Coca-Cola HBC AG

Thank you for standing by, ladies and gentlemen, and welcome to Coca-Cola HBC's conference call for the 2025 half-year results. We have with us Zoran Bogdanovic, Chief Executive Officer, Anastasios Stamoulis, Chief Financial Officer, and Jemima Benstead, Head of Investor Relations. At this time, all participants are in a listen-only mode. There will be some opening remarks followed by a question-and-answer session. If you wish to ask a question, please press star 1 1 on your telephone keypad at any time and wait until your name is announced. I must also advise that this conference is being recorded today, 6th of August 2025. I now pass the floor to one of your speakers, Jemima. Please go ahead. Thank you.

Good morning and thank you all for joining the call. I'm here with our CEO, Zoran Bogdanovich, and our CFO, Anastasia Stamoulis. We have about an hour for the call today, which should give plenty of time for a good discussion. Please keep to one question and one follow-up, waiting for us to answer the first question before moving to your follow-up. I will also remind you that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements in our press results press release this morning and at the end of our slide deck. And with that, I will turn the call over to Zoran.

Thank you, Jemima. Good morning, everyone, and thank you for joining the call. This morning, I will start by sharing our operational review for the first half with updates on a few strategic areas of the business. Our staff will then take you through our financial performance in more detail. I will then come back to touch on the environment and discuss the outlook for 2025. I am very pleased with our progress in the first half of 2025. We've continued to execute our strategy delivering a strong performance in a mixed market environment while investing in our portfolio and capabilities. I'd like to call out three things that stand out for me in the period. First, the high-quality top-line growth we've delivered. Organic revenue grew 9.9%, with good volume growth of 2.6%. Growth was led by two of our strategic priority categories, sparkling and energy, And I'm pleased that we saw an improved volume performance in the second quarter. Second, the strong EBIT performance, both in terms of organic growth and margin expansion. And even better, delivery of EPS, growing nearly 26%. Anastasios will get into more detail here shortly. Third, we continue to win in the market and deliver real value to our customers. we gained a further 100 basis points of value share in NARTD year to date. And we remain the number one contributor to our retail customers' absolute revenue growth within FMCG in Europe. The numbers we have reported today show that our growth strategy is working and give us the confidence to update our guidance for 2025 as well. More on that later. Let's get straight into the drivers of our strong top-line performance from a category perspective, starting with Sparkling. Sparkling remains the most important engine of growth for our company and has performed well this half with organic volume growth of 2.3%, supported by our focus in market execution of campaigns and innovations. In April, we launched the Share a Code campaign across most of our markets, with locally relevant consumer and customer experiences across all channels. This campaign has had a great start and will continue throughout the summer. We are looking forward to launching the campaign in Nigeria in Q4 during their peak season with a record 1,000 popular first names on bottles. We saw good ongoing performance from Coke Zero up high single digits. Sprite delivered an improved performance up mid-single digits. The reformulation we had at the end of last year is seeing good results, and we continued with the Sprite Spicy Meals campaign. Fanta grew low single digits, and we launched a new limited edition flavor across several markets, Fanta Tutti Frutti. In adult sparkling, we also delivered mid-single digit growth, with a good performance from Schweppes, particularly in Nigeria and Egypt. In the second quarter, we launched the new purple flavor with a strong market activation. Energy continues to perform very well, up 30%, even against increasingly tough comparatives. All segments saw strong growth, with our segmented portfolio allowing us to tailor the offering to different markets, demographics, and affordability needs. Monster performed well, helped by successful innovations such as Rio Punch and Ultra Strawberry. Predator and Fury, our affordable offers in Africa, also continue to perform strongly, supported by locally relevant marketing and partnerships that resonate with consumers. The innovation continues, and we are really looking forward to the launch of the new Monster drink with Lando Norris, which we've started rolling out already and is coming to most of our markets in Q3. Moving on to coffee. As I mentioned in the last few sets of results, we have made a strategic decision with our partners at Costa Coffee to prioritize the out-of-home channel. Now, with both Costa Coffee and Café Bernano, we are putting our full focus behind this channel, because that is where we see the greatest potential for sustainable, profitable growth. This means we are seeing an impact on total coffee volumes this year, and in the first half, volumes declined 7.6%. That said, I am really encouraged that we are seeing good results from the out-of-home channel, with volume growth of 17% from both existing outlets and newly recruited outlets. Steel's volumes were broadly flat. We are focused on capturing growth in the highest value parts of the portfolio. That means prioritizing premium water, sports drinks, and ready-to-drink tea, with offers tailored to the local markets. In ready-to-drink tea, we launched Peace Tea in Switzerland in Q2, with activations focused on Gen Z consumers. Sports drinks continues to be a standout performer. delivering mid-teens growth. With Powerade, we leveraged relevant global football activations featuring new ambassadors, Barcelona's Jamal and Real Madrid's Rodrigo. We also executed many local activations to drive growth across summer sporting activities such as running events and in local gyms. We launched Powerade in Romania in the period and rolled out flavor innovations such as Mountain Blast Zero. Premium spirits volumes grew by 24%, with good growth across all three segments. I'm pleased that we saw growth from both Philandia Vodka and our brand distribution partners. In April, we launched a new marketing campaign for Philandia Vodka. While it's still early days, we've had a positive feedback from consumers and customers. We are also investing in our team and capabilities. with a refreshed Premium Spirits Academy for our salespeople, and we are building stronger marketing capabilities. We also launched Bacardi and Coca-Cola in 11 markets in the first half, with encouraging initial signs. One area of the business we don't talk about every quarter is our digital data and AI transformation and Coca-Cola HBC. These capabilities are truly an accelerator of business growth and transformation, and they are constantly evolving. Our investment is focused in three key areas to drive growth and transformation. Firstly, consumer and customer centricity. This is how we use data, digital tools, and AI to power our commercial capabilities, like revenue growth management and route to market. We continue to enhance our ability to drive personalized execution for every outlet with suggested orders, personalized marketing, and optimize promotions, to name just a few. Secondly, operational productivities within our enterprise. We've been investing ahead of the curve in this area for a number of years. For example, we've been live with SAP S4 HANA across 28 markets since 2021 and added Egypt last year. This gives us the latest capabilities from SAP, including real-time reporting, and is, we believe, a real competitive advantage. And across our supply chain, we are driving industry 4.0 transformation, which basically means leveraging automation, computer vision, and advanced analytics. Thirdly, transforming and digitizing the employee experience to drive collaboration, productivity, and foster a digital workplace. Let me touch for a moment on digital commerce. We've been investing and developing our digital commerce platforms to better serve the growing numbers of consumers and customers choosing to shop online. We broadly split these opportunities between route to customer and route to consumer. In our route to customer, Customer Portal is our largest B2B platform, which allows our customers to buy CCH products through our platform any time of the day. This platform is most relevant for our direct sales delivery customers, and we are live in 20 markets. We continue to see good growth in the number of active customers, orders, and revenue generated. We also have serviced our B2B marketplace for the Horeca channel, which is mostly relevant for indirect customers, as well as offering our own 24-7 beverage portfolio The platform also offers a range of products from our wholesale partners and a range of services. After piloting this in 2022 in Italy, we've seen a great increase in its share of orders. Service is now live in five markets, with Croatia having launched earlier this year and more markets coming. And in Nigeria, as you might have seen in the Bitesize event a few weeks ago, We have developed the WhatsApp chatbot, a tool made specifically for customers in Nigeria to effortlessly place orders directly via the platform. When it comes to route to consumer, we are partnering with e-retailers and food delivery platforms. This area of our business grew by 25% in the first half and is margin accretive. At Coca-Cola HVC, we believe sustainability is key. to our business growth. Let me share some of the highlights during the first half. We are pleased to be part of a co-developed sustainable link business plan announced by the Coca-Cola company and our valued customer CAFUR. This is the first time that the retailer and a manufacturer have formalized joint goals in sustainability with an aim to reduce packaging waste and cut carbon emissions. Our team in Romania will be one of the first markets to implement this. It is collaboration with our partners that can help us deliver our sustainability targets and drive value for our customers and consumers. Packaging circularity remains at the top of our agenda. Deposit Return Schemes, or DRS, are one way to ensure both high packaging collection rates and supply of feedstock for recycling. DRS went live in Austria in January this year with a promising start. In general, we are finding that the transitions to DRS are progressing in line with plans and customers and consumers are responding positively. For example, both Romania and Hungary have seen average return rates of around 80% this year. Achieving our decarbonization targets requires innovation. We started using biomethane a clean and renewable source of energy at our Knockmore Hill plant in Northern Ireland. This should contribute up to 25% of the energy at the plant by the end of 2025. Finally, it's great that we have retained our A-list position in CDP's 2024 Supplier Engagement Assessment and the highest score in the FTSE RASTEL ESG report of the soft drinks category. Let me now hand over to Anastasis. to take you through the financial results.

Thank you, Zoran, and good morning, everyone. In the first half, we delivered strong top line growth with organic sales up 9.9%, driven by both volumes and revenue per case expansion. We also drove organic EBIT growth and margin improvement, leading to strong comparable earnings per set growth of nearly 26%, which was also supported by better net finance costs. Finally, Free cash flow increased by 10% to 243 million euro, driven by the EBIT delivery, while also increasing capits. So let me start with a strong top-line performance. As already mentioned, the quality of our organic revenue growth of 9.9% remains high, with 2.6% volume growth, and with volumes accelerating in quarter two, and growing in all three segments. Organic revenue per case increased by 7.2%, a slowdown versus quarter one, but as expected. Overall, pricing remains the most important driver of revenue per case. Carryover pricing drove over half of this, largely due to the pricing in Nigeria and Egypt over the last 12 months, as we mitigated inflation and currency devaluation. In line with our plans, we saw this impact reduce in quarter two compared to quarter one. Category mix and package mix were also positive, with continued improvement in single-serve mix, which expanded by 120 basis points in the first half. Comparable EBIT grew 11.8% on an organic basis in the first half to 650 million euro. Our comparable EBIT margin increased 70 basis points on a reported basis to 11.6% and increased 20 basis points organically. Let me break down the drivers of this. We improved gross profit margins by 60 basis points with a strong recovery in the emerging segment, which benefited from pricing leverage, easing COGS pressure, and efficiency initiatives. Operating costs, excluding direct marketing expenses, improved by 50 basis points as a percent of revenue. You may recall that last year we faced headwinds in our operating expense line due to the foreign currency reimbursement of balance sheet items in Egypt. following the significant devaluation of the Egyptian pound. This gave us a cycling benefit this year, as expected, since we did not face additional currency headwinds. This improvement in OPEX was partially offset by an increase in direct marketing expenses. We invested in the Serre Coke and the New Finlandia marketing campaigns, as well as investments ahead of the upcoming Winter Olympics in Italy in February 2026. Let's now look at the drivers of performance by segment. I'm going to discuss these figures on an organic basis and for the first half of the year. In the established segment, revenue grew by 2.5%. Established markets volume was broadly in line with last year and with a return to growth in quarter two, partly held by a later Catholic Easter than in 2024. Sprouting volumes decreased low single digits, despite mid single digit growth in Coke Zero and high single digit growth in Sprite. Energy showed good momentum, with volumes growing mid-teens in the period. Stills grew low single digits, with sport drinks growing high single digits. On a country basis, it was good to see better volumes in Italy up low single digits in the first half. The return to growth in quarter two was supported by later Easter and better start to the summer season compared to the prior year. In Greece, volumes grew low single digits in half one. In the second quarter, we saw a slowdown in volume growth against the tough competitive and with less favorable weather resulting in a later start to the season. Established revenue per case was up 2.4%, driven by pricing, as well as positive packets and category mix. Established segment comparable EBIT declined 7.2% due to the accelerated marketing investments and operating expenses in the period. Turning to the development segment, revenues were up 6.4%. Volumes were flat, but returned to growth in quarter two, supported by later Catholic Easter. Sparkling volumes declined by low single digits, despite growth in Coke Zero, Fanta, and Sprite. Energy grew strongly on a soft comparative. Steels declined mid-single digits, driven by water, despite strong double-digit growth in sport drinks. In terms of country performance, Check was a standout performer, growing volumes high single digits despite a tough comparative. Poland declined, but saw an improvement in quarter two, as we expect a better second half. Developing revenue per case increased by 6.4%, driven by pricing actions taken to manage inflation, along with positive category and package mix. Comparable EBIT was down 0.6% year-on-year due to higher operating and marketing expense in the period, mainly due to the new Philandia marketing campaign. In the emerging segment, revenue grew by 17.4%, driven by both volume and good price mix. Emerging markets volume grew 4.1%. Sparkling volumes increased by mid-single digits, with mid-single digit growth in trademark coke, Sprite, and adult sparkling. Energy grew strongly, despite upcomparatives driven by affordable brands. still volumes grew low single digits with a very strong growth on a small basis for drinks. In terms of countries, the performance of both Nigeria and Egypt has been really impressive in the first half of the year, with volumes up mid-single digit and high single digit respectively. I'd also like to mention Ukraine, where volumes grew high single digit in what continues to be a tough market to operate in. Emerging segment revenue per case increased 12.7%, with a step down in quarter two relative to quarter one, as we started to see inflation come down in Nigeria and Egypt, which also had more stable currencies. In the first half overall, we benefited from pricing actions taken throughout the last 12 months to manage the impact of currency devaluation and cost inflation, as well as from positive category mix. Comparable EBIT grew 31.3%, a strong rebound due to organic growth, as well as citing the impact of foreign currency remeasurement in Egypt last year. Moving to the Group E&L, we saw comparable learnings per share grow 26% to €1.31. This was supported by the strong EBIT delivery and lower net finance costs than the previous year. The better finance costs were due to several factors. We delivered better cash flow than we expected in Nigeria and Egypt, meaning we had lower financing needs. As we've seen greater currency stability this year, which meant lower foreign exchange losses compared to the previous year. And we also benefited from higher finance income. This performance has allowed us to upgrade the finance cost guidance for the year. We also improved our FX translation guidance. The first half of year-on-year step up in CAPEX, in line with our plans, CAPEX was 5% of the revenues in the period, up 100 basis points compared to the same period last year, in line with the planned phasing. For the full year, we expect CAPEX to be within our guided range of 6.5% to 7.5% of revenue. We continue to generate strong fricasse flow of 243 million, 10% higher year-on-year, reflecting higher EBIT and improving working capital, partly offset by the higher CAPEX. Let me now hand back to Zoran to share more perspectives on the market environment and our expectations for the rest of the year. Thanks, Anastasi.

As Anastasi has laid out, we've delivered strong results at the group level in the first half of the year, building on what has been a good performance in the last few years as well. This performance has been achieved despite operating in a mixed market environment. We have seen and continue to see a range of trends across our diverse 29 markets, with some areas that have been more challenging and sensitive to the consumer environment. What we've learned across many years operating in a range of markets and conditions is that there is no one size fits all approach. We strike a careful balance to focus on what makes the local market unique, staying relevant and tailoring our approach while aligning with a group strategy. leveraging our global scale, tools, and capabilities, particularly with digital and data insights to drive personalized execution. In some of our emerging markets, in Africa particularly, we manage volatility proactively with rigorous scenario planning and empowered local teams. I'm particularly pleased that despite the external challenges, Nigeria and Egypt have both delivered strong volume growth and share gain in the period. and improvements in profitability. In some of our European markets, consumer sentiment has remained a bit softer, but in these markets, we remain agile in adopting our plans, investing more in marketing, and stepping up promotions and affordable offers. We expect these conditions to persist in the second half, and we will continue to take these steps to drive growth. we've demonstrated our ability to adapt to local market dynamics and consistently deliver at the group level, which is why we remain confident in achieving low single-digit volume growth in 2025 with all segments growing. Moving to the outlook for the year. As we progress into the second half, we do expect the broader macroeconomic and geopolitical environment to remain challenging with the consumer environment still a mixed picture across our market. Having said that, we have high confidence in our unique 24-7 portfolio, in our bespoke capabilities, in the growth opportunities across our diverse market, and in our people. Given our strong first-half performance, we now expect to deliver growth in organic revenue and organic EBIT at the top end of our guided ranges. To close, I'd like to finish on the three areas I highlighted at the start. First, the strong and high quality top line growth we've delivered in the first half of the year. Second, the strong EBIT performance and even better delivery of EPS. Third, our ongoing investment in our strategic priorities is allowing us to continue to win in the market and deliver real value to our customers. And before I close, I would like to sincerely thank all our colleagues, customers, suppliers, and partners for their ongoing efforts and support. Thank you for your attention. And with that, let us now open the call up to questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 1 and 1 again. We will now take the first question. This is from the line of Lawrence Wyatt from Barclays. Please go ahead.

Morning. Thanks very much for the questions around Anastasis. Thanks very much. First one for me on Finlandia. You've had that brand now for a couple of years. I'm just wondering how you're thinking about your portfolio of alcoholic products. Would you increase your number of spirits that you own? Would you expand into ready-to-drink products? Of course, you've got the... I'm with a Coke brand already, but using your vodka brands and you can imagine things like vodka tonics or Coke and tonics using the brands that you've got. And then also the non-alcoholic products that would be adjacent to that. With Costa, you could have something like an espresso martini non-alcoholic or non-alcoholic products using the Coke and brand that you own. Are these being considered and how do you think about that sort of merging of categories?

Good morning, Loren. Thanks for this question. First of all, we are very pleased with the addition of Finlandia into our portfolio from the angle of us being the owner. And let me just say that the fact that we are seeing very good and very strong growth now is the result of the fact that the whole transition and integration into Hellenic has gone very smoothly, very well. And as we highlighted last year, we took the time to develop marketing campaign, which started this year, and we are very pleased how it is progressing. And Finlandia proves its role as a fantastic mixer with our core portfolio of non-alcohol portfolio, driving clearly transactions. To remind you, on top of this, we have a range of high-quality premium brands in partnership with Brown Forman, Edrington, and Bacardi, and to some extent, Campari. So, very strong portfolio. And this is where we see ourselves primarily as the partner and distributor of these brands. as a reminder Finlandia was a unique opportunity and fit because 60% of its global volume is in our territories that's why it was a great strategic fit and we are now focused on working with that primarily and supporting and working with all other partners for their brand so that's That's where we stand now as our priority. In terms of the ready-to-drink things, this is where we partner with our, of course, key partner, Coca-Cola Company, and beyond Jack and Coke, now also with Bacardi Coca-Cola, which is performing, both of those are performing very well. And this is where we plan extensions as those might be coming in the future. Just to say on espresso martini, for example, we actually do that already in the channels of out of home where we are really leveraging portfolio, our coffee presence, So mixability is a great part of our strategic focus, how we drive transactions in the out-of-home channel. So we are actually doing those, whether they are alcoholic or non-alcoholic, as we call them, mocktails. So all of that is fully activated and used. And just to close to say that we really feel excited about the growth prospect that we have with this part of the portfolio and how it perfectly blends with our non-alcohol parts portfolio.

Super. Thank you very much. And as a follow-up, I'd just like to talk about the guidance in the second half of the year. Of course, you delivered EBIT growth ahead of your guidance range in the first half. And so just what's giving you the caution in the second half of the year not to sort of raise that top end of the guidance range? Are there any circumstances in which that could happen or what particularly are you concerned about? Thank you.

Hi, good morning, Lorenz, Anastasis. First of all, let me reiterate that we are very pleased with the strong performance in the first half of the year when we saw a delivery of 11.8% of organic EBIT growth. Now, actually, we have updated our guidance to the top end of what we have already provided of 7% to 11%. This, as you understand, assumes a slowdown in the seventh half of the year, but that's in line with the expectations of the phase we had for the year, and that's something we had already communicated at our earlier calls. I mean, if you recall, we were also cycling the currency devaluation, the re-measurement impact we had in Egypt in the first half of 2024. So, obviously, that's something that is reflected in the guidance. As you understand, we're in the middle of the peak trading season. We had ahead of us a big five months. And considering the external environment with a certain level of unpredictability, the economic movement, the geopolitical landscape, we believe that the current guidance captures very well what we see outside. We will continue to invest in the market, as we have done so far, and we feel strong about delivering another strong year.

That's really clear. Thank you very much.

Thank you. We will now take the next question. This is from Aaron Adamski from Goldman Sachs. Please go ahead.

Thank you. Good morning, Zoran, Anastasios, Jemima. Thanks for taking my questions. I have two. My first question is on the share buyback program. I believe you have not been executing on the remaining portion of the buyback program since September last year. Therefore, I was wondering what are your plans with respect to those funds and would you consider returning it to shareholders in a different way, perhaps a special dividend as you have done in the past?

Good morning, Adam. Let me take that one. Well, overall, we have progressed strongly with the share-buy-back program. We have repurchased about 226 million worth of shares since the start of the program, which is about 60% of the target of the program. Now, having said that, We always say that we have full discretion over the program, and we have been very disciplined on how we use our capital allocation priorities, particularly in times of volatility as we've seen going on over this year. So the program remains in place, and we are flexible on how we will execute it as we see through the end, adjusting the current market environment as we see appropriate.

Thank you. That's great. And then my second question is on the retailer landscape in Europe. I think in the release you highlighted your number one position when it comes to generating the FMCG revenue growth for retailers. So I was wondering if the recent increase in the number of retailer purchasing groups we've seen in Europe, if that concerns you in any way when it comes to next year's price negotiations or do you see yourself as being relatively more immune than other FMCG companies given the value you create for those retailers?

Hi, Aaron. Looking short, we've been dealing and partnering with such various retailer groups for a number of years. So they are not new to us. And we have a very strong capability within the house from our key account teams that is working on this. So I can say that as so far, we've been partnering very effectively, and we have always come to win-win agreements, creating evidently value. And in short, I believe this is going to be such case also for the future.

Thank you. Thank you. We'll now take the next question. This is from Nadine Sawat. Francine, please go ahead.

Yes, good morning, everybody. Two questions for me. First, comparable EBIT margin was, I think, quite weak versus expectations in the established and developed markets. I know you called out higher marketing and operating expenses as a driver, both in the release and your prepared remarks. But could you unpack that a little bit further? And, you know, crucially, how are you expecting those line items to play out in the second year? And then maybe as a follow-up in established markets, I know you commented on what you're seeing in Q2 versus Q1 and improvements there for the top line. Are you able to comment on any exit rates in Q2 and perhaps what you're seeing in July? Thank you.

Hi, Nadine. Let me start, and then Zoran will take the second part of the question on the trading. So let me give a bigger view of the segment movement, and particularly on the established, as you referred to, right? So we have, as we said earlier on the call, that we had a step-up on our investments across the group with the SEDECO campaign and the New Finlandia marketing campaign launched. So specifically in the established, the performance was broadly in line with expectations, but the, and especially when it comes to the gross margins, but they stepped up on investments with a campaign. as well as some particular market activities like the Fanta 70 years anniversary in Italy, or the Winter Olympics step up on the investments I had in preparation of the Winter Olympics in Milano, which had even 40 base points on the margin as an effect, are some of the key drivers. In addition, I would like to call out that we had increased investments when it comes to our field force in the out-of-home channel, in markets like Greece, cycling the incremental field force that we see in the second half of 2024. I think on the second point on the developing markets, the performance was in line with the expectation. And again, the incremental investment in marketing was the key driver. Here, in addition to the Sereco campaign, the other big driver has been the New Finlandia marketing campaign. when it's a relaunch of the whole brand out on a global basis, and considering the fact that in the developing segment is where we have the biggest turnover in business in Finlandia, in Poland in particular, you see a bigger weight out of these marketing allocation expense being driven there. On top of that, operating expenses similarly, as I said before, on established was on the upper end in line with our expectations. Now, If we look into the second half of the year, we do expect that both segments will continue to improve profitability and they will be adding to the overall organic unit growth as I guided earlier.

Yeah, and Nadim, related to Q2 and your question, first of all, we are very pleased that established performed positively in Q2, bearing in mind that it was cycling solid Q2 of last year. And I would particularly highlight very good performance of Italy, which had a very nice Q2, bringing Italy to be at the end of first half on a positive note, exactly as we were anticipating and planning. so in that regard also you know you see Ireland performing quite well Greece staying positive for the first half yes we also have some markets like Austria and Switzerland where we did see some more consumer price sensitivity and softness however all in all we are positive that established for the full year will be positive in the second half. And we remain very much focused on the execution. We are in the middle of the season, so if you will, the game is on. And I just reiterate that all three segments we anticipate to be positive. To land overall with a low single-digit volume positive performance for the full year, as we said from the beginning of the year.

Perfect. Thank you very much.

Thank you. Next question is from Edward Mundy from Jefferies. Please go ahead.

Morning, Dawn. Morning, Anastasis. So my first question is around your comments in the release around stepping up promo activity to drive volume growth. And I know that this is part of your normal playbook to balance affordability with premiumization, but perhaps a few comments on sort of what you're seeing with regard to external environment. Are you seeing it deteriorating, or is this just the standard practice that you carry out to drive volume growth?

Hi, Ed. Let me start saying it. I would rather see that as a quite standard practice and promo is one of the excellent tools to drive value together with customers. And this is part of that agile approach that we talk about and quickly, swiftly adopting as the circumstances in the countries evolve. I just mentioned... good performance in Italy, for example, where we have seen some more positive recovery. And you might remember how I said already in the last two, three calls, how we have been rewiring the algorithm in Italy where to support more of the volume performance because we were also adjusting the promo investments as part of the overall RGM. And similar is being done, as we speak, in other markets. And those are not necessarily only price promotions. We equally focus on value-added promotions, leveraging on a number of excellent assets that we have in our hands. One of those is already Olympics, where we have our winning ticket promotions. So it's a variety of things. So just for the sake of saying it clearly that when we say promotions, that we don't only think price promotion. And promotions are also helping us to drive mix. You've seen that our mix, again, has been quite positive. In established, every single country has, for example, a positive mix. And with promotions, we are driving transactions. So just a little bit longer answer, but basically to say that that's where we are and what we are planning for is in the frame of a standard approach.

Understood. Thanks for clearing that up, Zoran. And Anastasios, just on the finance charges, which are coming in slightly lighter than we've seen in the past, and I think you highlighted the cash flow in Nigeria, Egypt, greater currency stability. perhaps a bit more finance income from certain markets. But is this the right level of finance costs going forward, assuming currencies stay where they are, there's no big M&A, there's no special divvy or incremental buyback? Based on what we're seeing today, is this the right level of interest that we should be modelling going forward?

Yes. I mean, look, for... As you rightfully highlighted, yes. I mean, the first half of the year we benefited from the environment, especially in Nigeria and Egypt, normalizing, less currency volatility, good cash generation, better than expected in this case, or less need for capital, and better income from finance, right? Now, for the second half of the year, and this is on the back of this performance, we have updated our guidance to 15 to 25 million, right? Now, on the second half of the year, that would imply that there is a step up, and that's because we, considering that, we see that it's a mix of environment out in the markets. And also, including the dynamics from Russia, as well as the cost we have, we believe that this range is capturing for this year the needs on finance costs. Now, if you're implying about a longer term, like 26 onwards, what I can say, even if we don't provide guidance at this stage of the year, what we can say is that directionally, we would expect finance costs to normalize at a higher level in 2026 and 2025, but probably not as high as we had in 2024, given the current situation of the available cash, the income from this case, and the stability we see in the particular markets.

Great. Very helpful. Thank you.

Thank you. Next question is from Sanjit Aljula from UBS. Please go ahead.

Yeah, hi, morning, Zoran, Anastasia, Jemima, a couple from me as well, please. Firstly, Zoran, can you just talk to what you're seeing in establishing and developing between away from home and the home channel performance, please? In particular, I'm curious to get a sense of to what extent the investments you're putting in OPEX is already paying back in the away from home in particular. And my follow-up question is just on the cash pile that's building up in Russia. I think that's got up to over 700 million euros now, Anastasis. Is there any update on your ability to be able to extract that cash or upstream that cash out of Russia? What needs to change for that to happen? Thank you.

Hi, Sanjit. On established and developing, first to highlight that both of those in Q2 had a very good progress versus Q1. And as from intro remarks, you've seen that we really have a number of markets performing well, while also having few where we see watchouts and for those we've been adjusting quickly plans but overall I'm very positive that both in developing and established we will have a positive volume performance in the second half and good to see that overall for us as the whole company we had growth coming from both away from home and at home. And I'm very happy that out of home has been positive across all three segments. Same goes for at home, with the only exception in developing for Poland, and that's for this particular specific situation of a key competitor re-entry. into the largest customer in Poland, which we know that is going to have just a short-term impact. We are not concerned about that. We anticipated that. And just to highlight that when you take out and exclude this event and situation in the rest of the Poland market, we are gaining share both in NARTD as well as in SparkLink.

Good morning, Sancit. No, nothing has changed to what we previously communicated in relation to the cash positions in Russia, apart from the amount, as you said. So, as per the current requirements and legal obligations, we're not able to currently have streamed dividends out of Russia. Now, let me remind that the cash there is covering the operational needs of the business, which is being fully self-sustained, and there's no cash injections coming from the group to Russia. And I would really like to stress out that our balance sheet remains strong, and the cash position in Russia does not limit our ability to pay dividends or invest in the group or any general execution of capital allocation strategy.

Thank you.

Thank you. Next question is from Charlie Higgs from Redburn Atlantic. Please go ahead.

Yeah, good morning. So I'm Anastasios. Hope you're both well. My first question is on energy drinks, where I think volumes accelerated in Q2 and Q3. You've got some pretty exciting launches coming. So could you maybe just talk a bit more about the energy drinks performance in Q2, maybe split between Monster and then Predator, Fury and some of the emerging markets? Where were you seeing particular strength? And should we expect that to continue in H2? That's my first question.

Hi Charlie, hope you are well as well.

So energy, as expected, has performed very strong. I highlighted in the intro remarks several, again, very good innovations that we had in our portfolio of activities, and that really worked very well. Then, very excited with the fact that we already started launching the London Norris new flavor, and initial reactions are excellent, as one would assume. Great thing is that all the brands are performing very well. in their own segment, delivering on their own, you know, purpose and positioning. Very happy that Fury and Predator in Africa are really kicking extremely well, but also Monster overall, leveraging excellent assets that those brands are bringing that we are activating through the promotions. but also emphasizing that there is a lot on the experiential part, the way the brands are activated throughout the countries. And this is what the target consumers really want. So I think that the overall performance of energy just is a testament to strong plans, multi-brand strategy, which allows us to play across all segments, leveraging of strong assets, and coupling it with a very disciplined, focused execution in the market, fueled also by continuously increasing number of cold-rig equipment, which is important for this category as well. So, all in all, we continue to be very positive and confident about the performance of energy, which, just as a reminder, nine years in a row, we've been delivering at a very strong double-digit growth And this year will be no exception. And we remain positive that also in the years to come, energy will be more than average contributor to our overall growth algorithm.

Thanks, Owen. And then my second question for Anastas is on COGS per unit case inflation, 4.8% in H1. Are we able to maybe provide a bit more colour on commodity inflation within that and transactional effects and then how you see COG's PUnit case trending for the rest of the year and some early thoughts perhaps on 2026 given current hedging? Thank you.

Yeah, good morning, Charlie. Okay, for the first half of the year, we benefited from lower sugar costs versus prior year. Aluminium and PET remained inflationary. We also faced certain higher cogs when it comes to Finnish goods, like the energy premium spirits being part of the portfolio in the mixed effect, and also certain levels from impacts on taxation, like the sugar tax in Slovakia. Now, this year, you're right, we did not benefit from translational effects impact as much as we had last year. I remind you that last year, for example, the Cox-Per-Case would have been double-digit, around 10% if it weren't for the current devaluation idea in Egypt, right? So, this year, we don't have this type of volatility. So, we expect for the remaining of the year and the full 2025 to keep the Cox-Per-Case in low to mid-single-digit. Now, Where we see the commodities, as I said, we've seen some moderation when it comes to sugar and oil, but aluminum and secondary packaging materials remain relatively elevated. But to this point, I want to highlight that we have a very strong hedging coverage against our key commodities. We are above 85% covered, with most coverage in sugar and aluminum above 90%. which pretty much means that regardless of any possible movements on the year to go, we wouldn't see any significant impact on the cost, whether it's on the positive or negative side, even if we're looking for any improvements. To your question for 2026, it's a bit too early to comment on how we can guide on the cost for next year, but I can say that we already stepped up on our heads in coverage. I can say that we are significantly better covered at this stage of the year compared to the same period last year, but we'll provide more guidance on 26 at a later call.

Perfect. Thanks, Anastasios.

Thank you. Next question is from Matthew Ford, BNP Paribas. Please go ahead.

Morning. Well, thanks for the question. I've actually just got one question. It's on the volume performance in Nigeria and Egypt, clearly very strong, as you alluded to. Can I just get your thoughts around the kind of H2 progression on volumes? I think, you know, looking at the comp base for markets like Nigeria, I think, you know, we're about to start cycling some easier comps, mainly in Q4. But, yeah, any sense of, you know, what you're expecting? Would you expect a kind of underlying trend? in H2 in both these markets versus what we saw in Q2, and then just your overall take on the volume outlook going into 26 in these markets. Thank you.

Hi, Matt. Look, we've seen in both of those markets, Nigeria and Egypt, more stable environment over the last year. six or even more months, and that is one of the also, you know, reasons that such environment and backdrop create better environment for us to perform and to demonstrate all the strong plans that we have in both of those countries, which is reflected in the very strong revenue growth delivered by also positive volume growth. in parallel with very strong price fix for the obvious reasons. But also, I really want to highlight that in both of those markets, we have a very good and strong and consistent share gain, both in NARTD and Sparkling. So expectation is that in both of those markets, we'll have a positive volume in the second half of the year. both of those markets are robust growth markets with a very strong potential. And that's how we are thinking about both of those for the years to come. And we have a very strong plan for the rest of the year. I already mentioned Q4 with Nigeria share a Coke, which I'm very confident that this is going to be very strong driver and that is going to have a very strong appeal for the consumers there. So in short, very excited and confident for both of the market for the rest of the year and for the years ahead.

Great. Thank you.

Thank you. Next question is from Simon Hales from Citi. Please go ahead.

Thank you. Morning, everyone. Thanks for taking the questions. Zoran, I wonder if I could just come back to trading as we've started into Q3 again. I wonder if you could just provide a little bit more colour, perhaps, what you've seen as you've come out of July. I think the weather has clearly been okay across maybe your established markets, but maybe a bit more mixed still. in some of your developing market footprint, just interested in what you've seen specifically Q3 to date. And with regards to the developing markets, and particularly Poland, what's really giving you the confidence of that acceleration in H2 volumes in that key market? That's my first question. I'll come back on the second.

Hi, Simon. So first of all, you said about the trading and then Q3. I can say that Q3 started in line with our expectations with what we really say is a dynamic environment, which I truly mean that because what I said earlier, you see that in some of the markets, there is more positive development. In some markets, there is something slow. But overall, it started in line with our expectations and within the guidance that we have provided. uh which where we felt confident to say that you know we see ourselves really being at the top end of what we guided for so far to be fair for the weather which of course we don't control however we fully control what we do in the circumstances that that we have overall we can say that the weather was varied and say in general for the majority of our countries we saw less good weather year on year uh q2 was similar you know may was not easy for in many markets then june was quite better uh and then we've seen the very varied picture the uh in uh in july but look this we also don't take as a as a surprise we know that weather patterns have been evolving over the years so this is also part of our contingency planning and so we are ready for all kinds of eventualities and so in short overall in line with expectations and fully focused on our relentless execution in every country

Got it. Thanks for that, Zoran. And then just my second question was just coming back to the Russian cash pile that Sanjeev referenced. You know, I think there's a 50% increase in that Russian cash to $730 million from where we were at the end of December. That's quite a big move in the first half. I think you talked about Russian volumes in the market being at mid-single digits in the first half of the year. What's driving that massive step up in cash flow?

Yeah, well, hi, Simon. Yeah, there is also a certain element of phasing compared to the same period last year, right? So it was also a different phasing and also the currency has an impact on the room translation. But what I can say is that if we were to look at the emerging segment performance on an organic basis, if you exclude Russia, it will be even faster than what you see today on the segment.

So

Okay, got it. Thanks, Anastasis.

Thank you. We will now take the last question, and this is from Philip Spain from J.P. Morgan. Please go ahead.

Hi, good morning. Thanks for taking my questions. My first one was just on sparkling volume. So they were in decline, I think less than a glitch decline, both in the established and developed segments in the first half. And I just want to understand, firstly, was this driven mainly by trademark Coke? And if it was, what do you think you need to do to drive trademark Coke back into growth in these segments? I'm thinking particularly given this came at the time when you were doing the share of Coke campaign from the second quarter as well. Thank you.

Yeah, hi, Philip. Yeah, so listen, on the overall trademark Coke, we do see that very strong performance of Coke Zero. Really love to see ramping up also and stronger and wider performance of Coca-Cola Zero Sugar Zero Caffeine. On the original, yes, this is where we have seen a slight decline, but we are confident that with the ShareCo campaign, which only de facto started in Q2 and goes through the summer, even in several selected markets, we have extension of that campaign amplified with some local specificities and also with a strong plan that we have for the rest of the year. That's part of the uh that's part of the whole plan which i would rather say that it's quite intense uh intense plan that we have for the coke the minor that uh in developing um uh because of that specificity of the key competitor entering in the largest customer this is where i would see just a short term uh short-term impact but overall uh i uh no doubt about expectation for cola trademark to perform and deliver based on the very strong calendar that we have for the year to go and also shaping up plans for the next year.

Thanks very much. And then my follow-up was just on, you spoke earlier on the call in the press release about the very strong single-serve mix you'll be seeing. I wondered if you could just give us a bit more colour on what drove that in the first half, be it cooler rollout or things you're doing by channel as well. That'd be really helpful. Thank you.

Yeah. Look, single-serve is for us, as we always say in the RGM, apart from price and volume, mix is a very important element. And we've been consistently for now many years focusing on driving single-serve mix to constantly strengthen the quality of the revenue we generate. That is supported by, you are right, coolers. then types of promotions that we are doing. I just mentioned single serves, sorry, share a Coke campaign, which is done both on multi-serve, but even more is amplified in the single serve part of our portfolio. Then you have also our intentional drive with the multi-packs of single serves in the at-home channel, So where we are creating the habit of single-serve in-home consumption, which also is showing good results. So I mentioned at the beginning of the call mixability programs, which are also supporting the single-serve. We have constant focus on our glass bottles across the market. So there is a whole suite of things. that are serving the need of driving growth with single serves.

Great. Thank you very much. Thank you.

We have no further questions at this time, so I will now hand back to Zoran for closing remarks. Thank you.

Thank you, operator. And I'd like to thank everyone for taking part in today's call. Let me just very briefly conclude that we are very pleased with our performance year to date and we feel very well positioned to continue delivering in 2025 and beyond. Thank you very much and goodbye.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.