Operator: Ladies and gentlemen, please stand by. Your conference will resume momentarily. Again, ladies and gentlemen, please continue to hold. Your conference will resume momentarily. Ladies and gentlemen, please continue to hold. Your conference will resume momentarily. Thank you. You may resume your conference. Gabe, please repeat your question.
Daniel Fisher: Yeah. Gabe, I think I’ve got it, sorry.
Gabe Hajde: No, I don’t think anyone else wants to hear from you.
Daniel Fisher: Let me start with South America. No, we should see an inflection in earnings year-over-year. Some of the factoring that we’re retiring will help contribute to that. And we will see earnings growth off of the volume growth. And so, it will more or less mirror 2X the volume growth. It may come in a different form via AR factoring retirement and some interest expense being retired within our SG&A bucket. But it will — if we grow 5%, we should grow close to 10% earnings in that range. We’ll have mixed that a lot of said it country to country, but we have mechanisms to — continue to inflect profitably on that growth, which we’re encouraged by. And then your other question, I said the bridge, let me help you with some bridge items in North America.
I think there’s one piece that you didn’t cover, which is in the first quarter. And Howard made this in his opening comments. The VP Fp&A [ph], you got $30 million. There’s a like amount associated with the brand disruption. So, the unit volume we sold and the absorption we got from that brand that had the marketing issue in April is a like amount. So it’s closer to $60 million in the first quarter in North America. You will get the PPI benefits and the other things I think the way you laid out, it was in a very constructive manner. And we’re not anticipating anything inflecting mid-year. Right now, I think if PPI — excuse me — if inflation continues to be in a moderated position, it won’t be a plus or minus like we’ve been talking about here the last two and a half, three years.
I think it’ll be more or less, we can offset whatever inflationary pickup via productivity gains. So, it won’t be a bridge item, but you’re right. We have to carry-in for the first six months. You’ve identified it correctly in terms of the quarter capture on the numbers. But the only thing that I would call out is the additional $30 million disruption probably from the brand issue in Q1.
Gabe Hajde: Thank you for that, Dan.
Daniel Fisher: Yeah.
Operator: [Operator Instructions] Our next question comes from the line of Jeff Zekauskas with JP Morgan. Please proceed with your question.
Jeffrey Zekauskas: Thanks very much.
Daniel Fisher: Sure, Jeff.
Jeffrey Zekauskas: It’s been reported in the press that Carrefour, the French retailer, is pushing back against Pepsi because Pepsi wanted to increase prices, I don’t know, 7% for 2024. And so what Carrefour is doing is moving away from Pepsi products across the board. When you see something like that, do you think that the consumer products companies may be following different strategies and different geographies? And do you see that as a sign that there’s still an emphasis on increasing prices by the consumer products companies for next year?
Daniel Fisher: Yeah. Good question. So, it’s not just Carrefour. It’s all throughout Europe. Europe is much more regulated on price increases. So by virtue of that, what you can do in North America and what you can do in Europe are vastly different. But what is happening is the retailers are moving very aggressive against brands that are contemplating price increases in Europe. And that disruption is a positive thing for us. In North America, it’s also happening not as publicly. But I do think in North America, the brands have much more power in terms of their ability to price. And that’s something that they’re able to leverage, but they still have to have volume growth, and volume declined in the fourth quarter for a lot of those major brands at the end of the — in Q3 in a manner in which everyone’s going to have to take a different and a more historical approach to pricing.
Volume is going to have to show up. And I think that’s what the reaction has been in Europe in a really pronounced way because their inflationary pressures because the energy concerns have been much more present. And I think that’s something that is regulated and it’s also something where end consumers have really fallen off in terms of volume purchases in the fourth quarter. So hopefully that helps. But yes, different behavioral patterns in North America and Europe. It’s always been that way. But I do think the aggressive nature of the retail sentiment now in Europe probably lends itself to a better outlook for us in terms of volume.
Jeffrey Zekauskas: So would that mean that your better outcome for volume in Europe is more of a 2025 event rather than a 2024 event?
Daniel Fisher: No, I think what we’re pointing to — so this is something that we were seeing in the fourth quarter. It’s newsworthy now, but this is not something that would alter, I think, our outlook quite yet. I think what’s more important is like the regasification and the inflationary pressures that folks are experiencing in the end consumer across Europe. That will be more important than I think this retail issue of 5% price versus 7%, 3%, something along that nature. So, we do believe that there’ll be sequential volume improvement in Europe and it will inflect to kind of a low to mid single digit number kind of in that 3%-ish range for growth in Europe in our business. And that’ll be stronger toward the back end of the year. And then to your point, yes, 2025 will be stronger even more.
Jeffrey Zekauskas: Okay. Great. Thank you so much.
Daniel Fisher: Thank you. And Christina, we’ll take one more question.
Operator: Thank you. Mr. Fisher, we actually have no further questions at this time.
End of Q&A:
Daniel Fisher: Okay. Thanks everybody. And we’ll hopefully see most of you at the Investor Day here in June. Thanks very much.
Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
