THE MAGNUM ICE CREAM COMPANY N.V. (MICC) Q2 2026 Earnings Call Transcript

Hello, and welcome to the webcast for the H1 2026 results of the Magnum Ice Cream Company. My name is Lloyd Midwinter, Head of Investor Relations, and I'm here with our CEO, Peter Tekova, and our CFO, Abhijit Bhattacharya. Our press release and this presentation are published on our Investor Relations website, where a replay and transcript to this webcast will also be made available. Before we start, I would like to draw your attention to the cautionary statement regarding forward-looking statements and assumptions. This applies to the presentation and webcast, including the Q&A session. In a moment, Peter will share some key highlights on our business performance, showing how we are executing on our strategy. Albajit will then run through our financial results and outlook.

We will then be happy to address your questions so peter over to you good morning everyone and thank you for joining lloyd it's nice to have you with us welcome to tm icc let's start with the headline first we delivered a solid first half the ice cream category keeps growing and we outperformed it by achieving growth of 4.7%. Growth was balanced across volume and value, every region and each of our global brands. Importantly, our performance was driven by innovation and operational rigor. And this rigor meant we got off to a strong start for the summer season. Disciplined execution of our productivity program delivered 90 million savings during the first half. helping us deliver underlying margin improvement and providing fuel for growth. Adjusted EBITDA increased to 880 million, 18.7% margin, and adjusted EBIT margin was 15.3%. 50 base transformation remains on track for end of 27. Looking ahead, while we are clear-eyed on the wider external challenges, we are committed to our strategy, confident in our ability to execute and reaffirm our full year outlook. Before diving into the results of the first half, I want to take a step back and remind you of our vision and strategy. It's been almost a year since we presented this at our Capital Markets Day and we're in the middle of our most important period of execution, when you can see impact in action. Our vision for the Magnum ice cream company is simple. We want to make the most loved ice cream in the world to grow the market and build a highly competitive snacking business for our shareholders and customers. And we will do that by delivering our strategy to grow the ice cream market as category leader. We are executing against that strategy and today's results show that it is starting to work. I really do believe that life tastes better with ice cream. We have a simple but powerful value creation model that underpins our performance. Strong brands and innovation that create desire and demand. Execution rigor that converts demand into results and the culture and structure that empowers our colleagues to act like owners so on innovation we will generate demand through building and activating our brands like the best in the beauty industry because like beauty ice cream is a marketing and innovation lab category and we will leverage our unique capabilities and scale to create unmatched desire for our products secondly execution execution matters especially in ice cream we aim to have the rigor of our bottling and soft drinks peers getting the right product to the right place at the right price every time at some length of desire and lastly an ownership culture none of this is possible without the right culture it is the hardest thing for people outside the company to see but it is the most powerful change we have made in the past 24 months we are creating a culture with clear accountability a simple structure and aligned incentives that empower enables every colleague everyone at the Magnum ice cream company is an owner and everyone is here to sell ice cream this model will enable us to deliver against our median term targets for growth and returns we're off to a solid start Now, turning to our business performance during the first half. In the first half, we delivered 4.7 billion revenue, achieving organic sales growth of 4.7%. We balanced volume and value to outperform the global ice cream category, with 2.5% volume and price up 2.2 percent it's important to remember that this performance is against strong comparisons from the previous years in the first half of 2025 we delivered organic sales growth of 5.8 percent i'm proud of the team for delivering such a strong result it shows our strategy is beginning to work All three of our regions contributed to growth, with Europe and ANZ at 4.1%, America at 3.2%, and the May are growing 7.6%. Our focus on operational rigor meant the key summer selling season got off to a strong start. we gain share in all regions including the us our biggest market with 1.1 billion revenue for the first half france and the uk were key growth drivers for europe and maya was driven by double digit growth for turkey and pakistan as well as india included from q2 however we also have some markets not yet achieving their full potential which we see as future opportunity and we are working with the local teams to get it right into the detail of the challenges and fix the issues for example in Italy we're making progress with our sales and share stabilizing after taking action to address declines we have also renewed our team in Brazil and are making structural changes to be ready for the next peak season. This deep market focus work will take time to show in our results, but we are focused on setting ourselves up for long-term success in those countries rather than quick fixes. Our four leading brands Magnum, Ben & Jerry's, Cornetto and The Heart brand continue to drive organic sales growth. Magnum delivered mid-single-digit growth driven by the successful launch of Magnum Signature La Pistache ranked as the top ice cream innovation in Europe, as well as La Peche, Bombols in Europe and ANZ, as well as cones in multiple markets of Europe, ANZ and EMEA. Ben & Jerry's gained further momentum and grew mid single digit across the period with performance accelerating to 9.2 percent in the second quarter for both the americas and european set with the new sticks in the us and sandwich formats bringing new consumers to the brand stick and sandwich formats of ben and jerry are as popular as our other brands, maybe even more so, but it is an innovation for Ben & Jerry's which customers are loving. It's allowing consumers on-the-go snacking with one of their favorite brands with their favorite flavors, and they are in sizes that resonate with consumers on GLP once. Ben and Jerry's social reach and engagements continued to grow and our annual free cone day was the most successful yet with more than 1 million scoops shared with consumers. I also handed out scoops. Cornetto delivered low single-digit growth following high single-digit growth last year supported by the lounge of pistachio mugs in europe and turkia and an improved windmill structure for its famous topping as well as on-trend fruit sorbet variants in europe china and selected southeast asian markets the hard brand delivered mid-single digit growth driven by strong performance of solero within the core range and newly introduced solero bumbles as well as continued momentum of volcanics in Europe and Turkey. Our core portfolio superiority was enhanced with the success of new range additions. New pine flavors for Ben & Jerry's included strawberry doughnut tea and chukicoli churici are within the top 10 of new ice cream products in the UK Netherlands and Germany. We're also taking our premium brands increasingly multiformat, expanding occasions. Magnum sandwiches and bowl counts launched strongly in Turkey. Ben & Jerry sticks made up four of the top 10 super premium novelties in the US. And Ben & Jerry sandwiches were the number one new impulse ice cream product in the UK. I have spent a significant part of my career in ice cream and i cannot remember a time when this much innovation was successfully delivered into the market for magnum and ben and jerry's we also continued to create our perfect portfolio with a clear offer across all price points this included new launches for popsicle in partnership with hello kitty and bluey in the us and reinventing quality walls to lead with a new improved dairy recipe in India. This is really important in India, the biggest dairy market in the world. Our category expanding innovation continued with the launch of Yasso pints in the US, delivering six quarters of double-digit growth and ice balls in Asia or Hydra ice off to a good start in Iberia and the Benelux. Our increased speed and rhythm in innovation is delivering results. We can do more than just flavor renovations. Our frontline first model and ownership culture is driving growth in all channels. The at-home channel grew mid single digit supported by improved service level which enhanced availability growth was further supported by stronger in-store execution driven by more frequent visits from our dedicated sales force and a greater focus on merchandising in the u.s we continue to rebuild our business in the value and club segments the away from home channel delivered mid single digit growth supported by continued expansion of our cabinet fleet in key markets including India, Pakistan, China and Mexico sets us up for a better key summer season. Digital commerce maintain double-digit growth driven by solid execution and supported by strong collaboration with key partners as well as improved digital assets. Across regions we see DCOM driving category growth and we are positioning ourselves as the category partner of choice for leading players in the space as we partner on marketing initiatives it is one of the biggest long-term opportunities we see with decom changing consumption patterns in a way that can be structurally supportive to the ice cream category i'm pleased with the disciplined execution driving our productivity program which delivered 90 million of savings in the first half and remains on track to deliver the planned savings of half a billion in the medium term. Savings in the first half included 70 million in the supply chain and 20 million from overhead. We continue to reduce waste, improve factory utilization and debottleneck our supply chain with a proportion of these savings being reinvested in growth. I was very pleased to see that we were able to increase market share during the last week in June when there was a heat wave. Only when you get operationally the thing really tight you gain market share in heat waves. Our acquisition in india and portugal were completed on 30th of mars 2026 and first of april respectively and they are successfully integrated to our results we have appointed six strategic partners as the backbone of a future technology stack and we're building our systems processes and capabilities we are now in the heavy lifting phase and the team are doing a fantastic job all TSA access planned for the first half of 26 were concluded on time and we continue working to access remaining TSAs by the end of 27 will now share

more details on financial results and I will hand over to Abhijit our CFO to take you through the numbers thanks Peter and hello to everyone on the call I'm pleased to share we delivered solid financial results for the first half of 2026, driven by organic sales growth of 4.7%, balanced between volume and price. Adjusted EBIT margin was 50 basis points higher than the same period last year, and adjusted EBITDA increased from 853 million euros to 880 million euros, although adjusted EBITDA margin was impacted by TSAs and our acquisition in India. Free cash flow was 273 million euros, driven by working capital movements and higher EBIT. Based on this solid performance and looking ahead, we've reaffirmed our outlook for the full year. revenue was 4.7 billion euros for the first half up from 4.5 billion euros last year with organic sales growth across all regions this was achieved through a competitive balance of 2.5 percent volume growth and 2.2 percent price growth building on a solid comparator building on a solid comparator of 5.8% from the first half of 2025. Reported revenue growth was 4.2%, including 2.3% favorable impact from acquisitions and 2.7% adverse foreign currency translation effects. Forex translation effects related mainly to the strengthening of the euro against key currencies, particularly the Turkish lira and the U.S. dollar. Adjusted EBIT was 716 million euros, up from 666 million euros last year. An adjusted EBIT margin of 15.3 percent was 50 basis points higher than the first half of 2025, driven by improved gross margin, resulting from productivity savings pricing, which was partly offset by cost inflation. Adjusted EBITDA was also up at 880 million euros compared to 853 million euros in H1 2025. Adjusted EBITDA margin was 18.7% versus 19% last year, primarily impacted by TSAs of 70 basis points due to previously allocated depreciation charges, which are now charged as cash costs, and minus 30 BIPs due to the acquisition in India. We offset most of the headwinds thanks to our productivity program and selected pricing actions. Now turning to our regions, Europe and ANZ delivered a solid performance with 4.1% organic sales growth and share gains in key markets. Growth was volume driven, supported by innovation, better execution, and favorable weather towards the end of the period. France and the UK were the main growth drivers in the region, with France delivering double-digit growth and the UK posting mid-single-digit growth. In Italy, we continued to execute our turnaround plan, stabilizing share and market share, following a prolonged period of decline. Magnum and Ben & Jerry's performed strongly, delivering high single-digit and mid-single-digit growth, respectively, supported by new formats and flavors. According to Nielsen, our Magnum and Ben & Jerry's innovations, together with Volcanics, made up six of the top ten ice cream innovations in Europe for the first half of the year. Growth was also enabled by improved availability and on-shelf execution, with key wins, including new listings. Adjusted EBIT margin improved by 100 basis points despite the 50 basis points headwind due to lower royalties from India. Strong gross margin delivery was partially offset by previously allocated depreciation charged as cash cost according to the TSAs, which adversely impacted adjusted EBITDA margin by 90 basis points. The Americas delivered organic sales growth of 3.2% and continued to gain market share in growth, the U.S. and Mexico, while executing our turnaround plan in Brazil, where the business remained in decline. Reported revenue was 1.1% lower than last year due to 4.1% adverse impact from Forex translation. In North America, growth was driven by our leading U.S. brands, with Yasso and Popsicle continuing double-digit growth and Ben & Jerry's outperforming the broader market, resulting in market share gains. innovations continued to revitalize our u.s portfolio strategic partnerships including with hershey and disney supported growth across key brands while popsicle benefited from successful collaborations with hello kitty and bluey ben and jerry's delivered strong growth especially during the second quarter supported by the launch of stick and sandwich formats these launches plus yasso pines represented six of the top 10 ice cream innovations during the first half according to nielsen adjusted ebit margin improved 140 basis points due to carryover pricing effect from the second half of 2025 and savings from our productivity program which more than offset increased distribution cost adjusted ebitda margin improved 50 basis points driven by higher ebit partially offset by previously allocated depreciation now charged as cash costs amia continued to deliver strong growth with sales 7.6 percent higher turkey performed strongly with double-digit growth despite being impacted by measures imposed by the Turkish Competition Authority, or TCA. These interim measures are focused on the use of cabinets in small retail outlets where no other freezer cabinet is directly accessible to consumers. 30% of our freezers need to be allocated to competing products or left empty. We are cooperating with the TCA to comply with the measures imposed. Elsewhere in the region, Pakistan continued double-digit momentum while Indonesia achieved mid-single-digit growth and significant share gains. India, which is included in the perimeter from the second quarter onwards, also delivered double-digit growth. Growth was moderated by China, which was impacted by unfavorable weather towards the end of the period. Reported revenue increased 9%, including 6.8% favorable impact from our acquisition in India and 5.2% adverse forex translation effects. Growth was driven by innovations from our global brands, such as the Magnum sandwich in Turkey and market-specific launches, including the Cornetto multi-layer sticks. This was underpinned by driving consumption occasions and expanding market penetration through festive activations, as well as joint business plans with retail partners, resulting in greater product availability and consumer reach. Adjusted EBIT margin declined by 190 basis points due to significant external headwinds, including material cost inflation and measures imposed by the TCA as well as our acquisition in India. Material cost inflation had a more significant impact in Ameya during the first half when compared to other regions due to the more lengthy supply chain, which means that cocoa consumption in the first half was done from purchases made at higher prices. These impacts were partly mitigated by selective pricing actions and disciplined execution of our cost management program. Adjusted EBITDA margin decreased by 270 basis points, also reflecting previously allocated depreciation charged as cash costs. I'll now take you through the key margin developments compared to last year. Adjusted EBITDA margin increased 70 BIPs for the first half, excluding the impact of 70 BIPs related to TSAs with previously allocated depreciation now charged as cash cost and 30 BIPs from our acquisition in India. Operationally, 190 basis points saving from our productivity program and 160 basis points from select pricing actions more than offset 200 basis points commodity and other supply chain cost inflation with 80 basis points in reinvestment and other costs including advertising and promotion tsa markup and double run costs moving to cash flow it's important to remember the company was a division of Unilever during the first half of 2025, and we are now a standalone company. Free cash flow was $273 million for the first half of 2026, up from $138 million last year, with a year-on-year increase primarily driven by a favorable working capital movement and EBIT. Interest cost was $80 million higher and tax charges $38 million lower, reflecting our standalone financing and operating structure for H-1 2026 compared to operating as a division of Unilever with limited interest cost and allocated tax charges. Also, as already mentioned, previously allocated depreciation is now charged as cash costs resulting in $24 million lower depreciation and amortization. Excluding the factors related to the separation from Unilever, comparable free cash flow for H1 2026 would have been $99 million, up from $72 million last year. This was driven by higher EBIT, partly reinvested as additional capex, with around 40% of capex for the first half related to freezer cabinets. The working capital movements were mainly related to the interim operating model with Unilever. Our net debt to adjusted EBITDA ratio was 2.5 times at the end of H1 in line with our capital allocation policy. We are mindful of continued uncertainty in the global environment and we are taking mitigating actions. Our focus is on executing our growth strategy and productivity program and we are reaffirming our full-year outlook. We expect organic sales growth to be between 3% and 5% and adjusted EBITDA margin to improve by 40 to 60 basis points on a comparable perimeter basis with 2025. The reported improvement in adjusted EBITDA margin is expected to be between 0 and 20 basis points, primarily due to the impact of our acquisition in India. For the full year, we expect adjusted items to be in line with previous estimates and the adjusted effective tax rate to be around 27 percent, excluding the impact of prior year tax settlements which is at the upper end of our midterm plan while net finance cost is estimated to be around 160 million compared to the 180 million previously communicated one housekeeping point in Q3 2026 expected customer season and returns will be accounted for in the same quarter as related sales rather than when the returns occurred this mainly relates to turkey and shifts a portion of revenue between the quarters reducing q3 and increasing q4 by equal amounts this has no impact on half year or full year reported results we have published comparable growth rates in the appendix d of our press release to help with your modeling and our capital allocation policy is unchanged we will focus on delivering organic growth productivity and cash i'll now hand back to peter for a short summary before the q a session thanks abhijit our solid

performance for the first half of 26 was driven by innovation and operational rigor we delivered a 4.7 percent organic sales growth balancing volume and value and 90 million productivity savings resulting in underlying margin improvement looking ahead we are committed to our strategy confident in our ability to execute and reaffirm our full year outlook our key summer selling season got off to a strong start and we look forward to sharing future updates we'd now be happy to answer your questions please ask no more than two questions at one time so others can

participate and if you have further questions please feel free to contact me and the investor relations team the operator will now provide instructions and coordinate the Q&A session Thank you.

As a reminder to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Once again, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. For the benefit of all participants on this call, please limit yourself to two questions so that everyone is given an opportunity to ask questions. Thank you. We are now going to proceed with our first question. And the questions come from the line of Warren Ackerman from Barclays. Please ask your question.

Good morning. Hopefully you can hear me okay. Good morning, Peter. Good morning, Apertite, Lloyd. So two from me. First one is just on the trading on the top line. Obviously, very strong in the quarter. But you We do actually have a tougher comp in the third quarter in a two-year stack. I'm just wondering how much of that volume beat we should move across to the third quarter. Maybe you can talk about the exit rate in July, given the heat wave. I assume it's been very strong and maybe any kind of updated kind of market share, how you're seeing market share data, what's happening on the 12-week data versus 52-week data, just to really understand that piece would be helpful. The second one actually is a little bit around kind of emerging markets. So on this Turkey thing with the TCA, is there any risk that your supernormal margins in Turkey actually need to come down now because you have to open up freezers to some of the competitors? And how do you feel about the kind of margin dynamic between very high Turkey margins and very low margins in India and Brazil and the investment that you need to make? Are we kind of, you know, should we be expecting kind of like a bit of a, you know, a step down in rest of world margins and obviously that's going to be offset by Europe and other places. But just, yeah, is there an issue on Turkey and how do you feel about that versus India and Brazil?

Hi, Warren. Hi, everyone. Good morning. You know, the ice cream market is going from strength to strength. We always expected that increased penetration and new occasions and increased distribution would drive emerging markets. You know, we were not sure, but the trend towards portion control and calorie control is driving developed markets as well, most notable in the U.S. And all the hard work, stepping up execution and innovation is starting to pay off. You know, we had share gains nine out of ten quarters over, you know, since we since we started and we're innovation leader in the U.S. and Europe. Last year, we had a massive, massive share tick up, as you will remember. this year we started a little bit weaker in a number of European countries but we gained share in the US we gained share in Europe overall massive step ups in in some country and China still we're a little bit weak but we gained share we gained massive shares in China in China so all in all we feel good about shares but you know as expected is a competitive market this hard work and takes the best of best of us when you look at the when you look at the second question one second what just on Turkey was just on the side and margins and then what's going on yeah yeah good you know a couple of years ago we had an investigation by the you know antitrust authorities and we complied with all this investigation but our shares kept on growing we believe that one of the core strengths of the Turkish business is actually its innovation rates and the way they develop new brands and expand their portfolio we now had to open up our cabinets in the small outlets we fully comply with that but we gained a little bit of share in hard discounters and e-commerce yeah our Turkish business is extremely healthy we believe it will go back over the full year to both volume and volume growth and continues at high value growth level so we're we're in good space margins in Turkey indeed are are very healthy there is no reason why they should not stay healthy we're very committed to our investors of investments in India whilst we are building the business the profitability will improve but that's actually not the main thing we need to build a stronger business we need to grow very fast in Brazil we're in the middle of a turnaround yeah it's going a little bit slower than I had hoped to but these are all structural changes that will take it's fine Brazil is also not our largest country so that sort of answer yeah it does it does I mean on Brazil you are you able to tell us Peter how it did in the quarter to stay sequentially just to understand that part as well yeah Brazil was was still flattish slightly down but we're now making structural changes to the

portfolio peg price channel hopefully next season the results will come through super thank you okay next next question please sure we're not going to proceed with our next question and the questions come from the line of selling infinity from JP Morgan please ask a question well in you know good morning everyone yes good morning my first question is on the guidance obviously right now on top line H1 you came at the top end of your range. H2, as you said, you face slower, easier comps versus last year and you mentioned that you are off to a strong start in the summer and we can clearly see that the summer has been good so far in Europe. So first of all, am I right to expect you to be at the top end of the range and why you don't want to qualify that in your outlook and then my second question probably is related and on the margin front margin can better I presume that better top line should translate as well in better operational profitability and so it looks to me that it's quite conservative now the margin guidance of 0 to 20 basis point could you take me through what are the incremental negative versus the beat in H1 and the potential upside from the operational benefit thank you

thanks Celine you know we have made good progress in H1 it's encouraging but we still have half a year to go today we affirmed our outlook to achieve three to five percent we were in outlook in guidance in the first half and we have said that we will improve EBITDA in line with guidance you know we're committed to our strategy and we're confident in our ability to execute um yeah as we previously communicated we expect improvement in h2 we still do and yeah we basically stay within

the guidance and maybe uh selene just to add a bit on your question about uh the margin in the second half it's important to know that we are 30 basis points behind in the at the end of the first half so we have to actually to improve for the full year we have to have a margin improvement in the second half so that's why we still hold to our outlook for the year thank you we are now going to proceed with our next question and the questions come from the line of Guillaume Delma from UBS please ask your question.

Thank you and good morning Peter Abidit and Lloyd. Two questions from you as well. The first one is on your commodity cost outlook. I mean to what extent it has changed since you last updated us at the end of April since you know we've seen energy prices coming down and looking at the back half I mean do you expect a net benefit I mean thanks to Coco, or still like some headwinds? And if so, how will it compare to the 200 basis points adverse effect we saw in the first half? So that's my first question. And then the second one, question on your Cornetto brand. Out of your four leading brands, Cornetto is the one reporting a more muted organic sales question in that first half. wondering what has been weighing on the on the brand's growth and what are your ambitions for for connected going forward so I would assume some some nice acceleration thank you very much yeah thanks for the question as we have always also indicated at the beginning of the year in the first half we were basically still running with relatively high chocolate prices they will be easing off in the

second half of the year we had tsa's in the first half of the year which will reverse back in the second half of the year energy has gone up and down and then up again overall we therefore stick with guidance and will deliver a modest profitability step up in the in the second half here Conetto is very interesting Conetto is the leading cone brand in the world whilst we not even sell cones in in the US the last two months in China were relatively weak you know weather was poor shares were good but that waited on the Cornetto growth figures we actually have a really interesting innovation funneling codes we have premium codes which we now do via Magnum which is a massive 50% price up versus normal Cornetto codes so we have now a good better best portfolio we also branched out coneto into sandwiches and sticks which helps drive the brand it's all about creamy and crunchy so yeah it is a very successful uh global brand but it's skewed towards europe and asia coneto by the way is on fire in india which is very good to see thank you very much we are now

going to proceed with our next question and the questions come from the line of jeff stent from BNP Paribas, please ask a question.

Good morning. Just a quick accounting question. Could you just elaborate on what this changes to the treatment of customer returns, and also that seems to impact pricing, which I can't quite get my mind around. If you could just help us understand that, that'd be great. Thank you.

Abhijit, can you take that?

Yeah, so typically what happens in Turkey is what we sell partly in Q3 and in Q4, what remains unsold we take back at the end of the year when we also redo our cabinets. Now, in the past, those returns were all accounted for in Q4. And what we are doing now is we change that to account for it in Q3 partly and in Q4 so that the returns are accounted for matching with when the revenue is booked. And then, of course, when you do that, it has a bit of effect on volume and a bit of effect on price.

But for the half, it has no impact at all. so it's just more to help you in modeling q3 and q4 so it's also the correct accounting treatment for this exactly yeah but how do you pick a return when it's not being written sorry sorry I can't hear you Jeff well I'm saying how do you put a return when the product hasn't been written off you know are you making estimates of the returns in Q3 the profession exactly it's a profession all right okay thank you we are now going to proceed with our next question and the questions come from the line of Robert Jan Voss from ABN AMRO

ODO BHS please ask your question yes hi good morning all I have two questions as well first one is only Americas volumes were about flat in the second quarter same as Q1. Can you provide some color on that? For example, in Q1, you said that volume growth was 1.8% in the US. I understand that Brazil is down still, but maybe elaborate on how volumes developed in the US in the second quarter. And my second question is on EMEA, and then particularly on China. You posted high single-digit organic sales growth in China in Q1, according to what you said at Q1. What was it in Q2, and was the drag purely weather, or did you also see some other impacts that held back growth in China? Those are my questions.

Thank you. okay thank you very much to interesting questions in the US we see structural changes to the ice cream market historically there's a lot of vanilla ice cream that is used as a topping on apple pie you know they put it in soft drinks and call it a float that marketing market is declining and there is very strong growth in handhelds calorie control portion control and that is driving the american market as you can imagine this is really good for us because that is where we have the core strengths of our portfolio and our 3.6 percent growth in the u.s is driven on the growth of handheld ice cream in uh in america so that is so you don't get a lot of volume but you get a lot of Pieces and pieces and price because handheld is more premium than buckets of ice cream So the second question On China I spent two two weeks in China this year And let me talk a little bit about what happened this year and the structural changes in China We you had a very good first quarter and then the weather in May and June especially in the east where we are strong was not very good and that impacted sales but structurally you see something very interesting that the growth in the convenience channel is leveling up and there is a new channel called the snacking channel which is growing like gangbusters number of store open growth of the channel and we're pivoting our portfolio and sales approach to these channels what you also see which is very interesting that the growth in Q as tier one and tier two cities the Chongqing's the Beijing's the Xi'an's is more muted and the growth in tier four five cities is very strong and we're pivoting our machine more to lower tier cities and that's why we're still very confident and bullish on the potential of the Chinese market we are now going to proceed with our next question and the questions come from the line of Maxime Stranet from ING Bank please ask a question hi good morning hope you can hear me well actually one question on my side so if we look at the improvement in that accessibility margin in H1 actually on like-for-like basis

way above what you expect on the medium term so could you elaborate on want what actually went well in h1 and what do you believe all the challenges going forward secondly maybe moving on PSA's could you maybe a bit elaborate on what has been done so far and what are the main building blocks that still need to be achieved that would be all for me thank you yeah if you look at the the margin improvement in the first half uh it's in line with uh what we had expected primarily driven by the productivity uh program that is running a little bit from pricing of course uh so those are the two big drivers it's not uh we had some impact on on energy prices which were also in the first half so it's not way above the midterm expectation it's in line with what we had planned. I think if you look at the TSAs, what we have exited so far has been most of the service TSAs, which Unilever was providing us. What is left to be done is to move out of the IT-related TSAs. So as we kind of roll out our new IT stack from November and December onwards, we will then, on a country-by-country basis, start exiting from those TSAs as well, which will run till the end of next year.

We are now going to proceed with our next question, and the questions come from the line of Bing Ching Se from Ross Shile & Co Redburn. Please ask your question.

Hi, Peter, Abidjan and Lourdes. Thank you for taking my question. I have two. So the first one is about Indians. So you posted a double-digit growth in Indian in Q2. So that's the first period in the perimeter. Can you unpack what drove that? I think in the last quarter you mentioned some cabinet expansion, quite a lot of cabinet expansion in the market, shipped to dairy ice cream, price reset. And how sustainable is that pace? What point do you think that India will become a meaningful contribution to the group growth? That's my first question. And the second question I want to ask about the U.S. distribution. I think in the press release you flagged rebuilding the value in a club segment and also growing digital commerce. can you give us an update on the progress in these channels and again when we might to see a meaningful contribution from these channel kind of as channels underrepresented channels in the US so two questions there thank you thank you Ben-Jing yeah on India we basically did the following thing a we built a new team all the people now running the business are new in new structure we put more resources in it a lot of work on organization then we changed pricing

and we brought pricing more in line with core snacking price points our ice cream was a little bit overpriced then we moved from vegetable fat to dairy which is very meaningful in an indian context we then double down on our premium brands coneto magnum and the indian market is responding very well on that and last but not least we rebuilt our sales system historically ice cream business was selling in industry cabinets at retailers and we are turning it in a more turkey like cabinet driven model where we place cabinets last year 50 000 this year 50 000 and we rebuild our distributor base put the sales reps in so wholesale change of the indian system and it seems to be working it's obviously also still a big investment it's there for a loss-making business but that will improve as we get more scale and as we are building out on new factories in India what is the limit in India you know I've said that earlier occasions we now have approximately 250,000 cabinets I can imagine we have a million because ultimately India will be the largest ice cream market in the world in the US yeah you know the in Unilever the business had pulled out lastly out of club and the value channel we are building value channel we're building distribution in certain accounts we are back to our historic levels other accounts we still have a little bit to go in clubs we we do a pretty decent job in Sam's you know I would still like a broader portfolio in Costco and we are working that where's our account teams good progress but we're not there yet and over the coming years that still is a good growth opportunity for us so that's really helpful thank you we are now going to proceed with our next question.

And the questions come from the line of Tom Sykes from Deutsche Bank. Please ask your question.

Yeah, morning. Thank you very much. I just had a couple of questions on pricing. So when do you start the pricing negotiations with major retailers for next year's selling please and then on on out of home um what what's the difference in pricing power that you see in in out of home versus large retailers and and do you see yeah i guess if coco falls do you tend to hold on to that a little bit more in the product you sell to out-of-home versus the product that you sell to larger retailers. And I know it's early, but when we think about that sell-in for next year, I mean, are you expecting next year's growth to be a bit more volume-led than pricing-led, given what is likely at the moment to have happened to raw materials? Thank you.

Thanks, Tom. Yeah, basically we start discussing our full portfolio plans and marketing plans with retailers in September. So that is where we evaluate the season before, take the learnings. And these are also learnings on stocks and out of stocks, portfolio, what worked and not worked. And we mostly conclude it at the beginning of the year after. I expect that it will be this year the same as it was last year. You know, the pricing strategies in out-of-home and in-home are a little bit differently. In out-of-home, you mainly price versus broader snacking price points. So you want to be in line with the bottle of Coke, the bag of chips, the bar of chocolate. and that sort of drives out of home pricing obviously the very fragmented channel where we have three million cabinets the pricing power of the individual retailers is a little bit lower but you still want to be in bands of consumer acceptance and as you know this business is volume driven we now have eight quarters of of volume growth this is also what we like because it drives the economics of the business but that is the sort of out-of-home pricing in home pricing we have strategic pricing brands versus competitive

products versus retailer-owned brands and we stay very disciplined to death thank you we now have time for one final question and the questions come from the line of Jeremy Kincaid from VLK please ask your question good morning I'll make it quick, just with your organic growth, it was positive on the volume side and the price side for all of your regions, except for organic price growth within Europe, which was negative. I was just hoping if you could talk to that a little bit more. And then my second question was on your innovation rates. It's clearly very high at the moment. I'm just wondering if you have any measure of how much growth those new products contribute to your your bottom line or even your organic growth this quarter and do you think this rate of innovation is required going forward yeah clearly innovation is one of our core growth drive drivers you know we said that there is one the most important thing is that your core products are better than the same likewise

products of competition so there's always a lot of renovation to keep quality lead then we expand we look country by country what are the formats what are the price points do we have a good portfolio fill in then we have this strategy of taking the core brands in different formats to address different occasions and last but not least we address new benefits we believe this is sort of 40 percent of our growth of the the business is driven by is driven by innovation so clearly very important and we have created an engine that we can deliver this year on year hopefully every year a little bit better, but time will tell. On pricing in Europe, you know, we are a volume-led gross business, so we are very focused on getting our pricing right. It's a little bit up, it's a little bit down, it's dynamic. As you know, we were very proud that also last year we grow full volume, even in the chocolate segment. and for me it's a sign that we're you know we're quick quick on the wheel dealing with pricing issues to keep the volume growing we'll continue to we'll continue to do that thank you okay so that's it for the questions thank you very much to everyone for joining the call if you do have follow-up questions please get in touch with investor relations and we'd be happy to help