Coca-Cola Bottlers Japan Holdings Inc.

Good evening. This is Gomi, Head of Investor Relations at Coca-Cola Bottlers Japan Holdings. Thank you for joining our second quarter 2026 earnings presentation for analysts and investors. Today, we are joined by President Karin Dragan and Vice President and CFO Bjorn Ulganes. Also with us are Vice President, President of the Food Service Company and Chief Business Strategy Officer, Maki Kadou. Executive Officer and President of the retail company, Alex Gonzalez. And Executive Officer, Chief Supply Chain Officer, Chief Sustainability Officer, Andrew Ferrett. And Executive Officer and Chief Human Resources Officer, Yuki Higashi. Following prepared remarks, we will be happy to take your questions. Simultaneous interpretation in Japanese and English is available for both today's presentation and the Q&A. Before we begin, please note that today's presentation contains forward-looking statements and should be considered together with cautionary statements contained in our presentation materials. With that, I'd like to turn the call over to Karin Dragan. Karin-san, please.

Good evening, everyone. This is Karin Dragan. Thank you for joining our earnings call. Before the presentation today, I would like to express our deepest sympathies to all those affected by the Kumamoto earthquake on July 28, 2026. The safety of our employees and their families remains our highest priority. We are currently confirming the safety of our employees and assessing the impact on our facilities and equipment, manufacturing and logistic operations, and product supply at the Kumamoto plant and other sites within our business area. At the Kumamoto plant, as safety and product quality are our top priorities, operations have been suspended while detailed inspections are carried out. Logistics and delivery operations in certain areas have also been affected due to damage to roads and other infrastructure. We will continue working closely with the local authorities and internal teams. We will provide further updates as soon as material information becomes available. And once again, we sincerely hope for the safety of all those affected by the disaster and for a swift recovery. Now, I would like to share our first half financial results. These are the highlights of today's presentation. Please look at slide three. In the first half, we continued our trend of profit growth and achieving strong results. Business income for the first half grew by 6.6 billion yen versus the previous year. Although we are still ahead of the peak demand season, we have already achieved over 60% of our full-year profit growth target representing good progress. Furthermore, for the first time in eight years, since 2018, we have returned to profit in our first half. We view this as a significant achievement that demonstrates steady improvement across our entire business. Even while the whole industry faces raising costs, we are steadily improving our profitability. In the first half, revenue grew by 1.3% versus previous year, while gross profit grew by 3.4%, exceeding revenue growth and contributing to an increase in business income. Furthermore, during the first half, key initiatives that will drive future profit growth, such as expanding sales space in preparations for the peak demand season, implementing price revisions and accelerated rollout of Monster energy and value machines made significant progress. Transformation efforts to build growth foundation also proceeded smoothly. In addition, building on the strong earnings performance, we have announced a 40 billion yen share buyback program to be carried out over one year starting in November as part of our shareholders return program under Vision 2030. We have increased the scale of the buyback by 10 billion yen compared to the previous program, thereby accelerating our shareholder returns. We believe we are successfully creating a positive cycle of steadily improving our earnings performance and enhancing shareholder returns. Looking ahead into the second half, We will achieve our four-year business income target of 35 billion yen by maximizing commercial activities during the peak demand period, further advancing our key initiatives, and addressing cost increases impacted by the situation in the Middle East. We will also make significant progress towards achieving our ambitious mid- to long-term targets. Now, our CFO, Bjorn Urgenis, will provide a detailed explanation of our financial results.

Thank you, Colleen, and good evening, everyone. This is Bjorn. Please turn to slide five for the first half, profit and loss. The first half saw an increase in both revenue and profit compared with the previous year. and our business performance performed smoothly. Sales volume grew at a rate faster than the market, despite the impact of price revisions and other factors. Revenue grew by 1.3% year-over-year, driven by volume growth and an improvement in wholesale revenue per case, despite the impact of a less favorable channel mix. Gross profit increased by 3.4% year-over-year, outpacing the revenue growth rate. In addition to top-line growth driven by price revisions, this was due in part to our ability to control commodity and material costs, including joint procurement within the Coca-Cola system and hedging strategies. In an environment of rising costs caused by external factors. As a result of such initiatives, business income grew significantly at 6.6 billion yen year over year, which was more than five times the previous year's figure. I will explain the factors contributing to this increase in profit later. Operating income increased significantly by 10.3 billion year over year, driven by business income increases and cycling of the 88.4 billion yen impairment loss recorded in the vending business during the second quarter of the previous year. Net income improved by 70.77 billion yen year-over-year, reaching 4.8 billion yen. This was primarily driven by an increase in operating income and marks a return to first-half profitability for the first time in eight years since 2018. Slide 6 shows our financial results by segment. In the first half, Vending achieved profits driven by the benefits of transformation initiatives, while OTC and food service achieved revenue and profit growth. Let's look at the vending business. Sales volume declined due to price revisions and unfavorable weather in June, and although we continue to see improvements in wholesale revenue per case, revenue decreased. On the other hand, segment profit was 5.3 billion yen, an improvement of 6.7 billion yen from the previous year. While this figure includes the positive impact of lower depreciation expenses resulting from the impairment loss in the vending business recorded in the previous year, the transformation benefits such as improved profitability and enhanced route productivity are steadily becoming evident. As a result, we were able to achieve organic profit growth even in a challenging business environment. In the OTC business, revenue increased by 2.6% year-over-year, outpacing volume growth, driven by both volume growth and price revision benefits. In particular, online, Drugstores and Discounters Channel led the growth in both volume and revenue. Segment profit grew 8.3% year-over-year through relentless focus on profitability-driven initiatives. In food service business, we achieved strong double-digit growth year-over-year in sales volume, revenue, and segment profit. driven by business expansion with existing customers and the success of our efforts to secure new customers. Initiatives aimed at driving mid to long-term profit growth is progressing smoothly, and we will continue this positive trend going forward. Please turn to slide seven. for the factors behind the change in business income. Business income grew strongly, increasing by 6.6 billion yen compared to the previous year. Starting from the left, we can see the impact of volume, price, and mix. Together, these factors reflect changes in marginal profit from our commercial activities Inc. Inc. Inc. Inc. Inc. due to the changing consumer trends remain a headwind. Volume growth and improved wholesale revenue per case resulting from price revisions are steadily contributing to profit growth. Transformation benefits totaled three billion yen in line with our plan. Savings were particularly significant in commercial where benefits from the transformation of the vending business continue to materialize steadily. In supply chain and back office, we are building a foundation that contributes to mid- to long-term growth while also generating cost savings. Marketing expenses increase by 1.4 billion yen year over year. This was due to our marketing investments made with return on investments in mind while taking market conditions into account while strengthening marketing activities in the second quarter in preparation for the peak demand season. Manufacturing costs decreased by 0.7 billion yen versus the previous year. As production volume increased alongside higher sales volume, manufacturing efficiency improved. In addition, we continue to implement cost-saving initiatives on the production sites. Although other costs increased due to higher IT-related investments and expenses aimed at future profit growth, as well as higher personnel and outsourcing costs, The increase was limited to 0.1 billion yen offset by a reduction in depreciation expenses this year resulting from the impairment loss of the vending business recorded in the previous year. Commodity and utility costs decreased by 0.7 billion yen thanks to successful hedging strategies. and our procurement function leveraging the Coca-Cola system's global network, one of our company's key strengths. Commodities and foreign exchange were flat year over year, while utility costs achieved a decrease of 0.6 billion yen. From the next slide, Alex will give an overview of our commercial activities. Alex, please.