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Operator: Hello, everyone, and thank you for joining the Heineken Half Year Results Call. My name is Sami, and I'll be coordinating your call today. [Operator Instructions] I will now hand over to your host, Tristan Van Strien, Director of Investor Relations, to begin. Please go ahead, Tristan.
Raoul-Tristan Van Strien: Thank you, Sami. Good morning and afternoon, everyone, from Amsterdam. Thank you for joining us for today's live webcast of our 2025 half year results. Your host will be our CEO, Dolf van den Brink; and our CFO, Harold van den Broek. Following the presentation, we will be happy to take your questions. The presentation includes forward-looking statements and expectations based on management's current views and involve known and unknown risks and uncertainties, and it is possible that the actual results may differ materially. For more information, please refer to the disclaimer on the first page of this presentation. I will now turn the call over to Dolf.
Rudolf Gijsbert Servaas van den Brink: Thank you, Tristan. Welcome, everyone. We delivered a solid first half of the year in a turbulent world, whilst progressing on our multiyear strategy, EverGreen '25. We will update our progression on EverGreen at our upcoming CME in October. But before we delve into the results, let's start with a brief reminder of our strategy, which continues to shape our business and how we think about this going forward. Our ambition is to deliver superior and balanced growth to consistently create long-term value. We do this with a clear focus on 5 strategic priorities embedded in the business as indicated on the left. These priorities propel the flywheel of our growth algorithm with at the top, first and foremost, growth. We are targeting superior and balanced growth, both volume and value growth. Growth enables gains in productivity and this, in turn, fuels resources for investing in further growth and profitability. This half year, we continue to deliver on our Green Diamond. We delivered top line growth, continuous productivity, initiated our EUR 1.5 billion share buyback program and made progress against our ambitions on sustainability and responsibility. Let's take a closer look at our key highlights of the year. First and foremost, we report strong profit growth in the first half of the year, supported by our global footprint, especially by APAC and AME. We delivered volume growth improvement in the second quarter, continuing to be of high quality and despite some softer markets and one-off events. We're making sustained progress on our EverGreen journey, investing behind our brands and digital transformation to ensure quality growth for the future. Looking ahead to the second half of the year and despite macroeconomic challenges, we confirm our guidance for the full year operating profit (beia) next year to grow organically in the 4% to 8% range. So let's take a closer look at our financial highlights. Net revenue (beia) grew 2.1% organically versus last year. Net revenue per liter (beia) grew by 3.3%, whilst total beer volume was down by 1.2%. The good momentum behind the Heineken brand continues with 4.5% volume growth. Operating profit (beia) grew by 7.4%, and our operating margin was 14.3%, up 26 basis points. Net profit (beia) improved in line with OP by 7.5% with the growth coming mainly from the strong performance in operating profit. Diluted EPS (beia) landed at EUR 2.08 for the half year, and Harold will cover this in more detail later. Volume trends improved in the second quarter, and we ended the first half down by 1%. The quality of our volume, our effort continues to be high. Mainstream brands grew and outpaced our total portfolio, led by the big brands in some of our biggest markets, including Kingfish in India, Larue Smooth in Vietnam and Amstel in Brazil. Our premium brands grew at almost 2% across our regions, especially the Kingfisher Ultra franchise in India. And of course, led by Heineken, up 4.5%, growing double digits in 27 markets, most notably in Nigeria and very broadly in APAC, led by China and Vietnam. Heineken 0.0 was stable, below the usual high rates what we have come to expect something to which I will come back to you later. Our price/mix was strong in the first half, up 3.7% on a constant geographical basis, together with the high-quality volume performance. This resulted in a 2.1% net revenue increase, leading to the 7.4% operating profit growth. Let's discuss next, the regions. First, Africa and Middle East, where we achieved volume growth and are successfully rebuilding profitability. Net revenue grew organically by 19.8%, with 1.1% volume growth and a strong price/mix of 20.7%, pricing ahead of inflation in most markets. Operating profit doubled as we benefited from a transformed cost base and strong revenue growth. Notably, in euros, operating profit (beia) grew over 50%. In Nigeria, we reshaped the business over the last 18 months following the devaluation of the naira, taking out costs, restructuring the balance sheet and transforming the brand portfolio. Macroeconomic conditions are back to relative stability, though the consumer sentiment remains subdued and inflation stubbornly high. Nevertheless, we performed ahead of the market as our premium portfolio accelerated led by Heineken Desperados and Legend Stout. We now have over 40% share in Stout in Nigeria. At Heineken Beverages, there has been sequential improvements following actions we have taken. In South Africa, beer volume and market share stabilized towards the end of the first half, led by Amstel. Bernini continued its very strong growth in the RTD segment. We are pleased with the trajectory of improvement, but also conscious that there's still more to do. Namibia, Kenya and Tanzania performed strongly, leveraging the advantages of our broad alcoholic beverage portfolio. Elsewhere in Africa, we have seen strong growth in Ethiopia with brands such as Bedele and Harar supporting us to extend our market-leading position. As we indicated earlier in the year, we unfortunately lost control of our operations in Bukavu in the Eastern Congo as the security situation in the country deteriorated. We're focused on ensuring the safety of our employees. On to the Americas, where our business showed resilience. Net revenue declined 0.8% and beer volume was down 1.2% in the first half, but positive volume growth in the second quarter. Price/mix was slightly down. Operating profit was down 2.3% as we cycled our large step-up last year. In Mexico, beer full grew low single digits and expanded broadly in line with the market. We continue to invest in our channels and production footprint as our 17,006 stores boosted our revenue growth, and we started preparations for our new brewery in Yucatán. Our resilience in the first half was broad-based across the portfolio. Amstel Ultra and Miller High Life led the growth in premium, both expanding by a double digit. India grew by a high single digit, continuing to celebrate Mexican heritage, Tecate Original and Dos Equis delivered solid growth. In Brazil, after beer volume declined in the first quarter, as we rebalanced and reduced excess inventory, we returned to growth in the second quarter. Based on sell-out data, we captured some significant market share in the first half, while seeing a softening in the market towards the end of the half. In the growing premium segment, both Heineken and Eisenbahn delivered growth. I was also pleased to see Amstel sustaining its momentum with growth in the teams. Our new 5 million hectoliter brewery in Passos is on track to open in the next quarter. The U.S. continues to be a challenging environment for beer. The recent tariffs impact our business, particularly expected in the second half of the year. Despite an overall weaker market, Heineken 0.0 accelerated its momentum with double-digit growth. Moving on to APAC, where we posted both on all metrics as our key markets performed strongly in the first half of the year. Net revenue grew by 5.5%, beer volume by 3% and price/mix by 4.5%. Operating profit increased by 11%. In Vietnam, the market has returned to growth, and our investment to expand portfolio and broaden geographical reach are delivering strong results as volume expanded by high single digit and net revenue grew in the teens. We gained share in both channels and across the portfolio. The Heineken brand grew volume in the 50s, led by Heineken Silver. Our mainstream brand portfolio also continued to grow with Larue Smooth growing in the 60s. In India, volume was up by a high single digit as our momentum continued, growing significantly ahead of the overall market and winning share in more states. The premium portfolio grew in the 30s, gaining share in the segment, led by Kingfisher Ultra and Ultra Max. In China, Heineken continued its strong growth trajectory in the premium segment. Volume was up in the 30s, driven by the strong momentum of both Heineken Original and Heineken Silver. Amstel volume more than doubled, becoming a significant contributor to the growth. With the expanding contribution of royalties and share of profits, the importance of China to our business is increasing. Lastly, Europe. Net revenue declined by 4% with beer volume declining 4.7%, mainly because of prolonged retail negotiations in Western Europe. Price/mix was positive, up 1.2%. Our operating profit growth declined by 5.2%. In the U.K., we continue to win market share in both channels, where our broad portfolio delivered share gains, including in the premium and cider segments. Cruzcampo continued its strong trajectory, building on the growth of last year. Murphy's Stout expanded, benefiting from distribution gains and new draught placements in the on-trade. In Western Europe, extended customer negotiations in Western Europe, particularly in France, the Netherlands, Germany and Spain impacted performance. These strategic discussions, aimed at preserving future sustainable category development, are now fully resolved, positioning us for sequential volume improvement in the second half of the year. As such, in France, beer volume declined, but recovered strongly in June as negotiations concluded. In addition, we saw a recovery of growth in the on-trade channel in several key markets. Elsewhere, the beers were down in Poland and Austria, leading to volume decline, the latter due to the invitation of a new deposit scheme, resulting in a sharp decline in the canned segment. In Switzerland and Romania, volume grew, led by the strong growth of global brands, Birra Moretti and Amstel, respectively. Our strategy in Europe remains clear. We're shaping the category and delivering value by investing behind our premium and mainstream brands, accelerating low and no leadership, fueling innovation as sharpening our revenue management capabilities, all while driving productivity to fund investments in growth. Moving on to brand Heineken, leading our portfolio. The sustained momentum behind the Heineken brand continue to pace. The innovations of Silver and 0.0 have been additive to growing the brand power and volume of Heineken Original. Heineken's growth continued in the first half of '25, adding another 4.5% of growth with 27 markets in double digits, most notably in Nigeria and APAC, especially in Vietnam and China. Heineken Silver was a strong contributor to the portfolio with 34% of growth, primarily in APAC. Heineken 0.0 was, as mentioned earlier, flat, though returned to growth in the second quarter. The U.S.A. and also Canada delivered strong growth, and we continue to expand into the on-trade. However, it was offset by the temporary actions of inventory adjustments in Brazil and the impact of customer negotiations in Europe. Our strategic intent is to continue the growth as we lead and shape the 0.0 category. Let's call out another hero within the Heineken portfolio, Amstel. It's our second largest brand in our portfolio and one of the top 5 global beer brands. In the first half, Amstel grew by high single digits with over 10 million hectoliters sold globally in the first half of '25. Amstel is leading the charge for us in the affordable premium segment as a quality beer for quality bonding moments. The brand is sold in all regions in over 30 markets, growing double digits in 15 markets, including a doubling of the volume in China in the first half. Brazil has been leading the charge over the last years with the scale to partner with leading sponsorship platforms, including the CONMEBOL Libertadores, the biggest football tournament in the Americas. We have created a repeatable model with innovation being core to Amstel as a global brand with local relevance. This is exemplified by the successes such as Amstel Grande in India, Amstel Ultra in Mexico and Amstel Oro in Spain with more to come. Also an update on our sustainability strategy, Brewing a Better World, where we are progressing across all 3 pillars. In our ambition to achieve net zero carbon in Scope 1 and 2 by 2030, we continue to make progress during the first half of the year. For example, we agreed new Power Purchase Agreements in Italy and Nigeria and installed an industrial electrical boiler in Zoeterwoude brewery in the Netherlands. On our journey towards healthy watersheds, we improved water efficiency across all our breweries. We have been named the Water Basin Champion for The Rio Bravo/Grande Basin in Mexico. On the solar pillar, we achieved our target to have at least 30% women in senior management roles, and we continue to strengthen our pipeline talent to ensure equal performance-based opportunities. On responsible consumption, as category leaders, we continue making good progress on our ambition to normalize moderation. A recent Nielsen survey revealed Heineken being identified as the #1 drinks brand encouraging responsible consumption. To further strengthen this connection, we took our partnership with Formula 1 to the next level when Heineken 0.0 making an appearance in the F1 The Movie with Brad Pitt. Lastly, while we remain focused on delivering strong results today, I'd also like to offer a brief glimpse of what ahead at our upcoming CME in Seville, Spain. We will present the next step in our journey, future-proofing Heineken, EverGreen 2030. Our #1 priority will be on growth, showing progress and latest plans to continuously strengthen our advantaged footprint and shape our brand portfolios with bigger and better brands and innovations. On productivity, we have delivered over EUR 3 billion of gross savings and are now making the next step building more advanced capabilities to take better advantage of our scale and also step up our focus on capital efficiency. We're making the business future fit, implementing our digital backbone as we transform and digitize our organizational model while preserving what makes the Heineken culture unique and magical. I look forward to expanding on these topics at our upcoming CME in October in Seville. And now over to Harold.
Harold P. J. van den Broek: Thank you, Dolf, and good day to you all. Let me take you through the main items of our financial results. Starting with our top line performance for the first half of 2025. We posted an organic revenue growth of EUR 380 million or 2.1%, delivering EUR 14.2 billion of net revenue (beia) driven by positive price/mix and with a slight negative volume growth. The total consolidated volume decline of 1.1% reflects the decline of minus 2.4% in quarter 1 followed by a sequentially better second quarter at broadly flat volume with 3 regions in positive volume growth. Europe beer volume was down for both the quarter and the half by a mid-single digit affected by a prolonged and now fully resolved customer negotiations, as Dolf just indicated. The underlying price/mix for the first half year on a constant geographic basis was 3.7%, with pricing at 2.6%, almost entirely led by the Africa and Middle East region as we price for inflation and foreign exchange-related cost increases. Overall, net revenue per hectoliter increased by 3.3%. Currency translation had a major effect, reducing reported revenue growth (beia) by EUR 918 million, mainly because of the euro strengthening against most currencies significantly in the last 6 months. The consolidation effect primarily reflects the impact of our suspended operations in the Democratic Republic of Congo. Moving on to Slide 17. We delivered EUR 2 billion of operating profit (beia), growing 7.4% or EUR 155 million organically, taking the operating profit margin (beia) to 14.3%, up 26 basis points versus last year. Good to mention we ended up at the upper end of our expected range due to strong sales in June and for now limited impact of trade tariffs in anticipation of which we accelerated savings projects. Gross savings reached over EUR 300 million this half year. Given the sizable movements across regions, let me share some key drivers. The region Africa and Middle East was instrumental in delivering the profit growth. To unlock the potential of this complex region, we must navigate risks, yet act on the significant opportunities we see. Across markets, we adjusted the portfolio mix to specific global conditions, leveraging both premium and mainstream brands. We accelerated revenue margin management initiatives, stepped up route-to-market grips supported by digital solutions and continue to lean in heavily on growth savings to drive productivity, transforming the cost base. This, combined with restrained upfront investment, led to an operating margin expansion of close to 400 basis points. The biggest contributions came from Nigeria, Ethiopia and Heineken beverages. APAC delivered double-digit operating profit growth, led by Vietnam and India, an excellent performance of our 2 largest orders in that region. In Europe, continued gross savings in variable and fixed costs from our productivity programs largely offset the impact of significant volume deleverage for reasons detailed before. For the Americas, it's good to bear in mind that in the first half of 2024, we recorded 37% operating profit organic growth. So we are comparing to a high base. This half year is reduced by 2.3% organically, in part driven by a suppressed U.S.A. beer market and a one-off cost related to inventory reduction in Brazil to improve customer and portfolio mix going forward. As Dolf already pointed out, sell-out remained strong, and we continued to gain share in Brazil throughout the first half of 2025. Volume growth also was restored in the second quarter. Our variable cost per hectoliter increased organically by a low single digit as lower commodity and energy costs in Europe and the Americas were offset by a double-digit increase in Africa and Middle East, inflation and ForEx driven, in particular, affecting Nigeria and Ethiopia. Marketing and selling investment was up 23 basis points compared to the first half of 2024, reaching 10.1% as a percentage of net revenue (beia). This supported our market share momentum with over half of our markets growing or holding share. Consolidation changes had a negative impact of EUR 16 million (sic) [ EUR 6 million ] and the transactional currency effect was significant at EUR 190 million negative, mainly again from the euro strengthening against our major foreign currencies. Let me now turn to other key financial (beia) metrics. Our share of net profit (beia) from associates and joint ventures grew 3.7% organically, led by our partners in China and CCU. Net interest expenses (beia) decreased organically by 5.8% to EUR 260 million, with an average effective interest rate similar to last year. Other net finance expenses (beia) amounted to EUR 104 million, an organic decrease of 27.5%, mainly caused by cycling the currency devaluation in Nigeria during the first half of 2024. Net profit (beia) increased by 7.5% organically to EUR 1.64 billion, with the positives above largely offset by higher noncontrolling interests, notably in Vietnam, Nigeria and South Africa. The effective tax rate (beia) was 28.9%, similar to last year first half. The major currency translation impact of close to 9% more than offsets the strong net profit (beia) organic growth. This leads to an organic EPS (beia) decrease of 3.1%. Now on to capital returns. As per our practice, the interim dividend is fixed at 40% or the total dividend of the previous year, leading to an interim dividend of EUR 0.74 per share, up 7.2% versus last year. We initiated and are making steady progress towards our EUR 1.5 billion share buyback program. Our net debt-to-EBITDA (beia) ratio ended at 2.3x for the half year, below our long-term target of below 2.5x. Let me now turn to the operating -- to the free operating cash flow. We recorded a free operating cash inflow for the half year of EUR 257 million compared against the very strong inflow of EUR 655 million last year, a delta of EUR 400 million. Let me go through the main drivers. Cash flow from operations was EUR 142 million less than last year, mostly driven by foreign exchange and largely related to the strengthening of the euro against the local currencies of our key markets. The working capital movement was lower by EUR 152 million after the significant improvement of EUR 750 million we managed to achieve last year. We expect this to balance out in the second half. On payables, we made progress as we continue to improve our position through structural initiatives. On both receivables and inventories, we had several one-offs, therefore, nonrecurring items. Late trade replenishments in Europe following the conclusion of customer negotiations, the customer inventory reduction in Brazil and promotional phasing in South Africa to call out 3. Last, CapEx was up EUR 144 million, which is purely project-related timing. Investments were, for example, in our new Passos brewery in Brazil, with our first brewer expected in quarter 3 this year, and we opened up our new R&D center in Zoeterwoude in quarter 2. We also continue to invest behind our D&T infrastructure as we prepare for a 12 market rollout of our digital backbone early next year. We reconfirm our previous stated full year guidance on capital expenditure. And as a result, we expect free operating cash flow to be materially better in the second half of the year, returning to a normal average for the year 2025 as a whole. Before going to the outlook, a reminder that our EverGreen strategy sets out to deliver superior balanced growth with consistent long-term value creation. Near term, we anticipate ongoing macroeconomic challenges that may affect consumer spending, including softening sentiment in Europe and the Americas, inflation pressures and the impact of a weaker U.S. dollar. Hyperinflationary risks remain in Africa, for instance, Nigeria continues to be on the watch list. We now expect volumes for the full year 2025 to be broadly stable with some rebalancing across regions, showing the advantage of our global footprint. We expect a positive price/mix, leading to a continued positive net revenue growth. We update our gross savings outlook with clear line of sight of initiatives, we raised our ambition from EUR 400 million to over EUR 500 million for 2025, helping to offset lower volume, maintain a competitive level of marketing and selling investment, which we expect to increase for the full year versus the full year last year and finance our digitalization agenda. Following our solid operating profit delivery in the first half of the year, we expect the second half to be a bit more affected by import tariffs into the U.S.A., higher transactional exchange rate impacts in the Americas and in Africa as favorable hedges are rolling off. All in all, we reaffirm our expectation to grow operating profit (beia) organically in the range of 4% to 8% and expect net profit to grow broadly in line. To summarize, we report solid profit growth in the first half of the year with an improved volume trajectory into quarter 2. Our broad geographical footprint is supporting us as some markets experience a softer consumer environment. We remain long-term focused, yet are making sharper footprint and portfolio choices as we future-proof our business. All in all, we confirm operating profit (beia) to grow organically in 2025 in the range of 4% to 8%. And as Dolf said, we are excited to host you in October on our Capital Markets Day in Seville. We will share with you more detail on our multiyear journey towards EverGreen 2030. With growth as our #1 priority, building a strong footprint and portfolio, a step-up in productivity and a future-proof, more digitally enabled and more productive organization, we are looking forward to it. With that, happy to take your questions.
Operator: [Operator Instructions] Our first question is from Edward Mundy from Jefferies.
Edward Brampton Mundy: So one question and one follow-up, please. So volumes improved sequentially in Q2 versus Q1. And guidance implies further improvement into the second half. Could you perhaps provide a bit of color as to what gives you confidence why H2 volumes should be better than H1? And then my follow-up is on the profit side of things. You've delivered pretty strong profits in the first half despite Europe and the Americas hitting a bit more of a bump. How are you operating the business differently versus history? Could you perhaps provide some examples of increased agility that's allowed you to deliver on that 7% organic EBIT growth?
Rudolf Gijsbert Servaas van den Brink: Thanks for your questions. Let me take the first one and Harold, if you can take the second one. So on the volumes, and we saw a sequential improvement in the second quarter. Beer volume was down 0.4% with growth in 3 regions. And in total consolidated volume, which is becoming more relevant since the Distell acquisition, we were broadly flat in the second quarter. Importantly, key markets like Mexico and Brazil were up in the second quarter. Europe was better, but still in decline as we were still facing these prolonged customer negotiations, which have now all been concluded. Importantly, for example, in June, also on the back of good weather, we saw strong performance in the on-trade channel, both in share, but also in absolute volumes. And we do expect better volumes consequently in the second half in Europe. The APAC region is performing very, very well. High single-digit growth in India, it's both market and share. High single digit in Vietnam, it's both market and share. With Vietnam, we need to be a bit cautious on Q4 because we had an early Tet last year, but now we will have a late Tet. So some of the volume will shift into Q1. But underlying, we see strong volume momentum in the APAC region as well as in the AME region, where a critical market like Ethiopia bounce back to growth. We're getting very good revenue and profit growth in Nigeria, but there, we are deliberately managing for euros and volume a little bit softer. And we're starting to see sequential improvement in South Africa, very important where we start seeing the beer business, which is crucial, stabilizing in the second quarter with a good exit. So I think -- and that was also one of the key things we tried to emphasize in our release and that the diversity of our global footprint is very important where we are quite agile across our footprint, taking advantage of the market where there is momentum. We're seeing good market share results with more than half of our markets growing share. And we're also really, as always, focused on the quality of that volume growth, where economy volume was down, but mainstream volume was up in the first half. Premium beer was up a bit more and global brands like Heineken and Amstel growing in the mid- to high single digit. So that's a little bit of a flavor across our footprint and the quality of the footprint. And indeed, we do expect volumes to be better in the second half compared to the first half.
Harold P. J. van den Broek: Yes. And on your second point, Ed, the agility and planning, I think there are 3 main differences to call out versus prior practice. It starts with all expect the unexpected. And therefore, we are really starting to move from almost like fixed one plan, one execution to really look at different scenarios and also pay attention to things that might happen or might not happen. And this could be related to excise, it could be related to tariffs. So we're taking more variables into account in anticipation, less rigid planning, therefore, is the first point. The second point to call out is that we have good visibility, as I now repeatedly say on productivity savings, but they're not all being committed upfront. We hold some in reserve for these scenarios and events that I just talked about. And the third very big important shift that we've made is that we are more agile in resource allocation these days than what it was before. So when people in markets found savings, it was free to spend in that market. And these days, we're really looking as to Dolf's point, which brands, which markets can we dial up so that, for example, we can invest behind the acceleration in Vietnam, if we see some softer markets in Europe, for instance. And that helps with the agility in planning and balancing out, both in terms of growth, but certainly also in terms of profit delivery.
Operator: Our next question comes from Sanjeet Aujla, UBS.
Sanjeet Aujla: A couple from me, please. Dolf, please, can you just give us a little bit more clarity on your volume expectations for Europe in H2? So with the retailer disputes now resolved, is it reasonable to get back to stable or slightly growing volume in the region? And in that context, what have you seen so far in July in Europe, please? And my follow-up is just, again, on Europe. Is there something you structurally need to change in terms of how you manage your retailer relationships so as to avoid something like this happening again? And if so, what sort of changes are you making?
Rudolf Gijsbert Servaas van den Brink: Thanks, Sanjeet. I know everybody would love to have a very detailed number on volumes in Europe in the second half. For us, the third quarter is going to be key. You all know how important July, August are for Europe. And so we rather see through how volumes are responding there. But for sure, the weather has been helping so far. And again, we see that reflected in on-trade trends, which are materially better in the first half than our off-trades, the off-trade being impacted by those retail negotiations. And again, we do expect an improvement. But at this point, out of caution, we refrained from the specificity of a number. On the retail negotiations, over the years, we have seen more and bigger European retail alliances come to [ Ford ]. We have seen increased aggressiveness there. And first, as one of the leaders in FMCG in Europe, it was very important to fight for a couple of key principles, and one principle being retaining and defending our ability to pass on at least a portion of the input cost inflation. What was in play negative pricing, which is something that we, yes, simply cannot allow for the long-term financial health of the sector. And the good thing is if you look to the first half, even under difficult market circumstances, we're able to deliver 1.4%, 1.5% revenue per hectoliter in the first half. That is absolutely key. And that's why we decided to fight longer to really make sure that we didn't have to concede on key principles. And by now, all the deals have been concluded. There's nothing open, and we are happy with the outcome. And we believe this was something to the benefit of the long-term health of the category. Now there's no guarantee that there is no other disputes down the line. But this is for the first time in many years that we ended up in this situation, but we were quite deliberate in seeing it through. And again, we believe our revenue per hectoliter performance in the first half is proof that, yes, we are trying to do this the right way. Thanks, Sanjeet. I think that covers both your questions, right?
Sanjeet Aujla: Yes.
Operator: Our next question comes from Mitch Collett, Deutsche Bank.
Mitchell John Collett: Can you give us a bit more color on what you're seeing in both Mexico and Brazil, specifically interested in the health of the consumer, health of the category, your market share trends? And I guess what you're doing to improve performance given what you've said about some headwinds from -- within those 2 regions? I think that's 2 questions. So I'll stop there.
Rudolf Gijsbert Servaas van den Brink: Okay, Mitch, thanks for your question. Very happy to see volume being positive in both Mexico and Brazil in the second quarter. Quite important to us, in Mexico, volume was slightly up, broadly in line with the market, positive revenue per hectoliter. So quite pleased with our performance in Mexico. Also in the context of other categories like soft drinks, we did see a softening in the overall market towards the end of the quarter that we have been able to navigate as well also with market share gains towards the end of the quarter. We feel that overall, Mexico is in a good place, and our strategy with a very broad brand portfolio and a broad channel mix with 6 as a critical strategic asset is kind of working out as we anticipated. Brazil has been a little bit more volatile for us on the sell-in particularly as markets were growing less fast than we originally anticipated. We're sitting on too much stock. We were cycling the stock up of the price increase in April last year. We had to flush that out in the first quarter, leading to negative sell-in volume. Very important and positive, in the second quarter, our sell-in volumes bounced back, that is key. And all through the first half, our market share gains and sell-out remained positive. Our strategy focusing on premium and mainstream premium with the Heineken brand and a portfolio of craft brands like Eisenbahn continue to be positive. Amstel, an absolute pivotable brand in the portfolio growing in the high single digits, even the low teens. And as such, again, we -- it's all about sticking to our strategy and agile in-market execution. Later in the year, our Passos breweries opening, as I said, 5 million hectoliters. So we're still optimistic about the mid- and long-term prospects for markets like both Brazil and Mexico for that matter.
Operator: Our next question comes from Olivier Nicolai, Goldman Sachs.
Olivier Nicolai: I got 2 questions, please. So first of all, volume seems to be accelerating throughout the quarter in many places like Brazil, South Africa and Europe, while you also increased your cost savings target. So what prevented you today from narrowing or even increasing the guidance at organic EBIT level? And secondly, a bit more long term, but on -- what's the midterm estimates for 0.0 penetration in Europe and the U.S. without obviously this cannibalizing your beer volumes? And could areas like Middle East, for instance, offer some material opportunity for the group on the back of 0.0?
Harold P. J. van den Broek: Yes. Let me start with the first, and of course, Dolf will happily take the second. Fully understandable question, Olivier, in terms of this volume progression that we sequentially see and an improved cost savings target, why is the second half of the year still not changing the guidance range? I think there are, frankly, 3 important factors other than, let's call it, the more general sentiment that we remain cautious about as we specifically called in the outlook. The first is that we really see that the tariffs, of course, have a disproportionate impact in quarter 2 -- sorry, in the second half of the year versus the first half of the year, where we had a very benign impact only the fact that there was a tariff pause in a way to April and hardly any tariffs that were really announced. So that is a very big shift between the first half of the year and the second half of the year. The second main factor is that I called previously that we had a number of quite advantageous transactional ForEx exchange hedges that were in play, both in Mexico and Brazil, and they are rolling off in the second half of the year. That has a significant impact because, as you know, these are large markets for us. The third is also a simple small detail, but an important one, and that is the debt phasing this year. It falls really into 2026, and we had that comparator in our last year's base. Now the last remaining point as you will have seen, the pricing impact that we've taken in Africa this year and we were basically significantly covered in terms of our raw materials already early on. So we took pricing in line with inflation and foreign exchange devaluation, but the replenishment of materials is now at higher value in the second half of the year. So also in Africa, that 100% operating profit organic growth will not repeat itself in the second half of the year. I know there are quite a lot of moving parts, but that probably explains why the guidance remains as it is.
Rudolf Gijsbert Servaas van den Brink: Yes. And again, 4% to 8% operating profit guidance, that's something that we stand by and what's important to reiterate. On your question, Olivier, on 0.0, we really believe this is a long-term trend and it was ignited back in 2017 with the global launch of Heineken 0.0. We see continued momentum and growth for Heineken 0.0, a key market like the U.S., which is hypercompetitive with countless 0.0 brands being launched in the year-to-date under very difficult market circumstances. We see Heineken 0.0 still growing even in the double digits. In Europe, there's a couple of technical factors that impacted particularly the first quarter. But in the second quarter, globally, we had growth on 0.0, including in Europe. And again, it is deep cultural change in a way. We are investing a lot of marketing in destigmatizing drinking Heineken 0.0 in social occasions. That's why we are deploying the Formula 1 platform, including F1 The Movie with Brad Pitt behind this. We see -- on the upper end of the spectrum, we see markets like the Netherlands and Spain, where 10% of beer market is already 0.0, Germany in the same. On the average in Europe, it's 5%. So if only the U.S., Brazil, Mexico and a couple of other markets would just move to the current level of Europe, it would give us tremendous double-digit growth for years to come. As to the cannibalization, we see proof that the majority of this volume is incremental. This is really either lapsed consumers who stopped drinking alcohol because of health, age or other factors and will kind of return to the brands. We see existing beer drinkers for which this fulfills new occasions like lunch or a Monday evening, for example. So in the aggregate, it's very healthy. It's very complementing and it comes at good margins. We continue to be the global market leader. And by all means and purposes, we intend to stay the #1, and we keep launching new 0.0 propositions across our portfolios globally.
Operator: Our next question comes from Celine Pannuti from JPMorgan.
Celine A.H. Pannuti: My first question is on Europe. I think you mentioned earlier that you expected organic profit to be flat in Europe. Now with H1 being down 5%, what is the outlook for the year? Are you still expecting to be flat? And more broadly, if I look into the midterm, what kind -- what do you think should be seen as the key driver for profit growth in Europe, which has been now pedestrian for a couple of years? My second question is on Americas. So there are a few headwinds that you are mentioning in the second half of the year, the FX, the tariff impact. You had a tough comparative in organic profit in the first half, but do you expect any profit growth in the second half of the year in that region? And are you raising prices in Brazil?
Rudolf Gijsbert Servaas van den Brink: Harold, do you want to start, and I will complement?
Harold P. J. van den Broek: Yes. So indeed -- so your questions are all related to, let's call it, the profitable growth algorithm that we're trying to get in Europe. And I think what Glenn would say is that in order to grow Europe, we have to make sure that we are bringing consumers back into the category through innovation and building fantastic and very strong brands. And that's why it's also important that we keep on investing in the category, both in off-trade as well as in on-trade. But Dolf explained earlier today, we do that the right way, not by balancing, making sure that category and the beer category is affordable, but at the same time, that we're able to pass on certain levels of price increases so that we remain that we have the ammunition available to us to continue to invest in innovation, like, for example, the Cruzcampo launch in the U.K. Now that all comes with an obligation to drive productivity extremely hard. And this is what we also do. So with a sequential improvement in volumes in Europe, you will also see a sequential improvement in profitability in Europe. Whether that lands as before, what I said in recovery of profit in Europe to absolutely 0, that I don't know. There is a lot dependent on the volume trajectory, but also important to remain investing in category, but that is something that we are aspiring to. The return to better profit is, therefore, a factor of 3 things. The first is how do we return to growth in Europe, as we just said, with better innovation and better brand building. Secondly, in order to premiumize so that we get positive mix effect. And thirdly, to drive productivity in order to really see that volume growth and the premium growth coming through bottom line. That's basically what we're trying to do in Europe over time. It will not happen overnight, but certainly sustainable efforts will be made to get there.
Rudolf Gijsbert Servaas van den Brink: On the Americas in second half profit growth? Do you want to comment?
Harold P. J. van den Broek: Yes. On the second half, as I just indicated also there, we expect also improvement in the Americas in the second half, although what will be impacting us is the offset of that is the import tariffs as well as the favorable hedges that are rolling off. So also there, I think we need to be a bit cautious with profit growth in the Americas in the second half.
Rudolf Gijsbert Servaas van den Brink: But there will be profit grow in the second half.
Harold P. J. van den Broek: Yes. I think what's important to emphasize because we fully understand the spirit of the question. It's a volatile world, and there's a lot of ups and downs across the footprint. What we're really trying to do is be agile. There are things that we anticipated. There are things that we have not anticipated that we are trying to be very agile responding to. We try to make sure that we keep investing in our brands, that we keep investing in innovation, that we keep investing in capacity and to make sure in the end that across the footprint, it works. And again, as such, 0.4% volume decline in the second quarter. Also in the context of, for example, soft drinks showed pretty decent. Of course, total consolidated volume almost flat, getting revenue per hectoliter in 3 out of 4 regions. And we're really trying to leverage the diversity of the footprint to make it work in the aggregate. And that's why reiterating the 4% to 8% is absolutely key. That's the line in the sense and we will make that work in the aggregate.
Operator: Our next question comes from Simon Hales from Citi.
Simon Lynsay Hales: So just a couple of quick ones, really some follow-ups. I mean just coming back to the Americas and Brazil, specifically, Dolf, obviously, you mentioned you saw some softness in the market at the end of the quarter. Can you just expand a little bit on what you think was driving that? Is that tariff related do you think? Is it broad-based across price points? Is it just sort of consumer sentiment driven? Any color or any further color there would be helpful. And then secondly, just on a couple of your smaller markets. Obviously, the DRC has become more challenging as we've moved through the year. How do we think about how big of a volume negative that was in Q2? And how we should we think about the drag of the problems there into the second half of the year? And at the same time, Cambodia has been a tough market for the last 12 months for you. Are you starting to lap through now some of those tough volume declines we've been seeing there?
Rudolf Gijsbert Servaas van den Brink: Yes. Thank you, Simon. So on the consumer, I think there are 2 sides to it, and not just in Mexico and Brazil, but I think that also applies to the U.S. and to Europe that on key fundamentals like unemployment as wage increases, disposable income actually across a lot of key markets that looks pretty healthy. It is more on the consumer sentiment that it looks soft. And I think it's a reflection of everything that's going on politically, geopolitically and across markets. As such, based on those fundamentals, we remain optimistic for the mid and the long term. And we try to be appropriately cautious in the short term to not be called out by surprise. And again, it's back to that point of resilience. You mentioned DRC. I would answer that in the aggregate. There's a couple of things that we could not anticipate or did not anticipate DRC was a negative. The tariffs and the amount of the tariffs was something that we didn't anticipate back in January, February. The length of the negotiations lasted longer, but we're really trying to take responsibility and make sure that we find offsets. And as such, delivering 7.4% operating profit, even while absorbing those anticipated negatives, that's exactly the kind of resilient execution that we try to drive across the company. And again, therefore, reiterating our profit outlook for the full year.
Operator: Our next question comes from Laurence Whyatt from Barclays.
Laurence Bruce Whyatt: The first one on Europe. We've seen quite a big improvement in beer volumes as a sort of share of throat in many European countries. And that's sort of different to a number of other countries where spirit has been taking share, particularly in the U.S. over sort of recent, say, decade. What do you think is driving that in Europe? Is there any sort of differences that are happening there that are not happening in the U.S.? Is this sort of a category getting its act together? It's a very strong branding. Why do you think European beer volumes are doing well, taking share of throats? And then secondly, you've had a good performance in Africa this last sort of few quarters. I'm just wondering of your appetite for inorganic expansion within Africa, if the right asset were to become available, would you take a look at it?
Rudolf Gijsbert Servaas van den Brink: Thank you, Laurence. On Europe, indeed, it's good to see a good momentum on the share of throat. By the way, if you look over the last 10, 20 years, the European markets have performed better in that regard compared to the North American markets where share of throat has been under pressure for at least 20, 25 years in a row. In Europe, we have seen less of that, partly explained by the Mediterranean markets, which are actually growing significant share of throat against the wine market. I think coming out of COVID, there was this bounce in spirits, but that has been unwinding now for, let's say, the last 12, 18 months. Also seeing good relative better performance in the on-trade in the year-to-date, which is positive and a good asset rate in the on-trade in June also on the back of positive weather. Again, we need to make sure that we see through the impact of this one-off negotiations, which will be gone for the second half of the year. And I think Harold also tried to emphasize that through all these twists and turns, we try to stay focused on the essential and the strategic priorities, which is investing in brands, investing in innovations, investing in premium. Premium and low and no are continuously doing better across the global footprint, but also in a market like Europe. You see them reflected in the global brands as Heineken and Amstel. So yes, we believe that in that dimension, the European markets are a bit more healthy. And again, also the reason why we keep investing in those markets. On Africa yes, Africa was extremely beneficial in our footprint during COVID. We easily forget that in 2021, we had strong performance in these markets, while direct -- the more mature markets suffered with COVID. Last 2 years triggered by these massive devaluations in key markets like Nigeria, Ethiopia, Egypt. Those markets suffered. We didn't waste a good crisis, and we're really intervened on resizing our cost structures, redoing our balance sheet, sharpening our brand portfolios. And so you see on the bounce back, whether it's Nigeria, whether it's Ethiopia, whether Egypt, you see us coming stronger out of the crisis. And as such, we remain long-term committed to Africa as also our acquisition of Distell and Namibia Breweries exemplified, and those are healthy markets and markets where we want to be in. You know by asking the question on the inorganic, I can't answer it. But we will always be on the outlook of strengthening our global footprint. We believe that our footprint and its diversity, it's balanced between developed markets and emerging markets, it's balanced across regions is a huge strategic asset. And every opportunity of bolt-on acquisitions or filling in certain white spaces, we would take a serious look at.
Operator: Our next question comes from Chris Pitcher from Rothschild & Co, Redburn.
Chris Pitcher: Can I ask a broader question on how you're managing the business? Because you talk a lot about the agility and you reiterate the 4% to 8% operating profit growth for the full year. But earlier to Olivier's question, that not change in the guidance means there's probably a 30% chance on the outlook that you'll be below 4% to 8% in the second half. And that doesn't sound like to me a business that has the agility to respond to factors like tariffs and currency movements and a Tet later phasing, all of which would have been known months and months ago, not in June, July. Should we think of it the 45 to 8% as an annual target and there will be intra-year volatility? And as a follow-on to that question, part of improving agility is the digital backbone. You mentioned you've rolled it out in Rwanda, Serbia and Egypt. I think you said earlier there were 12 markets in train for next year. But in the statement, you said it's not going to be done until 2028. Can you give us a sense of are you doing the big markets now? Is there an urgency to actually get this digital backbone in place to improve that visibility and agility? Or is it going to be a more gradual rollout process?
Rudolf Gijsbert Servaas van den Brink: Yes. Shall I take the first crack at it? I think it's important to state that we are not managing the business on a very narrow bandwidth on a quarter-by-quarter business. When we make that statement, it's for the full year outlook. Beer, given our global footprint, seasonality, weather impacts, currencies, there's always twists and turns. And what we want to make sure that in the aggregate for the year, we make it work. And so I don't think in any way, we want to suggest that on a monthly, quarterly, that it all stays within a very narrow bandwidth, we want to make it work across. And we feel that as part of agility and leveraging the global footprint. On the DBB, let me leave that on to you, Harold.
Harold P. J. van den Broek: So indeed, the digital bank, look, we're trying to get the balance right between the big markets and ensuring that there is sufficient benefit for the smaller markets as well, because what we're really trying to do is to bring a digital backbone to life that services the different varieties that we have across our business. At the same time, risk management is also a key factor because the operations in Mexico are very different and very different integrated than they are in Brazil or in Vietnam. The trade structures are different. The ways of working are quite different. All of this is what we're trying to converge and we want to do it right. So we do have a mix between a broad portfolio of smaller markets and some larger markets year after year between '26, '27, '28 to make sure that we reap the benefits of scale, but also do the fine-tuning so that the smaller markets can also operate. That's how we think about it.
Rudolf Gijsbert Servaas van den Brink: Yes. And by the way, I'm happy that you mentioned the digital backbone because this is such a strategic and critical project to future- proof the company, especially in a world of AI. It is long overdue, but harmonizing our core processes, data systems and future- proofing it in a more modular digital cloud-based way that's prepared for AI is absolutely key. So I find it personally actually quite exciting that in the next, what will it be 36 months across our global footprint, we were upgrading our systems. And we do it in a way, as Harold said, where we're trying to do it smart, where we spread it over time. We spread it over a big versus small markets to also mitigate an operational risk. And again, the 3 first markets give us confidence that we're on the right trajectory. But this is an absolute necessary investment for the future of the company, which will enable both on growth and productivity of all, yes, let's say, next generation of opportunities.
Chris Pitcher: I'm sorry to clarify, can you just quickly say which of the big markets is going to go first, Brazil, Mexico, South Africa, U.K., which are the big markets to go first?
Harold P. J. van den Broek: Yes. So in '26, we're going okay.
Rudolf Gijsbert Servaas van den Brink: I'm not sure we should review market by market. Sorry. .
Harold P. J. van den Broek: We almost did it.
Rudolf Gijsbert Servaas van den Brink: No, I think that is the prerogative of the executives. And again, we will make sure that from a risk mitigation point of view, we spread those big markets out.
Operator: Our next question comes from Andrea Pistacchi from Bank of America.
Andrea Pistacchi: I have 2 questions, please. The first one on Vietnam. So you had strong growth in the half year. You've stepped up investment to support this momentum you said. Can you talk about the health of the market and the consumer as we go into the second half, given geopolitics there? And is a reasonable portion of your growth now actually coming from geographic expansion as you're going into the central region? I asked this because I guess, geographic expansion would still be there as a driver even if the environment were to soften a little. And the second question is on South Africa. Beer back to good growth in Q2. It's been quite volatile in the 18 months. So you've alternated maybe a couple of difficult quarters for beer. We have a good one, but then it was tough again. So a bit up and down in terms of market share. So what gives you the confidence that the better performance in beer is more sustainable now? And what will it take to fix the wine and spirits business there?
Rudolf Gijsbert Servaas van den Brink: Yes. So thanks for the question, Andrea. Vietnam had a very tough '23. Last year, we worked incredibly hard of adapting to new realities, adapting geographically, channel mix, segment mix, cost structure, what have you. First of all, on the markets, the markets already, since the back half of last year, stabilized and then returned to growth. Year-to-date, we see not only off-trade grow, but we also see the on-trade market growing, so that's very positive. Even with all the geopolitical challenges, as you say, we have seen that continue. In that context, also good to see that Vietnam was one of the first countries to strike a tariff deal with the U.S., providing stability and clarity. On our relative performance, I think we are really adapting our portfolio, but also leveraging the strength of the breadth of our portfolio. Most of our competitors are single or dual brand operators, and we are having multiple brands across multiple price segments. Brand Heineken is absolutely on fire since the launch of Heineken Silver back in 2019. It is now the #3 market globally for brand Heineken, larger than the U.S., as an example. It is #3 behind Brazil and China, it's still growing in the teens. We're seeing the Tiger brand slowly, but surely stabilizing. We're seeing good growth on the mainstream portfolio, particularly with the line extension called Larue Smooth. So I think across premium, mainstream, different brands, we have been rebalancing. The markets have been adapting to a new balance between on-trade and off-trade, which we have been navigating quite successfully. And indeed, there are still, in certain geographies, especially towards the north, still a lot of opportunity for us. So across those dimensions, I think it's a good example of agile execution and also agile responding and adapting to new market circumstances. And I think that we are, by far, the largest share gainer in the year. we do see it from a consumer and market dynamic pretty positive and stable for the second half of the year, stable in sentiment, positive in volume, with only that caveat on cycling the debt loading of last year, but underlying feeling pretty good. Do you want to take South Africa, Harold, just to share?
Harold P. J. van den Broek: Yes, sure. So Heineken Beverages, right? Very, very still comfortable and very, very optimistic about the long-term prospects of Heineken Beverages. And we see that already coming through in some of the markets like Heineken Beverages International doing extremely well across different parts of the portfolio. Namibia, very, very strong performance this half year. And then on to South Africa, where your question is, do we believe that we are now confident in the stabilization of beer? You really see that we have worked or the South African team has worked extremely hard in getting the brand propositions, right? Amstel is now in growth. The Heineken returnable bottle is really doing extremely well. And that has led to a stabilization of market share in close collaboration, I would say, with our customers because we have really stepped up in terms of customer business partnering in terms of really making sure that outlet execution is really a high priority for us. So we believe that in quarter 2 is the first signal of step-by-step improvement and that is also how we talk about it. We don't want to declare victory overnight. We know that this is a super competitive market, but we do believe we've got the fundamentals now in place to continue this step-by-step improvement. By the way, Bernini drink is doing phenomenally well. So also, we shouldn't lose sight of the fact that this is a multi-beverage company, and this multi-beverage company can really innovate as well as we've seen with Bernini, which is a real growth driver for us and hopefully are able to expand to some other markets. Your specific question on wine. It's a very competitive category. And we know that in the first quarter of this year, we got the price/ mix architecture and pricing wrong. We're in the process of adjusting that. And we already see a much improved performance in quarter 2, but not yet where we need it to be. So that will take a bit longer to adjust.
Operator: Our next question will be the final one for today's call, and it comes from Trevor Stirling from Bernstein.
Trevor J. Stirling: Two questions from my side. The big questions have been answered. So hopefully, they're still valuable. Dolf and Harold, intrigued in Brazil, the weak volumes from the destocking in the channel, but also a negative price/mix, albeit a fairly modest negative price/mix. Maybe you could just give us a little more color about what's going on in Brazil and what the underlying dynamics are there. And then the second one, probably for Harold. Harold, you've mentioned about the Passos brewery coming on stream. Yucatán not far away as well. Does that mean we're likely to see a big step-up in D&A in the second half in the Americas and a little bit of pressure on margins in the Americas coming from that?
Rudolf Gijsbert Servaas van den Brink: Yes. On Brazil, indeed, as you note, Trevor, a difference between sell-in volume performance in the half year versus sell-out. On the sellout, we are pretty happy with ongoing and consistent market share gains driven by Heineken and Amstel and the rest of the portfolio. On the sell-in, indeed, we had to take out stock and also in the channel and customer mix have to make some adjustments in the first quarter. That has been one. And again, we saw volume bounce back in the second quarter on the sell-in, which is good and healthy to see. On the revenue per hectoliter, indeed, we took pricing up last year in April. But candidly, we burned our fingers as we were left hanging out last year. So now we have done it in July, which is confirmed, and we have taken our pricing in July in the mid-single digits. So in the remainder of the year, you will see a positive revenue per hectoliter in Brazil as it should be.
Harold P. J. van den Broek: Yes. And on the questions of the new breweries, well, Passos will go live, third brewers in quarter 3 this year. But the Yucatán brewery will take a bit longer because that's under construction as we speak. So indeed, we will expect some elevated levels of depreciation and amortization in the Americas, but manageable in that context. So I wouldn't want to overemphasize that point, Trevor.
Rudolf Gijsbert Servaas van den Brink: Thank you, Trevor, and I think we're coming to an end. Thanks for all your questions. Again, we're happy with solid profit delivery in the first half. We are happy to reiterate our profit outlook for the year. We're working hard to keep investing in growth, keep building those important markets, platforms like India, Ethiopia,, South Africa, Vietnam, Brazil, Mexico. And we're looking forward to see you all in Seville in October at the Capital Market event to further update you on progress and plans. And other than that, wish you all a lovely summer. All the best.