okay.

Speaker Change: Thank you next question from Citibank.

Speaker Change: P Morgan.

Speaker Change: Alright, good morning.

Speaker Change: My first question and I'm, sorry, if I missed if you've already answered that would be on them.

Speaker Change: On the understanding.

Speaker Change: The pricing dynamic in Europe.

Speaker Change: In China, because those are two regions where pricing sequentially weekend.

Speaker Change: If you could talk.

Speaker Change: Took about those too.

Speaker Change: <unk>.

Speaker Change: And in terms of whether you expect this to continue or whether that would be the western temporary issues.

Speaker Change: Then my second point, which may be a follow up on the same subject.

Speaker Change: In terms of cost inflation can you remind us what you expect for the full year.

Speaker Change: And whether this has changed and what you think 2025 stripping Lake and at BTT, you may have to raise prices.

Speaker Change: Developed market and we heard from one of your competitor.

And when they tried to raise prices that got delisted.

<unk> been more challenging.

Speaker Change: Yes, good morning Luke.

Speaker Change: When we look at pricing of the third quarter at company level, plus 0.7%, we clearly see that we are back to a more normalized level.

Speaker Change: As I said three months ago is that we were confident to remain positive in terms of pricing for the company and I confirm what I said.

Speaker Change: Double click on Europe and China.

Speaker Change: China you saw that we are we are growing very fast in volume mix actually in double digit territory that pricing is negative at minus 2% and this is mainly to be attribute to our IMS business.

Speaker Change: He has a very strong correlation between strong volume mix effect and is temporary negative price we have been launching a number of new skus as you know in this category each of them at a higher price point compared to previous average those innovations and <unk> been talking a lot about incentives have actually good.

Speaker Change: Start with a very good start and are driving significant positive mixed into our results. While the stimulation of these demands made some investments necessary to get the right distribution in both the offline and online shares. So this is a temporary element and you will see that our pricing the normalize as we go over the next.

Speaker Change: Quarters.

Speaker Change: In Europe have been talking about that we have been investing I would say selectively into pricing, where we thought it's important in order to get the right volume dynamics. This is not about one country or one category, it's spreads spreads a bit across everywhere. We are we believe that we are a bit less deferred.

<unk>.

Speaker Change: <unk> been investing and the good news is that volumes are reacting to it to reassure you on what's in front of us for your pricing, while realistically speaking price will not be a major driver of growth for you over the coming quarters, if it needs to become a major drag on our reported performance there.

Speaker Change: So we are we're looking this confidence into that.

Speaker Change: Okay.

Speaker Change: Thank you next question from Savi <unk>.

Speaker Change: Oh, sorry.

Speaker Change: On the cost side, saying no actually no change vis vis what we discussed at each one.

Speaker Change: This year, some inflation and I would say normalized normalized level driven by.

Speaker Change: Mig and some mix ingredients driven by labor cost and transportation.

Speaker Change: Some volatility but.

Speaker Change: No real change vis vis what we have been discussing which means and coming back to the pricing points. What we will do moving forward is to stay with our consumer led pricing approach increasing prices, where we have a very strongly differentiated.

Speaker Change: Our portfolio and staying a bit more cautious whether it is not the case.

Speaker Change: Okay.

Speaker Change: Thank you Sydney.

Speaker Change: Next question from Charlie It's Dan.

Speaker Change: Yes, good morning, good materials have been paid.

Speaker Change: My first one is just on the guidance reiteration. This year I know you've been clear about reinvesting margin upside behind the top line growth.

Speaker Change: China and specialized nutrition.

Speaker Change: So well.

Speaker Change: Say Edp Europe, why why would you not perhaps raise the full year guidance or should we read this.

Speaker Change: There'll be greater marketing investment at age two along with some of the negative pricing we seem to spool up.

Speaker Change: Client growth. That's my first question and then the second one was just on Edp Europe.

Speaker Change: Could you maybe just give an update on activity or what youre seeing there in the market and how some of your recent focuses on gut health and fiber optical Mike. Thank you.

Speaker Change: Yeah, Good morning, Charlie.

Speaker Change: On the guidance look we have not been delivering three good quarters in year 2020 for each of them at the onset of plus 4% with actually a good mix as you as you are saying what is very important for us is to build a sustainable growth path.

We have been discussing in the capital market even in Amsterdam.

Speaker Change: Want to invest into true category leadership.

Speaker Change: When you look today at our categories. They are performing extremely well and performing better than the average of the food and beverage market.

Speaker Change: It is because those are categories.

Speaker Change: Which are invested into and they are invested into by us as a category leader in many of the regions. We are operating.

Speaker Change: When you look at the results of China, because you were mentioning China, China is performing very well, but also because we are investing into this growth and this is our intention moving forward. This is why we are to date confirming the guidance in terms of growth, but also in terms of moderate margin progression for the year 2024.

Speaker Change: Very clear positioning on health benefits is working for us it's working for us in Europe as well as in North America, and you will see that moving forward, we will be even more clear on the benefits and the claims of this great brand. This brand has a fantastic potential we have been creating the conditions.

Speaker Change: <unk> over the last two years to go back to growth and we are seeing it sequentially getting into our results. So we are confident on that path.

Speaker Change: Thank you.

Speaker Change: I think this was the last question. So thanks, Jason for your question and your interest.

Speaker Change: Thank you very much guys have a good day talk soon bye bye.

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