Heineken Holding

Good morning and afternoon everyone from Amsterdam. Thank you for joining us for today's live webcast of our 2025 half-year results. Your host will be our CEO, Dol van den Brugt, and our CFO, Harald van den Brugt. Following the presentation, we will be happy to take your questions. The presentation includes forward-looking statements and expectations based on management's current views and involve known and unknown risks and uncertainties. And it is possible that the actual results may differ materially. For more information, please refer to the disclaimer on the first page of this presentation. I will now turn the call over to Dol.

Thank you, Tristan. Welcome everyone. We delivered a solid first half of the year in a turbulent world whilst progressing on our multi-year strategy Evergreen 25. We will update our progression on Evergreen at our upcoming CME in October. But before we delve into the results, let's start with a brief reminder of our strategy which continues to shape our business and how we think about this going forward. Our ambition is to deliver superior balance growth to consistently create long-term value. We'll do this with a clear focus on five strategic priorities embedded in the business as indicated on the left. These priorities propel the flying wheel of our growth algorithm with at the top first and foremost growth. We are targeting superior and balanced growth, both volume and value growth. Growth enables gains in productivity and this in turn fuels resources for investing in further growth and profitability. This half year we continue to deliver on our green diamond. We deliver top-line growth, continuous productivity, initiated our 1.5 billion share by that program and make progress against our ambitions on sustainability and responsibility. Let's take a closer look at our key highlights of the year. First and foremost, we report strong profit growth in the first half of the year supported by our global footprint, especially by APAC and AME. We delivered volume growth improvement in the second quarter, continuing to be of high quality and despite some softer markets and one-off events. We're making sustained progress on our evergreen journey, investing behind our brands and digital transformation to ensure quality growth for the future. Looking ahead to the second half of the year and despite microeconomic challenges, we confirm our guidance for the full year operating profit by our next year to grow organically in the 4 to 8% range. So let's take a closer look at our financial highlights. Net revenue by a group .1% organically versus last year. Net revenue per liter by a group by .3% while total beer volume was down by 1.2%. The good momentum behind the Heineken brand continues with .5% volume growth. Operating profit by a group by .4% and our operating margin was 14.3 up 26 basis points. Net profit by improved in line with OP by .5% with the growth coming mainly from the strong performance in operating profit. Diluted EPS by a landed at 2.08 for the half year and Harald will cover this in more detail later. Volume trends improved in the second quarter and we ended the first half down by 1%. The quality of our volume however continues to be high. Mainstream brands grew and outpaced our total portfolio led by the big brands in some of our biggest markets including Kingfisher in India, Leroux Smooth in Vietnam and Amstel in Brazil. Our premium brands grew at almost 2% across our regions especially the Kingfisher Ultra franchise in India. And of course led by Heineken. Up .5% growing double digits in 27 markets most notably in Nigeria and very broadly in APAC led by China and Vietnam. Heineken 0.0 was stable below the usual high rates what we have come to expect something to which I will come back to you later. Our price mix was strong in the first half up .7% on a constant geographical basis. Together with the high quality volume performance this resulted in a .1% net revenue increase leading to the .4% operating profit growth. Let's discuss next the regions. First Africa and Middle East where we achieved volume growth and are successfully rebuilding profitability. Net revenue grew organically by .8% with 1% volume growth and a strong price mix of .7% pricing ahead of inflation in most markets. Operating profit doubled as we benefited from a transformed cost base and strong revenue growth. Notably in Euros operating profit bay grew over 50%. In Nigeria we reshaped the business over the last 18 months following the devaluation of the Naira taking out costs restructuring the balance sheet and transforming the brand portfolio. Micro economic conditions are back to relative stability though the consumer sentiment remains subdued and inflation stubbornly high. Nevertheless we performed ahead of the market as our premium portfolio accelerated led by Heineken, Desperados and Legend Stout. We now have over a 40% share in Stout in Nigeria. At Heineken beverages there has been sequential improvements following actions we have taken. In South Africa beer volume and market share stabilized towards the end of the first half led by Amstel. Bernini continued its very strong growth in the RTD segment. We are pleased with the trajectory of improvement but also conscious that there is still more to do. Namibia, Kenya and Tanzania performed strongly leveraging the advantages of our broad alcoholic beverage portfolio. Elsewhere in Africa we have seen strong growth in Ethiopia with brands such as Bedele and Hairaar supporting us to extend our market leading position. As we indicated earlier in the year we were fortunately lost control of our operations in Bukavu in the eastern Congo as the security situation in the country deteriorated. We were focused on ensuring the safety of our employees. On to the Americas where our business showed resilience. Net revenue declined .8% and beer volume was down .2% in the first half but positive volume growth in the second quarter. Price mix was slightly down. Operating profit was down .3% as we cycled our large step up last year. In Mexico beer volume grew low single digit and expanded broadly in line with the market. We continued to invest in our channels and production footprint as our 17,000 six stores boosted our revenue growth and we started preparations for our new brewery in Yucatan. Our resilience in the first half was broad based across the portfolio. Also Ultra and Miller Highlife led to growth in premium both expanding by double digits. Indio grew by a high single digit continuing to celebrate Mexican heritage. Takata Original and Dos Equis delivered solid growth. In Brazil after beer volume declined in the first quarter as we rebalanced and reduced excess inventory we returned to growth in the second quarter. Based on sell out data we captured some significant market share in the first half while seeing a softening in the markets towards the end of the half. In the growing premium segment both Heineken and Isoban delivered growth. We were also pleased to see Amstel sustaining its momentum with growth in the teams. Our new 5 million hectolitre brewery in Pasos is on track to open in the next quarter. The US continues to be a challenging environment for beer. The recent terrorist impacts our business particularly expected in the second half of the year. Despite an overall weaker market Heineken 00 accelerated its momentum with double digit growth. Moving on to APEC where we posted growth on all metrics as our team markets performed strongly in the first half of the year. Net revenue grew by 5.5%, beer volume by 3% and price mixed by 4.5%. Operating profits increased by 11%. In Vietnam the market has returned to growth and our investments to expand portfolio and broaden geographical reach are delivering strong results. As volume expanded by a high single digit and net revenue grew in the teams. We gained share in both channels and across the portfolio. The Heineken brand grew volume in the 50s led by Heineken Silver. Our mainstream brand portfolio also continued to grow with LaRue Smooth growing in the 60s. In India volume was up by a high single digit as our momentum continued. Growing significantly ahead of the overall market and winning share in more states. The premium portfolio grew in the 30s gaining share in the segment led by Kingfisher Ultra and Ultra Max. In China Heineken continued its strong growth trajectory in the premium segment. Volume was up in the 30s driven by the strong momentum of both Heineken Original and Heineken Silver. Also volume more than doubled becoming a significant contributor to the growth. With an expanding contribution of royalties and share of profits the importance of China to our business is increasing. Lastly Europe, net revenue declined by 4% with beer volume declining 4.7%. Mainly because of prolonged retail negotiations in Western Europe. Price mix was positive up 1.2%. Our operating profit growth declined by 5.2%. In the UK we continued to win market share in both channels where our broad portfolio delivered share gains including in the premium and cider segment. Cuscampo continued its strong trajectory building on the growth of last year. Murphy's stout expanded benefiting from distribution gains in neutral placements in the old trades. In Western Europe extended customer negotiations in Western Europe particularly in France, the Netherlands, Germany and Spain impacted performance. These strategic discussions aimed at preserving future sustainable category development are now fully resolved positioning us for sequential volume improvement in the second half of the year. As such in France beer volume declined but recovered strongly in June as negotiations concluded. In addition we saw recovery of growth in the old trade channel in several key markets. Elsewhere the beer markets were down in Poland and Austria leading to volume decline. The latter due to the implementation of a new deposit scheme resulting in sharp decline in the Cairn segment. In Switzerland and Romania volume grew led by strong growth of global brands Pira Moretti and Amstel respectively. Our strategy in Europe remains clear. We're shaping the category and delivering value by investing behind our premium and mainstream brands accelerating low and low leadership fueling innovation and sharpening our revenue management capabilities all while driving productivity to fund investments in growth. Moving on to Brent Heineken leading our portfolio to sustain momentum behind the Heineken brand continue to pace. The innovations of Silver and Zero Zero have been additive to grow in the brand power and volume of Heineken original. Heineken's growth continued in the first half of 25 adding another .5% of growth with 27 markets in double digits most notably in Nigeria and APEC especially in Vietnam and China. Heineken Silver was a strong contributor to the portfolio with 34% of growth primarily in APEC. Heineken Zero Zero was as mentioned earlier flat though returned to growth in the second quarter. The USA and also Canada delivered strong growth and will continue to expand into the old trade. However, they were offset by the temporary actions of entry adjustments in Brazil and the impact of customer negotiations in Europe. Our strategic intent is to continue the growth as we lead and shape the Zero Zero category. Let's call out another hero within the Heineken portfolio, Amstel. It's our second largest brand in our portfolio and one of the top five global beer brands. In the first half, Amstel grew by a high single digit with over 10 million hectoliters sold globally in the first half of 25. Amstel is leading the charge for us in the affordable premium segment as a quality beer for quality bonding moments. The brand is sold in all regions in over 30 markets, growing double digits in 15 markets. Including a doubling of the volume in China in the first half. Brazil has been leading the charge over the last years with the skill to partner with leading sponsorship platforms, including the Comembol Libertadores, the biggest football tournament in the Americas. We have created a repeatable model with innovation being core to Amstel as a global brand with local relevance. This is exemplified by the successes such as Amstel Grande in India, Amstel Ultra in Mexico and Amstel Oro in Spain with more to come. Also an update on our sustainability strategy, Brew a Better World, where we are progressing across all three pillars. In our ambition to achieve natural carbon in scope 1 and 2 by 2030, we continue to make progress during the first half of the year. For example, we agreed new power purchase agreements in Italy and Nigeria and installed industrial electrical boilers in Chuteau Vauden brewery in the Netherlands. On our journey towards healthy watersheds, we improved water efficiency across all our breweries. We have been named the water basin champion for the Rio Bravo Grande Basin in Mexico. On the solar pillar, we achieved our target to have at least 30% women in senior management roles. We continue to strengthen our pipeline talent to ensure equal performance based opportunities. On responsible consumption, as category leaders we continue making good progress on our ambition to normalize moderation. A recent Nielsen survey revealed Heineken being identified as the number one drink brand encouraging responsible consumption. To further strengthen this connection, we took our partnership with Formula One to the next level with Heineken 00 making an appearance in the F1 The Movie with Brad Pitt. Lastly, while we remain focused on delivering strong results today, I'd also like to offer a brief glimpse of what's ahead at our upcoming CME in Sevilla, Spain. We will present the next step in our journey future-proofing Heineken, Evergreen 2030. Our number one priority will be on growth, showing progress and latest plans to continuously strengthen our advantage footprint and shape our brand portfolios with bigger and better brands and innovations. On productivity, we have delivered over 3 billion of growth savings and are now making the next step, building more advanced capabilities to take better advantage of our scale and also step up our focus on capital efficiency. We're making the business future-fit, implementing our digital backbone as we transform and digitize our organizational model, while preserving what makes Heineken cultural unique and magical. I look forward to expanding on these topics at our upcoming CME in October in Sevilla. And now over to Harald.

Thank you, Dolph, and good day to you all. Let me take you through the main items of our financial results. Starting with our top line performance for the first half of 2025, we posted an organic revenue growth of 380 million or 2.1%, delivering 14.2 billion of net revenue per year, driven by positive price mix and with a slight negative volume growth. The total consolidated volume decline of .1% reflects the decline of minus .4% in quarter one, followed by a sequentially better second quarter at broadly flat volume, with three regions in positive volume growth. Europe's bear volume was down for both the quarter and the half by a -single-bidget, affected by prolonged and now fully resolved customer negotiations, as Dolph just indicated. The underlying price mix for the first half year on a constant geographic basis was 3.7%, with pricing at 2.6%, almost entirely led by the Africa and Middle East region as we price for inflation and foreign exchange related cost increases. Overall net revenue per hectolitre increased by 3.3%. Currency translation had a major effect, reducing reported net revenue growth by 980 million, mainly because of the euro strengthening against most currencies significantly in the last six months. The consolidation effect primarily reflects the impact of our suspended operations in the Democratic Republic of Congo. Moving on to slide 17. We delivered 2 billion of operating profit, BAYA, growing .4% or 155 million organically, taking the operating profit margin BAYA to 14.3%, up 26 basis points for the purchase last year. Good to mention we ended up at the upper end of our expected range, due to strong sales in June and for now limited the impact of trade tariffs, in anticipation of which we accelerated savings projects. Growth savings reached over 300 million this half year. Given the sizeable movements across regions, let me share some key drivers. The region Africa and Middle East was instrumental in delivering the profit growth. To unlock the potential of this complex region, we must navigate risks, yet act on the significant opportunities we see. Across markets we adjusted a portfolio mix to specific local conditions, leveraging both premium and mainstream brands. We accelerated revenue margin management initiatives, stepped up route to market grip supported by digital solutions and continued to lean in heavily on growth savings to drive productivity, transforming the cost base. This combined with restrained upfront investment led to an operating margin expansion of close to four on the basis points. The biggest contributions came from Nigeria, Ethiopia and Heineken beverages. APAC delivered double digit operating profit growth, led by Vietnam and India, an excellent performance of our two largest markets in that region. In Europe, continued growth savings in variable and fixed costs from our productivity programs largely offset the impact of significant volume deleverage for reasons detailed before. For the Americas, it's good to bear in mind that in the first half of 2024, we recorded 37% operating profit organic growth. So we are comparing to a high base. This half year, it's reduced by .3% organically, in part driven by a suppressed USA bear market and a one off cost related to inventory reduction in Brazil to improve customer and portfolio mix going forward. As Dole's already pointed out, sell out remains strong and we continue to gain share in Brazil throughout the first half of 2025. Volume growth also was restored in the second quarter. Our variable cost per hectolitre increased organically by a low single digit as lower commodity and energy cost in Europe and the Americas were offset by a double digit increase in Africa, Middle East. Inflation and for is driven in particularly affecting Nigeria and Ethiopia. Marketing and selling investment was on 23 basis points compared to the first half of 2024, reaching .1% as a percentage of net revenue by. This supported our market share momentum with over half of our markets growing or holding shares. Consolidation changes had a negative impact of 16 million and the transactional currency effect was significant at 190 million negative, mainly again from the euro strengthening against our major foreign currencies. Let me now turn to other key financial data metrics. Our share of net profit data from associates and joint ventures grew .7% organically, led by our partners in China and CCU. Net interest expenses Bayer decreased organically by .8% to 260 million euros with an average effective interest rates similar to last year. All the net finance expenses Bayer amounted to 104 million, an organic decrease of .5% mainly caused by cycling the currency devaluation in Nigeria during the first half of 2024. Net profit Bayer increased by .5% organically to 1164 billion with depositors above largely offset by higher non controlling interests, notably in Vietnam, Nigeria and South Africa. The effective tax rate Bayer was .9% similar to last year first half. The major currency translation impact of close to 9% more than offsets the strong net profit Bayer organic growth. This leads to an organic EPS Bayer decrease of 3.1%. Now on to capital returns. As per our practice, the interim dividend is fixed at 40% of the total dividend of the previous year, leading to an interim dividend of 74 cents per share, up .2% versus last year. We initiated and are making steady progress towards a one and a half billion share buy back program. Our net debt to EBITDA Bayer ratio ended at 2.3 times for the half year below our long term target of below 2.5 times. Let me now turn to the free operating cash flow. We recorded a free operating cash inflow for the half year of 257 million, compared against a very strong inflow of 655 million last year, a delta of 400 million. Let me go through the main drivers. Cash flow from operations was 142 million less than last year, mostly driven by foreign exchange and largely related to the strengthening of the euro against the local currencies of our key markets. The working capital movement was lowered by 152 million after the significant improvement of 750 million we managed to achieve last year. We expect this to balance out in the second half. On payables we made progress as we continue to improve our position through structural initiatives. On both receivables and inventories we had several one-offs, therefore non-recurring items. Late trade replenishments in Europe following the conclusion of customer negotiations, the customer inventory reduction in Brazil and promotional phasing in South Africa to call out three. Last, Capex was up 144 million, which is purely project related timing. Investments were for example in our new Passos Brewery in Brazil with our first brew expected in quarter three this year, and we opened up our new R&D center in Zute Valley in quarter two. We also continue to invest behind our D&T infrastructure as we prepare for a 12-mile market rollout of our digital backbone early next year. We reconfirm our previous stated full year guidance on capital expenditure, and as a result we expect free operating cash flow to be materially better in the second half of the year, returning to a normal average for the year 2025 as a whole. Before going to the outlook, a reminder that our evergreen strategy sets out to deliver superior balance growth with consistent long-term value creation. Near term we anticipate ongoing macroeconomic challenges that may affect consumer spending, including softening sentiment in Europe and the Americas, inflation pressures and the impact of a weaker US dollar. Hyperinflationary risks remain in Africa, for instance Nigeria continues to be on the watch list. We now expect volumes in the full year 2025 to be broadly stable, with some rebalancing across regions showing the advantage of our global footprint. We expect a positive price mix, leading to a continued positive net revenue growth. We update our growth savings outlook. With clear line of sight of initiatives, we raise our ambition from 400 million to over 500 million for 2025, helping to offset lower volume, maintain a competitive level of marketing and selling investment, which we expect to increase for the full year versus the full year last year, and finance our digitalization agenda. Following our solid operating profit delivery in the first half of the year, we expect the second half to be a bit more affected by import tariffs into the USA, a higher transactional exchange rate impacts in the Americas and in Africa as favorable hedges are rolling off. All in all, we reaffirm our expectation to grow operating profit buyer organically in the range of 4 to 8% and expect net profit to grow broadly online. To summarize, we report solid profit growth in the first half of the year with an improved volume trajectory into quarter two. Our broad geographical footprint is supporting us as some markets experience a softer consumer environment. We remain long term focused, yet are making sharper footprint and portfolio choices as we future prove our business. All in all, we confirm operating profit buyer to grow organically in 2025 in the range of 4 to 8%. And as Dolph said, we're excited to host you in October on our Capital Market Day in Seville. We will share with you more detail on our multi-year journey towards Evergreen 2030. With growth as our number one priority, building a strong footprint and portfolio, a step up in productivity and a future growth more digitally enabled and more productive organization, we are looking forward to it. With that, happy to take your questions.