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Executives

James Allison

Raoul Jean-Marc Sidney Huët - Chief Financial Officer and Executive Director

Paulus Gerardus Josephus Maria Polman - Chief Executive Officer and Director

Analysts

Christopher Wickham - Oriel Securities Ltd., Research Division

Christopher Wickham - Matrix Group Limited, Research Division

Martin John Deboo - Investec Securities (UK), Research Division

Jeremy Fialko - Redburn Partners LLP, Research Division

Harold Thompson - Deutsche Bank AG, Research Division

Warren Ackerman - Societe Generale Cross Asset Research

Celine A.H. Pannuti - JP Morgan Chase & Co, Research Division

Alain-Sebastian Oberhuber - MainFirst Bank AG, Research Division

Alex Smith - Espirito Santo Investment Bank, Research Division

Unilever (UL) Q4 2012 Earnings Call January 23, 2013 3:30 AM ET

James Allison

[Presentation]

There we go. I'd say a small step for mankind, a big step for Unilever.

Unknown Executive

It's hot in there.

James Allison

It's very hot. And I'm telling you, don't become an astronaut.

Raoul Jean-Marc Sidney Huët

I think we've had a 150,000 applications for those 22 lucky people next year to go to the moon and that was within 4 days. And so I hope that you put your applications in, but the chances are low that you'll be taken. 2 of them are taken already in 2011 [ph].

James Allison

I feel like saying ground control to Major Tom commencing countdown engines on. Martin [ph], you can probably use that later on. As you can see, we've got Paul and Jean-Marc, Lieutenant Paul and Sergeant Jean-Marc as there going to be known this morning, who are going to do the presentations, apparently in their astronaut outfits. So -- that probably means, they're going to lose about 10% of their body weight in sweat during the course. So the Axe -- tons of Axe that we have outside, we had an ulterior motive for that. You might be needing those by the end of the presentation.

We have a number of the Unilever Executive here with us this morning. Let me just -- I'll let you know who they are. We've got Pier Luigi Sigimondi, who's our Chief Supply Chain Officer; over here, we have Doug Baillie, who you know very well our Chief HR Officer; we have Geneviève Berger, who is our Chief Science Officer. And next to her, we have Tonia Lovell, who is our Chief Legal Officer. So they're here and if your questions move in that direction, I'm sure Paul or Jean-Marc may ask them to make their particular contributions. So this morning, Paul is going to share his reflections on the year as a whole and Jean-Marc will cover the financial highlights. And Paul will then finish by briefly looking at some of the areas where we want to step up our performance as we strive to become fit to win. As usual, I draw your attention to the disclaimer relating to forward-looking statements and non-GAAP measures. And with that, it's my pleasure to hand you over to Paul for his opening remarks.

Paulus Gerardus Josephus Maria Polman

Okay. We thought consumer goods products were dull. Anyway, happy New Year to everybody and obviously nice to see so many familiar places faces in the audience. You'll see from the chart, our new wonderful Axe campaign that you've been exposed to where we actually promised, as Jean-Marc said, to take 22 lucky people into outer space. So if any of you fancies to go beyond the Earth's atmosphere, you know what you have to do. And you don't have to wear this outfit to qualify. Now judging by some of the stuff that I actually read recently, it actually occurs to me that 1 or 2 of you are probably already no strangers to outer space in the first place.

Now thanks for making time to join us today. And thanks also for those of you who are listening from around the world. I hope by now that the Unilever story is familiar to you. So we'll try to keep it brief this morning and leave more time for questions.

It's worth reminding ourselves of what we set out to achieve. Simply put, it is consistent growth ahead of the market, consistent improvement in core operating margin and cash flow. And then obviously at the same time, consistently investing for the long-term health of this business. The Unilever Sustainable Living Plan and our mission [ph] of doubling our turnover result environmental impact and providing positive social impact, obviously, guides us. Now we do this whilst at the same creating a performance culture with an acute, external orientation, an obsession for satisfying the needs of consumers and customers and agile enough to thrive in this focal world [ph] I talked about many times.

This last year, our remark at 2011 had been one of the most challenging years that I could remember. Well, I'm not sure that 2012 frankly was any easier. We experienced commodity cost inflation once again in excess of EUR 1.5 billion. There was no let up in competitive pressure either in some of our categories, particularly hair in the U.S. and China, for example, as well as our laundry in Latin America or Central Africa. The cumulative impact of austerity measures that you've become accustomed to is really hitting consumer confidence in many parts of the world, particularly in Southern Europe. I was in Greece just 1 week ago for 1 day, and I saw myself the hardship that people went through when you get an adjustment to the magnitude of some of 30%, 40% and their ability to live decent lives, chronically high levels of unemployment and a very low consumer confidence. We've also seen key emerging markets such as Brazil, India, South Africa, to name a few, slowing down. The U.S. narrowly avoided a fiscal cliff with all the ongoing uncertainty, though, around the budget negotiations will be in for a roller coaster ride there as well in my opinion. To see the impact that I've talked about many times of living beyond the natural constraints of this planet. As a result of weather patterns, we see more extremes from one to the other, nearly every month is a surprise. Hurricane Sandy which followed the severe drought in the Midwest is in our fresh memories and helped fortunately put climate change also on the U.S. agenda. Elsewhere in places like the Philippines and Turkey, we saw severe floodings this year. These are just some examples. It's impacting our business and many others. We are in this volatile world that is here to stay with us. It requires a different way of running your business, a different way of organizing your company to be successful in navigating this volatility. The businesses that will prosper in this environment are those which are able to deal with this volatility and uncertainty. They create opportunities. They need to be businesses that are sufficiently aware of their extended surroundings and able to adjust and adapt while staying true to their purpose and values. They need to be businesses that are increasingly rewarded by consumers for becoming part of solutions and consumers increasingly becoming powerful as you well know. That is why that Unilever Sustainable Living Plan is so relevant and increasingly an engine for our growth. The results again that we have released this morning confirmed that Unilever is fit to compete, as James mentioned, and consistently delivering performance above the efforts of the industry. Now let me just reflect for a few movements, if I may, on some of the highlights.

In a single year, we've actually added EUR 5 billion of turnover bursting through the EUR 50 billion mark in the process. That's a milestone. Today, Unilever is nearly 30% bigger than it was in 2009, and we have passed a major milestone in our journey towards our EUR 80 billion vision. Underlying sales growth of 6.9% for the year is clearly ahead of our markets, and we see share gains across roughly 60% of our turnover as a result. We've also seen growth in every cluster and every category with a very good balance between volume and price.

Personal Care and Home Care delivered double-digit growth for the full year, continuing the excellent momentum which you've now seen for 6 quarters. Refreshments posted a very strong second half of the year which close to double-digit growth in the final quarter. Now this has been driven by excellent performance in ice cream, but may I add also tea to this, which ended the year strongly, as our interventions are starting to pay out. It helps sometimes to publicly call out an opportunity.

Our food category underperformed, growing 2% for the year with volumes down around 1%. I expected us to do better and we continue to remove small, noncore parts of our portfolio to get fully behind the bigger innovations like the Knorr jelly bouillon and the baking bags that continue to contribute strongly to growth. This category plays once more a very important role, not only as a cash generator, but also as growth for this company. And I see no reason why we should not accept better levels of growth. We now have 14 brands in the EUR 1 billion club. Adding Magnum and welcoming back Sunsilk. This last one reflects the strength of our hair business. And I agree currencies obviously helped a bit, too, to push one of these brands through the barrier, but so be it. The fact that Dove bar on its own is now a EUR 1 billion brand, as is Knorr bouillon boosted by the success of the jelly platform. So you actually could say we have 16, EUR 1 billion plus brands. Now these brands accounted for about 50% of Unilever's growth in 2012. And I'm particularly pleased that the bulk of these brands are showing now stronger equities. That's a testimony to our innovations and support levels. Our emerging market business continues to be the engine of growth of Unilever. This is successive -- second successive year of underlying sales growth, north of 11%. In fact, it now accounts for 55% of the turnover of the group and more importantly, 90% of Unilever's growth. Underpinning the growth, we continue to step up innovations.

Let me just give you little statistic. In 2012, 90 projects were launched in more than 10 markets. In 2009, the number was barely 9. The average value per project has increased 75% in the last 3 years and the proportion of turnover from our products launched in the last 2 years is now consistently higher than 30%. That's about the groove, if you may say that, that we want to be in. And we continue to drive our brands also into new markets with confidence. In fact, we began added another 80 new brand positions there during 2012. That's now over 300 more country brand combinations than they were in 2009, increasingly helping us to contribute to the growth. Now this is all part and parcel of building an even broader footprint of Unilever brands. This will pay dividends over the longer term and hopefully, allow us to maintain our solid growth for many years to come.

Now some of these brand extensions have been major investments, launching Clear and Simple in the U.S. or Tresemmé in Brazil are good examples of that. Heavy investments behind the launch of great products and brands do reflect our confidence, not only in our ability to compete, but even in our ability to win in these highly developed markets. Tresemmé Brazil has proven to be one of the most successful launches for many years, adding over EUR 150 million of turnover in the first year alone in one sell [ph] in a single year. That represents nearly 15% of the entire retained turnover from the Alberto Culver acquisition.

Portfolio changes was more muted in 2012, but that's obviously as you well know the nature of M&A. It is lumpy and will not go each time exactly on the timings you want. The Kalina acquisition is performing very well. The Bertolli frozen food has been disposed of and we have announced the disposal of Skippy peanut butter. We will continue to trim the small non-core parts of our portfolio, and we'll continue to keep our discipline on acquisitions.

Another crucial aspect of excellence in consumer goods is obviously winning in the marketplace. Here, we continue to drive towards becoming an execution powerhouse. As you discover over and over, execution is strategy in consumer goods. Discipline is absolutely key. Undoubtedly, we are becoming best-in-class here in the Harish Manwani's leadership and our winning performance culture is driving this more and more.

Service levels continue to improve within shelf availability now 800 basis points higher than in 2008. And now at the level of competition instead of languishing behind. In many markets, we're starting to see this reflected in an increasing number of supplier of the year awards. The U.K. actually is a terrific example whilst we are here, winning multiple awards. Again, reflecting the importance we give to helping our customers to win. Although we are not yet #1 in all of our customer perception studies in all of the markets, we are rapidly closing the gap as the U.S. Advantage study, for example, recently showed. And on top, we enrolled more than 1 million new perfect stores, as we call them, in our 2012 program, making the total now about 5 million perfect stores across the world and well on track to meeting the stretch in 2015 target of 10 million perfect stores. And I'm very happy to see that some of you are getting the bug as well. I actually got a photo sent to me from one of you that identified one of these perfect stores. So if you can't make it to the moon, enter the competition of identifying these perfect stores.

Now gross margin also improved by 10 basis points in the year with improved momentum over the second half as shown by the improvement of 16 basis -- 60 basis points as we've just mentioned. The -- one second, because the text disappears. This remains an important priority obviously for us for Jean-Marc and the finance team to continue to expand the gross margin expansion and we'll talk about that later. Now our cost structure is more competitive. Once again, a combination of restructuring, value improvement projects, better and more global buying and obviously the synergies that we help to generate across the supply chain are well over EUR 1 billion and that has mitigated significantly the inflation in commodity cost that we have seen. And what I'm particularly pleased about is that we can achieve this without a major restructuring announcement. We all know that this distracts companies for years to come and sets you back in corporate culture, with cost do have a habit of creeping back, of accumulating in pockets and then spreading again. So we need to contain all costs with disciplined and to drive efficiency improvements as a normal way of doing business. And to be clear, this applies as much to advertising and promotions as it does to factory cost and overheads. We will do that each and every year and avoid the big bass upheaval of periodic massive restructurings moving forward and these numbers I hope you'll agree with me reflect this. You've all heard me comment on the importance of the organizational changes we implemented at the end of 2011 when we move to 4 big categories and 8 market clusters. It takes a while for such a change to get cemented. But increasingly, I see more and more benefits. Now we're bringing more elements of R&D under the control of the category presidents, reinforcing once more our determination to become even more a consumer and customer-centric organization.

We've also stepped up capabilities in a number of other areas. We're building talent in Personal Care with external and internal hires, and we're investing obviously significantly in the training and development of our marketers. Our new state-of-the-art training center opens in Singapore in less than 6 months time from now. That's a highly regarded leadership development program that has now been extended to include all people within 2 levels of the leadership executive. And I'm talking over 500 people that participate in these programs. And all of this whilst making the organization more agile and more efficient and lower in costs. So I think you will agree that we are making good progress on a number of fronts.

Let me first pass over to Jean-Marc, who will cover the financial performance in detail before I come back and give you little bit more on the outlook. Jean-Marc?

Raoul Jean-Marc Sidney Huët

Thanks. Thanks, Paul, and in the interest of time, I wanted to focus today on key aspects of our financial performance. And so for your convenience, we've included 2 appendices to this presentation which show the development of turnover for the full year and for Q4. And it's not my intention today to go through this as it's clearly set out in the press release. So let's start.

Core operating margin was up by 30 basis points for the full year and by 60 basis points in the second half. 10 basis points comes from gross margin with a further 20 basis points from overheads. And this reflects lower business restructuring which came in at 110 basis points. This reduction reflects increasingly tough scrutiny and prioritization of projects. That, I have to say has been made much easier by the decision to include such costs within overheads and that's part of core operating margin.

Now as Paul mentioned a few moments ago, companies without a continuous improvement mindset are always looking for ways to remove costs. And so some level of business restructuring spend is required each and every year in order to stay competitive. We think that for Unilever, that level is around 100 basis points perhaps a little less. For most of the 2000s, Unilever's restructuring spend was close to 200 basis points per annum. That's why we gave so much guidance and reported on it in so much detail. But now we're at a time that we're at the level and the consistency where separate disclosure is no more relevant than any other line item in overheads. So from now on, we do not intend to break it out. Now rest assured as you have heard us say many, many times, our determination to remove unwanted cost will just continue undiminished.

Back to gross margin. As you can see in this chart, gross margin continued the sequential improvement that we have seen in the first half of 2011 and it was up by 60 basis points in the second half of the year. Commodity costs, including importantly the impact of FX, increased by high single digits in 2012. That's over EUR 1.5 billion. In fact, commodity costs have increased by around EUR 7 billion over the course of the last 5 years. Although at this stage, 2013 looks more benign, it is still early in the year and, as you know, much can change. As it stands today, we expect commodity cost inflation of low to mid-single-digit for the year. We view steady and sustainable gross margin improvement as a key steppingstone in becoming a company that is fit to win. And that was indeed the theme of our investor event in Paris. Where will it come from? Where will it be a combination of continuous cost management, margin accretive innovation, discipline in pricing and the maxing the mix initiatives that you've heard us speak about, and Paul will return to this later on.

Advertising and promotions increased by close to EUR 0.5 billion in 2012 despite our continued progress in driving better efficiency in our spending. That also is a big increase over EUR 1.5 billion in the last 4 years and close to 2/3 of that increase has been in a so-called good cholesterol of advertising, not promotion. Digital spend increased by close to 40% in the year, as we continue to find new digital expression for the brands that we have. We've been recognized by advertising age, as mentioned, one of the so-called A list digital companies from amongst other things. One, putting 2,000 marketers through a digital training academy; two, opening media labs in our clusters; and three, the extent of our global partnerships. I was at the CES show last week with Facebook, Apple, Google, Microsoft and Twitter. Nonworking media, that's the part of the advertising spend which is used to make films, pay agencies and the like continues to reduce, but we are still some way from benchmark levels and we aim to do better. Let me say a few words about overheads, as I do each and every quarter.

Some of you will remember that we reduced overheads in 2011 by 100 basis points and that was a surprise to many of you. And we called out that around 2/3 of this was structural and 1/3 was, let's call it, one-off tactical. As a result, I indicated that keeping overheads flat versus 2011 levels would be a good achievement in terms of basis points. Well, I actually believe we did better than that. They've been held flat and this despite very significant incremental investments in Personal Care, customer management, acceleration of our leadership development program and in our Enterprise Support organization ahead of further efficiency programs. The bottom line, this chart shows the moving parts in the development of our core earnings per share which were up 10.7% to EUR 1.57 per share.

In 2013, as previously, we have reported there will be a negative impact on the finance line as a result of the new IAS 19 pension accounting rules. In which, pension asset returns and liabilities have to be calculated using the same discount rate. And as a result of this, we expect pension financing to be around a debit of EUR 150 million in 2013 and that is versus a debit of EUR 7 million last year. Now this impacts 2013 earnings by around EUR 0.04 per share, as we had previously guided. So this chart just shows the impact of the new IAS accounting on 2012. You can see that hereto the impact is to reduce core earnings per share by around EUR 0.04. So the restated EPS, core EPS for 2012 which will be used to calculate core EPS growth in 2013 will be EUR 1.53. Let's just turn to free cash flow.

For the year, this is at EUR 4.3 billion which is up by EUR 1.2 billion, EUR 1.3 billion on 2011. That's an increase of around 40%, particularly strong contribution from trade working capital. Average trade working capital has now been negative for 13 successive quarters but particularly negative towards the end of the year. Credit has increased in line with overall cost but we held debtors and stock at similar absolute levels to those prevailing at the end of 2011. And this, despite the growth in the business. So this, together with the late phasing of some CapEx in the year, led to a positive contribution from trade working capital of close to EUR 800 million. I personally, I'm particularly pleased at the progress we are making with our operational planning inside Unilever. It is helping us and, as you have heard, it's significantly improving the service levels and, at the same time, we are reducing inventory levels by a further 2 days at the end of last year. And we are all, Pier Luigi, myself and the whole of ULE are convinced that there is more to come, as we drive and continue to drive further simplification throughout the business.

Net CapEx for the year was EUR 2.1 billion. That's just under 4.2% of turnover, and we expect to the levels in 2013 to be anywhere between 4.2 and 4.5, driven by the rigor and discipline that we are instilling in the business. At the same time, we are increasingly driving our return on assets as a key performance metric for those categories with lower than average margins and a higher than average demand for capital. This is helping to ensure that we drive the right kind of growth, the right kind of investment decision in categories such as refreshments and Home Care and that will not come as a surprise to you.

Let me now look briefly at the balance sheet. The strong cash flow help to reduce net debt which closed the year at EUR 7.4 billion and that's down from EUR 8.8 billion at the end of 2011. The pension deficit at the end of the year was at EUR 3.7 billion, and that's up EUR 500 million, plus or minus, from the end of 2011 and that reflects largely the impact of lower discount rates. The cash contribution to the pension funds was just over EUR 700 million, EUR 721 million to be specific last year, and we expect this figure to be actually nearer to EUR 900 million this year reflecting the overall increase in pension deficits. So with that, let me pass back to Paul for his closing remarks. Thank you.

Paulus Gerardus Josephus Maria Polman

Thanks, Jean-Marc. Thanks, I appreciate it. The -- let me finish by just covering 2 areas briefly. First, the outlook for 2013 and then areas where I specifically think there is some room for us to further step up performance as usual. Now it's not obvious to me, first of all, that the markets are going to be any easier in 2013, as I mentioned to you. And certainly, the competitive environment is not going to be more benign either. Governments everywhere are treading a very fine line between their cuts and austerity measures at the one hand and then the central banks simultaneously providing the quantitative easing on the massive scale that you have seen just to keep our economies from stagnating. And I'm obviously talking here Europe especially, but also the U.S. And consumers will continue to feel the effect of these austerity measures more and more. Retailers also are feeling the pinch. They reflect the total economy, and they're fighting for consumers at a zero-sum game, increasingly looking for exceptional values. Many of our competitors have lost ground for too long, and I'm sure they will come back in 2013, increasing to some extent the cost to compete. So we are prepared once more for an even more challenging year and there are certainly more for us to do as we transition this company from what we call capable of delivering, consistent top and bottom line growth whilst having sufficient juice in the system to absorb the bumps that will come along the road. And at the same time, obviously, preparing this company even stronger for an increasingly resource-constraint future.

Now where we need to focus on is that it demands for us even better progress on gross margin. Not only as a source of operating margin improvement, but just as importantly simply as fuel for growth. I think we're better place now than ever to deliver on this momentum that we have created. At a category level, you can actually see that we're starting to make progress. Second half gross margin expansion was up 60 basis points, as Jean-Marc said, and that would support this. By category, if you look in refreshments, as Jean-Marc indicated, we're now driving return on assets as a key metric. Core operating margins are up by 170 basis points for the year as a whole. In Home Care, we've not given an inch on the competitive battle front and never will, rest assured, but we have still managed to improve the core operating margin by 50 basis points.

In food, we continue to shed the non-core and margin dilutive parts of the portfolio and will continue to do so. Moving forward, I also expect that growth rates in Home Care and Personal Care will moderate from the exceptionally high levels of 2012, as I mentioned to you in Paris. And it's also important for that reason that food should actually take up some of the slack. This, too, should have a positive impact on gross margin. Innovation, of course, is an important source of gross margin improvement. In fact, you'll hear me say over and over that if a new product is not accretive to margin then you have to question, if it really is a real innovation. We have some notable successes across much of our portfolio take Dove, the jelly bouillon, the whitening toothpaste, the baking bags, the deodorant Maximum Protection and many, many more. So we know what to do. And we will further, next to working our innovations, lower cost, another important element to improve our margins by driving the continuous improvement program in all we do, be it manufacturing rationalization, especially in Europe or the low-cost business models as we now call them under Pier Luigi's leadership, but it really means actually a deep scrutiny across the extended value chain. And that is now starting to work for us in ice cream in China, in laundry in India and many other examples. We need to start capitalizing on the enormous investments in ES IT that we've made over the last few years and we see enormous possibilities there. And finally, there is still more for us to do to penetrate the more profitable faster-growing channels if you look at winning in the market. Here channels like e-commerce, drugstores and out of home are more profitable channels but we still see enormous opportunities, EUR 3 billion to EUR 5 billion incremental turnover and gross margins that are higher again once more than the Unilever average.

So some examples of how we build gross margin. There is more for us to do as we seek to improve the quality of our growth. The incremental turnover from our innovation projects, although vastly improved, I believe, is not yet high enough. Projects need to still be fewer and bigger. Product quality is now at the stage where equal or better to competition in blind testing in about 95% of the time. We've never been in a better position. But here, again, we can still increase our better than ratio such as an important part of the value equation with our consumers. So whilst we are in a good position, there's a lot more upside. And the performance culture, obviously, we need to continue to sharpen. The risk of complacency needs to be avoided. We need to be even simpler. We need to be less bureaucratic still and consequently faster and more able to react to the unexpected. More than ever, our agenda in 2013 will require us to go about everything with rigor and discipline and an even higher sensitivity to costs. There is no shortage of great opportunities. And once more, we have no excuse outside of this company that we -- actually, we're planning to share with you. We look forward to another exciting year and certainly appreciate the support that you've been giving us on this journey. As the Axe promotions shows, reach for the stars and you will never end up with mud in your hands. We will now be more than happy to take some questions. Thanks.

Question-and-Answer Session

James Allison

Thank you. Thank you very much, Paul. So the usual routine here. So if you're in the room and you want to ask a question, just stick your hand up. And then if you get selected, please remember to hit that button on your console. Please tell us who you are, who you represent. And if you don't mind, can I restrict you to 2 questions, please. We'll also be taking questions on the phone lines. [Operator Instructions] So we're going to start in the room. Martin Deboo, did you have your hand up there? Do you want to go first, Chris? You go first, well, Martin is getting himself ready.

Christopher Wickham - Oriel Securities Ltd., Research Division

Chris Wickham from Oriel Securities. Just a quick question on the growth. I mean, you've talked about food and acceleration there. I mean, do you think it's likely that the asymmetric pattern of your growth between emerging market and mature markets will shift so that we will start to see a better balance of the growth between the 2? And as a follow-up to that, does that have clearly positive implications for your ability to convert organic sales growth into EPS growth?

Paulus Gerardus Josephus Maria Polman

Yes, specifically talking of food, Chris?

Christopher Wickham - Matrix Group Limited, Research Division

I'm talking food and the implications of that for the asymmetric nature of growth between emerging markets and mature markets?

Paulus Gerardus Josephus Maria Polman

So as you know, although we have 55% of our food -- of our overall business in the emerging markets just to -- we has the statistics once more. On the food side, it's still more the 40%. Now while we are confident in our food business, obviously, is if you first look at it a little bit more granularly, increasingly, our food business is, really, if you take refreshments out because we're not -- that is food, the beverage and ice cream. But I'm talking about the rest of our business is basically now 3 big core activities. And that's -- we're getting nearly to that point now which is margarines, dressings and then hopefully savoury. And margarine, as I mentioned before, the markets are down and continue to decline but we have actually in margarine, we're growing our share. We're growing our share in a declining market. And we obviously play the volatility cycle and manage our cash flow. That will be a drag on the growth rates but it will be a contribution to the overall financial performance of the company. And we will continue to manage it that way, without expansion so you won't see any footprint shift in margarine in the foreseeable future. Then the second business is our Dressings business. Actually, a very healthy business. Growing very well by the way and we continue to expand that business. It was a good pipeline of innovations that you're familiar with and we're very confident there. And our Savoury business is the balance of the business where again it's about 40-60 ratio that we have to move to the other side. Our emerging market business is growing well. Our European business, we have too much of that is because we have of relatively small business in the U.S. Our European business gets the double whammy of being in Europe already with mature shares, if you want to, in markets that are down. And then there's a little drag on the Savoury business because of nonstrategic brands that we will continue to look at and find solutions for. I am convinced that we have to focus on the Savoury business for this discussion, if I may. I am convinced that with our focus now on the emerging markets and our innovation pipeline that we can actually bring the growth rate of that business up. There's no doubt that the category on the -- on the [indiscernible] is 100% focus on that. As we do that, then obviously you get also a positive contribution to earnings per share. I don't know Jean-Marc if you want to add to that?

Raoul Jean-Marc Sidney Huët

The only point that I would add is that increasingly, if you look at our business, I'm referring to the last question which was the translation of sales into profitability earnings is that despite the growth differential in emerging markets versus developed markets, we have a very, very good structural gross margin throughout our business be it D or D&E and obviously the margins are then a reflection of where we are spending our A&P.

James Allison

Martin?

Martin John Deboo - Investec Securities (UK), Research Division

Sorry, 2 questions if I may. First is on the refreshments business. I mean, it looks as if you had very good growth acceleration and accelerating margin expansion in H2 in that business is strikingly good. Can you just give us some more commentary on that but also is that a momentum that you would expect to carry into FY '13 in refreshments? Second question, Jean-Marc, is on gross margin. You're guiding to high single digit input inflation but obviously the other side of the equation is how you're managing the top line in terms of maxing the mix, et cetera. So what -- how would you expect the gross margin outlook to be in FY '13?

Paulus Gerardus Josephus Maria Polman

Okay. Thanks, Martin, on the refreshments side, we're actually on the Kevin Havelock's leadership, we're pretty happy with what is happening there because ice cream now is truly becoming a global business. Ice cream was a little bit where food was before was very much geared towards the Europe whilst the U.S. was a bulk in home business which frankly isn't very attractive. We have obviously with the launch of Magnum in the U.S. and some other activities that we've done, we are increasing our impulse business which is more profitable also out of home and that strategy is working for us. We've seen the same in Europe obviously, where out of home is still an enormous opportunity. We think that could be up to EUR 1 billion in incremental business. So changing this footprint from margin destroying in home bulk business to the more impulse added value out of home. Magnum is obviously an enormous success story. Since I started in the company, Magnum was EUR 550 million in turnover and now we just passed the EUR 1 billion barrier and that's just in 4 years time. It's one of the greatest success stories, I think, in the history of consumer goods. Perhaps not sexy for many, but certainly should be sexy for our investors. And we increasingly have taken their opportunity and their confidence to launch our ice cream businesses in the emerging markets. This is actually amazing if you think about it because the weather environment there is a whole year ice cream environment. That business doesn't need to be seasonal. And with the launches in Indonesia that you have seen when you were there which is an enormous success and continues to grow, we have added to that and all of the other places in the far east. Tremendous success for launches in the Philippines. We've now open Ben & Jerry's stores in Japan but people start queuing up. I could go on and on, and the same is true by the way for Latin America. So that momentum that you see in refreshments will also, hopefully, give us a better business if you look at it on 6-months basis moving forward. And then Tea which is the second part of that. I think we have -- we've seen very strong growth in some of the important Tea markets that were under pressure. Like Russia would be an example of that. Saudi would be an example of that. Where on the one hand, we have corrected the basics and on the other hand, we have stepped up the quality of our products and the innovation. As you know, in the U.S. would be an equally good example of that. Well, frankly, we have under supported the Lipton brand tea brand there. Literally under supported in quality and product and that has never a long-term strategy. We've reinvested and continue to reinvest in quality and product and you start seeing the results. So I am fairly positive that, that business bar a quarter here or there for different reasons, but that business is on the right trajectory. And then coming to the gross margin.

Raoul Jean-Marc Sidney Huët

Yes. As we've discussed a variety of times, gross margin is crucial if you want the virtuous circle of growth to really work in a sustainable way. And I would argue if you look at our financials over the last 3 years, we probably have to rely solely on overheads to drive that core operating margin. So we don't give you a view in terms of outlook for 2013 but it's strategic, it has to be positive and you see the trend between H1 and H2 for 2012.

James Allison

Okay. James [ph]?

Unknown Analyst

It's James of Australian [ph] from RBC. 2 questions if I may. Can you explain a bit more on the reasons for the Americas strength in Q4 and how sustainable that is? And also just around nerdy question but A&P, I think, you said was EUR 6.5 billion for the year. It was around EUR 470 million. On my calculation, that means a fall of about 30 basis points, but I think there was a chart where you showed it was flat. What's the difference between those 2?

Paulus Gerardus Josephus Maria Polman

Very quickly, James. On North America, again, as I said, we don't want to really take these discussions on quarterly numbers and once-offs, but we have this impact of this change that we have last year 2011 that for North America alone that's probably about 400, 500 basis points, by memory. So if you remember, it's a base question on the quarter. I think the North American market on a macroeconomic level, we'll see an economy that might be growing at around 2% level. It hasn't done that well in the last 2 years. But it's slightly there. Some signs that the U.S. is slightly picking up and we should be slightly above that with our innovation program net of divestiture obviously. On the A&P, I think what you probably looking at is apples and pears for the M&A, foreign exchange part of it. But if you look at the total, it's absolutely flat so we can take you through the calculation, if I may.

Unknown Analyst

Yes, I'll do that afterwards.

Raoul Jean-Marc Sidney Huët

Your point is the right one, don't extrapolate UVG in Q4, given the point that Paul mentioned on North Africa implementation in the 12 months prior.

James Allison

Jeremy?

Jeremy Fialko - Redburn Partners LLP, Research Division

It's Jeremy Fialko, Redburn. Couple of questions. Firstly, on the commodity guidance, you're looking for low to mid-single-digit increase. Now that was certainly lower than what we've seen in previous years. In some of the commodities that we look at, things like edible oils, which are very big items to you. Look as if they're down very significantly year-on-year. So could you tell us as to why the guidance is not sort of lower than that and what sort of the main items where you're seeing kind of cost inflation this year are? And the second question is just on your overheads in 2013. Clearly, you're looking for gross margin, be the main sort of driver of your operating margin progression. Do you think that overheads could end up being up year-on-year as you choose to kind of reinvest more on your capabilities, you think it will be flat or could that be even an additional kicker to your operating margins?

Paulus Gerardus Josephus Maria Polman

Yes, you want to take the...

Raoul Jean-Marc Sidney Huët

Yes. So thanks for pointing out because I think someone in the audience said the commodities would be mid-single-digit and it's indeed what we are saying is low to mid-single digits. And as you know, our policy in terms of hedging, simple forwards 3 to 6 months and so that's the P&L view that we have. So again, we maybe in a position to change our views by the half year. That's where we stand today. If you look at your screens on Bloomberg, there'll be spot prices. They can be different to the actual contracts in terms of purchasing. Secondly, there are whole variety of exposures in terms of commodities that we have some that have gone up, others that have gone down also depending on the region where you buy those. But also don't forget foreign exchange and other which we include in terms of our calculation of percentage increase because we're talking about the impact on our P&L.

Paulus Gerardus Josephus Maria Polman

I tend to think on commodities that we have a good system, good people looking forward, what we had, what we don't have. This is done very professionally and increasingly so as we, under Pier Luigi's leadership, have globalized that organization. But the reality of today's market is enormous pressures that can come on you from one end to another. Just the drought of grain in the U.S. wiped out 20% of the U.S. crop there. So that has a tremendous effect on the global market at a very short period of time. Obviously, you cover for that. So what is equally important is that we create a system that is able to deal with these increasing shocks that will be coming. Climate change as being one of them. And I think we're in a very good position versus our competitive set because we spent a lot of time on how to deal with that. We're also in a very good position with our brands and the market positions that we hold to manage these things in a way that we don't have to take all of that pressure into our own P&L, if I may. On the indirects, I think that your point on investing in capabilities is absolutely key. We continue to look first and foremost in what capabilities do we need, quality capabilities to fuel the growth. Interestingly, if I go back over the last 4 years and take a little bit of a macro picture, we have invested enormous amounts of money in training and developing our people over EUR 100 million. We've invested enormous amounts of money in bringing our sales capabilities up. We've invested in these state-of-the-art customer innovation centers. We're now investing in the Personal Care capabilities. We've invested in R&D to be able to fuel that growth. So our investments probably in the last 4 years in indirects have been higher than any time we probably could find in the previous 2 or 3 decades. And that we will continue to do. But that doesn't mean you cannot drive efficiencies. If you grow, if you don't grow I think you're in a pickle. But if you grow, and you grow with discipline, there is no reason why you cannot drive the indirects further down. An EUR 80 billion business doesn't need 2 CEOs either versus a EUR 40 billion business. I hope. So the efficiencies we will continue to look at in indirects. We still have a low decision-making compared to what we think would be ideal. We still have a lot of non-value added activities in a company like this as well. We still need to do a lot of restructuring in the way we go to market in some parts of the world where we have become too complex, and we will continue to drive them. But you don't want to do that with shocks because it will be dysfunctional to your growth. You will manage them consistently. So I think that our indirects should continue to show the 20, 30 basis points improvement.

James Allison

Harold?

Harold Thompson - Deutsche Bank AG, Research Division

Harold Thompson, Deutsche Bank. Just got 2 questions. One is a bit of a follow-up on investing in capabilities. You note in your press release that the Personal Care margin is down because of such investments. Can you maybe slightly expand what you're doing whether it be price positioning of your Personal Care offering or the categories where you're looking to compete in? My second question is kind of following yesterday's announcement on royalty rates in India which is on the back of Indonesia and then there's the Pakistan move as well. Can you maybe just a little update us on your kind of minority participation view which seems to be changing versus maybe 3 or 4 years ago, and how do you see that over the next 5 or 10 years?

Paulus Gerardus Josephus Maria Polman

Harold, thanks for the question. To be very brief and quick, the views are not changing. The organizational model is changing. And because the organizational model is changing with tasks being performed in different places now. When we were very decentralized, we had a lot of activities in the countries. When we have a more interdependent global structure like ES IT is a good example, our brand groups, our innovation groups if you want to, we have a different organizational model now very clearly than we even had 4 years ago. And that needs to be reflected in these markets to recover the true costs, and that's all what we're doing and we will continue to always look at that. It's dynamic and we're happy with that -- that is the way that is done. By the way, very well auditors in those countries because we have minority shareholders that we need to respect, and we will be the first ones to do that as you can imagine. But if we don't, it's very difficult to defend to other countries. We very much believe in being in each of the countries counting for these countries the benefit of the added value but we also have to recuperate cost if it is somewhere else. On the first question, on the Personal Care capabilities, for example, what you see here is the gross margin in Personal Care actually good. But the investment is A&P, a lot of the investment in A&P went to actually Personal Care because that's where you've seen this great expansion and the 10%, 12% growth. That obviously is part of that. And then the second thing, our capabilities would be, for example, Dave Lewis who leads very capably our Personal Care business is obviously investing in, for example, trend centers. We'll expose you to that in due time like we did with the customer innovation centers, but this is a fast-moving business. Obviously, even more so in the emerging markets where there is no one common denominator. And we are investing very skillfully, I think, with some capabilities that we bring in from the inside and outside. Capabilities in packaging and packaged design. And these are examples where the 4 mega categories we've created are actually increasingly working for us because the activity systems, as I've always been saying, it's not a surprise but it's more difficult to do. But the activity systems that we have created around these 4 categories are slightly different to succeed because different competitive set, different drivers for consumers and yet we are leveraging smartly the skill where it make sense. And the activity systems of Personal Care were never really that strong in this company, if I may honestly say, because we were so fragmented. And any individual business be it deodorants or hair or skin could never pay for that. Now that we have this aggregation and nearly are the size of a L'Oreal, this was Personal Care alone, we have these capabilities.

James Allison

One more in the room and then we'll go to the telephone lines. Warren?

Warren Ackerman - Societe Generale Cross Asset Research

It's Warren Ackerman of Soc Gen. Can I just ask about the balance sheet. I mean, the net debt is down. You told us about your priorities in Paris with the free cash flow improving. It looks like you could be kind of net cash almost within 2 years. Just wondering about your kind of priorities within that and would you consider a share buyback or are there more kind of Alberto Culver type deals out there or would you look at your dividend payout ratio because the balance sheet is really very, very strong at the moment. And then just secondly, on the Home and Personal Care growth, obviously, very pleasing that both Home Care and Personal Care grew double-digit in the year. I'm just wondering what you think the overall market growth in both Home Care and Personal Care was. And then you talked about the 60% where you're taking market share. I was just wondering about the other 40% where you're not taking market shares. Any kind of areas that you'd point to, the kind of things that you're doing to try to improve the situation?

Paulus Gerardus Josephus Maria Polman

Yes, the -- I think the balance sheet. Let me have first, Jean-Marc, if you can do that.

Raoul Jean-Marc Sidney Huët

Yes, very simply, no change. You saw dividend today and we usually look at that at Q1 each and every year so that's when we will review firstly. Secondly, no intention on changes in terms of use on share buybacks. Yes, we're happy with the free cash flow that we've created, but now is not yet the right time to really look at a different funding financing strategy. In terms of M&A, it continues to be bolt-on M&A, very focused on the EUR 1 billion to EUR 2 billion mark. If it's bigger, that's fine as long as it's not distracting. But just like Paul said, these things are lumpy. We don't rely on it. It's ordinary course of businesses just to add to our existing categories.

Paulus Gerardus Josephus Maria Polman

As you rightfully said, Warren, we have probably have 1 or 2 years. So ask the question again next year and we'll see, but let's not run too far ahead of ourselves on that one. The Home Care and Personal Care, actually the Home Care market interestingly is not growing that much. If you look at household cleaners, we see obviously the emerging market growth which is about 5% to 6% there but there's no growth in Europe or the U.S. And all the growth is coming from the added value where brands like Domestos or Cif with their innovation programs which are very strong and the introductions, by the way, we've introduced in 30 countries brands like Cif or Domestos are doing very well. So we're very pleased with that business. And that obviously is more and more for us since we're not in the U.S. really in significant way and in Europe, only in a few countries. It's an emerging market business and that's why you get that higher footprint that gives you higher growth rate. We are well beyond the 55% on those businesses. On laundry, the markets again, if you look at it on a global basis and for us, it's again all emerging markets. On a global basis, that market is probably growing 2% to 3%. In the emerging markets, again, you'll see the 5% to 6% growth rate. So with the double-digit growth rate that we are showing versus emerging market growth rates of 5% to 6%, if you average that out, we are outgrowing the market. And as a result, we are building share. I'm obviously very close to that business. And if you look at 16 sales that I look at, in 14 of those, we are growing share and we're very happy. Now I've always said that by the way I want to make a point that if the competitive -- if you are market leader and you manage your business very well and you have the trust of the consumer, otherwise you wouldn't be market leader. And competition comes in and you defend your business, you probably get a disproportionate benefit from that. The markets will grow faster because of the activities and it will gravitates towards you. We see the same in oral care where, I think, Colgate is not doing a bad job in growing their business in a very competitive environment. And they should be credited with that. So we believe in that. I firmly believe in that. And that's why we don't blink. In some of these Home Care markets, unfortunately, on the laundry side, we are seeing competition still underpricing us by 20%, 30% and yet we are growing share. But we cannot take prices up as fast as we wanted because of that. Now your last question is about market share. If 60% growth market share and 40% doesn't grow market share. That's pretty good for our consumer goods because when 40% doesn't grow market share, doesn't mean they're all declining at significant rates. Our food business, for example, if I may do our Savoury business has a small share decline. Most of that reflects the market itself. But it's the thing that I think is close to becoming positive. So the different degrees. The business that we like to do better if I may say on a macro level is obviously we want to continue to have our beverage part of our refreshments performed and that will increasingly be reflected in the share growth as the volume continues to be what it is right now.

Warren Ackerman - Societe Generale Cross Asset Research

Just to clarify, there's a comment about the moderation in growth in HPC. Is that simply a reflection of very tough comps going into 2013 or is it more of a reflection of competitive response potential?

Paulus Gerardus Josephus Maria Polman

No, it's a -- if I may be honest, the market growth might be 1% less or more. We don't really want to debate that. But if you continue to grow at 10%, 12% already for 6 quarters now and that's nearly double the growth of what the markets are seeing, we've obviously had a great momentum but it's difficult to -- we will try, but it's difficult to maintain that momentum in perpetuity as your business gets bigger and all that. And as probably some markets mature more and all the factors. So I have to be very transparent with the organization. I mean, obviously including you guys that as I expect that it will be more -- the pressures will be more towards the down than towards the up on that, I need the food business to then perform to give the same outstanding performance that you've become accustomed to. So businesses that we want to have, do better. In share terms, will be the beverage part will come through. The savoury part, those are big blocks for us already. And then in Personal Care, despite doing very well, we want our skin and especially our face business to do better as well. So we have even in Personal Care which has been a brilliant-performing business, we have some businesses that we would say have challenges on the -- and possibilities on the upside. But these are all great opportunities. If a business would grow 100% share which we now have in some of the markets is never healthy. Because if you grow 100%, then your ego starts to grow. So to have a few parts of the business that are suffering, keep you sharp overall. I like that actually so that's where we are.

James Allison

So we're going to go to the people waiting patiently on the telephone line. Celine, can you hear me and can you ask your questions, please?

Celine A.H. Pannuti - JP Morgan Chase & Co, Research Division

Yes, I can hear you. I have -- well, my 2 questions. My first one will be on the margin that you did this year was 30 basis points basis, which was your best performance in the past years. So I was wondering whether this is the new sustainable type of rate that you imply when you talk about the being fit to win and a sustainable margin improvement? And am I right in understanding from your comment of the increase cost to compete that we should expect these delivery to be done, despite an increase in A&P in 2013? My second question is on price outlook. It has been a bit of interesting in the fourth quarter that we have seen that pricing as we accelerated in some of the region. So I was wondering whether we should -- what kind of pricing are we going to have in 2013 coming from 2012 actions and whether there is a further upside to pricing for 2013?

Paulus Gerardus Josephus Maria Polman

Celine, listen, on your 2 very valid questions. The margin improvement this year is a good benchmark of what we are striving for and that's all I want to say on that one. On the cost to compete is exactly why we need the gross margin to continue to improve that volatility that is going out there, including the competitive pressures or if Europe doesn't grow, the retail pressures, et cetera. You have to assume that, that is going to increase. That's the cost to compete. For that, we need to create more flexibility. We use these value in price and this reality checks was the external environment to be sure that the organization continues to focus on taking costs out of the system, et cetera. So I think we can manage them but we are just sharing with you some of the forces that we have to deal with. And then in terms of your last question.

Raoul Jean-Marc Sidney Huët

Price outlook.

Paulus Gerardus Josephus Maria Polman

Yes, price outlook for next year, we don't know what happens with all the commodities, et cetera. But as it stands right now, half of the pricing will probably be carryover more or less and the other half will be incremental. And the incremental, I believe, will be more driven by some of the currency changes in the emerging markets. What you already see happening in Europe, for example, is exactly what I said last year. In an environment like this in Europe, it's very difficult to get pricing through. If a consumer has 15% less money or in Greece, 40% less money. If you're going to whack him with a 5% or a 10% price increase, you might as well fold your bags. That's very irresponsible. We are out there to help them. And I will work very hard personally and as a business, to be sure that the consumer doesn't have to suffer more from some of the things that really were outside of their control. So in Europe, we will work very, very hard to be able to take cost out of the system so that we don't have to price. And I'm sure, competition will do the same. So don't expect much. In the others, I think it's again once more, it's about half, half. Like it has been this year by the way. If you do your calculations, you might find to your surprise that there is some pricing over the second half more so than the carryover from the years before. Something that's some of you guys were skeptical about not the ladies obviously. The guys mainly. But you see now that we consistently have that pricing power as well where we need it.

James Allison

Okay, one more on the line and then back into the room, Celine. So Alain Oberhuber, could you ask you questions, please?

Alain-Sebastian Oberhuber - MainFirst Bank AG, Research Division

I have 2 questions. The first is about the inventory turnover. What could be the outlook for 2013 giving that you were very efficient in 2012? And then on the portfolio, Paul, you mentioned about the trimming in the portfolio. Could we expect that such kind of a trimming will be more in the food or in HPC? And what about the parameters? Is it about the size of a brand or the future growth rate of that potential brand which could be divested?

Raoul Jean-Marc Sidney Huët

Good. Thanks, Alain. So on the first one, just very briefly. If you just do a benchmarking in the broadest sense of our industry, we come very quickly to the conclusion that there's still a lot more that we can do in inventories. If you're actually looking at trade working capital that's probably the place where we can make the most progress. And so that will just continue each and every year. And as Paul said, it's just also a reflection of our systems, our processes working. And that is the real enabler to get stocks down but that will just continue.

Paulus Gerardus Josephus Maria Polman

Yes. Alain, I don't want to talk too much about what other businesses would be looked at when we have the acquisitions and divestitures other than we probably have about EUR 0.5 billion to EUR 750 million still of turnover that needs to be looked at because it's either a distraction or it's not -- it's margin dilutive and top line dilutive or it also has no capabilities of global expansion. And we can afford with our current growth rates and momentum to be a little stricter on that because we have enough opportunities to focus the organization as you see behind businesses that are really important to us. So I'm talking about the smaller businesses that you might find. Under some of these conditions are not belonging to one of the global franchises, not being globally expandable, being dilutive for the top and bottom line, then you have to have a very good explanation of why it doesn't work. We, for a long time held onto our Frozen Foods business in Italy under the excuse that we couldn't sell ice cream, otherwise. That turned out to be a fallacy. We sold that business. We did reasonably well in selling it. It allowed us to focus more and our Italian businesses, despite the tough environment there is doing reasonably well. So you get your returns by doing that. You have to be very selective. And likewise, on some of the other minor businesses that you might not even hear about, but the Brazilian tomato business was a commodity business that we ended up having from a historical perspective. We're not going to expand canned tomatoes globally. We have significantly more exciting initiatives like the baking bag or the jelly bouillons that are high-margin businesses growing truly of franchise like Knorr. So we will be looking at those type of things carved out probably a little bit more skewed still in the food side where there are less -- sorry, where there are more remnants still than in the Personal Care side. But there you have it. And we'll talk to them in due time. So with that, I don't -- do we have more time? One more question here. Thanks, Alain, for the question.

James Allison

We have more one and then we'll be done. So any last question in the room? Alex?

Alex Smith - Espirito Santo Investment Bank, Research Division

Sorry, Alex Smith from Espirito Santo. Just maybe if you could jump back to foods. You spend quite a bit about dressings and savoury but you didn't really elaborate much on the spreads business. I think you said it was doing quite well. It was gaining share. If I think back at Q3, I thought the situation was different. I think you said you were losing share and some of your pricing was out of line with your competition. You've made some adjustments in the U.S. You're looking to make some adjustments in Europe. It sounds like things have turnaround. I just wonder if you could elaborate a bit more in spreads.

Paulus Gerardus Josephus Maria Polman

That's a good memory and that's absolutely correct. You've given the answer. We have put the price equation right again. We found ourselves in a very unique situation than the butter prices were cheaper, although obviously significantly less healthy product but with the pressures on the economy, again, it forces some people perhaps to buy that. Now we have good initiatives coming through like the liquids, the aerated, the gold, Becel Gold is a good example. So on the one hand, we have good initiatives. As we said, winning differently in this category. They are coming through. They're actually growing. And on the other hand, it's exactly what you said. We have corrected the price equations where we needed to on the volatilities of this input costs. Some of that has helped obviously the lower prices on palm oil that we now see and some other things help us there. So we are managing the equation very well. And as a result of that, we see increasingly our business growing share there. In a market, though, I want to reiterate once more that it's not growing to the extent that some of our other markets are growing. But there you have it. As I've said many times, I personally think that actually the people managing that category do actually a very good job in managing it better than I think anybody else can do that I'm aware of. And it plays a crucial role in our total company. And what you buy into, obviously, is Unilever. And what you see here today again once more be it a fight in one of our categories in one part of the world, be it significant cost of expansion of our portfolio in other parts of the world, be it one part of the portfolio that we would always honestly call out with you as being underperforming or not. This is a company that in its entirety is starting to deliver and is starting to deliver consistently -- consistently top line growth above the market, consistently margin expansion. And I think you've also discovered once more with an enormous discipline on capital. In this case, the last question from Alain on working capital are basically financing that growth internally, just as we said we would. So once more a proof point, a 6-months proof point that we're well on track to move this company from fit to compete to fit to win. And would not be possible to do that without your right challenges to continue to set the bar higher, focusing on the right areas where we can improve and that is exactly why I like this company because equally, as we put in these enormous performances in a very tough market. I have not seen it tougher now than any time in my 30-plus years in consumer goods. We also are very energized by the enormous opportunities that we still have in this company. And that to me is the most exciting thing. And if you can combine the strong performance with the enormous opportunities in a business model which is responsible capitalism where you start to solve some of the world's problems, decouple your growth from environmental impact, help on the issues of food security, significant lower carbon emission by working on abolishing illegal deforestation, driving sanitation and health when there are still 6 million children dying from infectious diseases, half of which you can cut out by simply having the act of hand washing. Those are the type of things that drive us. A very strong purpose, a very strong operating model from a strong base with still enough opportunity. So I thank you and I certainly look forward to the next opportunities we have to interact. Thanks for your time.

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