Ladies and gentlemen, welcome to the Carlsberg Q1 twenty eighteen trading statement. Hosted by CEO, Kaes Harte and CFO, Heine Dalsgaard. And answer session.
Good morning, everybody, and welcome to Carlsberg's Q1 twenty eighteen Conference Call. My name is Katie Hartz. And I have Visme, CFO, Haynes Alsgaard and Vice President of Investor Relations, Peter Korn Group. I will go through the highlights the quarter, and Jaime will talk you through the regions and outlook. Please turn to Slide 2.
Quarter 1 is traditionally a very small quarter for our business due to seasonality. Organic net revenue in the quarter grew by 2% and this was driven by a 1% pricemix and 1% organic volume growth. Reported volumes were flat due to last year's divestments of the German wholesale at Nordic Keytanka. Reported net revenue declined by 5% due to the disposal and the negative currency development. The negative currency impact was broad based, but with the largest impact from Asian and Eastern European currencies.
We confirm our full year expectations for organic operating profit growth. Please turn to Slide 3. A few comments on our international premium brands for which we saw good growth. 1664 Blanc continues its strong performance and grew by 44% even after having achieved 46% growth in 2017. Further expansion in our Asian markets is important driver of the brand grows, but growth also picked up in Eastern Europe, where Russia delivered strong growth of the brand.
Greenback also continues its double digit growth and grew by 12% in the quarter. The growth came from Western Europe, with particularly strong results achieved in France. To work, our largest brands grew 11% supported by strong growth in India and China. The brand also grew in several markets in Western Europe such as Denmark Norway, Serbia and Bulgaria. In Denmark, the growth was achieved in spite of the price increase as consumers traded up into more premium tour line extensions.
In Turkey, our partner has done a very successful job making Tuborg 1 of the largest beer brands in the country. Volumes of the Carlsberg brand reflect a strong growth in Asia and growth in Eastern Europe, were offset by volume decline in the UK. Please turn to Slide 4 and a brief update on a few of our strategic priorities which are also receiving significant support from our CLP22 investments. The growth trajectory in the craft and specialty category continues and we grew our brands by 30%. Russia, France, China, Poland, and the Nordic markets were the main drivers of the growth.
Albow free brews grew by 23% in Western Europe with strong growth rates for our Albow free brands in markets such as Poland, France, Denmark, Sweden, Norway and Germany. In Russia, Bolthouseero also achieved strong results in the quarter. Lastly, the rollout of our proprietary one way draft system, DraughtMaster continues. Draftcraft and is U. S.
Consistent, high quality draft beer and the ability to have more tabs in the outlets leading to higher craft and specialty sales. As a result, our customers see an improved income and much easier operation. We continue to see very strong progress in Italy and Denmark, and we have now also launched the system in Norway and Sweden where initial customers interest has been, customer interest has been encouraging. Within that big city priority, we are now live in a handful of cities where we test different concepts and gain valuable learnings. We have decided not to provide any further updates on the big city strategy as our activities remain a very commercially sensitive.
The priority is a slow burner and it will not have any material top line impact for the next years. We would like to stress that of our growth priorities, The short- to medium term growth will come from craft and specialty continued growth in Asia and growing our presence in the expounding alcohol free beer segment. With that, I will hand over to Heine who will take us through the regions at outlook.
Thank you, Keith, and good morning, everybody. Please turn to Slide 5 and Western Europe. Net revenue declined organically by 3% as a result of a total volume decline of 2% and a negative pricemix of 1%. Reported revenue declined by 8% due to last year's disposal of Nordic Ksenge in Germany, which had an impact of minus 3 percent and a negative currency impact, primarily related to non euro linked currencies with the largest impact coming from the Swiss francs, Norwegian and Swedish kroner, and then the total slotted We saw a positive pricemix in most countries, but our export and license business is part of the regional numbers for the quarter due to lower exported license sales in the Middle East and growth of Tuborg brands in Turkey. Sales in the Middle East was impacted negatively by increasing excise duties and VAC in some of the markets.
In Turkey where Tuporg is sold by our partner through a license agreement, we only include the license fee in our revenue and consequently that impacts regional pricemix negatively. Adjusting for exported license, pricemix in Western Europe was close to +1 percent. Volumes were impacted negatively by the cold weather in many countries, which more than offset the earlier sell in to Easter. Looking at a few selected markets. Our volumes in the Nordics grew by mid single digit percentages supported by the relisting at a large customer in Finland for the winter campaign.
In Denmark, our beer business developed well and our value shares show solid improvements driven by value management and strong growth of craft and specialty and alcohol free premium. In Norway, the positive development continued with particular solid performance of our specialty products, although the CSD business was was impacted by a significant tumor tax increase. Sweden started the year well, mainly due to the earlier sell in to Easter. In France, our property specialty portfolio continues to develop positively with strong growth of brands such as 1664 Blanc and Glen Becker. The mainstream category remains under pressure and consequently, our volumes declined slightly.
In Poland, Our volumes declined and we lost market share following a price increase in Q1. However, our price mix improved as a result of this as well as our premiumization efforts. The UK was impacted by the continued challenges of the Carlsberg brand with our healthy growth of Brooklyn and San Diego. In some of our smaller Western European markets, subsets Bulgaria, Greece and Serbian, delivered solid results. In the quarter, we acquired the remaining 49% of Olympic Brewery in Greece.
Please turn to Slide 6 and ACF. We had a strong start of the year in Asia, net revenue grew organically by 16%, driven by 12% volume growth and across 3% pricemix. Reported net revenue grew by 6%, negatively impacted by currency movements. We continue to see strong results in our largest market China, supported by 14% growth of our premium portfolio, combined with a later sell in to the Chinese New Year, Our China's volumes grew by 9% and net revenue by 16%. All three major brands in our premium portfolio, that is Truvoire Carlsberg and 1664 Bank delivered solid growth rates with 1664punk, taking the lead with more than 50% volume growth.
Our Indian volumes grew by more than 30% to market share gains and also very easy comparables as Q1 last year was weak, being impacted by the highway ban. In most of the other markets in the region, we saw good momentum of our business with particular strong performance in layers in Nepal and in Vietnam. In general, we are very satisfied with the progress of our Asian business. Q1 was extraordinarily good due to the later sell in to the first season, our underlying performance of most markets is very strong. And we are investing as sizable portion of our sales 22 investments in the region to further drive volumes and premiumization.
Slide 7 and Eton Europe, please. Net revenue in Eton Europe declined by 3% percent volume decline and plus 3 percent pricemix. All markets with the exception of Russia grew volumes for the quarter. Reported net revenue declined by 14% due to the weaker currencies across all markets. The Russian market declined by an estimated 4% to 5% for the quarter.
We delivered flat market share sequentially of around 31% but we saw a market share decline of approximately 2 percentage points compared to Q1 last year due to the market share loss in the low end PEC segment during the summer. Consequently, our Russian volume declined by 11% for Q1. Our pricemix developed favorably by low single digit percentages in spite of the continued promotional pressure in the PEC segment. All other markets in the region continued the very positive trajectory of last year delivering percent volume growth and 19% revenue growth as a result of strong pricing and growth of our premium offerings. In Ukraine, we saw we had a very strong start to the year, driven by market growth and solid market share performance.
Please turn to Slide 8 and the outlook for the year. Based on the Q1 performance, we are well on track to deliver on our earnings expectations for the full year. Consequently, we maintain the outlook of mid single digit percentage organic growth in operating profit. Based on the spot rate on April 30, we now assume a negative translation impact on operating profit of around -5 1,000,000. The change versus February, FX is mainly due to the recent weakening of the Russian ruble.
All other assumptions remain unchanged. Keith, over to you for final remarks.
Thanks Heine. Before we open for questions, a few final remarks from my side. We are satisfied with our performance in Q1. We see solid growth in our key strategic priorities such as craft and specialty and alcohol free brews. We are well on track to deliver top and bottom line growth for 2018.
Finally, we maintained the outlook for the year. And with this, we are now ready to take your questions. Thank
And our first question comes from the line of Jonas Gilbert from Danske Bank. Please go ahead. Your line is open.
Yes, good morning, gentlemen.
Thank you for taking my questions. Firstly, if you could add some additional comments on your market share losses in the UK, to what degree this is a cost of concern? And then maybe also including the how did the price mix develop in Q1 in the UK? Then secondly, a comments, some comments around how you read the Russian market decline in Q1. Does it change your expectations for a flattish full year development in Russia?
And then, thirdly, if I look it sounds like if from the comments on the 50s, seasons in Asian countries that we should look at Q3 sorry, Q4 and Q1 in combination. And if I do that, it like Asian volumes has organically developed, flattish, but I guess that is is due to the change of your accounting. So if you could put comments on how the underlying growth was in Asia adjusted for these later sell in? Thank you. Okay.
Thank you very much. Good morning, Euna.
Thanks for your questions. With respect to the market share, in the UK, the market
share loss is mainly driven by, 1st of all, decline in
mainstream segment, as consumers are trading up, and the
over index in mainstream. Second thing is that the Carlsberg brand
continues to lose market share. In the mainstream segment,
we see Carlsberg export doing better because of the new advertising, but Carlsberg Green, as it is called, is continue to do some market share. We will come there, of course, with correcting
measures. I don't have, at this moment, time, information about a pricemix, but basically, I think that's too detailed for now.
With regard to the market decline in Russia, if the it's in our estimation, it's 4% to 5% if you compare that with Q1 last year, then mainly if you collect for the PET downsizing, we think the market has been flattish, and we don't change our view on the Russian market where we have said that we will be around 0 this year in terms of volume. And in Asia, frankly, I'm could the market and the year every time in different pieces, of course, but we are very satisfied with the development of our Asian market. Obviously, we have, and that is a bit later, you have some of the trade loading in Q1 rather than in Q4, if you combine it and if you look at China, India, if you look at our market share development, if you look at the different price mix developments, very satisfied about Asia.
Okay. Thank you. Thank you.
Thank you. Our next question
comes
from the line of Sandeep Oyla from Credit Suisse. Please go ahead. Your line is open. Hi. I'd just like to
come back to Russia. Can you just discuss the
the pricing environment there? Clearly, you've been running with a big
price gap with your competition driving some of the share losses that you've seen.
Are you seeing any signs of
of the pricing environment improving there? Thank
you, Sanderson. Good morning. No, we have not seen any changes in the pricing environment. Maybe it's a bit too early because this is the moment in the season that the price increases are being taken So, hopefully, we are monitoring that closely. And with regard to the way we operate is that we participate in some of the deep promotions in some of the key accounts by which we have been able to stay more our share and stabilize our share development in Q1.
Got it. And just
a follow-up on the can you just also discuss your market share performance in the premium segment in Russia? And just to follow-up on the Nordics, what would your volumes have been if you exclude the contract benefit in Finland?
The same performance
in premium is continued to improve in Russia. And in terms of the volume division will not have the contract in Finland, the volumes will be flat. In order to.
Got it. Thank you.
Thank you. Our next question comes from the line of Soren Sam from SEB. Please go ahead.
Line is open.
Yes, good morning gentlemen. First quick question regarding, the strong growth that you mentioned you have in some of your scalable premium brands like Kempag and 16, 16,000,000,000 dollars, $16,000,000,000, $16,000,000,000, $16,000,000,000, $16,000,000,000, $14,000,000,000,000, $16,000,000,000,000,000,000, $16,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 result of your sale 22 strategy? And in regards to that, would you say that you are in line or are you slide ahead or slightly behind the plan that you set out for now? Thanks, Erinn.
Yes, I think we can
say that this is a consequence of our investments of Sales 22, both in Green American 1664 Blanc. It has to do as well with the Royal rollout in different countries, as we said 2 years ago, especially, Greenberg was doing very well, but only in 4 or 5 countries, And as we discussed before, we have now moved to other countries with Greenberg and as well with 1664 Blanc and we see the coming through, which is very encouraging.
Okay. And then, I couldn't help noticing that you have moved up Asia. As the division you report as the number 2 division now, which I think is the first time I've
seen that. What should we read into this?
I mean, why don't you do that now? Well, maybe not now.
We talk earlier about this. We always get
a lot of questions about Russia and a lot of focus, but at the moment, you see that Asia now is basically our 2nd region, it, of course, is then the 2nd region that we should mention basically it shows as well how fast Asia is growing and how well we're doing there. Okay. Thank you very
much. Thank
you. Our next question comes from the line of Mitch Collett from Goldman Sachs. Please go ahead. Your line is open.
Hi, there. At the full year stage,
I think you want to be within a few the growth rates
this year.
We can't give you.
Apologies. Is that better?
Yes, that's relevant.
Sorry. So at the full year stage, you weren't keen to commit to the 2% to 4% organic revenue growth aspiration in F 'eighteen, you started with a 2 against what was the harder, one of your harder comps. Would you be willing to commit to 2% to 4% organic sales growth at this stage? And then perhaps can you just talk a bit more about the acceleration in Tuborg which has gone to 11% growth in Q1. I think it was running at 3% last year.
And then I suppose given that's your biggest brand what is the offset for that 2 ball growth and why haven't growth overall accelerated?
I'm not sure I got your last part of the question, but then the first 2, then in terms of the 2% to 4% as you probably recall is that we said that, that will be a CAGR for the coming years to 4% So we don't guide from the top line for this year. With regard to the acceleration of the 2 ore brands, that's very much due to India. We had the high grade bed 2017 in Q1, as you recall, and we grew in India this year in Q1 by 30%, but on an easy comps I looked at Peter, whether he got now, he didn't get to your 3rd question as well. So either you need to repeat that or be moved to the next.
Yes, I just wondered if with Tuborg accelerating so much given it's such a big brand, which other brand is getting slightly worse to offset that acceleration?
Great. John, the brand is offset. Well, basically, due to the fact that the main growth comes from China where we grow with our total portfolio and for India, where to work next to Carlsberg is one of our main brands. It doesn't need to it doesn't basically eat in in other volumes from other brands.
Our next question comes from the line of Trevor Stirling from Bernstein. Please go ahead. Your line is open.
Two questions from my side, please. The first one, if China, so if you could talk a little bit more about China case and what the underlying trends in China are, or is it still fair to say volumes flattish may be slightly done with very strong pricemix. And the second one, I think I know the answer to this, but any update on Habeco?
Good morning, Trevor. Thanks. Starting with the last one, there's no news on that vehicle deal. We could to have a good dialogue with this government, and that's, we leave it for now. With regard to China, we see the 40% growth of our premium portfolio.
The Chinese volumes in total grew by 9 percent and net revenue by 16%. So, we seem to have a good momentum in that market as we speak. 20% of the volumes of our volumes is in premium. That's 40% of our net sales. And our total portfolio, international portfolio grew by a set 14% of which calls back 8%, two more, 14% and blank, 53%.
So I hope that gives a bit of color to you.
Our next question comes from the line of Michael Rasmussen from ABG Sundal Collier. Please go ahead. Your line is open.
Thank you. I would like to follow-up a little bit more on the happy go question just after if possible. I do understand that's been some issues with the Sabeco deal. Can you please elaborate a little bit about this if this has changed your willingness to go ahead and increase the stake or potentially you will come into some kind of a price negotiations or just move along as in the past? And then also my second question will be on the new potential PT and in Russia.
Can you add a little bit of flavor on how that process is moving? What your guys are talking to the Duma members and so on now are saying, please? Thank you.
Yes, thank you. And with regard to Habeco and Sabeco, Well, we obviously, Montador like you was happening with Sabeco, but there's nothing at this moment of time, I can say, more about it, year over information, I guess, that we have, we continue to have our good dialogue with the government. With regards to proposal on further limitation of the PET sizes, a few members of the Duma have proposed to further reduce the size of a PET bottle, as you've read. There's not set any date for 1st reading in the Duma, And as we understand it, the proposal is not backed by the government at this stage. I will be in St.
Petersburg with the SPF in early May, And then of course, we will have talks with members of the government. And I imagine we'll allow to raise a question in the meeting with President Putin again. This case has started in this case on PET has started already 8 or 9 years ago. So these kind of steps can take quite a while, but there's no further update for now.
Thank you very much guys.
Thank you. Our next question comes from the line of Olivia Nicola from Morgan Stanley. Please go ahead. Your line is open.
Hi, good morning. Just got a couple of questions on India, please. You had a 30% volumes growth in Q1, which states were the main driver behind this volume growth? Also, are you aware of any further regression in 2018. I know that some of your peers, for instance, mostly in spirits to be fair, mentioned some route to market changes, which affected themselves in some states.
Thank you.
Okay. I got your first question, not your second, but let me first take your first question and then you might glad to repeat your second one. When we talk about the states, it's a bit mixed, but that has a lot to do with whether it effect of the highway ban was the highest, but we have seen recovery in almost all states just because of the highway ban recovery, we see the numerical distribution in many of the states coming back significantly. We are not yet on 100% in any state, but we are, I think, on average, between the 75% 80% with regard to the numerical distribution in Q1 2018, vis a vis 2017. So we're on our way back.
Yes, my second question was really about, if you are aware of the regulation in 2018, we've seen GST, we've seen highway ban is there anything up coming up in 2018 that you're aware of in India?
Yes, we in general, we don't see further announcement of regulations to come up, but we see a tax issue in West Magal So that probably will be an increase in the excise.
Thank you. Our next question comes from the line of Hans Gregersen from Nordea. Please go ahead. Your line is open.
Good morning. Heine, if I heard you correctly, you stated that you are well underway with Q1. Does that mean without going into specific numbers that Q1 from an EV point of view did better than you had forecast. That's the first question. Second part is if you look on Asian, you have for quite some time delivered very strong organic growth.
And the point is, how much operating leverage can we see that driving into the margin over a 5 year horizon? As the second question, Thirdly, how many new big cities, although not a part of the big city program have you added into China? And then finally, Cambodia, is any new status on the turnaround progress? Thank you.
Well, indeed that, hence, good morning with the question on the outlook for the full year. So you're right. That we're well underway in terms of delivering and continuing our progress and success with funding the journey. One is basically in line with our expectation. And that also means that we're continuing the journey towards delivering in line with our full year guidance.
In terms of Asia operating leverage, yes, you're right that it does help on profitability to have a higher volume growth and revenue growth clearly, but it's not something become done specifically.
Could you sorry, Hane, could you then give a little bit further insight in a different way? Can you give not in number terms, but then verbally how much are you over investing in the reading to drive growth? And how long will you or will you continue to do that, let's say, for the next 3 years?
First of all, we're not over investing in the regions at all. We are allocating with perfectly in line with sales 22. We are allocating quite a bit of our sale 22 money into the region and in particular, into into China and into India, but it's in line with our patients, and it's in line with the sale 22. And it's definitely not over investing, and it's paying off this one of the reasons why we have the strong growth we have.
Also, in regard to the Big Cities, outside our Big City program, so basically, these are the big cities indeed in China, in Western China. Sorry, it's in China. We talk about 10 cities there. And with regard to your question on Cambodia, we are working indeed on a turnaround plan, but we have not seen basically the evidence of success of that yet, but that's too early to say.
Thank you. Thank
you. Our next question comes from the line of Richard Vitagen from Kepler Cheuvreux. Please go ahead. Your line is open.
Yes, good morning, gentlemen. I've got two questions. First of all, can you talk about the dynamic of price mix, I think, especially in the Nordics and France, because if you look at your numbers you obviously mentioned in the Middle East and Turkey effect, but then also UK and Poland were weak. And I think those are where your revenue per liter is relatively low. So does that mean that your price mix in the Nordics and France is quite strong?
And is that mainly mix or is there also an element of price in there? And then the second question is on Russia, Baltika announced some new initiatives with Burger King and Terremok. Is that part of strategies that expand distribution or increase exposure to different channels in Russia and what kind of beers are predominantly sold in these outlets and what will be the impact on price mix.
Okay. With regard to the dynamics in Europe, indeed, we had a positive price mix in Nordics and in France. And if you take out the UK and Poland, we talk for Europe or about a pricemix improvement of +1 percent with regards to Baltika in Burger King, Yes, we obviously, we do want to be where the consumers consume or show, and that means as well that they use these kind of channels. It's very much on the Baltica 0. And the more Baltica 0 we sell, the better it is for our pricemix.
Very good. Thanks, guys.
Thank you. Our next question comes from the line of Woodmundy from Jefferies. Please go ahead. Your line is open.
Hi, good morning, everyone. Just two questions, please. You're keeping your your Russian market guidance have sort of flattish for the year despite Q1 down 4% to 5%. Have you seen evidence the market has improved in Q2? And then the second question is on Western Europe, where you're flagging the negative mix from Tuborg Growth in Turkey.
What was the impact of 2 bug exports on your volumes in Q1 and Western Europe?
On the first one, Well, we talked about, Q2 in Russia. Well, we had a good start on fall of April, but that's not so much issue. Our confidence is that basically we kept our share. We had a negative or a difficult comps first of Q1 2017. And a huge volume and share decline in Russia started in Q2 and basically continues in Q3.
So why we are confident to come back to more or less 0 is because we have a trust that we keep our market share and we have other comps more difficult than in Q1. Then on Tuborg Turkey, and while we are dealing there as a partner, you can imagine that we don't give specific details on that part.
Okay, thanks.
Thank you. Thank
you. Our next question comes from the line of Lawrence Wyatt from Societe Generale. Please go ahead. Your line is open.
Hi, good morning. Thanks very much for the questions. Firstly, in Vietnam, following the investment from Tybev into Saboca, wondering if you've seen any change in market practices from your competitive landscape? Secondly, in the UK, following the announcement of the Sainsbury's potential merger. I was wondering what impact do you think that might have on the UK supermarket landscape?
And thirdly, following we've had a number of months of the ABI FS merger in Russia or the joint venture. I was just wondering if you've seen any change in the competitive landscape there as a result of that one. Thanks very much.
Okay, Norman. Thank you very much. I I must admit that probably there are three times, no, no change as an answer. So in Vietnam, I think it's too early. Sabeco is basically taking over, as you know, at the beginning of the year and management needs still to come in as far as we have been informed.
So no change. In the UK, while the deal has been announced on Monday, Obviously, our teams are looking at it, but no answer on that one. And ABI efforts, we have not seen the core bind efforts in the market, yes.
Thanks. Just to confirm then on Saboca, you are expecting a management change following the type of investments?
Well, I guess if you take over the company for that kind of money, you want to run it yourself. So yes, we expected
Excellent. Thank you very much.
Thank you.
Thank you. Our next question comes from the line of Eddie Hargreaves from Investec. Please go ahead. Your line is open.
Good morning. Apologies for moving straight down into your 3rd division, but a couple of questions on Russia. One is, can you give us any sort of stir as to your expectations, around the World Cup phasing of sales profit marketing over Q2 and Q3. And just more broadly, how you expect that to pan out? Secondly, just very simply, could you say what your capacity after utilization is now at Baltica?
And then the second question is regarding Poland. Apologies if I missed it, but could you indicate what the size of your price increase has been and what the volume decline has been in that market, please?
Okay, Adi, thank you very much for your questions. In regard to the overall curve, as you know, that will be mainly played in Q2. So there will be the main activities as well, the cost. We are not the main sponsor, as you know, and we expect the main sponsor to activate a sponsorship, which may have a positive impact on their market share, but obviously, we have as well. So we're looking forward to the tournament.
The second question
What is the capacity utilization?
Of course, yes. That's between 50% 60% so that has not changed significantly because we basically produce more parts more volume. So more bottles run over the line. So in the blue house, we have a lower utilization, but on the lines, it's even slightly higher. And then I look at Peter for the 3rd question because is calculating that as we speak, and we talk about a 4% positive pricemix.
In 4% price mix in Poland. And the volume performance,
We will come as well as went down as we said, but we will come back to you later on that one.
Next question comes from the line of Frans Hoyer from Danske Bank.
This contract in Finland, was that a factor in the price mix erosion in Western Europe? And if so, how much?
Yes, it has been impacted our price mix in Europe. Frankly, I don't know how by how much now.
So small effect. Okay.
For fact, yes, it's And basically, if we move to that kind of detail, we don't have to disclose all these kind of things because the talks and as well about the contracts,
Okay. I don't know if I misunderstood your comments on the big cities effort. Are you pouring cold water on that effort, are you changing your plans on CapEx and so on in that area?
No, not at all. No cold water. The only thing is we have an early success there. We learn a lot from it, but we just want to, to basically develop that in peace And at the moment, we are going to talk too much about cities and success that will, of course, indicator competitive reactions. So that's the reason.
In terms of CapEx, we have now said that we would put a poor lot of CapEx in that. It's a asset light. But we are still firm on that big city project.
So those changes to the spending behind those efforts?
Thanks for clarifying that. Thank you.
Our next question comes from Andrea Pistacchi from Deutsche Bank. Please go ahead. Your line is open.
Yes, good morning. Two two questions, please. First one on Russia. Now I realized Q1 is a small quarter. Why do you think the market hasn't really, really improved yet there as the downsizing should now have should have played out by now?
2nd question on Vietnam and new management there. Now besides the tech timing, are you seeing an underlying improvement in the business there? And what is the new management doing differently? Thanks.
Thank you. With regard to Russia, it depends on how you look at it. If Look at it, I'm correct for the PET plan. You could argue that the market is stable, which is already very different from in the past. So in that respect, we don't feel that it's a negative news on Q1 with regard to the market development.
On Vietnam, yes, we have new management. We see improvement, basically in almost all the levers on the business with regard to how to run a business operationally. So we have renewed some of the contracts with wholesales and distributors. We are improving our distribution we are moving to better price segmentation and the disability in the market. So we see there a good impact of the new leader in Vietnam.
Can I sorry, can I just on Russia? So you're saying that the PET, the downsizing is still having some sort of tail end effect. It's not complete in Q1, it wasn't completely in the base yet.
Yes, you know, the big changes in Q1 2017, I mean, now, hovering against Q1 last year. So there is some impact in Q2, we expect that there was no any, let's say, impact of PET anymore, and then we see better underlying development of the markets. Thanks very much. Can we have the last question please?
Absolutely. The last question from the line of Simon Hales from Citi. Please go ahead. Your line is open.
Can I just ask about your full year guidance I appreciate that obviously the Q1 performance was in line with your expectations, but I wonder whether the mix of delivering Q1 was different to what you expected sort of 3 or 4 months ago, I? E, it was better in Asia and a little bit tougher than you thought in Europe. If that is the case, How do you think about the full year mid single digit organic EBIT growth guidance? Are you expecting a little bit more now perhaps from Asia and a little bit less? Than Europe than you expected 3 months ago?
Thank you, Simon. I think that's an excellent question for Henrik.
Yes. So you're right. In Q1, said before was in line with our expectations overall, it's clear when you look at the mix, there are some different elements into it. Us in our profitability and in our mix and in our volume and in our revenue. We do not comment specifically on the individual sort of elements of the full year guidance.
So basically, full year guidance remains a mid single digit growth in operating province, a lot of moving parts, some pluses and then some minuses. And it's basically our task to make sure that that negatives are balanced off against positive so that we whenever we see group ends and there is a lot of movement that we initiate GAAP closing plans, and that's what we do. So overall, confirming our full year guidance.
Okay. Thank you.
And with that confirmation of the full year guidance, we concluded the call. This was the final question for today. You for listening in and thank you for your questions. We're looking forward to meeting some of you during the coming days weeks. Have a nice day.
Thanks a lot.