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Good evening to you all, and Happy New Year to you all from all of us here at SEB. Glad to have you on this Q4 sales conference call. Tonight, we'll go through our provisional sales numbers for the year -- for Q4 and for the year and try to stay away as much as possible from a detailed financial discussion. In fact, we will stay away from that even though we will cover a little bit -- we'll come back a little bit on our guidance tonight.All right. So I'm on Page 5 of the document we sent out for a summary of our sales numbers. As you can see, we finished the year strong with EUR 2 billion in sales in the fourth quarter. That's a solid 8.4% like-for-like growth and of which -- out of which, stable sales within VMF (sic) [ WMF ]. So we were in line with the Q3 year-to-date performance. In Q4, we continued on the strong trend for the ex WMF perimeter. And on WMF, we were in line with our expectations for the quarter. All of that adds up to a excellent year at close to EUR 6.5 billion in sales, very close to 30% reported sales growth. More importantly, 9.2% like-for-like sales growth and a solid 5.5% sales growth at WMF, which was -- no, solid growth in this first year, which was an important -- I'd say set a good context for all the integration actions we had to accomplish this year.Moving on to Page 6, for review of those -- that sales growth -- those sales growth per region. As you can see, all regions were in positive territory for the year, adding up to 9.2% organic. EMEA was -- continued to be strong. It's more or less obviously the same story as you've heard on -- at the end of Q3. So I won't belabor it too much, but very solid growth within EMEA. With other countries within EMEA at 12.6%, very, very strong performance there. Helped a little bit by loyalty programs, but underlying growth was still double digits.The Americas, it's 3.1%. We'll obviously come back to discuss the performance in the Americas, which remained throughout the year sort of a soft spot for us. So we'll comment some more on that, but positive -- no positive growth in the Americas at 3.1%.Asia, at a very strong 15% with China continuing on its outstanding growth path. And other Asian countries are little bit more disappointing this year. If you look at this -- at 1.6%, if you look at that number ex loyalty program, that would be 4%. So reasonable growth in those market. Overall, loyalty programs had virtually no impact on our growth rates. And we'll come back on the WMF growth at 5.1%, which was solid.I think you -- just going back here, right. Okay, I'll -- I was going to say you may have slight inconsistencies in numbers, just very slight inconsistencies in numbers on WMF as when we present the WMF numbers this way on Page 6, we only include on the WMF lines what was not sold through the SEB subsidiaries. And in fact, as we've just started to commercialize WMF brands through our SEB subsidiaries, EUR 3 million of WMF sales are embedded into the region numbers. So in total, WMF is EUR 1,151 million and not EUR 1,148 million, as we presented here, right. So just so that you don't stumble on those -- on the slight inconsistency you might find in our document.In Q4, on Page 7...
That's mainly in Q4.
And that happens mainly in Q4, obviously, yes, right. Page 7 is presentation of Q4. Again, very much the same story there. EMEA finished the year at 7.9%. For full year it's 7.6%, so very consistent performance there. The Americas were a little bit better at 4.1% including North America at 4.2%. Again, a little better, but obviously the challenges remain there. We'll come back to that.South America at 3.9% was a nice pickup in our growth as we ended the year -- to close the year. Asia continued very strong. Other Asian countries minus 0.5, that would be 2% ex LP. So we suffered a little bit from lapping strong LPs in Southeast Asia. And we'll come back -- we'll come back on the performance of those markets.Overall, 8.4% growth in Q4. So we finished the year in the same way as we performed throughout the year, high single-digit growth. WMF closed the quarter, delivered minus 1.4% in the quarter. Again, we'll come back to that. The coffee sales, which had carried WMF performance throughout the year, were flat in Q4. We'll comment on that. As expected, it was flat.On Page 8, our organic growth by quarter over the last 3 years. So 9.2% overall, we see clearly very strong. Yes, I think it's our best top line year. I was going to say ever Isabelle tells me there was a year some time ago at 9.6%.
9.6%...
But it's certainly a very, very strong year on a large base. And we see a built up of that growth on Page 9 with organic growth at 9.2%, we've talked about that, virtually exclusively driven by volume. So very little pricing in that number. Again, as expected, right, we were not taking a lot of price increases, only in a very few markets. And in fact, we were giving back some prices -- some pricing in some markets like Russia for instance due to what was happening with -- happening to FX rates. So very strong volume growth driving that organic growth.Currency impacts, negative EUR 98 million, that is not what we expected midyear, right. I think when we presented our June financials, we were expecting a slightly positive FX impact on sales. We ended up with negative EUR 100 million. We'll see that in some more detail in a second.And then the impact of the WMF consolidation, 6 months of EMSA and the adjustment of the reclassification of some SUPOR expenses that we've talked about before. We can clarify further if needed.So 29.7% on a reported basis look pretty consistent with the 30%-plus. Admittedly, we said 30-plus percent guidance 6 months ago. Obviously, we took the risk of including -- of quoting reported number in the -- at that time. FX cost us more than 2 points of growth, so we end up at, let's say, 30% reported sales growth.Okay. Moving on to Page 10. The EUR 98 million negative FX impact is detailed here by currency. So first, you can see the evolution of that impact throughout the year turning positive and then turning strongly negative in Q3 and 4.And then, I don't need to go through all currencies, but clearly, you can see the renminbi and U.S. dollar, our 2 short currencies weakening, that's, as you know, good news for us in terms of costs, obviously impacting negatively on our sales.On the positive side, you see the ruble, no surprise, but the real and the Japanese yen, we should be careful that the recent trends will turn that into negative impact pretty soon. So we won't see that kind of picture most likely in the next quarters.And then strong devaluation, strong weakening of some currencies like the Turkish lira, pound in Egypt and Mexican peso also weakening and driving that net impact. We obviously focused a lot more, as you know, on our organic growth, and that's -- that really we feel is a better measure of our performance.On Page 11, we take a look at the split by region excluding WMF and then with WMF. On the excluding WMF side, no surprise there, pretty consistent with where we've been historically, dropping 2 point for mature countries versus last year we were at 54%, this is 53% and emerging at 47%.And then as we consolidate WMF, we see as expected, as we had explained, mature countries reaching close to 60% and emerging countries down to 41%. That's mostly Western Europe, right, with the bulk of WMF activity. And then instead, China dropping as WMF activities are much more limited than the old SEB Groupe activities in China.On Page 12, a view of our top 20 countries. So basically an almost perfect scorecard here with 20 -- with 19 of our 20 top markets in positive or flat territory. Within that group, some truly very strong performance, clearly into double digit for Russia, for China, for Germany, Mexico and a number of others. So really a strong, broad-based growth. USA flat. And Colombia impacted by the weather. We have a big fan business there. And it is obviously very much dependent on the weather. So weather was not with us this year.In addition to growing in virtually all those top 20 markets, we grew, and I don't think we -- we won't go through that today, but we grew in all our product family. Our big product families were all into positive territory through the -- for the whole year. So a truly broad-based growth at 9.2%.A quick focus on WMF on Page 13. WMF grew 5.1%. This is actually right. This is actually 5.4% if we include the EUR 3 million we sold from SEB subsidiaries. So clearly, a healthy overall performance, but contrasted, as you know, with professional driving that growth and consumer more -- much softer performance.On the professional side, plus 13% for the year. Q4 was flat. And within that, professional coffee machine sales up 17% for the year. Within that, stable in Q4. So as you would remember, the year, the 17% is made up of 2 main growth drivers. One is the base business growing strongly, growing probably 8%, 9%, right. And that is broad-based growth for the base coffee business at WMF. And then, the second driver being the 2 large contracts that were signed very late in 2016 and delivered to 2 key customers in Japan and Canada through the year, starting in Q4 2016 and into Q3 2017.So the impact of that -- of those 2 big deals was, I'd say, nonrecurring. And we will now be back to a more normal-based growth except that we'll have to lap very high base that included those contracts. So that's what we see in Q4. We're lapping the first shipments of those 2 contracts. And even though the base business was solid, we report flat growth.Hotel, hotel equipment. We had a difficult year in hotel, ended up in negative territory on the back of both logistics and IT transition initiatives. And obviously, we expect that to stabilize now into 2018.Consumer was almost flat for the year. Q4 was minus 2, lapping a strong Q4 2016. If you remember, WMF had a strong Q4 2016 in consumer. We ended up with a lot of inventory in the trade as we took over the business. So that impacted that comparison in Q4. But having said that, this was, as we've explained throughout the year, a challenging year on the consumer side, mostly driven by a tough retail environment in Germany, and we've been working hard at addressing those issues, but I'd say we're not totally out of the woods yet.Consumer was also impacted by lapping a big LP in Taiwan last year that was significant. We also started the integration of the WMF business outside Germany, in fact, outside DACH, right, outside Germany, Austria and Switzerland, into our SEB commercial subsidiaries, who either took over direct sales or took over the management of the WMF distributors in those markets. As you do that, inevitably, you'll have some disruption. So we had some, very limited in fact. And we're -- this is overall going very well, I'd say. So we should expect to see -- start to see some traction in those international market.On the SDA side, within consumer, right, so here, you have cookware and SDA. And SDA performance at WMF was strong with double-digit growth. It continues to be double-digit growth. The stores performed reasonably well in positive territory. And as I said, we're starting to see strong international momentum as SEB subsidiaries take over.And with that, I'll hand over to Isabelle.
Okay. Thank you. Just to start with France, as we do usually. The first thing I would like to -- sorry, the first thing I would like to say is that France experienced a kind of rollercoaster year with Q1, which was negative; Q2, which was positive; Q3 negative again; and Q4 plus 5%, so offsetting all this kind of hectic year. At the end of the year, sales were at EUR 791 million, which is a record year after a record Q4 at EUR 307 million. So a very good year, although it has been, as I mentioned before, quite hectic.The market regarding cookware has been down. We have already mentioned that in the previous quarters. And that was mainly due to very high comps last year related to heavy loyalty programs and especially at the end of the year. So the situation has been improving over the last month. But nevertheless, comps were very high in cookware, and the market was down. And as a matter of fact, our sales have been down during the whole year, turning positive again in Q4 in cookware, excluding loyalty programs. But it's been a tough year in cookware because of this -- of these high comps.In small electrical appliances, the market has been up quite well, quite nicely, softening in the past month, but with almost all the categories contributing to this growth. And in this market, which was up, Groupe SEB has obviously outperformed the market and gained market share, strengthening its leadership in small electrical appliances. As a matter of fact, there were very few winners on the market, but SEB was one of the good winners on the market.Growth has been broad based with many contributors, like Cookeo. The Connect one being a major contributor, but also the red model out of which we've been -- we've had really a shortage of the red model.Cuisine Companion, which had a very strong end of the year. The vacuum cleaners, I would say, almost all of them, bagless stick, Clean & Steam, but also the versatile AIR FORCE 360, which has been ramping up over the quarters, steam generators, full automatic espresso machines. So many, many contributors to growth. And also Dolce Gusto, which has a great, fantastic year as we sold more than 800,000 units this year. So clearly a huge, huge year.On the negative side, I would mention fryers. It's been a difficult year for fryers, but also for irons. Steam generators taking the toll over iron.Regarding Western Europe. As you know, it's more difficult to have statistics regarding the cookware market. But we think that the cookware market has been slightly up but have no -- it's not a really reliable statistic as the one we have for SDA.Regarding SDA, the market has been overall up, driven by 2 major categories: home care, that's vacuum cleaners; and beverage. And of course, it has been very strongly driven by online sales everywhere in Europe. Apart from the U.K., as a matter of fact, all the other countries have been contributing to this market growth.Now regarding Groupe SEB, again, almost all countries expect -- except for Scandinavia, but all countries have been growing with a few real nice stories and a sharp boost from Groupe SEB in online sales.As far as Germany is concerned, which is a big market, where Q4 has been really sticking to the strong previous quarter. And we have had a very great -- a real great momentum on all our flagship products, vacuum cleaners, full automatic espresso coffee machines, electrical cooking with OptiGrill being a real success in Germany, but also single-serve coffeemakers like Dolce Gusto and Nespresso.And given all this strong momentum, we've gained market share in Germany in this area.Regarding cookware, sales have been up, and they were boosted by loyalty programs, but we had a very good core business, which was also up double digit, and in addition also these loyalty programs and heavy ones. This is for Germany.Regarding Spain and Italy, it's more or less the same story. The -- we had a strong core business, rather broad based in Spain. We have sales increase in all our major categories. In Italy, a more narrow base, but with vacuum cleaners really driving the growth, and especially the Steam & Clean model, which is a huge success. And also linen care, which has been very good and where we're growing quite fast. All in all, in these 2 countries, strong business -- strong core business, which has been offsetting some LPs and B2B operations that were lacking this year.In the U.K., the market, as I mentioned before, has been difficult. It's down. Due to the situation and weakening of the British pound, we have implemented at the beginning of the year some price hikes, which did not prevent us from holding on -- from holding our volumes quite firm, quite surprisingly, but volumes have been rather resilient. And we have had some nice stories in linen care and beverage, which have been really the key contributors. And at the end of the year, we finished with slightly upward sales, but it's been quite a tough year in the U.K.In Belgium and the Netherlands, a good turnaround in Q4 after a weak Q3. Some loyalty programs in cookware that have been bolstering growth and also EMSA doing fine. A special mention in Belgium, which helped us quite a lot is -- it was [indiscernible] anniversary, 100 years. And that was, of course, a rationale for a lot of marketing operations that really helped us boost growth.In the EMEA region, while it was a successful year for, I would say, the vast majority of countries in a market -- in overall market, which was good apart from Turkey, where it's more challenging. But in all the other countries, Central Europe, Ukraine, Russia, market has been up, and our performance in these markets have been really good.In Central Europe, we continued a very strong dynamic with, I would say, almost all categories contributing and a core business which is really based on very solid pillars that help us year-after-year to improve our performance. And we had good performance in the Czech Republic, in Hungary, in Slovakia, in Romania, in all these countries very good momentum.In Ukraine, and I'm not going to spend too much time on it, but huge growth with little means, which is perfectly sound. It means that we have growth without investing too much. So it's a great -- that's a great story.In Russia. Well, as you probably noticed, Q4 growth was weaker than in previous quarters. And that was mainly the impact of loyalty programs that were here in 2016 at the end of the year but not this year, and also the depreciation of the ruble towards the end of the year. That had, of course, an effect on -- an impact on sales through price hikes. And that in these countries, Russia, Turkey, price hikes are kind of a daily -- a day-to-day management. We have to be very agile in our pricing policy. But overall, a sound dynamic in Russia in many categories, electrical cooking, food preparation with hand blenders really driving growth. Linen care, very good performance in linen care and also beverage, starting also in vacuum cleaners. And with all of that, we had quite a significant market share gain in Russia this year. At the same time, we had also a very strong performance in cookware. So a good year in Russia, even though Q4 growth is lower for the reasons I just mentioned than in previous quarters.And then a last focus on Turkey, where we had a very challenging environment. You know that we've just seen that the Turkish lira impacted our sales by probably something like close to EUR 20 million. And in order to offset this depreciation -- ongoing depreciation of the Turkish lira, we had 4, 5 waves of price increases. So as I just mentioned, it's day-to-day management, but volumes were rather resilient. And we had, in particular, a good momentum related to all the products that we manufacture today locally. That is to say either outsource or finalize in Turkey or manufacture in our Egyptian factory. So this is more or less, perhaps not half of the growth, but a big part of the growth today.Regarding cookware. We launched Ingenio in Turkey, and that was a good success and clearly contributed to a strong impetus in this country.In NAFTA, starting with the U.S. Well, you know that the major challenge and we have already spoken a lot about it was the -- is this crisis in the retail industry, which entails lower store traffic. And clearly, this is due to a major purchasing shift to a new and alternative channels, online channels in particular. As a matter of fact, 2017 has been a record year in the U.S. for store closing. We think that probably close to 10,000 stores have been closed in the U.S. last year, and a certain number of chains have gone bankrupt. So a very challenging environment regarding the retail industry in the U.S.Now what we can see is that Q4 in this very challenging and difficult environment, that our sales in Q4 have been better, offsetting more or less our poor performance in the previous quarters, which was not given at the start. So it's a rather good performance. And this is due to, of course, a certain number of measures that we've taken, but also brisk holiday shopping season still driven by online sales, but clearly, a better Q4.Core business is still difficult. It's -- in cookware, we had a hectic year due to a difficult and a fierce competition on the market with new entrants and -- causing disruptions. But also a decline in the linen care market, which did not help.Krups. And the new range of Krups has been doing fine with good replenishment towards the end of the year. And All-Clad is also doing fine. So all in all, at the end of the year, we finished 2017 on a flat -- on flat sales, which is not that bad.While Canada, same thing, a better Q4, but in a very challenging environment. So well, it's better to be cautious on Canada because we don't know if we would be -- we're going to be able to continue on this positive trend in Q4. But it's a good end of the year.And Mexico, which was really the contributor to growth in 2017 in NAFTA, with a core business -- very strong core business strongly anchored on cookware, linen care and now blenders, where we're gaining market share quarter-after-quarter and also with a new loyalty program with Soriana.Well, LATAM, one major issue on the whole continent is FX, which explains again the gap between reported and like-for-like sales. But -- well, this is not -- it's new again, but we have already been safe to this kind of problem.In Brazil, as everyone knows, there are a certain number of signs of economic recovery. But -- well, we still have political issues. There are going to be elections. So this maintains still a lid on growth. Consumer spending has been resuming with a certain number of international retailer that are really driving momentum.As it has been the case for the U.S., we had an improved business in Q4, which was mainly fueled by fans. We launched new models, including ceiling fans, although weather conditions are still so-so, not as bad as they were, but still so-so. And there is a risk of some inventories at customer level at the end of the year. But globally, a much better business at the end of the year in fans than it was the case before.And linen care is doing fine as well on dry and on steam irons. Food preparation business is kind of flattish, and cookware is still down. You know that we're ramping up the Itatiaia factory. As far as cookware is concerned, the transfer is not quite finished yet. So we expect things to improve on the cookware side in the coming months.And in Colombia, soft market context, with demand which is kind of under pressure, and cookware sales is down because we discontinued. And I already explained that in Q3, a certain number of nonprofitable ranges and deals capitalizing on Triforce, which is really our flagship product for the time being in Colombia.And SDA sales were strongly penalized by fans because of weather conditions, and they were not offset by good food preparation sale.Coming now to China. China, we -- it's -- in fact, it's our fifth year with SUPOR of double-digit growth. So since 2013, we have had only double-digit growth in China. And this is, of course, due to the market expansion. Market, which is also trading up, especially in cookware because consumers have higher disposable income and they want more value-added products. Growth is also bolstered, of course, and we already mentioned that, by the online channel, and we mentioned that we had a huge Double 11 Day with a huge growth compared to last year. So globally, a very good year in China with cookware sales up double digit, driven by pressure cookers, woks, frying pans, pots & pans, et cetera, et cetera, but also kitchenware and all the thermal cups.And also kitchen electric also growing double digit, mainly driven by rice cookers and high-speed blenders, where there is a sharp impetus of SUPOR, which is clearly ahead of competition and bringing onto the market high-end products with a new vacuum high-speed blender. And also, of course, a gain of momentum in the nonkitchen business and especially, air purifiers, vacuum cleaners and garment steamers.And now to finish with Asia Pacific. As we said, a contrasted performance, but the 2 big drivers are Japan and South Korea. Japan, ongoing solid growth, which is driven and fueled by cookware and kitchenware on a market which is stagnating. And in small electrical appliances, a very good performance in kettles, where we confirm our -- and strengthen our #1 position, bringing on to the market new products, which have been rather successful. Improving the situation -- improving our performance also and our market share in garment steamers as well as in irons where we launch a new compact iron -- cordless compact iron, which -- the launching of which is very promising.And also a very nice story in retail. As we mentioned in the press release, we have now around 30 stores, proprietary stores in Japan, which are growing nicely and clearly contributing to our performance on the market.And last, South Korea, where we have had balanced growth between cookware and kitchenware, where we're growing and small electrical appliances and a very good momentum with a certain number of new launching, especially high-speed blenders and robust growth also in hair care. That's it.
Thank you very much, Isabelle. So finishing with Page 22 and our guidance. We're obviously pleased with the sales performance for the year. We're also pleased to be able to confirm our before PPA one-off ORfA growth guidance of more than 30%. In fact, today, having closed the year on sales, we are able to be a little more specific on this and indicate and guide to a growth between 30% and 35%. So specifying that guidance. We confirm that WMF will be accretive by more than 20% on the -- on our full year EPS before PPA impact.I will also take this opportunity to elaborate a little bit on below -- some below ROPA items. First, on other income and expenses, we are likely to close the year with close to EUR 45 million in other expenses related to, I mean, the programs we've talked about before, our big plan in Brazil, 2017 being the last year really when we will incur significant expenses for that program. The relocation of some teams from various locations to our headquarters here in Écully and building a global R&D center here, and then some charges related to the integration and restructuring of some WMF activities. So other income expenses should come close to EUR 45 million.On the income tax rate, we should report an unusually low tax rate this year, probably around 20%, due to primarily 2 things. One is the U.S. tax reform that we can elaborate a little bit on that if you wish, but that's driving some accounting upsides for us. And the second thing is the recovery -- the reimbursement by the state of the 3% tax on dividends. So all of that is going to contribute to a very low tax rate this year. Obviously, our ongoing tax rate remains, including WMF, probably close to 25%.I would also mention that we are on track to -- with our plan to deleverage our balance sheet. And when we close the number and have final numbers, we'll be able to show that we are well on track towards that below 2 ratio or multiple in terms of net debt to adjusted EBITDA by the end of 2018, right, being our target. So we're on a path to deliver that.All right. And with that, we'll hand it over to you for questions. Please go ahead.
[Operator Instructions] We have first question from Nicolas Langlet from Exane.
I've got 3 questions, please. The first one on the like-for-like, so you said that for the full year, most of the growth came from volume growth. And given the price mix was up in H1, it means the price mix was down in H2. So can you confirm that? And if we look at 2018, given the raw material is likely to remain a headwind for you, have you already started to implement price increase for 2018? Second question, on China, you mentioned the good performance of the non-kitchen products. Can you tell us how much of sales this segment represented in 2017? And lastly, looking at WMF consumers, do you think you now have the right setup and you fixed all the issues, notably with the logistics in Germany, and that we should see some improvement already in early 2018?
Thank you, Nicolas. On pricing, there's really -- yes, I think we'll see -- when we report our final numbers, I think we'll see minimal pricing in our sales growth. We didn't have much pricing as we reported in Q2. I can't remember the exact number, but it was modest as we -- consistent with what we had explained, which is having now offset the impact of currencies -- of the negative currency impacts from the last 3, 4 years, having offset it and rebuilt our margins, we were now going to -- not going to push any significant price increases. So there was no, if you will, deliberate significant price decrease in the second half of the year. I mean, we certainly don't see that in the business. But for instance, if you take Russia, we did, through various mechanisms, either strengthening promotions or various deals with the trade, let's say, give back some of the FX -- favorable FX movements in Russia. We also had just strong promotional activity in many markets. And we don't really separate that -- we're not really able to separate that from straight pricing. In fact, we don't even try because it's all part of the one big effort to push our product. So no major deliberate pricing initiative in the second half of the year, neither up nor down. And that's what you will probably see when we report our final numbers in February. On the raw materials side, yes, we will continue -- we did face some headwinds in 2017. We will continue to face some headwinds or full year impact of headwinds in 2018. At this stage, we don't see that as being of such magnitude that it would lead us to take significant pricing. So there might be questions here and there in terms of pricing, but I think the answer to your question is no, we are not right now driving any significant pricing. Right, okay, kitchenware in China?
It's still a very small amount. It's less than 5% of SUPOR's turnover.
Okay. But growing fast and very...
It's growing fast. It's growing more than 100%.
Yes. And on the WMF consumer side, yes, I think we can say logistics issues are behind us. And we are now more dealing with, which is good, more standard commercial challenges in a tough market. But that we should -- we know how to deal with that and should be able to do a good job in 2018. So yes, those issues as well as any IT issues are behind us there.
Okay. If I can add just one small question on the one-off PPA for the full year. I think the impact was EUR 17 million in H1. The impact for H2 is 0, right?
That's right. It's all H1, yes.
Okay. And it's EUR 17 million for the full year.
And it is EUR 17 million, yes.
We have another question from Alessandro Cecchini from Equita.
I have some questions. The first one is about ForEx on ORfA. Could you provide us a guidance for 2017? And more importantly, 2018, we are seeing some benefits for you from U.S. dollar. But of course, we see as well some depreciation of emerging market currencies versus euro. This is my first question. My second question is about investments in growth drivers. We understood that this year, you increased growth drivers' expenditure. I would like to understand if you are happy about this kind of level, and so we need to expect flattish trend for 2018. And finally, about M&A probably, so you executed a very important deal. But I would like to better understand what kind of probably bolt-on, I don't know, a target do you have to improve your portfolio. What are the areas that you are focusing on?
All right. Thank you, Alessandro. FX, I think we will end up pretty much where we had guided recently. It's a slight negative. It's relatively modest. We're talking about probably close to EUR 20 million negative in 2017. So no major changes. I think it's slightly less favorable -- more unfavorable than what we had said. No major impact. Am I mixing up things, yes? Yes, I am, right? Sorry, let me take that back, Alessandro. FX in 2016 is slightly positive -- is slightly positive, right -- in 2017, is a slight positive. But really, I mean, yes, we're talking small numbers. Sorry, I was a little confused. So slight positive in 2017. Yes, right? Okay, so it's negative. My apologies, it is negative. Okay, it is negative. My apologies.
But slightly.
Slightly negative and in line with what we have said. Okay, minus EUR 10 million, all right. There we go. As we look at 2018, same kind of a benign effect, if you will. So we are expecting another slightly negative impact but nothing significant. Nowhere near the kind of impact we've seen in the past. So again, minus EUR 10 million in 2017 and somewhat similar level in 2018. So trying to simplify it, not a big deal, neither in 2017 nor in 2018, okay? Sorry for the mix-up. In terms of growth drivers, yes, we increased our investments in 2017 again. We executed it consistent with what we had explained before in terms of savings. We basically spent a bit more over the first 3 quarters than last year as a percentage of sales and in absolute terms. And instead in Q4 this year, we were flat in absolute terms. So we kind of rebalanced that investment. But overall, yes, we did increase -- continue to increase our investments. Are we happy about it? Yes, we're very happy about it. We are very happy with the kind of sales momentum this has generated. But at the same time, I think we feel that we've reached probably a plateau at least in terms of percentage of sales, right? So you'll probably see us continue to invest around that level, let's say, going forward. M&A targets, I mean, you know we don't really comment on that. We remain -- we sort of watch what's happening in the industry. We obviously look at the transactions that might happen, but -- and they would be -- if we did anything or when we do anything, it has to do with filling up weak spots in our either product portfolio or geographic footprint, right? This tends to be what we do. So from there, it can be a pretty wide range of things. And it's all a matter of opportunity. So there's not a lot -- a ton more I can say about that.
Okay. So basically, to better understand, you say that your growth driver expenditure will grow probably in 2018 but in line with the growth of organic trend. And basically, back to the raw material side, so we probably will see some negative from raw materials and ForEx. That seems that you are comfortable [indiscernible] to compensate through prices, some price hikes, maybe efficiencies, it's correct this kind of reasoning about these points?
Yes, I think growth drivers will grow in absolute terms. That's pretty much the intention and probably not in percentage of sales, right? And yes, we don't expect to need to take much pricing at all to offset the raw material movements or at least nothing very significant. And yes, we would rely on productivity actions and just bigger volumes and better absorption in our manufacturing sites to offset the negative impact of raw materials on our cost of sales.
We do not have any further questions. [Operator Instructions] We have a next question from Steve Levy from Natixis.
Just 2 questions, if I may. The first one, it seems that your activity in the retail space is growing nicely and performing well. Does it give any idea for future development in that area? And just wanted to have clarification on the growth in China, that the average basket of customers is growing, meaning that they are buying more and more product in addition to the equipment, that the way we need to look at the performance for China in this Q4. And that's it for me.
Steve, do you mind repeating your second question? We didn't get it.
So my question on China is to see whether or not the average basket for each customer is growing, meaning that they are buying more and more products on the same time. [Foreign Language]
Yes, yes, yes.
Okay. And the first one was on WMF retail, right?
On retail, on the retail group.
On retail group, right. So I mean, overall, whether with WMF or excluding WMF, retail was either quite good or good. Does it give us any ideas? I mean, it's been good for us for a while. I mean, that retail part of our business is an important part of the business, and we constantly look for investment opportunities, and we do open stores where -- in the markets where it makes sense, in the places where it makes sense. Having said that, it's not a major push at a group level. There are some markets where it makes a lot of sense. As we know, we have stores in -- we have a number of stores in some key markets, like in Japan, in China, in Turkey. I mean, some markets just lend themselves -- or our situation in those market such that having a retail network particularly -- makes particular sense. And in those markets, yes, we've had -- and now Germany. In those markets where it makes sense, we invest, but it's -- we also close stores. So it's a living animal, right, that retail network. And we optimize it as we go. So I wouldn't say that the good performance changes anything in terms of the strategy we have on retail.
It's true that in a certain number of countries, we had very good performances of our retail network. It's true for Japan, I mentioned that. It's true for Turkey, where we have clearly refurbished almost all stores right now. It's the case for -- it's increasing, it's gaining momentum also in Russia, in Central Europe. So yes, we have some nice stories in the retail.
And in China in terms of the average basket, I don't know that we have the data, Steve. I think what Isabelle described is the way we think about it. We think the market is trading up. And we are fully both benefiting that and driving that as much as we can with product ranges that even 5 years ago were much more narrow and much more low-priced and less sophisticated than they are today. I mean, if you take rice cookers, if you look at the price range we've had on rice cookers, it's considerably expanded and expanded to the right, towards higher-priced, higher-margin, more sophisticated products. So we see that a lot in the market. And we're trying to, as I said, both ride that wave and create it.
Yes. You've always heard us say that SUPOR is the most innovative company in China. And as such, we've been bringing value to the market across all these years. One of the latest example is the high-speed blender. It's clearly a sophisticated product. It's a high-end product. And now that SUPOR is launching the vacuum high-speed blender, it brings another good momentum to this specific category. So yes, clearly, it's -- we are really riding that wave.
And investing, too, to do that. The brand itself, the SUPOR brand, probably 5 years ago probably could not support the kind of high-margin, high-priced products that we sell today. The brand has considerably strengthened over the years and is now one of the most recognized, best equity brands in the market, if not the best in our industry. So all of that is contributing and facilitating the -- taking our consumers up the scale in terms of product and pricing.
We have another question from Christophe Chaput from ODDO.
Three quick questions, please, for me. The first one is on the currency impact for 2018. So you say it's slightly negative, if I understand, I mean, on the current EBIT side. But you are supposed to benefit from the depreciation of the U.S. dollar and the renminbi. So are there also currencies that could offset the positive impacts from the U.S. dollar and the renminbi? Or is it linked with your hedging policy? The second one is could you tell us more regarding 2017 and the profitability of 2017? The margin of WMF, how did that expand during the period [indiscernible]? And the third question is about U.S.A. and the visibility you can have for 2018 regarding the organic, let's say, that you could experience? Do you think that the disruption of your retailer can disrupt again your growth in 2018? Or is it more or less stabilized from your part?
Thank you, Christophe. On 2018 currencies, so yes, it's likely to be a slight negative if you look at today's exchange rates. And yes, the yuan and the dollar help us as they weaken. Having said that, you're right, as you know, we're typically hedged on those currencies and hedged a good 12, 15, 18 months ahead, not 100% but significantly hedged. So we are progressively exiting very favorable hedges. And therefore, as you compare to prior year, the impacts are not as favorable as they would be without hedging, obviously. So reality is catching up with you. And I mean, as you exit those very favorable hedges, you take that impact. And then yes, there's a number of currencies that are -- look like they're going to hurt us, Turkish lira, Brazilian real, Japanese yen is not good. So a number of currencies are going the wrong way. And now the sum of all that is not a very significant, right? If you remember, we've been talking about 3-digit numbers not so long ago. And we are now looking at -- so as we look at this, we find it a pretty -- overall, a pretty benign environment from an FX point of view. WMF margins, I think we're going to hold that question to the publication to our earnings release on March 1, if you don't mind. This is a little early for us to comment on that. And on the U.S.A., it's not very easy to make projections there. The retail environment will definitely remain tough for a while. I mean, the adjustments that need to take place are very significant. And every week, every month, we hear about such or such player announcing store closures and layoffs and bad results. So that is not over. That is not going to get resolved in a couple of months. We mentioned a tough competitive environment. That was very true in 2017 and those players are there. We also -- in a way, we're used to that, right? If you look at the U.S., periodically you have new entrants who've been very successful either through huge investments or some innovative way of going to market. And they can make -- they can disrupt our business for some time. But typically, what we've seen over the years is that things normalize themselves over time. So hopefully, we'll start to see some of that in 2018 on the cookware side. But overall, I think it's fair to say it's going to remain a difficult market for us and so will likely be Canada. Isabelle alluded to that earlier. We think the Canada environment in some ways is somewhat similar to what we see in the U.S. So we are somewhat careful about prospects of our Canada business at this stage.
We have another question from Charles Scotti from Kepler Cheuvreux.
One question on your organic growth in 2018. When you look at market-by-market, do you think that your stronger growth path is sustainable in 2018 and especially in China? I have seen some softening in retail sales in China in December, for example, below 10%, first thing more than 2 years. And my second question is on WMF. Have you seen any major contract -- signed any major contract on the professional coffee machine side that can boost revenue top line in 2018? And last question is your competitor, Spectrum Brands, that has announced that it wants to dispose its small domestic appliance business. Is that something you are looking at? Or is it too big or maybe it doesn't fit with your strategy in the U.S.?
Okay. Thank you, Charles. 2018 organic growth, it's early to talk about it. Having said that, we can repeat what we typically say. We aim to beat the industry, right? So if the industry grows low single digits, we aim to do a little bit better than that and gain share overall, which is what we've done over recent years. Within that, China -- frankly China, we don't see any indication, or for that matter any reason, why China should slow down. Obviously not -- and I'm not talking about the 20% growth rate we've seen in 2017, which is sort of the really high end of what we've delivered in recent years but very, very solid growth. And China remaining a huge growth driver for us. We believe that will still be -- that should still be the case going into 2018. So that's -- major contracted WMF, no, not at this stage. And frankly, the size of the 2 contracts we talked about before that helped 2017 was very unusual. So there's no -- there's basically no expectations that we would be able to secure that kind of size in 2018. But obviously, the team works hard to secure smaller contracts. And we should have a good base business in professional coffee into 2018. On M&A, I can basically only repeat what I've said. You've mentioned the Spectrum announcement, and we've obviously seen it. But as you know, we maintain a watch on transactions in our industry. And we constantly study those deals. So logically, this one should be no exception. But there's really not much more to say on that.
Another question from Eric LeBlanc from Raymond James.
Just 2 small details. You spoke about online sales, especially in Europe. Are there significant levels right now? Can you elaborate a little? And about -- I'm a little surprised about the U.S. tax reform to have an immediate impact on -- you said that you can elaborate a little. And one last question is on WMF. Do you think that it's prudent to take a very -- 2018 as another transition year because we're still on the first half, I think, a basis which is a little high or not?
Could you elaborate a little bit more on your last question, please?
Because on the first half, the basis was still high. I can't remember if the first half of 2017 was high. And if we have to expect to be cautious for the first half of 2018 because of the basis of 2017 on the first half, I mean.
Okay. So online sales in Europe...
Is growing fast.
Yes, growing fast everywhere in fact, not only in Europe. In Europe, it's probably more or less at the average of the group in terms of online sales, which is about getting to 20% of our total sales being online sales, either through a few players or through the online platforms or more traditional retailers, offline retailers. So I think that's what you were asking. The U.S. tax reform, yes, it's a little -- to be honest, it was a surprise to us. The U.S. tax reform impacts our tax charge this year in the sense that by dropping the rate from 35% to 21%, or when that happens, what you have to do is to revalue, to reassess your deferred tax balances. In case of the U.S., we carry large deferred tax liability balances that are, therefore, going to decrease, right, as a result of the decline in rate. And that reduction in the liability is a credit to your -- its impact.
It's not tax loss?
No, these are deferred tax liabilities that resulted from the revaluation of the All-Clad brand, [indiscernible], right? So we were carrying that. And as you revalue them, basically you reduce them and you get the benefit of that. That's [indiscernible], but it's a nice P&L item. WMF, 2018 being a -- I think you asked about, is that a transition year, another transition year? In a way, yes because we are deep into our integration plans. But obviously, some of them -- a lot of them are starting to get traction, to translate into reality. So we will see some of that happening in 2018. But yes, it's a big integration. And therefore, I would say the integration will take most of 2 years, right, and 2018 being the second year. And as it relates to our professional coffee, as I said, the 2017 growth is 2 parts, one part that goes away, essentially, right. I am oversimplifying, but it goes away for 2 contracts were hit in 2017. And one part that remains very solid, which is the base professional coffee business growing in Germany and around the world. So that will continue. But the comparison with 2017 will obviously be challenging because of that.
To come back, we have another question from Marie-Line Fort from Societe Generale.
Just very quick question. Could you tell us what impact on your European sales at the launch of a famous vacuum cleaner by an English manufacturer after having invested a lot on this category?
We focus on our performance, Marie-Line. We're very happy with it. And vacuum cleaners continues to be a fantastic story for us, and we're expanding rapidly into new markets as we gain share rapidly as well in those markets where we've already launched. So that's all...
It was the sense of my question. If you continue to gain market share and if the launch of very high premium products helps you to defend also your category.
Yes, we continue to gain market share in vacuum cleaners on our different -- on the different categories, bagless, stick, with the Clean & Steam and also the versatile 360, which is, let's say, the major competitor of the one that you just mentioned. And it will be a very promising launch.
There is nothing we don't like about our vacuum cleaner business.
And to come back on the question regarding online sales, in Europe, for instance, online sales are growing something like 5x faster than offline sales. So it shows that it's really the growth driver in our market.
We have another question from Nicolas Langlet from Exane.
I have got 2 quick ones. The first one, on the raw material, so you said that you don't expect any significant impact in 2018. And can you quantify what other impacts you are looking for? Is it in line with the expected FX impact or is it higher than that? And the second one, on the tax benefit in the U.S. you mentioned, is it a cash or noncash item?
Okay. Raw material, I did not mean we don't expect an impact. We do expect an impact probably in line with what we've seen in 2017. I propose we elaborate more on that on March 1, when we show you ROPA bridges and all that good stuff. But it is -- as far as we can see today, it is a headwind of a similar magnitude as we've seen in 2017. And as you understand, we've been able to manage it without any significant price increase. So that's more what I was referring to, we don't see any impact in terms of having to take pricing to manage those raw material costs going up. I hope that's clear, Nicolas. The tax benefit in the U.S. is noncash. It's accounting.
We do not have any further questions. [Operator Instructions]
I think when Nicolas asked his second series of questions, that's typically where we end it, so -- all right, okay. So with that, we will close it there. We thank you all very much for attending and for your questions. And we will see you all on March 1 for our full year earnings release. Thank you very much.
Thank you.
Bye-bye.
Bye-bye.