Coca-Cola Europacific Partners plc

Hello and thank you for standing by and welcome to today's Coca-Cola Euro Pacific Partners Q1 2026 trading update conference call. At this time all participants are in a listen only mode. After the speaker's remarks there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone. Must advise you this conference is being recorded today. I would now like to hand the conference over to Vice President of Investor Relations and Corporate Strategy, Sarah Willett. Please go ahead, Sarah.

Thank you. Thank you all for joining us today. I'm here with Damien Gamble, our CEO, and our CFO, Ed Walker. Before I hand over to Damien, a reminder of our cautionary statement. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in today'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. Prepared remarks will be made by Damien. We will then turn the call over to your questions. Unless otherwise stated, metrics presented today will be on a comparable and effects neutral basis throughout. Volume movements, unless otherwise stated, adjust for the impact of six more consumption days in this quarter when compared to the same period last year. Following the call, 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 for joining us today. Firstly, I would really like to thank all of our colleagues for their continued hard work and dedication to this great business, which next month celebrates its 10th birthday. It's been a good start to the year with CCEP continuing to lead the way in FMCG in creating value for our customers across our markets and in innovative and growing categories where we are gaining share. While Q1 is typically our smallest quarter, we have delivered broadly in line with expectations and today we are reaffirming our guidance for the full year 2026. Top line growth in the quarter has seen revenue continuing to benefit from the positive mixed drivers we saw last year, Driven by areas such as more coolers and the growth in Monster, we also delivered solid, comparable volume growth beyond the benefit of a slightly earlier Easter. The category remains really attractive for our consumers and customers, and it remains as competitive as ever. Price relevance across all occasions remains key, with value continuing to play a role for shoppers in our developed markets. And in our emerging markets, we continue to focus on entry-level affordability to build a category for the long term. So as we did last year, we continue to build our total beverage offering, leveraging our diverse brand and pack range and our capabilities in revenue and margin growth management. This, of course, goes beyond pricing as we continue to balance premiumization with affordability. We know that value is playing a role for a lot of consumers, but we also know they love innovation and they love excitement. As a category leader, we take the role of bringing this to the consumer, more taste innovation with new flavors, more pack innovation, and more promotional innovation, increasingly leveraging AI, which I will come on to next, with more win mechanics and more value add. All of this has supported positive share gains in Europe. This has been driven by strong growth in zeros, in colas, flavors, sports, and in energy. We've also seen a sequential volume improvement in APS, supported by share gains in Australia, more normalized volumes in the Philippines, and continued encouraging signs in Indonesia. Volumes in Europe grew by 1.4% on a comparable basis, primarily driven by growth in Germany and GB, particularly in the home channel, where we typically see more Easter-related spending and typically in larger future consumption packs. This was reflected in our revenue per unit case growth alongside those positive mixed benefits I mentioned just now, which I'm really, really pleased with. We grew APS volumes by 1.9% on a comparable basis, driven by the Philippines, double-digit growth in the Pacific Islands and PNG, and further improvement in Indonesia, driven by sparkling supported by a solid Ramadan festive period. Our revenue per case reflected a headwind from the Suntory alcohol exit which had just over 3% impact on APS revenues and 1% at a group level. Fantastic in-market execution has supported a strong start for new innovations across our markets, which in Q1 have been largely focused around the Coca-Cola trademark. As I said before, bolder moves on Coke are the name of the game, and we are seeing the benefits. Strong distribution of the nostalgic Coke, Cherry, Float, and GB is supporting the rollout of Cherry more broadly, with the excellent Devil Wears Prada movie sequel campaign supporting recent improvements in Diet Coke. We've seen a great start for the new Coke 500ml Super Can, or Super Fan Can as it's known in GB. We're also relaunching Zero Caffeine, now in much more eye-catching black and gold packaging, supported by a partnership with the newly released 007 First Light video game. In ARTD, we've added to our growing alcohol portfolio with the additions of Bacardi Spice with Coke and the recent launch of Absolute Vodka and Sprite Pineapple. Monster more broadly has continued to motor from where it left off last year, with volumes up by 20% or more. In many of our largest markets supported by new launches and the strong growth of core variants like Ultra White. There have been multiple Monster launches during the quarter, including Rehab, a lineup of tea-based stills, and the latest juice variant, Viking Berry. This variant has been the strongest energy release to date in, for example, GB, our largest energy market, where it's already outperformed last year's launches of both Rio Punch and Lando. Q1 saw further progress in away-from-home, with some great customer wins in QSOAR. These include the American team fast growing Chili's casual dining chain in the Philippines and the largest holiday park operator in GB, Park Team, boasting 66 sites and attracting 3 million visitors annually. We've also made great progress around placing even more coolers with a particular focus on convenience of food to go outlets, supporting immediate consumption. For as you know, what is cold is sold. So far this year, we've already added around 40,000 more Coke and Monster coolers with more to come. For example, we'll be adding up to 1,000 in co-op convenience stores, a great win for our GB team. Now, looking out to the rest of the year, much of our planned pricing is now in market. We have solid commercial programs in place with plenty more innovation and excitement to come. For example, in flavors, new Sprite Chill Zero will soon be available across our markets, together with the latest burst of the Fanta Wanted campaign with the new Gen Z-focused gaming tie-up with Xbox. We've more fused tea flavors to come in Europe, an expansion of Lyft in the Philippines, and more in energy across the Monza portfolio. And of course, as an avid football fan, June sees the start of the FIFA World Cup, which we'll see is front and center with colorful, exciting in-store activations and consumer promotions, particularly around Coke and Powerade. So all in all, lots to look forward to, to excite both our customers and consumers. More broadly, the macroeconomic environment is increasingly uncertain, particularly given the situation in the Middle East. We are resilient and have a robust operating model, so while input prices have been affected, we are able to manage the impact. Our highly hedged commodities position, now at around 85%, ongoing efficiency programs and control of discretionary spend gives us good visibility on costs for the year. Our planning has been based on a temporary market disruption, and whilst we aren't currently seeing any material impact on consumers, we're monitoring the situation closely and will adapt our plans accordingly should things change. We're continuing to invest in our business, in coolers, as I mentioned, in our supply chain, and our new mega plant outside Manila is on track to begin production at the start of 2027, and also in our digital capabilities. As an example, we've recently launched Kira, a newly developed natural language chat interface for our insights team, helping them analyze complex and diverse data to drive deeper understanding of our brands, markets, and power swifter decision-making as a result. As I mentioned earlier, we have reiterated our guidance for the full year. As a reminder, that is for between 3% and 4% revenue growth around 7% operating profit, and comparable free cash flow of at least 1.7 billion, which will be half too weighted as usual. Today's dividend declaration and our continuing share buyback program demonstrate the strength of our business and our ability to deliver continued shareholder value. So just before we take your questions, a reminder of our sustainability webinar on Thursday, which will provide details and progress on our business forward targets which we've now updated to include the Philippines. So again, thank you for your time today. Ed and I will now be very happy to take your questions and I hand the call back over to you operator.