Heineken Holding N.V. (HEIO) Earnings Call Transcript & Summary

Good morning all, and welcome to today's Heineken Half Year 2026 Results Call. My name is Seb, and I'll be the operator for your call today. [Operator Instructions] I will now hand you over to Tristan Van Strien, Director of Investor Relations. Please go ahead.

Thank you, Seb. Good morning, good afternoon and good evening, everyone, from Amsterdam. Thank you for joining us for today's live webcast on our 2026 half year results. Your host will be our CFO and member of the Executive Board, Harold van den Broek. Following the presentation, we will be happy to take your questions, as Seth mentioned. The presentation includes 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 over the call to Harold.

Thank you, Tristan, and good day to you all. Let me take you through the results for the first half of 2026. First, a brief reminder of our Evergreen 2030 strategy. To create sustainable value, we focus on 3 strategic priorities: growth, productivity and future fitting Heineken. Growth is our #1 priority, and we build balanced sustainable growth through our global and local power brands and prioritize markets where we see the greatest long-term potential. . Productivity and capital efficiency are important enablers to fund the right growth investment, strengthen profitability and improve shareholder returns. And we continue to future-proof the business through digital NII enablement, sustainability and responsibility and creating the right organization and talent base. We measure our progress along the 4 dimensions on our Green Diamond in pursuit of attractive shareholder returns. The first half results show ample proof points of how execution of our strategy are delivering quality results. And let me, therefore, start with the highlights. We delivered quality growth with volume momentum improving through the half, driven by strong performances in the APAC and Africa-Middle East regions and recovery in Europe. Let me say upfront, we are not satisfied with our America results and the necessary actions are taken to improve that. Our total volume growth was driven by our 5 global brands and top 25 local power brands with our focused markets delivering more than double the Heineken average growth rate. Cash conversion was strong helping fund attractive acquisitions such as FICO, an increase in interim dividend and a continuation of our share buyback program. And we progressed with base on the Evergreen 2030 change priorities, innovation, digital and AI enablement, operating model simplification and Heineken Business Services. Profitability was robust, supported by broad-based productivity and leading to a margin expansion. We have reduced around 3,000 FTEs in the first half, materially advancing our planned organizational changes. We are confident in our strategy and progress, yet remain prudent given ongoing macroeconomic and geopolitical uncertainty, and therefore, reiterate our full year operating profit growth guidance of between 2% and 6%. Let's now turn to some numbers with the financial highlights. We delivered total volume growth of 1.6%, led by Heineken and with strong profitable contribution from license partners in China and India. Net revenue grew 2.7% on a consolidated volume basis with net revenue per hectoliter up 2.3%. Operating profit increased 6.7% with operating profit margin expanding by 55 basis points. Net profit was up 10.2% and diluted EPS came in at EUR 2.29, an 11.6% increase on a constant currency basis. The first half, therefore, shows balanced delivery, volume growth, value growth, profit expansion and stronger cash flow generation. The quality of our growth is visible across the portfolio, whereas total mainstream volume declined slightly with more work to do on that. And as an aside, mainstream grew in our focus markets. Total consolidated volume grew 0.4%, total volume by 1.6%, global brands by 5.3% and premium volume by 5.8%. A strong result also from Heineken 0.0, up 7.2% and beyond beer by 7.7%. And this is the balance we want, growing volume, improving value and allocating resources where we see the strongest long-term growth opportunity. The right side of the chart shows the operating leverage coming through with 6.7% operating profit growth and net profit growing double digit, and EPS, as Jens mentioned, ahead of that. Let's turn to our flagship brand, Heineken, which again led to premium growth of this half year with 5.3% of total volume growth and 18 markets in double-digit growth momentum. Heineken 0.0, as mentioned, grew 7.2%, showing the continued relevance and the long-term potential of the non-alcohol category, which in aggregate in our portfolio was up 7.5% in volume. The ongoing success of Heineken Silver continues, growing 34.5%, particularly in APAC, led by Vietnam and China. You've perhaps noticed the beautiful picture on the left of the expanded Heineken product family, now including our recent innovations, as we meet evolving consumer needs as the leading global premium beer brand. We launched Heineken 0.0 Ultimate in the U.S., 0 alcohol, 0 carb, 0 sugar as well as flavored 00 propositions and launched Heineken 3.5% ultimate in Brazil, a lower alcohol gluten-free proposition where consumers can enjoy everything you want in a beer and nothing you don't. We are proud that Heineken was named Creative Brand of the Year at the International Festival of Creativity, becoming the first beer brand to receive this distinction. The award recognized the strength of our campaigns, which build on the brand's purpose of bringing people together. The long-term sustained success of Heineken brand is no coincidence and that's why we are now having started to apply the Heineken brand model on our global brands to unlock their full consumer potential across our markets. Let's therefore, turn now to our global brands for a minute. We are pleased with the performance all in growth this half year, and in aggregate, delivered 5.3% volume growth. And a few highlights outside of the Heineken brand that I just touched upon. Amstel growth continued strongly led by China, Brazil and South Africa, and Amstel Ultra is now the leading Ultra brand in Brazil. Tiger returned to high single-digit growth, led by Tiger Crystal in Vietnam as well as strong consumer activations in Myanmar. Birra Moretti did well in Europe, particularly in Switzerland and France. And Desperados continue to build relevance with Gen Z consumers. More and more, we see the potential of this brand coming through in the markets. The consumer pool is obvious, and the common threat to unlock the potential is sharper focus, clearer brand governance, more disciplined resource allocation and differentiated execution across markets. Let's for a moment, double-click on this Desperados. Desperados is a good example of how we are recruiting consumers with our beyond beer portfolio. Desperados is our leading Gen Z brand in Beyond Beer. The proposition is built around flavor, variety and flexible social occasions, exactly the spaces where our consumers are looking for more choice and more excitement. There is an innovation model behind it. Beyond the core proposition, we are extending the brand into new consumer opportunities with Desperados Sunlight, which targets lighter alcohol daytime occasions and introduce more experimental concepts from our Consumer Experience Center, La Fabrica such as Freeze and Pico, Desperados Essen shot for a different kind of vibe, which our consumers were able to enjoy across festivals in the summer. The early proof points are encouraging. In the first half, Desperados grew high single digits, driven by strong performances in France, the Netherlands and Spain. In Africa and Middle East, the brand also grew strongly, led by Nigeria and Ivory Coast and supported by the recent launch in Ethiopia. Desperados is establishing a following, based on a repeatable platform, a distinctive brand, a clear Gen Z attraction, flexible flavor later innovations relevant from Europe to Africa with more to come. Innovation is how we bring growth and excitement into the category. It is beyond introducing products to consumers. We are systematically changing our innovation approach. With consumer relevant insights, we are developing, testing and executing faster with more discipline, focused pilots, speed learning and scaling what works. In the first half, we executed more than 40 pilots across global brands, local power brands and new growth basis. On Global Brands, examples include extensions on Heineken, including Ultimate 0.0 and new Heineken 00 flavors, such as nectarine Juniper and cold pressed lime. From Heineken Studio, we crafted Heineken with pills in the Netherlands, named Heineken Bloom the Bai in France. Our local power brands, we scaled innovations such as Crusco Civilian Orange, Kingfisher Smooth and Takata Titania. We innovate across channels and for new occasions. For instance, we introduced the old Mount flavor wave drought system that offers exciting consumer flavor choices yet does so efficiently for publicans in the on-trade. With Heineken Costa Rica, we acquired not only a great business, but also strong innovation capabilities, showcased by VIDA, a functional sugar-free nonalcoholic drink that we launched in the market. In the U.K., we are pioneering with outdoor brewing, 0.0 beer dehydrates with magnesium and vitamin C, low in calories and gluten-free, and we are innovating in the occasion in where else, Italy with our beautiful Sicilian brand, Beresin. As you see, we systematically accelerate innovation to respond faster to evolving consumer needs, exciting consumers with new experiences and scale what works with more discipline. On brewing a better world, we have sharpened the agenda around the areas where we can have the greatest positive impact and supports long-term sustainable growth in Heineken. On responsibility, we are increasing choice through low and no alcohol and continuing to invest in responsible consumption campaigns. On social impact, we are strengthening our diverse talent base and focusing on community impact with practical support for hospitality workers and entrepreneurs. On environmental progress, we continue to decarbonize our operations and improve water resilience, including additional water balance sites and renewable energy milestones in Europe. In all of these priority areas, we are continuing to make substantial progress towards our longer-term ambitions. If we now move to the regions, starting with Africa, Middle East, which delivered a strong first half with net revenue up 8.2%, total volume up 2.9%, a price/mix of 7% and an operating profit up 30.8% with hard currency profit, supported by a transformed cost base and stronger balance sheet positions. In Nigeria, we delivered broad-based growth and strengthened category leadership in what still is a challenged consumer environment. Through portfolio mix and strong cost discipline, operating profit grew in both local and reported euro currency. Heineken, Desperados, our star portfolio in Maltina, all maintained or strengthened their leadership positions. Heineken beverages continue to show multi-category progress. In South Africa, beer performed well, led by Amstel, now proud of the partnership with the legendary Orlando Pirates, but also with Heineken, contributing. Bernini remains strong in ready-to-drink, and the wine portfolio was stable. In Ethiopia, we continue to reinforce our leadership in 1 of Africa's fastest-growing beer markets. Revenue grew in the 30s with strong volume expansion led by Hara, Bedele and Heineken. And at Heineken, we have extensive experience in Africa. We understand the region has ups and downs, yet believe in the long-term potential of the continent. I mentioned this to emphasize that the strong regional performance we have now consistently seen for some time is driven by good foundations, category leadership positions, a strong brand portfolio, disciplined execution and the sustained benefit of productivity actions taken over the recent years. Then, on to the Americas. As said, we are not satisfied with our performance. Let me say that at the front and clearly, but we are also not structurally concerned. According to our data, consumer offtake in our 3 big markets was negative due to subdued consumer sentiment and macroeconomic drivers. In those, we lost some market share in the first half year. Net revenue was flat. Total volume declined 3.4%. Price/mix was positive at 3.4%, and operating profit grew 2.2%. So the regional story is 1 of getting back to share growth through disciplined execution in softer markets, and Alex and the American team are really all on to that. Let me give a few market specifics. In Mexico, volume was down in a soft market with our performance improving during quarter 2, setting us up for a better second half of 2026. Takata, our largest local power brand, remains the focus of commercial and marketing activity, supported by innovations next to India, our local heritage brand. Within premium, Miller High Life grew in the high teens. In Brazil, the category remained under pressure, down 3.6% for the first half of 2026, but trends improving during the end of the second quarter. Revenue grew low single digits driven by price mix. Operating profit expanded strongly through productivity initiatives and supply chain optimization following the opening of the brewery. We launched Heineken Ultimate 3.5%, a gluten-free, lower alcohol proposition with promising early results, while Amstel delivered growth and its Ultra variant continuing to lead in the Ultra segment. Costa Rica made a strong first contribution following completion of the acquisition on the 30th of January. Integration is ahead of plan, including synergy capture, and the business brings a strong portfolio and innovation agenda, as can be seen on the slide with the new Imperial Michelada. All in all, a mixed performance, yet one, we are confident to improve upon. The long-term potential of this region is undisputed, and we will continue to strengthen our portfolio and execution with appropriate investment to capture it. Asia Pacific delivered excellent results with net revenue up 10.5%, total volume growing 11.6%, a price/mix of 4.5% and operating profit up 17.7%. A quick obvious reminder that our strong China growth is not captured in our consolidated net revenue. Vietnam delivered record share in both the on and the off premise, driven by the portfolio strength. We saw mid-single-digit category growth, and our business momentum reflected a strong festive season in which our premium portfolio outperformed. We expanded national coverage, and Heineken Silver had another outstanding half year. The Tiger brand was back to volume growth led by Tiger Crystal. We also introduced Tiger Smooth, a 3.4% alcohol proposition built around a clear consumer need, a smoother, easy drinking lager that stays true to Tiger's Bold Spirit. India continued to build on its leadership in high-growth beer market. We grew total volume high single digit, as we leveraged our scale and national footprint as a market leader with premium growth led by Kingfisher Ultra and Heineken Silver. And in China, our wealth momentum continued, now 8 years in a row in great partnership. Our portfolio of Heineken Original Silver and Amstel grew close to 30%, and China remains the top 3 market contributor to net profit in the first half of the year. This is a good example of the quality of growth we are targeting, strong market positions, premium momentum and disciplined execution in high potential markets with discipline on cost and cash, a very strong value creation engine. Let me double-click on Vietnam and India because these are 2 strong examples of where our advantage positions in Asia Pacific are compounding over time. And starting with India, we are the clear leader at scale. We combined Kingfisher, India's strongest national beer brand, with international premium brands such as Amstel and Heineken, and we operate the broadest commercial and supply footprint in the beer industry. This nationwide presence, a balanced supply chain across owned breweries and long-term license partner brewers gives us a great platform as the category accelerates. The market is also benefiting from favorable consumer trends and a progressively more supportive operating environment for beer in several states, helped by Brewers Association's efforts to ensure quality operations and responsible category dynamics. We are investing behind that opportunity through premiumization, refrigeration and commercial execution at scale, supported by greenfield investments such as in Andhra Pradesh. In Vietnam, we are on track to build broad market leadership. The business now has record market share across both on and off-premise supported by national coverage and a differentiated portfolio across premium, mainstream and value. Innovation and execution are also contributing with Tiger Revitalized and stronger participation across locations and price points. Both markets show how stakeholder engagement, brand strength scale, route to consumer, supply chain and disciplined investment can compound over time to unlock real market potential. Turning to Europe now. In Europe, results recovered, supporting by strong activation, innovation and transformation. Net revenue over the first half of 2026 was up 0.1%, while total volume declined 0.6% and price/mix was flat. Operating profit grew 0.6%. Perhaps worth pointing out, improved momentum in quarter 2 with volume positive 0.2% and revenue up 1.6%. In the United Kingdom, our system strength drove volume and revenue growth. We grew market share in the off-trade. And in the on-trade, our star pubs continued to outperform the broader pub market, while Cruzcampo, Murphy's, Fosters and our premium cider portfolio supported its momentum. In Western Europe, customer partnerships and innovation helped rebuild momentum. France delivered mid-single-digit volume growth, as weighted distribution recovered from the retailer dispute last year with innovation and strong summer activation supporting the growth. Finally, an efficient operating model and cash delivery remained important components to sharpen Europe's value creation model. The setup of multi-market organizations is helping simplify our business, supporting scale and productivity. Strong discipline on cost and gas conversion also supported the region's performance. Now, let's go through the financial highlights, which I keep briefly, relatively brief. Starting with net revenue. We delivered 2.6% organic net revenue growth, reaching EUR 14.8 billion in the first half. On the bridge, consolidated volume growth contributed EUR 57 million, and price mix, EUR 328 million, resulting in EUR 385 million of organic revenue growth. Consolidation changes added EUR 325 million, mainly reflecting the acquisition of Heineken Costa Rica, partly offset by a EUR 57 million currency translation headwind. Net revenue per hectoliter increased 2.3%, reflecting disciplined revenue management and positive mix. Growth was led by Asia Pacific and Africa-Middle East with Europe broadly stable and the Americas flat despite volume pressure, as you just heard. Importantly, growth gain from the markets which where we have chosen to focus. Our focus markets delivered over 90% of Heineken's organic net revenue growth, led by Vietnam, Ethiopia, Nigeria, India, Brazil, the U.K. and France. Moving on to operating profit. We delivered close to EUR 2.2 billion of operating profit, growing 6.7% organically with operating profit margin expanding 55 basis points to 14.6%. Organic growth contributed EUR 135 million. Consolidation added EUR 46 million, mostly reflecting Heineken Costa Rica and the disposal of the demographic Republic of Congo, and currency translation was a EUR 38 million headwind. Given the differences across regions, a brief color, Africa-Middle East was an important contributor to the organic profit growth, led by Nigeria and Ethiopia and supported by pricing, revenue management, productivity initiatives and a much improved cost base. Asia Pacific also delivered strong operating profit growth, led by Vietnam with China supporting through license income and share of profit, so not fully reflected here in the operating profit bridge. Drivers with a double-digit volume growth, favorable portfolio mix and productivity actions in key growth markets. In the Americas, profit grew despite softer volumes with Brazil supported by price/mix, improved customer and channel mix, productivity initiatives and supply footprint benefits. Results from Heineken Costa Rica are recorded as consolidation differences. In Europe, savings and cost discipline helped offset a declining category, negative channel mix as well as higher regulatory costs and competitive investments, mainly in pricing and brand activation. Head office costs were a slight drag on organic profit growth. I would position this as temporary transition-related costs towards a simpler and more scalable organization. Variable costs increased by low single digit per hectoliter, with gross savings helped to mitigate inflation as we kept pricing below inflation in many markets. Marketing and selling expenses remained at 10.1% of revenue with stronger resource allocations supporting our brand and marketing priorities and investments in sponsorship and in-trade execution. Overall, we expanded operating profit margin while continuing to fund growth momentum. Let me turn to other key financial metrics. At the middle of the slide, you see that net profit increased 10.2% organically to EUR 1.256 billion, and diluted EPS was EUR 2.29, up 11.6% on a constant currency basis. It reflects the strong operating profit delivery with the operating profit to net profit conversion broadly in line with last year. Share of profits from associates and joint ventures increased 19% organically to EUR 159 million, supported by profit growth from associate partner in China. Net interest expenses were $287 million on a basis. The organic development was favorable. The reported line includes consolidation and currency effects. All the net finance expenses improved organically to EUR 76 million, supported by lower losses from currency revaluations on outstanding foreign currencies payables. The effective tax rate was 29.7%, slightly higher than 28.9% last year as Heineken Costa Rica was integrated in the footprint. Net debt-to-EBITDA was 2.6x, slightly above our target of below 2.5x, mostly reflecting the acquisition of Heineken Costa Rica. And finally, the interim dividend is proposed at EUR 0.76 per share, in line with our dividend policy to pay out 40% of last year's total dividend. Let me now turn to free operating cash flow. We delivered a strong step-up in cash generation. with free operating cash flow increasing to almost EUR 1.4 billion compared with EUR 257 million last year. This represents a total improvement of EUR 1.1 billion and a cash conversion ratio of 97%. The improvement was mainly driven by stronger working capital performance and lower CapEx. Working capital moved from a EUR 405 million outflow last year to a EUR 290 million inflow this year, an increase of around EUR 600 million, driven by better inventory and payable days. CapEx was lower at EUR 1.1 billion or 7.2% of net revenue, significantly below the 9.9% ratio of last year, driven by improved capital phasing and tighter capital discipline, already in of growth without CapEx resonates and helps us think and act differently with opportunities to unlock additional capacity from existing breweries through research and development, recipe and process improvements, as we have seen, for example, in Rwanda and Ethiopia. Costa Rica also contributed to the cash performance with strong cash generation in the first month since acquisition, supported by improved payment terms and disciplined financial management. Overall, our capital productivity focus under Evergreen 2030 is starting to deliver stronger working capital management, more disciplined capital deployment for more cash and higher returns on invested capital. We are accelerating our Evergreen 2030 execution. As we mentioned earlier, on our growth priority, we are stepping up our innovation efforts through a more agile pilot and scale model. We are brewing the future with Heineken Studio, our consumer-facing innovation center here in Amsterdam, where we can experiment at space and improve through continuous and direct consumer feedback. In parallel, we expanded the deployment of AI and digital capabilities across the business, including the global rollout of My Freddie AI, an AI-powered platform supporting our commercial teams with global insight while ensuring local renewals. Together, these initiatives enable faster execution, stronger consumer engagement and will drive sustainable growth. Let me briefly turn how we are building the organization to deliver Evergreen 2030 with more speed, scale and discipline. This is the next phase of our productivity agenda, building the capabilities to invest behind growth, improve efficiency and strengthen execution. And Heineken Business Services is an important proof point. We already have circa 4,000 people in our Heineken business services, reflecting both the capabilities we already have built and the roles we have started to move into the network. With centers in Poland, Mexico, Brazil and India, HBS is now becoming a global capability platform, expanding specialist capability across finance, procurement, HR, data analytics and AI. The point is not only lower cost. HBS helps us to standardize processes, connect data, skill automation and robotics and build digital and AI-enabled ways of working. They should deliver better, faster and more consistent services while giving operating companies more focus on growth and commercial execution. The second proof point is in Europe, where we have launched 4 multi-market organizations. These so-called MMOs allows us to pool resources and capabilities across countries, combining local proximity with greater scale and more efficient execution. These are part of a broader productivity and operating model agenda. And across the group, productivity actions materially advanced in the first half, including a reduction of circa 3,000 FTEs while we continue to build a simpler, more scalable organization through HVS, MMOs and clearer ways of working. Let me now turn to a short reminder on our capital allocation priorities. We invest first behind our organic growth and business expansion, while maintaining strict financial discipline and our long-term net debt-to-EBITDA target of below 2.5x. We ended the half at 2.6x, reflecting, of course, the acquisition of Heineken Costa Rica, but are on track to be below our target this year. We value a consistent dividend policy and propose an interim dividend of EUR 0.76 per share. We recently updated our payout ratio for the full year to be in between 30% to 50% of net profit. We continue to shape Heineken's advantage footprint. And with Heineken Costa Rica, we materially strengthened our position in Central America, while the DRC disposal gives the opportunity to continue building our brands in that market with an asset-light model. Combined, this is expected to add 2% to 3% of earnings per share. And finally, we have remained in the second year of our EUR 1.5 billion share buyback program, which on a reduced share count should be around 2% accretive to EPS this year. Overall, the framework is unchanged, invest for growth, protect the balance sheet, maintain a consistent dividend policy, pursue value announcing acquisition and return excess cash where appropriate. Let me close with the outlook for 2026. We remain confident in the execution of the Evergreen 2030, but prudent in our expectations for the remainder of this year. We assume continued macroeconomic and geopolitical uncertainty and an unchanged consumer environment in most of our markets. We continue to invest behind growth and adapt our operating model with speed. Gross savings are expected towards the upper end of our EUR 400 million to EUR 500 million guidance range, helped and will help mitigate part of the emerging cost pressures related to the middling situation. And as a result, we expect to -- we continue to expect variable costs to rise by a low single-digit per hectoliter, broadly in line with previous guidance. We expect the effective tax rate to be around 28% towards the upper end of our previous range of 27% to 28%, reflecting the inclusion of Heineken Costa Rica, and other assumptions are broadly unchanged. All in all, we reiterate our operating profit growth guidance to be in the range of 2% to 6%. Note that based on current spot rates, currency translation is expected to be slightly favorable to operating and net profit. Finally, on EPS. The acquisition of Heineken Costa Rica and the DRC exposal are expected to be 2% to 3% accretive for full year '26, and the ongoing share buyback adds about 2% to EPS. Together, this reinforces the value of disciplined capital allocation while we continue to invest behind growth and maintain balance sheet discipline. So to summarize, we delivered quality volume and revenue growth, robust profit delivery and strong cash conversion in the first half. Growth was driven by our global and local power brands in focused markets, while productivity supported margin expansion and returns. You also heard many examples of how we accelerate implementation of Evergreen 2030, including innovation, business services, multi-market organizations and operating model simplification. And we reiterate our full year operating profit guidance of 2% to 6% growth. With that, thank you for listening, and we're happy to take your questions.

[Operator Instructions] First question on the line is from Edward Mundy with Jefferies.

So 2 questions for me, please. The first is really around Evergreen 2030, which appears to be working quite nicely given the good balance of volume sales, margins and cash. as you step back, what do you think are the 2 or 3 things that you're doing differently under Evergreen 2030 that's driving this better performance? And do you think this argues for continuity with the strategy as the new CEO comes in? . And my second question is on the guidance. Clearly, you've delivered above the guidance range of 3% to 6% in the first half, and that would imply some slower growth coming through in the second half. Other than Middle East uncertainty and some of these emerging cost pressures, what do you think continues into H2? And what do you think changes into H2?

Thank you for the question, Ed. First on Evergreen 2030, I think you will recall during our Capital Markets Day that this very much is built on the foundations of Evergreen 2025. I think we've got the megatrends right. But your question is what are you doing differently? There are 3 things. The first, on growth, we are very intentionally now starting to focus on fewer markets and our global and local power brands and are differentiating across the roles that these brands have in our portfolio, but also differentiating across the operating company value growth that we have. So this notion about how do we focus and how do we differentiate is really starting to kick in as you can see from our results. The second one is how we build both Heineken's global scale, but also leverage the skills that we have in some of the markets more broadly across the organization. And this is, for example, through a moving from brewery optimization to supply chain optimization, but also to really unlock skills with, for example, the introduction of Freddie AI, where marketing practices are just simply flowing faster through the system, and that helps us to build global brands with the power of the learnings of the Heineken brand behind it. The third one is that we are just faster as an organization because we are more intentional in what we want to achieve and the executive team, even without CEO leadership is very effectively in raising topics when they need to be raised, but then really deploying at speed in the market to really focus on execution and delivery and transformation. Those I would call out as the 3 things which are really changing. And my own view is that this will certainly continue in the second half of the year. As Rafa will start learning about the business as from the first of October. Then, on your point on the guidance range, I think it's -- we are very pleased with this set of results because, as you rightly point out, it's volume growth, its revenue growth is operating leverage. At the same time, we do really not see any good reason to narrow the guidance range at this moment in time. There is still uncertainty in the world. We also know that the Vietnam growth that we see in the first half of the year was boosted by -- with a very strong festive season and really very strong market share gains, and we, as we said, are not satisfied with our Americas performance, and we'll continue to invest and focus on accelerating that performance. And within that, we felt it was appropriate to basically stick to the guidance range and continue focusing on strengthening our business and securing consistent delivery.

Next question is from Sanjeet Aujla from UBS.

A couple from me, please. I think, Harold, a couple of times on the call, you alluded to not being satisfied with the performance in America and alluded to perhaps increased investments coming through. Is that -- can you just go deeper into what sort of investments you think you need to make to improve competitiveness? Is that marketing led? Is it route to market? Is it pricing or a combination of all? And is that something that we've seen already in the second half of the year? And my second question was really on Europe. So I think the pace of volume decline has improved over the half year. There's still a lot of productivity coming through Europe, I think, probably accounting for a disproportionate amount of those savings. So I'm surprised why margins are not stronger in Europe in the first half of the year.

Yes. Excellent questions, Sanjeet. Look, we decided to be very clear on how we assess our performance in the Americas. And indeed, we are not satisfied with the performance. And you would hear the same from Alex, Maricio and in all of those markets. So this is very intentional how to go. How to go -- let me first start with some positives here. We saw improved momentum towards the end of quarter 2. So we know that we're on the right track to restore competitive performance. We are also pretty confident, Alex and the team, that this will be sustained in the second half of the year because we see the early results of our actions. But what has happened, go a little bit deeper into this. The first one is let's look at the movie over a longer period of time. And I do want to start there because the point that I called out in the script was that I were not structurally concerned about our Americas position because we believe in the market, and we believe in what we have in our big operating companies. We have fantastic 6 stores. We have a fantastic route to market in Brazil. We have fantastic brand portfolios, and we have innovation now kicking in. So a movie is we're very happy with our performance and the structure that we built. The scene is the shorter term, as you will remember last year, when we were speaking about, let's call it, the volatility that we caused in our organization by going into channels with pricing discounting actions to support a fantastic growth momentum that we saw, particularly in Brazil, and that is now basically the after effects of that. So we are really trying to get the channel strategy, the portfolio strategy and the pricing strategy right and really focus on brand power and execution excellence to really bring that sustained growth back into the organization is just big markets, complex markets, complex route to market, so it takes time. And I did speak in quarter 1 about the fact that we would see improvement only in the second half of the year, and that is what we're seeing now. The second one is how we drive innovation. And a good example of that is the launch of Heineken Ultimate in Brazil, a 3.5% proposition, gluten-free, who has just been recently launched, but the early signals are fantastic not only in the month of June, but also -- and I'm not going to comment more on that in July, that momentum continued. So it's early days, but you also know how big the Heineken franchise is in Brazil, and if that starts firing, we really start to see an important contribution from innovation coming to the fold as well. So there are specific interventions by market with investments to bring back operational execution, price competitiveness and innovation support that will sustain that success in the second half of the year. If I then can move to Europe, you're right to first of all, celebrate that the category has become more stable in Europe because last year, Europe was quite in low single-digit decline as a market, not only our performance because you know that we had that retailer conflict, but the market this time around is broadly flat, slightly declining. What is not helping us is still an adverse channel mix because on-trade is not back and off-trade is growing. And that really means that, that productivity muscle that Europe is doing is really catering for the negative channel effect. And secondly, also very intentionally, we are investing in brand activation. We're investing in key brand support. We're investing in innovation, and we are pricing below inflation to bring affordability back into the category. So part of the reason why you see the European improvement not yet flowing through the bottom line is that we are prioritizing share and category recovery over the quick buck to get Europe back to margins. Of course, this needs to happen over time.

The next question is from Laurence Whyatt with Barclays.

2 from me as well, please. In China, you mentioned this is now a top 3 profit market, and you've been delivering excellent there for a number of years, sort of 20, 30 growth rates. Of course, we've seen companies deliver very strong growth in China in the past and have sort of slowed down as the overall China beer market has been declining, I think, for over a decade now. When do you think -- do you think it's possible that Heineken growth rate might come against the sort of larger declines in the overall China beer market? Or how long do you think you'll be able to deliver this sort of double-digit volume growth given the distribution benefits that you enjoy in that market? And then secondly, I'd love to hear a bit more about the Heineken Zero Ultimate launch and how that's gone in the market. It's gone into whether you'd expect to explore some additional markets for that brand, and how it sort of played into the flavored line extensions that you've also launched on that brand?

Thank you, Laurence. And thanks also for a question on China because you heard a little bit of my frustration coming through that we can't bank this on the net revenue line, but it is a very important part of our business. And you heard me say before as well, but we continue to be very confident that this growth is sustainable for a few years to come. Yes, the total market is in decline, but let me remind you, we are 30% of the distribution on the Heineken brand, and Amstel, which is now closed on an annual basis to about 1 million hectoliter, is actually almost growing twice -- 2x, twofold is the right word. And that's only unlocked in the northeastern province at this moment in time. So there is a lot of excitement with our partner on the potential of the Heineken portfolio, not only in Heineken that continues, and we are investing to first create demand before we put distribution in there, as you know, but also on the Amstel brand that is really starting to play a very significant role there. Importantly, as a proof point of that, the rotations per, let's call it, point of distribution continue to go up. So it's not only that we are seeing more distribution points, we also see velocity of our brand portfolio still growing. So this gives us confidence that we are in the journey for some time to come and so does our CRB partner because, as you know, this growth trajectory is very firmly regulated through a very appropriate joint venture and contractual agreement. So we're all putting investment and focusing to make that growth come through. Then, on 00 Ultimate, I think maybe it's good to zoom out and not go on to a specific product formula only. What you see happening with our flavor variants with Heineken 00 Ultimate with Heineken 3.5% Ultimate in Brazil is that we're opening up our strongest brand to cater for more consumer occasions. And this really is the macro picture that we're trying to display. And we know that in Europe and in the North America, the Heineken Silver franchise did not work, but I also want to point out that in Vietnam and China, and therefore, in APAC, we still delivered 34.5% growth. So the Heineken brand has much more consumer appeal, and that's what we're trying to broaden out. The precise articulation of that may differ market by market, but we're very encouraged with the early successes that we see. It's a bit too early to be specific about what is working, what is not working. That is first test and scale.

The next question is from Olivier Nicolai from Goldman Sachs.

A couple of questions, please. But first, a follow-up on the press release. Just on the head office costs, it was negative, how much of it was due to the Evergreen weighted cost savings implementation? And how much should we expect for H2? Because presumably, on one hand, you got the royalties as well from your license volume. So just will be keen to get a bit of your view on this, which is a bit of a black box of the outside. And then 2 questions. First on Mexico, I mean, Heineken has been losing share in Mexico this quarter, but also over time. How can you improve your share performance despite your geographic footprint within the country where you are much more exposed to the north where per capita consumption is high and offer less upside? And then lastly, I've noticed, I think it's the second time that you mentioned the brand in the press release, but Murphy's volumes doubled in H1 in the U.K. We've seen recent press reports that the on-trade distribution was getting better. What's been the initial feedback on the brand? And how big could it become for Heineken U.K.?

Thank you, Olivier. But that's a wide variety of questions, I have to say, Olivier, really nice. We can go all the places. So first on head office cost. Let me ask you to pick up with Tristan and the IR team, the specific details because I'm aware that this is a bit sticking out, but perhaps good for you to know that this is really transitionary in nature because, of course, what we are building is a changed Evergreen model with Heineken Business Services with D&T acceleration with the head office transformation, and this comes with incremental cost, and that is just a transitionary element of the model that we're building. That is true in Half 1. It will also be true in Half 2. But the specifics on the numbers, I would like you to speak to Tristan because I think that's more appropriate and not take too much time on this call. I'm not so worried about it because it's basically building a stronger underlying business going forward. Maybe to your point on Mexico, you are right that we have not been gaining market share in Mexico for some time. And everyone on the call knows that this has been due to the OXXO mixing effect and had the buildup of the own 6 stores. So I won't bore you with that long answer there. it's important to know that we are super happy with the 6 stores and actually believe that there is a lot more potential in it. And therefore, we will continue to invest behind it. So part of the answer how to improve and restore market share momentum is further unlock the potential of the 6-store franchise, which is now 17,000 stores across the country. The other point that you also rightly point out is the channel and regional portfolio mix. And we are disproportionately investing outside of our North strongholds to ensure that there is more consumer choice also with our portfolio in the central and south parts of Mexico, where there is still a very significant opportunity for us to grow. And last but not least, it is really revolving around the strength of our portfolio. And this is where Daseke's, as the traditional dark beer, which has a very important role to play the value brand Carta Blanca but also the investment in Takata where the brand power is really growing. This is where ultimately the long-term success needs to come from. What is encouraging is that we slowly, but surely start to see the premium segment start to accelerate, although from a small basis in Mexico. And just to point out that we are participating there, and Miller High Life was really growing at the high -- well, was it high single digit or even double digit? So that was very encouraging for us to see. Laurence -- sorry, Olivier, what is still the case is that this will take time because it really has channel and portfolio dynamics, and those things really take time to build, but we're focused on it, and it starts with excellent execution. The Murphy's on-trade is a fantastic proposition, and we really start to see that there is an opportunity there, and we are also introducing the nitro can in Murphy's. So we do believe that there is a potential to accelerate that, and we're very happy with the growth that we're seeing.

Maybe worth mentioning also in Ireland showed really strong growth as well. So we're seeing a much broader expansion of the brand. .

The next question is from Chris Pitcher with Rothschild & Co Redburn.

I got a question on Southeast Asia and India. I mean, at the start of the year when we had the Middle East crisis, Strait of Hormuz situation, it was an area where people were worried about consumer demand on energy costs and margin pressure. But actually, it's been one of your stronger regions with very good margin performance in the first half. Are there still sort of phasing of cost effects to be mindful of? I mean, United Brews was talking about cost as a result of it to think about in the second half? Or do you think it's realistic to grow margins in the second half in markets like Vietnam, Indonesia, India, et cetera? And then just a couple of follow-ons. Apologies for that. On India, are you looking to sort of rebalance as part of your CapEx away from contract manufacturing? Or is that a model that's just going to continue to weigh on price mix achieved in India because of that negative mix?

Yes. Chris, thanks. Look, I'm now going to give a real CFO answer, so brace yourself here. But we're very pleased with our results in APAC, as you know, but you're also right that there has been government support, for example, to keep diesel prices low. For example, food vouchers in Indonesia that helps consumers to the uncertainty of the Middle East crisis. Now, I think part of this is real creating let's call it, a platform for people to sustain livelihoods for those most in need. Part of it is also cushioning industries against certain shocks. So there has been active government interventions in Southeast Asia as well as India. And I think also our team has done a really good job to navigate that volatility. But part of your question, therefore, is, look, is this going to be sustained? Or what do we think about the second half of the year? Some of these costs will start to flow through because it's a shock absorber, it's not a structural solve according to the governments. And part of the currency weakening that you have seen, for example, in India is also related to that. So we are being a bit cautious in terms of our APAC results for the second half of the year because we believe, indeed, that the first half is not representative of how we look at it going forward, while still being very proud of what the teams have done. The margins, therefore, we're very happy with where they are, and as you know, both in Vietnam, we believe that the margin structure is where we want it to be. In India, it takes time to pass through prices and that's an active dialogue with state-by-state governments in order to reflect the latest input cost on the pricing, which is why you heard UBL talk about the cost pressures. So different realities in different markets. Maybe to close on the point of India, look, the one thing that makes us a standout company is that we have got the most widely set up brewery network, and that is a combination between third-party long-term contract brewer relationship and our own breweries. And depending on the reality, we will look at what is the optimal choice. So I don't see this as a strategic dilemma that we have. It's just a network optimization that we want to do. And frankly, partnership structures as we see in India and in China as long as they are well governed and long term, are a really important part of our whole ecosystem, and we're very pleased with them.