Good morning. Welcome to the Neste First Quarter Sales Conference Call. I am Roddy Child Villas, Head of Investor Relations, and I'll take you through the details today. First though, I'd like to remind you that the call is being recorded. I will now take the Safe Harbor statement as read and move to the group numbers and outlook.
The sales were €21,900,000,000 up 5.4%. This is similar to level of growth of 5.6% reported in the Q1 of 20 12. The organic growth was 4.3% achieved on the tough 2012 comparative of 7.2%. Real internal growth was 2.3%. Pricing was 2% considerably down from last year reflecting the rather different raw material cost environment.
Acquisitions net of divestitures added 2%, due to the inclusion of Wyeth Nutrition. Wyeth is not in our organic growth, but its inclusion within the group means that the emerging markets now represent about 45% of sales. Foreign exchange was negative 0.9%. The Q1 of the year has been characterized by volatility. And I will touch on this as I go through my presentation.
Looking beyond the Q1 volatility to our expectations for the rest of the year, we expect our growth to be weighted to the second half of the year and the same is likely true of our margin. For the full year, we expect to deliver the Nestle model with an improvement in the margin and in underlying earnings per share in constant currencies and in our capital efficiency and with organic growth likely coming in at the lower end of our 5% to 6% guidance. The consensus on organic growth is 5.5%. So clearly, our guidance is confirming what a number of you are already expecting. The next slide shows our performance by region for total Nestle, including our globally managed businesses.
And I will start with an overview of trading conditions. The emerging markets have slowed down since the Q1 of last year and there's volatility in Asia and the Middle East, but they continue to provide opportunities for good growth. The environment in Latin America has also slowed somewhat in recent months, but remains buoyant. The North American market has picked up a little recently, but it continues to be sluggish. Europe continues to be characterized by the great impact of austerity programs, the worsening crisis in Southern Europe, food price deflation, weak consumer sentiment and reduced consumer spending on food.
Our performance is consistent with previous periods and that we have grown in all three regions of the world. I'll now go through the numbers in detail beginning with Zone Americas. North America continued with the trend seen in 2012, reporting positive real internal growth and pricing. I'll start with frozen food. The pizza market returned to growth in the Q1 and we saw good growth in DiGiorno, helped by a strong start from the pizzeria launch.
Staffers and Hot Pockets both gained share. Sales of Lean Cuisine fell in the quarter impacted by continued weakness in the diet category, increased competition and promotional activity. More positive for Lean Cuisine is the early performance of the launch of salad additions. Ice cream also had volume growth helped by the Haagen Dazs gelato launch in the super premium segment. Nescafe continued to perform well, particularly Classico.
Coffee Mate also achieved share gains, Dizon Powder and Natural Bliss remained a highlight. Confectionery had a very strong start to the year. Skinny Cow performed well and the launch of Butterfinger Bliss king-size pack looks like being a success. The pet cat market has been very competitive, but we grew overall and had a strong market share performance in cat. Turning to Latin America.
We saw high pricing due to currency 1 year after its launch. Ambient culinary and ambient dairy were highlights in Latin America, contributing to a generally good performance across the region. Pet Care is outstanding, continuing to grow double digit. Next is Zone Europe. The Zone continued to deliver growth in Western Europe.
It has also seen accelerated growth in Central and Eastern Europe. I'll start with a few general comments on the environment and the particular volatilities in the quarter. There is intense competition between the players in traditional retail and between them the alternative channels and new channels such as e commerce. This has led to tough negotiations in the quarter between them and us. Aspects of volatility include the number of trading days, the industry horsemeat scandal and our voluntary pizza recall.
The weather was generally poor, including over Easter when the ice cream season would normally start with the placement of freezers in the impulse channel. So all in all, a challenging environment for the zone, but one in which it has performed well as reflected by both its positive organic growth and its market share performance in many categories. In Eastern Europe, we had a good start to the year following our reorganization in Russia last year. Let's now look at the Zone business in more detail. Ambient culinary had a slow start, but should see improving momentum through the year following customer relistings in March in Germany.
The frozen business was negative for the quarter, and we do not expect to see positive growth this year. Chilled culinary also had a slow start. Soluble coffee continued to be a key growth driver. The Nescafe Dolce Gusto system, the premium freeze dried Nescafe and the refill packs are all doing well. There were strong performances in the big British and Russian markets among others.
Confectionery also had a good start to the year with the Russian business continuing to pick up momentum. France and Germany also performed well. Ice cream had a slow start to the year generally in contrast to 2012, particularly weak. Russia on the other hand was a highlight. One innovation in ice cream was the launch of cones under the Movinpix brand, helping that brand to start the year well.
Pet Care had a strong start to the year across the zone, including double digit growth in the emerging markets, due to the continuing impact of our successful innovation and to the expansion of our presence in specialist retailers. Next is Asia, Oceania and Africa. First, a general comment. Our market share performance is mixed by country as you would expect, but our market shares are up as a whole at the zone level. In view of our level of growth, this supports my earlier statements that the trading environment in the emerging markets has slowed.
Even if we stick even if we still have double digit growth in some countries, including China. The most immediate impact of the slowdown has been on our downstream distributors, who have found themselves with too much stock. This stock needs to be dispersed before their order levels with us normalize. A further issue for us has been the destruction of our factory in Syria, which was a supplier for several categories across the Middle East. The Middle East is an important region for the zone.
We have put in place our business continuity plan for that region. The developed markets had a good start to the year. Japan continued to perform well and Oceania picked up momentum after a slow 2012. Now let's have a look at the categories. Amgen culinary, Maggi, had a slow start to the year due to some short term supply disruption in Central West Africa region, Maggi's biggest market in the zone.
It was also impacted by the loss of our factory in Syria. More positively, culinary continued to grow double digit in China and India and performed well generally. Ambient dairy had a strong start generally with good performances in China, including from Yinlu and in Indonesia and parts of Africa. There are challenges for dairy in the zone though, including in the Middle East and the Philippines. Globally, we have had real momentum in the dairy business and this applies in Latin America too.
Our innovation delivering enhanced nutritional benefits and supported by compelling communication touches the whole range from kids offerings to adult nutrition solutions and is clearly resonating with consumers. You will be aware that the global milk price has been on the rise. There is a risk that this will impact demand amongst lower income consumers in the coming quarters. Back to zone AOA. The soluble coffee market has been competitive, particularly in the mixes business.
On the other hand, Nesca and Dolce Gusto performed very well. Amongst other beverages, the ready to drink are growing double digit and powdered also are growing slightly less fast. Ice cream had a very strong start to the year. Particular highlights included China, Egypt and Israel. A note of caution here as the lack of foreign exchange in Egypt is likely to impact our growth as it will be difficult to import raw materials.
Confectionery started the year well with strong performance in South Asia and China, even if the Chinese New Year celebrations were more subdued than normal. Sufuchi performed well. Neste Waters is next. You might remember that Nestle Waters had a very strong start to 2012. Well, not so in 2013.
The weather has been poor in Europe and North America, where we have 80% of our sales. And the situation in both regions has been extremely competitive. More positively, we have continued to achieve double digit growth in emerging markets. In North America, we grew marginally, despite the tough comparative of near double digit growth in 2012 and despite increased price competition in 2013. The regional waters were most under pressure, whilst Neste Pure Life continued to perform well.
Just to put my earlier comments on the weather in context. In March 2012, 6 U. S. States had snow on the ground. In March 2013, 26 had snow.
The North American market as a whole is continuing to grow around mid single digits and our international brands are performing well. I have already discussed the environment in Europe in my zone comments. Nestle Waters saw sharply increased promotional activity there from its main competitor in contrast to our efforts to improve profitability. The staffing portfolio is performing well in Europe, particularly Perrier in its 150th anniversary year. And we continue to see good growth in the UK.
Next, Nestle Nutrition. Infant Nutrition has started the year strongly with double digit growth and broad spread share gains. The business grew in all three regions and was double digit in AOA and Latin America as well as Russia, with infant formula a highlight. There was good growth too in North America. Infant formula had a strong start there due to the innovations launched late in 2012, whilst in meals and drinks, Gerber graduates and Gerber organic pouches also performed well.
Meals and drinks also had a good start to the year in France and Russia. The infant cereal business continued to grow double digit as the 3 key innovations were further rolled out. The innovations are around immune protection and incorporating the appeal of yogurt into infant cereals. The consistent themes in infant nutrition are high level of innovation and renovation, strong appropriate communication and a good pace of geographic rollouts. Infinformin was a particular highlight, as I said, with double digit growth in many countries such as China, the USA, India, Russia and Indonesia.
This growth was driven very predominantly by rig with only a little price. Performance Nutrition started the year under competitive pressure, including an increased presence of private labels. Rate management experienced a further erosion of visitors to its centers and saw a decline in sales. We are not expecting an immediate improvement. Next is other.
Neste Professional is the biggest business within the segment. The business had a strong performance in 2012, as you might remember, with high single digit growth. The Q1 of 2013 has been rather slower, but growth is still positive. Importantly, the two areas of strategic focus, the Beverage Systems and Solutions business and Food Solutions have held up well. Beverage Solutions in particular, we've continued double digit organic growth.
The trading environment has been impacted by food safety concerns and quality issues and by austerity programs in Europe and Asia. Performance in the Americas and AOA has however remained good. Nespresso has started the year with growth in all The quarter was marked by limited edition capsules celebrating the different coffee cultures in Italy as well as further boutique openings. Neste Health Sciences had a slow start in terms of growth, but has seen good progress in terms of business development, closing the acquisition of PamLab and getting approval for the Nutrition Sciences Partners joint venture. Next is the chart summarizing the categories.
All are positive except prepared dishes and cooking aids. I think I've given a full account of their performance as I ran through the zones. I'm happy to discuss them further in the Q and A session. That concludes my presentation. It has been a challenging quarter in many Whether you look from a macro perspective, from the context of the tough 2012 comparative, at the volatility in parts of Africa and the Middle East, or if you just remember the weather and the headlines about food quality.
For all that, we have delivered growth in all regions. We will continue to manage the shorter term challenges whilst doing the right things to ensure long term profitable growth. And as we look beyond the challenges of Q1, we are confirming our full year outlook for 2013 of delivering the Neste model with a possible second half weighting of both growth and margin improvement. And that brings us to the end of the presentation. Let's now open up for questions.
Over to you, operator. Thank you. Okay. Should we have the first question, please?
Thank you. Your first question is from Selim Panuti from JPMorgan. You may now ask your question.
Yes. Good morning. My two questions. First one is on Asia. Earlier on this year, you were talking about normalization of growth to high single digit in Asia.
Do you think that's possible this year? And then could you give us a bit more thanks for your explanation on that, but could you give us a bit more color on why you say the trading environment has slowed? Where is that? And especially, you give us a bit of color on what happened by countries? I understand that China is in double digit, Oceania and Japan have picked up.
So are we inferring that Southeast Asia is weaker and exactly which countries are doing badly? And then if you could as well help us understand where the destocking is. Is it a country specific issue or category specific issue? My second question is on the outlook. I think earlier on in March, you talked about the impact from the leap year, which I assume would be 1% on Q1.
So that would mean the underlying trend is 5 ish for Q1. Is that what we should be looking at for coming quarters? Or effectively there would be issues that will recur in the second quarter that you're already seeing in April? Thank you.
Many thanks, Celine. So, AOA, first of all. Yes, I mean, we have said that we expect the long term growth in AOA to be around high single digit. As you know Q1 is a very tough comparative. Actually Q2 is an even tougher comparative for AOA.
And then the comparatives obviously ease off somewhat. We would certainly expect to see a good acceleration in AOA from where we are today. My one caveat on that is that clearly last year we had some quite considerable pricing even if that also eased during the year. We don't have the same cost pressures in 2013. So therefore, we may not have the same level of pricing contribution to our growth in 2013.
But certainly, we expect to see a pickup in rig and a meaningfully higher level of organic growth than we are today. Where have we slowed? We have slowed, if I talk about by region, top start with Africa. First of all, South Africa has been quite weak. And I think you're aware that there have been some issues down there.
I mentioned Siwa, Central West Africa region. This is a region where we've been doing comfortable double digit growth and we are in Q1 struggling for any growth. We think that will pick up a bit as the year goes on there as part of that relates to us changing some distribution networks in the region. Northwest Africa region has continued to perform well. Then if you look at the Middle East, I mentioned the loss of our Syrian factory.
This was a major regional manufacturing center for us. And we've clearly had to put in place continuity plans to replace the lost volumes and that's clearly not going to be an immediate recovery. Middle East was actually growing around 20% last Q1. This quarter again we had barely any growth at all. We expect that growth to pick up in the rest of the year as things improve.
Asia, we had a slightly slow start in India relating somewhat to our chocolate business and bringing new manufacturing on stream. Philippines was very tough, very competitive. China, as I said, continues to perform double digit. It's growing well. I would say that there has been some slowdown even in China relative to the Q1 of last year.
Where else? Indonesia has continued to perform very well. Indonesia seems to be maintaining its momentum. Indochina on the other hand, rather weaker. I think that's really covers off the whole of the zone.
In terms of outlook, I mean, yes, obviously, the trading day has an impact on Q1. But as I mentioned earlier, there are lots of impacts in Q1, some are positive, some are negative. And we factored that into our guidance that we've given for the rest of the year. I hope that answers the question, Celine.
Yes. Thank you very much. Just one thing on the distorting. Destocking. Was there any particular country that this happened?
Was it what you mentioned in Africa? Or was it as well in Asia used for stocking? And whether which country was that?
No, it was not in Africa. It was where it's where because in Africa the issue with or in Central West Africa region the issue was more of our changing our distribution over. The destocking came in those markets where there's been a slowdown in consumer demand and where the middlemen have effectively demand. Consumer demand has come off a bit. They're holding more stock than they would expect.
They need to move that stock downstream before we start resupply them with our usual levels of stock.
Thank you.
All right. Thanks, Helane. Next question, please.
Thank you for your question. Your next question is from Warren Ekerman from Societe Generale. You may now ask your question.
It's Warren here at SocGen. My question is just around the powdered and liquid beverage division grew 4% in the quarter. I mean, usually, we expect that to be kind of high single digit or maybe low double digit in a decent year. You talked a little bit on the call about sort of more competition. I think you mentioned that in reference to Nespresso.
I was just wondering whether
you can maybe just elaborate a bit more on what you're seeing, the kind of quantum of price competition and whether you are able to give us an indication of I know you don't give the specific numbers anymore in espresso, but sort of an indication on the direction of growth and maybe where you are seeing more pressure? That's the first question. And then secondly, Roddie, just your comment about input costs. Obviously, we are seeing skim milk powder prices up very significantly in recent months. And you did say that, that may have some impact on demand, particularly on zone AOA, where milk powder is a big part of the portfolio in some countries.
Just wondering, maybe you can give us a bit more color as to how you kind of see that playing out, what you expect to do in terms of your pricing strategy? And how big a drag might that be come the second half of the year? Thank you.
Thank you, Oren. Thanks very much. Okay. Powdered liquid first. This is a big category.
It incorporates obviously the Nescafe coffee business, powdered business such as Miley, Nescafe, liquid and also in espresso. I'll start with espresso. Yes, espresso had a slower start to this year than to last. I mentioned increased competition. That was a reference.
I mean, you know about competition generally in Europe. The difference between Q1, 2013 and Q1, 2012 is the introduction of competitor capsules in MIGO in Switzerland, which is clearly a big market for Nespresso. Nespresso does expect however to pick up its growth during the course of the year and to deliver in line with the targets that we talked about in the past of around an incremental €500,000,000 of sales in 2013. Then moving to Nescafe, there are 2 aspects well, there are three aspects to the Nescafe business. Dolce Gusto, Dolce Gusto is continuing to perform very well growing double digit.
We have the out of home business and we have seen a pretty marked slowdown in the legacy out of home business, which is the spoon and jar ingredient business, albeit that we're still seeing good growth in the systems business and out of home as well, Mescafe, Milano, Allegria and such like. So a slowdown in the big ingredient business out of home in Nescafe. Then retail in Nescafe, I mentioned some highlights in my speech. Some challenges too, quite competitive in the Philippines as well as in a number of countries in Western Europe. We had a relatively flat year in China sorry, flat start to the year in China.
But interestingly, our market shares in China are at all time highs. So we expect that probably to pick up again in the rest of the year. The liquid business is performing well. This is for example the Nescafe smooth latte business in China is Nescafe ready to drink in other markets. And then we've had a slightly slower start in the powdered beverages business.
And also of course as a whole, this is a category that's got less pricing than it had last year. Turning to milk, I think that one thing worth mentioning is that there is a we have adapted our sourcing strategy since the last peak in the milk price 3 or 4 years ago. And that in those days, we were very weighted towards New Zealand in terms of our milk sourcing for AOA. In the years in between, we've increased our sourcing capabilities I think that is good news going into the current inflationary environment in milk. I think also the you will start to see us taking some pricing, but we're not concerned about this from a profit perspective.
But we've seen it in the past and hence my note of caution, when you do take pricing, you do tend to see some of the PPPs come under pressure in terms of volumes. And that was my net of caution.
And Roddie, just to clarify, your comments on the call about the margin phasing being a bit more second half weighted and maybe a bit lower in the first half. Is that just purely an input cost reflection that the get easier in the second half? Or is it also an issue because the growth is a bit lower, you're going to have slightly lower operating leverage in the first half? Just wondering what's behind that comment?
Yes. I think that I mean, the latter point about the leverage is really the key driver of the guidance.
Right. Okay. Okay. Thanks.
Thanks
so much. Next question please.
Thank you for your question. Your next question is from Mr. John Cox from Kepler. You may now ask your question.
Yes. Good morning, Roddie. John Cox with Kepler. A couple of questions for you. I think at the start of the call, you said that you expected sort of seem to be guiding organic sales growth at the lower end of the 5% to 6% range.
And then you said but you're comfortable with consensus, which is 5.5%. I'm just trying to square the circle there. Secondly, just on the on this whole dividend issue announced at the with the AGM last week. I wonder if you could just give us a sort of a bit of an update or sort of clarity on the company's thinking on that. I think it looked like Peter Brabeck gave maybe a board view that the payout ratio should come down from where it has been towards 55% from over 60%.
And if I can, just the last one on the whole horsemeat issue. You talk about frozen in Europe likely to be weaker or down this year. Is that really on the back of the whole horse meat issue? And maybe you can just give us some sort of granularity on that horse meat issue from Q1? Thank you.
Thanks, John. Thanks very much for your questions. So on the guidance, first of all, what I said was that the consensus is 5.5. And therefore, clearly, for the consensus to be 5.5, a number of you, the analysts are already expecting us to have low to have organic growth at the low end of the 5% to 6% range, thus below 5.5%. That's what I was saying.
I didn't say I was happy with the census. I said that if consensus is 5.5, a number of you are already expecting us to have organic growth a little bit above 5. On the dividend, yes, I mean, basically, first of all, my apologies for the mistranslation that happened on the instantaneous translation into English, which clearly confused a lot of people, including the wire services. And we'll obviously do our best to ensure it doesn't happen again. But on the dividend policy, our intention is to have a sustainable dividend policy such that we can continue hopefully to have a year on year improvement in the absolute Swiss franc payout, which of course has been the case for more than 50 years.
The ratio might come down, but each year the dividend will be proposed by the Board in view of our results, our prospects, the external environment and the relative competitiveness of our payout. But our focus is very much on increasing the absolute rather than running a specific ratio. Okay. And your third question was on frozen. Yes, I mean the frozen business in Europe was down high single digit in Q1 relating both to the horsemeat scandal, but also to our recall in pizza.
So you combine those 2 issues, we had a fairly big impact in Europe. And I think, again, all credit to Europe, are continuing to produce growth despite these issues. We have to be realistic. And on the in the case of pizza, the factory that was involved supplied all of Europe except France and it's obviously taking time for us to rebuild the stocks in the retailers in Europe. And in the case of the food quality issue, we have to accept this going to take time for consumers to rethink their purchasing decisions.
So we're not expecting any particular we're not expecting to have positive growth in the full year. I should say also by the way that this impacted Neste Professional as well the big dabigel frozen business that we have in Neste Professional. So it's a fairly meaningful impact. Is that okay, John?
Right. Yes. I wanted to just have a quick follow-up on the infant nutrition. You talked about double digit growth there in China. I was just wondering about why.
You talk about things going as expected. I'm just wondering, can you give us a bit of an indication of Wyeth in China? I guess that's growing very strongly. I guess that's included in the net M and A rather than organic sales because you've only just started to integrate that.
Yes, exactly. Yes, I mean for sure infant formula in China has performed extremely well. Now if you look at the total infant formula business in China, so including YF, our total sales in China in Q1 in infant formula are bigger than our total sales for the full year last year in infant formula. So the business has made a has been significantly changed by the acquisition of Wyeth. Now when I talk organic growth, the organic growth in China and infant formula relates only to the legacy Nestle business.
The growth there is around mid double digit and it is almost wholly volume driven. We've also seen extremely strong growth from YS as well. But as I say, that is not included in the organic growth.
Okay. Great. Thank you. Okay.
Thanks, John. Next question, please.
Thank you for your question. Our next question comes from Ms. Eileen Ku of Morgan Stanley. You may now ask your question.
Good morning, Roddie. Alin Koo here, Morgan Stanley. I'll just cover follow ups really from the earlier questions. The first one is on the destocking that you mentioned. Could you just tell us how which particular countries you're seeing this issue?
And how long might this might you expect this to last? And the second one is on Nutrition. I mean, you've actually just quantified that you said it's mid double digits. Does this therefore imply a really big weakness in the rest of the business or performance with management? I mean was there some kind of impact there from discontinuation of some businesses or was that just purely organic?
Thanks very much.
Good morning, Eileen. Thanks very much. No, to be clear, the mid double digit is on infant formula. Infant nutrition also includes infant cereals, the baby food business is a much bigger business than just infant formula. Infant nutrition, thus including including the other businesses also grew double digit.
But having said that, yes, you're right, there's clearly a weak bit performance from the rate management business. The destocking is, I mean it's really it touches the countries that I referenced earlier where we've had a slowdown in growth. So it's fairly broad across the zone.
Okay. And how long would you expect this to last?
Well, I mean, hopefully it will resolve itself in the coming quarter. But I mean, as I say, we still have a tough comp in that quarter. So I wouldn't expect an immediate bounce back.
Okay. And then just on the performance lead management, so that was not because some of the businesses had been discontinued. So for example, I think in the UK, you've ended up the Jenny Creek business there. So that wasn't what was driving that weakness then?
No. I mean the UKHP the UK business was only started last year, I think, or even late year before, but I think last year. So it was tiny. So it didn't really have any particular impact on the overall number. The particular impact on the overall number.
The weakness is very much North America.
Okay. Thanks.
Thanks, Hany.
Thank you for your question. Your next question is from Mr. Alan O'Hara from MainFirst. You may now ask your question.
Yes. Good morning, Rody. Alain Oberhuber, MainFirst. Two questions. First question is about Latin America coming back again.
Two questions specifically there. Latin America, did you see double digit growth? And could you elaborate more on the development in Brazil? And the second question is about Health Science. Could you let us know what happened?
Why the growth was weak? Was it specifically because of Europe? Or did you lose some tenders with your customers?
Thanks, Alan. Good morning. On Health Science, the issues that are most relevant to the performance are the ongoing reimbursement situation in Southern Europe. And also there's been a change in the competitive set in for Carnation Instant Breakfast in North America with the entrance to the market of 2 branded players, Kellogg's and General Mills. And that's clearly impacted obviously the shelf space availability.
So there are 2 particular issues on for Health Science. In terms of Brazil and Latin America, Latin American growth as a whole is heavily weighted towards price. And this is also true for Brazil. But we are seeing positive volume growth in Brazil, positive volume growth in Latin America. In fact, actually the real internal growth in North America, Latin America is fundamentally about the same level, low single digit.
And then you've got heavy pricing in Latin America, you've got a little bit of pricing in North America. Brazil more specifically, the big businesses, dairy is performing very well, double digit growth, strong pricing. Biscuits, slightly weaker. Chocolate had a good Easter, so performed well. Market share performance is about is pretty mixed.
Does that answer the questions?
Yes, that's fine. Thank you.
Okay, great. Thanks. Next question, please.
Thank you for your question. Your next question is from Alan Erskine of UBS. You may now ask your question.
Hi, good morning, Roddie.
Hi, Alan.
I just wanted to
do the back of the envelope calculation and the difference between the zone AOA and the geographical region. Would I be right in thinking that the sort of infant nutrition business in Zone AOA grew? You mentioned double digit, but maybe even beginning with a 2. And if that was the case, can you give us any color on what happened to infant nutrition in Europe because you implied the U. S.
Was had a reasonable performance as well. So was it infant nutrition negative in Europe? Thank you.
Thank you, Alan. No, I think from my back of the envelope, I think you'll find that infant nutrition is mid teens in AOA. Water, of course, is also very strong in In Europe, infant nutrition was about mid it was between 4% 5% positive organic growth in Europe. So it performed well really everywhere.
Okay. Thank you.
Okay. Thanks.
Thank you for your question. Your next question comes from Mr. Jeremy Fialco of Redburn. You may now ask your question.
Good morning, Jeremy. It's Redburn. A couple of things. First of all, on this destocking point, I know you've touched on it already, but can you tell us how much visibility have you got on your distributors' inventories so that you'll kind of know when they are back at what you would term as sort of a normal level? And then the second question is on Southern Europe.
I mean is that kind of I know it's a very difficult market, but would you say it's kind of stable, but difficult at the moment? Or have you seen a further deterioration there during the Q1? Thank you.
Yes. Thanks, Jeremy. I don't really know if I can add to my previous destocking comment. It will take as long as it takes for the consumer demand to meet to exhaust the existing stocks. As I say, I think we'll see a little bit of benefit in the coming in the current quarter, but we have tough comps.
And then hopefully things will be normalized for the rest of the year. On Southern Europe, if you're talking specifically about Portugal, Italy, Greece and Spain, Greece, we were about flat. And for the picture as a whole, we were down about 5% in the Q1. So a worse performance than you're used to from us. But I would highlight here again the frozen food issues I mentioned, the pizza issues I mentioned and of course the ice cream performance with the poor weather.
Is that okay,
Jeremy? Okay. Thanks. So you'd look for that 5% not to be repeated in subsequent quarters?
Well, I mean, it's clearly very difficult. And I said that the frozen business issues are not going away. So we'll see.
Okay. Thanks.
Again, I think it's a credit to the team that they're delivering growth in Europe despite these issues. And the performance, a flat performance in Greece is I think outstanding in this environment.
Thanks.
Thank you for your question. Your next question is from Mr. Patrick Schindman of TDK. You may now ask your question.
Patrick Schindman, Societe Generale Bank. Good morning, Roddie.
Hi, Lasse.
Two questions regarding your outlook. You were mentioning that you see some strong momentum in key emerging markets. Which emerging markets do you mean here? That's my first question. And secondly, you were mentioning the outlook in your outlook that you're seeing some progress in the North American business.
What was the organic growth in quarter 1 in the U. S. Maybe compared to last year? And also what do you expect here from the U. S.
For the full year? Do you see an acceleration in growth? And why? Thank you.
Thanks, Patrick, very much. I mean, outlook, the emerging markets, I think we would hope to see, as I say, a pickup in the Middle East as our continuity plans pick up momentum. We would hope to see a recovery or a pickup in Siwa as our distribution comes on stream. I think those are the 2 big swing factors, if you will. On the U.
S, we had positive organic growth, as I said. And we're not expecting any particular acceleration in the U. S. It's positive. Our share gain performance is improving.
The environment remains tough. So I think we're expecting in our guidance a similar level of performance as in Q1.
But positive means really low single digits?
Yes.
Okay. Thank you, Ravi.
And as I said, it's positive both for rig and for price as well in North America.
Thanks.
Thanks, Kashy.
Thank you for your question. Your next question is from Mr. Robert Waldschmidt of Merrill Lynch. You may now ask your question.
Good morning, Ravi. A couple of questions, if I may. Coming on to Europe again, you've mentioned France is seeing seeing some slowdown. I mean, is it still in positive territory? And how do you see the shape of France trending over the upcoming quarters?
And then 2, when you speak about ice cream and the impacts we have from weather, can you speak more specifically about the U. S. In particular, where we know the market environment been pretty competitive and perhaps a bit less impacted by weather and what's going on there? Thank you.
Thanks, Robert. France as a whole was slightly positive. The impact I think the big issue in Q1 was that we had some quite tough negotiations with retailers. They've been resolved. Hopefully things will pick up a bit following those negotiations for the rest of the year.
In U. S, yes, I think the environment is tough. In water, we're clearly seeing price competition from the private label players. Frozen, the issue I think for frozen now is really lean cuisine. The rest of the business has picked up pace.
The whole diet segment is really struggling and lean cuisine has lost share. Ice cream, actually there's a bit of a change in the trend there and that we're seeing some share gain in premium where last year we'd be losing share. We need to get the momentum into the super premium, hence the gelato launch and that's going well. And we're still we still think we have a competitive advantage in terms of the snacks channel with our cones business and the other activities we're doing there. On soluble coffee, I mean, there's clearly been a change in the competitive set with the entry of a new branded player.
I think that's been good for the segment. And we are looking at our communication strategy around Nescafe to see how we can continue to benefit from the growth in that category. I think those are the key categories. Nutrition, I talked about earlier on, infant nutrition doing very well. And that covers really Informa doing well and the baby food business also doing well.
And then of course the other business is Purina. We've seen that we've seen, as you know, we've had a number of years of very strong market share performance in North America. And we've seen the inevitable sort of fight back by the competitors. And that's brought shares under pressure in dog, but we have plans in place to redress the balance. And in cats, we are still we are still gaining share and in fact had nearly double digit growth in cats in North America.
So that's a sort of a more detailed review the U. S. Business. Does that address the question, Robert?
Yes. Thank you very much.
All
right. Many thanks.
Thank you for your question. Your next question is from Mr. Judson of Exane. You may now ask your question.
Good morning, Roddie. Just a quick one. You said when talking about Chinese infant milk formula that this legacy Nestle business grew around mid double digit and you achieved share gains. Can I take it then your view of the market is that the Chinese IMF market grew less than mid double digit in Q1?
Well, I guess so. We grew share. I mean, I think the I think it's worth
Some peers have been making some pretty lofty comments terms of sales growth in China.
Yes. Well, I think mid double digit is quite lofty. But I think the thing to appreciate is that we are present in all segments of the market. So we are seeing growth. I mean everybody talks about the super premium end, but we are seeing growth in all the different categories, not just in the super premium.
So yes, we're comfortable that the market is growing nicely and we are growing faster.
Okay. Thank you.
Thanks.
Thank you for your question. Your next question is from Mr. David Hayes of Nomura. You may ask your question.
Good morning, Woody. Hi. Just two quick follow ups. I guess, just on the AOA region, I think one of the things that end of last year you had an issue with was the Australian retailer negotiations. Just wonder whether we could clarify that's all been resolved and you're fully restocked.
And also just on the China New Year, clearly, you said it was a less exuberant celebration this year, but just wonder whether there was some kind of benefit from the timing of the New Year, which we obviously saw impacting some others in the quarter? And then secondly, on the Prep Dishes side, I know there have been a little bit of some plans generally to, I think, rationalize the portfolio maybe a little bit there in some areas, perhaps in the U. S. Specifically. I just wonder whether that was taking place a little bit of impact of that in the Q1 and whether that timing wise means that recovers through the rest of the year.
Thanks very much.
Thanks, Dave. Yes, the Australia business grew in the Q1. So I think we've resolved the issues and hopefully we can continue to work constructively with the retailers. China New Year, yes, I think, I mean, clearly the fact that we had one is a benefit. But it wasn't, I think, as big a benefit as one might have hoped, but it was certainly a benefit.
Prepared dishes, I think there's anything that's going on in terms of business reorganization above the normal. So I wouldn't say there's any impact. I mean, clearly there are some sub lines that have come out. There's new innovation coming in. There's nothing out of the normal going on, I don't think, David, in North America.
Okay, great. Thanks very much, Woody.
Thanks, David.
Thank you for your question. Your next question is from Vincent Drayve of Exotics. You may now ask your question.
Good morning, Rody. I have two questions regarding your business in the CW in the Central and West African region. First of all, I would like a little bit more color on what's happening currently. You mentioned that Magi, there was a bit of slowdown in the uptake of Maggi. And you also mentioned that you faced some challenges regarding surrounding the reorganization of your distribution network.
So I was just wondering when do you expect a pickup in the CWA region? The second question is regarding the impact, the possible impact inflationary pressure of milk is having on that region. My understanding is that milk is mainly sourced locally. Is that the case? If not, would you be able to give us a little bit more color on the impact on that region?
Thank you.
Yes, certainly. Thank you very much. In Central West Africa region, Siwa, the two issues are related. The reason that Maggie is struggling in CUR in the Q1 is because of the reorganization of the distribution in the region. So the 2 are the same issue effectively.
And as I say, we would hope to see that pick up in the coming in the current quarter and then thereafter. In milk, it's not entirely correct to say that milk is most milk is sourced locally. And we have spent many years building milk districts in a range of countries. However, we still source a lot of milk from New Zealand. Frontera is the biggest supplier of milk in the world.
So there are 2 different dynamics. You have the global milk price on the one hand, then you have local milk prices on the other. The 2 are not entirely disconnected, but they are they can the rate of change and the trends can be a bit different, but they are connected. So as I said as I also said, what we've been doing over the last few years is increasing our own milk sourcing capabilities, particularly in Latin America. And this has reduced our exposure to that global milk price and to New Zealand.
Does that answer the question?
Yes. Thank you.
Okay. Thank you very much. I think there's one more question.
There are no more questions in the queue.
No more questions. Okay. Well, many thanks for your questions. My team and I are looking forward seeing many of you in our coming road shows. Thank you very much for your interest in Nestle and goodbye.