Welcome to the Nestle First Quarter Sales Conference Call and Webcast hosted by Wanling Martello, our Chief Financial Officer. Over to you, Wanling.
Good morning and welcome to Nestle's Q1 2014 conference call. Time has flown by. It seems like it was only yesterday I was here with Paul presenting the 2013 full year results. This morning, I'm going to take you through a review of our sales figures for the Q1 and then we will open up for questions. I will take that the Safe Harbor statement as read and move straight into the numbers.
So first slide, you will see there are 3 points that I want to highlight in these results. First, we delivered a solid organic growth performance of 4.2% in Q1, in line with our expectations in what was a tough trading environment. 2nd, both developed and emerging markets contributed to our growth by posting positive performances. 3rd, these results are consistent with the Nestle roadmap and position us well for the remainder of the year. Now to the key elements of our sales.
The business delivered rig of 2.6% and pricing of 1.6% in Q1. I would describe our rig performance as solid with pricing in line with our expectations. The organic growth was achieved despite a slowdown in emerging markets, no meaningful pickup in the developed markets and seasonal variations that you all would have been aware of. With challenges across many markets, including reduced consumer demand, deflationary pressure and competitive activity, 4.2% organic growth for Q1 of 2014 shows that we have the capabilities to deliver in today's tough environment. This performance has been supported by successful new launches, innovation in both developed and emerging markets and good execution across the value chain from PPP to premium.
The strengthening of the Swiss francs against our currency basket has again taken a heavy toll on a reported sales of CHF20.8 billion, an impact of minus 8.6%. Divestitures also reduced sales by minus 0.7%. Looking out towards the rest of 2014, we continue to expect our growth to be weighted to the second half of the year. And for the full year, we're confirming our outlook With performance weighted to the second half, outperforming the market, organic growth around 5% and improvements in margins, underlying EPS in constant currencies and capital efficiency. With that in mind, let's now review how our various regions have contributed to our growth so far this year.
This slide outlines the performance by region for total Nestle, including our globally managed businesses. It captures the challenges and opportunities in a nutshell. The emerging markets which represent 45% of our sales or CHF9.4 billion had organic growth of 8.5%, but momentum has slowed slightly in Q1. The slowdown we saw in China and India was partly offset by Africa and the Middle East, which if you recall lost a production facility in Syria last year. Looking markets, we continue to see growth from our businesses in a no growth environment, even if at a more subdued pace of 0.0%.
Despite some signs of economic recovery in some of our developed markets, unemployment in general remains high, consumer confidence fragile, many markets have deflationary pressures and the competitive intensity has not diminished. However, I want to reiterate that we don't just sit here and accept this. The tough macro situation drives us to innovate, to challenge, to outthink our competitors and to deliver results. Q1 was tough, but we've worked to lay down the foundations for the 2014 full year. Let us now take a look at each of these areas in more detail through our Zone and globally managed businesses, starting with Zone Americas.
Zone Americas grew at 4.1% in the first quarter. Both the North American and the South American businesses had their own challenges. On the positive side, where we have driven innovations, we've seen great traction and growth. Starting with North America, as you all know, North America faced some really extreme weather in the Q1. This affected not only consumer behavior, but also the infrastructure, factory operations, transport links and retail.
So that had an impact on our performance too. Looking at our categories, frozen pizza had a good quarter with California Pizza Kitchen due to the launch of the renovated crispy thin crust, a must for all you pizza lovers out there. Lean Cuisine grew on the back of the recent launches of Stuffed Pretzels and Lean Cuisine morning collection, although this was helped by Easter comps. Stouffer's and Hot Pockets had a more difficult quarter. And to wrap up Frozen, ice cream had a strong quarter in super premium with a weaker performance in snacks and premium.
In soluble coffee, we gained market share with both Nescafe Classico and Taster's Choice. Coffee made continued its momentum helped by the launch of new flavors and you can see an example on this slide here. Moving on to confectionery, our chocolate business was impacted by the shift in Easter holidays. Early Easter last year contributed to a double digit growth in 2013. However, I'm happy to say that our most recent launch of Butterfinger Cups is really performing well.
Innovations and line extensions in pet care continue to drive our growth across the category. Dog Chow and Friskies were 2 of the highlights. Our launch of lightweight litter and our reintroduction of Wagon Train and Snacks have both been a great success. Many of you would have heard John Vela talk at Cage about the long term potential for this great business. Turning now to South America.
On a regional perspective, all of our key categories grew with ambient dairy, pet care, biscuits and cocoa and malt beverages being the highlights. Chocolate was clearly affected by the late Easter. Looking at our 2 biggest markets in the region, which is Brazil and Mexico, Brazil had double digit growth in majority of the categories. The value added milk such as nino and molico were especially strong. Our cocoa and malt beverages with NESCO grew well and ice cream had a very strong performance, thanks to our focus on leaner operations and from the good weather down there.
Chocolate is one of our biggest categories in Brazil. In fact, our biggest confectionery market globally. So you can imagine the swing factor we see on seasonal sales. Mexico had a more challenging quarter and changes in tax legislation further dampen consumer sentiment. Soluble coffee with Classico and Nitto in dairy were 2 of the standout performers for the quarter.
Some of you may recall my talking about pet care in South America last year. It is now growing to a meaningful size and the performance is good. To recap, there is plenty in the Americas for us to be encouraged by and enough for us to work on. Let's move on to Zone Europe. Rig was 0.7%, while organic growth turned negative for Q1.
So this should not come as a surprise to most of you. Recent developments in the Ukraine have contributed to a slowdown across Central and Eastern Europe. Overall across the zone, consumer confidence remained low and the deflationary trend continued. In that context, the positive rig achieved by the zone and increased market share in Q1 is a testament to the high quality of our people delivering in a difficult environment. Innovation, premiumization continued to underpin growth.
And this is best demonstrated by Nescafe Dolce Gusto, the ongoing rollout of Papyrus, the range of innovative seasoned cooking papers and Purina Pet Care. In Western Europe, the slow start to the year in France, in Germany and in UK was a contrast to encouraging signs of recovery from Spain and Portugal. Greece however remained a challenge. Butoni and Wagner frozen pizzas had double digit growth in nearly all markets. Ambient culinary had a weak start to the year, especially in Germany, although innovations like Papyri's also continued to do well in that market.
Confectionery had tough comparisons versus 2013, again due to seasonal timing of sales, particularly in key Western European markets. Ice cream on the other hand had a good start to the year, particularly mauve and pick with double digit growth in both Germany and Switzerland. In Eastern Europe, the growth was driven primarily by Russia. Confectionery and ice cream were the 2 strongest performers. This is growth on growth as we saw these 2 categories begin to gather momentum this time last year.
Soluble coffee and ambient culinary also contributed to Russia's performance. Across the zone, Nescafe Dolce Gusto continued to grow double digit with increases in machine market share. The growth in pet care on the back of a strong performance last year was again driven by innovations and continued rollout of Felix, ONE and Cat Snacks. By market, pet care had especially strong growth in Russia, Germany, Poland, Italy and Spain. Overall, it was a tough Q1 in Europe, but innovation and rollout of new products were the major drivers.
Our team has worked very hard to deliver. Next up is Zone Asia, Oceania and Africa, which achieved rate of 2.9% and organic growth of 5.3% despite slower economies. A number of markets have seen currency devaluations, which resulted in us taking pricing action, Indonesia specifically. While competitive intensity remain high across the zone, we gained market share overall on our basket of products. In our emerging markets, the Philippines, Pakistan, Turkey and Africa delivered double digit growth.
In other parts of the zone, large markets such as China, India and Malaysia saw weaker trading conditions due in part to slower economies, lower consumer sentiment and seasonal timings. But nonetheless, we saw market share gains in many of our categories. The developed markets in Zone AOA had a mixed start to the year with Japan continuing to perform well. With the trade pressure and slower economy in Oceania has affected our business there, especially after a good comparable start to last year. Taking a look from a category perspective, powdered and liquid beverages had a great start to the year.
This is essentially our Milo brand. Nescafe Dolce Gusto kept its growth momentum in ambient dairy with our growing up milks such as Bear brand having a strong quarter. Premium products showed good growth and we continue to develop opportunities such as KitKat Bait in Japan. Oh, by the way, KitKat again achieved double digit growth in zone AOA. In short, AOA continues to offer great growth opportunities, but it's a competitive environment and we take nothing for granted.
Looking at our globally managed businesses, let's start first with Nestle Waters. We saw a pickup in demand for bottled water in general in both Europe and North America. In Europe, this was due to the very mild winter and in the U. S. It is more a factor of consumers switching to healthier hydration.
There also may have been some stockpiling of water due to the bad weather there. Overall, though the rig was positive across all regions and we continue to grow double digits in emerging markets. Specifically in North America where competition remains intense, the growth was driven by both our international sparkling waters, Sao Pellegrino and Perrier and by all of our regional spring waters, all of which were positive for rig and organic growth. And this would be Deer Park, Arrowhead and Osaka being the highlights. Looking at our European waters business, market share gains delivered positive growth in a highly competitive environment.
Buxton continued to be a great performer in the UK and both contracts and VITEL had strong performance in France. Our emerging markets, which represent around 20% of our sales in waters accelerated. China, Turkey and Egypt were particularly strong. Nestle Pure Life as well as local brands like Iriggly in Turkey were the key drivers. Overall, these numbers reflect our ongoing investment in our leading brands.
Next up, Nestle Nutrition. Nestle Nutrition achieved good growth in the Q1, but at a slower rate in the context of tough comparisons. The drivers were infant formula and cereals. Meals and drinks were soft as the category is more exposed to developed markets. Emerging markets were the key driver of the Q1 growth, notably China with double digit rig and the Middle East.
The premium and super premium offerings such as KNIME and Illumina delivered outstanding growth. In fact, 9 achieved double digit growth globally in the Q1 helped by continued success with recent innovations including our new EZ Scoop packaging. In infant nutrition in the U. S, we took a strategic decision to compete more selectively on individual contracts, focusing on value generation and optimizing use of our assets. Exiting some of these contracts has had an impact on the figures you see here.
Our renovated packaging in Gerber cereals met with strong consumer demand and that part of the category was a highlight. Overall, market shares continued to improve globally. Let us now take a look at what we call other in our reporting. This includes our Nestle Professional Business, Nespresso and Nestle Health Science. Together, they grew at 6.4%, the main contributor being RIG.
For professional, the operating environment continued to be difficult. In Western Europe, the out of home segment is still under a lot of pressure as quite simply people are just not eating out. Something that was not there last year was also the extreme weather in North America. This is obviously having an impact on dining and consumption habits on top of subdued consumer sentiment. On the positive side, our business in South America continued to grow, although at a slower rate than last year.
And AOA delivered a good performance with a pickup in China. Overall, our solutions business delivered good growth both in beverages and desserts. Nespresso. Nespresso grew well in all markets. The global growth was supported by continued rollouts and a new machine in Asia as well as extension of the permanent range of Grand Cru coffees with a new long go offering.
We also introduced a limited edition Colombian terroir to celebrate the expansion of Nespresso into the Colombian market. On that note, we continued our geographic expansion with new boutiques around the world. In the U. S, we are very excited with the launch of VertuLine, a revolutionary new system for long cup and short cup coffees tapping into the significant opportunity of the portion coffee market in North America. It is very early days, but so far we're very encouraged by the market reaction.
Nestle Health Science. Nestle Health Science grew in all regions and businesses despite continued pressure on public healthcare budgets. Key brands that drove the global growth included Boost, Nutran Senior, Peptamem and Alfa Mino. In summary, our other category continues to make its valuable contribution to group performance. On this slide, you see the breakdown of our products.
As usual, we won't spend much time here as I don't want to repeat my zone reviews. In powdered and liquid beverages, you've already heard that both Nespresso and Nescafe Dolce Gusto did well. I'm happy to report that Nescafe soluble accelerated and contributed to the growth as well. Milk products and ice cream has seen a slight rig deceleration, But there has been more pricing taken on the back of currencies as well as commodities. This especially the It is clear that growth in prepared dishes and cooking aids declined in the quarter.
I've outlined by zone the reason why, particularly given the challenging frozen category in the U. S. Bottom line is we have very strong brands and we will continue to drive innovation. Where we have done this successfully, we have seen the benefits. In Confectionery, the overall performance of the first quarter
We expect
comparable growth to come back in the course of the year with an element of increased pricing due to both currencies and commodities. As I've already outlined by zone, pet care had another good quarter. There was a slightly lower pricing contribution following the increase of prices last year related to input costs. This ladies and gentlemen wraps up our business review. Before we move on to questions, let me summarize our Q1 performance.
We have delivered a solid organic growth in what was a tough trading environment and both developed and emerging markets posted positive performances And this results position us well for the remainder of the year. This is why we describe ourselves as an end company. It is testament to the women, the men we have in our markets around the world that we grew in both developed and emerging markets. You have heard both Paul Boulke and myself on our full year webcast and subsequent roadshows reiterate our strategic direction through the Nestle roadmap. And just as a reminder, these are our 4 growth drivers, our 4 strategic pillars and our 4 competitive advantages.
They are as relevant now as they've ever been. The roadmap drives alignment across an organization of over 300,000 people And it ensures that we have the investment behind the right products, right brands and geographies. To deliver profitable growth from PPP to premium. We believe our Q1 performance represents a solid start to the year and it provides us a base to confirm our outlook for 2014. Performance weighted to the second half, outperforming the market with organic growth around 5% and improvements in margins, underlying EPS in constant currencies and capital efficiency.
Thank you very much for listening. Let's now open up the phones for questions.
Thanks, Now the first question comes from John Cox of Kepler. Go ahead please, John.
Yes. Good morning, Wang Ling. I hope all is well. I have just a question on the emerging market slowdown and you specifically allude to obviously India, China and Eastern Europe. Can you give a bit more granularity on that?
I'm wondering how much is seasonal and how much do you think there is something of a sort of a reemergence of a slowdown going on given the fact we saw an acceleration in emerging markets towards the tail end of last year and now we seem to have decelerated by 2 50 basis points or so. Just a second question for you. Given the fact that we're starting to see commodity inflation, I put it to you, do you think you'll start to see some more positive pricing towards the end of the year just on the back of what's happening in the commodity space? Thanks very much.
Thank you, John. I hope you're well too. I yes, emerging markets, like I said, represent 45% of our sales in Q1. And there are different dynamics going on. Clearly, currency devaluation in some of our emerging markets.
2nd, in China for instance, it has slowed down. But if you look at the comparison against last year, China started to slow down as we progress in 2013. So if you look at our growth rate in China for this year, it should the comparison should become easier for the balance of the year. So that's one dynamic that will also help us as we for the balance of 2014. But the good thing is in with China and India slowing down, like I said in my presentation earlier, we're seeing markets in Africa, markets in Middle East.
Even in Latin America, Brazil continues to do well and continues to grow very well across almost all categories in Brazil. And Russia did really well in Q1. And so clearly Eastern Europe markets like Ukraine and Poland that was they were tougher in Q1, but so many different dynamics going on in emerging market. But we should continue our expectation is that emerging markets should continue to do okay. In terms of your second question, which is commodity costs and the implication in terms of pricing, we have guided and we're not changing our guidance from a commodity cost perspective.
It still should be in the low single digit, but it will be higher than 2013. And so we should see some pricing impact going into H2 of this year. So we should see a positive impact in terms of that. And again, as you know, we do not guide on pricing. Pricing is something taken locally.
And I've always said this, and Paul has echoed the same sentiment. Nestle, when we see commodity price increases, we are never in a hurry to pass that along to our consumers. Our first line of defense always is you've heard our NCE which is necessary continuous excellence. We do everything we can to try to offset that from an efficiency standpoint. And so, the times that we are we pass on pricing is where we see innovation and new product launches, But no, and clearly there is also deflationary pressure in developed markets especially in Europe.
But we do generally speaking with commodities going up in H2, we do expect some pricing pickup for the balance of the year.
Can I just follow-up on the developing world or the emerging world question? So you think maybe Q1 was the worst of it in terms of that figure, which is still a decent figure by the way, but and you expect that to sort of slowly get better as we go through the year?
Yes. It's again many dynamics going on in emerging market. But we're just like I said, the comparison in China that should become easier for the balance of the year. And big markets like Russia and Brazil, we continue to be very encouraged by that. And so we'll see.
We're not saying we're encouraged by Q1. So we'll see.
Okay. Thanks a lot.
Because emerging market is always volatile. So I hate to make a definitive statement. Suffice it to say we're encouraged by what we've seen in Q1.
Thanks. The next question is from Warren Ackerman of Societe Generale. Go ahead Warren.
Good morning, Wang Ling. It's Warren Ackerman here at SocGen. Also a couple of questions. First one is on the Americas region, 4.1 OG and 0.9 on the rig. I was just wondering whether you can maybe split it for us between North America and Latin America.
Just to get a feel for, was North American rig positive in the quarter? Was LatAm pricing double digit? Just a bit more granularity as to the 2 very different dynamics in the region. I'm trying to get a feel for whether you think the U. S.
Is actually really turning a corner fundamentally. And then just secondly, on Europe, organic growth, negative 0.8%. So we've got a situation now where Southern Europe is improving, which is obviously nice, but now Northern Europe is slowing. So just wondering why you think UK, France, Germany has had a tough start. If you look at the UK, the economic base looks pretty decent at the moment.
So I'm a bit surprised that some of these markets are quite so weak. Russia is holding up so far, but Eastern Europe is weakening. Is that going to continue in Russia? Just trying to get a sense of whether you think organic growth in Europe overall will actually be positive this year given started the quarter negative in OG terms? Thank you.
Hi, Lauren. I hope you're well. Hi. Yes, in terms of let me just give you some color in terms of North and South America. North America rig and OG were subdued and it's impacted by both late Easter as well as weather issues.
In frozen food, I've touched on that. You have gone through sort of like the categories both in delinquency and so forth, hot pocket, acceleration in pet care. So the thing is, I was just in visiting North America with Chris Johnson and Patrice Beulah a few weeks ago. And if we talk about frozen as a category, it's very encouraging that it's not a structural issue that we are facing. And we're very encouraged by all the innovations that we have in the pipeline that should be coming that should be launched sooner than later.
And so in terms of Latin America, we did see a slowdown and as I touch on that, it was late Easter, Brazil being a big confectionery business, the biggest in fact for us. But it's Latin America good organic growth driven by pricing, but slowing a bit compared to last year. And the overall performance was clearly impacted by slow economies. Brazil had good growth. Mexico was partly impacted by the newly enacted fiscal legislation.
But pet care continues to be really strong. So again, it's different dynamics in both North and South Americas. In terms of Europe North
American rig and OG were actually slightly negative in the Q1 for the Easter and the frozen food reasons.
It was subdued. It was subdued for North America. In terms of Zone Europe, its rig slowdown was impacted obviously by late Easter, a big chunk of it you touched on the big markets like France, Germany, U. K, Confectionery business, it's big in those big markets. And so clearly that plays Easter shift plays a big role, but even ambient culinary to some extent was also impacted by late Easter.
And so by region, the slower performance U. K, Germany, France and but in the developed parts of Europe, Switzerland, Austria was strong from a product category. I already said, Confectionery was slow, culinary was off to a weak start, Pet Care, good growth, Nescafe Dolce Gusto great growth, pizza driven by Germany, France, Spain, Italy and even ice cream was helped by good weather after a week prior year, and Mauve and Peak being a really strong performance. And Southern Europe was improving. I talked about the 2 driven by Iberian region and Italy.
Spain benefited from strong growth in Nescafe Dolce Gusto and good growth in chocolate actually, thanks to Kit Kat tablets and Italy strong growth in Nescafe Dolce Gusto in Pizza, Bella and Napoli improve. And so, Greece remains challenging, but and we saw market share gains also in Spain and Portugal. So that should give you some color in terms of Europe.
Okay.
And in terms of the balance sheet. Thank you. Cheers.
Thanks. Next question from Eileen Khoo of Morgan Stanley. Go ahead please, Eileen.
Good morning, Eileen. Eileen Khoo here at Morgan Stanley. Hope you're well. Two questions from me. The first one is on nutrition.
It was encouraging to see commentary around optimizing the use of your assets. I was wondering if you could give us a bit more color on these nutrition? And then secondly, in what this business in Nutrition? And then secondly in Waters, I think you mentioned the impact of stockpiling. Would you be able to quantify or give us a bit more color on that impact and what you expect to be a more sustainable level of growth in waters going forward?
Thanks very much.
Good morning, Eileen. I hope you're well. In terms of nutrition, I talked about the slowdown in Q1 was partly because of the comparison, a tough comparison against last year. But in the U. S.
Specifically, we walked away from what we call WIC contract in the U. S. We had I think 3 states where we walked away from that weak contract trying to be strategic about it and making sure that growth is profitable. So that's associated with our nutrition, infant nutrition business in the U. S.
In terms of water, my comment about possibly also there's parts of stockpiling in the U. S. I don't have specific numbers in terms of what that dynamic how that dynamic impacted first quarter sales number for our U. S. Water business, but I'm sure that played a part.
But in general, in the U. S, you can it's a fact that consumers are shifting from to healthier alternative instead of yes.
So I just follow-up in that case in the Q1 quarter's break was 8.1%, which you say that's probably that should be sort of reversed to an extent in the Q2 then? And then the nutrition as well, 6 0.4% like for like, is that the run rate for the rest of the year as well?
Yes. We don't guide by business for the balance of the year. We just guide by the group that it's around 5%. But yes, but it should yes, but nutrition as I yes, a lot of the dynamics because of the comparison against 20 13 also.
The next question in the queue is from Jeremy Fialkow of Redburn. Go ahead please, Jeremy.
It's Jeremy Sialko with Redburn here. Two questions. First one is on pricing in emerging markets. Could you talk a little bit about the elasticities you're experiencing there when you put price rises through? You gave the example of Indonesia and somewhere you put quite a lot of price rises.
To. So what sort of volume reaction you're seeing as you put those price rises to and perhaps whether the consumer is more sensitive to price rises now versus what they were maybe 6 months or a year ago? And then the second question is just focusing on your China baby food market shares. Can you talk about that? Has there been any change in the rate at which you've been taking market share?
Obviously, with your competitors recall, whether you can give us any sort of sense on whether you're not taking market share at the same sort of rate as you were towards the back end of last year? Thanks.
Good morning, Jeremy. I am in terms of pricing in emerging market that very much depends on the specific market as well as the categories. So if I talk about Brazil for instance, even with inflation, our business in Brazil was able to take pricing in addition on top of the inflation impact. And so, whereas in certain markets in Asia for instance, the ability to price might not be as good. So a lot depends on categories, a lot depends on market and obviously goes without saying a lot depends on the competitive landscape.
And so it's hard to make a general statement in terms of elasticity in general. And so that's pricing in emerging markets. In terms of your second question, which is infant nutrition in China, infant nutrition in China grew double digit in Q1. And YF specifically also had an excellent performance as well as non. So it's we continue to be very encouraged by our infant nutrition business in China, both in terms of growth and in terms of market share performance.
Thank you very much.
Thank you, Jeremy.
Thanks. Next question we have from Alain Oberhuber of MainFirst. Please go ahead, Alain.
Good morning, Rangin. Question on the currency. I mean the impact was higher than people were expecting. So if we play it like that constant currency at the moment, what could be the impact at the current level of currencies? What could be the impact for the year on sales?
And then if we take it from here and if we expect currencies to stay at these levels, what could be then the impact on margins for the year? And the second question is about pricing development in Europe. Do you expect positive pricing in the second half or will it be still subcu?
Thank you, Alan. In terms of currency, we obviously do not guide on what the impact of currency is going to be. Having said that, assuming currency stays at the same level that we've seen in Q1, the one thing that will be going for us is the comparison will be much easier for the balance of the year assuming currency stays at the current at the existing level in Q1. And in terms of impact on margin, as you know, we reiterated our guidance for the year. We will improve margin on a constant currency basis and so that has not changed.
And in terms of I think your second question is pricing in Europe. It would be Europe no surprise to anybody continues to be the environment continues to be very deflationary. But having said that, we should expect some ability to price especially with commodity price increases in categories like So we should see some pickup from that in that category specifically.
But yes.
Thank you very much.
Thank you.
Next question from Patrick Schwindeman of Zurcher Kantonalbank. Go ahead, Patrick.
Patrick Schwendenalbank, Hurkantenalbank. Good morning, Wendling. First regarding your guidance for the full year that you expect organic growth acceleration in H2 just as a best guess? I know it's now April, but just as a best guess, would you say it's again possible to have an organic growth of over 5% than in H2? And my second question is regarding the Confectionery business, which was negative at the organic level of 0.5%.
I mean, it's clearly because of the late Easter. But what would you say was the growth on a normalized level excluding Easter? What should we expect here for H1 just to have an idea? Thank
you. Yeah. Thank you. In terms of organic growth, our guidance is for the full year around 5% and second half weighted, so that we're just reiterating that. In terms of the confectionery business, we do expect organic growth recovery and there will be pricing.
And so that should come back in the second half.
But overall also in H1 then growth of several percent?
Yes. We're not again, we don't want to go into specifics of H1 versus H2. Again, it's full year guidance H2 weighted.
Okay. Thanks.
Thanks very much. Next question from Jon Ravall of The Wall Street Journal. Go ahead please, Jon.
Good morning, Wanling. Else, a couple of questions. I just wondered, in regards to Europe, you said that France, Germany and UK had a slower start to the year. Can you just give us a bit more color on that? I was talking about sort of with your sales decline there or just slightly slower growth.
And when do you kind of see Europe kind of sort of Northern Europe market like that picking up? That's my first point. And secondly, with regards to the U. S, obviously, the U. S.
Market is basically by the winter, but also been other problems with frozen. I was wondering when do you see that kind of picking up and a little bit more on what's happening out in the U. S. Please?
Good morning, Chang. I in terms of Zone Europe, I touched on this earlier. U. K. Was so the 3 big developed markets, U.
K. Slow confectionery and that's because we have a big confectionery business in the U. K. And so that's clearly affected by the timing of Easter. In Germany, so the shift in Easter affected Germany, U.
K. And France. But Germany in addition to confectionery also had a slow start in terms of culinary. And France is again it's confectionery. In terms of the U.
S, we again I describe it as now we have to be clear. We have U. S. When we talk about ZONE Americas, we've got the U. S.
Business. We've got but when we talk about U. S. In general and that's U. S.
What we call Nestle in the market, which is not just our food and beverage, but also waters, nutrition, professional, Nespresso. And so we it had so on the U. S. In general, we had positive rig and organic growth. And so, and it's a very we've got 40 segments and some it's a mixed bag, some segments doing better than others and some share market shares are up, some shares are flat to down and so very much a big bag.
But we are look, some businesses are doing really well and some we know we have room to improve. And so back to my comment earlier, it's very encouraging if you go back to where we have challenges is to see the improvements that are being done and the kinds of innovation that are in the pipeline.
Right. Okay. Looking back to France, Germany and U. K, I mean, are their sales actually down or just slower growth?
We do not give specific OG in terms of our business markets. Nice try, John.
Thank you. Next question is from Jean Philippe Bertier from Tobler. Go ahead please Jean Philippe.
Good morning. I hope you're well. I have a question with regards to Galderma. Can you share with us the performance in the Q1?
Hi, good morning, Jean Philippe. I hope you're well too. We do not at this point, the transaction has not closed yet. And so typically, we do not when the transaction closes, obviously, we will report Galderma as part of our results. Prior to that, Galderma is reported as a in our associate line.
And so we do not report sales or profit separately. And so we will, Champ Philippe, you'll just have to wait until we close the transaction. I'll make sure that we highlight Galderma for you.
Thanks. And now we come to the last question, which is from Celine Panuti of JPMorgan. Go ahead please, Celine.
Yes. Good morning, everybody. Just two quick follow ups. The first one in your statement, you said that growth will be around the same as last year. In full year results, you sorry, you said around 5%.
In year results you said it would be around the same level as 2013, which you have not reiterated at this time. So could you just say whether you still see that or you rather only stick around 5%? That's my first question. 2nd, in terms of the you said the outlook on top line will be H2 weighted. Is it something of the same for margin expansion?
Will there be a difference H1 versus H2? The reason I'm asking that is that you've been talking about pricing rather accelerating in the second half while you're also talking about from material increase. So I just wonder whether that could have an impact on the delivery of profitability of margin. Thank you.
Yes. I want to make sure I understand your second question. But let me answer your first one. Your question about growth being around 5%, yes, that is our guidance for the full year. I think you touched on 2013.
That might have I think we said that the condition is much like 2013. So but our guidance in terms of organic growth is definitely around 5%. So that has not changed. I think I want to make sure I understand your second question. Are you asking about the second half weighting for both?
Yes, it's margin. I want to know if margin will be second half weighted. The rationale behind that is you're talking about pricing accelerating through H2. So I'm wondering whether because of raw material inflation, you'll see more of H2 margin delivery versus H1?
Yes. Celine, our year will be second half weighted from a performance standpoint, whether you look at top line or bottom line, it's growth driven. And so it's a whole host of factors. I touched on China being comparison being easier as we go through the 2nd year commodity pricing picking up. So we should be able to take some pricing.
There is some innovation launches that will pick up steam. We talked about even just to give you some specifics for instance like wagon train, the limited reintroduction in Q1 that should continue to roll out. So it's really a whole host of factors as we see the year progresses. So definitely H2 driven for the year, but clearly still around 5% is our guidance.
Great. And then just maybe one for us since you just mentioned it. You're still saying that China see easier comps. I'm not too sure, I mean, how like if there's any specific that you can pinpoint that was some comfort that there is a I don't know maybe inventory was low and that is an easy pump. Because if I look at zone A08 has been around the 5%, six percent level now for several quarters and we still do not see an acceleration on easy comp.
So I just want understand whether there is something more specific in China?
No. China slowdown in Q1 was a few things. The timing of Chinese New Year, as you know Chinese New Year this year is quite early. There is I talked about difficult comps, but no in terms of and China in general has slowed down. I mean you know it's widely known that China as a country, as a market has slowed down.
So nothing beyond those broad reasons. But the good thing about China that's important for us is we continue to gain market share in across many of the categories and that's the one thing that's important regardless of sort of like the macroeconomic situation that's happening.
All right. Thank you so much.
Thank you, Celine. Peter, I want to make sure that there is no that we answered all the questions from our investor community. And I'm getting the signal that we have that there is no more question in the queue.
No more question.
No more question. Okay. Well, thank you. Thank you for the questions. We believe that the solid Q1 is a great base on which we will deliver our outlook for the year.
We look forward to engaging with many of you at the Nestle's Investor Seminar to be held in Boston, Just as a reminder on June 3 and 4th. So until then, goodbye and thank you. Stay well.