Q3 2025 Earnings Call Transcript

Welcome to the Q3 2025 trading update. Present today are CEO Damien Gammell and CFO Ed Walker. This call contains forward-looking statements; please refer to cautionary language in today's release and SEC filings.

We are reaffirming our full year guidance, reflecting the strength and resilience of our business. The company delivered solid year-to-date performance with 41,000 colleagues driving the business forward. Q3 showed volume growth of 0.4% and revenue increase of 3.2% year-over-year. Monster Energy volumes surged 24%, while Coke Zero grew 6.3% supported by Star Wars collaboration and Premier League activation.

Key challenges included softer consumer demand in Germany, Philippines flooding impacts, and portfolio changes in Australia and Spain. However, away-from-home performance remained strong, particularly in Great Britain. Q3 Revenue was 5.41 billion euros meeting forecasts. Second-half dividend of 1.25 euros per share.

Share buyback program continues.

We will now take your questions.

Questioned consumer affordability pressures and sequential deterioration throughout Q3, specifically in large PET packages. Asked about volume prioritization versus price-mix strategy going forward and outlook for European top-line growth into 2026.

Consumers are responding positively to a lot of our value pricing and communication. Away-from-home returning to growth signals positive sentiment. The company maintains balanced growth strategy, price, volume, and mix, assuming consistent consumer conditions into 2026.

Discussed how CCEP's business structure navigates softer environments compared to previous cycles, emphasizing digital tools, revenue growth management investments, execution capabilities, and energy category mix.

We have invested smartly in good capabilities around revenue and margin growth management. Multi-pack pricing architecture remains core strength. Portfolio diversification including ARTD, energy drinks, and emerging sports categories provides growth optionality. Diet Coke recovery in GB demonstrates brand investment effectiveness.

Focused on Indonesia's turnaround, noting high-single-digit volume declines persist despite improvement. Asked about distribution transformation completion and confidence in returning to growth in 2026.

Route-to-market transition completing strengthens execution and reduces costs. Sparkling portfolio showing improvement; tea remains challenging. We know that's a period that excites our consumers regarding early Ramadan timing in 2026. Early-stage improvements in macroeconomic conditions evident.

Explored away-from-home strength paradox amid consumer pressure, asking whether bifurcation exists between income segments and whether gains stem from category health or execution.

People are drinking more NARTD beverages when they are out and about. Category fundamentals healthy in away-from-home. Customer value deals proliferate; favorable weather in northern Europe aids performance. Cooler placements drive longer-term growth. GB particularly strong; Germany remains challenging.

Asked about Diet Coke trajectory toward mid-single-digit growth, other market expansion potential, and Coke Zero Sugar acceleration drivers from low single-digit to mid-single-digit growth.

Diet Coke success in GB and Australia reflects dedicated campaigns. Brand responds positively to independent support. Future multi-market strategy depends on dual Lyocola approach success. Zero Sugar growth driven by improved taste perception and promotional strategy. I'm still somewhat discontent that we could do more on Zero Sugar growth rates.

Requested demographic breakdowns of consumer pressure, age versus income, and which segments worsened versus improved quarter-over-quarter.

Pressure concentrated among lower-income, value-oriented consumers. Large PET is really around your 1.5 liter to 2 liter where greatest stress appears. Single-serve and can formats performing well. Not uniform across all packaging tiers.

Asked about energy drinks' remarkable 24% growth, innovation versus core contribution breakdown, geography-driving growth, and Monster Philippines performance following brand proposition changes.

Innovation is key to the category. Balanced growth between innovation and core brands. Monster Green and Ultra continue performing strongly. Away-from-home energy distribution presents substantial opportunity. Strong innovation pipeline visible for next two years supports mid-teen midterm growth expectations.

Asked whether 3% organic sales growth trajectory makes 4% midterm target difficult given ongoing Suntory exit headwinds and tea transition in Spain.

Full 2026 guidance provided at February year-end results. Technical headwinds persist but some elements cycle out like Spain tea. If you kind of take those out, clearly we're pretty much bang in line with that 4% guidance. Philippines returning to normal growth levels; Indonesia improving gradually.

Regarding Bacardi offsetting Suntory, it is quite small and it's going to take a number of years for us to get back to a similar level of revenue.

Requested highlights of key 2026 initiatives aligned with Coca-Cola Company regarding innovation, RGM, IT capabilities, and World Cup activation historical impact.

World Cup represents a great event for our brands. Energy innovation pipeline continues with distribution expansion. Cooler placements from 2025 benefit 2026 forward. Priority brands Diet Coke, Coke Zero, Fanta receive continued support. Pretty full calendar, Robert, and I'd say quite balanced growth across our brands and our territories.

2026 continues productivity themes targeting 350 to 400 million euros. Record cooler investment year planned. SAP S/4HANA initial deployments begin with Germany go-live progressing smoothly. Significant AI and RGM capability investments continue alongside ongoing transformation.

It's another solid year for CCEP and lots of opportunity as we look into 2026 and beyond. Full year results to follow in February 2026.