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Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's JDP's Half Year 2025 Earnings Call. My name is Sharon, and I will be your operator for the call. For the duration of the presentation, all participants will be in a listen-only mode, and the conference call is being recorded. Following the presentation, there will be an opportunity to ask questions. If you do have questions, please press the star 1-1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 if you wish to ask a question. At this time, I would like to turn the call over to our first speaker, Robin Janssen, Director, Investor Relations for J.D.E. Peets.

Thank you, Sharon. Good morning, everyone, and welcome to J.D.E. Peets Earnings Call for the first half of 2025. Joining me are Rafa Oliveira, CEO, and Yang Xu, CFO. After my introduction, Rafa will walk you through the operational and financial highlights related to our first half-year business performance, followed by a strategic update. Yang will then provide more detail on our financial performance and will provide an update on our full-year outlook. After that, we will be happy to answer your questions. Our press release was published at 7 a.m. CET this morning. both the release and the slide deck for this call are available in the investor section of our website. A full transcript of this conference call will be made available there as soon as possible after this call. Before heading over to Rafa, I'd like to draw your attention to the disclaimer on slide three regarding non-IFRS measures and forward-looking statements. Please take a moment to review this information carefully. With that, I'm pleased to hand over the call to you, Rafa.

Thank you, Robin, and welcome, everyone. I'm pleased to share the key highlights of the results of the first half of 2025 with you and provide you with an update on our five key priorities for the year, along with a brief recap of our new brand-led strategy we introduced at our Capital Markets Day on the 1st of July. As you saw in this morning's press release, we delivered another set of strong, broad-based results. On an organic basis, our sales were up 22.5%, our adjusted gross profit increased by 2.2%, and our adjusted EBIT grew by 2%. Our free cash flow was also solid at 565 million euros, underscoring our strong cash-generating capabilities. We are proud of this performance across top-line profitability and cash. especially when considering the persistently high green coffee prices that we had to continue to deal with in the first half of 25, which Yung will elaborate on later. Once again, we successfully managed to appropriately offset this semester's unprecedented level of inflation with efficiencies, productivities, and pricing across products and markets. This allowed us to protect our gross profit, enabling necessary investments for growth and profitability. Despite the short-term volume pressure we experienced during retailer negotiations in Europe at the start of the year, volumes rebounded quickly from March onwards, resulting in very resilient fall mix growth of 1% and overall stable market share performance, especially in faster-growing categories such as beans and aluminum capsules, especially in capsules we are very pleased to see that again in the first half of 25, we are outperforming the market with low-teens organic sales growth, fueled by mid-single-digit volume mix growth. We are also pleased with the progress we made on the five key priorities we set for 2025, and which we shared with you when we published our full year 2024 results back in February. I'll briefly address the progress we've made on each of those five priorities in the next slide. Last but not least, we returned 43% of our free cash flow to shareholders. 172 million was returned through dividends, while another 71 million was returned through our 2025 250 million euro share buyback program, which we launched nearly five months ago as part of our 1 billion euro share buyback commitment for the coming years. By the 25th of July, we had completed 38% of the 2025 share buyback probe. Overall, looking back at the first six months of the year, we are very pleased with the progress we made from a strategic, business, as well as financial perspective. More importantly, as a leadership team, we have clearly noticed that the organization is starting to refine momentum and that the new strategy and decisive actions we are taking are re-energizing and motivating our teams across the globe. Let's now take a look at how we are progressing on the five key priorities we've made set for our team for 2025. First and foremost, pricing discipline. It goes without saying that with an inflation headwind of about 800 million euros in half month, and an estimated total level of inflation at our cost base of around 1.6 billion euros for the full year. The number one priority for the entire organization is to stay laser-focused and extremely disciplined on protecting our gross profit, our EBIT, and our free cash flow, which we did. We pull all the levers we can to mitigate inflation and have built a robust pipeline of productivity and efficiency measures to absorb as much of the inflation headwind as possible. And only the part of inflation that we cannot offset despite our efforts has been and will be passed on to our value retail and our home partners through price increase. To this end, we are currently discussing pricing with customers across the globe, and I am pleased to report that we expect to have successfully concluded price negotiations covering 87% of our total sales by the end of next week, which will then include France, where a different timeline is applicable due to the rules that apply to their market. And to be clear, Being disciplined on pricing and protecting our absolute gross profit is crucial to our ability to continue to invest in areas such as new product development, product quality, sustainability, capacity expansion, etc. And this ultimately benefits all our stakeholders, including consumers, customers, employment, and the more than 1 million farmers we source from. Our second priority for 2025 is to identify and deliver additional efficiencies to fund incremental investments behind our leading brands, Peets, Lore, and our 10 iconic brands led by Jacobs. We have done intensive granular analysis to identify the four main areas where we are going to get these productivities. We share these four areas at our capital markets day. and started to execute on since the start of this year. The four areas we have identified are portfolio simplification, synergies in the way we work, drive continuous improvement, and focus on asset life throughout the market and partnerships. We have a specific target for each of these areas and a very detailed zip code of where we are going to get these productivities from. In terms of timing, we expect to deliver 250 million euros of net savings by the end of 2027, and in total, 500 million euros by 2032. And of course, we will update you on the progress we are making on this front on a regular basis. Let me call out some of the most important initiatives we undertook in the first half of this year to simplify our operating model and optimize resource allocation. We divested our tea business in Turkey, which was loss-making, to air for holding. We discontinued the rollout of lore barista machine in the U.S. We transferred our lore capsules business in the U.S. to pits in San Francisco to better capture the significant potential of U.S. coffee market. In procurement, we implemented a design for value program that is already bringing productivity. Using our coffee expertise, we are able to mix our blends to optimize cost while maintaining quality. When it comes to manufacturing, we announced the intent to closure our plant in Banbury in the UK. And we also announced the optimization of our operating model in Europe by reducing the number of country clusters from 10 to 5, harmonizing ways of working across teams and centralizing finance transactional activities in a global business service model to improve effectiveness and efficiency. So, yes, a good start has been made, but as this is a significant and multiyear program, what we've done today is just the beginning, and we'll continue to work on strategic initiatives to simplify and optimize the company. So, stay tuned here. Third, the strategic assessment we have done in the first half of the year and the new brand-led strategy that this resulted in provides us with a clear strategic roadmap to be much more selective and rigorous in our capital and resource allocation to drive brand investments behind our three big bets, Beats, Lore, and the 10 iconic brands led by Jacobs, with a bigger focus on organic growth. To revigorate the focus on organic growth, we are deploying as the fourth priority a spectrum of initiatives to increase agility, remove bureaucracy, and drive an ownership culture across the organization. An example of this is a two-day summit we organized right after the market day for the 100 most senior leaders of the company for alignment and deployment of the new brand-led strategy and crystallized what this means for the entire organization. When it comes to the fifth priority, to put more emphasis on stakeholder value creation, I believe we are also making good progress. We continue to invest in the business with, for example, a mid-single-digit organic increase in AMP. We improved our engagement score. We are intentionally engaging an additional 165,000 farmers to reach a total of 1 million farmers by the end of this year. and we deliver a solid free cash flow, which is used to return 243 million euros to our shareholders and to reduce our net leverage to 2.5 times. Let me now briefly provide you with a recap of a new brand-led strategy we reviewed at our Capital Markets Day on July 1st. We are simplifying the organization into one unified JDP, with three big bets, PITS, lore, and 10 local icons led by Jacobs. These 10 local icons have the strongest meaning, brand salience, and penetration in the markets where they are present and across all age groups. And very importantly as well, these are brands that enjoy very high rotation and have proven to be highly responsive to activation. And these 10 iconic brands are 100 complementary since they mostly do not coexist nor are they activated in one or same geography moving forward and leveraging the commonalities that bring these brands together we will platform once and deploy multiple times on the on the back of jacobs we will create a chassis that will adapt on the last mile for meaning and distinctivities And this is not a theoretical model. We've been experimenting over the last months, and we have proven the model can work. The focus on these three big bags does not mean that the other remaining brands in the portfolio will, by definition, be neglected or sold. We see various future avenues for the second-tier brands and the ones that find themselves in the tail. These brands could. either develop a plan that steps up their performance to aspire to become part of the group of local icons, or be transitioned to another brand like we have, for instance, done in the past with L'Amour and Carte Noire that transitioned to L'Or, and Medailles d'Or transitioned to Jacobs in Switzerland. In some cases, we could conclude over time that we are no longer the best owner of certain brands, and thus we'll look for alternatives and state models. Our transformation will be driven by five key catalysts, a winning culture of agility, ownership, and transparency, a consumer-led organization built on iconic brands, commercial excellence across four mission-critical capabilities, a simplified structure to an ambitious productivity program with financial disciplines at the core. Before sharing some examples of the progress we've been making on these five catalysts, Let me first highlight some of the promising product launches we have rolled out to our leading brands, Peeps, Lohr, and our 10 iconic brands led by Jacobs. The three big bets I just mentioned, Anchor and our brand-led strategy, are creating a powerful focus for innovation. And we are already seeing great results. We are bringing meaningful new products that meet changing and evolving needs and preferences. at the right time while increasing the value of every cup. Let me share a few highlights from the first half of the year. Peeps stepped into exciting new territory with the launch of Peeps Popping Pearls, a bold innovation designed to surprise and delight. These pearls gently burst with intense coffee flavor, deliver a unique and playful sensory experience. Because of its success, we've now brought popping pearls to more markets than the Lolo brand, where it's becoming a key feature in our experimental activations. With more than 50% of U.S. coffee drinkers now choosing medium roast, Peace is expanding its beans offering in the medium roast category. Off the Grill is our latest addition to the beans portfolio, and specifically crafted to attract new consumers by offering the coffee they already love with the premium taste and quality that only Peet's can deliver. We are also building on the strong momentum of the fast-growing iced coffee trend, especially with millennials and Gen Z. Lower Coconut Iced Espresso made a strong debut in over 20 markets, and it's just the beginning. We are now preparing to launch a seasoned lineup that reflects how our consumers live and feel throughout the year. Coming this autumn, Lore Pumpkin Spicy, a typical warming blend with notes of cinnamon, clove, allspice, and nutmeg. In June, we launched Lore Barista Absolute in six markets. Our most advanced machine yet, offering 18 brew options, including a dedicated ice function to brew a perfect iced coffee through a machine. Whether hot or cold, each cup is elevated with richer flavor and aroma. To elevate the experience for consumers when brewed cold, our innovative punch function pre-wets the coffee grounds, allowing them to bloom before extraction. This means you also get full aroma and flavor of ice when the ice button is selected. Let's now switch to the iconic brands led by Jacobs and provide you with an example of the exciting opportunities we have to platform and roll out new innovations across these strong heritage brands. Dubai Chocolate. In response to a fast-moving social media trend, this product went from concept to shelf in just 18 weeks. Its strong performance allows us to roll it out quickly across more than 20 markets under several of our leading brands, and it's already becoming one of the top-performing products in our mixes ranging in the UK. And lastly, after Peet's Ultra Coffee Concentrate opened a new category, Mocona launched Liquid Espresso Coffee Sachets in Australia. It's the first of its kind there and answers the growing need for convenience. 76% of survey consumers indicated that they will make it part of their daily routine. With that kind of response, we are now planning a wider rollout across Asia. Let me now move on to share a selection of the progress we are making on each of our five strategic catalysts I just referred to. As I mentioned at the start of this call, we have clearly noticed that the organization is starting to refine momentum. and that the new strategies and decisive actions we are taking are re-energizing and motivating our teams across the globe. This is also underpinned by the most recent outcome of our annual Gallup Employee Engagement Survey. The score improved to 4.12, based on participation rates, which was 91%, compared to 81% on average at other FMCG companies using Gallup. We also announced a new setup for the central marketing organization aligned with our new brand-led strategy and aimed at consolidating all category teams under one portfolio strategy role to drive a holistic category agenda and align priorities. Scaling up expert capabilities and removing duplicity. To beef up commercial excellence, we have, among other things, set up a brand-new revenue growth management platform and are enriching our key account management reach and capabilities. As you have heard earlier during this call, our simplification and productivity programs are in full swing, and our financial discipline remains strong, reflected in strong free cash flow, a leverage of 2.5 times, and 38% of our 2025 share-by-back program complete. So, to wrap it all up, I would like to conclude that we've delivered a strong set of broad-based results. We've put a clear and simple, brand-less strategy in place. And we've set the strategy in motion that are making solid progress since the start of the year. taking these three points into account, we feel confident in raising our full year guidance, which Young will come back at the end of their session. With that, I would now like to hand the call to Young to discuss our first half financials and the outlook for the full year 2025.

Thank you, Rafa, and good morning, everyone. Following Rafa's overview of our H1 highlights, I will now provide more details on our financial performance and then update you on our outlook for full year 2025. Slide 14 shows that we have delivered a strong set of results across top line, profitability, and cash in the first half of 2025. Organically, our sales increased by 22.5%. Our adjusted gross profit increased by 2.2%. and our adjusted EBIT by 2%, reflecting a strong delivery in H1. When taking into account the net effect of Forex and the changing scope, ourselves increased to 5 billion, adjusted gross profit increased to 1.7 billion, adjusted EBIT increased to 709 million, and our free cash flow was 565 million euros. Slide 15 shows more details on the drivers of our sales. Our organic sales grew 22.5%. It was driven by pricing of 21.5% as we continue to pass through the necessary and appropriate pricing to offset incremental inflation. In light of this pricing, volume mix growth showed a strong resilience with a plus of 1%. The negative foreign exchange impact of 2.8% was mainly driven by the depreciation of the Brazilian reais. The 0.2% contribution from Scope reflects the consolidation of Caribou as of the 31st of March, 2024, and the exit of the tea business in Turkey at the start of May. Let's now go to slide 16 to look in more details at our EBIT performance. Our organic adjusted EBIT increased by 2%. What this bridge clearly shows is two things. First, we managed an inflation headwind of about 800 million, which is more than our entire adjusted EBIT we generated in the first half of 2024. Second, we maintained our absolute gross profit by implementing appropriate price adjustments to address inflationary pressure that could not be fully mitigated through productivity and other measures. The bar chart shows that we have successfully protected our absolute profit base, reflecting the resilience and strong market position of our brands. Our overall A&P spend was up mid single digit organically with a stable to increasing AMP spend across all four segments. Let's now take a closer look at the organic sales and adjusted EBIT performance by segment on slide 17. Looking at the performance by segment, you can see that all four segments contributed to our top line growth. When it comes to profitability, both Europe and Lamia developed strong performance at gross profit and adjusted EBIT level, which was partially offset by declines in profitability at peace and APAC. Let me now go through each segment one by one. In Europe, volume mix performance was very resilient at 1.8%, taking into account pricing of plus 15.4%. Part of the relatively strong volume mix performance we believe reflects some consumer pre-buying ahead of planned price increases in the second half of the year. We estimate this pre-buying effect had a positive effect of around the two to three points on volume mix performance in the first half, which by nature will therefore become the headwind for volume mix performance in the second half of the year. and is fully reflected in our updated outlook of the full year. In H1, markets such as France, the Nordics, and Italy, and brands including Jacobs, Lohr, Dover-Edwards, and Gevalia drove organic sales growth. The adjusted EBIT increased organically by 8.6%, reflecting an increase in gross profit supported by the retailer pre-buying I just mentioned, and an increase in AMP spend as we actively reallocate funds to areas we would get better returns. In LaMia, organic sales growth was driven by 55% price growth, which was offset by a decline in volume mix of negative 1.2%. Various markets in LaMia actually delivered positive volume mix which was offset by Brazil, which continued to experience softer market conditions. Organic sales growth was driven by brands such as Pilau in Brazil and Jacobs in Eastern Europe and South Africa. Adjusted EBIT increased organically by 19.2%, which mainly reflects an increase in gross profit, productivity, and stable AMP spend. The freed up AMP as a result of a discontinuation of the rollout of the low barista machines in the US was reallocated to high impact opportunities elsewhere in Lamia. At Peace, organic sales growth was driven by 3.5% price and 0.6% volume mix. Peace in-home business continued to deliver competitive growth across its piece Caribou, Stumptown, and Intelligentsia brands. In Peet's US coffee stores, same store sales and ticket size were up, and Peet's China continued to deliver strong double-digit organic sales growth. Adjusted EBIT decreased organically by 37.6%, which is a result of two main drivers. First, as a reminder, Peet's had a high base of comparison related to a €1.16 million insurance payout benefit in H1 2024. Second, Peet's saw a decrease in gross profit, reflecting the interplay of the spacing of inflation and pricing between H1 and H2. This is reflecting that Peet's is a challenger brand in the U.S. coffee market and therefore follows, instead of leave, when it comes to passing through pricing. The level of AMP remains stable in the first half. In APAC, organic sales growth of 8.4% was driven by an increase of 7.7% in price and 0.7 in volume mix, mainly reflecting higher price elasticity in the region. Sales performance was geographically mixed. with strong performances in countries such as China and Thailand, partially offset by softer performances in countries such as Malaysia and New Zealand. Organic sales growth was driven by brands such as Makona, Super, and Old Town. The adjusted EBIT for APAC decreased organically by 14.7%, meaning reflecting phasing of productivities this year and last year. and the interplay of the facing on inflation and pricing between the first and second half. AMP spend was relatively stable compared to the same period of last year. On page 18, as Rafa mentioned earlier in the call, the three big bets, PEACE, LORE, and the local iconic brands led by Jacobs. They are core to our brand-less strategy and that's where we allocate most of our management attention and resources. This means that we will also closely track how those three big bets will perform. In H1, these three big bets altogether had solid performance with a combined organic growth of gross profit of 3%. Let's now move to slide 19 and have a look at our net profit development in absolute terms and per share. On the left-hand side of this slide, you can see that our underlying EPS, excluding the effect of the fair value change of our equity swaps, has increased by 3.4% to one euro and two cents. This was mainly driven by better operational performance and full exchange gains in the net finance line. When keeping the effect of the fair value changes of our equity swap in, the underlying EPS increased from 76 euro cents in first half 2024 to 1 euro and 33 cents in first half of 2025. Let me now share a bit more detail on our free cash flow and net debt developments on slide 20. Our free cash flow generation of 565 million euros in the first half reflects a solid operational performance driven by higher EBITDA while absorbing a net cash outflow from working capital. This net outflow in working capital reflects the following movements. In the period, inventories increased mainly on the back of higher green coffee price. Receivables increased due to higher sales, and this was partly offset by payables, and the increase in payables on the back of higher green coffee prices was partially offset by Euro-US dollar-related forex effect. The net debt bridge on the right-hand side shows that our free cash flow enables us to return 243 million euros to shareholders and reduce our net debt position by 337 million euros. Therefore, contributing to improvement of our net leverage to two and a half times. Before I update you on our outlook for full year 2025, I would like to briefly remind you on the next slide, slide 21, of the refined capital allocation priorities we shared at our capital market day at the start of July. As part of a renewed strategy, we'll emphasize creating and unlocking value by focusing on absolute gross profit growth, adjusted EBIT growth, and free cash flow generation. We will deploy our capital in a more disciplined and intentional way to enable our strategy and further strengthen our financial profile. Our first priority is to reinvest in our business, especially in our three strategic big bets, using productivity from within to fund such growth. Second, as we continue to grow EBITDA and generate strong cash flows, we're committed to building an even stronger balance sheet through cycles and target now a net leverage of two times. This is more conservative than our previous target of two and a half times, which we successfully delivered in first half. Third, we also want to deliver a more consistent return to shareholders. We aim to increase our dividend gradually and steadily over time. And next to that, we will execute the multi-year 1 billion share buyback program we started in March. As mentioned by Rafa earlier in this call, 38% of the 250 million earmarked for this year had been completed by the 25th of July. When it comes to M&A, we will prioritize the leveraged acquisitions and focus on organic growth. Our M&A focus will have a bias for asset light, and to the extent relevant, explore non-core asset diversities. That said, we do believe that in the long run, we're still a strong consolidator in the category. But right now, we're focused on getting our own house in order. Let me now update you on our outlook for 2025, starting with green coffee price developments, as these remain a very important factor in how our financial performance will take shape. As you can see on the graph on slide 23, green coffee prices have gone up very significantly and have reached historical highs in the first half of 2025. As you know, we had our green coffee price exposure in a very disciplined and consistent way. This allows us to create sufficient time to take the right measures to offset the negative effect that such inflation would otherwise have on our absolute level of profitability. It is therefore important to keep in mind that the green coffee prices in H1 2025 were on average more than 60% higher than the same period of last year. And that is exactly why we're implementing significant mitigating initiatives, including appropriate and additional pricing to offset the significant headwinds in H2 and maintain absolute profit levels. Looking ahead, green coffee experts believe that green coffee price developments will remain volatile due to ongoing supply concerns linked to climate, tight stocks, and continued speculative activities. The good thing is that, to date, we did not see meaningful signs that price elasticity is materially going up. And we know that the vast majority of consumers do not lower income coffee consumptions when prices go up. Having said that, we expect to see some short-term volume pressure again during price negotiations with our retail partners, most notably in Europe. However, based on the attractiveness of the category, the equity of our brands with our consumers, and the collaborative relationships we have with our retail and out-of-home partners, we expect that some of the volume impact can be temporary, similar to what we have seen in first half of the year. This leads me to slide 24. Our strong financial performance in the first half of the year provides a solid foundation for our full year results. Looking ahead to second half of the year, we continue to face significant inflationary pressure and ongoing volatility in green coffee prices. To address this, while implementing further mitigation actions, including appropriate pricing adjustments. In addition, volume mix performance in H2 will reflect the impact of the retailer pre-buying effect in Europe that benefited in the first half of the year. Taking the strong performance in H1 and these factors related to H2 together, we're confident in raising our full-year outlook. We now expect organic sales growth to reach a high teens percentage and anticipate that adjusted EBIT will be at least stable on an organic basis. We also continue to expect to deliver a free cash flow of around 1 billion euros. With that, we've come to the end of our prepared remarks, and with that, I will now turn it over to the operators so we can start the Q&A.

Thank you. Ladies and gentlemen, we are now ready to take your questions. Please remember that you are limited to one question and a follow-up per round. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now take our first question. One moment, please. And your first question comes from the line of Robert Jan Vos from ABN AMRO Odo BHS. Please go ahead.

Yes, hi, good morning all. Thanks for taking my questions. I have two. First one is, did you experience new delistings already or anticipate delistings with the 13% tail of the remaining customer negotiations? That's my first question. Second question, You increased the guidance for adjusted EBIT quite significantly for the full year. Why is this not reflected in your fee cash flow guidance as well? That's my second question. Thank you.

Yeah. Hi, Robert. I'll take the first one. Jan can answer the second. Under the list. No, we have not experienced. I'll dissociate a little bit to the two things that you mentioned. We could In terms of negotiation, no, we have not experienced delisting right now because of the price negotiations. In the reality, we had, as we shared with all of you, we had a tough January, February negotiations, but then in March, everything rebounded, the volumes rebounded, showing the resilience of the category. And so we are still confident in the second round that like a similar pattern will happen with the remaining customers that we haven't closed yet. So not associated to the brands at all that we mentioned on the capital markets day. So in terms of the listing, nothing significant. In terms of the brands, what you mentioned, remembering that we were talking about the 33 brands that we talked on the capital markets day as the tail brands, I mean, we are now doing the work, and we mentioned briefly on the prepared remarks, that we are doing the work to see which, and this is all over the globe, okay, it's not only Europe, but which brands, I mean, what should we do with each one of them? So, we are going very detailed on which one of them, which brands we should convert into other existing brands, which brands, in fact, like, it doesn't make sense, we should just discontinue. and which brands eventually will take different routes or will upgrade into becoming a relevant brand. I mean, this, we want to drive this process, let's say, proactively. So we will do this ourselves and then come to the retailers on the country that carry those brands to decide how to operate with them. So it's not necessarily related to the, to the negotiations of them. But as I said, as we said on the prepared remarks, negotiations, we've done 87% of the global negotiations right now for the second wave. This concluded, and there's still like 13% pending, but no delisting expected.

Then I take the second question. Hey, morning, Robert. No, we are very happy with our first half-year results, and the results, we also raised our full-year guidance in terms of adjusted EBIT. As everyone may remember, our prior guidance was low single-digit decline, and now we raise it up to at least stable. So we're very happy to the performance, but cautiously optimistic for the full year. However, when you think about the EBIT in the grand scheme of cash flow, which has been very consistent in the past two years, averaging a billion, so the EBIT movement by itself, the raise of the guidance, we'll be talking about tens of millions. So that's why in the grand scheme of the free cash flow of the $1 billion, that's why we confidently confirm our free cash flow for year guidance, still around $1 billion.

That's good. Thank you.

Thank you. Sure. Thank you. Your next question comes from the line of Antoine Prevost from Bank of America. Please go ahead.

Thank you, and good morning, everyone. Two questions for me, please. So first one on pricing. I mean, looking towards the second half of the year, so this new price round, considering you have pretty much the same COGS headwind, about 800 million incremental on headwinds, each half I mean how much additional pricing are you talking about like what level of magnitude and on elasticity from a second question I mean overall compared to like 22 23 which was the last period of major inflation I mean you have much better elasticity around even including the pre-buying in Europe so I mean What is different this time around compared to last time? I mean, why is elasticity much better this time? Thank you.

Hi, Antoine. Good to hear from you. So I'll take the first one, the pricing first on the second hand. I mean, what we try to do in our model obviously is like to offset as much as other pricing we can with productivity, efficiencies, then whatever we cannot, we pass through. And, I mean, as you mentioned, I mean, green coffee prices have remained quite high. I mean, we expect about the same level of price increase that we did in the first half and the second half. So, roughly, like meetings, a price that will be required, you know. So, again, not very different in terms of absolute levels in the first and the second half. The... The second question on elasticity, I mean, what reality happened, as you know, elasticity in coffee is quite low, you know, and has remained low. In fact, in the first half, has been actually lower, despite the price, has been lower than historical, you know, so at a very low level. What we do expect is in the second half, you're going to have some elasticity again back to historical levels, you know, so a bit higher than the first half, but still low. quite low you know and and we're talking uh according to like to to uh many years of history here elasticity depends a lot varies a lot by country okay depending on the legacy of the country consumption etc you can have a pretty big value variations of elasticity but you're talking 0.3 uh minus 0.3 elasticity on average so so again l assist on the first half was even lower than that we do expect a bit higher on the second half So that's the answer on elasticity. You also had a question on comparing 22. That was it, right? Yeah. Yeah. Is that what you answered the question?

Yeah. And just as a follow-up on pricing, is it fair to assume that on Laramie, considering pricing is probably more linked to spot price, your pricing level here should clearly decelerate?

Yes, yeah, it's fair to assume that. Indeed, you're right. The price tends to move, let's say, quicker, you know, and the hedges tends to be shorter. So, indeed, the market reacts much faster, especially in Brazil, which is an important market for us. So, yes, that's indeed true.

Amazing. Thank you. Thank you.

Thank you. Your next question. comes from the line of David Wu from Morgan Stanley. Please go ahead.

Yeah. Hi there, everyone, and well done on a solid set of results. I just wanted to get a quick check in perhaps in terms of your newer innovation. Can you just talk about exactly when the pipeline will flow through and of the newer products that have come through, I mean, what sort of resonance have you seen with your retail partners and customers? And then the second one is I know it's smaller part of the business, but could you just quantify the impact from tariffs? I know there is some chat around green coffee beans possibly being exempted from tariffs into the U.S., but in terms of any finished product flow across the sea, can you just give us an impact, sort of an update on what you think the impact could be there? Thank you.

But just to see if I understand, David, your first question is just an update on where we are in terms of innovation. Is that correct?

Yeah. Of the products that we saw at the CMD and that you highlighted today, I mean, which of those have you rolled out yet? If not, can you just give us an understanding on the timing exactly of those coming through? And if you have any that have been rolled out so far, what's the feedback been?

Yeah. We highlighted a few that you saw in the CMD and you saw here on the – on the prepared remarks, for example, the coffee pearls. You know, it's something that we launched in, we did a test, let's say, at Pete's stores during the second quarter, like halfway of the second quarter. of the year, and it performed extremely well. So now we rolled over not only across peaks, but also taking to different markets lower and starting to explore. Call it like a new category, the coffee pearls. We are quite excited about that. If you look at the parallel is the bubble tea, right, which is a multi-billion category. So the parallel will be the coffee pearls. I mean, the acceptance of retailers is, of consumers has been really significant. But in terms of impact on the P&L, frankly, to be material, I wouldn't expect this to be that soon. It'd probably take one or two years, you know, to be a material thing, because it's almost like you create a new category. But that has been, like, the green shoots of it have been very, very positive, you know. The same way with what you mentioned here as well, the medium roast in Peets, It's extremely important innovation because PEATS was famous or well-known for dark roles, and expanding the portfolio of PEATS, you remember from Capital Markets Day we showed the details, where it's going to be extremely important to have more SKUs in order to come east in the U.S. and conquer the rest of the country. with more distribution. So, again, the acceptance where we are distributed has been extremely strong. So, those are two that I'm very optimistic with what the results are showing. The last one I would mention is the platformization. We call it Jacobs and the icons, you know. And the Dubai chocolate is one example we already, like, that we launched in several brands now. And it's performing extremely well. We gave the example in the UK where it's one already, the top mix is in the UK. So this product, I mean, we do expect to have a very good return on it. But again, as it flows to the P&L, you remember from the capital market, we do model this into more towards second part of 26 and then 27 to have a real financial impact on it. on the second question you had on the tariffs, you know, I mean, it's just like important to highlight here one thing, and we import, I mean, the main one is the tariffs will impact everyone, and it's not positive, right? Coffee prices have been, green coffee prices have been up a lot already globally, as we talked about, as you know, and then obviously tariffs, it's a small piece of it, but it doesn't help. Now, the big effect is the is a terrorist from Brazil. Because as of today, I mean, starting August 1, so in a couple days, there is a 50% 50% tariff from Brazil into the US. And that's a big impact on the industry. I mean, remember, Brazil produces roughly 40% of the coffee of the world. I mean, we compared to our this will affect the whole industry, right. But we compared to to our competitors in in the u.s i mean the proportion that we use of brazilian coffee is significantly smaller than uh than most of other coffee players you know i can tell you it's uh i mean more or less less than 30 percent of what we consume it comes from from brazil and then other other players have much more, sometimes of 50%. But the expectation is, assuming this tariff continues, goes through, I mean, prices will have to go up overall in the US. And I mean, on a relative basis, we think we are better positioned because we don't have as much coffee coming from Brazil, but they will have to come up. And so it will be a further impact on passing through price to consumers.

Okay, that's very clear. So just to follow up on those, firstly on the Brazil impact, I assume within your expectation for mid-teens pricing for the second half, that is taken into account. And then the second point on your new products coming out, would they be accretive at an EBIT margin level, just given the amount of marketing, et cetera, that's going in?

Yeah, pricing, yes, it's taken into account right now, the pricing. But remember, as Yang mentioned, that in the U.S., although we've been probably pricing ahead of competition, but we are more followers than price leaders, okay, different in many parts of the world. But, yes, it's modeling already. The margin on the innovations, Our aim is always to be accretive. I'm not going to tell you like 100% of the innovations are always accretive because it's not the case. Sometimes you'll be incremental absolute numbers or in a slightly new categories, like bringing new consumers, but it might be a margin dilutive. But the aim is always to be in some of those mixes overall, they have a pretty high margin. So when you're doing, for example, the Dubai Chocolates of the world and this type of mix is very high margin. You know, Pearls is a pretty good margin as well as accretive. So it varies one. We have to go one by one. But our target is always to be margin-acquisitive, but it's not going to be always 100% the case.

Very clear. Thank you very much.

Thank you, David.

Thank you. Your next question comes from the line of Peng Zhang from Jefferies. Please go ahead.

Hi. Thank you for taking my questions. I've got two. The first one is about the new products. It's great to see that the new products are yielding some early results. Do you have a rough estimate how much the growth in H1 is driven from this product rolling out? That means is there any factor like retailers are building up stocks or is it still too early to talk about impact? And my second one is follow up on the Brazil impact on tariffs. Are you looking to change the sourcing in the long term to mitigate impact?

Thank you. Frank, good to hear from you. The new products impact, neglectable, okay? It's not relevant at all right now. It's still very small, and it doesn't affect the P&L, so no effect of it. The tariffs, I mean, the reality is it will be, frankly, impossible for the whole globe to change the coffee, coffee sourcing, let's say, from Brazil because of the size of Brazil production of coffee globally. As I said, about 40% of the global coffee comes from Brazil. So, I mean, coffee, there's a lot of other regions developing coffee plantations, as you know, and there are many countries in Central America and Africa, in Asia, but it's far away to be able to manage. to mitigate the impact from Brazil. So we, like I said, we don't source as much from Brazil. So we are quite confident, and that's a lot because of the positioning of the type of coffee we have with Pete. We don't source a lot. We source mainly from Central America. If you take an average, most of the countries we source, the tariff is going to be around 10%. You know, we don't really source from Vietnam. which is mainly the Robusta one, so which is the second largest producer. So the reality, the impact for us is going to be quite small. Now, so I don't think we're going to change necessarily the source, but it will impact the whole industry, indeed. And there's a lot of conversations, rumors that Brazilian producers are going to try to deviate more of their production. into different regions because it will be too expensive in the U.S. So there's going to be a shift in the, let's say, the global equilibrium of where coffee goes, you know, and that's expected. As I mentioned, we don't expect a major shift for us, but it will affect the whole industry, assuming this 50% sticks, right, which we also don't know if it will change. It could change, but hard to predict.

Thank you.

Thank you. Thank you.

Thank you. Your next question comes from the line of Patrick Folan from Barclays. Please go ahead.

Good morning. Thanks for taking my questions. I don't know if I missed it. So my first question is just on the efficiencies to fuel brand growth. Can you comment on what the benefits have been there thus far, and has there been any any cost benefits that can be quantified. Secondly, on Peet's, there's been more positive commentary on the U.S. coffee market recently. Should we expect Peet's to continue the momentum we've seen H1 into H2? Because I think the concern previously has been how high ticket sizes were before, and so I guess are we now seeing consumers becoming more used to these prices now, or how should we think about squaring two points of ticket sizes going into the second half versus the wider, you know, coffee market impedes? Thank you.

Hey, Patrick. This is Yang. Good morning. Let me take your first question about the productivity. As you have heard from us, we were quite excited with our entire productivity program, which we have – specific initiatives behind the 500 million that is our target, and half of it we're confident we can deliver by the end of 2027. Now, what has happened in this maybe first half here, let me zoom in a little bit. We talked about portfolio simplification as a concrete example. We announced our closure of a Banbury plant that is a processing and packaging factory in the U.K., And the second bucket, we also talk about synergies in the ways of working within ourselves. So we also just recently announced that we are streamlining and reorganizing our European businesses. We were having 10 clusters, and now we are leaning up into five clusters. And on top of that, we also have centralized our entire European finance function into our offshore or nearshore GBS function, global business services. So that creates a lot of synergies, by the way, that are working. The third bucket, we talked about continuous improvement. Well, earlier on, Rafa also mentioned that our design for value program is well underway. We're very pleased to see that the momentum is going on. The last one focused on the asset light route to the market. We also have announced that we're well underway in the U.S. For our DSD, as you may remember, our piece used the DSD route to market, and now we are transitioning into a direct-to-serve type of a business that will be much more asset-light and CNA-light. So those productivity programs are well-progressing, and we have very detailed initiatives and owners and timeline. Of course, for now, like at this particular moment, it's a bit too early to demonstrate all the ways but for every initiative that we have specific business cases and yields in a certain return for us. What we do intend to do is, as we promised, we will report our progress, and as we continue this journey, and on a full-year basis, we'll be able to give a snap update on that.

And, Patrick, on the piece, I mean, It's obvious you can see the numbers. We are very happy with overall performance of the company, right, in the first half, but not necessarily with PIT. I mean, we don't like to see that we decline our A-BIT performance in PIT. And as you notice, I mean, the reality, as we mentioned also on the remarks, the reality, the market has been lagging a bit, the cost increase, the overall market, and consequently, we do as well. We haven't been able to price as much as is needed given what happened to the green coffee prices. So this is happening now, and the last signs that we have in the last couple months have been quite positive on the market acceptance of pricing. So we do think, as you heard in other companies' calls, you know, the market's starting to pick up, and consumption is picking up. Elasticity remains quite low. So we are still confident that we're going to have a much better run rate going forward on the PITs performance. And as you know, it's a critical, one of the big bets for us is the development of PITs across the country. So short term, and I say half one, we were not as pleased with PITs what could be. The market wasn't as good, but the last few months have been much better. So again, we are happy. much more positive what will happen in second half.

Okay. Thank you, Yang. Thank you, Rafa. Thank you, Patrick.

Thank you. We are now approaching the end of the call. We will now take our last question for today. And the last question comes from the line of Jeremy Kincaid from . Please go ahead.

Good morning, all. I have two questions also. The first one's just on the price increases that you've managed to put across in the different regions. You've obviously already talked about Peets and La Mer, but I was just wondering if you could talk to price increases in Europe versus APAC. Obviously, APAC's a little bit lower, so I was just wondering as to why that's the case. And then my second question is, if we look at the difference between EBIT and adjusted EBITs, The difference is the largest this half compared to all your other halves you've been listed. So I was just hoping if you could talk through the various adjusting items that have occurred this half and maybe give an indication as to whether or not some of these larger adjusting items might continue into the future or not. Thank you.

Hi, Jeremy. I'll take the first one on the price. Young can explain the difference a little bit. The price, I mean, as I mentioned here, we do expect pricing first half and second half roughly about the same levels, call it like 15, you know, in Europe. And again, we've implemented in the first half. as the beginning of the year, we had a lot of pushback. Eventually, due to, I believe, the strength of our brands and then the good relationships we have, the prices went through and the volumes fully recovered. So, elasticity, as we mentioned on the full-year call in February, I mean, the impact you see in volume sometimes is very short-lived because it's retaliation. but then the consumption, which alternates what methods, remains strong and recover their volume, as you see on the full year results. So, again, we are right now in the middle of these negotiations. As we mentioned, globally, we have 87% of this concluded, so there's still a few customers that we need to sign off and be there on the shelf. Again, we do expect this to be implemented. We do need this to be implemented. And consequently, like, and we also expect slightly higher elasticity, as I mentioned, than in the first half. But, I mean, it hasn't happened before to have two price increases of this same magnitude in one year. So, it is very high. Unfortunately, that's what needs to happen for us, for the industry. So we do expect a bit higher elasticity, but not significant, and it's modeled already on our guidance. So for this, I mean, that's Europe. Asia, it's a bit different because The mix in Asia is very different. I mean, there's a lot of mixes, which is like not only coffee or pure coffee, but it has milk, sugar, other components on the product. So the impact of green coffee is smaller, albeit still high, but it's smaller overall. And we did, in some countries, we saw a higher elasticity In countries, as I mentioned before, elasticity can vary quite a bit globally, but in some countries where coffee is not a legacy coffee country, you saw more elasticity overall in consumption with the price increase. So it has taken a bit longer. And consequently, like, but we are putting through, as we said, we are passed through company, passed through category, and we're going to pass through everything that we need apart from what we can avoid with efficiencies. So this price is happening as we speak, and it should see a bigger impact or impact . Maybe Young can take the adjustment.

Yeah, Jeremy, I'll take the second one. As you see the adjustment, first of all, I think it's important to lay out that it's a very consistent approach and methodology versus prior. However, it is true that this year, in the first half year, we have a big swing of mark-to-market results. So those are the derivatives, particularly for the commodities that we're hedging, that we have a mark-to-market swing year-over-year, almost a little bit more than 140 million per se by itself. But of course, it's not yet settled and just a point in time of how the market is trending versus our hedging. Beyond that, smaller things, for example, the amortization of intangible that's mostly driven by because we sold off our off-site business. So some of the old books and the non-cash item is written off. So that's an entire swing coming from that. Share-based account is, I have to say, is much more representative for the ongoing basis because last year there was a one-off because of a departure of a and executive, so there's some forfeiture over there. So last year's company was lower. This year's more representative. The rest of them are transformation activities. As I earlier mentioned, it's squarely to support our productivity program. So, you know, in terms of our factory manufacturing closure was related to operating model change and so on and so forth. So those things have a specific return and initiatives that support our overall productivity program. I hope this answers your question.

Very clear. Thank you very much.

Thank you. And I would now like to return the call to the speakers.

Thank you, Sharon. Ladies and gentlemen, thank you very much for attending today's conference call and for taking part in the discussion about our results. If you have any additional questions, please do not hesitate to contact the IR team. We're happy to answer your questions. And again, thank you very much and enjoy the rest of your day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.