Nestle 2Q15 Earnings Call Notes

Environment across EMENA remains volatile

“The environment across the Zone remains volatile, with inflationary conditions in certain European markets — Eastern European markets, leading to price increases and volume pressure. On the other hand, in many parts of Western Europe, our organic growth was mainly driven by volume, as pricing was negative in a deflationary environment. Additionally, political and economic uncertainties in parts of Eastern Europe and Middle East were also challenging. In that context, EMENA’s results were strong in the first half of the year. ”

China is difficult as you all know

“Let’s move to China now. The overall economic situation is difficult and I’m sure that you have read and seen that as well. That also impacts our business there. Nevertheless, we continued our efforts to update our portfolio in line with fast changing consumer expectations.”

The environment in China is very volatile right now

“Regarding China, we are experiencing an interesting growth. Actually, if you look at the last three months we were having mid-single-digit growth in China, which is good, which is satisfactory. And there, once again, we see an improvement, which we are very pleased with, post cleaning of some inventory issues. So we are pleased with that. That being said, I want to be careful. As you saw and as you read and as you heard over the last couple of days, there is a lot of volatility today in China. So we are satisfied with what we have seen and the turnaround that we see in China. That being said, we are very careful about the outlook, given the volatile trading environment.”

Pricing is a local decision

“we are operating in an environment where we’ve got places around the world with deflationary conditions. We’ve got places with inflationary conditions. And this is also why we always say pricing is a local decision is because we have to act within the local conditions. We have to act within the local strength of our brand, within actions of our competitors, within the strategies of the retailers as well. So, there are many components that go into pricing.”