Nestle Sa Reg Shrs S (OTCPK:NSRGY)
October 17, 2013 3:30 am ET
Robin Tickle - Head of Corporate Media Relations
Paul Bulcke - Chief Executive Officer, Member of Executive Board, Director and Member of Chairman's and Corporate Governance Committee
Wan Ling Martello - Chief Financial Officer, Executive Vice President and Member of Executive Board
Luis Cantarell - Executive Vice President, Member of Executive Board, Head of Nestlé Nutrition, Chief Executive Officer of Nestlé Health Science SA and President of Nestlé Health Science SA
Chris Johnson - Executive Vice President, Zone Director for United States of America, Canada, Latin America & Caribbean and Member of Executive Board
Laurent Freixe - Executive Vice President, Zone Director for Europe and Member of Executive Board
Patrice Bula - Executive Vice President of Strategic Business Units, Marketing, Sales & Nespresso and Member of Executive Board
Doreswamy Nandkishore - Executive Vice President, Zone Director for Asia, Oceania, Africa & Middle East and Member of Executive Board
Thomas Adrian Russo - Gardner Russo & Gardner
Warren Ackerman - Societe Generale Cross Asset Research
Eileen Khoo - Morgan Stanley, Research Division
Liam Rowley - Barclays Capital, Research Division
Patrik Schwendimann - Zurcher Kantonalbank AG, Research Division
Robert Waldschmidt - BofA Merrill Lynch, Research Division
Jeremy Fialko - Redburn Partners LLP, Research Division
Jeff Stent - Exane BNP Paribas, Research Division
Good morning, ladies and gentlemen. Welcome to our 9-month sales conference here in Vevey. The conference will be held in English, but you can also follow it in German and French using the headsets provided. And if you're watching the webcast, you can choose the right language by clicking on the respective link on the webcast page. Now let's start. Paul, you have the floor.
Now thank you, Robin. Good morning, ladies and gentlemen, and welcome to our 9-month sales conference, and thank you for your interest in our company. Also, I want to say welcome to everybody who is following us via the webcast, also, thank you for your interest in our company.
On our podium, we have, first, Wan Ling Martello, our CFO. On her left, we have Roddy Child-Villiers, Head of our Investors Relations; and on my right, I have Robin, Robin Tickle, Head of Corporate Media Relations. And I have here in the front row my colleagues of the Executive Board who are there also to answer questions maybe later on.
We're holding this conference the fall -- of the fall back in Vevey after a few years having been traveling. And also, we do it -- we have changed the format. We are combining now the investors, analysts call with the press conference, and that's because, also, as these events are webcast that we felt there is an increasing duplication of interesting points that we want to cover. And we rather give it -- we do it in one conference, and we give it enough time to answer all your questions. So that's why we have combined it. We -- when it came back to Vevey for once after, I think, 3 years traveling. First, we went to New York and Paris, and last year, we were in Shanghai. And basically, what we wanted to convey with also having it in different physical locations was showing and sharing with you how our strategy that we have been sharing with you in many, many occasions is actually getting done, being done in the markets because that's where the action is. That's where the results are brought in. And so on New York, we had actually, in our biggest market, the whole -- all the aspects of our strategy being explained to you through the different divisions that we have there. In Paris, we were focusing on innovation because that was already in quite a downturn in Europe and how we could grow in Europe. And specifically in France, we're sharing with you the strength of innovation and how we want to go about our own agenda in spite of all the negative headwinds through innovation.
Shanghai was a dynamism, what's happening in the emerging markets. We speak about emerging markets. Well, it was really to share with you our -- how we have increased our presence there, how we have increased our engagement in this country that has fascinating prospectus, but it was actually an example of what we are doing also in Africa, what we are doing in Latin America for so many years. It is engaging for the long term and building the capabilities there.
Well, you saw earlier this morning, our figures, sales figures of the 9 months. I would say, they are sound, healthy sales figures. They are broad based, and they show acceleration, continued acceleration of growth, specifically a real internal growth, which is the volume growth, which is the growth that reflects market position and leadership. And it is broad based. It was about -- around all categories, also geographies. And we also are quite proud to show that still, in Europe, in spite of all the negative consumer confidence and all that, we can show growth way ahead of the market, and also how AOA Zone has picked up in growth again, has increased their speed in growth, but I don't want to steal the show of Wan Ling. So Wan Ling, please, the floor is yours to comment a little bit on our 9-month results.
Wan Ling Martello
Thank you, Paul. Good morning everyone here in the room, and a happy Thursday to everyone who is listening in through the webcast. It has -- I will take the Safe Harbor statement as read.
It has only been 2 months since we reported our first half results. So there should be no surprises for you in our 9-months sales. Our sales, consistent with the first half, were driven by a broad-based improvement in our real internal growth, or RIG as we call it. This performance has enabled us to confirm unchanged our guidance for the full year. Our 9-month sales were CHF 68.4 billion, with an increased RIG of 3% and pricing of 1.4%, which was unchanged from the first half, giving organic growth of 4.4%.
Now one meaningful issue in the last few months has been the strengthening of the Swiss franc against most currencies. There has also been significant weakness in a number of emerging market currencies, such as those of Brazil and India. Our currency impact for the 9 months was negative 2.5%, down from minus 0.9% at the half year.
Now coming back to RIG, I would highlight, in particular, the performance of Zone Europe, where we are growing in a no-growth environment, and of Zone Asia, Oceania and Africa, where we have seen a strong acceleration in the RIG. The broad-based growth, like Paul alluded to earlier, both in emerging and developed markets, is one confirmation of Nestlé's commitment to being the end company, being the end [ph]. If you recall back in the full year roadshow, we talked about Nestlé being end company, developed, emerging, PPP, premium, investing for the future, as well as delivering for the short term. So in this case, we are determined not just to benefit from the growth in the more dynamic emerging countries, but also to grow in developed markets as well.
Now with all the excitement in recent years about the potential for growth in emerging markets, it is sometimes forgotten that developed markets account for around 50% of the world economy. One of the points of difference in Nestlé's growth has been that we are equally focused on growing in developed markets, seeing no reason why we should limit ourselves to that 50% of the global economy that is driven by emerging markets. With the slowdown in emerging markets, our continued focus on underdeveloped markets is perhaps becoming an even greater differentiator. In the first 9 months of 2013, we grew 1.1% in the developed markets, in the developed world, as well as 8.8% in emerging markets.
Among product groups, I would highlight, in particular, the consistent good growth in PetCare and the acceleration in both Confectionery and Powdered & Liquid Beverages. Our pattern of growth, with all areas contributing positively, is the same whether you look at our operating segments, at the zones and globally managed businesses, which you can see on this slide, or whether you look at our product groups, which you can see on the next slide. All have contributed positively to our organic growth in the first 9 months.
This next slide pulls together all our globally and regionally managed businesses into the 3 regions. Again, all 3 grew. In Europe, we achieved RIG of 1.9% and organic growth of 0.9%. Somewhat unusually, but it's a pattern we've seen already this year, our RIG in Europe was higher than our organic growth, this reflecting deflation in some categories, particularly coffee and chocolate. In the Americas, we had RIG of 2% and organic growth of 5.1%. And in Asia, Oceania and Africa, we had RIG of 5.8%, with organic growth of 6.9%.
These last 3 slides demonstrate both that our growth is broad based and that ours is a strong performance given the economic environment we have today.
Let's now take a look at the performance in more detail, starting with Europe. And as I did at the first half, I will discuss both the zone and the globally managed businesses together by region. There is nothing I can add to the debate about the challenges facing many economies in Europe. What I can say, however, is that our Zone Europe management has refused to give in to the macro issues, instead focusing on identifying opportunities to grow the business. Successes have included addressing the needs of cash-strapped households, as you would expect, but also more counterintuitive perhaps, innovation focused on premiumizing our categories. They have been also very focused on increasing distribution of our products, ensuring our products are present not just in supermarkets, convenience stores, but in all channels, channels like hard discounters and e-commerce and online, newer and faster growing. This has resulted in a good market share performance for Zone Europe.
Let's have a look at the categories. PetCare has continued to deliver mid single-digit growth, with good performances in its key markets, both in Western and Eastern Europe. Brand highlights include Gourmet, ONE, Proplan and Felix. PetCare is an example where we have increased distribution, particularly in Eastern Europe. Our coffee activities have also continued to perform well, with both Nescafé Dolce Gusto and Nescafé Gold gaining shares, while Nespresso has continued to accelerate. The pizza business has been picking up momentum throughout the year. Both Wagner and Buitoni brands are accelerating. Confectionery is also growing, with highlights including Russia, the U.K., Germany and France. KitKat is performing extremely well.
Turning now to our globally managed businesses. Nutrition showed good growth in Russia. The Western European businesses continues to be generally slow due to economic environment and overall category slowdown. However, our innovations, particularly in infant formula are showing good results. Waters had a good late summer in Europe. The U.K. grew double digit, which is a highlight, but there was growth in many markets, including France and Greece. Regional Waters performed well. And Perrier and S.Pellegrino maintained their strong momentum from earlier in the year. Nestlé Professional's performance is being impacted by the poor dynamics in Western Europe for the out-of-home markets, though it continued to enjoy strong growth in Russia.
Moving now to the Americas. Consumer confidence in North America has, if anything, slightly deteriorated since the first -- since the half year, although there was a bit of the good news coming out of the U.S. last night. Our growth for the 9 months has continued to be driven more by RIG than price. PetCare continued to grow and show solid growth, fueled by innovation such as Beneful Healthy Smile and Tidy Cats Light Weight Litter. The frozen food category remains subdued, particularly the continued weakness in the diet-related segment impacting our Lean Cuisine brand. We're seeing stronger performances in Stouffer's, as well as pizzas, where I would highlight the success of our DiGiorno pizza relaunch. In ice cream, we continue to see good performances in super premium, as well as in snacks, but weaker performance in premium. Häagen Dazs Gelato, launched earlier this year, has achieved really good traction. Chocolate, creamers and coffee activities are all performing well.
In Latin America, growth this year has been more driven by price than RIG, reflecting currency weakness in the region. Brazil accelerated, driven by the large dairy category, while Mexico's growth was a little bit weaker. The picture was mixed in other regions, though all contributed to the region's growth. Some categories for the zone and the region were PetCare, chocolate, biscuits, culinary, cocoa and malt beverages.
The globally managed businesses continued to have a strong year in the Americas. Water and Infant Nutrition made good progress in North America and continued to be highlights in Latin America, growing double digit. The North American water market has been highly promotional, but we have chosen to be more focused on profitable growth than driving market shares in this environment. Our growth there was driven primarily by Nestlé Pure Life, Perrier and S.Pellegrino. Infant Nutrition's good performance in North America was driven by dynamic growth in its formula business and continued momentum in meals and drinks. Nestlé Professional also delivered growth in North America despite the tough trading environment. We also saw good progress by Nestlé Health Science, and this is a continued good performance by BOOST in North America.
Next up is Asia, Oceania and Africa, or AOA. The trading environment, no surprise, continues to be affected by the broad-based economic slowdown. As you know, it's been like that for about a year, as well as increasing civil unrest. That said, we have seen our improving RIG momentum already evident at the half year point, accelerating further in recent months, such that the zone achieved 5.1% RIG for the 9 months, up from 4% at the half year. It is true that we have benefited from easier comparables, but growth was also driven by our initiatives in the zone, as well as by us resolving some of the issues we discussed earlier in the year, issues including the loss of our Syria factory and stock levels with distributors. Most markets contributed to the improved growth. China did slow down. The slowdown there impacted most categories in the zone. Having said that, our Chinese business continued to outperform the market, delivering high single-digit growth for the 9 months.
Markets and regions have been performing well earlier in the year, such as Japan, Malaysia, Indonesia, Africa and South Asia, which includes India, Sri Lanka and Bangladesh continued to do so, accelerating in recent months. We saw an improvement in the Philippines, as well as in Indochina, but we still have work to do in both markets to ensure sustainable growth. The Middle East accelerated, but the region remains extremely unstable, no surprise.
Looking at the zone's categories, I would highlight the performance of culinary, dairy, chocolate and both powdered and ready-to-drink beverages in the emerging markets and chocolate and coffee in the developed markets.
Turning now to globally managed businesses. The Water business continued to grow well. Infant Nutrition further increased its strong momentum, with both formula and cereals contributing. Markets to highlight include South Asia, China, the Middle East and Indonesia. Nestlé Professional is performing well generally in the region, though its big business in China has slowed during the course of the year.
This completes my review of the 9-month sales performance. I'd like to summarize. The environment continues to be tough. But you know what? Instead of focusing on underlying trends, we continue to focus on creating our own opportunities to grow. Our performance is broad based, with all regions and categories contributing. We have growth momentum in the business, particularly in RIG, and we maintain our full year guidance unchanged of organic growth around 5%, together with an improvement in margins and earnings per share in constant currencies, as well, of course, as in our capital efficiency.
I thank you very much. I will now hand it back to Paul.
Now thank you, Wan Ling. Yes, indeed, I call it sound performance because of broad base, but also, it shows that the gain in momentum that we have seen already in the second quarter behind growth, real internal growth that is really driving our position in the markets, et cetera. So -- and to reflect the end company that we have been expressing sometimes through -- to you, too, it is that we combine. We're not going for one or the other. We have it broad based through the categories, also the different price points that we have been offering to the consumers. That is very relevant when the consumer is subdued and also to all the categories.
Well, I also said in the press release that actually, in difficult times -- and these are not easy times. I don't think there are ever easy times, but we are particularly challenged in these last years that the difficult environments, difficult times are ideal times or good times to really challenge ourselves, too, and see if we really can enforce it more our fundamentals that are driving our success that is driving our businesses. These drivers that are going for growth, like innovation renovation, like distribution, like how we connect to the consumers or those that drive our performance, like are we structured? Like are we using our structure to the right extent? Are we driving efficiency? Are we leveraging our size into scale, into competitive advantage? These are the things that, actually when you are challenged, are the -- are to be also asked for. And yes, indeed, we are permanently challenging ourselves on these, and that has been the driving force and the driving condition, how we have been able to deliver profitable growth during all these years.
And you see here the growth, the blue bars, the growth that we had in the last 10 years and giving us an average of 6.1%, and doing that again in the mentality at the end with an increase in margin, as you'll see in the red line that is on top of it. So we have been able to drive what we then came to call the Nestlé Model, which is the logic of the top line, bottom line increases over the years. And the Nestlé -- that model is to do that consistently over a longer time and do that on a line that we said that we walk, which is between -- a span that is between 5% to 6%. And you see we have overdone that in average to the 6.1%. Sometimes, we were way above that. Sometimes, we were slightly under that, but that's the line that we walk. The Nestlé Model is a model that is stretched over time. It doesn't have the nervousness of quarters, and that is what -- and how we engineer everything we do around it. So this is driven by innovation renovation. This is driven by putting the money and resources behind the right ideas. This is driven by building our capabilities in the world. This is driven by putting the right people in the right places in the past, and it's going to be also in the future. This is also driven by the fact that every time we challenge ourselves and we ask ourselves if we do the right things with the right inspiration.
And driving performance over time is, first of all, linked with, yes, indeed, the right inspiration, the right strategic direction and then also creating alignment of all organization behind that right direction. And that is what we come to call our roadmap. And the roadmap, you see it here. We have shared with you that in many, many locations, the roadmap is all centered around the nutrition health environment.
Nestlé is all about nutrition. And with that, we define clearly what we want to be as a company. That is giving the purpose of 340,000 people all over the world that wake up in the morning and drive that agenda. What does it mean, nutrition, if I imagine? It means that we want to, through food and beverages, allow people to make healthier and tastier choices every day, every moment of his life and then by doing so, call it, build quality of life for himself and his family. That is what we want to drive. That is the purpose of this company. That is what is in the center of the roadmap.
The roadmap also -- and I have shared that with you in many occasions, is defining very clearly what do we want to leverage? What is our strength that we want to scale up and with whom with which we want to go and drive performance? And you see that the competitive advantages that drives our portfolio or a mix of brands and products that is linked with our research and development, that is driving the permanent innovation and arguments into that portfolio, that is linked with our worldwide presence and how we drive our value creation in every bit and every part of the world. And it is linked, definitely, with people because it's people driving everything else.
And we have also, in the roadmap, defined where we want to grow, defining where we're going to look for growth. And we have shared that with you, too. And I think the biggest argument of growth of this company is what is in the core of our DNA, which is nutrition, Nutrition, Health and Wellness. And we have shared that also in other occasions, the value creation potential just by driving that agenda, just by driving the arguments in our portfolio that is allowing these tastier and healthier choices and, by doing so, creating a better quality for all society. That's the biggest agenda we have, growth to be found in emerging markets that has been played and augmented in many occasions.
Out of home -- 50% of what people spend on food and beverages is out of home. We want to play there, and we have built and are building still our platforms and our base for the future there. Premiumization, we have mentioned that, too, so much value, so much rationale and emotional arguments to be built in that premiumization. So we have defined what we want to be, what we want to leverage, where we want to grow. And then we say the third part is how we are going to do that efficiently and effectively. And that is consumer-centric innovation, really going for what the consumer values and engineer and create products and portfolios around that. It is done with efficient operations, do that efficiently and effectively then bring that product where the consumers is looking for it. That is to be everywhere where the consumer wants to touch you the products, distribution. And then it is also consumer engagement. If you have done all that, innovated rightly, done it efficiently, distributed well, you're proud and you're connected with the consumer to say that you're ready for him. And you're engaged in a dialogue which is now through digital media and social media even more easier.
That is all based on -- and I mentioned that before. Our values that we have as a company, our principles, that is driving this dimension, which is most precious to us, trust. And trust is a base of how interrelated with -- how we interrelate with society. Trust is basically what we're most sharing as the most important dimension of our relationship. And we do that through Creating Shared Value. We feel really that our company can only be successful if we interrelate well with society and all stakeholders Creating Shared Value.
Yes, indeed, that is the roadmap that has guided us, that has aligned the organization to deliver over time even in these turbulent times that we live today. And yes, indeed, these turbulent times, we call a VUCA world, volatile, uncertain, complex and ambiguous world. We call it the new reality. And I'm sure we have selective memory. The new reality was always new for everybody also in the past, factors a little bit of new trends and all that, or events have intensified over the last years and have given the impression of many, many challenges. The new reality is like felt by many challenges. The crisis is indeed deeper and longer. We just came out of one in the United States. So it is good news this morning, still a lot of work to be done, but at least, that was a decision on the 11th hour. And employment is going up. And it's quite sticky, and we see that in many parts of the world. The emerging markets that had given us so much tailwind are slowing down a little bit. I see it rather as a good sign to get back to levels that are sustainable. It is sustainable growth and an environment that allows to continue on a slow pace, more important than acceleration. It's acceleration. I think that is happening.
So we have many, many challenges and -- but yet indeed, in the world today, there are many opportunities, too, and that's how you drive a company like Nestlé. It's to see, yes, indeed, be aware of the challenges but see many opportunities. And I have been sharing them with you not at least the emerging consumer. 80% of the world population is working for a better tomorrow. The emerging markets are emerging. That, I would say, is the biggest single driving force because there is so much collateral trends coming with that, that allows so much for this company to offer and to grow with. Yes, indeed, we do have -- and the global awareness of healthier lifestyles that play so much into our hand as a company because that's what we want to do. That's what is part of our DNA. There is new technologies and science that are converging into new platforms that allow this company to also to play and to drive innovation even faster.
Yes, indeed, there is a continuous change, a continuous dynamism in the world. And our roadmap is tested against that, and it's valid. It is valid. And we always ask, "Is it, in every part of that, still driving us in the right direction?" And it is. It is most relevant than ever. It is all done in a faster world. And I think to maintain competitive intensity, we have to drive things faster. We have to increase the sense of urgency that is needed and that we have to challenge. And that gave us somewhere also behind this roadmap, looking at the day -- the times of today, the new reality. We have to have clearer fixed priorities. And the first one is making choices. It is really to go and define things, say yes to certain things and no. We have to make these choices, sometimes tough, but it is a matter of faster, sharper decision-making, and as we are decentralized. This is a very important dimension to take as a priority on our organization.
Then the other one is seeing these opportunities I talked about and really then not also identify them, defining them clearly, but then organizing the resources and -- behind it to embrace these opportunities and to really go after them. You have to organize around opportunities.
The third one -- priority was also do that with a very acute sense of what the consumer values. What is it what the consumer values really? Because sometimes, we are too inside out, and we should be much more outside. And knowing what are the worries. What is what drives this decision-making? What is what really worries and is valued by that consumer? That means also the same time that what he doesn't value, we should take out and we should not put resources behind things that is not having any value for the consumer. And there is so much outside that, too. This has all to do that we are in a value-creation business, not in a price business. You have heard that we are very conscious about that, too.
Fourth dimension is trust. I mentioned it before, this Creating Shared Value. How we interrelate with a society at large as a company is a very, very hard topic that is very relevant and even more so today than yesterday. We have engaged and are engaging with multiple stakeholders. Everybody has a voice. And what is more, they are heard. Social media is bringing a whole new dimension to that trust-building capability that we are engaged in.
It brings me then to the fifth priority, embracing digital. A company like ours has to engage fast and deep into digital. Having 2 faces, first of all, this whole social media, and then also the third, on the other side, the e-commerce. That's why we have set up our digital acceleration team here in this floor in our building, where we have young people -- normally, it's linked with young people, this whole digital world from all our markets, bringing their knowledge, sharing it with others and creating a corporate knowledge that is much deeper than before, going back to the markets and driving that. So that's why we have now digital acceleration teams in many, many markets already. We are connected through that world in a much more intensive way. You see also how we link up with big players in digital, like the Twitters or the Facebooks or Google for that matter. And you have -- may have seen lately how we also, with Google, have deepened the relationship as they have called their new Android KitKat release, which is really giving you a great break.
Then the sixth one, again, it's all about people. And I cannot stress enough how serious we are of looking for the right people, the right people to drive our business with the right attitude and the right attitude, the right culture, the right values because as we are decentralized, we have to rely on the right people, definitely. And there, again, we pride ourselves of loyalty and -- but also on diversity. In a world that is globalizing and opening up, diversity is very important. We have flexibility, and people going from one place to another, driving that agenda but also driving what we value so much, which is our principles and values throughout the world. Only -- speaking about diversity, in this building alone, we have almost 100 nationalities, bringing an understanding and making us understand the world in a much deeper way.
Well, we have these priorities. Now these priorities, they -- and then we have also the third -- the last one, sorry, which I skipped that, very, very important, expanding the boundaries of nutrition. I told and I shared with you: Nestlé is all about nutrition. And we do that through these tasty and healthier food and beverage choices that we create permanently, driving the agenda through the whole portfolio there, but yet also, we are aware of potential future platforms that we're going to give to this company, big opportunities in the future. It is science driven. It is driven by the fact that we have a much deeper understanding, how nutrients interact with the human body and with health and to a large extent, the society. That compared and phased to the healthier cause among society. That, linked with our developing world, is really developing, and building also these dimensions in the society is a fascinating, fascinating opportunity.
Now these are the priorities we have. And priorities, it uses also a plan of action and, I would say, a shortlist for action. And I want to share with you 3 dimensions of my shortlist -- that I have on my shortlist, which is a consequence of having put these priorities. And I have shared them with you here. It is linked with strengthening our portfolio and making choices, grasping opportunities and evaluating consumer values. They bring 3 dimensions to us, 3 dimensions that are the shortlist for action. You have it here. It refreshes our focus on certain areas that we're present. We just have to sharpen our focus on them and really give us no escape for them. And that is strengthening our portfolio. I'm going to get very shortly into it, allocating resources, too, because at the end of the day, it is resource efficiency that matters and then also mastering our complexity.
Let me say a few words on the first, on portfolios, and how we want to cycle them because I have mentioned before that we were able and we will be able to deliver the Nestlé Model because we drive a very strong portfolio, portfolio of products, portfolio of brands and mixture of value creators that is accretive to driving our profitable growth. And we have done that in the past. And you do it through different actions, and you do it through innovation renovation like we did in the past. You see here only a snapshot of a few that we have done in the last years. It actually started 150 years ago with a very innovative product. It continues over a newer chocolate, with the milk chocolate that has -- with the Nescafé that just before the Second World War came into the world, with the Nespresso model that we had then later on, with Dolce Gusto later on, with so many innovation. And you have heard over and over again that whole Purina, and the strength of Purina has been innovation. You see actually, classical products like KitKat, where we are exploring flavors, where the consumer is open to that. So it is a permanent driver of innovation renovation. That is, in my eyes, the strongest force behind our dynamics and behind our strength of portfolio.
Well -- and also then through the normal products, because there is bigger, even, innovation that they are so nice to mention, but there's so much more capital innovation behind our brands. That is driven by our 60/40+. This mindset that we have in our organization, where we drive through all our products and portfolios. This, well, pleasure arguments of taste, we should have preference and taste, and yet also, through the plus, nutritional arguments. And that is quite extensive. There's thousands and thousands of test and projects that are driven -- that is driving the 60/40+ mindset. 1/3 of our portfolio can be said as permanently going through that test and we churn our product portfolio, each of them, over -- every 5, 6 years, we churn them permanently towards that better agenda.
That's one way of driving the portfolio and one very important one. The other one is, yes, indeed, also acquisition, partnerships and also divestitures. And acquisitions -- and you see here quite a few ones. They should reinforce our strategic directions. They should be accretive to creating -- be accretive to the Nestlé Model, drive business. As I always said, this has to be accretive to both sides. And you have Purina, Gerber, the last so many years. And Yinlu and Hsu Fu Chi in China, where we have built our capabilities and presence in a market that is important one, very important, Wyeth Nutrition. We need to build even stronger our -- core of our business, so Prometheus and Pamlab, the latest link with our -- this new opportunity of Nestlé Health Science are all nice examples of that.
But also, on the other side is divestitures. And when something doesn't really fit strategically or doesn't really add to the Nestlé Model and is a drag, we have to take decisions there and divest why should we drag on the performance. And that is what we have done in the past. I think there is opportunity there also for us in the future. And we have built in a portfolio management tool -- or we actually had it always, but what we have done is now through the enablers like GLOBE and all that, is build in a global total transparency. We have standardized the criteria to manage this whole portfolio management tool. We have created, in other words, global transparency.
And we define the portfolio through building blocks. And the building blocks are the categories in markets. We have this dual dimension of each category and market. And each category in a market, we call it the cell. We are analyzing 1,800 cells worldwide. So this is quite an undertaking, but still, through the transparency, you conglomerate then you can pool some cells together. You can open them up. So we have different ways of going around this, and that is what we have been doing the last years. It's building that transparency even further. We have created a global standard language to talk about. We have built it in into our business plans, be it on markets, be it on categories, to make that really more an active part of it. And that is what we've done, so products, brands, categories, markets, combining that and give transparency.
Criteria are, how those -- does that cell fit into our strategic direction? It should be accretive to creating our agenda. It should be profitable growth enabler. Why should we stay with categories that are no -- having no prospect of adding to that profitable growth? And it should be also test against the resource intensity, one very explicit one is return on invested capital, but it's more than that, how much we put behind that marketing spend, how much talent and resources, human resources we want to put to R&D resources, et cetera.
So -- and at the end of the day, you have 3 possibilities. Of course, you're enthused that is really accretive, you invest and invested more to drive it faster, stronger, deeper. Or you will say, "There's a problem, but I believe we can fix this." Then you fix it and you have to have deadlines there and milestones instead of just dragging on. Or you cannot or you don't see the final -- the end of the tunnel of underperformers, well, then you have to just divest it or get rid of it. I mean -- and that is a, well, a relatively sharp language, but that's what we should do. That is also linked with making choices, really knowing what the consumer values. You see, again, there is logic in there, too. So -- and the fact is if you have to divest, then it's not a matter of if, it's a matter of when and how and do that in a time line elegantly, do it as we have to do. And these are the -- I wouldn't say the marching orders, but as a mindset of which we have known in our company, going about that, and I would say, to a certain extent, a little bit less tolerant. We were a company that -- we really believe in our products but sometimes believe it may blind you if there is no real possibility of certain cells to be accretive to divest. But that means also invest heavily behind the right things too. So it's definitely , and more so, that part.
The second part of focus that came out of these priorities is allocating resources. And I mentioned it. Resources are multiple. It is talent. It is people. It is our management time. It is R&D time. It is marketing spend, and it is also capital. And it is also capital. It's money, so we speak -- let me speak more specifically about capital, the financial resource that we put behind our products. And in the last years, we have been probably telling you, these are the right time to invest. The world is growing. Many parts of the world are starting to grow. We have to invest. It's the right time to invest in people. It's the right time to invest in capabilities. It's the right time to invest in capacities, and we have been building capabilities, specifically in our capacity of innovation to R&D -- our R&D network. We have opened up in Beijing, in 2008, an R&D center that goes about nutrition, safety, and life science; in Abidjan, [indiscernible] raw materials, cocoa and local raw materials and ingredients. India, more of that is also in the same way, local raw materials. And our [indiscernible] position, plus we have been closer to home, inaugurating our system technology center because so much value is created now through systems, and we have a scale there again to be leveraged. We have also built out our PTC, product technology center, in Konolfingen. So we have invested quite heavily in capabilities. We have constructed from scratch a Nestlé Institute of Health Science, where we're going to build a corner -- the building stones, create the building stones for our Nestlé Health Science initiative. We have invested in capabilities. Also, we invested in capacities. And we were also, on that side, proud to communicate new facilities, be it in Nigeria, Turkey, India, Brazil, Dubai, Congo, in China, quite sizable factories, also in Europe. Closer to home, U.K., we have a water factory, also in Germany with a new factory for Dolce Gusto, in Spain. So in many areas, also in the U.K. and the United States.
In short, over time, we have been able to build and strengthen our global presence. And here, you see how we have been building these capabilities and capacities. We have been investing really in the capability to innovate and the capacity to grow. And you see here, the darker points are the new factories and the new R&D capabilities here in the world. You see how we are really mapped into the presence of the world. We have operations in almost 200 countries, 470 factories in almost 100 countries to 34 R&D platforms. So differently, we have been building and keeping our competitive advantage of, I would say, scale and presence in the world.
Well, that brings -- that comes at a price. You have to invest, and that is what we did. In the last 3, 4, 5 years, we felt it was the right time to accelerate our investment in the world and to build these capabilities because we saw and felt that potential and that opportunity. That brings capital investment, and that went above the 5% line. We were normally between 4% and 5%. Now what I feel is it's the right time now to use it, to leverage it, to sweat the assets and to leverage what we have. Now that's why we have imposed ourselves the discipline of bringing it back then to the normal levels, between 4% and 5%. And that, in an organization like ours, has a meaning. I mean, that's a capping, but that's something we did and it's going to induce through also a better resource usage, like with SKU management, and thinking it over and turning the time twice before investing. It's going to create a very healthy discipline of sweating our assets and bringing back -- bringing into the equation much more from, permanently, the dimension of return on invested capital.
Then the last point -- the last thing I have on the shortlist is mastering complexity, and that's always a killer because of complexity. We are living in a complex world and we -- indeed, we are a complex company. And we are a complex company by decision -- by strategic decision. Many years ago, Nestlé has opted to be in different categories because we felt if you want to be the nutrition of a managed company, you have to offer products that can be part of people's lives in a meaningful way. At the same time, if you really want to drive innovation through more science and R&D, you need scale. You cannot build a system like we have if you have one category, and you very focus on that with all the merits of focus. Yet we have to see how we combine the different and the bigger, broader portfolio of products with that advantage of size and scale and yet also maintain focus on sharpness on the other side. And that is -- how are we going to go from managing complexity to mastering complexity? And that is, again, something that has -- that we have been doing so far during all these many years, and that is what has built our structure. That first site, you see it here on this chart, may impress by the complexity because as indeed, we have worked and you see here different categories. You have it there, product and -- Powdered & Liquid Beverages, water, milk products and going over PetCare. Then you have Nestlé Waters, Nutrition, Professional, different categories, yet we have organized that, first, in a matrix way. We have geographies that goes over the certain parts of the products. And then we have also global managed businesses.
So we have indeed a matrix organization, and that is because we have always privileged the generating demand. What drives demand should dictate structure. And we are not one-size-fits-all. We do have different business models. And we do have also one fundamental argument that is, we are a true believer of decentralization. Food is local. Bring the decision-making as close as possible to where the consumer is. These dimensions are driving an organization like we have it here. Now that, we have been building enablers to be able to manage and to master that complexity through GLOBE that gave the transparency, through the NBS that create the scaling up of the back line and starting to split, to clear up the back line and the front line, the Nestlé Business Services, NBS. We have been implementing the NCE, Nestlé Continuous Excellence, how we drive value creation and efficiency and driving waste out of the system, specifically more in operations, but driving it further out now also to the broader dimension of our company. These are -- that reality, it has certain complexity. It was and it is a strategic decision because it gives us the right arguments. It gives us the right presence. It gives us the possibility on enabling tools, enabling platforms that really translate size into scale, and scale into competitive advantage.
Yet, at the same time, we have to ask us the right questions and permanently say, "Is this working fine? Is this working well? Is this effective and efficient?" And in a normal human organization like ours, you can always ask this question and answer them with, "Yes, we can do better." And that is -- these are the questions we are asking. We are really asking the tough questions, like, are we keeping things simple? Are we actually keeping simple things simple? Are we bringing unnecessary complexity? Do we take the right decisions at the right places? Do we have ownership of decisions in the right places? Do we have dual reporting systems? Do we have too much trouble? Do we have -- or are we using new technologies to the extent that we could drive out bureaucracy or paperwork or, et cetera, et cetera? And I can only tell you that whatever, there is upside. And that is something that we felt, as an Executive Board, we should go after that and see in how we organize to really bring also in the same mindset of NCE. This is not a new project. This is just an initiative that allows us or should allow us to leverage what we have going on in this company, which is basically linked with this continuous excellence, asking the right questions. And you see it here definitely this size to scale to competitive advantage. We have gone a long way. I still believe there is an upside, and that is what we will do. It is not managing complexity, but mastering it and making that intrinsic part of our competitive strength.
So ladies and gentlemen, a shortlist for action. Coming out of the 6 priorities, which are embedded in our roadmap, that is what I want to share with you. And it is linked with asking the right questions. And it is linked with the roadmap that gives us the strategic direction. It is linked with 6 priorities that brings us that shortlist of 3 things, too, where I feel personally we should give the highest attention to. It translates, in other words, in consequences that are linked with portfolio decisions. It is linked with a resource allocation, and it is linked with, yes, indeed, accepting our complexity and freeing -- being invited to really build efficiency into it even more.
So as I said in the beginning, these are challenging times, and this is the right time to ask the right questions and to build this company even stronger. We have been delivering what we call the Nestlé Model, which is a model that projects continuum in growth over a line -- we're on the line of 4%, 5% to 6% with margin increases. Why? Because it is intrinsically linked to our value creation agenda. That is linked with Nutrition. It creates more value for the consumer, more margin. And we want to do that in a permanent way, consistently, over time. And for that, we have to build our competitiveness through the questions and through the priorities and through the focus areas I shared with you.
With that, I think I am through my presentation and now...
Thank you, Paul. [Operator Instructions] Now let's take the first question from the room, please. John?
John Revill, Wall Street Journal. Today, you've reiterated your guidance for 2013 organic growth. You think it's going to be around 5% this year. I was just wondering, so Q3 has been improved a little bit and a lot of people think that Q4 may improve as well. I wondered what's your view for 2014 on organic growth. That's the first question. And the second one is, emerging markets seemed to have improved a little bit. So do you think you've kind of turned the corner there? Or what's -- so any concerns over that, particularly with currencies because they seem to have sort of taken a kind of big bite out of you in emerging markets?
First of all, 2000 -- like what we said, we're going to be around 5%, and yet, indeed, that has a -- I believe that the acceleration that we have should continue in the third then in fourth quarter, too. Now you asked, what it was '14? See, the Nestlé Model is this line that we want to walk on 5% to 6%. For all what I said just before, what we want to do, the question you're going to ask, the answers we want to give is to assure that, over time, we continue walking the Nestlé Model, which is, yes, top and bottom line at the same time, quality growth, profitable growth over time. So again, do I commit already to that? Well, it looks like logical. If this is a model that we want us to walk a line year-after-year, that basically that is the intention we have, clearly.
So if you [indiscernible] 6%, 7% next year [indiscernible]
We're going to work for it. I think it should be doable. I mean, we see some colors coming back in many areas of the world in spite of some slowing down, but it is the levels that are totally allowing us to project that growth, so yes. On the emerging markets, I'd say it's slowing down and turning the corner. I didn't feel they had to turn the corner per se. What you see is a little bit slowing down of growth in certain emerging markets. Now I'm the first to say, you have huge countries growing double-digit during many, many years. It is shown over and over again that you get an overheated engine and you have to stabilize a little bit to have enough capacity or possibility to have sustainable growth. And when big economies are growing 7%, 8%, well, I want to be part of that. That's a good base. And if that is projected in a way that is more continuous instead of having a 15% and then a 2% and then a 12% again and then -- I'd rather go up for a 7%, 8% permanently, consistently, and that allows also slightly to absorb that growth in a more continuous and sustainable way. So I would -- actually, I see that rather positively than negative. What we also have to see is the developed world really taking the right decisions there and starting to grow again. And I mentioned it before, the crisis is much deeper and longer than what we would have expected, although we have a little bit of thinking a problem that was in the making for many, many years. Normally, it takes a few years to get out of it, too. So what we see is, yes, indeed, a differentiated or a different reaction to it. Some governments are more daring to do the right steps. The others are not there yet, but I hope rationality is going to prevail.
Thank you. Let's take another question from the room. Olga [ph]?
I'm sorry to bother with rumors, but if I remember correctly, you said on the investor call that there would be no big acquisitions in the near term. So I -- then is my thinking correct that the report from Repubblica this morning that [indiscernible] at Ferrero is then wrong, so no interest for that? Secondly, in terms of this investment, when -- what is the time frame? When can we expect to have some concrete decisions and communications on that? Until the end of the year or next year with the full year numbers? Just to have some clarity on the time frame of that.
Well, we said no big acquisitions. And normally, there should -- we spoke about bolts on and so that stands. And I'm not going to comment on speculations and that -- yes, indeed, maybe in the press this morning. I have no comments on that. But our acquisitions -- and I'm speaking of this linked from what's in the press now. Our acquisitions, indeed, bolts on. We did a quite a sizable one though with Wyeth, so a good one. It gives us a lot of work and a lot of joy, but it has to be strategically fitting. Again, it should fit into the whole logic of portfolio management. And there, we see more bolt-on opportunities than big ones. So on the time frame of divestitures, look, I'm not going to answer completely, but when we say we're going to go above that, we are serious. And so -- and -- but that doesn't mean that we want to give the timeline the priority. It should be the right thing to do. It should be done in the right way. That's how we are going to go about that. But there is firmness behind this focus. So there are things going to be happening in a reasonable frame -- time frame. So just give time to time, as I always say, without losing time.
Let's now take a call -- a question from the call. We have Thomas Russo, Gardner.
Thomas Adrian Russo - Gardner Russo & Gardner
Wan Ling, I was impressed to hear your reference to Boost in North America. I just wondered if you could spend a second describing the size and the opportunity of that particular product. And secondly, Wan Ling, your observation that China was up high single digit, can you highlight where that growth came from most forcefully?
Yes, Boost, maybe I -- as I have, we have here Luis Cantarell. Luis, if you could answer that question as you are responsible for that and enjoying it. Yes, you need a mic.
Yes. Yes, Thomas. Boost is enjoying good growth, not only this year but also in the last years. We have been completely renovating our offer. We have one of the best tasting products yet delivering the good nutritional values. And it is a brand that is in the hundreds of millions, and we will expect this brand to continue growing, as we speak, in the future. And we have already plans to continue pushing this brand in the U.S.
It's a fantastic brand name, too, Boost. So that's given us a lot of enjoyment and growth, yes. And China, yes?
Wan Ling Martello
Yes. Tom, I take it that you're not in the States, otherwise, you must be up really early. But anyway, now China is, like I said, did slow down, but we are really still happy with the rate of growth. And in all -- virtually almost all categories, we are outperforming the market. So that's the good news.
Let's take another question from the room. Uli [ph]?
Julio [ph], AWT [ph]. We've seen quite a rise in cocoa prices in the last couple of weeks. Could this have impact on the margins in the next month or quarters in some product categories?
Well, that's like a rhetoric question. I mean, it is clear that the prices has gone up quite sharply again, but that's a little bit the reality we are living in permanently. It's called -- other raw materials are going up, others going down. And so cocoa prices that we have -- it's a very important raw material for us. So we really watch that market very closely. We try to be smart there and do the right things. And for me, the most important thing is that we shouldn't price to the consumer with the same nervousness that raw material prices are sometimes going, sharp increases and then decreasing again. And again, I said, we tried to read through these nervous trends what the underlying trend is and try to manage our business with these projected lines of cost, which are less, much less nervous. These are -- because you cannot just price a consumer with the same nervousness and increase prices, decrease prices, et cetera. And that is actually what is defining, also. If you add it all up, that's where the pricing that you see reflected globally in our company. So when the -- back in 2007, '08, when we had this huge spike of all raw materials, I got the question also, "How is Nestlé reacting to that?" Well -- and I answered, "We're not going to price on the peak of what we feel is not sustainable." That's going to come and rationalize back into that trend that we have seen. It's going to be higher though, and that's what actually happened. The raw material price are higher because the fundamentals are that 80% of the world population is starting to eat differently and more into these raw materials. So the same thing, we have cocoa prices. We have to read through these nervousness of trends and do and create some stability in our prices, although when it confirms over time to be higher, our prices are going to be higher, too. But then again, it's not only prices. We have -- can we drive more efficiency into it, et cetera, to compensate because you cannot do one-to-one pricing to consumers, less so today when the consumer is really price sensitive.
Let's take the next question from the call. We have Warren Ackerman of the Société Générale.
Warren Ackerman - Societe Generale Cross Asset Research
It's Warren Ackerman here at SG. A couple of questions. The first one is, could we dig in to North America in a bit more detail? It's your biggest market, representing 1/4 of your sales. There has been a lot of concerns given competitive comments. And I'll just be interested to know what you think the category growth is in the U.S. in the first 9 months of the year or if you've got Q3 number and then what your growth is in the U.S. compared to the category growth. It's hard for us to see that because of Latin America being included in the numbers. I'm just interested, where are you winning share, where are you losing share in the U.S.? And are you seeing any evidence of destocking in the U.S. market? That's the first question. And then the second one is just on Chinese Infant Nutrition. I was wondering whether you can give us an update as to the trends that we're seeing in China especially in light of some of your competitor recalls. I mean, what is your growth in China Youth Infant Nutrition? I know Wyeth is not yet in the organic numbers, but if you could give us an idea of the growth rate year-to-date or in Q3 and maybe your market share position as you see it. And it -- I mean, it seems to me that you may have taken leadership position now in China baby. Is that right?
Well, let me organize here. North America -- and I'm going to give it to Chris. But in North America, definitely, we have the Americas. North America is more volume-driven growth than price-driven growth. And there again, you have to go -- we have different categories, different dynamics. Maybe Chris, you can give some light on that question.
Sure. That's very true. I mean, we do have, in North America, very different categories, different dynamics, and it's one of the strengths we have. It's true. It's our biggest market in the Nestlé world. But because of that breadth of products and brands, even in the difficult economic times that were talked about earlier, even though we don't have the tailwinds when it comes to the economy and to consumer sentiment, we can still do well. So to talk maybe a little bit about the major categories that we have -- or the largest category, as you know, is PetCare, and PetCare continues to have very strong leadership in the U.S., again driven by strong innovation, some of them Wan Ling had already mentioned earlier. The next biggest category is frozen food for us. And if you dig in a little bit deeper into frozen food, you'll see that it's a bit of a mixed picture. When you look at the regular or we call them the prepared foods -- the frozen prepared foods like our Stouffer's brand, there, we're gaining some good share. We're seeing some good positive momentum in the Stouffer's business. If we look at our pizza business, last year, as you know, the category in our business was suffering last year. This year, the category has flattened off and we're, in the case of DiGiorno, gaining share, and overall basically holding Hot Pockets as a segment, the handheld snacks, actually increasing as far as the segment goes. That segment is increasing in volume, and we're also growing with Hot Pockets. The challenge is with Lean Cuisine in the individual nutritional frozen segment. And here, it's a function of a few different things. There is a perception in frozen which seems to be hurting this segment, which we're addressing and addressing this fact on behalf of the industry, talking about the virtues of frozen food as a real, ideal way to keep freshness in; issues with pricing. We're trying to get the price value relationship correctly. So we've taken some actions in that range; and also, innovation. In the past, this segment has not had the rates of innovation that we've seen in years prior. And we're coming back with that now with things -- with items like Salad Additions and Honestly good, which have recently been launched. But then if you dig down even deeper into other segments, for example, mentioned earlier, coffee, we're showing growth; coffee enhancers, also good growth, gaining share in powders in this area; and confectionery also showing some strong growth. So it's a mix, but overall, because of our breadth, because of the strength of our brands, positive about the future for North America.
Now thank you, Chris. And then the second question of China Infant Nutrition. Let me respond to that. Infant Nutrition and the whole industry, milk industry and Infant Nutrition specifically is a category that has shown very, very strong dynamics, growth, like many other categories. But specifically, Infant Nutrition is a very sensitive one. There were some issues. I must say we were not involved in these issues, but still, this environment has some nervousness, and that's clear. And so it is all about trust. And we have 2 big dimensions there in the sense of Wyeth, with their organized -- with their trust relationship, et cetera, and Nestlé, we have to play that in harmony together. So we see that whole industry is also because of -- if we speak about kids and children, babies, and there is a framing that is really much more explicit there. And we welcome that because this is a serious industry that has to be taken seriously in every part of that industry. And so we see ourselves imposed, framing that we have, really value there. Are we growing? Yes, we are growing. Is it something that helps us in the growth of China? Definitely. It is something that drives us in Infant Nutrition worldwide. Yes, there is something that is accretive to that, too. I would not say a leadership. This is a market that's still in the making. We have 2 expressions there, Wyeth and Nestlé, and we are doing, I hope, all the right things there to keep that growth going in a very meaningful and responsible way.
Yes, let's take our next question from the room.
Warren Ackerman - Societe Generale Cross Asset Research
Can I just come back also? Can you just confirm, in the U.S., that you're not expecting any destocking pressures in the next coming quarters as has been kind of widely reported from the biggest retailer in the U.S.?
Destocking, I think some of that has happened already. So I hope that the biggest wave is over, and that gives us also a bit of a refreshed, positive feeling.
Okay. Let's take the next question from the room, here in the front, please.
Patrick O'Hara [ph] from Nikkei [ph] News . I have a question about Nespresso. You have been losing some court cases over the patent of capsules. Do you think you will go on and fight even more in the court? Or would you consider change your strategy maybe, change the distribution, have it sold in the supermarkets in the future?
Well, first of all, let me -- court cases. First of all, there is no stage of change of strategy. The strategy was not only court cases. It was -- and we always said that, that is to win in the quality of the cup of coffee. And the Nespresso -- to have the best Nespresso experience with Nespresso. It is clear to me that we -- as we are a [indiscernible] company, we fight on different fronts. And if we feel that our intellectual property, where we have invested so heavily in, is being betrayed or used, then we defend. And that's fair play. I mean, that's how the industry has settled. And so therefore -- and sometimes, we win. Sometimes, we lose. We may agree or not, but that's -- but we have total respect for the decision made there. We see if we can take that step further or not, but the whole focus, all the energy at the end of the day goes to driving the business model of Nespresso, driving the value and the fundamentals of that brand. That is linked with a more holistic experience that starts with the highest quality in the cup, with some excitement of innovation, new flavors, new blends, also linked with design, linked with an experience, linked with -- being linked up with that society through the club. So that is where, actually, the value lies. That's where we' focus on. And it is not to be found in the retail. Why? Because the whole concept of Nespresso is geared and engineered around direct relationships. So we stay put to these principles, and I think it's the right thing to do. That is showing in our growth and the strength of the brand that it is the right thing to do.
Let's take the next question from the call. We have Eileen Khoo at Morgan Stanley.
Eileen Khoo - Morgan Stanley, Research Division
Eileen Khoo here from Morgan Stanley. So 2 questions. The first one is actually on coffee. Earlier this day, you mentioned that you had lost shares in some of your key emerging markets, for example, in mixes. Is this recovering now? Can you just update us there? And then on Nescafé Dolce Gusto, specifically, can you update us on where you are with your global rollout plans? How many countries is it in now? How big is the business now for you? And when you say double-digit growth, are we still talking 40%-plus? And then the second question is actually on AOA. Can you please update us on whether you still have any supply chain disruptions here that are still ongoing that might actually improve your performance in the coming quarters? Or are things pretty much normalized now?
Well, we have mentioned in coffee, certain markets, we lost some market share. And I would say, basically, it was driven by 3-in-1. You may know this is a very, very strong category. We have lots of growth, many players coming in there. So that is something where we're working on specifically. We have gained and have good strong market positions there. But as we were quite, in many markets, the innovator, the initiator, it is clear that with new players coming in, they want a part of the enjoyment. So -- and answers has to be given again. There are 2 marketing support, true innovation, true quality, and we are playing on all these fields. And in Dolce Gusto, I would say the rollout is indeed going very strongly. It was quite European-centric when we started it last year. I think we are now almost 50 countries with Dolce Gusto, 50 countries and rolling out, having some very, very nice growth figures in all these countries where we started. But what's nice about Dolce Gusto is still, in Europe, where we started, where it is now for 6 years or 7 years in the market, we see very, very interesting growth figures, too. We see that we -- this whole coffee business -- let's take Europe, where we have so many players really playing very well and with very good arguments, how this whole market is dynamic and that yes, indeed, in spite of many other initiatives of other players that we can keep our agenda going and keep in gaining market shares because we are going into the market with these different offers. We have Nespresso. We just mentioned it. We have Dolce Gusto and systems that is retail based, and that is having many, many additional arguments actually that all the players don't find so easily through different brands that we have. Then we have the out of home and all the models that we are introducing, be it Milano or be it Nescafé Alegria. So you have these different angles. Then you have the Nescafé where super premium is again doing very well through Nescafé Gold in many markets like Russia. So that's the nice thing about the coffee market, that we have this complementarity of going about the market that is showing so many signs of a dynamism in an environment that is actually not giving that for free with a consumer confidence that is low. That same dynamics is translated in all markets of the world step-by-step. So Nespresso is extending its geographic footprint in its own way, city by city, country by country. Dolce Gusto has rolled in through retail in these mergers. We have the Nescafé arguments and Nestlé Professional is rolling out all their new offerings, too. So it's a fascinating journey. And AOA -- and may give it then shortly to Nandu, who is here also. The supply chain interruptions, I think that's going to be part of AOA or Zone Asia, Oceania and Africa. We call it actually sometimes, with a little twink in the eye, the Zone CNN. There is always something in the news. It's a pity though, but it is all reality. It has been all reality for many, many years. And we have interruptions. We have mentioned to you in Syria, how we hold on to our factory, 300 people, 350 people working there to the last minute until it was really bombarded and alluded completely. So we are rewiring all these things. It's a permanent issue, a permanent challenge, but I think we have the right people to do that. And in the turnover strength, how we can rewrite them, but maybe some more light on it very shortly, Nandu?
Yes. Look, if your question is specifically on, have we been able to replace the supply that we have lost out of the Syria factory? The answer is yes, we have replaced that supply. If your question is do disruptions continue across the Middle East, across the northern part of West Africa and on other parts of the Zone? Disruptions continue, and we have seen -- you read the news and you'll see, in fact, in general, the situation is not getting any better from a stability or fair environment point of view. But as Paul mentioned, we cope with that. That's what we are good at doing.
Actually, Middle East is showing nice growth with the [indiscernible] wide supply chain. Yes, it would be easier with total stability, but that's why sometimes we're quite unique in being there.
The next question from the room. Sorry, you need the microphone.
The mic for the webcast, yes.
Will you buy back shares, and will you divest Jenny Craig and PowerBar?
Well, buying back shares, no, it is not on the agenda. It's always a possibility, but that's not part of the agenda now. And on the others, I would not answer that because, as I said, we're serious about things. And we have to give time to time without losing time. And you're going to be timely informed.
We have a question actually from [indiscernible] asking about CapEx over the last 2 years and for 2014.
Well, that is linked with my -- part of my presentation where I said, our CapEx over the last 2 years, globally speaking, and by intention of creating that necessary footprint and capacity and capabilities has been over 5%. We had, in the past, a -- I don't know if you can speak about the cruising speed of capital investments, expressed in sales, in percentage of sales, but we had in capital investment between, I would say, 4%, 4.5%, give and take. And it went up above 5%, 5% to 5.5%, which was the right thing to do at that time. I feel that it's the right time now, too, to use what we have invested in and leverage it. We have all the capabilities. We have the capacities now, and that is exactly what we want to do. So we -- for 2014, I've said, we want to cap that, definitely under 5%, between 4% and 5%. That's where we are. That's our -- that's the instructions or the guiding that we have imposed ourselves to. So it is basically back to a certain cruising speed, so still, a sizable investment though.
Let's take the next question from Ivo [ph] over here in the room.
Ivo [ph] from [indiscernible]. I have 2 question. First one about your portfolio management. You said you had identified 1,800 cells. Is that too many? And you also said that you had a shortlist. Can you tell us a bit more, explain to us what are your priority in terms of divestment? Will it be a few nonprofitable cells, or mainly small cells are not -- that doesn't fit anymore with the portfolio? And my second question was about price. Especially in Western Europe, given the competition between retailers, how do you see room for price increase in the coming months?
Well, and first of all, this whole portfolio management, indeed, we have many cells. You say, are there are too many? It's like we have many SKUs, are there too many? There is always some too many. And that's why we have this tool to give that transparency because at the end of the day, average that are done by over-performers, underperformers, but how far were they and how long do you want to have underperformers? And I don't want to centralize all categories, all cells, to the same common denominator if you have to deliver x and y, but there has to be judgment. And that judgment should be done with some criteria that we all share, so that we have 1 common language. This portfolio management is not something new to Nestlé. All of a sudden, we're going to start, talk about portfolio. We had already in, on all level of SBUs on our strategic business units or in the markets or in the zones, a portfolio management. But what we did is to make it more capital [ph] and have it much more visible and to standardize some criteria. So that when we speak to each other, more of when we agglomerate to certain dimensions like -- sometimes, you have to agglomerate because the world is changing, it's integrating. That is now allowed in a much more simpler way through, I would say, the tool or the sharpening of our tool that we have now. In order to do that, you have to have also capabilities of data standardization. That is what GLOBE gives us, to be able to actually to see and to look the reality, which is complex. I mentioned that, we are in many markets, we are in many categories. And when you add it all up, you have 1,800 cells. But we are able to do that actually by simplifying with a push of a button. And the access we are calculating or plotting, is basically a strategic fit. It is resource intensity, and you can open it up, a resource intensity in CapEx or resource intensity in R&D, so you have many angles to do it. How big is the growth potential? Can we drive and win in these categories? Because you can be in a category without growth, but you have not capability to win. While all that is -- now pull it out, we have 1 common language, and we go after it. If you say, what is your shortlist? Well, it is not my shortlist. It is our shortlist here of all of us, looking into it from different angles and discussing. We're building the answers of that [indiscernible] into the -- we call it, the strategic business, the global business plans, which are made per category worldwide. That is translated into zone plans that is then taking these -- that transparency in concentration and then the market business strategy plans. So it is translated, not just in a list of categories or sales that we then shoot down like that. I mean that's not how it works. We built it in into a logical plan that is more holistic than that. And -- but it results -- and you put more resources behind because that's the most enjoyable business that needs that resources or you fix it or you get rid of it. That is the translation that we have, which would much more, I would say, a sharpness and intolerance than we may have before. Pricing in Europe -- and maybe you, Laurent, you are the specialist of that now. But first of all, our pricing, our pricing, we wouldn't like third parties to manage our pricing, our pricing, because it should reflect the value that we see. Again, value with consumer value -- to see what we feel we built into that product, yet, we are part of reality. And it is true that there is not a lot of beyonds of high pricing, but you've seen also we have been sensitive to it. Also, raw material prices have a lot of uncertainties. So it's more a combination of things, but maybe 2 words on pricing in Europe, and that's linked with the retail dimension of Europe.
Yes. It's clear that we have seen in the last months, deflationary tensions building up for a number of reasons. The very first one is that there is no growth in the marketplace, so everyone is fighting for a share of a shrinking pie and that is building up tensions, that's one. The second one is that the commodity environment, especially on the coffee front, has been relatively mild, so that has also fed those deflationary tensions. What have we been doing? Basically, when we price, we tend to first, make sure that we stay competitive at all times and we protect our market shares. That's one. The second one is that we make sure as well that we capture the value of our brands, of our products in the eyes of the consumers and protect our gross margins, which we have been achieving if you see the H1 numbers. Now going forward, I don't see the market will really pick up. You have seen the unemployment numbers. That will hamper the growth going forward for a period of time. Taxation as well is impacting available income, so it's most likely that markets will remain subdued. And when we look at the commodities, it's always difficult to forecast, but we see some inflationary tensions building up. Cocoa has been mentioned; dairy is another one. So what I can assure you is that we'll make sure we stay price competitive and capture the value of our brands in the eyes of the consumers, that will dictate our pricing strategy going forward.
Let's take the next question from the call. We have Liam Rowley at Barclays.
Liam Rowley - Barclays Capital, Research Division
It's Liam Rowley from Barclays here. Just sort of relating to that last comment there. I mean you touched on specific commodities that are going in your favor or going against you. But I wonder whether you could give us sort of comment, overall, how your commodity basket is looking for the second half and maybe sort of into 2014? And then related to that, do you still expect margin progression to be slightly [indiscernible] in the second half than it was on the first half?
Wan Ling Martello
Liam, in terms of commodity, we do not -- we will guide commodity assumptions for 2014 during our full year when we publish our full year results, so we'll have to wait for that. In terms of balance of the year, we have -- we're not changing our net guidance, which is low-single digit for the balance of the year. And was there another question?
Margins, if you see margins as projected as they were the first half.
Wan Ling Martello
No. No, it's...
No, but we have mentioned it. We have mentioned it first half. We mentioned that the projection that we had the first half, the margin, 50 basis points and all, that's not to be extended, too. That's not how we manage the business, too, because the dynamics of our [ph] during the year. But we -- our commitment is to have margin increase, though, so in line with what we have been delivering in the past 2, that should be rational.
Wan Ling Martello
Yes. Just building on what Paul said, our trading operating profit margin was up 20 basis points in H1. And obviously, like Paul said, our commitment is to improve margin year-on-year, and so that's all we can say at this point.
Our next question from the room, Matt, over there please?
Matt Boyle with Bloomberg. I know -- regarding L'Oréal, I know you said you're keeping all options open, I just wanted to know if you'll be able to help us out in terms of the timing of a decision. Do you expect to say something early next year? Do you expect it to be at the AGM? Can you give us any sense in terms of when you expect to let us know about that?
Yes. We have mentioned that we keep our, all options open also to the option of saying when and where we're going to say it. So you're right in your first sentence, so we keep that as an option.
Okay. So let's take the next question from the call, Patrik Schwendimann of Zürich Kantonalbank.
Patrik Schwendimann - Zurcher Kantonalbank AG, Research Division
My first question is regarding the organic growth guidance. You were mentioning a further exploration quarter 4 compared to quarter 3. Which regions and product categories would you expect to accelerate, and where would you be a little bit more prudent for the future? That's my first question. And the second question regarding your water business, which had a slight slowdown in quarter 3. You were mentioning a tough promotional environment in North America. Could you give us some more flavor, what was the growth rate in the water business in U.S. and in emerging markets and in Europe?
Do you want to take [indiscernible]?
Wan Ling Martello
Yes. We expect -- well, we don't manage our businesses on a quarterly basis. But for the balance of the year, we do expect that growth should continue to accelerate, which is what you've seen in our 9 months results. And that will -- we expect that to come from just like broad based, just like 9 months, all regions, most of the categories accelerating for the balance of the year.
Then the other question about water. We have John Harris here, who is managing our water business and actually, who is here for the last time, so -- because you're retiring. You're still too young to retire, but you look young because you drink a lot of water. So please comment a little bit on the slow down and the acceleration also in similar areas. Please, John?
In terms of water, particularly, as it pertains to North America, we had a slowdown in July. We had a very good month in September from a water standpoint. Some of it was weather related. We're back on growth trend in terms of water, particularly in North America. North America was hit with a lot of competitive pricing as regards to private label. Private label really took their prices down in the month of July, and we decided that we were going to protect our margins, which is what we did, but we are coming back. I also want to comment on the strength of North America as it pertains to Perrier and San Pellegrino. Both those brands, which are basically our premium sparkling brands, showed tremendous growth. So we're pleased with the growth there in terms of North America on the sparkling brands, which helps us from a margin standpoint and a profitability standpoint.
Thank you, John.
Should we take the next question from the room over here?
Christina [indiscernible] from [indiscernible]. I have 2 questions. You mentioned your cooperation with Google and [indiscernible] is thus covered with Google. And you're getting more information about patients' needs, so I wonder, could that be an opportunity for Nestlé to cooperate with Google and getting information from customer needs? The second one would be, you pointed a very strong on the hazardousness of your business. But on the other hand, their -- your business is -- the basis of your business is, more or less, a lot of unhealthy products. So how does it fit together, or you're going to change anything there?
Well, with Google, Patrice, maybe a word or 2 on Google? You have been behind this fantastic KitKat-Google relationship, but the relationship with Google is much broader than that. And patients' needs and some ideas about digital and collecting data?
Yes. Thank you for the question. I think on Google, of course, what has happened with KitKat was, in fact, the result of -- or an outcome of a deep relationship that we have initiated with them now 2 years ago on -- in search for excellence in social media, and especially in search, which is the -- of course, where Google can bring a lot. So we have several projects with Google in several part of our businesses on where we are working together at finding this excellence in search. And one can be, of course, how -- by deepening relationship and communication interaction with consumer, we can serve this consumer better, being patient, being young mother and/or young consumer. And this is what we have done, and this is where they came when launching their new Android which, as you may have known, was always branded with some generic confectionery brand. They asked us if we could do things together for the first time for the -- and brand, the new Android version, KitKat, which we embraced and we did together, I think, very, very well. The last count, to give you an idea on the impact, was we were close to 1 billion tweets exchange among people with the KitKat Android brand mentioned in the tweet. This is on top of all social media happening, promotion and so on that we did together, which was a first in the world. So that's part of it. That's part of the way we work in marketing cooperation. We have this with Facebook. We work with Twitter. We work with Google because this is the new way that we have an interaction with consumer, that you enter conversation with consumer.
Thank you, Patrice. Then your second question is Nestlé, you all talked about nutrition [indiscernible]. You're talking about how healthy, your products, et cetera, or you're talking about -- and then you have chocolate, shame on you. That's what you're saying. That's -- I don't think that's what you believe in, you want to provoke. And I do believe there are not really unhealthy products you can have but we don't have these. You have -- and it's easy to say you have unhealthy diets, but we should be part of building healthier diets and more understanding. We have said actually our agenda on nutrition, among others, goes about first, pleasure, balance and understanding. And we have to be part of driving these 3. Pleasure, because people stay with things that they like. You are not going to force something as being part of people's daily life that he doesn't really like at all. So pleasure is important. That's why we have 60-40. We want to be preferred as a taste. Second, we have to have balance, means it has to be part of a -- it has to be possible to be part of a diet, of a healthy diet. But for a healthy diet, you need people's understanding. So we have to do education. You have to be transparent in your -- on the label about the intrinsic qualities and nutrition of the product you serve. You have to link up with that label to the digital media now and Internet and all that so that you can even go deeper into explaining what the product is all about, how it is made of, what is here and what is there. And you also have to educate people. And in nutrition, we were not educated in nutrition before. When I was in school, I never was. We see that coming in, we are pushing that. We have the healthy, the Nestlé Healthy Kids Programme that it's just going about that. It is nutrition educations in schools. And it's not us all program. It's just driving with the authorities in their respective countries that program and building or educating children that can go in a more balanced way about healthier diets. So we bring in, in our portfolio whatever pleasure we can with more goodies and less baggage. We have less and we are investing an incredible amount of money in how can we deliver preference of taste with less sugar or less calories in general or less fat. We have our internal policies that are really driving this agenda, the way we're putting an amazing amount of time and energy resources behind just to do that. And this is possible. And science is being created to be able to do that. So we are definitely a company that thinks about healthier diets in a more holistic way, driving that agenda, which is not only products. It is products, education transparency, et cetera, R&D, science. So I think that's a much more honest answer to the question than saying, "Let's get disengaged from whatever may be seen as negative." But we know it's going to be part of people's lives anyhow. But let's not disengage our understanding, our R&D, our science, our knowledge. Let's disengage from that category and let -- I'd rather have a company that says, "No, we want to be there. We can leverage our size there, too, and bring and be part of a broader dimension of healthier diets and a healthier lifestyles." Yes, indeed, we accept that we may be criticized for it, but we're going to stay engaged. That's why I said, engage with stakeholders in their dialogue. So we do truly believe that we're sometimes pushed in the corner as you're a big part of the problem. And I do truly believe, honestly believe, we are rather part of the solution if we work together on this in a more balanced and honest discussion. And we do see an incredible openness of all parties involved and is shaping that nutritional dimension of our societies. It's so much part of healthier lifestyles. And yet, at the same time, it could be part if you don't go about it seriously and honestly and responsibly, could be part of driving unhealthier. So we want to be part of the first dimension or be part of the solution.
We have another question from the call. We have Robert Waldschmidt of Bank of America Merrill Lynch.
Robert Waldschmidt - BofA Merrill Lynch, Research Division
Yes. Just a couple of questions, if I may. You've talked about North America and what's going on there. I was wondering if you could give us some color on Latin America given there's been some concerns about slowdowns at market levels there, and what are you seeing in market levels, and indeed, within your business given it sounded like you're seeing accelerations in those regions as well? And then also back on Europe, you mentioned that Professional is not doing so great. I mean can you give us here in terms of, is that actually literally negative? And if so, how much?
Well, let me answer that. North America, Latin America, well, Latin America, indeed, it has -- have been, I have been quite a few years in Latin America. Latin America is still Latin America. It means we see some inflation coming back, some nervousness, too, in big countries. And you know Latin America is basically shaped and made by 2 countries, Brazil and Mexico. They have their challenges. Mexico linked with North America. But they do see that the arguments of labor and all that is coming back, so the factories, the industrial dimension is taking some new cause. And that should give growth in the future. Brazil has some questioning that they do to themselves, and I think rightly so, there are certain things that has to be sorted out. There is quite a worldwide events coming up, too, that creates some nervousness and some opportunism in certain areas, too. So I feel also this country is -- and what you see, in general, apart from some exceptions, but in general, the democracies in these countries are, in my eyes, the fundamental basics that they believe this continent is going to continue growing interestingly, but a few exceptions made. The political authorities or leadership in these countries have seen that through democracies through stability. There's so much value to be created. They do still have, in my eyes in many areas, to do the structural reforms that would allow to have even more growth flourishing through these countries on a longer term. So what we see though is, yes, indeed, some inflationary, but way far from what we know, but some inflationary dimension coming back. That is linked in with price increases, linked in also with a more subdued demand, which goes hand-to-hand. I do believe that the fundamental balance is still there though for growth. And Nestlé Professional, there, Nestlé Professional has 2 dimensions. First, one is which is internal, which is external. The external one is a big part of the business of Nestlé Professional as we have it, was linked with the parts of the world, the developed markets that are subdued where consumers are cutting on their spending of going out of home, where we were and also, et cetera, and so that is one. So external headwinds. And internal -- not headwinds, but internal things that we are doing is we have a few years ago, defined and say it in this is huge, huge market that we have, which is out of home and we have to pick our balance. And we have said we're going to go for branded beverage solutions and really building the capabilities and answers there in a very strong and proprietary way and then also to customize food solutions, branded food solutions, too. So what we're actually doing is, I would say, one step back to jump better, so actually to see how we then build the capabilities. That's where we are with these 2 trends combined. That's a little bit what is reflected in our results there. I am a true believer that we are doing the right things and that we're going to enjoy that Nestlé Professional dimension, which is one of our growth business. Definitely, we're going to enjoy that in the future.
We have a question from the room over here.
[indiscernible] from São Paulo. So what was really the impact of the devaluation of the Brazilian currency on the business this year? And secondly, we can expect that this level will increase, still more depressed in Brazil since the inflation is getting higher?
Well, I'm not going to answer that because impact on our business of -- one, it's impacting our consolidation. Two, I mean the real has lost a little bit of color. It was one of the stronger ones a few years ago, and now it lost some color. So at the end of the day, although we say -- sell the same or even more of pins [ph] or chocolates and all, or milk, if you consolidate in swiss francs, it's less, but that's how it is. I mean that's something we cannot drive at the end of the day. But what it does though, as I mentioned before, it creates -- because of the import dimensions, you still have to change some areas that creates inflation. Inflation is translated into price increases. And we had to increase certain prices. We do that always and not only -- we do it with holistically in the sense that we try to compensate as much as possible. We are very local producing, so we have actually a competitive edge there in the sense. Our local production capabilities that we have are much more linked with the realities and the dynamics of cost structures of the markets per se or the countries per se. It would be worse if we were to import everything in Brazil, which is for Nestlé actually, an exporting market. This is not really affecting us directly there in that sense. So we almost, I would say, produce everything that we sell, a few small, small exceptions made. Everything we said in Brazil is produced in Brazil. So that is a competitive edge we have.
We have another question on the call from Jeremy Fialko of Redburn.
Jeremy Fialko - Redburn Partners LLP, Research Division
Jeremy Fialko at Redburn here. I just got 1 question on your pricing in the AOA Zone. That looked like you had a very good acceleration in RIG in the quarter, but your pricing actions turned slightly negative. So really, can you talk about the way you're seeing that negative pricing? I'm guessing coffee would be where you've done most of it, and how you might think it's going to evolve, given the fact that you have had some quite big currency devaluations and that would need to stop [ph] prices to offset those?
Nandu, a very specific question, if you could give a short answer to that.
Yes. Firstly, Zone AOA is -- you have to understand, 25% of our business is developed markets where the dynamics are similar to Europe in terms of deflationary environment, and 75% of our business is emerging markets. In emerging markets, the bulk of our business comes from the PPP segment. And it's the lower population groups, which really face the pressure of an economic slowdown and inflation at the same time. So what we have chosen to do is to build volumes, is to grow market share to improve gross margins and to do those all at the same time that we also drive cash flow and working capital. So personally, I see this as a very positive evolution of our business competitiveness and strength going forward.
And generally, I would say, if we have low pricing, which is sometimes we have higher pricing, lower pricing. Pricing is linked with many factors. The major drivers over to the prices and costs. But we have very low pricing, in general though, it is that -- is there a best proof that we are sensitive to consumers' expectations and needs and how we reflect our cost structures also, our efficiency driver and all that into the prices. So I would see that as a rather positive.
We have a final question from the call from [indiscernible].
I just have 1 question. You mentioned the recent slowdown in emerging markets. I just wanted to know if you could shed some light on smaller markets in the [indiscernible] region, i.e. Africa, but more specifically, Nigeria, just to have an understanding of what's going on at the moment and what's your expectation for fiscal year '14?
It looks like, Nandu, quite a lot of interest in your zones. Many things happening, but I give that to you. Africa is a continent that has -- that we always believed in very, very early on many, many years there. We have invested heavily. And it is also a continent that has quite a lot of stories to tell, fascinating, but also, a lot of volatility and turbulence, so...
Yes. Thank you, Vinta [ph], a good question. Across Africa, we see continued growth. That's the underlying story. Now within that, we, of course, see pressures, as I mentioned earlier, political disturbances when you take the northern part of West Africa where safety starts to become a concern. So it's not as easy to reach products and distribute products as it was there earlier. So those effects continue. In general, inflation or a currency devaluation has an effect also on purchasing powers, so those issues continue, but we know how to deal with that. Our market shares are strong. Our market shares are growing, and our business continues to gain in strength and penetration in West Africa, in Equatorial Africa, in South Africa and also in the Northern part of Africa, in Egypt, in Libya. We see good acceleration of our business across the continent.
Thank you. And Nandu?
I thought we had a -- that was the last question from the call. But in fact, we have another one from Jeff Stent at Exane.
Jeff Stent - Exane BNP Paribas, Research Division
And just a very quick question. Is 4.5% around 5%? That's the question.
I don't know, but Versailles is around Paris. Look, around 5% is our commitment. We're going to see where we get. A good question though. A little bit of a strange question for being the final question. Is there some other question from the room here or -- no, it doesn't look like, but anyhow, thank you for the last question. That's the answer. I think I'm going to have to look to the dictionary.
But anyhow, no, first of all, once again, thank you for following us and being here for us, for the persons here in front of me, but also for you, watching and following us through the webcast. I really thank you for your interest in our company. And it's always nice to be able to share with you what is happening, what is in our minds, what is pushing us, what is enthusing us, what is challenging us. And sometimes, we are called sometimes -- I take that actually as a complimentary that say Nestlé is like a [indiscernible]. Somebody in France said it's [indiscernible]. Yes, it's a compliment, yet at the same time, I say, "Wait." Because if they just would know that the quality intrinsic, the internal competitive intensity we have and how we really asked us tough questions and how we are challenging ourselves virtually [ph] and ourselves collegiately and how we go and build capabilities and how we sent people out there in difficult places that many, many of us wouldn't like to go to and how we find people with their families doing it, so this intensity, how we have built in also this external -- looking permanently into our way of deciding or evaluating our actions. That is something we want to share, sometimes difficult because we are sitting in this room or in the webcast through these new technologies. And then you look out and you see the lake, and it's all pleasant and nice. Well, I can tell you there's a lot of intensity that drives these performances. It doesn't come from nowhere. It is driven by people. It is driven by the 340,000 people we are. So with that, I just want to close here. Maybe, you say a few words.
This new format, we're going to be open to your comments on them to see and to see if it drives that and that sense further. I would say for us, it's helpful to do it combined because we can really build all messages together and share that with you with a little bit more time then. But I'll leave that a little bit also to your feedback. So, Robin.
Thank you, Paul. And as usual, we're happy to take any follow-up questions via e-mail or Twitter. And I'm sure you know the addresses. Thank you very much.
Thank you. Thank you, all.
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