We are about to hand over to Unilever to begin the conference call. [Operator Instructions] We'll now hand over Jean-Marc Huët. Raoul Jean-Marc Sidney Huët: Well, good morning, everybody, and welcome to the Unilever's results presentation for the third quarter of 2014. I will begin this morning with the context for this set of results and a brief review of our overall performance; James will then take us through the categories and the regions overview; and then I will then conclude with the actions that we are taking to ensure sustained competitive, consistent and profitable growth. We continue to stay focused on taking the right decisions for the long-term health of the business. At the same time, we are sharpening our execution to reflect the market conditions, which are likely to remain tough for at least the remainder of the year. The actions that we are taking gives us confidence that we will meet the objectives that we set for ourselves for 2014. First, let me draw your attention to the usual disclaimer relating to forward-looking statements and non-GAAP measures. So now let's begin with the wider context for this set of results. There is no doubt that the market conditions are very tough. The global slowdown has been more pronounced, more prolonged than expected. On a worldwide basis, our markets had been growing in value of between 3% to 4% last year in 2013. And today, they have now slowed to less than 2%. So given the magnitude of this slowdown, I want to be very clear this morning about what we are seeing. In the Eurozone, the modest economic recovery is faltering. Consumer spending power remains below historic levels by any means. As people struggle to make their ends meet, they may change how much product they use,…

Thank you, Jean-Marc, and good morning, everyone. As usual, we'll start with Personal Care, our largest category. Growth of 4% in the first 9 months continues to be broad based across our subcategories and brands. It's also equally split between volume and price. Growth is ahead of our markets, led by global share gains in hair care and deodorants. Markets have continued to slow during the year, particularly in the mass segments, as consumers have adjusted to squeeze disposable incomes and become more frugal in their usage and purchases. As Jean-Marc said, many are making a little go a long way. At the same time, competitive intensity remains high, especially in the U.S. and in oral care in a number of countries. The strongest brand growth in Personal Care comes from Lifebuoy. This brand combines superior technology with a clear social message all built around helping more children reach the age of 5. Lifebuoy is now in 37 countries after the most recent launch into China, which has started well. Our 2 largest Personal Care brands, Dove and Rexona, continue to show good innovation-led growth. For Dove, new technologies are bringing added benefits in products like the improved NutriumMoisture body wash or the Dove Advanced Hair Series, with a range of premium variants offering clearly differentiated benefits, be it more volume, shinier hair, fullness or 72-hour manageability. Both are good examples of our Maxing the Mix way of innovating. Rexona is seeing a good start for the compressed format, which is now in 6 countries, another example of a sustainability initiative enabled by superior technology for the benefit of consumers. There's no compromise on quality and performance, it is more convenient and it is better for the environment. In the third quarter, Personal Care growth of only 3% was well…

Okay, everybody, it's the usual format. [Operator Instructions] So I see that first up, it's Celine. So Celine, what's your questions?

My 2 questions, first one, if I think about the deflation you alluded to in Western Europe and, clearly, pricing in Western Europe worsening throughout the year, how do we look at that going forward? You mentioned as well there was a weaker, benign environment, which now I presume, as I look into 2014 -- 2015, is still going to be there. So do we look at a minus 2, minus 3 as a normal pricing level now going into the next quarter? That's my first question. And second, on the margin -- on the EPS levels that you are -- the different levels that you are enacting in order to deliver the EPS, obviously, you mentioned about the lower tax rate and some of the activities you are doing below the EBIT line. Are you flagging that maybe probably margin is going to be a bit less, and you are going to deliver on the EPS through these levels below the EBIT line? Or shall we take these benefits, including the tax benefit, as on top of what we already have in our numbers? Raoul Jean-Marc Sidney Huët: It's Jean-Marc. Let me just make a key message on your last point on earnings per share. We are responding to this lower growth environment by driving our savings program harder. We're doing a variety of things, not just below the line. The first one is, we've talked about it for a lot, is Maxing the Mix within our categories. 75% of our innovations are margin accretive. This is good for gross margins. Secondly, you're right, we're doing a lot in terms of ongoing savings, tight control on costs, supply chain savings programs. We're accelerating low-cost business models, which are currently focused on laundry and ice cream, and we are pricing,…

I think we're going to move on to Warren Ackerman now.

It's Warren Ackerman here at Societe Generale. Two questions from me. The first one, could we dig a bit deeper on China? Down 20% in the quarter, is that all destocking? So x that, is China flat? I mean, others have mentioned some destocking but not to this extent. I was just wondering whether you can go to what you're seeing in the supply chain. How much stock is there in the supply chain, and how can you be sure that it will be worked through by the year-end? And then just secondly, on pricing, you disclosed that LatAm pricing was 9.8% in the quarter. So working that through, LatAm would be 1.6% of the 1.8% group pricing. I mean, if I strip out LatAm pricing, as I imagine that most of that is hyperinflation pricing, although you did say Brazil took some low pricing, the group organic growth would have been much lower at 0.5% rather than 2.1%. So I'm just wondering, are you able to say how much was hyperinflation pricing in LatAm out of the 9.8%? So I'm just a bit surprised that you're saying that you're growing ahead of your markets when I look at the real underlying growth x LatAm pricing. Raoul Jean-Marc Sidney Huët: Why don't I just take Latin America first, and James, you take China, and I can supplement if need be. If you don't mind, Warren, I'll just make a couple of comments on Latin America in general, and then I'll zoom in on your point just on pricing. Let's make a couple of points clear. The first one is that economies do remain difficult in Latin America. Markets -- our markets continue to grow double digit, but volumes are flat. So the USG is driven primarily by price. We do…

Yes. Warren, thanks for that question, I'm sure it's on many people's minds. So let me just say a word or 2 about China, and then I'll come directly to your specific question. So for Unilever, this is a EUR 2 billion business with very attractive gross margins. It's an important part of Unilever as a whole. It's still only 4% of the overall group. We have there 3 primary categories that we are putting a lot of our attention into. Those are skin cleansing, hair and laundry; to a lesser extent, also ice cream; and we have a strong Food Solutions business there as well. And in April of this year, you remember that we bought the Qinyuan water purification business, and I'm glad to say that that's off to a really good start. So that's just a little bit of context about China for those of you who don't know it so well. Now as Jean-Marc was saying, we've seen market growth slowing very dramatically and quickly in China from 7% to 8% in 2013 to now less than 2% in quarter 3 of this year. And this slowdown is particularly acute in the larger cities and the hypermarkets where Unilever happens to be stronger. So as a result of this, there's been a triggering of some very sharp reductions in stock levels throughout the extended supply chain. And in this context, Unilever has chosen to reduce the level of promotional activity that we put into the trade now -- or in quarter 3 because we just don't want to exacerbate that stock situation any more than it is already. We'd much rather have these stocks coming down to allow our new innovations to come through and to reduce any risk of future returns coming to us. So…

Just going back to the margin outlook and trying to piece together some of the moving parts, I mean, the acceleration on the cost saving, I assume, may come with a restructuring charge, which is slightly higher than you thought, beginning of the year. I guess that's part of the question. Just picking up on the comment about why the geographic reach in terms of growth, driving growth, I assume that's quite high cost to serve, initially. And then again, picking up on the point you made earlier, that the slowdown was more than you perhaps you expected. So I guess the leverage -- or deleveraging is a little bit more severe than you would've expected. So just putting that all together, I just wonder how confident you are that, that core margin can still be up, whether there's an element of comfort around that or whether that's an aspiration and there is some pressure there when you put those things together. And I guess just related to that, which maybe is the answer in some ways, I'm just looking at Slide 17, where you showed that nonworking media drop of circa 400 basis points year-to-date. Just wondering, can you explain what that's showing. It looks -- when you're looking at that, that's a 400 basis points of sales benefit in terms of nonworking media costs. I just want to make sure whether that's what it is and whether that's partly why the margin benefit -- or the margin delivery is still likely. Raoul Jean-Marc Sidney Huët: Well, thanks, David. Let me take your question, and I can make it very short. We are confident in the core operating margin improvement for 2014 on a current basis. So that's actually making life harder for ourselves because of the adverse impact…

Okay, we've got Richard on the line now.

Richard Withagen, Kepler Cheuvreux. Two questions. Could you talk a bit about how the build up to the seemingly high stock levels in China happened? And also China, is there -- is it only hypermarkets? Or is it also in other channels? And the second question I have is, you plan to reduce SKUs by 10% to 20% in 2014. So I'm wondering, where do you stand today? And what kind of reduction do you plan for next year? Raoul Jean-Marc Sidney Huët: Let me take just the one on SKUs. That is very much going to plan. We actually had a very specific effort of reducing SKUs that amounted to less than EUR 50,000 of sales or so, totally according to plan. Success, however, of SKU reduction is if it really is part of the way we work each and every year because these initiatives, actually, can be very successful within a certain period of time and then, all of the sudden, pop back up. So I am pleased with the performance that we've been making on SKUs. I think the reduction, I look at Andrew [ph] here, is around 25% to 30%, so absolutely on plan. I think we had 40% as a real aspiration. But obviously, keeping the discipline around SKUs next year as we continue to innovate is going to be very important. No promises made there, but just the acceptance that we need to improve each and every year because, otherwise, it's just not worth it. SKU reduction is one of those initiatives within Project Half, which I am happy to say is really starting to stick within the organization. James, on China.

Yes, Richard, so I think what we are seeing is that there are stock -- stock levels are high across all aspects of the supply chain, so we mean here the distributors, the wholesalers, all the way through. I think the point we're making about hypermarkets is that that's where our business predominantly is, and some of the slowdown in sales has happened there. How can it happen? Well, I think the point that we've been making is the speed with which the Chinese demand has come down has been rather more quick than we've seen in other markets. So it happens quickly, and it does take time for people to adjust to a new normal. And so I think it's not just Unilever that's been mentioning stocks and the trade in China. Perhaps our level is a little higher than so far people have reported, but nevertheless, I think it's probably true for a number of people. So if you don't mind, we're going to move on to the next question now, and it's from your colleague, Marco Gulpers.

I've got 2 questions. The first is, what do you see in terms of the acceleration and the discount channel having an effect, basically, on your market, especially in Europe? And the second is also related to China, the destock effect. Is there any risk that this might move to other markets as they slow? Raoul Jean-Marc Sidney Huët: Let me ask my residential China expert, James, next to me, to give the comment on China, and then I'll go back to lovely Europe.

So we're not picking up, Marco, any particular signs of this destocking elsewhere in our markets. Now, that doesn't mean to say that there isn't some or there won't be some as markets slow. That can always happen. But there's certainly nothing on the scale that we're seeing in China. Raoul Jean-Marc Sidney Huët: If I then, Marco -- if I just go to your point on discounters, and the real question is, is it a challenge to your business model or not? A couple of points. The first one is this is not a new phenomenon. They've been around for a long time. And companies like Unilever, we just simply follow the shopper, and we've been focusing on serving discounters for a while. In actual fact, if I'm not mistaken, our turnover with discounters is north of EUR 1 billion, growing ahead of the EU average. And in actual fact, it may surprise you, but the margins that we have are actually in line with our overall business. So what we've been doing is we've been stepping up our focus, given the growth on discounters. We have a dedicated discounter team, and that focus is very different to the other customer teams. You can imagine they are very focused on the GBP 1 or the EUR 1 ranges. They are very focused on the very large packs. They are very focused on specific packaging solutions. And overall, the overall business model is a more volatile one with discounters, where you're talking about annual tenders and the like. So we have a very dedicated team to deal with the discounters. But rather than see them as the enemy, it's part of our business. And we need to serve the shopper, and the shopper has decided to go more to discounters than the traditional retailers. And yes, there are implications, but we serve the shopper.

All right. Then maybe a small follow-up question. So the channel shift that you're seeing in China, you are not seeing any acceleration in any other markets that you feel you need to highlight? Raoul Jean-Marc Sidney Huët: No, especially not at this point in time. China is very specific. In terms of the growth deceleration, in terms of just the complexity of the go-to-markets and, as a result, the call out is China and China only.

Okay, I think we've got time for one more question, and that's coming from Harold Thompson.

I just got one question. On North America, clearly, a very impressive performance overall and good volumes there. But how should we see the margin performance of that volume given there's the need to -- negative pricing to achieve that? And you also comment that North America is maybe finally picking up from a consumer perspective. So does that mean you're calling the U.S. turn or you're simply stating a fact that in the last -- in recent weeks, just U.S. data had been better for your categories? Raoul Jean-Marc Sidney Huët: Harold, overall, the banners in the newspaper around North America have been actually positive for a while. And what we've always said is, yes, that's the case, but it's maybe in real estate, maybe it's in other industries, but we don't see it actually in our markets. For the first time, for longer than 1 day, if I may say, it's now starting to impact positively the markets which we're operating in. So we see a clear improvement, and now the markets in which we operate are growing at around 1%. But let me, at the same time, say it's only 1%. And so while we do see improvement, glimmer of hope, it is only 1%. The environment in the U.S., specifically, remains a challenging one. There's around 1/3 of volume, I think, sold on deal. Promotional intensity is higher. I was there a couple of weeks ago, and specifically, in the hair care market, there's a huge level of intensity. So we're happy that the overall market seems to be improving. It is at modest levels. We are gaining share and growing ahead of the market. I think we're gaining share in around 3/4 of our business. Refreshments is back to growth. Tea is doing better. So we are more bullish on our own specific business. But obviously, I would say, at this point in time, that a swallow doesn't make a summer.

Okay, I think probably there are other callers on the line, so if you don't mind, the IR team are very happy to take your calls. We'll do that in a few moments when we get upstairs. And so I'll just pass back to Jean-Marc for final words. Raoul Jean-Marc Sidney Huët: Well, thank you very much, everybody, for your time this morning. Let me just sum up in a couple of words. There is no doubt that market conditions are tough or very tough. We at Unilever, we continue to focus on the right long-term actions for the health of the business. And we are confident -- yes, we are confident that we will deliver our objectives for 2014. So thanks from me, James and the team for your time today. I look forward, Paul looks forward to seeing many of you at our Annual Investor Day on the 4th of December. And as usual, for the remainder of the day and the week and the months, the IR team is very happy to answer any further questions that you may have. Thank you very much.

This conference has been recorded. Details of the replay number and access codes can be found on Unilever's website. An audio webcast will also be available on Unilever's website, www.unilever.com, and on the Investor Relations app.