Group 1 - Invesco is an independent investment management firm focused on enhancing the investment experience for individuals [1] - The firm emphasizes the importance of understanding investment objectives, risks, charges, and expenses before investing [1] - Invesco provides educational content but does not offer tax advice, highlighting the complexity and variability of tax laws [1] Group 2 - The opinions expressed by Invesco's authors are based on current market conditions and may change without notice [1] - Invesco's investment advisory services are provided by affiliated investment advisers, who do not sell securities [1] - Invesco Unit Investment Trusts are distributed by Invesco Capital Markets, Inc., and other broker-dealers [1]

Core Points - The conference call is focused on Coca-Cola Europacific Partners' Q3 Trading Update for 2025 [1][2] - Key executives present include the CEO Damian Gammell and CFO Ed Walker [2] - The call will include forward-looking management comments and should be considered alongside cautionary statements [3] Company Information - The trading update will present metrics on a comparable and FX-neutral basis [4] - A copy of the information discussed will be available on the company's website [4]

Financial Data and Key Metrics Changes - In Q3 2025, volumes increased by 0.4% and revenue grew by 3.2%, outperforming the first half of the year [11] - The company reaffirmed its full-year guidance, indicating strong business resilience [6][19] - The NARTD category grew by approximately 6% in value and volume, highlighting the company's competitive position [7] Business Line Data and Key Metrics Changes - Coke Zero saw a volume growth of 6.3%, driven by promotional activities and partnerships [11] - Energy drinks, particularly Monster, experienced a significant volume growth of 24% in Q3 and 18% year-to-date [12] - Fanta and Sprite also performed well, with Fanta benefiting from a Halloween campaign and Sprite growing by 4.2% [12] Market Data and Key Metrics Changes - The company reported a 0.9% volume growth in Europe, supported by strong performance in the Away From Home segment [14] - The Philippines faced challenges due to flooding, impacting Q3 volumes, but recovery signs were noted in September [17] - Australia Pacific's volumes were down 0.6%, but revenue remained broadly flat excluding one-off impacts [16] Company Strategy and Development Direction - The company focuses on balancing premiumization with affordability, aiming for profitable growth while enhancing consumer value [8] - Investments in technology and infrastructure, including a new canning line and a new plant in the Philippines, are set to support long-term growth [18] - The company is committed to maintaining a balanced growth strategy, emphasizing revenue and margin management [20] Management's Comments on Operating Environment and Future Outlook - Management noted that while consumer sentiment remains challenging, they expect to see volume growth in 2026, supported by effective pricing strategies [24][25] - The company is optimistic about its ability to navigate a potentially softer environment due to its investments in digital tools and revenue management capabilities [29] - The fundamentals of the business are strong, with confidence in achieving mid-term growth objectives despite macroeconomic volatility [20][21] Other Important Information - The company declared a second-half dividend of EUR 1.25 per share, maintaining an annualized payout ratio of approximately 50% [19] - A EUR 1 billion share buyback program is set to conclude in December [19] Q&A Session Summary Question: Consumer affordability and its impact on strategy - Management indicated that consumer sentiment has been consistent, with a focus on value pricing and continued volume growth expected in 2026 [24] Question: Navigating a softer environment - Management expressed confidence in their capabilities to grow volume and revenue, citing investments in revenue and margin growth management as key factors [29] Question: Improvement in Indonesia's performance - Management acknowledged challenges in Indonesia but noted improvements in the sparkling portfolio and ongoing efforts to enhance the tea segment [40] Question: Trends in the Away From Home segment - Management highlighted strong growth in the Away From Home channel, driven by favorable weather and effective customer strategies [48] Question: Energy drinks growth and innovation - Management confirmed that both innovation and core products contributed to the 24% volume growth in energy drinks, with a strong pipeline for future innovations [66] Question: Top line growth outlook for next year - Management refrained from providing specific guidance for 2026 but expressed confidence in achieving mid-term growth objectives despite technical headwinds [72] Question: Key initiatives for 2026 - Management discussed plans for the World Cup activation, continued innovation in energy drinks, and a focus on flavor innovation for key brands [80]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported a volume growth of 0.4% and revenue growth of 3.2%, indicating solid performance compared to the first half of the year [11][14] - The NARTD category grew by approximately 6% in value and also saw volume growth, which is a positive trend not observed in other FMCG categories [7][8] - The company reaffirmed its full-year guidance, reflecting confidence in its business resilience and performance [6][19] Business Line Data and Key Metrics Changes - Coke Zero experienced a volume growth of 6.3% during the quarter, driven by successful marketing campaigns [11] - Energy drinks, particularly Monster, saw a remarkable volume growth of 24% in Q3 and 18% year-to-date, supported by new product launches and distribution strategies [12][66] - The performance of the sparkling beverage segment was mixed, with Coke trademark volumes being flat due to various market challenges, including flooding in the Philippines and increased sugar taxes in France [11][57] Market Data and Key Metrics Changes - In Europe, volume growth was reported at 0.9%, with strong performance in the away-from-home segment contributing positively [14][48] - The Philippines faced challenges due to flooding, impacting distribution and sales, but there are signs of recovery as the market stabilizes [17][40] - The Australian market showed mid to high single-digit growth, supported by strong performance in Papua New Guinea [16] Company Strategy and Development Direction - The company is focused on driving profitable growth while balancing premiumization with affordability for consumers [8][15] - Investments in technology and infrastructure are ongoing, including the opening of a new canning line and the introduction of smart coolers [18][84] - The company aims to enhance its product portfolio, particularly in the energy and ARTD categories, to capture more market share [32][80] Management's Comments on Operating Environment and Future Outlook - Management noted that while consumer sentiment remains challenging, there are positive signs in the away-from-home segment and a return to growth in certain markets [20][46] - The company is confident in its ability to navigate the current environment, emphasizing the importance of value pricing and effective execution [29][30] - Future growth is expected to be supported by ongoing investments and a strong pipeline of innovations [33][66] Other Important Information - The company declared a second-half dividend of EUR 1.25 per share, maintaining an annualized payout ratio of approximately 50% [19] - A share buyback program of EUR 1 billion is set to conclude in December [19] Q&A Session Summary Question: Consumer affordability and its impact on strategy - Management indicated that consumer sentiment has been consistent, with a focus on value pricing and continued volume growth expected in 2026 [23][24] Question: Navigating a potentially softer environment - Management expressed confidence in their capabilities to manage pricing and maintain growth despite market challenges [28][29] Question: Improvement in Indonesia's performance - Management highlighted progress in the sparkling segment while acknowledging challenges in the tea portfolio, with expectations for better performance in 2026 [38][40] Question: Trends in the away-from-home segment in Europe - Management noted strong growth in the away-from-home category, driven by effective customer strategies and favorable weather conditions [45][48] Question: Growth of energy drinks - Management confirmed that both innovation and core products contributed to the strong growth in the energy drinks segment, with a positive outlook for future performance [66][67] Question: Top-line growth expectations for next year - Management refrained from providing specific guidance but expressed confidence in achieving mid-term growth objectives despite technical headwinds [70][72] Question: Focus areas for 2026 - Management discussed plans for continued innovation, particularly in the energy category, and emphasized the importance of the upcoming World Cup for brand activation [80][81]

Financial Data and Key Metrics Changes - In Q3 2025, volumes increased by 0.4% and revenue grew by 3.2%, outperforming the first half of the year [9][12] - The company reaffirmed its full-year guidance, indicating strong business resilience [4][19] - The NARTD category grew by approximately 6% in value and volume, highlighting the company's competitive position [5][19] Business Line Data and Key Metrics Changes - Coke Zero saw a volume growth of 6.3%, driven by promotional collaborations [9] - Energy drinks, particularly Monster, experienced a significant volume growth of 24% in Q3 and 18% year-to-date [10] - Fanta and Sprite also performed well, with Fanta benefiting from a Halloween campaign and Sprite growing by 4.2% [10][11] Market Data and Key Metrics Changes - The company reported a mixed consumer environment across different markets, with growth in the Philippines and GB, but challenges in Germany and Indonesia [12][19] - Away from Home channels showed strong growth, particularly in GB, contributing to overall volume increases [7][12] - The Philippines faced disruptions due to flooding, impacting Q3 volumes, but recovery was noted in September [15][19] Company Strategy and Development Direction - The company is focused on driving profitable growth while balancing premiumization and affordability [5][19] - Investments in technology and infrastructure are ongoing, including a new canning line in Queensland and a new plant in the Philippines [16][17] - The company aims to enhance its market presence through improved distribution and innovative product offerings [19][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing consumer affordability challenges but expressed confidence in maintaining pricing strategies and volume growth [22][24] - The company anticipates a return to growth in Indonesia, supported by a new marketing campaign and improved distribution [34][35] - Despite macroeconomic volatility, the company remains optimistic about its mid-term growth objectives, expecting to cycle out of current headwinds [19][60] Other Important Information - A second-half dividend of EUR 1.25 per share was declared, maintaining a payout ratio of approximately 50% [18] - The company is concluding a EUR 1 billion share buyback program in December [18] Q&A Session Summary Question: Consumer affordability and its impact on strategy - Management noted that consumer sentiment has remained consistent, with a focus on value pricing and continued volume growth expected into 2026 [22][24] Question: Navigating a softer environment - The company highlighted its investments in revenue and margin growth management as key to navigating challenges, with confidence in maintaining volume and revenue growth [27][29] Question: Performance in Indonesia - Management discussed improvements in the sparkling portfolio and ongoing challenges in the tea segment, with expectations for better performance in 2026 [34][35] Question: Trends in the away-from-home market - The company attributed growth in the away-from-home segment to favorable weather, effective customer strategies, and increased cooler placements [39][40] Question: Growth of energy drinks - Energy drinks, particularly Monster, showed strong growth driven by innovation and core products, with expectations for continued expansion [54][56] Question: Guidance for 2026 - While specific guidance for 2026 was not provided, management expressed confidence in achieving mid-term growth objectives despite technical headwinds [59][60]

Core Insights - Coca-Cola Europacific Partners (CCEP) has initiated the construction of its largest plant in the Philippines, located in Tarlac City, with production expected to start within the next one-and-a-half years [1][2]. Group 1: Joint Venture and Investment - The joint venture, Coca-Cola Europacific Aboitiz Philippines (CCEAP), is a collaboration where CCEP owns 60% following the acquisition of Coca-Cola Beverages Philippines (CCBPI) from The Coca-Cola Company in 2023 [2][3]. - The full construction of the Tarlac City plant is projected to take ten years, reflecting CCEP's commitment to growth and local economic support [1][2]. Group 2: Market Position and Financial Performance - CCEP reported revenue of €1.65 billion ($1.95 billion) in the Philippines, contributing to a group revenue of €20.44 billion, with "double-digit" volume growth driven by flagship products [5]. - The new factory is part of a strategic move to protect and grow Coca-Cola's market share while fostering local economic development [4].

Core Viewpoint - The analyst gives a hold rating for Coca-Cola Europacific Partners (NASDAQ: CCEP) as the current valuation reflects much of its fundamental strength, with the stock trading near its recent peak multiple and expected earnings growth likely to remain stable [1] Group 1: Investment Philosophy - The investment approach is fundamentally driven, focusing on identifying businesses with potential for scaling and unlocking significant terminal value [1] - Emphasis is placed on understanding core business economics, including competitive moat, unit economics, reinvestment runway, and management quality, which are crucial for long-term free cash flow generation and shareholder value creation [1] - The analyst has a preference for sectors with strong secular tailwinds, indicating a strategic focus on growth areas [1] Group 2: Professional Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds, which were seeded from friends and family [1] - The motivation for writing on Seeking Alpha is to share investment insights and receive feedback from fellow investors, aiming to help readers focus on long-term equity value drivers [1] - The analyst believes that good analysis should be both analytical and accessible, contributing value to readers seeking high-quality, long-term investment opportunities [1]

Financial Performance - H1 2025 reported revenue reached €10,274 million, reflecting a 4.5% increase compared to H1 2024[3] - Operating profit for H1 2025 was €1,364 million, a 19.4% increase year-over-year, with adjusted comparable operating profit at €1,390 million, up 7.2%[11] - Diluted EPS for H1 2025 was €1.99, representing a 15.0% increase, while comparable diluted EPS was €2.02, up 3.1%[11] - Total volume for H1 2025 was 1,932 million unit cases, a 4.1% increase compared to H1 2024[3] - Comparable profit after tax for the first half of 2025 was €951 million, up from €924 million in 2024, indicating a 2.9% increase[43] - Reported profit after tax for the six months ended 27 June 2025 was €937 million, compared to €811 million for the same period in 2024, reflecting a growth of 15.5%[70] - Profit after taxes for the six months ended 27 June 2025 was €913 million, compared to €797 million for the same period in 2024, representing a 14.6% increase[121] Cash Flow and Dividends - Comparable free cash flow generated in H1 2025 was €425 million, supported by strong net cash flows from operating activities of €986 million[11] - The interim dividend per share declared for H1 2025 was €0.79, calculated as 40% of the FY24 dividend[7] - The Group declared a first half dividend of €0.79 per share for the first six months of 2025, an increase from €0.74 per share in the same period of 2024, representing a 6.8% increase[143] Cost and Expenses - Adjusted comparable cost of sales per unit case increased by 3.6%, driven by higher concentrate costs and inflation[11] - Total cost of sales for the first half of 2025 was €6,637 million, a 4.8% increase from €6,332 million in 2024[50] - Comparable operating expenses increased to €2,241 million, up 1.3% from €2,212 million in 2024, reflecting the impact of acquired CCBPI operations and inflation, partially offset by efficiency programs[52] - Reported operating expenses for the six months ending June 27, 2025, were €2,303 million, a decrease of 2.2% compared to €2,354 million in 2024, primarily due to lower business transformation costs[52] Market and Volume Insights - H1 volumes were broadly flat, excluding the Q1 impact of Capri Sun de-listing[8] - Double-digit volume growth in Monster across all markets, driven by innovation with new listings for Monster Green & Ultra in the Netherlands[8] - H1 low single-digit volume growth in Great Britain, driven by improved performance in AFH and better weather in June[15] - Mid-single-digit increase in H1 volumes in Australia and the Pacific Islands, with strong growth in Coca-Cola Zero Sugar and Fanta[19] - Strong double-digit volume increase for Dr. Pepper in Great Britain, driven by the new Cherry Crush variant[22] - H1 energy volumes grew by 14.6%, supported by new variants and continued strength of Ultra[22] - H1 juices declined by 13.6% due to the strategic de-listing of Capri Sun in Europe[22] Strategic Initiatives and Guidance - The company reaffirmed its full-year profit and cash guidance, expecting revenue growth of 3% to 4% for FY25[11] - The company plans to execute a share buyback program of €1 billion over 12 months starting February 2025[11] - The company announced a new efficiency program aimed at further supply chain efficiencies, with expected restructuring charges of €40 million for the first half of 2025[53] - The company is focusing on enhancing its technical footprint through transformation projects and acquisitions, particularly in cybersecurity and AI integration[77] - The company is actively monitoring geopolitical tensions and their impact on supply chains, particularly in the Middle East and Ukraine, to mitigate risks[76] Financial Position and Debt - Total borrowings increased to €12,012 million as of 27 June 2025, up from €11,331 million at the end of 2024, indicating a rise of 6.0%[68] - Net debt rose to €10,032 million as of 27 June 2025, compared to €9,672 million at the end of 2024, marking an increase of 3.7%[68] - The net debt to comparable EBITDA ratio is a key metric used by investors and analysts to assess the company's financial leverage[41] Sustainability and Compliance - CCEP aims to reduce GHG emissions by 30% compared to 2019 as part of its climate change roadmap[85] - The implementation of a Corporate Sustainability Due Diligence Directive (CS3D) is planned to enhance corporate social responsibility efforts[86] - CCEP is prioritizing water security and long-term water rights through partnerships and investments in low carbon technologies[85] - The company is committed to maintaining compliance with legal and regulatory requirements to avoid punitive actions that could negatively impact financial results[85] Tax and Provisions - The effective tax rate for the six months ended June 27, 2025, was 26%, compared to 22% in 2024[63] - The company expects a comparable effective tax rate of approximately 26% for the full year 2025[64] - The Group maintains tax provisions of €295 million as of 27 June 2025, an increase from €267 million at the end of 2024, reflecting ongoing audits by tax authorities[155]

Financial Data and Key Metrics Changes - The company reported revenue of €10.3 billion for H1 2025, an increase of 2.5% compared to the previous year [24] - Comparable volumes were marginally ahead, up 0.3%, despite challenges in Indonesia [24] - Operating profit increased by 7.2% to €1.4 billion, with an operating margin expansion of approximately 60 basis points to 13.5% [26] - Comparable diluted earnings per share rose by 3.1% on an FX neutral basis [26] - Comparable free cash flow generation was €425 million for H1, with a target of at least €1.7 billion for the full year [27] Business Line Data and Key Metrics Changes - The core NARTD category grew by more than 5% in the last twelve months, with significant contributions from Monster and other brands [8] - Monster volumes increased nearly 15%, driven by innovation and distribution gains [17] - Fanta Zero volumes grew by around 7%, and Sprite Zero by approximately 13% [18] - The away-from-home business saw a return to volume growth in Q2, supported by better weather and Easter timing [11] Market Data and Key Metrics Changes - The European market returned to volume growth in Q2, contributing positively to overall performance [24] - The Philippines market performed well despite strong comparables from the previous year, with a 10 basis point increase in overall value share [12] - Indonesia faced a weaker consumer backdrop, impacting group volumes by around 1% in Q2 [9] Company Strategy and Development Direction - The company is focused on driving profitable revenue growth while maintaining affordability and relevance for consumers [13] - A multiyear view on promotional and pricing strategies is emphasized to create sustainable value [12] - The company is investing heavily in technology and digital capabilities to enhance productivity and efficiency [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the midterm growth objectives, reaffirming full-year profit and cash guidance [40] - The company anticipates volume growth for the full year, particularly in Europe and APS, despite challenges in Indonesia [30] - Management acknowledged the competitive landscape but remains focused on sustainable value creation [70] Other Important Information - The company completed around €460 million in share buybacks and maintained a dividend payout policy of around 50% [7] - The launch of new campaigns, such as "This Is My Taste" for Diet Coke, is expected to drive consumer engagement [32] - The company is transitioning to a partner distributor model in Indonesia to enhance distribution efficiency [37] Q&A Session Summary Question: Guidance on top line and bottom line growth - Management noted that despite a slight change in revenue guidance, they expect acceleration in the second half driven by volume growth and pricing strategies [44][46] Question: Performance in Europe and away-from-home growth - Management highlighted strong performance in Europe, particularly due to favorable weather and increased consumer engagement in away-from-home settings [52][54] Question: Medium-term growth outlook considering Indonesia - Management indicated that while Indonesia presents challenges, it is a small part of the overall business, and they remain optimistic about long-term opportunities [90] Question: Update on COGS and hedging for 2026 - The company is well-hedged for 2025 and has around 60% hedging in place for 2026, with expectations of flat commodity prices [94] Question: Australian margin turnaround - Management expressed confidence in the Australian business's margin recovery, emphasizing ongoing structural changes and efficiency improvements [99]

Financial Data and Key Metrics Changes - The company reported revenue of €10.3 billion for H1 2025, an increase of 2.5% compared to the previous year [23] - Comparable volumes were marginally ahead, up 0.3%, despite challenges in Indonesia [23] - Operating profit increased by 7.2% to €1.4 billion, with an operating margin expansion of 60 basis points to 13.5% [25] - Comparable diluted earnings per share rose by 3.1% to €2, reflecting a higher effective tax rate of 26% [25] Business Line Data and Key Metrics Changes - The core NARTD category grew by more than 5% in the last twelve months, with significant contributions from Monster and other brands [7] - Operating profit growth of 7.2% was driven by strong top-line performance and efficiency programs [13] - The energy category, particularly Monster, saw volumes increase nearly 15%, with retail value share growing by around 140 basis points [16] Market Data and Key Metrics Changes - European markets returned to volume growth in Q2, supported by favorable weather and the Easter holiday [11] - The Philippines market performed well despite strong comparables from the previous year, with overall value share growing by 10 basis points [12] - Indonesia's weaker consumer backdrop impacted total first half volumes, contributing to a 1% decline in group volumes [11] Company Strategy and Development Direction - The company is focused on driving profitable revenue growth while maintaining affordability and relevance for consumers [13] - A multiyear view on promotional and pricing strategies is emphasized to create sustainable value [12] - The company is investing in technology and digital capabilities to enhance productivity and drive future growth [10] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed full-year profit and cash guidance, indicating a revenue growth range of 3% to 4% for the year [8] - The company remains optimistic about long-term opportunities in Indonesia despite current challenges [37] - Management highlighted the importance of digital transformation and technology investments to unlock value [39] Other Important Information - The company completed around €460 million in share buybacks and maintained a dividend payout policy of approximately 50% [6] - The return of the "Share a Coke" campaign was well received, contributing positively to brand performance [15] - The company is recognized for its sustainability efforts, retaining inclusion on CDP's A List for Climate for nine consecutive years [21] Q&A Session Summary Question: Guidance on top line and bottom line growth - Management indicated that despite a slight change in revenue guidance, they expect acceleration in the second half driven by volume growth and pricing strategies [45][46] Question: Performance in Europe and away from home growth - Management noted strong performance in Europe due to favorable weather and increased consumer engagement, with a focus on cooler placements and promotional activities [52][55] Question: Competitiveness in the market - Management acknowledged ongoing competition but emphasized a commitment to sustainable value creation and effective pricing strategies [68][71] Question: Metrics for the "Share a Coke" campaign - Management tracks metrics such as shelf distribution and consumption rates to evaluate the success of the campaign, which has positively impacted volume and price mix [75][76] Question: Acceleration in away from home growth - Management highlighted the return of consumers to public spaces and the impact of weather on away from home sales, indicating a positive trend for the remainder of the year [80][86] Question: Medium-term growth outlook considering Indonesia - Management reiterated that while Indonesia presents challenges, it is not critical to achieving midterm growth objectives, as other markets can offset weaknesses [90][93] Question: Update on COGS and hedging - Management reported being over 90% hedged for 2025 and around 60% for 2026, with expectations of flat commodity prices [96][97] Question: Update on Australian margin turnaround - Management expressed optimism about the Australian business's margin recovery, supported by structural changes and efficiency improvements [101][102]