Q4 2024 Earnings Call Transcript

Thank you all for joining us on this lovely day today. I am here with Damian Gammell, our CEO; and Ed Walker, our CFO. Before we begin with our opening remarks, I remind you of our cautionary statements. This call will contain forward-looking management comments and other statements reflecting our outlook.

These comments should be considered in conjunction with the cautionary language contained in today’s release as well as the detailed cautionary statements found in reports filed with the UK, U.S., Dutch financial authorities. A copy of this information is available on our website, www.cocacolaep.com. Prepared remarks will be made by Damian followed by Q&A. Unless otherwise stated, metrics presented today will be on a comparable and FX-neutral basis throughout.

They will also be presented on an adjusted comparable basis, that’s reflecting the results of CCP on our Australia/Pacific and Southeast Asia business unit, APS as if the Coca-Cola Philippines transaction had occurred at the beginning of last year rather than in February when the acquisition completed. Following the call, a full transcript will be made available as soon as posted on our website. I will now turn the call over to our CEO, Damian.

Thank you, Sarah and many thanks to everyone for joining us today. I’d like to start off with a recap on our strategy, which continues to deliver. Our value creation is clear with 2024 being another solid year for CCEP and a year that saw us further diversify with the addition of a great market in the Philippines. I’d like to start today by thanking all of my colleagues at CCEP for their ongoing energy, hard work and continued commitment to our customer and to our business.

As always, this is underpinned by our strong and aligned relationships with both the Coca-Cola Company and Monster and our other brand partners. We will touch on many of these themes today, all of which contributing to our TSR of more than 160%. So, just turning to our key messages. We enjoyed a great finish to a solid year with robust top and bottom line growth.

We are more geographically diversified with the strong performance of our higher growth APS markets helping offset some softer volumes in Europe, which reflected some strategic delistings, mixed summer weather, which we’ve touched on before, and softer demand in our away-from-home channel. I am particularly happy to have grown share ahead of the market and led on value creation for our customers. Alongside ongoing productivity gains, we drove impressive comparable free cash flow of over €1.8 billion. Looking ahead, we have strong investment and commercial plans in place to drive growth, both in Europe and APS in categories that continue to grow.

We are therefore confident that we will deliver on our mid-term growth objectives. Our full year ‘25 guidance, combined with the resumption of our share buybacks also announced today, demonstrating our ability to deliver continued shareholder value. Now to some of the key performance highlights. We delivered a great top line performance, reflecting underlying volume growth with transactions ahead of volume and solid gains in revenue per unit case.

This was driven by revenue and margin – management initiatives and our continued focus on our price and promotion strategies. The NARTD category grew in volume and value in both Europe and APS. We grew our value share by 40 basis points in the home channel, while also making gains in away-from-home and critically online. In the Advantage survey, our customers – with our customers CCEP was registered again as a top-tier supplier.

Our strong top line performance, together with the delivery of our efficiency programs, drove a solid operating profit growth of 8%, with operating margin expansion in both Europe and APS and diluted earnings per share growth of 6.5% on a comparable and FX-neutral basis. Again, we generated impressive comparable free cash flow of €1.8 billion after investing over €1 billion across our business in the areas of capacity, technology and digital and also supporting the early return to our target leverage range. We delivered healthy dividend growth and have today announced a new €1 billion share buyback program.

As ever at CCEP, we remain focused on great people, great brands, great execution, all done sustainably. I will now share a few brief highlights on these topics for last year. As ever starting with our people, we continue to build the capabilities of our teams. And for example, our partnership with the London Business School has upskilled over 500 of our executive leaders.

We continue to be recognized internally and externally. We saw record scores in our engagement survey placing CCEP amongst the best of its peers as a great place to work. And recently, the Top Employers Institute recognized CCEP as a top employer across many of our markets. And finally, committed to building an even more inclusive and diverse culture, we welcomed another 9,000 colleagues of CCEP with the seamless integration of the Philippines business.

On our brands, we are extremely privileged to make, move and sell the world’s most loved brands, in which we continue to invest to make them even better and to appeal to even more consumers. Category highlights are included in today’s release. Overall, it’s fantastic that in Europe, for example, Coca-Cola trademark remains the biggest FMCG brand with Monster, the third fastest growing. We delivered innovation across the board through packaging, flavor extensions, special collaborations and a lot more and a bit later, I will share with you some of the brand plans in place for 2025. As a bottler, great execution is always a key priority for us at CCEP.

We continue to create leading value for our category, adding well over €1 billion of value to our retail customers. Activation both in-store and online is key. Last year, as you know, was a standout with the summer’s iconic sporting events, namely the Olympic and Paralympic Games in Paris, the EURO’s in Germany and the America's Cup in Barcelona, providing us with a powerful platform. We also increased our share of cold drink space with even more cooler placements, all helping our brands reach more households and to improve our share across our categories.

Our customers and consumers rightly expect our products to be made to the highest quality and safety standards. In that context, we recently had a small issue with some products manufactured in Belgium late last year. This was deeply unfortunate in nature, but we are pleased that this was quickly resolved and has naturally led to appropriate learnings being incorporated into our product safety and quality procedures with new protocols put in place. Now on to our sustainability highlights for which we continue to be recognized externally, including retaining our inclusion on CDP’s A List for Climate now for the ninth year and maintaining our MSCI AAA ESG rating.

We are also recently included in Sustainalytics ESG top rated companies for 2025, which rated CCEP number one in the food and beverage category. And we continue to invest in sustainability-focused technology to our ventures arm across ingredients, manufacturing and packaging to support our decarbonization journey. For example, Avalo are using AI to develop a low-carbon sugar crop with higher yields and improved drought resistance. Just one example of how this sustainability journey makes CCEP a better business.

Before I hand over to Ed, I’d just like to call out the Philippines, which will soon reach its first birthday in the CCEP family and what a year it was having delivered double-digit volume growth. Underlying market demand in the Philippines was strong, which with great execution, drove nearly 300 basis points of value share gains to a record high at an impressive 75% Sparkling and 50% NARTD share. This translates into a very healthy operating margin expansion of around 200 basis points. I’ve said it before, but the more time I spend in the market, the more excited I become about the addition of the Philippines into the CCEP family.

We see lots of opportunities, both long and short-term, which naturally will be led by Coke trademark. We all see opportunities in other areas such as low and no sugar energy and our recently launched ARTD brands. Our strong focus on capital allocation and our long-term mindset will ensure we will invest in this exciting business to support and lead the market’s long-term growth expectation. So given the positive outlook, we are accelerating some of our CapEx plans in that market.

I know many of you are coming to our Capital Markets event in the Philippines in May, where the leadership, local teams, and I look forward to showcasing this market. We will also be bringing Indonesia to Manila. So on Indonesia, whereas clearly, the Philippines had a standard year, our Indonesian volumes similar to many other Western brands, were significantly affected by geopolitical events. We did however see encouraging sparkling growth in less affected parts of the country and the transformation of our route to market has progressed well.

So we will ensure Indonesia continues to be fit for the future. I wanted to not only recognize the fantastic efforts made by our Indonesian business in this challenging environment, but also to reiterate at CCEP, we continue to believe in an exciting and long-term opportunity in this market. However, given the context, business performance is naturally behind plan, leading to a non-cash impairment charge in our full year ‘24 results. Ed will touch more on this shortly.

So now I’d like to hand over to Ed to take you through our financials in some more detail. Ed?

Thank you, Damian and thank you all for joining us today. So firstly, to our financial summary. So we delivered revenue for the year of €20.7 billion, an increase of 3.5% and in line with our guidance. While comparable volumes were flat for the year, underlying volumes were up 0.7% and we take into account the effect of strategic delistings, principally Capri-Sun in Europe.

As Damian mentioned earlier, we also felt the impact of adverse weather in Europe, particularly during Q2 and Q3, which contributed to softer volumes, particularly in the away-from-home channel. Volumes in Europe were down 2.4% or 1.4% on an underlying basis. Volumes in APS were up 4.9%, driven by the Philippines, but also reflecting impressive growth in the Pacific Islands and Papua New Guinea. We delivered strong revenue per case growth of 2.7%, reflecting positive headline pricing and promotional optimization with a focus on consumer price relevance, all built on data and insights.

We had favorable brand mix, which was partly offset by geographic mix driven by the strong growth in the Philippines, which is coming from our lower revenue per unit case. Cost of sales per unit case increased 2.6%, in line with guidance, cycling high single-digit growth in ‘23. This reflects our increased revenue per unit case, driving higher concentrate costs through our incidence pricing model and inflation in manufacturing, offset by the mix impact from the stronger growth in the Philippines, which has a lower cost of sales per unit. A breakdown of this is all provided in the appendix to the presentation.

OpEx as a percentage of revenue was 22.5%, an improvement of 50 basis points. And all these elements combined drove operating profit for the year of €2.7 billion, up 8% and an operating margin of 12.9%, an expansion of around 50 basis points. On a reported basis, operating profit declined by just under 9%, reflecting higher business transformation costs to support our growth and productivity programs and the €175 million non-cash impairment charge relating to the carrying value of the Indonesian business unit, which Damian referred to earlier. We delivered diluted earnings per share of €3.95, up 6.5% on a comparable and ForEx-neutral basis.

And this was driven by our operating profit growth, in part offset by the higher non-controlling interest and interest charges, both driven by the Philippines and by a higher effective tax rate in line with guidance. Comparable free cash flow generation continues to be a core priority for us, delivering an impressive €1.8 billion. And our return on invested capital increased by 50 basis points to 10.8% driven by the increase in profit after tax and our continued focus on capital allocation. And finally, on shareholder returns, we paid a total dividend per share of €1.97, up just over 7% for the year.

Now on to efficiency and productivity where we have a proven track record of delivery. As a reminder, our current program aims to deliver between €350 million and €400 million of efficiencies by 2028. In its first year, we have delivered around €80 million earlier than planned and ahead of our original guidance of €60 million to €70 million. Around half of this came from supply chain initiatives in Europe and Australia, alongside further leveraging of our digital and shared service capabilities in Bulgaria. Looking ahead to 2025, while we still expect to see inflationary pressures on the business, particularly in labor, we are confident of continuing to drive further efficiencies in line with our plans.

One example relates to the further optimization of our German network, leading to the closure of the Cologne site and the consolidation of warehousing facilities, which also generates carbon benefits. And as previously referenced, all the benefits of these programs and the cash restructuring costs to deliver them are included within our guidance. Turning now to free cash flow, as I said, a core priority for us. The €1.8 billion of comparable free cash flow generated translates into a very healthy free cash flow conversion to net profit.

And this bridge lays out the key components, including ongoing cash restructuring costs, as I mentioned earlier. Recognizing the importance of targeted investments, we spend around €1.1 billion on CapEx on supply chain, digital and technology as well as more cold drink equipment. Examples include new can lines in GB in Australia, a new PET line in Papua New Guinea and the new RGB line in Germany. We are also entering the build phase of our new unified SAP architecture, having successfully completed the design phase.

And finally, as you know, driving working capital benefits remains a core focus for us. So I am really pleased that we delivered yet another year of benefits, taking the cumulative amount to more than €1.5 billion since 2017. And thus impressive free cash flow generation has driven sustained deleveraging over time. This enabled us to return to our target leverage range of 2.5x to 3x EBITDA 1 year ahead of plan, which brings me on to our capital allocation framework, which is unchanged. We remain focused on ensuring we maintain a strong and flexible balance sheet, operating within our leverage range and with a strong investment grade rating.

We continue to benefit from a balanced debt maturity profile with an attractive total weighted average cost of net debt expected to remain around 2%. We touched already on CapEx and restructuring spend, with our guidance on capital investment unchanged for ‘25, which implies well over €1 billion of spend to support our growth plans. Of course, we remain alert to value-accretive M&A should the opportunity arise. And finally, as Damian referenced earlier, we are committed to delivering shareholder returns.

These comprise our annual dividend payout ratio of around 50%. And as of today, our new share buyback program of €1 billion to be executed over the next 12 months. Before I move on to our guidance for ‘25, I wanted to share a few comments on two well-trailed portfolio changes that will increase our alignment with the Coca-Cola Company and unlock further growth opportunities. The first is the transition from Nestea to Fuze Tea.

Following its successful rollout in Europe, Iberia is the last market to change to this better and bolder platform in the growing tea category. As you would expect, this has been well planned. Distribution is going well with both home and away-from-home customers, supported by great marketing. And the second relates to the end of our partnership with Suntory Global Spirits running until the end of June in Australia and the end of December in New Zealand.

This paves the way for the start of the multiyear transition to launching ARTD offerings, as we’ve seen in Europe and the Philippines, but in Australia, now extended to the Coca-Cola Company’s recently acquired popular vodka-based Billson’s brand. Just to note that both of these exciting changes are reflected in our full year ‘25 guidance. A brief reminder of our mid-term objectives. These are unchanged and we remain confident in their delivery, as Damian mentioned earlier, which then brings me on to our full year ‘25 guidance, reflecting our current view of the market conditions and is aligned with these mid-term objectives.

Touching briefly on some areas by exception. We expect revenue growth of approximately 4% and to be more balanced between volume and revenue per case compared to last year. From a phasing perspective, I would call out that in Q1, we will annualize the impact of the Capri-Sun strategic delisting and Easter this year will fall in Q2 versus Q1 and we have 2 less selling days in Q1 versus last year. On cost of sales, we expect this to grow by around 2%.

As I mentioned earlier, our concentrate costs are tied to our revenue per unit case growth and we anticipate broadly flat commodity inflation on which we are approximately 80% hedged for full year ‘25. We do continue to see inflationary pressures in labor within manufacturing, partly offset by our combined efforts on efficiency. We have the throughput tax impacts from the GB soft drinks excise tax changes announced late last year with the offset within revenue and finally, the mix benefit of higher anticipated volume growth in the Philippines given its lower cost of sales per unit case. Our effective tax rate for the year is expected to be around 26%, up from 25% last year, reflecting differences in the mix of taxable profits across our markets and our current assessment of uncertain tax positions.

We expect to generate at least €1.7 billion of comparable free cash flow and our new €1 billion share buyback program will commence imminently to be executed over the next 12 months through to February ‘26. We broadly expect any accretion this year flowing through from the 12 months of the share buyback to be offset by the anticipated higher effective tax rate and the growth in non-controlling interest given the positive outlook in the Philippines. And now back to Damian.

Thanks, Ed. So just turning to what we talked about earlier, so we are confident in our ability to deliver approximately 4% revenue growth in 2025 and beyond. This will be driven by these four levers balanced between healthy underlying volume and revenue per unit case growth. Before I share some examples of what gives me confidence for this year, I did want to call out that we exited 2024 with a good December and that this has continued into January.

So on our portfolio, there is a lot to be excited about across our great brands and as always, consumer-led and consumer-focused. For Coca Original Taste and Zero Sugar, new flavors continue with the addition of lime and later in the year we watch out for new fruit eye-catching graphics across our packs. The new Diet Coke campaign, This Is My Taste, fronted by our new brand ambassador, Jamie Dornan, is gaining momentum and for Fanta, an up-weighted choice of flavor extensions, including Tutti Frutti. In Energy and Monster as well as new additions to the juice range, we are excited about the new collaboration with Lando Norris and the McLaren F1 team.

And we continue to expand our portfolio to capture new opportunities in areas such as sports and ARTD, as Ed referenced. In sports, I was really excited to hear about the young Spanish star and parade fan, Lamine Yamal, has entered into a multiyear deal as a team, parade athlete, which will resonate well with our consumers, build affinity and drive preference for this terrific brand. And in ARTD, we are continuing to build our presence in this growing segment with the launch of Bacardi and Coca-Cola and adding new flavors to existing ranges like Absolut and Sprite watermelon. Now to our customers.

Our customer relationships are always front and center and what a great retail foundation to be the number one Absolut revenue growth creator. Full year ‘25 pricing is largely in place, including GB in Germany, executed later last year with other negotiations well advanced. We continue to leverage our best-in-class revenue and margin growth management tools and capabilities across our broad pack offering, as you see here. And to highlight a few recent customer wins including Alsea, a multi-brand restaurant franchise operator in Spain, Subway in GB and Gerry’s Grill, a 110-plus restaurant chain in the Philippines.

As I touched on earlier, we are fanatical about in-market execution and activation whether in-store, online or in outlet, all to drive distribution of our great brands and visibility everyday. We love creating engaging displays, especially around key holiday events all well planned across the calendar year, all driven by the largest sales force in FMCG, nearly 9,000 in total, powered by technology, enabling more contact with more customers. We are investing in more coolers this year, aiming to add over 100,000 across our Coke trademark and Monster. We continue to accelerate our digital capabilities, like adding even better functionality to our B2B portal, myccep.com, to make life even easier for our customers.

We believe there are a few eB2B platforms in Europe, delivering annual revenue of nearly €2.5 billion in the FMCG space. And we are also improving our forecasting accuracy with machine learning and AI. In Germany, for example, 80% of our SKUs no longer require any human intervention. This has driven best-in-class forecasting accuracy and a 2% improvement year-on-year and better forecasting means more cases delivered to our customers on time and in full.

Geographically, our diversification across 31 markets, with leading market positions makes us stronger. This is evidenced by our performance last year. Going forward, we ultimately recognize that volume and revenue growth in Europe is critical for CCEP across Sparkling, Energy and other NARTD. We are, however, excited by the balance of exposure we now have to high growth markets, where we continue to build our capabilities.

In my mind, these include not only the Philippines and Indonesia, but also Papua New Guinea and the Pacific Islands. They represent half of our markets, which having grown revenue last year by around 10%, clearly demonstrate their power as an organic top line accelerator for CCEP. And so to conclude, we are very well placed for 2025 and beyond. We are confident we have the right strategy done sustainably to deliver on our mid-term growth objectives.

Our full year ‘25 guidance, combined with the resumption of share buybacks demonstrates the strength of our business and our ability to deliver continued shareholder value. We look forward to sharing more on our exciting future at our Capital Markets event in Manila in May. So thank you very much. Ed and I would now be very happy to take your questions.

And I’ll hand the call back over to you, operator.

Thank you. [Operator Instructions] And the first question comes from Mitch Collett from Deutsche Bank UK. Please go ahead. Your line is now open.

Hi, Damian. Hi, Ed. Hi, Sarah. My question is a very quick one, can you give some color on why you’ve chosen to increase the free cash flow guide. Is that all driven by operating profit or are there other lines within cash flow that are helping you to have a higher level of free cash flow going forward? Thank you.

Thanks, Mitch. Yes. So we’ve increased the guidance to at least €1.7 billion. Obviously, we did €1.8 billion in 2024, which we are very pleased about.

So it’s really just the increased confidence that we have in the business and the ability for the business to generate operating profit growth and value and then us to convert that into free cash flow. We are keeping some flexibility within that, because as we said in the – in the prepared remarks, we have over €1 billion of CapEx investment planned and we are keen to invest to unlock that growth across our markets. So yes, we are pleased to be saying at least €1.7 billion for 2025.

Very clear. Thank you.

Thank you. We will now take our next question. Please standby. And the next question comes from Matthew Ford from BNP Paribas Exane. Please go ahead. Your line is now open.

Thanks. Afternoon, Damian and Ed. My question is just on, I suppose, on the Philippines, Indonesia. So it’s sort of two in one really.

But on the Philippines, I just want to get a sense of how you finished the year. You talked about solid trading in Q4 and you spoke overall about trends improving across or continuing to perform well in Q1, but just to get a sense of how Philippines is going and what your expectations are for the year? And then just on Indonesia, clearly, still a difficult market to operate in. Just be great to get an update on the boycotting situation about what you are seeing if you have seen any kind of improvement in the last weeks and months there?

Thanks.

Yes. Thanks, Matthew. Maybe I’ll start with Indonesia. So it’s fair to say our business has stabilized very well there in light of some of those geopolitical challenges.

As you know, it’s a big, big country, which is one of the reasons we remain very excited about it for the long-term. What is interesting, and I’ve just got back from a trip down there is there are certain areas more impacted than others, where we see less of an impact, we see our brands growing high single-digit to mid-teens. So I think that gives us confidence that the changes we have made both in terms of route-to-market, our pricing strategies and the marketing push with the Coca-Cola Company are working. Obviously, we will continue to keep a close eye on the situation.

And as it improves over time, which it will, I think the changes that we’ve been able to make in the last year will really pay off, particularly our route-to-market change, some of the restructuring we’ve done. And I am particularly excited as we move into Ramadan we have got a great campaign around Sprite. So, definitely more to come in Indonesia. As I mentioned in my prepared remarks, a big call out to our team there.

Challenging when you have got some of those macro elements out of your control, but I think they have continued to focus on the long-term as we have, and that will pay out in Indonesia for that, I am sure. On the Philippines, and yes, great year last year. Great finish of the year. So, Christmas is a really big occasion in the Philippines and our teams locally really made the most of it.

Record volumes, that continues into 2025. Yes, and I would just call out that we would see the Philippines pretty much in line with our mid-term guidance, so high-single digit growth. And we have talked many times that one of our priorities is margin expansion. We are seeing that coming through. Some of the capital that we are deploying is unlocking that.

Yes, so another great start to the year in the Philippines and looking forward to another – not a very, very strong year from that business. Thank you, Matthew.

Thank you. We will now take our next question. Please standby. And the next question comes from Eric Serotta from Morgan Stanley. Please go ahead. Your line is now open.

Good morning. Good afternoon. Thanks for taking the call – taking the question. I am hoping you could give some color on what you are seeing in energy, 6% change growth, you called solid or strong. But it’s certainly a slowdown from what we have seen over the past few years. Any color on energy as 2024 unfolded in your expectation for 2025?

Yes. Thank you, Eric. I mean relatively speaking, energy was still the standout category, if you look at growth across most of our markets last year. And I see it continuing to play that lead.

On a percentage level, it will be slightly down. A couple of things, I would call out. We are looking at expanding energy into newer markets, so Indonesia, Philippines. I touched earlier on the pipeline of innovation coming from Monster.

And so it continues to be a very exciting innovative category for us. I see it returning back to that more high-single digit growth. So, I don’t see anything in the category that points to that being a sustained slowdown. In fact I think it’s getting more competitive.

And so we see a lot of people investing in the category, which will generate growth. Clearly, that puts an emphasis on us being at the top of our game with the Monster company, which we are. So, a great pipeline of innovation, particularly in Western Europe, gaining share, launching it into some of our more emerging markets where I think it will play a role long-term. And that gives me confidence that we will continue to see energy leading our growth against our mid-term guidance.

Thank you. We will now go to our next question. Please standby. And the next question comes from Lauren Lieberman from Barclays. Please go ahead. Your line is now open.

Great. Thanks. Hi everybody. I know in the release, you flagged some away-from-home weakness in Europe.

And so I would just like to talk a little bit more about plans to help support that channel this year, particularly in light of what remains a pretty stretched consumer backdrop and you have had a lot of other beverage companies broadly talking about the challenges in that outlet – that set of outlets. Thanks.

Yes. Thanks Lauren. So, I would probably call out a couple of areas. I think one, the brand innovation that we showed a bit earlier, I think will definitely play into that channel in terms of bringing excitement to the consumer and to our customers.

So, we have got some specific programs, particularly on Coke trademark that I won’t talk to in detail for obvious reasons coming into the summer. But I think once they hit the market, you will see very much targeted against the consumer in the Away-From-Home segment. So, we really want to support the consumer. Our pricing has moderated in that channel, so we think relevance – price relevance is in good shape.

And I referenced as well in the prepared remarks, we will be stepping up our cooler investments. That is a key support to the away-from-home channel as well. And a lot of our digital-led campaigns will be focusing on helping our customers drive incidents in store and drive traffic. And then finally, we are also winning a lot of new business in the away-from-home area.

And I think that also supports our growth ambition in that channel. So, I do see 2025 being a better year in away-from-home, particularly in Europe. And I think the steps we have taken will support that. And then obviously, we are looking at forward to summer, and that will definitely unlock growth.

So, yes, they would be the four pillars that I would talk to Lauren.

Okay. Thanks so much.

Thank you. We will now take our next question. Please standby. And the next question comes from Edward Mundy from Jefferies. Please go ahead. Your line is now open.

Just coming back to the volume piece within Western Europe, I mean you managed to generate about 8% EBIT growth in 2024 despite European volumes down 2.5, nearly 2.5. And I know you don’t guide for volumes. But if you were to get a percentage of volume growth in Europe, would there not be quite favorable implications for EBIT, given some of the operating leverage that would kick off? And I am just trying to square that circle with regards to your 7% EBIT growth and your sort of higher free cash flow guidance as well.

Go ahead, Ed.

Yes. So, thanks Ed. Well, I think the first thing to say is that it’s still very early in the year. And we are here in February.

And so as we look forward, we want to give guidance that we are confident in delivery for the year. You are absolutely right, 4% is above the 3.5% from a revenue perspective that we did in 2024. But when we look at the mix of that revenue for ‘25, we think more of it will come from volume, as we mentioned earlier, and less from revenue per case. And actually, as you look through the P&L, that then has less of accretive effect because we obviously need the cost of that extra volume to go through the P&L. So, that’s the reason why we are maintaining the 7% guidance, approximately 7% guidance for the year.

And the same goes for our free cash flow. We want to maintain some flexibility as we go through the year. And as we talked about earlier, we have lots of opportunity to invest cash to unlock growth for the future.

And just maybe to Bill and Ed’s comments, I mean as you would expect, as a part of below volume, if I speak to my supply chain colleagues. What gets them most excited is more volume going through our plants and getting that leverage that Ed talked to. So, you will see a more purposeful focus on quality volume in Western Europe in ‘25. I am switching back to what I mentioned to Lauren, that starts with an away-from-home investment levels that are very, very strong. I think a lot of the marketing innovation that you are seeing from the Coca-Cola Company and from Monster will help us support that volume growth.

If you look at last year, I mean it was a bit bumpy both in terms of some of the macros, but also delist like Capri. So, the underlying volume performance is clearly stronger than it looks on a reported level, and that also gives us confidence going into ‘25. And as I called out, we did finish the year strongly and January started well. So, as ever, as we go through the year, we will keep all of you fully updated on how we are seeing volume progress, particularly in Europe.

And Damian, just as a follow-up, I mean 2024 was a year of a lot of support that it didn’t fully materialize from a volume standpoint because there is a washout summer. It feels like 2025, you have almost got a lot more innovation than you normally would have to sort of lap the sporting summer, but given that you didn’t have the benefit from the summer of sports, it does feel like the setup for 2025 volumes is quite favorable.

Yes. I mean we were planning ‘25 and ‘23. So, I mean we would obviously higher expectations in ‘24 that on the back of great assets that we would have strong volume growth in ‘24. That didn’t quite materialize as we would have liked. But that did give us the catalyst to make sure the ‘25 from a kind of campaign and cycling those assets, that work started in ‘23. And you are seeing some of that coming through, both in terms of Diet Coke, particularly in GB, some of the Fanta innovation that’s hitting the market. Great summer campaign that I can’t talk about for Coke, but that will all become clear pretty soon.

Yes, and innovation across other brands. So, it’s probably – yes, probably one of the most exciting marketing product calendars that we have had for a while. And I think that’s exactly what we need to stimulate that growth in Europe, in particular.

Great. Thank you.

Thank you. We will now take our next question. Please standby. And the next question comes from Sanjeet Aujla from UBS. Please go ahead. Your line is now open.

Hi Damian and Ed. My question is really around the pricing and promo strategy in Europe. So, I think you called out maybe some adjustments have been made in the away-from-home channel. But how are you thinking about the home channel? Is the mantra still to price in line with CPI despite a more favorable input cost environment? Any context there would be helpful.

Yes, Sanjeet. Yes, broadly you are spot on. I think we have a very good discipline and I suppose, harvest of taking what we believe are really good, relevant price moves every year. We will continue to do that broadly in line with CPI, as you said.

Beyond that, we have an amazing amount of investment deployed in our P&L and promotions, if you look at the amount of the number, the quantum, it’s significant. So, every percent that we can make that work harder really adds both to the P&L, but to the top line growth. So, I suppose on top of that CPI, we continue to use a lot of data analytics work and in-market testing to try and make sure that we are finding the most relevant price points, particularly on promotion. That’s also very true for Australia and New Zealand.

So, yes, CPI and then a more efficient and productive use of that promotional funding would be the two key elements for us in ‘25. And on the second one, continuing to build that muscle of data and analytics to allow us to make better decisions, but also a bit faster. So, you will see some changes in some of our promo strategies in our key markets in terms of multipacks. We also believe that there is still premiumization in our markets. And I think that you saw on the slide earlier, the amount of SKUs we have deployed across our retail landscape gives us a chance to make sure we also capture some of those training up opportunities, some of those personalization, many cans.

So, I think as we have definitely play to a more, I suppose price-sensitive consumer in some markets, we have also retained our premiumization and people will still pay for that. So, I think it’s important to do both right. So, that’s kind of how we are thinking about it. But in summary, you are spot on, CPI is probably a good benchmark to think about our pricing.

And just to clarify your point on change in the promo strategy on multipack stay. Is that reallocating or stepping up promo to support that particular pack?

No, it’s all reallocating. I mean we have a lot of investment deployed already. So, it’s not about more investment. It’s about continuing to invest smarter. Testing new ideas to see what resonates with the shopper. Yes, so it’s more efficiency, I would say, rather than the step up.

Got it. Thank you.

Thank you. We will now take our next question. Please standby. And the next question comes from Bryan Spillane from Bank of America. Please go ahead. Your line is now open.

Hey. Good morning or afternoon everyone. Can you hear me?

Yes, Bryan.

Hi Bryan.

Okay. Great. Sorry about that. Hey Damian, so maybe just kind of a bigger picture question.

The time that since you have taken over as CEO, I think the enterprise value in the business has basically doubled. And also the free cash flow has effectively doubled as well. And I know over the course of the last, I guess three months or so with the potential for the addition of Fuze Tea, you have been introduced to a lot of maybe investors that you would have been introduced to. Actually, Sarah that’s probably done the bulk of that work.

But – so can you just kind of give us some perspective on like what it would take to double again over the next 8 years? How much of it was acquisitions? How much of it was operational? Just trying to give people a perspective on how this business can actually compound returns.

Well, it’s a big picture question, Bryan. Thank you. And just to confirm, Sarah most of the hard work when it comes to meeting the investors, but we are getting an opportunity to tell the CCEP story to a lot more newer investors on the back of the Fuze Tea conversation, so that’s been great. And yes, clearly, we are excited about where we have got with CCEP.

And if you look at our value creation, a lot of its organic, right. So, I think we have done some really good M&A. But ultimately, what underpins this business is strong growth organically in our markets. And if I was to – it’s probably a boring answer, but it’s kind of a red line through probably a lot of what we have talked about today.

I think sustained quality volume and revenue growth is the key to building the business again. I think we get good leverage on our P&L. We have got enough capital. We have got great talent.

So, really, when I think about the next 8 years, it’s about quality top line growth, volume and revenue with volume obviously being the priority in ‘25. And then I think the innovation pipeline from the Coca-Cola Company, I didn’t think 8 years ago, we would be an ARTD, who knows how big that’s going to be for us. We have seen how big it could be in Australia. I think the energy category continues to deliver. Honestly, we have got categories that I feel we have not got the most value out of.

One is sports and power aid. There is more to go on Fuze Tea. So when I look at something the business will really be around that space, if there is M&A that is accretive and we can drive value for the Coke Company and we would definitely be interested. But it’s probably going to be a more organic story going forward.

And I love M&A. It’s gone really well. I have to say it’s also good to focus on getting the most of what you have already bought, and that’s really what we are doing in ‘25 and ‘26.

Thanks Damian. Thank you. Great answer, excellent.

Thank you. We will now take our next question. Please standby. And the next question comes from Charlie Higgs from Redburn Atlantic. Please go ahead. Your line is now open.

Yes. Hi Damian, Ed and Sarah. Well, I have got a question on the balance sheet and the net debt to EBITDA, which I think has come down very nicely to 2.7x comparable EBITDA. And you have obviously announced a €1 billion buyback this morning.

But I think on my numbers, even with that leverage might fall a little bit in 2025. So, can you just think or tell us through like how you are thinking about cash allocation over the coming years? I know you have got some up-weighted capital expenditure. But are you leaving some dry powder, maybe some M&A? It doesn’t sound like from the last answer you were.

So, just how you think about the balance sheet over the coming years? Thank you.

Thanks Charlie. Yes, good question. So, yes, we are delighted that we are now back in that leverage range at 2.73 and 1 year early. And of course, we have acquired the Philippines in that period of time as well.

So, as we look forward, I mean that we want to stay within that 2.5% to 3% range. We are leaving ourselves a little bit of flexibility. That’s to allow for more cash investment in the business should the growth opportunities be there. But it’s also to allow for variation in business results over time and potentially for some M&A.

So, we don’t want to over-commit now and need to change that guidance and those expectations later. So, we are leaving ourselves a little bit of flexibility. But we see ourselves continuing to operate within that 2.5x to 3x range.

And just to add to that, I mean I think we have – we are really happy that we could announce a share buyback 12 months. Clearly, to your point, Charlie, and to Ed’s comments, that still leaves some powder for M&A, particularly with that cash flow guidance that we have given today. So, we have demonstrated we can create value, particularly for the Coke Company, and our shareholders. If there are opportunities, for sure, we are interested.

And I suppose, like we have talked about before, NARTD and soft drink seems to be a business that lots of people are attracted to get into. So, finding bottling assets that are coming up is always going to be a priority, but it’s probably getting a bit more challenging. But we have the powder, and we have the flexibility. And I think that’s what we will continue to focus on.

Thanks Damian. Thank you, Ed.

Thank you. We will now go to our next question. Please standby. And the next question comes from Robert Ottenstein from Evercore ISI. Please go ahead. Your line is now open.

Great. Thank you very much. So, Damian, one of the great, I think successes for the Coca-Cola system overall, which you guys play a very key role has been the greater coordination between the bottlers in Atlanta and the agility, the coordination on marketing, planning, obviously, incidents. And I am wondering if you could kind of maybe give us a little bit of sense of what sort of initiatives that the global system is doing, the sort of initiatives that Atlanta has been talking to you about as it relates to your business, both in 2025 and beyond.

So, we get a little bit of sense of kind of the bigger picture and how you are participating in those initiatives coming out of Atlanta? Thank you.

Thank you, Robert. Yes. So, for sure, we are benefiting from the new – evolving new marketing approach from the Manolo, the company. And I think that’s driving a higher quality of engagement with our consumers.

It’s more productive and efficient. So, we benefit from that efficiency in terms of marketing spend and allows us to connect with more consumers. So, I think the way Manolo and the Coke Company have evolved, the marketing structure is definitely helping us. And secondly, we are benefiting on the portfolio.

So, if you look at our plans, very aligned in terms of sparkling flavor growth, Coke Diet – Diet Coke. We are clearly learning from markets like Australia, the U.S. around sports and Powerade and how that becomes a mainstream category. We are curious about innovations as well that the company – we have looked at a lot of the innovation out of North America, but globally, so we get great access very quickly to portfolio innovation. And then we kind of have a good conversation about how relevant that is for our consumers here in Asia or Australia and New Zealand.

A good example of that is ARTD, Bacardi and Coke, a great look and pack. So, we definitely benefit on their investments, the quality of output from the new model, and the portfolio. And then an area that is getting better, and I would say we are still probably at the beginning is really more around data insights and leveraging better that bridge between consumer, customer and shopper. And we have been working on that.

Obviously, AI unlocks another tool to get into that quicker and to get more output. So, that’s probably an evolving area that I am excited about over the next couple of years. Yes, but overall, very aligned. I think we have talked about it before, Robert.

I think the financial model on incidents just continues to drive the right behavior in the system. And I see that every day in decision-making, and that gives me a lot of confidence. And I suppose we all have great marketing. I mean that’s why we love this business and when you see some of the product innovation or the quality of media copy or the online activation coming out of Atlanta, it’s just going to continue to support our top line growth objectives, so a lot happening.

Great. Thank you.

Thank you. We will now go to our next question. Please standby. And the next question comes from Philip Spain from JPMorgan. Please go ahead. Your line is now open.

Hi. Good afternoon. Thanks very much for taking my question. I just had one on the Philippines, please.

In your prepared remarks, you spoke about accelerating your CapEx plans in that market. And I just wanted to understand better what gave you the conviction to make that decision to accelerate the CapEx plans? And if you could also share more color on what that accelerated investment will entail as well? Thank you.

Yes. Hi Philip. So, really, it’s all those expectations that the Philippine team or the Tigers, as they call themselves, have delivered well ahead of our expectation in year one. So, some of it’s quite a linear investment behind extra volume.

So, we pulled forward a couple of lines. That in our kind of 5-year plan, they were in there, we are just bringing them forward. It’s not a step up in our overall CapEx guidance, as Ed talked to. So, that remains intact.

So, it’s from within that guidance in ‘25 of around circa 5%. We are also looking at in line with our other markets, more cooler placements on the back of more volume. And then also, we will start to invest a bit more in technology and systems and as clearly, that’s going to be an area in such a high-growth business that we feel is really important. And then some of it is fundamental, which is bottles and cases.

So, a lot of that volume growth is coming from our refillable glass business and that just requires a bit more CapEx to keep our lines running and make sure we have got enough stock. So, from a CapEx deployment area, all good reasons and exciting. And as I have said, the catalyst is really an over-delivery on volume last year, and that’s flowing through into ‘25 and beyond. Ed, I don’t know if there is anything else.

I think – and also some of that capital will unlock some of those mix opportunities. It’s a very RGB-focused market, but we see lots of opportunities in cans, in PET. And so that investment as well is going to unlock some of those mix opportunities. So, we are very excited about that, and we are always happy to spend money on things that unlock that level of growth.

Great. Thanks so much.

Thank you. We will now take our last question. And the last question comes from Richard Withagen from Kepler Cheuvreux. Please go ahead. Your line is now open.

Thanks. Good afternoon Damian, Ed and Sarah. Just one question on, going back to the energy drinks category, two-parts question. First of all, can you talk a bit about the competitive situation in the category? I think Red Bull has introduced a bit more flavors last year. So, what’s the competitive situation? And the second point is, is the cost of growth increasing in that category?

Yes. So, it’s – as you would expect, given its consistently probably the fastest-growing segment within NARTD that brings in a lot of competition, not just from big players like Red Bull, but you will see a lot more local innovation coming into the category, different price tiers. So, it is evolving every year on the back of that high growth. So, that competition really pushes us to be on the top of our game with Monster.

You are correct, Red Bull have gone back into some flavor innovation and we also have probably enjoyed more growth in that space over the last number of years. And we will continue to do so on the back of some of the juice variants from Monster. So, overall, healthy competitive category, driving high-single digit growth over time. And our aim is to grow and take share in that category, and we are doing that.

And it will probably remain one of the most competitive categories. It’s not driving an increased cost of growth. In fact, as we grow, as Ed talked about, it is an area that we get better leverage on our fixed asset base. So, in some ways, over time, our margins will improve in energy as well.

So, there is not a significant higher cost of growth. Yes, I don’t expect that, but I do expect it to remain nice and competitive.

Thank you. I would now like to hand the conference back over to Damian Gammell for his closing remarks. Damian, please go ahead.

Thank you. So firstly, again, a big thank you everybody for taking time out this morning and this afternoon to join us. As we have closed out 2024 was a great end to a very solid year for CCEP. Today, we are very pleased to announce our €1 billion share buyback that will start on Monday.

As you have heard from both myself and Ed today, we are super excited about the investment, and in particular, commercial plans to drive that quality growth for 2025 and beyond. And we look forward to you joining us on the ground in Manila in May, where we can showcase the growth and success of our Philippines business and we will also showcase the changes we are making in Indonesia to ensure the long-term success and health of that business. And we will also give you, obviously, an update on how we see our European business as we head into the summer. So, see you in Manila.

And again, thank you for joining us.