Roddy Child-Villiers Wan Ling Martello - Chief Financial Officer, Executive Vice President and Member of Executive Board

Eileen Khoo - Morgan Stanley, Research Division Patrik Schwendimann - Zurcher Kantonalbank AG, Research Division Jon Cox - Kepler Capital Markets, Research Division Alain-Sebastian Oberhuber - MainFirst Bank AG, Research Division Warren Ackerman - Societe Generale Cross Asset Research Celine A.H. Pannuti - JP Morgan Chase & Co, Research Division David Hayes - Nomura Securities Co. Ltd., Research Division Alan Erskine - UBS Investment Bank, Research Division Jeremy Fialko - Redburn Partners LLP, Research Division Robert A. Dickinson - Citigroup Inc, Research Division James Targett - Berenberg Bank, Research Division Jeff Stent - Exane BNP Paribas, Research Division Andreas von Arx - Helvea SA, Research Division Roddy Child-Villiers: Good morning, everyone, and welcome to the Nestlé Full Year Results Conference Call. As usual, we'll start with a presentation and then we'll take your questions. I would like to remind you this call is being recorded. Before handing you over to Wan Ling, I'd like to update you on our plans for the coming weeks. Immediately after this call, at 10:00 a.m. Swiss time, Paul Bulcke will host our press conference. Our next presentation will be by Chris Johnson, Head of Zone Americas at CAGNY next week. Paul Bulcke will then present at CAGE in March. We are not doing our usual road show presentation in London next week, as we feel that the other presentations during the course of February and March, render it unnecessary. I'm excited to announce that we will launch a new IR section of the Nestlé website 1 week today. I think you will find it -- you'll find that we have made it a more useful tool for you, as ever, I'd welcome any feedback. Back to today, we are not going to run through each of the zones and globally managed businesses, which are covered in the press release, but will instead cover the key financials and then do a broader look at our performance in 2012 and the drivers for 2013. I will now take the Safe Harbor slide as read and pass the call to Wan Ling.

Thank you, Roddy. Great to have you back in top form. Good morning, everyone. We are live via webcast from our home office in Vevey. I never imagine I would spend Valentine's Day with a few hundred investors and analysts. Hopefully, this results will make your hearts beat faster. I don't need to tell you that 2012 was another tough year to be operating a global business. So let's just remind ourselves of what we set out to accomplish in 2012. In terms of financial performance, the commitment was to deliver the Nestlé Model. We have done so. Our key priority and one which I told you would be very focused on during my first year was to improve our working capital performance. This, we did, with a resulting big improvement also in our cash flow performance. The credit goes to all our people, who have done a fantastic job. In terms of efficiencies, our target was to deliver at least CHF 1.5 billion, we did so. In terms of complexity, the priority was to reduce our SKU count meaningfully and we reduced our SKUs by almost 14%. We have also increased a dividend to CHF 2.05 per share. So some good achievements from a financial perspective in 2012 but, of course, this only raises the bar for us for 2013. On the strategic front, the priority was to integrate the 2 Chinese partnerships, the integration has gone well and the partnerships are very much on track. We also closed the Wyeth acquisition. This was, of course, great news as we expected it to close in 2013. We have transitioned the business, started the integration, cleaned up inventory with our distributors and we expect to meet our pre-acquisition estimates for 2013. So I would describe 2012 as a good year for Nestlé, especially because of the way in which we have delivered our results. It is some years back when our CEO Paul Bulcke first described Nestlé as the "and" company, A-N-D, emphasizing our ambition to make the right choices without compromise, to deliver top line and bottom line, to focus on winning in both emerging and developed markets, in essence to deliver today and to invest for tomorrow. As I go through the details of our performance, I hope you will agree that these are broad-based results, aligned with our strategic roadmap and achieved while continuing to do the right things for the longer term. They've confirmed that we are indeed the "and" company. We have lifted our performance in 2012, while laying the foundations to win in 2013 and beyond, to deliver the profitable growth year-after-year that is so ingrained in the Nestlé DNA. So now let's take a look at the highlights. Sales increased by CHF 8.6 billion in 2012. Organic growth was 5.9% and RIG 3.1%. To deliver this growth, we had to overcome tough 2011 comparables of 7.5% organic growth and 3.9% RIG. I have to say for someone like me, new to Nestlé, near 6% growth on top of 7.5% is just really awesome. The trading operating profit was up CHF 1.5 billion to CHF 14 billion. The margin was up 20 basis points to 15.2%. The operating cash flow was up CHF 5.5 billion to CHF 15.8 billion. The free cash flow was up from CHF 4.8 billion in 2011 to CHF 9.9 billion in 2012. Let's now take a look at the profit performance. NCE, also known as Nestlé Continuous Excellence once again contributed over CHF 1.5 billion of savings. That's CHF 1.5 billion. These savings are most evident in the reductions in the cost of goods sold, 30 basis points, and in distribution costs, 20 basis points. The marketing and admin costs were up 50 basis points. The increase in marketing cost, 30 basis points, reflects our commitment to supporting our brands and sales activities. In constant currencies, consumer-facing marketing spend was up nearly 8%. The 20 basis points increase in admin costs in 2012 should be seen in the context of the 80 basis points decline in 2011 due to the restructuring of pension plans that year. R&D spend was up CHF 100 million but unchanged as a percentage of sales at 1.7%. As I go through the business review in a few minutes, you will see a lot of innovations both for 2012 and 2013. Our pipeline is strong, whether for premium and systems, for PPP or for Nutrition, Health and Wellness. The net other trading expenses were down 20 basis points, below the average of recent years. The inclusion of this line in the Nestlé Model adds a degree of volatility, as you know. The important thing for us is that our people running the business, who are responsible for delivering the Nestlé Model, are held accountable also for these line items. On this next slide, the rest of the income statement, no major changes here year-on-year. Net profit was up 11.8% to CHF 10.6 billion. Earnings per share were up 12.2% to CHF 3.33 per share, and the underlying earnings per share, in constant currency, were up 7.5%. On this next slide is our cash flow and working capital. You might recall we shared our enhanced cash flow reporting with you at the half year point. It is now fully in place. As you can see, we have significantly increased our cash flow generation, up around 50% to CHF 15.8 billion at the operating level. The key driver is our improved working capital performance. Obviously, part of the 2012 improvement is just a reflection of the easy comparable from 2011, as I said at the half year presentation. For the year as a whole, we saw a significant step-up in our performance in all dimensions of working capital. I should add an obvious note of caution. Such a large improvement in cash flow due to working capital like we achieved in 2012 cannot be repeated in 2013. So you should not extrapolate the 2012 performance for 2013. That said, we will continue to drive working capital efficiency. On this next slide, you can see the net debt bridge, the second half was impacted by the Wyeth closing. The year-end position is helped by a good contribution from cash flow. On the next slide, to help you with your 2013 forecast, is an update on the restatements resulting from changes in accounting standards. We told you about IAS 19, which is pension, at the half year. The other change is the deconsolidation of joint ventures, IFRS 11. We will publish the full restated 2012 in good time before the first quarter sales call. So just to wrap up on the financials, we have delivered a good broad-based set of numbers, once again demonstrating our ability to grow the business profitability today while investing for the future. We achieved the Nestlé Model. We upped our brand support. We improved our cash flow and we delivered double-digit growth in our earnings per share. So now let's review the business performance. First, the Billionaire Brands as usual. They have outperformed the group with 7% organic growth. Highlights this year include Kit Kat, Nescafé, Nespresso, Nestlé Pure Life, Milo, the Infant Nutrition and Milk brands, as well as 1 in Dog Chow. I will touch on many of these as well as other brands in my business review. Next, the geographic perspective, including all our businesses both regionally and globally managed. This is the most complete comparison I can give you with our peers. Our growth is truly, truly broad-based and it is achieved on the back of growth in previous years. This is key, a global company can truly claim to be winning only if it is growing everywhere, both in developed markets and in emerging year-after-year. A couple of quick comments. In the Americas, you might remember that I told you on the first half call that the U.S. had improved its RIG in each quarter. This trend continued in the fourth quarter, both the U.S. and Latin America grew during the year. The U.S. had challenges in some categories in 2012. I think the new product launches, the communications plan and the new leadership are all reasons to be more positive about the prospects for 2013 and beyond. In Europe, we continue to grow in the West, even despite the macro issues in the region. I have to say team Europe under the leadership of Laurent Freixe has delivered in the face of shrinking local economies. I mean, just a fantastic job. Russia has maintained its improved momentum seen earlier in the year to end with high-single-digit growth. In AOA, I'm happy to report that the zone's RIG was significantly higher in the final months of the year than in the previous period. This delivers on Roddy's forecast on the 9-month call that the region would have a stronger end to the year. We ended with double-digit growth in many of the emerging markets, and Japan had a better year than it has had for quite some time. I'm now going to go through the business in detail, but rather than show the reporting units, which are in the appendix so not to worry, I'm going to divide my presentation between developed and emerging markets. I have to say I was surprised to hear at our investor seminar in Shanghai last September that some of you were surprised by just how big we are in emerging markets, which, of course, go beyond Asia and Africa, with our large businesses in Latin America, as well as Central and Eastern Europe. So let me now start with the developed markets. Developed markets are 57% of our sales and grew by 2.5% in 2012. I don't need to tell you that the trading environment in these markets has remained tough around the world. And consumer confidence remains very low. You can see this with private label in Europe, the growth of dollar stores in the U.S. as examples. In that context, we achieved share gains in Western Europe, building on those achieved in 2011 and we grew the business. While in the U.S., our market share has, for the most part, been improving during 2012. What have been the key drivers of our performance? Our product segmentation has been critical, whether supplying moments of indulgence and pleasure with premium, addressing cash-strapped consumers with PPPs or delivering on our Nutrition, Health and Wellness promise. Let me give you some examples. I would like to highlight coffee. The systems Nespresso, Nescafé Dolce Gusto, Nescafé Milano and Viaggi are all performing extremely well at the premium end. This slide shows the new San Francisco Nespresso boutique just opened on Grant Street on Union Square near Saks Fifth Avenue and Neiman Marcus. Roddy has been there and tells me in his usual quintessential Roddy way that, "It is fab." The success of the Nestlé Professional beverage systems is one reason for that division's continued ability to grow around the world. Despite an extremely tough environment for the out-of-home industry. But coffee is more than just systems. See in this picture the lower price refill packs in the U.K., the value offerings in Southern Europe, particularly in Greece, the Hispanic range in the U.S. and Nestlé Professional's value system, Alegria, which is now in over 60 markets are all performing well. Nescafé was key to our successful year in Japan where the Barista machine has sold 1 million units since launched in 2010. 2013 is Nescafé's 75th anniversary. The Nescafé story is one of nonstop innovation, which has seen it go from a tin of soluble in 1938 to the world's #1 hot beverage brand present in 180 countries. It's amazing for me to see an 80-year-old brand with sales of over CHF 10 billion deliver 8% organic growth in 2012. Our Nutrition, Health and Wellness focus was also key in 2012. Let me give you 4 examples. The first new lower sugar recipes, driving growth for Nesquik; the second, it's a performance of the new NaturNes baby foods in France. The third is Gerber Organics in the U.S.; and fourth but not -- last but not the least, the market share gain for the relaunched BOOST, which is part of the Nestlé Health Science portfolio. Our water business both demonstrate the benefit of segmentation and validates our focus on Nutrition, Health and Wellness. I mean, after all what can be better for you than drinking water? The business has seen good growth at the premium end, with San Pellegrino across developed markets and in regional water such as Poland Spring in the U.S., Buxton in the U.K. and that the value end with Nestlé Pure Life also in the U.S. and U.K. Talking about water, I'm going to take a water break, Vittel, our very own brand, so, Roddy, do you want to say something, while I'm taking a break. Roddy Child-Villiers: Cheers. Santé.

Quality H2O. Okay. Initiatives in other categories -- that was not rehearsed, by the way. Initiatives in other categories, for instance letting consumers choose flavors for Kit Kat, such as the green tea one here on the screen, which, oh, by the way, happens to be my all-time favorite. I was visiting with an investor in South Korea, and she told me that every time she goes to Tokyo she stuffs her suitcases with the green tea Kit Kat, so I don't blame her. It's really fantastic. Another one on the screen is a multi-pack of mini Buitoni pizzas and peelable ice cream have all played their part. Kit Kat became the #1 chocolate brand in Japan in 2012, which is so exciting, a fantastic achievement for a brand that was launched in 1935 in the U.K. and is delivering near double-digit growth globally nearly 80 years later. Then there is, of course, PetCare, which has continued to be strong contributor. They have delivered compelling innovations, addressing different segments and channels. For example, they've launched a super-premium offer in the U.S., while at the same time, by contrast, making good inroads into the dollar store channel. In Europe, PetCare has also taken share in key markets. I mentioned dollar stores, channel development is also important in Europe, whether it is hard discounters, still growing fast or the pound stores in the U.K. And then there are the online retailers, another relatively new channel for food, as well as our own online activities. Key, too, has been our ability to find opportunities to grow in Southern Europe as demonstrated by the performance of our coffee business in Greece. Greece, a country where unemployment has tripled since 2008 to 25%. Overall, we were able to keep growth near flat in Portugal, Spain, Italy and Greece, where the economies have shrunk. The categories that have helped apart from coffee, include ice cream and chocolate. Our performance in these markets demonstrate that, for Nestlé, for us, all markets have opportunities for growth no matter how weak their economies. Sticking with developed markets, I'd like to look briefly now at what we've been doing in 2012 to ensure continued growth in 2013 and beyond, including investing in R&D, in innovation and consumer communication. This commitment to investment is one of the key takeaways of my presentation. I've already told you that we increased our media spend and that our total marketing spend was up 30 basis points. One of the things that I believe sets Nestlé apart is our commitment, regardless of shorter-term challenges, never ever to sacrifice future development just to meet shorter-term targets. So let's have a look at what we've done in 2012. We have announced 2 new R&D centers in developed markets, the first was the Nestlé Institute for Health Sciences. Working closely with Nestlé Health Science, it will focus on personalized science-based nutritional solutions to help prevent or manage chronic diseases. The second was a global center for our clinical trials attached to our R&D center here in Switzerland. This is the first time we've centralized our clinical development work. Clinical trials are recognized by food authorities as a robust way of assessing the effect of nutrients or foods on consumers. Because of that, we welcome the increased rigor that exist around claims, which means that the ability to make claims is more important today than ever. This new center will be at the heart of our efforts to drive competitive advantage through our claims. We also enlarged our global chocolate product technology center in England. This will work on our innovative ideas around manufacturing, raw material processing, product reformulation and packaging. Innovations are the cornerstone of our ability to develop growth and to remain differentiated from our competition, whether it's private or branded. In the U.S., there is also a stream of innovation coming through in our frozen business. This includes DiGiorno pizzeria, to which I give my personal seal of approval and DiGiorno Italian Favorites and Lean Cuisine Salad Additions. And in ice cream, you can see in the picture, Häagen Dazs Gelato, Outshine fruit bars and Skinny Cow candy bars. There will also be new capsule options and machines coming from Nescafé Dolce Gusto and Nespresso, some innovations in Nescafé, new flavors in Kit Kat, range extensions in PetCare, innovations in Maggi. So a very, very full pipeline. With a lot of innovation to come, it is natural that we will be continuing to provide an appropriate level of communication and brand support. We will also continue to exploit opportunities in digital media. Turning to investment, we announced a new factory for Nescafé Dolce Gusto in Germany, for Nespresso in Switzerland and for Nestlé Health Science and Petcare in Australia. We have extended lines in the range of factories across Europe and the U.S. Important to note, therefore, that we continue to see many opportunities for growth in the developed markets even despite the challenges. Finally, on developed markets, a few words on creating share value. I think many people associate our social activities more with emerging markets, working with farmers and the like, but we also are very active in the developed markets. Let me give you some examples. In the U.S., we're partnering with the Academy of Pediatrics as a founding sponsor of a new organization called, the Institute for Healthy Childhood Weight. This is dedicated to the prevention and treatment of childhood obesity. We are also working with the International Association of Athletics Federations to encourage school kids to get into sports and to educate them about the benefits of exercise. At the other end of the age spectrum, we are working with the Osteoporosis Foundation to help make people more aware of what can be done to prevent this disease. And in Carbon Disclosure Project, Nestlé topped the list of companies disclosure -- disclosing and cutting their carbon emissions. So now let's look at emerging markets. Special tea. Our sales in emerging markets are now over CHF 39 billion. This makes us the biggest player in our industry in the emerging markets, a fact which is sometimes overlooked, not really sure why. This represents 43% of our sales and is accretive to the Nestlé Model. The emerging markets had organic growth of 11% in 2012. The BRIC markets and our PPPs, which are sold mainly in emerging markets both also grew by about 11%. A number of markets, including Greater China, Africa and the Middle East achieved double-digit growth. We had high-single-digit growth in Russia, Brazil, South Asia and others. This is a good performance in a trading environment that, well, okay, definitely very positive, slowed a bit in the final months of 2012. Let's have a look at some of the catalysts for our 2012 performance. We have maintained a good level of innovation. Examples in AOA are Maggi Magic Meals in the Philippines and Malaysia; Nestlé Omega One to reduce cholesterol; Milo with added fiber; a new ready-to-eat version of Golden Morn Cereal in Africa; and a further rollout of the peelable ice cream across the zone. And in Latin America, apart from the famous peelable ice cream launched in a number of markets, there have been regional launches and rollouts of the Maggi Juicy range, of Nescafé with microgrounds and of Greek yogurt. We also launched 2 firsts in Mexico, the first shelf-stable yogurt and the first drinking yogurt that helps reduce cholesterol. A big success was the launch of Kit Kat in Brazil. We also had a success there in the out-of-home channel with 2 Nutrition, Health and Wellness chocolate offerings, a diet white chocolate bar and a no-lactose-no-sugar bar. We also launched a range of Nestlé fitness snack bars. Nutrition, Health and Wellness is arguably even more important in emerging markets than developed. This is especially true for our emerging consumers who spend a high proportion of their incomes on food and who do not have the protection of insurance and cannot afford the luxury of being ill. Nestlé Pure Life grew rapidly took. Emerging markets now represent about 20% of our water business. The dairy business saw good growth on the back of its strong nutrition credentials and communications. And the infant formula and infant cereal businesses both grew double-digit, with innovations being rolled out across their markets. One aspect that people, perhaps, overlook in emerging markets is out-of-home consumption. Nestlé Professionals saw double-digit growth. It serves the extremes, from supplying food ingredients for traditional on-street vendors to providing coffee systems to the Western QSR chains that are springing up everywhere and wanted high-quality, easy to operate coffee solution. China is, today, Nestlé's Professionals' third biggest market and will likely be the #2 in 2013. PetCare in emerging markets grew about 20%, including in Latin America where sales are now around CHF 1 billion. It enjoyed 40% growth in Russia. So I would conclude on 2012 by saying we had a good year in emerging markets. There was strong growth, a good contribution to the group's margin improvement and an improved working capital performance. But we won't simply focus on delivering 2012, just like in the developed markets, it's the same in the emerging. Much of our energy was spent on securing a successful future. We are in the fast-moving consumer goods, and one thing is for sure, they move even faster in emerging markets. You cannot wait for opportunities to come to you and you cannot wait to invest. If we want to continue to win in the future, we need to be positioned to lead today. We announced or opened factories in Malaysia, the Philippines, the Congo, Angola, South Africa, Chile and Sri Lanka, and we have extended lines in many factories, including in Russia, China and India. We also opened 3 R&D centers in emerging markets, 2 in China in Xiamen and Dongguan and 1 in India. Our 2 Chinese partnerships, Yinlu and Hsu Fu Chi, I'm happy to report, are meeting our expectations. We are equally excited but what -- by what we can learn from them, which is very important. These transactions have significantly increased our scale in AOA. Our sales there in 2012 were up by 1/4. We've also begun the integration of Wyeth. This is a great fit with our existing business, both in terms of geography, also brand positioning, as well as know-how. We have also continued to expand our distribution. For example, reaching an additional 1 million points of sale, that's 1 million points of sale in 2012 in AOA. This extends our sales footprint for 2013. As an example, you have already heard about the boat we use on the Amazon to reach consumers. We now have one in Bangladesh. You can see it in the picture, where about 80% of the population lives in rural areas. Another likely positive for 2013 is Russia. We are seeing improving trends there, helped by now having local manufacturing in coffee and increased capacity in PetCare. We also have improved chocolate portfolio. We've also seen an extremely strong takeup for Nescafé Dolce Gusto, the best-selling system there in their first full year on the market, which is incredible, first full year in the market, Nescafé Dolce Gusto becoming the best-selling system. It's unbelievable. I will finish my global tour with a few words about our creating shared value activities in emerging markets. I've mentioned coffee quite often today, so I will start there. We have many programs with coffee farmers. In 2012, we extended our commitment with Colombian farmers for a further 5 years. We launched a program to help farmers in Haiti, and we're now working with 20,000 farmers in Vietnam. We also opened our first coffee demonstration farm in India. All of these initiatives have a shared objective. It's to ensure a high-quality crop for us and to improve the standards of living for the farmers. Nespresso, meanwhile, sources 100% of its coffee direct from farmers. Do you know that only about 1% of the world's coffee beans are good enough quality for Nespresso? Only about 1%. No wonder people love the Nespresso coffee. Turning to chocolate. We scaled up the Nestlé cocoa plan, increasing the amount we sourced directly from farmers, aiming to reach 15% of our total supply this year. We trained 21,000 farmers in 2012 and we distributed 1 million high-yielding, disease-resistant plantlets. We also continue to work with the Fair Labor Association to try to eradicate child labor from cocoa farming. Our biggest interaction with farmers is in dairy. Among other initiatives, we've opened a training farm in China and we're working with the authorities in Morocco to improve dairy farming practices. Finally, one initiative that crosses all crops. Since 2001, we have reduced our own greenhouse gas emissions per tonne of product by 50%. We are now working with our farmers to help them also reduce their emissions. This concludes my presentation. To recap, as I said at the half year, this year was not a walk in the park. Even so, we delivered a good broad-based set of results, delivering on top line once again and on the margin, on the earnings and on the cash flow. We delivered in emerging markets and in developed world. We have brought dynamism to our categories. We brought exciting far-reaching consumer-driven innovations to our products and brands. And our innovations go beyond products. We're bringing new services to our consumers and we're finding new ways to engage with them. We have grown the portfolio across all segments in premium systems and products and in PPPs. And we know there's no room for complacency, which is why we have continued to invest for the future, to invest in our people and brands, to invest in R&D and to invest in our capacities and our capabilities. And we have done so while respecting our commitment to create value, both for our shareholders and for those societies in which we operate. This sets us up well to win in our markets around the world, not just in 2013 but also beyond. To deliver the Nestlé Model and to continue to drive the consistent growth, the performance improvement and the brand investment that is Nestlé's DNA. Thank you very much for listening. I'd now like to open for discussion for Q&A and we'll now pass the call back to the operator.

[Operator Instructions] Your first question is from Eileen Khoo of Morgan Stanley. Eileen Khoo - Morgan Stanley, Research Division: My 2 questions, the first one is on Zone AOA. If I look at the growth in the fourth quarter, it was about 5.9%, so that's still substantially below the usual double-digit run rate. Would it be right to assume then that the one-off issues that you raised in the third quarter was still impacting growth to an extent maybe in October and November last year and, therefore, your underlying growth might actually have been higher, excluding that? And then the second question is on the balance sheet, I mean, your net debt is now back at CHF 18 billion, which I think was your original target before you made the Pfizer acquisition. So can you share with us how you're thinking about capital allocation and possibly a return of your share buyback program at some point?

Eileen, so 2 questions. Let me address the question on AOA. First of all, the markets where we had highlighted in Q3, in the 9-month call that Roddy had highlighted, they have all come back -- they've all reversed the trend. And so really happy to see the performance, the reversal of the trend in AOA markets and towards the end of the year. But also I want to highlight that H1 performance and in terms of growth for AOA was unusually high. If you look back in recent years, AOA's growth has averaged in the high single digit. And so we do not expect any different for 2013 and going forward. In terms of net debt, you are completely right. It was a few years back, if I recall, that we had guided net debt to be in the CHF 15 billion to CHF 18 billion range by 2013, excluding acquisitions. So you're completely right. Despite Pfizer acquisition, we're now at CHF 18 billion the close of last year. So we're very happy about that. So what we usually say on share buyback, whereas the dividend policy is one of a sustainable dividend policy, for share buyback, it's more opportunistic. So to the extent that we have excess cash, we will always consider a share buyback program. Roddy Child-Villiers: I think also on AOA, Eileen, the -- I think you need to strip out the impact of the pricing because pricing has obviously trended down in each quarter during the year. So that has a negative impact on the trend in the fourth quarter, if you like. But the trend in RIG is absolutely clear. If you look at the RIG in AOA for the final quarter compared to the previous quarter, there's a very significant improvement.

Your next question is from Patrik Schwendimann from ZKB. Patrik Schwendimann - Zurcher Kantonalbank AG, Research Division: I have a question regarding input costs. What are your best guess estimates for 2013? And my second question is regarding the powdered and liquid beverages. The margin was down 20 basis points for the full year but was down 60 basis points in H1, so a clear improvement in H2, but what should we expect for the future in terms of -- I mean investing a lot in Dolce Gusto, for example, in new boutiques, what is your best guess for the future in terms of margin development?

Thank you, Patrik, for the question. In terms of input costs, what we had guided for last year, for 2012 was exactly spot on. For 2013, we are not giving any guidance because we only give guidance if we anticipate high input cost volatility, which we do not anticipate for 2013. In terms of powder and liquid beverages category, it was down for 3 main reasons. Input cost was up. The second thing is a continuing -- our continuing investment in Nescafé Dolce Gusto. And the third one being we were lapping in some markets with pension cost benefit in 2011 that was not repeated in 2012. Roddy Child-Villiers: And the -- I mean the second half trend that you referred to, I haven't actually look at the second half numbers but clearly, the input cost pressure that Wan Ling referred to was greater in the first half than the second half. Patrik Schwendimann - Zurcher Kantonalbank AG, Research Division: And looking into the future? Roddy Child-Villiers: Well, we would, as we do with the other categories, we would want the powdered and liquid to contribute to Nestlé Model. But I think, I mean, one has to remember that Dolce Gusto now is a materially sized business. It is a fast-growing business and because it's still in sort of launch phase in a number of markets, it's still dilutive to the powdered beverage margin so that is clearly a drag that is there, and it's there on purpose because clearly over time it will become a market -- a margin-accretive business for that division.

But that also goes back to the point of the presentation, which is that we deliver on short term but also have the courage to continue to invest in the future, and Nescafé Dolce Gusto clearly is a great example of that.

Your next question is from Mr. Jon Cox of Kepler. Jon Cox - Kepler Capital Markets, Research Division: I have a couple of questions for you. Actually, it's good to see that AOA appeared to improve in Q4, but just looking at the Americas and emerging markets overall, it appears there was a deterioration in Q4. I was just wondering it was something specific potentially to Brazil. I know it's a very big market for you and is it more of a macro issue there, or am I being wrong with my assumptions? That is a Latin America slowdown we saw towards the tail end of the year, which knocked emerging market growth overall versus a 9-month figure you gave. That's the first question. Just on the second question and congratulations on the cash flow statement, it's obviously very, very positive. I'm just wondering what you think you can do in the future in terms of working capital, trade working capital as a proportion of sales? Do you have any sort of target in terms of percentage of sales? I know you've always said, you can't compare us to someone like [indiscernible] or Unilever. We're not going to go negative but clearly, you could probably do a little bit better in terms of trade working capital proportion of sales. So I'm just wondering, should we be expecting 50 basis points improvement per year, is that the sort of average you're looking for? Or what is your thinking there? And I'm just going to slip in very quickly the dividend, the CHF 2.05, it wasn't potentially -- it wasn't really very generous, given the fact that the cash flow statement was so good, so I'm just wondering what are your thoughts were on that dividend payout.

Let me go back -- so it's on the 3 questions. On the working capital, you're exactly right. We're not going to repeat because in 2011, it was working capital increased by 2 and 2012 it went down by 2. So you're not going to see the kind of delta improvement in 2013. That said, we will continue to focus driving working capital efficiency both in terms of absolute, as well as a percent of sales. Now we do not guide -- we do not share externally but we do have internal targets. So the focus -- management's focus on working capital, which was great in 2012, will continue in 2013 and beyond. On your first question in terms of emerging markets pricing for AOA did slow down towards the second half of last year and back to dividend... Roddy Child-Villiers: Yes, Jon, on the dividend, I think you need to put it in the context of the ratio. And we were quite clear, during the course of last year, in saying that our focus was on the absolute amount of Swiss franc that we were paying rather than increasing the ratio because we're already are on the ratio. And I think we've been consistent with that. Just going back to the emerging markets, I think the issue is the pricing because it's clear that the RIG has continued to improve in the emerging markets in the fourth quarter. And actually even if you ignore AOA, it's improved in the other emerging markets. But -- and we told you this at the 9 months, if you remember, we did a resetting of the pricing for coffee in Russia, a very big change to the Gold Blend pricing. That has a significant impact in emerging markets. And then in Latin America, as was the case earlier in the year, the pricing has come off of it. But the underlying growth to the RIG has continued to improve in the fourth quarter. Jon Cox - Kepler Capital Markets, Research Division: Okay. Because if you look at emerging markets overall, it appears there was another deceleration, probably below 9% in same Q4 in the organic. And when I do my backing out on the Americas of the RIG, it looks like RIG was actually little bit weaker in Q4 but maybe I'm doing my sums wrong. Roddy Child-Villiers: The key driver is the pricing.

Yes.

Your next question is from Mr. Alain Oberhuber from MainFirst. Alain-Sebastian Oberhuber - MainFirst Bank AG, Research Division: Just 2 questions. The first is about Japan. Could you elaborate a little bit more which categories grew faster, how was the development of the categories, excluding coffee and confectionery? And the second question is about CapEx pattern, when you compare it to sales. Will it be similar in 2013 as we saw in 2012?

Yes. Let me -- on the 2 questions in terms of CapEx, our guidance will be about the same level as in 2012. And in terms of Japan, Kit Kat, like I said, did really well. In terms of -- so confectionery did really well. Coffee also did very well. The Barista machine was -- had an outstanding performances so... Roddy Child-Villiers: Yes. I mean, Alain, those 2 categories are about 80% of our Japanese business. The smaller categories, I mean, they performed fine but frankly if we don't get those 2 right, we won't get Japan right and they're both doing very well.

It's really good to see Japan come back and not only in terms of growth, in terms of profitability but their market share is also up, which is really good to see. Roddy Child-Villiers: And then coffee it's not just the Barista. Barista is obviously a great success but also Dolce Gusto is doing well, and so as the traditional soluble business. So it's doing well across the board. Alain-Sebastian Oberhuber - MainFirst Bank AG, Research Division: What about pricing and volume? Was both up or was pricing flat and only the volume up? Roddy Child-Villiers: We had a bit of both.

Yes. Roddy Child-Villiers: A bit of both, yes.

Your next question is from Mr. Warren Ackerman of Société Générale. Warren Ackerman - Societe Generale Cross Asset Research: It's Warren Ackerman here at Soc Gen. Couple of questions. Wan Ling, can I get some of your thoughts on some of the other moving parts for 2013? Obviously, there's lots of moving parts I'm thinking about any kind of color on gross margins, your marketing spend, should we infer the similar run rate in cost saves, and is there anything you would like to say on the first half, second half phasing on organic growth and margin? That's the first question. And then secondly, you said at the Q3 stage that you were looking for a strong performance in Q4 in the U.S. Obviously, your biggest market. And I think at the Q3 stage, you said that the macroeconomic situation in the U.S. was improving, but also your market share trends were picking up as well. And I was just wondering whether you're able to tell us what the Q4 organic growth was versus Q3 in the U.S.? I know you don't like to split it out, but it's obviously hard to see the U.S. in isolation when it's lumped in with Latin America. I mean, back at the Q3 stage, you even sounded a bit more confident on categories like frozen food, which has been struggling for some time. So the question is, could you kind of maybe just walk through some of your U.S. categories, what's happening to market shares and how's that been an overall pickup in the weighted category growth in foods in the U.S.?

Thank you, Warren. In terms of guidance for next year, obviously, we always stick to the Nestlé Model. And then also continuing our commitment in terms of NCE of CHF 1.5 billion in savings. So that's really like our guidance. In North America, it's really good to see as we closed the year that RIG continues to be very -- continues to be up. Market share also continues to be up. And in terms of the Frozen Aisle categories, we actually saw good momentum closing the year. So quite happy with the way we ended the year and coming into 2013. Roddy Child-Villiers: I think, I mean, as you've pointed out yourself, Warren, we don't give the Q4 numbers, but broadly speaking, the U.S. performance was in line with the developed market performance in the fourth quarter. And as you know, that was quite positive. So it's a good performance. Warren Ackerman - Societe Generale Cross Asset Research: [indiscernible] various categories. I think in the Q3 stage one category you said that wasn't up was water. I think because there was some issues with private label. Is there any kind of big variances in market share in some of your bigger categories in the U.S.? I'm thinking on a PetCare, confectionery? Or are they all generally moving in the right direction?

Yes, Warren, if you think about the businesses that started the year really well, so your PetCare, your coffee, you're Coffee-Mate, confectionery, they're still doing very well, and in terms of the ones that didn't start out well, which is basically the Frozen Aisle, it's improved during the course of the year both in terms of RIG and market shares. Roddy Child-Villiers: And also, Warren, my comment was talking about Nestlé U.S.A. in the zone. If you would have broadened that to Nestlé in the U.S., then my comment will be -- would have been an understatement of how well it performed, because Nestlé Waters had a very strong fourth quarter in terms of sales partly because of Hurricane Sandy. And the other globally managed businesses contributed as well. So that, nutrition improved as well, and Nespresso also had a good quarter. So, in fact, the U.S. is looking...

Your next question is from Celine Pannuti of JPMorgan. Celine A.H. Pannuti - JP Morgan Chase & Co, Research Division: I have 2 questions. My first question is on coming back on Zone AOA. I understand your guidance like that we may come back to rather high-single-digit like-for-like versus double-digit, but equally, Q4 was not, what I would call, high-single digits, so can you give -- try to give us a bit more color maybe by big [ph] countries on what -- why was the number at around 5.8%? And am I right in understanding that December was much better and towards the high-single digit, is that what you are trying to say for 2013? And secondly on guidance on delivering the Nestlé Model and your commitment to continue to improve trading margin, if I'm correct, the acquisition of Wyeth should have a positive margin impact, both in terms of the higher mix of the margin and as well the potential savings? Do we look at it this on top of the underlying business model of Nestlé in terms of margin expansion?

Yes, in terms of AOA, we -- there was a 250 basis points improvement going in terms of RIG in Q4. And so it's now back to the sort of like the long-term average in Zone AOA. And at the NiM, so that's for the food and beverage. At the NiM level, it was even stronger. Our guidance for -- in terms of Wyeth Nutrition, our guidance -- you're correct. It's accretive and that we do not foresee any change in 2013. That's a deviation from our earlier guidance when we announced the signing of the deal early -- almost a year ago in April. So our guidance continues to be the Nestlé Model for 2013 and that's all-in, including the Wyeth Nutrition. Roddy Child-Villiers: I think it's also a question of relative scale, Celine, in that it's a good margin business, whereas CHF 2 billion of sales as against CHF 90 billion of sales. So the incremental margin impact to us, on the group, as a whole, is not enormous. I think on AOA, it's always difficult to compare a quarter to a year or a quarter to a trend but if you think about 2013 -- 2012, as a whole, the big markets, China, Africa and Middle East are double digit. South Asia is high single digits. Yes, these businesses are -- and the emerging markets, as a whole, in AOA were double digit. So these markets are performing broadly what you'd expect them to perform. We turned Japan around after many years of struggling in a difficult economy. So I don't see why our expectation of returning to an average level of growth in AOA for the year is unreasonable. And we effectively did the average in 2012 despite one weak quarter. Celine A.H. Pannuti - JP Morgan Chase & Co, Research Division: [indiscernible] but pricing, I think, decelerated to 1%. What is the outlook, therefore, for local inflation and local pricing in AOA next year -- or in '13, sorry?

[indiscernible] Roddy Child-Villiers: Yes, we didn't hear the first half of your question. But I think... Celine A.H. Pannuti - JP Morgan Chase & Co, Research Division: Sorry, the question was the RIG has come back to around mid-single digit, but pricing as you rightly say has been weakening, nevertheless, 1% pricing given the local inflation in those markets seems light so I was wondering whether we should see a rebound in pricing in '13 in AOA? Roddy Child-Villiers: Well -- I mean, we're not going to give you a forecast on the pricing for AOA but, I mean, clearly, you have to also factor in not just raw material cost inflation but wage inflation and other issues as well. And the markets will take the pricing they need to take. But that's all -- that is all factored into our expectation of AOA performing well.

Your next question is from David Hayes of Nomura. David Hayes - Nomura Securities Co. Ltd., Research Division: Just 2 for me. I think you mentioned earlier about SKU rationalization and part of that being the working capital management. I just wondered whether that was kind of any influence on the RIG performance in the second half of the year and whether you can try and quantify there was any impact? And then secondly, just following up on sort of discussion around emerging markets, just looking at China specifically. I mean can you confirm that the RIG in China in the first half and the second half was the same kind of level?

It's -- I can confirm that in terms of the SKU rationalization, there's no material impact vis-a-vis RIG. So that did not happen. In terms of China RIG, first half and second half, it's a bit lower but nothing material. It's a bit lower due to tough comparison if you go against 2011. Roddy Child-Villiers: And by the way, it's double digit in both parts and for the year.

The next question is from Mr. Alan Erskine. Alan Erskine - UBS Investment Bank, Research Division: Yes, just a couple of quick questions. One is on restructuring. I seem to recall a year ago, Jim indicated that you thought restructuring costs might go up a little bit this year -- sorry, in 2012 and they've actually seemed to go down a tad. So I just wondered if you could give us some color on that and I guess also any guidance you can as to what that line item might do in 2013? My second question is on pricing again. If I've done my math right, I think pricing in Q4 was about 1.6%. Clearly, you do have some inputs coming down, which may need to be reflected in lower selling prices. I mean can you give us any guidance at all as to what pricing might do at the group level in 2013, if even just to say that it's -- it could be a bit above or below the normal trend?

Alan, in terms of restructuring, as you know, like the items in that category tends to be volatile, and it's strictly triggered by business decisions so we do not forecast or give particular guidance in terms of that sort of like those line items. In terms of pricing, we had the benefit of pricing going from 2011 to 2012. And clearly, we saw a deceleration in pricing for the balance of 2012. But having said that, we also did take new pricing actions. So going into 2013, we guide on OG. We don't -- I mean, on an organic growth, we don't break it out by RIG or pricing. Alan Erskine - UBS Investment Bank, Research Division: Can I just follow up, you mentioned you're taking new pricing in 2012. Could you give us any idea what the level of sequential pricing was in the second half of last year, just to get a handle on what would be the pricing, simply due to carryover from increases that you took during 2012? Roddy Child-Villiers: We don't try and work it out. I mean, it's a hugely complicated thing to do and it doesn't really bring us -- present a much benefit. I mean, the important thing for us is that the people in the different markets are taking the pricing that they need to take. And I can tell you that PetCare has taken pricing, and clearly you're aware of the grain cost in the U.S. They've taken pricing, I think, globally. Culinary has taken a bit of pricing. Milk has taken pricing in Latin America. Milk beverages has taken pricing. So there is pricing in a number of categories in the sort of final months of the year that obviously will play through into 2013. But we can't give you a number on what that impact is.

Our next question comes from Jeremy Fialko of Redburn. Jeremy Fialko - Redburn Partners LLP, Research Division: So yes, just a couple of questions from me. First of all on Nespresso, can you talk about how that's finished the year and what your expectations for that are in 2013? And then the second question is on the tax rate. That looks like it's a little bit lower than we had thought in 2012 and what the expectation for your 2013 tax rate is.

Jeremy, in terms of Nespresso, we are very happy to say that it met expectations in terms of growth rate profitabilities in 2012. And we continue to have high expectations from our Nespresso business going into 2013. As you know, at the half year call, I had said that we were not going to give a lot more details in terms of our Nespresso business, given the competitive environment that we're in. But just know that Nespresso met expectations and we'll continue to -- we continue to have high expectations of that business. The rate -- the tax rate is actually similar to last year, and we do not give guidance on sort of like underlying tax rate going into 2013, so we don't anticipate anything significantly different. Jeremy Fialko - Redburn Partners LLP, Research Division: From the 2012 rate?

Yes. Roddy Child-Villiers: We don't give guidance on the reported. The underlying is around 27.

Yes, it will be about the same.

Our next question comes from Robert Dickinson of Citi. Robert A. Dickinson - Citigroup Inc, Research Division: I have just a quick question on margins within the zones. I see that you've continued to improve margin in Zone Europe despite overturns of basis points improvement in 2011. And then in Zone AOA, there's just sort of 10 basis points of improvement in 2012. Is this what we should expect going forward in terms of continuous improvement in Zone Europe, and was the margin improvement in Zone AOA a bit below your expectations?

No, I mean our expectation is that margin should continue to improve for all businesses, for all zones. What had happened in AOA, if you recall in the half year point, we did say that there was a slight dilution from our 2 Chinese partnerships in Yinlu and Hsu Fu Chi for -- that caused AOA to come down a bit. And so going forward, we don't give guidance results in GMBs but we do -- our internal expectation is that all businesses should improve year-on-year.

Our next question comes from James Targett of Berenberg Bank. James Targett - Berenberg Bank, Research Division: Just a couple for me. Firstly on -- could you give some color on the RIG developments in Southern Europe in Q4 versus the 9-month period? And then secondly, you mentioned the strength or the positive development in the discount channels and online channels in developed market, so I'm wondering if you could just give us some color on the growth there and the size of the business that it accounts for now?

Let me take the online markets. The online e-commerce is going to continue to grow. I mean obviously, from an industry perspective, we've seen the migration of categories like electronics, apparel and consumables have tended to be slower in terms of migration. But having said that, that will happen. And so what we've done is in different markets in the U.K., in Switzerland, we've started to work with either the pure-play online players and also been experimenting on our own in this space. So that's really like the answer to the online market. In terms of the Southern European markets, Greece did really well, thanks to coffee and ice cream. There's really no big change between how we ended the year versus the 9-month sales results that you shared a few months ago. Roddy Child-Villiers: Yes, basically it was in line for the 9 months.

Yes. And what's exciting about that is despite the economies, the challenges, the macroeconomic challenges, it's really innovation that's driving that. So you see the Nescafé Dolce Gusto, the different products in our PPP lineup continues to help us win in very tough markets like Greece, Spain, Italy. James Targett - Berenberg Bank, Research Division: Can I just quickly follow up on the first question, just in terms of the discount channels in Europe. I mean, was there a significant difference in growth in these channels than for the region as a whole? Roddy Child-Villiers: The discount channels have been growing faster than the traditional retail channels. I think, there's -- I mean this is also -- as we succeed in those channels in Europe, there can be an impact on pricing, but I'll just remind you of what we talked about in -- well, a few years ago now, when we first started talking about how discount is in discount channel, which is that the cost to serve these channels is often a lot lower than a cost to serve other channels. And so even if the pricing appears to be suffering as a result, in fact, it's not impacting the overall profitability of the business. So we're very excited about the opportunity in those channels.

Yes, and this is clearly a phenomenon not just in Europe, but also in the U.S.

Our next question comes from Jeff Stent of Exane. Jeff Stent - Exane BNP Paribas, Research Division: Just a quick question on margins. I know you sort of focused on a nearly [ph] defined margin, but is there still a -- sort of a will within the business to actually achieve underlying margin improvement each year and i.e., excluding trading items, or is that sort of no longer percolating through the business?

Thank you, Jeff. First of all, our Nestlé Model on trading operating profit, I'm very, very proud of what the team has accomplished in 2012, delivering 20 basis points above 2011. And this is done despite the fact that we have increased our spending in marketing. This despite the fact that we were lapping against some onetime benefit in 2011 like the pension restructuring benefit. This despite the fact that, I mentioned in the presentation, what a great news that we closed on the Wyeth Nutrition business early, much earlier, than we had anticipated. I think we guided last year that was going to happen some time in Q1 of 2013 and it happened at the end of November. So when we took over the business in December of last year. We had some transition costs. We took the business over and we had a lot of inventory at the distributor level. So we did the right thing, which is clean out the inventory in December and so we had transition costs, as well as early integration costs that were not anticipated. So very proud of the team that they were able to do the Nestlé Model at 20 basis points despite this headwind. Roddy Child-Villiers: I think also, Jeff, the -- it's a very good question, but the other way to think about it is that because of the low level of what you're calling non-underlying costs, the buyer is tougher for 2013 and we need to deliver the Nestlé Model in 2013 as well. And so arguably, that makes what you're calling the underlying margin improvement all the more important. So we are absolutely focused on delivering the Nestlé Model and delivering it in the way that we always have, which is we asked [ph] to continue to invest in the brand and deliver -- and if that means delivering your underlying margin then that's what we have to do and that's what the markets are focused on.

Our last question comes from Andreas von Arx from of Helvea. Andreas von Arx - Helvea SA, Research Division: Two questions. The first one will be if you could give any details on Dolce Gusto, either a sales number or a growth rate? And the second question, if you could give an update on these remaining countries of Pfizer acquisition in Latin America or, let's say, a number in percentage of sales of businesses that you would have to dispose?

Yes, we are, in terms of Pfizer, we had said earlier, I think, in one of our calls, maybe yours, Roddy, but we had said it's about 15% of the business will be divested. And we're clearly, at this point, working with the local regulatory agencies and in terms of divesting the business. So nothing too -- nothing significant, 15%. In terms of Dolce Gusto, Roddy, I don't think we disclose the growth for Nescafé Dolce Gusto. Roddy Child-Villiers: I think we risk getting into another Nespresso situation. But no, I mean, it's high, it's very high, hundreds of millions of sales and it's carrying well into double-digit.

I can probably say this, that Nescafé Dolce Gusto sooner than later will become part of our Billionaire Brand. Roddy Child-Villiers: Yes, absolutely.

So that would give you a good sense of the size of the business growing very, very fast. Roddy Child-Villiers: Okay, thank you. Anymore questions? Was that the last one?

At this time, there are no more questions. I will hand the call back to Wan Ling Martello.

Okay, great. Thank you. Well, thank you, everyone for your questions. As I said, 2012 was a good year for Nestlé and one which leaves us fit to win again in 2013. Don't forget, if you're interested, our press conference will be webcast in about half -- well, at about 10:00 Swiss time, right? So thank you again. Goodbye, and have a great year.