Thor Erickson - Vice President-Investor Relations John Brock - Chairman & CEO Manik Jhangiani - Chief Financial Officer Damian Gammell - Chief Operating Officer.

Ali Dibadj - Bernstein Research Caroline Levy - CLSA Judy Hong - Goldman Sachs Bill Schmitz - Deutsche Bank Stephen Powers - UBS Mark Swartzberg - Stifel Nicolaus Brett Cooper - Customer Edge Research Andrew Holland - Societe Generale Robert Ottenstein - Evercore.

Good day and welcome to the Coca-Cola European Partners Third Quarter 2016 Conference Call. At the request of Coca-Cola European Partners, this conference is being recorded for instant replay purposes. At this time, I'd like to turn the conference over to Mr. Thor Erickson, Vice President of Investor Relations. Please go ahead, sir..

Thank you. And thanks to everybody for being on our call. We appreciate your interest and for joining us to discuss our third quarter 2016 results and our outlook for 2016. Before we begin, I'd like to remind you of our cautionary statements.

This call will contain forward-looking management comments and other statements reflecting our outlook for future periods.

These comments should be considered in conjunction with the cautionary language contained in this morning's release, as well as the detailed cautionary statements found in our interim financial report filed with the UK, US, Dutch and Spanish authorities. A copy of this information is available on our website at www.ccep.com.

Today's prepared remarks will be made by John Brock, our CEO; and Nik Jhangiani, our CFO. Damian Gammell, our COO is also with us on the call today. Following the prepared remarks, we will open the call for your questions.

In order to give as many people as possible the opportunity to ask questions, please limit yourself to one question and we will take follow-up questions if time permits. Now, I'll turn the call over to John Brock..

Thank you, Thor, and we thank each of you for joining us today. Before discussing our third quarter results, a brief comment on today's announcement that Damian Gammell will succeed me as Chief Executive Officer at the end of the year. Since joining as COO in 2015, Damian and I have worked very closely together.

Following the successful completion of the merger, we now have an experienced leadership team, a clear plan for growth and we’re building the structure that will help us capture that growth. Importantly, our business is in a meaningfully stronger position and our strategy is already starting to deliver improved results.

Now as we look to 2017 and beyond, our Board of Directors and Damian and I all agree this is the right transition and it is at the right time. With over 25 years in the Coca-Cola system, Damian is the right person to lead the next chapter for CCEP. And I know he will be an exceptional CEO.

It's been a privilege to be a key part of the creation of Coca-Cola European partners. And further over the last 10 years, it's been a real pleasure to have led Coca-Cola Enterprises through a transformation that delivered substantial share on a value.

And it’s contributing to a new company with strong foundations and the significant potential for future growth. So, now I would like to focus on our results.

This is our first full quarter since the merger to create CCEP and as we saw on our release this morning we have returned to growth with a combination of solid revenue and operating profit increases. There were several factors impacting these results including brand and package innovations, better execution, and favorable weather.

Most importantly, however these results demonstrate the solid opportunity that we have at CCEP to create meaningful, value building, long-term growth. We have significant assets including the right brands, the right people and a solid relationship with the Coca-Cola Company that we believe will enable us to continue to achieve success.

As we work toward this objective, we are maintaining a keen focus on three key areas. First, it’s vital that we deliver against our guidance for this year. This includes merging EPS growth, flat revenue growth and a modest mid-single-digit operating profit increase, all on a pro forma, comparable and currency neutral basis.

We affirm this guidance on our release this morning. Second, we must continue to deliver on our synergy objectives, which include a pre-tax goal of €315 million to €340 million by mid-2019. We are making good progress and in fact we’re already seeing the benefits in our results.

There is still much work to do however and we are committed to achieving this objective. Third, we must continue to work in partnership with Coca-Cola Company to deliver long-term sustainable, profitable growth. Our two companies have shared goals in a consistent view of the marketplace.

Now, as you are seeing in our news release this morning, our third quarter results include pro forma, comparable diluted earnings per share of $0.66. This reflects a revenue increase of 3.5% with operating profit growth of 7% both on a pro forma, comparable and currency neutral basis.

Importantly, volume grew 3.5% in the quarter, which reflects the benefits of our brand, package, marketing initiatives and improved weather. For example, Coca-Cola trademark brands grew 2% in the quarter, driven by 1% growth in regular Coca-Cola and very strong mid-teen growth in Coca-Cola Zero.

Our Coca-Cola Zero brand has been re-launched as Coca-Cola Zero Sugar in Great Britain, France, Belgium in the Netherlands and the campaign has been very successful. We are achieving renewed consumer interest in trial leading the volume and value share gains and we’re working with our customers to expand the brands presence and distribution.

We will continue the re-launch in additional territories next year. In Sparkling flavors, we achieved excellent growth for Fanta up 6%, and in Germany, we benefitted from the introduction of Sparkling Beverage ViO Bio Limo, made with organic juice.

Energy drinks also achieved solid growth driven by Monster and low-calorie Monster Ultra and the incremental volume created by the acquisition of Monster distribution rights in Iberia earlier this year. Overall, Still volume grew 4.5% driven by growth in sports drinks, ready-to-drink tea and water.

Key brands here included Aquarius, Nestea, ViO, Chaudfontaine, Smart Water and Aquabana. Let me note that we see significant long-term potential for our Still brands, particularly water. A great example here is smartwater, which we launched very successfully in Great Britain more than a year ago and more recently a Sparking version of that brand.

Now as the heart of this success of our brands, is the strength and the success of our supply chain. For example, we've introduced new production lines in Spain. Increased smartwater capacity in Great Britain, added the new speed glass line in the Netherlands and completed a logistics overhaul in Germany.

Every day, we are working to improve our operations and ultimately to improve the service we provide to our customer. In closing, let me share some key thoughts. First, we’re encouraged by our return to growth in the third quarter, which is our first full quarter as Coca-Cola European Partners.

This is a positive first step and supports our belief that there are opportunities from meaningful growth. We have strong popular brands in the Sparkling and Still categories and we have a clear plan to deliver that growth. Second, we also recognized that we continue to face a challenging operating environment.

This makes it imperative that we achieve our objectives to synergy that we continue to bring innovated brands and packages to the market, and that we continue to enhance our supply chain. Third, we will continue to build on our solid strategic partnership with the Coca-Cola Company.

We have a shared vision of the future of our business compatible sustainable long-term growth and we will work together to reach that vision. And last, as the leading Coca-Cola Partner and a major European CPG Company. Coca-Cola European Partners has a strong commitment to driving shareowner value.

Our commitment that was at the very hard of the decision to create this company, and importantly, I'd like to note that our management transition will not impact this commitment. Thanks very much for your time and now, I'll turn the call over to Nik for more detail on our financial results as well as our full year outlook..

Thank you, John and thank you to all of you for joining us today to discuss our third quarter results and the outlook for 2016. On a reported basis, the third quarter diluted share was €0.67 or €0.66 on a pro forma comparable basis including a negative currency translation impact of €0.03.

Third quarter revenue was €3 billion, up 3.5% and a pro forma comparable and currency neutral basis, operating profit was €459 million, up 7% also on a pro forma comparable and currency neutral basis.

As John mentioned, this return to growth was sealed by brand and package innovations, strong execution in favorable weather conditions enabling us to grow volumes at 3.5% during the quarter.

We were also able to maintain gross margins as pro forma comparable and currency neutral revenue for the case was down 0.5% and cost of sale for the case declined 0.5%. This gross margin reflects favorable year-on-year costs for some key commodities including sugar, offset by slightly negative price mix.

It also reflects the increase in Germany due to a shift from returnable to recyclable packages, and the impacting changes our route to market, clearly the right thing to do from an OI level over the midterm. Additionally, operating margins improved even though operating expenses increased 1.5% on a pro forma, comparable and currency neutral basis.

Several factors influence this result including the positive impact of volume growth and timing of expenses, partially offset by realization of our in-flight synergy savings and our efforts to manage expenses while fully meeting the needs of our customers and our business. Looking forward at 2016 full-year guidance.

We continue to expect revenue to be approximately flat and operating profit growth in a modest mid-single-digit range, both on a pro forma comparable and currency neutral basis. This reflects the benefits of ongoing cost control and the initial benefits of restructuring.

We also have affirmed diluted earnings per share growth in the mid-teen range on a pro forma comparable and currency neutral basis. When you include an expected negative currency impact of approximately 4.5%, we expect pro forma comparable diluted earnings per share in a range of €1.86 to €1.90.

In addition to operating profit growth full-year 2016 diluted earnings per share growth is benefiting from differences in interest and tax rates between comparable 2015 figures and our 2016 outlook.

Our weighted average cost of debt is expected to be approximately 2% and the pro forma comparable effective tax rate for 2016 is expected to be approximately 25%. Now, let me add a note on restructuring as we discussed in our release this morning, we recorded about €53 million in restructuring charges.

These are principally related to initiatives in Germany that are already underway at the time of the merger, and they started the transition of Atlanta-based headquarters roles to Europe.

Additionally, in October 2016, we announced several new restructuring initiatives including those related to further supply chain improvements, the transfer of German transactional activities to our shared services center in Bulgaria and other central function initiatives.

Please do note that these efforts are subject to consultation and agreement with the relevant employee groups. We look forward to providing you with more details on our synergy initiatives as well as our outlook for 2017 in December. So, let me close with a couple of key points.

First, we remain committed to managing each of the leaders of our business to achieve our guidance and objective for the remainder of the year. So we’re very pleased with the growth we have in the third quarter. We acknowledge some of this was driven by favorable weather. Second, as John mentioned.

We are on track to deliver our expected synergy objectives with a pretax goal of €315 to €340 million by mid-2019. Finally, we remain focus on generation cash and creating long-term profitable growth. All in support of our most important goal delivering increasing levels of sharing our values. Thanks for your time.

And now John, Damian and I will be happy to take your questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from Ali Dibadj with Bernstein. You may begin..

Hi guys. A few two main questions. One is in terms of volumes specifically. Can you try to quantify how much was weather versus underlying and then in the underlying how much is increasing kind of like-for-like versus rolling out distribution like Coca-Cola Zero or Monster rollouts? Then I have another question..

Yes, that's been incredibly difficult question to answer to take a part of the various components so Damian, why don’t you give us your thoughts on that?.

I agree, John. I think it is very difficult to try and break it out in terms of specific weather impact. Clearly, we've seen an uplift in our business across all the territories and obviously, the weather is a factor, but we don’t break out specifically, I disclose the amount that we attribute to the weather.

I think what we’re more focused on is, when we are less with good weather that our business and our system is in a place to respond and take advantage over there and I think when you look at our volume in Q3 clearly right through the supply chain and right through the organization, we were able to deal with other glints and we’re also more focused around continuing to do right things in markets, so in Q3 and you will see the benefit of our continued focus on Zero Sugar quote particularly in GB and pushing distribution of all our brands and packs across the market.

So, rather than focusing on the weather impact, we want to just make sure we continue to do the right things long-term in the marketplace, and I think that's what you’re seeing in Q3 as well..

Okay, okay. I know it is a tough to segregate. The second question is totally different. Congratulations to you both John and Damian. John, as you transitioned to Damian, maybe Damian, can you comment on any changes in philosophy.

You mentioned this John, in your prepared remarks, but is there really any changes in philosophy, because clearly, the markets view and there’s a lot to note in the market view, they just don’t know, but the markets that you seem to be Damian, the belief that you are much more focused on top-line driving as opposed to not against, but as opposed to more emphasis on bottom-line drivers of growth, so I wanted to hear your assessment of that interpretation clearly by the market, I mean in that context what prevents the company from just going higher in terms of the 2.5 to 3 times debt-to EBITDA target and buyback stocks sooner? Thanks..

Yes, Damian, I’ll let it to you answer the first part of that question, I think Nik, you might want to take the second part..

Sure. Yes, I think for those of you have to be at our meeting in Barcelona, I think that question is also raised and categorically, my focus like John’s is on shareholder value creation, and generating free cash flow. So, there is no substantial change in the way, I look at the business versus the way John and I have looked at it.

And I think that’s been clearly, we’ve been working together on both - at CCE aspect, but also on creating CCEP for over a year now, and I think at all times, both have been consistent in our view around, our primary focus is being shareholder value creation. Clearly, top-line growth is an enabler, but it’s one of many.

And I think in the past both CCE and would about this have benefited from top-line growth as it enabled to grow shareholder value along with many, many other metrics. So, that’s my focus going forward and that’s very consistent with what John and I have spoken about over the last 12 months..

Okay.

Nik?.

Yes. I think again, just to reiterate at this point and I think we’ve talked about it several times. One, I think as a company we remain fully committed to driving shareowner value. Now, I don’t think the only lever through which we drive shareowner values is levering up and returning cash or doing share buybacks, right.

So, I think it’s a combination of business growth; it’s a combination of what we need to do to look at opportunities in the marketplace. And obviously continue to look at a dividend yield or some of the form of returning cash; with sitting on excess cash.

Today, we set a long-term capital structure target at 2.5 times to 3 times, which doesn’t mean that we couldn't revisit that.

We believe that’s the right structure for us today, particularly as we look to remain focused on maintaining dry powder as we look at other opportunities whether it be in M&A opportunities, restructuring our business, investments for growth to drive top-line. I think it’s a combination of those factors.

And ultimately if that isn’t those opportunities clearly, we would look at what is the best use of cash and what is the best leverage for us to be operating on a long-term basis.

But no change to our philosophy, no change to our target today, and something that we would continue to reassess based on the business environment and opportunities that are out there..

Thank you. Our next question comes from Caroline Levy with CLSA. You may begin..

Thank you so much. It’s over along the same lines in terms of I do know Damian; you are very competitive you like gaining share. As a just understanding if there might be even in the short-term and cost to doing that, there is some pricing adjustments that need to be made, or other things that could impact margins at least in the short-term.

And then just secondly, what is the outlook for CapEx again, because it seems like you might need to retool plants, in order to have more flexibility with packages that would be really helpful..

Okay.

Damian?.

Simple answer Caroline no to the first question. Maybe, Nik can deal with the second question..

Sure. I mean Caroline, I think we have indicated a capital spending in the range of 4.5% to 5%, 4% to 5% of net revenue. But I think that is really what we see for this business in the steady state.

So having said that, I would say to you as we look at our plan and this is completely linked in any way to John or Damian as we look at our plans for CCEP and what are the right things to do.

I think our CapEx initially might be slightly higher than our G&A, because we'll be in investing in some of those synergies and as we provide you with an update on that in December in terms of particularly our 2017 outlook, we will give you some indications of that.

but again, we feel comfortable on a normalized recurring basis about 35% should be a sustainable level of CapEx investments in the business..

Thank you..

Our next question is from Judy Hong with Goldman Sachs. You may begin..

Thank you. Good morning and John, congratulations on your well-deserved retirement and it's been great working with you over the years. .

Thank you..

So, I guess my question is just broadly speaking on the pricing side. Obviously, it's been kind of flattish maybe down a little bit in the third quarter.

So maybe just a little bit more color just in terms of by region, where are you seeing a little bit more pressure just from a pricing standpoint and it looks like France was down in the third quarter and then I should about 2017 obviously inflation potentially picking up in markets like GB, sort of your comfort level in getting more price mix as part of your revenue growth algorithm?.

Yes, when I say as we look to the future, we are confident that the whole algorithm around price mix does work and then our category is one of the most important ones there in terms of our ability to capture price, which we are doing.

Damian, why don’t you specifically comment on the results?.

Yes. Thank John. Hi, Judy. Yes, just to your point on France, we had a slightly more consumer promotions in Q3 in France, so that's the primary driver of pricing in France in the third quarter.

and secondly overall if you recall on our earlier calls, we have been pretty happy with our ability to realize our pricing plans in 2016 and most of those were dealing in the first quarter and carried on through the year and to John's point, we believe that that's going to be part of our plan going forward, and a combination of mix and headline pricing on volume driving, our net revenue guidance and through 2017 and beyond.

So, that's really what's been happening with pricing in Q3..

Okay. and maybe just a little bit more color on the gross margin.

just flattish gross margin I think in the last few quarters we've seen gross margins a little bit better, so can you sort of bridge between how much all states regarding the quarter some of the commodity impact in the quarter just on the margin side?.

I would say to you that was no big shift from the perspective of year-on-year sales on the commodity side in the third quarter specifically. We did have some synergy benefits starting to come through and I would say that would circle about €15 million of benefits that we've seen place closed towards our target of €315 million to €340 million.

So outside of that obviously, a part of this also is driven by strong top-line from the volume perspective that just give you some leverage through as well. So, nothing else really..

And the €15 million is - can you break out between COGS and SG&A?.

We will give you more for breakdown in December in when we give you a full-year position on ‘16 as well as our outlook for ‘17..

Okay, got it. All right. Thank you..

Thanks, Judy..

Our next question comes from Bill Schmitz with Deutsche Bank. You may begin..

Hey, guys. Congratulations to both Damian and John..

Thank you..

So my first question is last quarter you gave us like a pretty boldest September trends, can you tell us what's going on so far in October in terms of current month versus that September month?.

Go ahead, Damian..

Yes. Obviously, you have seen Q3 as we talked about those came in quite strongly. We have also seen a good October and so again, we will continue to see momentum through October. Our challenge really is as we look at Q4 December is a huge month for us in Europe with Christmas et cetera.

So, clearly that’s what our priority is now is getting through November and then making sure and we’re already doing that all, our Christmas activations are in place across the customer and come through base to ensure a strong finish to the year.

But with the size of December in Q4 obviously that’s our primary focus, but it answered your question of October was also a strong month for us..

Great thanks. And I’m going to back that guy, and sort of go through a bunch of the countries and I apologize for that advance, but it is the worst over France, I know with up 1%.

Are you starting to see like tourists then come back, I mean Spain was great too and it might take Spain is like all the tourists, who want to go Egypt, Turkey and France are going to Spain now. So, tell me if that’s true, if that continues, and if you think France is bottomed.

And then on the GB side, why some inflation coming through in GB, I know there has been some resistance to some of the retailers, but like intuitively, from like a macroeconomic perspective, you get a big currency devaluation, typically everyone starts to pass new pricing and it’s been a little slower than we expected.

So, am I looking at the wrong way or do you think it's just a matter of time and are you getting any resistance from the retailers in the short-term?.

So maybe, I'll just be with Spain first. I mean clearly, we have seen Spain, and ideally continuing to perform very well. Obviously, history of very solid execution in that market, but as it's publicly well known a bigger place in tourism in 2016 and which also has made a part in the year-to-date results and it’s benefited from favorable weather.

So, we would see that continuing obviously close and plays lesser role in Q4, compared to the summer, but obviously, that’s a positive trend for those and if you look at the date of the 2017, there is also a lot of commentary about 2017 and also being a strong year and pre-bookings with Spain.

So, now we will focus on how we can make it most of that going forward. And I think in GB, it’s a good point, obviously when you look at the valuation in the currency and the impact that may have on consumer pricing. that hasn’t happened yet. It's safe to say that it is a discussion across all categories and across all customers.

GB is quite of a cheer market, so a lot of the activities locked in well in advance. So I think it's going to be probably closer to Q1 2017 before we may see, I mean significant impact from the currency translating into inflation rates as you would be jumping up to 1% or 2%.

so, we’ll keep the close eye on that, but candidly, a lot of the pricing activity and pack architecture was in place and that's what we’re seeing in the execution going forward. We will look at that closely and obviously, we’ll make our own decisions around what drive for business in GB based on the inflation numbers we see coming through.

I think in France, we had a good quarter, but again, I’d like to talk about France after a number of good quarters and clearly, we haven’t seen any real change in tourism figures in France.

I think a lot of people again made decisions about that as weekend, where holidays early in the year due to a number of external reasons, France dropped down the list for a lot of people and that has continued to year-end.

So if we look at the trend beyond the quarter, I would say France has been hit negatively in tourism particularly, obviously affecting away from home business.

Thankfully, there has been no further incidents in recent months and obviously, that's what we wish to continue and therefore maybe consumer and tourism confidence will pick up as we move into 2017, but candidly, it's a bit too early to talk about any turnaround in France..

It's okay, great thanks….

And the only other point, I would make Bill is….

Sorry..

Go ahead..

Go ahead..

Yes.

The only other point, I was going to make to you, Bill, you remember for 2016 in particular, we were pretty much covered in terms of our transactional exposure, so as the company we've been able to maintain what our pricing is for 2016, but to Damian's point clearly we will be looking at this as we look at what's happening in the market in 2017 and what our exposures are as well..

Okay. thanks so much..

Thank you..

Our next question is from Stephen Powers with UBS. You may begin..

Hey, thanks, and congrats from me as well. Two quick ones on specific businesses to start and then I got a broader one for Nik in follow-up.

But first on the quicker ones, any early comments you can share on the Honest Tea launch in Great Britain, I'd be curious there and similarly, as we think about energy specifically, can you comment maybe on the velocity you are seeing on Monster Ultra and how those Ultra SKUs compare to the core Monster SKUs again in terms of velocity relative to your expectations?.

Damian?.

Thanks, Steven. As I said early days of Honest Tea, I think the initial reaction has been very positive from consumers and from customers. And again, we've seen that as a play into a fairly new developing segment of the Tea category and quite challenged specific.

So, we will continue to look at up around performance, but early days, very successful, but again, we will see our goals.

on Monster, the bulk of our growth is coming from the Ultra variance and again, they are planning into a widened consumer trends and we’re seeing where we broadened the number of SKUs and monitored to four, now in most markets and we’re seeing that driving a lot of our top-line energy growth.

In particular in Germany and also in Spain, where there are newer markets for us with Monster. So again, they are benefitting even more, but they are more mature market like GB, we’re seeing Ultra continue to take a higher and higher share of the energy category and of the Monster brand, which for us long-term is a very positive trend. .

Yes, and is that confidence of that consumption and through velocity versus this distribution wins as you roll that out?.

Yes. We’re seeing it topping our rate of stand numbers off shells, so there is obviously a distribution benefit that when we get it listed it’s right to say that this is extremely strong. So, it's definitely to sell out consumer driven..

That is great.

And then nik, as we think about the go-to-market model today across your geographic portfolio, and apologies if you’ve spoken about this before, but can you just identify how much of today is SG&A or distribution costs are - what you’ve classified as variable in the form of third-party relationships in indirect distribution for example versus the more fixed costs that will create leverage or deleverage with better or worse growth.

And then looking forward to your synergy and supply chain restructuring plans, what do you think that balance of fix versus variable SG&A looks like in a few years when that does this settle? Thanks..

I think if you look at our SG&A, you’ve got essentially about a third in selling, a third in delivery, and a third in true admin type of expenses. And so if you look at the selling and the delivery piece in particularly, if you take that two thirds, you’re going to find that roughly half of that at least is variable if not slightly higher too.

So, there is an opportunity there as we continue to look to get more leverage throughout D&R.

From an admin perspective that’s where we have actually looked at a lot of opportunities from a synergy target perspective outside of what is procurement and the manufacturing efficiencies from a perspective of best practice sharing, net low customization et cetera.

So, I wouldn’t be able to give you a clear indication of that today, but it is something as we would roll out with our plans to realize those synergies and look to be able to variabilize a lot of it. We would come back to you with that. The other piece you got to keep in mind that if you look at our COGS, truly about 85% of that is variable.

Because it's all linked to stuff that is in the product and goes out, be it concentrate, be it commodities et cetera. So, there is a fair amount of variability that we already enjoyed through this D&R, and hence our model would work from a perspective giving operating leverage..

Okay.

is it fair to assume that on the distribution portion of cost that you spoke of that those costs are elected to migrate more towards variable costs as we go forward as you look maybe more towards moving things from direct your own distribution to interact third-party distribution?.

Yes. I mean again, keep in mind, if you look at the majority of our market, even in Spain, where we have essentially what I would call a direct but an indirect model, because we have direct from the standpoint, but we have our sales people going into the store.

We do the merchandising and we do the invoicing, but the deliveries already variables, so a bit of it’s to a third-party. So the one market where we would continue to evolve that is in Germany with moving more from DSP towards more things to warehouse.

So that’s where the opportunity is and that’s where you will see some re-classifications in our P&L as well overtime, because of the fact that with your DFT and how you actually report that there is an impact to your revenues and impact to your cost of sales and SG&A, but then net-net that's actually overtime, a positive to our ROI..

Okay, perfect. Thank you..

Our next question is from Mark Swartzberg with Stifel Nicolaus. You may begin..

Yes, thanks. Hi everyone. Two questions and perhaps, I direct it to you, Damian.

One is, can you give us the performance of your wholly-owned brands in Germany and Iberia specifically, just trying to get a sense of the underlying trends there backing out Monster and then irrespective of that when you think about Germany and your own history there, what is your opinion about the path to growth in Germany and I appreciate the timing is uncertain, but when you think about getting Germany back to growth, what do you think the key variables are?.

Hi, Mark. Well, so first of all, on our wholly-owned brands, I'm not sure what you’re referring to, but in Germany, all our brands are pretty much KO brands. So, I mean when you look at the performance of Germany, it's pretty much KO and now we’ve added Monster and we own separated out by country.

The performance was in; overall they are all pretty much KO system brands. .

Don’t you have distribution of Monster in Germany? That's what I'm trying to back up..

Yes, we do..

Yes, but Monster is less than 2% of our total portfolio for CCEP. So I don’t think that would move the needle significantly in terms of just happening in Germany or Iberia..

Got it, great. Well, that was the assumption of I and my questions. So, that's okay, got it. .

And then I mean Germany has been growing quite successfully for a number of quarters and years now. So Germany is backing growth certainly in terms of volume and revenue, and we've also seen margin expansion in Germany over the number of years.

So, I think that plans that are being put in place in Germany are delivering clearly being part of CCEP and leveraging that that's factor sharing and leveraging our scale within rest Europe, our goal is to accelerate that improvement and that's what we’re focused, but if you look across all of the Western European market certainly over the last two to three years, Germany has been pretty much at the top in the overall quarters of growth in Western Europe and that's being on the backdrop of strong growth within for Sparkling and flavors, but also expanding its portfolio into steals and they acquired Solid Water and Premium Water business with pretty good growth in Germany market over the last number of years.

.

That’s a reference to volume.

I'm just looking at the press release the -1 revenue in Germany in the quarter and the -0.5 year-to-date?.

Yes, yes. There is one specific dynamic in Germany that will affect our net revenue as you've called out as we move out of the return of the PET in Germany into one way PET, which is part of our ongoing count and then also is allowing us to switching our business there as we take out some constant complexity.

So, kind of the delivery costs for one way obviously above that revenue, because they’re going to central warehouse and so they’re really sitting in the terms with the customer, and for refillable, they’re actually below, because it goes to our own distribution system, so it’s a sales expense below in that revenue.

so it's difficult in Germany to look at net revenue as we transition, because clearly, we’re doing the right thing in terms of long-term growth, consumer choice and profitability.

But on the net revenue line, there is a cork as the distribution expenses won’t go both revenue and for the other go below and that’s really what you’ve seen in the quarter and also year-to-date in Germany..

That’s very helpful and if I could follow up.

So what is the underlying volume and when do you rate of growth and when in Germany and when do you think this noise sort of peak will start to become comparatively small?.

So, we will continue with the transition on packaging through '17 and '18, and obviously, as we go further, we’ll look at just ensuring that we make that clear and because it is a dynamic that will affect the net revenue in Germany going forward.

But if you look at our overall performance and volume wise, we’ve seen strong growth in Germany quarter-by-quarter, I think 36 months. So if you look at this probably volumes up about 2% in that business and year-to-date in Germany. So that gives us some indication and also on the underlying revenue as well..

Awesome. Very helpful. Thank you, Damian. Thanks, Nik..

Thank you. Our next question is from Brett Cooper with Customer Edge Research. You may begin..

Good morning guys. Two quick ones from me.

In the guidance component, you guys removed the tax of net debt targets for yearend, can you just give the reasons as to why you did that is there cash is coming out of the business at year-end that we should expect?.

Nik, would you like to address that one?.

Sorry, Brett. I think we continue to be remained focused on bringing our leverage down to our target range of 2.5 times to 3 times net debt-to-EBITDA.

But I think if you just look at some of the recent exchange rates if you have on the current projection we’ve seen probably a modest increase that we would expect now 2016 net debt-to-EBITDA projections. But I think the important piece is we continue to one, remain on track for our synergy efforts and two, strong focus on cash.

So, we will provide you an update in terms of what '16 and '17 look like when we do outlook call..

Okay.

And then it was specific in GB, but there is a coke trademark, the growth that we’ve seen in zero, wondering if you just kind of review what you’ve seen in regular red can life in Zero, to kind of give a holistic view of that?.

Damian, would you like to explain a little on coke in GB?.

Yes. So, when you look at our GB numbers, we have a very strong Cola franchise both in terms of classic dye coke is a great big bound for us in GB, it’s one of the strongest markets not just for GB, but globally.

We’ve seen a very strong performance on the new zero sugar variant, not just in terms of existing zero users - but clearly when we look at our volume growth we’re anticipating - we’re also bringing in new users into that particular brand, which is one of our goals. What interestingly in our Q3 and in GB, are existing red classy coke also grew.

So we saw a strong growth across our three coke varieties in Q3 and that gives us optimism going in all this is to Q4 and also for 2017..

Yes. Red grew at the top a little over 1%..

Thank you..

Thank you. Our next question is from Andrew Holloman with Societe Generale. You may begin..

Hi. Just two questions if I may just coming back to what you were saying about Germany on this transition with PET, did I hear right that that's going to continue to drag through 2017 and 2018, it is question number one, and question number two is, you have given us a range of EPS on the basis of pro forma FX neutral to 186 to 190.

Are you able to give a similar figure on a reported basis?.

And Andrew, just to be clear that 186 to 190 includes the impact of FX that we’ve currently quantify. We have a negative impact of about 4.5%..

Okay. And that is just on the same basis, but it is just as you are giving that.

Can you give us the same parameters on a reported basis?.

So, I can probably give you that on offline, because I mean that's really not that meaningful number from the perspective of something competitive, but would be happy to provide that to you offline..

Thank you..

And maybe Andrew, I'll just come back on Germany. So we've got a well-managed transition plan on our packaging strategy in Germany.

So, I wouldn’t use it will drag and it's been a huge part of our business, the refill business in Germany and we've transitioned out of that while growing to top-line and growing volume on revenue, and we will continue with that plan through ‘17 and into ‘18, at one point over 50% of consumption in Germany wasn’t refillable and we've managed that down as I said while growing the business and growing revenue and improving margins.

So, we’re very confident that we’re on the right path and it is slightly ahead of our plans actually in terms of expectations, we've gone further in ‘16 and we will continue to do that.

So I wouldn’t use the word drive, but you would expect that transition to continue through 2017 and into 2018?.

Okay, thank you. .

Our last question is from Robert Ottenstein with Evercore. You may begin..

Great, thank you very much. I think we all appreciate that it's impossible to understand the impact of the weather on the top-line.

Obviously, great volume numbers and I think we're all kind of looking for any kind of evidence to suggest that you can get the kind of volume growth that you guys are looking for and everybody is very confident on the synergy numbers, it’s the top-line whether question marks.

I was just wondering if you could give us any additional kind of intangible things that you can call out in the quarter in terms of improved execution that's sustainable or additional information in terms of the innovation and stuffs that are coming out into the market.

So that we could have a little bit more confidence that maybe you can’t continue to do 3% volume growth obviously or perhaps not obviously, but maybe a little bit more than what most people have modeled, which I think is a lot less than company guidance?.

Okay, Damian..

Yes. Again, just to maybe give you three or four examples of what we believe is whether independence activities that will deliver sustainable growth in the business. Some of these come from one of the benefits of CCEP like the best practice sharing.

So you’ll see in Q3, we’ve started to business with Aldi in our Belgium business, so we’ve listed a number of SKU and brands in Aldi, obviously a very big part of us in Germany and across Western Europe. We’ve managed to create good relationships in Belgium, so that’s in there.

You will see honest tea, which was referenced from the call in GB being distributed and sold now across GB, and we will look at the opportunity for that brand in all the markets, but that’s an example of its tapping into the 75% share of the market we don’t operate within in Europe.

You’ll see strong front activation across Europe on the back of Halloween in the quarter. Again, that’s a property that we believe is very relevant brand and those paying dividends. And obviously, the biggest contributor, which is a sustainable innovation, is the sugar-free Zero in the GB.

As we’ve talked about the four - that variant formula is going to be rolled out across Western Europe. So there are a number of specific initiatives that are supporting that 3% in the third quarter that will continue through Q4 and into 2017.

And obviously like all of the butlers, we’re also focused on some of the basics of execution through the placement distribution and great customer service. So there are - as we talked about there are a lot of sustainable activities going on beyond the weather and that we are excited about..

Terrific. Thank you very much..

Okay thank you. And let me just say to all of you, thanks for joining us today as we sign off just a couple of thoughts I have one is to let you know again, just what a pleasure it's been for me, running CCE and CCEP for 11 years. It's been great working with all of you and I cannot assure you that this transition is going to go well.

And we are moving to the right new CEO that I’m leaving this company in good hands going forward. So, secondly look forward to an opportunity to share a coke with many of you, who we’ve worked with over the years and that’s not to say goodbye, but to say thanks.

So I'll be with you on the outlook call in December, and then in the meantime, have a great day. Thank you..

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. Have a wonderful day..