Transcript of Q1 results video

Behind the heavy input costs, pricing is up 6.8% but, unfortunately, volume is still down 1.8%. I call that solid or encouraging if I compare that with our competitive set. Some are better than us, some are worse. We’re sort of in the middle of the pack and I think we’re starting to see the first signs of the changes we’ve made to both our portfolio and our organisational changes.

I’m encouraged with the volume progress. Although volume in the quarter is still down in total, we’ve had some encouraging signs. Where we can reach shares, like Europe and the US, we’re actually seeing shares move up again. In fact, the US was better than last quarter and had positive share growth. We’ve also focused, as a first priority, on our €13 billion brands that we call them; those are the brands that have more than €1 billion or more in turnover. They’re actually growing faster than the company as a whole and that’s encouraging as well.

Then, last but not least, if I look by month at the quarter volume trends, we actually see the volumes moving up month after month. You look at the operating margin, although we’re reporting 30 basis points decline, if I correct for the disposals last year, we’re more or less flat; and then if I look at cash flow, it’s actually positive on the quarter behind some good work, the organisation has done in working capital, especially the cash conversion cycle.

Well, I would describe the economic environment as still being very tough. In this environment it is very important, if we want to get our volume back, that we continue to focus on innovations, invest behind that with our A&P, and obviously, last but not least, invest in our people and in our organisation and that’s what we keep focused on.

Well, I think one of the reasons why we see our volumes going up month after month is actually that our innovations are getting stronger. We’ve looked at the average innovations that we had last year and the incremental turnover was about €15 million. Now we’re looking at innovations and quite a lot of them where the incremental turnover is €50 million or more.

At the same time as our initiatives are getting more robust, I’m also very encouraged by how quickly we’re now addressing, via what we call the 30 day plans, our problem cells. These are businesses in specific countries where we’ve seen our share go down over a prolonged period of time and, also, here, I believe that we’re getting better and faster to address these issues.

As we’ve talked before in this environment, driving non-value-added costs out of the system is more important than ever so focus on cost is tremendous. Here, again, we’re making good progress towards our cost targets. As you know, we’ve also pulled forward some of our restructuring efforts and, equally, we’re seeing our working capital – especially our cash conversion cycle – moving in the right direction. Having said that, we have some headwind on the currencies which in many places are turning against us so we need to keep the pressure on cost to ensure that we stay competitive and that, hopefully, will allow us also to support our brands and innovations at competitive levels.

We’ve done a tremendous job in changing our portfolio over the last decade; the last few years under Patrick we changed the organisational structure and, I think, now the bigger challenge is to continue to evolve our culture to stay competitive in this environment. What does that mean? That means making the organisation increasingly more customer/consumer-focused, getting our bias for action, like the 30 day plans, and driving accountability responsibility. So I feel that we’ve made significant progress in this area and we’ll continue to do so.