SEB SA

PAR:SK

Earnings Call Transcript 2019-Q4

[Nathalie Lomon, Senior Executive VP & CFO]

Hello, everybody, and thank you for joining our call on our provisional sales 2019. This is Nathalie Lomon speaking. I would suggest we go directly to the Slide #5 where we can see that Groupe SEB has delivered another dynamic performance this year with total sales of EUR 7,354,000,000. This is an 8% growth on a published basis and a 5.8% growth on a like-for-like basis. This is the 6th year in a row of organic growth above 5% for the group, and we have benefited from strong increases in both Consumer and Professional divisions. Consumer division has been up 6.1% year-on-year, including 5.2% of organic growth. And Professional has delivered a strong 12.1% on an organic basis and 26% on a reported basis when including the acquisition of Wilbur Curtis.With respect to Q4, they amount to EUR 2,240,000,000. They're up 2.5% on a reported basis and 0.9% on an organic basis. Regarding Q4, again, organic growth would have reached 2.3% when taking into account the positive nonrecurring events, the recognition of the tax receivables in Brazil last year, that improved the performance last year. Both divisions have been up, Consumer by 0.4% and Professional by 0.6% (sic) [ 6.3% ] on an organic basis. We have benefited from a strong performance in Eurasia, in China in the fourth quarter, where we delivered organic growth exceeding 15% and in Professional Coffee. However, business at the end of the year was less firm than expected in Western Europe, especially in Germany and in France. We will come back to that.I am moving to Slide 6 for the outlook for the full year 2019. So based on this provisional sales, we indicate that the increase in operating result from activity should be between 6% and 6.5% in 2019. And furthermore, as expressed in our press release, the 2019 P&L will include around EUR 80 million of nonrecurring expenses. They will take into account the provisions for the restructuring at WMF's Consumer we have already announced in July. On top of that, all the investigations we have carried out at Groupe SEB Deutschland and that we had previously mentioned in our press release at the end of October have been finalized. The findings led us to extend to previous financial years in mainly 2018, the accounting adjustments related to business practices that derogated from group principles. And the corresponding amount should be close to EUR 20 million, so booked in 2019 but concerning 2018.On Slide 7, and coming back to our sales performance, you can see here the organic sales growth we achieved quarter-by-quarter since 2017, so 0.9% in Q4 2019. As I was telling you before, Q4 '18 sales included EUR 30 million positive impact related to the recognition of tax receivables in Brazil. Adjusted from this impact, Q4 2019 organic sales growth would have reached 2.3%. And on top of that, our Q4 organic sales growth is also impacted by the mechanical effect of timing effects related to significant loyalty programs that were higher last year than this year. So adjusted from those 2 items, group Q4 organic growth would have reached 3.6%.I'm now moving to Slide 8. On this slide, you can see the buildup of our full year 2019 sales. Organic growth is at 5.8%, just like I mentioned. We also benefit from a positive impact from currencies for EUR 71 million that's representing 1% of growth and also the positive contribution of scope, EUR 75 million, coming from the acquisition of Wilbur Curtis and also from Krampouz, a French company we have acquired at the end of 2019. And as a reminder, for those who do not know this company, Krampouz is specialized in crepe makers, waffle makers and grills for Professionals and for Consumers.On Slide 9, as I was mentioning in the previous slide, you can see the breakdown of the EUR 71 million of positive impact coming from currencies, including EUR 25 million in Q4. The tailwind mainly came from U.S. dollar, Chinese yuan and Japanese yen. And oppositely, Latin American currencies have negatively impacted our sales in 2019, so has the Turkish lira.I'm moving to Slide 10, which shows the breakdown of our sales and growth by main region. Again, at group level, 5.8% organic growth. If I were to look in detail, Western Europe has been down 4.8% organically in Q4 but remained slightly up on a full year basis. As I previously mentioned, our performance has been affected by some headwinds we faced in Germany. Excluding the nonrecurring item we booked in 2019 that's related to 2018, Germany would have been slightly up. We also faced some headwind in France, and Isabelle will give you more color on this in a few minutes. The performance in other EMEA countries remained very strong with sales being up close to 11% on an organic basis in Q4 and 12% in 2019 full year. All in all, this leads the EMEA region to post a 3.3% organic growth on a full year basis. Regarding Americas, North America has been down 3.8% in Q4 on an organic basis in a retail environment that is still challenging. But on a full year basis, the sales remained up 2.9%, which is an improvement compared to last year. Moving to South America. As I mentioned previously, the decrease we can see in Q4 is coming from the one-off of the tax receivable recognition we have benefited from at the end of 2018. And if I were to exclude this one-off effect, the sales would have been up close to 9% in South America in Q4 and close to 8% on a full year basis.Moving to Asia and focusing first on China. We have posted a strong growth in the fourth quarter, above 15%. That came from -- as we mentioned during Q3 communication, came from the Chinese New Year effect, which is earlier this year compared to what happened at the beginning of 2019. On a full year basis, China delivered a 12.2% growth, which is very much in line with our expectation. Sales from the other Asian countries have been down by 2.6% in Q4, mainly due to Japan as an effect of the timing effect coming from the VAT increase in Japan, which led Japanese consumers to buy more in Q3 than in Q4, but they remained up 1.2% in 2019. All in all, this led the Asia area to be strongly up in both Q4 and on a full year basis, being close to 10% in Q4 and 9.4% on a full year.Last but not least, the Consumer division reached an organic growth of 5.2% in 2019 and was broadly stable in Q4. This division -- sorry, that was the Consumer division. Professional division has been up 12.1% in 2019 on an organic basis and 6.3% in Q4. The slowdown between H2 and H1 was largely anticipated coming from high comps, with major deals have been shipped as of the summer 2018 and during H1 2019.I'm now moving to Slide 11, which shows a rather stable breakdown. This is the one we have previously reported on sales in mature countries versus emerging countries.And now I'm handing over to Isabelle, first, for more details market by market.

[Isabelle Posth]

Yes, good evening. Let's go through the different regions, starting with Western Europe. As you can see, sales for the full year were stable on a like-for-like basis with the Q4, which was a [ marked ] down, and that was mainly due to 2 countries. First, France. In France, full year sales have been flat. But following a difficult fourth quarter, despite easy comps, as you remember, last year, we had the yellow vest protest at the end of last year. And despite this easy base of comparison, Q4 was difficult. And that was after a rather dynamic Q3, which was driven both by a firm core business and also LPs, which normally boded well for the end of the year. What has happened is that, as you know well, the overall environment remains tough, and the strikes in December added another layer to this tough context. And all our clients, customers are rather cautious in managing their inventories and reducing their stock. Second point is that we had some unexpected delayed purchases and restocking by major customers in France, and this heavily impacted our SDA business. Excluding this specific factor, as a matter of fact, performance was quite good, especially in cookware, for both the core business, and we had also a good loyalty program. But as I mentioned before, more difficult in electrical appliances, although we had some good performances in vacuum cleaners, versatile as well as robots, fully automatic espresso coffee machine, Cake Factory and yogurt makers. Steampod was very good. Garment steamers, even steam generators, were good. So some good news but also a difficult stance due to this postponement of purchases by major retailers. That is for France.Second, Germany. We are experiencing in Germany a more tense market, a challenging context and also a challenging comparison base for the group. As mentioned last year in October, we found out the existence with some retailers of commercial conditions at Groupe SEB Deutschland, which were not compliant with the group's principles. Well, these practices have been adjusted, and penalized turnover at this stage. If we do not take into account these one-offs, sales would have been up, including a very good performance in cookware, kitchenware and also OptiGrill and Cook4me that continue their good career over there.If we look at now other Western European countries, the situation varied quite significantly from 1 country to the other. Let's take a few examples. Down the Netherlands but on high comps due to major loyalty programs last year, yet the core business has been holding quite -- holding up quite firm, thanks to strong performance in vacuum cleaners and fully automatic espresso coffee machines in particular.Stable sales in Spain in a very challenging market, especially in vacuum cleaners where our sales have been under pressure, but a very solid performance in most other categories and a strong push in online sales, in e-commerce. Among the categories that were significantly up in Spain, I'd like to mention personal care, Steampod, which is doing pretty well, and the coffee partnerships that have been also contributing to growth. And among countries that are up in sales, Italy, which is driven still by home cleaning, with major contributor to growth being versatile vacuum cleaners that have been supported by strong activation plans, digital as well as in store. And also to be mentioned, linen care, steam generators, garment steamers, the launch of the IXEO ironing system that have been contributing quite significantly to growth. Other countries with growth in sales is Belgium, overall, a positive momentum that has been boosted by a large loyalty program at the end of the year on Lagostina cookware. And even U.K., sales have been up, thanks to some significant initiatives in a bearish market that helped the business in cookware, oilless fryers and linen care. What I would like to mention is that these flat sales over the year do not really reflect some major advances that have been achieved, especially in e-commerce, the Group Retail and also WMF Consumer.If we go now to the other EMEA countries, well, steady growth over the past 5 years, steady and strong growth over the past 5 years, and that has to be highlighted. Overall, we are in very dynamic markets, growing demand. And on top of this buoyant market or these buoyant markets, the group adds it on solid dynamic, which is based on 3 major pillars. The first thing is product dynamic, which is based -- which is fueled by launches and quite successful launches, such as the Flex versatile vacuum cleaner, the IXEO ironing system, the Evidence full automatic expresso coffee machine, the rollout -- the continued rollout of OptiGrill, which continues its international career, and also Ingenio cookware. But also range extensions, especially, for instance, in garment steamers or robot vacuum cleaners. This is the first pillar. Second pillar is strong partnerships with key accounts, which capitalizes on an excellent activation in the field, including e-commerce and digital, loyalty programs on top of a very good core business and the development of online sales, an intensified presence of online sales in e-commerce. And also, third pillar, ongoing development of Group Retail, including WMF because we have more and more corners of WMF in our Group Retail.Now if we go through a few countries, Russia is clearly the first growth driver in the region. It's fueled by all categories. And as a matter of fact, we strengthened our leadership in small electrical appliances during the year, including in Q4. This is due to, of course, new launchings. This is due to a very strong activation, as I said, in the field. But it's also due to enlargement of distribution network, increased WMF sales, thanks to shop-in-shop at retailers -- at targeted retailers. So Russia, very good stance. Ukraine, ongoing robust momentum. We gained leadership in small electrical appliances. And as in Russia, it was nurtured by all product lines and excellent marketing execution, off-line and online. Central Europe, also Poland, which is becoming a large market for the group and confirmed a vigorous growth in sales based still on the same pillars. And last thing about Middle East, I would like to mention a return to growth in Saudi Arabia, following 2 years of very tough business. This turnaround has been made in an environment which remains fragile. And as usual, the main driver in this type of country is food preparation. Successful integration of Zahran also in Egypt, good business based on 3 brands: Moulinex for food preparation, with a solid product dynamic; Tefal for nonstick cookware and linen care; and Zahran for stainless steel cookware. And in this country, we are progressing and accelerating our business.Now coming to NAFTA countries, so North America. Well, overall, a better full year than last year, where reported sales have been obviously helped by currencies. Q4 sales have been down, following a good performance in Q3. I'd like to say that this -- in fact, Q4 sales are not really relevant for the full year. We are working in contracting markets, both in cookware and linen care, and a very, very challenging retail environment. And the latest news stemming from some retailers are another testimony of the tough context that we're experiencing in the United States. They announced additional store closures. There have been already in '19. There will be some others in 2020. And again, [ tight ] management of inventories and reduction in inventories. Now Q4 sales were down. That was mainly due to Tefal cookware, and that was mainly due to a different phasing of selling for major commercial operations. Yet, if we look at Tefal, not taking into account this phasing, overall, Tefal has been rather outpacing the market, thanks to distribution gains and range optimization. As a matter of fact, Tefal is clearly the #1 brand in cookware in the United States. [indiscernible] have been -- also, sales have been also well-oriented, and Rowenta has been rather successful, well, has been really successful in enlarging its distribution and is the first brand in the U.S. garment care business -- market. So Q4 was down, but overall, the year is rather good.Canada, tough core business, the same retail environment as in the U.S. But the -- as in Q3, we have been helped by the special deal that continues and that made that, at the end of the day, growth was there. Mexico, very good year, strong performance in cookware and kitchenware and market share gains. Core business was very good, and we had the loyalty program that we most of the time have with one of our retailers. South America. Well, reported revenue were penalized by FX effects, weakening currencies against the euro since the last summer, as a matter of fact. Now the reading of sales change in this area, in this region, is a little complicated due to the one-off that we have been having, so the recognition of tax receivables in Brazil. Well, they impacted positively Q4 last year by EUR 32 million and positively Q3 2019 by EUR 8 million. And due to the weight of Brazil, which is more or less 2/3 of sales in the region, these one-offs had, of course, a major impact on South American revenue. As such, excluding one-offs, figures of change in sales would have been much more pleasant and reflecting the reality of the business. So more than 8% like-for-like growth in -- both in Q4 and full year for South America and growth of around 5% like-for-like in Q4 and 10% year-on-year for Brazil.The Brazilian market remains volatile and very competitive, where Q4 growth, nevertheless, was fueled by a strong momentum for Dolce Gusto, good growth in washing machine sales, fans, of course, but also the ramp-up of new categories such as oilless fryers and grills. I'd like also to mention pressure cookers in cookware, which have been doing quite well. In Colombia, accelerated growth in Q4, fueled by fans and cookware, where we launched a new coating, and that helped us a lot, and also, the rollout of new categories such as the oilless fryers.China. Well, China -- well, we have already spoken about a more moderate growth in GDP. Well, e-commerce is still driving growth but at a more moderate pace than before. I'd like to repeat that we're passing on a high multi-year comparison base. Over the past years, growth has been comprised between 15% and 25% year after year. And nonetheless, Supor has been maintaining an overall very solid sales momentum with -- and as a matter of fact, full year growth is in line with our expectation. Q4 growth, which was more than 15%, was made out of firm core business growth and also anticipated sell-in for the Chinese New Year. The Double 11 festival was very good. We had an outstanding performance, better than the market. And [indiscernible] products have been, as it has been the case over the past months, cookware, even mature categories like woks, have been up quite significantly. Drinkware, which is still very dynamic, with a range extension that is very successful. Kitchen electrics, rice cookers, mature business but boosted by new models, high-speed blenders, [indiscernible], health pot kettles, grills, baking pans, new categories have been really fueling growth. And garment steamers, vacuum cleaners and air purifiers as well as water purifiers in the nonkitchen electrics. Overall, Supor has been outpacing the market and strengthening its competitive positions on the market. Last but not least in the regions, the other Asian countries. Full year sales were slightly up, following a Q4 revenue down around 3% like-for-like. Japan and South Korea are the big countries in this area and has been experiencing, in fact, very different growth patterns. Japan is definitely fueling growth year-on-year despite declining sales in Q4. This decline, as Nathalie said before, was due to advanced anticipated sales ahead of the VAT change on October 1. But yet, the overall picture in Japan is very good. Flagship products have been continuing to drive growth, cookware, kettles, garment steamers, and newcomers have also started to contribute to growth. Group Retail has been very good, and this has been now the case for several quarters. So it's really worth mentioning.South Korea, more difficult context, a decreasing market. But Q4 -- we have been able to stabilize sales in Q4, thanks to a good performance of a certain number of flagship products. As you probably remember, we still have an issue regarding WMF inventories in the trade in South Korea, which, of course, are not helping. The growth would have been positive without WMF in South Korea.Perhaps just a word about the Professional business, which is a 90% professional coffee machines. The phasing, as was mentioned before, changes the deal, clearly in the reading of 2018 and 2019. But as a reminder, the 3 big deals that have been delivered this year has started to be delivered in H2 2018. And which makes that comparison base was easy in H1 this year and more difficult in the second part of the year. That said, even on tougher comps, Q4 was very dynamic as you have seen. The core business is also brisk and rather broad-based across all regions, with some very nice [ successes ] in the United States in some convenience stores, and in the U.K. and Eastern Europe. We're still very happy with our partnership with Luckin Coffee in China, and you have probably heard and seen a certain number of comments recently about Luckin Coffee which bode well for the future of our partnership with them.Last but not least, the integration of Wilbur Curtis continued. Early days of commercial synergies have been made, training sales people, Schaerer machines are now in the catalog. We're in line with our plan. And we implemented in 2019, the new organization that is dedicated to help our development in PCM in the U.S., especially.

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. Well, thank you, Isabelle for the detailed explanation on the trends for Q4 and on a full year basis in our various markets and activities. We're now happy to take your questions.

[Operator]

[Operator Instructions] The first question comes from Nicolas Langlet from Exane BNP.

[Nicolas Langlet, Research Analyst]

I've got 3 questions, please. The first 1 on China for the Q4 like-for-like. Are you able to quantify the impact of the Chinese New Year timing? Just to see what was the underlying trend. And looking at this underlying trend in the coming quarters, do you expect any improvement? Do you have any self-help initiatives that could help you improve the trend we have seen in recent quarters? Second question, on the accounting adjustment in Germany, just to be sure, so you are excluding the impact from the ORfA guidance, and I think it was part of the EBIT in the 9 months or so should we restate the 9 months and restate it for the full year overall? Is that the right approach? And finally, you have made some comments regarding the soft trend in China in Q1 because of the timing of the Chinese New Year. Are there other regions where you are cautious regarding the trend?

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. So thank you, Nicolas, for your questions. So I will start with Germany and maybe give more explanation. So what we will book below the ORfA 2018 and not 2019. As said in the press release, we have moved forward in our investigation in this subsidiary, and we have found out that we had to depreciate some of our receivables to reflect the agreements we had granted to our customers in 2018. So because this is not part of 2019 activity and it's not a decision that has been made in 2019, we have made the decision to book the depreciation of receivables below the ORfA. On China, the underlying trend is very much in line with what we were expecting when we commented in Q3, so you may recall that at that time, we said we would grow, excluding the impact of the Chinese New Year between 7% to 8%. This is exactly what the subsidiary has delivered. So Q4 underlying is very much in line with the growth we had benefited from in the third quarter, and it's been fueled by the fact that the Chinese New Year happened earlier this year in 2020 compared to last year, and this has helped us in terms of revenue growth because we have done the sell-in for Chinese New Year, mainly in December. So if we were to adjust that in 2020. Obviously, the comparison base is not the same because in Q1 2019, we had in our revenue, the sell-in for the Chinese New Year of 2019, which was later in February. So if we were to take that into account, obviously, we will see a limited growth in the first quarter in China because of the comparison base.

[Nicolas Langlet, Research Analyst]

Okay. And I guess, you will have the same negative impact in Q4 '20 as well?

[Nathalie Lomon, Senior Executive VP & CFO]

Yes, yes.

[Nicolas Langlet, Research Analyst]

Okay. And overall, for the full year, what is the impact you expect in 2020 in China like-for-like related to those Chinese New Year timing, both including Q1 and Q4?

[Nathalie Lomon, Senior Executive VP & CFO]

It's a bit complex, but maybe you can do the math. The fact is that in 2019, we had kind of 2 Chinese New Year, and so in 2020, we will have -- we won't have any impact of the Chinese New Year.

[Nicolas Langlet, Research Analyst]

Okay. So the 8% growth difference in Q4, we should replicate that in Q1 and Q4, basically.

[Nathalie Lomon, Senior Executive VP & CFO]

Well, this is the impact, at least for this year.

[Operator]

The next question comes from Charles-Louis Scotti from Kepler Cheuvreux.

[Charles-Louis Scotti]

Three questions, please. The first one on -- can you give us a rough indication of the impact of strikes in France in Q4 in December? And have you seen any impact also since the beginning of the year? My second question, what explains the slight upgrade in your ROPA guidance for the full year despite the very slight miss on top line? My third question on the restructuring expenses. Can you give us an idea of the share that is cash and noncash? And should we expect any residual impact in 2020? And my last question, any risk that the wrongdoing in Germany have been replicated elsewhere.

[Nathalie Lomon, Senior Executive VP & CFO]

So thank you, Charles, for your question. I may have to ask you to repeat one of them because we had an issue here. You [ weren't here ]. But first on the strikes in December, it's a bit complicated for us to tell you what is the exact impact on our business. For sure, we think there is 1 impact because we were expecting orders at the end of December from the French specialized distribution that were supposed to [ cover ] for restocking. And those orders, they did not come. So that's for sure, an impact. Now to give you an exact number on the sales we had in France, it's a bit difficult for us. And again, regarding the beginning of the year, we are now restarting the discussions with our customers. We understand that they are carefully monitoring their inventory. So it's a bit, again, too early to give you an outlook on what Q1 will look like in France.Your second question, I did not hear well. I will answer to the third question, which was relating to restructuring. So for the time being, it's a provision for restructuring, so it's mainly a noncash impact. This is based on the, I would say, current status we have regarding the negotiation we have with Workers' Council in Germany, but it's likely that the impact of the restructuring will also take place in 2020. And I'm sorry, but I did not catch either your fourth question. So if you could repeat the second and the fourth, please?

[Charles-Louis Scotti]

My second question was on your slight upgrade in your ROPA guidance for the full year despite the slight organic miss in Q4. So basically, what are the reasons behind it? And the last question was on the wrongdoing in Germany. Is there any risk that the same practices have been replicated elsewhere?

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. So on your question in Germany, obviously, we have put a strong push in the organization and a tougher look at analysis on the quality of the receivables. So we have also made it very clear to management, in distribution, subsidiaries that those kind of practices, i.e., granting discounts that were not in line with group guidelines, was clearly forbidden and I think that it's been made very clear to the rest of the business as the entire management team of this subsidiary has now left the company. Regarding the ROPA upgrade, it's a combination of many effects. It's a mix effect coming from the quality of sales we have delivered in the fourth quarter. That delivered more margin than expected on the 1 hand. And on the other hand, we also told you in previous communications, that if we had the feeling that the business was not there, we would reduce some of our growth drivers. So this is also what we have done in the areas where we have seen that the demand was a bit weaker than expected. But having said that, it's a bit too early to give you more comments on the ROPA, so we will provide you with more details and analysis at the end of February when we release our full financials.

[Operator]

The next question comes from Ji Cheong from Citi.

[Ji Cheong, Senior Associate]

Just 1 question on your Professionals. So on Wilbur Curtis, so I'm seeing that it's EUR 71 million for 11 months. So if I remember correctly, when you acquired the company, this was somewhere similar in terms of like their past revenue growth for the year, so -- which implies that they haven't really grown in terms of revenue if you just split out Wilbur Curtis post-acquisition. So I'm just wondering if I'm missing something here. Or is there a seasonality effect that I'm missing? And in terms of the tougher comp effect for -- so we can expect, obviously, the first half for 2020 to be tough as well, but just wondering if we're looking at somewhere along the lines of -- in line with what we're seeing in Q4 or are we looking at tougher comps? Can you just give us some sense on what kind of growth can we expect in Professional for the first half of '20 as well, please?

[Isabelle Posth]

Regarding Wilbur Curtis, it's -- yes, it's around EUR 71 million for not quite 11 months because we started to consolidate on the 8th of February, so it's kind of rounding. The overall business has been good. And if we put things over 12 months, the turnover would be more or less in line, slightly above last year, which is, in fact, in line with our expectations for this year. So no issue.

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. And so maybe to answer on your second question regarding the comp effect in the Professional business. What I can tell you now, and I won't be able to give you more information, is that we have a strong pipeline in that business. And you know that it's a deal business. So then depending on when those deals will be executed in 2020, then we will see whether there will be an effect from the comparison base, so whether we will be able to offset that. But again, for the time being, it's a bit too early to give you some elements on how the growth will look like in the Professional. Just have in mind that we are very happy with the business and with the current development, and we are confident in the quality of the pipeline.

[Operator]

The next question comes from Alessandro Cecchini from Equita.

[Alessandro Cecchini, Analyst]

The first one is our -- about the WMF Consumer business reorganization. Do you expect -- consider your current progress is some savings in early -- in the second half of 2020? Or do you expect to have the bulk or to see something starting from 2021? This is my first question. My second question is about -- I know that it's a little bit early to talk about that, but on a qualitative basis, what are your expectations for ForEx and raw materials for 2020, ForEx considering the [ trend ] of U.S. dollar and for raw material, the trend in plastics?

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. So first, your question on the restructuring in the Consumer business. So obviously, there will be some savings in 2020, more likely to materialize in the second half of the year. But what -- and I think we stated that when we commented on the restructuring plan earlier in July 2019, the full effect of the restructuring, which is currently under negotiation, will deliver in 2021. Regarding the cost of raw materials, we were still in the process of finalizing our assumptions for 2020. So it's a bit too early for us to comment on what we're going to take as assumptions for those costs in the P&L.

[Alessandro Cecchini, Analyst]

And about ForEx?

[Nathalie Lomon, Senior Executive VP & CFO]

While ForEx, we will use forward assumptions. So again, when we will deliver some outlook for the full year, we will take into account the latest available assumption, including some hedges that we will book meantime.

[Alessandro Cecchini, Analyst]

Okay. And then, if I understood it correctly, my last question about China. In the first quarter, you stated in the Bloomberg News, you stated a weaker -- for you, weaker is a limited growth. Is it right my understanding of your messages before?

[Nathalie Lomon, Senior Executive VP & CFO]

Can you say that again, please?

[Alessandro Cecchini, Analyst]

So during the speech, you stated about the trend -- your expectation for the first quarter in China. In the Bloomberg News, you stated about a weaker first quarter. For weaker, you expect a limited growth, as you said before. So is this your qualitative assumption for the first quarter in China? Is it correct?

[Nathalie Lomon, Senior Executive VP & CFO]

Yes, limited growth because of the fact that we will have -- we won't have in the first quarter, the sales coming from the Chinese New Year, where the -- those sales were booked in the first quarter in 2019, so it's a comparison base effect.

[Operator]

We have no more questions. We have a new question from Steve Levy from MainFirst.

[Steve Levy, Analyst]

Just 3 questions from me on my side. Can you give us the scope impact in North America, please? The second question is on the PCM market. Can you give us an idea about how many jumbo deals you have made in '19 compared to '18? And how much do you expect in '20? I know that there is a lot of discussion and it's a deal business, but just in order to compare the deals you had in '18 and '19. And just wanted to have your view on Netherlands, if you can come back on the environment in terms of pricing in Netherlands, in particular?

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. So maybe I will take the last question on Netherlands. I'm not sure what -- to understand what you're looking for. To my knowledge, we haven't faced any specific event or difficulties in that area that was coming from pricing. Then you had another question regarding the Professional business. So we had signed in 2018 a very large deal, and obviously, this is what explains the seasonal effect that we had strong sales in the second half of 2018 and strong sales in the first half of 2019. We have signed other deals in 2019. And we have, as I mentioned previously, a strong pipeline for 2020. Then you had a further question on the U.S.?

[Steve Levy, Analyst]

Yes. What is the scope impact? What is -- just to get -- for this region, the scope impact?

[Nathalie Lomon, Senior Executive VP & CFO]

So it's -- in the U.S., we haven't made any acquisition that are reported in the Consumer business, it's all reported in Professional, and so this is the acquisition of Wilbur Curtis.

[Operator]

We have no more questions. [Operator Instructions] We have a new question from Nicolas Langlet from Exane.

[Nicolas Langlet, Research Analyst]

I've got 2 additional ones. The first one on the accounting adjustment in Germany again. So the EUR 20 million is for 2018. Can you quantify the impact -- the negative impact in 2019 ORfA and just to confirm that you will include it in the ORfA? Second question, that was my last question previously. Beyond China, do you see other areas for Q1 where you are cautious? I mean, do you expect any improvement in Germany and France notably?

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. So coming back on the Germany impact. So yes, I do confirm that the EUR 20 million we are booking in below ORfA, so in other products and expenses are relate to 2018. And regarding 2019, the amount coming from those discounts that were granted to customers and were not agreed with the top management of the company are in the -- are around EUR 15 million.

[Isabelle Posth]

15, 1-5.

[Nathalie Lomon, Senior Executive VP & CFO]

1-5. EUR 15 million for 2019, and those are booked in the ORfA. And coming to your other question and the outlook for in Q1. Again, as I said previously, it's very difficult for us to give you some information. We are -- beginning of January, all discussions are resuming with the main customers, especially after the year-end Christmas period, et cetera. So it's a bit difficult for us to tell you what the Q1 will look like in those 2 countries.

[Operator]

We have no more questions.

[Nathalie Lomon, Senior Executive VP & CFO]

Okay. So I assume that there are no further questions. So maybe for us it's time to close the call but beforehand, my conclusion for this year is that the group has delivered another dynamic growth, 8% on a published basis and 5.8% on an organic basis, in a changing environment, as you know. As I said, for us, it is a 6-year in a row that we deliver organic growth above 5%, so it's a very good performance. And for me, reflecting really the relevance of the strategy of the company. In the Consumer business, we keep on benefiting from the global footprint we have, which allows us to monetize our innovation in metro countries and to capture all the opportunities that are coming from the growth of the middle class in emerging. And in Professional, what we can say is that the move to the B2B is a success. The business is growing fast. And it's -- we're really happy to have welcomed Wilbur in the Professional segment of the group. Last but not least, as I mentioned earlier, the increase in the group operating results from activity should now be between 6% to 6.5% in 2019. And we will give you more detail, obviously, on February 27, with the release of our full year 2019 results.Thank you for your attendance. And we'll talk to you on the 27th of Feb. Thank you. Bye-bye.

[Isabelle Posth]

Bye-bye.