Coca-Cola Europacific Partners plc

Good afternoon. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Coca-Cola European partners first half 2020 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. if you would like to withdraw your question please press the pound key we ask at question time if you would limit yourself to one question that would be great in order to allow everyone to get their questions in I would now like to turn the call over to Sarah Willett VP investor relations you may begin your conference thank you and good afternoon in Europe or good morning in the US thank you all for joining us today

I'm here with Damian Gammell our CEO and Nick Gianghiani our CFO. Before we begin with our opening remarks on our first half earnings and COVID-19 update I would like to remind you of our cautionary statement. This call will contain forward-looking management comments and other comments and statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in this morning's release as well as the detailed cautionary statements found in reports filed with the UK US, Dutch and Spanish authorities a copy of this information is available on our website at www.cocacolaep.com today's prepared remarks will be made by Damian Nick and accompanied by a slide deck followed prepared remarks we will turn the call over to your questions and following the webcast a full transcript will be made available as soon as possible on our website I will now turn the call over to our CEO Damian

Thank you Sarah and many thanks again to everyone joining us today. Clearly we all continue to live and operate in unprecedented and uncertain times. So firstly I would like to extend our sincere gratitude and thanks to everyone who has been and continues to keep us safe and well. Thank you. We have a strong franchise with solid fundamentals, a solid business built upon great people, great service and great beverages. We entered 2020 with good momentum. Then the pandemic hit our markets and our communities. Our response was rapid and we have demonstrated our agility and resilience over these past months. We have and will continue to prioritize the well-being of our people, serving our great customers, supporting our communities and taking action to protect our performance and Conserve Cash as you will have seen in our results today. We do believe the most impacted quarter is now behind us. However, we face uncertainty. The full extent of the pandemic is unpredictable and its impact on all businesses continues. Many of our customers continue to operate at reduced capacity and some outlets remain closed and on-the-go consumption in particular remains under pressure. With all this in mind, we are very focused on driving a strong recovery in the second half of the year. We are confident about the future of our business and this future will continue to be supported by an enhanced digital and sustainability strategy. You will have seen this slide before, but we do come from a position of strength. CCEP has achieved a lot since the merger and we delivered on our commitments. We continue to operate in an attractive and very valuable category. We do enjoy scale and a market leading position across our markets, including the more and more important online segment. And critically, we also have a fantastic portfolio of brands and products and packaging that are loved by our consumers and customers across Europe. We are creating a lot of value for those customers and delivering great service. We've worked to build a very solid balance sheet. We do generate a lot of cash and we have solid access when needed to liquidity. And we continue to be more aligned than ever with our largest franchise partner, the Coca-Cola Company. Our focus remains to doing all of this as sustainably as possible. And I'm very privileged to be working with 23,000 committed, talented, and very engaged colleagues at CCEP. Now to our response to the pandemic. It was rapid, as I said earlier, and I'm very proud of how all our colleagues and our partners have shown extraordinary ability to adapt and stepping up to the task in very challenging times. We detailed the key measures we took at our Q1 trading update. So today, briefly by way of a recap and update. First, to safeguarding our people, which, as I mentioned, remains a number one priority. We implemented comprehensive measures in line with guidance. Large scale home working now almost feels like the new norm, supported by enhanced digital support with specific measures for our colleagues at sites or in the field. We also continue to provide emotional and mental well-being support alongside a very comprehensive communication strategy. We ensured the continuity of supply of our products throughout the pandemic with the brands people wanted to buy, shifting production as necessary across our site and by prioritizing core SKUs. With our communities, we continue to work closely with the Coca-Cola company, providing substantial financial aid to the Red Cross and other local NGOs. We have so far donated over 650,000 unit cases of products in the countries where we operate. as well as giving access to our logistics and transportation resources for relief work. And we took the right actions to protect our business for the long term. We increased the cadence of leadership reviews with our teams, our board and the Coca-Cola company whilst also learning from other bottlers across the Coca-Cola system. We have been and continue to be extremely disciplined from a cost perspective on CapEx as well as our cost of goods and OpEx to ensure all spend is relevant and essential. And finally, from a broader perspective, you'll remember that we formally withdrew our full year 2020 guidance in March. We suspended our share buyback program. We bolstered our liquidity through the debt markets. And once the board fully continues to recognize the importance of cash returns to shareholders, the decision has been taken to defer consideration of a full year 2020 dividend until quarter three. So all in all, a very rapid and solid response to the pandemic. So now let's look at our first half performance. I am particularly pleased that we've continued to take value market share in the first half, according to Nielsen, both in-store and online. We've seen behavioral shifts in society in recent months, and people are now living, shopping and working very differently, including a significant increase in demand for online grocery. We were strong in this space pre-crisis, and this is serving us well today. Overall, our online grocery revenue grew 35% in the first half, resulting in value share gains of 150 basis points. And as lockdown restrictions have limited away from home socializing, we've continued to see strong growth in online food delivery to portals such as Uber Eats and Takeaway.com, with revenue growth of around 30% in the first half. but importantly our digital momentum goes much further than just online grocery. We've also been accelerating our B2B platforms to make it even easier for our customers and wholesalers to do business with us. We have a winning portal with myccep.com now available in all our markets with functionality that continues to improve and encourage higher customer reach. We currently have around 30,000 customers using the platform A 300% increase since the end of last year, and this number continues to grow, despite most of our away-from-home challenge customers being closed for much of the second quarter. We have a great portfolio of brands. Coca-Cola Zero Sugar was the number one NA-RTD brand for absolute value growth during the first half, a fantastic achievement given the backlog. The energy category has also been resilient, led by Monster, which saw volume and revenue growth of 7% and 8% respectively, supported by new flavors such as Pacific Punch and a broader multi-pack offering in markets such as GB. As I mentioned earlier, one of our key priorities has been to protect our P&L. We remain on track to deliver between 200 and 250 million euros in full year discretionary OPEC savings. And Nick will talk more about that later. and finally, as sustainability remains a key priority for our business, we've continued to make further progress in the first half, which I will now come to. Our integrated sustainability action plan is now importantly underpinned by carbon reduction targets being incorporated into our long-term incentive plans. This makes CCEP a very early adopter in this space. We will do more to reduce our carbon footprint, improve our packaging, and support new packaging solutions and continue to use less water. You will see here a few examples of some of the progress we are making on our sustainability objectives. I am especially proud that Sweden recently became our first 100% recycled PET market and the first in the Coca-Cola system. We also recently signed the recover better business statement A call to action for business leaders and governments globally to prioritize science-based climate action in their COVID-19 recovery efforts. We wholeheartedly support this agenda. And for us, the pandemic has strengthened our determination to go further and faster in building a better and greener future for our business. Details of which we will continue to share with you in due course. I would now like to hand over to Nick to talk in more detail to the financials. Thank you, Nick.