ROYUF (ROYUF) Q2 2026 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to Royal Unibrew's presentation of our first half results for 2026 My name is Lars Jensen, CEO for Unibrew. And joining me today is CFO, Lars Vestergaard and Flemming Nielsen from Investor Relations. We will take you through the highlights of our first half performance, review, developments across our segments, discuss the financial results and outlook and then open the line for questions. Now please turn to Slide #2. Before we begin, please note the usual disclaimer regarding forward-looking statements, assumptions and risk factors that may cause actual results to differ from expectations. And with that, please turn to Slide #3. Before turning to our first half performance, I would like to briefly revisit our strategy and how it continues to evolve. The headline on this slide is simple. Our core strategy remains unchanged, but some components are now being prioritized even higher. The first area is partnerships. As you know, we announced changes to our PepsiCo partnership in Northern Europe earlier this year. While we do not comment on specific partnership opportunities, discussions of potential partners, value-creating partnerships remain an important part of our multi-beverage strategy. We continue to keep all options open and will pursue partnerships where they strengthen our portfolio and create value for both parties. The second priority is our continued focus on growth categories. Consumer preferences continue to evolve, and our growth category framework remains at the center of how we allocate investments and commercial resources. In the first half of '26, our growth categories accounted for approximately 62% of group net revenue and delivered growth of more than 6%, once again growing ahead of the group average and supporting our overall growth. The third priority is to accelerate the development of our own brands, our recent years -- our strongest growth has increasingly been driven by our own brands. We continue to invest behind brands such as Faxe Kondi, Faxe Kondi Booster, Jaffa, Crodo, Ceres, Faxe and Original to support or supported by innovation, focused marketing and strong commercial execution. As fourth and fifth priorities, we continue to see significant opportunity in international in Italy which remain true of our most attractive growth platforms. Both markets delivered strong performance in the first half and continue to benefit from favorable category exposure, strong brands and attractive long-term growth opportunities. Growth in Italy and International is developing ahead of the assumptions made when we established our long-term financial target and is expected to contribute more to our long-term EBIT growth ambitions than originally anticipated. And finally, while growth remains important, we maintain a strong focus on operational efficiency across procurement, production, logistics and administration, we continue to identify opportunities to improve productivity and strengthen profitability. This remains a key contributor to our ability to deliver profitable growth. Taken together, these priorities do not represent change in the strategy. Rather, they reflect the areas where we see the greatest opportunities to create value and accelerate growth in the coming years. And with that, let's turn to our first half performance on Slide #4. First half was characterized by solid commercial execution and continued progress against our strategic priorities. Organic volume growth was 1.6%, while underlying net revenue growth was approximately 4%. The planned exit from lower-margin activities reduced reported net revenue growth to 1.2% and organic growth to 0.7%. Growth is primarily driven by our own brands and supported by innovation, focused brand investments and strong commercial focus across markets. We delivered organic EBIT growth of 6.7% and expanded the EBIT margin by 80 basis points to 13.3%. Importantly, this was achieved while continuing to invest behind our brands and despite increasing inflation across energy, raw materials, consumables and transportation costs. Earnings per share increased by more than 10% and ROIC for the last 12 months improved by 80 basis points to 12.8%. Our cash flow in balance sheet developed according to plan. And today, we launched a new share buyback program of DKK 300 million. And last but not least, on this slide, we reiterate our full year outlook and EBIT growth in the range of 6% to 10%, and we are on track to deliver earnings per share growth above 10% for the year. Now let's look at the individual segments and starting with the Northern Europe business on Slide #5. When we turn to Northern Europe, our largest segment, which is accounting for 64% of group net revenue and 60% of group volume in the first half of '26. Before discussing the individual markets, let me highlight the impact from Easter timing. Easter fell in Q1 this year compared to Q2 last year, which makes the quarterly comparisons less meaningful. As a result, we believe the first half development provides the most representative view of the underlying business performance. For the first half, organic revenue growth was 2.3%, while underlying net revenue growth was approximately [indiscernible] adjusted for the planned exit from lower-margin businesses. Reported net revenue growth was on level with first half of '25. EBIT increased by -- increased to DKK 646 million from DKK 632 million last year, and the EBIT margin improved from 12.7% to 13% and was impacted by the exit from lower-margin business. EBIT for the first half of '26 included an additional amortization charge of DKK 6 million as we accelerated amortization of intangible assets relating to the PepsiCo partnership through to the end of 2028. And now looking at the individual markets. In Denmark, we gained market shares across most categories during the first half. Growth was driven by strong performance in carbonated soft drink, beer, enhanced beverages and the broader RTD category. Within the carbonated space, carbonated soft drink space growth was led by Faxe Kondi, supported by strong brand investments, focused commercial execution and innovation. In beer, both Royal and Heineken delivered growth despite of a declining overall market. Faxe Kondi Booster continued to gain market share within energy drinks, while both Shaker and our recent launched Royal Club Delivered double-digit growth in RTD and gained close to 6% market share when we are talking about Royal Club. In Finland, volume and net revenue both increased during the first half, supported by a strong commercial execution. Weather conditions in May and June was broadly in line with seasonal norms compared to a colder than normal period in the same month last year, so slightly easy comparison. Market shares were flat to slightly up across categories with the strongest development within water and RTD supported by innovation and new product launches within RTD growth was driven by hard sales and cocktails while the laundering category, where we hold a leading position declined. While we are winning share in the total RTD category in Finland, this shift weighted on price mix as growth moves to more mainstream, more affordability in the RTD category. In Norway, we continued the positive commercial momentum from '25 and delivered strong growth in both RTD and beer. We also saw improving momentum in spirits and wine despite a challenging market as higher alcohol beverages is a decline. While we continue to gain share across several alcoholic beverage categories, the overall market remains in decline. This reinforces the importance of building a stronger position in nonalcoholic beverages, where we see attractive long-term growth opportunities. During the first half, we continued the rollout of Faxe Kondi in Norway. It was supported by the Uno-X Mobility Cycling team partnership but we also announced a long-term license agreement for Dr. Pepper, which from '27 will be locally produced, distributed and marketed, and sold in Norway. In the Baltics, the market continues to be affected by geopolitical uncertainty, soft consumer sentiment, higher beer tax duties and the introduction of sugar tax on carbonated soft drink. And despite this backdrop, we achieved growth across most categories and sales channels. Beer, RTD and enhanced Beverages was the strongest growth drivers while we maintained our CSD market share despite a competitive pricing environment. Original laundering, together with our beer and cider brands performed particularly well during this period. Overall, Northern Europe delivered good underlying growth, continued market share gains across key categories and improved profitability in the first half. Now please turn to Slide #6 and focus on Western Europe. Western Europe delivered another strong contribution to group earnings in the first half of '26. Organic net revenue increased by 1.1%, while organic EBIT growth reached 19.6%. EBIT increased to DKK 260 million, and the EBIT margin improved by 200 basis points to 13.6%, reflecting the continued strong performance in Italy and improved profitability in the Netherlands. Overall, our commercial and operational performance was in line with our plans. Italy remains the segment's main growth driver and continued to gain market share across categories, partly offset by lower volume, net revenue in the Netherlands following the deliberate reduction of selected low- and no-margin promotional activities. In Italy, we continue to deliver high single growth in a relatively flat market. Our beer brands, Ceres, Faxe performed strongly, while the Crodo portfolio also continued to gain market share within carbonated soft drinks. The strength of our brands combined with focused innovation, new pack formats and strong execution across both off- and on-trade channels continue to support growth and profitability. In France, we continue to expand Crazy Tiger and Lorina through focused brand activation, optimization of our price pack architecture and expansion into new consumption occasions. In the Netherlands, performance developed in line with our plans. The revised commercial strategy implemented during the second half of '25 continue to weigh on volume and net revenue development in the first half but supporting improved profitability, revenue quality and a more attractive sales mix. In BeLux, we continue to make progress through market share gains, commercial optimization and improved in-store execution. Growth was driven by the PepsiCo portfolio and supported by our own brands and in particular, Crodo. While BeLux remained broadly earnings neutral in the first half, the business continues to develop according to plan. And overall, Western Europe continues to demonstrate the attractive growth and profitability opportunities within our portfolio and remains an important contributor to the group's earnings growth. Now please turn to Slide #7. On where we focus on the international business area. International remained a key growth engine for the group in the first half. Organic volume growth reached 11%, while net revenue increased by almost 9%. Growth was driven by the Faxe Beer, Crodo within soft drinks and our Malt Beverage portfolio, which includes brands such as Vitamalt and Supermalt. We continue to see strong consumer demand across our key markets particularly in Africa and estimate that the first half volume growth was broadly in line with the underlying sales outgrowth across our markets. The comparison for the second quarter was impacted by tax related inventory buildup in the United States during the same period last year, making the growth comparison somewhat challenging. Profitability remained strong with EBIT growth of more than 13% and margin expansion despite increasing logistic costs driven by geopolitical development and inflationary pressure. Overall, we remain very satisfied with the development in international and continue to see significant long-term potential across the segment overall. And with that, I will hand over to Lars Vestergaard for the financial review. Now please turn to Slide #8.

Thank you, Lars. Let me walk you through the financial development for the first half of 2026. Before reviewing the financials, let me again remind you that the quarterly development is impacted by Easter timing and the H1 growth rates provides the best indication of the underlying business performance. As already highlighted, organic volume growth was 1.6%, while reported organic revenue growth came to 0.7%, adjusted for the planned exit from lower-margin activities, underlying net revenue growth for the group was approximately 4%. Gross profit increased by 3.4% to DKK 3.4 billion, while gross margin improved from 43.8% to -- from 42.8% last year. The improvements reflects a continued focus on profitable growth, operational efficiencies and the exit from lower-margin activities. The first half was characterized by volatility and inflationary pressure across energy, raw materials, consumables and transportation through hedging fixed price agreements with suppliers efficiency initiatives and price increases, we managed to largely offset this impact. Sales and distribution expenses increased by 3.9% in the first half. The increase reflects continued investment in sales and marketing to sort our brands and growth ambitions. The first half of 2026 was also impacted by higher cost for transportation and distribution as a result of higher fuel prices. Admin expenses declined by 5.5% compared to last year. This reflects our continued focus on efficiency and disciplined cost management across the organization. EBIT increased by 7% to DKK 1.26 billion. And the EBIT margin improved 80 basis points to 13.3%. The financial expenses amount to DKK 119 million in the first half compared to DKK 133 million last year, while the effective tax rate was 22.1%, both in line within the expectations. Net profit increased 7.7% to DKK 707 million, while diluted earnings per share increased by 10.7% to 14.5% benefit from both higher earnings and lower number of outstanding shares. Overall, we are pleased with the first half performance, which demonstrates our ability to deliver profitable growth and margin expansion while continuing to invest in our brands and commercial capabilities and managing the impact of increased cost inflation. Please turn to Slide #9. Cash flow and balance sheet developments remains fully in line with our plans. Operating cash flow amounted to DKK 908 million, where capital development was less favorable than last year, reflecting normal seasonal developments and business growth. But overall, cash generations remain solid. CapEx amounts to DKK 450 million, corresponding to a 5.8% of net revenue. Investment activity is expected to increase during the second half and we continue to expect full year CapEx of around 7% of net revenue. Free cash flow amounted to DKK 458 million, at the same level as last year. Net debt increased compared to the end of 2025, primarily due to higher share buybacks, while leverage remains well within our targeted range at 2.2x EBITDA. Trailing 12-months ROIC Improved by 80 basis points to 12.8%, reflecting our continued focus on value-[ creating ] earnings growth and capital efficiency across our business. Please turn to Slide #10. Based on our performance in the first half and our expectations for the remainder of the year, we reiterate our outlook for 2026. We continue to expect organic EBIT growth in the range of 6% to 10%. The consumer environment remains challenging across our markets and geopolitical developments continue to create volatility across energy, commodity and logistics costs. While cost inflation has increased compared to our assumptions at the beginning of the year, we continue to expect impact to be mitigated through pricing initiatives operational efficiencies and ongoing cost management. A portion of our raw material and energy requirements remain protected through hedging instruments and price agreement which further supports visibility for the remainder of the year. Based on our current assumptions, the midpoint of the EBIT guide range remained the most likely outcome. However, given the continued uncertainty around consumer demand, commodity markets and geopolitical developments, the full guidance range remains achievable. All other assumptions behind the outlook remain unchanged. With that, please turn to Slide 11, and I will hand back the word to Lars.

Thank you, Lars, and let me briefly touch upon our management agenda for the remainder of the year. First, we remain fully focused on executing our growth strategy. The first half result demonstrates that our focus on strong local brands, innovation and attractive beverage categories continued to deliver profitable growth and we'll continue to invest behind these priorities. At the same time, we are preparing for the previously announced PepsiCo partnership changes that will take effect from '29, while continuing to support and invest in and develop our broad multi-beverage portfolio. Innovation remains a key priority across markets. We continue to expand and strengthen our beverage portfolio through new flavors, formats and propositions aligned with evolving consumer preferences. And as Lars just outlined, we continue to actively manage inflationary pressure across key cost categories, through pricing mix improvements, discipline, commercial execution and operational efficiencies. We are working to offset these headwinds while continuing to invest in the business. Operational excellence and cost discipline remain important priorities across the group. We continue to optimize resource allocation, improve efficiencies and strengthen the profitability of our business. And finally, we remain focused on delivering our '26 guidance while continuing to execute against our long-term financial targets. And please turn to Slide #12 for the key takeaways. Let me conclude with a few key messages. The first half of '26 demonstrated the strength of our strategy and operational model. We continue to gain market shares, delivered profitable growth and expanded margins despite increasing cost inflation. Underlying net revenue growth was 4%, driven primarily by our own brands and supported by innovation and strong commercial execution. International and Italy were the strongest growth contributors during the period, while Northern Europe demonstrated resilience and broad-based market share gains. We delivered 7% EBIT growth. We increased the earnings per share by 10.7%. We generated a solid cash flow. We maintained a robust balance sheet, and we improved our return on invested capital by 80 basis points. And finally based on our performance so far, we reiterate our full year outlook and remain confident in our ability to deliver our '26 targets. Thank you for your attention. Now we are ready to take your questions, and I'll hand back to the operator.

[Operator Instructions] First question, and this question comes from the line of Matth Ford from BNP Pariba.

Just three quick ones from me, please. First one is just on the guidance. You touched on it at the end there. You've reiterated the 6% to 10% range at this stage. Clearly, we're already kind of well into Q3 at this point, and you have reasonably good visibility on how the kind of the summer has gone so far. So just -- yes, it would be good to get your sense of what is really driving that range at this point clearly, clearly, costs are an element of that, but it would be just good to get your sense of what's embedded within the top and bottom of that kind of full year expectation? And then linked to that is just on, on COGS, I suppose, I mean you're kind of flagging potentially incremental COGS impact in the second half. It'd be good to get your sense potentially your early thoughts on '27, at this point, based on your current hedges and I suppose your expectations into next year at this point, at least. And then the final question is just on volumes in Northern Europe actually. I mean Q2 was clearly in decline, granted that perhaps H1 is a better indication of the go-forward level of growth. But as we move into the second half and potentially in '27 as we cycle slightly tougher comps. How do you think about volume growth in Northern Europe? It doesn't feel like many of the issues around consumer affordability are going to materially improve. But clearly, weather was a bit of a benefit in Q2. So just good to get your sense of what is your kind of run rate of volume growth in Northern Europe into the second half and potentially into next year.

Yes. If I take the last one first, if you take Easter out of the equation, as we are trying to do by focusing on the first half, if you're taking the summer swings that naturally is there, we had a slight growth on volume underlying in the total Northern Europe European business. And that is -- when you're talking about the consumer sentiment, small skew towards off-trade than on-trade and a small skew towards the non-alcoholic portfolio than the Alcoholic portfolio when you look at it overall. And of course, Denmark, Finland and 3 Baltic countries there. From a volume standpoint, they are so big that whatever happens in Norway and Sweden, you're never going to see in those numbers in reality. But as we have said, we are gaining share in the Northern European territory in an otherwise flat -- flat volume situation. So consumers are not drinking more, they're drinking differently. On the first question, I would say on your guidance question, I would say 3 Cs that we're always looking at. It's competition. You never know what competition will do. And of course, that has an impact. Consumer, depending on the sentiment, the willingness to spend and so on is always a factor. If the interest rate suddenly goes up for whatever reason, then that can cause negative suddenly. And you can find other positives if as an into a war, one of the wars, then I think the consumer sentiment will turn more to the positive and so on. So that still gives a swing. And then you mentioned cost although that we have a fairly high level of hedging for the remainder of the year, there's always a part of the cost that you cannot hedge. So cost is eventually something that needs to be taken into the incretion that can be both positive and negative depending on what plays out. And then to the results, we see as in the middle of the guided interval you need to adjust. I think that's fair to say for the DKK 6 million in amortization, which has come in unexpectedly on the back of Pepsi announcement. So this is cost that was unforeseen. We are not changing our guidance interval because of that. But if you change those DKK 6 million to the earnings that we are delivering, we are somewhere like, I don't know, 7.6, 7.7. So very, very close to the midpoint of the guidance that we have given. And then for the further details on the cost, I'll hand over to Lars.

Yes. So in 2026, we are, of course, benefiting from the hedges we have in place, in particular, on aluminum and on energy. And when you look into '27, we do not have hedges from the past. So here, you will see a step-up in cost, in particular, on packaging material. So there is an unhedged element for next year, and we need to go out and make certain that we mitigate that with price/mix initiatives for next year. There's nothing that's unique to Royal Unibrew. I think our cost will move very much in line with the whole industry. So that needs to be managed through pricing and mix initiatives for next year.

And this question comes from Thomas Lind Petersen from Nordea.

One question regarding your sales and distribution expenses and I guess, marketing costs also here. Just Wondering if you can help us quantify the fuel surcharges. I think at least we were hoping for some lower distribution costs owing to the new warehouse in Faxe, but now it seems like fuel surcharges are offsetting this. So can you help us please quantify the amount of fuel surcharges and how we should think about this going forward? Then also in terms of sales and marketing costs, the new cycling sponsorship or the Faxe Kondi rollout, anything here you can help us quantify? And are these costs temporary? Or are these more structural? So that would be the first question. And then the second question is regarding last, what you said regarding Italy and International, which has evolved ahead of your plans for the long-term growth of 6% to 8% CAGR. So I was just wondering what that means for the long-term EBIT growth CAGR here. Are we trending towards the high end that formula? Or should we more see it that you're just more comfortable with this range?

Yes. On the second question, if I take that first, on the sales and marketing costs. So we do believe in building brands. This is the core of how we think about our business, and we do put more money behind them. And there is -- '26 is going to be skewed more towards spending more on our own brands and slightly less on Partner Brands. There will be a slight mix between the segments. From a marketing standpoint, we are spending a bit less on International. And then we are spending more in Northern Europe. And yes, the essence of that is the money that we are spending on building on Faxe Kondi further in Denmark, but also outside of the Danish borders. And that is a weight on the costs in the first half, and it will also continue into second half, given that these are multi-year contracts. So that's, I would say, is the dynamics around the sales and marketing costs. On the side of the International business, we took a 3-year initiative years back on trying to build a unique position in a country, and we concluded that the likelihood of success was not very high. So we ended that. And then we have moved that money into Northern Europe, so to speak. So that is what you are seeing. And on the growth on international and Italy, I think our growth formula, that's intact. And what we are trying to guide here is that also given the changes that we are going to see on the partnership front, that a part of the makeup of continuously delivering a growth organically of between 6% and 8%. When we looked at that 2 years ago, They built the spreadsheets, we thought that Italy and International will be a smaller part than what we believe today, because of the growth rates are higher. But on the other hand, we also reckon that the messaging of the Northern European business then will take the expectation for that region down until that we have a full strategy in place from the first -- that will be active from 1st of January '29. So it's not -- when we look at the numbering now, the compensation for the loss of the PepsiCo business is not going to be only in the Nordics. We are looking at it as Royal Unibrew as a whole, and that means that we are going to put a higher emphasis on continuing the growth in the areas where we do see growth. We are mentioning Italy and Internationally, obviously, but we're also finding a brand like Faxe Kondi. So how do we move more resources to a brand like that, so that, that becomes a bigger part of the growth engine. So that's the reason why that we are mentioning in it.

Yes. And on the savings coming from the investments in warehousing. The warehousing was taken into use during the first quarter. We are seeing all the benefits coming through. So less outside story, less struggling to and from outside storage, et cetera. So that is coming in according to plan. Of course, we have higher depreciation from that. The intention was never to reduce the amount of distribution fuel we use. So we do see some extra cost related to higher diesel prices in our network. So there is some inflation on that, but we are seeing all the benefits from the warehouse investments.

And this question comes from Richard Withagen from Kepler Cheuvreux.

Lars, Lars and Flemming. Three questions from me, please. First of all, on Northern Europe EBIT and the margin were a bit below consensus despite around 5% underlying revenue growth. So what specifically explains the weaker-than-expected operating leverage that we see in the region in the first half of the year? Second question is on -- second and third question is perhaps on the Pepsi contract following the announcement of the loss of that contract in the Nordics by the end of '28, you've said to double down on your own brands growth. So how has execution or resource allocation change since April since you announced that Pepsi contract loss? So how has that changed to accelerate growth of your own brands? And finally, have you changed how you look at the geographic profile of the company after the announcement of the Pepsi contract loss?

Yes. So again, following up on the same as Thomas asked on International and Italy. Yes, we do see -- because of our -- we have been able to create a growth rate in those territories, which is higher than what we originally anticipated. We do believe that those two geographies will be a larger part of the total makeup of Royal Unibrew when we are in '29 and [ 2030 ] the way that we look at it right now. So yes, so that's the answer to that question. On execution, I think we got the message mid of April, on our way into the high season, and it is generally not very good to make massive changes when you're in the season or in your way into the season. So you will see and have seen over the last 2, 3 months, relatively few changes in terms of the executional part. But of course, when it comes to priorities, we have been over prioritizing the PepsiCo portfolio in the Nordic countries because what we have done has been very successful. We are, over time, going to bring that down to and normal prioritization. And that then indirectly, of course, gives our own brands more space and more focus. And then I think what is changing is that whenever we have looked at something or doing something together with PepsiCo, we could do the math with an unlimited time, so to speak. And now we have 2.5 years to earn the money, and there will be an exit cost. So building business cases on developing new things on the PepsiCo portfolio in the Northern Europe is going to be very difficult. And we are not going to deliver less innovation, less engagement, less marketing to the market. So over time, that will, of course, put our own brands, I would say, higher on winning the resources because of the simple math on the payback on the initiatives that we do. But to say that you have seen a significant change now, no. That's, I would say, the clear answer. And then on Northern Europe, we actually -- we do not see a weakness in Northern Europe. We see a strength. And when you look at it mathematically, it's small money that makes a difference between I would say what is in the consensus numbers and what we are delivering. And I think the two things that I would mention is the amortization. You need to take that in, as I call it, a non-expected cost because we need to do the amortization a few years faster. And then the other part, as I mentioned, is a marketing cost. So we have moved marketing costs into Northern Europe, which is hopefully going to help us in accelerating the growth of our own brands. And when you correct for that, I think we are delivering a very strong result in Northern Europe. I think very few companies can demonstrate an underlying growth of 5% top line wise. So that's super strong, and it also converts to bottom line and cash flow.

And this question comes from Aron Adamski from Goldman Sachs.

I have three questions. First, on Finland. Could you please quantify your second quarter performance there, including the contribution from carbonates and Beer? And how is your market share evolving in these categories in Finland? And I guess, looking ahead, given a relatively tough third quarter comparison, how should we think about the volume trends in the broader market -- the broader outlook for Finland for the remainder of 2026. Then my second question is on International. Can you please share with us where do you see the largest opportunities to accelerate growth over the next few years, in particular, which markets appear the most attractive to you? And are there any new geographies where you would expect to establish or meaningfully expand the presence? And then lastly, a bit of a housekeeping question. The amortization impact you've seen in H1, is there going to be a repeat of it in the second half? Or is this a one-off that we've seen in H1?

Yes. If we start with the housekeeping question, then we took some amortization in the first half, and that's going to repeat in the second half. So that is a shortening of the amortization period for some of the intangibles that relates to the PepsiCo distribution agreement. So that will repeat itself. Of course, it's a noncash charge. So it's not impacting the cash flow. If you look at the Finnish market and on the shares, we do not give detailed information on all categories. I think as Lars mentioned in the intro. We are gaining shares in RTD, which is the biggest segment for us. However, within the RTD segment, you see some migration from the more high-priced segments, long drinks down to more affordable options, that has a slight negative margin impact, but we are taking shares in this segment. And so there, we are doing well. Pricing in CSD is extremely competitive. We are keeping our shares in that. And then there is a good development in our water business in Finland. In terms of beer, it's important to note that in Finland, there are segments that are very unprofitable in -- so you can get some positions where you make absolutely 0 margin. But in the segments that we play, we have a decent development. But for us, beer is not about market share. it's about making certain that the things we have in the market is profitable so that we don't just use our capacity for MT calories. So I think that's the status on Finland.

Yes. And then on International, so it's a repeat of what you have seen over a fairly long period of time. Our Faxe beer is growing mostly in Africa, West Africa. The Crodo portfolio is growing very nicely. It's mostly in Europe. And then we have the Malt business, which is also growing nicely centered around Africa and a few selected markets in the Greater Caribbean area. And when you look at the growth rates, that is -- the sequence that I mentioned is the sequence in terms of the opportunity and our current growth. And the biggest growth opportunity we have is still doing it better in the markets where we're already present. It's not so much about opening new markets, although that we are scouting for what could be new markets that can drive the growth in 3 to 5 to 10 years. But if you look at it over the next 2 to 3 to 4 years, I would say that it's the current markets that we have opened some even 20 years ago, that's where most of the growth is expected.

And this one comes from Nadine Sarwat from Bernstein.

Two questions from me, please, both related to your guidance. So earlier in the call, you said that you still believe you will be most likely in the middle of your guidance range for organic EBIT growth, that would be around 8%. Could you just confirm, does that comment on the midpoint you likely include the incremental amortization in H1 that you said would continue into H2 or excluding it? And then my second question you're reiterating your guidance point again. On the midpoint, organic EBIT growth came in at 6.7% from the lower end for H1 that would imply an acceleration in H2, what would be driving that if so?

Yes. So the guidance includes the amortization. So that's impacted into the full year guidance. So of course, that is what you say, effectively -- what do you say at an underlying pressure on our earnings, but that is included in the guidance. So the midpoint is still the guidance. We make more money in the second half than we do in the first half. There are many moving parts, I would say we have seen some initiatives that we couldn't offset in the first half. So we've been doing some pricing initiatives in the middle of the year to offset the commodity price inflation. So there are a number of moving parts what will the mix be in the second half, what will competition do? So when we look at our plans for the rest of the year, and acceleration in the second half is absolutely part of that equation. But it could also be that some of the geopolitical headwinds will lead to more headwinds. So we think that with the world as it is today, we can see both headwind and tailwind in the second half of the year.

And then I'll repeat the first question that regards and you have the 3 Cs, you have competition, you have a consumer sentiment and you have costs. Those are the three. So that's -- that's the answer.

This question comes from Edward Mundy from Jefferies.

I'd love to dig into Italy a little bit more. Are you seeing very strong growth relative to the market on trade-off trade? And I think you've highlighted some of the things that are driving that in the release. But could you talk about the sustainability of this momentum? And whether you're seeing any competitive response either in the Beer or Soft Drinks side of things? And then my second question is around your opening comments around the importance of partnerships -- in the value-creating partnerships. Could you -- without going into too much detail, given its commercial sensitive. Could you perhaps give a bit of stear as to which categories you're looking at? Is it beer? Is it softies? Is it wine? Is it spirits? Where are the biggest opportunities for you to make the most of your strong distribution network?

Yes. I think the last question, I think the clear answer is that, of course, after '28, the biggest opportunity that sits in the Cola segment. So there's other areas where we can see that we can enhance our portfolios, but Cola is obviously the big one. In the meantime, for us, it's about making sure that we enhance everything else by Cola, and that's literally what the consumers want in most of the geographies where we do business on the nonalcoholic side. So that is a transition in all of that. But it's not only Cola, it's in multiple areas where we do see that we can enhance our portfolio, and we also look at it from a geographical point of view. That partnership is not just about what we are losing. We could potentially in other geographies, new geographies where we do not have partnerships that we could add partnerships. So yes, so all options are open, and we are running it through the funnel as we normally would do. On Italy, yes, we are convinced that this is a sustainable growth. We have seen the growth for many years now. But I would say, in particular, for beer, it has accelerated. The growth -- we see growth in both on and off trade, but on-trade is under pressure from a consumer point of view, which you should have seen in most other markets as well. So the majority of our growth is deriving from off-trade. And it's a combination of better distribution, better price pack, architecture, more consumers into the brand and a higher frequency when you buy at Ceres. So it is kind of like a -- we have been able to create a multiplicator effect why not just expanding by one parameter, but at multiple parameters at the same time. When it comes to competition, yes, we do see competition trying to get a piece of the pie because strong lager is where the growth sits in Italy. Heineken has launched a new brand in the category and Carlsberg has done the same. Too early days to conclude anything as they are 3, 4, 5 months into their launches but their launches have not yet made any significance. I would then say on that one, we believe that it is important that you have strong competitors in the categories because that drives the growth even further. And that means that the more consumers that will move into strong lagers, the more is going to help us. So that's -- we consider this as being very sustainable and it's about the same story when it comes to the Soft Drink portfolio. We are very focused on the single-serve consumption occasion to a lesser extent on the large pack sizes and that is enhancing our value, it's enhancing our volumes. And then we are adding new flavors to the game, and they are working really, really well. So when we bought the business, it was the Lemon Soda business, Orange soda is growing quite nicely. And we have a very strong growth on some of the side products as well like the Mojitos and the spirits. So, we are driving the, I would say, the non-Cola segment in Italy, which is very strong. So yes, we believe that this is sustainable.

And just a follow-up on the first question around the desire to fill in the gap on Cola. And I should know this, but is Dr. Pepper, is that Cola, or is that something a bit different? And then just more on that, could you talk about sort of the benefits that you bring Dr. Pepper in-house. I know you already have it as a trading product. But as you bring it in-house, clearly, that's probably benefits on margins and ROIC and probably a bit more addition, but I'd love to get your views on both of those two parts of that question.

Yes. We bring it in-house in Norway. We do not consider it as a Cola. It has a different flavor characteristics. What we are looking more at is occasions. And in the -- if you look at Norway, we do believe that Dr. Pepper will be able to compete with both Orange and Cola in terms of some of the occasions where you consume those. And I think if you look at the journey that Dr. Pepper has had in the U.S. and in other countries, also outside of the U.S., I think it's very promising what that brand can deliver.

And this one comes from Andre Thormann from Danske Bank. André Thormann: Yes. Just a few from me as well. So first of all, to be sure, do you have any comments around how the third quarter have started for you guys. Second, in terms of EBIT in Norway, just to be sure, it did grow in the second quarter? And then third of all, are third -- is it correctly to assume that the cost pressure will, all else equal, be higher in the second half for you guys?

Yes. So if we start with Norway, we have a number of strong building blocks in place for improving the profitability in Norway. So we have closed one site. We have launch new categories. So we are very happy with the development in Norway, we're not giving EBIT data on specific markets, but I would say Norway is a place where there's a lot of good building blocks for '26 and beyond. So we are on track in Norway. And I would say the weather in Q2, early days was good in some markets -- sorry, Q3 was pretty good in Denmark, dreadful in Finland, okay-ish in parts of Norway. So probably across countries, the weather was neutral. So not a lot to read into the beginning of Q3.

Then you asked about the cost pressure. I think last tried a couple of times to mention it. Yes, cost is going up in the second half compared to the first half. And on the other hand, improvement in price and mix should compensate for that. So that's how we see it. André Thormann: And can you compensate that fully already in the second half, does it usually take longer to offset?

I think -- so we're looking at it as a whole. And I think you have also heard us talk about efficiencies and so on. So you can improve your value creation by manufacturers. So pricing is one. Price mix is one, you move your category -- your focus on categories in a certain direction where you earn more money and then you can try to be more efficient throughout the whole chain. And you would say that we are better positioned in the second half to cater for that compared to the second quarter because the inflation came in immediately, and there's a number of things that cannot be hedged. So you're always vulnerable when something negative happens. And that means that we see ourselves better positions far better positioned to cope with that for the second half of the year than we were capable of in the second quarter.

And this one is from Soren Samsoe from SEB.

So first question is on Northern Europe, where you have a negative price mix. I would maybe affect that the exit from the low-margin businesses would have a positive impact. So is this Finland that gives us a negative development in price mix? And is it more price? Or is it more mix?

I think overall, it's very difficult just to judge it on the basis of the net revenue per volume because it doesn't necessarily translate into profitability per volume. In some categories, they are just low on price, but they are also cheaper to produce and so on and so forth. When you look at it overall, the alcohol portfolio is -- is not growing, and that comes with a higher net revenue per volume, whereas the nonalcoholic portfolio is growing, so that is ordering it out, but it's not necessarily watering the profitability out. When you look at it from a category standpoint, yes, in Finland, original laundering and the long drink category as such is one of the highest when it comes to net revenue per volume. And with that category in decline and other categories compensated for that, that will be a dilution on net revenue per volume.

And then in Finland, more specifically, is there anything sort of more you're planning to improve? Or is it more a matter of the consumer improvement in Finland?

In Finland, we bring a lot of innovation to the market. And we have recently launched a new lineup of original long drink, which is catering more for the same consumers as on hard sales and similar products. So slightly lower on calories, slightly lower on alcohol, a slightly lower price on shelf, which is predominantly led by the lower alcohol lower excise. And then in different way of selling, where most of what we sell on original laundering is either big containers, single serve or it is 6 packs with 33 whereas the hard seltzer and similar products is more on single serve. So we are adjusting as we speak to that. So a fairly high rate of innovation to fill the gap, so to speak.

Okay. And then finally, on Italy, you already talked a bit about it, but do you believe that Italy could be as big as in market of Finland in value?

From a revenue standpoint, then no, I don't think so. unless something structurally really happens, and that's not the strategy that we are pursuing. We are pursuing a multi-niche strategy where we are very targeted on what we do. But it's a business that is building up both from top line and bottom line very nicely. Yes, so I don't want to put up that competition between markets.

And this one is from Andrea Pistacchi, from Bank of America.

Two from me, please. Firstly, you've started to implement pricing to offset cost pressures and you're saying you're planning to take more as we approach next year. Can you give us a bit more color, please, on where and in what channels you're implementing this pricing, what you've done so far, what comes next as much as you can share? And the second question is a bit similar to this. It's on international where historically, you find it difficult to pass on higher transportation cost because in some of the markets you're competing with local players who are not sort of subject to the transportation cost appreciate you've localized your business to a certain degree. But is the situation different on the ability to pass on or not the transportation costs?

No, it's the same, Andre. So international will always be subject to a slightly different measurement because competition is different than it is in the local market, so to speak. So if we would not have had the increase in transportation costs, you would have seen the profitability in International would have been bigger in the quarter. That's our assessment. So we are trying to be very, very smart and massaging this without losing competitiveness, and this is market by market, category by category. And when it comes to the broader discussion around pricing and improving mix and so on, it is very, very broad-based. We are working with price pack architecture, we are working with different analysis tools in terms of finding out what those different price points mean. And for some categories in some channels, we don't have an ability to push through pricing. But then in other categories, we have bigger opportunities. And of course, we are talking these through and giving the best advice to our customers so that we create a situation where we get the cost covered where our customers get their cost covered because they also see cost increases and where the consumers still see that they get a good price for the buy that they do. So we work very professionally with this and getting better at that every single day.

And this one comes from Aron Adamski, from Goldman Sachs.

I wanted to quickly follow up on pricing, actually. How are retailers responding to the increases you've announced? And are you seeing your competitors follow through with similar announcements? Or are you relatively quicker to announce price increases than your peers are? And second, to quickly follow up again on amortization. I wanted to clarify whether the impact in the second half could be bigger than the DKK 6 million we've seen in the first half, given that the Pepsi license loss was announced sometime in the midway through the first half?

So take the last one first. It will be the same chart in the second half that we had in the first half.

And on pricing, we are, as I last said earlier on, we're all in the same boat. Everybody is going to see the same amount of price increases on COGS. There might be a different timing. And you also -- you could have different underlying needs depending on how your business is performing. Yes, we do see competition is also putting pricing. We don't know, of course, what is going on between the customer and our competitors, but we can see it on the shelf. We can see it on the promotion prices. And we have a clear impression that pricing is coming through as we speak.

There are no further questions for today. I will now hand the call back to the speakers for closing remarks.

Thank you, and thanks for good questions. And as I would always say, you know where we are if you lead us, give us a call, if there's anything you need to know. Thank you, and enjoy the day.

Thank you.