Question-and-Answer Session
Operator
(Operator instructions). Jeff Zekauskas of JPMorgan has our first question.
Silka Koopf – JPMorgan
Good morning, this is Silka Koopf for Jeff. How are you?
Kevin Berryman
Good morning, Silka, how are you?
Silka Koopf – JPMorgan
I'm doing okay.
Kevin Berryman
Very good.
Silka Koopf – JPMorgan
It seemed there was a lot of emphasis on price this quarter, which also benefited margins. Can you outline what the pricing benefit was in the quarter when we look at your organic 2% improvement in volume on pricing?
Kevin Berryman
Silka, we actually highlighted some of the pricing activity in our second quarter as well. So I don't know that there is an incremental focus on it in this quarter. And as a matter of fact, as we have communicated in the past, our pricing actions that we took, which were kind of at the end of 2008, and in the beginning of 2009, we're starting to lapse some of that. So actually the pricing benefit associated with our Q3 results are starting to decelerate versus the first half of the year. We actually saw volume growth in both of our businesses. And so you can imply from that that the pricing activity is actually declining over time.
Silka Koopf – JPMorgan
When I look at like a 2% organic growth year-over-year, is that then 1% volume, 1% price?
Kevin Berryman
Well, I would say we talked about a 2 plus percent number, and I would say that we had talked pricing in the neighborhood of 2.5% in the past. We're down from that level, and we did see relative volume growth versus year ago period. So we're declining in terms of the impacts of price, specifically in the third quarter. And we would expect that that would continue to be reduced in the fourth quarter of this year and again in 2010 as well. So, yes, some slight volume growth for both of the businesses, with the balance being some pricing.
Silka Koopf – JPMorgan
Okay. In terms of the food flavor sales in North America, which are very strong, up 5% this quarter, is that sustainable that rate given that fourth quarter trends may be more difficult?
Kevin Berryman
And Silka, you are specifically talking in North America?
Silka Koopf – JPMorgan
Yes.
Kevin Berryman
Flavors. I think ultimately it is the level of performance that we have seen in Flavors in North America, specifically, there is a long track record of very, very strong performance. So whether or not this is that much higher than what we have been able to show historically, I'm not sure exactly that's the case. But I think we have a long track record of performing very well in North American Flavors, driven specifically by some strong performance in Savory. I would ask Hernan to add any insight if he feels appropriate. But I think we actually have a strong track record of good solid growth in that particular region in Flavors.
- To read the full transcript on Seeking Alpha, click here »
