Coca Cola HBC AG

LSE:CCH

Earnings Call Transcript 2018-Q1

[Operator]

Thank you for standing by, ladies and gentlemen, and welcome to Coca-Cola HBC's Conference Call for the 2018 First Quarter Trading Update. We have with us Mr. Zoran Bogdanovic, Chief Executive Officer; Mr. Michalis Imellos, Chief Financial Officer; and Ms. Basak Kotler, Investor Relations Director. [Operator Instructions] We will have a brief update on 2018 first quarter trading and then we will open the call to questions. [Operator Instructions] I must also advise that this conference is being recorded, today, Thursday, May 10, 2018. I now pass the floor to one of your speakers, Ms. Basak Kotler. Please go ahead.

[Basak Kotler, Investor Relations Director]

Good morning. Thank you for joining our call today to discuss Coca-Cola Hellenic Bottling Company's first quarter trading update. Today, I'm joined by our Chief Executive Officer, Zoran Bogdanovic; and our Chief Financial Officer, Michalis Imellos. Before we get started, let me remind everyone that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements in our trading update press release, which we published this morning. Although we've added a webcast facility to our call for ease of access, there will be no slide presentation today as per our usual practice for trading updates. We will start with some brief opening remarks from Zoran, and then open the floor to your questions. In order to facilitate a good Q&A session, we suggest that you ask your questions one at a time, waiting first to answer one question before you ask another. The operator will keep your line open until we have exhausted your questions. Now let me turn the call over to Zoran.

[Zoran Bogdanovic, Chief Executive Officer]

Thank you, Basak. Good morning, everyone, and thank you for joining our call. Today, we are pleased to report a good start to the year and a solid performance in line with our expectations against the backdrop of mixed trading conditions. I would like to highlight a few elements. Our revenue growth 4.5% on a currency-neutral basis continues to be driven by balanced growth between volume and price/mix. Our volume growth of 2.3% in the quarter is the result of good performance in the Established and Developing markets as well as the medium-sized Emerging markets. On a category basis, Sparkling drinks volume was strong, up 2.8%. We are particularly pleased to see the impact of our strategy on these results including innovation in new products and flavors, revenue growth management initiatives and the effectiveness of our commercial strategies. Let me now walk you through some of the segmental detail. Established markets volumes grew by 1.1% in the quarter marking the fourth consecutive quarter of growth. The shift of the Catholic Easter to the first quarter this year contributed positively to volumes in some of the countries in this segment. Volumes improved in Ireland and Switzerland, and Greece continued to make good progress helped in part by product innovation. The volume performance in the Developing market is particularly strong, up 11.8%. There are a few factors at play here. For the most part, volumes in the segment were driven by mid-teens growth in Poland, where we saw strong growth in the underlying market, particularly in the organized trade and promoted Water ahead of the peak season. Hungary and the Czech Republic also continued to grow well. Looking at the other factors, the segment benefited from easy comparatives in 2017 and the timing of Easter, which we estimate, contributed approximately 3 percentage points to the growth. Emerging markets volume was broadly stable. Within this, strong growth in the medium-sized countries, predominantly Romania, Serbia and Ukraine was offset by volume decline in Nigeria and Russia. Nigeria volumes were down 10% as a result of the tough comparative, both in volume and price versus the prior year quarter, and availability issues in certain packs. In Russia, the pricing environment was intensely competitive, so we chose to prioritize profitability and long-term brand equity over volumes. In both of these markets, we continue to expect gradual improvement in volumes in the remainder of the year. Turning now to price/mix. Group FX-neutral revenue per case increased by 2.1% in the quarter. The rollover effect of price increases we took in 2017 and mix improvement in the Emerging and Established segments partly offset some mixed deterioration in the developing segment, mainly driven by the Easter effect. In the Emerging segment, the 4.5% increase in FX-neutral revenue per case was driven by the rollover effect of the price increases we took in Nigeria in 2017 as well as improved category and package mix in the majority of the markets. FX-neutral revenue per case in the Established markets improved by 0.8%, driven predominantly by category mix. We are happy that our efforts to accelerate Sparkling drinks through the formulation and flavor extension are delivering in the Established markets. We talked about the volume increase in the Developing markets, and especially in Poland, driven by Easter phasing. This magnitude of growth in a country dominated by the organized trade and multi-serve PETs had an adverse effect on channel and package mix. As a result, even though we achieved better category mix and a small improvement in price in the developing segment, overall FX-neutral revenue per case deteriorated by 1.3%. Finally, some highlights by category. We started executing our new product and flavor launches in the quarter in addition to implementing our ongoing revenue growth management initiatives and strong commercial plans. The success of all these initiatives is evident in the growth we are seeing in our key categories. Sparkling drinks grew by 2.8% with growth coming through in all 3 geographic segments. Coke Regular, Coke Zero and Fanta were particularly strong as a result of various initiatives, including flavor extensions such as Coca-Cola Zero Cherry, Coca-Cola Zero Lemon and Fanta Pear, Shokata, Dragonfruit and Grape. Water grew by 0.9% in the quarter driven by strong growth in the developing segment, offset by declines in some Emerging markets, mainly Russia and Nigeria. The Energy category maintained its good momentum and grew by 27.8% with a continued strong performance from Monster in all 3 segments. Juice and Ready-to-Drink Tea declined in the quarter, however, we are on track with our plan to revise the Tea category. As planned, we launched FUZE Tea in all of our markets apart from Nigeria, and although it is at an early stage, we are encouraged by the success of the launch. So in summary, we are, for a number of reasons, pleased with the good to the year. Looking ahead, we are excited about our plans for the new product launches, the FIFA World Cup and seasonal preparation. These plans combined with anticipated gradual economic recovery in Russia and Nigeria, give us confidence for faster revenue growth as the year progresses. With that, I will now hand over to the operator to take any questions you may have.

[Operator]

[Operator Instructions] The first question is from Sanjeet Aujla from Crédit Suisse in London.

[Sanjeet Aujla, European Beverages Analyst]

Zoran, my first question is regarding the competitive dynamics in Nigeria and Russia. You talked about intense price competition, and I seem to remember in Nigeria you're running at a bit of a price premium tea competition. So can you just talk a little bit about how you're managing the competitive environment there? That's my first question.

[Zoran Bogdanovic, Chief Executive Officer]

We -- Sanjeet, so let me just remind, we indicated in the full year call that indeed Nigeria is going to be having a soft Q1 start and that has happened, because we knew that we will be cycling tough volume comparatives as well as cycling a quarter where last year we have been with 2 price increases just before the last bigger price increase that we took in April last year. So that has materialized and we knew that we will be trading at a price premium versus the key competitor and other competitors there. So nothing surprising there. Basically, intensity of the competition is as we anticipated and based on that we have adjusted our plans both for Q1, but even more importantly, for the quarters that are ahead of us with various pack, brand and price combinations. In Russia, we also see that competition has actually a bit more intensified in the quarter, deciding to what we see in the market, putting much more promo pressure. Our conscious choice was to respond to that to only a certain degree because we do prioritize the value-creation gain for us and our customers and that has been the reason for the result and that is what drove our choice. We also saw, according to our plan, that as we were approaching the end of the Q1, Russia came back to growth and this is what we also see how it started in the Q2.

[Sanjeet Aujla, European Beverages Analyst]

Understood. My second question is just coming back to some of your revenue growth management initiatives, can you just give us a bit more color as to, maybe some examples as to some of the initiatives and how they are driving price/mix benefits across your business?

[Zoran Bogdanovic, Chief Executive Officer]

Yes, sure. So indeed, as I mentioned in the last call, we have been intensively focusing as the organization on raising these capabilities across all of our business units. We are, this year, finishing our full rollout and this will be valid in all markets, which means that we have -- first of all, ensure that we have resources in all the business units who have the expertise, knowledge, and we have enhanced the tools which we are using, which are helping us to read better the market dynamics, draw insights, which we are then converting into sharp and focused actions. Now in each market, there is a specific dynamic on what we are focusing that depends on the market conduct, competitive play, so that's why I cannot say that all markets are having the same initiatives or strategies. That means also that we, within this context, analyze very well and understand where are the opportunities for our strategic pricing as well as various smart or if you call -- if you will, tactical pricing. Secondly, how we focus on the evolution of our packages where bigger focus on smaller packages plays continuously a bigger role. That's why you would see examples where we are introducing smaller size packages. So basically, doing even bigger SKU proliferation within single serves. That's why you see in several markets where we are launching 250 ml cans. Also, we are having multipacks of single serves, which are going into the organized trade, which clearly drives the value and creates the habit of the single-serve consumption in the -- at-home consumption. RGM is helping us also that in a better and educated way, we are improving our promotional effectiveness of what we are doing in the market as well as what kind of combinations or multipacks we are executing in the market and that helps us a lot. Additionally, RGM also helps us to realize how we can better do stratification between the brands, which also is connected with our recognition of how do we premiumize and focus on premiumization of certain categories or even brands. Example is that we see Schweppes in many of our markets. Actually, I didn't mention it earlier, but I will -- I want to highlight that Schweppes in Europe is growing 18%, the only country where it is exception is Nigeria, but that's also a conscious choice because we prioritize other brands. But Schweppes in Europe is growing 18% and that is also a result of our RGM focus and identified initiatives. And maybe just one last point to say, Sanjeet. I mentioned that in Q1 volume of Sparkling drinks has been 2.8% up. At the same time, Sparkling revenue grew 5%. So that clearly also tells you how revenue grows faster than volume, which is our key objective. That is not valid only for Sparkling, but equally, it is also valid in Water where we are playing both and I would say good balanced gain between volume and price/mix. So the volume of Water in Q1 grew 0.9%, but at the same time, revenue of the Water grew 2.4%. So I'm very passionate about it, so I could talk for ages about this. But I hope this gave you solid flavor of Water, those things that we are working on and that even going forward we will be focusing on.

[Operator]

The next question is from Edward Mundy from Jefferies in London.

[Edward Brampton Mundy, Research Analyst]

[Technical Difficulty] My first question is you mentioned that Russia has come back into growth at the end of the first quarter, can you say as to whether the price environment has normalized into Q2?

[Basak Kotler, Investor Relations Director]

Apologies, Ed, that is a very bad line. Could you at least repeat your question and we will...

[Edward Brampton Mundy, Research Analyst]

Sure. Let me try again. So you indicated Russia has come back into growth at the end of the first quarter, and has the pricing environment improved or normalized since the second quarter?

[Zoran Bogdanovic, Chief Executive Officer]

Thanks, Ed. Well, we actually -- we do see that it continues to be quite price-sensitive -- sorry, price intense, so we don't see that it is easing off. But what is important to say in Russia, is that of our planned RGM initiatives and changes that we are doing in the market have been launched at the end of Q1. So effectively, they are kicking in from Q2 and that's why we know that a number of these moves that we are doing are also taking into account this intensive competition that is at the moment visible in Russia.

[Edward Brampton Mundy, Research Analyst]

And my second question is on currency. Presumably, given you don't mention currency within the Q1 trading statement, there's no change to the outlook given -- [ but with ] fiscal '17 results of the EUR 30 million adverse impact to EBIT?

[Michalis Imellos, Chief Financial Officer]

Ed, this is Michalis. So we do have some changes with regard to our expectations for FX. And that's primarily because we have seen recently the ruble weakening quite significantly against the dollar. So let me just give you some color about quarter 1 first and then a little bit on the full year. So in quarter 1, we had the situation where the euro versus prior year strengthened quite significantly against the dollar, that was approximately 13%, 1-3. And this resulted in the dollar-based currencies like the ruble to weaken significantly versus the euro. So for example, the ruble weakened against the euro by about 12% year-over-year in quarter 1, despite the fact that it strengthened against the dollar in the same period by about 2%. So that means that in quarter 1, we saw transactional effects being positive year-over-year, but translational being strongly negative as a result of the euro strengthening and all the cross rates being quite strong. So overall, in quarter 1, we saw FX being negative year-over-year by about EUR 5 million in the first quarter. Now, what's happening in the full year compared to the guidance that we gave back in February for EUR 30 million hit based on the levels of hedges that we had at that point in time and the spot rates at that point in time? As I said, the ruble has weakened recently against the dollar, it's about 8% depreciation. And we saw also some other currencies like, for example, the Swiss franc and the Polish zloty also moving to a weaker position around 3% to the euro. So that means that both the translation and the transactional effects will deteriorate on a full year basis compared to the February guidance based on the spot rates that we see now. And that means that we expect, based on the hedges we have and the current spot rates, the FX hit on the full year to be around EUR 45 million, so from the EUR 30 million to EUR 45 million. And the ratio of transactional to translational will stay at more or less 1:2, transactional to translational. Now of this EUR 15 million deterioration versus the February guidance, I would say 2/3 is attributable to the ruble to Russia and the rest is all the other currencies to a smaller extent. We are quite well hedged having said all that. We are more than 80% hedged on the ruble to dollar and around 50% on the ruble to euro, which plays a role both on transactional. Obviously, we are not hedged on translation and that's where the exposure is. And I would conclude by saying that this extra EUR 15 million has always been part of our plans when we were starting the year. So with the acceleration of the year to go top line that you heard from Zoran, we are confident that we can fully absorb this extra EUR 15 million impact should it materialize and should the current rates continue throughout the year.

[Edward Brampton Mundy, Research Analyst]

Right. And just my final question. Zoran, you mentioned quite a lot of innovation coming through on some of the core Sparkling brands. Are you able to indicate as to whether those are coming in at a higher price point and also the level of cannibalization to the core brands?

[Zoran Bogdanovic, Chief Executive Officer]

So first of all, let me just say that and build on what I said in the last call is that this year really indeed we see and we will see a much higher level of innovation that we've seen in the past or actually ever. And this year, we see that coming through either as the new brands or packages or reformulations and majority of that, even though it started in Q1, but effectively, it starts from Q2 onwards. So it really depends on various packages and sizes, but we do always have in mind that we are looking after products and brands that will drive the value for us and the customers. So for example, we are extremely happy that we are starting in Q2 with a full new category of plant-based beverages, which is clearly enhancing us or bringing us on the journey towards the total beverage company that we are evolving to. That has higher NSR per case. We are also starting with Smartwater as a way to also bring more value into the category that doesn't have, versus other categories, the bigger value. So Smartwater also commands that higher value per liter that is very good for us as well as customers, and of course, consumers, because it offers a distinctive product benefit. Also in the Sparkling category as well, we have various flavor extensions, which are mostly related to Coca-Cola Zero extensions, because we see that that is working extremely well, further fuels our strong growth of the Light and Zero segment and in some of the markets those extensions are coming at premiums to the regular variant. Also, we have launched already end of Q1, a new brand into the adult Sparkling, which is Royal Bliss, which has been launched in Italy, Austria, Switzerland, Hungary. That comes at even a significant premium to Coca-Cola brand. And also, we had a number of extensions on Schweppes, which I mentioned a little bit earlier, which almost in all markets where we operate already has premium to Coca-Cola and such extensions, which offer very unique flavor combinations are giving us a good leverage to come at even a higher price premium. That has been also combined with innovation in the packaging that we have done, which further enhances the premiumization justification of what we do in the market. I hope that answers and gives you a sufficient light to what we're doing there.

[Operator]

The next question is from Saranja Sivachelvam from Bank of America, London.

[Saranja Sivachelvam, Equity Research Analyst]

First one is about Russia and Nigeria. So given what you've elaborated on, on FX and trends, what's driving the full cost of recovery in these markets going forward?

[Zoran Bogdanovic, Chief Executive Officer]

Thank you -- you don't mean on FX, but overall?

[Saranja Sivachelvam, Equity Research Analyst]

Exactly.

[Zoran Bogdanovic, Chief Executive Officer]

Clear. So first of all, we do see that in both of the markets like in Russia, we do see that slowly, but steadily, the market is improving. Also, the level of inflation that at the moment we see and that is there also is encouraging. Also, Nigeria is in stable economic trending, which is very good. So that's the starting point. Now let me just say in Nigeria, we have started with a high-speed line in March, which is critical for our product availability in a critical package for -- or PET and that helps us going forward to close some of the availability gaps that we had so far. Also, we did have in Q1 certain issues with our Juice line, which has disrupted our availability in Juice and -- it was not continuous, which has been fully fixed. So we are operating now full speed also in this category. Plus that we have very strong plans in the remainder of the year from activation of the FIFA, Nigeria being in the World Cup. That plays a very important role for Nigerians and the way we are activating that with the Coca-Cola Company, we believe, is strong and gives us the confidence that this will drive transactions and revenue for us and our customers. In Russia, first of all, we are -- we have completed in April full listing of the FUZE Tea with all the key accounts. As I mentioned in the earlier question, we started -- effectively from Q2, we are starting with our new business strategy, which is introducing some of the single-serve packs in the market. We also have small -- downsize of 1 liter to 0.9 liter to strike the better balance of keeping the price point and better price per liter value. We have to bear in mind also that in Russia, we will be cycling very poor summer of last year. Also, I mentioned that already in March and April trading is encouraging and in line with our expectations. And last, but certainly not least is that Russia hosting the FIFA World Cup. We are just now entering into heat of the activation and campaign with this great property that we will be activating. So we have a number of reasons that do give us the confidence that both in Nigeria and Russia, we will be bouncing back from Q1 and we will see growth in the coming quarters.

[Saranja Sivachelvam, Equity Research Analyst]

And just one other question, please. I appreciate that the Irish sugar tax has only been in place for a short time, but what are your initial thoughts around it. I saw in a press release that there was some trade loading ahead of the price hike?

[Zoran Bogdanovic, Chief Executive Officer]

Well, as you said there it's really -- it's fresh. It's fresh as in the Republic of Ireland, this only started as of May 1. And I would just say that nothing -- there is nothing so far that indicates any worry or concern or anything like that. I have to give a credit to the local team, which well in advance has prepared very thoroughly for this change and that has caused a number of moves that were done in the market, obviously in the pack and price, which means that we have introduced now 2 smaller packages for regular Coke, which is 250 ml can, 375 ml PET, so to keep the critical price of Coca-Cola intact. Also in the larger packages, we have reduced 175 to 1.5 on regular Coke. So we have done critical adjustments. There has been excellent collaboration and buying of -- or customers who have also recognized that these adjustments are well-suited to amortize and to deal with the tax. As a reminder as well, we already know 60% of our portfolio is below the threshold of the levy, so we'll not be impacted. So we're already on a strong base coupled with this PET price changes that have been done, excellent collaboration with customers, communication. So we believe that we are as good as one can be in dealing and accepting the new reality in both of the islands.

[Operator]

The next question is from Stamatios Draziotis from Eurobank Equities Investment.

[Stamatios Draziotis, Research Analyst]

Just a quick question from my side. Could you just quantify what the Easter impact was in the Established and the Developing segments, please?

[Zoran Bogdanovic, Chief Executive Officer]

Stam, as -- I think mentioned earlier the effect of Easter in Established we estimate that it is around 50 basis points, whereas in Developing, we said it's 3%, the reason that also in Established as Easter came this year earlier than effectively being end of Q1 or being on April 1. In some of the markets like Italy, Austria, where weather and winter lasted longer than we really wanted, that really minimized the impact of the Easter and we really didn't see the usual effect of what Easter should bring for our type of business.

[Stamatios Draziotis, Research Analyst]

That's very helpful. And just a very quick follow-up on the question on the cost side. You talked about the adverse effects, impact and the update you had on that given the recent move of the ruble. I was just wondering about the input cost inflation on the FX-neutral basis, does the -- this still remain based on your estimates are in the low single digits?

[Michalis Imellos, Chief Financial Officer]

Stam, no change on the input cost front. Everything is moving exactly in line with expectations. And that's no surprise, because, as we were saying, also in February, we are extremely well hedged for 2018. We are already fully covered in EU sugar, we are fully covered in Russia, sugar-wise, more than 80% in Nigeria. Aluminum, we are 70% -- 75% covered already. So the only commodity that we are potentially more open is resin. We are right now around 35% to 40% on a full year basis covered. So what we see is a price in the resin that is very close to where we were expecting. We see very, very small good news on world sugar, because the spot rates have moved recently at very low levels. So all in all, reiterating the guidance we gave in February for low single-digit increase in input cost per case currency-neutral on a full year basis.

[Operator]

And we have a question from Laurence Whyatt from Societe Generale in London.

[Laurence Bruce Whyatt, Equity Analyst]

My first one is a follow-up from the previous question on the Irish sugar tax. Those volume reductions that you mentioned seem to be pretty large, about 25% volume reduction on those 2 pack sizes you mentioned. Are you therefore taking price on those if you're putting those through at the same prices as the original pack sizes and therefore getting a slight benefit from the sugar tax?

[Zoran Bogdanovic, Chief Executive Officer]

Laurence, so can you just clarify, on which volume reduction you mean?

[Laurence Bruce Whyatt, Equity Analyst]

So you...

[Zoran Bogdanovic, Chief Executive Officer]

You mean on the pack sizes?

[Laurence Bruce Whyatt, Equity Analyst]

Yes, exactly. So it sounded like you've taken your PET down from 500 to 375, that's about a 25% reduction and then the 330 can down to 250 ml, which is just shy of a 25% volume reduction.

[Zoran Bogdanovic, Chief Executive Officer]

No, no. You -- it's excellent that you ask this question because it's -- I just need to clarify. I had mentioned the additional packages that we are introducing in the market, which are coming on top of the half liter, which stays in the market.

[Laurence Bruce Whyatt, Equity Analyst]

Okay. That's very clear, thank you very much for clarifying that. The second question on -- again on sugar taxes. We've obviously had a lot of press in the U.K. market around that sugar tax and no doubt Ireland has had something similar. How -- I'm sure you're constantly in dialogue with numerous countries that you deal with in terms of the health lobbies and the governments that are interested in the health of their citizens. Since the introduction of these taxes, particularly in 2018, have any of those discussions intensified with either government health officials or health lobbies in these -- in any of your countries?

[Zoran Bogdanovic, Chief Executive Officer]

Well, first of all, those kind of considerations in the countries in our territories are really not widespread. And secondly, we have not seen that anything has intensified because of the situation in Ireland and in GB, because of this tax. So nothing that we would really say that has been triggered further or anything like that.

[Laurence Bruce Whyatt, Equity Analyst]

Okay. And then finally, just a clarification really. You mentioned that your Developing business got an additional 3% growth you think from the timing of Easter. Could you give similar numbers for your other 2 divisions and therefore an overall effect of the timing of Easter on your Q1 numbers?

[Zoran Bogdanovic, Chief Executive Officer]

Yes, so indeed -- so 3% in Developing. I mentioned earlier, 50 basis points in the Established and the Emerging, we don't see -- basically, we didn't see the impact, we didn't see.

[Operator]

The next question is from Chris Pitcher from Redburn in London.

[Chris Pitcher, Partner of Beverages Research]

A couple of questions or one question really on competition. Can you give us a bit more color on where the competition is coming from, specifically in Nigeria and Russia? Is it Pepsi? Is it the local B brands? Or is it increasingly from the brewers as they push into soft drinks with lowering their alcohol beer?

[Zoran Bogdanovic, Chief Executive Officer]

So in both of the markets you mentioned, yes, Pepsi is the key competitor. And yes, so they are the key competitor and they have -- obviously with probably their own objectives they have been intensifying the price sensitivity and intensity in the market. Now in Nigeria also apart from the Pepsi, you have a number of smaller players, but this is something that we've seen always in Nigeria, that a number of the players come and go. So we do pay attention not only to always the key competitor, but we always look at the broader market. And when we design our plans for the next years and how we course-correct what we do in the current year takes into account the key competitor, but also the other ones. So we take all those into account.

[Chris Pitcher, Partner of Beverages Research]

Could you be a bit more specific on what the brewers are doing, and maybe extend it to Italy as well where the brewers are going after the no-alcohol occasion?

[Zoran Bogdanovic, Chief Executive Officer]

Yes, look, nothing -- I mean, you know that in Nigeria, brewers are in malt, which is kind of a specific category for that country. So nothing new or unusual there. But also across the rest of the countries, we haven't seen anything that is visibly accelerating versus what we have seen in the past years that here and there with a small percent of their portfolio, they are doing stints into nonalcohol beer or some Radlers or these type of things. But nothing that I would say we would report as big or significantly increasing. But let me just also add that to build on what I said earlier, when we see what happens in the market, we equally always keep on the radar screen what all these guys also in the beer sector are doing, because we all start with the consumer and what are the occasions. So we take that very well into account when we also design what we will do.

[Chris Pitcher, Partner of Beverages Research]

And maybe just one quick clarification, apologies if I missed it. Did you give an absolute impact of the prebuying in Ireland on the following number?

[Zoran Bogdanovic, Chief Executive Officer]

No, you didn't miss it, because I didn't mention it. And there was nothing -- there was really nothing significant and we didn't hear any -- we didn't see any serious pre-stocking, maybe it was around 1%, but really nothing major.

[Operator]

And we have a question from Andrea Pistacchi from Deutsche Bank, London.

[Andrea Pistacchi, Research Analyst]

My question is on constant currency net revenue per case, please. I think at the full year results, your suggestion for the full year, it was in an Established markets that you could improve a bit what you did in 2017, and for Developing markets, you also said slightly better net revenue per case this year. Q1 was a bit slower on both. I appreciate there is this channel mix but has it changed in any way your expectations for the full year?

[Zoran Bogdanovic, Chief Executive Officer]

So, well, short answer is no, in the Established indeed with this plus 0.8%, but we do see that we will have another year of the NSR per case growth. So we confirm that outlook. And in the Developing, we do see that we would be around 2017 possibly a bit -- slightly higher, but we do confirm also that piece.

[Operator]

[Operator Instructions] We have no further questions. So I'll hand back to your host to conclude. Thank you.

[Zoran Bogdanovic, Chief Executive Officer]

Thank you, operator. I want to thank you for joining us today and for all your questions that facilitated a good discussion around our first quarter performance. We have a clear roadmap for top line growth and margin expansion as well as the strategic initiatives that will get us there. We are pleased with the results that these initiatives have delivered in the last 3 years. We look forward to sharing more progress with you in the coming periods. Thank you, and have a great day.

[Operator]

Ladies and gentlemen, thank you for joining today's conference. You may now replace your handsets. Thank you.