Carlsberg As Shs A

Ladies and gentlemen, welcome to the Carlsberg Q3 2025 Trading Statement conference call. I am Healy, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jakob Arup-Andersen, CEO. Please go ahead.

Thank you very much, and good morning, everybody, and welcome to the Casper Q3 2025 conference call. So, as I said, my name is Jakob Arup-Andersen. I'm the group's CEO, and I have with me our group's CFO, Ulrike Fern, and Vice President of Investor Relations, Peter Gondrup. Before we get into the meat, let me begin by summarizing the key headlines for the quarter. First of all, we delivered strong volume and revenue growth due to the British acquisition, for which both integration and synergy realization are progressing very well. In a soft consumer environment, we achieved solid underlying volume and revenue growth in Western Europe, and we achieved sequential quarterly improvement in Asia. As part of our well-embedded performance management process, we have since early summer taking decisive actions to adjust our cost base in order to protect continued earnings growth and to enable uninterrupted investments in our business. As you will have seen, we maintain our full-year earnings guidance. Now, I will provide the key group headlines for the quarter, and then Ulrike will take you through the regions and the full-year outlook. So let's turn to slide number three. As a result of the British acquisition and the consolidation of Gorkha Brewery in Nepal, reported revenue grew strongly by 17.8% to 24.1 billion kroners. Organic growth was impacted by the loss of San Miguel in the UK, the soft consumer sentiment, and the war in Ukraine, the combination of which led to an organic revenue decline of 1.4%. However, adjusting for San Miguel, organic revenue grew slightly. The impact from currencies was minus 2.3%, and mainly related to Asian and Eastern European currencies. So the 16.2% reported volume growth was also positively impacted by Britwick and Gorka Brewery, while the organic development of minus 3.0% was subject to the factors I just went through. Excluding San Miguel, the volume decline was 1.7%. We continue to see good progress for revenue for hectolitum, which improved by 2%, with positive contribution from all three regions. The improvement was driven by price increases and also a positive product mix, partly offset by channel mix due to a soft on-trade across the regions. Let's have a look at the positive mix drivers on slide four. Year to date, soft drinks accounted for 28 percent of our total volumes. making soft drinks our second largest volume segment after mainstream core beer. In Q3, soft drinks grew organically by 4%. This was driven by strong results in most of our major soft drinks markets. We saw particular good growth for the Pepsi franchise in Norway, Sweden, and Switzerland, and the Coca-Cola business in Finland. In Denmark, Tuborg Squash delivered good results following the relaunch earlier in the year. The 5% growth of our premium beer portfolio adjusted for San Miguel was the result of good performance in Western Europe and Asia, in particular in markets such as the UK, France, Finland, China, and Laos. Premium volumes were down by a low single digit in CE&I, primarily due to the very difficult circumstances in Ukraine, the soft consumer sentiment in Kazakhstan, and the heavy monsoon in India. Total alcohol-free brews were impacted, the volumes of total alcohol-free brews were impacted by Ukraine, excluding which volumes grew by 6%. In Western Europe, the growth was strong at 9%, and it was broadly based. And in several C&I markets, including Kazakhstan, Greece, and Croatia, we achieved double-digit growth rates. Beyond beer had a difficult quarter. Although wind, flowers, snow, moon delivered close to 20% volume growth in China, This could not upset overall lower category volumes, particularly in the large markets of Ukraine and Poland. Our key international brands all delivered positive growth in the quarter. While total reported Carlsberg volumes grew by 3%, the brand grew by 8% in markets with a premium positioning, not least thanks to a very strong growth in China. Reported Tuvok volumes grew by 2%, and this was mainly due to growth in premium markets, especially China and Vietnam. The 6 percent volume growth for 1664 Blanc was driven by strong performance in several Western Europe and C&I markets. That more than offset continued challenges in China where the brand is persistent in the super premium segment and was impacted by the decline in the night entertainment channel. Let's take slide five and an update on Britwick. We're very pleased with this acquisition. As you know, we increased the expected cost synergies by 10 million pounds. to 110 million pounds at our capital markets day on 1st of October. The upgrade was done based on the successful execution of our integration plans, which are delivering synergies across both the acquired Redwick business and across the old Carlsberg business. The teams are working hard to advance the integration as quickly as possible so we can ensure continued strong momentum in the coming years. The increasingly positive feedback from major customers in the UK is confirming our very strong confidence in the advantages of combining beer and soft drinks also in the U.K., and the long-term value creation opportunities from this acquisition remains very strong. Thanks to our rigid focus on business continuity and commercial execution, and despite the ongoing integration efforts, volumes in the U.K. and Ireland grew by 4 percent, and our market share strengthened, supported by the Pepsi franchise in both markets. Total bread brick volume and revenue development was impacted by the decisions taken earlier in the year to exit unprofitable volumes in France and Brazil. On October the 16th, we informed the Works Council of Teixeira in France of a project to overhaul the business model, impacting production, sales, and back office functions. More information can be found in the queue-free announcement. With this, I'm going to hand over to Ulrike, who's going to take you through the regions and the outlook.

Thank you, Jakob, and good morning, everyone. Please go to slide six in Western Europe, where we delivered strong reported growth due to BRITVIC, but also solid organic growth rates in many markets, including the Nordics, France, and the UK, excluding San Miguel. We delivered market share improvements in most markets in both beer and soft drinks. Reported revenue growth was 37.2%, while organic revenue was minus 1.2%. In adjusting for San Miguel, organic revenue growth was plus 2.1%, and volumes followed the same pattern, with reported growth of 48% and adjusted organic growth of plus 1.3%. Revenue per hectolitre was up by 1%, with low single-digit improvements in nearly all markets, thanks to a combination of price increases across the region and a positive category mix, partly offset by channel and country mix. Looking at a few markets and starting with the UK, and Jakob has already talked about soft drinks on the previous slide, so I will focus here on the organic business, which delivered very strong underlying set of results with mid-teens volume growth. The strong growth was in particular the result of double-digit growth for Carlsberg Peretti and the 1664 brand family. We are very satisfied with the progress of replacing the lost San Miguel volumes with our own brands. and we gained market share in both the on and the off trade channels. The Nordic markets delivered mid-to-single-digit volume growth, mainly driven by the very strong soft drinks performances, but also good growth for alcohol-free brews and premium beer. And on the back of easy comps, our French business continued the positive momentum in Q3, strengthening its market share and delivering low single-digit volume growth, thanks to the double-digit growth for alcohol-free brews, and mid-single-digit growth for premium. And these solid growth rates were, however, partly offset by the continued decline of the mainstream Kronenberg red and white. It was a difficult quarter for our business in Poland, where the beer market suffered from both bad weather and the soft consumer sentiment. Our premium portfolio grew double-digit, led by Ceteki and Blanc, and alcohol-free brews saw high single-digit growth, but these categories are not yet large enough to offset the volume decline in mainstream. We gained market share, but total volumes declined by double-digit percentages. And our Swiss volumes declined slightly, mainly due to a soft on-trade. So please go to slide seven in Asia, where we, as expected, saw sequential improvement, although consumer sentiment is still soft and the trading environment challenging. Organic revenue declined by 0.6% as a result of volume development of minus 1.2% and an increase in revenue per hectolitre of 1%. The positive development in revenue per hectolitre was driven by price increases and the favourable product and country mix. And the reported revenue development of minus 5.7% was impacted by the depreciation of the Chinese, Laotian and Vietnamese currencies. Looking at China, the beer market declined by an estimated 2% in Q3, despite easy comparables. And this was due to a tough macro environment and low consumer confidence. Our volumes were flat, and we strengthened our market share, both in Q3 and year-to-date. And year-to-date, our volumes in China were slightly up, while the market was slightly down. We saw mid-Singapore growth in the big cities, while our mainstream skewed businesses in the Western stronghold declined slightly. Our premium portfolio grew by mid-single digits thanks to more than 25% growth in Carlsberg and Windflower Snow Moon and mid-single digit growth for the very large Tuboy brand. Revenue per hectolitre was slightly up due to the positive brand mix, partly offset by channel mix. In Vietnam, our business delivered sequential quarterly improvement in line with our expectations. Our market share stabilised towards the end of the quarter and we saw mid-single digit growth for our premium portfolio, led by Carlsberg and Tuboy, and for Somersby. However, our big mainstream Huda brand was impacted by weak market in the central part of the country, exacerbated by three big storms in the quarter. And consequently, total volumes declined by mid-single digits. And while we see a continued progress in Q4, we will see an impact from the heavy rainfalls and floodings in central Vietnam that are happening as we speak. In Laos, our business stabilized in Q3. Although seeing signs of improvement in Q3, the market remained under pressure, impacted by soft consumer sentiment and labor migration. Premium beer grew strongly, albeit from a low base, and total volumes were slightly up, mainly driven by soft drinks. So let's go to Site 8 and CE&I, where reported volumes grew by 2.5% and revenue by 3.1%. positively impacted by the Brickvick acquisition and consolidation of the Gorkha brewery in Nepal. Organic numbers were impacted by the overall soft consumer sentiment, the war in Ukraine and the monsoon in India. And consequently, revenue declined organically by 2.8% and volumes by 5.2%. Revenue per hectolitre improved by 3%, mainly driven by price increases. And then a few comments on the largest businesses in the region. As already mentioned a few times today, the Indian beer market was negatively impacted by the heavy monsoon in the quarter. However, growth resumed in September. And while our volumes were not immune to the weather, declining 1% for the quarter, we still outperformed the market and gained further market share. As with the market, our volumes grew in September. Our volumes in Ukraine decline by high teens percentages. And in addition to the war-related challenges, including mobilization, missile attacks and emigration, the market was also impacted by cold and rainy weather during the season and high inflation. In Kazakhstan, our volumes increased by low single digits, supported by good growth of the mainstream portfolio. And here we are preparing for the full takeover of the Pepsi license from the 1st of January. And as we mentioned in August, the construction of the new bottom facility is ongoing and expected to be operational in half to 2026. And until then, we will make use of co-packers, which means that we will not expect any profit contribution from the Pepsi business in Kazakhstan in 2026. Now please go to slide nine and the earnings outlook for the year. In August, we updated our full year earnings expectations to the upper end of the previous range. Based on the Q3 performance, we maintain the outlook of an organic operating profit growth of 3 to 5%, and remember that this includes the negative San Miguel impact of around 2 to 3 percentage points. We have a strong cost culture in Carlsberg and well-embedded performance management process to ensure that we, when necessary, can take cost actions and or reallocate resources quickly. And as part of this process, we have since early summer taken actions to adjust our cost base to mitigate the impact from the subdued consumer environment. And these actions will protect earnings growth and at the same time secure the financial flexibility to allow us to increase our commercial investments in digital tools and capabilities and also in sales and marketing investments in key markets such as China in half too. The expected 250 million pounds of operating profit contribution from Britvic remains unchanged and we continue to focus on faster leveraging. And to repeat what we said earlier, the leverage reduction will be rather modest in 2025, and this is due to high cash costs this year, mainly related to the BrickVic integration. And based on yesterday's spot rates, we assume a currency impact on operating profit of minus 200 million Danish kroner, unchanged compared to the previous assumption. And this excludes the impact from hyperinflation in Laos. All other assumptions are also unchanged. Net financial expenses, excluding FX, are expected at minus 2.4 billion. The expected tax rate is unchanged at 23%. And we also keep the CapEx outlook of around 7 billion, although with a bias towards less than 7 billion. And with that, over to you, Jakob.

Thank you, Ulrike. Before we open up for Q&A, let me just summarize what you just heard. First of all, we delivered strong volume and revenue growth due to the BritBrick acquisition. And on the BritBrick acquisition, integration and synergy realization are progressing very well. In a soft consumer environment, we achieved solid underlying volume and revenue growth in Western Europe, and we delivered sequential quarterly improvement in Asia. As part of our well-embedded performance management process, we have, since early summer, taken decisive actions to adjust our cost base And we're doing that to protect continued earnings growth and to enable uninterrupted investments in our business. And then, as Ulrike just said, we maintain our full year earnings guidance. For the Q&A, we're going to limit the number of questions to two per person, so everyone can get a chance to get through. After you have your questions answered, you're welcome to join the queue again. And with that, let's take some questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. The first question comes from the line of Sanjit Ayola from UBS. Please go ahead.

Hi, good morning, Jacob. Ulrika, two from me, please. Can we dig a little bit into China in terms of how you're seeing the on-trade versus off-trade momentum? I think you spoke about big cities being up mid-single the jet, but I'd love to get a bit more colour on how you're seeing your western provinces evolve. Is that the softness there macro, more competitive, or just look to get an update on the status quo there and maybe what you start seeing at the start of Q4. And then my second question was really specific on Poland. I think you called out your volumes down double digit, pleaded the markets in the top place. But what are you really seeing in terms of the outlook there? I'm conscious as we go into 26, it's an excise duty on beer coming through as well. Would you anticipate continued category volume declines on Poland into next year on the back of that? Thanks.

Thanks, Sanjit. So let's start in China, as you suggest. So, yeah, so color on Western and on on-trade. So it's just in terms of on-trade, off-trade. We don't see any different momentum in Q3. It's the same. We're seeing on-trade remain weak. And we're seeing part of that spill over into off-trade. There is that channel mix continuing in China, which is favoring off-trade over on-trade. You know, there's been a number of factors affecting on-trade. We also highlighted that at our Q2 results. When we look at the overall Chinese market, it's down 2%, and part of that is the on-trade weakness, so the 2% down in Q3. I know we had some pushback when we said it on Q2, but I guess we turned out to be right on China from that perspective. Do also note, of course, that the minus 2% in the market, we're flat, so we're taking a bit of share. But we're not seeing a change in on-trade. We didn't see a particularly sharp decline, but we just saw a continued weakness in on-trade due to a number of factors, whether that's the disposable income, overall consumer sentiment, and then also some of these government measures that you're aware of. When we look at the, you spoke about the Western strongholds versus the big cities. You're right, big cities are growing mid-single digits, so continued good growth there. That's also good from a product mix perspective. On the Western strongholds, so they're down a bit, down low single digit. That low single digit drop is basically in line with overall market and macro growth. We're not seeing ourselves lose share in any of those strongholds. There's no meaningful change in market share. So this is basically macro-slash-market-driven. It's not a competitive element. So when you look at that going forward and you look into the coming quarters, we're not seeing any change in the broader themes around markets. Western strongholds versus big cities and off-trade versus on-trade. I think that's too early to call a shift in those patterns. When you look at Poland, yeah, you're right, Liszt, and I think some of our esteemed colleagues have also been highlighting a very, very tough market in Poland. The fact that we can say that we had double-digit declines and we took market share, I think that says everything around how tough that market has been. for all of us operating in it. With that being said, I think it's too early to call how 26, you ask specifically around how 26 will be. Currently, it's a very tough market. Year to date, we estimate that the market decline is around 6%. It's a soft consumer. It was also a very tough summer comp in terms of weather comp from last year, combined with bad weather this year. So there is not just consumer, but also a weather impact on it. We are seeing that premium and alcohol-free has been growing, but mainstream has been declining, so there's also some nuances within the mix there. As we go into 26, I'm not going to paint a bullish picture on Poland. We do expect it to remain tough, but of course the market comps will be easier going into 26, but I think we need more data on the Polish consumer before we can start calling any significant change in the overall outlook.

Great, thank you.

Then a question comes from the line of Andrea Pistacchi, Bank of America. Please go ahead.

Yes, morning. I just wanted to follow up with the first question on China, please, a minute. So we've been hearing about some signs of easing of the government and extravagance, a crackdown in China. So I just wanted to hear your perspective on that. You just talked about the entree continuing to be weak. but if you're have you seen any improvement towards the end of the quarter um and how are you feeling about accelerating growth in china in q4 on on an easy comp my second question please is on the guidance you narrowed the ebit guidance back in the summer today you're confirming that three to five organic ebit yet the environment in some markets has turned out probably to be more difficult like ukraine you have then the bad weather in india So are there any offsetting positives that support the guidance? You were talking earlier about tighter cost control. So could you also elaborate a bit on that? What has changed in recent months maybe on the cost control? Thank you.

Thank you, André. Let me start on China and then Ulrike will speak to the guidance question. So you did sneak two questions into one there. So let's just have a look at it. First of all, you asked about the anti-extravaganza and whether there is an easing towards the end of the quarter. I think that is too much of a nuance for us to try to have a perspective on. I think there are many moving factors right now in on-trade in China. We are not seeing any decisive change in on-trade in China. We would not go as far as to call that. We've heard many opposing views on the effects of this decree, and I think it's too early to call. We sat in early August at the Q2, and we had several people in the market making the same statements as you're just making here. It turned out not to be true. So I think it's too early to make a decisive call on the impact on on-trade. On-trade remains weak in China. You're referring to a specific factor around anti-extravaganza, but there is a number of factors that is impacting on-trade, and this is just one of them. We remain focused, of course, on gaining any opportunity we can get in on-trade in China, but what we're seeing real opportunity for us is especially in off-trade, as you know, also with new innovations such as the one-liter cans that are doing incredibly well, and also what we're doing more beyond beer as well. You also asked around the momentum into Q4. So when we look at China in Q4, we do expect the market to decline slightly in Q4. But we are, for Carlsberg, we are assuming volume growth in China, so positive volume growth in Q4 for Carlsberg. You're right, there are easier comps. We're also doing higher commercial investments. But overall, we do expect to grow positively in Q4 in China. And then Ulrike on the guidance and the cost question.

Yeah, thank you, and I think you're absolutely right. The three to five, we're reiterating, but we're also calling a subdued consumer environment to be expected to continue. And you asked about what are the positives we've seen there, and we have talked about this in the past. Given what we saw in the consumer environment, We did, of course, always have a very tight cost focus, and we are set up to adapt rapidly, and that's what we're doing in an environment like this. So one of the reasons that we feel confident in coming through at the 3% to 5% is the actions that we took before the summer, and we started to drive behind cost actions, whether that was reducing discretionary spend, looking at people's costs related to the BRITVIC integration, or even pushing harder on our supply chain savings and making sure we spent the money also from a marketing point of view in the right places and given the environment, getting the right return. All of those is helping us support earnings growth, but also actually continue to invest in our strategic initiatives. So that would be the sort of mechanism that we put behind our confidence between the 3% to 5% guidance being maintained.

Okay, thank you.

We now have a question from the line of Søren Samso from SEB. Please go ahead.

Yes, it was actually just a follow-up on the previous question. Maybe you can quantify a little bit how much it's impacting your EBIT growth, these cost adjustments that you're talking about. And then secondly, on the CAPEX, if you can help us a little bit, going into next year, if we should look for the same level, and also how much is the Kazakhstan investment impacting, will impact CapEx? Thanks.

Yes, hi. I can take both of those. I think we won't put a specific number on the cost, but I can say that we are constantly adjusting to the top line to make sure that we're fitting into the top line you'd The long-term growth algorithm is what we keep in the back of our minds, and when the top line is not there, we need to lean further into the cost side to make sure that fits to that top line. So if I refer back to that, that will give you a bit of a sense of what we're trying to achieve. On the CAPEX side, we haven't given any specific guidance, but generally we are saying we're sitting about 6% to 7% of revenue, and that is what we'll continue to aim for within that range up and down, depending on the environment.

The next question comes from the line of Simon Hayes from Citi. Please go ahead.

Thank you. Good morning, all. So just a couple of market questions for me, please. Can I just start off on Vietnam? Ulrika, I think you said that you were seeing some market share stabilization towards the end of the quarter. I assume that means that the exit rate of the business there was back to growth there. I appreciate, as you said, this flooding as we moved into Q4 that's going to impact your business. But is it right to think that the underlying momentum into Q4 as we head into 2026 is probably for positive volume growth for now, excluding any of those one-offs like flooding? And then secondly, on the Ukraine, clearly a tough situation there. How do we think about what's driving that? I think clearly, obviously, the intensification of the war, having more people leaving Ukraine. the country. What does that mean for how you think about Ukraine volumes, not only in Q4, but into 2026? Should we assume it will continue in the third quarter for the next few quarters?

Hi, Simon. Why don't I start on Ukraine? And then Ulrike will speak to Vietnam. So first of all, of course, as you also say, so this is very much externality. So it's not our own business. But The market and our volumes are very negatively impacted by the escalating war. If you look at the Q3 volumes, the decline is around 20% due to intensified bombings, the immigration effect we've seen from young men leaving the country, and then very weak consumer sentiment on the back of this entire environment. On top of it, Ukraine also had bad weather in Q3 just to exacerbate things. Our market share is slightly up, flat to up, depending on what segment you're looking at. So this is not a question of us losing share. As we look at it, listen, it's a very, very difficult question to answer because given that our underlying share momentum for the last couple of years has been very strong in Ukraine, We've been very strong on new innovations. We've been taking a good share in everything from premium to alcohol-free, etc. This is not really a construct execution question. This is a question of how the current war develops. And we're not going to sit here and pretend that we are bigger experts than you are. We are planning for all eventualities. Of course, when you look into 2026, That's going to be the big decisive factor. We are planning in our business planning the prudent way you would expect us to do, and that is for a continuation of the current environment. That doesn't mean that we expect Ukraine to be year-on-year minus 20% next year. That's not the case. But, of course, we do expect that we need to navigate in a difficult environment. I think right now we're seeing a lot of negatives coming together at exactly the same time. This, of course, also creates easier comps next year. So I wouldn't be penciling in the dramatic numbers to the tune of what you've seen and what you're seeing currently. But I think it's too difficult to call unless you have a perspective on how the war develops in Ukraine, unfortunately. We don't. We can have a personal perspective, but as a company, we need to assume status quo the way we plan. But, of course, an improvement versus the current run rate has to be expected next year, given the comps. Ulrike on Vietnam.

Yeah, what we are seeing there is that we are seeing the market in general improving with solid growth in Q3 in general. And I guess we have also seen through the year now our market share sort of bottoming out and starting to improve sequentially, and it's now up around 9%. And if you translate that into our volumes, we are expecting to see sequential improvements also into Q4 in our volumes. and hoping to get north of the zero into 2026. So on the back of that and the actions we've taken, that's the trend we're seeing.

Okay, thank you. Many thanks.

The next question comes from the line of André Thormann from Danske Bank. Please go ahead.

Yes, good morning. Just two questions from my side. First of all, I wonder if you can comment on And the momentum for Western Europe in ZOQ4, have everything materially changed in that region? And then second of all, you see quite good growth in soft drinks, 4% volume growth. Can you maybe comment a bit on what exactly drives it? Are you taking market share and maybe also is this a sustainable growth rate going forward? Thank you.

Hi, Andrea. So let me look at those two. So on Western Europe into Q4, we don't see any major changes versus Q3. This is the last quarter with the last San Miguel impact, as you know, so that will be out of the numbers after that quarter. We expect to see continued good underlying performance in the Nordic region, as we've been seeing in this quarter as well. UK momentum in terms of market share improvements are also expected to continue. Poland remains challenging in Q4, no doubt about it. That market is going to remain tough. But overall, I think most of the trends we expect to see continue in Q4, including good CSD or soft drinks performance. And now it's been a number of quarters where the team in Western Europe has... has performed very well and also held or taken market share in most markets. So it's good to see the momentum, which is very much our backyard. Then when you look at the soft drinks question, yes, 4% growth both in the organic business and also in the British business, UK and Ireland. So we didn't manipulate those numbers. It all ended up at 4%. But very good to see. It's a combination of factors. One, We've said it before and we'll repeat it again. Soft drinks is a structurally growing segment, and that's also why we see this as being very attractive. Two, in a number of our markets, we've also taken some share. So you're seeing Pepsi share gains, which is, of course, our biggest brand across those markets. In a number of markets, you're also seeing strong performance from the Coca-Cola portfolio. In Finland, you're seeing a number of our own brands performing well. So generally, we are seeing... good share performance as well. But the majority of the growth you're seeing here is driven by the fact that the market is growing. So soft drinks has had a good quarter. Thank you.

We now have a question from the line of Sarah Simon from Morgan Stanley. Please go ahead.

It was just a quick one on the announcement yesterday about the partnership in Africa. Is that something that you would expect to become meaningful to numbers, or is it just kind of a bit of a rounding error that's maybe more significant for the partner? Thanks.

Thanks, Sarah. So I think what you're referring to is, I think Varun commented that we were starting a partnership in Zimbabwe. It's an initiation of a partnership there. We So far, it's very small volumes, and it's us testing out a partnership in Zimbabwe. So let's see how that develops. As you know, we have a number of businesses in Africa and on an export and license business. This is an addition to that, but it's too early to say what this will lead to. Thank you. Thanks.

We now have a question from the line of Thomas Lind from Nordir. Please go ahead.

Hi, good morning everyone. So two questions from my side. The first one is just, sorry, we get to come back to this with the discretionary spending. Is it correctly understood that you're also adjusting the number of employees? And also, Jacob, did you say that this is primarily impacting China? Or how should we think about this? And then the second question is regarding Britwick. I'm just wondering if you could put a bit more words on the strong performance here of 4% growth. Jacob, I didn't hear you highlight Pepsi in the UK. You highlighted Pepsi in many markets, but not in the UK as strong. Is that correct, or how should we think about the Pepsi in the UK? Thank you.

Yes, hi. Let me start with a cost question. And no, it's not a China-specific thing. It is, as I mentioned before, it's part of how we run the business here in terms of When the market is not there, our performance management process are there to constantly adjust our costs and then reallocate resources across the portfolio. And in that, and as I said before, and as you referred to, before the summer, we concluded that we needed to start pushing this side of the P&L a little bit harder to make us, as I said before, to continue to support the earnings growth, but also to make sure we continue those big investments that we had started in commercial and digital markets. And that will include, again, versus what I said before, both discretionary spend, but we will also adjust some structures, specifically around the Britsic integration, as you already know we're pushing for. And as we go through this by market, by function, it will also include making sure that we maybe delay some initiatives, we replace some initiatives that might have some people cost implications as well. But as I said, this is not just one of the lines. We also focus on supply chain savings and other parts of the P&L to drive to the cost. So there is a part of that that is people cost, but it's much more than that.

And Thomas, on the Bradwick side, so thanks for calling that out. So that gives me a chance to highlight it because I guess mentally I was moving around in an organic world. And therefore, if we move to the inorganic part of this, The strong performance in BRITRIC is very much driven by the Pepsi portfolio, actually, and it's more driven by the Pepsi portfolio compared to in the past. If you look at it, we saw across, if you look at cola, Pepsi takes, we take around 1% market share gain in cola, and in non-sugar cola, we take 1.5% value share year-to-date, so very strong performance of the Pepsi brand. And on top of that, we're also seeing strong performance from 7-Up in fruit-flavored carbs. 7-Up is taking half a percent market share. So a very strong performance by the Pepsi portfolio in the U.K. So very pleased with that. And it was my omission that I didn't go into that detail. So thanks for highlighting it.

Thank you. Very clear.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Jen Cross from PNP Baribas. Please go ahead.

Good morning, Jakob. Good morning, Ulrike. It's a couple of questions from me. The first one, Jakob, I think you mentioned you didn't see any major changes in Western Europe in Q3, but... I think other peers of yours have commented on being slightly concerned by stretched affordability in Europe and going as far as to comment on likely pricing being below CPI, not specifically in Europe, but across their footprint. So I just wonder if you could comment on whether you see affordability being somewhat stretched in any of your markets and and your latest thoughts on likely direction of pricing relative to CPI. That's the first question. The second question, just a quick one on Britvic. Obviously, as previously commented on, the performance, particularly in the UK and Ireland, is very strong, 4% volume growth, but the total vols are slightly negative as you've exited unprofitable volumes. I just wonder if you could comment on how far you expect that exit of unprofitable volumes to progress by the time we get to the start of next year and Britvic starts moving into your organic growth. Thank you.

Thanks, Jan. Let me talk to those two. The first one around stretched affordability. So don't get us wrong. We're not saying that Western European markets are easy to operate. The consumer is clearly stretched across Western Europe and in some markets more than others. When we look across our Western European performance in this quarter, we had actually low to mid single-digit growth across all four Nordic countries. So that was good to see. Switzerland, we saw a slight volume decline due to a challenge market. Poland, we talked about in a number of these questions, a very tough market. And you can say in France, we're taking share, but the overall market is not particularly strong. So in the same story in the UK. So there is a lot of nuances here. And so we completely agree with the notion that we have definitely seen a stronger Western European consumer than the one we're seeing right now, which is stretched affordability, no doubt about that. and but we also see disposable incomes being rebuilt over the coming years as wage increases come through and that should also ease some of it so no we're not striking an easy tone around western europe but we are performing well in that environment as you can see from the numbers and we have no reason to believe that we cannot continue to to hold our own and then some in those markets on the question on pricing I'm not going to comment on what someone else has said on pricing. We at Carlsberg, we are very firm that we don't guide on pricing because we think that's outside of the boundaries of what we can talk to. What we can say more holistically is that we always aim to recover the cost increases we see in our cost base via pricing. And when we look at the coming years, we do expect that we therefore need to continue to see pricing come through. But I'm not going to talk to specific markets. We don't go to that level for legal reasons. But we do expect to continue to take price in the coming years in Western Europe. Your question on BRITRIC. So you're right, Brazil and France and also the international export business, we've taken down volumes in all three of those. It's not a really profitable volume, so it's more a volume thing than it's a profit thing. As you know, we've done most of that in Q1 and then a bit in Q2, but most in Q1, and that also means once you're past Q1 next year, you will have lapped those effects. So that will wash out of the comparables over the next couple of quarters. Thanks.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Aroub Anderson for closing remarks.

Thank you so much, and thanks for listening in, and as always, thank you for your questions. We look forward to seeing a bunch of you during the coming days and weeks, and until then, make sure you have a nice day. Thank you so much.

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