Dessi Temperley – Investor Relations Mark Schneider – Chief Executive Officer François Roger – Chief Financial Officer

Jean-Philippe Bertschy – Vontobel Warren Ackerman – Societe Generale James Edwardes Jones – RBC Capital Markets Mitch Collett – Goldman Sachs Jon Cox – Kepler Cheuvreux Eileen Khoo – Morgan Stanley James Targett – Berenberg Patrik Schwendimann – ZKB Jeremy Fialko – Redburn Martin Deboo – Jefferies Alex Smith – Barclays Capital

Good morning, and good afternoon to everyone. And welcome to our 2017 Full Year Results Conference Call for Investors and Analysts. My name is Dessi Temperley. I'm the new Head of Investor Relations, and I'm looking forward to working with all of you. I am here with our CEO, Mark Schneider, and our CFO, François-Xavier Roger. As usual, we first present our numbers and a business overview, and then we will open the lines for questions. [Operator Instructions] I'll take the Safe Harbor statement as read. And I now hand over to Mark Schneider.

Dessi, thank you, and a warm welcome to our investor call participants today. As always, you know we do appreciate your interest in our company. I'd like to be very brief in my remarks today, and focus on some key metrics for the year 2017, the outlook for 2018, and then a few thoughts on how our actions of the year 2017 are positioning us for 2018 and beyond. Before I get going, I'd like, on behalf of the Board and Executive Board to thank our 330,000 employees around the globe for their hard work in the year 2017 over and above their demands of the base business. It's been a very hard year because we kicked off and landed a lot of initiatives, a lot of projects that position us well for the future. And everyone's commitment and hard work is duly appreciated. As we now move on to the key messages. By now you will have seen our press release and seen our organic growth figures. Clearly, no beating around the bush, we are disappointed about our Q4 organic sales performance. It came in somewhat softer than anticipated. As a result of that our organic growth for the entire year 2017, while it is inside the guided range, came in somewhat on the softer side. There were a few geographic areas that we have to point out. One of them is the North American market. The other one is Brazil. But then when it comes to business categories we have to point to Waters and Nestle Nutrition. I regard most of these issues as transitory issues or issues that we have already addressed and fixed, and hence as I look at all those four specific areas into 2018 I have more optimism. There's also good news on the OG side in that I think our real internal growth has held up really strong. That's important because I think that bodes well when it comes to future growth opportunities. I think we've also seen a fairly even performance across our categories, so all categories contributed to positive organic growth. And I also believe, and I will try to explain to you later in my presentation, that a lot of the actions that we kicked off in 2017, over and above what you can see in the OG number, will actually benefit us in '18 and '19, because many of our actions invariably are linked with time lags when it comes to actually feeding into OG. As opposed to organic growth, most of the actions on costs tend to kick in faster and hence moving to the second quarter point, it should be no surprise that there we're getting more traction already. We're seeing a very solid improvement of the underlying trading operating margin. In fact, we're slightly ahead of our expectations. And that puts us well on our track for the 2020 margin target. So, going forward and looking at 2018 and beyond, the key focus will be on these two planks. One is the organic sales growth and the other one is efficiencies. And we'll pursue the various strategies and actions that we outlined to you as part of the London investor day. We've also seen encouraging progress in 2017 when it comes to implementation of our portfolio management strategy. But there, in particular, as I will point out to you later in this presentation, there are some significant time lags till those steps will actually benefit our consolidated organic growth number for the group. When it comes to the 2020 growth and margin targets that we laid out to you in London, I'm in a position to fully confirm those to you. Again, I know this comes against the backdrop of a softer-than-anticipated fourth quarter. But when I look at all the underlying works that's underway and all of the initiatives that we have picked up and the base development of our business now, at the beginning of 2018, I actually have a lot of faith and optimism. In addition to the numbers for the 2020 targets, I would also like to confirm all of the strategy items, strategy steps that we laid out to you as part of London investor call, so there's no fluctuation there. We're steadily executing on the plans that we laid out to you, and we're making good progress. The next slide is just a very quick recap of our 2017 performance highlights. So sales of CHF89.8 billion, organic growth 2.4%, real internal growth, that's the one that's really at or near the top of the industry, at 1.6%, and then the underlying trading operating margin at plus 50 basis points. As you know, we introduced that underlying trading operating profit metric to you as part of our Q2 conference call last summer. I think over the year then, in line with the guidance that François had given to you, we've accelerated some of our restructuring spending, and hence we are well on our path when it comes to our margin improvement projects. The next slide talks about those various commitments that we're delivering on and I think that shows you that on many fronts, we have been either initiating or implementing a meaningful change in year 2017 as we try to implement this strategy that we've laid out to you. I would not go into all of these items in detail, sufficed to say that at the center of everything we do is the changing consumer, consumer is more than ever interested in good nutritional products and the health benefits of nutrition enhance I think fully validating our nutritional health and wellness strategy that consumer is on the one hand very willing to pay for premium products and hence we saw as perhaps I will show you later on encouragement progress on the premiumization of our portfolio but that same consumers also increasingly price sensitive when it comes to what they perceive to be exchangeable standardized products and hence efficiency work is also needed to remain competitive in all aspects of our business. Of course with digital tools as great as they are to be in direct touch with consumers, there is increasing transparency which also then leads to increasing price sensitivity. So around all of those items, all of those trends we organize our strategies and when we talk about advancing organic growth through meaningful innovation and renovation when we talk about increasing the efficiency levels in our company that's really the mirror image of that changing consumer, the one that is expecting more and better innovation and more distinguished products from us on the one hand and the one that's also efficiency, great expecting great prices and efficiency on the other hand. So really all of the strategies, all of these items we're pursuing are reflecting quite well that changing consumer landscape. What I'd like to do on the next three slides is to talk about our initiatives on organic sales growth, on efficiency and also on portfolio management. So starting with organic sales growth this slide is a recap of what we showed you in London, it's basically our steps towards the mid single-digit organic growth targets that we've laid out for 2020, it's been updated for the starting point now in the year 2017 at 2.4%, this compares to the 3.2% that we accomplished in 2016 hence we fully acknowledge that the incline has become steeper and so the challenge is certainly a harder one than the one that we looked at last year. On the other hand for each of the three steps here, each of the three buckets where we expect growth from we've laid out a few specific actions that we have now implemented in the year 2017 and I'm taking great hope from those that when it comes to 2018 and '19 and beyond, you will see those kick in and naturally help us towards our mid single-digit target. When it comes to fixing base business, I would like to point your attention to this stabilization of Yinlu, I think that was point for long period of time that has been flat quite often all your conference calls and analyst meetings and a lot of work has been put into this situation in the years 2016 and '17 in particular under the leadership of my executive work colleague Wan Ling Martello who is the Zone CEO for AOA and I think it's really strong results by now. So in contrast, we're seeing some good meaningful recovery, peanut milk continues to be challenged but then we also use that many patching setup that we acquired to launch our ready to drink coffee products which are really flying in the Chinese market. So I think the initial actions here that we've taken one or two years ago really starting to kick-in now and we have good hopes here when it comes to the future development, the whole thing over time I believe will develop into good case study of what we can do to actually stabilize and turnaround the business. The next bucket is portfolio management, this really summarizes the acquisitions that were announced in 2017 and also the disposal of U.S. confectionary, as you know most of these transactions here listed in this bucket have already closed, there are two exceptions, one is Atrium and acquisitions that one is expected to close towards the end of the first quarter and for the disposals we also expect closing of the U.S. confectionary transaction towards the end of the first quarter. So all of these acquisitions, all of these companies are really high growth businesses that will over time contribute in some cases meaningfully to our organic growth and the disposal of U.S. Confectionary would also lift up our average organic growth because its organic growth profile had suffered in a previous years. The important point here though to remember is that this will only kick in with a certain times of the delay, so let's take for example again Atrium which I think is a very attractive deal they're positions us well not only from a strategy point of view but also from a financial point of view, when that transaction closes to was end of the first quarter it'll still be a full-year before it will contribute to our consolidated group organic growth. So, assuming a closure on time starting from the second quarter of 2019, you will see the organic growth benefits of this company which is posting at the present time maintain organic growth rates, so this is the way the economy rules go and as you apply those to the other acquisitions the same holds true, most of these deals have closed but none of them is included in our organic growth figure yet take Blue Bottle, which close in the part of 2017. It will not be counted then for group organic growth until most like the fourth quarter of 2018. On disposals similar picture of course the minute you close the transaction it is no longer counted meant to watch the organic growth but that closing for U.S. confectionary is still a few weeks away and so hence you will only see relief from the sale of U.S. confectionery as from the second quarter 2018. Moving on to the high growth categories, I won't go into all of these examples by detail let me show you that there's a lot of positive activities underway and particularly proud of what we've done in the ecommerce and digital arena and you see that were very meaningful growth rates reflected here. Nespresso in the U.S. is making good progress with mid-teens organic growth, so very strong as well, picking emerging markets and also our premium stocking water range is doing very well globally. Moving on to the next slide and operating efficiencies, François will cover this area in a bit more detail in his presentation. I'm just focusing here on the structural cost development over the years. And I think one of the accomplishments of the year 2017 is that we were able to bend that cost curve for the first time in a while. In fact when you look back the past decade, most of these years' structural costs have been increasing at a faster clip than organic growth in some cases that was fully justified because some investments were involved in these numbers into that's worth pointing out. But nonetheless the math holds true that as a percentage of revenue or structural costs kept increasing, so bending that curve to invest can hear from 60 to 70 I think was an important accomplishment and as we're committed to presume that further as we're trying to improve our structural cost percentage of revenue, so good promising work underway and I think we're in a solid path year and François will later on cover that in more detail. On the next slide I'm getting back to the portfolio management aspect and while as we've done a number of transactions I would like in particular to compare the disposal of our U.S. confectionery business to the purchase of Atrium both of them are in the North American theater as you know when it comes to acquisition price both of them and CHF 2 billion to CHF 3 billion range so roughly similar. And they're both a shade under a CHF 1 billion when it comes to the sales volume. When that's group of transactions when these two transactions are completed it will be a net benefit after that year lapping time that I talked to you about earlier or about 20 basis points when it comes to organic growth, so this clearly a benefit and there's also margin benefits since the Atrium business is higher margin than our U.S. confectionary business. Most important though it will certainly up create the composition of our U.S. portfolio and now one off American portfolio to what's one that is more nutrition health and wellness inspired more in line with where today's consumers are going and what they demand from us and hence I think strategically it puts us in a much nicer spot closer to where we want to be, so good range of transactions and as when it comes to the continued evolvement of our portfolio we're not done, we have to announced just last week. And if we have a acquisition called Terra Fatil [ph] based in South America which is active in natural and organic foods in various South American markets. And this is on today's press release we are also exploring strategic alternatives for Gerber Life Insurance business, which is based in the U.S. So, this is an ongoing process and I think we're on our way towards a meaningful, but also prudent portfolio management strategy. With that, I'd like to go to the 2018 outlook we are confirming our sales growth expectations into 2% to 4% range. The underlying trading operating margin is going to be improving inline, fully in line with our 2020 target. We expect the restructuring cost of around CHF700 million, so pretty similar to the levels you've seen in 2017 and we are also of course continuing to work on increasing underlying EPS and capital efficiency that's the mainstay of our guidance that you've seen in over the years. So that summarizes my quick presentation, over to François Roger, then we will be back for Q&A. Thank you. François Roger: Thank you, Mark. Good morning or good afternoon to all. Let me start with the highlights for 2017 we finish the year with organic growth of 2.4%, which was within our guidance range. So in the lower half RIG was at 1.6% placing us at the high-end of the food and beverage industry. Pricing in today's environment continues to be limited, yet still at the same level as previous year at 0.8%. Underlying trading operating profit margin, which is before restructuring was up 50% basis points in constant currency above our guidance. Free cash flow amounted to 9.5% of sales at CHF8.5 billion. Underlying EPS increased by 4.7% on a constant currency basis to CHF 3.55. The biggest driver of the earnings growth was a major improvement. Looking at the geographic breakdown of our growth, the slide shows a sales development for zones as well as a globally and regionally managed businesses combined. Our growth was broad based both in terms of organic growth and RIG with all geographies in positive territory. In AMS, we have seen some slowdown of OG in the latter part of the year coming from both North America and Brazil. In North America, weak consumer demand has affected most of our categories from waters to food or even in concentration. In Brazil, we had some pricing pressure as mill prices went down by close to 20% in the latter part of the year. EMENA sustained good momentum especially in the last two quarters in the year supported by strong RIG. Pricing in Western Europe stabilized after two years of deflationary pressure. AOA has had another year of improved growth helped by a stronger performance in China. However, RIG was softer in the last quarter, mainly due to the late timing of Chinese New Year. Looking now at our performance split between developed and emerging markets, both met positive contribution to our overall growth. In the developed markets, we have broadly stable organic growth throughout the year. Pricing stabilized and was flat for the first time in the number of years as we moved of deflation. Regions of fourth quarter was impacted by a softer performance in North America across most categories. In the emerging markets, RIG has improved in 2017 however pricing in the second half was limited due a lower contribution coming from Latin America as well as Sub-Saharan Africa. Moving now to the details of each zone and globally managed businesses and I will start with Zone Americas. We finished the year with sales of CHF28.5 billion. Organic growth was subdued at 0.9% with RIG 0.2% following a slowdown in North America. Pricing was surfed at 0.7% reflecting a lower contribution from Latin America mainly coming from Brazil. Looking at the two sub-regions in more details, organic growth in North America declined in a context of sub consumer demand and an overall difficult trading environment. The second growth in many of our categories in North America translated into slightly negative RIG throughout 2017 as old pricing did remain positive. However, if we exclude the confectionary business, organic growth in the U.S. was flat. In terms of categories, coffee creamers and PetCare generated growth in North America offset by declines in confectionary and ice-cream. As you know, we have recently confirmed the sale of our U.S. confectionary business. Moving on to Latin America, RIG improved moderately for the region without any growth slowdown since the nine months due to a lower contribution from pricing largely due to Brazil. Pricing in Brazil was heavily impacted by deflationary pressures particularly for diary, which is allotted business in Brazil, where we sold the price of milk for by close to 20% in the second half of the year. Mexico finished the year with mid single-digit growth held by an improvement in RIG in the last quarter. Nearly all categories contributed positively to gross in Mexico. PetCare continued to be a highlight in the region sustaining double-digit growth throughout 2017. The zones underlying trading operating profit margin improved by 60 basis points to 20.3%. We continue to see the benefits from a restructuring project mainly in the U.S. as well as ongoing operational efficiency savings. This helped to more than offset higher commodity cost and some headwinds coming from foreign exchange. Moving now to zone EMENA with sales of CHF16.5 billion, organic growth increased by 2.3% as the zone finished the year with good momentum. The final two quarters of the year had organic growth about 3%. This has held by improved pricing in Western Europe, which stabilized following several years of deflation. All three sub-regions have positive organic growth on RIG. If we look at the dynamics by category for EMENA, PetCare continued to be a good growth driver delivering mid single-digit growth with strong results in Russia. For coffee, organic growth improved in most markets in the second half and confectionary, culinary, and diary all delivered improved year-on-year growth held by successful product launches. Underlying trading, operating profit margin increased 80 basis points in EMENA. The improvement was driven by price increases portfolio management and operational efficiencies all of which more than offset the impact of higher commodity cost. Moving now to Zone AOA with sales of CHF16.2 billion, organic growth improved for third year in a row, finishing at 4.7%. The timing of Chinese New Year was inseparable and therefore impacted slightly the fourth quarter. Pricing during the year was broadly stable at 1.8%. China returned to positive organic growth on a year-on-year basis despite the timing of Chinese New Year. Coffee and ready-to-drink beverages were the highlights and it started to show early signs of stabilization. Developed markets in AOA, saw strong RIG especially in Japan, which was partially offset by negative pricing. Southeast Asia sustained good RIG driven growth supported by Milo and the ambient dairy. South Asia delivered high single-digit organic growth in spite of some pricing pressures coming from the implementation of GST in India. And Sub-Saharan Africa saw double-digit growth with positive RIG on pricing. The Zones underlying trading operating profit margin increased by 20 basis points to 20.1%. Operational efficiencies on structural cost savings more than offset an increase in good cost. Moving to our globally managed businesses, I'm starting with Nestle Waters, we finished 2017 with sales of CHF8 billion on organic growths, following a challenging second half of the year. RIG deteriorated to 1.8% for the full year reflecting softer growth across both North America and Europe. The contribution from pricing remained limited at 0.3% with deflationary pressures across several developed markets. Looking at the developments by region and starting with North America, we finished the year with slightly positive organic growth driven entirely by RIG while pricing was negative. The regional brands in North America faced weak demand and pricing pressures impacting growth. Europe maintained low single digit organic growth. And emerging markets overall delivered a high single digit growth driven by Asia and Latin America. International premium brands continue to see high single digit growth San Pellegrino and Perrier. Moving to our margin, underlying trading operating profit margin for Nestlé Waters rose 20 basis points to 12.7%. While we faced higher commodity cost in 2017, savings were delivered thanks to operational efficiencies and structural cost savings. The strong growth of international brands also drove portfolio premiumization and therefore high profitability. Next is Nestlé Nutrition which stands at CHF 10.4 billion. Organic growth was soft at 1.1%. RIG improved on a quarter-by-quarter basis during the year. It recovered from a negative first half of the year to reach 2.3% in the last quarter. Pricing, however, was very limited at just 0.2% with some deflationary dynamics in the second half of the year. As you know, we announced in November that we will be operating infant nutrition business with a different organization as of January this year. We will move from a globally managed business model to regionally managed business that will be reported within the respective zones. We might remember that we did a similar move with our professional business in 2016. Looking at the dynamics by region, in China organic growth remained soft but showed some improvements in the back half of the year. NAN and Illuma continued to perform well leveraging on the strong brand equity. Organic growth in the U.S. was slightly positive essentially driven by pricing, the re-launch of global including [technical difficulty] progress. Our several range in the U.S. continue to do well. Brazil was negative with price decreases implemented in the second half of the year in response to the significant deflation in the local dairy market of close to 20%. South Asia and the Middle East made strong contributions with mid single digit growth supported by strong RIG in both regions. Moving to the bottom line, Nestlé Nutrition's underlying trading operating profit margin decreased by 10 basis points. This is mainly coming from lower profitability in Brazil where pricing was significantly impacted by deflationary pressure. And finally, we have other businesses, which include Nespresso, Nestlé Skin Health, and Nestlé Health Science. Sales for these three businesses combined were CHF 10.2 billion with organic growth improving year-on-year to 4.8%, driven by a stronger re-contribution of 4.5% versus the previous year. Pricing have stable at 0.3% versus 2016. I will start with Nespresso. We sustained healthy mid single digit growth led by mid teen growth in the United States as well as solid results in both Europe and Asia. Innovation remains a key driver for success. And both our consumer and out-of-home business grew well. The business continues expand geographically as we entered eight new markets last year. We also introduced the virtual system in the U.K. and in Australia building on previous successful launches in United States, in Canada, and in France. The range grew well and it presents a complementary offering our existing range with its long cup coffee formats. Overall, virtual contributed to almost one third of Nespresso's overall organic growth. Nestlé Skin Health improved its organic growth versus the prior year delivering an attractive contribution to the group led by a good performance in the aesthetic and corrective business. Nestlé Health Science maintained mid single digit growth driven by medical nutrition which delivered nearly 8% OG. The underlying trading operating profit margin for other businesses increased by 50 basis points to 15.9%, this was driven by an improvement in Nestlé Skin Health in particular, also levels remains below our plans. We also made additional investments for geographic expansion for Nespresso with the opening of 80 new boutiques around the world in 2017. Moving now to organic growth by categories, our growth continued to be broad based as a contribution by 2% to 3.6%, so relatively close to the average of the group at 2.4%. The exception is confectionary where year-to-date OG was slightly positive impacted by two factors, timing of Chinese New Year as well as negative growth in the U.S. Excluding the U.S. business, which we are disposing off, the organic growth in confectionary was 0.8%. For powdered and liquid beverages, the full-year organic growth was a robust 3.6% which represent an acceleration since the last year. Coffee sustained its good RIG and pricing momentum in the fourth quarter and cocoa based beverages also did well driven by Milo. Water, I have already covered. So, I will move directly to milk products and ice-cream which had a positive OG and RIG driven by coffee Coffee-Mate which continues to be strong in the U.S. as well as in Asia and in the Middle East. We saw a slowdown in the fourth quarter largely due to Brazil where we were affected by the deflation. Nutrition and Health Science already covered in my previous presentation. For prepared dishes and cooking aids, ambient culinary continued to be strong with mid single digit growth led by Maggi, which did especially well in many emerging markets. Frozen meals in North America was positive but pizza and Hot Pockets were negative as the mainstream segment of these categories declined. And finally, Petcare had RIG driven performance with double digit growth in emerging markets. For Petcare in North America, we finished the year with slightly positive growth supported by pet food. Moving now to the profit evolution by product group, while most categories have been affected by the increase in commodity prices, the benefit from our cost saving programs and more efficient marketing spend have more than offset this impact with nearly all of our product groups showing improvement over last year. Powdered and liquid beverages, nutrition and pet care continued to deliver a strong overall margin for the group. The only exception where we had a margin reduction was in milk products and ice-cream. We saw 60 basis points contraction of the margin largely related to the increase of milk prices outside of Brazil. Moving to our gross margin, so following four years of progressive improvement, our gross margin showed a slight contraction last year, but remained at an attractive level, reflecting the power of our brands and our efficiency programs. We incurred in 2017 around CHF 900 million of additional commodity cost. We have been able to offset more than half of this amounts for efficiencies, pricing, and mix at gross margin level. For 2018, we start to see signs of a moderate price increase in commodity basket. If we take a look at the full-year underlying trading operating margin, which is before restructuring, it increased by 50 basis points in constant currency which is an acceleration over previous years. The chart shows components of our underlying trading operating margin evolution. Cost of goods sold and distribution was 70 basis points headwind. As mentioned earlier, commodity costs were significantly higher last year by CHF 900 million. This is a meaningful swing compared over the last few years where we benefited from decrease of input cost. At the same time, pricing mix and cost reduction helped to mitigate the commodity headwind. Marketing expenses were slightly down on a constant currency basis. The main driver of this decrease comes from marketing efficiencies through reduction of agencies and consolidation of activities for both markets. Moving to underlying EPS, and I will start with the underlying trading operating margin which increased by 40 basis points on a reported basis to 16.4%. We have increased our restructuring and related expenses by CHF900 million last year, consequently bringing the trading operating profit margin down by 60 basis points, in line with our guidance. Net profit was impacted by an impairment of goodwill of CHF2.8 billion, which was for Nestlé Skin Health. We have discussed already the challenges that this business is facing, and consequently we took an impairment to reflect the current prospects of this business. As you know, we are working actively to turn around Nestlé Skin Health by simplifying the organization and by optimizing our manufacturing and R&D footprint. Another important factor impacting our net profit and consequently EPS relates to the change in the corporate tax rate in the U.S. In 2017, we recorded a one-off tax gain of around CHF850 million related to deferred taxes in the United States. And as from 2018 onwards we will realize a recurring yearly tax benefit of around CHF300 million, which is equivalent to about 200 basis points of underlying tax rate reduction for the entire group. Moving on to working capital, the 60 basis points decline showed that over the last 12 months we continued to make improvements on our working capital as a percentage of sales on a five-quarter average calculation, even on the back of year 2016, which was exceptionally strong in terms of decrease. We have continued to make progress in spite of increased inventory levels when commodities prices went up. Following several years of significant progress in working capital reduction, we continue to see opportunities for further improvement in the future. But as expected, the improvements will not come at the same exceptional pace of 2016. This improvement in working capital does not drive a cash flow improvement in 2017 as our balance sheet position in December 2017 does not show an improvement versus the pervious year. The balance sheet position is only a snapshot for one day of the year. Free cash flow declined by CHF1.6 billion, from CHF10.1 billion to CHF8.5 billion. The largest contributor to this decrease was working capital as we did not enjoy a benefit, in 2017, from working capital reduction as I just indicated, as we did while we did it in the previous year, in 2016. Our working capital went down steadily during the year but was marginally up as of the 31st of December after the CHF2 billion improvement in 2016. We have increased our net debt by CHF4 billion in 2017. We have returned more than CHF10 billion to our shareholders, of which CHF3.5 billion represents our share buyback program which we launched last year. In 2017, we purchased over 40 million shares for a consideration of CHF3.5 billion. This leaves CHF16.5 billion for the share repurchase program still to be completed by the end of June 2020. Our free cash flow last year was CHF8.5 billion. To conclude, Mark has already presented to you our outlook for 2018, but I would like just to finish my presentation by reiterating our priorities. We will focus on maintaining volume growth at the high end of the industry while improving our margin in line with our 2020 targets. We will continue our focus on our structural saving program as it is a key component to deliver our margin improvement while continuing to invest for growth. We remain committed to improve capital efficiency and EPS. I'm now handing over to Dessi for the Q&A session.

Thank you, François, and thank you Mark. With that we move to the Q&A session, and we open the line for questions. A - Dessi Temperley: [Operator Instructions] Now the first questions come from Jean-Philippe Bertschy from Vontobel. Jean-Philippe, good afternoon. Please go ahead with your questions. Jean-Philippe, can you hear? Jean-Philippe Bertschy: Yes. Can you hear me?

Yes, we can hear you now. Please go ahead with your questions. Jean-Philippe Bertschy: The first question is related to the [technical difficulty] I think François was addressing to the [indiscernible] impairments. If you can give us now your strategy or vision with regards to this division which has really destroyed some value over the past years, especially with regards to goodwill impairment? The second one would be related to the U.S. weak growth. And I think the outlook for PetCare is not that great with regards to the goodwill assumptions you take on your report [indiscernible] to ice cream and frozen foods overall with negative growth. Can you maybe elaborate on that?

Jean-Philippe, this is Mark. Let me talk about Nestlé Skin Health first. I think what you're seeing in terms of our accounting treatment is a reflection, as François said, about the current prospects. I think I used the London investor day to give you some of the history and some of the reasons about why we are where we are. We did mention, there we addressed the situation fairly aggressively. We have a new leadership team in place that started last winter. It took very decisive, very energetic action. And we're in the middle of a fairly comprehensive restructuring program to make the business more efficient. Execution of that is going well, but I also pointed out, and this has not changed since September, that this is probably not the best time to strategize. It is all about putting that restructuring program in place, making sure it works, making sure it sticks and delivers the expected results. That's the best thing we can do for the business right now. And then we need to see where we take this thing going forward. But I think on that perspective our view has not changed from the moment that we discussed this in London, in September. When it comes to the U.S. business, as a snapshot, I know that some of these core figures are disappointing. I think going forward, when I look at some of the underlying projects that we have in place, be it PetCare, or be it ice cream or be it our frozen section, I do believe that we have a lot of good work here in place that will pay benefits in the years '18 and '19. And I know it's always hard to argue this against the backdrop of a quarter that has been on the soft side, but again, it's about the forward-looking aspect of these projects, and they give me confidence. Jean-Philippe Bertschy: Thank you.

And next one on the line is Warren Ackerman from Societe Generale. Warren, please go ahead with your questions.

Good morning Mark, good morning François. It's Warren Ackerman here. Two for me, first one for Mark, on the top line, Mark, you said the 2.4%, is that the incline now to get back to the mid single-digit by 2020 is a bit steeper and more of a challenge. Are you any less confident about that given the starting point is much lower? And then specifically, can you talk about nutrition or infant nutrition, which is supposed to be one of your high growth categories, but only grew 1% in the year. Are you disappointed by that? And what can you do to really get that division motoring? And then the second one is for François, can you talk a bit about the structural savings, where they came from in the year, and what the priorities are on structural costs in 2018? And maybe if you could give us some idea of that 19.2% number on structural cost savings, where do you think that could actually get to in the course of time? Thank you.

Warren, thanks. And on the first question, a very clear statement, we stand fully behind their expectation for 2020. I stand behind it, and I have the same amount of confidence that we're going to get there. And so when I was saying that the incline is getting steeper I was just acknowledging the sheer math, the fact that in 2017 our organic growth was not as good as in 2016. But as I said, I have to judge it not as backward looking snapshot of what our organic growth was, I have to judge it from the initiatives we have underway, and how they will payoff in the next few years. And those give me a lot of confidence. Now, specifically on nutrition, I am with you, for a category that we see as a growth category, we cannot be happy with our growth rate, absolutely not. But you also know, going back to some of the announcements we made in the fourth quarter, we have already taken fairly energetic action when it comes to giving this business a new structure, which I believe gears it for much better growth. Because it kind of blends in the business more with our zone management structure, makes decisions fasters, brings it closer to the markets where we have to win and to some of these benefits as we're looking at initiatives they are already paying off, things are happening faster, there is more transparency and yes we typically have a quarter or two when if you reorganization like this where there is some diversion but once that's in place then you hit the crown running and that is my expectation going forward. François Roger: Good afternoon, Francois speaking. On this structural cost, I think that we have reached an inflection point last year as Mark indicated earlier in his presentation we had an increase on the regular basis over the last decade year-after-year which was actually higher than sales on a last year we actually declined in actual value in terms of structural cost. You remember the structural cost is close to 20% of our sales and it has been effective in all areas of the company, we did it in manufacturing, we did it in supply chain, in procurement, in G&A and all these areas have delivered the contribution to the increase of structural cost. It has been even probably stronger last year in G&A, manufacturing takes a little bit of time, so it will be little bit more back-loaded and we were pleased as well to see that we have achieved that in all geographies. So it's not a cross functions or across categories but it happened as well across geographies with some areas where we had stronger delivery such as in the Americas for example. So we aim at continuing that effort not only to keep our structural cost flat but ideally to see them decreasing while continuing supporting our growth. What is important as well is a fact that we manage to decrease this structural cost in absolute value while continuing to increase our investment behind growth opportunities and we mentioned one Nespresso Boutique quite simple because they are booked in structural costs because they are I mean the boutiques are part of free distribution costs and we still increased our network by 80 boutiques last year and which is a significant cost and in spite of that we manage to reduce our structural cost in absolute value. So I think it's a good achievement and good delivery for last year.

Thank you, Francois. Next one on the line is James Edwardes Jones from RBC. James please go ahead with your questions.

Good afternoon, everyone. On marketing on the basis of what you said about commodity cost and cost savings, I'm guessing your marketing cost fell by something around 90 basis points in the year, is that right and whether it's right or not what was the trend in movement in marketing cost between the first and second half of the year? François Roger: Good afternoon, James. I had indicated already in July last year that our marketing cost went slightly down in the first half of the year, they were down again in the second half or marginally more and so that overall during the year, we slightly marginally declined our marketing costs. You remember that in London we indicated clearly the fact that we didn't want to refinance marketing spend but we wanted to make sure that we would reach efficiencies as well. And Patrice Bula made a presentation where he explained that we were targeting efficiency savings in marketing of about $0.5 billion by 2020, this comes for example from reduction of agencies that we work with or consolidation of activities of world markets none of these savings affect a real consumer facing spending of consumer facing activities. What happened in 2017, we delivered already a significant portion of these savings, so which means that the bulk of the reduction that happened last year which is probably what you mentioned actually happen efficiencies are not full effective in marketing spend.

Next question. Next question is from Mitch Collett from Goldman Sachs. Mitch, good afternoon please go ahead.

All right. My first when we did a slightly general one, you said that the growth should be better in 2018, few acquisitions obviously going to contribute to 2018 made divestment but could you just walk us through a couple of the steps specifically that can make factor in 2018 and then secondly talk about the cost environment in dairy in retail, I think you said you are a dairy driven customers in generally quickly high, can you perhaps give us some color on why pricing in that market is so difficult, why you won't able to recover from the input cost there? François Roger: Mark, you want to comment?

I can't comment, I didn't hear the first question actually that I can answer on the second one, on the Brazil, the price of milk in Brazil went down by about 20% in Q4 of Q3 and it obviously impacted I mean pricing in the markets. We have pricing for obviously but I mean 20% decline if it is reflected by many of our competitors it is difficult to maintain too high a price premium for our products, so we have to address price level accordingly. We actually recover a significant part of it in terms of volume which is good news. We actually gain market share in dairy. Dairy being our largest category in Brazil, so whenever you have two dramatic fall season I would say in the short period of time, you have to address. I think that we need the right thing and once again by avoiding to dramatic consequence by gaining market share on recovering on volume. I'm not sure that I understood the first question. François Roger: Yes, the first question, Mitch, it was a little hard to hear. I think we have to put a connection but what I gather is your interest is in the 2018 OG development and one of the things I was trying to point out in my presentation is that levers that we have in our hands it actually over time improve OG all of them whether the internal or external suffer from some lead times, so internally the biggest one we have is innovation and renovation, so clearly we've done a lot of steps to crack that up but from the moment you push the button to develop a product and then get it out the door and sell it up in the market. It really takes a few quarters till that actually becomes invisible in OG and likewise on acquisitions you do a deal you announce it then you have to wait till you close it and then after closing it is one year before it starts to contribute to our consolidated group OG number. Enhance realistically even though a lot of things were kicked off in 2017 landed in 2017 we'll now have to wait until the year '18 and '19 for those to kick in. On the four areas I pointed out the beginning of my presentation like the markets in the U.S. and Brazil and then also Nestle Nutrition. I think we have taken fairly meaningful steps to address those specific situations and enhance them optimistic about those when it comes to 2018 and beyond.

So just the follow up it's the combination of the divestment and the benefit you get 2019 - because you have a strong innovation pipeline coming, is that correct? François Roger: I'm sorry, I still can't hear right, could you repeat that again or dial in again.

If I understood you correctly that the building blocks to better growth in '18 versus '17 are you, you have the divestment on confectionary but you also sound like you have a strong innovation pipeline behind that and then that you mentioned within your slide that you already begin to fix seems like give me example. François Roger: That is correct but then also don't forget that we also see continued good performance just in some areas we didn't touch upon. I think in may not for example has been showing recently some very good results and we expect that to continue in 2018. So there are also a lot of base issues that are not subject to specific actions that are supposed to give us benefits in 2018. Also to keep in mind that '17 but I usually don't like to talk too much about the calendar. It did have some particular calendar challenges that are not recurring to the same extent in 2018.

We move to the next one in the queue Jon Cox from Kepler. Jon, good afternoon. Please go ahead with your questions. Jon, we cannot hear you. Jon

Yes, good afternoon.

Good afternoon, go please go ahead.

Kepler Cheuvreux. The line is quite bad but some two questions one question on just general innovation and sort of product development mark you being that for being that for year now. You've talked about accelerating this, can you talk a little bit more about what you may be doing on that and may be some examples. The things that maybe coming down the pipe just to give us some comfort about a pick up a new products coming through because obviously the portfolio reshaping that's going to take a little bit of time and obviously and you are more interested in the overall base portfolio and then the second question maybe if its happy on the cash flow statement you're seem to be saying that working capital actually was better than it looked like on the last day of the year. And so you're suggesting that actually free cash flow should improve this year and as into that may be can just talk about CapEx spend as well? Thank you.

Thanks, Jon. So, on innovation, I think I was taken a lot of steps and we are taken lot of steps to speed up, when you look at the role of our strategic business units so as the group of units that's headed by Patrice Mula; look at it in two directions, I mean these are the people that do all this strategy development and in some of the innovation planning. They face backwards into our R&D and they fair pace downstream into our zones and markets when it comes to implementing this. So, we have taken a lot of effort the last few years in terms of strength in the working relationship between these strategic business units and our R&D function to be sure that there's a smooth pipeline of things that are actually strategically relevant to each category and that are making a meaningful difference with consumers. And to basically speed up the flow of these products to make them available, and then downstream from the strategic business units into the markets, we're spending now a lot of time and review in the working relationship between the markets, our zones and those strategic business units to be sure that depending on what category you're looking at whether it's a closure one or a local print. That we actually shape the decision rise in a way that we can bring these things to the market in the best possible way when something is globally done and needs to be done with a lot of discipline, needs to be done in a coordinated way when something is locally done and used to be done in a fast and direct way and then local responsibility in there you don't want to slow down with excessive co-ordination. So, a lot of it is in the fine details again buy a category by a brand that we need to streamline. Again a lot of work accomplished already a lot more I think especially on the downstream components yet to do. I would also like to point you attention to the fact that we have a new Chief Technology Officer as of January 1. Someone who has been with the company for a long time very deeply grounded in the food and beverage industry and someone that's very much committed to fast cycle development and has given us actually a few very meaningful fast cycle innovations already, so I'm very bullish on that aspect and look forward with him to accomplish more. François Roger: Jon, François speaking. Good afternoon. You're absolutely right as far as the test was concerned, so our free cash flow declined by CHF 1.6 billion to CHF 8.5 billion last year which is equivalent to 9.5% of sales. If you look at it's mainly coming from the working capital. We had a very strong contribution from the working capital decrease in 2016 which was exceptionally high I would say to start with and it was more than CHF 2 billion and we had a slight increase of working capital in 2017. That being said the working capital balance on the contribution that it has to the cash flow is just the view as a snapshot, as that's this up 1 of December which is one single day of the year. It doesn't reflect the underlying decrease of working capital. As I indicated earlier in my presentation or working capital as a percentage of sales on average last year declined by another 60 basis points, so indeed I'm not too worried about that and we have identified further opportunities to continue seeing our working capital declining. Just talking a little bit of free cash flow going forward we do expect anywhere to have less contribution coming from working capital than what we had in the past because we did quite a lot already moving from 8.5% of sales five years ago to 2.2% last year. We won't go that far again in the next coming years but we will have probably a stronger contribution coming from our margin improvement, so net let's see on it depends a little bit from one year to the other but net we might be in the same level as what we had in the past. There is one item that might impact really impact cash flow generation and especially probably in the next two years which is restructuring cost. We had booked quite a lot already in the last two years but that doesn't mean necessarily that we have spent it entirely yet. I'm sorry Jon you had question about a CapEx as well. Our CapEx has been relatively stable, last year we were at 4.4% sales for a total consideration of CHF 3.9 billion which is pretty much in line with what we had last two to three years.

Okay, next question is from Eileen Khoo from Morgan Stanley. Eileen, good afternoon.

Good afternoon, good afternoon Mark and Francois, two questions from me please, so the first one is on portfolio management. At your Capital Markets Day in London you indicated that you have perhaps up to 10% of sales to divest, you've done relatively lesser so far still the announcement to-date obviously you have confectionary, could you give some color on what are the businesses you could potentially be looking to sell and the second question is on EMENA, in the second quarter now of growth that is 3%-ish has this surprised you? What you think is going particularly well and do you see this as a sustainable run rate? Thank you very much. François Roger: Thanks, Eileen. Let me just clarify on the portfolio management what I did see in London is not that we had 10% of our crew consolidated revenue for sale, what I did say is that was going to be portfolio turnover with that volume but that is buying and selling and so clearly, when you look at what we have accomplished so far even just currently the last transactions in the vicinity of about 2%, so that's the sale of U.S. Confectionary and the purchase of Atrium and then we announced today that we're reviewing strategic options for our Global Life Insurance business which is a business again with about $800 million to $900 million on dollars in sales. So not huge but also not a tiny business, in fact 1% of Group revenue, so one by one we look at India, I did make it clear, we're not creating an overhang here by creating the huge sell list, I think this is not in the interest of our shareholders, we are every time we announce the transaction like this or review like this, we carefully prepare this with the management team and then we run a very tight process and as you've seen from the U.S. confectionary sale that is leading to good results, that's the way to do it professionally. If I create a sell list and circle it that tomorrow the day after you have 100s and 1000s of people going to work basically with less motivation, less open mind, less future in mind and that's not the way to create value for our company. So we'll do this one by one and align with our capabilities, we'll do it professionally and with the best of intention of creating maximum shareholder value here out of those portfolio changes. When it comes to EMENA, I'm very encouraged by what I'm seeing, I think what's really paying off is what you were shown in London by Marco Settembri and that is a category led procedure in particular for Western European countries, those countries traditionally have been led with the very strong country focus and I think while it's important to stay close to local market conditions, when it comes to the categories overall, they do benefit from a more coordinated style of management, so when you think about one of our leading clients Nescafe and one of our leading products Nescafe Gold we're now benefiting from much more coordinated activities and marketing approaches and advertising campaigns in that product and I think we're seeing the good benefits of that already. It's showing two ways inside the company when it comes to cost reductions is you really create efficiencies in our marketing approach but then nothing outside, if you reinvest some of those savings, you can really create so much more impact with consumers, you have a more professional approach and you avoid duplication, duplication backend is really dilutive effort and we focus our efforts. So that category approach is paying off big time and really applaud Marcos leadership and putting that in place and giving appropriation back to Europe.

Thank you much. Next one on the line is James Targett from Berenberg. James, good afternoon. Please go ahead with your questions.

Hi, good afternoon. Couple of questions from me, firstly just on margins, now to 2017 in the back, I just wondered if you had better visibility on the phasing of the margin expansion to 2020, I think on unit basis to now is about 40 to 70 bps per annum, so how we should expect for 2018 that kind of range. And then secondly I wonder if you could talk about related to that, clearly delivering these cost efficiencies fair amount of disruption to your business, is that a factor you would call out for impacting your growth in 2017? François Roger: Thanks James. I think on the margins, we did indicate that we expect improvement fully in-line with the 2020 target but we deliberately stayed away now from a precise phasing about how much to expect in '18, '19 or 20. So I think you've seen from our focus in '17, we're well on our way and there is going to be continued focus on this but at this point bearing in mind also how much these margins are being whacked around not just by our own internal efforts, but also by where raw materials prices are going, I think it is better to leave ourselves some flexibility here. But again, I can assure you we feel good about our efforts here and feel strong about it. If I understand your second question correctly, it's about delivery services and to what extent that has an impact on our business. So I think it's a market development that is part of a broader picture and that is what I call the anytime anywhere environment where it's no longer just you know, the traditional in-home channel or the tradition of out of home, it's no longer just about your weekly trip to the supermarket. These days consumer won't get product in all sorts of various moments and however is there to fill that demand is getting it. So yes, it's a development that we need to look at closely and to rather than starting a delivery service on our own. I think the important thing is to be sure that some of our products actually embedded in what these delivery services have to offer.

So, thanks for the answer. On my next question, I guess I was more referring to delivery of the cost savings that you are doing to the extent which delivering is cost savings is impacting your ability to deliver organic growth at the moment.

Okay, I'm sorry. I got that wrong. It's again a poor connection, so let me hand it to François for that. Sorry about that. François Roger: James, I'll try to answer your question. You remember that in London we presented a savings program with a focus essentially on non-consumer offsetting activities, which means that we do not expect any of these programs to materially impact or capacity to grow and out of the 40 basis points that we deliver last year. The very vast majority is coming from non-consumer operating activities, from manufacturing to supply chain procurement and administration. I'm not saying that it does not have an impact throughout the organization because it does to a certain extent. But we don't think that it has an impact on our sales and even as I mentioned earlier the savings that we achieved in terms of efficiency on our marketing spend. Once again, it did not impact our activities vis-à-vis consumers. So we are relatively comfortable the non-impact that it has on our organic growth.

Okay, next question is from Patrik Schwendimann from ZKB. Patrik, Please go ahead.

Good afternoon Mark, Franc, Dessi the growth categories Water, PetCare and coffee are below their historic growth rates. What are the main issues to prevent that growth and how to reach - are you to reach the foreseeable future. A much better growth again in this category and second question, quarter one should benefit from later Chinese in the year and earlier Easter, would it be a fair assumption to say that the organic sales growth in quarter one should be in the upper half of the 2% to 4% guidance? Thank you.

Patrik, let me take the first one. So as you've seen our overall organic growth is down from 3.2 to 2.4 and down. It would be surprising if these major growth categories that are almost half of the company and they had been exempt from that. So yes we've seen a downward draft everywhere in 2017. Now when it comes to the specific reasons why, I think the reasons are vastly different from category-to-category. So it's really different strategies and different issues that we have to look at here. I think in coffee in particular we are quite focused on growth in Asia Pacific and making sure that we defend our market shares and some of the key Asia Pacific markets. When it comes to Water, we had some issues - faced some issues in Nestle Waters North America in particular I think we were initially a bit slow to react to the rise in carbonated water and so I think we are making good progress here and clearly in that demand and to medium bad consumer demand and PetCare likewise in some of our plans we were in the middle of our transition to a more natural higher value offering and kind of overtaken by that trend. But I think we are now nicely catching up. So again, I think that's good strategy, it's good actions in place to address some of the weakness in the growth categories, just as we are as in the rest of our portfolio and that this gives me confidence going forward. But there is not one common reason why overall these categories, one of them slow - I think in 2016. When it comes to your second question on the first quarter, please do understand we'd like to stay away from quarter-by-quarter guidance. I think we are giving you our annual expectations and we'd like to update you as we go through the year about the reasons how and why. Do keep in mind, if I remember correctly the first quarter does have one billing day less. So again this counts as pluses and minuses. But I wouldn't want to get now into quarterly guidance.

Next one on the line is Jeremy Fialko from Redburn. Jeremy, good afternoon. Please go ahead.

Hi good afternoon, Jeremy Fialko, Redburn here. So just some questions from me on kind of commodities and pricing; first of all, could you just clarify the comment you made on commodity inflation in 2018 and in net of the expansion of that is on pricing, let's say if you don't see as much inflation in the commodity basket in '18 and logically does that mean that the pricing effect of your organic sales growth would also be lower? Thanks. François Roger: Jeremy, good afternoon. So in 2017, so we had a significant additional cost to bare which is 900 million, in the trend that we can see in terms of commodity pricing for 2018 is very small decrease that we are just I mean one or enough months in the year. So still early to draw any conclusion, even if we have 2018 as what we had in 2017. And there is some correlation obviously between commodity pricing and sales price. But it's not always direct correlation as you could see for example last year, we had quite a significant increase I commodities but we did not necessarily reflect everything in terms of pricing because we need to make sure whenever they have commodity movement that they are obsessed and able as well because we don't want to start moving prices up and then we have to move them down again the next months and so forth. So it's really early to draw any conclusion, you could see a pricing has been relatively stable in 2017 above '16 at 0.8%.

Thank you, Franco. And the next question is from Martin Deboo from Jefferies. Martin, good afternoon. Please go ahead.

Good afternoon everybody. It's Martin Deboo, Jefferies. Two question, please; one on margins probably for Franco, one on USA, so organizationally for Mark. Franco on the margins, I noted what you said to James, Edwardes James, well I'd just like to go one more if I may on your margin bridge. I mean, you have 40 basis points structural cost savings. Am I to assume that therefore the marketing reduction is 70 basis points or it sounds if it's less than that from what you said about constant currencies? And also just a supplementary did -- was M&A particularly different area exit materially accretive to margins in 2017, that's the margin question. And Mark just thinking about you assuming, you moved ahead of this year and given you know, the issues in the U.S. do you think they had any sort of materially disruptive effect on your commercial effectiveness in U.S. was that a factor in the week, but framing the question more positively do you think that the relocation of the head office looking forward in a more natural location plus the infusion of the acquisitions like Atrium eventually, do you think -- do you foresee as sort of cultural and organizational change in the U.S. that would improve your go-to-market effectiveness there?

Martin, let me start with the second one then Franco will get to the margin. So, on the U.S. fairly, yes, I'm more optimistic going forward. But maybe slightly different reasons, one is clearly last year, while we would have like to see more organic growth. I think most of a fast moving consumer goods companies and certainly food and beverage companies were in the same space as well in that market and I think what we've seen is that some of the good news from the macro environment did not really feed through to consumer spending and that was slow to feed through to consumer spending and I think has slowly starting to change. So I think the macro and the consumer behavior is somewhat helping us, your consumer sentiment, I think is improving. Specifically now when it comes to the move from west coast to east coast that was executed perfectly. I really applaud the team for doing a perfect job on that and yes I mean if you do that there is going to be a bit of disruption and a bit of distraction and on the margin I kind of rule out that took some effort away. But under the circumstances what is humanly possible. I think they had done it really, really well and do keep in mind this is more than just geographic headquarters move. It was also a slight consolidation project actually focused our core U.S. sites and gives us more concentrated, more core located groups now going forward. So I really applaud that move, it's more of interest changing cities. It really will increase the operational efficiency going forward. We will have the effects of some of the acquisitions kick-in later. We will have now the effect of U.S. confectionary gone by the time it closes and do keep in mind when it comes to the second half of the year. When you do announce the sale of a business like this as much as you can put good diligence in place to avoid that it go south to in search of process. Of course this competition flows in your own people are focused on the transaction and yet there was and yes there was a bit of a price to pay you when it comes to organic growth in U.S. confectionary in the second half. I think that's unavoidable when you go through a deal like this and it's basically part of the switching cost and one more reminder that portfolio management should be done with great deliberation and great care. So when you put all of these things together and then some of the good things we have going for 18 and 19. I feel good about where the U.S. is going. François Roger: Martin, on your question on margin, so once again the marketing spend decreases relatively limited, I mean, it's essentially coming from efficiencies that we delivered in line with what we presented in London and we did quite a lot already in the first year. There are other savings that you don't necessarily see which is -- which are not in structural cost because they are variable but they are recurring. For example, in procurement when I talk of 900 million of commodity increase last year, it is before any saving that we have been able to deliver on procurements for consolidation of procurement activities above market and these further savings are quite significant. We did not enjoy any real benefit from culinary in 2017 because we reaped off already most of the benefit in 2016 because we started to deconsolidate at the end of September and we will actually traditionally making losses in the last quarter of the year, so there is no real impact for the full deconsolidation in 2017.

Okay. And the last two questions are from Alex Smith from Barclays. Alex, please go ahead.

Yes, hi. Good afternoon. A question I guess on your market shares across portfolio, I think in H1 you said you sort of slightly loss of share across the portfolio. How we are looking for the second half, are we into the territory? And then, a question on management de-layering, Mark I think you spoke at the investor seminar, you spoke a bit about the scope to delay management to really speed up the business, drive execution faster. I'm just wondering if you've been able to make any progress on that front as of yet? Thanks.

I think on market shares Alex the picture is more or less unchanged from the first half. So, no major changes there. On the de-layering I mean the single biggest example I can point it to other changes that we announced in the fourth quarter regarding Nestle Nutrition. These are not my new changes, this is a 10 billion part of our company that we are transforming there from a globally managed business to one that is managed under the Aegis of upper zones and that's a huge de-layering job and we are seeing some benefits already as I mentioned earlier when it comes to faster communication. But as we point it out at the time in addition to she has speed and flexibility and closeness to the markets. There is a cost benefit associated with it. So when we talked about this in London, we made it clear, we are not going to be doing across the board kind of stuff. These are going to be targeted, very focused actions and hence nutrition was one of them and the other ones may not be as large and may not be subject to public announcements but we actually look at it unit-by-unit, layer-by-layer and try to find the best setup and I think taking great diligence and that is important because otherwise when it comes to this across the board organizational changes. I just feel there is too much collateral damage. So if you don't want to harm the company's growth prospects. If you don't want to create collateral damage, you have to do this careful and you have to do it unit-by-unit and that's what we are doing.

Okay. And with that, we come to the end of our conference call today. Thank you, Mark. Thank you, Francois. Thank you very much to everybody on the line who attended our conference call. If we couldn't answer all your questions, so if you need more detail you know where to reach the Investor Relation Team by phone or by email, and we look forward to speaking to you again at our three months sales conference call in April. Thank you very much, and good-bye.

Thank you everyone, and look forward to stay in touch.