Coca-Cola Europacific Partners PLC Q2 FY2025 earnings call

• Strong top and bottom line growth, with cash returns accelerating including EUR 460 million in share buybacks and a dividend in line with policy. • Resilient categories like ARTD and hot coffee are structurally growing. • Innovation across brands with packaging, flavor extensions, and collaborations. • Execution in store, online, and outlets with a large sales force powered by technology. • Sustainability efforts including retaining CDP's A-List for Climate and investing in sustainable technology. • Efficiency programs on track to deliver savings by 2028, with shared service centers in Manila and Bulgaria.

In the first half, revenue was EUR 10.3 billion, up 2.5%. Comparable volumes were marginally ahead, up 0.3% despite Indonesia's challenges. Operating profit was EUR 1.4 billion, up 7.2%, with an operating margin of 13.5%. Monster had volumes up nearly 15%, Fanta Zero grew by around 7%, Sprite Zero by 13%, ARTD volumes up around 9%. Europe saw revenue growth, and APS markets performed well though Indonesia impacted volumes.

• Reaffirmed profit and cash flow guidance. • Updated revenue growth range to 3%-4% for full year 2025 due to slower growth in Indonesia. • Anticipate FX headwind of around 150 basis points to revenue and almost 200 basis points to operating profit. • Operating profit guidance remains around 7% on an FX-neutral basis, impacted by higher effective tax rate and growth in noncontrolling interest.

• Macroeconomic slowdown in Indonesia impacting volumes. • Weather-related challenges in the Philippines. • Competitive market conditions affecting pricing and promotional strategies. • FX headwinds affecting revenue and operating profit.

Q: Bonnie Herzog from Goldman Sachs asked about guidance, specifically drivers of top-line acceleration and price/mix vs volume growth in the second half.

A: Damian Gammell and Ed Walker responded, noting Q2 strength, continuation of growth, and that second half volume growth is expected with less contribution from revenue per case.

Q: Simon Hales from Citi inquired about Q3 trading, regional performance in Europe and APS.

A: Damian Gammell mentioned better weather in Europe boosting July business, stabilization in Indonesia, and APS markets including Philippines with some impact from flooding.

Q: Edward Mundy from Jefferies asked about volume inflection in Europe and medium-term volume growth confidence.

A: Damian Gammell stated confidence in midterm volume growth due to campaigns, innovation, and focus on Away-from-Home growth.

Q: Lauren Lieberman from Barclays asked about market competitiveness and multiyear view.

A: Damian Gammell said market remains competitive but not significantly different, with a multiyear view on pricing and promo strategies.

Q: Richard Withagen from Kepler Cheuvreux asked about Share a Coke campaign metrics and global vs local campaigns.

A: Damian Gammell discussed metrics like display, shelf share, and consumer consumption, noting global and local campaigns both play roles.

Q: Eric Serotta from Morgan Stanley inquired about Away-from-Home acceleration and Sparkling growth in Europe.

A: Damian Gammell talked about Away-from-Home growth due to weather and consumer engagement, and Sparkling growth focus on volume and revenue.

Q: Nadine Sarwat from Bernstein asked about Indonesia's impact on medium-term guidance.

A: Ed Walker and Damian Gammell said Indonesia is a headwind but has a long-term opportunity and doesn't materially affect midterm objectives.

Q: Matt Ford from BNP asked about COGS hedging for 2025 and 2026.

A: Ed Walker responded that COGS is well hedged for 2025, with 60% hedged for 2026 and flat commodities expected.

Q: Charlie Higgs from Rothschild & Co Redburn asked about Australia margin turnaround.

A: Damian Gammell and Ed Walker discussed margin expansion due to revenue growth, portfolio rationalization, and shared services.

Q: Robert Ottenstein from Evercore ISI asked about ARTD initiatives.

A: Damian Gammell and Ed Walker said ARTD initiatives are performing well with learnings and expansion plans.

Q: Mitch Collett from Deutsche Bank asked about 4 or more ambition beyond 2025.

A: Damian Gammell stated confidence in top-line growth continuing, with 2026 expected to maintain growth.

Q: Sanjeet Aujla from UBS asked about commercial agreements in Europe and Indonesia stabilization.

A: Damian Gammell said agreements are resolved, and Indonesia is stabilizing with Sparkling leading.

Q: Carlos Laboy from HSBC asked about trade management outlook in Europe.

A: Damian Gammell discussed digital capabilities in trade management, progress in organized and fragmented trade, and future investments.

Q: Usama Tariq from ABN AMRO ODDO BHF asked about comparable free cash flows.

A: Ed Walker responded that it's phasing related, with confidence in reaffirmed guidance as Indonesia's impact is small.