On Thursday, Unilever PLC ADR (NYSE:UL) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Market Growth and Guidance
Celine Pannuti – JP Morgan: My first question is on your guidance growing faster than the market and if I remember well at the beginning of the year you were saying that you’re expecting total market of 4% to 5% and that should grow ahead of that market. Given what you said in the context of weakening consumer confidence and macro point, do you still feel confident with that 4% to 5% outlook for the market? Then my second question is on Latin America, which has been a very strong in the quarter and yet you were as well mentioning that the economy itself is weakening. So could you give us a bit of an understanding of what (will) continue to do well? Is the consumer still happy buying staples in this emerging market?
Paul Polman – CEO: Let me call quickly through them. The 4% to 5% market growth, I still think we can stay ahead of the market. What you will see over the second half is probably slightly different mix as we’ve said before between volume and pricing, but the gross rates should continue to be ahead of the market. But the stronger and stronger innovations that we have under new brand expansions, I don’t want to compromise on that. As far as Latin America, it is challenging because we see a situation in Venezuela that certainly isn’t getting easier. We see a situation in Argentina that is fairly difficult, and we have a deodorant factory there, difficult to import things, export things. So it’s disrupting a little bit of our supply. But we’re confident, despite the very competitive situations in both Brazil and Mexico also on the competitive front, we’ve invested. I gave you the example of TRESemme. We have some other wonderful innovations in these markets and not surprisingly they are putting in double-digit return and as you know, at the end the day in Latin America, if you will, in Brazil and Mexico you (NYSE:SAW) the bulk of the challenge there. So I feel confident that on both of these we will not disappoint you as we faced the next six months of this year.
Celine Pannuti – JP Morgan: But just to comeback on Latin America where the pricing component remains high. Should we expect that to continue or we’ll see that…
Paul Polman – CEO: No, you shouldn’t expect to see that continue, but easing off a little bit. There is obviously a carry-forward effect that you have to take into account. But contrary to what some people always thought on do we have pricing power and this and that, we actually have pricing in the quarter again and (we’re) pricing over to six months. If you see a reais devaluing, the way we’ve seen it in Brazil, we unfortunately have to put it into pricing. We don’t see any other option. So depending on what happens moving forward, you have the carryover effects of that for sure, but it should ease a little bit on the year-to-year comparison.
Volume Growth Trends
Marco Gulpers – ING: I wonder if you can talk a bit more on the volume growth trends. You mentioned in developing market they are still negative. Could you tell us a bit more on the trends that you are witnessing in the markets quarter-on-quarter and what you expect from volumes for the second half of the year? The second question is on your excellent performance in Personal Care compared to your, let’s say, more challenging performance in Refreshments. What are, let’s say, your expectations for the second half of the year in Refreshments in tea and ice cream?
Paul Polman – CEO: Yeah, Marco very quickly, our quarter-to-quarter performance is definitely better than the Dutch Soccer team, but we like to look at it on the six months basis. What we see, obviously, is that the volume in the markets in total are under pressure a little bit. In the emerging market it is because of pricing that we need do behind the weakening currencies, often you need to compare the currency cost in dollar. So that’s often a double hit in these countries, and there is volume slowdown. In Europe, I don’t have to talk to you about that, that’s a continuous saga. The way we compensate for that is, as you’ve seen in the results our A&P is up again. Our innovations are getting stronger. We’re doing these white space launches. Just take the last six months alone, launches of Clear in the U.S. or Simple in the U.S., our Dove in the Philippines, our TRESemme in Brazil and I could go on, Magnum in two or three places. These are big launches that are really starting to kick in now to help us stay ahead of that curve. So we don’t need to compromise on that. If you go to the second part of your question, which is equally important on Refreshments, I think Kevin Havelock and his team had done an outstanding job in that category. As you know, Refreshments now comprises a tea and ice cream, and here again we’re starting to see the benefits of our new organizational structure by putting it together a lot of consumer commonalities around the few goods about the technology, the texture, the mouth-feel, the flavor technology. Also the way we go to market in the out-of-home, it’s starting to kick in for us and we’re starting to see the benefits once more of this new organizational structure. But even if you peel the onion and, frankly, and you know I’m not a guy that likes to use excuses, but we’ve had a lousy six months on the weather. If you are in the ice cream business, you ought to be worried when it just pours down for six months and when you have the wettest spring in living memory and yet our total ice cream business over the first half is up over 6%. If the second half, the weather turns a little bit positive for us, we’d be very happy. On tea, we actually see the economic climate resulting in people down-trading a little bit to the more (Brooke) tea, which is obviously a value loss. We don’t like that but that is the reality. But here again, if you look at the last 12 weeks, we’re actually starting to grow share. Tea is mixed picture and I’ve always said that I’ve been very straight about that. We need to do better on tea. We’re now launching in the U.S., the new Honey (indiscernible) which is doing extremely well, that’s the first time in years that we’re starting to invest in the Lipton brand in the U.S. We’re doing the same now in some other places in the world and I think I would put it this way, I would be disappointed if we don’t start to show better numbers on that front as well, but the overall refreshment category is actually reasonably good performance if you look at that, given the environment that we were facing.
Marco Gulpers – ING: Maybe one final question, if I may. It’s regarding the cost savings delivery. You basically highlighted for the full year you expect more or less in line with 2011. Could you help us out whether there will be some phasing in the first half versus the second half in terms of realization of those cost savings?
Jean-Marc Huet – CFO: Unfortunately, this is my first question, the answer is we’re not going to give you that type of disclosure between first and half. The only view that we give in terms of phasing first half and second half is that of all the commodity cost inflation, it’s more weighted to first and the second half. So that’s the only type of guidance that we give between the two halves.