Thank you for standing by, ladies and gentlemen, and welcome to Coca-Cola HBC's conference call for the 2023 third quarter trading update. We have with us Mr. Zoran Bogdanovic, Chief Executive Officer, Mr. Ben Almanzar, Chief Financial Officer, and Mr. John Dawson, Head of Investor Relations. At this time, all participants are in listen-only mode. There will be some prepared remarks, followed by a question and answer session, and if you wish to ask a question, please press star one on your telephone keypad at any time and wait until your name is announced. I must also advise that this conference is being recorded today, Tuesday, October 31st, 2023. I now pass the floor over to one of your speakers, Mr. John Dawson. Please go ahead, sir. Thank you, Operator, and good morning, everyone. I'm here with our CEO Zoran Bogdanovic, and our CFO Ben Almanzar. We'll start with some opening remarks from Zoran and then open the floor to your questions. Please keep to one question and a follow-up, waiting for us to answer the first question before asking the other. We have about an hour for the call today, which should leave plenty of time for good discussion. I will also remind you that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements in our trading update press release, which we published this morning. Thank you for your attention, and with that, I'll now turn the call over to Zoran. Thank you, John, and good morning, everyone. Thank you for joining the call. I'm pleased to report that we have had another good quarter of sales growth with both volume growth and strong revenue per case expansion. Let me share a few highlights with you. Firstly, we continue to benefit from our focus on our strategic priority categories. Sparkling, energy, and coffee all grew revenue strongly in the quarter, supported by a robust volume performance in all three categories. Secondly, I'm very encouraged that we have further increased our value share in NARTD and Sparkling, even while embedding price increases over the last 12 months. This clearly demonstrates the success of our in-market execution, the strength of our customer relationships, and the strength of our brand. Our relationships with key partners are stronger than ever, with successful product launches, joined-up marketing initiatives, and good commercial planning. This has extended into sustainability, where we have worked closely with key suppliers to introduce new packaging solutions, and more on that later. Finally, with three strong quarters behind us, we are reiterating our guidance for 2023 of mid-teens revenue growth and organic EBIT growth of 9%-12%. Looking further ahead, despite continued macro uncertainties, we are building an excellent foundation on which to grow as we deliver against the medium-term targets which we shared in May. With that, let me get into the details before we take questions. Third quarter organic revenue grew by 15.3%, underpinned by volume growth of 2.2 and organic net sales revenue per case expansion of 12.9%. I am really pleased with this performance, despite tougher trading conditions in some of our markets. Our careful planning for the summer season, in partnership with The Coca-Cola Company and Monster, paid off. This, coupled with effective in-market execution by our teams, meant we continued to win in the marketplace, as shown by further share gains. Indeed, we improved our share performance year to date, gaining 110 basis points of value share in NARTD and 60 basis points in Sparkling. Our revenue per case growth was largely driven by pricing actions taken over the previous 12 months to recover the high levels of cost inflation. At the same time, our revenue growth management initiatives, powered by our ongoing investment in data, insights, and analytics, allowed us to enhance revenue per case across our markets while addressing both affordability and premiumization. In all our markets, we are offering affordable solutions. For example, smaller entry packs addressing lower discretionary spend. This is particularly true in Romania, Hungary, and Czech, where there is a more notable pressure on consumer disposable income. We continue to balance affordability with successful premiumization, such as offering multipacks of single serves and brands. Our targeted actions also drove positive category and package mix. Category mix benefited from the increased contribution of adult sparkling and energy. Package mix improved due to good activation of single serve offerings, which drove single serve mix up 90 basis points, with improvement across all three segments. Overall, our revenue per case expansion in the quarter represented a slowdown from the 19% growth in the first half of the year. This was in line with expectations, and looking ahead, we expect revenue per case growth to continue to moderate as inflation eases. Turning to look at performance by category. As we said before, our strategic priority categories are last, are less elastic and face less pressure from private label than other areas of NARTD. This is evident from the strong revenue growth and positive volume growth we achieved in all three of our strategic priority categories. Sparkling volumes grew by 1.5%. Highlights included an improved performance in adult sparkling, with mid-single-digit growth driven by established and emerging. Coke Zero was the best performing trademark Coke variant, supported by a good performance of Coke Zero Sugar Zero Caffeine. Growth in energy continues to be very strong, with volumes up nearly 25%. We saw good momentum across all segments, led by Monster in established and developing markets, and Burn and Predator in emerging markets. I would call out Egypt, where we continue to make rapid progress with our launches into the category. Coffee volumes grew 34%. The out-of-home channel remains our priority for both Costa Coffee and Caffè Vergnano, and in the last quarter, we continued to recruit more outlets. Finally, in stills, volumes grew by about 1%. Sports drinks performed well, with volumes up high single digits. Established and developing markets saw high single digit and double-digit declines in stills, respectively, weighed down by water as we focused on the opportunities for the most profitable revenue growth in the category. On sustainability, I'm delighted to share that the pilot in Austria I mentioned at our Investors Day in May is successfully up and running. We have launched an industry-leading cardboard-based alternative to plastic shrink film for 1.5L PET multipacks, initially saving about 200 tons of plastic per year. We also invested EUR 11 million in new equipment to become the first beverage company in Romania, producing recycled PET in-house. I was very pleased to be there for the opening of the rPET unit last month with the Prime Minister of Romania, government officials, partners, and many other stakeholders that have supported our sustainability journey. With the investment in Romania and transitions to recycled bottle portfolios in Austria, Ireland, Italy, and Switzerland, we are on track to deliver almost 50% recycled PET use by the end of 2023 across our EU and Swiss markets, achieving our target for these markets a year ahead of schedule. Turning briefly to performance by segment. Established markets delivered organic revenue growth of 7.7%, led by strong price mix expansion. We benefited from pricing actions taken in all markets over the last 12 months, as well as positive mix. Targeted activations of single-serve offerings drove another quarter of good package mix. Volume in the segment declined, mainly due to Italy, which more than offset good volume growth in Greece. In Italy, performance was driven by ongoing declines in water, strong comparatives, and poor weather conditions. As a company deeply connected to Greece, we share the shock and sadness felt by so many as the wildfires and floods devastated the country this summer. Our priority is always the safety of our people and the support we can provide to our customers and communities. We have therefore been staying close to all our colleagues and partners, and we remain committed to playing our part in the short and longer-term recovery efforts. We responded, too, in the market, carefully executing our plan for the tourist season. We continued our momentum behind energy with double-digit growth. When I look at the category performance for the segment, I'm very encouraged with growth in adult sparkling and energy on top of a strong performance in 2022. For our developing markets, organic revenue grew by 15.9%. There was a strong contribution from price mix. Volumes declined modestly, similar to second quarter, largely reflecting the challenging economic conditions in Hungary and Czech Republic I previously highlighted. On a category basis, energy delivered another strong performance, as did coffee. Stills volumes were down by double digits, led by water category. Finally, for our emerging markets, organic revenue grew by 21.8%. We saw a good improvement in volume growth to nearly 8%, reflecting a strong performance from Egypt and another quarter of growth in Nigeria. Key to success in both countries has been a solid performance from trademark Coke brand and continued growth in energy, particularly in Egypt. Romania, on the other hand, continues to face a more challenging consumer environment, further impacted by higher value-added taxes from the start of the year. Overall, a strong performance from our emerging markets. I'm both proud and grateful to see that the engagement of our employees has increased in recent employee surveys. I'd like to take the opportunity to thank all our teams for their tremendous efforts. Not only have they delivered these strong results, but they have done so while supporting many of our communities during periods of terrible weather events and natural disasters. It's their drive and determination and the strong collaboration we have with our brand partners, particularly the Coca-Cola Company that underpins the day-to-day execution of our strategic priorities and the value we create across our markets. Our commitment to delivering strong growth in 2023 and beyond is unchanged. We continue to invest behind our capabilities, and we remain well positioned for future profitable and sustainable growth. Thank you for your attention, and I will now hand back to the operator, and Ben and I will be happy to take your questions. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Edward Mundy from Jefferies. Please go ahead. Morning, Zoran. Morning, Ben. First question is really around, you know, revenue per case, which has seen a really good step up over the last couple of years. I think at the group level, you're up 18%, versus pre-pandemic levels, and the established over 30%. And clearly the proof of the pudding is you're still taking share within NARTD and Sparkling. But what I'd love to understand is sort of based on all your monitoring tools and what type of framework you think about to ensure that you get that right balance of affordability, you know, how do you think about it relative to, let's say, soft drinks or relative to CPG? You know, how do you think about ensuring that your, your brands still remain affordable despite the very significant expansion in revenue per case? Thank you, Ed. Good morning. Look, revenue per case, which was absolute priority over last year and this year, is derived both from pricing as well as mix. Now, last year and this year, in this price mix combination, price had a more dominant role, but I wouldn't disregard the importance of mix, and especially as we will go forward, where we will see more balanced also ratio between price and mix. So that plays a role. Needless to say that there are so many levers within mix that, in various territories we are activating, whether that's on the package with various types, multipacks, that we are constantly adjusting as we are flexible, as we are tailoring the plans. Category mix, you know, where we are focusing and also channel mix. So, we constantly monitor, as part of the RGM framework, competitiveness in each market, what competition does, what we need to adjust, and this is also where promotions play a critical role, either for more tactical actions or for, you know, some deeper actions where and needed and for as long as it's needed. So I would say that, so far, our RGM framework and management has really proven that it's working very well. I feel very confident about it, and I'm very pleased that we have achieved our objectives, while at the same time growing both NARTD and Sparkling share, which is a good sense check of, you know, how we are balancing all these balls that we are juggling. Thanks. Second question is really around the European consumer. I think, you know, you flagged, you know, a bunch of the markets are under a little bit of pressure. Does that represent a significant step down relative to the first half? I appreciate, you know, weather was quite a big factor during the third quarter. I suppose the same part of that question, you know, if we do see a more difficult environment, could you just remind us what your playbook is to make sure you continue to sort of hit your algorithm, you know, over the medium term in a tougher environment? We do see. On one side, we do see that, you know, consumer, let's say, the consumer power is a little bit softening, which is natural, given the fact of price increases of all the players in the market, across all categories. So we do see that, and that there is some kind of a slowdown. We called particularly several markets where this is more visible than the others. But it's visible across Europe that the whole NARTD, as well as sparkling categories, are having a slowdown. Now, that only informs of how we are reacting based on the consumer sentiment, what's going on in each of the markets, and we are immediately adjusting our plans, so that which packages we emphasize, what kind of promotions we are doing, and that's why I'm really pleased that actually, even in these circumstances, we are having now two consecutive quarters of volume growth, and especially to see that volume performance in our three priority categories is positive, and I'm very, very encouraged by that. And just to close on that, Ed, is to say that we are aware that because where consumer is that we have to pay more attention on affordability going forward. Therefore, we said that going forward, we will see more balanced split between price mix and volume, as we will be giving more space to the programs and initiatives that will be behind volumes, exactly for the reason where consumer at this moment is. Great. Thank you. The next question is from Simon Hales with Citi. Please go ahead. Thank you. Morning, Zoran, morning, Ben, morning, John. So just a couple for me. I mean, Ben, maybe I could just ask you first, just around the changes in the financial charges line again, clearly a further improvement in the guidance this quarter, building on what you said at the Q2 stage. I'm just curious to understand what continues to drive that improvement, given the backdrop we've got of a raising rates environment, you know, sort of elsewhere, is it all just interest income, sort of driven? And then secondly, I just wonder whether you could just give us a bit more color about the performance, you know, of the Russian business in the period. I've seen the statements, clearly you've seen some organic growth, Q3 on Q3, but I'd just be interested in a bit more color there, Zoran, if you can share that. Very well. Thank you, Simon. So I'm going to start with the, with the finance cost and, and give you some color about what's driving it, and then I'll hand over to, to Zoran to say a few words about, the Russia performance. So look, our guidance implies, an improvement of EUR 15 million in finance costs, as you've seen for the full year 2023, and this is really mainly driven by the increased interest rates, as you rightly point out, which benefits our strong group cash position. And I want to underscore here, and make it clear, that the impact of Russia here is minimum. Hi, Simon, let me just provide input on your second question. Really nothing new to add related to Russia versus what we've been discussing on the previous calls. Just to reiterate that, we are looking here in a quite smaller business, on a two-year stack, we are 40% down on volume. Even though logically versus last year, we are above for the obvious reasons, as in Q3, we have transitioned from the Coca-Cola brands to, and started with our own, but we are talking about 40% lower volume in the quarter. But everything else is the same, and nothing else new to share. Thank you. Great, thank you. The next question is from Matthew Ford with BNP Paribas Exane. Please go ahead. Hi, Zoran. Hi, Ben. Just one question, on the outlook for next year. So obviously you reiterated your outlook for 2023. Just looking forward to 2024, you know, which areas of the business do you foresee kind of presenting the most difficult challenges from here, and where do you expect to see, you know, the most tailwinds? And then just kind of tagged onto that, you know, how do you expect, you know, the outlook for COGS in 2024, you know, based on your current level of hedging? Thank you. Thank you, Matthew. Look, it's still really early for us, and we will re-issue and give a better color on the 2024 guidance when we give our 2023 results in February next year, after we really put this year behind us, and we will have better reading of everything that's going on, as you know, we are witnesses of how much is really going on. I'll just say that despite the ongoing macro challenges, we are confident in setting a strong platform in 2023, from which we will build on from 2024, and we regard all our segments as playgrounds of driving growth. So, we'll give more color in February, if you can appreciate that. Thank you. The next question is from Fintan Ryan from Goodbody. Please go ahead. Good morning, Zoran, Yes. Ben, John. First question for me, please, if you could just talk about the performance in Egypt, to predict, I guess there's quite easy comps from last year, but, you know, given the growth in, in waters, you know, how we should think about this with that portfolio mix going forward, and then given that, last year, I guess the profitability in Egypt was quite constrained, you know, would you be factoring in margin improvements year on year from that Egyptian business? Hi, Fintan, the audio was a little bit low, so on Egypt, I understood. So, first of all, encouraging to see Q3 performance from Egypt, which comes as a result of us really doing a number of things from the moment we started having this wonderful business in our group. First of all, I reiterate how we are excited to have Egypt as a market, which has tremendous long-term potential, but evidently, Egypt is going through macroeconomically through challenging period, which last year saw devaluation this year and also now significant inflation. But at that backdrop, it provided a genuine sense of urgency with which we fast-tracked the way we build our prioritized capabilities, our bespoke capabilities in the country. And, we see that that already starts to bear the fruit, especially in the area of revenue growth management, which we regard as the most critical framework that for any market, and Egypt is not exception. And that's why seeing the performance of, of Sparkling in the country and also Water. Water played a good role in Q3 because we've done some significant price increases and adjustments which were needed in the category to make it more economically viable, and that has been achieved with a good success. So, in both of those categories of Sparkling and Water, we've done necessary steps, and good to see that now that bears the fruit. Also, we have launched two brands, Fury and Monster in Egypt, because that was the first priority category where we recognized the opportunity, and we are quite pleased how so far these introductions are performing. I would also highlight the extent to which we are really training and educating our sales force as a critical population to drive our results. They have gone through our Sales Academy, reaching gaining their License to Sell, as we call it. That's very important in how we upskill the sales force. Also, the way we have reset the whole approach, working with wholesalers in the country, which is a very important segment of customers, I'm really pleased how the team has done the adjustments for a healthy growth. So these are some of the, some of the things that really are coloring of, of what we do in Egypt. Needless to say, that we are intensifying our investments, coolers in the market that, that we are doing. There is also focused on digital commerce with e-wholesalers. So I would say on many fronts, we are working very hard and very busy in, in strengthening the business. And I'm concluding to say that I'm, quite, optimistic about the, of the outlook and, on a, on, on... in the years going forward. Great. Thank you, Zoran. And then quickly then on- Thank you, Fintan. Just given the pressures that a number of the major beer companies are talking about in the market, I wonder could you talk about how you're continuing to significantly gain share, well, gain share growth from the consumer? You know, would you still be confident on driving volume growth into Q4 and into next year? Yeah. Yes, Fintan. The very first thing I will emphasize on Nigeria are the bespoke capabilities that we are developing and heavily investing behind in Nigeria. I always like to remind that Nigeria is always, if not the first, it's always among the first countries where we start and pilot many areas of our capabilities. And the way we have developed revenue growth management capability, also route to market and now data insights analytics, is really critical. We've seen how that carried us through the COVID times and then in post-COVID, and at the beginning of the year, when country had issue with the banknotes, because of our proximity, frequency of visits, intelligence of where we need to go, what we do, and that it's not one size fits all, but we take very segmented approach in the way we plan our initiatives, how we execute them per different region, how we are now doing pricing in a paced and well-planned waves between different regions. I think all that is very important in how we execute locally adjusted marketing plans from the Coca-Cola Company, where I really need to say that we like the way the global marketing programs are adjusted to the local reality and local consumer, and we are actually really encouraged to see how our partners from the Coca-Cola Company are doing that. And as a result of that, we do see that we are jointly increasing the number of weekly plus consumers, which is a good fact. So when you put that all together, I cannot make one point that will... is a sole driver, but all these together is giving us the confidence that this quarter we will see a volume growth. We are cycling very low volume comps in Nigeria from last year. And also our planning for next year is taking both into account price mix but also volume. So both of those are critical for our revenue generation next year in Nigeria. Perfect. Thank you very much, Zoran. Thank you, Fintan. The next question is from Alicia Forry with Investec. Please go ahead. Hi there. I think most of my questions have been answered actually, but I wondered if, just coming back to Egypt, would it be possible for you to break out at least roughly how much of the growth there was due to the new launches that happened, and how much is sort of the underlying health of that market? And, perhaps, as you just did with Nigeria, if you could dig into a little bit about the kind of consumer backdrop in Egypt a bit more, that would be helpful. Thank you. Good morning, Alicia. Even though we are excited with the new launches in energy, but those still are really not material to call them out, so it's the underlying performance of two well-established categories of sparkling and water that's driving the result in Q3. Consumer sentiment is not easy, given the fact that we are talking about very high general inflation, but especially food inflation is even higher. And we do see that the overall NARTD category market performance is in a small decline. While it's good to see that even in these kind of circumstances, that sparkling category is still in the positive trajectory. So, we appreciate to see that level of resilience on the consumer side, but we fully acknowledge the sentiment and the burden that is on consumer, and that's reflected in our plans and adjustments of our brand pack price architecture that is being done in the market. We feel that really that plays a role to address the consumer needs at this moment. Thank you. Thank you. The next question is from Andrea Pistacchi, Pistacchi with Bank of America. Please go ahead. Yes, hi. Hi, Zoran, Ben. So two questions, please. The first one on established volumes, which obviously you had a difficult quarter in Q3, held back by the weather. Could you comment on to what degree trends may have improved in September, particularly in Italy, as the weather was less of a drag? And the second question is on 2023 guidance. So Q3 was another quarter of strong top line growth. You haven't, of course, changed the guidance. Your guidance this year implies quite a bit lower margins in the second half, and historically, margins have been higher in the second half than the first half. So how do you really square this, and what do you see with two months to go as the main areas of uncertainty for your performance in the year? Good morning, Andrea. Let me start with your first question, and then I'll give Ben the pleasure of the second one. So, on established, first of all, I really use the opportunity to say how pleased I am with the progress that we are making in the established segment. Just to say that couple of years ago, if you would ask me how would we be able, or to which extent in such inflation environment, to pass on, you know, pricing and improve our revenue per case, I probably would not be as confident as I am today to really see the testament and the result of Revenue Growth Management that we are doing across all established markets. And I'm very pleased that our conscious choice of focusing on price mix has delivered a desired result of very strong revenue per case, where both pricing and mix play the role. We knew that this is going to possibly create a temporary impact on volume, but it was a conscious choice. And also to mention that we know that we were cycling very, very strong volumes in this segment of Q3 of last year. If you remember, it was we were cycling 10%. So, all in all, very pleased very pleased with the performance and in line with what our plan was. Going forward, like for the rest, we are going to see a more balanced ratio between price mix and volume, as in all segments, but also in this one. All right, then. Hi, Andrea. So look, after a strong first half, where we saw organic EBIT growth of 18%, that was led by good execution of price increases and that resilient volume performance that you saw earlier in the year, now our guidance for the second half implies a slowdown in the revenue growth, and that is primarily driven by a moderation in revenue growth, driven by price mix, as Zoran has earlier said. And basically, the other thing to consider is that on the cost front, while inflation is subsiding, we must also account for more significant transactional FX headwinds, that we see in the second half, coming from things like the Russian ruble, the Nigerian naira and the Egyptian pound. So that's why the guidance remains as it is. One, if I can just one super quick follow-up, please, on, on Italy and the sugar tax. I think I was reading it's possibly being postponed again. Is that, do you know, is that confirmed? Is that right? And are you hearing of potential sugar taxes in other markets? You are right. You're right, you're right, Andrea. In Italy, at the moment, this has been pushed to July of 2024. And we remain working with industry on this case, but it has been pushed to July, and then we will probably have more accurate status of that at our next call. And then, as you said, in any other markets, we do see that in Romania we expect, and there was going to be sugar tax from January, and that's something that we have anticipated now in the preparation of our plans, and we are taking that into that into account, and plans will be completely address that. Thank you. You're welcome. For any further questions, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time. Good. So thank you, Operator, and let me just recap a few key points from the call. We had another good quarter of sales growth with resilient volume growth, as well as strong revenue per case expansion. We are iterating our guidance for 2023, providing a strong platform from which to build on in 2024 and beyond. Thank you all for your attention, and with that, I close the call and wish you a good day. Thank you. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.