Steve Cahillane: No, I wouldn’t say you’d see pricing down. I think you just see a return to quality merchandising off of what are inescapably higher list prices. And so that’s really the dynamic that you’ll see.
Alexia Howard: Great. Thank you very much. That’s clear. And then on the leverage, it looks as though your leverage is fairly comfortable at the moment, probably around 2.4, 2.5x if — at $600 million on with W.K. Kellogg. How does that mean you make or where does that put you in terms of M&A aspirations, particularly on the acquisition side? And if you were thinking about further deals, which geographies and what type of criteria would you be thinking about on that front?
Amit Banati: Yes. So firstly, I think, we like the organic opportunity that’s in front of us. And I think despite the short-term volume discussion, right, I think the growth potential of our portfolio is strong. We’ve got plenty of organic growth opportunities. I think from a capital allocation standpoint, prioritizing investments into the organic opportunity, particularly in capacity expansion in Pringles in emerging markets, is kind of the immediate priority. We’d always evaluate M&A opportunities, I think largely in the areas of snacking and emerging markets. So if something — we run a very disciplined process, and so we continue to evaluate opportunities come.
Alexia Howard: Great. Thank you very much. I will pass it on.
Operator: Thank you. Our next question comes from Robert Dickerson of Jefferies. Your line is now open. Please go ahead.
Robert Dickerson: Hi. Great. Thanks so much. Steve, I just wanted to ask about the — some of the volume impacts around — I think you said some changes to price pack architecture and also SKU rationalization. So maybe if you could just kind of dive into that, just a little bit more in detail. I’m not sure if that’s kind of across the overall global portfolio or if it’s more North America-based and kind of what’s driving that rationalization in the near-term. And then, I guess, as we think about next year, is it — yes, we have this better base with rationalization fully coming through in 2023, and we should be able to end that by the end of this year, which, therefore, allows us some higher probability volume growth next year? Thanks.
Steven Cahillane: Yes. So a couple of things, Rob. First, the biggest impact was in Latin America, where we made very purposeful SKU reductions, price package architecture to improve profitability. And we’re very pleased with the program and how that worked out. In North America, there’s also elements. We’ve gotten out of some lower-margin cracker business, for example. We did rationalize SKUs when we had severe shortages and bottlenecks and — last year to get better performance in the plants. And so we’ll be lapping that. But biggest headline is definitely Latin America followed North America.
Robert Dickerson: Okay. All right. Fair enough. And then just secondly, kind of quickly, on the pricing side. Pricing clearly is still part of the top-line. I think Alexia said, I’m not sure exactly how many rounds have gone in and kind of what time on a per segment basis. But as we think through into 2024 – excuse me, and may be this pertains a little bit more to some of the emerging markets, do you foresee kind of incremental pricing needs? Doesn’t sound like that’s something many of us are discussing at this point. But like, when I look at AMEA, kind of pricing relative to currency, maybe there are some opportunities. Maybe there can be some incremental pricing potential in certain geographies. Thanks.
Steve Cahillane: Yes. I’d say a couple of things. First, in the developed markets, we’re looking at a more benign inflationary environment going forward. And we certainly feel like the consumer has taken enough pricing and are working hard to mitigate any potential needs to take more pricing going forward. And again, returning to quality merchandising means promotional activity and benefits to the consumer. In the emerging markets, generally, every year, we’re going to be taking pricing. Whether that’d be currency, whether that’d be inflation, just cost of doing business, that’s fairly routine. And we see the same thing happening in our emerging markets for next year, although not to the same levels that we’ve seen over the course of the last two years.
And we’ll exercise all the RGM levers that we have in those emerging markets to maintain affordability, to maintain — in the shopping baskets of our consumers in the emerging markets. But it’s more of a — I would say, a more normalized environment in emerging markets relative to the past two years. But that doesn’t mean deflationary and it doesn’t mean flat. It means just more measured price increases going forward.
Robert Dickerson: All right. Great. Make sense. Thank you.
John Renwick: And we may have time for one last question, if it’s there.
Operator: Thank you. Our next question comes from Steve Powers of Deutsche Bank. Your line is now open. Please go ahead.
Steve Powers: Okay. Great. Maybe just a pick up on that last question from Rob, specific to AMEA. For a while, pricing was running well above the currency headwinds. So, you were seeing double-digit US dollar growth. Now pricing is running below. So you’re seeing the double-digit organic growth, but you’re seeing kind of double-digit declines in US dollars. So could you frame for us what’s going on there? Maybe give us a little bit more of a tutorial around sort of timing of when pricing has been or can be taken in that market relative to currency fluctuations? And then just how you — net of all that, how you’re thinking about kind of real growth in that market in dollar terms over time? Thank you.
Amit Banati : Yes. So I think the easiest way to think about it is there’s a lag between the devaluation that happens on an operating transaction basis and when the official rate moved. But we’ve been seeing the devaluation of the naira on the ground from an operating basis all the way through 2022, first half of 2023 and have been taking pricing to cover that. And I think the business has done a remarkable job taking multiple rounds of price. And the great news, and it’s a testament just to the strength of our brand and our route to market, that despite the pricing that we’ve taken, volumes have held up and our shares have held up. So that’s been happening. And like you said, we’ve been seeing that come through with elevated growth rates through 2022 into the first half of 2023.
Then you have the devaluation that happened in the last quarter. And so the transaction and the translation have gotten more in sync as a result of that. And so that’s why now you’re seeing a bit of a lag. I mean the business continues to be growing at double-digit rates and we continue to take pricing, but there is a lag that’s kind of flowing in, in the way it’s go through in the P&L. But I think from an overall standpoint, a strong route to market, taking the pricing to cover our margins through this whole cycle, we protected our margins. And that’s been the focus of the team, and we’ve done that volumes of hand.
Steve Powers : Okay, okay. That’s great. And just real quick, you talked about similar currency headwinds in the fourth quarter relative to the third quarter. So we take that to mean around about like a $0.04 drag on EPS from FX?
Amit Banati : Well, EPS has been — it’s been a help to EPS. That’s the reference there was from a top line standpoint, about a 3% drag the top line growth. EPS was actually positive in the — in quarter three, right? And so — yes. But I think from a top line standpoint, about a 3% hit to the top line. And from an EPS, I’d say, using the exchange that we have, probably flattish. So much more impact on the top line than the EPS.
Steve Powers : Understood. Thank you very much.
John Renwick: Okay. Operator, we are at time. So thank you, everyone, for your interest. And please do not hesitate to call if you do have follow-up questions.
Operator: Thank you for joining today’s call. You may now disconnect your lines.
