Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Claudia Hueston - J.P. Morgan
Claudia Hueston - J.P. Morgan
First what you’re seeing in Beauty & Home, is it getting worse? How did it progress over the course of the quarter, are there big differences between Europe and the US and then what gives you confidence that a second half pickup is likely in that business?
Peter Pfeiffer
We have seen these tendencies both basically in both areas in Europe and in the United States. There are a lot of discussions on the part of our customers. The reason of this decline basically is coming from emptying of the supply chain. Inventories are going down in the whole supply chain and this is basically the reason also between the difference we see the consumer decline is between 2% and 6%, our business is going down by 17%, 10%, 3% there a big mismatch which tends to explain why supply chain reductions.
As I said in the United States, it’s in Europe, less effect in the Asian market which is still growing. The Chinese market is still positive and we are not seeing the same declines in Latin America.
Claudia Hueston - J.P. Morgan
In terms of the supply chain reductions do you feel like we’re sort of hitting a bottom in those or is there still inventory being worked down?
Peter Pfeiffer
For the time being it’s very difficult to predict but we are seeing decline in almost one and a half quarters. There has to come to an end. We have seen some answers from our customers. Some of them are saying that they will start re-ordering in the end of the second quarter to the third quarter. Keep in mind, some of our big customers have their financial year ending in end of June and they are trying to keep their inventories smaller, low till this point which is they might be starting ordering in the third quarter maybe.
Claudia Hueston - J.P. Morgan
You mentioned underutilized capacity in Beauty & Home and in the past you’ve talked about that as an issue in Closures. Has the situation gotten better in Closures in terms of the utilization of your capacity?
Steve Hagge
It has gotten somewhat better. The other thing we’ve done, frankly the consolidation of business units that we’re putting together in Closures our efficiencies have continued to improve. As a result of that we’ve been able to reduce one of our factories and consolidate that with another one here in France. The other thing I think in the Closures side that’s important is the mix of business.
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