Question-and-Answer Session
Operator
The company would like to provide everyone the opportunity to ask a question, so if you could please limit yourself to one question at a time, it would be greatly appreciated. You may re-queue as often as you would like, time permitting.
(Operator Instructions) Your first question comes from Jeff Zekauskas from J.P. Morgan.
Jeff Zekauskas - J.P. Morgan
Your prices were up roughly 5.5% this quarter. Do you expect your prices to be up that much or greater in the first quarter of next year?
Michele Volpi
Well clearly when you look at it from a year-over-year comparison, I would say that pricing in the first quarter in the first half of the year is going to be one of the few positive comparisons year-over-year; so first quarter ’09 versus first quarter’08. Clearly on the other side, on the negative, we will compare ourselves with currency volumes and raw materials that show a much starker comparison.
As for our pricing is concerned, I would say that your [inaudible] and commercial ability, in keeping over our prices at the current levels has been regained in the fourth quarter. You saw a significant sequential improvement versus the third quarter, and our goal in ’09 is to increase our spread by capitalizing on raw material reductions and to join costs to serve reduction initiatives with our customers.
That is reformations, working on the logistics, forecasting complexity. Now how effective we will be in doing that clearly is still out in the open, that is why we are not giving guidance, but clearly our committal is to make sure that we manage that raw material price and volume equation in the best possible way both for our customers and for ourselves.
Jeff Zekauskas - J.P. Morgan
Maybe if I can just rephrase my question. On the sequential basis in the first quarter, do you think prices will be flat to up or flat to down?
Michele Volpi
I would say more flat.
Jeff Zekauskas - J.P. Morgan
Secondly just in looking at some of your geographic results, it looks to me as though in some geographies raw materials are falling at a faster rate and other geographies are higher, or maybe you still have high cost inventory, guess Europe seems to be the problem area. Can you comment on that?
Michele Volpi
I am going to give you parts of the answer and then maybe Jim wants to add something, but yes, we have different inventory accounting ways in North America versus the rest of the world. And, yes there are different raw material dynamics in the world. Not only because there are different suppliers, there are different dynamics right now going on in terms of price negotiations, but there are also different balances in terms of volume capacity and complexity of the raw materials that we buy.
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