Half Year 2025 JDE Peet's NV Earnings Call

Rafael Oliveira: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's JDE Peet's N.V. half-year 2025 earnings call. My name is Sharon, and I will be your operator for the call. For the duration of the presentation, all participants will be in a listen-only mode, and the conference call is being recorded. Following the presentation, there will be an opportunity to ask questions. If you do have questions, please press the star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 11 if you wish to ask a question. At this time, I would like to turn the call over to our first speaker, Robin Jansen, Director of Investor Relations for JDE Peet's N.V.

Good morning, ladies and gentlemen, and thank you for standing by welcome to today's J D. P. It's half year 'twenty 25 earnings call. My name is Shannon and I will be your operator for the call.

Relation with the presentation, all participants will be in a listen only mode and the conference call is being recorded following the presentation there'll be an opportunity to ask questions. If you do have questions. Please press the star one one on your telephone keypad and wait for your name to be announced to withdraw your question. Please press star one.

And again once again, please press star one if you wish to ask a question at this time I would like to turn the call over to our first speaker Robin Johnson director of Investor Relations for J D E P.

Robin Jansen: Thank you, Sharon. Good morning, everyone, and welcome to JDE Peet's earnings call for the first half of 2025. Joining me are Rafael Oliveira, CEO, and Yang Xu, CFO. After my introduction, Rafael will walk you through the operational and financial highlights related to our first half-year business performance, followed by a strategic update. Yang will then provide more detail on our financial performance and will provide an update on our full-year outlook. After that, we will be happy to answer your questions. Our press release was published at 7:00 A.M. CET this morning. Both the release and the slide deck for this call are available in the Investor section of our website. A full transcript of this conference call will be made available there as soon as possible after this call.

Thank you Sharon.

Good morning, everyone and welcome to J D Pizza earnings call for the first half of 2025.

Joining me are rough Oliveira, CEO and young Soo CFO.

After my introduction Rockford will walk you through the operational and financial highlights related to our first half year business performance, followed by a strategic update.

Young we will then provide more detail on our financial performance and will provide an update on our full year outlook.

After that we will be happy to answer your questions.

Our press release was published at seven a M. CET this morning.

Both the release and the slide equity scope.

Billable in the investors section of our website.

A full transcript of this conference call will be made available there as soon as possible. After this call.

Robin Jansen: Before handing over to Rafael, I would like to draw your attention to the disclaimer on slide three regarding non-IFRS measures and forward-looking statements. Please take a moment to review this information carefully. With that, I am pleased to hand over the call to you, Rafael.

Before handing over to Russia, I would like to draw your attention to the disclaimer on slide three regarding non <unk> measures and forward looking statements.

Please take a moment to review this information carefully.

With that I am pleased to hand over to go to Russia.

Yang Xu: Thank you, Robin, and welcome, everyone. I am pleased to share the key highlights of the results of the first half of 2025 with you and provide you with an update on our five key priorities for the year, along with a brief recap of our new brand-led strategy we introduced at our Capital Markets Day on July 1. As you saw in this morning's press release, we delivered another set of strong, broad-based results. On an organic basis, our sales were up 22.5%, our adjusted gross profit increased by 2.2%, and our adjusted EBIT grew by 2%. Our free cash flow was also solid at 565 million euros, underscoring our strong cash-generating capabilities.

Thank you, Rob and welcome everyone I.

I am pleased to share the key highlights of the results of the first half of 2025 with you and provide you with an update on our five key priorities for the year along with a brief recap of our new brand led strategy, we introduced at our capital markets day on the first of July.

As you saw in this morning's press release, we delivered another set of strong broad based results.

On an organic basis, our sales were up 22, 5% our adjusted gross profit increased by two 2% and our adjusted EBITDA grew by 2%.

Our free cash flow was also solid at 565 million years, underscoring our strong cash generating capabilities.

Yang Xu: We are proud of this performance across top-line profitability and cash, especially when considering the persistently high green coffee prices that we had to continue to deal with in the first half of 2025, which Yang Xu will elaborate on later. Once again, we successfully managed to appropriately offset this semester's unprecedented level of inflation with efficiencies, productivities, and pricing across products and markets. This allowed us to protect our gross profit, enabling necessary investments for growth and profitability. Despite the short-term volume pressure we experienced during retailer negotiations in Europe at the start of the year, volumes rebounded quickly from March onwards, resulting in very resilient ball mix growth of 1% and overall stable market share performance, especially in faster growing categories such as beans and aluminum capsules.

We are proud of this performance across top line profitability and cash, especially when considering the persistently high green coffee prices that we had to continue to deal with in the first half of 'twenty, five which young will elaborate on later.

Once again, we successfully managed to appropriately offset this semester's unprecedented level of inflation with efficiencies productivity and pricing across products and markets.

This allows us to protect our gross profit, enabling necessary investments for growth and profitability.

Despite the short term volume pressure, we experienced during retailer negotiations in Europe at the start of the year volumes rebounded quickly from March onwards, resulting very resilient volume mix growth of 1% and overall stable market share performance, especially in faster growing.

Categories, such as bins and aluminum caps.

Yang Xu: Especially in capsules, we are very pleased to see that again in the first half of 2025, we are outperforming the market with low-teens organic sales growth, fueled by mid-single-digit volume mix growth. We are also pleased with the progress we made on the five key priorities we set for 2025, and which we shared with you when we published our full-year 2024 results back in February. I will briefly address the progress we have made on each of those five priorities in the next slide. Last but not least, we returned 43% of our free cash flow to shareholders. 172 million was returned through dividends, while another 71 million was returned through our 2025 250 million euro share buyback program, which we launched nearly five months ago as part of our 1 billion euro share buyback commitment for the coming years.

Especially in capsules, we are very pleased to see that again in the first half of 'twenty. Five we are outperforming the market with low teens organic sales growth fueled by mid single digit volume mix growth.

We are also pleased with the progress we've made on the five key priorities, we set for 2025 and which we shared with you when we publish our full year 2024 results back in February.

I'll briefly address the progress we've made on each of those five priorities in the next slide.

Last but not least we returned 43% of our free cash flow to shareholders $172 million was returned through dividends. While another 71 million was returned through our $2025 250 million euros share buyback program, which we launched nearly five months ago as part of.

Our 1 billion share buyback commitment for the coming years.

Yang Xu: By July 25, we had completed 38% of the 2025 share buyback program. Overall, looking back at the first six months of the year, we are very pleased with the progress we made from a strategic, business, as well as financial perspective. More importantly, as a leadership team, we have clearly noticed that the organization is starting to regain momentum and that the new strategy and the set of actions we are taking are re-energizing and motivating our teams across the globe. Let's now take stock of how we are progressing on the five key priorities we have set for our team for 2025. First and foremost, pricing discipline.

But the 20 <unk> of July we have completed 38% of the 2025 share buyback program.

Overall looking back at the first six months of the year. We are very pleased with the progress we've made from a strategic business as well as financial perspective.

More importantly, as a leadership team we have clearly notice that the organization starting to refined momentum ended the newest strategy and decisive actions. We are taking a reenergizing of motivating our teams across the globe.

Let's now take a stock of how we are progressing on the five key priorities. We've made set for our team for 2025.

First and foremost pricing discipline.

Yang Xu: It goes without saying that with an inflation headwind of about 800 million euros in H1 and an estimated total level of inflation at our cost base of around 1.6 billion euros for the full year, the number one priority for the entire organization is to stay laser-focused and extremely disciplined on protecting our gross profit, our EBIT, and our free cash flow, which we did. We pulled all the levers we can to mitigate inflation and have built a robust pipeline of productivity and efficiency measures to absorb as much of the inflation headwind as possible. Only the part of inflation that we cannot offset despite our efforts has been and will be passed on to our value retail and out-of-home partners through price increases.

It goes without saying that refund inflation headwind of about 800 million euros in half one and an estimated total level of inflation at our cost base of around $1 6 billion for the full year. The number one priority for the entire organization is to stay laser focused and extremely disciplined.

Our gross profit, our EBITDA and our free cash flow, which we did.

We pull all the levers we can to mitigate inflation and have built a robust pipeline of productivity and efficiency measures to absorb as much of the inflation headwind as possible.

And only the part of inflation that we cannot offset despite our efforts has been and will be passed on to our value retail and out of home partners through price increases.

Yang Xu: To this end, we are currently discussing pricing with customers across the globe, and I am pleased to report that we expect to have successfully concluded price negotiations, covering 87% of our total sales by the end of next week, which will then include France, where a different timeline is applicable due to the rules that apply to their market. To be clear, being disciplined on pricing and protecting our absolute gross profit is crucial to our ability to continue to invest in areas such as new product development, product quality, sustainability, capacity expansion, et cetera. This ultimately benefits all our stakeholders, including consumers, customers, employment, and the more than 1 million farmers we source from. Our second priority for 2025 is to identify and deliver additional efficiencies to fund incremental investments behind our leading brands: Peet's, L'OR, and our 10 iconic brands led by Jacobs.

To this end we are currently discussing pricing with customers across the globe and I am pleased to report that we expect to have successfully concluded price negotiation covering 87% of our total sales by the end of next week, which will then include France, where a different timeline as applicable due to the rules that apply to their mark.

And to be clear being disciplined on pricing and protecting our absolute gross profit is crucial to our ability to continue to invest in areas such as new product development product quality sustainability capacity expansion et cetera.

This ultimately benefits all our stakeholders, including consumers customers employment and the more than 1 million farmers we source from.

Our second priority for 2025 is to identify and deliver additional efficiencies to fund incremental investments behind our leading brands beads law and our iconic brands led by Jacobs.

Yang Xu: We have done intensive granular analysis to identify the four main areas where we are going to get this productivity. We shared those four areas at our Capital Markets Day and started to execute on since the start of this year. The four areas we have identified are portfolio simplification, synergies in the way we work, drive continuous improvement, and focus on asset-led go-to-market and partnerships. We have a specific target for each of these areas and a very detailed zip code of where we are going to get this productivity strong. In terms of timing, we expect to deliver 250 million euros of net savings by the end of 2027, and in total, 500 million euros by 2032. We will update you on the progress we are making on this front on a regular basis.

We have done intensive granular analysis to identify the four main areas, where we are going to get this productivity.

We share those these four areas at our capital markets day.

And started to execute on <unk> since the start of this year.

The four areas, we have identified our portfolio simplification synergies in the way, we work drive continuous improvement and focus on asset light route to market and partnerships.

We have a specific target for each of these areas in a very detailed ZIP codes of where we are going to get this productivity is strong.

In terms of timing, we expect to deliver 250 million euros of net savings by the end of 2027 in total 500 million by 2032.

And of course, we will update you on the progress we are making on this front on a regular basis.

Yang Xu: Let me call out some of the most important initiatives we undertook in the first half of this year to simplify our operating model and optimize resource allocation. We divested our tea business in Turkey, which was loss-making to Afro Holdings. We discontinued the rollout of L'OR Barista machine in the U.S. We transferred our L'OR capsules business in the U.S. to Peet's in San Francisco to better capture the significant potential of the U.S. coffee market. In procurement, we implemented the Design for Value program that is already bringing productivity. Using our coffee expertise, we are able to mix our blends to optimize costs while maintaining quality. When it comes to manufacturing, we announced the intent to close our plant in Banbury in the U.K.

Let me call out some of the most important initiatives we undertook in the first half of this year to simplify our operating model and optimize resource allocation.

We divested our tea business in Turkey, which was lossmaking to <unk>.

We discontinued the rollout of <unk> machine in the U S with.

We transfer our Lora capsules business in the U S. Two pits at San Francisco to better capture the significant potential of U S coffee market.

In procurement, we implemented the design for value program that is already bringing productivity.

Using our coffee expertise, we are able to mix, our blends to optimize costs, while maintaining quality.

When it comes to manufacturing, we announced they intend to closure our plant in Banbury in the UK.

Yang Xu: We also announced the optimization of our operating model in Europe by reducing the number of country clusters from 10 to 5, harmonizing ways of working across teams, and centralizing finance transactional activities in a global business service model to improve effectiveness and efficiency. A good start has been made, but as this is a significant and multi-year program, what we've done today is just the beginning, and we will continue to work on strategic initiatives to simplify and optimize the company. Stay tuned here.

And we also announced the optimization of our operating model in Europe by reducing the number of country clusters from 10 to five harmonizing ways of working across teams and centralized in finance transactional activities in our global business service model to improve effectiveness and efficiency.

So yes, a good start has been made but as this is a significant multiyear proven what we've done today is just the beginning and we will continue to work on strategic initiatives to simplify and optimize the company so stay tuned here.

Yang Xu: Third, the strategic assessment we have done in the first half of the year and the new brand-led strategy that this resulted in provide us with a clear strategic roadmap to be much more selective and rigorous in our capital and resource allocation to drive brand investments behind our three big beds: Peet's, L'OR, and the 10 iconic brands led by Jacobs, with a bigger focus on organic growth. To reinvigorate our focus on organic growth, we are deploying as the fourth priority a spectrum of initiatives to increase agility, remove bureaucracy, and drive an ownership culture across the organization. An example of this is the two-day summit we organized right after the Capital Markets Day for the 100 most senior leaders of the company for alignment and deployment of the new brand-led strategy and crystallized what this means for the entire organization.

Third the strategic assessment, we have done in the first half of the year and the new brand led strategy that this resulted in provides us with a clear strategic roadmap to be much more selective and rigorous in our capital and resource allocation to drive brand investments behind our three big bets.

Law ended 10 iconic brands led by Jack with a bigger focus on organic growth.

To review a greater focus on organic growth, we are deploying as the fourth priority a spectrum of initiatives to increase agility remove bureaucracy and drive an ownership culture across the organization.

An example of this is the two day summit, we organized right. After the capital markets day for the 100, most senior leaders of the company for alignment and deployment of the new brand led strategy and crystallize what this means for the entire organization.

Yang Xu: When it comes to the fifth priority, to put more emphasis on stakeholder value creation, I believe we are also making good progress. We continue to invest in the business with, for example, a mid-single-digit organic increase in AMP. We improved our engagement score. We are intentionally engaging an additional 165,000 farmers to reach a total of 1 million farmers by the end of this year. We deliver a solid free cash flow, which we used to return 243 million euros to our shareholders and to reduce our net leverage to 2.5 times. Let me now briefly provide you with a recap of the new brand-led strategy we revealed at our Capital Markets Day on July 1. We are simplifying the organization into one unified JDE Peet's N.V. with three big beds: Peet's, L'OR, and 10 local icons led by Jacobs.

When it comes to the fifth priority to put more emphasis on stakeholder value creation. I believe we are also making good progress with.

We continue to invest in the business with for example, a mid single digit organic increase in A&P.

We improved our engagement score.

Our intention engaging an additional 165000 farmers to reach a total of 1 million farmers by the end of this year.

And we deliver a solid free cash flow, which we used to return $243 million.

To our shareholders and to reduce our net leverage to two five times.

Let me now briefly provide you with a recap of our new brand led strategy, we feel that our capital markets day on July one.

Yes.

We are simplifying the organization into one unified GDP with three big bets beads law intent local icons led by Jacobs.

Yang Xu: These 10 local icons have amongst the strongest meaning, brand salience, and penetration in the markets where they are present and across all age groups. Very importantly as well, these are brands that enjoy very high rotation and have proven to be highly responsive to activation. These 10 iconic brands are 100% complementary since they mostly do not coexist, nor are they activated in one or same geography. Moving forward and leveraging the commonalities that bring these brands together, we will platform once and deploy multiple times. On the back of Jacobs, we will create a chassis that will adapt on the last mile for meaning and distinctivity. This is not a theoretical model. We have been experimenting over the last months, and we have proven the model can work.

This 10 local icon has amongst the strongest meaning brand sales and penetration in the markets, where the oppressed and across all age groups.

And very importantly, as well these are brands that enjoy very high rotation and have proven to be highly responsive to activation.

And this 10 iconic brands are 100% complementary since they mostly do not quite exist nor are they activated an one off thing geography.

Moving forward and leveraging the commonalities that bringing these brands together, we will platform once and deploy multiple times.

On the on the back of Jacobs will create a chassis that will adapt on the last mile for meaning investing activity.

And this is not a theoretical model we've been experimenting over the last months and they have proven the model can work.

Yang Xu: The focus on these three big beds does not mean that the other remaining brands in the portfolio will, by definition, be neglected or sold. We see various future avenues for the second-tier brands and the ones that find themselves in the tales. These brands could either develop a plan that steps up their performance to aspire to become part of the group of local icons or be transitioned to another brand like we have, for instance, done in the past with L'Amour and Carte Noire that transitioned to L'OR and Medalles, D'Or, transitioned to Jacobs in Switzerland. In some cases, we could conclude over time that we are no longer the best owner of certain brands. Thus, we will look for alternatives and state models.

The focus on distribute back does not mean that the other remaining brands in our portfolio, we will by definition be neglected or sold.

We see various future avenues for the second tier brands and the ones that find themselves in the tail.

This brands could either develop a plan that steps up there for performance to aspire to become part of the group of look like.

Or be transition to another brand like we have for this is done in the past, we learn more and <unk> the transition to la <unk> d'or transition to Jacobs in Switzerland.

In some case, we could conclude over time that we are no longer the best owner of certain brands and.

Thus, we will look for alternatives and state models.

Yang Xu: Our transformation will be driven by five key catalysts: a winning culture of agility, ownership, and transparency; a consumer-led organization built on iconic brands; commercial excellence across four mission-critical capabilities; a simplified structure to an ambitious productivity program; with financial disciplines at the core. Before sharing some examples of the progress we have been making on these five catalysts, let me first highlight some of the promising product launches we have rolled out through our leading brands: Peet's, L'OR, and our 10 iconic brands led by Jacobs. The three big bets I just mentioned, anchored in our brand-led strategy, are creating a powerful focus for innovation. We are already seeing great results. We are bringing meaningful new products that meet changing and evolving needs and preferences at the right time while increasing the value of every cup. Let me share a few highlights from the first half of the year.

Our transformation will be driven by five key catalysts are winning culture of agility ownership interest bearing.

Our consumer led organization built on iconic brands.

Commercial excellence across four mission critical capabilities.

Our simplified structure to an ambitious productivity program with financial discipline at the core.

Before sharing some examples of the progress we make on this five catalyst let me first highlight some of the promising product launches, we have rolled out to our leading brands beads law and our attempt iconic brands led by Jacobs.

The three big bets I just mention anchor in our brand led strategy a creep.

A powerful focus for innovation.

And we're already seeing great results.

We are bringing meaningful new products that meet changing and evolving needs and preferences at the right time, while increasing the value of every cup.

Let me share a few highlights from the first half of the year.

Yang Xu: Peet's stepped into exciting new territory with the launch of Peet's Popping Pearls, a bold innovation designed to surprise and delight. These pearls gently burst with intense coffee flavor, delivering a unique and playful sensory experience. Because of its success, we have now brought Popping Pearls to more markets than the L'OR brand, where it is becoming a key feature in our experimental activation. With more than 50% of U.S. coffee drinkers now choosing medium roast, Peet's is expanding its beans offering in the medium roast category. Off the Grid is our latest addition to the beans portfolio and specifically crafted to attract new consumers by offering the coffee they already love with the premium taste and quality that only Peet's can deliver. We are also building on the strong momentum of the fast-growing iced coffee trend, especially with Millennials and Gen Z.

Pete stepped into exciting new territory with the launch of pit pumping perils.

Bold innovation designed to surprise and delight.

Dispose gently burst with intense coffee flavor deliver unique and playful sensory experience.

Because of its success, we've now brought popping pebbles to more markets under lower brand, where it's becoming a key feature in our experiment to activation.

If more than 50% of U S. Coffee drink is now choosing medium roast.

<unk> is expanding its beans offering in the medium roast Kathy.

Off the grid is our latest addition to the <unk> portfolio and specifically crafted to attract new consumers by offering the coffee they already love with the premium taste and quality the only pizza can deliver.

We are also building on the strong momentum of the fast growing ice coffee trend, especially with millennials and Gen Z.

Yang Xu: L'OR Coconut Iced Espresso made a strong debut in over 20 markets, and it is just the beginning. We are now preparing to launch a season lineup that reflects how our consumers live and feel throughout the year. Coming this autumn, L'OR Pumpkin Spicy, a typical warming blend with notes of cinnamon, clove, allspice, and nutmeg. in June, we launched L'OR Barista Absolute in six markets. Our most advanced machine yet offers 18 brew options, including a dedicated ice function to brew a perfect iced coffee through a machine. Whether hot or cold, each cup is elevated with richer flavor and aroma. To elevate the experience for consumers when brewed cold, our innovative Punge function pre-wets the coffee grounds, allowing them to bloom before extraction.

Lower Cocoanuts Iced espresso made a strong debuted in over 20 markets and this is just the beginning.

We are now preparing to launch our seasonal lineup that reflects how our consumers live and few throughout the year.

Come and you saw some lower pumpkin spice of typical warming blend with thoughts of cinema globe, all spice and that back.

In June we launched la barista absolute in six markets.

Our most advanced machine, yet offering 18 brew options, including a dedicated ice function to brew a perfect ice coffee throw machine.

Whether hot or cold each cup is elevated with reach a flavor and our own.

To elevate the experience for our consumers when Brent korb, our innovative booms function free with the coffee grounds, allowing them to bloom before extraction.

Yang Xu: This means you also get full aroma and flavor of ice when the ice button is selected. Let us now switch to the iconic brands led by Jacobs and provide you with an example of the exciting opportunities we have to platform and roll out new innovations across these strong heritage brands: Dubai Chawal. In response to a fast-moving social media trend, this product went from concept to shelf in just 18 weeks. Its strong performance allows us to roll it out quickly across more than 20 markets under several of our leading brands. It is already becoming one of the top-performing products in our mixes ranging in the U.K. Lastly, after Peet's Ultra Coffee Concentrate opened a new category, Mokona launched liquid espresso coffee sachets in Australia. It is the first of its kind there and answers the growing need for convenience.

This means you also get full aroma and flavor of ice when the ice buttons select.

Let's now switch to the iconic brands led by Jacobs and provide you with an example of the exciting opportunities we have two platform and roll out new innovations across the strong heritage brands Dubai chart.

In response to fast moving social media trend. This product went from concept to shelf in just 18 weeks.

It's strong performance allow us to roll it out quickly across more than 20 markets under several of our leading brands and it's already becoming one of the top performing projects in our mixes ranging in the UK.

And lastly after.

After pits ultra coffee concentrate opened a new category more corner launched liquid expresso coffee such as in Australia.

It's the first of its kind there and this is a growing need for convenience.

Yang Xu: 76% of surveyed consumers indicated that they will make it part of their daily routine. With that kind of response, we are now planning a wider rollout across Asia. Let me now move on to share a selection of the progress we are making on each of our five strategic catalysts I just referred to. As I mentioned in the start of this call, we have clearly noticed that the organization is starting to refine momentum and that the new strategies and the size of actions we are taking are re-energizing and motivating our teams across the globe. This is also underpinned by the most recent outcome of our annual Gallup employee engagement survey. The score improved to 4.12 based on participation rates, which was 91% compared to 81% on average at other FMCG companies using Gallup.

76% of survey consumers indicated that they will make it part of their daily routine.

With that kind of response, we are now planning a wider rollout across Asia.

Let me now move on to share a selection of the progress we are making on each of our five strategic catalyst I just referred to.

As I mentioned in the start of this call. We have clearly notice that the organization starting to refund moment and that the new strategy and decisive actions, we have taken a reenergizing and motivating our teams across the globe.

This is also underpinned by the most recent outcome of our annual Gallup employee engagement survey.

Score improved to $4 12 based on participation rate, which was 91% compared to 81% on average at other FMC competencies using GAAP.

Yang Xu: We also announced a new setup for the Central Marketing organization, aligned with our new brand-led strategy, and aimed at consolidating all category themes under one portfolio strategy role to drive a holistic category agenda and align priorities, scaling up expert capabilities, and removing duplicities. To beef up commercial excellence, we have, among other things, set up a brand new revenue growth management platform and are enriching our key account management reach and capabilities. As you have heard earlier during this call, our simplification and productivity programs are in full swing, and our financial discipline remains strong, reflected in strong free cash flow, a leverage of 2.5 times, and 38% of our 2025 share buyback program complete.

We also announced a new setup for the central marketing organization aligned with our new brand led strategy.

Aimed at consolidating all category teams under one portfolio strategy role to drive a holistic category agenda and align priorities.

Scaling up expert capability and we're moving to please.

To beef up commercial excellence, we have among other things set up a brand new revenue growth management platform and are in reaching our key account management reach and capabilities. As you have heard earlier during this call our simplification and productivity programs are in full swing and our financial discipline.

Remains strong reflected in strong free cash flow our leverage of two five times and 38% of our 2025 share buy back program complete.

Yang Xu: To wrap it all up, I would like to conclude that we have delivered a strong set of broad-based results. We have put a clear and simple brand-led strategy in place, and we have set the strategy in motion that are making solid progress since the start of the year. Taking these three points into account, we feel confident in raising our full-year guidance, which Yang Xu will come back at the end of our session. With that, I would now like to hand the call to Yang Xu to discuss our first half financials and the outlook for the full year 2025.

So to wrap it all up I would like to conclude that we've delivered a strong set of broad based results.

We've put a clear and simple brand led strategy in place.

And we've set the strategy motion there are making solid progress since the start of the year.

Taking this three points into account, we feel confident in raising our full year guidance with two young will come back at the end of the session.

With that I would now like to hand, the call too young to discuss our first half financials and the outlook for the full year 2025.

Feng Zhang: Thank you, Rafael, and good morning, everyone. Following Rafael's overview of our H1 highlights, I will now provide more details on our financial performance and then update you on our outlook for full year 2025. Slide 14 shows that we have delivered a strong set of results across top-line, profitability, and cash in the first half of 2025. Organically, our sales increased by 22.5%, our adjusted gross profit increased by 2.2%, and our adjusted EBIT by 2%, reflecting a strong delivery in H1. When taking into account the net effect of forex and the changing scope, our sales increased to 5 billion, adjusted gross profit increased to 1.7 billion, adjusted EBIT increased to 709 million, and our free cash flow was 565 million euros. Slide 15 shows more details on the drivers of our sales. Our organic sales grew 22.5%.

Thank you Ralph and good morning, everyone.

Following <unk> review of our H one highlights.

I will now provide more details on our financial performance and then update you on our outlook for full year 2025.

Slide 14 shows that we have delivered a strong set of results across top line profitability and cash in the first half of 2025.

Organically, our sales increased by 22, 5%.

Adjusted gross profit increased by two 2% and our adjusted EBIT by 2%, reflecting a strong delivery in each one.

When taking into account the net effect of Forex and the changing scope.

Our sales increased two 5 billion.

Adjusted gross profit increased to $1 7 billion.

Adjusted EBIT increased to $709 million and our free cash flow was 565 million euros.

Slide 15 shows more details on the drivers of ourself.

Our organic sales grew 22, 5%.

Feng Zhang: It was driven by pricing of 21.5% as we continue to pass through the necessary and appropriate pricing to offset incremental inflation. In light of this pricing, volume mix growth showed a strong resilience with a plus of 1%. The negative foreign exchange impact of 2.8% was mainly driven by the depreciation of the Brazilian real. The 0.2% contribution from scope reflects the consolidation of Cariboo as of March 31, 2024, and the exit of the tea business in Turkey at the start of May. Let us now go to slide 16 to look in more details at our EBIT performance. Our organic adjusted EBIT increased by 2%. What this bridge clearly shows is two things. First, we managed an inflation headwind of about 800 million, which is more than our entire adjusted EBIT we generated in the first half of 2024.

It was driven by pricing of 21, 5% as we continue to pass through the necessary and appropriate pricing to offset incremental inflation.

In light of this pricing volume mix growth showed a strong resilience with a plus of 1%.

The negative foreign exchange impact of two 8% was mainly driven by the depreciation of the President's AI.

The 0.2% contribution from scope reflects the consolidation of the Cariboo as of the 30 <unk> of March 2024.

The exit of the key business in Turkey at the start of May.

Let's now go to slide 16 to look in more details and our epic performance.

Our organic adjusted EBITDA increased by 2%.

What does this bridge clearly shows is two things.

We managed and inflation headwind of about $800 million, which is more than our entire adjusted EBITDA. We generated in the first half of 2024.

Feng Zhang: Second, we maintained our absolute gross profit by implementing appropriate price adjustments to address inflationary pressure that could not be fully mitigated through productivity and other measures. The bar chart shows that we have successfully protected our absolute profit base, reflecting the resilience and strong market position of our brands. Our overall AMP spend was up mid-single digit organically, with a stable to increasing AMP spend across all four segments. Let us now take a closer look at the organic sales and adjusted EBIT performance by segment on slide 17. Looking at the performance by segment, you can see that all four segments contributed to our top-line growth. When it comes to profitability, both Europe and La Mia developed strong performance at gross profit and adjusted EBIT level, which was partially offset by declines in profitability at Peet's and APAC. Let me now go through each segment one by one.

Second we maintained our absolute gross profit by implementing appropriate price adjustments to address inflationary pressure that could not be fully mitigated through productivity and other measures.

The Bar chart shows that we have successfully protected our absolute profit base, reflecting the resilience and strong market position of our brands.

Our overall A&P spend was up mid single digits organically.

Stable to increasing A&P spend across all four segments.

Let's now take a closer look at the organic sales and adjusted EBIT performance by segment on Slide 17.

Looking at the performance by segment.

I see that all four segments contributed to our topline growth.

When it comes to profitability.

Europe and EMEA developed strong performance at gross profit and adjusted EBIT level.

Which was partially offset by declines in profitability at peace and APAC.

Let me now go through each segment one by one.

Feng Zhang: In Europe, volume mix performance was very resilient at 1.8%, taking into account pricing of plus 15.4%. Part of the relatively strong volume mix performance we believe reflects some consumer pre-buying ahead of planned price increases in the second half of the year. We estimate this pre-buying effect had a positive effect of around 2 to 3 points on volume mix performance in the first half, which by nature will therefore become the headwind for volume mix performance in the second half of the year and is fully reflected in our updated outlook of the full year. In H1, markets such as France, the Nordics, and Italy, and brands including Jacobs, L'OR, Douwe Egberts, and Gevalia drove organic sales growth.

In Europe.

Volume mix performance was very resilient at one 8% taking.

Taking to account pricing, a plus 15, 4%.

Part of the relatively strong volume mix performance, we believe reflect some consumer pre buying ahead of planned price increases in the second half of the year.

We estimate this pre buy effect had a positive effect of around two to three points on volume mix performance in the first half.

Which by nature will therefore, it becomes a headwind for volume mix performance in the second half over the year and is fully reflected in our updated outlook of the full year.

In H, one markets such as France.

IDEXX and Italy and <unk>.

Brian including Jackups lower.

Edwards and chavarria drove organic sales growth.

Feng Zhang: The adjusted EBIT increased organically by 8.6%, reflecting an increase in gross profit supported by the retailer pre-buying adjustment mentioned and an increase in AMP spend as we actively reallocate funds to areas where we would get better returns. In La Mia, organic sales growth was driven by 55% price growth, which was offset by a decline in volume mix of negative 1.2%. Various markets in La Mia actually delivered positive volume mix, which was offset by Brazil, which continued to experience softer market conditions. Organic sales growth was driven by brands such as Pilão in Brazil and Jacobs in Eastern Europe and South Africa. Adjusted EBIT increased organically by 19.2%, which mainly reflects an increase in gross profit, productivities, and a stable AMP spend. The freed up AMP as a result of a discontinuation of the rollout of the L'OR Barista machines in the U.S.

The adjusted EBIT increased organically by eight 6%, reflecting an increase in gross profit.

Fortify the retailer pre buying I just mentioned.

And an increase in A&P spend as we actively reallocate funds two areas, we would get better returns.

In EMEA or.

<unk> sales growth was driven by 55% price growth, which was offset by a decline in volume mix of negative one 2%.

Various markets in EMEA actually delivered positive volume mix, which was offset by Brazil, which continue to experience softer market conditions.

Organic sales growth was driven by brands, such as <unk> in Brazil, and Jackups in Eastern Europe, and South Africa.

Adjusted EBIT increased organically by 19, 2%.

Meaning reflects an increasing gross profit.

At activities and stable A&P spend.

The freed up A&P as a result of the discontinuation of the roll out of the low power rates to machines in the U S was reallocated to high impact opportunities elsewhere in EMEA.

Feng Zhang: was reallocated to higher impact opportunities elsewhere in La Mia. At Peet's, organic sales growth was driven by 3.5% price and 0.6% volume mix. Peet's in-home business continued to deliver competitive growth across its Peet's, Caribou, Stone Town, and Intelligentsia brands. In Peet's U.S. coffee stores, same-store sales and ticket size were up, and Peet's China continued to deliver strong double-digit organic sales growth. Adjusted EBIT decreased organically by 37.6%, which is a result of two main drivers. First, as a reminder, Peet's had a high base of comparison related to a one-off Euro 16 million insurance payout benefit in H1 2024. Second, Peet's saw a decrease in gross profit, reflecting the interplay of the phasing of inflation and pricing between H1 and H2. This is reflecting that Peet's is a challenger brand in the U.S.

At Pes organic sales growth was driven by three 5% price and 0.6% volume mix.

Keith income business continued to deliver competitive growth across its Pete Cariboo downtown intelligence your brands.

In <unk> U S coffee stores same store sales and ticket size were up and China continued to deliver strong double digit organic sales growth.

Adjusted EBIT decreased organically by 37, 6%, which is a result of two main drivers.

First as a reminder piece had a high base of comparison related to a one off <unk> 16 million insurance pay our benefit in <unk> 2024.

Second piece saw a decrease in gross profit, reflecting the interplay of the facing of inflation.

I think between <unk> and <unk>.

This is reflecting that piece is a challenger brand in the U S coffee market.

Feng Zhang: coffee market and therefore follows instead of leads when it comes to passing through pricing. The level of AMP remained stable in the first half. In APAC, organic sales growth of 8.4% was driven by an increase of 7.7% in price and 0.7% in volume mix, mainly reflecting higher price elasticity in the region. Sales performance was geographically mixed, with strong performances in countries such as China and Thailand, partially offset by softer performances in countries such as Malaysia and New Zealand. Organic sales growth was driven by brands such as Mokona, Super, and OldTown's Hot & Cold premium instant mixes. The adjusted EBIT for APAC decreased organically by 14.7%, mainly reflecting phasing of productivities this year and last year and the interplay of the phasing of inflation and pricing between the first and second half. AMP spend was relatively stable compared to the same period of last year.

Therefore follows instead of lead when it comes to passing through pricing.

The level of A&P remained stable in the first half.

In APAC organic sales growth of eight 4% was driven by an increase of seven 7% price.

0.7 in volume mix.

Mainly reflecting higher price elasticity in the region.

Sales performance was geographically mix with strong performances in countries, such as China and Thailand.

Partially offset by softer performances in countries, such as Malaysia, and New Zealand.

Organic sales growth was driven pipelines, such as mokoena Super and <unk>.

The adjusted EBIT for APAC decreased organically by 14, 7%, mainly reflecting the phasing of productivity this year and last year and the interplay of the facing on inflation in pricing between the first and second half.

A&P spend was relatively stable compared to the same period of last year.

Feng Zhang: On page 18, as Rafael Oliveira mentioned earlier in the call, the three big bets: Peet's, L'OR Iced Coffee, and the local iconic brands led by Jacobs. They are cores to our brand-led strategy, and that is where we allocate most of our management attention and resources. This means that we will also closely track how those three big bets will perform. In H1, these three big bets altogether had solid performance with a combined organic growth of gross profit of 3%. Let us now move to slide 19 and have a look at our net profit development in absolute terms and per share. On the left-hand side of this slide, you can see that our underlying EPS, excluding the effect of the fair value change of our equity SWOT, has increased by 3.4% to $1.02.

On page 18.

As Rafa mentioned early in the call the three big bets piece lore, and the local iconic brands led by Jack ups.

They are core to our brand strategy and Thats, where we allocate most of the management attention and resources.

This means that we will also closely track how those three big bets will perform.

In each one of these three big bets altogether had solid performance with a combined organic growth of gross profit of 3%.

Let's now move to slide 19, and have a look at our net profit development in absolute terms and per share.

On the left hand side of this slide you can see that our underlying EPS, excluding the effect of the fair value change of our equity swaps has increased by three 4% to one zero and <unk>.

Feng Zhang: This was mainly driven by better operational performance and foreign exchange gains in the net finance line. When keeping the effect of the fair value changes of our equity SWOT in, the underlying EPS increased from €0.76 in first half 2024 to €1.33 in first half of 2025. Let me now share a bit more detail on our free cash flow and net debt development on slide 20. Our free cash flow generation of €565 million in the first half reflects a solid operational performance driven by higher EBITDA while absorbing a net cash outflow from working capital. This net outflow in working capital reflects the following movements. In the period, inventories increased mainly on the back of a higher green coffee price. Receivables increased due to higher sales. This was partly offset by payables.

This was mainly driven by better operational performance and foreign exchange gains in the net finance line.

One keeping the effect of the fair value changes of our equity swap in.

The underlying EPS increased from 76 Euro cents in first half 2024 to $1 33 in first half of 'twenty five.

Let me now share a bit more detail on our free cash flow and net debt developments on slide 20.

Our free cash flow generation of 565 million euros in the first half reflect the solid operational performance driven by higher EBITDA.

Absorbing a net cash outflow from working capital.

This net outflow in working capital reflects the following movements.

In the period.

Inventories increased mainly on the back of higher Green coffee price risk.

Receivables increased due to higher cells.

And this was partly offset by payables and the increase in payables on the back of higher Green coffee prices was partially offset by Euro U S dollar related Forex effect.

Feng Zhang: The increase in payables on the back of higher green coffee prices was partially offset by Euro U.S. dollar-related forex effect. The net debt bridge on the right-hand side shows that our free cash flow enables us to return 243 million euros to shareholders and reduce our net debt position by 337 million euros, therefore contributing to an improvement of our net leverage to 2.5 times. Before I update you on our outlook for full year 2025, I would like to briefly remind you on the next slide, slide 21, of the refined capital allocation priorities we shared at our Capital Market Day at the start of July. As part of renewed strategies, we will emphasize creating and unlocking value by focusing on absolute gross profit growth, adjusted EBIT growth, and free cash flow generation.

The net debt bridge on the right hand side shows that our free cash flow enables us to return 243 million euros to shareholders.

And reduce our net debt position by 337 million euros.

And therefore contributing to improvement of our net leverage to two and half times.

Before I update you on our outlook for full year 2025.

I would like to briefly remind you on the next slide slide 21 of the refined capital allocation priorities, we shared at our capital market day at the start of July.

As part of a renewed strategy will emphasize creating and unlocking value by focusing on absolute gross profit growth.

Adjusted EBIT growth and free cash flow generation.

Feng Zhang: We will deploy our capital in a more disciplined and intentional way to enable our strategy and further strengthen our financial profile. Our first priority is to reinvest in our business, especially in our three strategic big bets, using productivity from within to fund such growth. Second, as we continue to grow EBITDA and generate strong cash flows, we are committed to building an even stronger balance sheet through cycles and target now a net leverage of 2 times. This is more conservative than our previous target of 2.5 times, which we successfully delivered in the first half. Third, we also want to deliver a more consistent return to shareholders. We aim to increase our dividend gradually and steadily over time. Next to that, we will execute the multi-year 1 billion share buyback program we started in March.

We'll deploy our capital in a more disciplined and intentional way to enable our strategy and further strengthen our financial profile.

Our first priority is to reinvest in our business, especially in our three strategic big bets.

Using productivity from within to fund such growth.

Second as we continue to grow EBITDA and generate strong cash flows we are committed to building, an even stronger balance sheet through cycles and target now a net leverage of two times.

This is more conservative than our previous target of two and half times, which was successfully delivered in first half.

Third we also want to deliver a more consistent return to shareholders.

We aim to increase our dividend gradually and steadily over time.

And next to that we will execute the multi year $1 billion share buyback program, which started in March.

Feng Zhang: As mentioned by Rafael Oliveira earlier in this call, 38% of the 250 million earmarked for this year are being completed by the 25th of July. When it comes to M&A, we will deprioritize leverage acquisitions and focus on organic growth. Our M&A focus will have a bias for asset light and, to the extent relevant, explore non-core asset diversifiers. That said, we do believe that in the long run, we are still a strong consolidator in the category, but right now we are focused on getting our own house in order. Let me now update you on our outlook for 2025, starting with green coffee price developments, as these remain a very important factor in how our financial performance will take shape.

As mentioned by Ralph earlier in this call 38% of the 250 million earmarked for this year are being completed by the 20 <unk> of July.

When it comes to M&A, we will deploy the highest leverage acquisitions and focus on organic growth.

Our M&A focus will have a bias for asset light and to the extent relevant explore noncore asset divestitures.

That said, we do believe that in the long run we are still a strong consolidator in the category.

Right now we're focused on getting our own house in order.

Let me now update you on our outlook for 2025, starting with Green coffee price developments.

These remain a very important factor in how our financial performance will take shape.

Feng Zhang: As you can see on the graph on slide 23, green coffee prices have gone up very significantly and have reached historical highs in the first half of 2025. As you know, we hedge our green coffee price exposure in a very disciplined and consistent way. This allows us to create sufficient time to take the right measures to offset the negative effect that such inflation would otherwise have on our absolute level of profitability. It is therefore important to keep in mind that the green coffee prices in H1 2025 were on average more than 60% higher than the same period of last year. That is exactly why we are implementing significant mitigating initiatives, including appropriate and additional pricing to offset the significant headwinds in H2 and maintain absolute profit levels.

As you can see on the graph on slide 23, Green coffee prices have gone up very significantly and have reached historical highs in the first half of 2025.

As you know, we hedge of our green coffee price exposure in a very disciplined and consistent way.

This allows us to create sufficient time to take the right measures to offset the negative effect that such inflation would otherwise have another absolute level of profitability.

It is therefore important to keep in mind that the green coffee prices in <unk> 2025.

Average more than 60% higher than the same period of last year.

And that is exactly why we're implementing significant mitigating initiatives.

Including appropriate and additional pricing to offset the significant headwinds in H, two and maintain absolute profit levels.

Feng Zhang: Looking ahead, Green Coffee Experts believe that green coffee price developments will remain volatile due to ongoing supply concerns linked to climate, tight stocks, and continued speculative activities. The good thing is that to date, we did not see meaningful signs that price elasticity is materially going up. We know that the vast majority of our consumers do not lower in-home coffee consumptions when prices go up. Having said that, we expect to see some short-term volume pressure again during price negotiations with our retail partners, most notably in Europe. However, based on the attractiveness of the category, the equity of our brands with our consumers, and the collaborative relationships we have with our retail and out-of-home partners, we expect that some of the volume impact can be temporary, similar to what we have seen in the first half of the year. This leads me to slide 24.

Looking ahead green coffee experts believe that green coffee price development will remain volatile due to ongoing supply concerns linked to climate type stocks and continued speculative activities.

The good thing is that to date, we did not see meaningful signs that price elasticity is materially going up.

And we know that the vast majority of our consumers to not lower income cause coffee consumption when prices go up.

Having said that we expect to see some short term volume pressure again to in price negotiations with our retail partners, most notably in Europe.

However, based on the attractiveness of the category the equity of our brands with our consumers.

And the collaborative relationships, we have with our retail and out of home partners. We expect that some of the volume impact can be temporarily similar to what we have seen in first half of the year.

This leads me to slide 24.

Feng Zhang: Our strong financial performance in the first half of the year provides a solid foundation for our full-year results. Looking ahead to the second half of the year, we continue to face significant inflationary pressure and ongoing volatility in green coffee prices. To address this, we are implementing further mitigation actions, including appropriate pricing adjustments. In addition, volume mix performance in H2 will reflect the impact of the retailer pre-buying effect in Europe that benefited in the first half of the year. Taking the strong performance in H1 and these factors related to H2 together, we are confident in raising our full-year outlook. We now expect organic sales growth to reach a high teens percentage and anticipate that adjusted EBIT will be at least stable on an organic basis. We also continue to expect to deliver a free cash flow of around 1 billion euros.

Our strong financial performance in the first half of the year provides a solid foundation for our full year results.

Looking ahead to second half of the year, we continue to face significant inflationary pressure and ongoing volatility in green coffee prices.

To address this while implementing further mitigation actions, including appropriate pricing adjustments.

In addition volume mixed performance in <unk> reflects the impact of the retailer pre buy effect in Europe that benefited in first half of the year.

Taking the strong performance in H, one and these factors related to H two together.

We are confident in raising our full year outlook.

We now expect organic sales growth to reach a high teens percentage.

And then dissipate that adjusted EBIT will be at least stable on an organic basis.

We also continue to expect to deliver a free cash flow of around 1 billion euros.

Feng Zhang: With that, we have come to the end of our prepared remarks. With that, I will now turn it over to the operators so we can start the Q&A.

With that we've come to end of our prepared remarks, and with that I will now turn it over to the operators. So we can start the Q&A.

Sharon: Thank you. Ladies and gentlemen, we are now ready to take your questions. Please remember that you are limited to one question and a follow-up per round. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take our first question. One moment, please. Your first question comes from the line of Robin Jansen from ABN AMRO. Please go ahead.

Thank you.

And gentlemen, we are now ready to take your questions. Please remember that you are limited to one question and a follow up per round.

To ask a question you will need to press star one on one on your telephone and wait for your name to be announced.

To withdraw your question. Please press star one on one again.

We will now take our first question.

One moment please.

And your first question comes from the line of Robert Jan Vos from ABN Amro.

Please go ahead.

Patrick Folan: Yes, hi. Good morning all. Thanks for taking my questions. I have two. The first one is, did you experience new delistings already or anticipate delistings with the 13% tail of the remaining customer negotiations? That is my first question. My second question, you increased the guidance for adjusted EBIT quite significantly for the full year. Why has this not reflected in your free cash flow guidance as well? That is my second question. Thank you.

Yes, hi, good morning, all thanks for taking my questions I have two.

The first one is did you experience new de listings already or anticipate de listings with the 13% sale of the remaining customer negotiations. That's my first question second.

Second question.

You increased the guidance for adjusted EBIT.

It's quite significantly for the full year why has this not.

Why is it is not reflected in your fee cash flow guidance as well. That's my second question. Thank you.

Robin Jansen: Yeah. Hi, Robert. I will take the first one. Yang Xu can answer the second. On the delist, no, we have not experienced. I will dissociate a little bit the two things that you mentioned because in terms of negotiation, no, we have not experienced delisting right now because of the price negotiation. The reality is we had, as we shared with all of you, we had a tough January-February negotiations, but then in March, everything rebounded, the volumes rebounded, showing the resilience of the category. We are still confident in the second round that a similar pattern will happen with the remaining customers that we have not closed yet. So not associated to the brands at all that we mentioned on the Capital Markets Day. In terms of delisting, nothing significant.

Yeah, Hi, Robert.

The first one yung Kim can answer the second on the list no we have not experienced.

I'll discuss it a little bit the two things that you mentioned because in terms of negotiation no we have not experienced.

The de listing right now because of the price negotiations and the reality is we had as we shared with all of you. We had a tough January February negotiations, but then in March everything rebounded volumes rebounded showing the resilience of the cash.

Category and so.

So we are still confident in the second round that.

Similar pattern will happen with the remaining <unk>.

<unk> customers that we haven't closed yet so so not associated to the brands at all that we mentioned on the capital markets day. So in terms of domestic and nothing significant in terms of the brands. What you mention remembering that you're talking about the 33 brands that we talked on the capital markets day.

Robin Jansen: In terms of the brands, what you mentioned, remembering that we are talking about the 33 brands that we talked on the Capital Markets Day as the tail brands, we are now doing the work, and we mentioned briefly on the prepared remarks that we are doing the work to see which, and this is all over the globe, okay? It is not only Europe, but which brands, what should we do with each one of them? So we are going very detailed on which one of them, which brands we should convert into other existing brands, which brands, in fact, it does not make sense we should just discontinue, and which brands eventually will take different routes or will upgrade into becoming a relevant brand. We want to drive this process proactively.

The <unk> brand.

Now doing the work and we mentioned briefly on the prepared remarks that.

That we are doing the work to see which and this is all over the global case, not only Europe, but which brands I mean, what should we do with each one of them. So we're going very detail in each one of them, which brands, we should convert into other existing brands, which brands in fact like it doesn't make sense, we should just does.

Continue and which brands eventually will take.

Current routes are all upgrading to becoming a relevant Brent I mean, this we want to drive this process, let's say proactively so we will do this.

Robin Jansen: So we will do this ourselves and then come to the retailers on the countries that carry those brands to decide how to operate with them. So it is not necessarily related to the negotiations of things. As I said, as we said on the prepared remarks, negotiations we have done 87% of the global negotiations right now for the second wave is concluded, and there is still 13% pending, but no delisting expected.

Our sales and then and then come to the retailers on the countries that carry those brands to decide how to operate with them. So it's not necessarily.

And related to.

To the to the to the negotiations of thing, but as I said as we said on the prepared remarks negotiations we've done 87% of the global negotiations right now for the second wave is concluded and <unk>.

Still like 13%.

Pending but no delisting expected.

Yeah.

Yang Xu: Then I take the second question. Hey, good morning, Robert. No, we are very happy with our first half-year results. The results, we also raised our full-year guidance in terms of adjusted EBIT. As everyone may remember, our prior guidance was a low single-digit decline, and now we raise it up to at least stable. So we're very happy to the performance, but cautiously optimistic for the full year. However, when you think about the EBIT in the grand scheme of a cash flow, which has been very consistent in the past two years, averaging $1 billion, the EBIT movement by itself, the raise of the guidance, we'll be talking about tens of millions. So that's why in the grand scheme of the free cash flow of the $1 billion, that's why we confidently confirm our free cash flow for your guidance still around $1 billion.

Then I'll take the second question Hey, good morning, Robert.

No we are very happy with our first half year results and are the result.

Its still up.

Ah raise our full year guidance in terms of adjusted EBIT.

As everyone May remember our prior guidance was low single digit decline and now we've raised it up.

At least sustainable.

Happy to the performance, but cautiously optimistic for the full year.

However, when you think about that a bit in the Grand scheme of our cash flow, which has been very consistent in the past few years, averaging 1 billion. So the EBIT movement by the cells.

The raise of the guidance, we will be talking about tens of millions. So thats why in the Grand scheme of the free cash flow of the $1 billion and Thats why we constantly confirm our free cash flow for your guidance still around 1 billion.

Patrick Folan: is clear. Thank you.

That's great. Thank you.

Sharon: Thank you.

Thank you Sir.

Yang Xu: Sure.

Sharon: Thank you. Your next question comes from the line of Antoine Provost from Bank of America. Please go ahead.

Thank you Gil.

Your next question comes from the line of from.

From Bank of America. Please go ahead.

Antoine Provost: Thank you, and good morning, everyone. Two questions for me, please. First one on pricing. Looking towards the second half of the year, this new price round, considering you have pretty much the same COGS headwind, about $800 million incremental on each half, how much additional pricing are you talking about? What level of magnitude? On elasticity, my second question, overall, compared to 2022, 2023, which was the last period of major inflation, you have much better elasticity around, even including the pre-buying in Europe. What is different this time around compared to last time? Why is elasticity much better this time? Thank you.

Thank you and good morning, everyone.

Two questions from me. Please so first one on pricing.

Looking towards the second half of the year.

So just your price rounds, considering you have pretty much the same cogs headwinds of about 800 million.

Inventory on each of them.

How much additional pricing are you talking about like what level of magnitudes.

And on elasticity from a second question I mean overall compared to <unk>.

<unk> to 'twenty three.

Was there a myriad of major inflation I mean, do you have much better around even encouraging pre buying in Europe. So I mean, what is different this time around.

Compared to desktop.

Is it has achieved much better this time thank you.

Robin Jansen: Hi, Antoine. Good to hear from you. I will take the first one, the pricing first on the second half. What we try to do in our model, obviously, is to offset as much of the pricing we can with productivities, efficiencies, and then whatever we cannot, we pass through, right? As you mentioned, green coffee prices have remained quite high. We expect about the same level of price increase that we did in the first half and the second half. So roughly a price that will be required. Again, not very different in terms of absolute levels in the first and the second half. The second question on elasticity, what really happened, as you know, elasticity in coffee is quite low and has remained low.

Good to hear from you so.

So I'll take the first one the pricing first on second half.

What we've tried to do in our model, obviously is like two to offset as much as other pricing, we can with productivity efficiencies and then whatever we cannot.

With pass through.

And as you mentioned I mean green coffee prices have remained quite high.

We expect about the same level of price increase that we did in the first half and the second half so roughly like mid teens.

That will be required so so again not very different.

Terms of absolute levels.

In the first and the second half.

Okay.

The second question on elasticity I mean, what we have.

We have been as you know elasticity in in coffee is quite low.

It has remained low in fact in the first half has been actually lower despite the price has been lower than stores.

Robin Jansen: In fact, in the first half, it has been actually lower, despite the price has been lower than historical, so at a very low level. What we do expect is in the second half, you are going to have some elasticity again back to historical levels, so a bit higher than the first half, but still quite low. We are talking according to many years of history here, elasticity depends, varies a lot by country, okay? Depending on the legacy of the country consumption, et cetera, you can have pretty big variations of elasticity, but you are talking -0.3 elasticity on average. Again, elasticity on the first half was even lower than that. We do expect a bit higher on the second half. So that is the answer on elasticity. You also had a question on comparing, no, that was it, right? Is that what you answered the question, Antoine?

So at the very low level, what do we do expect this in the second half you are going to have some elasticity again back to historical levels. So so a bit higher than the first half, but still quite low and with bulky.

According to <unk>.

Many years of history here elasticity depends varies a lot by country. Okay.

Depending on the legacy of the country consumption et cetera, you can have a pretty big variations.

Variations of our system, but youre talking 0.3 minus point elasticity on average so.

So again.

Just on the first half was even lower than that we do expect a bit higher on the second half.

Thats.

<unk> you also had a question on <unk>.

Comparing thank you Don.

That was it.

Is that what you answered a question I'm sorry.

Antoine Provost: Just as a follow-up on pricing, is it fair to assume that on La Mia, considering pricing is probably more linked to spot price, your pricing level here should clearly decelerate?

Yes.

As a follow up on pricing is.

Is it fair to assume that's unlike me are concerning.

So I think it's probably more linked to spot price.

Youre pricing local share should clearly deteriorates.

Robin Jansen: Yes. Yeah, it's fair to assume that indeed, as you're right, the price tends to move, let's say, quicker. You know, and the hedges tend to be shorter. So indeed, the market reacts much faster, especially in Brazil, which is an important market for us. So yes, that's indeed true.

Yes, yes, it's fair to assume that indeed is euro.

The price tends to move let's say weaker.

<unk>.

The hedge is tends to be shorter so indeed, the market reacts much faster, especially in Brazil.

So which is an important market for us so yes.

That's indeed too.

Antoine Provost: Amazing. Thank you.

Thank you.

Robin Jansen: Thank you.

Thank you.

Sharon: Thank you. Your next question comes from the line of David Wu from Morgan Stanley. Please go ahead.

Thank you.

Your next question comes from the line of David Lewis from Morgan Stanley. Please go ahead.

Patrick Folan: Yeah. Hi, everyone, and well done on the solid state of results. I just wanted to get a quick check-in, perhaps in terms of your newer innovation. Can you just talk about exactly when the pipeline will flow through? Of the newer products that have come through, what sort of resonance have you seen with your retail partners and customers? The second one is, I know it is a smaller part of the business, but could you just quantify the impact from tariffs? I know there is some chat around green coffee possibly being exempted from tariffs into the U.S., but in terms of any finished product flow across the sea, can you just give us an update on what you think the impact could be there? Thank you.

Yes.

Ron and well done on a solid set of results I just wanted to get a quick check in.

Perhaps in terms of your new innovation can you can you just talk about exactly where in the pipeline will flow through and of the newer products that have come through I mean, what sort of big ones have you seen what.

With your retail Youll retail partners customers and then the second one is a much smaller part of the business, but could you just quantify the impact from from from tariffs I know there is some chatter around green coffee beans.

Possibly.

Being an example, Paul from tires into the U S. But in terms of any finished product, Florida across the across the sea. It can you just give us an impact.

Of an update on what you think the impact could be there. Thank you.

Robin Jansen: Just to see if I understand, David, your first question is an update on where we are in terms of innovation. Is that correct?

But just the CFO I understand David Your first question is just an update on where we are in terms of innovation is that correct.

Patrick Folan: Of the products that we saw at the CMD and that you highlighted today, which of those have you rolled out yet? If not, can you just give us an understanding on the timing exactly of those coming through? If you have any that have been rolled out so far, what is the feedback been?

Yes.

The products that we saw at the <unk> that you highlighted today, I mean, which of those have you rolled out yet and if not can you just give us an understanding on the timing exactly of those coming through and if you have any of that have been rolled out so far what's what's the feedback been.

Robin Jansen: Yeah. We highlighted a few that you saw in the CMD, and you saw here on the prepared remarks. For example, the coffee pearls. It is something that we launched in, we did a test, let us say, at Peet's stores during the second quarter, like halfway of the second quarter of the year, and it performed extremely well. So now we roll over not only across Peet's, but also taking to different markets, L'OR, and starting to explore. It is called like a new category, the coffee pearls. We are quite excited by that. If you look at the parallel, it is the bubble tea, right, which is like a multi-billion category. The parallel will be the coffee pearls. The acceptance of retailers of consumers has been really significant.

Yes.

We highlighted a few that you saw in the CMV and you saw here on the on the prepared remarks for example, the cost deferrals.

Something that we launched in we did a test let's say a piece at these stores do.

During the.

Second quarter.

Half way of the second quarter.

<unk>.

The year and it performed extremely well so now we roll over not only across speeds, but also take into different markets lower and starting to explore is it all of the new category. The multiples. We are quite excited about that if you look at the the parallel as the bubble tea, but which is more.

<unk> category. So the parallel will be the coffee both I mean, the acceptance of what data is.

Of consumers has been really significant.

Robin Jansen: But in terms of impact on the P&L, frankly, to be material, I would not expect this to be that soon. It will probably take one or two years to be a material thing because it is almost like you are creating a new category. But that has been like the green shoots of it have been very, very positive. The same way with what we mentioned here as well, the medium roast in Peet's, it is extremely important innovation because Peet's was famous or well known for dark roast. Expanding the portfolio of Peet's, you remember from the Capital Markets Day, we showed the details where it is going to be extremely important to have more SKUs in order to come east in the U.S. and conquer the rest of the country with more distribution. Again, the acceptance where we are distributed has been extremely strong.

But in terms of impact on the P&L frankly to be material.

We wouldn't expect this to be.

Thats soon you'll probably take one or two years to be a material thing because it's almost like you're creating a new category, but thats.

That has been like the the green shoots of it have been very very positive.

The same way with what we mentioned here is the the medium rules team.

And Pete is extremely important innovation because.

Pete was fame was all well known for dark roast and expanding the portfolio.

Pete you will remember from capital market markets. They will show the details where it's going to be extremely important to have more skus in order to to come east in the U S and conquer the rest of the country.

With more distribution so again.

The acceptance, where we're distributed has been extremely strong. So those are two that.

Robin Jansen: So those are two that I am very optimistic with what the results are showing. The last one I would mention is the platformization. We call it Jacobs and the icons, and the Dubai Chocolate is one example. We already like that we launched in several brands now, and it is performing extremely well. We gave the example in the U.K. where it is one already. The top mix is in the U.K. So this product, I mean, we do expect to have a very good return on it. But again, as it flows to the P&L, you remember from the Capital Markets Day, we do model this into more towards the second part of 2026 and then 2027 to have a real financial impact on it. On the second question you had on the tariffs, it is just important to highlight here one thing.

I'm very optimistic with what the results are showing.

Last one I would mention is the.

Is the platform innovation recall at Jacobs and the <unk>.

And the icons in the Dubai Chocolate as one example, we already like debt, we launching several brands now and it's performing extremely well. We gave the example in the UK, where it's one already the top mixes in the UK. So this product I mean, we do expect to have a very good return on it but.

But again as it flows to the P&L, you'll remember from the capital markets day, we do what we do.

Although business into more towards the second part of 2006, and then 27 to have a real financial impact on it.

And then on the second question you had on the tariffs.

It's just.

Important to highlight here one thing we import.

Robin Jansen: We import, the main one is the tariffs will impact everyone, and it is not positive, right? Coffee prices have been, green coffee prices have been up a lot already globally, as we talked about, as you know. Tariffs, it is a small piece of it, but it does not help. The big effect is the tariffs from Brazil because as of today, starting August 1st, so in a couple of days, there is a 50% tariff from Brazil into the U.S. That is a big impact on the industry. Remembering Brazil produces roughly 40% of the coffee of the world. We compared to our, this will affect the whole industry, right? But we compared to our competitors in the U.S., the proportion that we use of Brazilian coffee is significantly smaller than most of other coffee players.

The main one is the <unk>.

<unk> will impact everyone and it's not positive right off the prices have been green coffee prices have been up a lot already globally as we've talked about as you know and then obviously tariffs it's a small piece of it but it doesn't help now the big effect is the is that there are some brazil because as of today.

Starting August 1st so in a couple of days there is a 50% five zero percent tariff from Brazil into the U S and that's a big impact on the industry I mean, remember, Brazil produces roughly 40% of the coffee.

I mean, we.

<unk>.

Compared to our this will affect the whole industry, but we compared to to our competitors.

In the U S. I mean, the proportion that we use of Brazilian coffee is significantly smaller than than most of other corporate players I can tell you.

Robin Jansen: I can tell you, it is more or less less than 30% of what we consume, it comes from Brazil. Other players have much more, sometimes above 50%. The expectation is assuming these tariffs continue, go through, prices will have to go up overall in the U.S. On a relative basis, we think we are better positioned because we do not have as much coffee coming from Brazil, but they will have to come up. It will be a further impact on passing through price to consumers.

I mean more or less.

Less than 30% of what we consume it comes from from Brazil.

And then are there other players have much more sometimes above 50%. So so like but the expectation is assuming this tariffs goes continues goes through.

Prices will have to go up overall in the U S and I mean on a relative basis, we think.

We are better position, because we don't have as much.

Coming from Brazil, but they will have to come up and so it will be a further impact.

On the on passing through price to consumers.

Patrick Folan: Okay, that is very clear. Just to follow up on those, firstly, on the Brazil impact, I assume within your expectation for mid-teens pricing for the second half that that is taken into account. Then the second point on your new products coming out, would they be accretive at an EBIT margin level, just given the amount of marketing, et cetera, that is going in?

Okay, that's great and sorry, just to follow up on those firstly on the on the Brazil impact I assume.

And your expectation for mid teens pricing for the second half that that is taken into account.

And then the second point on year on year, new products coming out.

Would they be accretive at the EBIT margin level.

Given the amount of marketing et cetera, that's going on.

Robin Jansen: Yes. Pricing, yes, it is taken into account right now, the pricing. But remember, as Yang Xu mentioned, that in the U.S., we, although we have been probably pricing ahead of competition, but we are more followers than price leaders, okay? Different than many parts of the world. So, but yes, it is modeling already. The margin on the innovations, our aim is always to be accretive. You know, I am not going to tell you like 100% of the innovations are always accretive because it is not the case. Sometimes you will be incremental absolute numbers or in slightly new categories, like bringing new consumers, but it might be a margin dilutive. But the aim is always to be, in some of those mixes overall, they have a pretty high margin.

Yeah pricing, yes, it's taken into account right now.

The pricing, but remember as yung mentioned that in the U S.

Although we've been probably pricing ahead of competition, but we are more followers than price leaders, okay different than many parts of the world. So.

But but he asks is modeling already.

The.

The margin the margin on the on the innovations.

Our aim is always to be accretive I'm not going to tell you like 100% of the innovations are always accretive because it's not the case, sometimes you'd be incremental.

Salute numbers on that slightly new categories, like bringing new consumers, but but it might be margin dilutive, but the aim is always to be in some of the mix is overall they have a pretty high margin. So when you're doing the Dubai charters of the world in this type of mix. It is very high margin.

Robin Jansen: So when we are doing, for example, the OldTown's Hot & Cold premium instant mixes of the world and this type of mix is very high margin. You know, Peet's Ultra Coffee Concentrate is a pretty good margin as well as accretive. So it varies. We will have to go one by one, but our target is always to be margin accretive, but it is not going to be always 100% the case.

Pearl is a pretty good margin as well as accretive. So if there is one we will have to go one by one but our target is always to be margin accretive, but it's not going to be always 100 syndicate.

Patrick Folan: Very clear. Thank you very much.

Alright, Thank you very much.

Robin Jansen: Thank you, David.

Thank you David.

Sharon: Thank you. Your next question comes from the line of Feng Zhang from Jefferies. Please go ahead.

Hi, Keith.

Your next question comes from the line of things on from Jefferies. Please go ahead.

David Wu: Hi. Thank you for taking my questions. I have two. The first one is about the new products. It is great to see that the new products are yielding some early results. Do you have a rough estimate how much of the growth in H1 is driven from this product rolling out? That means, is there any factor like retailers are building up stocks, or is it still too early to talk about impact? My second one is follow up on the Brazil impact on tariffs. Are you looking to change the sourcing in the long term to mitigate impact? Thank you.

Hi, Thank you for taking my questions I've got two.

So the first one.

Is about the new products, it's great to see that the new products, yielding some early results do you have a rough estimate how much of the growth in H. One is driven from this product rolling out that means.

Is there any factor like retailers are building up stocks or is it still too early to talk about impact.

My second one is follow up on the Brazil impact on tariffs.

Are you looking to change the sourcing in the long term to mitigate impact. Thank you.

Robin Jansen: Feng, good to hear from you. The new products' impact, negligible, okay? It is not relevant at all right now. It is still very small, and it does not affect the P&L. So no effect of it. The tariffs, I mean, the reality is it will be frankly impossible for the whole globe to change the coffee sourcing, let us say, from Brazil because of the size of Brazil production of coffee globally. As I said, about 40% of the global coffee comes from Brazil. So, I mean, there is a lot of other regions developing coffee plantations, as you know, and there are many countries in Central America, in Africa, in Asia, but it is far away to be able to manage to mitigate the impact from Brazil. So, like I said, we do not source as much from Brazil.

Good to hear from you.

New products impact negligible, okay, it's not relevant at all right now is still very small and it doesn't affect the P&L. So.

No no no effect of it.

The.

Tariffs I mean the reality.

It will be frankly impossible for the whole globe to change.

The coffee.

While sourcing lets say from from Brazil, because because of the size of Brazil production of coffee globally, there as I said.

About 40% of the global coffee comes from reserves.

I mean, there is no cough is theres a lot of other regions developing coffee plantations.

You will know and there are many countries in Central America in Africa in Asia, but but that's it.

It's far away to be able to manage through.

To mitigate the impact from Brazil. So so we are like I said, we don't source as much from Brazil. So we are quite confident and thats a lot because of the positioning of <unk>.

Robin Jansen: So we are quite confident, and that is a lot because of the positioning of the type of coffee we have with Peet's. I mean, we do not source a lot. We source mainly from Central America. If you take an average, most of the countries we source, the tariff is going to be around 10%. You know, we do not really source from Vietnam, which is mainly the Robusta one, which is the second largest producer. So the reality, the impact for us is going to be quite small. Now, I do not think we are going to change necessarily the sourcing, but it will impact the whole industry, indeed. And there is a lot of conversations, rumors that Brazilian producers are going to try to deviate more of their production into different regions because it will be too expensive in the U.S.

And the type of coffee, we have with Pete we don't source a lot we've sourced mainly from Central America. If you take an average and most of the countries resource the therapy is going to be around 10%.

We don't really source from Vietnam, which mainly that will boost our loans. So.

The second largest producers so the reality of the impact for us is going to be quite small now.

So I don't think we're going to change necessarily the source.

But it will impact the whole industry, Indeed, and there is a lot of.

Conversations rumors that Brazilian producers are going to try to deviate more of that production into into different regions, because it will be too expensive in the us so that's going to be a shift in the.

Robin Jansen: So there is going to be a shift in the, let us say, the global equilibrium of where coffee goes, you know, and that is expected. As I mentioned, we do not expect a major shift for us, but it will affect the whole industry, assuming this 50% sticks, right, which we also do not know if it will change. They could change, but it is hard to predict.

Let's say the global equilibrium off where coffee goals.

As expected.

As I mentioned, we don't expect a major shift for us, but it will affect the holdings.

Assuming this 50% sticks right, which we also don't know if we'll change that could change, but hard to hard to predict.

David Wu: Thank you.

Thank you.

Robin Jansen: Thank you, Feng Zhang.

Thank you Frank.

Sharon: Thank you. Your next question comes from the line of Patrick Folan from Barclays Bank. Please go ahead.

Thank you.

Your next question comes from the line of Patrick Folan from Barclays. Please go ahead.

Antoine Provost: Good morning. Thanks for taking my questions. I do not know if I missed it. My first question is just on the efficiencies to fuel brand growth. Can you comment on what the benefits have been there thus far, and has there been any cost benefits that can be quantified? Secondly, on Peet's, there has been more positive commentary in the U.S. coffee market recently. Should we expect Peet's to continue the momentum we have seen in H1 into H2? I think the concern previously has been how high ticket sizes were before. I guess, are we now seeing consumers becoming more used to these prices now, or how should we think about squaring two points of ticket sizes going into the second half versus the wider coffee market and Peet's? Thank you.

Good morning, Thanks for taking my questions I don't know if I missed it. So my first question is just on the efficiencies to fuel brand growth.

Can you comment on what the benefits have been there thus far and has it been.

Any cost benefits that can be quantified.

Secondly on Pizza there has been more positive commentary on the U S. Coffee market recently should we expect <unk> to continue the momentum we've seen H, one and H two.

Because I think the concern previously it's been high ticket sizes were before and so I guess are we now seeing consumers coming more do you see these prices now or how should we think about squaring two points of ticket sizes going into the second half.

Versus the wider coffee market in piece. Thank you.

Yang Xu: Hey, Patrick. This is Yang. Good morning. Let me take your first question about the productivity. As you have heard from us, we are quite excited with our entire productivity program, which we have specific initiatives behind the $500 million that is our target. Half of it, we are confident we can deliver by the end of 2027. What has happened in this maybe first half-year linear, zooming a little bit, when we talk about portfolio simplification as a concrete example, we announced our closure of a Bamboo Plant that is a processing and packaging factory in the U.K. The second bucket, we also talk about synergies in the ways of working within ourselves. We also just recently announced that we are streamlining and reorganizing our European businesses. We were having 10 clusters, and now we are leaning up into five clusters.

Hey, Patrick This is John Good morning, Let me take your first question.

Productivity.

As you have heard from US we are quite excited with our entire productivity program, which we have a.

Specific initiatives behind that.

$100 million that is our target and half of that we're confident we can deliver by the end of 2027 now what has happened.

In this.

First of all half year linear assuming a little bit when we talk about portfolio simplification as a concrete example.

<unk>.

We announced our closure of our bandwidth plant.

That is a processing and packaging factory in the UK.

And the second bucket, we also talk about synergies in the ways of working within ourselves. So we also just recently.

Bounced a that we are streamlining and reorganizing our European businesses.

Sure.

Having.

10 clusters, and now we're leaning up into five clusters and on top of that we also have a centralize all the entire European finance function into our.

Yang Xu: On top of that, we also have centralized our entire European finance function into our offshore or nearshore GBS function, our global business services. That creates a lot of synergies by the ways of working. The third bucket, we talk about continuous improvement. Early on, Rafael also mentioned that our design for value program is well underway, that we are very pleased to see that the momentum is going on. The last one, focus on the asset light route to the market. We also have announced that we are well underway in the U.S. for our DSD. As you may remember, our Peet's used the DSD route to market, and now we are transitioning into a direct-to-serve type of business that will be much more asset light and G&A light. Those productivity programs are well progressing, and we have very detailed initiatives and owners and timeline.

Offshore and near shore GBS function, our global business services, so that creates a lot of the synergies by the ways of working.

The third bucket as we talk about continuous improvement well early on Rockwell automation to that of a design for value program is well underway that we're very pleased to see.

That the momentum is going on.

In the last year, one focus on the asset light route to the market. We also have announced and we're well underway in the U S for our DSP as you may remember, our PC user DSD route to market and now we are transition into a into interactive service type of a business is that it will be much more asset light and G&A like so.

Those productivity programs are progressing and we have very detailed initiatives and owners and timeline of course for now like in this particular moment is a bit too early to demonstrate all the ways that for every initiative that we have a specific business cases and yields in a certain return for us.

Yang Xu: Of course, for now, at this particular moment, it is a bit too early to demonstrate all the wins, but for every initiative that we have specific business cases and yields in a certain return for us. What we do intend to do is, as we promised, we will report our progress. As we continue this journey and on a full-year basis, we will be able to give a snap update on that.

We do intend to do.

We promise, we will report our progress and as we as we continue this journey and on a full year basis is we'll be able to give a snap the update on that.

Robin Jansen: Patrick, on the Peet's, I mean, it is obvious. You can see the numbers. We are very happy with the overall performance of the company, right, in the first half, but not necessarily with Peet's. I mean, we do not like to see that we decline our EBIT performance in Peet's. As you notice, I mean, the reality, as we mentioned also on the remarks, the market has been lagging a bit, the cost increase, the overall market, and consequently, we do as well. I mean, we have not been able to price as much as is needed given what happened to the green coffee prices. This is happening now, and the last.

And Patrick on the on the peaks I mean.

It's obvious you can see the numbers, we are very happy with overall performance of the company and the first half, but not necessarily repeat.

We don't like to see that.

We declined our a bit.

Performance in Pete and as you will notice I mean, the reality is we mentioned also on the remarks.

The reality of the markets has been lagging a bit the cost increase the overall market and consequently, we do as well.

We haven't been able to price as much as is needed given what happened to the green coffee prices. So.

So this is happening now in the last.

Rafael Oliveira: Signs that we have in the last couple of months have been quite positive on the market acceptance of pricing. We do think, as you heard in other companies' calls, the market is starting to pick up and consumption is picking up. Elasticity remains quite low. We are still confident that we are going to have a much better run rate going forward on the Peet's performance. As you know, it is a critical, one of the big bets for us is the development of Peet's across the country. Short term, I would say half one, we were not as pleased with Peet's what could be. The market was not as good, but the last few months have been much better. Again, we are much more positive what will happen in the second half.

Signs that we have in the last couple of months have been quite positive on the market acceptance of pricing. So we do think as you heard in other other companies' calls the market starting to pick up in consumption is picking up in our system remains quite low. So so we are still confident that.

We're going to have a much better.

Run rate going forward on the on the Pizza performance and as you know it's a critical.

One of the big bets for US is the development of beat across the country. So short term.

They have one we will not.

As pleased with beats what could be the market wasn't as good but the last few months have been much better. So again, we are much more positive what will happen in the second half.

Robin Jansen: Okay. Thank you, Yang. Thank you, Rafael.

Okay. Thank you Yang Thank you Rafa.

Rafael Oliveira: Thank you, Patrick.

Thank you Patrick.

Yang Xu: Thank you. We are now approaching the end of the call. We will now take our last question for today. The last question comes from the line of Jeremy Kincaid from Vanlanchok Kempen. Please go ahead.

Thank you we are now approaching the end of the call. We will now take our last question for today and the last question comes from the line of Jeremy Kincade from Baden lunch at <unk>. Please go ahead.

Hi, Good morning, I have two questions also.

Feng Zhang: Good morning all. I have two questions also. The first one is just on the price increases that you have managed to put across in the different regions. You have obviously already talked about Peet's and Lamia, but I was just wondering if you could talk to the price increases in Europe versus APEC. Obviously, APEC is a little bit lower, so I was just wondering as to why that is the case. My second question is if we look at the difference between EBIT and adjusted EBIT, the difference is the largest this half compared to all your other halves you have been listed. I was just hoping if you could talk through the various adjusting items that have occurred this half and maybe give an indication as to whether or not some of these larger adjusting items might continue into the future or not. Thank you.

<unk>.

That's the first one is just on the price increases that you've managed to put across in the different regions. You've obviously already talked about pets and la Mer, but I was just wondering if you could talk to.

Price increases in Europe versus APAC, obviously apex, a little bit lower so I was just wondering as to why that's the case.

And then my second question is if we look at the difference between EBIT and adjusted EBIT.

The difference is the largest this half compared to all your other hubs being listed so I was just hoping if you could talk through the various adjusting items that have occurred.

This half and maybe give an indication as to whether or not some of these larger adjusting items might continue into the future or not thank you.

Rafael Oliveira: Hi, Jeremy. I will take the first one on the price. Yang Xu can explain the difference on EBIT. The price, as I mentioned here, we do expect pricing first half and second half roughly about the same levels, call it like 18, in Europe. Again, we have implemented in the first half. At the beginning of the year, we had a lot of pushback. Eventually, due to, I believe, the strength of our brand and then the good relationships we have, the prices went through and the volumes fully recovered. So elasticity, as we mentioned on the full-year call in February, the impact you see in volume sometimes is very short-lived because it is retaliations. But then the consumption, which ultimately is what matters, remains strong. We recover that volume, as you see on the full-year results. Again, we are right now in the middle of these negotiations.

Hi, Jeremy ill take the first one on the price Yung Kim can explain the difference on the EBIT.

Price I mean, as I mentioned here, we do expect pricing.

First half and second half roughly about the same levels call it like <unk> in Europe and.

Again, we've implemented in the first half.

As.

Beginning of the year, we had a lot of pushback eventually with <unk>, we believe the strength of our brands and then the good relationships we have.

Prices went through and the volumes fully recover so so elasticity as we mentioned on the.

The full year call in February I mean, the the impact Youre seeing volumes, sometimes is very short lived because this retaliation, but then the consumption, which ultimately what methods remains strong and.

We recover the volume as you see on the full year results. So so again, we are right now in the middle of these negotiations as we mentioned globally, we have 87%.

Rafael Oliveira: As we mentioned, globally, we have 87% of this concluded. So there is still a few customers that we need to sign off and be there on the shelf. Again, we do expect this to be implemented. We do need this to be implemented. Consequently, we do also expect slightly higher elasticity, as I mentioned, than in the first half. But it has not happened before to have two price increases of this same magnitude in one year. So it is very high. Unfortunately, that is what needs to happen for us, for the industry. So we do expect a bit higher elasticity, but not significant. It is modeled already on our guidance. So for this, that is Europe. Asia, it is a bit different because the mix in Asia is very different.

This concluded so theres still a few.

Customers that we need to.

Sign off and be there on the shelf.

Again, we do expect this to be implemented we do need this to be implemented and consequently, like and we would also expect slightly higher this year as I mentioned, then in the first half but.

I mean, there hasnt happened before to have two price increases of this same magnitude.

In one year. So it is very high.

Fortunately, that's what needs to happen for us.

As for the industry. So so we do expect a bit higher elasticity, but not significant and it's model already on our on our guidance. So so far this that's Europe Asia is a bit different because the mix in Asia is very different I mean, theres a lot of mix.

Rafael Oliveira: There is a lot of mixes, which is not only coffee or pure coffee, but it has milk, sugar, other components on the product. So the impact of green coffee is smaller, albeit still high, but it is smaller overall. We did, in some countries, we saw a higher elasticity in countries. As I mentioned before, elasticity can vary quite a bit globally. But in some countries where coffee is not a legacy coffee country, you saw more elasticity overall in consumption with the price increases. So it has taken a bit longer. Consequently, we are, but we are putting through, as we said, we are passed through company, passed through category. We are going to pass through everything that we need apart from what we can avoid with efficiency. So this price is happening as we speak, and we should see a bigger impact or impact in the.

Which is like not only coffee or pure coffee, but it has.

No sugar other other components on the product so the impact of Green coffee is smaller, albeit still high but it's smaller overall and we did in some countries. We saw a higher elasticity in countries as I mentioned before our system can vary quite a bit globally, but in some countries where.

Sure.

<unk> is not a legacy coffee country, you saw more elasticity overall in consumption.

With the price increase so that has taken a bit longer.

And consequently, like what we have but we are putting through as we've said we are pass through to company a pass through category and we're going to pass through everything that we need a part from what we can avoid this with.

Efficiencies. So so this price is happening as we speak and should see a bigger impact.

Impact.

Rafael Oliveira: Maybe Yang Xu can take the EBIT adjustment.

Maybe I can take the EBIT adjustment, yes, Jeremy I'd take the second one.

Yang Xu: I take the second one. As you see the adjustment, first of all, I think it is important to lay out that it is a very consistent approach and methodology versus prior. However, it is true that this year, in the first half year, we have a big swing of mark-to-market results. Those are the derivatives, particularly for the commodities of our hedging, that we have a mark-to-market swing year over year, almost a little bit more than 140 million per se by itself. Of course, it is not yet settled and just a point in time of how the market is trending versus our hedging. Beyond that, smaller things, for example, the amortization of intangible, that is mostly driven by because we sold off our offshore business. Some of the old books and the non-cash item is written off. That is an entire swing coming from that.

And you see that adjustment first of all I think it's important to lay out that that is a very consistent approach and methodology versus prior. However, it is true that this year on the first half year, we have a big swing in mark to market results. So those are the derivatives, particularly for commodities, our hedging that we have a mark to market swing year over year.

Most of all a little bit more than 140 million per se by itself of course is not yet settled and just a point in time of how the market is trending versus our hedging.

Beyond that.

Smaller things for example, the amortization of intangible that is mostly driven by because we sold off of Akshay business. So some of the books and a noncash item is written off so that's a that's an entire swing coming from that.

Yang Xu: Share-based account, I have to say, is much more representative for the ongoing basis because last year, there was a one-off because of a departure of an executive. That is on full picture over there. Last year's account base was lower. This year is more representative. Rest of them are transformation activities. As I earlier mentioned, it is squarely to support our productivity program. You know in terms of our bamboo manufacturing closure, it was related to our operating model change and so on and so forth. Those things have a specific return and initiatives that support our overall productivity program. I hope this answers your question.

Share based comp.

It's I have to say its much more representative for the ongoing basis, because the last a year.

Was a one off because of the departure.

And the executive suite, that's in full patient over there so last year's comp base listen or this is more of a preventative.

Most of them that transformation activities as I earlier mentioned is squarely to support our productivity program. So.

In terms of our.

Banbury manufacturing closure was really too.

<unk> model changes so on and so forth. So those things have a specific return on initiatives that support our overall productivity program.

I Hope this answer your question.

Feng Zhang: Very clear. Thank you very much.

Very clear thank you very much.

Yang Xu: Thank you. I would now like to return the call to the speakers.

Thank you.

And I would now like to return the call to the speakers.

Sharon: Thank you, Sharon. Ladies and gentlemen, thank you very much for attending today's earnings call and for taking part in the discussion about our results. If you have any additional questions, please do not hesitate to contact the IR team. We are happy to answer your questions. Thank you very much and enjoy the rest of your day.

Thank you chairman, ladies and gentlemen, thank you very much for attempting todays earnings call and for taking part in the discussion about our results.

You have any additional questions. Please do not hesitate to contact the IR team, we're happy to answer your questions and again, thank you very much and enjoy the rest of your day.

Yang Xu: Thank you. This concludes today's conference call. Thank you for participating. You may now.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].

Okay.

<unk>.

Okay.

[music].

Okay.

Okay.

Okay.

Okay.

[music].

Yes.

Yes.

Okay.

Sure.

[music].

Okay.

Yes.

[music].

Okay.

Okay.

Yes.

[music].

So.

Okay.

Yes.

[music].

Okay.

[music].

Okay.

Okay.

[music].

Yes.

Okay.

Okay.

[music].

Okay.

[music].

Okay.

Yes.

Yes.

[music].

Okay.

[music].

[music].

Sharon: Good morning, everyone, and welcome to JDE Peet's N.V. earnings call for the first half of 2025. Joining me are Rafael Oliveira, CEO, and Yang Xu, CFO. After my introduction, Rafael will walk you through the operational and financial highlights related to our first half-year business performance, followed by a strategic update. Yang will then provide more detail on our financial performance and will provide an update on our full-year outlook. After that, we will be happy to answer your questions. Our press release was published at 7:00 A.M. CET this morning. Both the release and the slide deck for this call are available in the investor section of our website. A full transcript of this conference call will be made available there as soon as possible after this call.

Good morning, everyone and welcome to J D. PS earnings call for the first half of 2025.

Joining me are rough Oliveira, CEO and young Soo CFO.

After my introduction Rocco will walk you through the operational and financial highlights related to our first half of the year business performance, followed by a strategic update.

Young we will then provide more detail on our financial performance and will provide an update on our full year outlook.

After that we will be happy to answer your questions.

Our press release was published at seven a M. CET this morning.

Both the release and the slide deck for this call are available in the investors section of our website.

A full transcript of this conference call will be made available there as soon as possible. After this call.

Sharon: Before handing over to Rafael, I would like to draw your attention to the disclaimer on slide three regarding non-IFRS measures and forward-looking statements. Please take a moment to review this information carefully. With that, I am pleased to hand over the call to you, Rafael.

Before handing over to Russia, I would like to draw your attention to the disclaimer on slide three regarding non <unk> measures and forward looking statements.

Let's take a moment to review this information carefully.

With that I am pleased to hand over to go to Russia.

Rafael Oliveira: Thank you, Robin, and welcome, everyone. I am pleased to share the key highlights of the results of the first half of 2025 with you and provide you with an update on our five key priorities for the year, along with a brief recap of our new brand-led strategy we introduced at our Capital Markets Day on the 1st of July. As you saw in this morning's press release, we delivered another set of strong, broad-based results. On an organic basis, our sales were up 22.5%, our adjusted gross profit increased by 2.2%, and our adjusted EBIT grew by 2%. Our free cash flow was also solid at 565 million euros, underscoring our strong cash-generating capabilities.

Thank you Robyn and welcome everyone.

I am pleased to share the key highlights of the results of the first half of 2025 with you and provide you with an update on our five key priorities for the year along with a brief recap of our new brand led strategy, we introduced at our capital markets day on the first of July.

As you saw in this morning's press release, we delivered another set of strong broad based results.

On an organic basis, our sales were up 22, 5% our adjusted gross profit increased by two 2% and our adjusted EBITDA grew by 2%.

Our free cash flow was also solid at 565 million years, underscoring our strong cash generating capabilities.

Rafael Oliveira: We are proud of this performance across top line, profitability, and cash, especially when considering the persistently high green coffee prices that we had to continue to deal with in the first half of 2025, which Yang Xu will elaborate on later. Once again, we successfully managed to appropriately offset this semester's unprecedented level of inflation with efficiencies, productivities, and pricing across products and markets. This allowed us to protect our gross profit, enabling necessary investments for growth and profitability. Despite the short-term volume pressure we experienced during retailer negotiations in Europe at the start of the year, volumes rebounded quickly from March onwards, resulting in very resilient ball mix growth of 1% and overall stable market share performance, especially in faster-growing categories such as beans and aluminum capsules.

We are proud of this performance across top line profitability and cash, especially when considering the persistently high green coffee prices that we had to continue to deal with in the first half of 'twenty, five which young will elaborate on later.

Once again, we successfully managed to appropriately offset this semester's unprecedented level of inflation with efficiencies productivity and pricing across products and markets.

This allows us to protect our gross profit, enabling necessary investments for growth and profitability.

Despite the short term volume pressure, we experienced during retailer negotiations in Europe at the start of the year volumes rebounded quickly from March onwards, resulting very resilient volume mix growth of 1% and overall stable market share performance, especially in faster growing.

Categories, such as bins and aluminum caps.

Rafael Oliveira: Especially in capsules, we are very pleased to see that again in the first half of 2025, we are outperforming the market with low teens organic sales growth, fueled by mid-single-digit volume mix growth. We are also pleased with the progress we made on the five key priorities we set for 2025, and which we shared with you when we published our full-year 2024 results back in February. I will briefly address the progress we've made on each of those five priorities in the next slide. Last but not least, we returned 43% of our free cash flow to shareholders. 172 million was returned through dividends, while another 71 million was returned through our 2025 250 million euro share buyback program, which we launched nearly five months ago as part of our 1 billion euro share buyback commitment for the coming years.

Specially in capsules, we are very pleased to see that again in the first half of 'twenty. Five we are outperforming the market with low teens organic sales growth fueled by mid single digit volume mix growth.

We are also pleased with the progress we've made on the five key priorities, we set for 2025 and which we shared with you when we publish our full year 2024 results back in February.

I'll briefly address the progress we've made on each of those five priorities in the next slide.

Last but not least we returned 43% of our free cash flow to shareholders $172 million was returned through dividends. While another 71 million was returned through our $2025 250 million euros share buyback program, which we launched nearly five months ago as part of.

Our 1 billion share buyback commitment for the coming years.

Rafael Oliveira: By the 25th of July, we had completed 38% of the 2025 share buyback program. Overall, looking back at the first six months of the year, we are very pleased with the progress we made from a strategic, business, as well as financial perspective. More importantly, as a leadership team, we have clearly noticed that the organization is starting to refine momentum and that the new strategy and the size of actions we are taking are re-energizing and motivating our teams across the globe. Let's now take stock of how we are progressing on the five key priorities we have set for our team for 2025. First and foremost, pricing discipline.

But the 20 <unk> of July we had completed 38% of the 2025 share buyback program.

Overall looking back at the first six months of the year. We are very pleased with the progress we've made from a strategic business as well as financial perspective.

More importantly, as a leadership team we have clearly noted that the organization starting to refined momentum ended the newest strategy and decisive actions. We are taking a reenergizing of motivating our teams across the globe.

Let's now take a stock of how we are progressing on the five key priorities. We've made set for our team for 2025.

First and foremost pricing discipline.

Rafael Oliveira: It goes without saying that with an inflation headwind of about 800 million euros in H1 and an estimated total level of inflation at our cost base of around 1.6 billion euros for the full year, the number one priority for the entire organization is to stay laser-focused and extremely disciplined on protecting our gross profit, our EBIT, and our free cash flow, which we did. We pulled all the levers we can to mitigate inflation and have built a robust pipeline of productivity and efficiency measures to absorb as much of the inflation headwind as possible. Only the part of inflation that we cannot offset despite our efforts has been and will be passed on to our value retail and out-of-home partners through price increase.

It goes without saying that refund inflation headwind of about 800 million euros in half one and an estimated total level of inflation at our cost base of around $1 6 billion for the full year. The number one priority for the entire organization is to stay laser focused and extremely disciplined.

Our gross profit, our EBITDA and our free cash flow, which we did.

We pull all the levers we can to mitigate inflation and have built a robust pipeline of productivity and efficiency measures to absorb as much of the inflation headwind as possible.

And only the part of inflation that we cannot offset despite our efforts has been and will be passed on to our value retail and out of home partners through price increases.

Rafael Oliveira: To this end, we are currently discussing pricing with customers across the globe, and I'm pleased to report that we expect to have successfully concluded price negotiations covering 87% of our total sales by the end of next week, which will then include France, where a different timeline is applicable due to the rules that apply to their market. To be clear, being disciplined on pricing and protecting our absolute gross profit is crucial to our ability to continue to invest in areas such as new product development, product quality, sustainability, capacity expansion, etc. This ultimately benefits all our stakeholders, including consumers, customers, employment, and the more than 1 million farmers we source from. Our second priority for 2025 is to identify and deliver additional efficiencies to fund incremental investments behind our leading brands, Peet's, L'OR, and our 10 iconic brands led by Jacobs.

To this end we are currently discussing pricing with customers across the globe and I am pleased to report that we expect to have successfully concluded price negotiation covering 87% of our total sales by the end of next week, which will then include France, where a different timeline as applicable due to the rules that apply to their mark.

And to be clear being disciplined on pricing and protecting our absolute gross profit is crucial to our ability to continue to invest in areas such as new product development product quality sustainability capacity expansion et cetera.

This ultimately benefits all our stakeholders, including consumers customers employment and the more than 1 million farmers we source from.

Our second priority for 2025 is to identify and deliver additional efficiencies to fund incremental investments behind our leading brands beads law and our iconic brands led by Jacobs.

Rafael Oliveira: We have done intensive granular analysis to identify the four main areas where we are going to get this productivity. We shared those four areas at our Capital Markets Day and started to execute on since the start of this year. The four areas we have identified are portfolio simplification, synergies in the way we work, drive continuous improvement, and focus on asset-led go-to-market and partnerships. We have a specific target for each of these areas and a very detailed zip code of where we are going to get this productivity from. In terms of timing, we expect to deliver €250 million of net savings by the end of 2027, and in total, €500 million by 2032. Of course, we will update you on the progress we are making on this front on a regular basis.

We have done intensive granular analysis to identify the four main areas, where we are going to get this productivity.

We share those these four areas at our capital markets day.

And started to execute on on since the start of this year.

The four areas, we have identified our portfolio simplification synergies in the way, we work drive continuous improvement and focus on asset light route to market and partnerships.

We have a specific target for each of these areas in a very detailed ZIP codes of where we are going to get this productivity is strong.

In terms of timing, we expect to deliver 250 million euros of net savings by the end of 2027 in total 500 million by 2032.

And of course, we will update you on the progress we are making on this front on a regular basis.

Rafael Oliveira: Let me call out some of the most important initiatives we undertook in the first half of this year to simplify our operating model and optimize resource allocation. We divested our T-business in Turkey, which was loss-making to Afro Holding. We discontinued the rollout of L'OR Barista machine in the U.S. We transferred our L'OR capsules business in the U.S. to Peet's in San Francisco to better capture the significant potential of the U.S. coffee market. In procurement, we implemented the Design for Value program that is already bringing productivity. Using our coffee expertise, we are able to mix our blends to optimize costs while maintaining quality. When it comes to manufacturing, we announced the intent to close our plant in Bamburgh in the U.K.

Let me call out some of the most important initiatives we undertook in the first half of this year to simplify our operating model and optimize resource allocation.

We divested our tea business in Turkey, which was lossmaking to <unk> with.

We discontinued the rollout of <unk> machine in the U S.

With transfer our <unk> capsules business in the U S. Two pits at San Francisco to better capture the significant potential of U S coffee market.

In procurement, we implemented the design for value program that is already bringing productivity.

Using our coffee expertise, we are able to mix our blends to optimize costs.

While maintaining quality.

When it comes to manufacturing, we announced they intend to closure our plant in Banbury in the UK.

Rafael Oliveira: We also announced the optimization of our operating model in Europe by reducing the number of country clusters from 10 to 5, harmonizing ways of working across teams, and centralizing finance transactional activities in a global business service model to improve effectiveness and efficiency. Yes, a good start has been made. As this is a significant and multi-year program, what is done today is just the beginning, and we'll continue to work on strategic initiatives to simplify and optimize the company. Stay tuned here.

And we also announced the optimization of our operating model in Europe by reducing the number of country clusters from 10 to five harmonizing ways of working across teams and centralized in finance transactional activities in our global business service model to improve effectiveness and efficiency.

So yes, a good start has been made but as this is a significant multiyear program. What we've done today is just the beginning and we will continue to work on strategic initiatives to simplify and optimize the company so stay tuned here.

Rafael Oliveira: Third, the strategic assessment we have done in the first half of the year and the new brand-led strategy that this resulted in provides us with a clear strategic roadmap to be much more selective and rigorous in our capital and resource allocation to drive brand investments behind our three big bets: Peet's, L'OR, and the 10 iconic brands led by Jacobs, with a bigger focus on organic growth. To reinvigorate a focus on organic growth, we are deploying as the fourth priority a spectrum of initiatives to increase agility, remove bureaucracy, and drive an ownership culture across the organization. An example of this is the two-day summit we organized right after the Capital Markets Day for the 100 most senior leaders of the company for alignment and deployment of the new brand-led strategy and crystallized what this means for the entire organization.

Third the strategic assessment, we have done in the first half of the year and the new brand led strategy that this resulted in provides us with a clear strategic roadmap to be much more selective and rigorous in our capital and resource allocation to drive brand investments behind our three big bets.

Law ended Stan iconic brands led by Jacobs with a bigger focus on organic growth.

To reiterate our focus on organic growth, we are deploying as the fourth priority a spectrum of initiatives to increase agility remove bureaucracy and drive an ownership culture across the organization.

An example of this is the two day summit, we organized right. After the capital markets day for the 100, most senior leaders of the company for alignment and deployment of the new brand led strategy and crystallize what this means for the entire organization.

Rafael Oliveira: When it comes to the fifth priority, to put more emphasis on stakeholder value creation, I believe we are also making good progress. We continue to invest in the business with, for example, a mid-single-digit organic increase in AMP. We improved our engagement score. We are intentionally engaging an additional 165,000 farmers to reach a total of 1 million farmers by the end of this year. We deliver a solid free cash flow, which we use to return 243 million euros to our shareholders and to reduce our net leverage to 2.5 times. Let me now briefly provide you with a recap of the new brand-led strategy we revealed at our Capital Markets Day on July 1st. We are simplifying the organization into one unified JDE Peet's N.V. with three big bets: Peet's, L'OR, and 10 local icons led by Jacobs.

When it comes to the fifth priority to put more emphasis on stakeholder value creation I believe we are also making good progress.

We continue to invest in the business with for example, a mid single digit organic increase in A&P.

We improved our engagement score where intention engaging an additional 165000 farmers to reach a total of 1 million farmers by the end of this year.

We deliver a solid free cash flow, which we used to return 243 million to our shareholders and to reduce our net leverage to two five times.

Let me now briefly provide you with a recap of our new brand led strategy, we feel that our capital markets day on July one.

Yes.

We are simplifying the organization into one unified GDP three.

Three big bets.

La intent local icons led by Jacobs.

Rafael Oliveira: These 10 local icons have amongst the strongest meaning brand salience and penetration in the markets where they are present and across all age groups. Very importantly as well, these are brands that enjoy very high rotation and have proven to be highly responsive to activation. These 10 iconic brands are 100% complementary since they mostly do not coexist, nor are they activated in one or same geography. Moving forward and leveraging the commonalities that bring these brands together, we will platform once and deploy multiple times. On the back of Jacobs, we will create a chassis that will adapt on the last mile for meaning and distinctivity. This is not a theoretical model. We have been experimenting over the last months and have proven the model can work.

This 10 local icon has amongst the strongest meaning brand sales and penetration in the markets, where the oppressed and across all age groups.

And very importantly, as well these are brands that enjoy very high rotation and have proven to be highly responsive to activation.

And this 10 iconic brands.

Hundred percent complementary since they mostly do not exist nor are they activated.

In the same geography.

Moving forward and leveraging the commonalities that bringing these brands together, we will platform once and deploy multiple times.

On the on the back of Jacobs will create a chassis that will adapt on the last mile for meaning investing activity.

And this is not a theoretical model we've been experimenting over the last months and they have proven the model can work.

Rafael Oliveira: The focus on these three big bets does not mean that the other remaining brands in the portfolio will, by definition, be neglected or sold. We see various future avenues for the second-tier brands and the ones that find themselves in the tail. These brands could either develop a blend that steps up their performance to aspire to become part of the group of local icons or be transitioned to another brand like we have, for instance, done in the past with L'OR and Carte Noire that transitioned to L'OR and Medall D'Or transitioned to Jacobs in Switzerland. In some cases, we could conclude over time that we are no longer the best owner of certain brands. Thus, we will look for alternatives and state models.

Full force on distribute back does not mean that the other remaining brands in our portfolio, we will by definition be neglected or sold.

We see various future avenues for the second tier brands and the ones that find themselves in the tail.

This brands could either develop a plan that steps up there for performance to aspire to become part of the group of look like.

Or be transition to another brand like we have for this is done in the past, we learn more and cart block that transition to law and middle door transition to Jacobs in Switzerland.

In some case, we could conclude over time that we are no longer the best owner of certain brands and thus we will look for alternative and state models.

Rafael Oliveira: Our transformation will be driven by five key catalysts: a winning culture of agility, ownership, and transparency; a consumer-led organization built on iconic brands; commercial excellence across four mission-critical capabilities; a simplified structure to an ambitious productivity program with financial disciplines at the core. Before sharing some examples of the progress we have been making on these five catalysts, let me first highlight some of the promising product launches we have rolled out through our leading brands: Peet's, L'OR, and our 10 iconic brands led by Jacobs. The three big bets I just mentioned, anchored in our brand-led strategy, are creating a powerful focus for innovation. We are already seeing great results. We are bringing meaningful new products that meet changing and evolving needs and preferences at the right time while increasing the value of every cup. Let me share a few highlights from the first half of the year.

Our transformation will be driven by five key catalysts are winning culture of agility ownership interest parenting a.

Our consumer led organization built on iconic brands.

Commercial excellence across four mission critical capabilities.

Simplified structure to an ambitious productivity program with financial discipline at the core.

Before sharing some examples of the progress we make on this five catalyst let me first highlight some of the promising product launches, we have rolled out to our leading brands beads law and our attempt iconic brands led by Jacobs.

The three big bets I just mention anchored in our brand, let's set strategy are creating a powerful focus for innovation.

And we've already seen great results.

We are bringing meaningful new products that meet changing and evolving needs and preferences at the right time, while increasing the value of every cup.

Let me share a few highlights from the first half of the year.

Rafael Oliveira: Peet's stepped into exciting new territory with the launch of Peet's Popping Pearls, a bold innovation designed to surprise and delight. These pearls gently burst with intense coffee flavor, delivering a unique and playful sensory experience. Because of its success, we have now brought Popping Pearls to more markets than the L'OR brand, where it is becoming a key feature in our experimental activation. With more than 50% of U.S. coffee drinkers now choosing medium roast, Peet's is expanding its beans offering in the medium roast category. Off the Grid is our latest addition to the beans portfolio and specifically crafted to attract new consumers by offering the coffee they already love with the premium taste and quality that only Peet's can deliver. We are also building on the strong momentum of the fast-growing iced coffee trend, especially with Millennials and Gen Z.

Pete.

<unk> two exciting new territory with the launch of pit pumping pearls, a bold innovation designed to surprise and delight.

<unk> gently burst with intense coffee flavor deliver unique and playful sensory experience.

Because of its success, we've now brought popping pebbles to more markets under lower brand, where it's becoming a key feature in our experiment to activation.

If more than 50% of U S. Coffee drink is now choosing medium roast beef is expanding its beans offering in the medium roast Kathy.

Off the grid is our latest addition to the <unk> portfolio and specifically crafted to attract new consumers by offering the coffee they already love with the premium taste and quality the only piece can deliver.

We are also building on the strong momentum of the fast growing ice coffee trend, especially with millennials and Gen Z.

Rafael Oliveira: L'OR Coconut Iced Espresso made a strong debut in over 20 markets and is just the beginning. We are now preparing to launch a season lineup that reflects how our consumers live and feel throughout the year. Coming this autumn, L'OR's Pumpkin Spicy, a typical warming blend with notes of cinnamon, clove, allspice, and nutmeg. in June, we launched L'OR Barista Absolute in six markets. Our most advanced machine yet offers 18 brew options, including a dedicated ice function to brew a perfect iced coffee through a machine. Whether hot or cold, each cup is elevated with richer flavor and aroma. To elevate the experience for consumers when brewed cold, our innovative Punch function pre-wets the coffee grounds, allowing them to bloom before extraction. This means you also get full aroma and flavor of our ice when the ice button is selected.

Laura Cocoanuts Iced espresso made a strong debuted in over 20 markets and this is just the beginning.

We are now preparing to launch our seasonal lineup that reflects how our consumers live and few throughout the year.

Come and you saw some lost pumpkin spice of typical warming blend with thoughts of cinema globe, all spice and that bank.

In June we launched la barista absolute in six markets.

Our most advanced machine, yet offering 18, breo options, including a dedicated ice function to brew a perfect ice coffee machine.

Whether hot or cold each cup is elevated with reach a flavor NRO.

To elevate the experience for our consumers when we record our innovative booms function free with the coffee ground, allowing them to bloom before extraction.

This means you also get full aroma and flavor of ice when the ice buttons select.

Rafael Oliveira: Let's now switch to the iconic brands led by Jacobs and provide you with an example of the exciting opportunities we have to platform and roll out new innovations across the strong heritage brands, Dubai Charlotte. In response to a fast-moving social media trend, this product went from concept to shelf in just 18 weeks. Its strong performance allows us to roll it out quickly across more than 20 markets under several of our leading brands and is already becoming one of the top-performing products in our mixes ranging in the U.K. Lastly, after Peet's Ultra Coffee Concentrate opened a new category, Mokona launched liquid espresso coffee sachets in Australia. It's the first of its kind there and answers the growing need for convenience. 76% of survey consumers indicated that they will make it part of their daily routine.

Let's now switch to the iconic brands led by Jacobs and provide you with an example of the exciting opportunities we have two platform and roll out new innovations across the strong heritage brands Dubai chart.

In response to fast moving social media trend. This product went from concept to shelf in just 18 weeks.

It's strong performance allow us to roll it out quickly across more than 20 markets under several of our leading brands and it's already becoming one of the top performing products in our mix as range in the U K.

And lastly.

After bids ultra coffee concentrate opened a new category more corner launched liquid expresso coffee such as in Australia.

It's the first of its kind there and this is the growing need for convenience.

76% of survey consumers indicated that they will make it part of their daily routine.

Rafael Oliveira: With that kind of response, we are now planning a wider rollout across Asia. Let me now move on to share a selection of the progress we are making on each of our five strategic catalysts I just referred to. As I mentioned on the start of this call, we have clearly noticed that the organization is starting to refine momentum and that the new strategies and the size of actions we are taking are re-energizing and motivating our teams across the globe. This is also underpinned by the most recent outcome of our annual Gallup employee engagement survey. The score improved to 4.12 based on participation rates, which was 91% compared to 81% on average at other FMCG companies using Gallup.

With that kind of response, we are now planning a wider rollout across Asia.

Let me now move on to share a selection of the progress we are making on each of our five strategic catalyst I just referred to.

As I mentioned on the start of this call. We have clearly noted that the organization starting to refined momentum and that the new strategy and decisive actions, we have taken a re energizing and motivating our teams across the globe.

This is also underpinned by the most recent outcome of our annual Gallup employee engagement survey.

The score improved to $4 12 based on participation rates, which was 91% compared to 81% on average at other FMC competencies using GAAP.

Rafael Oliveira: We also announced a new setup for the central marketing organization, aligned with our new brand-led strategy, and aimed at consolidating all category themes under one portfolio strategy role to drive a holistic category agenda and align priorities. Scaling up expert capabilities and removing duplicities. To beef up commercial excellence, we have, among other things, set up a brand new revenue growth management platform and are enriching our key account management reach and capabilities. As you have heard earlier during this call, our simplification and productivity programs are in full swing and our financial discipline remains strong, reflected in strong free cash flow, a leverage of 2.5 times, and 38% of our 2025 share buyback program complete. To wrap it all up, I would like to conclude that we have delivered a strong set of broad-based results. We have put a clear and simple brand-led strategy in place.

We also announced a new setup for the central marketing organization aligned with our new brand led strategy.

Aimed at consolidating all category teams under one portfolio strategy role to drive a holistic category agenda and align priorities.

Scaling up expert capabilities, and we will moving duplicitous.

To beef up commercial access we have among other things set up a brand new revenue growth management platform and are in reaching our key account management reach and capabilities. As you have heard earlier during this call our simplification and productivity programs are in full swing and our financial discipline remains.

Strong reflected in strong free cash flow, our leverage of two five times and 38% of our 2025 share buyback program complete.

So to wrap it all up I would like to conclude that we've delivered a strong set of broad based results.

We've put a clear and simple brand led strategy in place.

Rafael Oliveira: We have set the strategy in motion that are making solid progress since the start of the year. Taking these three points into account, we feel confident in raising our full-year guidance, which Yang Xu will come back at the end of the session. With that, I would now like to hand the call to Yang Xu to discuss our first half financials and the outlook for the full year 2025.

And we've set the strategy in motion there are making solid progress since the start of the year.

Taking this three points into account, we feel confident in raising our full year guidance, which young we will come back at the end of the session.

With that I would now like to hand, the call too young to discuss our first half financials and the outlook for the full year 2025.

Yang Xu: Thank you, Rafael, and good morning, everyone. Following Rafael's overview of our H1 highlights, I will now provide more details on our financial performance and then update you on our outlook for full year 2025. Slide 14 shows that we have delivered a strong set of results across top line, profitability, and cash in the first half of 2025. Organically, our sales increased by 22.5%, our adjusted gross profit increased by 2.2%, and our adjusted EBIT by 2%, reflecting a strong delivery in H1. When taking into account the net effect of forex and the changing scope, our sales increased to 5 billion, adjusted gross profit increased to 1.7 billion, adjusted EBIT increased to 709 million, and our free cash flow was 565 million euros. Slide 15 shows more details on the drivers of our sales. Our organic sales grew 22.5%.

Thank you Ralph and good morning, everyone.

Pauline <unk> overview of our H one highlights.

I will now provide more details on our financial performance and then update you on our outlook for full year 2025.

Slide 14 shows that we have delivered a strong set of results across top line profitability and cash in the first half of 2025.

Organically, our sales increased by 22, 5%.

Adjusted gross profit increased by two 2% and our adjusted EBIT by 2%, reflecting a strong delivery in each one.

When taking into account the net effect of Forex and the changing scope.

Net sales increased two 5 billion.

Adjusted gross profit increased to $1 7 billion.

Adjusted EBIT increased to two $709 million and our free cash flow was 565 million euros.

Slide 15 shows more details on the drivers of ourself.

Our organic sales grew 22, 5%.

Yang Xu: It was driven by pricing of 21.5% as we continue to pass through the necessary and appropriate pricing to offset incremental inflation. In light of this pricing, volume mix growth showed a strong resilience with a plus of 1%. The negative foreign exchange impact of 2.8% was mainly driven by the depreciation of the Brazilian real. The 0.2% contribution from scope reflects the consolidation of Cariboo as of March 31, 2024, and the exit of the T-business in Turkey at the start of May. Let's now go to slide 16 to look in more details at our EBIT performance. Our organic adjusted EBIT increased by 2%. What this bridge clearly shows is two things. First, we managed an inflation headwind of about 800 million, which is more than our entire adjusted EBIT we generated in the first half of 2024.

It was driven by pricing of 21, 5% as we continue to pass through the necessary and appropriate pricing to offset incremental inflation.

In light of this pricing volume mix growth showed a strong resilience with a plus of 1%.

The negative foreign exchange impact of two 8% was mainly driven by the depreciation of the Brazilian AI.

The 0.2% contribution from scope reflects the consolidation of the Cariboo as of the 30 <unk> of March 2024.

The exit of the key business in Turkey at the start of May.

Let's now go to slide 16 to look in more details on our epic performance.

Our organic adjusted EBITDA increased by 2%.

What does this bridge clearly shows is two things.

We managed and inflation headwind of about $800 million, which is more than our entire adjusted EBITDA. We generated in the first half of 2024.

Yang Xu: Second, we maintained our absolute gross profit by implementing appropriate price adjustments to address inflationary pressure that could not be fully mitigated through productivity and other measures. The bar chart shows that we have successfully protected our absolute profit base, reflecting the resilience and strong market position of our brands. Our overall AMP spend was up mid-single digit organically, with a stable to increasing AMP spend across all four segments. Let's now take a closer look at the organic sales and adjusted EBIT performance by segment on slide 17. Looking at the performance by segment, you can see that all four segments contributed to our top line growth. When it comes to profitability, both Europe and Lamia developed strong performance at gross profit and adjusted EBIT level, which were partially offset by declines in profitability at Peet's and APEC. Let me now go through each segment one by one.

Second we maintained our absolute gross profit by implementing appropriate price adjustments to address inflationary pressure that could not be fully mitigated through productivity and other measures.

The Bar chart shows that we have successfully protected our absolute profit base, reflecting the resilience and strong market position of our brands.

Our overall A&P spend was up mid single digits organically.

Stable to increasing A&P spend across all four segments.

Let's now take a closer look at the organic sales and adjusted EBIT performance by segment on Slide 17.

Looking at the performance by segment.

I see that all four segments contributed to our topline growth.

When it comes to profitability.

Europe and EMEA developed strong performance at gross profit and adjusted EBIT level.

Which was partially offset by declines in profitability at peace and APAC.

Let me now go through each segment one by one.

Yang Xu: In Europe, volume mix performance was very resilient at 1.8%, taking into account pricing of +15.4%. Part of the relatively strong volume mix performance we believe reflects some consumer pre-buying ahead of planned price increases in the second half of the year. We estimate this pre-buying effect had a positive effect of around 2 to 3 points on volume mix performance in the first half, which by nature will therefore become the headwind for volume mix performance in the second half of the year and is fully reflected in our updated outlook of the full year. In H1, markets such as France, the Nordics and Italy, and brands including Jacobs, L'OR, Douwe Egberts, and Gevalia drove organic sales growth.

In Europe.

Volume mix performance was very resilient at one 8% taking.

Take into account pricing, a plus 15, 4%.

Part of the relatively strong volume mix performance, we believe reflect some consumer pre buying ahead of planned price increases in the second half of the year.

We estimate this pre buy effect had a positive effect of around two to three points on volume mix performance in the first half.

Which by nature will therefore, it becomes a headwind for volume mix performance in the second half over the year and it's fully reflected in our updated outlook of the full year.

In H, one markets such as France.

IDEXX, and Italy, and Brian, including Jackups lore.

Edwards and chavarria drove organic sales growth.

Yang Xu: The adjusted EBIT increased organically by 8.6%, reflecting an increase in gross profit supported by the retailer pre-buying I just mentioned and an increase in AMP spend as we actively reallocate funds to areas where we would get better returns. In Lamia, organic sales growth was driven by 55% price growth, which was offset by a decline in volume mix of -1.2%. Various markets in Lamia actually delivered positive volume mix, which was offset by Brazil, which continued to experience softer market conditions. Organic sales growth was driven by brands such as Pilão in Brazil and Jacobs in Eastern Europe and South Africa. Adjusted EBIT increased organically by 19.2%, which mainly reflects an increase in gross profit, productivities, and a stable AMP spend. The freed up AMP as a result of the discontinuation of the rollout of the L'OR Barista machines in the U.S.

The adjusted EBIT increased organically by eight 6%, reflecting an increase in gross profit.

Fortify the retailer pre buying I just mentioned.

And an increase in A&P spend as we actively reallocate funds to areas, we would get better returns.

In EMEA.

<unk> sales growth was driven by 55% price growth, which was offset by a decline in volume mix of negative one 2%.

Various marketing launch actually delivered positive volume mix, which was offset by Brazil, which continue to experience softer market conditions.

Organic sales growth was driven by brands, such as <unk> in Brazil, and Jackups in Eastern Europe, and South Africa.

Adjusted EBIT increased organically by 19, 2%.

Meaning reflects an increasing gross profit.

The activities and stable A&P spend.

The freed up A&P as a result of the discontinuation of the roll out of the low power rates to machines in the U S.

Yang Xu: was reallocated to higher impact opportunities elsewhere in Lamia. At Peet's, organic sales growth was driven by 3.5% price and 0.6% volume mix. Peet's in-home business continued to deliver competitive growth across its Peet's, Caribou, Stumptown, and Intelligentsia brands. In Peet's U.S. coffee stores, same-store sales and ticket size were up, and Peet's China continued to deliver strong double-digit organic sales growth. Adjusted EBIT decreased organically by 37.6%, which is a result of two main drivers. First, as a reminder, Peet's had a high base of comparison related to a one-off €16 million insurance payout benefit in H1 2024. Second, Peet's saw a decrease in gross profit, reflecting the interplay of the facing of inflation and pricing between H1 and H2. This is reflecting that Peet's is a challenger brand in the U.S. coffee market and therefore follows instead of leads when it comes to passing through pricing.

We allocated two high impact opportunities elsewhere in EMEA.

At Pes organic sales growth was driven by three 5% price and 0.6% volume mix.

Keith in home business continued to deliver competitive growth across its Pete.

Cariboo downtown intelligence your brands.

In <unk> U S coffee stores same store sales and ticket size will up and Pete China continued to deliver strong double digit organic sales growth.

Adjusted EBIT decreased organically by 37, 6%, which is a result of two main drivers.

First a reminder piece had a high base of comparison related to a one off euro 16 million insurance, they all benefit in <unk> 2024.

Second piece saw a decrease in gross profit, reflecting the interplay of the phasing of inflation.

I think between <unk> and <unk> two.

This is reflecting that piece is a challenger brand in the U S coffee market and therefore follows instead of lead when it comes to passing through pricing.

Yang Xu: The level of AMP remained stable in the first half. In APAC, organic sales growth of 8.4% was driven by an increase of 7.7% in price and 0.7% in volume mix, mainly reflecting higher price elasticity in the region. Sales performance was geographically mixed, with strong performances in countries such as China and Thailand, partially offset by softer performances in countries such as Malaysia and New Zealand. Organic sales growth was driven by brands such as Mokona, Super, and OldTown's Hot & Cold premium instant mixes. The adjusted EBIT for APAC decreased organically by 14.7%, mainly reflecting facing our productivities this year and last year and the interplay of the facing of inflation and pricing between the first and second half. AMP spend was relatively stable compared to the same period of last year.

The level of A&P remained stable in the first half.

In APAC organic sales growth of eight 4% was driven by an increase of seven 7% in price and <unk> seven in volume mix, mainly reflecting higher price elasticity in the region.

Sales performance was geographically mix with strong performances in countries, such as China and Thailand.

Actually offset by softer performance in countries, such as Malaysia, and New Zealand.

Organic sales growth was driven pipeline, such as mokoena Super and <unk>.

The adjusted EBIT for APAC decreased organically by 14, 7%, mainly reflecting facing our productivity this year and last year and the interplay of the facing of inflation in pricing between the first and second half.

A&P spend was relatively stable compared to the same period of last year.

Yang Xu: On page 18, as Rafael Oliveira mentioned earlier in the call, the three big bets: Peet's, L'OR Iced Coffee, and the local iconic brands led by Jacobs. They are core to our brand-led strategy, and that's where we allocate most of our management attention and resources. This means that we will also closely track how those three big bets will perform. In H1, these three big bets altogether had solid performance with a combined organic growth of gross profit of 3%. Let's now move to slide 19 and have a look at our net profit development in absolute terms and per share. On the left-hand side of this slide, you can see that our underlying EPS, excluding the effect of the fair value change of our equity swap, has increased by 3.4% to 1 euro and 2 cents.

On page 18.

As Rafa mentioned early in the call the three big bets piece lore, and the local iconic brands led by Jack ups.

They are core to our brand strategy and Thats, where we allocate most of the management attention and resources.

This means that we will also closely track how those three big bets will perform.

In each one of these three big bets altogether had solid performance with a combined organic growth of gross profit of 3%.

Let's now move to slide 19, and have a look at our net profit development in absolute terms and per share.

On the left hand side of this slide you can see that our underlying EPS, excluding the effect of the fair value change of our equity swaps has increased by three 4% to one zero and <unk>.

Yang Xu: This was mainly driven by better operational performance and foreign exchange gains in the net finance line. When keeping the effect of the fair value changes of our equity swap in, the underlying EPS increased from 76 eurocents in first half 2024 to 1 euro and 33 cents in first half of 2025. Let me now share a bit more detail on our free cash flow and net debt development on slide 20. Our free cash flow generation of 565 million euros in the first half reflects a solid operational performance driven by higher EBITDA while absorbing a net cash outflow from working capital. This net outflow in working capital reflects the following movements. In the period, inventories increased mainly on the back of a higher green coffee price. Receivables increased due to higher sales, and this was partly offset by payables.

This was mainly driven by better operational performance.

Foreign exchange gains in the net finance line.

Well im keeping the effect of the fair value changes of our equity swap in the.

The underlying EPS increased from 76 Euro cents in first half 2024 to <unk> 33 in first half of 'twenty five.

Let me now share a bit more detail on our free cash flow and net debt developments on slide 20.

Our free cash flow generation of 565 million euros in the first half reflect the solid operational performance driven by higher EBITDA.

Absorbing a net cash outflow from working capital.

This net outflow in working capital reflects the following movements.

In the period.

Inventories increased mainly on the back of higher Green coffee price.

Receivables increased due to higher sales.

And this was partly offset by payables and the increase in payables on the back of higher Green coffee prices was partially offset by year on U S dollar related Forex effect.

Yang Xu: The increase in payables on the back of higher green coffee prices was partially offset by euro U.S. dollar related forex effect. The net debt bridge on the right-hand side shows that our free cash flow enables us to return 243 million euros to shareholders and reduce our net debt position by 337 million euros, therefore, contributing to an improvement of our net leverage to 2.5 times. Before I update you on our outlook for full year 2025, I would like to briefly remind you on the next slide, slide 21, of the refined capital allocation priorities we shared at our Capital Market Day at the start of July. As part of a renewed strategy, we'll emphasize creating and unlocking value by focusing on absolute gross profit growth, adjusted EBIT growth, and free cash flow generation.

The net debt bridge on the right hand side shows that our free cash flow enables us to return 243 million euros to shareholders.

<unk> reduced our net debt position by 337 million euros.

Therefore, contributing to improvement of our net leverage to two and half times.

Before I update you on our outlook for full year 2025.

I would like to briefly remind you on the next slide slide 21 of the refined capital allocation priorities, we shared at our capital market day.

At the start of July.

As part of our renewed strategy will emphasize creating and unlocking value by focusing on absolute gross profit growth adjusted EBIT growth and free cash flow generation.

Yang Xu: We will deploy our capital in a more disciplined and intentional way to enable our strategy and further strengthen our financial profile. Our first priority is to reinvest in our business, especially in our three strategic big bets, using productivity from within to fund such growth. Second, as we continue to grow EBITDA and generate strong cash flows, we're committed to building an even stronger balance sheet through cycles and target now a net leverage of 2 times. This is more conservative than our previous target of 2.5 times, which we successfully delivered in the first half. Third, we also want to deliver a more consistent return to shareholders. We aim to increase our dividend gradually and steadily over time. Next to that, we will execute the multi-year 1 billion share buyback program we started in March.

We'll deploy our capital in a more disciplined and intentional way to enable our strategy and further strengthen our financial profile.

Our first priority is to reinvest in our business, especially in our three strategic big bets using productivity from within to fund such growth.

Second as we continue to grow EBITDA and generate strong cash flows while committed to building, an even stronger balance sheet through cycles and target now a net leverage of two times.

This is more conservative than our previous target of two and half times, which we successfully delivered in first half.

Third we also want to deliver a more consistent return to shareholders.

We aim to increase our dividend gradually and steadily over time.

And next to that we will execute the multi year $1 billion share buyback program, which started in March.

Yang Xu: As mentioned by Rafael Oliveira earlier in this call, 38% of the 250 million earmarked for this year are being completed by the 25th of July. When it comes to M&A, we will deprioritize leverage acquisitions and focus on organic growth. Our M&A focus will have a bias for asset light and, to the extent relevant, explore non-core asset diversifiers. That said, we do believe that in the long run, we're still a strong consolidator in the category. But right now, we're focused on getting our own house in order. Let me now update you on our outlook for 2025, starting with green coffee price developments, as these remain a very important factor in how our financial performance will take shape. As you can see on the graph on slide 23, green coffee prices have gone up very significantly and have reached historical highs in the first half of 2025.

As mentioned by Ralph earlier in this call 38% of the 250 million earmarked for this year are being completed by the 20 <unk> of July.

When it comes to M&A, we will prioritize the leverage acquisitions and focus on organic growth.

Our M&A focus will have a bias for asset light and to the extent relevant explore noncore asset divestitures.

That said, we do believe that in the long run we are still a strong consolidator in the category.

Now we're focused on getting our own house in order.

Let me now update you on our outlook for 2025, starting with Green coffee price developments as this remains a very important factor in how our financial performance will take shape.

As you can see on the graph on slide 23, Green coffee prices have gone up very significantly and have reached historical highs in the first half of 2025.

Yang Xu: As you know, we hedge our green coffee price exposure in a very disciplined and consistent way. This allows us to create sufficient time to take the right measures to offset the negative effect that such inflation would otherwise have on our absolute level of profitability. It is therefore important to keep in mind that the green coffee prices in H1 2025 were on average more than 60% higher than the same period of last year. That is exactly why we are implementing significant mitigating initiatives, including appropriate and additional pricing to offset the significant headwinds in H2 and maintain absolute profit levels. Looking ahead, Green Coffee Express believes that green coffee price developments will remain volatile due to ongoing supply concerns linked to climate, tight stocks, and continued speculative activities.

As you know, we hedge of our green coffee price exposure in a very disciplined and consistent way.

Allows us to create sufficient time to take the right measures to offset the negative effect that such inflation would otherwise have on novel absolute level of profitability.

It is therefore important to keep in mind that the green coffee prices in <unk> 2025.

Average more than 60% higher than the same period of last year.

And that is exactly why we're implementing significant mitigating initiatives, including appropriate and additional pricing to offset the significant headwinds in H, two and maintain absolute profit levels.

Looking ahead green coffee experts believe that green coffee price development will remain volatile due to ongoing supply concerns linked to climate type stocks and continued speculative activities.

Yang Xu: The good thing is that to date, we did not see meaningful signs that price elasticity is materially going up. We know that the vast majority of our consumers do not lower in-home coffee consumptions when prices go up. Having said that, we expect to see some short-term volume pressure again during price negotiations with our retail partners, most notably in Europe. However, based on the attractiveness of the category, the equity of our brands with our consumers, and the collaborative relationships we have with our retail and out-of-home partners, we expect that some of the volume impact can be temporary, similar to what we have seen in the first half of the year. This leads me to slide 24. Our strong financial performance in the first half of the year provides a solid foundation for our full-year results.

The good thing is that to date, we did not see meaningful signs that price elasticity is materially going up.

And we know that the vast majority of our consumers to not lower income cause coffee consumption when prices go up.

Having said that we expect to see some short term volume pressure again to in price negotiations with our retail partners, most notably in Europe.

However, based on the attractiveness of the category the equity of our brands with our consumers.

And the collaborative relationships, we have with our retail and out of home partners.

We expect that some of the volume impact can be temporarily similar to what we have seen in first half of the year.

This leads me to slide 24.

Our strong financial performance in the first half of the year provides a solid foundation for our full year results.

Yang Xu: Looking ahead to the second half of the year, we continue to face significant inflationary pressure and ongoing volatility in green coffee prices. To address this, we are implementing further mitigation actions, including appropriate pricing adjustments. In addition, volume mix performance in H2 will reflect the impact of the retailer pre-buying effect in Europe that benefited in the first half of the year. Taking the strong performance in H1 and these factors related to H2 together, we are confident in raising our full-year outlook. We now expect organic sales growth to reach a high teens percentage and anticipate that adjusted EBIT will be at least stable on an organic basis. We also continue to expect to deliver a free cash flow of around 1 billion euros. With that, we have come to the end of our prepared remarks.

Looking ahead to second half of the year, we continue to face significant inflationary pressure and ongoing volatility in green coffee prices.

To address this while implementing further mitigation actions, including appropriate pricing adjustments.

In addition volume mix performance in <unk> reflects the impact of the retailer pre buy effect in Europe that benefited in first half of the year.

Taking the strong performance in each one and these factors related to H two together.

We are confident in raising our full year outlook.

We now expect organic sales growth to reach a high teens percentage.

Anticipate that adjusted EBIT will be at least stable on the organic basis.

We also continue to expect to deliver a free cash flow of around 1 billion euros.

With that we.

Come to the end of our prepared remarks, and with that I will now turn it over to the operators. So we can start the Q&A.

Yang Xu: With that, I will now turn it over to the operators so we can start the Q&A.

Patrick Folan: Thank you. Ladies and gentlemen, we are now ready to take your questions. Please remember that you are limited to one question and a follow-up per round. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now take our first question. One moment, please. Your first question comes from the line of Robin Jansen from ABN Amro. Please go ahead.

Thank you ladies.

Ladies and gentlemen, we are now ready to take your questions. Please remember that you are limited to one question and a follow up per round to ask a question you will need to press star one on your telephone and wait for your name to be announced.

To withdraw your question. Please press star one on one again.

We will now take our first question.

One moment please.

And your first question comes from the line of Robert Jan Vos from ABN Amro.

Please go ahead.

Robin Jansen: Yes, hi. Good morning all. Thanks for taking my questions. I have two. The first one is, did you experience new delistings already or anticipate delistings with the 13% tail of the remaining customer negotiations? That is my first question. My second question, you increased the guidance for adjusted EBIT quite significantly for the full year. Why has this not reflected in your free cash flow guidance as well? That is my second question. Thank you.

Yes, hi, good morning, Thanks for taking my questions I have two.

The first one is did you experience new de listings already or anticipate the listings with the 13% sale of the remaining customer negotiations. That's my first question second.

Second question.

You increased the guidance for adjusted EBIT.

It's quite significantly for the full year why has this not.

Why is it is not reflected in your fee cash flow guidance as well. That's my second question. Thank you.

Rafael Oliveira: Yeah. Hi, Robert. I will take the first one. Yang Xu can answer the second. On the delist, no, we have not experienced. I will dissociate a little bit the two things that you mentioned because in terms of negotiation, no, we have not experienced delisting right now because of the price negotiation. The reality is we had, as we shared with all of you, we had a tough January-February negotiations, but then in March, everything rebounded, the volumes rebounded, showing the resilience of the category. We are still confident in the second round that a similar pattern will happen with the remaining customers that we have not closed yet. So not associated to the brands at all that we mentioned on the Capital Markets Day. In terms of delisting, nothing significant.

Yeah, Hi, Robert.

The first one yung Kim can answer the second on the list no we have not experienced.

I'll discuss it a little bit the two things that you mentioned because in terms of negotiation no we have not experienced.

The de listing right now because of the price negotiations and the reality is we had as we shared with all of you. We had a tough January and February negotiations, but then in March everything rebounded volumes rebounded showing the resilience of the cash.

Category and so.

So we are still confident in the second round that.

Similar pattern will happen with the remaining <unk>.

Remaining customers that we haven't closed yet so so not associated to the brands at all that we mentioned on the capital markets day. So in terms of domestic and nothing significant in terms of the brands. What you mention remembering that when you're talking about the 33 brands that we talked on the capital markets day.

Rafael Oliveira: In terms of the brands, what you mentioned, remembering with you talking about the 33 brands that we talked on the Capital Markets Day as the tail brands, we are now doing the work, and we mentioned briefly on the prepared remarks that we are doing the work to see which, and this is all over the globe, okay? It is not only Europe. But which brands, what should we do with each one of them? So we are going very detailed on which one of them, which brands we should convert into other existing brands, which brands, in fact, it does not make sense we should just discontinue, and which brands eventually will take different routes or will upgrade into becoming a relevant brand. We want to drive this process, proactively.

The <unk> brand.

Now doing the work and we mentioned briefly on the prepared remarks that debt.

We are doing the work to see which and this is all over the global case, not only Europe, but which brands I mean, what should we do with each one of them. So we're going very detail in each one of them, which brands, we should convert into other existing brands, which brands in fact like it doesn't make sense, we should just.

And which brands eventually will take different routes are all upgrades into becoming a relevant Brent I mean, this we want to drive this process, let's say proactively so we will do this.

Rafael Oliveira: So we will do this ourselves and then come to the retailers on the countries that query those brands to decide how to operate with them. So it is not necessarily related to the negotiations of things. But as I said, as we said on the prepared remarks, negotiations we have done 87% of the global negotiations right now for the second wave is concluded. There is still 13% pending, but no delisting expected.

Our sales and then and then come to the retailers on the countries.

Those brands to decide how to operate with them. So it's not necessarily.

And related to.

To the to the to the negotiations of thing, but as I said as we said on the prepared remarks negotiations we've done 87% of the global negotiations right now for the second wave is concluded and there's still like 13%.

But no delays expected.

Yes.

Yang Xu: Then I take the second question. Hey, good morning, Robert. No, we are very happy with our first half-year results and other results. We also raised our full-year guidance in terms of adjusted EBIT. As everyone may remember, our prior guidance was a low single-digit decline, and now we raise it up to at least stable. So we are very happy with the performance, but cautiously optimistic for the full year. However, when you think about the EBIT in the grand scheme of a cash flow, which has been very consistent in the past few years, averaging $1 billion. So the EBIT movement by itself, the raise of the guidance, we will be talking about tens of millions.

Then I'll take the second question Hey, good morning, Robert.

No we are very happy with our first half year results and are the result.

No.

Ah raise our full year guidance in terms of adjusted EBIT.

As everyone May remember our prior guidance was low single digit decline and now we raise it up to.

At least sustainable.

Very happy to the performance of cautiously optimistic for the full year.

However, when you think about that a bit in the Grand scheme of our cash flow, which has been very consistent in the past few years, averaging a $1 billion. So the EBIT movement by yourself.

The raise of the guidance will be talking about tens of millions. So thats why in the grander scheme of the free cash flow of the $1 billion and Thats why we have confidence we confirm our free cash flow for your guidance still around 1 billion.

Yang Xu: So that is why in the grand scheme of the free cash flow of the $1 billion, that is why we confidently confirm our free cash flow for your guidance still around $1 billion.

Robin Jansen: is clear. Thank you.

That's great. Thank you.

Patrick Folan: Thank you.

Thank you Sir.

Yang Xu: Sure.

Patrick Folan: Thank you. Your next question comes from the line of Antoine Provost from Bank of America. Please go ahead.

Thank you Gil.

Your next question comes from the line of.

From Bank of America. Please go ahead.

Robin Jansen: Thank you, and good morning, everyone. Two questions for me, please. First one on pricing. Looking towards the second half of the year, this new price round, considering you have pretty much the same COGS headwind, about $800 million incremental on each half, how much additional pricing are you talking about? What level of magnitude? On elasticity, for the second question, overall, compared to 2022, 2023, which was the last period of major inflation, you have much better elasticity, even including the pre-buying in Europe. What is different this time around compared to last time? Why is elasticity much better this time? Thank you.

Thank you and good morning, everyone.

Two questions for me. Please so first one on pricing I mean looking towards the second half of the year.

So just your price wrong, considering you have pretty much the same cost headwinds of about 800 million.

Inventory on each off I mean, how much additional pricing are you talking about like what level of magnitudes.

And on elasticity.

Second question, I mean overall compared to <unk> <unk>.

<unk> to 'twenty free.

Which was the last period of major inflation I mean, you have much better. It is just around even encouraging pre buying in Europe.

I mean, what is different this time around.

Sure.

Compared to desktop.

Is it is this achieved much better this time thank you.

Rafael Oliveira: Hi, Antoine. Good to hear from you. I will take the first one, the pricing first on the second. What we try to do in our model, obviously, is to offset as much of the pricing we can with productivities, efficiencies, and then whatever we cannot, we pass through. As you mentioned, green coffee prices have remained quite high. We expect about the same level of price increase that we did in the first half and the second half. So roughly mid-teens, a price that will be required. Again, not very different in terms of absolute levels in the first and the second half. The second question on elasticity, what really happened, as you know, elasticity in coffee is quite low, and it has remained low.

Good to hear from you so.

So I'll take the first one the pricing first on second half.

What.

We tried to do in our model, obviously is like two to offset as much as other pricing, we can with productivity efficiencies than whatever we cannot.

With pass through.

And as you mentioned I mean green coffee prices have remained quite high.

We expect about the same level of price increase that we did in the first half and the second half so roughly like mid teens, a price that will be required. So so again not very different.

In terms of absolute levels.

In the first and the second half.

The the second question on elasticity I mean, what we obviously have been as you know <unk> in coffee is quite low and has remained low in fact in the first half has been actually lower despite the price has been lower than historical.

Rafael Oliveira: In fact, in the first half, it has been actually lower despite the price has been lower than historical, so at a very low level. What we do expect is in the second half, you are going to have some elasticity again back to historical levels, so a bit higher than the first half, but still quite low. We are talking according to many years of history here, elasticity depends a lot, varies a lot by country. Depending on the legacy of the country consumption, etc., you can have pretty big value variations of elasticity, but you are talking minus 0.3 elasticity on average. Again, elasticity on the first half was even lower than that. We do expect a bit higher on the second half. That is the answer on elasticity. You also had a question on comparing, no, that was it, right?

So at the very low level.

But we do expect is in the second half you are going to have some elasticity again back to historical levels. So so a bit higher than the first half, but still quite low.

We are talking.

<unk> like to too.

Many years of history here elasticity depends varies a lot by country. Okay.

Depending on the legacy of the country consumption et cetera, you can have pretty big.

Ideations of elasticity, but youre talking 0.3 minus point elasticity on average so.

So again, let's see.

So on the first half was even lower than that we do expect a bit higher on the second half.

<unk>.

So <unk> you also had a question on.

Comparing.

Rafael Oliveira: Is that what you answered the question, Antoine?

Yes.

Is it that once you have the answer for your question I'm sorry.

Robin Jansen: Yeah. Just as a follow-up on pricing, is it fair to assume that on Lamia, considering pricing is probably more linked to spot price, your pricing level here should clearly decelerate?

Yes.

Follow up on pricing.

Is it fair to assume that's allowing me are concerning.

For us things probably modeling to spot price.

Youre pricing local share should clearly deteriorates.

Rafael Oliveira: Yes. Yeah, it's fair to assume that. Indeed, as you're right, the price tends to move, let's say, quicker, you know, and the hedges tend to be shorter. So indeed, the market reacts much faster, especially in Brazil, which is an important market for us. Yes, that's indeed true.

Yes, yes, it's fair to assume that indeed is euro.

The price tends to move let's say weaker.

<unk>.

The hedge is tends to be shorter so indeed, the market reacts much faster, especially in Brazil.

So which is an important market for us so yes.

That's in the tube.

Robin Jansen: Amazing. Thank you.

Thank you.

Rafael Oliveira: Thank you.

Thank you.

Patrick Folan: Thank you. Your next question comes from the line of David Wu from Morgan Stanley. Please go ahead.

Thank you.

Your next question comes from the line of David Lewis from Morgan Stanley. Please go ahead.

Robin Jansen: Yeah. Hi, there, everyone, and well done on the solid state of results. I just wanted to get a quick check-in, perhaps in terms of your newer innovation. Can you just talk about exactly when the pipeline will flow through? Of the newer products that have come through, what sort of resonance have you seen with your retail partners and customers? The second one is, I know it is a smaller part of the business, but could you just quantify the impact from tariffs? I know there is some chat around green coffee possibly being exempted from tariffs into the U.S. But in terms of any finished product flow across the sea, can you just give us an impact, sort of an update on what you think the impact could be there? Thank you.

Yes.

And well done on a solid set of results I just wanted to get a quick check in.

Perhaps in terms of your new innovation can you can you just talk about exactly when the pipeline will flow through and of the newer products that have come through I mean, what sort of England's have you seen what.

With your retail Youll retail partners customers and then the second one is a much smaller part of the business, but could you just quantify the impact from.

From tariffs I know there is some chatter.

Around green coffee beans.

Possibly.

Being an example call from tariffs into the U S. But in terms of any finished product Florida cost.

Across the <unk> can you just give us an impact.

Sort of an update on what you think the impact could be there. Thank you.

Rafael Oliveira: Just to see if I understand, David, your first question is an update on where we are in terms of innovation. Is that correct?

But just see if I understand David Your first question is just an update on where we are in terms of innovation is that correct yes.

Robin Jansen: Of the products that we saw at the CMD and that you highlighted today, which of those have you rolled out yet? If not, can you just give us an understanding on the timing exactly of those coming through? If you have any that have been rolled out so far, what is the feedback been?

<unk> that we saw at the <unk> that you highlighted today, I mean, which of those have you rolled out yet if not can you just give us an understanding on the timing exactly of those coming through and if you have any of that have been rolled out so far.

What's the feedback been.

Rafael Oliveira: We highlighted a few that you saw in the CMD and you saw here on the prepared remarks. For example, the coffee pearls. It is something that we launched, we did a test, let us say, at Peet's stores during the second quarter, like halfway of the second quarter of the year, and it performed extremely well. So now we rolled over not only across Peet's, but also taking to different markets, L'OR, and starting to explore. It is called like a new category, the coffee pearls. We are quite excited about that. If you look at the parallel, it is the bubble tea, which is like a multi-billion category. So the parallel will be the coffee pearls. The acceptance of retailers has been really significant.

Yes.

We highlighted a few that you saw in the <unk> and you saw here on the on the prepared remarks for example, the cost deferrals, it's something that.

We launched in we did a test let's say.

These stores are doing.

During the <unk>.

Second quarter.

Halfway of the second quarter.

<unk>.

The year and perform extremely well so now we roll opened not only across the.

But also take into different markets law and starting to explore is it all of the new category. The multiples. We are quite excited about that if you look at the the parallel is the bubble tea, but which is a multibillion category. So the parallel will be the coffee both the acceptance of that data.

Of consumers has been really significant.

Rafael Oliveira: In terms of impact on the P&L, frankly, to be material, I would not expect this to be that soon. It will probably take one or two years to be a material thing because it is almost like you are creating a new category. But the green shoots of it have been very, very positive. The same way with what we mentioned here as well, the medium roast in Peet's. It is extremely important innovation because Peet's was famous or well known for dark roast and expanding the portfolio of Peet's. You remember from Capital Markets Day we showed the details where it is going to be extremely important to have more SKUs in order to come east in the U.S. and conquer the rest of the country with more distribution. So again, the acceptance where we are distributed has been extremely strong.

First in terms of impact on the P&L frankly to be material I wouldn't expect this to be.

Soon you'll probably take one or two years to be a material thing because it's almost like you create a new category, but thats.

That has been like.

The green shoots of it ive been very very positive.

At the same way with what we mentioned here as well the the medium roasting.

And Pete it's extremely important innovation because.

Pete was famous all well known for dark roast and expanding the portfolio.

Pete you will remember from the capital market markets. They will show the details where it's going to be extremely important to have more skus in order to to come east in the U S and conquer the rest of the country with more distribution. So again.

The acceptance, where we are distributed has been extremely strong. So those are two debt.

Rafael Oliveira: So those are two that, I am very optimistic with what the results are showing. The last one I would mention is the platformization. We call it Jacobs and the icons, and the Dubai Chocolate is one example. We already like that we launched in several brands now, and it is performing extremely well. We gave the example in the U.K. where it is one already. The top mix is in the U.K. So this product, I mean, we do expect to have a very good return on it. But again, as it flows to the P&L, you remember from the Capital Markets Day, we do model this into more towards the second part of 2026 and then 2027 to have a real financial impact on it. On the second question you had on the tariffs, it is important to highlight here one thing.

I'm very optimistic with what the results are showing.

Last one I would mention is.

Is the platform innovation, we call at Jacobs and the <unk>.

And the icons in the Dubai Chocolate as one example, we already like debt, we launching several brands now.

And it's performing extremely well we gave the example in the UK, where it's one already the top mixes in the UK. So this product I mean, we do expect to have a very good return on it but but again as it flows to the P&L, you'll remember from the capital markets day, we do what we do.

<unk> seem to more towards the second part of 2006, and then 27 to have a real financial impact on it.

And then on the second question you had on the tariffs I mean is this.

Important to highlight one thing.

Rafael Oliveira: We import, the main one is the tariffs will impact everyone, and it is not positive. Coffee prices have been green. Coffee prices have been up a lot already globally, as we talked about, as you know. Then obviously tariffs, it is a small piece of it, but it does not help. The big effect is the tariffs from Brazil because as of today, starting August 1st, so in a couple of days, there is a 50% tariff from Brazil into the U.S. That is a big impact on the industry. Remember Brazil produces roughly 40% of the coffee of the world. We, compared to our, this will affect the whole industry, but we compared to our competitors in the U.S., the proportion that we use of Brazilian coffee is significantly smaller than most of other coffee players.

Port.

The main one is that.

Tariffs will impact everyone and it's not positive right off the prices have been green coffee prices have been up a lot already globally as we've talked about as you know and then obviously tariffs it's a small piece of it but it doesn't help now the big effect is the is that there are some brazil because as of today I mean.

Starting August 1st so in a couple of days there is a 50% five zero percent tariff from Brazil into the U S and that's a big impact on the industry I mean, remember, Brazil produces roughly 40% of the coffee.

<unk>.

Hey.

Compared to our this will affect the whole industry, but we compared to our competitors.

In the U S. I mean, the proportion that we use of Brazilian coffee is significantly smaller than than most of other coffee players I can tell you.

Rafael Oliveira: I can tell you, it is more or less less than 30% of what we consume, it comes from Brazil. Other players have much more, sometimes about 50%. So the expectation is assuming this tariff continues, goes through. Prices will have to go up overall in the U.S. On a relative basis, we think, we are better positioned because we do not have as much coffee coming from Brazil, but they will have to come up. So it will be a further impact on passing through price to consumers.

More or less less than 30% of what we consume it comes from from Brazil.

And then are there other players have much more sometimes some above 50%. So so like but the expectation is assuming this starts growth continuous goes through.

Prices will have to go up overall in the U S and I mean on a relative basis, we think.

We are better position, because we don't have as much.

Coffee coming from Brazil, but they will have to come up and so it will be a further impact.

On the on passing through price to consumers.

Robin Jansen: Okay, that is very clear. Just to follow up on those, firstly on the Brazil impact, I assume within your expectation from a team's pricing for the second half that that is taken into account. The second point on your new products coming out, would they be accretive at an EBIT margin level, just given the amount of marketing, et cetera, that is going in?

Okay, that's great and sorry, just to follow up on those firstly on the on the Brazil impact I assume.

And your expectation for mid teens pricing for the second half that that is.

Taking into accounts.

And then the second point on year on year, new products coming out.

Would that be accretive at the EBIT margin level.

Just given the amount of marketing et cetera, that's going on.

Rafael Oliveira: Yes, pricing, yes, it is taken into account right now, the pricing. But remember, as Yang Xu mentioned, that in the U.S., we, although we have been probably pricing ahead of competition, we are more followers than price leaders, okay, different than many parts of the world. But yes, it is modeling already. The margin on the innovations, that is our aim, is always to be accretive. I am not going to tell you 100% of the innovations are always accretive because it is not the case. Sometimes you would be incremental, absolute numbers or in a slightly new categories like bringing new consumers, but it might be a margin dilutive. But the aim is always to be in some of those mixes overall, they have a pretty high margin.

Yeah pricing, yes, just take into account right now.

The pricing, but remember as yung mentioned that in the U S. We although we've been probably pricing ahead of competition, but we are more followers than price leaders, okay different in many parts of the word so, but but yes his modeling already.

The.

The margin the margin on the on the innovations.

Our aim is always to be accretive I'm not going to tell you like a 100% of the innovations are always accretive because it's not the case, sometimes you'd be incremental.

Absolute numbers on that slightly new categories, like bringing new consumers, but but it might be margin dilutive, but the aim is always to be in some of the mix is overall they have a pretty high margin. So when you're doing there is ample Dubai charters of the word in this type of mix is is very high margin.

Rafael Oliveira: So when we are doing, for example, the Dubai Chocolates of the world and this type of mixes, it is very high margin. OldTown's Hot & Cold premium instant mixes is a pretty good margin as well as accretive. So it varies, we have to go one by one, but our target is always to be margin accretive, but it is not going to be always 100% the case.

Pearl is a pretty good margin as well as accretive so.

Various one we will have to go one by one but our target is always to be margin accretive, but it's not going to be always 100% of the case.

Robin Jansen: Very clear. Thank you very much.

Alright, Thank you very much.

Rafael Oliveira: Thank you, David.

Thank you David.

Yang Xu: Thank you. Your next question comes from the line of Feng Zhang from Jefferies. Please go ahead.

Hi, Keith.

Your next question comes from the line of Feng Zhang from Jefferies. Please go ahead.

Feng Zhang: Hi, thank you for taking my questions. I've got two. First one is about the new products. It's great to see that the new products are yielding some early results. Do you have a rough estimate how much the growth in H1 is driven from this product rolling out? That means, is there any factor like retailers are building up stocks or is it still too early to talk about impact? My second one is follow up on the Brazil impact on tariffs. Are you looking to change the sourcing in the long term to mitigate impact? Thank you.

Hi, Thank you for taking my questions I've got two.

The first one.

Is about the new products, it's great to see that the new products yielded some early results do you have a rough estimate how much the growth H. One is driven from this product rolling out that means.

Is there any factor like retailers are building up stocks or is it still too early to talk about impact.

On my second one is follow up on the Brazil impact on tariffs.

Are you looking to change the sourcing in the long term to mitigate impact. Thank you.

Rafael Oliveira: Good to hear from you. The new product's impact is negligible, okay? It is not relevant at all right now. It is still very small and it does not affect the P&L. So no, no, no effect of it. The tariffs, I mean, the reality is it will be frankly impossible for the whole globe to change the coffee sourcing, let us say, from Brazil because of the size of Brazil production of coffee globally. As I said, it is about 40% of the global coffee comes from Brazil. So, I mean, there is no coffee, there is a lot of other regions developing coffee plantations, as you know, and there are many countries in Central America, in Africa, in Asia, but there is it is far away to be able to manage to mitigate the impact from Brazil.

Good to hear from you.

New products impact negligible, okay, it's not relevant at all right now is still very small and it doesn't affect the P&L. So.

No no no effect of it.

The tariffs I mean, the reality is it will be frankly impossible for the whole globe to change either.

Coffee.

Our historic and let's say from from Brazil, because because of the size of Brazil production of coffee globally. There as I said is about 40% of the global coffee comes from Brazil, So I mean.

There is no coffee is theres a lot of other regions developing coffee plantations.

As you will know and there are many countries in Central America in Africa in Asia, but but.

It's far away to be able to manage too to mitigate the impact from Brazil. So so we are like I said, we don't source as much from Brazil. So we are quite confident and thats a lot because of the positioning of <unk>.

Rafael Oliveira: So we already, like I said, we do not source as much from Brazil. So we are quite confident, and that is a lot because of the positioning of the type of coffee we have with Peet's. I mean, we do not source a lot. We source mainly from Central America. If you take an average, most of the countries we source, the tariff is going to be around 10%. You know, we do not really source from Vietnam, which is mainly the Robusta one, which is the second largest producer. So the reality, the impact for us is going to be quite small. Now, I do not think we are going to change necessarily the source, but it will impact the whole industry indeed.

And the type of coffee, we have with Pete.

We don't source a lot we've sourced mainly from Central America. If you take an average and most of the countries resource the tariff is going to be around 10%.

We don't really source from Vietnam.

Which means that will boost alone so with the second largest producers. So the reality of the impact for us is going to be quite small now.

So I don't think were going to change necessarily the source.

But it will impact the whole industry, Indeed, and there is a lot of.

Rafael Oliveira: There is a lot of conversations, rumors that Brazilian producers are going to try to deviate more of their production into different regions because it will be too expensive in the U.S. So there is going to be a shift in the, let us say, the global equilibrium of where coffee goes, you know, and that is expected. As I mentioned, we do not expect a major shift for us, but it will affect the whole industry, assuming this 50% sticks, right, which we also do not know if it will change. It could change, but hard to predict.

Conversations rumors that Brazilian producers are going to try to deviate more of that production into into different regions, because it will be too expensive to the U S. So that's going to be a shift in the let's say the global equilibrium off where coffee goals.

Thats expected.

As I mentioned, we don't expect a major shift for us, but it will affect the holdings.

Assuming this 50% Stakes, which we also don't know if we'll change it.

Could change, but hard to hard to predict.

Feng Zhang: Thank you.

Thank you.

Rafael Oliveira: Thank you, Yang Xu.

Thank you Frank.

Yang Xu: Thank you. Your next question comes from the line of Patrick Folan from Barclays Bank. Please go ahead.

Thank you.

Your next question comes from the line of Patrick Folan from Barclays. Please go ahead.

Sharon: Good morning. Thanks for taking my questions. I do not know if I missed it. My first question is just on the efficiencies to fuel brand growth. Can you comment on what the benefits have been there thus far? Has there been any cost benefits that can be quantified? Secondly, on Peet's, there has been more positive commentary in the U.S. coffee market recently. Should we expect Peet's to continue the momentum we have seen in H1 into H2? I think the concern previously has been how high ticket sizes were before. I guess, are we now seeing consumers coming more used to these prices now? How should we think about squaring two points of ticket sizes going into the second half versus the wider coffee market and Peet's? Thank you.

Good morning, Thanks for taking my questions I don't know if I missed it. So my first question is just on the efficiencies to fuel brand growth.

Can you comment on what the benefits have been there thus far.

Has there been.

Any cost benefits that can be quantified.

Secondly on Pizza there has been more positive commentary in the U S. Coffee market recently should we expect <unk> to continue the momentum we've seen H, one and H two.

Because I think the concern previously it's been how high ticket sizes were before and so I guess are we now seeing consumers coming more use of these prices now or how should we think about squaring two points of ticket sizes going into the second half.

Versus the wider coffee, Marc and Pete Thank you.

Patrick Folan: Hey, Patrick. This is Yang. Good morning. Let me take your first question about the productivity. As you have heard from us, we're quite excited with our entire productivity program, which we have specific initiatives behind the $500 million that is our target. Half of it, we're confident we can deliver by the end of 2027. What has happened in this maybe first half here? Let me zoom in a little bit. We talked about portfolio simplification as a concrete example. We announced our closure of a Banbury Plant. That is a processing and packaging factory in the U.K. The second bucket, we also talked about synergies in the ways of working within ourselves. We also just recently announced that we are streamlining and reorganizing our European businesses. We were having 10 clusters, and now we are leaning up into five clusters.

Hey, Patrick This is John Good morning, Let me take your first question by the productivity.

As you have heard from US we are quite excited with our entire productivity program, which we have a.

Specific initiatives behind that.

Media and that is our target and how from the edge. We're confident we can deliver by the end of 2027 now what has happened.

In this.

First of all half year linear assuming a little bit when we talk about portfolio simplification as a concrete example.

<unk>.

We announced the closure of our bandwidth plant.

That is a processing and packaging factory in the UK.

And the second bucket, we also talk about synergies in the ways of working within ourselves. So we also just recently.

Thanks to that we are streamlining and reorganizing our European businesses.

Having.

10, plus years and now we're leaning up into five clusters and on top of that we also have centralize all the entire European finance function into our.

Patrick Folan: On top of that, we also have centralized our entire European finance function into our offshore or nearshore GBS function, our global business services. That creates a lot of synergies by the ways of working. The third bucket is we talk about continuous improvement. Earlier on, Rafael Oliveira also mentioned that our design for value program is well underway, that we're very pleased to see that the momentum is going on. The last one, focus on the asset light route to the market. We also have announced that we're well underway in the U.S. for our DSD. As you may remember, our Peet's Ultra Coffee Concentrate uses the DSD route to market, and now we are transitioning into a direct-to-serve type of business that will be much more asset light and CNA light. Those productivity programs are well progressing, and we have very detailed initiatives and owners and timeline.

On offshore on the issuance UBS function on global business services, so that creates a lot of the synergies by the ways of working.

The third bucket, we talk about continuous improvement well early on Rockwell automation to that of a design for <unk> program is well underway and we're very pleased to see.

That the momentum is going on.

And the last one focus on the asset light route to the market. We also have announced and we're well underway in the U S for our DSP as you may remember, our PC user DSD route to market and now we are transitioning into a.

Into interactive service type of a business is that it will be much more asset light and G&A like so those productivity programs are progressing and we have very detailed initiatives and owners and timeline of course for now like in this particular moment is a bit too early to demonstrate all the ways that for every initiative.

Patrick Folan: Of course, for now, at this particular moment, it's a bit too early to demonstrate all the wings. For every initiative that we have specific business cases and yields in a certain return for us, what we do intend to do is, as we promised, we will report our progress. As we continue this journey and on a full-year basis, we'll be able to give a snap update on that.

Though we have a specific business cases and yields in a certain return for us while we do intend to do.

We promise, we will report our progress and as we as we continue this journey and on a full year basis is we'll be able to give a snap the update on that.

Rafael Oliveira: Patrick, on the Peet's, I mean, it is obvious you can see the numbers. We are very happy with the overall performance of the company, right, in the first half, but not necessarily with Peet's. I mean, we do not like to see that we decline our a bit performance in Peet's. As you notice, the reality, as we mentioned also on the remarks, the reality, the market has been lagging a bit, the cost increase, the overall market, and consequently, we do as well. We have not been able to price as much as is needed given what happened to the green coffee prices. This is happening now. The last signs that we have in the last couple of months have been quite positive on the market acceptance of pricing.

And Patrick on the on the peaks I mean.

It's obvious you can see the numbers, we are very happy with overall performance of the company in the first half, but not necessarily repeat.

We don't like to see that.

We declined our a bit.

Performance in Pete and as you will notice I mean, the reality is we mentioned also on the remarks.

The market has been lagging a bit the cost increase overall market and consequently, we do as well.

We haven't been able to price as much as is needed given what happened to the green coffee prices. So.

So this is happening now in the last.

Signs that we have in the last couple of months have been quite positive on the market acceptance of pricing. So we do think as you heard in other other companies' calls the market starting to pick up in consumption is picking up in our system remains quite low. So so we are still confident that.

Rafael Oliveira: We do think, as you heard in other companies' calls, the market is starting to pick up and consumption is picking up. Elasticity remains quite low. We are still confident that we are going to have a much better run rate going forward on the Peet's performance. As you know, it is a critical, one of the big bets for us is the development of Peet's across the country. Short term, I would say half one, we were not as pleased with Peet's as what could be. The market was not as good, but the last few months have been much better. Again, we are much more positive on what will happen in the second half.

We're going to have a much better.

Run rate going forward on the on the Pizza performance and as you know it's a critical.

One of the big bets for US is the development of beat across the country. So short term.

They have one we were not.

As pleased with beats what could be the market wasn't as good but the last few months have been much better. So again, we are much more positive what will happen in the second half.

Sharon: Okay. Thank you, Yang. Thank you, Rafael.

Okay. Thank you Yang Thank you Rafa.

Rafael Oliveira: Thank you, Patrick.

Thank you Patrick.

Yang Xu: Thank you. We are now approaching the end of the call. We will now take our last question for today. The last question comes from the line of Jeremy Kincaid from Van Lanchok Kempen. Please go ahead.

Thank you we are now approaching the end of the call. We will now take our last question for today and the last question comes from the line of Jeremy Kincade from bottom lunch at Kempen. Please go ahead.

Sharon: Good morning all. I have two questions also. The first one's just on the price increases that you've managed to put across in the different regions. You've obviously already talked about Peet's and Lamia, but I was just wondering if you could talk to the price increases in Europe versus APEC. Obviously, APEC's a little bit lower. So I was just wondering as to why that's the case. My second question is if we look at the difference between EBIT and adjusted EBIT, the difference is the largest this half compared to all your other halves you've been listed. I was just hoping if you could talk through the various adjusting items that have occurred this half and maybe give an indication as to whether or not some of these larger adjusting items might continue into the future or not. Thank you.

Good morning, I have two questions also.

<unk>.

The first one is just on the price increases that you've managed to put across in the different regions. You've obviously already talked about <unk> and <unk>, but I was just wondering if you could talk to.

Price increases in Europe versus APAC, obviously apex, a little bit lower so I was just wondering as to why that's the case.

And then my second question is if we look at the difference between EBIT and adjusted EBIT.

The difference is the largest this half compared to all your other half <unk> being listed so I was just hoping if you could talk through the various adjusting items that have occurred.

This half and maybe give an indication as to whether or not some of these larger adjusting items might continue into the future or not thank you.

Rafael Oliveira: Hi, Jeremy. I will take the first one on the price. Yang Xu can explain the difference on EBIT. The price, as I mentioned here, we do expect pricing first half and second half roughly about the same levels, call it like 18, in Europe. Again, we have implemented in the first half at the beginning of the year. We had a lot of pushback. Eventually, due to, we believe, the strength of our brand and the good relationships we have, the prices went through and the volumes fully recovered. Elasticity, as we mentioned on the full-year call in February, the impact you see in volume sometimes is very short-lived because it is retaliations. But then the consumption, which ultimately is what matters, remains strong. We recover that volume, as you see on the full-year results. Again, we are right now in the middle of these negotiations.

Hi, Jeremy ill take the first one on the price.

Can you explain the difference on the EBIT.

Price I mean, as I mentioned here, we do expect pricing.

First half and second half roughly about the same levels call it like <unk> in Europe and.

Again, we've implemented in the first half.

As.

The beginning of the year.

Had a lot of pushback eventually with <unk>, we believe the strength of our brands and then the good relationships we have.

<unk> went through and the volumes fully recover so so elasticity as we mentioned on the <unk>.

With a full year call in February.

In fact, you've seen volumes, sometimes is very short lived because it's this retaliation, but then the consumption, which ultimately what methods remains strong and we recover that volume as you see on the full year results. So so again we.

We are right now in the middle of these negotiations as we mentioned.

Rafael Oliveira: As we mentioned, globally, we have 87% of this concluded. There is still a few customers that we need to sign off and be there on the shelf. Again, we do expect this to be implemented. We do need this to be implemented. Consequently, we would also expect slightly higher elasticity, as I mentioned, than in the first half. It has not happened before to have two price increases of this same magnitude in one year. It is very high. Unfortunately, that is what needs to happen for us, for the industry. We do expect a bit higher elasticity, but not significant. It is modeled already on our guidance. For this, that is Europe. Asia, it is a bit different because the mix in Asia is very different.

Globally, we have 87% of this concluded so theres still a few.

Customers that we need to see.

Often in B b there on the shelf.

Again, we do expect this to be implemented we do need this to be implemented and consequently, like and we would also expect slightly higher this year as I mentioned, then in the first half but.

I mean, there hasnt happened before to have two price increases of this same magnitude.

In one year. So it is very high Unfortunately, that's what needs to happen for us for the industry. So so we do expect a bit higher.

But not significant and it's model already on our on our guidance. So so far this that's Europe Asia is a bit different because.

The mix in Asia is very different I mean, theres a lot of mixes which is not only cost for your pure coffee, but it has.

Rafael Oliveira: There is a lot of mixes, which is not only coffee or pure coffee, but it has milk, sugar, other components on the product. The impact of green coffee is smaller. Our weight is still high, but it is smaller overall. We did, in some countries, we saw a higher elasticity in countries. As I mentioned before, elasticity can vary quite a bit globally. But in some countries where coffee is not a legacy coffee country, you saw more elasticity overall in consumption with the price increases. It has taken a bit longer. Consequently, we are putting through, as we said, we are passed through company, passed through category. We are going to pass through everything that we need apart from what we can avoid with efficiency. This price is happening as we speak, and we should see a bigger impact or impact in the.

Neil Sugar other other components on the products.

Back of Green coffee as smaller, albeit still high but it's smaller overall and we did in some countries we saw Ah ha.

Higher elasticity.

In countries as I mentioned before our system can vary quite a bit globally, but in some countries where cost is not a legacy coffee country you saw more elasticity overall in consumption.

If the price increase so that has taken a bit longer and consequently, like we are but we are putting through as we've said we are pass through to company a pass through category and we're going to pass through everything that we need.

Apart from what we cannot argue with efficiencies. So so this price is happening as we speak and should see a bigger impact.

Impact.

Rafael Oliveira: Maybe Yang Xu can take the EBIT adjustment.

Maybe I can take the EBIT adjustment, yes, Jeremy I'm, taking the second one.

Patrick Folan: Yeah, Jeremy, I take the second one. As you see the adjustment, first of all, I think it is important to lay out that it is a very consistent approach and methodology versus prior. However, it is true that this year, in the first half year, we have a big swing of mark-to-market results. Those are the derivatives, particularly for the commodities of our hedging, that we have a mark-to-market swing year over year, almost a little bit more than 140 million per se by itself. Of course, it is not yet settled and just a point in time of how the market is trending versus our hedging. Beyond that, smaller things, for example, the amortization of intangible that is mostly driven by because we sold off our offshore business. Some of the old books and the non-cash item is written off. That is an entire swing coming from that.

As you see the adjustments first of all I think it's important to lay out that that is a very consistent approach and methodology versus prior. However, it is true that this year on the first half year, we have a big swing in mark to market results. So those are the two additives, particularly for commodities, our hedging that we have a mark to market swing year over year.

Most of all a little bit more than 140 million per se by itself of course is not yet settled and just a point in time of how the market is trending versus our hedging.

Beyond that.

The smaller things for example, the amortization of intangible that is mostly driven by because we sold off of Akshay business. So some of the old books and a noncash item is written off so that's that's the entire swing coming from that.

Patrick Folan: Share-based account, I have to say, is much more representative for the ongoing basis because last year, there was a one-off because of the departure of an executive. That is on full picture over there. Last year's comp base was lower. This year is more representative. The rest of them are transformation activities. As I earlier mentioned, it is squarely to support our productivity program. In terms of our Bambury manufacturing closure, it was really to our operating model change and so on and so forth. Those things have a specific return and initiatives that support our overall productivity program. I hope this answers your question.

Share based comp.

It's I have to say its much more representative for the ongoing basis, because the last a year, where there was a one off because of the departure.

And the executive suite, that's in full picture over there. So last year's comp base was lower this year, it's more of a prison to do.

Most of them are transformation activities as I earlier mentioned is squarely to support our productivity program. So in terms of our.

Banbury manufacturing closure was really too.

Pretty modest changes so on so forth. So those things have a specific return on initiatives that support our overall productivity program.

I Hope this answer your question.

Sharon: Very clear. Thank you very much.

Very clear thank you very much.

Yang Xu: Thank you. I would now like to return the call to the speakers.

Thank you.

And I would now like to return the call to the speakers.

Robin Jansen: Thank you, Sharon. Ladies and gentlemen, thank you very much for attending today's clearance call and for taking part in the discussion about our results. If you have any additional questions, please do not hesitate to contact the IR team. We are happy to answer your questions. Again, thank you very much and enjoy the rest of your day.

Thank you chairman, ladies and gentlemen, thank you very much for attempting todays earnings call and for taking part in the discussion about our results.

Do you have any additional questions. Please do not hesitate to contact the IR team, we're happy to answer your questions and again, thank you very much and enjoy the rest of your day.