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Walmart’s Cautious Outlook Reflects Uneven State of US Economy · Bloomberg Intelligence

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  Speaker 2: Walmart reported some numbers. I thought they were pretty darn good.
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  Speaker 2: They're always seemingly pretty good out of Walmart. They know
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  Speaker 2: what they're doing over there.
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  Speaker 3: Stocks up two percent.
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  Speaker 2: Here today, let's break it down with Emily Cohene, consumer
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  Speaker 2: team leader for Bloomberg News. Emily talk to us about
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  Speaker 2: the quarter. What's the company saying about their business?
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  Speaker 4: Yeah, I think you nailed it as another solid quarter
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  Speaker 4: for Walmart in the fourth quarter. They did come out
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  Speaker 4: with conservative guidance, which is pretty typical for Walmart, come
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  Speaker 4: out with cautious guidance and then exceed it later in
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  Speaker 4: the year, which is sort of their playbook. And then
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  Speaker 4: their guidance was also paired with some warning signs or
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  Speaker 4: cautious outlook about the economy, which I found interesting.
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  Speaker 5: Yeah, I want to pick up on that idea because
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  Speaker 5: the CFO talked to Bloomberg and mentioned that tariff driven
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  Speaker 5: inflation has reached or is reaching its peak, which I
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  Speaker 5: thought was really interesting given that there's so many people
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  Speaker 5: expecting rate cuts later on this year, given that inflation
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  Speaker 5: seems to have settled down, What more can they tell
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  Speaker 5: us about pricing?
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  Speaker 4: I think they told us that prices rose one percent
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  Speaker 4: in the quarter, which I think was the same as
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  Speaker 4: the last quarter. But they also mentioned other things like
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  Speaker 4: tepid job growth, student loan delinquencies, rising consumer sentiment being uneven,
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  Speaker 4: things that you know, would give any CEO or CFO
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  Speaker 4: or company pause when they're trying to outlay what might
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  Speaker 4: happen in the coming year.
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  Speaker 2: And I noticed over the last a couple of years
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  Speaker 2: they've talked about how maybe their customer base is changing
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  Speaker 2: a little bit, people, some middle class maybe for income
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  Speaker 2: areas coming down to Walmart.
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  Speaker 3: They're seeing more and more of that. Is that still
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  Speaker 3: the case.
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  Speaker 4: I think yes, that's definitely the case, and that's sort
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  Speaker 4: of their superpower right now that you know, poor this
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  Speaker 4: is the case shaped economy that we talk about a lot.
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  Speaker 4: Poor customers are pulling back in areas, but what they're
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  Speaker 4: seeing is wealthier clients clientele who might not have come
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  Speaker 4: to Walmart in the past, shopping at Walmart, especially for
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  Speaker 4: things like their groceries, which they've invested in a lot
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  Speaker 4: in the last ten years. You can now find organic
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  Speaker 4: groceries in Walmart and that's really paying off.
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  Speaker 5: And they also have this Walmart Plus program which they're
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  Speaker 5: really putting a lot of emphasis on. It's actually one
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  Speaker 5: of the benefits if you're an American Express Platinum cardholder,
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  Speaker 5: which speaks to that idea that they're really reaching for
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  Speaker 5: the higher income consumer. How's that going in Is it
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  Speaker 5: making any headway on stealing Marcus share from Amazon with
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  Speaker 5: its Prime program?
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  Speaker 4: Yeah, they're seeing a huge growth in e commerce. I
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  Speaker 4: think that was one of the major areas that grew
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  Speaker 4: this quarter. That is drawing in higher income shoppers who
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  Speaker 4: actually pay even more than the membership for faster deliveries,
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  Speaker 4: speedier pickup times, and that's helping them also grow market
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  Speaker 4: share among wealthier shoppers who are looking for convenience over
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  Speaker 4: everything else.
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  Speaker 2: So what are they saying about Did they even talk
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  Speaker 2: about on CONFT called tariffs anymore? That's still a discussion point.
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  Speaker 2: And what's the company saying about tariffs?
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  Speaker 4: Yeah, tariffs came up a little bit, but they said
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  Speaker 4: that they expect that that tariff driven inflation to peak.
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  Speaker 3: Now.
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  Speaker 4: I think they also benefit here again from their groceries.
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  Speaker 4: Groceries are a portion of their assortment that is less
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  Speaker 4: impacted by tariffs, and they're really benefiting from I think
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  Speaker 4: sixty percent of their sales come from groceries these days.
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  Speaker 5: You mentioned e commerce, It sounds like Walmart will continue
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  Speaker 5: to invest in techlogy and automation. What were some of
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  Speaker 5: the things that they flagged that they're working on in
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  Speaker 5: terms of innovation and building on the technology that they
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  Speaker 5: have already implemented into their system.
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  Speaker 6: Yeah, it was interesting.
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  Speaker 4: They said most of their fulfillment and stores is now
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  Speaker 4: coming from automated warehouses, most of their fulfillment for e
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  Speaker 4: commerces coming from automated warehouses. They have really made huge
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  Speaker 4: gains here to speed up fulfillment centers, and I think
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  Speaker 4: we should expect to see more of that in the
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  Speaker 4: coming quarters. They cited story models and automation as the
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  Speaker 4: main areas where they're going to be continuing to invest.
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  Speaker 2: You know, one of the things that's amazed me really
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  Speaker 2: for ten fifteen years about Walmart is how well their
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  Speaker 2: digital business has been.
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  Speaker 3: Their e commerce business.
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  Speaker 2: They have built that to not only I mean they
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  Speaker 2: can go toe to toe with Amazon dot Com just
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  Speaker 2: about anything, it seems like.
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  Speaker 3: Is that still a growth story for them?
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  Speaker 4: Yeah? I think they said something like a third. They've
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  Speaker 4: you know, a huge amount of shoppers are now actually
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  Speaker 4: interacting with their AI, their AI assistant on their app
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  Speaker 4: and on their website. That really helping people make shopping
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  Speaker 4: decisions faster. They're seeing an increasing spend from customers who
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  Speaker 4: interact with the AI shopping assistant, they said, which which
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  Speaker 4: I think we can expect to see.
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  Speaker 2: Just in the last five years, their ibathas roughly doubled,
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  Speaker 2: but their cap X is tripled.
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  Speaker 3: Yeah, so commerce build out, that tech build out, yep.
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  Speaker 3: So I mean they're putting their money where their mount
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  Speaker 3: is here.
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  Speaker 5: You know what Paul's dream job is, Emily us He
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  Speaker 5: mentioned this to you, No.
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  Speaker 2: Be a greeter at Walmart. See I'm a nice, friendly guymock.
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  Speaker 3: He wants to wear the smock.
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  Speaker 5: But you know, to that point, Walmart employees about two
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  Speaker 5: point one million people, which makes it a huge employer.
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  Speaker 5: Do we have a sense of whether they've been growing
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  Speaker 5: their employee base at all with this commitment to technology,
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  Speaker 5: to automation.
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  Speaker 4: I think They've definitely made a huge investment in technology.
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  Speaker 4: They have a lot more people working on tech than
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  Speaker 4: they ever have, and I think we could expect to
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  Speaker 4: see more of that for sure.
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  Speaker 3: Stay with us more from Bloomberg Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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• 6:28
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• 6:31
  Speaker 2: All right, let's move from cars to tractors. We can
• 6:35
  Speaker 2: do that with John Deere. John Deer reported some really
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  Speaker 2: solid numbers of stocks up twelve percent today, so a
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  Speaker 2: big move for Dear. It's up forty two percent year
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  Speaker 2: to date. And when you think about the John Deer company,
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  Speaker 2: you think about the US farmer because that's the primary
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  Speaker 2: customer there. When a farmer has money, the farmer links
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  Speaker 2: to buy some new tractors. So let's check in with
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  Speaker 2: Chris Chiolino. He covers all the big equipment companies for
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  Speaker 2: Bloomberg Intelligence. Chris tell us about what did they tell
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  Speaker 2: us in their earnings report?
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  Speaker 6: Yeah, it was a really solid beat and race quarter.
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  Speaker 7: And I think this kind of gives us the all
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  Speaker 7: clear on the cycle and that you know twenty six
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  Speaker 7: will be the trough earnings year. The one Q beat
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  Speaker 7: was was broad based, all segments, better top line, better
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  Speaker 7: margins than expected, really on the back of higher shipment volumes,
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  Speaker 7: with particular strength in the small agg business and construction.
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  Speaker 7: Those those are markets that you know, have started to
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  Speaker 7: already recover now this year.
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  Speaker 6: The large agg.
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  Speaker 7: Business, which is obviously their their bigger growth engine, continues
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  Speaker 7: to be soft. But I think we're seeing that business
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  Speaker 7: stabilize and really for the first time, you know, in years,
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  Speaker 7: we're starting to see some green shoots emerge there. Order books,
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  Speaker 7: you know, strengthened a little bit during the quarter as well.
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  Speaker 5: How about how does this compare it in contrast with
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  Speaker 5: what CNH Industrial reported earlier this week, which took more
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  Speaker 5: It feels like a cautious stance.
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  Speaker 7: Yeah, you know, I think so. Both companies are calling
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  Speaker 7: twenty six as the bottom. I think that's pretty well
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  Speaker 7: understood at this point. I think the incremental piece coming
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  Speaker 7: out of Deer today is that you're starting to see
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  Speaker 7: some early signs of improvement in the North American lar
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  Speaker 7: jag business. That's a market they're projecting in terms of
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  Speaker 7: unit volumes to you down fifteen to twenty percent this year.
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  Speaker 7: That's going to put volumes at the lowest level in
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  Speaker 7: more than four decades. But what you're starting to hear
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  Speaker 7: from them this quarter is that the order book strengthened.
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  Speaker 6: Particularly just in the last month of the quarter. You're
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  Speaker 6: starting to.
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  Speaker 7: See a little bit more trade flows going to China,
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  Speaker 7: the fleets continue to age, you have the government aid support,
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  Speaker 7: so this is not a big step change, but it's
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  Speaker 7: really the first signs of incremental improvement.
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  Speaker 2: You got to have a great sense of timing, Chris,
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  Speaker 2: as I said, Deer's up forty two percent year to date,
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  Speaker 2: so the market's anticipating this business bottoming and then turning up.
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  Speaker 2: How long is this cycle for some of these companies
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  Speaker 2: that you followed here, they are cyclical.
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  Speaker 7: Yeah, so a typical downturn in this business will last
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  Speaker 7: anywhere from two to four years.
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  Speaker 6: This will be the third year of the downturn.
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  Speaker 7: So in terms of the downturn, it looks very similar
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  Speaker 7: to what we've seen historically. Typically the upturns last a
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  Speaker 7: little bit longer. But you know, this is an incredibly
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  Speaker 7: volatile market and it's ultimately dictated by crop prices and
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  Speaker 7: farmer profitability. So the crop outlooks do have a significant
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  Speaker 7: impact here in terms of what farmers are willing and
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  Speaker 7: able to spend.
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  Speaker 5: And it looks like Deer relies on the US for
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  Speaker 5: a huge part of its revenue, if not half. What
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  Speaker 5: is it doing in terms of growing its business overseas
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  Speaker 5: does it? Is it just kind of a trajectory of
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  Speaker 5: growth there that is similar to what it sees in
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  Speaker 5: the US, or is it competing against some established players.
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  Speaker 7: Yeah, so they're regional markets, but in terms of what
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  Speaker 7: markets matter for Deer, it's North America and now South
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  Speaker 7: is becoming more important. Reason being those are you know,
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  Speaker 7: typically the bigger producers of road crops, corn, soybeans. They're
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  Speaker 7: larger farms, they utilize more, the larger equipment that you know,
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  Speaker 7: is more conducive to some of the precision technologies which
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  Speaker 7: which come in at a higher margin. Europe tends to
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  Speaker 7: be a little bit more stable, They get a lot
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  Speaker 7: of government support, so I think of that market as
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  Speaker 7: less less cyclical. You know, lower peaks, higher troughs. Those
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  Speaker 7: are really kind of the three big growth engines. If
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  Speaker 7: you think about Deer's geographic exposure.
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  Speaker 3: So what is Deer saying about the US farmer these days?
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  Speaker 6: Listen, things are still challenging.
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  Speaker 7: Let's let's not understate that, you know, crop prices really
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  Speaker 7: haven't moved that much and still under tremendous pressure. As
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  Speaker 7: we look at another year of you know, near record production,
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  Speaker 7: they are seeing some signs of stability, I would say,
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  Speaker 7: And like I mentioned earlier, I think we're starting to
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  Speaker 7: see some early signs of improved activity again, albeit off
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  Speaker 7: a very low base, and a lot of that's predicated
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  Speaker 7: on you know, we're starting to see a little bit
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  Speaker 7: more exports going to China, you have a continued government support,
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  Speaker 7: and then also you know, there's certainly a need for replacement.
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  Speaker 7: The age of the fleet is as old as it's
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  Speaker 7: been in a number of years. So as farmers get
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  Speaker 7: more money, you start to see some stability on the
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  Speaker 7: crop price front.
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  Speaker 6: That should, you know, unlock some pent up demand.
• 11:25
  Speaker 5: Yeah, I'm just looking at the stock price trading. It
• 11:27
  Speaker 5: at a record high, but it really has gone on
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  Speaker 5: a tear over the past three weeks or two weeks.
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  Speaker 5: What accounts for that? Was it anticipation of this report
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  Speaker 5: or was it something else?
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  Speaker 6: A combination of things.
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  Speaker 7: You know, I think, you know, it's pretty well understood
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  Speaker 7: now that we this year will be the trough of
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  Speaker 7: the cycle. So I think there's some positioning ahead of that.
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  Speaker 7: And you know, a lot of these heavy machinery companies
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  Speaker 7: typically do well in early in the rate cut environment.
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  Speaker 7: So the anticipation of lower rates stronger growth environment not
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  Speaker 7: only in the ag business but also construction, and I
• 12:00
  Speaker 7: think that sometimes get over gets overlooked. They're completely refreshing
• 12:04
  Speaker 7: their excavator product lineup. They have a pretty strong position
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  Speaker 7: in construction equipment, and I think the growth dynamics there
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  Speaker 7: moving for twenty six and twenty seven are still quite favorable.
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  Speaker 6: Stay with us.
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  Speaker 3: More from Bloomberg Intelligence coming up after this.
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• 12:32
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 12:36
  Speaker 2: Six Flags Great Adventure, my first amusement and next second
• 12:40
  Speaker 2: amusement park.
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  Speaker 3: The first one is Hershey Park.
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  Speaker 5: Okay, yeah, that's a good starter.
• 12:45
  Speaker 6: Amusement park.
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  Speaker 3: Yeah, yeah, that was a good one. Then you go
• 12:47
  Speaker 3: to then you step up to six Flags. Great adventure.
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  Speaker 3: That's some serious park there.
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  Speaker 6: Yeah.
• 12:52
  Speaker 5: Well we have to be ready to kind of be
• 12:54
  Speaker 5: you know, have trouble standing because of the roller coaster
• 12:58
  Speaker 5: rise being super aggressive.
• 12:59
  Speaker 8: Yep.
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  Speaker 2: Absolutely, And they're still there, cars going in, packing in
• 13:03
  Speaker 2: all the time down there in Jackson, New Jersey. They're
• 13:05
  Speaker 2: all around the country. They reported some earnings here today.
• 13:07
  Speaker 2: Let's get down to it with Jody Lourie. She's a
• 13:09
  Speaker 2: credit analyst. She covers all the leisure companies, including six
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  Speaker 2: Flags Entertainment. Jody, thanks so much for joining us. What
• 13:16
  Speaker 2: did you hear from six Flags today with their earnings?
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  Speaker 9: So I think what's interesting, Paul, is that we're seeing
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  Speaker 9: that some of what six Flags said, oddly was similar
• 13:25
  Speaker 9: to what we saw on APHIS's call. And both companies
• 13:29
  Speaker 9: had these large impairment charges to boost ebada, but it
• 13:33
  Speaker 9: didn't necessarily equate to cash generation, And both companies are
• 13:37
  Speaker 9: focused on improving their debt load and also just the
• 13:40
  Speaker 9: core of the business, the operational side, adding an AI
• 13:44
  Speaker 9: to boost the business and figuring out ways to turn around,
• 13:47
  Speaker 9: and both companies are dealing with new CEOs. So it's
• 13:49
  Speaker 9: just like a weird sort of compare contrast scenario that
• 13:53
  Speaker 9: I've been toying with my head all morning.
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  Speaker 5: I mean, Paul was talking about how Hershey was his
• 14:00
  Speaker 5: first amusement park, and then we're obviously the big one
• 14:04
  Speaker 5: would be Disney, yep or Universal.
• 14:07
  Speaker 6: Have you been there?
• 14:08
  Speaker 3: No?
• 14:08
  Speaker 5: Okay, that's a pretty good one.
• 14:10
  Speaker 3: Yeah.
• 14:11
  Speaker 5: Is that the competition for six Flags or does it
• 14:14
  Speaker 5: work on a different level than those?
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  Speaker 9: It is and it isn't the competition Scarlett. I mean,
• 14:19
  Speaker 9: I think you know, six Flags likes to compare itself
• 14:22
  Speaker 9: more to alternatives in leisure and entertainment. There was a
• 14:26
  Speaker 9: great slide that they provided that that showcase the value
• 14:30
  Speaker 9: proposition if you compare it to like concert tickets or
• 14:34
  Speaker 9: you know, in cert sporting event. The amount of time
• 14:37
  Speaker 9: that you spend at six Flags, in theory is all day, right,
• 14:41
  Speaker 9: So the cost to enter and the cost for the
• 14:44
  Speaker 9: you know, all the sort of concessions is much lower
• 14:46
  Speaker 9: than what you would pay to go to like a
• 14:48
  Speaker 9: Taylor Swift concert. Now that said, I mean, I think
• 14:51
  Speaker 9: what's so interesting is is when the company combined, there
• 14:54
  Speaker 9: was this image that they could create like an all
• 14:57
  Speaker 9: pass promotion, right that you can end in all parks.
• 15:00
  Speaker 9: They've only finally started rolling out something that's our regional
• 15:03
  Speaker 9: pass recently, and I'm curious to see what could happen
• 15:08
  Speaker 9: with the company as they improve those sort of points
• 15:11
  Speaker 9: of it. Because what's funny is if you look at
• 15:13
  Speaker 9: it from a revenue perspective, it did actually pretty well
• 15:16
  Speaker 9: this year compared to twenty four, and twenty four was
• 15:18
  Speaker 9: a pretty strong year. Same thing with some of the
• 15:20
  Speaker 9: per cap spending pieces of it, right, the per cap component,
• 15:25
  Speaker 9: the admissions were down, but the in park spending was decent,
• 15:28
  Speaker 9: and so you say, what's going on, like why are
• 15:30
  Speaker 9: they having such issues? And it comes down to an
• 15:33
  Speaker 9: operational issue. It comes down to the fact that the
• 15:35
  Speaker 9: legacy six Flags assets, I think were in way worse
• 15:38
  Speaker 9: shape than Cedar Fair anticipated when they took on the company,
• 15:41
  Speaker 9: and they're saddled with a lot of debt. So it's
• 15:43
  Speaker 9: really a question of if the capital markets are going
• 15:45
  Speaker 9: to be encouraging enough to help them through. You know,
• 15:48
  Speaker 9: they helped them through in January with a new issue,
• 15:51
  Speaker 9: but really are they able to sort of support the
• 15:54
  Speaker 9: company through this transition.
• 15:55
  Speaker 5: That park past you mentioned sounds like a you know,
• 15:58
  Speaker 5: the amusement park version of an epic, which makes sense
• 16:00
  Speaker 5: if you're skier and you are chasing the weather around
• 16:04
  Speaker 5: the country. What doesn't make sense to go to the
• 16:06
  Speaker 5: West Coast for six Flags and then come back.
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  Speaker 9: I don't know it could Scarlet. You don't talk to
• 16:12
  Speaker 9: Ira Jersey enough. Apparently, at least when it comes to
• 16:15
  Speaker 9: roller coasters. You probably talked him about interest rates. Next
• 16:17
  Speaker 9: time when you have him on, ask him about his
• 16:19
  Speaker 9: son's American Coasters Enthusiast card that he proudly can If
• 16:24
  Speaker 9: you are deep into the roller coaster dynamics and culture,
• 16:29
  Speaker 9: people will go to the end of this of the Earth.
• 16:31
  Speaker 9: And I am curious to see how the Middle East
• 16:33
  Speaker 9: traction for six Flags, for SeaWorld and for some of
• 16:36
  Speaker 9: the other parks that have expanded there, how that's going
• 16:39
  Speaker 9: to play out If you do see these park coaster
• 16:41
  Speaker 9: enthusiasts fly out to Saudi Area, fly out to the
• 16:44
  Speaker 9: Oe to ride certain coasters.
• 16:48
  Speaker 3: Stay with us. More from Bloomberg Intelligence coming up.
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• 17:09
  Speaker 2: Our good friends over in Switzerland Nesley, a lot of
• 17:12
  Speaker 2: news coming out of them today. They're talking about maybe
• 17:16
  Speaker 2: backing away a little bit from the ice cream business.
• 17:18
  Speaker 3: How can you do that? I don't know.
• 17:20
  Speaker 2: But let's check out what's going on with Nesley with
• 17:23
  Speaker 2: our good friend Duncan Fox. He's Bloomberg Intelligence senior Consumer
• 17:26
  Speaker 2: Stables Analytis based over there in London. Duncan, what's going
• 17:30
  Speaker 2: on with Nestley. It seems like they considering some strategic
• 17:34
  Speaker 2: moves here.
• 17:36
  Speaker 8: Well, yes, I think it's such a large organization. I
• 17:39
  Speaker 8: spion it's quite a small part of their business, and
• 17:41
  Speaker 8: that it's already in it Well, I love it too,
• 17:44
  Speaker 8: but it's in a joint venture, well, most of it's
• 17:46
  Speaker 8: in a joint venture with fron Aire, and they took
• 17:49
  Speaker 8: a back two billion dollars out last year when from
• 17:53
  Speaker 8: Area did a raising capital. So I think it was
• 17:56
  Speaker 8: sort of set that the chance would be that they
• 18:00
  Speaker 8: would probably clean up their portfolio a little bit and
• 18:02
  Speaker 8: try and concentrate on really where they have huge market share.
• 18:06
  Speaker 8: I mean, as much as I love the ness, I scream,
• 18:09
  Speaker 8: it is not the global leader. Magnum is so and
• 18:13
  Speaker 8: it's well behind. It's sort of half the market share
• 18:16
  Speaker 8: globally that that Magnum's got, So it makes sense, I think,
• 18:19
  Speaker 8: to monetize that that stake and put it into areas
• 18:23
  Speaker 8: where they are global number one or number two, which
• 18:26
  Speaker 8: is coffee, pet food, and nutrition. So it does make sense.
• 18:29
  Speaker 5: And it makes sense in the context of there's a
• 18:31
  Speaker 5: new CEO and he's kind of putting his stamp on
• 18:34
  Speaker 5: the company and setting out strategic direction for Nesley based
• 18:38
  Speaker 5: on what he's done so far, is he still in
• 18:40
  Speaker 5: the assessing stage of, you know, trying to figure out
• 18:44
  Speaker 5: what works, what doesn't work, or is he ready to
• 18:46
  Speaker 5: make actual moves.
• 18:49
  Speaker 8: It feels like it's ready to make those moves. I mean,
• 18:52
  Speaker 8: he's already sort of sharpened up the focus in sort
• 18:55
  Speaker 8: of making it much more of the four big core
• 19:00
  Speaker 8: acid bases, and you know, three of which are global,
• 19:02
  Speaker 8: so he's merging two sort of nutrition businesses into one.
• 19:05
  Speaker 8: So I actually get some cost savings which should then
• 19:09
  Speaker 8: be invested back into driving organic growth or particularly volume
• 19:13
  Speaker 8: in the case of Nessie, which is something that's been
• 19:15
  Speaker 8: a bit shy the last couple of years. So it
• 19:19
  Speaker 8: really feels that he's sort of focusing very much on
• 19:23
  Speaker 8: getting the volume moving forward on their core categories and
• 19:28
  Speaker 8: sort of I wouldn't say he's getting rid of everything else,
• 19:31
  Speaker 8: but he's de emphasizing that the importance of some of
• 19:35
  Speaker 8: the smaller parts of the business to make sure they
• 19:37
  Speaker 8: get the large parts right. And you know, if you
• 19:41
  Speaker 8: can do that, then maybe there'll be some other assets
• 19:43
  Speaker 8: to monetize over time. But he did say that in
• 19:46
  Speaker 8: the food businesses a lot of local assets there, things
• 19:49
  Speaker 8: like kick Kat, which which are very very big and
• 19:51
  Speaker 8: very cash generative. So you know, there are ways they've
• 19:55
  Speaker 8: got to make sure that they keep investing in some
• 19:58
  Speaker 8: of those, maybe smaller because they actually offer quite a
• 20:01
  Speaker 8: lot of cashloads of the business. But it's really about
• 20:04
  Speaker 8: focusing on the core areas where they can grow and
• 20:07
  Speaker 8: really shape the business moving forward. So it does look,
• 20:10
  Speaker 8: like you said, the ground running dunk and I.
• 20:12
  Speaker 2: Know that part of the Nestle story is a cost
• 20:14
  Speaker 2: cutting story. Give us a sense of kind of what
• 20:17
  Speaker 2: costs they're looking to cut and kind of how far
• 20:20
  Speaker 2: along in their plans.
• 20:23
  Speaker 8: Well, I suspect they'll always be looking to costs. It's
• 20:26
  Speaker 8: such a huge organization. I mean, I think it was October,
• 20:29
  Speaker 8: they said they're getting in red of sixteen thousand employees,
• 20:33
  Speaker 8: which is a bit shy eight percent of the global workforce.
• 20:36
  Speaker 8: So I think there's probably quite a lot of middle
• 20:39
  Speaker 8: managers in the business that could potentially be moved and
• 20:44
  Speaker 8: moved out. I mean, they've got to keep the local
• 20:48
  Speaker 8: salesforce moving in the right direction. But it's quite clear
• 20:51
  Speaker 8: that maybe the decision making was a little bit fuzzy
• 20:54
  Speaker 8: in the past in that there were too many competing
• 20:57
  Speaker 8: people trying to push the runs in one way or
• 21:01
  Speaker 8: the other. So it does feel that they're going to
• 21:03
  Speaker 8: be taking the costs out of there. They've got about
• 21:06
  Speaker 8: three two billion to three billion to take out by
• 21:10
  Speaker 8: twenty twenty seven twenty twenty eight, so I think that
• 21:13
  Speaker 8: they're well on the track on that. After that, merging
• 21:17
  Speaker 8: the two nutrition businesses together could generate a little bit
• 21:21
  Speaker 8: more sewing assets as well. You end up with some
• 21:24
  Speaker 8: sort of stranded overhead which will presumably give them a
• 21:28
  Speaker 8: little bit more to take out as and when those
• 21:30
  Speaker 8: assets are sold. So I think this is going to
• 21:32
  Speaker 8: be an ongoing story, but it won't be as big
• 21:35
  Speaker 8: as the sort of a three billion that they've got
• 21:38
  Speaker 8: out there. Over the next sort of few years, so yeah,
• 21:43
  Speaker 8: it'll be probably sort of Most company seems to say
• 21:46
  Speaker 8: half a percent percent of sales wishing Nessles's case, ninety
• 21:49
  Speaker 8: billion of ninety billions with frant to sales is quite
• 21:52
  Speaker 8: a chunk coming out on an annual basis. Break.
• 21:55
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