On Friday, Nestle SA ADR (OTC:NSRGY.PK) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what the C-suite revealed.
Warren Ackerman – Societe Generale: A couple of questions. The first one is I appreciate it’s not easy, but I was just wondering whether you’re able to give us a feel for the group impact on organic growth of the leap year, also the early Easter, which you touched on in your confectionery commentary. I was wondering whether you can kind of (accredite) both of those impacts up at the group level that would be really useful. The second one is the M&A line was higher than consensus, quite a little higher than consensus mainly due to in Yinlu and Hsu Fu Chi. Just wondering how big pro forma will China be after those acquisitions. It looks like it’s going to be maybe a doubling of your Chinese business. Are you able to talk about how those acquisitions will impact your capabilities generally in China?
Roddy Child-Villiers – Head of IR: On the Q1 impact, I think as you say it’s a quite difficult question. I think we need to start with 2011 and of course back in 2011 we had the Arab Spring, we had the tsunami in Japan, we had some customers buying in ahead of price increases. On the other hand, we didn’t have an Easter. So, there are whole number of things went on in Q1 last year that are quite different from Q1 this year. This year, as you say we have the leap year, we did have the Easter. We didn’t have customers buying in ahead of price increases, but we did have some disruption of customers in Europe around price negotiations. So, there is a whole bunch of moving pieces in both quarters, and we haven’t attempted to try to sort of aggregate out what that would mean in terms of basis points. I mean clearly you can do the leap year and ask yourself, it’s about 1% simplistically, but there is a bunch of other stuff in there as well. So, I’m not sure, it’s hugely Meaningful to do it. We haven’t done it. On the M&A side, I guess, the reason that the M&A number has come out higher than consensus is because the Chinese businesses – perhaps the Chinese businesses, the partnerships that we signed at the end of last year are probably growing faster than people imagined. Remember, that there is no RIG or organic growth in these acquisitions. It’s all included in the acquisition number. In terms of the impact of this businesses on China, where it is very early days and I mean, clearly, the SBU heads have been out there, there they met the businesses, they’ve talked about what we can bring in terms of marketing expertise, equally they are keen to learn from the Chinese businesses about their capabilities. You ask about capabilities, we are very excited in particular about, Hsu Fu Chi’s distribution capabilities into retail. Also Yinlu’s aseptic packaging capabilities, which are as good as anything we’ve seen anywhere in the world. So they are certainly bringing a lot to us in terms of capabilities and that’s one of the reasons that they are so attractive apart from obviously the categories that they are in. Of course, the other thing that we are excited about is that takes us into local Chinese diets rather than just more European-focused business. I may be reluctant to give a sort of pro forma Chinese number for the current year, but I mean it’s clearly going to be somewhere around 4% to 5% of sales. So the Chinese business is quite material, which actually reminds me that when it comes to the 2013 Q1, you’re not only going to have the Easter and the leap year, in fact, we’re also going to have the Chinese New Year impact, because Chinese New Year is the preseason for Hsu Fu Chi. So the key one in 2013 and thereafter is going to be a pretty poor guide I think to the underlying trends in the business.
Warren Ackerman – Societe Generale: Roddy, just in terms of the point of clarification, you said something at the beginning of your speech about the raw material issues been a bit of a lag. I was just wondering whether there was a bit of a message in there the margin delivery will therefore be maybe a bit more H2 weighted compared to H1.
Roddy Child-Villiers – Head of IR: Well, Warren, there is always a message. There is always a message and that’s a good read through yeah.
Jon Cox – Kepler: Good set of figures there probably much better than everybody expected. But just to come back to this Easter issue. It looks like you are a bit reluctant to talk about an overall impact, but just wondering on the confectionery specifically, due you think maybe add it maybe a point to organic growth and as a result maybe a point less organic growth in confectionary in Q2. That’s the first question. Second question, just on the sort of coffee generally in the system business, this is a tremendously important for you in terms of Nespresso and the Dolce Gusto (maybe). I wondered if you a), could actually just mention something about Dolce Gusto have the trends out there, but also wondering if you’ve seen anything that worries you from a competition perspective, given the fact that there seems to be a lot competitors getting into it and trying to obviously grab some that fast growing market. Is there anything that gives you cause for concern or are you pretty relaxed for the time being?
Roddy Child-Villiers – Head of IR: You are probably broadly right on your Easter assumption, but again there are a lot of moving parts, evening confectionery. On the coffee business, while we continued to see a very good development of both the Dolce Gusto and the Nespresso, retail system and as I said also with the Nestle professional, with their systems, so that broad business segment continues to be a key growth driver. You talk about new entrants into the market. I think at this stage, the new entrants are still actually talking about it rather than doing it, but it’s clearly something that’s coming. No we’re not relaxed. We’re never relaxed. We are very focused on ensuring that we are doing all the right things to continue to drive the business forward as successfully as we have been doing so far. So we’re saying not relaxed. The other business – I mean there is not much more to say about it. I mean Dolce Gusto continues to build on its presence. It’s now in nearly 60 markets, growth is – I mean organic growth is lower than it was last year, but it’s coming from much bigger base so that’s why it is surprising and it’s still the fastest growing big brand that we have I guess by a fair way. As I said earlier, our Nespresso is performing very well.