Operator: [Operator Instructions] Our next question comes from David Green from Boldhaven.
David Green: Yes, sorry, thanks for that. A couple of just the quick questions around comments on improving customer order patterns that you’re seeing in F&E and some early signs in color would just be great if you could give us any more sort of detail on that. And I guess I’m sort of a broader question around what the shape of recovery looks like. Do you see sort of volume rebounds happening quite quickly post the end of a destock? Or do you think it’s going to be a slightly more measured bounce back in volumes before sort of getting back up to historic level?
Paul Manning: Okay. So, the first part about customer order patterns, yes, I don’t want to give you a, it depends because I think you need something a little bit more pragmatic than that. So, here’s the pragmatic version of this. Customer order patterns are improving in flavors. Going back to my comments about shelf life and there’s only so much more you can possibly do. But I think most of our customers in the flavor side of the business are at much more normalized level. Yes, there’s little pockets here or there. But in general, I see an improving picture in flavors, which I think will culminate to a pretty good start to the year in 2024. And so, I would not be surprised if we had volume growth beginning in the early part of 2024.
There’ll be a little bit of pricing, but I think that one plays out pretty well. Now, food colors, which again, trailed flavors, but it has been probably a bigger impact in terms of the customer’s activity. There again, we’ll feel another big destocking in Q4. But I think that will largely swing a little bit faster than flavors. Flavors, it was kind of elongated. It was kind of a 12 plus month destocking effort at a number of our customers. I think the color one will be a little bit shorter than that. And so I could see in the early part of 2024 as well, volume returning to the color group just simply based on that reduction in destocking. Now, the other piece, though, the big piece that’s going to really drive the volume is the new win rate.
That, beyond any other factor, after destocking goes away, is going to be the winning outcome here. So as revenue and volume recover, right. Revenue gets fixed first, and then operating profit lags that, as you know, because we have inventory, we have fixed costs, and these things are the timing of when operating profit recovers is not precisely aligned to revenue. And so you’ll see the revenue and volume improve first, and then you’ll see operating profit improving, and therefore EPS and the company improving. So that’s kind of how I would anticipate it. If the market volumes return from a negative picture to a more neutral or slightly positive like we’re seeing in Europe, that’s a real good thing, but I can’t predict when that will be. I can hope, and I’m hoping right now it’s Q1, but I think that the sense that we get from our customers is 2023 is a transition year.
It’s kind of a clear the deck, folks, and let’s kind of start anew on January 1st, and that feels very much like what we’re seeing. Nevertheless, destocking is not a perfect science. It’s kind of an unprecedented thing. We haven’t done this kind of thing in the food industry. I don’t know, in my lifetime in the food industry, I can’t speak to before that, but this is a pretty unprecedented thing. And so customers may not hit that perfectly, and we see signs of that. We’ve been getting more urgent orders. Hey, I need a bunch of stuff, because maybe they got a little bit too aggressive on destocking in some cases. That has been a little bit of a factor in some pockets. But the other thing, too, is when your service levels are good, like ours are, you start to get shorter lead times from your customers, which makes forecasting a little bit more problematic in these out months.
