Coca-Cola Europacific Partners plc Q3 FY2024 earnings call

• Year-to-date 2024 has been solid with volume and revenue growth, share ahead of market, and NARTD category resilient. • Q3 had solid revenue growth driven by revenue per unit case, with activation around iconic events like Olympics, Euros, and America's Cup. • Won new customers such as Alyssa, Punch Taverns, and Ancol Dreamland. • Brands like Coca-Cola, Sprite, Monster performed well; sports volumes grew 7%; NARTD diversified with new launches. • Progress in route to market transformation in Indonesia and investment in the Philippines, including refillable glass bottles in Indonesia and increased capital allocation.

In Q3, total revenue grew 2.4%. Total volumes were flat year-on-year, but transactions were ahead. Underlying volumes excluding certain exits grew ~1%. Europe volumes were down 1.4%, while APS volumes were up 3.3% led by the Philippines. Revenue per unit case in Europe grew 3.2%, and in APS it was up 1.2%. Europe's revenue contribution is significant but affected by softer volumes, while APS, particularly the Philippines, contributed strongly with volume growth.

• Reaffirmed full-year profit and free cash flow guidance. • Lowered full-year revenue guidance to around 3.5% from previous ~4% due to mixed weather in Europe and softer away-from-home channel. • Expect COGS per unit case growth of around 2.5% due to positive mix from Philippines and commodity favorability. • Declared second half dividend of EUR 1.23 per share, maintaining annualized payout ratio ~50% with absolute full-year dividend increase over 7%. • Plan to invest in key markets like Philippines, Europe, and Australia, and accelerate digital transformation.

• Adverse weather in Europe impacted volumes. • Geopolitical events affected Indonesian volumes. • Potential impact of sugar taxes in the UK on pricing and volumes, with industry likely to pass on costs to consumers.

Q: Matthew Ford asked about European consumer health and 2025 outlook.

A: Damian Gammell said retail in Europe has held up well, revenue per case growth is a positive, and while volume growth expected didn't materialize, diversification strategy is right; details on 2025 to be discussed in February.

Q: Simon Hales asked about revenue per case development in Europe.

A: Damian Gammell said revenue per case growth in Europe is due to pricing across markets and data analytics, expecting to sustain through Q4 with stable promo calendar.

Q: Sanjeet Aujla asked about underperforming sub-channels in Europe's away-from-home.

A: Damian Gammell said outdoor dining in Southern Europe terraces (France, Spain) hit most, convenience and QSR held up but QSRs promoting more value meals due to affordability.

Q: Mitchell Collett asked about factors maintaining EBIT guidance despite lower revenue.

A: Ed Walker said main driver is cost of sales mix benefit from Philippines, commodity favorability, and transformation program benefits.

Q: Lauren Lieberman asked about 4Q implied acceleration.

A: Damian Gammell said Christmas retail focus in Western Europe, retail business strength, added selling days, and strength in Philippines support acceleration.

Q: Eric Serotta asked about reinvigorating away-from-home trends and Spain tragedy impact.

A: Damian Gammell said focusing on taking share, winning new customers, investing in coolers, and Spain tragedy has small consolidated impact; continuing to work with customers in away-from-home.

Q: Bryan Spillane asked about next year's headwinds and tailwinds.

A: Damian Gammell mentioned Olympics and Euros as past tailwinds, awaiting normal weather in 2025; Ed Walker discussed cost stability and hedging for 2025.

Q: Charlie Higgs asked about Southeast Asia division.

A: Damian Gammell said Philippines team did well with RGB investment and price moves; Indonesia has challenges but refillable glass launch and route to market changes show progress.

Q: Edward Mundy asked about Europe's volume growth opportunity.

A: Damian Gammell said focusing on Diet Coke campaign, sports activation, Fuze transition, and continuing away-from-home investments for quality volume growth.

Q: Philip Spain asked about UK sugar tax impact.

A: Damian Gammell said industry has reformulated 70% of drinks in GB as low/no calorie, expects price pass-through, and will factor into pricing strategy and reformulation if opportunities arise.