Coca-Cola Bottlers Japan Holdings Inc.

Gumi, Head of Investor Relations for Coca-Cola Bottlers Japan Holdings. Thank you for joining us today for our third quarter 2025 earnings presentation for analysts and investors. Today, we have our President, Kelly Dragan, and CFO, Bjorn Ulganes. We are also joined by Executive Officer and President of the Retail Company, Alex Gonzalez, Executive Officer, President of the Food Service Company, and Chief Business Strategy Officer, Marky Cuddle, Executive Officer, Chief Supply Chain Officer, and Chief Sustainability Officer, Andrew Ferrett. Following prepared remarks, we will be happy to take questions. Simultaneous interpretation is both In both Japanese and English, it's being provided for both today's call and the Q&A. Before we begin, let me remind you that today's presentation contains forward-looking statements and should be considered together with cautionary statements contained in our presentation. With that, I'd like to turn the call over to Kelly Dragon. Kelly-san, please.

Good evening, everyone. This is Kalindra Ghani and thank you for joining our earnings call. Before I share details of our financial results, this time we are announcing earnings about one week earlier than before and compared to any other major company in the domestic beverage industry. This progress reflects our efforts to standardize and streamline our operations to process the engineering and digitalization. It shows that our transformation initiatives are delivering positive results in this area as well. Now let's move on to the financial results. First, I would like to explain the positive trend in our current performance improvement. Please turn to slide three. Over the past four years, we achieved a robust increase in business income of 39 billion yen. We highly value this and are very satisfied with this trend of profit growth. Now, looking back in 2021 under the severe business environment, our business income was at the loss of approximately 15 billion yen. Since then, we focused on profitability-driven commercial activities and transformation of our business, achieving significant results and remarkable performance improvements. Regarding price revisions, one measure for improving our profitability, we have implemented eight revisions since 2022, driven by our strong commitment to enhancing profitability. And as a result, this year's business income, it's expected to reach 24 billion yen following this upward revision. This 24 billion yen business income includes the impact of significant cost increases due to external factors not in our control, such as forex and commodities. If would be to exclude this impact, the adjusted business income would exceed 50 billion yen, reaching the highest level in the history of our company. Overall business restructuring has led to this very strong performance. We achieved this business growth together with our customers and partners. In our customer satisfaction survey conducted by Advantage, we are recognized as the most highly valued partner within the consumer goods industry and the domestic beverage industry, which includes many local and global companies. This demonstrates that we have built a solid growth foundation and a great partnership. Our achievement of improved performance based on this robust growth foundation proves the correctness of our strategic direction and gives us great confidence in achieving our upcoming strategic business plan, Vision 2030. Slide four details the largest shareholder return program in our company history announced in Vision 2030. Alongside ambitious growth in business income, we plan to significantly accelerate the pace of expanding shareholder returns in line with our Vision 2030. The 150 billion yen plan for share buybacks announced in Vision 2030 represents approximately 35% of our market capitalization. We are pleased to note that this represents one of the largest buyback amounts relative to market capitalization in the Japan market. Our company has thus created a positive cycle linking improved performance with enhanced shareholder returns, and this announcement is consistent with that approach. Now, let's turn to today's highlights. Please take a look at slide five. I'm very pleased to share another set of strong results with you all. This year, third quarter delivered financial results that demonstrate the steady success of our ongoing initiatives. The third quarter year-to-date business income reached 24.5 billion yen, 1.7 times higher than last year, exceeding the plan that had been revised upwards in August. This strong performance was the solid result of profitability-focused commercial activities and cost savings achieved through transformation and other measures during the peak demand third quarter delivering above plan. Shell's volume also stayed strong in the third quarter, exceeding the growth rate of the overall market. So based on the strong performance, we have decided to further raise our full year business income forecast once again. We are now targeting 24 billion yen in business income for the full year. This is double of the last year results and 20% above our original plan. Along with this upward revision, We are enhancing shareholder returns in line with our shareholder value enhancement policy outlined in Vision 2030. Further details will be provided later, but as part of the initiatives, we will implement the cancellation of treasury shares equivalent to 6.5% of the total shared issues and increase the year-on-year dividend by 10% compared to the initial plan. Additionally, as previously announced, we will continue to share buyback program starting in November, targeting 30 billion yen to further enhance shareholder value. Now, our CFO Bjorn Ylkenes will walk you through our financial results in more details.

Thank you, Colleen. Good evening, everyone. This is Bjorn. Slide 7 shows the P&L statement for the third quarter year-to-date. Revenue continued to grow and business income gained momentum, resulting in a larger profit increase. Revenue increased by 1% year-on-year. This was driven by higher wholesale revenue per case of the price revisions despite lower sales volume and weaker channel mix. Gross profit increased by 2.4 billion yen year on year, driven by the benefit of price revisions, despite being affected by deteriorating channel mix and rising costs due to external factors. Business income rose by 9.8 billion yen year on year, driven by higher revenues and cost savings from our transformation initiatives. The third quarter profit increase was the largest among the year's quarters, accelerating the trend of quarterly profit growth. The next slide explains the main factors behind this change in business income. Operating income and net income decreased year on year, due to the recording of an impairment loss of ¥88.1 billion in the vending business during the second quarter as previously explained. Now please turn to slide 8 for factors behind the change in business income. Starting from the left, we can see the impact of volume, price and mix. These reflect changes in marginal profits from our commercial activities, contributing a positive 6.9 billion yen year-on-year. The main factors were a negative impact of 6.3 billion yen from volume, including channel mix, and a positive impact of 15.1 billion yen from unit price, and a negative impact of ¥1.9 billion from other factors. Although lower volume and an unfavorable channel mix affected results due to changing consumption trends, improved wholesale revenue per case from price revisions made a strong positive contribution. Transformation benefits totaled ¥4.6 billion This is mainly driven by strong results from vending transformation and improved efficiency in our supply chain network. In particular, the vending transformation is progressing ahead of our original plan. Marketing expenses increased by ¥1.2 billion compared to the previous year. This increase reflected strengthening activities in the third quarter to capture peak season demand and secure shelf space ahead of price revisions in October. However, spending remained below the initial plan thanks to careful investments based on return on investments and market conditions. Manufacturing costs fell by 1.7 billion yen compared to the previous year. This was the result of cost-saving meshes implemented at our production sites and through more efficient procurement processes. Other costs increased by 700 million yen year-on-year. This was mainly due to higher outsource fees, logistics costs, and vehicle and facility expenses, despite reduced personnel costs. This figure also reflects special factors including lower depreciation expenses following the impairment loss of the vending business. Commodity and utility costs increased by 1.5 billion yen. Market conditions and exchange rate impacts accounted for 1.4 billion yen of this increase, while higher energy costs added a further 100 million yen. Next is slide 9, outlining sales volume performance by channel and category. Third quarter year-to-date sales volume was impacted by past price revisions, the cycling impact of last year's strong Ayataka renewal, and the temporary surge in demand following the non-Kaeterov emergency notice. However, Contributions from strengthening core categories, expanded Salesforce space, and effective marketing helped limit the decline to 1%, outperforming the overall market. Wholesale revenue per case achieved a double-digit yen improvement year-on-year across all channels, reflecting the impact of price revisions. Supermarket sales volume decreased by 4%, primarily due to lower volumes of tea beverages and large PET water bottles, influenced by price changes and the cycling of last year's performance. At drugstores and discounters, growth in medium-sized PET coffee bottles helped limit the volume decline to 1%. At convenience stores, volume decreased by 5%, but profit rose thanks to a profit-focused strategy that included optimization of promotions. In vending, market conditions remained tough, with volume down 5%. However, price revisions continue to have a positive impact, improving wholesale revenue per case by 98%. In retail and food service, volume increased by 6%, supporting by new customer acquisitions and stronger sales in the sparkling category. Online volume grew by 17%, driven by growth in the tea category and the launch of channel exclusive products. By category, Sparkling grew 3%, driven by contributions from Coca-Cola and Coca-Cola Zero. Tea volume held was flat year-on-year, supported by Ayataka's solid sales of the last year's successful renewal and the strong performance of Kochakaden. Sports drinks and water saw a decline due to factors including price revisions, and Cycling of the Nankai's Rough Emergency Notice. Coffee volume remained at last year's levels, supported by contributions from medium-sized PET bottles, despite tough competition. Slide 10 shows market share and retail price trends. Profitability-focused sales activities helped us grow our value share and maintain price premiums. Market share increased by 0.1 points in the total channel value share and by 0.4 points in volume share. We are very pleased that we achieved both higher volume share and positive value share growth even while implementing price revisions. Vending volume share increased by 0.3 points, even as the overall market continued to shrink. The strong growth in volume share compared to value share reflects the impact of product mix, while our wholesale revenue per case showing solid improvement, as mentioned earlier. In the OTC channel, share declined due to lower volume and changes in channel and package mix. However, profitability is improving steadily here as well, supported by higher wholesale revenue per case. Our retail prices maintain a premium relative to the industry average. We have applied price revisions with discipline and retail prices for both small and large PET bottles have improved compared to last year. Now on the next slide, Alex will explain the status of our commercial activities. Alex, over to you.