Coca-Cola Europacific Partners plc

Hello and thank you for standing by and welcome to today's Coca-Cola Europacific Partners Q3 2026 Trading Update Conference Call. I must advise you this conference call 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.

Yes, hi everybody. I'm here with Damian Gammell, our CEO, and our CFO, Ed Walker. First, a reminder of our cautionary statements. 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 the reports filed in the UK, US, Dutch, and Spanish authorities. Copy of this information is available on our website at www.cocacolaep.com. Prepared remarks will be made by Damian. We will then turn the call over to your questions. Unless otherwise stated, metrics presented today will be on a comparable and FX neutral basis throughout. Volume movements for the year to date adjust for the impact of six more consumption days during Q1 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 to everyone joining us today. Before looking at our Q3 in more detail, I did want to take a moment just to reflect on our year to date. Our performance to date has been strong with balanced revenue delivery supported by good volume growth and solid revenue per case. The breadth and quality of that delivery is particularly pleasing, with growth in both Europe and APS, in both home and away from home, and with their strongest brand performances aligned to where we see the consumer continuing to move. At a macro level, while the cost environment remains inflationary, we have acted early and decisively through hedging, productivity, discretionary cost control, and disciplined pricing as you'd expect. That gives us the flexibility to absorb incremental pressure while continuing to invest behind growth for the future. So although we have seen an increase in the cost of doing business, particularly during H2, we remain firmly on track with no change to our full year guidance. The strength of our performance and consistent delivery of our midterm objectives is grounded in the execution of our focus strategy, which revolves around our core strategic priorities. We are broadening our total beverage portfolio, investing behind faster growing categories like zeros, hydration and energy, driving innovation across both established and emerging brands. We bring those brands to life in market with great execution through eye-catching shelf presentation, many points of interruption, more coolers than ever before, or major activations like the recent FIFA World Cup or Australian Rugby League Finals. This enabled us to continue to differentiate ourselves in the marketplace. The enhancements we are making in revenue and margin growth management, investment in commercial capabilities and productivity improvements ensure we will remain competitive. We are creating long-term and scalable opportunities to accelerate growth through our investments in the Philippines and Indonesia, and the development of tech and AI is helping us to generate new growth opportunities across our business Improving decision making and increasing our manufacturing efficiency. Now to touch on NARTD. The category continues to grow in both volume and value and we remain the number one retail value creator for our customers across all our major markets. We've grown value share in Europe this year and we're also seeing encouraging volume share gains in GB, Sparkling led by Lycolas. We also continue to gain traction and away from home with some great customer wins, including over 300 new points of sale with SSP, the second largest operator in train stations and airports in France, Domino's in Australia, and the transition to Marriott International representing over 600 hotels in our markets is now well underway. The shape of the NARTD category is developing as consumer preferences evolve. with growing demand for zero sugar, functional beverages that serve a specific need, whether that is energy and caffeine, hydration and replenishment, or protein. Our portfolio is well-placed to capture these trends with innovation playing a key role in our growth this year with many more exciting developments to come as we look into next year and beyond. With the Coca-Cola Company and Monster, we continue to have access to a great pipeline of global innovation. Now turning specifically to our Q3, Revenue grew 5.8% on an FX neutral basis with volumes of 3.6%. Revenue growth was well balanced with the increase in volume complemented by improved revenue per unit case reflecting promotional optimization, positive brand and pack mix, and headline pricing. While some consumers remain value conscious, we've not seen a material increase in that as a driver of shopping behavior. As ever, We remain focused on balancing affordability and premiumization across our broad PAC offering to drive sustainable, profitable growth. Our R and MGM capabilities play a vital role in this context, enabling us to make increasingly segmented choices by market, customer, brand and PAC, meaning we remain relevant on price and value while supporting mix, creating value for our customers and driving unique and fun experiences in store for our consumers. They continue to respond to innovation, exciting activations, and great execution, all of which are reflected in our strong volumes, which also benefited from favorable weather through the quarter in Europe. We have seen strong brand performances across our portfolio. Coke trademark volumes grew by 2% in the quarter, driven by Coke Zero Sugar, up 10% this year, and the improvement we've seen in Diet Coke, up 5% this year in GB, its major market. Performance also reflects the success of Coke Zero Caffeine and the growing appeal of our 500ml supercans which are driving incremental volume, particularly with younger consumers. So that format has now been extended to include Coke Cherry, Dr Pepper, Fanta and Sprite. Sprite continued its strong performance with growth in Europe supported by Sprite Zero Chill and in APS by the success of Nickley's Mint in Indonesia, with Sprite packaging across our markets now reflecting the great exciting global tie-up with the NBA. Our sports portfolio has delivered double-digit volume growth across Powerade, Aquarius and Body Armor, building on and beyond the World Cup. New pack formats and Powerade flavors are supporting performance including a new Cherry variant in GB and a new Sars range in Australia. This is designed to recruit the next generation of drinkers by making the brand more relevant and exciting. There has been no let up in the growth of energy, up 17% in the quarter, with Monster grown by more than 20% in many of our key markets. This has been supported by innovations such as VikingBerry, UltraVice GAVA, but also by the core with UltraWhite in the market for nearly a decade, delivering more than both of them combined. This balance between innovation and existing SKUs with higher distribution and more coolers is supporting sustainable Double digit growth for the brand. Across the portfolio, the demand for zero sugar continues to grow. We're seeing double digit growth, Coke Zero, Coke Zero Caffeine, Sprite Zero, and around three quarters of total energy growth has now been driven by Monster Ultra. Looking forward, we will broaden our participation across these faster growing categories while continuing to invest in the core, something we'll come back to in February as part of our full year results. Turning briefly now to performance in our markets. We had a strong start to the quarter in July as we highlighted in our half one results supported by the later stages of the World Cup and favorable summer weather in Europe which continued through much of the quarter. Europe had a very positive quarter with volumes up 2.3%. Revenue was up 5.2% with revenue per unit case growth of 2.9%, higher than the previous quarter reflecting the phasing of promotional spend being half one weighted and a lower half two comparative. We saw good growth across both channels supported by fantastic in-market execution, innovation and customer wins with standout performances in Iberian GB building on the record performance last year. Germany had a strong start to the quarter with growth through July and August similar to the rest of our European markets. This was offset by the impact of temporary customer disruption in September As we negotiated new commercial terms which are now in place, we're trading now more or less in line with expectations. Volumes in APS increased by 6.4% with good growth both in Australia Pacific and in Southeast Asia. We grew revenue in APS by 7.8% with 7.2% growth in Australia and the Pacific Islands, significantly ahead of the previous quarter. with the headwind of the Centauri alcohol exit in Australia having been fully annualized during half one. In the Philippines, solid momentum continued with volume growth in line with our midterm expectations driven by Coke original taste and strong double digit growth in Coke Zero supported by our full on flavor campaign. We've also seen continued double digit growth in water driven by Wilkins Pure. In Indonesia, we are encouraged by the shape of what we see in the NARTD category. Traditional tea is under pressure, however sparkling and sports drinks are growing ahead of the category. I am particularly pleased by what we've seen in our business in Indonesia, with strong double-digit volume growth during the quarter. It's a combination of successful innovation, more affordable smaller packs, and increased distribution, supported by our route to market changes, that are starting to deliver a real positive outlook as we look towards next year and beyond. So in summary, and back to where I started, we've had a great year so far and have continued to demonstrate the resilience of our business and consistency of delivery. Clearly, on the cost side, the uncertain geopolitical environment, including the situation in the Middle East, has led to more inflationary backdrop and higher operating costs for our business, both in commodities and in optics. A combination of hedging, control of our discretionary spend, delivery of productivity savings and discipline management of pricing and promotions has provided the flexibility to absorb additional costs while maintaining record levels of investment behind growth, which stands us in good stead as we look into 2027 and beyond. We're also pleased to be declaring a second half dividend of €1.42 per share, which together with our first half dividend of 82 cents maintains an annualized payout ratio of approximately 50%. The current 1 billion share buyback will conclude this year. Looking ahead, Q4 started well, and we have strong commercial plans in place as we look towards an important final couple of months with Christmas and summer training in Australia and New Zealand to come. As a reminder, we have six fewer consumption days in Q4. That is reflected in our guidance for the full year, which as I mentioned earlier remains unchanged. So standing back there is much to feel pleased about. We delivered a great Q3 with strong revenue and volume growth balanced across markets and channels. We are broadening our portfolio which is a well aligned with the evolving consumer preferences. We're winning through execution, growing value for customers and creating excitement for our consumers. Our own MGM capabilities and consistent pipeline of productivity savings means we're competitive and resilient despite increasing inflation. And we are unlocking new growth opportunities through investments in technology and the ongoing development of our markets in Southeast Asia. We therefore remain confident that we have the right strategy done sustainably to continue to create long term sustainable shareholder value. So thank you for your time today. Ed and I will now be very happy to take your questions and I'll pass the call back over to you operator. Thank you.