Andre Schulten: Right, we’re contributing. There we go. Just last point on PHC, if you look at the share development in every treatment area that we cover in PHC, we’re up in share. In every treatment area, we’re up in organic sales across regions. So again, it’s purely a seasonal element. On distribution, Andrea, I won’t give you an answer other than obviously driving innovation, driving incremental sales for our retail partners, driving category growth helps with their desire to have our brands present on their shelves.
Operator: The next question comes from Peter Grom of UBS. Please go ahead.
Peter Grom: Thanks, operator, and good morning, everyone. So, I know you maintained your commodity outlook this morning, but just given the first half performance, the outlook does not embed as much of a tailwind from here, which you alluded to Andre, but can you maybe just unpack what you’re seeing across your key cost buckets? Where are things getting better? Where are things getting worse? And maybe just based on current spot rates, how should we think about the phasing? Would you expect deflation in both 3Q and 4Q, or is there any potential for cost to become a headwind as we exit the year? Thanks.
Andre Schulten: Hi, Peter. The commodity basket is wide, complex, and changing very quickly. So the best guess we have is what we told you, $800 million of tailwind for the year, which the majority of which has been flown through the P&L in the front half. What I’ll leave you with, I don’t expect any headwind from commodity in the second half. It continues to be a tailwind. The second thought I’ll leave you with, is the impact on the P&L given the time it takes for commodity changes to flow through our contract structures and our own variance holding policy, make the time lag significant. So, even if we saw significant volatility on commodity spot prices, the impact on the fiscal will decrease over time simply, because of those two dynamics. But continue to expect tailwinds just less than you saw in half one.
Operator: The next question comes from Jason English of Goldman Sachs. Please go ahead.
Jason English: Hi, good morning, folks. Thanks for slotting me in and yes belated Happy New Year to you all. A couple questions. We’ve talked a few times about the North America volume strength. I had in my notes that you’re lapping some under-shipment that should have been a couple-point benefit to this quarter, yet I don’t think you’ve mentioned it so far. So, A) am I wrong was there not a sizable benefit this quarter? And then it’s encouraging to hear the confidence that you’re expressing around – sort of sounds like an imminent improvement in SK-II, with words like recovery and improvement throughout the back half. With the decline sort of half related to Japan boycotts and half related to market conditions, where are you seeing the improvement? Is that dissipating concerns around Japanese brands, or are you actually seeing improvement in market conditions? Thank you.
Andre Schulten: So the volume – we don’t see a transitory effect on the volume side Jason, good morning first of all. So the base, there is always some base volatility if you know in terms of inventories, in terms of our ability to ship, but there is no material impact that I would call out that would have to be taken into account, if you look at the U.S. volume results. So nothing there. The SK-II improvement again, I want to pace expectations, but the improvement is really in the consumer sentiment that we’re seeing, where we had very high social media coverage in quarter one, leading to negative sentiment and negative top-of-mind awareness of the brand, that is now dying down and honestly most consumers have gone back, to a neutral position, open to SK-II.
And so, what we’re doing is really doubling down with innovation and doubling down with communication on the efficacy, the quality of the product, the quality of the brand and leveraging the most loyal and passionate consumer group to help us make the case for SK-II, which we believe will help us improve run rates in the second half. The market dynamics, we continue to see bumpy, even over the next quarters improving, but there will be volatility there.
Jon Moeller: It’s just an end of one, Jason. So it’s kind of irrelevant. But I was in the home of a heavy SK-II user in Beijing. And I asked her about this dynamic and how it was affected in her purchasing. And she kind of laughed, and it wasn’t the normal nervous laugh. It was – and she said she followed that up with, if Japanese consumers aren’t afraid of this, why should I be. And she said, I’m much more afraid of the pimple that I will get, if I don’t use this than I am about. So it’s starting to normalize again, that’s and of one. It was also interesting to me to see, what was happening with her kind of personal inventory and just looking at the liquid fill levels in the bottles, which were low. So I think, there’s a dynamic as well, where a number of consumers just kind of waited to see how this whole thing played out, and reduce their personal stocks in the process. But again, that’s probably neither here nor there, but I thought it was worth sharing.
Operator: The next question comes from Callum Elliott of Bernstein. Please go ahead.
Callum Elliott: Hi, good morning. My question guys is, about your end market restructuring, which I think in the release you described as substantial liquidation of the affected markets in places like Argentina and Nigeria. And I guess look, recognizing these are not huge markets for you today. From a profit perspective, this still feels like fairly extreme decision and clearly, a challenging macro backdrop today in those markets. But in the case of Nigeria, probably one of the highest long-term potential economic market. So my question is, Jon I know these enterprise markets for your baby, so to speak, for a number of years. Just hoping you can walk us through what I imagine must have been a difficult strategic decision.
Jon Moeller: Yes, these decisions are not taken lightly. A couple of points. One is where we’re moving to an import model, which will be the case in Nigeria. We maintain an option on the future of those brands in those markets. We’re just choosing to operate in a way that’s – that frankly is viable. You get into some tough situations in some of these markets with currency controls with pricing controls with the ability to dividend money out of these markets. And at some point, you run into a set of conditions that just make it impossible operate. You can’t get – you can’t source dollars as an example, in order to purchase the ingredients and raw materials, you need to manufacture your products. And so, we’ve come to a decision when those situations present themselves to be pragmatic to be value creative and to flow resources to bigger opportunities that present more near-term opportunity, while in some cases, maintaining our optionality on the long-term.
