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

Jonas Guldborg Hansen - Danske Equities Sanjeet Aujla - Credit Suisse Soren Samsoe - SEB Mitch Collett - Goldman Sachs Trevor Stirling - Bernstein Michael Rasmussen - ABG Sundal Collier Olivier Nicolai - Morgan Stanley Hans Gregersen - Nordea Richard Withagen - Kepler Cheuvreux Edward Mundy - Jefferies Laurence Whyatt - Societe Generale Eddy Hargreaves - Investec Frans Hoyer - Jyske Bank Andrea Pistacchi - Deutsche Bank Simon Hales - Citi

Ladies and gentlemen, welcome to the Carlsberg Q1 2018 Trading Statements hosted by 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 Q1 2018 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 quarter and Heine will go through the regions and outlook. Please turn to Slide 2. Quarter one is regionally a very strong quarter for our business due to seasonality. Organic net revenue in the quarter grew by 2% and this was driven by 1% price mix and 1% organic volume growth. Reported volumes were flat due to last year divestments of the German wholesaler Nordic Getränke. Reported net revenue declined by 5% due to the disposal and the negative currency development. The negative currency impact was broad based, but there is a large stay back from Asian and Eastern European currencies. We confirm our full year expectations for organic operating profit growth. Please turn to Slide 3 and a few comments on our international premium brands showed a good growth. 1664 Blanc continued its strong performance and grew by 44% even after having achieved 46% in 2017. Further expansion in our Asia markets is an important driver of the brand growth but the growth also picked up in Eastern Europe where Russia delivered its strong growth of the brand. Grimbergen also continues its double digit growth and grew by 12% in the quarter. The growth came was Western Europe is particularly strong results achieved in France. Tuborg, our largest brand grew 11%, supported by strong growth in India and China. The brand also grew in several markets in Western Europe such as Demark, Norway, Serbia and Bulgaria. In Denmark, the growth was achieved despite of a price increase that's because stated [ph] up into more premium Tuborg line extensions. In Turkey, our product has a very successful deal making Tuborg one of the largest beer brands in the country. Volumes on the Carlsberg brand reflect a strong growth in Asia and growth in Eastern Europe were offset volume decline in the U.K. Please turn to Slide 4 and a brief update on a few of our strategic priorities which are also receiving significant support from our SAIL'22 investments. The growth in craft & specialty category continuous and they grew our brands by 30%. Russia, France, China, Poland and the Nordic markets were the main drivers of the growth. Alcohol-free brews grew by 23% in Western Europe with strong growth rates for our Alcohol-free brands in markets such as Poland, France, Denmark, Sweden, Norway and Germany. In Russia, Baltika Zero also achieved strong results in the quarter. Lastly, throughout of our proprietary draught system, DraughtMaster continuous. DraughtMaster as it was consistent, high quality draught beer and ability to have more DIOTs in the outlets leading to higher craft & specialty sales. As a result, our customers see an improved income and much easier operation. We continue to see very strong progress in Italy and Denmark and we have now also launched the system in Norway and Sweden where initial customer interest has been encouraging. Within the big city priority, we are now live in handful of cities where we test different concepts and gain valuable earnings. We have decided not to provide any further update on the big city as our activity remained very commercially sensitive. The priority is a slow burner and it will not have any material impact for the next years. We would like to address that of our growth priorities, the short to medium term growth will come craft & specialty, continued growth in Asia and growing our presence index funding our three beer segment. With that I will hand over to Heine, who will take us through the regions and outlook.

Thank you, Cees, and good morning, everybody. Please turn to Slide 5 and Western Europe. Net revenues declined organically by 3% as a result of a total volume decline of 2% and a negative price mix of 1%. Reported revenue declined by 8% due to last year disposal of Nordic Getränke in Germany which has an impact of minus 3% and a negative currency impact primarily related to non-Euro linked currencies with a large impact growing from the Swiss franc, Norwegian and Swedish krone and then Polish Zloty. We saw a positive price mix in most countries out of license business as far as the regional numbers for the quarter due to low export license fees in the Middle East and growth of Tuborg brands in Turkey. Sales in the Middle East was impacted negatively by increasing excise duties and VEC in some of the markets. In Turkey, where Tuborg is sold by our partner through a license agreement. We only include the license free in our revenue and contemplating that impacts regional price mix negatively. Adjusting for each quarter license price mix in Western Europe was close to plus 1%. Volumes were impacted negatively by the cold weather in many countries which more than offset the earlier selling to Easter. Looking at a few selected markets, our volumes in the Nordics grew by mid-single-digit percentage supported by the re-lifting at a large customer in Finland for the winter campaign. In Denmark, our beer business developed well and our value share showed solid improvements driven by value management and strong growth of craft & specialty and alcohol-free premium. In Norway, the positive development continued with particular solid performance of our specialty products, although the CSE business was impacted by a significant tax increase. Sweden started the year well, mainly due to the earlier selling to Easter. In France, our craft & specialty portfolio continued to develop positively with strong growth of brand success 1664 Blanc and Grimbergen. The mainstream category remains under pressure and consequently our volumes declined slightly. In Poland, our volumes declined and we lost market share following a price increase in Q1. However, our price mix improved as a result of this as well as efforts. The U.K. was impacted by the continued challenges of the Carlsberg brand but with a healthy growth of Brooklyn and Sinebrychoff. In some of our Western European market such as Bulgaria, Greece and Serbia, we delivered solid results. In the quarter, we hired the remaining 49% of Olympic Brewery in Greece. Please turn to Slide 6 and Asia. We had a strong start of the year in Asia. Net revenue grew organically by 16%, grew by 12% volume growth and plus 3% price mix. Reported net revenue grew by 6%, negatively impacted by currency movements. We continue to see strong results in our largest market China supported by 14% growth of our premium portfolio combined with a latest sell in to the Chinese New Year, our Chinese volumes grew by 9% and net revenue by 16%. All three major brands in our premium portfolio that is Tuborg, Carlsberg and 1664 Blanc delivered solid growth rates with 1664 Blanc taking the lead with more than 50% volume growth. Our Indian volumes grew by more than 30% due to market share gains and also very easy comparable as Q1 last year was weak being impacted by the highway ban. In most of the other markets in the region, we saw good momentum of our business with particular strong performance and layouts in the Nepal and Vietnam. In general, we are very satisfied with the progress of our Asian business. Q1 was extraordinarily good due to the later sell in to the festive season but underlying performance of most markets is very strong. And was investing a sizable portion of our SAIL'22 investments in the region to further drive volumes and premiumisation. Slide 7 and Eastern Europe please. Net revenue in Eastern Europe decline by 3% due to 3% volume decline and plus 3% price mix. All markets with the exception of Russia grew volumes for the quarter. Reported net revenue declined by 14% due to the weaker currencies across all markets. The Russian market declined by an estimated 4%-5% for the quarter. We delivered flat market share sequentially of around 31% while we saw a market share decline of approximately 2 percentage points compared to Q1 last year due to the market share loss in the low end PET segment during the summer. Consequentially our Russian volume declined by 11% for Q1. Our price mix developed favorably by low-single-digit percentages in spite of the continued promotional pressure in the PET segment. All other markets in the region continued the very positive trajectory of last year delivering 6% volume growth and 19% revenue growth as a result of strong pricing and growth of our premium offerings. In Ukraine, we saw, we had a very strong to the year, driven by market growth and solid market share performance. Please turn to Slide 8 and the outlook for the year. Based on the Q1 performance, we are well on track to the level on our earnings expectations for the full year. Consequentially, we maintained the outlook of mid-single-digit organic growth in operating profits. Based on the spot rates on April 30, we assume a negative translation impact on operating profit of around minus 550 million, against versus February, our FX is mainly due to the recent weakening of the Russian ruble. All other assumptions remained unchanged. Cees 't over to you for final remarks. Cees 't Hart: Thanks Heine. Before we open for questions, a few final remarks from my side. We are satisfied with our performance in Q1. We see a solid growth in our key strategic priorities such as craft & specialty and alcohol-free brews. We are well attracted to deliver top and bottom line growth for 2018. Finally, we maintained the outlook for the year. And with this, we are now ready to take your questions.

Thank you. [Operator Instructions] And our first question comes from Jonas Guldborg from Danske Bank. Please go ahead, your line is open.

Yeah, good morning, gentlemen. Thank you for taking my questions. Firstly, if you could add some additional comments on your market share losses in the U.K., to what degrees this is a cost concern and maybe also including how did the price mix developing in Q1 in the U.K.? Then secondly, some comments around how you read the Russian market decline in Q1, does it change your expectations for a flattish for year development in Russia? And then thirdly, it sounds like from the comments on the 50 seasons in Asian countries that we should look at Q3, Sorry Q4 and Q1 in combination. And if I do that it looks like Asian volumes has organically developed flattish but I guess that is due to the change of your accounting. So if you could put some comments on how the underlying growth was in Asia adjusted to this later sell in? Thank you. Cees 't Hart: Okay, thank you very much. Good morning, Jonas. Thanks for your questions. With respect to the market share in the U.K. there are market share rose is mainly driven by first of all declining mainstream as it is trading up and the over index in mainstream. And second thing is that the Carlsberg brand company issued its market share in the mainstream segment. We see Carlsberg export doing better because of the new advertising that Carlsberg green as it is called is continued to do some market share. And of course this is collecting measures, I don't have enough time information but price mix we have basically I think that's putting into tunnel. With regard to the market decline in Russia, in our estimation it's 4% to 5% if you compare it this Q1 last year. Then mainly heavy collection of DIOT downsizing, we think the market will be flattish and we don't think our view on the Russian market where we said that will be around zero this year in terms of volume. And in Asia, frankly the market and the - every time in different pieces of course. We first described the development of our Asian market, obviously we haven't - that is a bit later, you have some of the trade loading in Q1 rather than in Q4. But if you combine it and if you look at China, India, if you look at our market share development, if you look at the different price mix development, we first described about Asia.

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

Thank you. Our next question comes from the line of Sanjeet Aujla from Credit Suisse. Please go ahead, your line is open.

Hi, I just like to come back to Russia. Can you just discuss the pricing environment there clearly you've been running with a big price gap with the competition driving some of the share losses that you've seen, are you seeing any signs of the pricing environment improving there? Cees 't Hart: Thank you, Sanjeet, and good morning. No, we've not seen any change in the pricing environment. Maybe it's a bit too early because this is the moment and the season that price increases are being taken. So obviously, we are monitoring that closely. With regard to the radio operators that we participated in some of the deep promotions in some of the key accounts by which have been able to stable our share - stabilize our share development in Q1.

Got it. And just a follow-up on the - can you just also discuss your market share performance in the premium segment in Russia? And just the follow-up on the Nordics, what would your volumes have been if you exclude the contract benefit impairment? Cees 't Hart: The share performance in premium has continued to improve in Russia. And in terms of the volumes, if we don't have the contract in Finland, the volumes would be flat in Nordics.

Got it. Thank you.

Thank you. Our next question comes from the line of Soren Samsoe from SEB. Please go ahead, your line is open.

Yes. Good morning, gentlemen. First question regarding the strong growth that you mentioned you have in some of your scalable premium brands like Grimbergen, the 1664 Blanc. Would you say that this is due to your - I mean is this a direct result of your SAIL'22 strategy? And in regards to that would you say that you are in line or are you slightly hit or slightly behind the plan that you set out for now? Cees 't Hart: Hi, Soren. I think we can really say that this is a consequence of our investments of SAIL'22 both in Grimbergen and 1664 Blanc. It has to do as well, rollout in different countries as you said three years ago, especially Grimbergen was doing very well but only in four or five countries. And as we discussed before, we have now moved to other countries with Grimbergen and as well the 1664 Blanc, obviously the success is coming through which is very encouraging.

Okay. And then I could now - help noticing that you have moved up Asia as the division reports as the number two division now which I think is the first time I've seen that. What should we read into this, I mean why you choose to do that now? Cees 't Hart: Well, maybe not now, we talked earlier about this, that we always get a lot of questions about Russia and a lot of focus, but at the moment that you see that Asia now is best, we have second region. It of course is then the second region that we should mention. So basically it shows as well how fast Asia is growing and how well we are doing there.

Okay. Thank you very much.

Thank you. Our next question comes from the line of Mitch Collett from Goldman Sachs. Please go ahead, your line is open.

Hi, there. At the [Technical Difficulty] Cees 't Hart: We can't get you, Mitch.

I apology, is that better? Cees 't Hart: Yeah, that's little better.

Sorry. So, at the full-year state, you were in keen to commit to the 3% to 4% organic revenue growth aspiration in FY '18, you started with the two again what was the harder, one of the harder comps. Would you be willing to commit 2% to 4% organic sales growth at this stage? And then perhaps can you just talk a bit more about the acceleration in Tuborg which is gone to 11% growth in Q1. I think it is only 3% last year? And I suppose given that your biggest brand what is the offset for that Tuborg growth and volume growth overall accelerated? Thanks. Cees 't Hart: Mitch, I am sorry about your part of the question. But the first two, in terms of the 2% to 4%, as you probably recall is we said that that will be CAGR for the coming years 2% to 4%, so we don't guide from the top line for this year. With regard to the acceleration of the Tuborg brand that's very much due to India. We had a highway ban in 2017 in Q1 as you recall. We grew in India this year in Q1 by 30%, but on easy comps. Other than that we didn't get to your first question as well. So how do you need, to repeat that or we move to the next.

Yeah, I just wonder if you know with Tuborg accelerating so much given such a big brand. Which other brand is getting slightly worse to offset that acceleration? Cees 't Hart: Great, the other brands also as well, basically due to the fact that the main growth comes from China where we grow with our total portfolio and from India were Tuborg next to Carlsberg is one of our name brands. It doesn't need to do - it doesn't basically in another volumes from other brands.

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

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

Good morning, Cees and Heine. Two questions from my side please. The first one if China, so if you could talk a little more about China, Cees, and there will be underlining trends in China obviously it's still fair to say volume is flattish maybe slightly down but very strong price mix? And the second one, I know you answered this but any update on Habeco? Cees 't Hart: Hi, good morning, Trevor. Thanks. As always with last one, there is no news on the Habeco deal, we continue to have a good dialog with the government. And that's we leave it for now. With regard to China, we see there are 40% growth of our premium portfolio. The Chinese volumes in total grew by 9% and net revenue by 16%. So we seem to have a good momentum in that market as we speak. 20% of the volumes, of our volumes is in premium, that's 40% of our net sales and our total portfolio, international portfolio grew by set 14% average, Carlsberg 8%, Tuborg 14% and Blanc 53%. So I hope that gives a bit of color to you.

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

Thank you. Our next question comes from the line of Michael Rasmussen from ABG Sundal Collier. Please go ahead, your line is open.

Thank you. I would like to follow-up a little bit more on the Habeco question just after that if possible. I do understand that's been some issues with the Habeco deal, can you please, elaborate a little bit about this, if this has changed your willingness to, let's go ahead and increase the stake or potentially you will come into some kind of price negotiations or just move along as in the past? And then also my second question will be on the new potential PET brand in Russia. Can you add a little bit of flavor on how that process is moving? What you're guys talking to the members of Duma and so on I think please? Thank you. Cees 't Hart: Yeah, thank you. With regard to Habeco and Sabeco, well we be obviously monitor like you what's happening with Habeco but there's nothing at this matter of time, I can't say more about, you have the same information I guess that we have and we continued have our good dialog with the government. With regards to the proposal on further limitation of PET sizes, few members of the Duma have proposed to further reduce the maximum size of PET bottles, have you read. There has not set any day for first reading in the Duma. And as we understand the proposal is knocked back by the government at this stage. [indiscernible] in early May and of course we will have talks with the members of the government and I might even be allowed to raise a question in the meeting with President Putin. This case has started - this case of PET has started already 8 or 9 years ago. So these kind of steps can take quite a well, but there is no further update for now.

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

Thank you. Our next question comes from the line of Olivier Nicolai from Morgan Stanley. Please go ahead, your line is open.

Hi, good morning. Just a couple of questions on the India, please. You had a 30% volumes growth in Q1, which states were main driver beyond this volume growth also are you aware of any further regulation in 2018, I know that some of the peers for instance must be in spirits which mentions some route to market changes which affected that size in some states? Thank you. Cees 't Hart: Olivier, I got your first question, not your second. But let me first take your first question and then you might have to repeat the second one. When we talk about the states, it's a bit mixed but has lot to do with where the impact of the highway ban was highest, but we've seen recovery in almost all states just because of the highway ban recovery. You see therefore distribution in many of the states coming back significantly, we are not yet own a 100% in any state, but we are I think on average between the 35% and 80% with regard to the numerical distribution in Q1 2018, especially 2017. So we're on our way back.

Perfect. My second question was really about if you are aware of further regulation in 2018, we've seen GST, we've seen highway ban, is there anything coming up in 2018 that you are aware in India? Cees 't Hart: Yes, we - in general we don't see further announcement of the regulations to come up but we see in tax issue in West Bengal, so that probably there will be an increase in the excise.

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

Thank you. Our next question comes from the line of Hans Gregersen from Nordea. Please go ahead, your line is open.

Good morning. Heine, if I have to correctly, you stated that you are well underway with Q1, does that mean without going into specific numbers that Q1 from any point of view did better than you have forecasted? It's the first question? Second part is, if you look at Asia, you have for quite some time delivered very strong organic growth and the point is how much operating leverage can we see that driving into the margin over give year horizon? It's the second question. Thirdly, how many new big cities, although not a part of the big city program, have you added into China? And then finally Cambodia is any new status on the turnaround progress? Thank you.

Well indeed Hans, good morning. With the question on the outlook for the full-year, so you are right that we will underway in terms of delivering and continuing our progress and success with funding the journey. Q1 is basically in line with our expectation and that also means that we are continuing the journey as what's delivering in line with our full-year guidance. In terms of Asia operating leverage here, you're right that it does help on profitability to have higher volume and revenue growth clearly, but it is not something we comment on specifically.

But Heine, could you lens give a little bit further insight in a different way. Can you give not in number terms but then verbally how much are you overinvesting in the reading to drive growth and how long will you or will you continue to do that let's say for the next two years?

Well, first of all we are not overinvesting in the region at all. We are allocating with this perfectly in line with SAIL'22. We are allocating a quiet a bit of our SAIL'22 and money into the region and in particular into China and into India. But it's in line with our expectations and it's in line with SAIL'22. And it's definitely not overinvesting and it's paying off. This is one of the reasons why we have the strong growth we have. Cees 't Hart: Obviously, with regard to big cities outside our big city program, so actually these are the big cities indeed in China, the Western China - Eastern Chin. We talk about 10 cities there. And with regard to your question on Cambodia, we were working indeed on turnaround plan but we have not seen basically the evidence of the success of that yet but that's too early to say.

Thank you.

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

Yes. Good morning, gentleman. I have two questions. First of all, can you talk a bit about the dynamic of price mix? I think especially in the Nordics and France because if you look at your numbers, you actually mentioned the Middle East and Turkey effect, but then also U.K. and Poland were weaken I think those are markets where your revenue is relatively low. Does that mean that your price mix in the Nordics and France is quite strong and is that mainly mix or is there also an element of price in there? And then the second question is on, Russia, Baltika announced some new initiatives with Burger King and Teramo. Is that part of strategy to expand distribution or increase exposure to different channels in Russia and what kind of beers are predominantly sold in these outlets and what will be the impact on price mix? Cees 't Hart: Okay. With regard to the London Exchange, Europe, indeed we had a positive price mix in Nordics and in France. And if you take out the U.K. and Poland, we talk for Europe about the price mix improvement of plus 1%. With regards to both Baltika in Burger King, yeah obviously we do want to be where the consumers consume or shop as at lease well that they use these kind of channels, it's very much on the Baltika Zero, and the more Baltika Zero we saw the better days for our price mix.

Okay. Thanks, guys. Cees 't Hart: Yeah, Richard.

Thank you. Our next question comes from the line of Edward Mundy from Jefferies. Please go ahead, your line is open.

Hi, good morning, everyone. Just two questions, please. You keeping your Russian market guidance sort of flattish for the year, despite Q1 down 45, and have you seen evidence the market has improved in Q2? And then the second question is on Western Europe, where you're flagging the negative mix from Tuborg growth, what was the impact of Tuborg exports on your volumes, I mean Q1 in Western Europe? Cees 't Hart: On the first one, what we talk about Q2 in Russia, well we had a good size, that's not so much issue. While, we are confident is that basically we kept our share, we had a negative or a difficult accounts versus Q1 2017 and huge volume and share decline Russia spotted in Q2 and basically continuous in Q3. So while we're confidence to come back to more or less zero is because we have a trust that we can keep our market share and we have other accounts more difficult than in Q1. Then on Tuborg Turkey, well we are indeed there is a partner, you can imagine that we don't give specific details on that part.

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

Thank you. Our next question comes from the line of Laurence Whyatt from Societe Generale. Please go ahead, your line is open.

Hi, good morning. Thanks so much for the questions. Firstly, in Vietnam following the investments from Tuborg into Sabeco, wondering if you have seen any change in market practices from your competitive landscape? And secondly in the U.K. following the announcement of the century is to merger, I was wondering what impact do you think that might have on the U.K. supermarket landscape? And thirdly, following we've had a number of months of the ABI-Efes merger in Russia of the joint venture, I was just wondering if you have seen any change in the contested landscape as a result of them? Thank you very much. Cees 't Hart: Okay. Laurence, thank you very much. I must tell you that probably there are three times no change as an answer. So if you have known, I think it's already, Sabeco is basically taking now as you know in the beginning of the year and management needs still to come in as far as we have been informed, so no change in the U.K. Well the deal has been announced on Monday obviously our teams are looking at it, but no answer on that one. On ABI-Efes, we have not seen any bold mind efforts in a market yet.

Thanks. Just to confirm that on Sabeco, you are expecting a management change following the type of investment? Cees 't Hart: Well, I guess if you take over a company for that kind of money, you want to run it yourself. So yes we expect that.

Excellent. Thank you very much. Cees 't Hart: Thank you, Laurence.

Thank you. Our next question comes from the line of Eddy Hargreaves from Investec. Please go ahead, your line is open.

Hi, good morning. Apologies for moving straight down into your third division, but a couple of questions on Russia, One is, can you give us any sort of - is to your expectations around the World Cup facing your sales profit marketing over Q2 and Q3 and just more broadly, how you expect that to pan out? Second, just most simply, could you say what your capacity utilization is now the Baltika? And then the second question is regarding Poland, apologies if I missed that, but could you indicate what the size of you price increase has been and what the volume decline has been in that market please? Cees 't Hart: Okay. Eddy, thank you very much for your questions. Regarding the World Cup, it will be mainly played in the Q2, so there will be the main activities and there is rather cost. We are not the main sponsor as you know and we expect the main sponsor rectify its sponsorships which may have a positive impact on their market share, but obviously we have activations as well. So we are looking forward to the tournament. The second question?

With the capacity utilizing? Cees 't Hart: All right, of course yeah. There is between 50% and 60%, so that does not change significantly because we basically produce more volumes, so more bottles run over the line. So in the blue house, we have the lower utilization, but over the line it's even slightly higher. And then I look at Peter for his third question, because he is calculating that as we speak and we talk about 4% positive price mix.

In 4% price mix in Poland and the volume performance? Cees 't Hart: We will come, as we said that we will come back to you later on that one.

Okay.

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

Thanks very much. This contract in Finland did, was that a factor in the price mix erosion in the Western Europe and if so how much? Cees 't Hart: Yes. It has been impacted our price mix Europe, frankly I don't by how much now.

So a small effect. Okay Cees 't Hart: It's small effect, yeah. And basically if move to that kind of detail, we can't disclose all these thing because that talks in as well about the complex.

Okay. I don't know if I misunderstood your comments on the big cities effort, are you pouring cold water on that effort, are you changing your plans on CapEx and so on in that area? Cees 't Hart: Well no, no. No cold water, the only thing is we have an early success there. We learn a lot from it, but we just want to basically be some of that in peace and at the moment that we are going to talk too much about cities and success than that we're of course is greater competitor reactions. So that' a reason. It is of CapEx, those of that we wouldn't put a lot of CapEx in that, it's as it like but we are still firm on that big city project.

So no changes to the spending behind those efforts? Cees 't Hart: No, no.

Thanks for clarifying that. Thank you. Cees 't Hart: Yes.

Thank you. Our next question comes from Andrea Pistacchi from Deutsche Bank. Please go ahead, your line is open.

Yes, good morning. Two questions, please. First one on Russia, now I realize Q1 is a small quarter, but why do you think the market hasn't really improved there as the downsizing should now have sort of played out by now? The second question on Vietnam, on new management there, now besides the touch timing all you seeing an underlying improvement in the business there and what is new management doing differently? Thanks. Cees 't Hart: Thank you. With regard to Russia Q1, it depends on how you look at it. If we look at it on a correct for the PET ban, it would argue that the market is not stable, which is already very different from the past. So in the perspective, we don't feel that it's negative news on the Q1 with regarding to the market development. On Vietnam, yes, we have new management. We see improvement basically in almost all the level on the business with regard to how to run a business operationally. So we have renewed some of the complex with wholesalers and distributors. We are improving our distribution. We're moving to better price segmentation and disappear in the market, so we see there a good team of the new leader in Vietnam.

Can I just on Russia. So you are saying that the PET, the downsizing is still having some sort of tail end effect, it's not complete - in Q1, it wasn't completely in the base yet? Cees 't Hart: Yeah, you know the big changes in Q1 2017, I mean now lowering against Q1 last year, so there is some impact. In Q2, we expect that there is no any let's say impact of PET anymore and obviously better underlying development of the market.

Thanks. Cees 't Hart: Thanks very much. Can we have the last question, please?

Absolutely. The last question comes from the line of Simon Hales from Citi. Please go ahead, your line is open.

Thank you, gents for taking the final question. Can you talk about your full-year guidance and I appreciate obviously the Q1 performances was in line with your expectations, but I wonder whether the mix of delivering in Q1 was different to you expected 2, 3 or 4 months ago i.e. it was better in Asia and a little bit tough that you thought in Europe. If that is the case, how do you think about the full-year mid-single-digit organic EBIT growth guidance, so you are expecting a little bit more now perhaps from Asia and little bit less in Europe than you expected three months ago? Cees 't Hart: Thank you, Simon. I think that's an excellent question for Heine.

Yeah. So, you're right, Q1, first of all was in line with our expectations. Overall it's clear when you look at the mix, there are some different elements into it. But overall, there are many moving parts in our profitability and in our mix and in our volume and in our revenue. So we do not comment specifically on the individual sort of elements of the full-year guidance. So basically, full-year guidance remains mid-single-digit growth in operating profit, a lot of moving parts, some pluses and some minuses and it's basically our task to make sure that negatives are balanced up against positive, so that we - whenever we see movement and there is a lot of movement that we initiated and get closing plans and that's what we do. So overall, confirming our full-year guidance.

Thank you. Cees 't Hart: And by that confirmation of the full-year guidance, we conclude the call. That was the final questions for today. Thank you for listening in and thank you for your questions. We're looking forward to meeting some of you during the coming days and weeks. Have a nice day. Thanks a lot.