Coca Cola HBC : 2021 Half year Presentation Script

CCH - 2021 Half-year results

Conference call script - 12 August 2021

C O R P O R A T E P A R T I C I P A N T S

Zoran Bogdanovic - Coca-Cola HBC AG - CEO

Ben Almanzar - Coca-Cola HBC AG - CFO

Joanna Kennedy - Coca-Cola HBC AG - IR Director

1.Title slideOperator

Thank you for standing by ladies and gentlemen, and welcome to Coca-Cola HBC's conference call for the 2021 half-year results. We have with us Mr. Zoran Bogdanovic, Chief Executive Officer, Mr. Ben Almanzar, Chief Financial Officer, and Ms Joanna Kennedy, Investor Relations Director. At this time all participants are in listen only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, please press star one on your telephone keypad at any time and wait until your name is announced. I must also advise that this conference is being recorded today Thursday, August 12, 2021. I now pass the floor over to one of your speakers, Ms Joanna Kennedy. Please go ahead. Thank you.

Joanna Kennedy - Coca-Cola HBC AG - IR Director

Good morning. Thank you for joining the call today to discuss Coca-Cola HBC's half year 2021 results.

Zoran and Ben will present the results and following that we will open the floor to questions.

We have about 1 hour and 15 minutes available for the call today and we will therefore ask you to keep to one question and one follow up before joining the queue again.

2. Forward looking statements

Before we get started, I would like to remind everyone that this conference call contains various forward-looking statements. These should be considered in conjunction with the cautionary statements on the screen. This information can also be viewed in our press release issued today.

Now let me turn the call over to Zoran.

Zoran Bogdanovic - Coca-Cola HBC AG - CEO

3. Operational review and strategy

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CCH - 2021 Half-year results

Conference call script - 12 August 2021

Thank you, Joanna. Good morning everyone and thank you for joining the call.

Before we get going, I want to flag the announcement just made on our agreement to acquire Coca-Cola Bottling Company of Egypt.

We wanted to announce this along side our results but that simply was not possible as we were finalising the last but critical details of the transaction. We're very excited about the opportunities we have in front of us in this market and I'll discuss this in greater detail shortly.

Let me then give you an update on strategy, the CCBCE acquisition plans, and business performance in the first half of the year, after which Ben will talk you through the financials in more detail before handing back to me for some comments on the rest of the year and beyond.

4. Growing share and accelerating momentum as markets reopen

The numbers we released this morning show a strong recovery across all aspects of our business. H1 like for like revenues were up 23.1% year on year. Very importantly, revenues were 4% above H1 2019 levels, and volumes 5% above on the same comparative basis - giving us confidence about progressively returning to normality following the disruption caused by COVID in 2020.

Year to date we have gained 50 basis points of value share, improving the performance from 2020. Meanwhile, EBIT margins expanded 340 basis points while EPS is up 82%.

The agility with which the business has been able to respond to the reopening of our markets is clearly visible in the strength of our financials and the continued expansion of our value share performance. This has been enabled by the bold investments we have made into capacity and prioritised capabilities to deliver best in class execution, be that new lines in Nigeria or digital tools to allow our sales people to offer our customers a more targeted, better service. This is also fuelled by our tight partnership with The Coca-Cola Company team, and our aligned and effective way of doing business.

We continue to invest in our sustainability commitments, launching 100% recycled packaging in mineral water in Czech and Slovakia, which adds to our existing portfolio of 100% recycled Water brands. In Q2 we also added 100% recycled Sparkling single serve packs in Italy.

The pandemic is not yet behind us. In this operating context, the safety of our people and ongoing service of our customers remains central. The people of CCH have shown continued commitment and care and I am also proud of the speed and adaptability I witness in this business every day. I want to thank them wholeheartedly, its inspiring to see, and I'm excited for us to continue growing together with our customers, creating value for our stakeholders.

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CCH - 2021 Half-year results

Conference call script - 12 August 2021

5. Delivering our strategy

In 2019 we laid out a clear strategy to drive the business towards our vision of being the leading, 24/7 beverage partner. This strategy is called Growth Story 2025 and it is under-pinned by 5 growth pillars.

• Leveraging our unique, 24/7 portfolio;
• Winning in the marketplace with our customers;
• Continuing to focus on efficiency and fuelling investments with careful prioritisation;
• Developing our people, particularly by accelerating critical capabilities; and
• Earning our license to operate by delivering on our Mission 2025 sustainability commitments

These pillars are positioning the company for sustained success. They have guided our investment choices and actions and we are making very good progress. I believe that continued focus on this strategy over the last 2 years has readied us for the strong performance we are now seeing in the recovery.

6. Recovery in the out-of-home

Let me give you an update on the trends we are seeing during the first half of the year.

The easing of restrictions across our markets during Q2, combined with increased mobility, is fuelling a strong recovery in the out-of-home channel and 'on-the-go occasions'.

Volume growth in out-of-home accelerated sharply in Q2, and we have seen that while volumes in that channel remain slightly below 2019 levels, the gap narrowed in the second quarter. Given the constrained capacity in the hospitality sector, this suggests a healthy underlying demand for available out-of-home experiences. While we continue to monitor new emerging variants, we are also cautiously optimistic for much of this positive momentum in the out-of-home channel to continue throughout the summer months and into Q4.

Throughout the pandemic, we have worked hard to support our out-of-home customers - sharing our consumer insights, providing targeted programmes and offering practical support. This has ensured they, and we, are well positioned to capture the growth opportunities together as markets reopen.

Even as the out-of-home channel has reopened, we have continued to deliver a strong performance in the at-home channel. We are benefiting from favourable comparatives in Q2, but looking at the performance on a two year stack, it is reassuring to see volumes consistently high-single digit to mid-teens ahead versus 2019.

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CCH - 2021 Half-year results

Conference call script - 12 August 2021

We are seizing opportunities around premiumisation in the at-home channel. Consumers have developed rituals, recreating out-of-home experiences in their houses and we believe that some of these trends will stick, propelling our performance in Adult Sparkling.

7. Improvement in single-serve mix

As a company we have been focused on selling increasing volumes of high-value single- serve packages for many years. Our track record is confirmed by improved single-serve mix - which we grew by over one percentage point per year between 2015 and 2019.

In 2020, COVID negatively impacted that by limiting volumes in the out-of-home channel where single-serve packs predominate. In 2021 we are seeing that the recovery in the out-of-home channel has driven a quick turn-around in package mix, which in turn, is helping to drive healthy price/mix.

Through deliberate actions, we continue to fuel single-serve consumption. We consciously focus innovations on single serve formats, while in the at-home channel we have targeted growth in multi-packs of single serves. These package formats grew by 18% in the at-home in H1.

What is particularly notable and encouraging is that single serve mix in H1 is already1.8pp above the 2019 level, even without a full recovery in the out-of-home channel.

8. Prioritisation of opportunities is driving momentum

Careful prioritisation of the opportunities across our 24/7 portfolio continues to drive momentum.

The Sparkling category was resilient throughout the pandemic and now, as we are seeing markets recover, volume growth is accelerating further. Activation of the most valuable, high-potential occasions such as Coke with meals across our markets is bringing strong results. Trademark Coke volumes are also benefiting from the roll out of the new Coke Zero which was launched in April and is now available in 24 of our markets.

Growth is broad-based across brands, with Fanta volumes up 17% and Sprite up 22%, but we are also really pleased to see the strongest performance is from our strategic focus areas, namely low and no sugar variants and Adult sparkling.

Low and no sugar now makes up 22% of Sparkling category volumes and is growing faster than full sugar across the segments. We see no signs of slowdown in this performance.

In Adult sparkling we focus on the key occasions of socialising, both at-home and now also out-of-home. We have a well-established play book, developed with the Coca-Cola Company team, to elevate the position of Schweppes and Kinley in the market through new visuals, packaging, flavours and execution, which builds on the product as a premium mixer.

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CCH - 2021 Half-year results

Conference call script - 12 August 2021

Energy closed with exceptional results: volumes up 66% in H1. Here we are benefiting from the continued pace of innovation in the category as well as the range of our portfolio which effectively targets the most attractive market partitions: mass premium with Burn, mass with Monster, as well as an affordable offering with Predator.

9. Coffee strategy strengthened

We continue to make progress on rolling out Costa Coffee which is now live in 16 markets.

We are building depth and breadth of distribution in the at-home channel in our markets and seeing good early results, with Nielsen data showing clear progress in Q2 versus Q1 both in terms of share as well as distribution.

However, the at-home is only a part of this opportunity.

Having had the experience of selling a full portfolio of coffee in several of our markets through our previous coffee partnership, we believe we are uniquely positioned as a partner of The Coca-Cola Company to target all channels across our markets with Costa Coffee. We believe we can offer a breadth of portfolio as well as level of service, enabled by technology, to our out-of-home customers that is compelling. Early feedback and take up is good and we are accelerating the roll out of Coffee in the out-of-home channel in 2021.

We are also delighted to have strengthened our coffee portfolio with an agreement to acquire a 30% stake in Caffè Vergnano, one of the oldest Italian coffee roasters with an exceptional product and brand, and a truly premium positioning. As part of our minority stake, we will acquire exclusive rights to distribute Caffè Vergnano in all of our markets outside of Italy. We intend to hit the ground running by early 2022.

10. Expanding into Egypt - strategic rationale

You will have seen this announcement on our expansion into Egypt with the acquisition of CCBCE.

We are excited to welcome this growth market to our group. We see huge potential for

Egypt. The country has Africa's second largest NARTD market by volume with very

attractive demographics.

To put that into some context - with the addition of Egypt, CCH would have access to the two largest NARTD markets in Africa and a combined 25% of the population of the whole continent. The acquisition would increase the population we serve by 100 million, taking it to a total of 715 million people.

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