Full Year 2023 Nestle SA Earnings Call

Luca Borlini: Good afternoon and good morning to everyone. A warm welcome to the Nestle Full Year 2023 results webcast, and thanks for joining us. I'm Luca Borlini, head of Nestle's investor relations. Today, I'm joined by our CEO, Mark Schneider, and our CFO, Francois Roger. Mark will begin as usual with an overview of 2023 and discuss the 2024 guidance, and Francois will follow with a review of the full year 2023 sales and profit figures. We will then open up the lines for your questions. Before we begin, please take note of our disclaimer. And now, I hand over to Mark.

David Brown: Good afternoon and good morning to everyone. A warm welcome to the Nestlé Full Year 2023 Results webcast, and thanks for joining. I'm Luca Borlini, Head of Nestlé's Investor Relations. Today, I'm joined by our CEO, Mark Schneider, and our CFO, François-Xavier Roger. Mark will begin, as usual, with an overview of 2023 and discuss the 2024 guidance. François will follow with a review of the full year 2023 sales and profit figures. We will then open up the lines for your questions. Before we begin, please take note of our disclaimer. Now I hand over to Mark.

Luca Borlini: Good afternoon and good morning to everyone. A warm welcome to the Nestlé Full Year 2023 Results webcast, and thanks for joining. I'm Luca Borlini, Head of Nestlé's Investor Relations. Today, I'm joined by our CEO, Mark Schneider, and our CFO, François-Xavier Roger. Mark will begin, as usual, with an overview of 2023 and discuss the 2024 guidance. François will follow with a review of the full year 2023 sales and profit figures. We will then open up the lines for your questions. Before we begin, please take note of our disclaimer. Now I hand over to Mark.

Good afternoon, and good morning to everyone.

A warm welcome to the necessary full year 2023 results webcast and thanks for joining.

Luca Bellini Nestle's investor relation.

Luca Borlini: Today, I'm joined by Yoda, CEO, Mark Schneider CFO friends' photos you.

Mark Schneider: Mark will begin as usual with an overview of 2023 and discuss the 'twenty 'twenty four guidance.

Mark Schneider: That's what we'd photo with a review of the full year 2023 sales and profit figures.

Mark Schneider: We will then open up the lines for your questions.

Speaker Change: Before we begin please take note of our disclaimer.

Speaker Change: Now I hand over to Mark.

Luca Borlini: Luca, thank you, and a warm welcome to our conference call participants today. As always, we do appreciate your interest in our company, and we look forward to answering your questions. Now, let me move straight to the key messages for the year.

Luca Borlini: Luca, thank you. A warm welcome to our conference call participants today. As always, we do appreciate your interest in our company, and we look forward to answering your questions. Let me move straight to the key messages for the year. I believe that in a context of soft consumer demand in the food industry, we have demonstrated resilient performance. I think in this environment, we did come in within our guided range, both on organic growth and profitability. We did show, as we had indicated before, positive real internal growth in Q4 and as a result of the improvement in Q4, also in H2. We did show a significant improvement in free cash flow from 2022 to 2023. I think we've also seen a marked improvement in our return on invested capital. Our underlying earnings per share also came in within the midterm expected range.

Mark Schneider: Luca, thank you. A warm welcome to our conference call participants today. As always, we do appreciate your interest in our company, and we look forward to answering your questions. Let me move straight to the key messages for the year. I believe that in a context of soft consumer demand in the food industry, we have demonstrated resilient performance. I think in this environment, we did come in within our guided range, both on organic growth and profitability. We did show, as we had indicated before, positive real internal growth in Q4 and as a result of the improvement in Q4, also in H2. We did show a significant improvement in free cash flow from 2022 to 2023. I think we've also seen a marked improvement in our return on invested capital. Our underlying earnings per share also came in within the midterm expected range.

Mark Schneider: Okay. Thank you and a warm welcome to our conference call participants today.

Mark Schneider: Always we do appreciate your interest in our company and we look forward to answering your questions.

Mark Schneider: Let me move straight to the key messages are for the year.

Mark Schneider: I believe that in a context of soft consumer demand in the food industry, we have demonstrated resilient performance. I think in this environment, we did come in within our guided range, both on organic growth and profitability. We did show, as we had indicated before, positive real internal growth in Q4 and, as a result of the improvement in Q4, also in the second half. We did show a significant improvement in free cash flow, from 22 to 23, and I think we've also seen a marked improvement in our return on invested capital. Our underlining earnings per share also came in within the midterm expected range.

Mark Schneider: I believe that in a context of soft consumer demand in the food industry, we have demonstrated its resilient performance.

Mark Schneider: I think in this environment and we did come in within our guided range, both on organic growth and profitability.

Mark Schneider: We did show as we had indicated before positive real internal growth in Q4, and as a result of the improvement in Q4 also in the second half.

Mark Schneider: We did show a significant improvement in free cash flow.

Mark Schneider: From 'twenty to 'twenty three.

And I think we've also seen a marked improvement in our return on invested capital.

Mark Schneider: Our underlining earnings per share also came in within the midterm expected range, we clocked, 8.4% and that's slightly above the mid point after 6% to 10% range in constant currency that we have given out to you.

Luca Borlini: We clocked 8.4%, and that's slightly above the midpoint of the 6% to 10% range in constant currency that we had given out to you. What's important to me is that all of these financial results did not stand in contradiction to putting in the needed investment to ensure growth acceleration and sustainable growth in the future, and of course, consistent value creation for the long term. We have put in considerable resources when it comes to meaningful innovation but also constant renovation of our products. We have stepped up our marketing investments to the tune of 80 basis points last year over 2022. We will continue to do that now. We will continue to increase our marketing investments in the year 2024.

Mark Schneider: We clocked 8.4%, and that's slightly above the midpoint of the 6% to 10% range in constant currency that we had given out to you. What's important to me is that all of these financial results did not stand in contradiction to putting in the needed investment to ensure growth acceleration and sustainable growth in the future, and of course, consistent value creation for the long term. We have put in considerable resources when it comes to meaningful innovation but also constant renovation of our products. We have stepped up our marketing investments to the tune of 80 basis points last year over 2022. We will continue to do that now. We will continue to increase our marketing investments in the year 2024.

Mark Schneider: We clocked 8.4%, and that's slightly above the midpoint of the 6 to 10% range in constant currency that we had given out. What's important to me is that all of these financial results did not stand in contradiction to putting in the needed investment to ensure growth, acceleration, and sustainable growth in the future, and, of course, consistent value creation for the long term. So we have put in considerable resources when it comes to meaningful innovation but also constant renovation of our products. We have stepped up our marketing investments to the tune of 80 basis points last year, more than 22. We will continue to do that now.

Mark Schneider: What's important to me is that all Lp's financial results did not stand in contradiction to putting in the needed investment.

Mark Schneider: To ensure our CRO for acceleration and sustainable growth in the future and of course consistent value creation for the long term. So we have put in considerable resources when resources when it comes to meaningful innovation, but also constant renovation of our products, we have stepped up our mark.

Mark Schneider: Cutting investments to the tune of 80 basis points last year over 22.

We will continue to do back now we will continue to increase our marketing investments N. B 24, and I think you've also seen continued investments and continued progress in our sustainability agenda, whether it's around the theme of good for you which is for the nutritional value of our products offer the good for the planet.

Mark Schneider: We will continue to increase our marketing investments in year 24. And I think you've also seen continued investments and continued progress in our sustainability agenda, whether it's around the theme of good for you, which is about the nutritional value of our products, or for the good for the planet agenda as part of sustainability. Based on these solid results, our board proposes a dividend per share of 3 Swiss francs, which is an increase of 5 centimes, and it marks the 29th consecutive year of dividend increases for our company.

Luca Borlini: I think you've also seen continued investments and continued progress in our sustainability agenda, whether it's around the theme of good for you, which is for the nutritional value of our products, or for the good for the planet agenda as part of sustainability. Based on these solid results, our board proposes a dividend per share of CHF 3 Swiss francs, which is an increase of 5 centimes. It marks the 29th consecutive year of dividend increases of our company. As we move to the next slide, let's take a quick look at the historic food price inflation over the last 50 years.

Mark Schneider: I think you've also seen continued investments and continued progress in our sustainability agenda, whether it's around the theme of good for you, which is for the nutritional value of our products, or for the good for the planet agenda as part of sustainability. Based on these solid results, our board proposes a dividend per share of CHF 3 Swiss francs, which is an increase of 5 centimes. It marks the 29th consecutive year of dividend increases of our company. As we move to the next slide, let's take a quick look at the historic food price inflation over the last 50 years.

Mark Schneider: Shanda, that's part of our sustainability.

Mark Schneider: Based on these solid results our board proposes a dividend per share of suites pre Swiss francs, which is an increase of pipestone teams and it marks the 29th consecutive year of dividend increases upon company.

Mark Schneider: As we move to the next slide, let's take a quick look at historic food price inflation over the last 50 years. And I think it explains a lot about the softness that we've all seen, especially in the second half of 2023 when it comes to the food sector, because we're literally seeing a 50-year event when it comes to the spiking of food price inflation, not only when it comes to the sheer size of the amplitude but also the steepness and unexpectedness that we saw in 22 and then continued in 23. And I think against that backdrop, it was not surprising that you've seen such a volume of reaction from quite a few companies in our sector. And Nestle, of course, as the world's leading food and beverage company, was no exception.

Mark Schneider: As we move to the next slide let's take a quick look at the historic food price inflation over the last 50 years and I think that explains a lot about the softness that we've all seen especially in the second half of 2023 when it comes to the food sector. Because we are literally seeing 50 year event.

Luca Borlini: I think it explains a lot about the softness that we've all seen, especially in H2 2023, when it comes to the food sector because we're literally seeing a 50-year event when it comes to the spiking of food price inflation, not only when it comes to the sheer size of the amplitude but also the steepness and unexpectedness that we've seen in 2022 and then continuing in 2023. I think against that backdrop, it was not surprising that you've seen a volume reaction with quite a few companies in our sector. Nestlé, of course, as the world's leading food and beverage company, was no exception. It's important that not all of the lower volume and real internal growth is related to this.

Mark Schneider: I think it explains a lot about the softness that we've all seen, especially in H2 2023, when it comes to the food sector because we're literally seeing a 50-year event when it comes to the spiking of food price inflation, not only when it comes to the sheer size of the amplitude but also the steepness and unexpectedness that we've seen in 2022 and then continuing in 2023. I think against that backdrop, it was not surprising that you've seen a volume reaction with quite a few companies in our sector. Nestlé, of course, as the world's leading food and beverage company, was no exception. It's important that not all of the lower volume and real internal growth is related to this.

Mark Schneider: When it comes to the spanking after food price inflation not only when it comes to the sheer size of the amplitude, but also the steepness and unexpectedness that we've seen in 'twenty, two and then continuing in 'twenty three.

Mark Schneider: And I think against that backdrop. It was not surprising that you've seen a volume of reaction with quite a few companies in our sector and that's of course as the world's leading food and beverage company was no exception.

Mark Schneider: It's important that not all of the lower volume and real internal growth is related to this. It's also an important reminder we did put in place policies in 22 and 23 that focused on the targeted exit from unprofitable SKUs. We have walked away since the summer of 22 to now from about 700 million Swiss francs of annualized revenue.

Mark Schneider: It's important that not all of the.

Mark Schneider: Lower volume and real internal growth is related to this it's also an important reminder, we did put in place policies in 'twenty, two and 23 that focus on the targeted exit from unprofitable Skus, we have walked away since the summer of 'twenty two to now from a balance sheet.

Luca Borlini: It's also an important reminder we did put in place policies in 2022 and 2023 that focus on the targeted exit from unprofitable SKUs. We have walked away since the summer of 2022 to now from about CHF 700 million of annualized revenue. This is SKUs that are discontinued, that clearly were providing little growth, and they were providing also no profitability. This has helped to increase our service levels significantly. The net benefit of that is definitely starting to shine through. It's very hard to quantify, but clearly, going forward, the fact that we don't have this long tail end of low-growth, unprofitable SKUs will be a significant boost. I think starting from later this year, as the situation normalizes and we are through some of the difficult and challenging year-over-year comparisons, you will see the strength of the growth engine in Nestlé come through.

Mark Schneider: It's also an important reminder we did put in place policies in 2022 and 2023 that focus on the targeted exit from unprofitable SKUs. We have walked away since the summer of 2022 to now from about CHF 700 million of annualized revenue. This is SKUs that are discontinued, that clearly were providing little growth, and they were providing also no profitability. This has helped to increase our service levels significantly. The net benefit of that is definitely starting to shine through. It's very hard to quantify, but clearly, going forward, the fact that we don't have this long tail end of low-growth, unprofitable SKUs will be a significant boost. I think starting from later this year, as the situation normalizes and we are through some of the difficult and challenging year-over-year comparisons, you will see the strength of the growth engine in Nestlé come through.

Mark Schneider: 100 million Swiss francs of annualized revenue and this is S. K you said it just continued that clearly we're providing little CRO and they were providing also no profitability and this has helped to increase our service tablets significantly the net benefit up Matt is definitely starting to shine through.

Mark Schneider: This is SKUs that are discontinued that clearly were providing little growth, and they were also providing no profitability, and this has helped to increase our service levels significantly. The net benefit of that is definitely starting to shine through. It's very hard to quantify but clearly, the fact that we don't have this long tail end of low-growth, unprofitable SKUs will be a significant boost. And I think starting from later this year, as the situation normalizes, and we are through some of the difficult and challenging EOB or comparisons, you will see the strength of the growth engine in Nestle come through. In this very challenging context, it's also very important for me to thank our associates around the world.

Mark Schneider: It's very hard to quantify it but clearly going forward.

Mark Schneider: Not that we don't have this long tenant of low crop unprofitable skus won't be significant boost and I think starting from later this year as the situation normalizes and we are through somewhat difficult and challenging year over year comparisons are you will see the strength of the cross engine in this to come through.

Luca Borlini: In this very challenging context, it's also very important to me to thank our associates around the world. I think Nestlé prides itself on strong entrepreneurial commitment and execution from the bottom up in all the locations and communities we serve. In the 187 countries around the world where we're present, I think you've seen enormous commitment, enormous efforts to keep the company growing in an environment that was challenging and that also had seen hyperinflation in a number of markets. Very thankful for that strong commitment and also counting on that commitment going forward to propel the company in 2024 and beyond. Moving to the next slide, I would like to highlight a number of strong growth catalysts that also give us hope and aspirations for the future for continued real internal growth and organic growth.

Mark Schneider: In this very challenging context, it's also very important to me to thank our associates around the world. I think Nestlé prides itself on strong entrepreneurial commitment and execution from the bottom up in all the locations and communities we serve. In the 187 countries around the world where we're present, I think you've seen enormous commitment, enormous efforts to keep the company growing in an environment that was challenging and that also had seen hyperinflation in a number of markets. Very thankful for that strong commitment and also counting on that commitment going forward to propel the company in 2024 and beyond. Moving to the next slide, I would like to highlight a number of strong growth catalysts that also give us hope and aspirations for the future for continued real internal growth and organic growth.

Mark Schneider: Yeah.

Mark Schneider: In this very challenging context, it's also very important to me to thank our associates around the world I think nestle prides itself in strong entrepreneurial commitment and execution from the bottom up and all the locations and communities, we serve and the 187 countries around the world. We have a presence I think you've seen enormous.

Mark Schneider: I think Nestle prides itself on strong entrepreneurial commitment and execution from the bottom up in all the locations and communities we serve. In the 187 countries around the world where we were present, I think you've seen enormous commitment, enormous efforts to keep the company growing in an environment that was challenging and that also saw hyperinflation in a number of markets. So, very thankful for that strong commitment and also counting on that commitment going forward to propel the company in 24 hours. Moving to the next slide, I would like to highlight a number of strong growth catalysts that also give us hope and aspirations for the future of continued real internal growth and organic growth. What you're seeing here is five growth platforms that we have been consistently feeding with investments and growing over time and showing positive rates of return even in a challenging year like 2023, and poised for continued future growth.

Mark Schneider: MS commitment enormous efforts to keep the company crawling in an environment that was challenging.

Mark Schneider: And then also I had seen hyperinflation in a number of markets. So very thankful for that strong commitment and also counting on that commitment going forward to propel the company in 'twenty four and beyond.

Mark Schneider: Moving to the next slide I would like to highlight a number of strong growth catalysts that also gave us hope and term aspirations for the future for continued real internal growth and organic growth what you're seeing here is a five crore platforms.

Luca Borlini: What you're seeing here is five growth platforms that we have been consistently feeding with investments and growing over time and showing positive break even in a challenging year like 2023 and poised for continued future growth. Alongside our usual growth locomotives of Petcare and Nespresso, you're also seeing KitKat with stellar results and also a renewed growth dynamic in our confectionery segment. You see the significant success of HMO products in infant nutrition and also the resurgence of Nestlé Professional, which I think completely reinvented itself during the COVID years and now is enjoying very good growth and benefiting from renewed out-of-home trends. When you look at these five growth platforms alone, they stand for about a third of the company's revenue.

Mark Schneider: What you're seeing here is five growth platforms that we have been consistently feeding with investments and growing over time and showing positive break even in a challenging year like 2023 and poised for continued future growth. Alongside our usual growth locomotives of Petcare and Nespresso, you're also seeing KitKat with stellar results and also a renewed growth dynamic in our confectionery segment. You see the significant success of HMO products in infant nutrition and also the resurgence of Nestlé Professional, which I think completely reinvented itself during the COVID years and now is enjoying very good growth and benefiting from renewed out-of-home trends. When you look at these five growth platforms alone, they stand for about a third of the company's revenue.

Mark Schneider: That we have been consistently feeding with investments and growing over time and showing positive break even in a challenging year like 2023 and poised for continued future growth.

Mark Schneider: Alongside our usual growth locomotives of Petcare and Nespresso, you're also seeing KitKat with stellar results and a renewed growth dynamic in our confectionery segment. You see the significant success of HMO products in infant nutrition and also the resurgence of Nestle Professional, which I think completely reinvented itself during the COVID years and is now enjoying very good growth and benefiting from a renewed out-of-home trend. So when you look at these five growth platforms alone, they stand for about a third of a company's revenue. But if, in fact, you're not just counting Nespresso but the wider coffee category, which of course saw some of the same growth dynamics, then you're talking close to 50% of a company's revenue. So I think we have very strong growth platforms that we intend to build on going forward. When it comes to 2024, clearly, we expect a continued demanding environment, and this calls for a number of priorities, and we highlight a few for you here. Execution excellence, I think, is going to be front, left, and center. This applies to our supply chain. It applies to in-store execution, our cost position, and also order fill rates.

Mark Schneider: Alongside our usual CRO for locomotives off Petcare and tennis Presto, you're also seeing a kid with stellar results and also renewed croak dynamic in our confectionery segment do you see them be significant success of HMO products and infant nutrition and also the reserve.

Mark Schneider: The trends of Nestor professional which I think completely reinvented itself Jumba Cobra tiers.

And now is enjoying a very good crop and benefiting from a renewed out of home trends.

Mark Schneider: So when you look at these five crore platforms alone they stand for about a third of our company's revenue. If in fact, you're not just counting this presto what the wider coffee category, which of course saw somewhat the same Kraft dynamics, then you're talking close to 50% of the company's revenue. So I think very strong chrome chrome.

Luca Borlini: If, in fact, you're not just counting Nespresso but the wider coffee category, which of course saw some of the same growth dynamics, then you're talking close to 50% of the company's revenue. I think very strong growth platforms that we intend to build on going forward. When it comes to 2024, clearly we expect a continued demanding environment. This calls for a number of priorities. We highlight a few for you here. Execution excellence, I think, is going to be front, left, and center. This applies to our supply chain. It applies to in-store execution, our cost position, and also order fill rates. I think I'm seeing very good progress on many of these dimensions, and we will continue to focus on them going forward. We definitely intend to make the basics in this company shine and help us with continued growth.

Mark Schneider: If, in fact, you're not just counting Nespresso but the wider coffee category, which of course saw some of the same growth dynamics, then you're talking close to 50% of the company's revenue. I think very strong growth platforms that we intend to build on going forward. When it comes to 2024, clearly we expect a continued demanding environment. This calls for a number of priorities. We highlight a few for you here. Execution excellence, I think, is going to be front, left, and center. This applies to our supply chain. It applies to in-store execution, our cost position, and also order fill rates. I think I'm seeing very good progress on many of these dimensions, and we will continue to focus on them going forward. We definitely intend to make the basics in this company shine and help us with continued growth.

Mark Schneider: Platforms that we intend to build on going forward.

When it comes to 'twenty 'twenty four clearly we expect a continued demanding environment and that this calls for a number of priorities and to we highlight a few for you here execution.

Speaker Change: Excellent I think is going to be front left and center. This applies to our supply chain, it's applies to in store execution.

Speaker Change: Our cost position and also order fill rates I think I'm seeing very good progress on many of these dimensions and we will continue to focus on them going forward, we definitely intent to make the basics and this company shine and help us with continued growth.

Mark Schneider: I think I'm seeing very good progress on many of these dimensions, and we will continue to focus on them going forward. We definitely intend to make the basics in this company shine and help us with continued growth. When it comes to marketing and growth investments, as I mentioned, we've already started to ramp up significantly in the year 2023. You can expect continued focus on those going forward. It's not only about spending more on brand support; it's also about focusing in particular on our best performers.

Luca Borlini: When it comes to marketing and growth investments, as I mentioned, we've already started to ramp up significantly in the year 2023. You can expect continued focus on those going forward. It's not only about spending more on brand support. It's also on focusing, in particular, on our best performers. I think many of these are among our fast-growing billionaire brands. The focus and the additional investment will certainly help us to ensure future growth. We will focus on growth that is real internal growth-led. Clearly, with the inflation spike now coming down, the volume and mixed components of our growth have to take the lead. This, as you know, is the healthier side of growth and the one that's more sustainable. It's the one that's more related to operational efficiencies over time as you gain in scale.

Mark Schneider: When it comes to marketing and growth investments, as I mentioned, we've already started to ramp up significantly in the year 2023. You can expect continued focus on those going forward. It's not only about spending more on brand support. It's also on focusing, in particular, on our best performers. I think many of these are among our fast-growing billionaire brands. The focus and the additional investment will certainly help us to ensure future growth. We will focus on growth that is real internal growth-led. Clearly, with the inflation spike now coming down, the volume and mixed components of our growth have to take the lead. This, as you know, is the healthier side of growth and the one that's more sustainable. It's the one that's more related to operational efficiencies over time as you gain in scale.

Speaker Change: When it comes to marketing on crop investments as I mentioned, we've already started to ramp up significantly in the year 2023, and you can expect continued focus on those going forward.

Speaker Change: It's not only about spending more on brand support is also in focusing in particular on our best performers and I think many of these are among our fast growing billionaire brands and so the focus and the additional investment would certainly help us to ensure our future growth.

Mark Schneider: And I think many of these are among our fast-growing billionaire brands. So the focus and the additional investment will certainly help us to ensure future growth. We will focus on a crop that is a real internal crop lead.

Speaker Change: We will focus on CRO that is real internal trove, let so clearly with the inflation spikes now coming down the volume and mix components of our growth have to take the lead. This as you know is the healthiest side of chrome and the one that's more sustainable I still want that's more.

Mark Schneider: So clearly, with the inflation spike now coming down, the volume and mixed components of our crop have to take the lead. This, as you know, is the healthier side of the crop and the one that's more sustainable, the one that's more related to operational efficiencies over time as you gain in scale, and it's also the one that is more closely related to market share gains. And this is what we're focusing on, and we will hopefully lay out in this call and when we answer your questions the agenda for how we make that happen going forward. I also wanted to confirm that regarding the restoration of our close margin and continued increase in free cash flow, we will stay fully committed to those. On free cash flow, you've already seen significant progress in 2023. Expect more to come in 2024 and beyond.

Speaker Change: Related to operational efficiencies over time as you gain scale and it's also the one that is more closely related to market share gains and this is what we're focusing on and that we will hopefully lay out in this call and when we answer. Your question is the agenda for how we make that happen going forward.

Luca Borlini: It's also the one that is more closely related to market share gains. This is what we're focusing on. We will hopefully lay out in this call and when we answer your questions the agenda for how we make that happen, going forward. I also wanted to confirm that regarding the restoration of our gross margin and continued increase in free cash flow, we will stay fully committed to those. On free cash flow, you've already seen significant progress in 2023. Expect more to come in 2024 and beyond. On gross margin, you've seen now a promising turnaround after the inflation spike has hit us. Here again, we're working patiently to bring back the gross margin to historic levels. Now, let's spend a bit of time on the next slide and Nestlé Health Science.

Mark Schneider: It's also the one that is more closely related to market share gains. This is what we're focusing on. We will hopefully lay out in this call and when we answer your questions the agenda for how we make that happen, going forward. I also wanted to confirm that regarding the restoration of our gross margin and continued increase in free cash flow, we will stay fully committed to those. On free cash flow, you've already seen significant progress in 2023. Expect more to come in 2024 and beyond. On gross margin, you've seen now a promising turnaround after the inflation spike has hit us. Here again, we're working patiently to bring back the gross margin to historic levels. Now, let's spend a bit of time on the next slide and Nestlé Health Science.

Speaker Change: I also wanted to confirm that regarding the restoration of a crows modern and continued increase in free cash flow, we will stay fully committed to various on free cash flow you've already seen significant progress in 'twenty, three and expect more to come in 'twenty, four and beyond and then cross margin <unk>.

Mark Schneider: And on the close margin, you've seen a promising turnaround after the inflation spike hit us. And here again, we're working patiently to bring back the close margin to its historic level. Now, let's spend a bit of time on the next slide and Nestle Health Science, and let me give you right up front my regrets for the negative surprise in the second half when it comes to our Q3 and Q4 performance. We're fully aware that we were disappointing you.

Speaker Change: See now a promising turnaround after the inflation spinnaker hit us enter here again were working patiently to pre impact the gross margin to historic levels.

Speaker Change: Now, let's spend a bit of time on the next slide and Nestle Health Science, and let me give you right upfront my regrets for the negative surprise in the second half when it comes to our Q3 and Q4 performance. We're fully aware that we were disappointed you we had high expectations.

Luca Borlini: Let me give you right up front my regrets for the negative surprise in the second half when it comes to our Q3 and Q4 performance. We're fully aware that we were disappointing you. We had high expectations for this business in 2023. It's all the more credible that the market has come back pretty much exactly as we had expected. We had told you that until about midyear there were going to be some negative year-over-year effects, coming from the post-COVID era and that from then on, you would have every reason to expect high single-digit growth. We've seen the good growth in many areas outside of the vitamins, minerals, and supplements area, and in fact, the market in vitamins, minerals, and supplements came back very nicely.

Mark Schneider: Let me give you right up front my regrets for the negative surprise in the second half when it comes to our Q3 and Q4 performance. We're fully aware that we were disappointing you. We had high expectations for this business in 2023. It's all the more credible that the market has come back pretty much exactly as we had expected. We had told you that until about midyear there were going to be some negative year-over-year effects, coming from the post-COVID era and that from then on, you would have every reason to expect high single-digit growth. We've seen the good growth in many areas outside of the vitamins, minerals, and supplements area, and in fact, the market in vitamins, minerals, and supplements came back very nicely.

Mark Schneider: We had high expectations for this business in 23. And it's all the more incredible that the market has come back pretty much exactly as we had expected. We had told you that until about mid-year, there were going to be some negative year-over-year effects coming from the post-COVID era, and that from then on, you would have every reason to expect high single-digit growth.

Speaker Change: Spectation for this business in 'twenty three.

Speaker Change: And it's all the more of Accretable that the market has come back pretty much exactly as we had expected. We had told you that until about mid year that we're going to be some negative year over year effects coming from the post Covid era and that from then on you would have every reason to expect high single digit growth.

Mark Schneider: We've seen a good crop in many areas outside of the vitamins, minerals, and supplements area. And, in fact, the market for vitamins, minerals, and supplements came back very nicely, but we were not able to benefit from it as a result of the integration issues that we had laid out to you as part of a Q3 call. Those integration issues, when we looked at them more closely, they took us more effort. They were more fundamental than we initially estimated.

Speaker Change: We've seen the good crop in many areas outside of the vitamins minerals and supplements area.

Speaker Change: And in fact, the market in vitamins minerals and supplements came back very nicely, but we were not able to benefit from it as a result of the integration issues that we had laid out to you as part of the Q3 call that was integration issues. When we looked at them more closely but it took us more effort there were more.

Luca Borlini: We were not able to benefit from it as a result of the integration issues that we had laid out to you as part of a Q3 call. Those integration issues, when we looked at them more closely, they took us more effort. They were more fundamental than initially we have estimated. You will have seen we did go through quite a number of leadership changes in this business. We significantly boosted the executive ranks and especially the operational capabilities in this business. As a result of that, we saw additional needs for a more thorough and better integration to capture synergies going forward and address all the underlying problems. We believe once these plans are put in place, we will be in a much better position to take advantage of the future growth opportunity.

Mark Schneider: We were not able to benefit from it as a result of the integration issues that we had laid out to you as part of a Q3 call. Those integration issues, when we looked at them more closely, they took us more effort. They were more fundamental than initially we have estimated. You will have seen we did go through quite a number of leadership changes in this business. We significantly boosted the executive ranks and especially the operational capabilities in this business. As a result of that, we saw additional needs for a more thorough and better integration to capture synergies going forward and address all the underlying problems. We believe once these plans are put in place, we will be in a much better position to take advantage of the future growth opportunity.

Speaker Change: Our fundamental that initially we have estimated.

Mark Schneider: You will have seen that we did go through quite a number of leadership changes in this business. We significantly boosted the executive ranks and especially the operational capabilities of this business. As a result of that, we saw additional needs for a more thorough and better integration to capture synergies going forward and address all the underlying problems.

Speaker Change: You will have seen we did go through quite a number of leadership changes in this business, we significantly boosted the EM executive ranks and especially the operational capabilities in this business as a result of that we saw additional needs for a more thorough and better integration to capture synergies going.

Speaker Change: Forward and address all the underlying problems we belief once these plans have put in place will be.

Mark Schneider: We believe once these plans are put in place, we will be in a much better position to take advantage of the future crop opportunity, but in the short term, it does take this extra effort to position the business for success. What I would like to reassure you about are the attractive long-term trends, both in consumer care and medical nutrition, which are the two main growth pillars in this business. In medical nutrition, which had not been affected by the integration issues, you saw double-digit growth in 2003. And in consumer care, you have seen some very strong examples of either very solid single-digit or even double-digit growth in areas that were not affected by the integration issues. So I would like to highlight Orgain, which is part of our active nutrition program, segment in consumer care, which has performed very nicely in double digits. And I would also, even in the VMS space, point out Pure Encapsulation.

Speaker Change: We'll be in a much better position to take advantage of the future crop opportunity, but short term. It does take this extra airport to position the business for success.

Luca Borlini: Short term, it does take this extra effort to position the business for success. What I would like to reassure you about is the attractive long-term trends, both in Consumer Care and Medical Nutrition, which are the two main growth pillars in this business. In Medical Nutrition, which had not been affected by the integration issues, you have seen double-digit growth in 2023. In Consumer Care, you have seen some very strong examples of either very solid single-digit or even double-digit growth in areas that were not affected by the integration issues. I would like to highlight Orgain, which is part of our Active Nutrition segment in Consumer Care, which has performed very nicely in double digits. I would also, even in the VMS space, like to point out Pure Encapsulations.

Mark Schneider: Short term, it does take this extra effort to position the business for success. What I would like to reassure you about is the attractive long-term trends, both in Consumer Care and Medical Nutrition, which are the two main growth pillars in this business. In Medical Nutrition, which had not been affected by the integration issues, you have seen double-digit growth in 2023. In Consumer Care, you have seen some very strong examples of either very solid single-digit or even double-digit growth in areas that were not affected by the integration issues. I would like to highlight Orgain, which is part of our Active Nutrition segment in Consumer Care, which has performed very nicely in double digits. I would also, even in the VMS space, like to point out Pure Encapsulations.

Speaker Change: What I would like to reassure you about is I'll be attractive long term trends, both in consumer care and medical nutrition, which is the two main chrome pillows and this business in medical nutrition, which had not been affected by the integration issues you have seen double digit growth in 'twenty three.

Speaker Change: <unk> and in consumer care, you have seen some very strong example itself them either very solid single digit or even double digit growth in areas that would not affect it.

Speaker Change: By the integration issues, so I would like to highlight all gain which is part of our active nutrition segment.

Speaker Change: Segment in consumer care, which has performed very nicely in double digits and I would also even in the Vms space I would like to point out pure encapsulation that was the only major at B M. S. Print that was not part of these integration plans and they're also we continued with double digit growth.

Luca Borlini: That was the only major VMS brand that was not part of these integration plans. There also, we continued with double-digit growth. Once we have the integration issues behind us, we expect continued, midterm high single-digit, organic sales growth opportunities here for Nestlé Health Science. We believe we have the portfolio, we have the technologies, to make that happen. To give you a sense on what it cost us in Q4, we believe that the penalty to the group of those issues in Q4 was greater than 50 basis points to RIG or OG. Because the problem is now taking us slightly longer, and we have to refill the pipeline, we believe that we're still looking at a negative Q1 when it comes to RIG and OG. We will then turn the corner at some point during Q2.

Mark Schneider: That was the only major VMS brand that was not part of these integration plans. There also, we continued with double-digit growth. Once we have the integration issues behind us, we expect continued, midterm high single-digit, organic sales growth opportunities here for Nestlé Health Science. We believe we have the portfolio, we have the technologies, to make that happen. To give you a sense on what it cost us in Q4, we believe that the penalty to the group of those issues in Q4 was greater than 50 basis points to RIG or OG. Because the problem is now taking us slightly longer, and we have to refill the pipeline, we believe that we're still looking at a negative Q1 when it comes to RIG and OG. We will then turn the corner at some point during Q2.

Mark Schneider: That was the only major VMS brand that was not part of these integration plans, and there we also continued with double digit growth. So once we have the integration issues behind us, we expect continued midterm, high single-digit organic growth opportunities here for Nestle Health Science. And we believe we have the portfolio to do that. We have the technologies to make that happen.

Speaker Change: So once we have the integration issues behind US we expect continued midterm high single digit organic growth opportunities here for Nestle Health Science, and we believe we have the portfolio with hat, we have the technologies to make that happen to give you a sense of what it cost.

Mark Schneider: To give you a sense of what it cost us in Q4, we believe that the penalty to the group for those issues in Q4 was greater than 50 basis points to RIG or OG. And because the problem is now taking slightly longer, and we have to refill the pipeline. We believe that we're still looking at a negative Q1 when it comes to Oregon OG, but we will then turn the corner at some point during Q2. And then we're looking at double-digit organic growth in the second half. All in all, for the full year 24, it should add up to mid-single-digit.

Speaker Change: Asked us in Q4, we believe that the penalty to the group of those issues in crew for in Q4 was a greater than 50 basis points to rig Oh, Gee and time, because the problem is now taking a slightly longer.

Speaker Change: And we have to refill the pipeline.

Speaker Change: We believe that we're still looking at a negative Q1, when it comes to a rig and Oh Gee, We will then turn the corner.

Speaker Change: At some point during Q2, and then we're looking at double digit organic growth in the second half all in all for the full year 'twenty four it should add up to mid single digit growth.

Luca Borlini: We're looking at double-digit organic growth in H2. All in all, for the full year 2024, it should add up to mid-single-digit growth. One question that has come up repeatedly this morning is about why Q4 was worse than Q3 when, in fact, we were expecting to be in demand. The simple answer is that in Q3, we're still benefiting from some of the stocks we had on hand. Now we've depleted that. We have to refill the pipeline. I can tell you we are making very good progress on this issue. One more time, I can only express my regrets. If you're sensing a certain amount of frustration over this issue, yes, there is frustration. I do believe that we have the problem now under control, and it's in demand.

Mark Schneider: We're looking at double-digit organic growth in H2. All in all, for the full year 2024, it should add up to mid-single-digit growth. One question that has come up repeatedly this morning is about why Q4 was worse than Q3 when, in fact, we were expecting to be in demand. The simple answer is that in Q3, we're still benefiting from some of the stocks we had on hand. Now we've depleted that. We have to refill the pipeline. I can tell you we are making very good progress on this issue. One more time, I can only express my regrets. If you're sensing a certain amount of frustration over this issue, yes, there is frustration. I do believe that we have the problem now under control, and it's in demand.

Mark Schneider: One question that has come up repeatedly this morning is about why Q4 was worse than Q3, when, in fact, we were expecting to be on the mend. And the simple answer is that in Q3 we were still benefiting from some of the stocks we had on hand. Now we've depleted that. We have to refill the pipeline. But I can tell you we are making very good progress on this issue. So, one more time, I can only express my regrets.

Speaker Change: One question that has come up repeatedly. This morning is about why Q4 was worst in Q3. When in fact, we were expecting to be on the mens and the simple answer is that in Q3, we were still benefiting from some of the stocks. We had on hand now with depleted that we have to refill the pipeline, but I can tell you we are making very good.

Speaker Change: Progress on this issue. So one more time I can only express my regrets if you're sensing a certain amount of frustration of what this issue. Yes, there is frustration, but I do believe that.

Mark Schneider: If you're sensing a certain amount of frustration over this issue, yes, there is frustration. But I do believe that we have the problem now under control, and it's on the mend. Another question that has come up several times is why such a basic IT integration issue could create such a headache for the company. Clearly, IT integration, when it comes to our standard zones and markets, is not something that's usually giving us trouble. I think it is something where we have a well-honed machine. It is important to keep in mind the very special organizational setup of Nestle Health Science as what we call a globally managed business, so a fairly freestanding unit. That unit was very much targeted at strong growth.

Speaker Change: We have the problem now under control and its on demand.

Luca Borlini: Another question that has come up several times is why such a basic IT integration issue could create such a headache for the company. Clearly, IT integration, when it comes to our standard zones and markets, is not something that's usually giving us trouble. I think it is something where we have a well-honed machine. It is important to keep in mind the very special organizational setup of Nestlé Health Science as what we call a globally managed business, so a fairly freestanding unit. That unit was very much targeted on strong growth. As you can imagine, I mean, and many of you followed this business over the years, from less than $2 billion of revenue in 2016, we were scaling it up to north of $6 billion of revenue now.

Mark Schneider: Another question that has come up several times is why such a basic IT integration issue could create such a headache for the company. Clearly, IT integration, when it comes to our standard zones and markets, is not something that's usually giving us trouble. I think it is something where we have a well-honed machine. It is important to keep in mind the very special organizational setup of Nestlé Health Science as what we call a globally managed business, so a fairly freestanding unit. That unit was very much targeted on strong growth. As you can imagine, I mean, and many of you followed this business over the years, from less than $2 billion of revenue in 2016, we were scaling it up to north of $6 billion of revenue now.

Speaker Change: Another question that has come up several times is why such a basic tenet creation issue could create such a headache for the company are clearly I T integration when it comes to our standard zones in markets is not something thats, usually giving us trouble I think it is something where we have a well honed machine.

Speaker Change: It is important to keep in mind, the very special organizational and setup of Nestle Health Science.

Speaker Change: As what we call it globally managed business, so fairly freestanding unit.

Speaker Change: That unit was very much targeted on strong growth and so you can imagine I mean, and many of you followed this business over the years from less than 2 billion of revenue in 2016, we were scaling up to north of 6 billion of revenue now.

Mark Schneider: As you can imagine, I mean, many of you have followed this business over the years. From less than $2 billion in revenue in 2016, we were scaling it up to now for $6 billion in revenue now. As part of that growth mandate and growth focus, what we had to realize now is that some of the integration matters and some of the integration priorities did not get the attention that they should have gotten. This is the lesson we learned from it.

Luca Borlini: As part of that growth mandate and growth focus, what we had to realize now is that some of the integration matters and some of the integration priorities did not get the attention that they should have gotten. This is the learning we had from it. We will definitely now make sure that all the integration steps are in place before we target further growth. On the segment itself, it is important to me, and you will see later in the presentation, there are continued growth opportunities. They're clearly around the themes of healthy aging, around the themes of weight management, and many others. Clearly, I think we're onto the right thing here, and we will intend to make more of it. On the next three slides, I would like to address three strategic topics when it comes to our overall strategy and group direction.

Mark Schneider: As part of that growth mandate and growth focus, what we had to realize now is that some of the integration matters and some of the integration priorities did not get the attention that they should have gotten. This is the learning we had from it. We will definitely now make sure that all the integration steps are in place before we target further growth. On the segment itself, it is important to me, and you will see later in the presentation, there are continued growth opportunities. They're clearly around the themes of healthy aging, around the themes of weight management, and many others. Clearly, I think we're onto the right thing here, and we will intend to make more of it. On the next three slides, I would like to address three strategic topics when it comes to our overall strategy and group direction.

Speaker Change: As part of that growth mandate and CRO focused what we had to realize now that some of the integration matters and some of the integration priorities did not get the attention that they should have gotten business. The learning we had from it.

Mark Schneider: We will definitely now make sure that all integration steps are in place before we target further growth. But on the segment itself, it is important to me, and you will see later in the presentation, there are continued growth opportunities. They're clearly around the themes of healthy aging, around the themes of weight management, and many of us

Speaker Change: We will definitely know make sure that all the integration steps are in place before we target further growth, but on the segment itself. It is important to me and you will see later in the presentation. There are continued growth opportunities, they're clearly around the themes of healthy aging around the themes of our weight management.

Speaker Change: And many of us and so clearly I think were onto the right thing here and we will intend to make more of it.

Mark Schneider: And so clearly, I think we are on to the right thing here, and we will intend to make more of it. On the next three slides, I would like to address three strategic topics when it comes to our overall strategy and group direction. The first one is around premium products.

Speaker Change: Yeah.

Speaker Change: On the next three slides I would like to address three strategic topics when it comes to our overall strategy and croup direction. The first one is around our premium products. I know this has been a theme on many of our investor days and quarterly updates. It's good now on a 10.

Luca Borlini: The first one is around premium products. I know this has been a theme on many of our investor days and quarterly updates. It's good now on a 10-year time horizon to take stock. You see here, on that 10-year basis, the significant contributions to our organic growth and also to the margin development that are coming from premium products. You see that over that decade, we have been increasing the contribution to sales by a factor of more than 3, from 11% to 36%. Mind you, when we talk premium products, we're not talking luxury. As you see in the footnote, we're talking of a price premium of 20% or more over the mainstream offerings in a category. At the bottom of the slide, you see some specific examples across the categories.

Mark Schneider: The first one is around premium products. I know this has been a theme on many of our investor days and quarterly updates. It's good now on a 10-year time horizon to take stock. You see here, on that 10-year basis, the significant contributions to our organic growth and also to the margin development that are coming from premium products. You see that over that decade, we have been increasing the contribution to sales by a factor of more than 3, from 11% to 36%. Mind you, when we talk premium products, we're not talking luxury. As you see in the footnote, we're talking of a price premium of 20% or more over the mainstream offerings in a category. At the bottom of the slide, you see some specific examples across the categories.

Mark Schneider: I know this has been a theme on many of our investor days and quarterly updates. It's good now to take stock, and you see here on that 10-year basis the significant contributions to our organic growth and also to the margin development that are coming from premium products. And you see that over that decade, we have been increasing the contribution to sales by a factor of more than three, from 11% to 36%. Mind you, when we talk about premium products, we're not talking luxury.

Speaker Change: Year time horizon to take stock and you see here on that 10 year basis, the significant contributions to our organic growth and also to the mantra in development that are coming from human products.

Speaker Change: And do you see that over that decade, we have been increasing the contribution to sales by a factor of more than three from 11% to 36% mind you. When we talk premium products were not talking luxury as you see in the footnotes, we're talking of a price premium of 20% or more over there.

Mark Schneider: As you see in the footnote, we're talking about a price premium of 20% or more over the mainstream offerings in a category. At the bottom of the slide, you see some specific examples across the categories, and I think without going into any of these specifically, what this should give you confidence about is that this is not just focused on one or two categories but rather something that we can very broadly apply across our categories in Geo. Let me also assure you that on the other end of the spectrum, and that is affordable products and extremely affordable products, especially in emerging markets where we know that we do play an important social role, these continue to get our full attention. We know that we have a very important public role with those, and I can also assure you that that end of the spectrum is also overall delivering very good growth profiles and also good contributions to our margin and financial economy.

Speaker Change: Mainstream offerings in a category at the bottom of the slides you see some specific examples across the categories and I think without going into any of these specifically what it should give you comfort. It's about is that this is not just focused on one or two categories, but rather something that we can very broadly.

Luca Borlini: I think without going into any of these specifically, what it should give you confidence about is that this is not just focused on one or two categories but rather something that we can very broadly apply across our categories and geographies. Let me also assure you that the other end of the spectrum, and that is affordable products and extremely affordable products, especially in emerging markets where we know that we do play an important social role, that these continue to get our full attention. We know that we have a very important public role with those. I can also assure you that that end of the spectrum as well is overall delivering very good growth profiles and also good contributions to our margin and financial success.

Mark Schneider: I think without going into any of these specifically, what it should give you confidence about is that this is not just focused on one or two categories but rather something that we can very broadly apply across our categories and geographies. Let me also assure you that the other end of the spectrum, and that is affordable products and extremely affordable products, especially in emerging markets where we know that we do play an important social role, that these continue to get our full attention. We know that we have a very important public role with those. I can also assure you that that end of the spectrum as well is overall delivering very good growth profiles and also good contributions to our margin and financial success.

Apply across our categories and geographies.

Speaker Change: He also assure you that the other end of the spectrum and that is affordable products and extremely affordable products, especially in emerging markets, where we know that we do play an important social role that these continue to get our full attention. We know that we have a very important public role with those and I can also assure you that that end up the spec.

Speaker Change: From as well as overall delivering very good growth profiles and also good contributions to our margin and financial success.

Speaker Change: Yeah.

Mark Schneider: As part of adding value to our consumers, and very often hand-in-hand with premiumization, I would like to talk to you about what I consider to be a major trend going forward, and that is healthy aging solutions. And when you think about the nutritional solutions that Nestle offers, obviously, we are focused on all stages in life, from early life to the aging population. And we were founded, as you know, with infant formula products. So clearly, at a time in the 1860s when there were very high birth rates but also very high child mortality, we were offering a solution, nutrition-based, to address those problems at those times. I think these days, while we stay fully committed to the beginning of life and the importance of the first 1,000 days, from a demographic point of view, the great opportunity in many large economies is about the aging population. And this is where nutrition is also playing a key role in avoiding noncommunicable diseases and making sure that we have longer, more active years.

Luca Borlini: As part of adding value to our consumers and very often hand in hand with the premiumization, I would like to talk to you about what I consider to be a major trend going forward, and that is healthy aging solutions. When you think about the nutritional solutions that Nestlé offers, obviously, we are focused on all stages in life, from early life to the aging population. We have been founded, as you know, with infant formula products. Clearly, at a time in the 1860s when there were very high birth rates but also very high child mortality, we were offering a solution, nutrition-based, to address those problems at those times.

Mark Schneider: As part of adding value to our consumers and very often hand in hand with the premiumization, I would like to talk to you about what I consider to be a major trend going forward, and that is healthy aging solutions. When you think about the nutritional solutions that Nestlé offers, obviously, we are focused on all stages in life, from early life to the aging population. We have been founded, as you know, with infant formula products. Clearly, at a time in the 1860s when there were very high birth rates but also very high child mortality, we were offering a solution, nutrition-based, to address those problems at those times.

Speaker Change: As part of adding value to our consumers and very often hand in hand with the premium amortization I would like to talk to you about what I consider to be a major major trend going forward and that is healthy aging solutions and when you think about.

Speaker Change: The nutritional solutions that National office, obviously, we are focused on all stages in life from our early life to the aging population and we have been founded as you know with infant formula products. So clearly at a time in the 18 sixties when they were very high birth rates, but also very high.

Speaker Change: Chalk mortality, we were offering a solution nutrition based to attract those problems at those times I think these days, but we stay fully committed to the beginning of life and the importance of our first 1000 days from a demographic point of view the credo opportunity in many large economies is about the <unk>.

Luca Borlini: I think these days, while we stay fully committed to the beginning of life and the importance of the first 1,000 days, from a demographics point of view, the great opportunity in many large economies is about the aging population. This is where nutrition is also playing a key role, in avoiding non-communicable diseases and making sure that we have longer, more active years. You see a number of examples here. You see in each of the four boxes, products from Nestlé Health Science that clearly does take a leading role in this area. It's also important to note, that our dairy and food segments have very important contributions to make. I think over time, as we apply this lens of healthy aging across a number of categories, you will see others come in.

Mark Schneider: I think these days, while we stay fully committed to the beginning of life and the importance of the first 1,000 days, from a demographics point of view, the great opportunity in many large economies is about the aging population. This is where nutrition is also playing a key role, in avoiding non-communicable diseases and making sure that we have longer, more active years. You see a number of examples here. You see in each of the four boxes, products from Nestlé Health Science that clearly does take a leading role in this area. It's also important to note, that our dairy and food segments have very important contributions to make. I think over time, as we apply this lens of healthy aging across a number of categories, you will see others come in.

Speaker Change: <unk> population and this is where and nutrition is also playing a key role in avoiding noncommunicable diseases, and making sure that we have longer more active years, you'll see a number of examples here and you see in each of the four boxes are products from Nestle Health science that clearly does take a leading role.

Mark Schneider: You see a number of examples here, and in each of the four boxes, products from Nestle Health Science that clearly take a leading role in this area. But it's also important to note that our dairy and food segments have very important contributions to make. And I think over time, as we apply this lens of healthy aging across a number of categories, you will see others come in. So I think there are quite a few categories within Nestle that can contribute to serving this growing need. I also believe it's one where our R&D capabilities and the sheer nutritional knowledge inside the company can make a very credible, very important contribution. When it comes to the content of the healthy aging themes, I would like to highlight four.

Speaker Change: In this area.

Speaker Change: But it's also important to note that our dairy and food segments have very important contributions to make and I think over time as we apply this lens of healthy aging across a number of categories. You will see of us come in so I think there's quite a few categories within this land that can contribute to serving this grow.

Luca Borlini: I think there's quite a few categories within Nestlé that can contribute to serving this growing need. I also believe it's one where our R&D capabilities and the sheer nutritional knowledge inside the company positions as well to make a very credible, very important, contribution. When it comes to the content of healthy aging themes, I would like to highlight four. There's probably quite a few of them in addition. I think those are the big four that we're focusing on. The first and most important one that I'll focus on in a minute is achieving and maintaining appropriate weight. The next one, as you age, that's very important, is preserving lean muscle mass. Of course, the proper amount of micronutrients is important. Addressing any micronutrient deficiencies is an important contributor to fighting aging. Another important one is to avoid unnecessary sugar spiking.

Mark Schneider: I think there's quite a few categories within Nestlé that can contribute to serving this growing need. I also believe it's one where our R&D capabilities and the sheer nutritional knowledge inside the company positions as well to make a very credible, very important, contribution. When it comes to the content of healthy aging themes, I would like to highlight four. There's probably quite a few of them in addition. I think those are the big four that we're focusing on. The first and most important one that I'll focus on in a minute is achieving and maintaining appropriate weight. The next one, as you age, that's very important, is preserving lean muscle mass. Of course, the proper amount of micronutrients is important. Addressing any micronutrient deficiencies is an important contributor to fighting aging. Another important one is to avoid unnecessary sugar spiking.

Speaker Change: Neat I also believe it's one where our R&D capabilities and pursue nutritional knowledge inside the company positions as well to make it very credible very important contribution.

Speaker Change: When it comes to the content of healthy aging of themes I would like to highlight four there's probably quite a few of them. In addition, but I think those are the big four that we're focusing on the.

Mark Schneider: There's probably quite a few of them in addition, but I think those are the big four that we're focusing on. The first and most important one that I'll focus on in a minute is achieving and maintaining an appropriate weight. The next one, as you age, that's very important, is preserving lean muscle mass. Then, of course, the proper amount of micronutrients is important, and addressing any micronutrient deficiencies is an important contributor to fighting aging.

Speaker Change: The first enforcement most important one that I focus on in a minute is achieving.

Speaker Change: And maintaining.

Speaker Change: Appropriate weight next.

Speaker Change: The next one as you age that's very important is preserving lean muscle mass then of course the proper amount of micro nutrients is important in addressing any micronutrient deficiencies is an important contributor to our fighting AR aging and then another important one is to avoid unnecessary.

Mark Schneider: And then another important one is to avoid unnecessary sugar spiking. That can happen either by reducing the sugar content in our products or making that sugar something that is slower acting, so hence it avoids the spiking in your system, the stress on the cardiovascular system, and some systemic inflammation. So those are key themes that we're focusing on, and clearly, out of those, weight management, maintaining target weight, does have a major importance. And obviously, that item, as we move to the next slide, has received a lot of attention, especially in the last year with the large public success of GLP-1 drugs and their importance for many consumers to initiate significant weight loss. At the moment, as you know, this opportunity is very much focused on the United States. There is a growing popularity of these drugs now in Western Europe, but we can imagine that, over time, this will be an important treatment option around the world.

Speaker Change: S S scenarios sugar spanking that can happen either by reducing the sugar content in our products or making that sugar something that is a slow acting so hence it voiced the spanking in your system distress on the cardiovascular system and some of the systemic inflammation. So that was a key theme.

Luca Borlini: That can happen either by reducing the sugar content in our products or making that sugar something that is slower acting. It avoids the spiking in your system, the stress on the cardiovascular system, and some of the systemic inflammation. Those are key themes that we're focusing on. Clearly, out of those, weight management, maintaining target weight, does have a major importance. Obviously, that item, as we move to the next slide, has received a lot of attention, especially in the last year, with the large public success of GLP-1 drugs. They have importance, for many consumers, to initiate significant weight loss. At the moment, as you know, this opportunity is very much focused on the United States. There's a growing popularity of these drugs now in Western Europe.

Mark Schneider: That can happen either by reducing the sugar content in our products or making that sugar something that is slower acting. It avoids the spiking in your system, the stress on the cardiovascular system, and some of the systemic inflammation. Those are key themes that we're focusing on. Clearly, out of those, weight management, maintaining target weight, does have a major importance. Obviously, that item, as we move to the next slide, has received a lot of attention, especially in the last year, with the large public success of GLP-1 drugs. They have importance, for many consumers, to initiate significant weight loss. At the moment, as you know, this opportunity is very much focused on the United States. There's a growing popularity of these drugs now in Western Europe.

Speaker Change: They were focusing on and Hum clearly out of those weight management, maintaining target weight does have a major importance and obviously that item as we move to the next slide has received a lot of attention, especially in the last here.

Speaker Change: With the large publics.

Speaker Change: Public success of G O P, one trucks and be of importance for many.

Speaker Change: <unk> was to initiate significant weight loss at the moment as you know if this opportunity is very much focused on benighted states. There's a growing popularity of peace trucks now in Western Europe, but.

Luca Borlini: We can imagine that over time, this will be an important treatment option around the world. I think it's also fair to assume that for this important treatment option, prices will come down and that in addition to subcutaneous application, there will also be oral solutions over the next few years. It is an important new trend. Over and above the inner core of GLP-1 drugs, I think it has brought the whole topic of dieting and weight loss back to the top of the agenda. To put it in slightly flippant terms, diets are cool again. It's something that people used to do quietly on the side, uncertain about their outcomes. I think now, with a much greater chance of success and strong scientific underpinnings, there's a renewed interest in the topic.

Mark Schneider: We can imagine that over time, this will be an important treatment option around the world. I think it's also fair to assume that for this important treatment option, prices will come down and that in addition to subcutaneous application, there will also be oral solutions over the next few years. It is an important new trend. Over and above the inner core of GLP-1 drugs, I think it has brought the whole topic of dieting and weight loss back to the top of the agenda. To put it in slightly flippant terms, diets are cool again. It's something that people used to do quietly on the side, uncertain about their outcomes. I think now, with a much greater chance of success and strong scientific underpinnings, there's a renewed interest in the topic.

Speaker Change: But we can imagine that over time this will be an important treatment option in around the world. I think it's also fair to assume that for this important treatment option prices will come down and that in addition to subcutaneous Ah application. They will also be oral solutions over the next few years. So it is important new trend.

Mark Schneider: I think it's also fair to assume that for this important treatment option, prices will come down, and that in addition to subcutaneous application, there will also be oral solutions over the next few years. So this is an important new trend. And over and above the inner core of GLP-1 drugs, I think they have brought the whole topic of dieting and weight loss back to the top of the agenda. To put it in slightly flippant terms, diets are cool again. It's something that people used to do quietly on the side, uncertain about their outcomes.

Speaker Change: And over and above the inner core of G. O P. One trucks I think it has brought the whole topic of dieting and weight loss back to the top of the agenda.

Speaker Change: To put it in scientists flip in terms our diets are cool again, it's something that people used to do quietly on the site are uncertain about their outcomes I think now with a much greater chance of success and tag strong scientific underpinnings, there's a renewed interest in the topic and it's something that gets discussed more and more openly.

Mark Schneider: I think now, with a much greater chance of success and strong scientific underpinnings, there's a renewed interest in the topic, and it's something that gets discussed more and more openly and where, of course, there's a number of ways to achieve weight loss, but GLP-1, at the moment, is getting most of the attention. On GLP-1, we told you that we have a number of companion products that might be a good fit for those consumers on these diets. You see here three key areas: muscle mass preservation, micronutrient deficiencies, and gastrointestinal health.

Luca Borlini: It's something that gets discussed more and more openly and where, of course, there's a number of ways to achieve weight loss, but GLP-1 at the moment getting most of the attention. On GLP-1, we had told you that we have a number of companion products that might be a good fit to those consumers on these diets. You see here three key areas: muscle mass preservation, micronutrient deficiencies, and gastrointestinal health. At the moment, when you look at the parameter that we outlined, this is a sales volume of about CHF 1.5 billion. In addition to what we have on offer today, we, of course, are working very hard inside our R&D area to come up with new and even more helpful companion products that will be important for GLP-1 patients during and after their treatment.

Mark Schneider: It's something that gets discussed more and more openly and where, of course, there's a number of ways to achieve weight loss, but GLP-1 at the moment getting most of the attention. On GLP-1, we had told you that we have a number of companion products that might be a good fit to those consumers on these diets. You see here three key areas: muscle mass preservation, micronutrient deficiencies, and gastrointestinal health. At the moment, when you look at the parameter that we outlined, this is a sales volume of about CHF 1.5 billion. In addition to what we have on offer today, we, of course, are working very hard inside our R&D area to come up with new and even more helpful companion products that will be important for GLP-1 patients during and after their treatment.

Speaker Change: Where of course, there's a number of ways to achieve weight loss, but she L. P. One at the moment getting most of the attention.

Speaker Change: On G. L. P. One we had told you that we have a number off companion products that might be a good fit to those consumers on these diets.

Speaker Change: You see here three key areas muscle mass preservation, micronutrient deficiencies and gastrointestinal health at the moment when you look at the parameter.

Mark Schneider: At the moment, when you look at the perimeter that we outlined, this is a sales volume of about 1.5 billion Swiss francs. In addition to what we have on offer today, we are, of course, working very hard in our R&D area to come up with new and even more helpful companion products that will be important for GLP-1 patients during and after their treatment. As I mentioned, in addition to GLP-1 alone, there are other ways to achieve weight loss, and it's important that we also have a competitive offering in those areas.

Speaker Change: That we outlined this is a sales volume of about a 1.5 billion Swiss francs. In addition to what we have on offer today, we of course, working very hard inside or.

Speaker Change: R&D area to come up with new and even more helpful companion products that will be important for G. O P. One patients during and after their treatment.

Luca Borlini: As I mentioned, in addition to GLP-1 alone, there's other ways to achieve weight loss. It's important that we also have a competitive offering in those areas. You see a number of them, at the bottom of the slide. I think those are seeing renewed attention as well. All in all, we are approaching this in a very proactive manner. We're trying to get prepared for this lower-calorie, higher-nutrient future. I think that we have a competitive offering there. Hence, looking at the GLP-1 situation, it's important not just to see it as a potential negative to certain products that might be demanded less. It's important to also see those growth opportunities. We will see over time, what the balance is.

Mark Schneider: As I mentioned, in addition to GLP-1 alone, there's other ways to achieve weight loss. It's important that we also have a competitive offering in those areas. You see a number of them, at the bottom of the slide. I think those are seeing renewed attention as well. All in all, we are approaching this in a very proactive manner. We're trying to get prepared for this lower-calorie, higher-nutrient future. I think that we have a competitive offering there. Hence, looking at the GLP-1 situation, it's important not just to see it as a potential negative to certain products that might be demanded less. It's important to also see those growth opportunities. We will see over time, what the balance is.

Speaker Change: As I mentioned in addition to G O P. One alone there's other ways to achieve weight loss and it's important that we also have a competitive offering in those areas you see a number of them are at the bottom of the slide and.

Mark Schneider: You see a number of them at the bottom of the slide, and I think those are seeing renewed attention as well. So, all in all, we are approaching this in a very proactive manner. We're trying to get prepared for this lower calorie, higher nutrient future, and I think that we have a competitive offering there. And hence, looking at the GLP-1 situation, it's important not just to see it as a potential negative for certain products that might be demanded less. It's important to also see those growth opportunities, and then we will see over time what the balance is. But to us, it's a change in consumer needs and consumer preferences, like many changes in consumer needs and preferences in the past. And it's simply our job to adjust to that and also take a leading role in offering nutritional products that are in demand by these consumers and patients. Moving on to the next two slides, I'd like to briefly touch upon our Good for You, Good for the Planet agenda.

Speaker Change: I think those are seeing renewed attention as well so all in all we are approaching this in a very proactive manner. We're trying to get prepared for this lower calorie higher nutrient future and I think that we have a competitive offering there and hence are looking at the T. O P. One situation, it's important not to.

Speaker Change: As to seed as a potential negative to certain products that might be demanded less it's important to also see those crop opportunities and then we will see over time, what the balances but to us it's a change in consumer needs and consumer preferences and like many changes in consumer needs and preferences in the past.

Luca Borlini: To us, it's a change in consumer needs and consumer preferences, like many changes in consumer needs and preferences in the past. It's simply our job to adjust to that and also take a leading role in offering nutritional products that are in demand with these consumers and patients. Moving on to the next two slides, I'd like to briefly touch upon our Good for You, Good for the Planet agenda. You will see more detail in our Creating Shared Value report that also became available for the year 2023 online today. The first one I would like to talk about is some of the nutritional initiatives that we kicked off last year. As you know, we were the first company that rated its entire global portfolio on the Health Star Rating. We published those numbers last March.

Mark Schneider: To us, it's a change in consumer needs and consumer preferences, like many changes in consumer needs and preferences in the past. It's simply our job to adjust to that and also take a leading role in offering nutritional products that are in demand with these consumers and patients. Moving on to the next two slides, I'd like to briefly touch upon our Good for You, Good for the Planet agenda. You will see more detail in our Creating Shared Value report that also became available for the year 2023 online today. The first one I would like to talk about is some of the nutritional initiatives that we kicked off last year. As you know, we were the first company that rated its entire global portfolio on the Health Star Rating. We published those numbers last March.

Speaker Change: And it's just simply our job to adjust to that and also take a leading role in offering nutritional products.

Speaker Change: That arent demand with these consumers and to patients.

Speaker Change: Yeah.

Speaker Change: Moving on to the next two slides I'd like to briefly touch upon our good for you good for the planet agenda you.

Mark Schneider: You will see more detail in our Creating Shared Value report that also became available for the year 23 online today. The first one I would like to talk about are some of the nutritional initiatives that we kicked off last year. As you know, we were the first company that rated its entire global portfolio on the Health Star rating, and we published those numbers last March. I'm glad to report now that, as part of our GROVE agenda, we have increased the share of more nutritious products that are rated 3.5 or higher from 57 to 59 percent in the year ahead. So I think a nice trend here when it comes to growing that. And as you know, during the year, we'd also given out the target for the year 2030 that we intend to grow.

Speaker Change: You will see more detail in our creating shared value report that also became available for be twenty-three online today.

Speaker Change: The first one I would like to talk about is somewhat be nutritional initiatives that we kicked off last year. As you know we were the first company that right at its entire global portfolio on the health Star rating and we publish those numbers last March.

Luca Borlini: Glad to report now that, as part of our GROVE agenda, we have increased the share of more nutritious products that are rated 3.5 or higher, from 57% to 59% in the year 2023. I think a nice trend here when it comes to growing that. As you know, during the year, we had also given out a target towards the year 2030 that we intend to grow this sales in this area of 3.5 and higher, to the tune of CHF 25 to 30 billion. For the categories that are more enjoyment-related and where it's more important to support responsible marketing and responsible consumption, we've also had some key initiatives and commitments. A key one is to apply over the next two or three years calorie caps for children's confection and ice cream products and limit those to 110 kilocalories or less.

Mark Schneider: Glad to report now that, as part of our GROVE agenda, we have increased the share of more nutritious products that are rated 3.5 or higher, from 57% to 59% in the year 2023. I think a nice trend here when it comes to growing that. As you know, during the year, we had also given out a target towards the year 2030 that we intend to grow this sales in this area of 3.5 and higher, to the tune of CHF 25 to 30 billion. For the categories that are more enjoyment-related and where it's more important to support responsible marketing and responsible consumption, we've also had some key initiatives and commitments. A key one is to apply over the next two or three years calorie caps for children's confection and ice cream products and limit those to 110 kilocalories or less.

I'm glad to report now that as part of our CRO for agenda. We have increased the shelf more nutritious products that are rated three and a half or higher.

Speaker Change: From 57% to 59% <unk> 23.

Speaker Change: So I think a nice trends here when it comes to growing that and as you know during the year, we'd also given out a target towards the year 'twenty authority that we intend to grow.

Mark Schneider: Sales in this area of three and a half and higher amounted to the tune of 25 to 30 billion Swiss francs. For the categories that are more enjoyment-related and where it's more important to support responsible marketing and responsible consumption, we also had some key initiatives and commitments. A key one is to apply calorie caps for children's confectionery and ice cream products over the next two or three years and limit those to 110 kilocalories or less.

Speaker Change: This sales in this area of three and a half and higher to the tune of 25 to 30 billion Swiss francs.

Speaker Change: For the categories that are more enjoyment relate it in time, where it's more important to support responsible marketing and responsible consumption.

Speaker Change: We've also had some key initiatives and our commitments.

Speaker Change: Key one is to apply over the next two or three years calorie caps put children's confection ice cream products and limit those to 110 kilo calories or less and then also transparency airports, whether it's front of pack or whether it's through digital tools to help consumers make informed choices. So all of this.

Luca Borlini: Then also, transparency efforts, whether it's front-of-pack or whether it's through digital tools, to help consumers make informed choices. All of this is progressing very nicely. I hope you appreciate the full transparency on what is an outside-of-the-company neutral rating system, the Health Star Rating system, and also the progress that you've seen from last year to this year. Moving to the Good for the Planet agenda and sustainability, here also, I hope you do appreciate the full transparency. We're reporting our greenhouse gas emission reductions year after year. As you know, in 2019, we signed on to the Science Based Targets initiative. We published a net-zero roadmap in 2020. The first major milestone, which calls for a 20% reduction in 2025, is coming due very shortly. With the 13.5% we achieved now, we're on track towards that and feel very confident.

Mark Schneider: And then also transparency efforts, whether it's front of pack or whether it's through digital tools to help consumers make informed choices. So all of this is progressing very nicely, and I hope you appreciate the full transparency on what is an outside-of-the-company, neutral rating system, the HealthStar rating system, and also the progress that you've seen from last year to this year. Moving to the good for the planet agenda and sustainability, here also, I hope you appreciate full transparency. We're reporting our greenhouse gas emission reductions year after year. As you know, in 2019, we signed on to the Science-Based Targets Initiative, and we published a net zero roadmap in 2020.

Mark Schneider: Then also, transparency efforts, whether it's front-of-pack or whether it's through digital tools, to help consumers make informed choices. All of this is progressing very nicely. I hope you appreciate the full transparency on what is an outside-of-the-company neutral rating system, the Health Star Rating system, and also the progress that you've seen from last year to this year. Moving to the Good for the Planet agenda and sustainability, here also, I hope you do appreciate the full transparency. We're reporting our greenhouse gas emission reductions year after year. As you know, in 2019, we signed on to the Science Based Targets initiative. We published a net-zero roadmap in 2020. The first major milestone, which calls for a 20% reduction in 2025, is coming due very shortly. With the 13.5% we achieved now, we're on track towards that and feel very confident.

Speaker Change: Crescent very nicely and I hope you appreciate the full transparency on what is a outside of the company neutral rating system. The health Star rating system and also the progress that you've seen from last year to this year.

Speaker Change: Moving to the good for the planet agenda and sustainability here also I hope you do appreciate the full transparency, we are reporting our clean house gas emissions reductions he after a year.

Speaker Change: In 2019, we signed on to the Science based targets initiative, we published a net zero roadmap in 2020.

Mark Schneider: The first major milestone, which calls for a 20% reduction in 2025, is coming due very shortly. With the 13.5% we've achieved now, we're on track towards that and feel very confident. When you look at the 2018 baseline, when you look at the continued growth of the company since, and then the 13.5% net reduction, it's very clear that we have successfully decoupled the growth of the company from the growth of our greenhouse gas emissions. And I think that is very reassuring to see.

Speaker Change: The first major milestone, which calls for a 20% reduction in 2025 is coming to a very shortly with a 13, 5%. We achieved now we're on track towards that and feel very confident when you look at the 2018 baseline, but when you look at the continued growth of the company since.

Luca Borlini: When you look at the 2018 baseline, when you look at the continued growth of the company since, and then the 13.5% net reduction, it's very clear that we have successfully decoupled the growth of the company from the growth of our greenhouse gas emissions. I think that is very reassuring to see. We have also provided more details on other greenhouse gases other than CO2. Methane, of course, in our industry is an important one as a result of our large use of dairy products. Very, very happy to report here that against the same baseline, 2018, we've now seen a 15.3% reduction. Very good, very patient work that dates back actually a long time in the dairy supply chain, that allowed us to achieve net reduction. Overall, very comfortable with it.

Mark Schneider: When you look at the 2018 baseline, when you look at the continued growth of the company since, and then the 13.5% net reduction, it's very clear that we have successfully decoupled the growth of the company from the growth of our greenhouse gas emissions. I think that is very reassuring to see. We have also provided more details on other greenhouse gases other than CO2. Methane, of course, in our industry is an important one as a result of our large use of dairy products. Very, very happy to report here that against the same baseline, 2018, we've now seen a 15.3% reduction. Very good, very patient work that dates back actually a long time in the dairy supply chain, that allowed us to achieve net reduction. Overall, very comfortable with it.

Speaker Change: And then the 3rd.5% net reduction it's very clear that we have successfully decoupled the crop up a company from the crop our greenhouse gas emissions.

Speaker Change: And I think that is very reassuring to see we.

Mark Schneider: We have also provided more details on other greenhouse gases and CO2. So methane, of course, in our industry is an important one as a result of our large use of dairy products. And very, very happy to report here that against the same baseline, 2018, we've now seen a 15.3% reduction. So very good, very patient work that dates back actually a long time in the dairy supply chain allowed us to achieve that reduction. So overall, very comfortable with it, and in our opinion, this whole notion of, on the one hand, having full transparency and annual disclosures of these greenhouse gas emissions, and then also being firmly able to say that peak carbon is behind us and that we are on our way down, that, to me, in our industry, is an important statement.

Speaker Change: We have also provided more details on other greenhouse gases and C. O. Two so methane of course in our industry is an important one as a result of our large shoes of dairy products and very very happy to report here that against the same baseline 2018, we've now seen a 15.3% reduction.

Speaker Change: And so very good very patient work that dates back actually longtime inventory supply chain that allowed us to achieve that reduction so overall very comfortable with it and in our opinion.

Luca Borlini: In our opinion, this whole notion of, on the one hand, having full transparency in annual disclosures of these greenhouse gas emissions and then also being firmly able to say that peak carbon is behind us and that we're on our way down, that, to me, in our industry, is an important statement to make. Before I hand it over to François, let me talk about our guidance, for the year 2024 and then also remind you and fully confirm our 2025, medium-term targets. For the year 2024, we're guiding for organic growth around 4%. I would also like to point out that around 4% is not a backdoor 3% to 5% guidance. Around 4% centers around 4%. This is where we have the confidence.

Mark Schneider: In our opinion, this whole notion of, on the one hand, having full transparency in annual disclosures of these greenhouse gas emissions and then also being firmly able to say that peak carbon is behind us and that we're on our way down, that, to me, in our industry, is an important statement to make. Before I hand it over to François, let me talk about our guidance, for the year 2024 and then also remind you and fully confirm our 2025, medium-term targets. For the year 2024, we're guiding for organic growth around 4%. I would also like to point out that around 4% is not a backdoor 3% to 5% guidance. Around 4% centers around 4%. This is where we have the confidence.

Speaker Change: This whole notion of on the one hand, having full transparency and annual disclosures of these greenhouse gas emissions and then also being firmly able to say that peak carbon is behind us and that we're on our way down that to me in our industry is an important statement to make.

Mark Schneider: Before I hand it over to Fransma, let me talk about our guidance for the year 2024 and then also remind you and fully confirm our 2025 midterm targets. So for the year 2024, we're guiding for organic CS scope around 4%. And I would also like to point out that around 4% is not a backdoor 3 to 5 guidance. So around 4% sent us around 4%, and this is where we have confidence. At the same time, given some of the difficulty in your comparisons that we're facing, especially for the first quarter and the second quarter, we felt it was not right at this point to guide towards mid-single digits. So I hope you appreciate that conservative approach.

Speaker Change: Before I hand, it over to <unk>, Let me talk about our guidance for the year 'twenty 'twenty four and then also remind you and fully confirm our 'twenty to 'twenty five a midterm targets. So for the year 'twenty 'twenty four we're guiding for organic she has coped.

Speaker Change: Around 4%.

Speaker Change: And I would also like to point out that around 4% is not a back door three to five guidance. So around 4% centers around 4% and this is where we have the competence at the same time, given some of the difficult year over year comparisons that we're facing especially for the first.

Luca Borlini: At the same time, given some of the difficult year-over-year comparisons that we're facing, especially for Q1 and Q2, we felt it was not right at this point to guide towards mid-single digit. I hope you appreciate that conservative approach. At the same time, I hope you also see some of the underlying optimism at a time when the nature of growth is shifting very significantly from something that was pricing-led for the most part of last year and then, of course, needs to be a real internal growth-led, for this year. We also point to and expect a moderate increase in the underlying trading operating profit margin. I think this is very much in line with what you've seen in the past from our statements and, in the old Nestlé model.

Mark Schneider: At the same time, given some of the difficult year-over-year comparisons that we're facing, especially for Q1 and Q2, we felt it was not right at this point to guide towards mid-single digit. I hope you appreciate that conservative approach. At the same time, I hope you also see some of the underlying optimism at a time when the nature of growth is shifting very significantly from something that was pricing-led for the most part of last year and then, of course, needs to be a real internal growth-led, for this year. We also point to and expect a moderate increase in the underlying trading operating profit margin. I think this is very much in line with what you've seen in the past from our statements and, in the old Nestlé model.

Speaker Change: Quarter in the second quarter, we felt it was not right at this point to guide towards mid single digits. So I hope you appreciate that conservative approach and then at the same time I hope you'll also see some of the underlying optimism at a time when the nature of growth is shifting very significantly from something.

Mark Schneider: And at the same time, I hope you also see some of the underlying optimism at a time when the nature of growth is shifting very significantly from something that was pricing-lit for the most part of last year and then, of course, needs to be real internal growth-lit for this year. We also point to and expect a moderate increase in the underlying trading operating profit margin. I think this is very much in line with what you've seen in the past from our statements in the old Nestle model, and we believe that the two features here will help us to again reach an underlying earnings per share growth in constant currency between 6% and 10%. For the year 2025 and beyond, we do expect that return to mid-single-digit organic sales growth. And this is a key point for me to make.

Speaker Change: There was pricing that for the most part of last year, and then of course needs to be a real internal CRO flat for this year.

Speaker Change: We also point to and expect a moderate increase in the underlying trading operating profit margin.

Speaker Change: This is very much in line with what you've seen in the past from our statements and and the openness the model and we believe that the two features here will help us to again reach and underlying earnings per share growth in constant currency between six and 10%.

Luca Borlini: We believe that the two features here will help us to again reach an underlying earnings per share growth in constant currency between 6% and 10%. For the year 2025 and beyond, we do expect that return to mid-single digit organic sales growth. This is a key point for me to make. When we started to call out for you that we have a portfolio that can consistently deliver mid-single digit organic growth several years ago, we meant it. Clearly, we confirm that for the year 2025 and beyond. For this year, again, the more cautious approach after three consecutive years of being significantly above the mid-single digit corridor, I think, should be understandable given that we're working our way down from this historic inflation spike.

Mark Schneider: We believe that the two features here will help us to again reach an underlying earnings per share growth in constant currency between 6% and 10%. For the year 2025 and beyond, we do expect that return to mid-single digit organic sales growth. This is a key point for me to make. When we started to call out for you that we have a portfolio that can consistently deliver mid-single digit organic growth several years ago, we meant it. Clearly, we confirm that for the year 2025 and beyond. For this year, again, the more cautious approach after three consecutive years of being significantly above the mid-single digit corridor, I think, should be understandable given that we're working our way down from this historic inflation spike.

Speaker Change: For the year 'twenty 'twenty five and beyond we do expect that returned to mid single digit organic sales growth and this is a key point for me to make and when we started to call out for you that we have a portfolio that can consistently deliver mid single digit organic growth several years ago, we meant it so clearly.

Mark Schneider: And when we started to call out for you that we have a portfolio that can consistently deliver mid-single-digit organic growth several years ago, we meant it. So clearly, we confirmed that for the year 2025 and beyond. And for this year, again, the more cautious approach, after three consecutive years of being significantly above the mid-single-digit corridor, should be understandable given that we're working our way down from this historic inflation. And going forward, I also wanted to underline to our shareholders that we're fully committed to creating value for our investors. And we intend to do this with a convincing, strong underlying operational performance and, of course, analyzing every strategic opportunity to create value with an open mind, as long as it creates lasting value. With that, I will hand it over to Francois, and then I look forward to coming back and answering your questions.

Speaker Change: We confirmed that <unk> 25, and beyond and for this year again, the more cautious approach after three consecutive years of being significantly above the mid single digit corridor I think should be understandable given that we're working our way down from this historic inflation Spike.

Luca Borlini: Going forward, I also wanted to underline to our shareholders that we're fully committed to creating value for our investors. We intend to do this with a convincing, strong underlying operational performance and, of course, analyzing every strategic opportunity to create value with an open mind as long as it creates lasting value. With that, let me hand it over to François. I look forward to coming back and answering your questions. Thank you, Mark. Good morning or good afternoon to all. Let me start with some of the key highlights for 2023. We delivered a resilient financial performance in a context of soft consumer demand. As you can see from the chart, organic growth was strong at 7.2%. Our underlying trading operating profit margin was up 40 basis points in constant currency versus the prior year.

Mark Schneider: Going forward, I also wanted to underline to our shareholders that we're fully committed to creating value for our investors. We intend to do this with a convincing, strong underlying operational performance and, of course, analyzing every strategic opportunity to create value with an open mind as long as it creates lasting value. With that, let me hand it over to François. I look forward to coming back and answering your questions.

Speaker Change: And going forward I also wanted to underlying to our shareholders that we're fully committed to creating value for our investors and we intend to do this with a convincing strong underlying operational performance and of course analyzing every strategic opportunity to create value with no.

Speaker Change: But mind as long as it creates lasting value.

Speaker Change: With that let me hand, it over to Francois and then I look forward to coming back and answering your questions.

François-Xavier Roger: Thank you, Mark. Good morning or good afternoon to all. Let me start with some of the key highlights for 2023. We delivered a resilient financial performance in a context of soft consumer demand. As you can see from the chart, organic growth was strong at 7.2%. Our underlying trading operating profit margin was up 40 basis points in constant currency versus the prior year.

François Roger: Thank you, Mark, and good morning or good afternoon, and Deliver the Resilient Financial System or the underlying Profit Margin. The underlying earnings per share growth was robust, increasing by 8.4% in constant growth, and cash flow increased by $3.8 billion. 1.4 billion.

Francois: Thank you Mark and good morning, or good afternoon to all let me start with some of the key highlights for 2023, we delivered a resilient financial performance in the context of soft consumer demand as you can see from the chart.

Francois: Those were strong at seven 2%.

Francois: Underlying trading operating profit margin was up 40 basis points in constant currency versus the prior year.

Luca Borlini: Underlying earnings per share growth was robust, increasing by 8.4% in constant currency. Free cash flow increased by CHF 3.8 billion to CHF 10.4 billion. Organic growth was driven by pricing of 7.5%, reflecting the impact of cost inflation over the last two years. RIG was -0.3%, impacted by soft consumer demand, capacity constraints, and, in H2, a temporary supply disruption for vitamins, minerals, and supplements. Net divestitures reduced sales by 0.9%. Foreign exchange had an exceptionally negative impact of -7.8% on net sales, following the significant and broad-based appreciation of the Swiss francs versus our basket of currencies. On average, over the last 10 years, foreign exchange has had a negative impact of about -3.5% per annum on our reported sales. In 2023, this impact was twice as large. Total reported sales decreased by -1.5% to CHF 93 billion.

François-Xavier Roger: Underlying earnings per share growth was robust, increasing by 8.4% in constant currency. Free cash flow increased by CHF 3.8 billion to CHF 10.4 billion. Organic growth was driven by pricing of 7.5%, reflecting the impact of cost inflation over the last two years. RIG was -0.3%, impacted by soft consumer demand, capacity constraints, and, in H2, a temporary supply disruption for vitamins, minerals, and supplements. Net divestitures reduced sales by 0.9%. Foreign exchange had an exceptionally negative impact of -7.8% on net sales, following the significant and broad-based appreciation of the Swiss francs versus our basket of currencies. On average, over the last 10 years, foreign exchange has had a negative impact of about -3.5% per annum on our reported sales. In 2023, this impact was twice as large. Total reported sales decreased by -1.5% to CHF 93 billion.

Francois: Underlying earnings per share growth was robust increasing by eight 4% in constant currency pre.

Francois: Free cash flow increased by $3 8 billion Swiss francs to $10 4 billion Swiss francs.

François Roger: Organic growth was driven by pricing of 7.5%, reflecting the impact of cost inflation over the last... RIG was minus 0.3% impacted by self-consumer demand, capacity constraints, and, in the second half, a temporary supply disruption for vitamins, minerals, and supplements. Net divested shares reduced sales by 0.9%. Foreign exchange had an exceptionally negative impact of 7.8% on net sales following the significant and broad-based appreciation of the Swiss francs versus our basket of currencies. On average, over the last 10 years, foreign exchange has had a negative impact of about 3.5% per annum on our reported sales. In 2023, this impact was twice as large, and total reported sales decreased by 1.5% to 93 billion Swiss francs.

Francois: Organic growth was driven by pricing of seven 5%, reflecting the impact of cost inflation over the last two years.

Francois: Rig was minus 0.3% impacted by soft consumer demand capacity constraints and in the second half, but temporary supply disruption for vitamins minerals and supplements.

Francois: Net divestitures reduced sales by 0.9 persons.

Francois: Foreign exchange had an exceptional negative impact of seven 8% of net sales for the wings are significant and broad based appreciation of the Swiss francs versus our basket of currencies.

Francois: On average over the last 10 years Foreign exchange has had a negative impact of about three 5% per annum on a reported sounds in.

Francois: In 'twenty two 'twenty three this impact was twice as large.

Francois: Total reported sales decreased by one 5% 293 billion Swiss francs.

François Roger: Turning to the distribution of growth between developed and emerging markets, organic growth in developed markets was 6.4% based on price. RIG was negative, although improving in the second half of the year. However, growth in emerging markets was robust at 8.4%, supported by pricing with positive risk. Growth was driven by Latin America, Africa, and South Asia, with continued momentum for affordable offerings. Here, we can see the evolution of our organic cell growth factors over the last six years, including the breakdown of RIG into volume and mix. As a reminder, we have always excluded water and health science from this analysis.

Luca Borlini: Turning to the distribution of growth between developed and emerging markets, organic growth in developed markets was 6.4% based on pricing. RIG was negative, although improving in H2. Growth in emerging markets was robust at 8.4%, supported by pricing with positive RIG. Growth was driven by Latin America, Africa, and South Asia, with continued momentum for affordable offerings. Here, we can see the evolution of our organic sales growth factors over the last six years, including the breakdown of RIG into volume and mix. As a reminder, we have always excluded water and Health Science from this analysis. The negative evolution of volume growth in 2023 largely reflects soft consumer demand and capacity constraints. The at-home food and beverage industry has seen low single-digit volume declines consistently since the start of 2023.

François-Xavier Roger: Turning to the distribution of growth between developed and emerging markets, organic growth in developed markets was 6.4% based on pricing. RIG was negative, although improving in H2. Growth in emerging markets was robust at 8.4%, supported by pricing with positive RIG. Growth was driven by Latin America, Africa, and South Asia, with continued momentum for affordable offerings. Here, we can see the evolution of our organic sales growth factors over the last six years, including the breakdown of RIG into volume and mix. As a reminder, we have always excluded water and Health Science from this analysis. The negative evolution of volume growth in 2023 largely reflects soft consumer demand and capacity constraints. The at-home food and beverage industry has seen low single-digit volume declines consistently since the start of 2023.

Francois: Turning to the distribution of girls between developed and emerging markets are.

Francois: Ill get any growth in developed markets was six 4% based on pricing.

Francois: <unk> was negative or is it improving in the second half of the year.

Francois: Growth in emerging markets was robust at eight 4% supported by pricing we supposed to read.

Francois: Growth was driven by Latin America Africa, and South Asia with continued momentum for affordable offerings.

Speaker Change: Yeah, we can see the evolution of our organic set of growth factors over the last six years, including a breakdown of rig into volume and mix.

Speaker Change: As a reminder, we have always excluded water on health science from Zika analyses.

François Roger: The negative evolution of volume growth in 2023 largely reflects self-consumer demand and capacity constraints. The at-home food and beverage industry has seen low single-digit volume declines consistently since the start of 2023. This trend should be seen in the context of the historically high level of inflation that has accumulated over the last two years. Our volume growth has improved over the course of 2023 and was only slightly negative in the fourth quarter, supported by the moderation of pricing, portfolio optimization, and marketing investment. At the same time, our mix increased to 2.6% in 2023, reaching the highest level over the last six years. The Strengths of Mix illustrate our capacity to innovate and premiumize, even in volatile macroeconomic circumstances. It also reflects our conscious decision in 2023 to favor mix over volume to ensure profitable growth.

Speaker Change: The negative evolution of volume growth in 2023, largely reflect soft consumer demand and capacity constraints.

Speaker Change: At all food and beverage industry has seen low single digit volume declines consistently since the start of 2023.

Luca Borlini: This trend should be seen in the context of the historically high level of inflation that has accumulated over the last two years. Our volume growth has improved over the course of 2023 and was only slightly negative in Q4, supported by the moderation of pricing, portfolio optimization, and marketing investments. At the same time, our mix increased to 2.6% in 2023, reaching the highest level over the last six years. The strength of mix illustrates our capacity to innovate and premiumize even in volatile macroeconomic circumstances. It also reflects our conscious decisions in 2023 to favor mix over volume to ensure profitable growth. Premium products grew at a high single-digit rate with slightly positive RIG. These products account for 36% of sales, three times higher than 10 years ago.

François-Xavier Roger: This trend should be seen in the context of the historically high level of inflation that has accumulated over the last two years. Our volume growth has improved over the course of 2023 and was only slightly negative in Q4, supported by the moderation of pricing, portfolio optimization, and marketing investments. At the same time, our mix increased to 2.6% in 2023, reaching the highest level over the last six years. The strength of mix illustrates our capacity to innovate and premiumize even in volatile macroeconomic circumstances. It also reflects our conscious decisions in 2023 to favor mix over volume to ensure profitable growth. Premium products grew at a high single-digit rate with slightly positive RIG. These products account for 36% of sales, three times higher than 10 years ago.

Speaker Change: These trends should be seen in the context of the Easter equally high level of inflation that have accumulated over the last two years.

Speaker Change: Our volume growth has improved over the course of 2023 and was only slightly negative in the fourth quarter supported by a moderation of pricing portfolio optimization and marketing investments.

Speaker Change: At the same time, our mix increased to two 6% in 2023, reaching the highest level over the last six years.

Speaker Change: The strength of mix illustrates our capacity to innovate on premium is even in volatile macroeconomic circumstances.

Speaker Change: It also reflects our conscious decisions in 2023, two favorable mix over volume to ensure profitable growth.

François Roger: Premium products grew at a high single-digit rate with slightly positive risk. These products accounted for 36% of sales, 3 times higher than 10 years ago. When looking at the quarterly evolution of RIG for the total group and adjusting for the number of trading days, we have seen a material and steady improvement in RIG across the year. RIG reached 0.4% in the fourth quarter and was slightly positive in the second half, as expected.

Speaker Change: Premium products grew at a high single digit rate with slightly positive read.

Speaker Change: These products account for 36% of Sandoz three times higher than 10 years ago.

Luca Borlini: When looking at the quarterly evolution of RIG for the total group and adjusting for the number of trading days, we have seen a material and steady improvement in RIG across the year. RIG reached 0.4% in Q4 and was slightly positive in H2, as expected. This positive trend was supported by the moderation of pricing, positive benefits from portfolio optimization, and higher marketing investments. That said, the path of this RIG recovery has been more muted than expected, reflecting a soft consumer environment and the temporary supply disruption in vitamins, minerals, and supplements in H2. After several years of progress on RIG until 2020, we went through a period of heavy turbulence, beginning with the pandemic and followed by a period of unprecedented inflation. These factors created significant volatility and disrupted the components of our organic sales growth.

François-Xavier Roger: When looking at the quarterly evolution of RIG for the total group and adjusting for the number of trading days, we have seen a material and steady improvement in RIG across the year. RIG reached 0.4% in Q4 and was slightly positive in H2, as expected. This positive trend was supported by the moderation of pricing, positive benefits from portfolio optimization, and higher marketing investments. That said, the path of this RIG recovery has been more muted than expected, reflecting a soft consumer environment and the temporary supply disruption in vitamins, minerals, and supplements in H2. After several years of progress on RIG until 2020, we went through a period of heavy turbulence, beginning with the pandemic and followed by a period of unprecedented inflation. These factors created significant volatility and disrupted the components of our organic sales growth.

Speaker Change: When looking at the quarterly evolution of rig for the total group and adjusting for the number of trading days, we have seen a material and steady improvement in rig across the year.

Speaker Change: Rig rich, 0.4% in the fourth quarter and was slightly positive in the second half as expected.

François Roger: This positive trend was supported by the moderation of pricing, positive benefits from portfolio optimization, and higher marketing investment. That said, the pace of this RIG recovery has been more muted than expected, reflecting a soft consumer environment and the temporary supply disruption of vitamins, minerals, and supplements in the second half. After several years of progress on RIG until 2020, we went through a period of heavy turbulence, beginning with the pandemic and followed by a period of unprecedented inflation. These factors created significant volatility and disrupted the components of our organic cell growth.

Speaker Change: This positive trend was supported by a moderation of pricing positive benefits from portfolio optimization and higher marketing investments.

That said the pace of this recovery has been more muted than expected, reflecting a soft consumer environment and the temporary supply disruption in vitamins minerals and supplements in the second half.

Speaker Change: After several years of progress on rig until 2020, we went through a period of heavy tailed balloons, beginning with the pandemic and followed by a period of unprecedented inflation.

Speaker Change: These factors created significant volatility and disrupted the components of it are getting extended girls.

Luca Borlini: During 2023, we have seen clear signs of normalization, with a lower contribution from pricing and a higher contribution from RIG. We expect this trend to continue in the coming quarters. We are confident in our ability to return to positive RIG and expect RIG to trend back towards pre-COVID levels over the course of 2024. The phasing of RIG is not expected to be linear and should be more weighted to H2 2024. In Q1, RIG could be below Q4 2023 given muted consumer demand and the residual impact of supply issues in our US VMS business. Just as a reminder, Q1 has one less trading day. Let's now turn to the results of our seven operating segments, beginning with zone North America, where we saw 7.3% organic growth driven by pricing of 7.6%.

François-Xavier Roger: During 2023, we have seen clear signs of normalization, with a lower contribution from pricing and a higher contribution from RIG. We expect this trend to continue in the coming quarters. We are confident in our ability to return to positive RIG and expect RIG to trend back towards pre-COVID levels over the course of 2024. The phasing of RIG is not expected to be linear and should be more weighted to H2 2024. In Q1, RIG could be below Q4 2023 given muted consumer demand and the residual impact of supply issues in our US VMS business. Just as a reminder, Q1 has one less trading day. Let's now turn to the results of our seven operating segments, beginning with zone North America, where we saw 7.3% organic growth driven by pricing of 7.6%.

François Roger: During 2023, we have seen clear signs of normalization, with a lower contribution from pricing and a higher contribution from rigs. We expect this trend to continue in the coming quarter. We are confident in our ability to return to positive RIG and expect RIG to trend back towards pre-COVID levels over the course of 2024. However, the phasing of RIG is not expected to be linear and should be more weighted to the second half of 2024.

Speaker Change: During 2023, we have seen clear signs of normalization with a lower contribution from pricing under higher contribution from <unk>.

Speaker Change: We expect these trend to continue in the coming quarters.

Speaker Change: We are confident in our ability to return to positive read unexpected rig to trend back towards pre COVID-19 levels, Although the course of 2024.

Speaker Change: The phasing of rig is not expected to be linear and should be more weighted to the second half of 2024.

François Roger: In the first quarter, RIG could be below the fourth quarter of 2023, given muted consumer demand and the residual impact of supply issues in our US VMS business. Just as a reminder, the first quarter has one fewer trading day. Let's now turn to the results of our 7 operating segments, beginning with Zone North America, where we saw 7.3% organic growth driven by pricing of 7.6%. RIG was minus 0.3 percent, reflecting self-consumer demand, capacity constraints, and the winding down of the frozen meals and pizza business in Canada.

Speaker Change: In the first quarter rig could be below the fourth quarter of 2023, given muted consumer demand on the residual impact of supply issue as you know U S Vms business.

Speaker Change: Just as a reminder, the first quarter has one less trading day.

Speaker Change: Let's now turn to the results of our seven operating segments, beginning with North America, where we saw seven 3% organic growth driven by pricing of seven 6%.

Luca Borlini: RIG was minus 0.3%, reflecting soft consumer demand, capacity constraints, and the winding down of the frozen meals and pizza business in Canada. The zone's underlying trading operating profit margin increased by 120 basis points, mainly as a result of the divestments of a majority stake in Freshly and portfolio optimization actions. Pricing and mix also helped to offset both cost inflation and a significant increase in advertising and marketing spend. Next is Zone Europe. Organic growth was 8.2% driven by pricing. As you know, pricing in Europe can only be negotiated during specific windows. The passing through of pricing, therefore, takes longer in many European markets than in other geographies. RIG was minus 2.4%, reflecting demand elasticity and capacity constraints for water and pet food.

François-Xavier Roger: RIG was minus 0.3%, reflecting soft consumer demand, capacity constraints, and the winding down of the frozen meals and pizza business in Canada. The zone's underlying trading operating profit margin increased by 120 basis points, mainly as a result of the divestments of a majority stake in Freshly and portfolio optimization actions. Pricing and mix also helped to offset both cost inflation and a significant increase in advertising and marketing spend. Next is Zone Europe. Organic growth was 8.2% driven by pricing. As you know, pricing in Europe can only be negotiated during specific windows. The passing through of pricing, therefore, takes longer in many European markets than in other geographies. RIG was minus 2.4%, reflecting demand elasticity and capacity constraints for water and pet food.

Speaker Change: Rig was minus 0.3%, reflecting soft consumer demand capacity constraints and the winding down of the frozen meals on pizza business in Canada.

François Roger: The zone's underlying trading operating profit margin increased by 120 basis points, mainly as a result of the divestment of a majority stake in Freshly and portfolio optimization actions. Pricing and mix also help to offset both cost inflation and a significant increase in advertising and marketing spending. Next, we look at Europe. Organic growth was 8.2% driven by pricing. As you know, pricing in Europe can only be negotiated during specific windows.

Speaker Change: The zones underlying trading operating profit margin increased by 120 basis points, mainly as a result of the divestments of a majority stake in freshly and portfolio optimization actions.

Speaker Change: Pricing and mix also help to offset both cost inflation on the significant increase in advertising and marketing spend.

Speaker Change: Next is on Europe organic growth was eight 2% driven by pricing.

Speaker Change: As you know pricing in Europe can only be negotiated during specific windows.

François Roger: The passing through of pricing therefore takes longer in many European markets than in other geographies. RIG was minus 2.4% following demand elasticity and capacity constraints for water and pet. The zone's underlying trading operating profit margin was unchanged, as significant cost inflation and higher advertising and marketing expenses offset pricing and portfolio optimization actions. Moving to zone AOA, the zone reported high single-digit organic growth with 0.3% RIG. Pricing increased to 8% with broad-based contributions from all geographies and categories. By geography, all regions posted positive growth, with particular strengths in South Asia, Africa, as well as Oceania.

Speaker Change: The passing through of pricing therefore takes longer in many European market then he knows all geographies.

Speaker Change: Greig was minus two 4% following demand elasticity and capacity constraints for water on pet food.

Luca Borlini: The zone's underlying trading operating profit margin was unchanged, as significant cost inflation and higher advertising and marketing expenses offset pricing and portfolio optimization actions. Moving to zone AOA, the zone reported high single-digit organic growth with 0.3% RIG. Pricing increased to 8% with broad-based contributions from all geographies and categories. By geography, all regions posted positive growth, with particular strengths in South Asia, Africa, as well as Oceania. India continued to see strong growth across all categories, becoming the largest market worldwide for Maggi and the second-largest market for KitKat. As some of our peers have mentioned, the conflict in the Middle East has led to some pressure on global consumer brands. Some of our products' offerings have been impacted in a few markets in Q4. The zone's underlying trading operating profit margin increased by 60 basis points.

François-Xavier Roger: The zone's underlying trading operating profit margin was unchanged, as significant cost inflation and higher advertising and marketing expenses offset pricing and portfolio optimization actions. Moving to zone AOA, the zone reported high single-digit organic growth with 0.3% RIG. Pricing increased to 8% with broad-based contributions from all geographies and categories. By geography, all regions posted positive growth, with particular strengths in South Asia, Africa, as well as Oceania. India continued to see strong growth across all categories, becoming the largest market worldwide for Maggi and the second-largest market for KitKat. As some of our peers have mentioned, the conflict in the Middle East has led to some pressure on global consumer brands. Some of our products' offerings have been impacted in a few markets in Q4. The zone's underlying trading operating profit margin increased by 60 basis points.

Speaker Change: The zones underlying trading operating profit margin was unchanged as significant cost inflation on higher advertising and marketing expenses offset pricing and portfolio optimization actions.

Speaker Change: Moving to zone, AOA Zoltan reported high single digit organic growth with 0.3% region.

Speaker Change: <unk> increased two 8% with broad based contributions from all geographies and categories.

Speaker Change: By geography, all regions posted positive growth with particular strength in South Asia Africa, as well as Oceania.

François Roger: India continued to see strong growth across all categories, becoming the largest market worldwide for Maggie and the second largest market for KitKat. As some of our peers have mentioned, the conflict in the Middle East has led to some pressure on global consumer brands. Some of our product offerings have been impacted in a few markets in the fourth quarter. The zone's underlying trading operating profit margin increased by 60 basis points.

Speaker Change: India continued to see strong growth across all categories, becoming the largest market worldwide for Maggie and the second largest market for keep kept.

Speaker Change: As some of our peers Ive mentioned the conflict in the Middle East has led to some pressure on global consumer brands.

Speaker Change: Some of our products offerings have been impacted in a few markets in the fourth quarter.

Speaker Change: The zones underlying trading operating profit margin increased by 60 basis points pricing discipline cost control and portfolio optimization more than offset the impact of input cost inflation and higher advertising and marketing expenses next is on Latin America, which reported.

François Roger: Pricing, Discipline Cost Control, and Portfolio Optimization more than offset the impact of input cost inflation and higher advertising and marketing expenses. Next is Latin America, which reported high single-digit organic growth led by pricing of 8.9%. RIG was resilient at 0.3%, turning positive in the second half. By geography, Brazil reported strong double-digit growth.

Luca Borlini: Pricing, disciplined cost control, and portfolio optimization more than offset the impact of input cost inflation and higher advertising and marketing expenses. Next is Zone Latin America, which reported high single-digit organic growth led by pricing of 8.9%. RIG was resilient at 0.3%, turning positive in H2. By geography, Brazil reported strong double-digit growth. Sales in Mexico grew at a high single-digit rate. The zone's underlying trading operating profit margin decreased by 50 basis points as one-off items in the prior year, cost inflation, and higher advertising and marketing expenses more than offset pricing and cost efficiencies. Turning to Zone Greater China, organic growth was 4.2% with pricing of 1.7%. RIG was 2.5% despite the unfavorable timing of Chinese New Year. The zone's underlying trading operating profit margin increased by 40 basis points, driven by favorable mix and disciplined cost control. Next is Nestlé Health Science.

François-Xavier Roger: Pricing, disciplined cost control, and portfolio optimization more than offset the impact of input cost inflation and higher advertising and marketing expenses. Next is Zone Latin America, which reported high single-digit organic growth led by pricing of 8.9%. RIG was resilient at 0.3%, turning positive in H2. By geography, Brazil reported strong double-digit growth. Sales in Mexico grew at a high single-digit rate. The zone's underlying trading operating profit margin decreased by 50 basis points as one-off items in the prior year, cost inflation, and higher advertising and marketing expenses more than offset pricing and cost efficiencies. Turning to Zone Greater China, organic growth was 4.2% with pricing of 1.7%. RIG was 2.5% despite the unfavorable timing of Chinese New Year. The zone's underlying trading operating profit margin increased by 40 basis points, driven by favorable mix and disciplined cost control. Next is Nestlé Health Science.

Speaker Change: High single digit organic growth led by pricing of eight 9% rig was resilient at 0.3% turning positive in the second half.

Speaker Change: By geography, Brazil reported strong double digit growth sales in Mexico grew at a high single digit rates.

François Roger: Sales in Mexico grew at a high single-digit rate. The zone's underlying trading operating profit margin decreased by 50 basis points as one of the items in the prior year, cost inflation and higher advertising and marketing expenses more than offset pricing and cost efficiency. Earnings to the zone in greater China, organic growth was 4.2% with pricing of 1.7%, and RIG was 2.5% despite the unfavorable timing of the Chinese New Year.

Speaker Change: The zones underlying trading operating profit margin decreased by 50 basis points as one off items in the prior year cost inflation and higher advertising and marketing expenses more than offset pricing and cost efficiencies.

Speaker Change: Turning to his own greater China organic growth was four 2% with pricing of one 7% rig was two 5% despite the unfavorable timing of Chinese new year.

François Roger: The zone's underlying trading operating profit margin increased by 40 basis points, driven by favorable mix and disciplined cost control. Next, Nestle Health Science; the business posted low single-digit growth with pricing of 4.8%. RIG was minus 3.2% impacted by supply constraints for vitamins, minerals, and supplements in the second half of 2023. Vitamins, Minerals, and Supplements, so negative growth, sales in the second half decreased following an IT integration issue when highly automated systems were implemented during the consolidation of U.S. packaging size. The recovery is taking longer than expected, as the extent of the issue was deeper and more complex than we initially thought. We are mobilizing the group's full resources, and the supply constraints are expected to be fully resolved by the end of the first half of 2024. Active nutrition, so mid-single-digit growth, with robust cell developments for organ and vital proteins.

Speaker Change: The zones underlying trading operating profit margin increased by 40 basis points, driven by favorable mix and disciplined cost control.

Speaker Change: Next is Nestle health science, the business posted low single digit growth with pricing of four 8%.

Luca Borlini: The business posted low single-digit growth with pricing of 4.8%. RIG was -3.2%, impacted by supply constraints for vitamins, minerals, and supplements in H2 2023. Vitamins, minerals, and supplements saw negative growth. Sales in H2 decreased following an IT integration issue when implemented highly automated systems during the consolidation of US packaging sites. The recovery is taking longer than expected, as the extent of the issue was deeper and more complex than we initially thought. We are mobilizing the group's full resources, and the supply constraints are expected to be fully resolved by the end of H1 2024. Active Nutrition saw mid-single-digit growth with robust sales developments for Orgain and Vital Proteins. Medical Nutrition recorded double-digit growth with strong sales development for adult medical care, as well as pediatric and allergy products. By geography, sales in North America decreased.

François-Xavier Roger: The business posted low single-digit growth with pricing of 4.8%. RIG was -3.2%, impacted by supply constraints for vitamins, minerals, and supplements in H2 2023. Vitamins, minerals, and supplements saw negative growth. Sales in H2 decreased following an IT integration issue when implemented highly automated systems during the consolidation of US packaging sites. The recovery is taking longer than expected, as the extent of the issue was deeper and more complex than we initially thought. We are mobilizing the group's full resources, and the supply constraints are expected to be fully resolved by the end of H1 2024. Active Nutrition saw mid-single-digit growth with robust sales developments for Orgain and Vital Proteins. Medical Nutrition recorded double-digit growth with strong sales development for adult medical care, as well as pediatric and allergy products. By geography, sales in North America decreased.

Speaker Change: Rig was minus three 2% impacted by supply constraints for vitamins minerals and supplements in the second half of 2023.

Speaker Change: But that means minerals and supplements so negative gross sales in the second half decreased following in the I T integration issue when implemented highly automated systems during the consolidation of U S packaging sites.

Speaker Change: The recovery is taking longer than expected as the extent of the issue was deeper and more complex than we initially thought.

Speaker Change: We are mobilizing the group's full resources under supply constraints are expected to be fully resolved by the end of the first half of 2024.

Speaker Change: Active nutrition, so mid single digit growth with robust sales developments for all gain on vital proteins.

François Roger: Medical nutrition recorded double-digit growth with strong self-development for adult medical care as well as pediatric and allergy products. However, by geography, sales in North America decreased. Europe reported mid-single-digit growth, while other regions combined posted high single-digit growth. The underlying trading operating profit margin of Nestle Health Science decreased by 160 basis points as a result of temporary supply constraints. Finally, Nespresso reported mid-single-digit organic growth driven by both pricing and risk. Growth was led by broad-based momentum for the virtual system, continued expansion of the momentum system in out-of-home channels, and innovation. By geography, North America posted double-digit growth with continued market share gains. Europe reported low single-digit growth, and other regions combined saw mid-single-digit growth.

Speaker Change: Medical nutrition recorded double digit growth with strong sales development for adult medical care as well as pediatric allergy products.

Speaker Change: By geography sales in North America decreased <unk>.

Luca Borlini: Europe reported mid-single-digit growth, while other regions combined posted high single-digit growth. The underlying trading operating profit margin of Nestlé Health Science decreased by 160 basis points as a result of temporary supply constraints. Finally, Nespresso reported mid-single-digit organic growth driven by both pricing and RIG. Growth was led by broad-based momentum for the Vertuo system, continued expansion of the Momento system in out-of-home channels, and innovation. By geography, North America posted double-digit growth with continued market share gains. Europe reported low single-digit growth, and other regions combined saw mid-single-digit growth. Nespresso's underlying trading operating profit margin decreased by 120 basis points. Significant cost inflation and the appreciation of the Swiss francs more than offset pricing actions and cost efficiencies. The business continued to invest in the rollout of the Vertuo system, as well as in brand advertising. Let's now look at product categories.

François-Xavier Roger: Europe reported mid-single-digit growth, while other regions combined posted high single-digit growth. The underlying trading operating profit margin of Nestlé Health Science decreased by 160 basis points as a result of temporary supply constraints. Finally, Nespresso reported mid-single-digit organic growth driven by both pricing and RIG. Growth was led by broad-based momentum for the Vertuo system, continued expansion of the Momento system in out-of-home channels, and innovation. By geography, North America posted double-digit growth with continued market share gains. Europe reported low single-digit growth, and other regions combined saw mid-single-digit growth. Nespresso's underlying trading operating profit margin decreased by 120 basis points. Significant cost inflation and the appreciation of the Swiss francs more than offset pricing actions and cost efficiencies. The business continued to invest in the rollout of the Vertuo system, as well as in brand advertising. Let's now look at product categories.

Speaker Change: Europe reported mid single digit growth, while other regions combined posted high single digit growth.

Speaker Change: The underlying trading operating profit margin of Nestle health science decreased by 160 basis points as a result of temporary supply constraints.

Speaker Change: Finally, nespresso reported mid single digit organic growth driven by both pricing and region.

Speaker Change: Growth was led by broad based momentum for the virtual system continued expansion of the momentous system in out of home channels and innovation.

Speaker Change: By geography, North America posted double digit growth with continued market share gains Europe reported low single digit growth.

Speaker Change: Other regions combined so mid single digit growth.

François Roger: Nespresso's underlying trading operating profit margin decreased by 120 basis points; significant cost inflation and the appreciation of the Swiss francs more than offset pricing actions and cost efficiency. However, the business continued to invest in the rollout of the virtual system as well as in brand advertising. Let's now look at product categories. Organic growth was broad-based, supported by pricing across all categories. We continue to see a normalization of channel trends across categories with growth supported by momentum in out-of-home and e-commerce, particularly for pet care, coffee, and Nestle Health Science. Overall, e-commerce grew by 13.4% in 2023 and accounts for 17.1% of total group sales, up from 15.8% in 2022. We are now implementing a number of innovative internal and external eB2B platforms that will help us to accelerate our e-commerce growth. E-commerce remains gross accretive, and our priority is to meet consumer demand across channels and points of sales, either online or offline. Within powdered and liquid beverages, coffee sales grew at a high single-digit rate. Growth was broad-based across segments, brands, and geographies, with continued momentum for the out-of-home business, which grew at a strong double-digit rate. Cocoa and mulled beverages reported low single-digit growth based on a strong contribution from Milo and Nesquik.

Speaker Change: Mispriced those underlying trading operating profit margin decreased by 120 basis points significant cost inflation on the appreciation of the Swiss franc has more than offset pricing actions and cost efficiencies.

Speaker Change: The business continued to invest in the rollout of the virtual system as well as in brand advertising.

Speaker Change: Let's now look at product categories organic growth was broad based and supported by pricing across all categories.

Luca Borlini: Organic growth was broad-based, supported by pricing across all categories. We continue to see a normalization of channel trends across categories, with growth supported by momentum in out-of-home and e-commerce, particularly for pet care, coffee, and Nestlé Health Science. Overall, e-commerce grew by 13.4% in 2023 and accounts for 17.1% of total group sales, up from 15.8% in 2022. We are now implementing a number of innovative internal and external eB2B platforms that will help us to accelerate our e-commerce growth. E-commerce remains growth-attractive, and our priority is to meet consumer demand across channels and points of sales, either online or offline. Within powdered and liquid beverages, coffee sales grew at a high single-digit rate. Growth was broad-based across segments, brands, and geographies, with continued momentum for the out-of-home business, which grew at a strong double-digit rate.

François-Xavier Roger: Organic growth was broad-based, supported by pricing across all categories. We continue to see a normalization of channel trends across categories, with growth supported by momentum in out-of-home and e-commerce, particularly for pet care, coffee, and Nestlé Health Science. Overall, e-commerce grew by 13.4% in 2023 and accounts for 17.1% of total group sales, up from 15.8% in 2022. We are now implementing a number of innovative internal and external eB2B platforms that will help us to accelerate our e-commerce growth. E-commerce remains growth-attractive, and our priority is to meet consumer demand across channels and points of sales, either online or offline. Within powdered and liquid beverages, coffee sales grew at a high single-digit rate. Growth was broad-based across segments, brands, and geographies, with continued momentum for the out-of-home business, which grew at a strong double-digit rate.

Speaker Change: We continue to see a normalization of channel trends across categories with growth supported by momentum in out of Oman E Commerce, particularly for Petcare coffee unnecessary health science.

Speaker Change: Overall E Commerce grew by 13, 4% in 2023 Undercounts for 17.1% of total group sales up from 15, 8% in 2022.

Speaker Change: We are now implementing a number of innovative internal and external E. B to be platforms that will help us to accelerate our e-commerce growth.

Speaker Change: I'm also remains growth accretive and our priority is to meet consumer demand across channels and points of sales either online or offline.

Speaker Change: Within powdered and liquid beverages coffee sales grew at a high single digit rate.

Speaker Change: Growth was broad based across segments brands and geographies with continued momentum for the out of home business, which grew at a strong double digit rates.

Luca Borlini: Cocoa and malt beverages reported low single-digit growth based on a strong contribution from Milo and Nesquik. Pet care posted strong double-digit growth for the fourth consecutive year. Science-based, premium, and veterinary products saw strong sales developments. Sales of Purina Pro Plan reached almost CHF 3 billion. Growth was also supported by continued e-commerce momentum and innovation, particularly for functional products. Nutrition and Health Science posted 5.4% growth. Infant nutrition reported 8.5% organic growth, with market share gains and broad-based contributions across geographies, segments, and key brands. Sales of human milk oligosaccharide products grew at a strong double-digit rate, reaching CHF 1.4 billion. We have already discussed Nestlé Health Science. Prepared dishes and cooking aids saw 4.9% growth, driven by Maggi, which reported double-digit growth. Plant-based food posted flat growth, impacted by portfolio optimization. Milk products and ice cream recorded 6.1% growth.

François-Xavier Roger: Cocoa and malt beverages reported low single-digit growth based on a strong contribution from Milo and Nesquik. Pet care posted strong double-digit growth for the fourth consecutive year. Science-based, premium, and veterinary products saw strong sales developments. Sales of Purina Pro Plan reached almost CHF 3 billion. Growth was also supported by continued e-commerce momentum and innovation, particularly for functional products. Nutrition and Health Science posted 5.4% growth. Infant nutrition reported 8.5% organic growth, with market share gains and broad-based contributions across geographies, segments, and key brands. Sales of human milk oligosaccharide products grew at a strong double-digit rate, reaching CHF 1.4 billion. We have already discussed Nestlé Health Science. Prepared dishes and cooking aids saw 4.9% growth, driven by Maggi, which reported double-digit growth. Plant-based food posted flat growth, impacted by portfolio optimization. Milk products and ice cream recorded 6.1% growth.

Speaker Change: Coco on more beverage is reported low single digit growth based on a strong contribution from Milo on this week.

François Roger: Petcare posted strong double-digit growth for the fourth consecutive year, science-based, premium, and veterinary products so strong sales development. For example, fans of Purina ProPlan reach almost 3 billion Swiss Francs. Growth was also supported by continued e-commerce momentum and innovation, particularly for functional products. Nutrition and Health Science posted 5.4% growth. Instant Nutrition reported 8.5% organic growth with market share gains and broad-based contributions across geographies, segments, and key brands. Sales of human milk oligosaccharide products grew at a strong double-digit rate reaching 1.4 billion Swiss francs. We have already discussed Nestle Health Science.

Speaker Change: Petcare posted strong double digit growth for the fourth consecutive year science.

Speaker Change: Science Bez premium on veterinary products saw strong sales development.

Speaker Change: Sales of Purina Pro plan reached almost 3 billion Swiss francs.

Speaker Change: Growth was also supported by continued e-commerce momentum on innovation, particularly for functional products.

Speaker Change: Nutrition and health Science posted five 4% gross infant nutrition reported eight 5% organic growth with market share gains on broad based contributions across geographies segments and key brands.

Speaker Change: Sandoz of human milk oligosaccharide products grew at a strong double digit Detroit, reaching $1 4 billion Swiss francs.

Speaker Change: We have already discussed Nestle health science.

François Roger: Prepared dishes and cooking aids saw 4.9% growth, driven by Maggie, which reported double-digit growth; plant-based foods posted flat growth impacted by portfolio optimization. Milk products and ice cream recorded 6.1% growth. The key contributors to growth were fortified milks, coffee creamers, and home baking products. Sales of ice cream grew at a mid-single-digit rate.

Speaker Change: Prepared dishes and cooking AIDS, so four 9% growth driven by Maggie which reported double digit growth.

Speaker Change: Around best food posted flat growth impacted by portfolio optimization.

Speaker Change: Milk products and ice cream recorded $6 one person girls. The key contributors to growth were 45, milks coffee creamers and home banking products.

Luca Borlini: The key contributors to growth were fortified milks, coffee creamers, and home baking products. Sales of ice cream grew at a mid-single-digit rate. Growth in confectionery was 8.5%, reflecting continued strong broad-based demand for KitKat, which continues to gain share across all geographies. Confectionery also saw positive sales development for key local brands, including Garoto in Brazil, Munch in South Asia, and Crispy Shark in China. Sales in water grew by 4.9% despite temporary capacity constraints for Perrier and a high base of comparison in 2022. San Pellegrino and Acqua Panna saw double-digit growth. The modernization of our Perrier site has been completed during Q4, with supply normalizing from Q1 2024 onwards. Moving now to underlying trading operating profit margin by product category.

François-Xavier Roger: The key contributors to growth were fortified milks, coffee creamers, and home baking products. Sales of ice cream grew at a mid-single-digit rate. Growth in confectionery was 8.5%, reflecting continued strong broad-based demand for KitKat, which continues to gain share across all geographies. Confectionery also saw positive sales development for key local brands, including Garoto in Brazil, Munch in South Asia, and Crispy Shark in China. Sales in water grew by 4.9% despite temporary capacity constraints for Perrier and a high base of comparison in 2022. San Pellegrino and Acqua Panna saw double-digit growth. The modernization of our Perrier site has been completed during Q4, with supply normalizing from Q1 2024 onwards. Moving now to underlying trading operating profit margin by product category.

Speaker Change: Sales of ice cream grew at a mid single digit rates.

François Roger: Growth in confectionery was 8.5%, reflecting continued strong broad-based demand for KitKat, which continues to gain share across all geographies. Confectionery also saw positive sales developments for key local brands, including Garoto in Brazil, Munch in South Asia, and Shark Wafer in China. Channels in water grew by 4.9% despite temporary capacity constraints for Perrier on a high base of comparison in 2020. John Pellegrino and Aquapana, therefore, showed double-digit growth. The modernization of our Perrier site has been completed during the fourth quarter, with supply normalizing from the first quarter of 2024 onwards. Moving now to the underlying trading operating profit margin by product category. Margins within the powdered and liquid beverages category decreased by 150 basis points, mainly due to significant cost inflation in coffee beans and increased advertising and marketing expenses.

Speaker Change: Growth in confectionery was eight 5%, reflecting continued strong broad based demand for kitkat, which continues to gain share across all geographies.

Speaker Change: Confectionery also saw positive sales development for key local brands, including Gallo Tau in Brazil, Munch in South Asia, and Shockwave for in China.

Speaker Change: Sales in water grew by four 9% despite temporary capacity constraints for failure on the high base of comparison in 2022.

Speaker Change: San Pellegrino and Acqua panna, so double digit growth.

Luca Borlini: Margins within the Powdered and Liquid Beverages category decreased by 150 basis points, mainly due to significant cost inflation in coffee beans and increased advertising and marketing expenses. PetCare margins increased by 20 basis points, supported by gross leverage and improved mix, which more than offset a significant increase in advertising and marketing expenses. Nutrition and Health Science margins decreased by 60 basis points due to a margin decline for Nestlé Health Science, which we have already covered. Infant nutrition saw a margin increase of 30 basis points as a result of pricing and cost efficiencies. Margin increases in prepared dishes and cooking aids, as well as milk products and ice cream, were supported by pricing, portfolio optimization, and cost efficiencies. Margin in confectionery was unchanged, as gross leverage and pricing were offset by cost inflation for cocoa and increased advertising and marketing expenses.

François-Xavier Roger: Margins within the Powdered and Liquid Beverages category decreased by 150 basis points, mainly due to significant cost inflation in coffee beans and increased advertising and marketing expenses. PetCare margins increased by 20 basis points, supported by gross leverage and improved mix, which more than offset a significant increase in advertising and marketing expenses. Nutrition and Health Science margins decreased by 60 basis points due to a margin decline for Nestlé Health Science, which we have already covered. Infant nutrition saw a margin increase of 30 basis points as a result of pricing and cost efficiencies. Margin increases in prepared dishes and cooking aids, as well as milk products and ice cream, were supported by pricing, portfolio optimization, and cost efficiencies. Margin in confectionery was unchanged, as gross leverage and pricing were offset by cost inflation for cocoa and increased advertising and marketing expenses.

François Roger: Pet care margins increased by 20 basis points, supported by gross leverage and improved mix, which more than offset a significant increase in advertising and marketing expenses. Nutrition and health science margins decreased by 60 basis points, due to a margin decline for Nestle Health Science, which we have already covered. Infant nutrition saw a margin increase of 30 basis points as a result of pricing and cost efficiency. Margin increases in prepared dishes and cooking aids, as well as milk products and ice cream, were supported by pricing, portfolio optimization, and cost efficiency. Margin in confectionery was unchanged, as gross leverage and pricing were offset by cost inflation for COCOA and increased advertising and marketing expenses.

Speaker Change: As a result of pricing and cost efficiencies.

Speaker Change: Mahjong increases in prepared dishes and cooking AIDS as well as milk products on ice cream were supported by pricing Boxful Europe T musician and cost efficiencies.

Speaker Change: Mal gene in confectionery was unchanged as girls leverage unpromising were offset by cost inflation for Coco and increased advertising and marketing expenses.

François Roger: Water posted a significant margin increase of 280 basis points, supported by pricing, mix, and cost efficiencies. Mix benefited from a continued focus on premiumization. It is worth noting that the benefits of our portfolio management actions last year are clearly visible in categories like dairy, which was the most profitable category for the group in 2020. Next is underlying trading operating profit, which increased as a percentage of sales by 40 basis points in constant currency. The increase was driven by higher gross margin and lower distribution costs, which more than offset increased investments in marketing and one-offs in 2020. We are on track to deliver our 2025 target of 17.5% to 18.5% U-Top Margin. Going into greater detail on the evolution of gross margin, in 2023, we made solid progress in restoring our gross margin with a year-on-year increase of 160 basis points to 46.1% in the second half.

Luca Borlini: Water posted a significant margin increase of 280 basis points, supported by pricing, mix, and cost efficiencies. Mix benefited from a continued focus on premiumization. It is worth noting that the benefits of our portfolio management actions last year are clearly visible in categories like dairy, which was the most profitable category for the group in 2023. Next is underlying trading operating profit, which increased as a percentage of sales by 40 basis points in constant currency. The increase was driven by higher gross margin and lower distribution cost, which more than offset increased investments in marketing and one-offs in 2022. We are on track to deliver our 2025 target of 17.5% to 18.5% UTOP margin. Going into greater detail on the evolution of gross margin.

François-Xavier Roger: Water posted a significant margin increase of 280 basis points, supported by pricing, mix, and cost efficiencies. Mix benefited from a continued focus on premiumization. It is worth noting that the benefits of our portfolio management actions last year are clearly visible in categories like dairy, which was the most profitable category for the group in 2023. Next is underlying trading operating profit, which increased as a percentage of sales by 40 basis points in constant currency. The increase was driven by higher gross margin and lower distribution cost, which more than offset increased investments in marketing and one-offs in 2022. We are on track to deliver our 2025 target of 17.5% to 18.5% UTOP margin. Going into greater detail on the evolution of gross margin.

Speaker Change: What posted a significant margin increase of 280 basis points supported by pricing mix and cost efficiencies mix benefited from a continued focus on premium musician.

Speaker Change: It is worth noting that the benefits of a portfolio management actions last year are clearly these ebola in categories like theory, which was the most profitable category falls a group in 2023.

Speaker Change: Next is underlying trading operating profit, which increased as a percentage of standards by 40 busy pointing constant currency. The increase was driven by higher gross margin and loyal distribution cost, which more than offset increased investment in marketing and one offs in 2022.

Speaker Change: We are on track to deliver of 2025 target of 17 on enough to 89 and half percent, Utah Mountain.

Speaker Change: Going into greater detail on the evolution of gross margin in 2023, we met solid progress in the rest of the ring a gross margin we use a year on year increase of 160 basis points to 46.1% in the second half.

Luca Borlini: In 2023, we made solid progress in restoring our gross margin, with a year-on-year increase of 160 basis points to 46.1% in H2. This improvement reflects the positive effect of responsible pricing, cost efficiencies, and portfolio optimization actions, which more than offset cost inflation. While easing, the impact of cost inflation in 2023 on our cost of goods sold was still significant at a mid-single-digit level, mainly impacting H1. In 2024 and beyond, we expect our gross margin to increase further. Although the environment is still very volatile, we expect input cost inflation in 2024 to be relatively flat based on what we know today. We see different trends by commodity, with some cost increasing versus the peak for some items, while other items, such as sugar, cocoa, and Robusta, continue to see increases. Turning to the evolution of advertising and marketing expenses by semester.

François-Xavier Roger: In 2023, we made solid progress in restoring our gross margin, with a year-on-year increase of 160 basis points to 46.1% in H2. This improvement reflects the positive effect of responsible pricing, cost efficiencies, and portfolio optimization actions, which more than offset cost inflation. While easing, the impact of cost inflation in 2023 on our cost of goods sold was still significant at a mid-single-digit level, mainly impacting H1. In 2024 and beyond, we expect our gross margin to increase further. Although the environment is still very volatile, we expect input cost inflation in 2024 to be relatively flat based on what we know today. We see different trends by commodity, with some cost increasing versus the peak for some items, while other items, such as sugar, cocoa, and Robusta, continue to see increases. Turning to the evolution of advertising and marketing expenses by semester.

François Roger: This improvement reflects the positive effect of responsible pricing, cost efficiencies, and portfolio optimisation actions, which more than offset cost inflation. However, while easing, the impact of cost inflation in 2023 on our cost of goods sold was still significant at a mid-single-digit level, mainly impacting the first half. In 2024 and beyond, we expect our gross margin to increase further. Furthermore, although the environment is still very volatile, we expect input cost inflation in 2024 to be relatively flat based on what we know today. We see different trends by commodity, with some costs increasing versus the peak for some items, while other items, such as sugar, cocoa, and Robusta, continue to see increases.

Speaker Change: This improvement reflect the positive effect of responsible pricing cost efficiencies unprofitably optimization elections, which more than offset cost inflation.

Speaker Change: While easing the impact of cotton inflation in 2023, and the cost of goods sold we're still significant at the meet single digit level, mainly impacting the first half.

Speaker Change: In 2024 and beyond we expect our gross margin to increase fell though.

Speaker Change: Rosie environment is teed very volatile, we expecting food cost inflation in 2024 to be relatively flat based on what we know today.

Speaker Change: We see different trains by commodity with some costing cruising versus the peak for some items, while other items such as sugar Coco on robusta continued to see increases.

François Roger: Turning to the evolution of advertising and marketing expenses by semester, in 2022, we temporarily reduced our investment levels as we limited advertising and marketing activities in the context of supply chain constraints. As the slide shows, however, during 2023, we materially increased our advertising and marketing investment. The increase was 160 basis points in the second half of 2023 to reach 8.2% of sales, with the spend particularly focused on our largest billionaire broker. It is worth noting that billionaire brands account for more than 70% of our sales and so organic growth of 10%. They are gaining a holding share in 52% of business sales. Digital media represented 68% of our paid media spend in 2023, up from 55% in 2020. In 2024, we expect to further increase our investments in advertising and marketing as we focus on delivering rig-led growth.

Speaker Change: Turning to the evolution of advertising and marketing expenses by semester in 2022, we temporary reduced our investments levels as we limited advertising and marketing activities in the context of supply chain constraints.

Luca Borlini: In 2022, we temporarily reduced our investment levels as we limited advertising and marketing activities in the context of supply chain constraints. As the slide shows, during 2023, we materially stepped up our advertising and marketing investments. The increase was 160 basis points in H2 2023 to reach 8.2% of sales, with the spend particularly focused on our largest billionaire brands. It is worth noting that billionaire brands account for more than 70% of our sales and saw organic growth of 10%. They are gaining or holding share in 52% of business sales. Digital media represented 68% of our paid media spend in 2023, up from 55% in 2022. In 2024, we expect to further increase our investments in advertising and marketing as we focus on delivering RIG-led growth.

François-Xavier Roger: In 2022, we temporarily reduced our investment levels as we limited advertising and marketing activities in the context of supply chain constraints. As the slide shows, during 2023, we materially stepped up our advertising and marketing investments. The increase was 160 basis points in H2 2023 to reach 8.2% of sales, with the spend particularly focused on our largest billionaire brands. It is worth noting that billionaire brands account for more than 70% of our sales and saw organic growth of 10%. They are gaining or holding share in 52% of business sales. Digital media represented 68% of our paid media spend in 2023, up from 55% in 2022. In 2024, we expect to further increase our investments in advertising and marketing as we focus on delivering RIG-led growth.

Speaker Change: As the Slideshows during 2023, we met a yearly stepped up a daft housing and marketing investments Decaf.

Speaker Change: The increase was 160 basis points in the second half of 2023 to reach 8.2% of sales. We just spent particularly focused on our largest billionaire bronze.

Speaker Change: It is worth noting that billionaire bronze accounts for more than 70% of sales and so I'll get any girls of 10%.

Speaker Change: They are gaining a ordering share in 52% of business Sanders.

Speaker Change: Digital media represented 68% of paid media spend in 2023 up from 55% in 2022.

Speaker Change: In 2024, we expect to further increase our investments in advertising and marketing as we focus on delivering Rigolet girls.

Luca Borlini: Moving to underlying earnings per share, which increased by 8.4% in constant currency and by 0.1% on a reported basis to CHF 4.80. The improvement was driven by strong organic growth and an increase in the underlying trading profit margin. Nestlé's share buyback program also contributed 1.2% of the increase net of finance costs. These increases were partly offset by the negative effect of exchange rates and higher financing costs, as well as a slight increase in our underlying tax rate from 20.9% in 2022 to 21.2% in 2023. Free cash flow increased from CHF 6.6 billion to CHF 10.4 billion. The main factor behind the increase was working capital, which decreased by CHF 4.3 billion, largely related to lower inventory levels.

François-Xavier Roger: Moving to underlying earnings per share, which increased by 8.4% in constant currency and by 0.1% on a reported basis to CHF 4.80. The improvement was driven by strong organic growth and an increase in the underlying trading profit margin. Nestlé's share buyback program also contributed 1.2% of the increase net of finance costs. These increases were partly offset by the negative effect of exchange rates and higher financing costs, as well as a slight increase in our underlying tax rate from 20.9% in 2022 to 21.2% in 2023. Free cash flow increased from CHF 6.6 billion to CHF 10.4 billion. The main factor behind the increase was working capital, which decreased by CHF 4.3 billion, largely related to lower inventory levels.

François Roger: Moving to underlying earnings per share, which increased by 8.4% in constant currency and by 0.1% on a reported basis to 4.80 Swiss francs. The improvement was driven by strong organic growth and an increase in the underlying trading profit model. Nestle's share buyback program also contributed 1.2% of the increase net of finance. However, these increases were partly offset by the negative effect of exchange rates on higher financing costs, as well as a slight increase in our underlying tax rate from 20.9% in 2022 to 21.2% in 2023. Pre-cash flow increased from 6.6 billion Swiss francs to 10.4 billion Swiss francs. The main factor behind the increase was working capital, which decreased by 4.3 billion Swiss francs, largely related to lower inventory levels.

Speaker Change: Moving to underlying earnings per share, which increased by 8.4% in constant currency and by 0.1% a new reported busies two four Swiss francs on 80 some teams the.

Speaker Change: The improvement was driven by strong or get any girls and an increase in the underlying trading profit margin.

Speaker Change: Nestle shut buyback program also contributed 1.2% of the increase net of finance Ghost.

Speaker Change: The scene Crazies were partly offset by the negative effect of exchange rates and higher financing costs as well as a slight increase in the underlying tax rate from 20.9% in 2022% to 21.2% in 2023.

Speaker Change: Free cash flow increased from 6.6 billion Swiss francs to 10.4 billion Swiss francs the.

Speaker Change: The main factor behind the increase was walking capitola, which decreased by 4.3 billion Swiss francs, largely related to lower inventory levels.

François Roger: Expenditure on CapEx and intangible assets increased by around 800 million Swiss francs to 6.2 billion Swiss francs, largely reflecting ongoing investments in pet care and coffee. We expect our capex level to normalize at around 5% of cells by 2025. Our cash generated from operations before changes in working capital and capital expenditure remains solid and dependable at around 20% of sales over the last five years. As expected, free cash flow as a percentage of firms increased to 11.2%, reflecting our action to reduce inventory levels.

Luca Borlini: Expenditure on CapEx and intangible assets increased by around CHF 800 million to CHF 6.2 billion, largely reflecting ongoing investments in pet care and coffee. We expect our CapEx level to normalize at around 5% of sales by 2025. Our cash generated from operations before changes in working capital and CapEx remained solid and dependable at around 20% of sales over the last 5 years. As expected, free cash flow as a percentage of sales increased to 11.2%, reflecting our action to reduce inventory levels. As a reminder, the decision in 2022 to increase inventories was taken in the context of supply constraints and the energy crisis in Europe. At the same time, we have continued to invest in capital expenditure above historical levels to support the expansion of capacity in pet care and coffee.

François-Xavier Roger: Expenditure on CapEx and intangible assets increased by around CHF 800 million to CHF 6.2 billion, largely reflecting ongoing investments in pet care and coffee. We expect our CapEx level to normalize at around 5% of sales by 2025. Our cash generated from operations before changes in working capital and CapEx remained solid and dependable at around 20% of sales over the last 5 years. As expected, free cash flow as a percentage of sales increased to 11.2%, reflecting our action to reduce inventory levels. As a reminder, the decision in 2022 to increase inventories was taken in the context of supply constraints and the energy crisis in Europe. At the same time, we have continued to invest in capital expenditure above historical levels to support the expansion of capacity in pet care and coffee.

Speaker Change: Expenditure on Capex, an intangible assets increased by around 800 million Swiss francs, two 6.2 billion Swiss francs, largely reflecting ongoing investments in petcare on coffee, we expect Capex live only to normalize at around 5% of cells by 2025.

Speaker Change: Off cash generated from operations before changes in working capital not in Capex remains solid and dependable at around 20 per cent of sounds over the last five years.

Speaker Change: As expected free cash flow as a percentage of Sam's increased to 11.2%, reflecting our action to reduce inventory levels.

François Roger: As a reminder, the decision in 2022 to increase inventories was taken in the context of supply constraints and the energy crisis in Europe. At the same time, we have continued to invest in capital expenditure above historical levels to support the expansion of capacity in pet care and coffee. Working capital and capex are normalizing, and we are seeing a corresponding increase in free cash flow trending back towards 12% of sales by 2025 in line with our mid-term financial target. As flagged in our half-year 2023 results call, we have been actively working to reduce inventory levels. We expect our inventory levels to decrease to pre-pandemic levels in 2024. The progression on this chart reinforces our confidence that we have the levers to return working capital back to zero or below in the short to medium term. The group's return on invested capital after Goodwill and Intangibles was 13.9%, an increase of 170 basis points over the prior year.

Speaker Change: As a reminder, the decision in 2022 to increase inventories was taken in the context of supply constraints on the energy crisis in Europe.

Speaker Change: At the same time, we have continued to invest in capital expenditure above historical levels to support the expansion of capacity in Petcare on coffee.

Luca Borlini: Working capital and CapEx are normalizing, and we are seeing a corresponding increase in free cash flow trending back towards 12% of sales by 2025, in line with our midterm financial targets. As flagged in our H1 2023 results call, we have been actively working to reduce inventory levels. We expect our inventory levels to decrease to pre-pandemic levels in 2024. The progression on this chart reinforces our confidence that we have the levers to return working capital back to zero or below in the short to medium term. The group's return on invested capital after goodwill and intangibles was 13.9%, an increase of 170 basis points over the prior year. The group's ROIC is trending back to our 2025 target of 15%. This is a level two times higher than our WACC and comes even as we have made significant acquisitions.

François-Xavier Roger: Working capital and CapEx are normalizing, and we are seeing a corresponding increase in free cash flow trending back towards 12% of sales by 2025, in line with our midterm financial targets. As flagged in our H1 2023 results call, we have been actively working to reduce inventory levels. We expect our inventory levels to decrease to pre-pandemic levels in 2024. The progression on this chart reinforces our confidence that we have the levers to return working capital back to zero or below in the short to medium term. The group's return on invested capital after goodwill and intangibles was 13.9%, an increase of 170 basis points over the prior year. The group's ROIC is trending back to our 2025 target of 15%. This is a level two times higher than our WACC and comes even as we have made significant acquisitions.

Speaker Change: Working capital and Capex are normalizing and we're seeing a corresponding increase in free cash flow trending back towards 12% of sense by 2025 in line with a midterm financial targets.

Speaker Change: As flagged you know have here 2023 results call. We have been actively working to reduce inventory levels. We expect our inventory levels to decrease to pre pandemic slave owners in 2024.

Speaker Change: The progress shown on this chart reinforces are confident that we have the liberals to retail working capital back two zero or below in the short to medium term.

Speaker Change: The group's return on invested capital after good we don't intend G bones was 13.9% an increase of 170 basis points of of the priority though.

François Roger: The Group's ROIC is trending back to our 2025 target of 15%. This is a level two times higher than our WAC and comes even as we have made significant acquisitions. Net debt increased by 1.4 billion Swiss francs to reach 49.6 billion Swiss francs as of December 31, 2023.

Speaker Change: The groups are ice's trending back two of 2025 target of 15%. This is a level two time, a higher than not watch comes even as we have made significant acquisitions.

Luca Borlini: Net debt increased by CHF 1.4 billion to reach CHF 49.6 billion as of 31 December 2023. The increase largely reflected the dividend payment of CHF 7.8 billion and share buybacks of CHF 5.1 billion. At the same time, this was largely offset by a significant increase in free cash flow. Our net debt-to-EBITDA ratio remained stable during the year at around 2.5 times. We are committed to maintaining our practice of increasing the dividend every year in Swiss francs. At the next annual general meeting, the board of directors will propose a dividend of CHF 3 per share. If approved, this will be the company's 29th consecutive annual dividend increase, in line with our practice of increasing our dividend in Swiss francs. The company has maintained or increased its dividend in Swiss francs over the last 64 years.

François-Xavier Roger: Net debt increased by CHF 1.4 billion to reach CHF 49.6 billion as of 31 December 2023. The increase largely reflected the dividend payment of CHF 7.8 billion and share buybacks of CHF 5.1 billion. At the same time, this was largely offset by a significant increase in free cash flow. Our net debt-to-EBITDA ratio remained stable during the year at around 2.5 times. We are committed to maintaining our practice of increasing the dividend every year in Swiss francs. At the next annual general meeting, the board of directors will propose a dividend of CHF 3 per share. If approved, this will be the company's 29th consecutive annual dividend increase, in line with our practice of increasing our dividend in Swiss francs. The company has maintained or increased its dividend in Swiss francs over the last 64 years.

Speaker Change: Net debt increased by 1.4 billion Swiss francs to reach 49.6 billion Swiss francs as at December 31st 2023.

François Roger: The increase largely reflected a dividend payment of 7.8 billion Swiss francs and share buybacks of 5.1 billion Swiss francs. However, at the same time, this was largely offset by a significant increase in free cash flow. Our net debt to EBITDA ratio remains stable during the year at around 2.5 times. We are committed to maintaining our practice of increasing the dividend every year in Swiss francs. At the next Annual General Meeting, the Board of Directors will propose a dividend of three Swiss francs per share.

Speaker Change: The increase largely reflected the DVD payment of 7.8 billion Swiss francs, Unshell buybacks of 5.1 billion Swiss francs.

Speaker Change: At the same time this wasn't allowed to Leo upset by a significant increase in free cash flow.

Speaker Change: Oh that would be the ratio remained stable during the year at around 2.5 times.

Speaker Change: We are committed to maintaining our practice of increasing the D. V done every year in Swiss francs at the next annual General meeting the board of Directors will propose a D V done of Sweet Swiss wrong spill share.

François Roger: If approved, this will be the company's 29th consecutive annual dividend increase, in line with our practice of increasing our dividend in Swiss francs. The company has maintained or increased its dividend in Swiss francs for the last 64 years. The dividend in Swiss francs has more than tripled over the last 18 years, representing a compounded annual growth rate of close to 7%.

Speaker Change: If approved this will be the company's 29th consecutive annual D. V done increase in line with our practice of increasing a D V done in Swiss francs.

Speaker Change: The company has maintained or increased the D V done in Swiss francs of of the last 64 years the.

Luca Borlini: The dividend in Swiss francs has more than tripled over the last 18 years, representing a compounded annual growth rate of close to 7%. This concludes my remarks. I now hand over to Luca to open the Q&A session. Thank you, François. With that, we move to the Q&A session. We open the lines for questions from financial analysts. Please limit yourself to no more than two questions. The first question is from Warren Ackerman at Barclays. Please go ahead, Warren.

François-Xavier Roger: The dividend in Swiss francs has more than tripled over the last 18 years, representing a compounded annual growth rate of close to 7%. This concludes my remarks. I now hand over to Luca to open the Q&A session.

Speaker Change: Dv done in Swiss francs as more than tripled over the last 18 years, representing a compounded annual growth rate of close to 7%.

Luca Borlini: This concludes my remarks. I now hand over to Luca to open the Q&A session. Thank you, François. With that, we move to the Q&A session. We open the lines for questions from financial analysts. Please limit yourself to no more than two questions. The first question is from Warren Ackerman at Barclays. Please go ahead, Warren.

Speaker Change: This concludes my remarks, I know Andover to look out to open the Q&A session.

Luca Borlini: Thank you, François. With that, we move to the Q&A session. We open the lines for questions from financial analysts. Please limit yourself to no more than two questions. The first question is from Warren Ackerman at Barclays. Please go ahead, Warren.

Speaker Change: Thank you for this what we got we moved to the Q and a session Ah we open the lines for questions from financial analyst.

Speaker Change: That limit yourself to no more than two question. The first question is from war and accumulate Barclays. Please go ahead <unk>.

Warren Ackerman: Yeah, good morning, everybody. Good morning, Marc. François Warren is here at Barclays.

Warren Ackerman: Yeah. Good morning, everybody. Good morning, Mark. François, Warren here at Barclays. First question is around the health of the US consumer, Mark. It's 35% of your global sales. How much impact has SNAP had on your categories, and how big a benefit do you think you'll get as you lap that in April? I think it was April. What trends are you seeing, especially in US pet food? Because that's 40% of the US, and your expectation for US pet food in 2024. I guess the extra capacity gives you a big RIG opportunity. If you can just address the SNAP and maybe specifically US pet food on the first one. The second one is just back on the 4% guidance on organic growth. Can you maybe sort of talk a little bit about the puts and the takes and the sensitivities around that, Mark?

Warren Ackerman: Yeah. Good morning, everybody. Good morning, Mark. François, Warren here at Barclays. First question is around the health of the US consumer, Mark. It's 35% of your global sales. How much impact has SNAP had on your categories, and how big a benefit do you think you'll get as you lap that in April? I think it was April. What trends are you seeing, especially in US pet food? Because that's 40% of the US, and your expectation for US pet food in 2024. I guess the extra capacity gives you a big RIG opportunity. If you can just address the SNAP and maybe specifically US pet food on the first one. The second one is just back on the 4% guidance on organic growth. Can you maybe sort of talk a little bit about the puts and the takes and the sensitivities around that, Mark?

Warren: Yeah. Good morning, everybody that good morning, Francoise bar inherits Barclays. First question is around the health of the U S. Kosiba.

Mark Schneider: The first question is around the health of the US consumer market, 35% of your global sales. How much impact has SNAP had on your categories and how big a benefit do you think you'll get as you lap that in April? I think it was April.

Warren: Mark is thirty-five Bizango your global sales how.

Barclays: How much impact a snap had on your categories and how big a benefit do you think your cat as your lap that in in April I think it's April and then what frenzy, he seeing in the especially in U S pet food cause that 40% of the U S.

Mark Schneider: And then what trends are you seeing, especially in US pet food, because that's 40% of the US, and what is your expectation for US pet food in 2024? I guess the extra capacity gives you a big rig opportunity. So if you can just address the SNAP and maybe specifically US pet food on the first one. And the second one is just back on the 4% guidance on organic growth. Can you maybe talk a little bit about the puts and the takes and the sensitivities around that, Marc? I mean, assuming double-digit recovery in health sciences in the back half, how confident, for example, are you on that particular point? And what other puts and takes should we be thinking about? I assume it's going to be more volume recovery rather than mixed acceleration, but any color on that would be helpful.

Barclays: And your expectation for U S pet food in 2024, I guess the extra capacity. It gives you a big rig opportunist saved so if he can just address.

Warren: The staff and maybe specifically U S pet food on the first one and the second one is just on the back of the 4%.

Warren: Guidance on organic growth can you may be sort of talk a little bit about the person that's hike for the sensitivities around that Mark I'm in is a seeming.

Warren Ackerman: I mean, in assuming double-digit recovery in Health Science in the H2, how confident, for example, are you on that particular point? And what other puts and takes should we be thinking about? I assume it's going to be more volume recovery rather than sort of mix acceleration. Any color on that would be helpful. Thank you.

Warren Ackerman: I mean, in assuming double-digit recovery in Health Science in the H2, how confident, for example, are you on that particular point? And what other puts and takes should we be thinking about? I assume it's going to be more volume recovery rather than sort of mix acceleration. Any color on that would be helpful. Thank you.

Warren: Double digit recovery and health Sciences in the bad cough are you. How confident for example are you are you on on on on that particular point and what other person takes should we be thinking about I I see me, it's going to be more volume recovery rather than is what makes et cetera Asia any.

Speaker Change: Any color on that what what what would be helpful. Thank you.

Mark Schneider: Thank you. Warren, thank you. And a good thing that you are pointing out the snap situation with the U.S. consumer. As you can imagine, given the size of the U.S. market, we spent a lot of time trying to understand exactly what had been going on there, in particular in the second half of the year. And here is my best thinking on it, and that is that, in hindsight, all of us, the entire industry, kind of underestimated the importance of some of these snap support payments running out as from the second quarter last year. It clearly led to slow food industry growth in the second half in the U.S. And I think what you saw is all of the elements of what was discussed in other conference calls in the industry as the bifurcated consumer.

Mark Schneider: Warren, thank you. Good thing that you are pointing out the SNAP situation, the US consumer. As you can imagine, given the size of the US market, we spend a lot of time trying to understand exactly what has been going on there, in particular in H2 of the year. Here is my best thinking on it, and that is that in hindsight, all of us, the entire industry, kind of underestimated the importance of some of the SNAP support payments running out as from Q2 last year. It clearly led to a slow food industry growth in H2 in the US. I think what you saw is all of the elements of what was discussed in other conference calls in the industry as the bifurcated consumer. Clearly, at the premium end, things were going quite well.

Mark Schneider: Warren, thank you. Good thing that you are pointing out the SNAP situation, the US consumer. As you can imagine, given the size of the US market, we spend a lot of time trying to understand exactly what has been going on there, in particular in H2 of the year. Here is my best thinking on it, and that is that in hindsight, all of us, the entire industry, kind of underestimated the importance of some of the SNAP support payments running out as from Q2 last year. It clearly led to a slow food industry growth in H2 in the US. I think what you saw is all of the elements of what was discussed in other conference calls in the industry as the bifurcated consumer. Clearly, at the premium end, things were going quite well.

Speaker Change: Warren Thank you and Tim good thing that you're pointing out the snap situation in the U S consumer and she can imagine given the size of the U S market. We spent a lot of time trying to understand exactly what has been going on there in particular in the second half of the year.

Speaker Change: And here is my best thinking on it and that is that in hindsight all of us the entire industry kind of underestimated the importance of some of the snap support payments funding out ask from the second quarter last year.

Speaker Change: It clearly led to slow food industry growth in the second half M. B U S.

Speaker Change: And I think what you saw is all of the elements of what was discussed in other conference Columbia industries in the industry as.

Mark Schneider: So clearly, at the premium end, things were going quite well. But at the low end of the buy spectrum and at the low end of... the socioeconomic spectrum, you did see quite some significant stress on U.S. consumers. And with these support payments running out, I clearly think that led to some down-trading in food, either from more expensive brands to more affordable ones, or from branded products to private label, or, for example, from prepared foods to some of the components and then scratch cooking. But clearly, there were some issues. And if you try to square that with, overall, a pretty healthy holiday season, here is my best interpretation. Everything that's somewhat durable, everything that you can pay for in installments went reasonably well. But when you really have to either pay cash, or when you have to pay for it using your existing credit card limits and debit cards, then those things are under quite some stress. And food, of course, is one of those.

Speaker Change: The bifurcated consumer so clearly at the premium and thanks for going quite well, but at the low end of the buying spectrum and if the low end of them.

Mark Schneider: At the low end of the buy spectrum and at the low end of the socioeconomic spectrum, you did see quite some significant stress on US consumers. With these support payments running out, I clearly think that led to some downtrading in food, either from more expensive brands to more affordable ones, or from branded products to private label, or, for example, from prepared foods to some of the components and then scratch cooking. Clearly, there was some issue. If you try to square that with overall the pretty healthy holiday season, here is my best interpretation. Everything that's somewhat durable, everything that you can pay for in installments went reasonably well. When you really have to either pay cash or when you have to pay it on your existing credit card limits and debit cards, then those things were under quite some stress.

Mark Schneider: At the low end of the buy spectrum and at the low end of the socioeconomic spectrum, you did see quite some significant stress on US consumers. With these support payments running out, I clearly think that led to some downtrading in food, either from more expensive brands to more affordable ones, or from branded products to private label, or, for example, from prepared foods to some of the components and then scratch cooking. Clearly, there was some issue. If you try to square that with overall the pretty healthy holiday season, here is my best interpretation. Everything that's somewhat durable, everything that you can pay for in installments went reasonably well. When you really have to either pay cash or when you have to pay it on your existing credit card limits and debit cards, then those things were under quite some stress.

Speaker Change: Pop the socioeconomic spectrum, you did see quite some significant stress on U S consumers and what these support payments running out clearly think that led to some downtrading and food.

Speaker Change: Either from more expensive brands to more affordable one or from a printed products to private label for.

Speaker Change: For example from prepared foods to some of the components.

Speaker Change: Components, and then scratch cooking, but clearly there was some issue and if you try to square dance with overall, the pretty healthy holiday season.

Speaker Change: He was my best interpretation everything that somewhat doorbell everything that you can pay for in installments when to re simply well.

Speaker Change: But when you really have to either pay casual when you have to page on your existing credit card limits debit cards, then those things were under quite some stress and food of course is one of those enhance at the lower end of the spectrum. I think there is some continued weakness I think until.

Mark Schneider: Food, of course, is one of those. Hence, at that lower end of the spectrum, I think there is some continued weakness. I think until the lapping now of some of these SNAP payments slowdowns in the Q2, it'll continue. This is part of our assumption here, that the situation then at least will normalize to the extent that some of the other underlying growth trends will shine through to a stronger extent. Then regarding the guidance overall, obviously, this is a guidance that is given with our usual prudence and caution. I mean, I did point out that even in a year like 2023 that saw some negative surprises and disappointments, it was important to us that we came in within our guided range. When we do give guidance, we try to be very thoughtful about it.

Mark Schneider: Food, of course, is one of those. Hence, at that lower end of the spectrum, I think there is some continued weakness. I think until the lapping now of some of these SNAP payments slowdowns in the Q2, it'll continue. This is part of our assumption here, that the situation then at least will normalize to the extent that some of the other underlying growth trends will shine through to a stronger extent. Then regarding the guidance overall, obviously, this is a guidance that is given with our usual prudence and caution. I mean, I did point out that even in a year like 2023 that saw some negative surprises and disappointments, it was important to us that we came in within our guided range. When we do give guidance, we try to be very thoughtful about it.

Mark Schneider: And hence, at that lower end of the spectrum, I think there is some continued weakness. I think until the lapping of some of these SNAP payments lowdowns in the second quarter, it'll continue. And this is part of our assumption here, that the situation then at least will normalize to the extent that some of the other underlying growth trends will shine through to a stronger extent. And then, regarding the guidance overall, obviously, this is a guidance that is given with our usual prudence and caution. I mean, I did point out that even in a year like 2023, which saw some negative surprises and disappointments, it was important to us that we came in within our guided range. So when we do give guidance, we try to be very thoughtful about it, so we're not taking only the sunny day outlook but rather really trying to put in some checks and balances here and a balanced view that incorporates upsides and downsides.

Speaker Change: The lapping now of similar be snapped payments slowdowns in the second quarter. It'll continue on this is part of our assumption here that the situation been at least will normalize to the extent that some of the other underlying crow trends would shine through to a stronger extent.

Speaker Change: And then regarding the guidance overall obviously.

Speaker Change: This is the guidance that is given with our usual prudence and caution I did point out that even in a year like 2023 that saw some negative surprises and disappointments. It was important to us that we came in within our guided range. So when we do give guidance, we try to be very thoughtful about it.

Mark Schneider: We're not taking only the sunny day outlook, but rather really try to put in some checks and balances here and a balanced view that incorporates upsides and downsides that relates to Nestlé Health Science, but it also relates to some of our other businesses and regions we're doing business in.

Mark Schneider: We're not taking only the sunny day outlook, but rather really try to put in some checks and balances here and a balanced view that incorporates upsides and downsides that relates to Nestlé Health Science, but it also relates to some of our other businesses and regions we're doing business in.

Speaker Change: So we're not taking only the sunny day.

Speaker Change: Outlook, Vermont really tried to put in some checks and balances here in a balanced view that incorporates upsides and downsides that relates to Nestle have science, but it also relates to some obama other businesses and regions, we're doing business in.

Mark Schneider: That relates to Nestle Health Science, but it also relates to some of our other businesses and regions we're doing business in. So the next question is from Bruno Monteyne at Bernstein. Please go ahead, Bruno. Hi, good afternoon.

Luca Borlini: Next question is from Bruno Monteyne at Bernstein. Please go ahead, Bruno.

Luca Borlini: Next question is from Bruno Monteyne at Bernstein. Please go ahead, Bruno.

Speaker Change: So the next question is from the Bruno Montana said Bernstein and please go ahead Bruno.

Bruno Monteyne: Hi. Good afternoon. You finished the year on 8.3% marketing spend. Now, how did that compare with the level of marketing spend pre-COVID? Are you back at that level? Is my first question. The second one is back to the sustainability program. The income accelerator was a very big step forward. Can you update us what percentage of your farmers are benefiting from the income accelerator today, and by what date will all of them benefit from that? Linked to that, a few years ago, François made it clear that the cost of sustainability would weigh on future margin expansion as you're making big investments in the net zero. In the last few years, do you think the cost of sustainability has increased? I mean, do you think the margin headwinds from that transition are bigger than what they were a few years ago?

Bruno Monteyne: Hi. Good afternoon. You finished the year on 8.3% marketing spend. Now, how did that compare with the level of marketing spend pre-COVID? Are you back at that level? Is my first question. The second one is back to the sustainability program. The income accelerator was a very big step forward. Can you update us what percentage of your farmers are benefiting from the income accelerator today, and by what date will all of them benefit from that? Linked to that, a few years ago, François made it clear that the cost of sustainability would weigh on future margin expansion as you're making big investments in the net zero. In the last few years, do you think the cost of sustainability has increased? I mean, do you think the margin headwinds from that transition are bigger than what they were a few years ago?

Bruno Monteyne: Hi, good afternoon.

Bruno Monteyne: You finished the year with 8.3% marketing spend. Now, how did that compare with the level of marketing spend pre-COVID? Are you back at that level?

Bruno Monteyne: You finish the <unk> now how does that compare with the level of milk thing's been pre COVID-19 Ah you're back a at a level.

Mark Schneider: That is my first question. The second one is back to the sustainability program. The income accelerator was a big step forward. Can you tell us what percentage of your farmers are benefiting from the income accelerator today? And you know, by what date will all of them benefit from that?

Bruno Monteyne: Is my first question. The second one is back to the sustainability program.

Bruno Monteyne: The income in February it was a big step forward can you update us what percentage of your farmers are benefiting from the income accelerated today and you know by what date.

Bruno Monteyne: Benefited from that and linked to that a few years ago.

Mark Schneider: And linked to that, a few years ago, Karl Schwab made it clear that the cost of sustainability would weigh on future margin expansion as you're making big investments in the net zero. In the last few years, do you think the cost of sustainability has increased? I mean, you know, do you think the margin headwinds from that transition are bigger than they were a few years ago? And should we be concerned about that for future years? Thank you. Thank you, Bruno. And let me take a stab at both of them.

Bruno Monteyne: The coastal sustainability would weigh on future margin expansion as you're making big investments in a zero.

Bruno Monteyne: R. C. Yes, do you think the cost of sustainability has increased you know do you think Martin headwinds storm that transition a big into what they want a few years ago and she will be concerned about it with food yes. Thank you.

Bruno Monteyne: Should we be concerned about it for future years? Thank you.

Bruno Monteyne: Should we be concerned about it for future years? Thank you.

Mark Schneider: Thank you, Bruno. Let me take a stab at both of them, and I'll also invite François to weigh in on the marketing spend part. Clearly, with the levels we're seeing now, we're still a little bit below the pre-COVID levels. We're not miles away, but a little bit below. It's important to incorporate that in those years since 2019, there have been some changes in everyone's marketing mix. Of course, there's a much, much larger share of digital now, where I think it's fair to assume that there's a higher degree of productivity. As a result of that, while we still continue to see some improvements now in 2024, I don't think it'll be entirely necessary to go Swiss franc for Swiss franc to the levels that we have seen in pre-COVID levels.

Mark Schneider: Thank you, Bruno. Let me take a stab at both of them, and I'll also invite François to weigh in on the marketing spend part. Clearly, with the levels we're seeing now, we're still a little bit below the pre-COVID levels. We're not miles away, but a little bit below. It's important to incorporate that in those years since 2019, there have been some changes in everyone's marketing mix. Of course, there's a much, much larger share of digital now, where I think it's fair to assume that there's a higher degree of productivity. As a result of that, while we still continue to see some improvements now in 2024, I don't think it'll be entirely necessary to go Swiss franc for Swiss franc to the levels that we have seen in pre-COVID levels.

Speaker Change: Thank you Bruno intent, let me take a stab at both of them and I also invite France wanted to weigh in on the marketing spend part.

François Roger: And I also invite Francois to weigh in on the marketing spend part. So clearly, with the levels we're seeing now, we're still a little bit below the pre-COVID levels. We're not miles away, but a little bit below.

Speaker Change: So clearly what the levels were seen now we're still a little bit below the pre COVID-19 levels were not miles away, but a little bit below and it's important to incorporate that in those years. Since 2019, there have been some changes in everyone's.

François Roger: And it's important to note that in those years since 2019, there have been some changes in everyone's marketing mix. And, of course, there's a much, much larger share of digital now, where I think it's fair to assume that there is a higher degree of productivity. And as a result of that, while we still continue to see some improvements now in 2024, I don't think it'll be entirely necessary to go Swiss franc for Swiss franc to the levels that we have seen in pre-COVID levels. It's simply that the nature of brand support and marketing has changed.

Speaker Change: Marketing mix and of course, there's a much much larger share of digital now where I think it's fair to assume that there's a higher degree of productivity and as a result of that while we still continue to see some improvements now in 2024, I don't think it'll be into.

Speaker Change: Nearly necessarily to go spruce Frankfort was Frank tuba levels that we have seen in a pre COVID-19 levels, it's simply that the nature of <unk>.

Mark Schneider: It's simply that the nature of brand support and marketing has changed, and I think there has been some progress here on productivity. Regarding the cost of sustainability, we still believe very much in this mantra that this is not something that should come out of our investors' pockets alone. Clearly, this whole notion of working on continued productivity improvements and then channeling that into forward-looking spend, whether it's product development, whether it's sustainability, or whether it's brand support, that whole notion, which we call the virtuous circle, that's still fully alive and kicking. On the sustainability cost, I think you've seen quite a large spread of potential outcomes. I mean, there's some regions where, for example, recycled plastics was getting all of a sudden more expensive. On the other hand, you've seen others where the cost per ton has come down.

Mark Schneider: It's simply that the nature of brand support and marketing has changed, and I think there has been some progress here on productivity. Regarding the cost of sustainability, we still believe very much in this mantra that this is not something that should come out of our investors' pockets alone. Clearly, this whole notion of working on continued productivity improvements and then channeling that into forward-looking spend, whether it's product development, whether it's sustainability, or whether it's brand support, that whole notion, which we call the virtuous circle, that's still fully alive and kicking. On the sustainability cost, I think you've seen quite a large spread of potential outcomes. I mean, there's some regions where, for example, recycled plastics was getting all of a sudden more expensive. On the other hand, you've seen others where the cost per ton has come down.

Speaker Change: Brian support and marketing has changed and I think there has been some progress here on productivity.

Mark Schneider: And I think there has been some progress here on productivity. Regarding the cost of sustainability, we still believe very much in this mantra that this is not something that should come out of our investors' pockets alone. And so clearly, this whole notion of working on continued productivity improvements and then channeling that into forward-looking spend, whether it's product development, whether it's sustainability, or whether it's brand support, that whole notion, which we call the virtuous circle, that's still fully alive and kicking. On the sustainability cost, I think you've seen quite a large spread of potential outcomes. I mean, there are some regions where, for example, recycled plastics are getting all of a sudden more expensive. On the other hand, you've seen others where the cost per ton has come down. So it's very hard to show a distinctive direction here.

Speaker Change: Regarding the cost of sustainability, we still believed very much in this mantra that this is not something that should come out of our investors pockets alone.

Speaker Change: And uhm. So clearly this whole notion of working on continued productivity improvements and then channeling in bat into a forward looking spend whether its product development, whether it's sustainability or whether it's Brian support that whole notion, which we call the virtuous circle that's still.

Speaker Change: Fully alive and kicking.

Speaker Change: On the sustainability cost I think you've seen quite a large spread of potential outcomes. I mean, there's some regions where for example, recycled plastics was getting all of a sudden more expensive on the other hand, you've seen of us where the cost per ton has come down.

Mark Schneider: It's very hard to show a distinctive direction here. I do believe that overall, when it comes to the affordability of it doesn't go against what we told you earlier, and that is we try to pay for this out of our ongoing productivity improvements. Regarding the farmers benefiting, in particular, from our income accelerator in the cocoa space, so we're talking at the present time around 10,000 families, and we intend to scale that up further over the next year. François, maybe you want to add.

Mark Schneider: It's very hard to show a distinctive direction here. I do believe that overall, when it comes to the affordability of it doesn't go against what we told you earlier, and that is we try to pay for this out of our ongoing productivity improvements. Regarding the farmers benefiting, in particular, from our income accelerator in the cocoa space, so we're talking at the present time around 10,000 families, and we intend to scale that up further over the next year. François, maybe you want to add.

Speaker Change: So it's very hard to show a distinctive direction here, but I do believe that overall when it comes to the affordability of it it doesn't go against what we told you earlier and that is are we trying to pay for this out of our ongoing productivity improvements brig.

Mark Schneider: But I do believe that overall, when it comes to the affordability of it, it doesn't go against what we told you earlier, and that is, we try to pay for this out of our ongoing productivity improvements. Regarding the farmers benefiting, in particular, from our income accelerator in the COCO space. So we're talking at the present time about 10,000 families, and we intend to scale that up further over the next year. Francois, maybe you want to add something? No, maybe very briefly.

Speaker Change: Guarding the farmers are benefiting in particular from <unk>.

Speaker Change: Our income et cetera.

Speaker Change: And the cocoa space. So we're talking at the present time around 10000 families and we intend to scale it up forever over the next year.

Speaker Change: Francois maybe you want to add no maybe very briefly you. Good afternoon no on the marketing support. So in addition to what Mark said, what makes a difference as well as the fact that we are now focusing essentially on a billionaire bronze that account of 70% of ourselves and we do expect to extract much more efficiency out of it in terms of gross and market share.

François-Xavier Roger: No, maybe very briefly. Good afternoon, Bruno. On the marketing support, so in addition to what Mark said, what makes a difference as well is the fact that we are now focusing essentially on our billionaire brands that account for 70% of our sales. We do expect to extract much more efficiency out of it in terms of growth and market share. On sustainability, just to give you an idea, over the last two years, the additional cost on our margin was about 20 basis points additional year-on-year, which obviously doesn't come at the expense of our margin at the bottom line. We have developed, I would say, good tools over the last couple of years in order to be more efficient.

François-Xavier Roger: No, maybe very briefly. Good afternoon, Bruno. On the marketing support, so in addition to what Mark said, what makes a difference as well is the fact that we are now focusing essentially on our billionaire brands that account for 70% of our sales. We do expect to extract much more efficiency out of it in terms of growth and market share. On sustainability, just to give you an idea, over the last two years, the additional cost on our margin was about 20 basis points additional year-on-year, which obviously doesn't come at the expense of our margin at the bottom line. We have developed, I would say, good tools over the last couple of years in order to be more efficient.

François Roger: Good afternoon, Bruno. On marketing support, so in addition to what Marc said, what makes a difference as well is the fact that we are now focusing essentially on our billionaire brands that account for 70% of our sales. And we do expect to extract much more efficiency out of it in terms of growth and market share. And on sustainability, just to give you an idea, over the last two years, the additional cost on our margin was about 20 basis points, additional year on year, which obviously doesn't come at the expense of our margin at the bottom line. We have developed, I would say, good tools over the last couple of years in order to be more efficient.

Francois: Unsustainability just to give you an idea over the last two years the additional costs on our mountain was about 20 basis points additional year on year, which usually doesn't come at the expense of a mountain at the bottom line. We have been we have developed I would say a good tools over the last couple of years.

Guillaume Delmas: And as you can see, we are driving in the right direction in order to meet our commitments. While probably we will spend less than we thought initially, given that we can make arbitrage between geographies and categories, we don't necessarily need to do everything now. Technology and science can be available for some needs today, while it is not for other needs.

François-Xavier Roger: As you can see, we are driving in the right direction in order to meet our commitments, while probably we will spend less than what we thought initially, given that we can make arbitrage between geographies and categories. We don't necessarily need to do everything now. Technology and science can be available for some needs today while it is not for other needs. Then as a consequence of that, we can focus and be more efficient by making choices on these sustainability investments.

François-Xavier Roger: As you can see, we are driving in the right direction in order to meet our commitments, while probably we will spend less than what we thought initially, given that we can make arbitrage between geographies and categories. We don't necessarily need to do everything now. Technology and science can be available for some needs today while it is not for other needs. Then as a consequence of that, we can focus and be more efficient by making choices on these sustainability investments.

Francois: To be more efficient and as you can see we are driving in the right direction you don't have to meet our commitments wild probably we will spend less than what we soldierfish. Initially given that we can make arbitrage between geography's on categories, we don't necessarily need to do everything now and we can technology on science can be available for so.

Francois: Needs today, while it is not for all of our needs and then as a consequence of that we can focus on be more efficient by making choices on the sustainability investments.

Mark Schneider: And then, as a consequence of that, we can focus and be more efficient by making choices on sustainability investments. Thank you. The next question is from Guillaume Delmas at UBS. Please go ahead, Guillaume.

Luca Borlini: Thank you. Next question is from Guillaume Delmas at UBS. Please go ahead, Guillaume.

Luca Borlini: Thank you. Next question is from Guillaume Delmas at UBS. Please go ahead, Guillaume.

Speaker Change: Thank you and the next.

Gilmer Massa: Next question is from Ah Gilmer Massa T U B S. Please glad they're gilman.

François Roger: Thank you, Luca, and afternoon, Mark and Francois. So, two questions for me, please. The first one is this succession of issues Nestle has been facing over the last couple of years, be it butyne in France, Nestle Health Science, and now Waters in France again. So from the outside, it seems that Nestle is a little bit more accident-prone than it was, say, five or six years ago. So my question is, Mark, as you look at this, do you think some tweaks have to be made to Nestle's culture, processes, maybe way of doing business? And related to that, despite their strong benefits, do you maybe think that some of the efficiency initiatives that have been put in place over the past few years may have gone, in some instances, too far, maybe putting too much stress on the organization?

Guillaume Delmas: Thank you, Luca. Good afternoon, Marc and François. Two questions for me, please. The first one is on this succession of issues Nestlé has been facing over the last couple of years, be it Buitoni in France, Nestlé Health Science, and now Waters in France again. From the outside, it seems that Nestlé is a little bit more accident-prone than it was, say, five or six years ago. My question is, Marc, as you look at this, do you think some tweaks have to be made to Nestlé's culture, processes, maybe way of doing business? Related to that, despite their strong benefits, do you maybe think that some of the efficiency initiatives that have been put in place over the past few years may have gone, in some instances, too far, maybe putting too much stress on the organization?

Guillaume Delmas: Thank you, Luca. Good afternoon, Marc and François. Two questions for me, please. The first one is on this succession of issues Nestlé has been facing over the last couple of years, be it Buitoni in France, Nestlé Health Science, and now Waters in France again. From the outside, it seems that Nestlé is a little bit more accident-prone than it was, say, five or six years ago. My question is, Marc, as you look at this, do you think some tweaks have to be made to Nestlé's culture, processes, maybe way of doing business? Related to that, despite their strong benefits, do you maybe think that some of the efficiency initiatives that have been put in place over the past few years may have gone, in some instances, too far, maybe putting too much stress on the organization?

Gilmer Massa: Thank you Luca and afternoon, Mark and therefore oswell. So two questions for me. Please the first one is on this a succession of issues Nestle has been facing the last couple of years that'd be buitoni in France, Nestor Health Science and now waters in France again so.

Gilmer Massa: From the outside it seems that <unk> is a little bit more accident prone than it was say five or six years ago. So.

Gilmer Massa: So my question is Mark as you look at this do you think some tweaks have to be made to Netflix culture processes, maybe way of doing business.

Gilmer Massa: And related to that despite their strong benefits do you may be saying that some of the efficiency initiatives that had been put in place over the past few years may have gone in some instances too far may be putting too much stress on the organization.

François Roger: And then my second question is going back to the strong contribution from mix to your organic sales growth we saw in 2023. I mean, as you keep on increasing your advertising spend behind fewer, bigger brands and innovations, should we view this two to three percent mix benefit to your top line growth as sustainable? And so, therefore, like your multi-year financial objective of four to six percent organic sales growth should be on average made of two to three percent mix, and then volume and pricing each adding on average one percentage point. So any column that would be great. Thank you.

Guillaume Delmas: Then my second question is going back to the strong contribution from mix to your organic sales growth we saw in 2023. I mean, as you keep on increasing your advertising spend behind fewer, bigger branded innovations, should we view that this 2% to 3% mix benefit to your top-line growth as sustainable? Therefore, your multi-year financial objective of 4% to 6% organic sales growth should be, on average, made of 2% to 3% mix and then volume and pricing, each adding, on average, one percentage point. Any comment that would be great. Thank you.

Guillaume Delmas: Then my second question is going back to the strong contribution from mix to your organic sales growth we saw in 2023. I mean, as you keep on increasing your advertising spend behind fewer, bigger branded innovations, should we view that this 2% to 3% mix benefit to your top-line growth as sustainable? Therefore, your multi-year financial objective of 4% to 6% organic sales growth should be, on average, made of 2% to 3% mix and then volume and pricing, each adding, on average, one percentage point. Any comment that would be great. Thank you.

Gilmer Massa: And then my second question is going back to the strong contribution from mixed to your organic sales gross we saw in 2023 I mean as you keep on increasing your advertising spent behind your bigger brands and innovation should.

Gilmer Massa: Should we view that this 2% to 3% mix benefit to your top line growth as sustainable and so therefore like your multiyear financial objected about 46% organic sales growth should be on average made up to two 3% mix and then volume in pricing each adding on average one percentage point, so any color on that would be.

Mark Schneider: Thank you, Guillaume. Let me try and address the issues and then hand it to Fransma for the next question. So look, on these issues you cited, I can only offer my regrets, and I do understand that in a short space of time, we had quite a few of them. However, to the best of my knowledge, I do feel that the underlying reasons for those and the specific circumstances are actually quite different. Of course, I'm also having a very fine antenna for what might be systemic issues, but I don't see a systemic connection here. And so I do see it at this point as a very unfortunate piling up of a few things in a short order of time, again, with very, very different timelines in which they developed, underlying reasons, and situations. What I think I can firmly say is that there is no nexus with the efficacy programs that we have had underway over the years.

Speaker Change: Great. Thank you.

Mark Schneider: Thank you, Guillaume. Let me try and address the issues and then hand it to François for the mix question. Look, on these issues you cited, I can only offer my regrets. I do understand that in a short order of time, we had quite a few of them. To the best of my knowledge, I do feel that the underlying reasons for those and the specific circumstances are actually quite different. Of course, I'm also having a very fine antenna for what might be systemic issues, but I don't see a systemic connection here. I do see it at this point as a very unfortunate piling up of a few things in a short order of time, again, with very, very different timelines in which they developed underlying reasons and situations.

Mark Schneider: Thank you, Guillaume. Let me try and address the issues and then hand it to François for the mix question. Look, on these issues you cited, I can only offer my regrets. I do understand that in a short order of time, we had quite a few of them. To the best of my knowledge, I do feel that the underlying reasons for those and the specific circumstances are actually quite different. Of course, I'm also having a very fine antenna for what might be systemic issues, but I don't see a systemic connection here. I do see it at this point as a very unfortunate piling up of a few things in a short order of time, again, with very, very different timelines in which they developed underlying reasons and situations.

Speaker Change: Think of you know the me trying to address the issues and then handed to a pharmacy for the next question. So look on these issues you cited I can only offer my regrets and I do understand that in a short of time, we had quite a few of them.

Speaker Change: To the best of my knowledge I do feel that the underlying reasons for those and the specific circumstances are actually quite different of course, you know I'm also having a very fine antenna for what might be systemic issues, but I don't see as in systemic connection here.

Speaker Change: And so I do see it at this point is a very unfortunate piling up a few things in a shorter time again with very very different timelines and wished they developed underlying reasons and and situations. What I think I can firmly say is there is no nexus where.

Mark Schneider: What I think I can firmly say is there is no nexus with the efficiency programs that we had underway over the years. I think we've been generally very, very thoughtful in how we went about this. As you know, we've never resorted to massive restructuring programs where people drop everything they're doing and then only focus on the new structure, but rather always try to find the right balance between diligently doing what we're doing and at the same time then putting some of these efficiency improvements in place, most notably in those areas where we also have increasing volume so that we have the virtuous circle at work. Again, I express my regrets. I hope you also appreciate the full transparency around these issues.

Mark Schneider: What I think I can firmly say is there is no nexus with the efficiency programs that we had underway over the years. I think we've been generally very, very thoughtful in how we went about this. As you know, we've never resorted to massive restructuring programs where people drop everything they're doing and then only focus on the new structure, but rather always try to find the right balance between diligently doing what we're doing and at the same time then putting some of these efficiency improvements in place, most notably in those areas where we also have increasing volume so that we have the virtuous circle at work. Again, I express my regrets. I hope you also appreciate the full transparency around these issues.

Speaker Change: The efficacy program that we had underway over the years I think we've been generally very very thoughtful and how we went about this and asks you know we've never resorted to massive.

François Roger: I think we've been generally very, very thoughtful in how we went about this. And as you know, we've never resorted to massive restructuring programs where people drop everything they're doing and then only focus on the new structure, but rather, we always try to find the right balance between diligently doing what we're doing and, at the same time, putting some of these efficiency improvements in place, most notably in those areas where we also have increasing volume so that we have the virtues circle at work. So again, I express my regrets. I hope you also appreciate the full transparency around these issues, and then definitely, all I can ask you for is some patience and to bear with us as we manage through those and then give you that very steadfast operational performance that I was trying to point out as a key goal for 24andBeyond. Guillaume Francois is speaking. Good afternoon, Let me try to help you on the mixing thing.

Speaker Change: Restructuring programs, where people drop everything they're doing and then only focus on the new structure, but while they're always trying to find the right balance between diligently doing what we're doing and at the same time, then Ah putting similar piece efficiency improvements in place most notably in those areas, where we also have.

Speaker Change: Ah increasing volume so that we have the virtuous circle at work. So again express my regrets I hope you're also appreciate the full transparency around these issues and then definitely all I can ask you for is some of the patients and bear with US as we managed to prove Ellis and then give you.

Mark Schneider: Definitely, all I can ask you for is some of the patience and bear with us as we manage through those and then give you that very steadfast operational performance that I was trying to point out as a key goal for 2024 and beyond.

Mark Schneider: Definitely, all I can ask you for is some of the patience and bear with us as we manage through those and then give you that very steadfast operational performance that I was trying to point out as a key goal for 2024 and beyond.

Speaker Change: That's very steadfast operational performance that I was trying to point out is akiko 424 and beyond.

François-Xavier Roger: Guillaume, François speaking. Good afternoon. Let me try to help you on the mix thing. I cannot guide, really, on mix because we don't even guide on RIG. Let me help you. If you look at it historically, you could see that we had a positive volume pre-COVID, 1% to 1.5%. This is where we should go back, and we are really working on it as we speak. The fact that we were slightly negative in Q4 is a good indication that we are moving in the right direction. Mix should be the largest contributor to OG, as it was the case pre-COVID as well. I don't want to guide on the 2 to 3, but obviously, mix is the most interesting part with volume of our growth because it illustrates our capacity to innovate.

François-Xavier Roger: Guillaume, François speaking. Good afternoon. Let me try to help you on the mix thing. I cannot guide, really, on mix because we don't even guide on RIG. Let me help you. If you look at it historically, you could see that we had a positive volume pre-COVID, 1% to 1.5%. This is where we should go back, and we are really working on it as we speak. The fact that we were slightly negative in Q4 is a good indication that we are moving in the right direction. Mix should be the largest contributor to OG, as it was the case pre-COVID as well. I don't want to guide on the 2 to 3, but obviously, mix is the most interesting part with volume of our growth because it illustrates our capacity to innovate.

Speaker Change: Mcgee your impulse was speaking good afternoon, let me try to help you on the mix thing we could I cannot guide really a mixed because we don't even guy Don Regan, but let me help you. If you look at it historically you could see that we had a positive volume pre COVID-19, 1% to 1.5%. This is where we should go back.

Mark Schneider: I cannot really guide you on mix because we don't even guide on rig, but let me help you. If you look at it historically, you can see that we had a positive volume pre-COVID of 1 to 1.5%. This is where we should go back, and we are really working on it as we speak. And the fact that we were slightly negative in Q4 is a good indication that we are moving in the right direction. Mix should be the largest contributor to OG, as it was the case pre-COVID as well.

Speaker Change: We are really working on it as we speak and the fact that we were slightly negative in queue for is a good indication that we are moving in the right direction Meeks should be the largest contributor to Oh G. As he towards the kiss pre COVID-19 as well and I don't want to guide on the two to three but obviously mix.

François Roger: And I don't want to give you an opinion on the 2 to 3, but obviously, mix is the most interesting part with the volume of our growth because it illustrates our capacity to innovate. This is the outcome of our R&D and our capacity to premiumize as well. And what Mark shared earlier, the fact that we have increased the share of premium products from 11% to 36% of our net sales is certainly a good illustration of that. So mix should continue to be the largest driver of our growth going forward, as has been the case. And that has been the case, by the way, during inflationary times outside of pricing, obviously, and during COVID as well. Thank you. The next question is from Jeremy Fialko at HSBC. Please go ahead, Jeremy.

Speaker Change: He's the most interesting part with volume of girls, because if you destroyed our capacity to innovate and he sees the outcome of R&D unlocked capacity to premium is as well and what mark mm shelled earlier. The fact that we have increased the share of premium product from 11% to 36% of all net sales.

François-Xavier Roger: This is the outcome of our R&D and our capacity to premiumize as well. What Mark shared earlier, the fact that we have increased the share of premium product from 11% to 36% of our net sales, is certainly a good illustration of it. Mix should continue to be the largest driver of our growth going forward, as it has been the case. It has been the case, by the way, during the inflationary time outside of pricing, obviously, and during COVID as well. Thank you.

François-Xavier Roger: This is the outcome of our R&D and our capacity to premiumize as well. What Mark shared earlier, the fact that we have increased the share of premium product from 11% to 36% of our net sales, is certainly a good illustration of it. Mix should continue to be the largest driver of our growth going forward, as it has been the case. It has been the case, by the way, during the inflationary time outside of pricing, obviously, and during COVID as well. Thank you.

Speaker Change: This is certainly a good use for reduced version of it so mix should continue to be the largest drive or girls going for awhile as it has been the case and it has been the case by the way during the inflationary time.

Speaker Change: Outside of pricing, obviously and during Covid as well.

Speaker Change: Thank you.

Luca Borlini: Next question is from Jeremy Fialko at HSBC. Please go ahead, Jeremy.

Luca Borlini: Next question is from Jeremy Fialko at HSBC. Please go ahead, Jeremy.

Speaker Change: Next question he said on the Jeremy Fiasco at HSBC. Please go ahead to Jeremy.

Jeremy Fialko: Hi, good afternoon; thanks for taking the couple of questions. So the first one is just on the EPS guidance range that you've given, so you've kept the 6 to 10, albeit the top line growth is a little bit below the single-digit range. So clearly, there's a greater role for margin to play. So I guess that's just a logical inference, and you're not saying, well, you know, the EPS growth is likely to be at the low end of the range, and if you're at the upper end, that would imply just a good margin performance for the year. And then the second question is on Europe and the rig in Q4. So that was quite weak when, actually, across the rest of the business, the rig was pretty good.

Jeremy Fialko: Hi. Good afternoon. Thanks for taking the couple of questions. The first one is just on the EPS guidance range that you've given us. You've kept the 6% to 10%, albeit the top-line growth is a little bit below the typical mid-single-digit range. Clearly, there's a greater role for margins to play. I guess, is that just a logical inference? And you're not saying, "Well, the EPS growth is likely to be at the lower end of the range. The whole range is there." And if you're at the upper end, that would imply just a good margin performance for the year. Then the second question is on Europe and the RIG in Q4. That was quite weak when, actually, across the rest of the business, the RIG was pretty good. Can you talk about the RIG in Europe?

Jeremy Fialko: Hi. Good afternoon. Thanks for taking the couple of questions. The first one is just on the EPS guidance range that you've given us. You've kept the 6% to 10%, albeit the top-line growth is a little bit below the typical mid-single-digit range. Clearly, there's a greater role for margins to play. I guess, is that just a logical inference? And you're not saying, "Well, the EPS growth is likely to be at the lower end of the range. The whole range is there." And if you're at the upper end, that would imply just a good margin performance for the year. Then the second question is on Europe and the RIG in Q4. That was quite weak when, actually, across the rest of the business, the RIG was pretty good. Can you talk about the RIG in Europe?

Jeremy: Hi, Thanks for taking the a couple of questions. The first one is just on the E. P. S guidance range that you've you've give us that you kept the six to 10.

Jeremy: Be buying growth is a little bit below the typical single digit range. So clearly there's a greater role of margins of place. So I guess is that just a logical influence and you'll not saying well. The P. S growth is likely to be at the low end of the range of the whole range is there.

Jeremy: And a few of the upper right and that would imply just a good molecule performance that yet.

Jeremy: The second question is on Europe, and the rig in queue for so that was quite weak when actually across the rest of the business that was pretty good. So can you talk about.

Mark Schneider: So can you talk about rigging Europe? Clearly, Europe was a bit later in terms of when the prices went up, and so you're seeing some of the reaction later. But maybe you could talk about some of the categories where it was weaker, and whether there are any areas you feel you might have overpriced and are now needing to roll those back or put in extra promotions. Jeremy, thank you.

Jeremy Fialko: Clearly, Europe was a bit later in terms of when the prices went up. You're seeing some of the reaction later. Maybe you could talk about some of the categories where that was weaker and whether there are any areas you feel you might have overpriced and are now needing to roll those back or put in extra promotions to stimulate the volumes. Thanks.

Jeremy Fialko: Clearly, Europe was a bit later in terms of when the prices went up. You're seeing some of the reaction later. Maybe you could talk about some of the categories where that was weaker and whether there are any areas you feel you might have overpriced and are now needing to roll those back or put in extra promotions to stimulate the volumes. Thanks.

Jeremy: It was a bit late in terms of when the prices went up and sees that you'll see some of the reaction data.

Jeremy: You could talk about some of the categories, where there was weaker and whether the any areas. You feel you might have overpriced and are now needing to roll those back who puts an extra promotions to stimulate the body's thanks.

Mark Schneider: Jeremy, thank you. Let me take a crack at the underlying EPS expectations and then hand it to François for Europe. Clearly, you've seen us quite consistently perform in the range that we had outlined a number of years ago. I don't see a change for that for 2024, 2025. When we put this together, obviously, we're not targeting the very low end of things. I mean, it's a 6 to 10 range. You saw us come in in the upper half, even in a challenging year like 2023. Being now in mid-single digits, more towards the low end with around 4% on organic sales growth, even just assuming normal margin progression does not put at peril the expectation of underlying EPS growth in constant currency at the 6 to 10. We feel very confident there.

Mark Schneider: Jeremy, thank you. Let me take a crack at the underlying EPS expectations and then hand it to François for Europe. Clearly, you've seen us quite consistently perform in the range that we had outlined a number of years ago. I don't see a change for that for 2024, 2025. When we put this together, obviously, we're not targeting the very low end of things. I mean, it's a 6 to 10 range. You saw us come in in the upper half, even in a challenging year like 2023. Being now in mid-single digits, more towards the low end with around 4% on organic sales growth, even just assuming normal margin progression does not put at peril the expectation of underlying EPS growth in constant currency at the 6 to 10. We feel very confident there.

Jeremy: Jeremy. Thank you, let me take a crack at the EPS underlying EPS expectations, and then handed a punishment for Europe. So clearly you've seen as quite consistently perform in the range that we had outlined a number of years ago and I don't see a change for that 424 25, when we put.

François Roger: Let me take a crack at the EPS, underlying EPS expectations and then hand it to Fransma for Europe. So, clearly, you've seen us quite consistently perform in the range that we had outlined a number of years ago, and I don't see a change to that for 2024, 2025. When we put this together, obviously, you know, we're not targeting the very low end of things. I mean, it's a six to ten range, and you saw us come in in the upper half, even in a challenging year like 23.

Speaker Change: This together, obviously you know we're not targeting the very low end of things I mean, it's a six to 10 range and you saw us come in in the upper half even in a challenging year like twenty-three so being now in mid single digits, you know more towards the low end with around 4% on organic.

Mark Schneider: So, being now in mid-single digits, you know, more towards the low end with around 4% organic sales growth, even just assuming normal margin progression does not put at peril the expectation of underlying EPS growth in constant currency at six to ten. So, we feel very confident there. On the European rig, indeed you said it, pricing has certainly contributed to it. However, pricing is coming always with a certain time delay in Europe, given that we have limited windows to increase prices.

Speaker Change: She is croft.

Speaker Change: You know, even just assuming normal marching progression does not put apparel the expectation of underlying EPS growth in constant currency. After six to 10, so we feel very confident there.

François-Xavier Roger: On the European RIG, indeed, you said it. Pricing has certainly contributed to it. Pricing is coming always with a certain time delay in Europe, given that we have limited windows to increase prices. As a consequence of that, at the beginning of 2023, we did a level of pricing that was exceptionally high, double-digit, which had some impact for a few months on RIG. In addition to that, you touched on it as well, we had some specific issues, and mainly with the water supply constraint that we had. Without the water supply constraint, our RIG would have been basically flat last year in Europe.

François-Xavier Roger: On the European RIG, indeed, you said it. Pricing has certainly contributed to it. Pricing is coming always with a certain time delay in Europe, given that we have limited windows to increase prices. As a consequence of that, at the beginning of 2023, we did a level of pricing that was exceptionally high, double-digit, which had some impact for a few months on RIG. In addition to that, you touched on it as well, we had some specific issues, and mainly with the water supply constraint that we had. Without the water supply constraint, our RIG would have been basically flat last year in Europe.

Jeremy: On the European Regan, Indeed, you said it a pricing is certainly contributed to eat pricing east coming always with a certain time delay in Europe, given that we have limited windows to increase prizes as a consequence of that at the beginning of twenty-three. We did a level of crossing that was exceptionally high W.

François Roger: As a consequence of that, at the beginning of 2023, we set a level of pricing that was exceptionally high, double-digit, which had some impact for a few months on rig. In addition to that, you touched on it as well, we had some specific issues, and mainly with the water supply constraint that we had. Without the water supply constraint, our rig would have been basically flat last year in Europe. The next question is from Patrik Schwendimann at Silker Continental Bank. Please go ahead, Patrik.

Jeremy: <unk>, which had some impact for a few months ornery. In addition to that you touched on it is when we had some specific issues on mainly with the water supply constrained that we had without the water supply constraints or <unk> would have been busy can be flat last year in Europe.

Luca Borlini: Next question is from Patrik Schwendimann at Zürcher Kantonalbank. Please go ahead, Patrik.

Luca Borlini: Next question is from Patrik Schwendimann at Zürcher Kantonalbank. Please go ahead, Patrik.

Speaker Change: Next question when you throw the better 20 minutes, you'll click Internet Bunk. Please go ahead Patrick.

Patrik Schwendimann: Yeah, thank you, Luca, Patrik Schwendimann, Cerdanyl Bank. Hi Mark. Hi François. Firstly, regarding your target to restore the growth margin back to historic levels, last year we saw 45.9%, which is still far away from the year 2019, where you had 49.6%. As a best guess, would you expect a stronger growth margin increase in 2024 versus the 70 base points we have just reached in 2023? That's my first question.

Patrik Schwendimann: Yeah, thank you, Luca. Patrik Schwendimann, Zürcher Kantonalbank. Hi, Mark. Hi, François. First, regarding your target to restore gross margin back to historic levels, last year, we have seen 45.9%, which is still far away from back to year 2019, where you had 49.6%. As a best guess, would you expect a stronger gross margin increase in 2024 versus the 70 basis points we have just reached in 2023? That's my first question. Second question regarding the pricing and RIG effect. First, regarding the RIG, you just have mentioned that RIG in Q1 could be below the RIG we have seen in Q4. You've mentioned that you'll see one trading day less. On the other hand, you will have the benefit of the leap year. You will have the benefit of earlier Easter and later Chinese New Year.

Patrik Schwendimann: Yeah, thank you, Luca. Patrik Schwendimann, Zürcher Kantonalbank. Hi, Mark. Hi, François. First, regarding your target to restore gross margin back to historic levels, last year, we have seen 45.9%, which is still far away from back to year 2019, where you had 49.6%. As a best guess, would you expect a stronger gross margin increase in 2024 versus the 70 basis points we have just reached in 2023? That's my first question. Second question regarding the pricing and RIG effect. First, regarding the RIG, you just have mentioned that RIG in Q1 could be below the RIG we have seen in Q4. You've mentioned that you'll see one trading day less. On the other hand, you will have the benefit of the leap year. You will have the benefit of earlier Easter and later Chinese New Year.

Patrick: Yeah. Thank you Luca Patricia in demand.

Patrick: Hi, Mark I fall fall at first regarding your target restore girls marching back to historic levels last theory of seen 45.9%, which they left far away from from back can you have 2019, which is where you had that 49.6% as a best guess would you expect a stronger girls.

Patrick: Marching Creasing 24 of us that 70 basis points you have just reached in and twenty-three. That's my first question and second question regarding the.

François Roger: And second question regarding the pricing and RIC effect. Firstly, regarding the RIC, you just mentioned that RIC in quarter one could be below the RIC we've seen in the fourth quarter. You've mentioned that you'll see one trading day less, but on the other hand, you will have the benefit of the leap here. You will have the benefit of earlier Easter and later Chinese New Year.

Speaker Change: Pricing and Rick effect at first that regarding the Ricki Joseph mentioned that reeking quarter, one could be below.

Speaker Change: You have seen in the fourth quarter, you've mentioned that the seal add one.

Speaker Change: Well I'm trading day less but on the other hand, you you will have the benefit of the <unk> you will have the benefit of earlier Easter and later Chinese new year.

François Roger: Can you answer what you're thinking about that one? And then, regarding pricing, I was still surprised to see a price effect of 5.2% in the fourth quarter, but it seems that with this 4% growth guidance for 2024, you're expecting just maybe a price effect of 2%. Thank you. Patrick.

Patrik Schwendimann: Can you answer here what you are thinking about that one? Regarding pricing, I was still surprised to see a price effect of 5.2% in Q4. It seems that with this 4% growth guidance for 2024, it seems that you're expecting just maybe a price effect of 2%. Thank you.

Patrik Schwendimann: Can you answer here what you are thinking about that one? Regarding pricing, I was still surprised to see a price effect of 5.2% in Q4. It seems that with this 4% growth guidance for 2024, it seems that you're expecting just maybe a price effect of 2%. Thank you.

Speaker Change: Oh, let's see about what you were thinking about that one and.

Speaker Change: Then that regarding pricing I was still surprised to see a price effect of 5.2% in the in the fourth quarter, but it seems that at least is 4% girls guidance for 24. It seems that you're expecting just may be a price effective 2%. Thank you.

François-Xavier Roger: Patrik, François speaking. On the gross margin, we saw a significant increase in H2 2023 over the same period of 2022. It will continue. We don't want to stay there, obviously. We aim to get our gross margin back to where it was between 49% and 50% over time. We don't want to give a precise time frame for it because the speed of recovery will also be impacted, obviously, by what we can do in terms of premiumization, in terms of pricing, and efficiencies, and so forth. It can be impacted as well by the commodity cycle in the same way as we have suffered a lot over the last two years from an unfavorable commodity cycle. We could not catch up as quickly as what we received.

François-Xavier Roger: Patrik, François speaking. On the gross margin, we saw a significant increase in H2 2023 over the same period of 2022. It will continue. We don't want to stay there, obviously. We aim to get our gross margin back to where it was between 49% and 50% over time. We don't want to give a precise time frame for it because the speed of recovery will also be impacted, obviously, by what we can do in terms of premiumization, in terms of pricing, and efficiencies, and so forth. It can be impacted as well by the commodity cycle in the same way as we have suffered a lot over the last two years from an unfavorable commodity cycle. We could not catch up as quickly as what we received.

Speaker Change: Patrick Frausto speaking on the gross margin so we so soon.

Mark Schneider: On the gross margin, we saw a significant increase in H2-23 over the same period of 22, and it will continue. We don't want to stay there, obviously. We aim to get our gross margin back to where it was between 49 and 50 percent over time. We don't want to give a precise time frame for it, though, because the speed of recovery will also be impacted, obviously, by what we can do in terms of premiumization, in terms of pricing and efficiencies and so forth, but it can be impacted as well by the commodity cycle. In the same way as we have suffered a lot over the last two years from an unfavorable commodity cycle, and we could not catch up as quickly as what we received, wherever the commodity cycle goes in the next couple of years could impact the speed of recovery of our gross margin, but clearly, the direction of travel is there.

Speaker Change: [noise] significantly increase in H two twenty-three over the same period of 22.

Patrick Frausto: It will continue we don't want to stay there obviously, we ambition to get gross margin back to where it was between 49 and 50% overtime. We don't want to give a precise time frame for it too because the speed of recovery will be also impacted obviously by what we can do in terms of premium musician in terms of pricing and.

Speaker Change: Efficiency themselves, but it can be impact he does well by the commodity cycle in the same way as we have suffered a lot over the last two years from the an unfavorable commodity cycle and we could not ketchup as quickly as what we received.

François-Xavier Roger: Wherever the commodity cycle goes in the next couple of years could impact the speed of recovery of our growth margin. Clearly, the direction of travel is there. Pricing and RIG, so in Q1 2024, we don't want to be too technical, but there is one less trading day, which looks a little bit counterintuitive because it's a leap year. The fact that Easter is significantly earlier, we are actually losing two trading days in Q1 2024. The pricing in Q4 was 5.4%. It will continue to go down, obviously. We do expect to have probably a little bit of pricing, obviously, in 2024, far less than in 2023. There are less needs for pricing, obviously. There will be some background pricing anyway coming from emerging market currency depreciation as we had in the past in the pre-pandemic period.

François-Xavier Roger: Wherever the commodity cycle goes in the next couple of years could impact the speed of recovery of our growth margin. Clearly, the direction of travel is there. Pricing and RIG, so in Q1 2024, we don't want to be too technical, but there is one less trading day, which looks a little bit counterintuitive because it's a leap year. The fact that Easter is significantly earlier, we are actually losing two trading days in Q1 2024. The pricing in Q4 was 5.4%. It will continue to go down, obviously. We do expect to have probably a little bit of pricing, obviously, in 2024, far less than in 2023. There are less needs for pricing, obviously. There will be some background pricing anyway coming from emerging market currency depreciation as we had in the past in the pre-pandemic period.

Speaker Change: Wherever the commodity cycled goes in the next couple of years could in fact, the speed of recovery of gross margin, but clearly the direction of travel is there.

Mark Schneider: Pricing and the rig, so in Q1 2024, we don't want to be too technical, but there is one less trading day, which looks a little bit counterintuitive because it's a leap year, but the fact that Easter is significantly earlier means we are actually losing two trading days in the first quarter of 2024, and the pricing in Q4 was 5.4%. It will continue to go down, obviously. We do expect to have probably a little bit of pricing, obviously, in 2024, far less than in 2023, but there will be less needs for pricing, obviously, but there will be some background pricing anyway coming from emerging market currency depreciation as we have seen in the past in the pre-pandemic period. For example, we have seen significant depreciation of currencies in countries like Argentina, like Nigeria, Egypt, and so forth.

Speaker Change: The pricing and the rig so in Q1 2024, we don't want to be too technical but there is one less trading day, which looks at it there'd be counterintuitive, because it's a leap year, but the fact that Easter is significantly earlier, we actually losing too trading days in the first quarter of 2020.

Speaker Change: Four and the pricing in Q4 was 5.4% each will continue to go down obviously, we do expect to have probably a little bit of pricing of usually in 2024.

Speaker Change: Far less than in 2023, but there is less there are lists needs for pricing, obviously, but there will be some background pricing anyway coming from emerging market Ah Carolyn C. D appreciation as we had in the past in the pre pandemic period. For example, we have seen significant depreciation of currencies in countries.

François-Xavier Roger: For example, we have seen significant depreciation of currencies in countries like Argentina, like Nigeria, Egypt, and so forth. Even if we cap the impact of this pricing for hyperinflationary countries, there will be still a little bit of it.

François-Xavier Roger: For example, we have seen significant depreciation of currencies in countries like Argentina, like Nigeria, Egypt, and so forth. Even if we cap the impact of this pricing for hyperinflationary countries, there will be still a little bit of it.

Speaker Change: Like Argentina like.

Speaker Change: Nigeria, a jeep and so forth, even if we cap the impact of these pricing for hyper inflationary countries that will be still a little bit of it.

François Roger: Even if we cap the impact of this pricing for hyperinflationary countries, there will still be a little bit of it. Patrik, let me just quickly build on that. So fully supportive of the points that Francois made, so those are all very valuable. And on the first quarter, let's also keep in mind what we discussed a few minutes ago in response to Warren's question. Don't underestimate it.

Mark Schneider: Patrik, let me just quickly build on that. Fully supportive of the points that François made. Those are all very valuable. On the first quarter, let's also keep in mind what we discussed a few minutes ago in response to Warren's question. Let's not underestimate. This is one of those quarters where the SNAP effect in the US would still apply before we fully start then to lap this in Q2 and Q3. Here again, I think this is a lesson learned from last year, not to underestimate the importance of that on the US consumer at the low end. I think all of the food companies had to see this. With our strong US presence, we were no exception. Hence, that is also just one to keep on the list for Q1.

Mark Schneider: Patrik, let me just quickly build on that. Fully supportive of the points that François made. Those are all very valuable. On the first quarter, let's also keep in mind what we discussed a few minutes ago in response to Warren's question. Let's not underestimate. This is one of those quarters where the SNAP effect in the US would still apply before we fully start then to lap this in Q2 and Q3. Here again, I think this is a lesson learned from last year, not to underestimate the importance of that on the US consumer at the low end. I think all of the food companies had to see this. With our strong US presence, we were no exception. Hence, that is also just one to keep on the list for Q1.

Speaker Change: Let me just quickly build a metro fully supportive of the points that Francois major those are all very valuable and on the first quarter. Let's also keep in mind, what we discussed a few minutes ago. In response to Warren's question. That's not under estimate. This is one of those quarters, where the snap effect in the U S would still apply before we.

Mark Schneider: This is one of those quarters where the snap effect in the U.S. would still apply before we fully start then to lap this in Q2 and Q3. And here again, I think this is a lesson learned from last year not to underestimate the importance of that for the U.S. consumer at the lower end. And I think all of the food companies had to see this, and with our strong U.S. presence, we were no exception. Hence, that is also just one to keep on the list for Q1.

Speaker Change: Fully start then to lap this in Q2 and Q3 and here again I think this is a lesson learned from last year not to underestimate the importance of that on the U S. Consumer at the low end and I think all of the food companies have to see this and without a strong U S presence we were no exception in here.

Speaker Change: That is also just want to keep on the list for Q1, but it was important for us to point out to you the soft expectations for Q1, but then I hope. He also see that coupled with you know some pretty firm expectations for every company throughout the year then and.

Mark Schneider: But it was important for us to point out to you the soft expectations for Q1. But then, I hope you also see that coupled with some pretty firm expectations for a recovery throughout the year, then, and especially in the second half. Thank you all. Yeah, thanks very much.

Mark Schneider: It was important for us to point out to you the soft expectations for Q1. I hope you also see that coupled with some pretty firm expectations for a recovery throughout the year then, and especially towards the H2.

Mark Schneider: It was important for us to point out to you the soft expectations for Q1. I hope you also see that coupled with some pretty firm expectations for a recovery throughout the year then, and especially towards the H2.

Speaker Change: Especially towards the second half.

Luca Borlini: Thank you, Mark. Question is from Jon Cox at Kepler. Please go ahead, Jon.

Luca Borlini: Thank you, Mark. Question is from Jon Cox at Kepler. Please go ahead, Jon.

Speaker Change: Thank you a lot of question instead of the junk, Oxford Kepler. Please go ahead John.

Jon Cox: Yeah, thanks very much. Just a couple of questions on my side. There was a report that potentially you would come out with a big restructuring program ahead of these numbers. I see, Mark, you keep mentioning ensuring execution excellence. I hear you talk about continuous improvement. Should we expect maybe a step up in some of those below-the-line costs this year if you do start to maybe do a bit more in terms of restructuring? As part of that question, you have this goal for a 17.5 to 18.5 margin in 2025. Just with moderate margin improvements, say, this year, it's quite a big step up to get to that halfway range in 2025. Just wondering if you have any thoughts on that. Just a last question, really, on deforestation. EU regulations become effective at the end of this year.

Jon Cox: Yeah, thanks very much. Just a couple of questions on my side. There was a report that potentially you would come out with a big restructuring program ahead of these numbers. I see, Mark, you keep mentioning ensuring execution excellence. I hear you talk about continuous improvement. Should we expect maybe a step up in some of those below-the-line costs this year if you do start to maybe do a bit more in terms of restructuring? As part of that question, you have this goal for a 17.5 to 18.5 margin in 2025. Just with moderate margin improvements, say, this year, it's quite a big step up to get to that halfway range in 2025. Just wondering if you have any thoughts on that. Just a last question, really, on deforestation. EU regulations become effective at the end of this year.

Jeff Stand: Just a couple of questions on my side. There was a report that, potentially, you would come out with a big restructuring program ahead of these numbers. And I see, Mark, you keep talking about ensuring execution excellence, and I think about continuous improvement. Should we expect maybe a step up in some of those below-the-line costs this year, if you do start to maybe do a bit more in terms of restructuring? As part of that question, you have this goal of a 17.5 to 18.5 margin in 2025. Just with moderate margin improvements, say this year, it's quite a big step up to get to that halfway range in 2025. Just wondering if you have any thoughts on that.

John: Yeah. Thanks, very much just a couple of questions on my side. There was a report of a potentially you would come out with a big restructuring program ahead of these numbers.

Speaker Change: I see Mark you keep talking about ensuring execution excellence and I think the bank continuous.

John: Improvement should we expect maybe a step up in some of those below the line costs. This year. If you do start maybe you're a bit more in terms of restructuring as part of that question.

John: We have this go for 17, and a half 218 and a half margin in 2025, just with moderate margin improvements say this year.

John: Quite a big step up to get to the half way range. In 2025, just wondering if you have any thoughts on that.

François Roger: And just the last question, really, on deforestation: EU regulations come into effect at the end of this year. How confident are you that all of your cocoa and coffee and anything else you'll be able to show is deforestation-free and thus avoid any fines from the EU at the start of next year? Thank you.

Speaker Change: Just the last question really own deforestation E U regulations become effective at the end of this year.

Jon Cox: How confident are you that all of your cocoa, coffee, and anything else you would be able to show is deforestation-free and thus avoid any fines from the EU effective the start of next year? Thank you.

Jon Cox: How confident are you that all of your cocoa, coffee, and anything else you would be able to show is deforestation-free and thus avoid any fines from the EU effective the start of next year? Thank you.

Speaker Change: Confident argue that all of your cocoa and coffee and anything else will be <unk>, you will be able to show. It is deforestation tree and thus avoid any fines from the E U.

Speaker Change: Effective to starve next year. Thank you.

Victoria Petrova: Jon, thank you, and let me share these responses with Francois and maybe take a first crack at some of them. So on the EU requirements, I feel very confident there, and see ourselves pretty much at or near the head of our industry when it comes to progress here on ensuring deforestation-free supply chains. So, very confident there. On the restructuring, I've seen those rumors for a few weeks as well, and while we usually don't comment on rumors, I think we were very clear that there was no massive restructuring in the cards. I don't know where this came from.

Mark Schneider: Jon, thank you. Let me share these responses with François. Maybe take a first crack at some of them. On the EU requirements, feeling very confident there and see ourselves pretty much at or near the head of our industry when it comes to progress here on ensuring deforestation-free supply chain. Very confident there. On the restructuring, I've seen those rumors a few weeks as well. While we usually don't comment on rumors, I think we were very clear that there is no massive restructuring in the cards. I don't know where this came from. You know that this is not our style from the past. What we have stressed for many years, and we're not stepping away from that, is this steady improvement in our operations. Lots of individual circumstances we're addressing, taking advantage of scale. We're not moving away from that.

Mark Schneider: Jon, thank you. Let me share these responses with François. Maybe take a first crack at some of them. On the EU requirements, feeling very confident there and see ourselves pretty much at or near the head of our industry when it comes to progress here on ensuring deforestation-free supply chain. Very confident there. On the restructuring, I've seen those rumors a few weeks as well. While we usually don't comment on rumors, I think we were very clear that there is no massive restructuring in the cards. I don't know where this came from. You know that this is not our style from the past. What we have stressed for many years, and we're not stepping away from that, is this steady improvement in our operations. Lots of individual circumstances we're addressing, taking advantage of scale. We're not moving away from that.

Speaker Change: John Thank you into it let me share these responses with Francois and maybe take a first crack at some of them. So on the E U requirements, three and very confident there and see ourselves pretty much at or near the head of our industry when it comes to.

Francois: Progress here on ensuring deforestation free supply chain, so very confident down.

Speaker Change: On the restructuring I've seen those rumors a few weeks as well and why we usually don't comment on rumors I think we were very clear that there is no massive restructuring in the cards I don't know where this came from you know that this is not our style from the past what we have.

Mark Schneider: You know that this is not our style from the past. What we have stressed for many years, and we're not stepping away from that, is this steady improvement in our operations. Lots of individual circumstances we're addressing, taking advantage of scale; we're not moving away from that, and as you saw from my prepared comments and some of the previous answers, we do give a lot of emphasis to operational excellence, and typically, that doesn't square so well with massive restructuring steps. So, obviously, you see that, and Francois can give you some more data, that the sum of these small steps then, I think, is slowly ramping up again and achieving pre-COVID levels, which bodes well for future efficiency and margin development.

Speaker Change: Stress for many years and we're not stepping away from that is this steady improvement in our operations lots of individuals circumstances. We're trashing taken advantage of scale will not moving away from that in S. Who saw from my prepared comments and some of the previous answers, we do give a lot of emphasis.

Mark Schneider: As you saw from my prepared comments and some of the previous answers, we do give a lot of emphasis on operational excellence. Typically, that doesn't square so well with massive restructuring steps. Obviously, you see that, and François can give you some more data that the sum of these small steps then, I think, is slowly ramping up again and achieving pre-COVID levels, which bodes well for the future efficiency and margin development. Then also, we talked in previous quarters about a very important project that has delivered very nicely for us called Project TASTY, where we're trying to take benefit of any harmonization that we have in our recipes and achieving economies of scale, which, of course, in a vast decentralized organization, you always have good opportunities there.

Mark Schneider: As you saw from my prepared comments and some of the previous answers, we do give a lot of emphasis on operational excellence. Typically, that doesn't square so well with massive restructuring steps. Obviously, you see that, and François can give you some more data that the sum of these small steps then, I think, is slowly ramping up again and achieving pre-COVID levels, which bodes well for the future efficiency and margin development. Then also, we talked in previous quarters about a very important project that has delivered very nicely for us called Project TASTY, where we're trying to take benefit of any harmonization that we have in our recipes and achieving economies of scale, which, of course, in a vast decentralized organization, you always have good opportunities there.

Speaker Change: On operational excellence and typically that doesn't square so way out with massive restructuring steps.

Speaker Change: So obviously you see that.

Speaker Change: And in France, where I can give you some more data that the some of the small steps then I think is slowly ramping up again, and achieving pre COVID-19 levels, which bodes well for the future efficiency and marching development and then also we talked in previous quarters about a very important project.

Mark Schneider: And also, we talked in previous quarters about a very important project that has delivered very nicely for us called Project Tasty, where we're trying to take advantage of any harmonization that we have in our recipes and achieve economies of scale, which, of course, in a vast decentralized organization, you always have good opportunities there. But let me hand it to Francois to give you some more details and also comment on your question regarding the margin expectation. Good afternoon, Jon.

Mark Schneider: That has to liberate very nicely for is called project tasty.

Speaker Change: Where you know we're trying to take benefit of you know any harmonization.

Speaker Change: That we have in our recipes and achieving economies of scale, which of course in in a vast decentralized organization you always have good opportunities there, but let me handle to France, what to give you some more detail and also comment on your question regarding the modern expectation. Good afternoon drug you should look at restructuring costs.

Mark Schneider: Let me hand it to François to give you some more detail and also comment on your question regarding the margin expectation.

Mark Schneider: Let me hand it to François to give you some more detail and also comment on your question regarding the margin expectation.

François-Xavier Roger: Good afternoon, Jon. If you look at it, restructuring cost, we had about CHF 700 million per annum pre-COVID. We did freeze most of this program in the context of the pandemic, obviously. If you look again in 2023, we were back to CHF 700 million. We need to adjust, obviously, our industrial base and our organization as well to the consumer needs. There is a permanent need for some restructuring. There is no big plan. There is just a sum of individual projects in order to adjust our organization to the needs of consumers. You talked about the margin, the 17.5% to 18.5% by 2025. We are absolutely confident of getting there. We are anyway very close to the bottom end already. We cannot comment at this stage for 2025 where we will be within the range.

François-Xavier Roger: Good afternoon, Jon. If you look at it, restructuring cost, we had about CHF 700 million per annum pre-COVID. We did freeze most of this program in the context of the pandemic, obviously. If you look again in 2023, we were back to CHF 700 million. We need to adjust, obviously, our industrial base and our organization as well to the consumer needs. There is a permanent need for some restructuring. There is no big plan. There is just a sum of individual projects in order to adjust our organization to the needs of consumers. You talked about the margin, the 17.5% to 18.5% by 2025. We are absolutely confident of getting there. We are anyway very close to the bottom end already. We cannot comment at this stage for 2025 where we will be within the range.

François Roger: If you look at the restructuring cost, we had about 700 million per annum pre-COVID. We did freeze most of this program in the context of the pandemic, obviously, but if you look again in 2023, we were back to 700 million.

Francois: We had to about 700 million per annum pre COVID-19, we did freeze most of these programming the context of the pandemic of easily and you should look again in 2023, we went back to 700 million we need to adjust.

Mark Schneider: We need to adjust, obviously, our industrial base and our organization as well to consumer needs. And so there is a constant need for some restructuring, but there is no big plan. There is just a sum of individual projects in order to adjust our organization to the needs of consumers.

Mark Schneider: Usually our industrial base on all the organization as well to the consumer needs and so is there is a permanent need for some restructuring, but there is no big plan.

Mark Schneider: Just to sum of individual project in order to address though.

François Roger: You talked about the margin, the 17.5% to 18.5% by 2025. We are absolutely confident of getting there. We are, anyway, very close to the bottom end already. We cannot comment at this stage on where we will be in the range in 2025. It will be impacted, as I said earlier, for example, at the gross margin level, by some external factors as well, such as the commodity cycle. So, obviously, if we are in a very favorable timing in terms of the commodity cycle, we could get to a higher level easily. But if things turn the other way around, it could be different. I mean, look at what has happened over the last two years.

François Roger: Or organization to the needs of consumers.

Mark Schneider: You talked about the mole Jean the 17 on enough to 18 on enough for a person by 2025, we are absolutely confident of getting there. We all and you were very close to the bottom and already.

François Roger: We cannot comment at this stage 425, where we will be within the range. We are each will be impacted as I said earlier for example that gross margin level by some external factors is one such as a commodity cycle and so obviously if we are in a very favorable timing in terms of community cycled, we could get you.

François-Xavier Roger: It will be impacted, as I said earlier, for example, at gross margin level by some external factors as well, such as the commodity cycle. Obviously, if we are in a very favorable timing in terms of commodity cycle, we could get easily at a higher level. If things turn the other way around, it could be different. I mean, look at what has happened over the last two years. We had a massive input cost inflation, which had an impact on our margin. Beyond that, obviously, there are a lot of levers that we have, such as what we are mentioning, restructuring, premiumization, mix, gross margin, market share, and so forth. We will use all levers available.

François-Xavier Roger: It will be impacted, as I said earlier, for example, at gross margin level by some external factors as well, such as the commodity cycle. Obviously, if we are in a very favorable timing in terms of commodity cycle, we could get easily at a higher level. If things turn the other way around, it could be different. I mean, look at what has happened over the last two years. We had a massive input cost inflation, which had an impact on our margin. Beyond that, obviously, there are a lot of levers that we have, such as what we are mentioning, restructuring, premiumization, mix, gross margin, market share, and so forth. We will use all levers available.

François Roger: Usually at a higher level, but if things turn the other way around it could be a different I mean look at what has happened over the last two years, we had a massive input cost inflation, which had an impact on our Virginia, so but beyond that obviously there are a lot of <unk> that we have such as what we are mentioning restructuring premium musician mix.

Mark Schneider: We had massive input cost inflation, which had an impact on our margin. But beyond that, obviously, there are a lot of levers that we have, such as what we are mentioning, restructuring, premiumization, mix, gross market share, and so forth. So we will use all the levers available. The next question is from Pascale Bull at Stifel. Please go ahead, Pascale. Yes, good afternoon, everyone.

Pascale Bull: Girls market share and so forth. So we will use all details available.

Luca Borlini: Next question is from Pascal Boll at Stifel. Please go ahead, Pascal.

Luca Borlini: Next question is from Pascal Boll at Stifel. Please go ahead, Pascal.

Pascale Bull: So the next question is from basketball at Stifel. Please go ahead <unk>.

Pascal Boll: Yes. Good afternoon, everyone. I'm a little bit surprised that you seem more cautious than some of your competitors. Also, you talk a lot about the low end in terms of price, the consumer, while you talked more about the premium side so far. Did it turn out that Nestlé is less resilient than actually expected? Maybe here also, looking at your slide 19, here, one could argue that over the last two years, you almost lost all the volumes that you grew during the pandemic. That also, in my view, questions a little bit the competitiveness, maybe also against the backdrop that you increased marketing spend considerably over the last 12 months. This would be my first question. Then secondly, on coffee, margin is down for Nespresso 120 basis points year over year, though it's an improvement in H2 versus H2.

Pascal Boll: Yes. Good afternoon, everyone. I'm a little bit surprised that you seem more cautious than some of your competitors. Also, you talk a lot about the low end in terms of price, the consumer, while you talked more about the premium side so far. Did it turn out that Nestlé is less resilient than actually expected? Maybe here also, looking at your slide 19, here, one could argue that over the last two years, you almost lost all the volumes that you grew during the pandemic. That also, in my view, questions a little bit the competitiveness, maybe also against the backdrop that you increased marketing spend considerably over the last 12 months. This would be my first question. Then secondly, on coffee, margin is down for Nespresso 120 basis points year over year, though it's an improvement in H2 versus H2.

Pascale Bull: Yes, good afternoon, everyone I'm, a little bit surprised that you see more cautious than some of your competitors also you talk a lot about <unk> in terms of price consumer while he talked more about the premium cycle for did it turn out that Netflix less less resilient and actually exit then may.

David Hayes: I'm a little bit surprised that you seem more cautious than some of your competitors. Also, you talk a lot about the low end in terms of price, the consumer, while you have talked more about the premium side so far. Did it turn out that Nestle is less resilient than actually expected? And maybe here also, looking at your slide 19, one could argue that over the last two years, you almost lost all your volume during the pandemic. So that also, in my view, questions things a little bit.

David Hayes: B here also looking at your slide 19, <unk> one you could one could argue that over the last two years you almost lost all the bones crew.

David Hayes: You wanted to pandemic, so uhm, but also in my view question's, a little bit of competitiveness, maybe I'll fill a cage the backdrop that you increase marketing spend considerably over the last 12 months.

Mark Schneider: Maybe also against the backdrop that you increased marketing spend considerably over the last year. This would be my first question, and then secondly on coffee. Margin is down for Nespresso by 120 basis points year over year, though it's an improvement from H2 versus H2. Is this just a phasing issue, or should we expect March to be on the pressure for longer as you spend more on AM? Pascal, thank you. Let me take a crack at the first one and then hand it to Francois for the copy question.

Mark Schneider: Might be my first question is and secondly on coffee marching is down for next breath of 120 basis points here over here, though we can improve improvement from you nature versus H two.

Pascal Boll: Is this just a phasing issue, or should we expect the margin being under pressure for longer as you spend more on A&P? Thank you.

Pascal Boll: Is this just a phasing issue, or should we expect the margin being under pressure for longer as you spend more on A&P? Thank you.

Mark Schneider: Is this just a phasing issue or should we act and marching being on the pressure for long or as you spend more on a M. P. Thank you.

Mark Schneider: Pascal, thank you. Let me take a crack at the first one and then hand it to François for the coffee question. Look, I think it's important, when you look at our peers, to also adjust for the different product profiles and geographic profiles. Clearly, for example, what we've seen in this post-COVID and post-inflation spike world, anyone who has exposure to personal care goods and household goods has seen a quicker recovery in their gross margin because inflation came down faster in bulk chemicals than it did in some of the basic food input commodities. Anyone who's been very exposed to the United States clearly saw that consumer hesitation in the food space in H2. I think there was little escaping from that.

Mark Schneider: Pascal, thank you. Let me take a crack at the first one and then hand it to François for the coffee question. Look, I think it's important, when you look at our peers, to also adjust for the different product profiles and geographic profiles. Clearly, for example, what we've seen in this post-COVID and post-inflation spike world, anyone who has exposure to personal care goods and household goods has seen a quicker recovery in their gross margin because inflation came down faster in bulk chemicals than it did in some of the basic food input commodities. Anyone who's been very exposed to the United States clearly saw that consumer hesitation in the food space in H2. I think there was little escaping from that.

Mark Schneider: That's cool. Thank you, let me take a crack at the first one I've been handed to Francois for the coffee question. So look I think it's important when you look at our appears to also adjust for the different product profiles and geographical profiles and.

Mark Schneider: So, look, I think it's important when you look at our peers to also account for the different product profiles and geographic profiles. And so clearly, for example, what we've seen in this post-COVID and post-inflation spike world, anyone who has exposure to personal care goods and household goods has seen a quicker recovery on a close margin because inflation came down faster in bulk chemicals than it did in some of the basic food input commodities. Anyone who's been very exposed to the United States clearly saw that consumer hesitation in the food space in the second half. And I think there was little escaping from that.

Mark Schneider: So.

Mark Schneider: So clearly for example of what we've seen in this post Covid and post inflation Spike World anyone who Essex Pozo too personal care goats, and household goods has seen a quicker recovery intercross marching because inflation came down faster in bulk chemicals.

Mark Schneider: Than it did in some of the basic food input commodities.

Mark Schneider: Anyone who's been very exposed to the United States clearly saw that consumer Ah hesitation in the food space in the second half and I think there was little escaping from that the fact that we did quite well at the premium interfaces no quantum.

Mark Schneider: The fact that we did quite well at the premium interface is no contradiction to this because we also have, as you know, quite a few mainstream offerings. So I think specifically with our geographic profile, which, of course, does have a major footprint in the U.S., and with our exclusive focus on food and beverage, I do believe that our volume and rig development, and overall, in light of this historic inflation spike, has been quite competitive. On marketing spend, it's going up now. As you know, with all of these forward-looking spend items, there is latency.

Mark Schneider: The fact that we did quite well at the premium end of things is no contradiction to this because we also have, as you know, quite a few mainstream offerings. I think specifically with our geographic profile, which, of course, does have a major footprint in the US and with our exclusive focus on food and beverage, I do believe that our volume and RIG development, and overall, in light of this historic inflation spike, has been quite competitive. On the marketing spend, it's pointing up now. As you know, with all of these forward-looking spend items, there is latency. You put it in, and it doesn't mean the next day that your organic sales growth ramps up. Rather, this is something that needs to build up momentum.

Mark Schneider: The fact that we did quite well at the premium end of things is no contradiction to this because we also have, as you know, quite a few mainstream offerings. I think specifically with our geographic profile, which, of course, does have a major footprint in the US and with our exclusive focus on food and beverage, I do believe that our volume and RIG development, and overall, in light of this historic inflation spike, has been quite competitive. On the marketing spend, it's pointing up now. As you know, with all of these forward-looking spend items, there is latency. You put it in, and it doesn't mean the next day that your organic sales growth ramps up. Rather, this is something that needs to build up momentum.

Mark Schneider: Diction to this because we also have S. You know quite a few mainstream offerings. So I think specifically with allergy graphic profile, which of course does have a major footprint in the U S and what our exclusive focus on food and beverage I do believe that our volume and Rick Davis.

Mark Schneider: [noise] meant and overall in light up as his target inflation Spike Spike has been quite competitive on the marketing spent it's pointing up now.

Mark Schneider: Ask you know with all of these forward looking spent items. There is latency. So you put it in and it doesn't mean the next day at that time, you organics years programs out, but rather this is something that.

Mark Schneider: So you put it in, and it doesn't mean the next day that the organic sales growth ramps up, but rather this is something that needs to build up momentum. And hence, here again, the continued increases and the focus that Francois pointed out around billionaire brands in 2023 and 2024, I think, bodes well for future growth development. Francois speaking on Nespresso, so we are first of all very pleased to see that Nespresso is back, to a level of mid-single-digit growth in terms of organic growth. The margin was down, first of all, because this is one of the few categories where we have seen a further increase, which is material on the commodity side, with coffee bean prices continuing to increase for Robustar. Second, Nespresso is a business that has a strong cost base in Switzerland, and as you can see, we had a very large appreciation of the Swiss franc last year, 7.8%.

Mark Schneider: It needs to build up momentum and hands ear again, the continued increases in the focus that Francois pointed out a billionaire France in 23, and 24, I think bodes well for the future growth development.

Mark Schneider: Hence, here again, the continued increases and the focus that François pointed out around billionaire brands in 2023 and 2024, I think, bodes well for the future growth development.

Mark Schneider: Hence, here again, the continued increases and the focus that François pointed out around billionaire brands in 2023 and 2024, I think, bodes well for the future growth development.

François-Xavier Roger: Pascal Boll, François-Xavier Roger speaking. On Nespresso, we are first of all very pleased to see that Nespresso is back to a level of mid-single-digit growth in terms of organic growth. The margin was down, first of all, because this is one of the few categories where we have seen a further increase, which is material on the commodity side, with coffee bean prices continuing to increase for Robusta. Second, Nespresso is a business which has a strong cost base in Switzerland. As you could see, we had a very large appreciation of the Swiss francs last year, 7.8%. I mentioned in my opening remark that it is more than two times what we have experienced over the last couple of years. During these years with a strong appreciation of the Swiss francs, it does impact the margin at Nespresso.

François-Xavier Roger: Pascal Boll, François-Xavier Roger speaking. On Nespresso, we are first of all very pleased to see that Nespresso is back to a level of mid-single-digit growth in terms of organic growth. The margin was down, first of all, because this is one of the few categories where we have seen a further increase, which is material on the commodity side, with coffee bean prices continuing to increase for Robusta. Second, Nespresso is a business which has a strong cost base in Switzerland. As you could see, we had a very large appreciation of the Swiss francs last year, 7.8%. I mentioned in my opening remark that it is more than two times what we have experienced over the last couple of years. During these years with a strong appreciation of the Swiss francs, it does impact the margin at Nespresso.

Mark Schneider: Pascale, what's worth speaking on this resource where we are first of all I'm very pleased to see that in this place. So he's back to a level of mid single digit girls in terms of organic rules.

Mark Schneider: The mountain was down first of all because this is one of the shoe category, where we have seen it fills or increase which is metal.

Mark Schneider: On the commodity side with coffee bean varieties continue to increase for a rubber stamp segunda. This.

Mark Schneider: This way so he's a business, which is which has a strong caused the base in Switzerland, and as you could see we had a very large appreciation of the Swiss francs last year, 7.8% I mentioned in my opening remarks that T. Ts more than two times, what we have experienced over the last couple of years. So during these deals with it was stronger appreciation of the Swiss francs is.

Mark Schneider: I mentioned in my opening remark that it is more than two times what we have experienced over the last couple of years. So during these years, with a strong appreciation of the Swiss franc, it does impact the margin at Nespresso. And third, we continue to invest in the development of Vertro, which is doing very well, given that we still have full patent protection, so it makes a lot of sense to do these investments now. So the next question is from Jeff Stand from Exana. Please go ahead, Jeff.

Jeff Stand: <unk> It does impact emoji net necessarily so uncertain, we continue to invest for the development of virtual which is doing very well given that we still have a full patent protection. So it makes it a lot of sense to do these investments now.

François-Xavier Roger: Third, we continue to invest for the development of Vertuo, which is doing very well given that we still have full patent protection. It makes a lot of sense to do these investments now.

François-Xavier Roger: Third, we continue to invest for the development of Vertuo, which is doing very well given that we still have full patent protection. It makes a lot of sense to do these investments now.

Luca Borlini: Next question is from Jeff Stent from Exane. Please go ahead, Jeff.

Jeff Stand: So the next question is from Jeff <unk> from Exerting. Please go ahead Jeff.

Luca Borlini: Next question is from Jeff Stent from Exane. Please go ahead, Jeff.

Mark Schneider: Thank you, Luca. So, one comment and one question, both for Francois. The comment is, I'm not one usually to give compliments, Francois, as you know, but I think you've done a pretty phenomenal job as CFO of Nestle, so I'd just like to say, on behalf of everyone, thank you for that over the last, well, many years, I guess. And the question for you is, why is being CFO of Sanofi more attractive than being CFO of Nestle? Thank you.

Jeff Stent: Thank you, Luca. One comment and one question, both for François. The comment is I'm not one usually to give compliments, François, as you know. I think you've done a pretty phenomenal job as CFO of Nestlé. I'd just like to say on behalf of everyone, thank you for that over the last, well, many years, I guess. The question for you is, why is being CFO of Sanofi more attractive than being CFO of Nestlé? Thank you.

Jeff Stent: Thank you, Luca. One comment and one question, both for François. The comment is I'm not one usually to give compliments, François, as you know. I think you've done a pretty phenomenal job as CFO of Nestlé. I'd just like to say on behalf of everyone, thank you for that over the last, well, many years, I guess. The question for you is, why is being CFO of Sanofi more attractive than being CFO of Nestlé? Thank you.

Jeff Stand: And thank you Luca so <unk> one question both for Francois They call me cause I'm not one usually take as a compliment transfer as you know, but I think you've done a pretty phenomenal job. The C. F O with nicely. So just like to see them often everyone. Thank you for that.

Mark Schneider: Over the last.

Mark Schneider: Many years I guess and the question for you is why is being C. At full works in all fee more attractive and being see it for today actually thank you.

François Roger: Thank you, Jeff, for your comment. I do appreciate it. First of all, you need to understand my decision has nothing to do with, and is not a negative decision towards Nestle. I've been CFO for almost nine years, which is a relatively long tenure. I have a chance to do one last lap, I would say, in my step in my career, and I want to embark on a new value creation project in a company that goes through a significant transformation, probably similar to what we have experienced over the last couple of years at Nestle. So it's not a negative view of Nestle. It's more something different that I want to do after nine years at Nestle. It's a personal choice as well.

François-Xavier Roger: Thank you, Jeff, for your comment. I do appreciate it. First of all, you need to understand my decision is not a negative decision towards Nestlé. I've been CFO for almost nine years, which is a relatively long tenure. I have a chance to do one last lap, I would say, at this stage in my career. I want to embark on a new value creation project in a company that goes through a significant transformation, probably similar to what we have experienced over the last couple of years at Nestlé. It's not a negative vision of Nestlé. It's more something different that I want to do after nine years at Nestlé. It's a personal choice as well.

François-Xavier Roger: Thank you, Jeff, for your comment. I do appreciate it. First of all, you need to understand my decision is not a negative decision towards Nestlé. I've been CFO for almost nine years, which is a relatively long tenure. I have a chance to do one last lap, I would say, at this stage in my career. I want to embark on a new value creation project in a company that goes through a significant transformation, probably similar to what we have experienced over the last couple of years at Nestlé. It's not a negative vision of Nestlé. It's more something different that I want to do after nine years at Nestlé. It's a personal choice as well.

Francois: Thank you Jeff for your government do appreciate first of all you need to understand my decision has nothing to do is not a negative decision to award initially I've been CFO for almost nine years, which is a relatively long to new mm mm I have a chance to do one last lap I would say in my.

François Roger: Step in my career.

François Roger: I want to embark in and you value Christian project company that goes.

François Roger: It goes through a significant transformation probably similar to what we have experienced over the last couple of years ethnicities, which not negate the vision of naturally it's more something different that I want to do after nine years to the to a personal choice as well [noise].

François Roger: The next question is from Victoria Petrova at Bank of America. Please go ahead, Victoria. Thank you very much, and I will be quick.

Luca Borlini: Next question is from Victoria Petrova at Bank of America. Please go ahead, Victoria.

Luca Borlini: Next question is from Victoria Petrova at Bank of America. Please go ahead, Victoria.

Speaker Change: The next question is slowly Victoria up it's rather a bank of America. Please go ahead Utopia <unk>.

Victoria Petrova: Thank you very much. I will be quick. My first question is on very helpful quantification you provided on VMS disruption, having a 0.5% impact on, if I remember correctly, 0.3 on RIG, 0.2 on pricing in Q3, and above 0.5 in Q4, if you could quantify it and also maybe quantify the headwind for H1 2024 on the group like-for-like. If it's correct to think about it as a tailwind of around 0.5, maybe 0.6% in H2 of the year for the group. If there was a chance to similarly think about SKU rationalization, is it a 1% like-for-like potential impact in 2023, kind of contributing to nine months of 2024, and the similar, again, thinking about capacity constraints in this context of tailwinds versus headwinds for the group? My second question is very technical.

Victoria Petrova: Thank you very much. I will be quick. My first question is on very helpful quantification you provided on VMS disruption, having a 0.5% impact on, if I remember correctly, 0.3 on RIG, 0.2 on pricing in Q3, and above 0.5 in Q4, if you could quantify it and also maybe quantify the headwind for H1 2024 on the group like-for-like. If it's correct to think about it as a tailwind of around 0.5, maybe 0.6% in H2 of the year for the group. If there was a chance to similarly think about SKU rationalization, is it a 1% like-for-like potential impact in 2023, kind of contributing to nine months of 2024, and the similar, again, thinking about capacity constraints in this context of tailwinds versus headwinds for the group? My second question is very technical.

Victoria Petrova: Thank you very much and they will be quick cause. My first question is on very helpful. Quantification that you provided on Vms disruption, having a 0.5 per cent impact on if I remember correctly 0.30, 0.2, when pricing in Q3 and.

Mark Schneider: My first question is on the very helpful quantification you provided on VMS disruption having a 0.5% impact on, if I remember correctly, 0.3% on RIG, 0.2% on pricing in Q3 and above 0.5 in Q4. If you could quantify it and also maybe quantify the headwind for the first half of 2024 on the group like for like, And if it's correct to think about it as a tailwind of 0.5, maybe 0.6% in the second half of the year for the group. And if there was a chance to similarly think about SKU rationalization, is it a 1% like for like potential impact in 2023, in nine months, kind of contributing to nine months of 2024. And the same again, thinking about capacity constraints in this context, the context of tailwinds versus headwinds for the group. And my second question is very technical. It's a client task. If you are considering moving to quarterly dividends, similar to basically the rest of Staples companies and Swiss companies. Thank you very much.

Mark Schneider: <unk> 0.5 in queue for a few quick coin to fight and also maybe quantify the headwind for the first half of 2024 on the group like for like.

Mark Schneider: And if it's correct to think about it is that they you know their own 0.5, maybe 0.6% in the second half of the year for the group and if there was a chance to see me. Let me think about this <unk> is it the 1% like for like potential impact in 22 23.

Mark Schneider: <unk> galaxy contributing to nine months of 2024, and the C. Miller Uhm again thinking about <unk> capacity constraints in this context context of <unk> verses headwinds for the group and my second question is very technically it's a client task and if you are considering to move to.

Victoria Petrova: It's a client ask if you are considering to move to quarterly dividends, similarly to basically the rest of staples companies and Swiss companies. Thank you very much.

Victoria Petrova: It's a client ask if you are considering to move to quarterly dividends, similarly to basically the rest of staples companies and Swiss companies. Thank you very much.

Mark Schneider: <unk> quarterly dividend email it to basically the rest of staples companies and Swiss companies. Thank you very much.

Mark Schneider: Thank you, Victoria. Regarding the second question, we do, for the moment, intend to stick with annual dividends. But of course, we're watching the situation and patterns in other companies and countries very closely. Regarding the Nestle Health Science business and vitamins, minerals, and supplements, I again wanted to confirm the drag on the group overall, on real internal growth and OG of more than.. one half of a percent. So pretty significant, and we are not in a position at this moment for the first quarter to provide a specific forecast.

Mark Schneider: Thank you, Victoria. Regarding the second question, we do, for the moment, intend to stick with annual dividends. Of course, we're watching the situation and patterns in other companies and countries very closely. Regarding the Nestlé Health Science business and vitamins, minerals, and supplements, again, wanted to confirm the drag on the group overall, on real internal growth and OG, of more than 0.5%, so pretty significant. We are not in a position at this moment for the Q1 to provide a specific forecast. Again, we try to resolve the situations as quickly as possible. In the spirit of now informing you of the full situation, it was important for us to caution you on the Q1 that this is still one that's impacted and that, of course, compares to a Q1 last year that didn't see any such impacts.

Mark Schneider: Thank you, Victoria. Regarding the second question, we do, for the moment, intend to stick with annual dividends. Of course, we're watching the situation and patterns in other companies and countries very closely. Regarding the Nestlé Health Science business and vitamins, minerals, and supplements, again, wanted to confirm the drag on the group overall, on real internal growth and OG, of more than 0.5%, so pretty significant. We are not in a position at this moment for the Q1 to provide a specific forecast. Again, we try to resolve the situations as quickly as possible. In the spirit of now informing you of the full situation, it was important for us to caution you on the Q1 that this is still one that's impacted and that, of course, compares to a Q1 last year that didn't see any such impacts.

Mark Schneider: Thank you retire so regarding the second question, we do for the moment intend to stick with annual dividends, but of course, we'll watch emptor situation and.

Mark Schneider: Patterns and other companies and.

Mark Schneider: Countries very closely rigged.

Mark Schneider: Regarding the Nestle health science business, and vitamins and supplements again, one or to confirm the track on the croup overall.

Mark Schneider:

Mark Schneider: Unreal internal Crow and O G of more than.

Mark Schneider: One half of a percent so pretty significant and we are not in a position at this moment for the first quarter to provide specific forecast that game could try to resolve the situation as quickly as possible, but in the spirit of now informing you off the force situation of what's important for us to caution you on the first quarter that this is.

Mark Schneider: Again, we try to resolve the situation as quickly as possible. But in the spirit of now informing you of the full situation, it was important for us to caution you about the first quarter that this is still one that's impacted and that, of course, compares to a first quarter last year that didn't see any such impacts. And then, as for the second quarter, I think we will approach a turning point.

Mark Schneider: Still one that's impacted and that of course compares to a first quarter last year, but didn't see any such impacts and then asked from the second quarter. I think we will approach a turning point and then we're expecting double digit organic growth for National Health science into the second half.

Mark Schneider: as from Q2, I think we will approach a turning point. We're expecting double-digit organic growth for Nestlé Health Science in H2. Regarding the discontinued SKUs, again, on an annualized basis, and this is building on an earlier conference call, I believe it was Q3, we're talking about CHF 700 million of discontinued business that was essentially zero growth, zero profitability. It's always very, very difficult. We discontinued this basically since the summer of 2022. It's very difficult to net out any benefits here. Maybe one helpful indication is that our service levels group-wide in 2023 increased by 600 basis points.

Mark Schneider: as from Q2, I think we will approach a turning point. We're expecting double-digit organic growth for Nestlé Health Science in H2. Regarding the discontinued SKUs, again, on an annualized basis, and this is building on an earlier conference call, I believe it was Q3, we're talking about CHF 700 million of discontinued business that was essentially zero growth, zero profitability. It's always very, very difficult. We discontinued this basically since the summer of 2022. It's very difficult to net out any benefits here. Maybe one helpful indication is that our service levels group-wide in 2023 increased by 600 basis points.

Mark Schneider: And then we're expecting double-digit organic growth for Nestle Health Signs in the second half. Regarding the discontinued SKUs, again, on an annualized basis, and this is building on an earlier conference call, I believe it was Q3, we're talking about 700 million Swiss francs of discontinued business that was essentially zero growth, zero profitability. And it's always very, very difficult.

Mark Schneider: Regarding the discontinued Sku's again on an annualized basis and this is building on an earlier conference call. I believe it was Q3, we're talking about about 700 million Swiss francs of discontinued business.

Mark Schneider: That was essentially zero Crow C. R O profitability and Uhm, it's always very very difficult with discontinue this basically since the sum of 22, it's very difficult to net out any benefits here, but maybe one helpful indication is that our service stables, croup wiant and twenty-three.

Mark Schneider: We have discontinued this basically since the summer of 22. It's very difficult to net out any benefits here. But maybe one helpful indication is that our service levels grew wide in 23, increasing by 600 basis points. And so even if some of that would have occurred anyway because there was some sort of easing in the supply chains, it shows you that taking off the distraction that came from this long tail of SKUs with little or no profitability and no growth was helpful to boost the service levels in the business. And that, of course, will also benefit then as growth takes off, and we'll be having lasting impacts on growth and profitability. So the next question is from David Hayes at Jefferies. Please go ahead, David.

David Hayes: Increased by 600 basis points and uhm, so even if somehow bad would have occurred anyways, because there was some sort of easing into supply and change. It shows you that taking off the distractions that came from this long tail of S. K use with little or no profitability and no crawl I think.

Mark Schneider: Even if some of that would have occurred anyways because there was some sort of easing in the supply chains, it shows you that taking off the distraction that came from this long tail of SKUs with little or no profitability and no growth, I think, was helpful to boost the service levels in the business. That, of course, will also benefit then as growth takes off and will be having lasting impacts on growth and profitability.

Mark Schneider: Even if some of that would have occurred anyways because there was some sort of easing in the supply chains, it shows you that taking off the distraction that came from this long tail of SKUs with little or no profitability and no growth, I think, was helpful to boost the service levels in the business. That, of course, will also benefit then as growth takes off and will be having lasting impacts on growth and profitability.

David Hayes: Was helpful to boost the surface tables in the business and that of course will also benefit then S. A crow takes off and we'll be having lasting impacts on crawl from profitability.

Luca Borlini: Next question is from David Hayes at Jefferies. Please go ahead, David.

Luca Borlini: Next question is from David Hayes at Jefferies. Please go ahead, David.

David Hayes: So the next question is from the DVD set Jeffrey Please go ahead David.

Mark Schneider: Thanks, Luca; good afternoon. Two areas for me, one on IT integration again and one on the Waters review. So on IT integration, sorry to come back to it again, but was there a risk at Exco level that this change did have big potential risks if it wasn't done so well? And I guess all the individual reviews of the process, was it done in a too rushed or poorly planned way? It was that kind of a conclusion in retrospect. And I guess very simply, I apologize, because I'm sure it's much more complicated.

David Hayes: Thanks, Luca. Good afternoon. Two areas for me. One on the IT integration again, and one on the waters review. On IT integration, sorry to come back to it again, but was there a risk at Exco level that this change did have big potential risks if it wasn't done so well? And I guess auditing or reviewing the process, was it done in a too rushed or poorly planned way? It was that kind of the conclusion in retrospect. I guess, very simplistically, I apologize because I'm sure it's much more complicated. What we get asked a lot is, why can you just not go back to the old system, correct the process of change, and then go again effectively? Could you just be a little bit more detailed as to why this is taking longer and deeper than you expected?

David Hayes: Thanks, Luca. Good afternoon. Two areas for me. One on the IT integration again, and one on the waters review. On IT integration, sorry to come back to it again, but was there a risk at Exco level that this change did have big potential risks if it wasn't done so well? And I guess auditing or reviewing the process, was it done in a too rushed or poorly planned way? It was that kind of the conclusion in retrospect. I guess, very simplistically, I apologize because I'm sure it's much more complicated. What we get asked a lot is, why can you just not go back to the old system, correct the process of change, and then go again effectively? Could you just be a little bit more detailed as to why this is taking longer and deeper than you expected?

David Hayes: Thanks, So if you're a good afternoon or is it to have it sent me the I T integration again and one on the waters review you said R. I T integration. So it's got magic again, but well yeah, what's the risk of X go level. This change did have big potential risks if it didn't wasn't done and say well in order.

Mark Schneider: What a single reviewing the process was it done to Russell pulled he planned way it would that come to the conclusion that in retrospect.

Mark Schneider: I got some very simplicity I apologize cause I'm sure it's much more complicated, but what we can.

Mark Schneider: But what we get asked a lot is why can't you just go back to the old system, correct the process of change, and then go again effectively? Can you just be a little bit more detailed as to why this is taking longer and deeper than you expected? And I guess finally on that, on the second half, will it be an additional cost to try and get yourself back on the shelf and to recover market share losses that you might have suffered through the last six to 12 months by that stage? And then on the Water review, in terms of the compliance review that you talked about in the release, what's the outcome of that potentially? And I guess, in worst-case terms, is it that you might have to close some plants a bit like you did with Perrier during the modernization? Are plant closures that could have to happen to kind of change some of the processes and approach to be more compliant? Thanks so much.

Mark Schneider: [noise] Hospital is why it can you just not go back to the old system correct. The process of change and then go again eventually but you can just be a little bit more detail as to why this is taking longer and deeper than you expected I guess finally on that on the second half.

David Hayes: I guess, finally, on that, on the second half, will it be an additional cost to try and get yourself back on shelf and to recover market share loss that you might have suffered through the last 6 to 12 months by that stage? Then on the water review, in terms of the compliance review that you talked about in the release, what's the sort of outcome of that potentially? I guess, in worst-case terms, is it that you might have to close some plants a bit like you did with Perrier with the modernization? Is it plant closures that could have to happen to kind of change some of the processes and approach to be more compliant? Thanks so much.

David Hayes: I guess, finally, on that, on the second half, will it be an additional cost to try and get yourself back on shelf and to recover market share loss that you might have suffered through the last 6 to 12 months by that stage? Then on the water review, in terms of the compliance review that you talked about in the release, what's the sort of outcome of that potentially? I guess, in worst-case terms, is it that you might have to close some plants a bit like you did with Perrier with the modernization? Is it plant closures that could have to happen to kind of change some of the processes and approach to be more compliant? Thanks so much.

Mark Schneider: Will it be an additional cost to try and get yourself back on shelf and take a couple of market share I lost that you might have suffered through the last six to 12 months by that stage and then on the wall to have you in terms of the compliance review that you talked about in the release what was the outcome of that potentially like as in worst case terms.

Mark Schneider: That you might have to close some plants, but like you do with perrier with a modernization is it is it plant closures, but could have to happen to kind of change some of the the processes and approached it should be more compliant. Thanks, so much [noise].

Mark Schneider: David, thank you. So, let me elaborate a bit more on the IT situation at Nestle Health Science. And what you have to keep in mind is that we have acquired over the years a number of VMS companies from private equity ownership or founder-based ownership situations, and it was always the plan to put this together to have more scale and to benefit from synergies and also simply to upgrade from what we perceive to be very outdated systems. And what happened here is that we, in hindsight, left it in the hands of a decentralized team that is not part of the mainstream Nestle IT team that did not fully envisage the complexity of this. Do keep in mind that the Nestle Health Science VMS business tends to have a larger number of SKUs than you would have in your mainstay food and beverage business. I mean, one of the features of the VMS business is that you do have a fairly large number of SKUs. Just look at the vitamin shelf at your local drugstore, and you'll see what I'm talking about.

Mark Schneider: David, thank you. Let me elaborate a bit more on the IT situation at Nestlé Health Science. What you have to keep in mind, we have bought over the years a number of VMS companies from private equity ownership or founder-based ownership situations. It was always the plan to put this together to have more scale, and to benefit from synergies, and also simply to upgrade from what we perceive to be very outdated systems. What happened here is, we, in hindsight, left it in the hands of a decentralized team that is not part of the mainstream Nestlé IT team that did not fully envisage the complexity of this. Do keep in mind that the Nestlé Health Science VMS business tends to have a larger number of SKUs than you would have in your mainstay food and beverage business.

Mark Schneider: David, thank you. Let me elaborate a bit more on the IT situation at Nestlé Health Science. What you have to keep in mind, we have bought over the years a number of VMS companies from private equity ownership or founder-based ownership situations. It was always the plan to put this together to have more scale, and to benefit from synergies, and also simply to upgrade from what we perceive to be very outdated systems. What happened here is, we, in hindsight, left it in the hands of a decentralized team that is not part of the mainstream Nestlé IT team that did not fully envisage the complexity of this. Do keep in mind that the Nestlé Health Science VMS business tends to have a larger number of SKUs than you would have in your mainstay food and beverage business.

Speaker Change: They would think you so let me elaborate a bit more on B I T situations Nestle help signs and what you have to keep in mind, we have bought over the years a number of Vms companies from private equity ownership or founder based ownership situations and.

Mark Schneider: And it was always the plan to put this together to have more scale and to benefit from synergies and also simply to upgrade from what we perceive to be very outdated systems and what happened here is.

Mark Schneider: In hindsight left it in the hands of a decentralized team that is not part of the mainstream nest in I T team that did not fully envisage. The complexity of is do keep in mind that the Nestle health signs Vms business tends to have a larger number of S. K used and you would have in your mainstay food and beverage.

Mark Schneider: I mean, one of the features of the VMS business is that you do have a fairly large number of SKUs. Just look at the vitamin shelf at your local drugstore, and you see what I'm talking about. What happened is that some of these old systems clearly got dismantled in the hopes that the new system would work. It turned out from Q3 that it was not up to snuff. Again, very regrettable. I think we have now turned it into very capable hands, have given it a lot more operational focus. I think we have a much better visibility on the full extent of the issues, but also the integration opportunities, and the synergies that come from it going forward.

Mark Schneider: I mean, one of the features of the VMS business is that you do have a fairly large number of SKUs. Just look at the vitamin shelf at your local drugstore, and you see what I'm talking about. What happened is that some of these old systems clearly got dismantled in the hopes that the new system would work. It turned out from Q3 that it was not up to snuff. Again, very regrettable. I think we have now turned it into very capable hands, have given it a lot more operational focus. I think we have a much better visibility on the full extent of the issues, but also the integration opportunities, and the synergies that come from it going forward.

Mark Schneider: Business I mean, one of the <unk>.

Mark Schneider: Features of the BMS business is that you do have a fairly large number of S. K use just look at the vitamin shelf at your local drugstore and you see what I'm talking about and so what happened is that some of these old systems clearly got dismantled in the hopes that the new system would work.

Mark Schneider: And so what happened is that some of these old systems clearly got dismantled in the hopes that the new system would work, but then it turned out in the third quarter that it was not up to snuff. So again, very critical. I think we have now turned it into very capable hands and have given it a lot more operational focus. And hence, I think we have much better visibility on the full extent of the issues but also the integration opportunities and the synergies that come from them going forward. When it comes to getting back on the shelf, I don't see it so much as a significant cost but something that also doesn't happen at the snap of your fingers.

Mark Schneider: And then it turned out from the third quarter that it was not up to snuff. So again very regrettable I think we have now turned it into very capable hands have given it a lot more operational focus and hence I think we have a much better visibility on the full extent of the issues, but also be integration opportunities in percent.

Mark Schneider: Entries that come from it going forward.

Mark Schneider: When it comes to getting back on shelf, I don't see it so much as a significant cost but something that also doesn't happen at the snap of your fingers. Clearly, with retailers, you now have to work patiently to gain back that space. That calls out then for a bit of a recovery period. I'm confident, due to the strength of these brand names and I think this is where what comes into the picture is the fact that we do have industry-leading brands in VMS. I do believe that, essentially, we'll be able to recover that. Regarding waters, it was important for us to flag this issue to all of our investors. It's still very early days, so I can't give you a more complete estimate here.

Mark Schneider: When it comes to getting back on shelf, I don't see it so much as a significant cost but something that also doesn't happen at the snap of your fingers. Clearly, with retailers, you now have to work patiently to gain back that space. That calls out then for a bit of a recovery period. I'm confident, due to the strength of these brand names and I think this is where what comes into the picture is the fact that we do have industry-leading brands in VMS. I do believe that, essentially, we'll be able to recover that. Regarding waters, it was important for us to flag this issue to all of our investors. It's still very early days, so I can't give you a more complete estimate here.

Mark Schneider: When it comes to getting back on shelf.

Mark Schneider: I.

Mark Schneider: I don't see it so much as a significant cost, but something that also doesn't happen at the snap of your fingers. So clearly with retailers you now have to walk patiently to came back that space and.

Mark Schneider: So clearly, with retailers, you now have to work patiently to gain back that space, and that calls out then for a bit of a recovery period. But I'm confident due to the strength of these brand names. And I think this is where the fact that we do have industry-leading brands in VMS comes into the picture. I do believe that, essentially, we'll be able to recover that. Regarding waters, it was important for us to flag this issue to all of our investors. It's still very early days, so I can't give you a more complete estimate here. But we noticed that a lot of the coverage over the last few weeks was focused on France and Switzerland, and we felt it was as part of good transparency practice that we flag it to you early. Our primary responsibility is to talk now to regulators and relevant authorities in some of the markets concerned, and we'll update you as we go through that process. So, it is too early to tell right now.

Mark Schneider: <unk> calls out there for a bit of a recovery period, but.

Mark Schneider: But I'm confident due to the strength of these brand names and I think this is where what comes into the Patriots different that we do have industry, leading brands and BMS I do believe that essentially will be able to recover that.

Mark Schneider: Regarding waters it was important for us to flag this issue to all of our investors. It's still very early days. So I can't give you a more complete estimate here.

Mark Schneider: We noticed that a lot of the coverage over the last few weeks was focused on France and Switzerland. We felt, as part of good transparency practice, that we flagged it to you early. Our primary responsibility is to talk now to regulators and relevant authorities in some of the markets concerned. We'll update you as we go through that process. Too early to tell right now.

Mark Schneider: We noticed that a lot of the coverage over the last few weeks was focused on France and Switzerland. We felt, as part of good transparency practice, that we flagged it to you early. Our primary responsibility is to talk now to regulators and relevant authorities in some of the markets concerned. We'll update you as we go through that process. Too early to tell right now.

Mark Schneider: We noticed that a lot of the coverage over the last few weeks was focused on France, and Switzerland, and we felt as part of good transparency practice that we flag. It to you early or primary responsibility is to talk now to regulate isn't relevant authorities in somewhat the market's concerned and we'll update you.

Mark Schneider: As we go through that process, so too early to tell right now.

David Hayes: Thank you.

David Hayes: Thank you.

Mark Schneider: The next question is from Tom Sykes at Deutsche Bank. Please go ahead, Tom. Yeah, thanks, Luca. Afternoon, everybody.

Luca Borlini: Next question is from Tom Sykes at Deutsche Bank. Please go ahead, Tom.

Luca Borlini: Next question is from Tom Sykes at Deutsche Bank. Please go ahead, Tom.

Mark Schneider: Thank you next question is from Tom Sykes at Archie Bunker. Please go ahead Thomas.

Mark Schneider: Yeah. Thanks, Luca. Afternoon, everybody. Firstly, just on, you've given the marketing spend as a percentage of sales. Could you maybe talk about what's happened to trade spend in relation to that and also, obviously, spend through sort of retailer websites and just whether that is a benefit or not to the gross margin in H2 year on year? I suppose, given that you've got a mixed benefit to the gross margin as well, are you actually, at the moment, yet seeing a gross margin benefit from price realization, sort of over costs? You didn't necessarily give much detail on the earlier question of US pet care. Maybe you could just talk about any headwinds you had to the margin in H2. Is that just A&P or capacity? Maybe just make any comments on the Purina TikTok issue, whether that's impacted demand at all, please.

Tom Sykes: Yeah. Thanks, Luca. Afternoon, everybody. Firstly, just on, you've given the marketing spend as a percentage of sales. Could you maybe talk about what's happened to trade spend in relation to that and also, obviously, spend through sort of retailer websites and just whether that is a benefit or not to the gross margin in H2 year on year? I suppose, given that you've got a mixed benefit to the gross margin as well, are you actually, at the moment, yet seeing a gross margin benefit from price realization, sort of over costs? You didn't necessarily give much detail on the earlier question of US pet care. Maybe you could just talk about any headwinds you had to the margin in H2. Is that just A&P or capacity? Maybe just make any comments on the Purina TikTok issue, whether that's impacted demand at all, please.

Tom Sykes: Yeah. Thanks for <unk> afternoon, everybody. Firstly, just on you you've given the marketing spend.

François Roger: Firstly, you've given the marketing spend and the percentage of sales; could you maybe talk about what happened to trade spend in relation to that? And also, obviously, spend through to the retailer websites and just whether that is a benefit or not to the gross market in H2 year on year? And then I suppose, given that you've got a.. um mixed benefit to the gross margin as well, are you actually at the moment yet seeing a gross margin benefit from price realization sort of over costs? And then just you didn't necessarily give much detail on the earlier question about US pet care, and maybe you could just talk about any headwinds you had to the margin in H2 -- was that just AMP or or capacity, and maybe just make any Tom Francois speaking. I'll take the first question.

François Roger:

Tom Francois: <unk> is percentage of sales could you maybe talk about what's happened to trade spend and.

Tom Francois: In relation to that Ah and I'll say or cspan tray instead.

Tom Francois: Retailer websites and just whether that is a benefit or or not the gross in in H two year, one year, and then I suppose given that you've got a.

François Roger: Mixed benefit to the gross margin as well you actually at the moment yet seeing.

Tom Francois: <unk> benefit from Christ, Lavation sort of Ah costs.

Tom Francois: And then just it didn't necessarily give much detail on the earlier question of the U S pet care.

François Roger: Maybe you could just talk about any headwinds he had to the March at an age too is that just a pale will capacity and maybe just make any comments on the purina tick tock issue, whether that's impacted the amount the total place.

François-Xavier Roger: Tom, François-Xavier Roger speaking. I'll take the first question. On the marketing spend, so we covered that already. We increased it. I can confirm as well that we did increase in 2023 our trade spend, both in absolute value and as a percentage of sales. It had been the case the year before as well. In 2023, contrary to the previous year, we had more pricing than input cost inflation. I mean, we were catching up to a certain extent. It is largely related to what I said about Europe earlier, where pricing came with a certain time delay, more specifically in Europe. It came as well in other geographies because we received so much cost in 2022 and at the beginning of 2023 that we could not necessarily catch up as quickly as whatever we received.

François-Xavier Roger: Tom, François-Xavier Roger speaking. I'll take the first question. On the marketing spend, so we covered that already. We increased it. I can confirm as well that we did increase in 2023 our trade spend, both in absolute value and as a percentage of sales. It had been the case the year before as well. In 2023, contrary to the previous year, we had more pricing than input cost inflation. I mean, we were catching up to a certain extent. It is largely related to what I said about Europe earlier, where pricing came with a certain time delay, more specifically in Europe. It came as well in other geographies because we received so much cost in 2022 and at the beginning of 2023 that we could not necessarily catch up as quickly as whatever we received.

To impulse was speaking I'll take the your first question on the marketing spend so we covered that already we increased it and I can confirm is one that we did increase in 2023 acre spend Bozian episode, you devalue Unnessary percentage of fans. So this is it had been the case before as well into.

Mark Schneider: On the marketing spend, so we covered that already, we increased it and I can confirm as well that we did increase in 2023 our trust spend both in absolute value and as a percentage of sales. So this is, it had been the case the year before as well. In 2023, contrary to the previous year, we had more pricing than input cost inflation, but I mean we were catching up to a certain extent and it is largely related to what I said about Europe earlier, where pricing came with a certain time delay, more specifically in Europe, but it came as well in other geographies because we received so much cost in 2022 and at the beginning of 2023 that we could not necessarily catch up as quickly as whatever we received.

2023, contrary to the previous here, we had more pricing then input cost inflation, but I mean, we were catching up to a certain extent and it is largely related to what I said about Europe earlier, where the pricing came with a certain time delay more specific in Europe, but he'd Kim is waning ultra groceries because.

We received so much coast in 22 and at the beginning of 2023 that we could not necessarily catsup as quickly as whatever we received.

François Roger: And Tom, this is Mark, and you're absolutely right in calling out pet care. You're right, Warren had raised that question earlier, and I had not deliberately avoided it. It's just that we were so focused on the SNAP debate, and since your usual SNAP consumer doesn't consume a lot of pet food, I somehow didn't get into it.

Mark Schneider: Tom, this is Mark Schneider. You're absolutely right in calling out pet care. You're right. Warren Ackerman had raised that question earlier. I had not deliberately avoided it. It's just that we were so focused on the SNAP debate. Since your usual SNAP consumer doesn't consume a lot of pet food, I somehow didn't get into it. Clearly, on pet care, it is interesting that when I talked about that weakness in H2, it was not impacted by the SNAP situation because when households can afford to keep pets, then obviously, quite often, that index is less than with being a SNAP household. We saw continued strong performance in H2. We also entered the year very strongly. As we told you in the past, we're not giving assurances going forward that this will continue to be a double-digit grower.

Mark Schneider: Tom, this is Mark Schneider. You're absolutely right in calling out pet care. You're right. Warren Ackerman had raised that question earlier. I had not deliberately avoided it. It's just that we were so focused on the SNAP debate. Since your usual SNAP consumer doesn't consume a lot of pet food, I somehow didn't get into it. Clearly, on pet care, it is interesting that when I talked about that weakness in H2, it was not impacted by the SNAP situation because when households can afford to keep pets, then obviously, quite often, that index is less than with being a SNAP household. We saw continued strong performance in H2. We also entered the year very strongly. As we told you in the past, we're not giving assurances going forward that this will continue to be a double-digit grower.

This is mark and you're absolutely right and calling out Petcare, you're right Warren had raised that question earlier and I'd not deliberately avoided it. It's just that we were so focused on the snap debate and since you usual snap consumer doesn't consume a lot of pet food I somehow didn't get into it so.

Mark Schneider: So clearly, on pet care, it is interesting that when I talked about that weakness in the second half, it was not impacted by the SNAP situation because when households can afford to keep pets, then obviously, you know, quite often that index is less than with being a SNAP household. And so we saw continued strong performance in the second half. We also entered the year very strongly. As we have told you in the past, we're not giving assurances going forward that this will continue to be a double-digit grower. I think this would be overdone, but it will definitely continue to be one of our high-growth categories, and we see no change to that. Regarding the TikTok situation in January, there was a very short-lived spike up, and then it came down.

François Roger: Clearly on Petcare it is interesting.

Mark Schneider: Listing that when I talked about that weakness in the second half it was not impacted by the snap situation because when households can afford to keep pets. Then obviously you know quite often that indexes less than with.

Mark Schneider: Being a snap household.

Mark Schneider: And so we saw continued strong performance in the second half. We also entered the year very strongly S. We told you in the past, we're not giving assurances going forward that this will continue to be a double digit grow I think this would be overdone.

Mark Schneider: I think this would be overdone. It will definitely continue to be one of our high-growth categories. We see no change to that. Regarding the TikTok situation in January, there was a very short-lived spiking up. It came down. We have not seen any material impacts from that. I think we made it very clear that some of these allegations there were completely groundless. I think we very staunchly addressed that. I think this is one of these situations where, in this new social media world, you just have to live with that. Occasionally, situations like that do spike up. All the more, it's important to say clearly what the facts are, which I think Purina did. The situation has already calmed down.

Mark Schneider: I think this would be overdone. It will definitely continue to be one of our high-growth categories. We see no change to that. Regarding the TikTok situation in January, there was a very short-lived spiking up. It came down. We have not seen any material impacts from that. I think we made it very clear that some of these allegations there were completely groundless. I think we very staunchly addressed that. I think this is one of these situations where, in this new social media world, you just have to live with that. Occasionally, situations like that do spike up. All the more, it's important to say clearly what the facts are, which I think Purina did. The situation has already calmed down.

But it will definitely continue to be one of our high krav categories, and we see no change to that regarding the ticktock situation in January there was a very short lift spiking up and uhm.

Mark Schneider: And so we have not seen any material impacts from that. And I think we made it very clear that some of these allegations there were completely groundless. And I think we very staunchly addressed that. But I think this is one of these situations where, in this new social media world, you just have to live with it. Occasionally, situations like that do spike up.

It came down.

And so we have not seen any material impacts from that and I think we've made it very clear that some of these allegations there were completely groundless and I think we have very staunchly address that.

But I think this is one of these situations where in this new social media won't you just have to live with it occasionally situations like that.

Mark Schneider: All the more reason it's important to say clearly what the facts are, which I think Purina did, and the situation has already come down. Our last question is from... Okay, so it seems that the last question has actually been removed. Sorry for that.

Do spank up.

All the more it's important to say clearly what the facts are which I think purina did and the situation that has already come down.

Luca Borlini: Oh, last question is from okay. It seems that the last question has actually been removed. Sorry for that. We thank you very much for the interest in Nestlé. Clearly, Mark is going to do some concluding remarks as well. Please go ahead, Mark.

Luca Borlini: Oh, last question is from okay. It seems that the last question has actually been removed. Sorry for that. We thank you very much for the interest in Nestlé. Clearly, Mark is going to do some concluding remarks as well. Please go ahead, Mark.

Oh bless question is from the.

Okay. So it seems that the last question I would actually be letting me would that sorry for that so we thank you very much for the interest in Leslie and the Ah clearly marker he's going to do some concluding remarks as well please <unk>.

Mark Schneider: So, we thank you very much for your interest in Nestle and, clearly, Mark is going to make some concluding remarks as well. Please go ahead, Mark. Yeah, thank you, Luca. So I wanted to build on the comment that Jeff made earlier and wanted to thank Francois very warmly for the almost nine years of very strong financial leadership and financial stewardship as CFO of the company. I know I did comment on this earlier in other conference calls, but I wanted to reiterate it here. We will have the handover from Francois to Anna Munns now, effective March 1st. I wanted to thank Francois profoundly for his flexibility in this transition period that took a little longer than originally estimated because this was now the first date that Anna was available.

Mark Schneider: Yeah. Thank you, Luca. I wanted to build on the comment that Jeff made earlier and wanted to thank François very warmly for the almost nine years of very strong financial leadership and financial stewardship as CFO of the company. I know I did comment on this earlier in other conference calls, but wanted to reiterate it here. We will have the handover from François to Anna Manz now effective 1 March. I wanted to thank François profoundly for his flexibility in this transition period that took a little longer than originally estimated because this was now the first date that Anna is available. She will join 1 March. I very much appreciated François's service during this transition time. I really wanted to thank him from the bottom of my heart, all the very best for that new role at Sanofi.

Mark Schneider: Yeah. Thank you, Luca. I wanted to build on the comment that Jeff made earlier and wanted to thank François very warmly for the almost nine years of very strong financial leadership and financial stewardship as CFO of the company. I know I did comment on this earlier in other conference calls, but wanted to reiterate it here. We will have the handover from François to Anna Manz now effective 1 March. I wanted to thank François profoundly for his flexibility in this transition period that took a little longer than originally estimated because this was now the first date that Anna is available. She will join 1 March. I very much appreciated François's service during this transition time. I really wanted to thank him from the bottom of my heart, all the very best for that new role at Sanofi.

Yeah. Thank you Luca so one or two built on the comment that you have made earlier and wanted to thank for months my very warmly or the almost nine years off the very strong financial leadership and financial stewardship S. C. F O of the company and now what it communist on this earlier and of a conference calls, but one or two.

Who are reiterated here, we will have the handlebar from Francois to Anna months now effective March 1st I wanted to thank Francois profoundly for his flexibility in this transition period that took a little longer than originally estimated.

Because this was now the first date that Anna is available.

Mark Schneider: So, she will join March 1st, and I very much appreciate Francois' service during this transition time and really wanted to thank him from the bottom of my heart for his service during this transition time and wish him all the very best for that new role at Zenovi. So, I wanted to mention that. In terms of closing the call, as you saw, there are also, in addition to some of the areas where we understand your hesitation and concerns, lots of positive developments underway, and I hope you're not losing sight of that. And we're clearly committed to putting the execution aspect and operational efficiency aspect front, left, and center and delivering a 24 that makes us see past some of the current issues that slowed us down in 23, and I hope you're So, bear with us, and we will look forward to updating you next quarter.

So she will join March 1st and I very much appreciate it prosper serve as doing this transition time and really wanted to thank him from the bottom of my heart all the very best for that new role at Sanofi. So one as I mentioned that in terms of clothes and bacall as you saw there's.

Mark Schneider: I wanted to mention that. In terms of closing the call, as you saw, there's also, in addition to some of the areas where we understand your hesitation and concerns, there's lots of positive developments underway. I hope you're not losing sight of that. We're clearly committed to putting the execution aspect and operational efficiency aspect front, left, and center and delivering it 2024 that makes us see past some of the current issues that slowed us down in 2023. I hope you're with us and you give us the benefit of the doubt as we put those in place and then realize the significant strategic opportunity that we see for the company ahead. Bear with us. Then we look forward to updating you next quarter.

Mark Schneider: I wanted to mention that. In terms of closing the call, as you saw, there's also, in addition to some of the areas where we understand your hesitation and concerns, there's lots of positive developments underway. I hope you're not losing sight of that. We're clearly committed to putting the execution aspect and operational efficiency aspect front, left, and center and delivering it 2024 that makes us see past some of the current issues that slowed us down in 2023. I hope you're with us and you give us the benefit of the doubt as we put those in place and then realize the significant strategic opportunity that we see for the company ahead. Bear with us. Then we look forward to updating you next quarter.

Also in addition to some of the areas, where we understand your hesitation and concerns there's lots of positive developments underway and I hope you're not losing sight of that and we are clearly committed to putting.

The execution aspect and uhm and operational efficiency aspect front left and center and delivering a 24, if that makes us see past some of the current issue is that slowed us down.

And twenty-three and I hope you have with us and you give us the benefit of the doubt as we put those in place and then realize the strategic significant strategic opportunity that we see for the company ahead, So bear with US and then we look forward to updating Hugh next quarter.

[noise].