We are about to hand over to Unilever to begin the conference call. For those participating in the teleconference, you may indicate your desire to ask a question at any time during the presentation by pressing star one on your telephone touchpad. Should you wish to cancel your question, simply press star two. If you need to speak to me, press star zero. To ensure all participants receive a high-quality audio experience, please ensure you are calling from a landline telephone and not a mobile phone. Please avoid using a speakerphone to ask your question. Use the telephone handset to minimize background noise. If you experience bad quality audio, then please try redialing. We will now hand over to Richard Williams.
Good morning. Welcome to Unilever's full year results. I'm pleased to be here with our new CEO, Alan Jope, and our CFO, Graeme Pitkethly. Alan will kick us off, and Graeme will cover the results in detail before Alan gives us his reflections on the year ahead. We expect the prepared remarks to last for no more than 30 minutes, leaving plenty of time for Q&A. First, I draw your attention to the disclaimer to forward-looking statements and non-GAAP measures. With that, I'll hand over to Alan.
Thanks, Richard. Good morning to everyone who's on the call. I must say, I am pleased to be here for my first results call since taking over as chief exec of Unilever at the start of the year. Especially so with a solid set of results to report. It's been a busy month so far. I've been out meeting with many of our investors and look forward to meeting many more in the days ahead. I guess, as you'd imagine, I'm in very active listening mode at the moment to shareholders, of course, and also to other stakeholders in our business, including customers, our employees, business partner, government, and so on. I'll give a few comments on the overall shape of the full -year results, then I'll pass over to Graeme, who will cover them in a lot more detail.
As Richard said, I'll then wrap up with some fuller reflections on what we see as the priorities for 2019 before we open the lines for questions. We delivered 3.1% underlying sales growth, excluding spreads last year. This was led by our emerging markets business and in particular, Asia. Volume made up two-thirds of the growth. As expected, pricing increased through the year as we saw commodity prices biting. I should mention that with Argentina becoming hyperinflationary, we've removed all the price growth of Argentina from our underlying sales growth number since the start of quarter three. Graeme's gonna deconstruct the Argentina effect in more detail in a moment because it has a big impact on our results.
Our margin delivery continued very strongly, up 90 basis points in current currencies, which has brought our underlying operating margin up now to 18.4%. I'm pleased to say that this was led by good gross margin performance and tight control of overheads, and that was driven by our flagship savings programs of 5S, zero-based budgeting, and our restructuring efforts. The growth and margin that I've just mentioned translated into underlying EPS being up by 12.8%. That's at constant rates and 5.2% in current money, with associated strong cash flow. The underlying cash flow performance was better than this headline figure shown, and that's because of a significant working capital adjustment that relates to the sale of our spreads business, which Graeme will talk you through in a second. These results are solid.
They demonstrate our ability to continue to grow profitably and keep delivering in very challenging market conditions with increased commodity inflation, currencies devaluing all over the place, and a few significant challenges in important countries for Unilever along the way. Let me state, however, up front that accelerating quality growth will be my number one priority. We still have many untapped opportunities to keep developing our markets and bring purpose into all of our brands, and that'll translate into more opportunities for growth right across our considerable geographic footprint. With that, Graeme is going to now take you through the detail of the results, and I'll give you some more reflections and comments on the year ahead. Over to you, Graeme.
Thanks, Alan. Good morning, everyone. We're still in January, so I guess I can still say Happy New Year to you all. Let's start by looking at the scorecard of our priorities for 2018. This is the same scorecard that we showed you back in April, actually. We completed the integration of Foods & Refreshment into a single operating division based in the Netherlands. That integration has gone well, and it is yielding the planned cost and innovation synergies. For example, gaining cross-category insights to address consumer trends in areas like naturals. In the middle of the year, we completed the complex disposal of spreads, and we're making progress to tackle the restructuring of stranded costs.
With our C4G organizational change bedding down well, we're seeing the benefits in a stepped -up innovation rate, launching 18 new brands in 2018, improving our speed to market for local innovations by up to 50%, and rolling out locally developed innovations to more markets. That's good progress, but nevertheless, we think there is further opportunity here to accelerate growth and step up our competitiveness.
Our focus on tackling non-value-added costs through the ZBB and 5S programs has continued to help us deliver the strong margin improvements this year, and there's still plenty of headroom for more. We completed the share buyback of EUR 6 billion at the end of November, which returned cash to shareholders following the spreads disposal. This means that including dividends, we've returned over EUR 10 billion to shareholders in 2018. Two other important events in 2018 were the announcement to acquire the health food drinks portfolio of GSK, primarily in India.
That's been approved now by the Indian Competition Commission and the acceleration of our digital transformation, which we talked through in detail at our investor event in December. Let's move on now to our markets. Currency devaluation was a feature of 2018 across many of our emerging markets, impacting consumer purchasing power, in particular in markets like Brazil, Argentina, and Turkey.
Commodity costs rose during 2018, although crude fell back in the last few weeks of the year. We expect commodity costs to continue to be higher in 2019, albeit with a better outlook than we saw at our Q3 reporting. The news, of course, continues to be dominated by economic and geopolitical uncertainty, whether that's coming from real or threatened trade wars or uncertainty in government or popular protests. This is the new normal, and the impact on consumers requires a rapid and effective local response from our brands. We have more than enough experience and knowledge in our local operations to manage this for the long term, but there will undoubtedly be some bumps, such as what we saw with the Brazil transport strike of 2018 or the trip into hyperinflation for Argentina in the second half.
Now, this chart shows our quarterly trend and full -year performance for volume and price. Our full -year growth, excluding spreads, was 3.1%, with 2.1% from volume and 1% from price, which picked up, as we expected, in the second half. Full -year volume delivery is ahead of the market, which we're pleased about. Asia/AMET/RUB has undoubtedly been our standout performer for the year. This was led by India, which posted double -digit growth every single quarter, and reinforced by key growth markets like Pakistan, Bangladesh, Turkey, and the Philippines. The impact of removing all Argentina price growth from our reported underlying sales growth in the second half was a 50 basis points drag on the full year. In terms of channels, e-commerce continues to grow around 40% like for like, with turnover up 50%.
We also continue to grow well in discounters, delivering mid- to high single -digit growth across developed markets. In Q4, underlying sales growth was 2.9% against quite a strong comparator. As we expected, price growth picked up at 2.1%, and that had some impact on volume. Our price increases were broad -based, but in high -inflation countries such as Argentina and Turkey, we've seen significantly lower volume as consumer purchasing power falls in the context of some very substantial price increases. For example, our Argentina volume in Q4 declined by over 20% with price increases of over 60%. We can expect this to continue throughout 2019 as we manage this business through a tough economic situation.
One of Unilever's enduring strengths is in emerging markets. They now account for 59% of our turnover, with indeed about 75% of that in Asia, where there was a really strong performance, as I said, in 2018. Emerging markets' growth was impacted by a much slower performance in Latin America. When we look in the aggregate, our emerging markets' volume growth has increased now for the third year straight. This is encouraging, particularly as Brazil, one of our largest businesses, has seen two improved quarters of growth even after neutralizing the impact of the transport strike last year. Let's take a little look at our divisional performance. Beauty and personal care grew by 3.1%, with 2.5% delivered through volume growth. There was a step up in pricing during the second half of the year.
Skincare and skin cleansing delivered mid-single -digit growth. Dove, our biggest brand, grew by 7% with innovations such as the Dove Botanicals range and Anti-Stress Micellar Water, with market development driving the growth. Actions to shift our portfolio to faster -growing segments are working. Our prestige unit grew by 11% with good performance on all of the six brands. Strong innovations are supporting the growth, with Dermalogica launching BioLumin-C Vitamin C, Hourglass launching Caution Mascara, and Murad launching Water Gel. Dollar Shave Club ended the year with double-digit growth. We've continued to launch new brands such as Korea Glow and Purify in China, which was developed in direct conjunction with Alibaba. Korea Glow has been launched with an eight-episode web series in the style of a Korean drama, a great example of content -driven marketing. Home care grew by 4.2% with balanced volume and price.
Growth was broad based coming from fabric solutions, fabric sensations and home and hygiene. Home and hygiene itself saw strong volumes across Asia, with our hand dishwash brand , Sunlight, developing the market through innovation and a relaunch across Southeast Asia. In fabric solutions, we saw strong performance in India, in China, and in Turkey. We launched a new OMO with recycled plastic packaging and natural ingredients across several of our markets. In Fabric Sensations, we continue to see high demand for softeners and fragrance in the emerging markets. Comfort had yet another good year, helped by the launch of Perfume Deluxe, an ultra-concentrated range across Southeast Asia and Europe. Our air purification unit, Blueair, declined sharply in China during 2018 with improved air quality in the major cities, leading to significantly lower demand. This was a drag on Home Care growth of nearly 100 basis points.
Foods & Refreshments, excluding spreads, grew by 2.3%, with 1.6% from volume. Ice cream grew by 5% with growth across Europe and Asia. Innovations such as Ben & Jerry's non-dairy and low-calorie products build on the health and wellness trend. Knorr grew by 2% in 2018, with double-digit growth in on-trend snacking as we rolled out mini meals across Europe. This was boosted by new brand launches in the snacking space, such as Red Red and PrepCo. Tea growth was modest in 2018. We had good performance in emerging markets, particularly with Brooke Bond in India. In developed markets we had good growth from Pukka and our new Lipton organic range, but that was offset by challenges in black tea. Pukka itself grew by around 20% in 2018, most of it in the U.K.
We continue to evolve our food portfolio into the natural space with products such as Knorr Organic Bouillon. We are further evolving and building scale in emerging markets through our planned acquisition of Horlicks and Boost in India and other markets. Let me turn now to our regional performance. The full-year performance in Asia/AMET/RUB was strong with 6.2% underlying sales growth. This was led by India, where you may have seen we reported double-digit Q4 volume-led growth. Strengthening the core and leading market development has enabled us to grow strongly across all divisions in India. In China, our full-year performance was strong, with Fabric Solutions, Fabric Sensations, Refreshment, and e-commerce doing particularly well. Carver had strong like-for-like performance in the year, but the fourth quarter was impacted by changing regulations in the daigou trade.
In our big market of Indonesia, we finished the year with much improved momentum, growing mid-single digits through the second half. Turkey, which has seen strong growth for many quarters, had a bit of a weaker Q4 as consistently high inflation started to impact consumption and hence volumes. Latin America was certainly our most challenging region in 2018. Looking at the quarters here, you can clearly see the impact of the Brazilian transport strike in the second quarter, which moved volumes out of Q2 and into Q3 and Q4. The full year was greatly impacted, of course, by the removal of all Argentina price growth from Q3 onwards and the consequent drag on volume. Brazil, in particular, had a stronger finish to the year with recovery from the transport strike and also landing price increases.
We continue to grow ahead of the markets in the key countries of Brazil and Mexico. Hyperinflation in Argentina has had a severe impact on consumer purchasing power. That deserves a slide all on its own. You recall that in Q3, we told you that we'd be removing all Argentinian prices from our headline USG number. We would continue to be very transparent and detailed with you about the Argentinian numbers and their impact on reported Unilever growth. The step-up in price in Argentina in both Q3 and Q4 reflects general inflation in the country. You can also see the significant impact that that high pricing is having on Argentinian consumers, with their volume declining by over 10% in Q3 and by over 20% in Q4. They are the dark blue blocks on the pillars there.
The negative volume effect is still included in our reported growth. That has depressed volume growth at a global level by 30 basis points for the year. The removal of pricing from Q3 onwards reduced the full-year group USG by 50 basis points. Despite the volume impact, we've continued to price as necessary. While the environment will remain difficult for some time, we're very confident that our business in Argentina will come out stronger. We have been asked what the growth would look like if we included, let's say, a normalized level of Argentinian pricing, say around 2% per month. If we applied this from Q3, it would add back 20 basis points to the global Unilever USG number. Turning to North America, full-year growth in North America was 1% excluding spreads, mostly volume -driven with Q4 at 0.4% USG.
We had a strong performance from deodorants and skin cleansing following renewed purpose campaigns on Rexona and Dove innovations using micellar water. While it's not yet in the underlying sales growth, our natural deodorant acquisition, Schmidt's, is growing over 100% as it gains listings in many additional grocery retailers. Our Home Care business has performed well in the U.S. with the natural brand Seventh Generation growing double digits, and following the success of Love Beauty and Planet in beauty and personal care, we've now launched Love Home and Planet in North America, which has started well. In Foods, we saw a stronger performance in savory. Dressings continue to face strong price and promotional competition. Our growth in Foods was low single digit, but this is competitive versus other North American food players in what is a very heavy promotional market.
As mentioned before, we took list price increases in Q3, but we increased our promotional investment in Q4. In Europe, we finished the year at 0.9% USG excluding spreads, and that was delivered through volume growth, though in Q4 growth, it was price-led as we lapped a heavy promotional Q4 in the back half of the year 2017. We're pleased to be back to growth in Europe with ice cream having delivered strongly off the back of innovations and warmer weather in Northern Europe, the U.K. doing well in foods and beauty and personal care, and CEE delivering across all divisions and all markets. The retail challenges continue across Europe, particularly in France and Germany, as I'm sure some of you will have seen reported. Turnover for the full year was EUR 51 billion. Underlying sales growth added 2.9%, including spreads.
M&A decreased turnover by 1.1% following the disposal of spreads and acquisitions such as Carver and Quala. Currency translation reduced turnover by 6.7%. This was mainly due to the weakening of key emerging market currencies such as Brazil, Argentina, and India. The impact of foreign exchange has softened through the year. Based on the latest spot rates, we actually expect a positive currency impact of around 1% on turnover and EPS in 2019. Coming to the underlying operating margin, we delivered an increase of 90 basis points to 18.4%. Savings programs and improving mix from higher beauty and personal care sales continued to drive gross margin, which increased by 50 basis points. 10 basis points came from brand and marketing investment, though our spend was up by EUR 60 million in local currencies.
Most of that increased spend was in beauty and personal care, where the majority of the increase was on media and point-of-sale activations rather than advertising production costs. We saw a 30 basis point improvement from overheads. Overall, we've delivered over EUR 2 billion of savings in 2018, with about two-thirds from supply chain and one-third from BMI and overheads. Putting all that together, underlying earnings per share increased by 5.2% in current rates and 12.8% in constant rates. Operational performance, the combination of growth and margin, contributed 8.1% to earnings. The 2018 share buyback and the carryover of the 2017 share buyback had a 4.4% impact on 2018 EPS, and we expect a further 2.8% impact of the 2018 share buyback to flow through into 2019, mitigating earnings dilution from the spreads disposal.
Cost of financing net debt was slightly higher after adjusting for the preference shares in 2017, with the increase being driven by an increase in debt offset by lower interest rates. We expected the interest rate on net debt to be around 3% in 2019. Our underlying tax rate was 25.7%. That was a small reduction on 2017's 26%. Looking ahead, we expect our tax rate over the medium term to continue to be around 26%. Currency movements, as you can see, decreased EPS by 7.6%. Turning to the balance sheet, free cash flow of EUR 5 billion was impacted by FX and higher working capital. Within working capital, EUR 0.4 billion of the increase relates to the disposal of spreads. That was fully compensated by an increase in the proceeds that we received on disposal. Our overall cash conversion sits at 96%.
A return on invested capital of 18.8% is broadly in line with last year. Looking out to the future, IFRS 16 on lease accounting applies from the 1st of January 2019. We're working through the impact of this. We do expect a small increase to underlying operating profit and a small decrease to ROIC as a result. Our net debt sits at 1.9 x EBITDA. We expect to continue to maintain this level of leverage. We've returned EUR 10 billion to shareholders in 2018 with EUR 6 billion of share buybacks and EUR 4 billion of dividends. With that, let me hand you back to Alan.
Thanks, Graeme. I think you've earned a glass of water after that long stint. Look, as you've seen, we did have a solid performance in 2018, but with , frankly, more to do on growth to get consistently into the middle of that 3%-5% range. I want to talk a little bit more about the kind of growth that I'm going to champion, which is quality growth. You'll consistently hear us reference the 4G growth concept that we've used before. We want to deliver consistent growth, competitive growth, profitable growth, and responsible growth. To have consistent growth, we need to use the breadth of our portfolio to avoid or minimize the impact of one-time shocks. Competitive growth is simple, growing ahead of our markets.
Profitable growth is going to require that we get the right balance of price and volume mix in any period, as well as keep delivering strong savings and efficiency programs. Finally, our growth will, of course, be responsible, which means putting purpose at the center of our brands and making continued progress on the ambitious environmental and social goals that we set out in the Unilever Sustainable Living Plan. Unilever's commitment to responsible business goes back to the very founders of the company. As a matter of interest, it was 130 years ago this year since William Lever boiled his first commercial batch of soap. He talked about things like making cleanliness commonplace, lessening the load for women.
I'll be proud to carry this legacy forward, putting purpose at the center of our brands. Making sure that all of Unilever's leaders are equipped to lead for sustainable living and ensuring that our winning business strategy and sustainability agenda are completely integrated. It is not purpose ahead of profits. It's purpose that drives better profits. Of course, as the clock speed of the world continues to pick up, the speed and agility in Unilever must also accelerate. We'll be beating the drum a little bit faster to make sure that we build new capabilities at a pace that allows us to remain future fit. Speed and the skills needed for a digital world will become a hallmark of Unilever. High quality of growth, of course, will always be our top priority, but we remain confident in our ability to continue to deliver sustained growth and margin improvement.
Underlying operating margin has already improved to 18.4% from 16.4% in 2016. There's more to go in the business, and we can see a very credible path to the 2020 underlying operating margin target of 20%, and that's why I reconfirmed our commitment to that goal at the investor event that many of you would've been at in December. Let me confirm now our guidance for 2019. Basically, we expect underlying sales to be in the lower half of our multi-year 3%-5% range. Of course, we'd prefer the top half of the range, but in the current uncertain market conditions that Graeme talked about, the lower half is where I expect us to be operating next year. Our acquisitions will continue to contribute to accelerating growth through 2019, though they will again be impacted by the drag from Blueair.
As Graeme and I have stressed multiple times, there's opportunity through further stepping up Unilever's speed and agility in our execution. We're going to continue our progress on the underlying operating margin through our relentless focus on saving programs and restructuring investments to take out costs. This is what will fuel continued competitiveness in the levels of our brand and marketing investment, as well as driving our bottom line. We're going to target another year of strong cash flow while maintaining roughly our current level of gearing. Thanks very much for your attention. That's the end of our prepared remarks, and now we're going to throw it open for some questions. Richard?
Okay, thank you, Alan. As a reminder, if you want to ask a question, please press star one, and if you wish to cancel your question, press star two. If you're listening to the conference on a speakerphone, please use the handset while asking a question. Finally, please keep your questions to a maximum of two. Right, we have the first question coming in from Alain Oberhuber from MainFirst. You want to go ahead, Alain?
Yes. Thank you much, gentlemen. Alain Oberhuber, MainFirst. All the best to you, Alan, also for your new job. Congratulations. I have two questions. The first is regarding the outlook you gave, which looks like a little bit on the lower side versus consensus. Could you give us a little bit more insight regarding the volume growth rate or pricing? Is it more on the volume growth rate you're more concerned? Second, which markets could be softer at the moment compared to 2018? The second question is just regarding net working capital. Could you give us a little bit of a highlight there if we could see a similar development of networking capital as we've seen in 2018? Thank you very much.
Okay. Thanks, Alain. Also, thanks for the best wishes. Yes, you're right. We have guided in the bottom half of our growth range for next year. We have shown through 2018 that we're able to balance the business between volume and price, really dependent on what's happening with input costs. Far be it from us to try and predict the future in too much detail in 2019. We're going to stick with that 3%-4% overall growth. I think for us to move up into the top half of our guidance range, we would need to see a sustained recovery in Latin America and continuation of the progress that we're seeing in Southeast Asia. As Graeme mentioned, we don't think that the Latin American issues are going to right themselves in the short term.
If I had to give one single reason why we're keeping on the conservative side for guidance on growth, I think it's because of Latin America, and to a lesser extent, the Southeast Asian markets. On the question about net working capital, maybe Graeme can come in on that one.
Yeah, sure. Hi, Alain. If I could just step out for a second and just talk maybe about the free cash flow result, because the headline number of EUR 5 billion, I made two adjustments to that before I compared it with last year's delivery. The first is to add back the EUR 400 million of basically the negative working capital that we sold on with the spreads business, for which we were fully compensated in an increased purchase price, and that just happens to be reported in a different line of the P&L. That's the first adjustment. The other one was EUR 300 million of foreign exchange. My like -for-like is sort of EUR 5.7 billion of free cash against EUR 5.4 billion last year. That's the first point. Within the working capital, we still get really healthy working capital. We're at -5.7% of turnover.
There were one or two adverse impacts this year. The first one is that EUR 400 million adjustment, which, as I said, is nothing really because we're fully compensated in cash for that, so set that to one side. After that, there has been about it.
Just under half a billion EUR increase in inventory. That is really due to some specific strategic decisions that we've made to mitigate some specific factors in this topsy-turvy world. We're building stocks for Brexit, obviously, and assuming the worst -case scenario there, which is a buildup. Similarly, around sanctions and other things. We also, with the restructuring investment we're making, obviously have a lot of that restructuring investment focused in developed markets in some of our bigger businesses in Europe. We're restructuring to take out the stranded costs of spreads. We had big spread businesses in some of our European markets. To do that involves increasing some stocks strategically as we're undertaking those restructuring projects, just to make sure that we've got buffers there as we land the restructuring, et cetera.
The final driver is the increased complexity of our portfolio because, as we've said, there are a lot more specifics and many new brands coming into the portfolio, and that's having an impact as well. We also saw some debtor increases in some of our challenging markets in Latin America and Turkey, and obviously, there we have to be very disciplined and keep an eye on the levels of debtors. Alain, they are the main drivers.
Okay, thanks. Thanks for the question, Alain. If we can move to our next question, it will be from Richard Taylor from Morgan Stanley. You're on, Richard.
Good morning. Richard Taylor here. I'd like to dig into a little bit more about how you're thinking about your priorities. You said accelerating growth is your number one priority, but you've inherited a pretty challenging margin target of 20%, which you've committed to now twice, I think. How should we think about those two things together in terms of people at Unilever on the ground making a decision between the two? I suppose I'm particularly interested in respect to investment behind brands and businesses.
Thanks, Richard. Well, let me use this as a third occasion to commit to our 2020 margin target. I think it's important to explain why you can hear a relaxed tone on our margin target commitments because we've got these flagship savings programs deeply embedded in the business. At a granular level in our company, people are working on the 5S Program, net revenue management, ZBB and restructuring projects, and those are kicking off EUR 2 billion a year, and we see that continuing into 2019. When you've got EUR 2 billion of new money coming out of your efficiency programs, as a rule of thumb, we're able to put two-thirds of that back into our brand and marketing investment or upskilling our people, and one-third trickles down to the bottom line.
Looking at our BMI changes, you have to factor in the underlying savings that are flowing into that line as well. I would say that the efficiency programs are super well embedded into the company, and I've got high confidence of those continuing. The reason why I'm calling internal and external growth our number one priority is because that's where all the uncertainty is. Markets are extremely dynamic; there are changes happening in our business model. Our old mass -market model of driving consumer goods with mass brands sold in mass channels through mass distribution systems and mass media is really being complemented by a very different type of marketing, where we put purpose at the center of our brands.
We create content rather than advertising, we use data and targeted digital marketing to get those messages to the right people at the right time. Unlearning the old ways of doing marketing and relearning the new ways of doing marketing is actually a bigger challenge and a bigger change than the savings programs that are underway right now. That's why I'm calling out quality growth as our overall priority, because it's going to stimulate the business to put the attention on those change areas that are so important in this madcap dynamic world that we're doing business in. Sorry, a bit of a long answer, but it was a good question, and I wanted to flesh it out a little bit.
Okay. Thanks, Alan. Thanks, Richard. Next question from Celine Pannuti at JP Morgan. Go ahead, Celine.
All right. Thank you. Good morning. I have two questions. The first one is to go back on the outlook. I understand the outlook takes into account a slightly lower market growth because of LatAm and Southeast Asia. At the same time, usually, and I think you put it yourself in your slide, you can outgrow the market. Your target is to outgrow the market by 1%, plus you should have more benefit from the acquisition kicking off this year in 2019. Now, I understand there is Blueair, but there should be about 2% of room above the market. What is it in those 2% that is not really delivering as expected for you to deliver more than the market? Would it be fair as well, given the comparison, to say that maybe your year would be into half and maybe more H2 weighted?
My second question is also on your priority, Alan, to accelerate growth as the number one priority. I was wondering, given that it's two years in a row now that A&P as a percentage of sales has been down, if we hear from your competitors that they are increasing that level. Do you see any link between the fact that you have lower your A&P and maybe growth is coming a bit short of expectation? Thank you.
Right. Let me try and decompose our guidance for next year a little bit. We think that markets are bumping along at probably somewhere between 2.5% and 3% real growth at the moment. We're not confident calling that up for 2019. Specifically on acquisitions, we're going to see the M&A. We will see, of course, the positive impact from the spread's disposal. That's probably about 40 basis points. Blueair's under-delivery means that we're going to be more in the 50 or 60 basis points impact from acquisitions and disposals than the longer -term 100 basis points that we've talked about in the past. The second big change is, at the moment, we've got about 50% of our business in situations where we're winning market share. We have the ambition to get that back to 60% business winning.
When we do those two things, we enjoy 2.5% market growth, a contribution from M&A of, I don't know, 60 basis points or so, and get our percentage of business winning up to around 60% of our portfolio. That squares with guidance in the 3%-4% range. I do hope that the emerging markets pick up through next year, but hope's a lousy strategy, and we're trying to give you as straight a call as we can. I think you might be right. It might be that through this year, we accelerate our growth. That remains to be seen, and we certainly got stretching internal goals for the first half. As far as the link between A&P and growth is concerned, Celine, we watch the competitiveness of our spend like a hawk.
It is getting more difficult to measure because of the fragmentation of media channels, but all the measures that we have access to would indicate that we're investing in our key brands and the key sales at exactly the right levels. We're not overspending and we're not underspending. 10 basis points up or down on BMI, as reported, is actually relatively trivial to the underlying investment that's going into our business when you factor in the ZBB savings that are coming through in that line. Perhaps at some point we should have a conversation about all the moving parts in BMI, but we believe that the reinvestment of savings, and a small swing of 10 basis points here or there, is allowing us to remain strongly competitive on the investment we're putting behind our brands.
Okay. Thank you, Celine. Our next question comes from James Targett at Berenberg.
Hi, good morning. James Targett here. Just a couple questions. Firstly, on a couple of factors affecting organic growth. Just maybe could talk about the U.S. I appreciate you've had tougher comps in Q4, but generally, I think the impression is that category growth is improving in the U.S., which doesn't necessarily feel reflected in your numbers. Also, on the organic growth, you've called out Blueair. Could you remind me when you lapped that comp, and are you expecting continued declines, sort of after you've lapped that comp? My second question is on buybacks. You've still got the 2x leverage target. I just wonder what your thoughts are for buybacks this year. Thanks.
Graeme, shall I talk about the U.S., and you can handle the buybacks question?
Sure thing, yeah.
James, Nielsen is indicating around 1% growth in the U.S.; we think that there's probably another 50 basis points of growth in non-Nielsen -tracked channels. All of our growth is coming from beauty and personal care in North America. That's basically it; that external picture is what I think is going to continue into next year. I think we should be restlessly dissatisfied with 1% growth in North America, and we should be looking at getting that into the 1%-2% range. That seems to be consistent with what the market's doing. If we can make sure that our growth is competitive, then we'll be in good shape. You mentioned declines. We don't see declines. We see North America growing 1% last year with the same balance of volume and price, interestingly, as total Unilever at a global level.
Of course, we have the ambition to get that up into the 1%-2% zone, in particular by going after some of the unmeasured channels that we don't see reported in the Nielsen growth rate. On buybacks, I'll hand over to my financial specialist colleague sitting next to me.
Thanks, James. First thing to say, I think, is that there's really no change to the way we think about capital allocation and prioritization in the business. As we've said many times, our priority, and we think this is what the owners of the company want, is that we would invest in the business for the long term. Try and improve our portfolio; try and position ourselves where our consumers are so we can continue to access growth long into the future. Our main priority is to maintain that sort of strategic flexibility for accretive acquisitions, and that is simply our bolt-on strategy that we've been executing. Of course, we shifted the leverage last year up to 2 x net debt to EBITDA. We're sitting at 1.9x now, which is broadly there.
The way to view this, I think, is we're looking over the long term to broadly be around that 2x leverage level. The extent to which we don't execute as much M&A, and it's impossible to forecast M&A for us and for you, of course. To the extent that we're in that situation and we don't have those acquisitions, I think we would, of course, return the cash through share buybacks to get back down to that leverage level. Or back up, I should say, to the leverage level of 2 x net debt to EBITDA.
Okay, thank you. Next question is from Alan Erskine at Credit Suisse. Go ahead, Alan.
Good morning, guys. Two questions from me. One, just going back to the impact from acquisitions. I think in 2017, with the acquisitions that you'd made, the like-for-like growth was 16%. You've given us the impact of the prestige businesses being +11 in 2018, but across all of the acquisitions that you've made, can you give us the like-for-like growth in 2018? Just to follow up on an earlier question, I was under the impression that Blueair had pretty much halved in terms of revenue in 2018 and was now down to only about EUR 100 million. Can it really have much of an impact, going into 2019? My final question is just on Argentina. Obviously, Unilever's been through a number of these devaluations over the years.
Can you give us some indication as to what you think volume growth in Argentina will be in Q1 in the first half? Should we take the -20% from Q4 and just carry that over, or how do you see that trajectory going through FY 2019? Thank you.
Yeah. Hi, Alan. Let me deal with the last one first. It's pretty straightforward. It's a reasonable assumption that the impact on the Argentinian economy and the pricing that we're having to put through in local currency there will continue to impact volume somewhere in the order of magnitude that we're seeing in Q3, Q4. I think it will be in the 10%-20% zone, negative volume growth in Argentina. On impact from acquisitions, well, let me give you two numbers. The first is that, collectively, all of the deals that we've done over the last three years are growing at double digits. We've got Prestige growing double digits; we've got Dollar Shave Club growing double digits; we've got Carver Korea growing double digits. Yes, collectively they're up into double digits.
Blueair is a problem. We've not seen the end of the problems with Blueair because it really kicked in from Q2 last year onwards. We've got at least a third of the coming year where we're lapping decent growth on Blueair in China last year. We're going to have to find a way of swallowing that. We're not at the end of the road on having to cover declines on Blueair yet.
Alan, about how Blueair plays into the forward outlook. You're right on the size of the business. The business was just over about EUR 100 million when we bought it back in 2015. It then doubled in a two-year period and has then halved again in a one-year period, and it's back around about EUR 100 million again. Against that 100 basis points that Alan mentioned earlier, of course, when we made that estimate, the business was twice the size that it was today and was growing at very substantive rates. Although the impact isn't the impact on the market growth, it's the impact on that expectation we had when we sized 100 basis points. Okay. Thank you very much. Next question is coming from Jonathan Feeney at Consumer Edge. Go ahead, Jonathan.
Good morning. Good morning. Thanks very much. I guess it's one question in two parts. Could you comment about the development of your online e-commerce business globally? Any sizing growth metrics? Sorry if I missed that. Would love any comments on how that developed over the second half of the year. Specifically within that, you made a comment that Dollar Shave Club ended the year growing double digits. At the time you did that transaction, I think a lot of us were looking for it to maybe be a lot about learnings and a lot about not just selling a lot of razors but a lot about learnings and developing that online channel in North America. If you comment specifically about that, its progress, and the opportunity there, I'd appreciate it. Thank you.
Right. Jonathan, a great question area, I must say. Our e-commerce business now represents just over 5% of Unilever. Last year, we saw 50% growth in our e-commerce business, which is, of course, ahead of the global e-com market growth. For the avoidance of doubt, it is a very high priority for us to maintain accelerated growth in that channel. That especially includes Asia, actually, where we're seeing e-commerce as a relatively large part of our Chinese business and growing very quickly, even in markets such as India, a very important market for Unilever. As regards Dollar Shave Club, we're really pleased with the development of the business there. It's growing double digits. We have made very good progress on taking it from cheap razors to a full male grooming brand.
I'd encourage you to join the club, and you can enjoy the tremendous range of hair care, skin care, and general male grooming products that are available. We've learned an awful lot about direct. In fact, we've stopped a lot of wasted effort on direct consumer business models. My own view is that with the technology that's available right now, direct -to-consumer really makes sense when either you can have a recurring revenue from a subscription model, a la Dollar Shave Club, or you can have a very high single basket with good margins, such as with our prestige business. That's where direct -to-consumer is a big part of the business. Selling one bar of Dove soap direct to consumers online is not an attractive outlook for the future.
I think what we've realized is that international expansion of Dollar Shave Club is definitely possible but not straightforward because each market has its own characteristics, its own consumer habits and insights, a different competitive context, and a different way of delivery to people's doors. I'd give us a green on overall Dollar Shave Club growth, a green on evolving to become a full male grooming brand, a bright green on learnings, and probably a yellow on international expansion. There you go. There's a pretty detailed decomposition.
Okay, thank you. Next question is to Martin Deboo at Jefferies. You're on, Martin.
Morning, everyone. It's Martin Deboo at Jefferies. Thanks very much. I'd like to take the debate sort of down from the top line to the bottom line, particularly in H2. Graeme, can I just understand, and sorry if I missed this in the detail on the call, what the spread dilution was in H2? My presumption from the way you've reported the moving parts of margin is that the spreads' effect is somewhere buried within those individual line items of GM, A&P, and overhead. Sort of broadening the question and touching on some of the themes Celine introduced, A&P was down 40 basis points in H2. In fairness to you, I think you've guided it to being down. Presumably, spreads are dilutive to A&P.
If we X spread out, it feels to me as if underlying core A&P could have been down more, which just goes to this question of why, when markets are slowing on you, there was disinvestment in A&P in the second half? Are you worried about what that does for your momentum into 2019? Thanks.
Hi, Martin.
Graeme, you take the first part.
I'll take the first part. You take the A&P part again, Alan, yeah. In the construct of the H2 margin performance, Martin, there wasn't any impact in there from the spreads. I guess your question is around the underlying impact on the shape of that. Overall, what we said with spreads is that we're battling 30 - 40 basis points, last year and this year, in the margin line from exiting spreads. We've been working away diligently on that by investing our restructuring money in order to get there. It's not really possible for us to identify, in retrospect, specifically how we're doing against that other than in aggregate, looking at what I think is a very strong margin delivery and a good step forward, particularly in the shape of the margin coming in through the GM.
There was, as you say, a relatively low rate of BMI spend in spreads. It was somewhere between EUR 100 million and EUR 150 million, if memory serves. In the half year. Let's pass back to Alan for this fundamental point around sufficiency of brand and marketing investment because I think we really do have to get into the detail of where that money gets spent.
Yeah. Martin, I don't want to open up a whole new discussion, but I can't avoid going in the following direction, which is we're now in a position where more than 35% of our media spend is on digital channels. Actually, it turns out that when you're shifting directly and aggressively into digital, the constraint is not money in the BMI line; it's people to run the digital campaigns. We're building around the company these digital hubs with a whole new set of skills around the table. The ability to manage content-driven, highly targeted, data-led campaigns needs new people with new skills. At the same time as we've taken out a lot of roles in our supply chain, we're actually adding back heads in the marketing space.
In a way, there is a shift from BMI into overheads to manage this new digital marketing world. If we think for one second that our brands are being undersupported and that our BMI is insufficient, then we will react, and we will prioritize growth and sufficiency of brand investment ahead of the bottom line. We just don't think that's necessary right at the moment.
Okay. Thanks, Alan. We've only got a few minutes left. One, possibly two more questions. Next one is from Guillaume Delmas from UBS. Go ahead, Guillaume.
Good morning, gentlemen. Couple of questions for me. The first one is, during your presentation, you mentioned that most of the increase in BMI was in the Beauty and Personal Care division. Looking at the growth of some of your European and U.S. competitors that have reported so far, it looks like you've been growing this year broadly in line, maybe slightly below category growth. My question would be, are you happy with the returns you got on these incremental investments? Would that suggest that there is an increased cost of doing business in the beauty care area? Second question is on emerging markets in X Latin America. We've still seen a strong performance, but a sequential slowdown compared to Q3. We've seen good numbers from Hindustan in Q4. What is driving that slowdown?
Is it a couple of air pockets like Turkey, or is it more broad -based?
Okay. The first thing I would say is we believe that the business in total and our Beauty and Personal Care business, is growing at least at market levels. Our ambition is to grow above market levels, which is why we guide from the current 3.1% up to 3%-4%. I don't want to comment on our competitors; you can see from their results reporting so far that it's not an easy environment out there. Beauty and Personal Care, of our three divisions, is the one that's most sensitive to investments in our brands. It's the one where A&P levels are by far the highest as a proportion of sales. It's also, to be blunt, our highest priority division. That's where we're deploying the extra money that's coming out of our savings programs.
There's the longer discussion, which I started to get into with Martin around the shift from very traditional models of advertising into different new digital models. Regards the areas that are dragging on the business, I think we've covered that, to be honest, in quite some depth. It's definitely primarily a Latin American issue. The macro situation in Argentina is terrible. The Brazil transportation strike: what happened there was there was a dramatic downturn in our sales in Brazil in quarter two. It reversed that in quarter three, but it was also a moment where inventory came out of the system. Net-net, we lost about 15 basis points in Brazil on a full -year basis for Unilever. Asia—there's no such thing as Asia, is there? We have seen really sensational growth from South Asia.
Four straight quarters of double-digit volume growth in India, with excellent performance from the surrounding markets of Pakistan, Bangladesh, Sri Lanka, and even Nepal. We've seen North Asia as a steady contributor from China, especially if you exclude Blueair. Southeast Asia is really the part of Asia where there's been volatility. The biggest part of that we've had to deal with was through 2017 and the first half of 2018, a marked slowdown in Indonesia, which has been a kind of decades-long reliable performer for Unilever, even dating back to the days when Graeme was the CFO of its Indonesian business.
Having survived Graeme as the CFO, I'm happy to report that we are seeing Indonesia starting to come back a bit in H2 of 2018. Long answer to a short story, which is Latin America is the most troubled part of the world; we'd like to see a bit more coming out of Southeast Asia.
Can I just put one number out, Alan? that's, I know your question was about Asia, not Latin America, but the specific impact of Argentina's volume decline, which was in the low 20% in Q4, was actually an acceleration from Q3, as I showed on the chart. That's nearly 60 basis points of volume impact at the Unilever level in Q4. That really is the big driver of the volume in Q4, if you want to get that. Other bits and bobs, if you are looking at the AER numbers, I just remind you that the Blueair volume decline all shows up there. Carver, which we mentioned in the presentation, all shows up there.
As we also said in the presentation, there was a big Q4 dip in Turkey, which I think we had flagged over the last couple of quarters because of the levels of pricing in the marketplace there.
Okay, thank you. Look, I'm looking at the clock, and we're out of time. I know that we still have two or three questioners on the line, but I think we're going to have to stop there. If you want to contact us on the phones afterwards, please do. Thank you, Graeme and Alan. Alan, do you want to make one or two closing remarks?
I do actually. I just want to highlight that even despite the trouble spots that we've gone into some depth on in the call, fancy that: Argentina alone could have a 60 basis points dilutive effect on total Unilever in one quarter. Even despite that, we've really managed to print a set of results with 3.1% growth, excluding spreads, nicely balanced between volume and price. We've continued to march on the bottom line delivery; we have a strong point of view that sustainable living at the core of our business is a competitive edge that will allow us to deliver the guidance that we put out for 2019. Great to hear the questions and look forward to continuing to listen to and answer our investors in the coming days. Thanks very much, everybody.
Okay, thank you. We close the call. Please contact Laura, Becky, and me if you have any further questions on the phones; enjoy the rest of the day. Thank you.
This conference has been recorded. Details of the replay can be found on Unilever's website and will be available shortly. Thank you.