Coca-Cola Europacific Partners PLC (CCEP) Earnings

Management highlights

- Overall Business Performance & Strategy * Delivered a strong balanced first half 2026 with broad-based growth across markets, continued 20 bps of overall value share gain driven by European share gains, robust profit, and strong cash generation * Value creation strategy is on track: over the past 3 years, CCEP has generated $4.4 billion of value for retail customers and returned $4.3 billion to shareholders via dividends and buybacks * Core strategic priorities are: 1) Broaden the total beverage portfolio, investing in faster-growing categories and innovation; 2) Enhance revenue and margin growth management via commercial capability and productivity improvements; 3) Scale long-term growth opportunities in Southeast Asia (Philippines and Indonesia); 4) Unlock new growth via technology and AI; 5) Deliver all growth sustainably, with updated ESG goals including the Philippines - Portfolio & Innovation Progress * Strong innovation momentum across markets: new cherry variants for Coke trademarks, 500ml Supercans (proven popular with younger consumers), Die Coke & GB return to growth, Royal Grape and Lychee in Philippines, Sprite Nipis Mint in Indonesia, and rebranded Fanta with Xbox gaming graphics * Zero sugar is a core growth driver: Zero Sugar volumes up 10% across all categories, with new launches (caffeine-free Coke Zero, Zero Chill Sprite, expanded Fanta zero sugar, Monster Ultra range) delivering above expectations; Monster Ultra grew over 50% * Expanded presence in high-margin, fast-growing categories: double-digit growth for Powerade following FIFA activations and its new launch in Indonesia, strong water growth across markets, and market-leading coffee growth in Australia - Operational Execution Highlights * Accelerated cooler rollout is running ahead of plan: 80,000 coolers added in H1 2026 (up 5% year-to-date, 10% higher than full year 2025), expanding cold availability for higher-margin single-serve impulse purchases * Secured multiple new customer wins globally, including Smartwater/Fuze Tea in selected McDonald's markets, Domino's Australia, multiple accounts in GB, and a global Marriott International partnership covering over 600 hotels rolling out in H2 * Progress on packaging and sustainability: Deposit Return Scheme (DRS) launched successfully in Portugal, preparation ongoing for GB DRS in 2027, cross-border recycling launched across the Pacific Islands * 2026 FIFA World Cup was CCEP's largest ever activation: over 500,000 in-store displays, 163 million packs with Panini sticker promotions, 135 million team/player branded cans, and over 1.3 million FIFA items awarded to consumers, driving strong volume growth with no pull-forward into Q2 that impacted Q3 momentum - Southeast Asia Development * Indonesia: New route-to-market distribution model is driving stronger execution, with new product launches (Sprite Nipis Mint, Coke Zero Vanilla, Powerade) driving accelerating Q2 growth; sparkling continues to outperform the total category, with only tea portfolio performance remaining a work in progress * Philippines: Strong momentum continues with double-digit volume growth for Coke Zero and growing demand for Wilkins water; new greenfield manufacturing facility construction remains on track for 2027, with business margins already approaching the 10% target * Combined, Indonesia and Philippines are emerging as a scalable long-term growth engine for CCEP - Technology & AI Integration * AI is being deployed to drive growth and productivity across the business: enhanced promotional pricing analytics, faster commercial decision-making from aggregated consumer and sales data, accelerated cleaning of manufacturing data, improved preparation for customer meetings, and efficiency gains via digital twins in supply chain * CCEP's Agentic AI tool KIRA aggregates data from multiple sources (Nielsen, Kantar, EPOS, Coca-Cola Company brand data) to deliver faster consumer and brand insights, cutting analysis time from weeks to days

Guidance

- Management reaffirms all elements of its full year 2026 guidance, maintaining prior targets despite a strong H1 start and solid early H2 performance * Full year comparable free cash flow is projected to be at least EUR 1.7 billion, on track to meet guidance * Full year cost of sales per unit case is guided to increase 1.5%, with H1's lower 0.6% increase reflecting a stronger H1 2025 comparative, and most Middle East-related cost impacts still expected to land in H2 * The guidance incorporates the impact of 6 fewer trading days in H2 2026 compared to H1 2026 * CCEP's medium-term group organic revenue growth objective remains in line with prior targets, with Europe guided for 2% to 3% medium-term organic revenue growth, consistent with previous framework - Management notes that while H2 has started strongly, it maintains conservative guidance with 5 months remaining in the year, amid ongoing cost volatility related to Middle East market disruptions; any updates to guidance will be provided in the Q3 update - 2027 growth will benefit from full year impact of 2026 innovation, new customer wins and cooler placements already executed in 2026, and the scaling of Southeast Asian growth; management will provide formal 2027 guidance later in 2026

Segment performance

Coca-Cola Europacific Partners (CCEP) reports total first half 2026 revenue of EUR 10.7 billion, an increase of 6.1% year-over-year. Volume grew 5.6% overall (2.2% on a trading days-adjusted basis), with volume growth across both the Europe and Australia Pacific & Southeast Asia (APS) segments. Revenue per case grew 0.4% overall, against a strong 4% comparative growth in H1 2025; in Europe, Q2 2026 revenue per case grew 1.3-1.4%, with the soft comparative reflecting lapping 4.2% growth in Q2 2025. APS revenue faced a 1% headwind from the exit of Suntory alcohol business, but APS revenue excluding alcohol grew 10% year-over-year. Cost of sales per unit case increased 0.6% in H1, below the full year guidance of 1.5%. Operating profit reached EUR 1.5 billion, up 8.1% year-over-year, with an operating margin of 13.8% (up 30 bps). Diluted EPS was EUR 2.20, up 10.6% supported by ongoing share buybacks. Free cash flow was EUR 435 million, slightly ahead of H1 2025. High-growth category performance: Zero Sugar volumes grew 10%, sports & hydration volumes grew 12%, energy volumes grew 19% (with Monster growing at roughly twice the category rate and gaining 230 bps of market share), coffee in Australia reached over AUD 100 million in retail sales with Grinders becoming the #1 coffee bean brand. Southeast Asia (Indonesia and Philippines) is CCEP's fastest-growing region: Indonesia saw solid growth with sparkling outperforming the total category, while the Philippines delivered double-digit volume growth with margins approaching the 10% target.

Risks & headwinds

- Ongoing uncertain geopolitical and cost environment in the Middle East: Most of the cost impacts from Middle East-related supply chain and commodity volatility are expected to be realized in H2 2026, and the situation remains an open, evolving item through the end of the year - Proposed sugar tax changes in the Philippines: While a sugar excise tax is already in place, proposed changes to the tax are under discussion; management notes it is experienced at managing tax changes across markets and has the portfolio and pricing tools to absorb impacts, but will assess the details once proposals are finalized for 2027 planning - Consumer affordability sensitivity: Many consumers remain focused on value, requiring a balanced approach to pricing, promotion, and pack mix to maintain volume growth while protecting margins - Macroeconomic volatility and inflation: Inflation is expected to accelerate in H2 2026 into 2027, requiring segmented, flexible pricing and mix management - Commodity price volatility: The Middle East crisis has increased volatility in global commodity prices, requiring active hedging to manage cost certainty for upcoming years

Analyst Q&A

• Q: What key drivers will support 2027 growth, given lapping strong 2026 summer and FIFA growth, new portfolio expansion, Southeast Asian scaling, and AI-driven productivity? /

  A: Full year 2027 will benefit from the full impact of 2026 innovation such as Supercans and Coke Zero Zero, which launched in 2026. CCEP has planned a similarly large, exciting consumer activation for 2027 in partnership with The Coca-Cola Company. Southeast Asia is starting to become a material contributor to group growth, and pricing optimization from AI tools will carry into 2027, with existing 2026 customer and cooler investments adding to the 2027 base. (327 chars)

• Q: What explains softer than prior year European revenue per case growth in Q2 2026, will it improve in H2, and what is the recent Philippines volume trend? /

  A: Q2 2026 is lapping a very strong 4.2% revenue per case growth in Q2 2025, and the temporary pack mix headwind in Q2 came from successful FIFA promotions that drove larger format volume. CCEP maintains ability to take price in Europe, and will balance affordability for consumers with value-added activations and premium innovation to drive sequential revenue per case improvement. The Philippines has started H2 strongly with no extreme adverse weather like 2025's typhoons, maintaining prior momentum. (456 chars)

• Q: Is planned H2 2026 EBIT growth slowdown driven by conservative guidance related to Middle East cost impacts? /

  A: The slower expected H2 growth primarily reflects the mechanical impact of more selling days in H1 and fewer in H2, which was already built into original full year guidance. While most Middle East-related cost impacts will land in H2 as expected, the situation remains open and uncertain with 5 months remaining in the year, so management chose to maintain original conservative guidance rather than upgrade, and will update later if needed. There are no unstated specific issues facing the business. (439 chars)

• Q: Is the Indonesia business turnaround gaining traction beyond easy comparative effects, and can it sustain positive volume growth? /

  A: The progress is not just comparative: the new restructured route-to-market distributor model is delivering structural long-term improvements, and new product innovations (Sprite Nipis Mint, Powerade) are driving incremental growth. Sparkling portfolio underlying performance is improving quarter over quarter, with only the legacy tea portfolio still holding back consolidated results. Management is seeing consistent quarterly progress, expects momentum to continue into H2 and 2027, and is on track to develop Indonesia into a sustained growth driver. (441 chars)

• Q: How does CCEP plan to manage pricing in 2027 amid expected higher inflation, and how does this differ by region? /

  A: CCEP has successfully managed both low and high inflation environments historically, and will maintain a balanced segmented approach. The company has multiple pricing levers beyond just headline price, including promotional efficiency, pack mix optimization, and premium innovation to drive revenue per case growth, and is well diversified across categories and price points to support this approach. Affordability is a larger focus in emerging Southeast Asian markets, but the segmented strategy works across both Europe and APS, with confidence that CCEP can maintain quality top line and margin growth. (466 chars)