Cees 't Hart - President and Chief Executive Officer Heine Dalsgaard - Chief Financial Officer

Sanjeet Aujla - Credit Suisse Matthew Webb - Macquarie Group Michael Vitfell-Rasmussen - ABG Sundal Collier Trevor Stirling - Bernstein Søren Samsøe - Skandinaviska Enskilda Banken AB Fernando Ferreira of Bank - America Merrill Lynch Simon Hales - Citigroup Hans Gregersen - Nordea Bank AB Laurence Whyatt - Société Générale Edward Mundy - Jefferies Group LLC Richard Withagen - Kepler Cheuvreux Frans Hoyer - Jyske Bank A/S Jonas Guldborg Hansen - Danske Bank Tristan van Strien - Redburn

Ladies and gentlemen, welcome to the 2017 Financial Statements Conference Call. Today, I am pleased to present CEO, Cees 't Hart and CFO, Heine Dalsgaard. For the first part of this conference, all participants will be in listen-only mode. And afterwards, there will be a question-and-answer session. As a reminder, this call is being recorded. Speakers, please begin. Cees 't Hart: Good morning, everybody, and welcome to Carlsberg's full year 2017 results conference call. May name is Cees 't Hart and I have with me CFO, Heine Dalsgaard, and Vice President of Investor Relations, Peter Kondrup. I will go through the highlights of the year and the regions and Heine will talk you through the financials and outlook. Please turn to Slide 2, and let me briefly summarize the key headlines for the year. 2017 was a very good year for Carlsberg. We delivered strong and disciplined execution of Funding the Journey and we invested significantly in our business to drive long-term growth. We grew both top and bottom line. Net revenue grew organically by 1%. Organic operating profit grew by a very solid 8.4% and this included investments of DKK 500 million in our strategic priorities. Adjusted net results grew by a strong 27%. Reported net result declined due to an impairment of the Baltika brand, which Heine will explain in details later. The group's cash generation continued to improve and free operating cash flow increased by 38%, being a key driver of the free cash flow of DKK 8.7 billion. ROIC increased by 100 basis points to 6.9%. Net debt was significantly reduced and net debt over EBITDA was down to 1.45 times. As a consequence, the Supervisory Board will recommend a 60% increase in dividends to DKK 16 equal to our targeted payout ratio of 50%. These financial results served as solid proof points of our delivery against our priorities for 2017 as well as the key financial SAIL'22 KPIs. Slide 3, and a few words on our Golden Triangle, which serves as a KPI in our performance management. It helps us to ensure that we continuously try to get the right balance between growth and profits, while at the same time delivering a strong free cash flow. The balance of the Golden Triangle in 2017 was not quite as we had planned for, going into the year as volumes were more negatively impacted by the situation in Russia than expected. However, the negative volumes were offset by strong results for GPaL margin and operating profit. GPaL margin strengthened by 40 basis points, driven by a solid 3% price mix and cost savings in supply chain. The 8.4% operating profit growth was the result of improved GPaL and cost efficiencies, which were positively impacted by Funding the Journey. The organic volume decline was 2%. This was primarily caused by the PET downsizing in Russia, which I will come back to later on today's presentation. Slide 4, please, and the brief update on our strategic initiatives. Our two group priorities for 2017 were firstly, to execute on Funding the Journey in order to create sufficient financial headroom, and secondly, to invest in our SAIL'22 priorities to drive sustainable long-term top- and bottom-line growth. We are very pleased with the progress of Funding the Journey. We delivered benefits of approximately DKK 1.2 billion in 2017 on top of the already DKK 500 million delivered in 2016. We now believe that the program will deliver total benefits of around DKK 2.3 billion. This compares with the previous expectations of DKK 2 billion. We continue to see good traction of all four elements of Funding the Journey and the expected high benefits are driven by good execution within all areas. It is very important that we ensure that the governance structures and processes established in connection with Funding the Journey are embedded in our daily routines and operations. While Funding the Journey, as a specific program, will terminate by the end of 2018, the principles, standards and processes will remain a vital part of how we do business in Carlsberg in the future. Regarding SAIL'22, we invested in our strategic priorities in support of our core business and to change the growth profile of the group. During the year, we invested DKK 500 million into our core brands, capability building, further expansion of our craft & specialty brands, alcohol-free brews and the establishment of activities in new territories. Proof points of achievements in 2017 are firstly, the good growth of the DraughtMaster system as we are winning new outlets and converting existing customers from steel kegs to the DraughtMaster system. Secondly, our craft & specialty portfolio grew by 29% underpinned by continued growth of Grimbergen, 1664 Blanc and Brooklyn, which was launched in more markets. Thirdly, with respect to alcohol-free brews, we grew volumes by 50% in Western Europe. Lastly, in Asia, more specifically in China, we further expanded the geographic reach of our international premium portfolio. In June, we launched a new sustainability program called Together Towards ZERO, with very ambitious targets within the areas of carbon footprint, water waste, irresponsible drinking and health & safety. Slide 5, please, and some numbers on our international premium brands. We saw good growth rates of our specialty brands with 46% growth of 1664 Blanc and 15% growth of Grimbergen. China and other Asian markets were important contributors to the growth of 1664 Blanc. And others brands to mention here is Brooklyn, which grew by 29%. Looking at our core international brands, Tuborg grew volumes by 3%, supported by strong growth achieved in China, in export markets and the launch last year in Laos. The Carlsberg brand grew by 1%, reflecting positive growth rates in markets such as Russia, Poland and China offsetting the decline of Carlsberg Green Label in the U.K. With that, I hand over to Heine for the financials.

Thank you, Cees, and good morning, everyone. Please turn to Slide 7 and a few comments on the P&L. Reported net revenue was DKK 61.8 billion. This was a slight decline of 1% due to the impact from disposals. Organic growth was plus 1%, thanks to the strong price mix of 3%. Asia and Eastern Europe were the drivers of the positive price mix. The impact from currencies on top-line was neutral. Cost of goods sold per hectoliter increased organically by 3% as a result of general inflation, product mix and the volume decline in Eastern Europe. Nevertheless, reported gross margin improved by 70 basis points positively affected by price mix and efficiency improvements. Operating expenses were down organically by 2%, including admin costs being down by 4%. The decline was driven by good execution of operating cost management, which as you know is an important element of Funding the Journey in Carlsberg. Marketing spend was 9.7% to net revenue, broadly in line with 2016 of 9.9%. The ratio of reported OpEx to net revenue declined by 60 basis points to 37.2%. In absolute terms, the decline in reported OpEx was DKK 714 million. The not-allocated cost line was DKK 1.3 billion, which was an increase of DKK 116 million versus last year. This was due to one-off costs related to among others, the outsourcing of shared services and higher investments in our SAIL'22 priorities. In total, we delivered organic growth of 8.4% operating profit. We are pleased with the fact that all three regions contributed with solid growth rates. In reported terms, operating profit grew by 7.7%. The contribution from currencies was a very small positive of 0.7% while the divestment of Carlsberg Malawi and Nordic Getränke Germany had a small negative impact of minus 1.4%. Slide 8, please, and the second half of the P&L. The main thing, impact from special items was the impairment of the Baltika brand of DKK 4.8 billion. The impairment was made due to changed market dynamics following the PET downsizing, our increased focus in Russia on local and regional brands, and lastly, changed interest assumptions. In total, special items amounted to minus DKK 4.6 billion as there was a small positive impact from disposals. Net financial expenses were DKK 788 million, which was a decline of DKK 459 million compared to last year. Excluding currencies and fair value adjustments, net financial expenses amounted to DKK 908 million, which is in line with our expectations. Our net interest costs were down DKK 251 million as a result of the repayment of the £300 million bond that matured in November 2016, the repayment of the €1 billion bond that matured in November 2017 and lower average net debt. The effective tax rate was 41% and that was impacted by the large impairment charge of Baltika. Excluding this, the tax rate was exactly 29%, in line with our expectations. Non-controlling interest was significantly up compared with 2016 amounting to now DKK 806 million. This increase was driven by the Chongqing Brewery in China, which in 2016 was impacted by impairment and restructuring, and in 2017 by higher earnings as well as gains from disposals. Excluding this one-off, non-controlling interest would have been around DKK 700 million to DKK 750 million for 2017. Not surprisingly, the Carlsberg Group's share of consolidated profit was down compared with 2016 due to the impairment. Adjusted for special items, we saw very healthy growth and delivered a net profit of DKK 4.9 billion equal to an adjustment - an adjusted EPS of DKK 32.3, an increase of 27%. And now some comments on the cash flow please turn to Slide 9. Free cash flow was strong at DKK 8.7 billion, driven by strong earnings as a - and a positive contribution from working capital. Free cash flow was marginally up versus 2016, which is a strong performance as the free cash flow in 2016 was significantly impacted by proceeds from disposals. I'll come back to trade working capital on the next slide and therefore here just mention that the change in trade working capital was positive DKK 848 million and the change in other working capital was DKK 388 million. Net interest paid was DKK 408 million positively impacted by the lower average net debt, the repayment of the £300 million bond in 2016, the repayment of the €1 billion bond in November 2017 and then settlement of financial instruments. Tax paid was DKK 1.9 billion. Net operating investments was DKK 3.8 billion with gross CapEx being DKK 4.1 billion in line with our expectations. Financial investments and other activities combined amounted to DKK 699 million, positively impacted by the disposals of a few non-core assets including Carlsberg Uzbekistan and Nordic Getränke. Slide 10, please, and trade working capital. On the slide, you can see the development as a percentage of net revenue. Even though we have delivered very good trade working capital performance in recent years, we improved trade working capital even further in 2017 and as a percentage of net revenue, average trade working capital reached minus 13.7% in 2017. This was 120 basis points better than 2016. We're very satisfied with the outcome of our ongoing and strict cash discipline and the current level of trade working capital to net revenue. Slide 11, please. Our financial leverage continued to decline and by the end of 2017 net debt to EBITDA was 1.45 times versus 1.96 times by the end of 2017 - 2016. Net interest bearing debt was reduced by DKK 5.9 billion versus year-end 2016. The main drivers of the decline are straightforward, namely improved earnings and continued working capital improvements. Slide 12, please, where we show dividend and payout ratio and ROIC, both clear strategic priorities of SAIL'22. As you may recall, we had clear capital allocation targets as part of SAIL'22. We want net debt to EBITDA to be comfortably below 2 times, and when this is achieved, we will increase our payout ratio towards 50%. As it was clear from the previous slide, we are now comfortably below 2 times and consequently, we are pleased that the Supervisory Board at the AGM on the March 14, will propose a 60% increase in dividends to DKK 16 per share equal to a payout ratio of 50%. As we have now reached our payout target, we will take a dialog with major shareholders on what could be the next step and we'll come back to you with a conclusion in February 2019 at the very latest. Improving ROIC is very high on the agenda and a key KPI of SAIL'22. In all regions, we were able to strengthen ROIC. We improved group ROIC excluding goodwill by 300 basis points; including goodwill, the improvement was 100 basis points to 6.9%. Please turn to Slide 13, and the outlook for the year. 2018 will be the year where we translate all the recent years' changes and investments into growth. A key focus for the year will be to accelerate revenue growth, while at the same time delivering the remaining benefits from Funding the Journey and ensuring that we maintain a strict financial discipline both when it comes to costs, but certainly also when it comes to cash generation. Our regional priorities are continued improvement of margins and operating profit in Western Europe, accelerating organic growth in Asia through premiumization and in Eastern Europe, rebalancing the focus towards top line growth. Based on this, we expect to deliver an organic operating profit growth of mid-single-digit percentages in 2018. Based on the spot rates on February 6, we assume a negative translation impact on operating profit of around DKK 450 million. The reason is a strong euro and hence the DKK versus most currencies. Excluding FX, we expect net financial costs of around DKK 800 million. The effect of tax rate is expected to continue to decline and we assume a tax rate below 29% in 2018. CapEx will remain largely unchanged compared to previous years at around DKK 4.5 billion in constant currencies. Please turn to Slide 14 and a few final comments from me on accounting changes. First of all, the changes do not impact the 2017 figures. They will be implemented as of the January 1, 2018. We will adopt IFRS 15 from the January 1, 2018. That means that we will reclassify some trademark in costs at discount and hence move them from A&P spend to discounts booked in revenue. This will reduce net revenue by around DKK 4.2 billion and marketing costs will be reduced by the same amount. There will be no impact on operating profit and cash flow. In addition to IFRS 15, we will reclassify certain costs for the central supply chain and IT functions. The net impact of this will be a reduction of admin costs of around DKK 314 million, which will reallocated to COGS and sales and distribution expenses, again no impact on operating profit. Finally, we will also change the way we report volumes. So far we have reported volumes on a pro rata basis, which means that we have included our pro rata share of volumes from associated companies. Since these companies are only one-time consolidated, we have not booked any revenue from them and therefore, there has not been a clear link between our reported volumes and net revenue. Going forward, we will not include volumes from associated companies and consequently, our volumes will decline. The impact will be seen in Western Europe and Asia as our largest associate currently are Portugal and Cambodia. In Appendix 1 in the announcement you can find 2017 pro forma numbers reflecting these changes so that you can update your models. Back to you, Cees. Cees 't Hart: Thank you, Heine. Please turn to Slide 16 and Western Europe. Net revenue in Western Europe was flat as a result of flat volumes and price mix. We achieved positive price mix in most of our Western European markets, but due to country mix, the regional price mix was flat. Reported net revenue declined by 3%, due to the disposal of Nordic Getränke in April 2017 and the negative currency impact. Beer volumes were impacted by the poor weather in parts of the region during December and declined organically by 1%. Other beverages grew organically by 2% due to the good performance in the Nordics. Market share development for the region was largely unchanged compared with last year. Organic operating growth was plus 7.5% and reported operating margin improved by 130 basis points. The progress in earnings was driven by value management efforts, improved mix due to our premiumization efforts and Funding the Journey benefits, including good results within supply chain savings and operating cost management. Almost all Western European markets delivered profit growth. H2 organic operating growth was 2.5% - 2.6% as it was impacted by the poor weather in Q3 and an acceleration of investments in SAIL'22 priorities. Slide 17, please, and some market specific comments. In the Nordic markets, our total volumes were flat. The summer, especially in Q3, was challenging because of the bad weather. Price/mix continued to develop favorably mainly due to growth of our premium propositions and we delivered approximately 1% price/mix. Our non-beer businesses in Sweden, Norway and Finland delivered solid volume growth while we lost market share in Denmark. All four markets improved profitability due to the Funding the Journey benefits and price/mix improvements. Our French business continued its positive premiumization efforts led by premium brands such as Kronenbourg, 1664, Grimbergen, Tourtel and Craft brands while Kronenbourg in the mainstream segment declined. We strengthened our market share in the off trade while we lost in the on-trade. Price/mix was flat in spite of a difficult pricing environment. Our Swiss business runs like a Swiss watch and delivered another year of very solid performance. Our core mainstream beer Feldschlösschen delivered good results supported by a number of craft line expansions. In addition, we grew our craft & specialty and alcohol-free offerings well ahead of the market. Price/mix developed favorably. In a declining and highly competitive Polish market, we grew volumes by 5%. Our brands in the upper mainstream and premium segments; Okocim, Kasztelan, Carlsberg and Somersby; grew while Harnas in the strong beer segment declined As a result of the premium focus, price/mix and profitability improved. Our volumes in the UK declined about 6% partly as a consequence of tough euro 2016 comparables. We continue to focus on premiumizing our portfolio and achieved the solid price mix. A number of portfolio initiatives were taken, including the additional program along with other craft and premium brands such as Poretti, the rejuvenation of Carlsberg Export at the beginning of the year and the addition of the London Fields Brewery portfolio. In the remaining part of the region, we saw particularly good top-line growth and margin improvements in markets such as Portugal, Italy, and Bulgaria. Furthermore, the Baltics, Greece and Germany reported a solid earnings improvement. Slide 18, at Eastern Europe, net revenue in Eastern Europe was down organically by 1%. Volumes declined by 8% partly offset by a strong 8% price/mix. Reported net revenue grew by 7% supported by a positive currency impact driven by the Russian ruble. The strong price/mix was a consequence of price increases and the introduction of smaller PET sizes in Russia following the PET downsizing as of the January 1, 2017. As expected, price mix was less pronounced in H2, as part of the positive impact from the downsizing came through in Q4 2016. Operating profit grew organically by 12.2% driven by the positive price/mix and strong execution of Funding the Journey. As a result of the positive currency impact, reported operating profit grew by 21.2%. Operating margin strengthened significantly, improving 240 basis points to 20.4%. We grew volumes in all markets with Russia. Slide 19, please, and some market specific comments. The Russian beer market declined by an estimated 4% to 5% for the year, impacted the downsizing of PET bottles. Our Russian volumes and market share were severely impacted by the PET downsizing. In response to this significant change in the marketplace, we adopted a value-based approach to drive further value in the market. Some competitors went for a volume-based approach and consequently our products in the PET segment were priced at a premium, resulting in market share loss. As a result, our volume market share declined and our volumes declined by 14%. However, our value approach resulted in a strong 7% price/mix. Combined with the tight cost control, our Russian business achieved strong profit improvement and a significant margin uplift in spite of the volume decline. We saw good progress of some of our key brands in the premium and mainstream segments such as Baltika 3, Carlsberg, Tuborg and Zatecky Gus; which all gained market share whereas the aforementioned value approach impacted brands in the lower mainstream segments where especially Zhigulevskoe lost share. In Ukraine, we continued to perform strongly and delivered 3% volume growth and strong price/mix. The market grew lightly and we gained market share driven by compelling performance by our local power brand Lvivske as well as Carlsberg, 1664 and Garage. The growth of our premium brands contributed to a favorable mix improvement. Our business in Belarus, Kazakhstan and Azerbaijan all delivered earnings improvement. Kazakhstan in particular delivered a strong set of results driven by a significant revenue growth that was achieved following a high-single-digit market growth, market share gain and strong performance of our local brand Irbis, Baltika 3, Carlsberg and 1664 brand. Slide 20 and Asia. Net revenue in Asia grew organically by 5% driven by a very solid 5% price/mix as were flat. Reported net revenue declined 1%, impacted by the negative currency impact, mainly from the Chinese, Malaysian, Laos and Vietnamese currencies and last year's divestments notably of Carlsberg Malawi in August 2016 and a number of breweries in China. Our international premium brands Tuborg, Carlsberg, 1664 Blanc and Somersby, all delivered strong growth and they were the key drivers of the solid price/mix improvement. Tuborg remains the main volume growth engine supported by continued popularity in markets such as China and India. In 2017 Tuborg volumes in Asia were up 6%. Organic operating profit grew by 8.4% and the reported operating margin expanded by 90 basis points to 20%. The premiumisation efforts and supply chain savings, especially in China impacted gross margin very positively and were key drivers of the profit improvement. In line with our expectations, the region delivered 4.4% organic operating profit growth in H2 due to higher marketing investments following a step-up of spend behind the SAIL'22 priorities. Slide 21, please, and some market specific comments. The Chinese market declined by an estimated 1%, but continued the ongoing premiumisation trend with consumers trading up into the international premium categories. Our good performance of our premium portfolio in China, which includes Tuborg, Carlsberg and 1664 Blanc, continued and grew by 12%. Tuborg remains our most important premium brand in the country. The brand reached 4 million hectoliter in 2017, which is an impressive achievement considering that the brand was launched in the market in 2012. In addition to our premium portfolio, we saw growth of our key local power brands. Volumes in Q4 were negatively impacted by the later sell-in to the Chinese New Year. Net revenue in China grew organically by 8% driven by 5% price/mix and 3% organic volume growth. We increased our marketing spend supporting the wider distribution of our international premium brands. Nevertheless, our profitability continued to strengthen as a result of our cost efficiency focus and the strong growth of the premium portfolio. In 2017, we reached an interesting milestone with China becoming our largest market in volume terms. In India, 2017 was a very volatile year due to the highway ban and the introduction of GST. Consequently, our volumes declined by 2%, but this was less than the market and we therefore strengthened our market position reaching an estimated 70% market share for the year. In spite of the volume decline, our profitability strengthened. In Laos, we continued to deliver solid performance with good revenue growth and margin improvement. We achieved particularly strong growth in the premium category with the Tuborg, Carlsberg and Somersby brands. In Vietnam, we changed the local management early in the year and the new management is driving changes in order to strengthen our local commercial organization, flooding and the latest owing to test, impacted volumes negatively in Q4. As I know you'll have questions about it, let's take the bigger question upfront. Our ongoing dialog with the Vietnamese government is progressing. The positive and constructive dialog has continued also very recently. We will continue towards a successful conclusion for all the parties involved. Our business in Myanmar grew strongly by more than 50% mainly driven by our local mainstream brand Yoma. In Cambodia, we lost market share and our volumes declined. Our businesses in Malaysia and Singapore delivered another year of solid performance driven by good delivery of Funding the Journey growth of our premium portfolio and continued growth of Carlsberg Smooth Draught. Nepal also delivered strong results driven by market growth, value management efforts and the tight cost control. That was all for today. But before opening up for Q&A, a few concluding remarks on Slide 22. We executed well on Funding the Journey. We invested DKK 500 million in our business to drive long-term growth, while growing operating profit organically by 8.4%. We delivered on all our regional financial priorities. We delivered good financial performance with solid organic operating profit growth, ROIC improvement and strong cash flow. And we reached the 50% payout ratio target already in the second year of SAIL'22. And with this, we are now ready to take your questions.

Thank you. [Operator Instructions] Our first question comes from Sanjeet Aujla of Credit Suisse. Please go ahead. Your line is open.

Good morning. Three questions for me, please. Firstly, on the market share dynamics in Russia, I think there was a deterioration in the second half. Can you just remind us where your price points are on the PET part of the portfolio? And what's your outlook on the market share dynamics and pricing into 2018? Second question, just on working capital, another year of strong progress. How do you feel about being able to further improve the working capital ratio over the medium term? And then just on the cost saving, you've raised the guidance again to DKK 2.3 billion. How do you feel going into 2018 and beyond about further opportunities on the cost base? And will you be giving guidance for 2019 and beyond? Thanks. Cees 't Hart: Hey, Sanjeet. And I will take the first question and Heine the other two. With regard to the share in Russia, our share indeed declined due to the PET ban and different pricing than our competitors. In total, the volume declined by 217 basis points year-over year. Regarding your price points, the question about the price points, we at the end of 2016 were 2% or 3% more expensive in PET than our competitors. However, due to the different strategies, we are now at between 20% and sometimes 30% price premium versus our competitors due to the fact that we slightly in the beginning of the year raised our prices, they reduced the prices, but as well and the further intensification of big promotions or depromotions in volume trade. And that has been the dynamics of 2017 and consequently our market-share development. In 2018, we are looking at the development of positive new price just before the season. At this moment of time, it doesn't seem that competition takes another stand than last year. And that means that we need to ensure that we are not further declined in our market share. So, basically the objective for our local team in Russia is to rebalance the Golden Triangle and to ensure that we are not rebalanced in the direction of volume and to ensure that we are not losing market share further.

Yeah, good morning. If we start with your question on working capital, you're right 2017 was a strong year minus 13.7%, definitely among the best in our industry. We will continue with a very strict cash flow discipline also going forward. But don't expect any material cash flow impacts in 2018. We focus on maintaining our current strong performance versus revenue. So the discipline will continue, but don't expect any material cash flow positive from this maintaining the current level versus revenue is our target. In terms of cost savings, you're right that we are now guiding towards around to 2.3. And then I'll review about further potential. Well, first of all, we feel comfortable. We will not sort of a new project around cost savings. Cost savings will and is already being embedded as a way of living in Carlsberg. So, the journey will definitely continue also after 2018.

Got it. And just a follow-up on the Russia pricing question. When do you - when will you take corrective measures there and does that therefore imply a year of price declines or price/mix declines in Russia for 2018? Cees 't Hart: Right. I think we're not going to comment on what we're going to plan in the market, because we don't want to make the competition wiser. Let's state, again, we want to rebalance the Golden Triangle. We want to improve our volumes and we want to stop the market share decline.

Got it. Thank you. Cees 't Hart: Yeah.

And our next question comes from Matthew Webb of Macquarie. Please go ahead. Your line is open.

Yeah, thanks very much. Two questions, please. Firstly, just to follow up on Russia. So just to be clear, your aim is not to try to recover any of the market share losses that you've incurred in 2017. It's just to prevent any further losses. And if I've answered that correctly is that because you've come to the conclusion that the market share losses and the volume that you ceded in 2017 was sufficiently unprofitable, but it's not really worth disrupting the overall pricing environment in the market to try to win that battle? I mean you've still delivered very good strong profit performance despite that. So, just wanted to make sure I've understood that correctly. And then the second question, are you able to give any indication of the reinvestment rate in 2018 of the gross savings that you're targeting from Funding the Journey? I mean, I don't expect a precise number, but could you perhaps say whether you expect it to be higher or lower than the reinvestment rate in 2017, which I think was just over 40%? Thanks very much. Cees 't Hart: Thank you, Matthew. Basically, you answered your own question. Thanks for that. But to echo you, yes, it's very low margin approach, but on the other hand, of course, there is a kind of line in a sense for market shares. But indeed we don't want to open a kind of price war and to regain the kind of very low priced and low margin volumes.

Yeah, good morning. Then answering the question on reinvestment rate in 2018, first of all we don't guide specifically on specific years on Funding the Journey or we can say that we expect to deliver around the DKK 2.3 billion, of which more than 50% will go to the bottom line and then less than 50% will be reinvested.

Okay. Thanks very much.

Thank you. Our next question comes from Michael Rasmussen of ABG Sundal Collier. Please go ahead. Your line is open. Michael Vitfell-Rasmussen: Thank you very much. And well done on your cost savings story guys. Three questions, so first on the craft & specialty beer, can you just give us an update on how large a share of volumes and revenues we are looking at, at this moment ? And then if you could also add a couple of words on the big cities approach. I think at Q3, you mentioned you were in two cities and when will hear more about how this is progressing? And finally on Russia, anything happening in terms of the Efes-ABI merger that you can share with us at this call? Thank you very much. Cees 't Hart: Thank you, Michael. Craft & specialty is around 5% of our volume now together with AUV, the value obviously is higher. With regard to the big cities, we anticipate in May to really go a bit more public on it. And with regard to Efes-ABI, that - as far we see it they still operate separate from each other. And obviously, we look carefully about the moves they are making. But I can't give you any update that you might not know. Michael Vitfell-Rasmussen: Great. And is it rightly understood that you are live currently in two cities in the big cities approach, is that right? Cees 't Hart: Few more, yeah, we do have about five now as a test market. Michael Vitfell-Rasmussen: Okay, great. Thank you very much. Cees 't Hart: Yeah.

Thank you. Our next question comes from Trevor Stirling of Bernstein. Please go ahead. Your line is open.

Morning, Cees and Heine. Three questions from my side too as well, please. The first one, Heine, would be the non-distributed are now running around DKK 1,300. As you look forward, some of those are one-off costs. Do you have an estimate of where you'd expect that number to be on a run rate basis as you get beyond the SAIL'22 investments or the hump of the SAIL'22 investments? Second thing for me, if you mentioned about the acceleration of organic growth you're expecting this year. Cees, do you have a vision of where you think you would like to get to in terms of a long-term organic revenue growth for Carlsberg? And the third question maybe, the FX hit came in a little bit higher than expected. Is that chiefly from the ruble or is it pretty broad based? Cees 't Hart: Okay, Trevor, good morning. Thanks for your questions. First, Heine.

Yeah, we start with not allocated, we're around DKK 1.3 billion versus DKK 1.2 billion the year before. The reason for the increase has to do with certain one-off costs, including investments in shared services and then also investments in SAIL progress. Going forward, expect year-over-year smaller declines so that's how we see that one. In terms of the other one, which was then FX, it's basically - so the reason for the amount basically comes across different currencies and it's all related to the strengthening of the euro. If we try to split it across mainly 40% comes from Asia currencies, 45% from the ruble and ruble related currencies and then 15% comes from Western Europe, Swiss francs, Norwegian krona and also the Swedish krona.

Thanks very much, Heine. Cees 't Hart: With regard to the net revenue growth that we expected. What we said earlier is that when you look back in 2022, we should have a CAGR of 2% to 4% organic net revenue growth.

Thank you very much, Cees. Cees 't Hart: Thank you, Trevor.

Thank you. Our next question comes from Søren Samsøe of SEB. Please go ahead. Your line is open. Søren Samsøe: Yes, good morning. Just a question regarding your new guidance for 2018, the mid-single-digit organic EBIT growth. Just trying to get my head around what lies behind this guidance. I mean you have easy comparables going into the year there's positive price/mix it seems, you have some benefits from Funding the Journey, and I guess, there also must come some effects from reinvestment into brands. Is that what is behind your EBIT growth guidance or should you more look at it in a sort of a Golden Triangle context? Maybe you could elaborate a little bit what you have been thinking behind making this guidance? Thank you.

You answered the question yourself. It is including all these different elements. So both the comparable from last year, Funding the Journey the benefits and then it's clear that in 2016, let's just say, we have reinvested around DKK 500 million into growth initiatives and part of that will pay off also in 2018. For our use of the balanced guidance, we feel comfortable otherwise we would of course not have guided like that. Søren Samsøe: Okay. Thank you.

Thank you. Our next question comes from Fernando Ferreira of Bank of America Merrill Lynch. Please go ahead. Your line is open.

Thank you. Good morning, Cees and Heine. Two questions for me, please. First one, I got your comments on Russia in terms of the market share evolution, but wanted to get your expectations for the total beer market in 2018 as we'll have the World Cup in June, July, and also no major regulatory hurdles? And then second question as your focus is shifting to the top line growth, can you talk about the pricing environment especially in Western Europe? Have you pursued any improvement recently or is it still a challenging environment for like-for-like pricing? Thank you. Cees 't Hart: Thank you very much, Fernando. Good morning. With regard to the Russian market, we feel that we are getting closer to bottom if you like. The market declined, however, by 4% to 5% in 2017. But if we adjust for the PET impacted the market would probably have been flattish in volume terms. We remain cautious on the Russian market. I don't want to predict if or when the market really turns, so basically our outlook will be flattish. On the positive side, there's no new regulation or tax increase for 2018. The economy is improving. However, consumer sentiment remains depressed and consumers have become more price conscious. And in addition, the market is going through large changes such as the growth of diet, the growth of regional brands, high promotional pressure in the modern trade and of course as well a strong number two player. So, it will be a volatile environment again in 2018. Yes, the World Cup is there as well so we by and large estimate around zero.

Thank you. And then on pricing in Western Europe? Cees 't Hart: Yeah. So pricing in Western Europe, there we feel, let's say, that it remains to be of course difficult, but we have some small successes in some of the countries where we have been able to increase our prices. What you see especially in Q4 in terms of negative price/mix and pricing was more because of the mix of countries, the UK had a difficult Q4 2016, because on the huge incident, Poland the Vidonka [ph] volume came nicely true in Q4, but as you know that is in terms of mix a bit worse. However, as we said in some other countries, we have been able to increase the prices and lead the market there. So it remains difficult, but we continue to look into that.

That's great. Thank you. Cees 't Hart: Thank you.

Thank you. Our next question comes from Simon Hales of Citi. Please go ahead. Your line is open.

Thank you. Just three quick questions, please. You've obviously given some good guidance in relation to the FX impact on EBIT for next year. I don't know, Heine, if you can say anything about the impact on the financial charges line that we might see from some of the recent euro strength? Secondly, wondering if you can just talk a little about the input cost outlook as you see it generally? And finally, just a step seeing in CapEx next year, can you just give us more detail on where that's going?

So you're right. Very specific on the EBIT impact from FX, I said is due to the strengthening of the euro. It's clear that here is also an impact on the net financial line, which is difficult to predict on this and that's why our guidance on net financials is excluding FX. In terms of CapEx, we're now guiding up around partly in line with this year, DKK 4.1 billion, and for 2018 it is around DKK 4.5 billion in current constant currencies, and it's basically across supply chain in particular, but also in commercial activities. The rollout of DraughtMaster is one example of that. You had one more question, which I really didn't - I didn't keep up with that.

It was just on the input cost outlook as you see it at the moment?

Yeah. So the cost for 2018, slightly up. It's included in the guidance, and we don't give any detailed indications neither by market nor by region.

And can I just follow up, just quickly go back to Russia and the pricing on PET versus competition. Can you - you said you don't want to give any detailed guidance at this stage as to your plans for the year. But have you actually moved pricing at all year-to-date in Russia on any of those PET brands? Cees 't Hart: Year-to-date, not. In 2017, we took a price increase of 2% in February and 2% in October following 2016, where we increased the prices by 8% to 9% in a year; but year-to-date, not yet.

Okay. So thank you very much. Cees 't Hart: It tends to follow consumer in fact in total.

Okay. Thank you.

Thank you. And our next question comes from Hans Gregersen of Nordea. Please go ahead. Your line is open.

Good morning. Leverage, you have created itself quite a good headroom, what should we expect in terms of capital allocation in terms of scope and timing that can be cash returns M&A? That's the first question. Second question, if we look to China, you mentioned in the H1 report, if I recall correctly, that you had a 400 bp margin expansion on the EBIT line and I think it was around 300 bp in 2016. What is the outlook for overall 2017 on that? And then unallocated cost, you mentioned that you had one-off cost related to outsourcing your shared service. Can you explain what that is? And then finally, you have in the past argued that you command more or less the entire Russian profit pool. Is that, that still the case? Thank you.

So good morning, Hans, if I start with the leverage and capital allocation question. So first of all, remember our four or five principles for capital allocation that we discussed with you guys, say - but, basically nearly a few years ago. One is that we want to invest in the business. We've done that. As you see this year, we have invested an additional DKK 500 million into growth initiatives within SAIL. Then the second priority was to reduce our leverage to be comfortably below 2. We're now at 1.4, also that is come to below 2. Third we say, we say that we want to increase the payout ratio to 50%. That is basically what we do from a historical level of 20% to 30%, now we are at 50%. So, we have done exactly as we said in the sequence we set. Then we also say that when this is done so when 1, 2 and 3 is the level, we are going to look at the potential for additional shareholder return. That could be either share buybacks or extraordinary dividends. As said before, we will now take a dialog with the biggest shareholders to get their view and then we will come back to you on this at the latest in February 2019. In terms of acquisitions, it is clear that that is the one thing that can change the timing of point number four, which is the additional shareholder returns from share buybacks or extraordinary dividends. We still focus primarily on the organic end. So that's our key focus in the company. But as you know, there are few in organic projects that can come and can change the timing and of course Habeco is the big one, probably also have a few minor ones here and there, of which the one we announced yesterday. Olympic increase is one good example. So overall, we are going to discuss it over the next month with the big shareholders and then come back to you.

How much capital did you spend on the Greek acquisition?

It's something that we are not allowed to disclose as per agreement with our partners in Greece. So, it's not an amount we can disclose. Cees 't Hart: Then with regard to China, as you've seen is that our premium brands grew substantially in 2017, Carlsberg by 9%, Tuborg 12%, 1664 Blanc 44%. As a result, and the result of the closure of the breweries over the last two years, the margin is improving significantly. We started to have this of - a goal of this 5%, now we are looking at the low teens, 13%, 14%. And of course, at the moment that the premium brand growth continues in 2018 that we will further move up towards 15% to 16%. Then with regard to the Russian profit pool, as far as we have the information we can only indeed confirm that we more or less own the profit pool in beer, in Russia.

And then answer on your question on outsourcing and what is it, it's basically initiatives that we launched in the middle of 2016, where we took one plan which was also a part of our captive shared service center in Poznan to Genpact, we have done that. So now, we move on to the next step, which has to do with further strengthening our capabilities in Poznan, outsourcing more to Poznan to Genpact. And then it's about strengthening the processes across - in particular to start with Western Europe and to look into whether there are more potential for shared services.

Yes, sorry, Heine, if my question was unclear. My question is, you mentioned in unallocated cost that you had a one-off cost related to that, how much was that?

That's an amount we disclose. But you could say the increase was DKK 100 million and you can expect that we have the same scrutiny of cost in headquarter as we have in other parts of the group. So versus last year, the costs should have been slightly down. Now they are with DKK 100 million. So this is slightly down across the DKK 100 million. All goes to shared services and then SAIL'22 investments.

And if I could just clarify, it was correct to understand the Chinese EBIT margin was around 13%, 14% today, and you target 15%, 16% in some point of time in the future? Cees 't Hart: Right, in 2018 indeed, because if the premium brands continue to develop as they did in 2017, this further - I'll say the consequence of closing the breweries, we should be there, yes.

Thank you. Cees 't Hart: Thank you.

Thank you. And our next question comes from Laurence Whyatt of SocGén. Please go ahead. Your line is open.

Hi, good morning. Thanks for taking my questions. Firstly in Russia, you mentioned that you haven't raised your prices yet this year. Could you give us any more insights on what the competition have done this year and if you've got any price expectations in Russia during 2018? You mentioned that it's still quite a difficult time just wondering if you could be able to get anything through it during 2018. And secondly, there has been some chopping and changing of the regulation on advertising in Russia recently. Could you give us an update on where we currently are and whether you expect the advertising regulations to change after the World Cup? Thank you very much. Cees 't Hart: Thank you. Good morning. Well, it is as I said earlier a difficult market to predict. There are so many different movements in that market. It remains to be in a dynamic and a stable trade environment. We see an acceleration of the general shifts, which leads to multiple new developments, the rebirth of wholesalers, the further inorganic expansion of largest chains through the acquisition of ailing local retailers, because of this counter-shift and so forth. So, basically a lot is going on. We obviously don't know what the competition has in mind with regard to price increases. We have our hopes, but we don't have the facts as with regards to the regulations. Yes, we have always said that we feel that 2018, they will be a bit more easy because of the World Championship and some let's say big sponsor there and we view - we have to understand what's ahead after 2018, difficult to predict. We are in conversation of course with different officials in this, but we don't have any direction that we can share with you because we don't have any direction.

Okay. And just to clarify on the pricing. Have you seen any changes from your competition during the first part of 2018? Cees 't Hart: No, nothing.

Thank you very much. Cees 't Hart: Sure.

Thank you. Our next question comes from Ed Mundy of Jefferies. Please go ahead. Your line is open.

Good morning, everyone. A couple of questions for me. In 2017, you grew revenues organically 1% below your 2% to 4% medium-term target. Are you able to quantify at all the impact of some of the one-off headwinds that probably won't occur in 2018 such as the PET ban in Russia, poor weather in the Nordics and lapping the EURO, comps in UK. What do you think collectively they were worth? The second question on top line. How confident are you of growing 2% to 4% in 2018, or could you even grow ahead of that in light of some easy comps? And then a point of clarification on tax, I think you indicated it's going to be better than 29%? Could you provide a bit more guidance on exactly what the tax rate could be for 2018? Cees 't Hart: Good morning. Thank you very much for your questions. With regard to the first one, we don't want to go into our guidance on the top line year by-year. You're right we were at 1% last year, we have basically a commitment to grow between 2% to 4% in the coming years as a CAGR. But bear in mind that what we said at the Capital Market Day that we changed gears. We have now the funds to support our brands because of Funding the Journey. We have invested in some of the brands and the capabilities and obviously that now needs to come through and you should see that in the top line. So we recommit to the 2% to 4% over the coming five years, but we don't give the guidance per year.

So then to answer the question on tax. You're absolutely right that we are guiding towards below 29% and that is basically the amount of detail we have in our guidance. What I can say is that for 2017, we said below 30% and we hit 29% corrected for the impairment.

Okay, thanks. And just as a final follow-up. I think the minority charges at the underlying it was DKK 700 million to DKK 750 million for fiscal 2017. Is that sort of a broadly sensible number to use for 2018?

Yes.

Okay. Thank you. Cees 't Hart: Thank you.

Thank you. Our next question comes from Richard Withagen of Kepler Cheuvreux. Please go ahead. Your line is open.

Yes, good morning. Thanks for the questions. First of all, can you talk a bit about the concrete plans for the three growth initiatives in 2018, so the big cities, the craft specialty and Asia? And perhaps also related to that the marketing spending in 2018, whether that will change compared to last year? And then second question is back on Russia, what innovations are you planning in 2018 also with the World Cup in the back of your mind? Cees 't Hart: Okay. Thank you very much. With regard to the three, which are now five big cities, these are really test markets. These are as well slow burners so we expect real competition further into 2020, 2021, because we try out new ways of handling a city or a country and we will update you as soon as we have some first reviews on that one. With regard to the initiatives on craft specialty and alcohol-free beer, craft specialty has the momentum. We just quoted some for example in China like we do the same in many other countries. We see that especially Grimbergen but as well as 1664 really have the momentum. You could argue for 1664 still from a relatively low base with 45% growth is in - or probably 46 [ph] is a commendable figure we think. And so we continue that by basically putting money behind it in resources and move further. With regard to the alcohol-free we focus first and foremost on Western Europe. We grew nicely in the first and second half of the year and we continue to invest in that. Don't forget when you talk about big initiatives is the further rollout of DraughtMaster and these are - if you like DraughtMaster, craft specialty and AFB, these are the engines for the growth in the coming period. With regard to innovations in Russia, well, we see there is a further need for craft specialty - our space for craft & specialties. So, that's where we will enrich our portfolio with in the coming periods. These are in like production markets innovations, but for us of course the brands that we have in our portfolio that have already shown some good results in other countries.

Sorry, guys. Just to come back on these - on the growth initiatives, I mean, related to that marketing spending in 2018, any comments on that? Cees 't Hart: Yes, they will be more or less the same as last year.

All right. Thank you. Cees 't Hart: Thank you.

Thank you. Our next question comes from Frans Hoyer of Jyske Bank. Please go ahead. Your line is open.

Yeah. So question regarding the timing of the remaining Funding the Journey benefits, around DKK 600 million today, all materialize in 2018 or is it into 2019 as well. And in terms of the SAIL'22 spend that was $0.5 billion in 2017, where do you see that number going in 2018? And then, more general question on the key swing factors the risks, the opportunities that you see for each of the three regions in 2018, please?

Good morning. I'll start with the timing of the Funding the Journey benefits. So, the benefits that we've talked about will come through in 2018 and it's all included in our guidance. But after that, as we've discussed previously, we are not going to launch a new sort of program, but we will continue the journey. This is about us spending company money in different ways than you would if it was your own money and a constant focus on cash and on cost will continue. In terms of SAIL investments in 2018 we don't give specific guidance on it. What we do say is that the total program will deliver around DKK 2.3 billion, we feel comfortable with that and more than 50% of that will go to the bottom line and that means less than 50% will go to SAIL investments.

Okay. Cees 't Hart: With regard to key risk and opportunities, that's a broad question but let me give you a few highlights. On risks, I think we have been clear, there remains to be a volatile environment. It can be a bit more positive because of the World Championship and no new regulations. On the other hand, maybe the pricing in PET is still being repaired and there remains to be high promotional pressure in all the trade. In Europe, well, we are all depending on the weather of course. We had a poor summer, but if that repeats in the course this year, then of course a risk. And then on the other side, pricing further improving our mix is not so much a risk. But basically these are the kind of things we need to work hard on to really get that through. In Asia, we are now in a moment of - and the streets [indiscernible] like in China, in particular that's the public space. But on the other hand, India there's all kind of regulations and changes. As we always said, that there will remain to be a rocky road. And therefore, that could make or break our year in India. And so these are kind of high-level overviews with some of the key risks and opportunities so.

Thanks. Thank you. Cees 't Hart: Welcome.

Our next question comes from Jonas Guldborg of Danske Bank. Please go ahead. Your line is open.

Yeah, good morning, everybody. I have one question remaining on my paper, so I will keep it short and sweet here. With the structure changes you made during 2017 and also the Greece acquisition from yesterday, what were the M&A impact on EBIT be in 2018 net?

That is going to be very limited.

There is what, sorry?

That will be very limited. So expect zero.

Okay, okay. Understood. Thank you very much. Cees 't Hart: Okay, Jonas, you're welcome. And then we have time for one more question. Could we have the final question, please?

Thank you. Our final question comes from Tristan van Strien of Redburn. Please go ahead. Your line is open.

Good morning, gentlemen. So I will finish with three questions, please. One, on Russia, there has been a lot of discounting in the traditional trades, originally by Heineken. So when I look at the numbers, you guys seem to be following Heineken on this. Particularly on your Bolshaya Kruzhka brand. So I was wondering why you're following and how does that tie-up with your value focus in that market? The second one, Heine, your working capital seems to really be a benefited from trade receivables. Can you just give a bit more color on that? Is that the trade terms or is that a geographical shift? What is driving that on your receivables or on anything else? And then the third is Laos is going very nicely. Are you maintaining or gaining share or is that market getting a bit more competitive at the moment? Thank you. Cees 't Hart: Thank you, Tristan. The first one with regard to Russia the Bolshaya brand is a bit indeed a kind Juaeski [ph] brand is a bit of indeed a kind of control brand. So there is very compete on price is needed with some of our competitors. So as you see that that is following that on purpose to have a price point, which we can match at the moment. The competition goes mad with discounts, but we basically don't do that with our other brands. With regard to Laos, we see some indeed some more competition there. So far, we have been able to control that, so our market shares have not slipped in beer. And that's good news for us. So the tactics we applied in that market really helped us in 2017 to maintain our market share.

Yeah, good morning, Tristan. Then on your question on - with capital, you're right that we had a significant improvement in trade working capital - sorry, in trade receivables in 2017. And it basically comes from two factors. One is our continued focus on optimizing the terms for trade receivables, which is something that we'll continue. But there is in the number as well a significant impact from the geographical mix. So in a year like 2017, when Russia on the top line is soft and India is soft, that is very good for trade volume capital. And that's also dougle [ph] and we don't expect that to continue. And that is also why we're cautious when looking ahead and saying that, maintaining a level of this 12%, 13% on-exit [ph] is actually our target.

Right, thank you. That's very clear. Thank you. Cees 't Hart: Thank you very much. That was the final question for today. Thank you for listening in and thank you for your questions. We are looking forward to meeting some of you during the coming days and weeks. Have a nice day.