Ladies and gentlemen, welcome to the Carlsberg's First Half 2020 Results Call. Today, I'm pleased to present the CEO, Cees Hart. [Operator Instructions]. And just to remind you, this conference call is being recorded. Speakers, please begin.

Good morning, everybody, and welcome to Carlsberg's H1 2020 Conference Call. My name is Cees Hart, and I have with me CFO, Heine Dalsgaard; and Vice President of Investor Relations, Peter Kondrup. I hope you and your families are all safe and well and that you're all getting through these challenging times. Let me first briefly summarize the key headlines for the first half year. The pandemic is having a significant impact on the business. We have taken many steps to protect our people, support our communities and protect the commercial and financial health of the group. We have been able to mitigate a large part of the financial impact, thanks to our resilient business and cost actions. We have made significant cash returns to shareholders, kept a strong balance sheet and secured liquidity. And despite of the continuous high level of uncertainty, we are today issuing a new full year guidance. I will now go through the group and regional highlights, after which Heine will take you through the financials and 2020 outlook. Please turn to Slide 3. The health and safety of our people have been, and will remain, a key priority for us. We have implemented new processes and procedures to minimize the risk of infections and ensure the physical and psychological safety of our employees. I would like to extend my thanks to all our colleagues who have done a tremendous job under very challenging conditions. We have strengthened our overall communication, set priorities and aligned objectives across markets and functions. Our leaders and employees were given the opportunity to be supported by virtual trainings and tools in order to cope with the new challenges. At the breweries, our initiatives included working in special shifts and expanding the use of protective equipment. It has been very important for us to contribute to and support our communities. We have been engaged in a variety of initiatives, including the production of hand sanitizers, donations of protective and testing equipment and alcohol-free beverages to health care workers and financial donations to local organizations. In addition, our majority shareholder, the Carlsberg Foundation, has made earmarked COVID-19 donations amounting to more than DKK100 million in support of research and various aid measures. Slide 4, please. And some overall comments on how we have navigated these uncharted COVID-19 waters. Our results were significantly impacted by the pandemic as our markets were affected by a range of government interventions, including lockdowns, social distancing and restrictions on people gatherings. Generally, the on-trade channel in all markets has been severely impacted. With around 25% of our volumes being sold in the on-trade channel, which has an above-average revenue and profit per hectoliter, the impact on business results is substantial. Our volumes declined by 7.7%, and price/mix was minus 4% due to the negative channel mix and also country mix. During the first half year, we have implemented many changes to protect the financial health of the group in terms of safeguarding 2020 results while still ensuring that we are able to capture new long-term growth opportunities. We have been pleased to see that the resilience of our business, which we have built over the past years, really proved very solid and was key in our ability to manage the sudden and very new challenges and make the necessary changes. With resilience, we are referring to financial position, organization, people and portfolio. Our financial resilience relates to our strong balance sheet and our ability to quickly adjust our cost base, protect cash and secure liquidity. The organizational resilience was evidenced by a high degree of flexibility and engagement, enabling fast adoption to change. The resilience of our people has been commandable. Everyone has walked the extra mile for the company. There is no doubt that being a purpose-driven company with a high level of employee engagement and satisfaction supported this. Lastly, our resilient brand portfolio enjoys strong market positions. In addition, our continued investments in and focus on building the craft & speciality and alcohol-free categories have been an advantage for us and helped us cater for changing consumer preferences. As a consequence of the business resilience, we were able to reduce the impact from the pandemic and, by that, deliver an increase in operating margin of 30 basis points, while organic operating profit declined by 8.9%. Slide 5, please. Some insights into what we are doing to prepare for a different future that is impacted by the uncertainty as to how the pandemic will evolve, the longer-term impact on the global economy and consumer spending and actions of regulators. For the beer industry, in particular, there is uncertainty related to the longer-term impact on the on-trade and possibly longer-lasting changes in consumer preference in terms of channels, brands and price points. Taking a prudent approach to these uncertainties, we have updated our priorities, pulling them under 2 headlines, respond for top line growth and reset for the future. Before elaborating on respond and reset, let me emphasize that our long-term strategic priorities are unchanged. We will continue to invest in and grow our well-positioned and strong core brands in order to ensure that we capture the long-term value opportunities in the core beer segment. We continue to believe in the long-term growth opportunities for craft & specialities and alcohol-free brews. And we will, therefore, continue to invest in these categories. When looking at our geographies, we are also confident that Asia will return to growth, and therefore, we will continue to expand our Asian business. And let me now explain what we mean by our 2 headlines. By respond, we are referring to an even more focused execution of our commercial programs, leveraging our strong brands and market positions. It also means prioritizing fewer brands and activities, focusing our innovation efforts more and make them more efficient. We will intensify our value management approach to ensure that we hit the right price points that appeal to consumers' possibly lower disposable income. And we will continue to invest in and expand our e-commerce activities. We will reset our business for the future to ensure that our structures, processes and cost base are well suited for post-COVID-19 reality. This includes a review of above-market cost and structures in our central, regional and support functions as well as supply chain. Unfortunately, this will impact the number of employees in these functions. In our markets, we are taking actions to ensure the right structures, flexibility and capabilities in response to a possibly smaller on-trade and changes within the off-trade subchannels. We will continue to leverage our Funding the Journey culture, and we are embedding the positive learnings and ways of working from this half year in our future ways of working. Slide 6 and Western Europe. As expected, Western Europe had a very difficult start to Q2, which was impacted by restrictions and lockdowns of the on-trade channel in almost all markets. When the gradual reopening started towards the end of the quarter, we saw some improvements in performance, albeit still in decline year-on-year. Volumes were also impacted by the changed Danish-German soft drinks border trade. Excluding this lost volume, total volumes declined by approximately 7%. Price/mix in most markets was impacted by channel mix, and for the region as a whole, mix was impacted by country mix as Poland performed much better than some of the high-priced markets in the Nordics and Switzerland. We were able to push through significant cost savings, particularly within supply chain, logistics, marketing and administration. Nevertheless, operating profit declined organically by 19.2% as the savings were not sufficient to offset the revenue decline. Slide 7 and a few country-specific comments in addition to the general COVID-19 situation in the region. In Norway, we saw a positive impact from the closed borders as the Norwegians didn't travel abroad and were unable to buy their beer on the Norwegian-Swedish border. Mix was negative due to channel mix, but within the off-trade, we saw favorable mix, both on channel and category, the latter due to a higher share of beer [indiscernible] water. As we already highlighted, volumes in Denmark were also impacted by the changed German-Danish border trade of soft drinks. The weather in Poland has been very poor, which has impacted the market negatively. Nevertheless, we achieved mid-single-digit percentage volume growth, helped by our limited exposure to the on-trade. We saw particularly good results for our craft & speciality portfolio, including the international speciality brand the Greenberg and 1664 Blanc, and alcohol-free brews. Both categories were up by solid double-digit percentages. As Switzerland is a large on-trade market, accounting for approximately 50% of our volumes, our business was severely impacted by COVID-19. On a positive note, we saw good growth for our craft & speciality and alcohol-free brew portfolios despite the closure of on-trade. In France, we were hit hard by the virus, so to speak. Not only was the on-trade closed for a prolonged period of time, we also faced production challenges due to the fact that our brewery was impacted by COVID-19 constraints. In the U.K., we saw good pickup of the Carlsberg brand in the off-trade, and our market share was slightly up. As you have probably read, in May, we signed an agreement with Marston's to form a joint venture with our U.K. business and their brewing businesses. We expect to get the final approvals for the deal in Q4. Please turn to Slide 8, and Asia, where the market development varied significantly. China turned positive in the second quarter, but unfortunately, this could not offset the challenges in the rest of the region. Price/mix was positive in Q1 but reversed in the second quarter due to a very strong recovery in China, where pricing is below the regional average. As we started taking out costs very early on in the year due to the early impact of COVID-19 in China, cost savings in H1 were substantial, resulting in a modest decline in operating profit and a significant operating margin increase of 290 basis points. Slide 9 and a few market-specific comments. As already mentioned, China saw a strong rebound in Q2, following a tough Q1. The strong 18% volume growth in Q2 compared to the market growth of around 5% was due to a number of factors. These included restocking at distributors and stock building ahead of the peak season as well as our commercial drivers such as impressive growth in e-commerce of more than 100%, admittedly on a low base; expansion of the Huda brand; growth in our big cities; and very good results for our international premium portfolio with Tuborg growing by 16% in Q2 and Blanc by 21%. We gained around 1 percentage point market share for H1. The Chinese price/mix was 6% up due to the growth of the premium products. In Laos and Vietnam, the beginning of Q2 was tough. But towards the end of the quarter, restrictions were gradually lifted, and that converted into a more positive momentum for our local businesses. Our local power brand, Beerlao, in Laos; and Huda, in Vietnam were important drivers of the volume growth seen in June. Unfortunately, in the beginning of Q3, we have seen new lockdowns in the central part of Vietnam. Our businesses in India, Nepal and Malaysia were severely impacted through Q2. During the quarter, all 3 markets had to completely shut down operations, which, not surprisingly, led to steep volume decline. By the end of Q2, we were able to reopen the breweries, but trading conditions remain tough. In addition, the India business has been impacted by very complicated and cumbersome processes for renewing licenses and also by excise tax increases in most states. Slide 10 and Eastern Europe, where our business saw a relatively modest impact from the pandemic due to a small on-trade exposure of approximately 5% of volumes. Beer volumes grew organically by 1.4%, positively impacted by growth in Russia and Kazakhstan. Non-beer volumes grew strongly by 20.4%, following continued solid growth of energy drinks across the region. Consequently, total volumes grew by 2.4%. Price/mix was impacted by the higher level of promotions in Russia as we are working on reversing last year's market share trend, and consequently, revenue declined organically by 1.3%. We delivered a flat operating profit margin of 18.9% as a significant cost savings across the region offset the higher promotional investments in Russia. Slide 11, please. The Russian market grew by around 1% in the first half year. We saw no change in the competitive dynamics in the market, which continued to be highly promotional driven. In March, we therefore kicked off our plan B, which entails a much more aggressive promotional approach in order to stop our market share and volume decline, and so far, our activities have delivered the intended outcome. Volumes were up 3%. And our market share was strengthened significantly vis-à-vis the beginning of the year, giving us, in June, the highest monthly market share during the last 18 months or slightly more than 28%. Not surprisingly, our high level of promotions impacted price/mix negatively. At this moment in time, we see no change in the level of promotions in the market and thus, we will continue our current strategy. Our business in Ukraine is more skewed towards the on-trade than the regional average, and we, therefore, saw a negative impact from COVID-19. Price/mix was slightly down due to the channel and packaging mix. Albeit still small volumes, we were satisfied that we were able to strengthen our market share in the craft & speciality and alcohol-free segments. And with that, I will hand over to Heine, who will take you through the financials and outlook. Heine?

Thank you, Cees, and good morning, everyone. Please turn to Slide 12 and the P&L highlights of the first half year. Revenue declined organically by 11.6%, impacted by both the volume decline and a negative price/mix of 4%. As Cees said earlier, the drivers of the price/mix were many, including country, channel, product and packaging mix. A slightly higher reported decline of 12.6% was due to currencies. COGS per hectoliter declined organically by 2.5%. The decline was mainly a result of country mix and due to the growth of China, Russia and Poland, which have below-average COGS. Looking at COGS per hectoliter by market, our supply chain has done a really good job in reducing costs to mitigate the impact from underabsorption of fixed costs. And in most markets, we therefore saw only very modest increases or declines. Gross profit declined organically by 13% and 14% in reported terms. Gross margin was 48.6%, a decline of 90 basis points. Our operating cost management tool really proved its worth during first half when we were faced with the significant headwind from COVID-19. The OCM tool enable us to quickly respond and execute very tight cost control, and consequently, operating expenses declined organically by 16%. Starting already in January, we were able to reduce costs in 14 out of 15 cost groups with the main contributors to the decline being marketing, supply chain and administration, including people-related costs. The one cost group where costs were not reduced was bad debt due to the hardship felt by most on-trade customers. Excluding marketing spend, operating costs declined organically by 12%. As a percent of revenue, marketing investments declined 150 basis points organically to 7.1%. The reduction in marketing was done partly as an obvious response in a time of crisis when certain marketing activities were less efficient and partly as a measure to protect short-term earnings. The decline in marketing spend is not sustainable long term, and we will have higher marketing spend in second half compared to first half. Reported operating profit amounted to DKK4.6 billion, which was a decline year-on-year of 10.8%. In organic terms, the decline was lower at 8.9%. The currency impact mainly related to the Norwegian, the Russian and the Chinese currencies. The operating margin improved by 30 basis points to 16%. Net profit benefited from lower financial expenses and also a lower tax rate. The former was positively impacted by lower average funding costs, and the latter was 26% versus 27% last year. Adjusted net profit was DKK2.872 billion, and it was almost on par with last year, while adjusted earnings per share were up by 2.8%. The improvement was the result of lower financial expenses, the lower tax rate and also supported by a lower number of shares due to the share buyback. Please go to Slide 13, and some comments on cash flow and net interest-bearing debt. Operating cash flow was, of course, impacted by the lower earnings or EBITDA, which, in reported terms, declined by DKK540 million. Trade working capital was significantly impacted by lower trade payables as a result of less production, less purchasing and lower CapEx, all due to COVID-19. Looking at the rate of the average trade working capital to revenue. This remains strong at minus 17.5%, although, this number, of course, was helped by the lower revenue. Somewhat counterintuitive, especially as we've talked about reducing CapEx and focus on cash, operational investments went up in the first half. This was, however, due to the acquisition of the Brooklyn brand rights in our markets. Please note that following IFRS, this posting in operational investments is offset by a similar entry in external finance -- financing in the cash flow from financing activities as the first cash payment is deferred to second half. CapEx, excluding the acquisition of the Brooklyn brand rights, declined by around DKK700 million. Note that when comparing net CapEx with last year, last year was positively impacted by the disposal of the brewery site in TWAN time in Norway. Free cash flow amounted to DKK3.1 billion, a decline of around DKK2 billion, of which big part relates to the Brooklyn brand rights acquisition. The increase in net interest-bearing debt of DKK3.1 billion versus year-end '19 was mainly due to the lower free cash flow and the significant cash returns to shareholders in the half year. In total, dividends and share buybacks amounted to DKK5.5 billion. We have been very focused on securing a continued, strong liquidity and financial flexibility. And hence, we issued 2 new EUR 500 million bonds at very favorable rates of 0.625% and 0.375%, respectively. Please turn to Slide 14, and a follow-up on our capital allocation priorities, which remain unchanged. As you may recall, our first priority is to continue to invest in our business to ensure the long-term value creation of the group. Despite being severely impacted by COVID-19, and notwithstanding significant costs in operating costs, including also marketing, we have been very alert not to compromise the commercial health of the business. Our second and fourth very important priority is to maintain a strong balance sheet. As I mentioned on the previous slide, net interest-bearing debt increased, but at 1.51x, our leverage ratio remains well below our target of below 2. We are satisfied with the financial flexibility that comes with a strong balance sheet. Please remember that the leverage multiple is based on 12 months trailing EBITDA, which means that there's strong pre-COVID-19 numbers included in the EBITDA figure. Our third priority of an adjusted payout ratio -- dividend payout ratio of around 50% was delivered upon, again, in March when we paid a dividend of DKK3.1 billion, equal to 50% of adjusted net profit in 2019. Our fourth priority is to distribute excess cash to shareholder -- to shareholders, currently in the form of share buybacks. In February, we initiated the first tranche of this year's intended share buyback. And last week, we completed the DKK2.5 billion share buyback and bought 2.9 million shares or 2% of total volume of shares at an average price of DKK863. Combined with the share buyback carried out in January, as part of the 2019 buyback program, this calendar year's total share buyback as of today amounted to DKK2.9 billion. We have, therefore, in total, returned DKK6 billion to our shareholders while, at the same time, maintaining a strong balance sheet. Our fifth priority is value-enhancing acquisitions. This year, we have entered into an agreement with Marston's in the U.K. to form a JV with their and our brewing businesses. We expect the deal to be completed in Q4. In addition, we have further strengthened our relationship with Brooklyn and acquired the rights to the brand in our markets, thereby reducing complexity and, importantly, also increasing future profitability. Due to the continued uncertainty related to COVID-19, the pending Marston's transaction, which amounts to approximately DKK2 billion, the purchase of the Brooklyn brand rights and possible other inorganic opportunities, it has been decided not to initiate the second tranche of the share buyback. The decision, not to initiate the second tranche, also reflects us prioritizing a solid balance sheet and the ability to pay solid dividend in line with our capital allocation principles. And now please turn to Slide 15, and the outlook for the year. On April 2, we suspended our guidance, but today, we are issuing a new guidance. The reason for this is that we now have first half and July numbers and are, therefore, well into the peak summer season. By providing guidance today, we are hopefully giving you a better understanding of how we, at this point in time, are seeing the impact of the pandemic on our full year financials. That said, we cannot emphasize enough that the guidance is significantly more uncertain than usual as the development of the pandemic, currently unknown government's actions, consumer reactions and the macroeconomic development may have significant implications on business performance in the remainder of the year. Important to also keep in mind is that we are still in the beginning of August, which is part of the important summer season and a month that, in recent years, has accounted for up to 15% to 16% of the full year's profit. Based on the results until and including July, the current COVID-19 situation in our markets and the mitigating actions that we are planning, we are now forecasting an organic operating profit decline of 10% to 15%. The guidance is based on the following assumptions for second half: In Western Europe, we are assuming a gradual recovery of the on-trade, although it will not, in 2020, come back to the precrisis levels. In Asia, the situation is more fluid. China started Q3 well, but due to recent lockdowns in some of our key provinces, H2 will remain volatile. In the rest of Asia, the situation is also volatile with some markets gradually recovering, while others continue to be heavily impacted. In Eastern Europe, our business is still expected to be less directly impacted by COVID-19, while macro environment definitely is a risk. On costs, we will continue our focused and very disciplined cost agenda, but our marketing costs are expected to increase compared to first half as some activities were postponed to second half and as we invest to prepare for 2021, ensuring the long-term health of our brands. Additional assumptions related to 2020 financials are a currency impact on operating profit of minus 400 based on spot rates on August 12 and primarily coming from NOK, COP, RMB and LAK. Finance costs, excluding FX, are expected to be around 600 to 650, and we expect a reported effective tax rate of around 26%. Our CapEx expectations, excluding the purchase of the Brooklyn brand rights, have been lower to now around DKK4 billion in constant currencies as we have reduced or postponed a number of projects. And now back to you, Cees.

Thank you, Heine. That was all for today. But before opening up for Q&A, a few concluding remarks from my side. So to summarize on H1 2020. The pandemic has so far had a significant impact on our business. We have taken many steps to protect our people, support our communities and protect the commercial and financial health of the group. We have been able to mitigate a large part of the financial impact, thanks to our resilient business and our cost actions. We have made significant cash returns to shareholders, kept a strong balance sheet and secured liquidity. And despite of the continued high level of uncertainty, we have today issued a new full year guidance. And with this, we are now ready to take your questions.

[Operator Instructions]. Our first question comes from the line of Trevor Stirling of Bernstein.

Cees and Heine. Just two questions from my side. The first one, it relates to the guidance. And it implies that margin performance in the second half is worse than the first half. Is that purely down to the impact of the delayed marketing investments? Or are there other costs that are delayed? Or is there country mix playing a role there in the second half? And so second question, Cees, can you talk about what you think may have changed permanently? And you talked about a number of factors. Clearly, delayed opening of the on-trade, but you also alluded to changes in regulation and changes in off-trade channels. I wonder, could you give you a little more color there about what your thinking is in terms of these topics?

Thank you. Heine, over to you.

Trevor, so with respect to the guidance for the full year and thereby also for second half, it is clear that the guidance is significantly more uncertain than usual. It's really a very volatile world. And of course, that makes us cautious in our outlook. As said, we expect higher marketing spend in second half than in first half. But except for that, there are no sort of significant other moves behind this in the other cost groups.

And then with regard to -- Trevor, with regard to the other question, yes, we see, across the globe, different paces, if you like, with regards to the further development of the on-trade. First of all, when we look at the Western Europe review, the on-trade sector is gradually recovering, but it's not expected to get back to pre-COVID-19 levels in 2020. We think that the price/mix will remain under pressure due to negative channel and country mix. In Asia, as we said earlier, the Chinese business started Q3 well. But some of our strongholds in Western China were subject, or are subject to renewed lockdowns as we speak. So therefore, H2 remains pretty volatile. Eastern Europe, the direct impact of COVID-19 is expected to be small. A key risk there is the macroeconomic development. So in general, it is a bit of a scattered picture. The situation remains fluid, and we continuously need to adapt to the new realities.

Our next question comes from the line of Sanjeet Aujla of Crédit Suisse.

Cees and Heine. A few questions from me, please. Firstly, just picking up again on the on-trade. What are you seeing in terms of volume declines in the on-trade and footfall into July, particularly in Western Europe? That's my first question. And then secondly, you talked about the possibility of further inorganic opportunities. Can you just clarify on the geographic remit in terms of M&A? Would you be interested in further sort of European assets? Or is Asia really the priority? Or are you even thinking about other regions outside your existing footprint? And then my third question is, Cees, you talk about looking to hit price points that appeal to the new reality. Should we think about lowering pricing or increased commercial activity? Is that across the board or more focused on Western Europe? If you can just elaborate on those points, please.

Yes. With regards to the on-trade in Western Europe, we see -- to give you a hard but also a harsh figure, Q2, Western Europe was down by 50%. We see gradually that number improving. But as we said earlier, we are not yet at all towards the level of last year. So on-trade is -- in Western Europe is recovering but at a slow pace. With regards to acquisitions, Heine, over to you.

Yes, Sanjeet. So inorganic opportunities, we don't comment for good reason specifically as to where it is that we are looking. But we have a strong balance sheet, as you've seen. So we are looking for inorganic opportunities. I think it is important to underline the fact that our primary focus is on SAIL'22, which means that our primary focus is on continuing to organically grow the business. Having said that, of course, there could be opportunities coming up. And there are, as you've also seen, a few opportunities already in first half. So no specific comments as to where.

And then with regards to the price points, Sanjeet, there we indeed see -- or we think there can come a kind of new reality. Also there, it is different per region. In Eastern Europe, there's a different reality because of competitive actions and also because of macroeconomic impact. There, we very much look at, indeed, some reduced prices and also increase in promotions. And by that, we gained market share. What we see in Western Europe that we need to focus even more on value management to ensure that we get the right price points. Also there, we need to maybe think a bit with the balance of the number and the depths of our promotions. But we don't have a plan to decrease prices. In fact, our premiumization strategy continues, especially with alcohol-free brewer, craft & specialities. Alcohol-free brewer was very much helping us in our mix. We grew by 10% in Western Europe. And that, of course, was good news in the first half year. So no plans for price decreases rather than increased attention to value management.

Can I just pick up on the M&A point. The Marston's deal that you announced in the period, should we view Carlsberg as a -- using that as a vehicle to consolidate further the U.K. market?

Well, frankly, I think that's a big, big word. We saw this as a good opportunity to strengthen our portfolio in the U.K. We've always said that we are or have not been satisfied with our position in the U.K. And in our view, this is an excellent opportunity to strengthen our reach to the market and also the total portfolio as we are now strengthening our position in ale. We see the Marston's brands as a strong set of brands. But frankly, I think we are not there to consolidate the market. This is an add-on. We strengthen our own position.

Our next question comes from the line of Simon Hales of Citigroup.

Cees, Heine and Peter. I've got, I think, 2 or 3 questions, please. I mean can you -- I know you talked in the presentation around the guidance, on the outlook taking account of the July performance. I wonder if you could just give us a little bit more detail as to how you exited the quarter in June and how the volume and sales trajectory is -- has trended as we've moved through July by sort of region. And then maybe as an addenda to that, specifically on China, clearly some restocking in the quarter built into the very strong volume recovery. How do we think about the underlying run rate in volumes in China in Q2 and what we've seen coming into July? And then away from that, just on marketing spend. How do we think about this longer term? I appreciate, obviously, a rebound in spend in the second half. But as we look into sort of 2021 and beyond and the commitment to the SAIL'22 objectives, should we expect a rebound in marketing to go back to previous levels of marketing as a percentage of sales? Or do you think you've delivered cost sort of savings over the last sort of 6 months, which will be permanent? And maybe another -- the [indiscernible] ratio to remain slightly lower than it has been historically?

Thank you very much. Heine -- thank you very much Simon. And Heine, over to you with regard to the guidance.

Yes. Simon, so on sort of June, July. In June, we saw sort of low to mid-single-digit volume growth in all regions, helped, of course, by good weather, and some on-trade stocking or restocking in Western Europe; and on top of that, also a strong Chinese performance supported by the IPBs, growth of the Wusu brand and also our big cities. The June rate, it cannot be used to predict the coming quarters. I know there is a lot of talk about exit run rates and stuff like that. But it's really a volatile world out there. Given the circumstances as well, we had a reasonable July. However, the uncertainty and also the volatility remains very high, while we saw very good June numbers in Western Europe, July, in Western Europe has been impacted by bad weather, in particular, in some Northern European markets. In Asia, as Cees said, the situation really is volatile, and we have recently seen some lockdowns in Western China and also in Central Vietnam. And the sort of hard-hit countries like India and Poland, Malaysia are only slowly recovering. And then on-trade is improving in most countries, but the speed of recovery is very dependent on local government's initiatives and, consequently, remains very volatile. When it comes to the marketing question, given the circumstances, we are very confident that we took the right calls on marketing in first half. As said, we are increasing the marketing spend for the second half to support the long-term growth of our brands. The full year marketing-to-revenue ratio for this year will be lower than 2019. But to your question, yes, it will be higher than where it is in the first half. And it will be sort of -- if you look further ahead, it will be back to where we've been over the last few years.

Our next question comes from the line of Pinar Ergun of Morgan Stanley.

I have a quick follow-up to Trevor's question on guidance. Could you give us a bit more color on the key assumptions underpinning your guidance? For example, are you factoring in a potential second wave for COVID? Another one on China. With the asset injection, Chongqing will evolve from a regional to a national player. How does this change the way the business is run? And do you see any room for further synergies?

Thank you, Pinar, and good morning. Heine, over to you.

Yes. Key assumptions behind sort of the full year guidance, just a few highlights. On government lockdowns, we are assuming no change compared to where we are today. And specifically to your questions, we have not included the risk of another spike in infections across all our markets that may result in sort of government interventions and further changing consumer behavior across the globe. So that's the assumption we've put in basically that it stays the way it is today. Yes.

And on the [indiscernible].

Yes. So in terms of the project in China, you're absolutely right that we will be combining our assets. We don't see big synergies going forward in terms of cost there. It is a relatively well-run company. Not only relatively, it is a very well-run company, both inside and outside Chongqing. So we don't expect any big synergies.

Our next question comes from the line of Laurence Whyatt of Barclays.

Three from me, if that's okay. In India, we've heard reports that there are some rollbacks and some of the tax increases in that country across a few other states. I was just wondering, are you seeing any immediate impacts on volumes as a result of those tax rollbacks? In Eastern Europe, you say you're getting some benefits from the reductions in pricing in Russia. Have you seen any changes in the competitive dynamics since you put those price reductions through in March? And then finally, I was wondering if you could give us an update on Habeco following the extended discussions on that asset.

Yes. Good. Thank you. With regards to India, as you were hinting at, it's a very uncertain and volatile environment in India. The number of infections have been very high. The country as a whole is struggling socially and economically. The changes by regulators, that is by state by state and city by city, have happened very often and very fast, making it very difficult for our Indian colleagues to run the business. And they are indeed also impacting our customers badly. Approximately 68% of the outlets are open. And then very concrete to your question, do we see impact? It's very difficult, of course, to distinguish where the impact comes -- whether the impact comes from higher excise, higher taxes or basically the COVID consequences, but we see a significant drop in our volume in India. First of all, the country was more or less closed at the beginning of Q2, but also, the recovery goes relatively slowly. So we see a huge impact in India of COVID because of multiple factors, including, indeed, excise taxes but also some states changing the route to market and making it more difficult to obtain the right licenses. So a difficult country to be in at this moment of time. With regards to Eastern Europe, we don't see changes in the competitive environment at this moment of time. We have been pretty successful with our one -- or our plan B, which we started in February, and we are happy with -- again, with the rebalancing of the Golden Triangle that focuses on regaining some of last year's lost market share. We also wanted to make sure that we had a reasonable capacity utilization. So at a certain moment, we draw a line in the sense with regard of the minimum volume we wanted to have. And as we have now regained market share, we will now rebalance a bit again towards becoming more profitable. And as we think in Golden Triangles, we want to have a balanced Golden Triangle, which means that we prefer to be a profitable #2 opposed to marginally run company but being number one. So basically, we are a bit more optimistic about the regain of share, and we now rebalance further the Golden Triangle towards profit. On Habeco, probably also because of COVID-19, no further progression can be mentioned here.

Okay. And just a follow-up on the Russia question. You mentioned capacity utilization starting to improve. I thought earlier in the year, before COVID, it was around the sort of 45 level. Could you give us an update on capacity utilization in Russia?

Yes. It's now around 50-50 plus. We look in 2 ways, if you like, capacity utilization but also kind of minimum kind of volume in hectoliters in order to keep the scale not only in the breweries but also towards our customers. And therefore, the current growth in Russia satisfies us. But again, there is a continuation of the investment of our competitors in price. And therefore, we continue our journey, at this moment of time, with a slight bias in the Golden Triangle towards improving our margins.

Our next question comes from the line of Søren Samsøe of SEB. Søren Samsøe: Yes. Two questions from my side. First of all, I think you mentioned your cost was down 12%, excluding marketing spend. Maybe you can elaborate a little bit on which of those cost cuts you can bring into 2021 and which one that you cannot and which will probably be back at the 2019 level when we go into next year. And secondly, also, if you can quantify how many SKUs you have caught and how many you haven't sort of.

Thank you, Søren. Heine, over to you.

Yes, Søren. On cost asset, SG&A declined organically by 16%. And excluding -- as you're saying here, excluding marketing, 12%. It is important to underline that we here benefit from the transparency, which we got from our OCM tool. And I said, we started our cost-cutting already in January when we saw the virus hit sort of China. The main drivers behind the reductions have been within travel, within marketing, within supply chain, within administration, within employee-related costs, including elements such as layoffs and hiring freeze as well. Regarding then how that looks for 2021, it is really too early to be very specific on 2021. Some of the costs will, of course, come back in 2021 as the virus hopefully comes better under control, and we're getting back to sort of a more normalized situation. But we are looking to make as much of the learnings and also the cost reductions as at all possible stick in 2021. And the tool to do that is really OCM, discipline and focus on costs. But -- and we will do that. But it's too early to give any specific numbers for 2021. We don't comment -- and then on the SKUs part, we don't comment on any number on SKUs. We've done that in the past. The way it is right now is that we maintain discipline also on the number of SKUs, and we are driving that down. But it is a bit more complicated than just a number. So we don't sort of comment specifically on any SKU number, but we are saying that we are reducing the number of SKUs. We are making -- taking the opportunity to decomplex our supply chain setup. And there, SKU reduction is just a key element. Søren Samsøe: Okay. So we should not expect those SKUs to come back, so to say, in terms of new SKUs back in 2021. And then if that's the case, so you have -- so you do go into 2021 with fewer SKUs. Do you then plan to put more marketing behind the, you can say, fewer SKUs that you have?

So you're right that this is one of the areas when it comes to SKU reduction that we want to make sure sticks into 2021. So yes, you are right that this is one of the areas where we expect the discipline from 2020 to continue into 2021 and onwards in terms of lower SKUs. And then you are right. When we then increase our marketing spend versus 2020, we sort of spread the marketing activity across few SKUs.

Our next question comes from the line of Jonas Guldborg of Danske Bank.

First, a question on the booking and the acquired branding rights here. Could you help us get a sense of how big that business is for you today and what you will be able to do with the brand now that you have the rights instead of a license? Then a question on the margin development in Asia. Impressive indeed. But are you able to say what it would have been, excluding changes in marketing spend, or how much of the improvement that is sustainable going forward? And then a more specific question following up on Søren's, on costs. Your admin costs declined relatively significantly in first half. Is that sustainable? And should we look at the same reductions in H2?

Thank you, Jonas. Heine, over to you.

Jonas. So the rationale for the Brooklyn deal, we've had a close cooperation with Brooklyn for, as you know, many, many years. We have now acquired the rights to the brand in our markets compared to what we had previously, which was a -- sort of a long-term license agreement. This new agreement brings several advantages for us. One is that the enhanced relationship with Brooklyn improves our joint management of the brand. Second, the way it's structured now, it does reduce complexity, and it does increase our profitability since we don't pay any license fees. And that also means -- and then that's been perhaps the last point, we will increase the investment in and also the prioritization of the brands in order to unlock further premium growth potential across the markets. We don't give specific numbers as to how big it is. And -- but it's something we do, of course, because we believe in the brand, and we believe in reducing complexity and also that increased profitability increases the focus.

With regards to the margin in Asia, the margin development, that's very much dependent on -- or impacted by country channel and SKU mix, and you can understand that it has been significantly different than in the past, including significantly reduced SG&A and reduced marketing spend. So yes, there will be a progression but more progression on the basis of 2019 and further, but I don't think that 2020 should be seen as a new platform for margins in Asia. So that will develop from another level or exit 2019 level than the exit 2020 level. And then your third question, over to Heine.

Yes. So on admin costs, you're right. We saw a good decline in admin costs in first half. Just highlighting what we've said before, the discipline on OCM goes across everything we have from sales to distribution to supply chain and, of course, also to admin costs and also that it's sort of looking at costs across the entire organization, whether it's in countries, in regions or in headquarter. We are really taking out costs and making our cost base more flexible across the board. So some of the costs reductions that you see in admin this half year will continue into second half. Most of it will into second half, by the way, but also into 2021, and some simply won't because there are some one-off effects. We will start to travel, for instance, more than we have done in first half. But we still expect to travel significantly less in 2021 than we did in 2019. So yes, a part of it will stick. Part of it will come back.

Our next question comes from the line of Richard Withagen of Kepler Cheuvreux.

Yes. I have two, please. First of all, on digital, I think, COVID-19 has made the need for a good digital infrastructure clear. So you've also indicated in the past to step up your investments, and you mentioned e-commerce in your prepared remarks today. So what have been the main learnings for the recent months? And in which functionality do you need to prioritize investments? That's the first question. And the second question, yes, coming back on the Marston's deal. Can you perhaps share your view on the medium-term prospects for the on-trade in the U.K., please?

Richard, thanks for your questions. First of all, with regard to the digital, we indeed saw a lot of changes in that area, but it's still small. Let me start with China. China is probably the most well-developed e-commerce market. And here, approximately 1% of our volumes go through e-commerce. It is both indirect B2B but also B2B2C. And we saw, in that channel, more than 100% growth in H1. In Western Europe, we have direct B2B via the Carl's Shop. We rolled it out in 6 Western European markets and 1 in Asia. And 40% of our on-trade orders go now through Carl's Shop. Obviously, we see huge changes at this moment of time. We need to cater for that in the future. We saw, for example, in Italy, Esselunga, moving in a couple of weeks towards home delivery, which previously, they either did not do or on the very low scale. So COVID have changed, if you like, conservative markets relatively quickly. And the first and foremost, we look at -- to your question is the e-retail that we are really on top of that. And further, in China, we continue with our successful story at this moment in time. And the third thing is to further develop Carl's Shop. Heine, now to the second question.

Yes, Richard. So on the Marston's question and our view on, on-trade, we don't comment specifically on sort of forward-looking views on on-trade. But it is clear that this deal will -- as Cees also said before, this deal will strengthen our U.K. business considerably for several reasons. One is significantly improved and also, as said before, very complementary brand portfolios, which will make the JV more appealing to suppliers, more sort of appealing to supplier, both for on-trade, to your question, but also to off-trade customers. Secondly, there are some very good cross-selling opportunities. And so Carlsberg brands to Marston's customers utilizing Marston's strong distribution network to 11,000 customers and then Marston's brands to Carlsberg's customers. So a lot of different, good opportunities, and we definitely see Marston's as a very good JV partner to us. Marston's know how to run pubs. They've done that for many years. We know how to run a brewing business. We've done that for many years.

All right. Cees, maybe I'll come back a bit on the digital. Do you think the IT infrastructure at Carlsberg is up to the job to a more digital future? Or do you think you need to make big investments over the next couple of years?

It's always a leading question in terms of are we -- at this moment of time, we don't have any big issues in this respect. We think that we have the right technology in-house. We are learning as we go. So there might be some more investments to come. But we don't think that, that will lead to investments, which are out of balance on the kind of investment we do in IT infrastructure at this moment of time. So maybe too early to say, but we don't expect big changes here.

Our next question comes from the line of Olivier Nicolai of Goldman Sachs.

Cees and Heine. Just three quick question, please. Cees, you mentioned a smaller on-trade channel going forward. Obviously, for the rest of the year, I understand. But just going forward beyond 2020, what are your assumptions at Carlsberg on how the on-trade is going to evolve in Asia and Western Europe? Second question is just to quantify something on your share gain in Russia. Are you able to quantify where you are in terms of market share? And are you planning to sustain this position? And just lastly, if I may, just a quick follow-up on this inorganic opportunities that you mentioned in the press release as a reason to postpone the share buyback for H2. Does your definition of inorganic opportunities includes potentially buying back some of your associates?

Very good. Thank you very much, Olivier. And with regard to the on-trades, I guess it's more kind of a global question, when will the virus be under control. So we think that the 31st of December, nothing will have changed at the moment that there is no vaccine against C-19. So yes, we plan for 2021 for an on-trade, which is smaller. We have different scenarios for that in different countries. And on the basis of that, we adapt our plans for the future. We very much focus on that, of course, in Western Europe, where we are gradually recovering but not yet at all at the level of pre-COVID, and we think that, that will take during 2021 to come back. And obviously, that is very different at the moment that there is [indiscernible]. But if not, we think, again, it will be below 2019 levels. Asia might be a bit different than that. It is maybe a bit more on the kind of V shape. Either it is lockdown, and there's nobody or -- and I'm talking more about them, for example, China, or everything is open, and then only, if you like, the night entertainment is impacted. It is very different, but it's not on-trade. It's more in general market structure in Nepal and India. But very specific to on-trade, we have different scenarios for different regions because of customer behavior is very different. But coming back to the initial -- or the key question. Do we see this continuing in 2021? Well, as our mantra is more or less, we hope for the best, but we plan for the worst in that respect. Then back to Russia. Russia has a market share of 28.5. At the latest reading, that is the highest since 18 months. Also, it's a kind of reasonable Golden Triangle. So yes, we have invested in it, and we lost some margins, but it's all relatively imbalanced. And as I said earlier, we'd rather be the profitable number two than a marginal number one. And therefore, we might reduce a bit our focus on promotions going forward to rebalance the Golden Triangle. But obviously, we don't run -- let's say, around 28%, 29% market share is something we would like to remain. With regard to inorganic options and opportunities, Heine?

Yes. So whether the inorganic opportunities include buying back minorities, it's a very good question and a very good reflection, and it definitely does. We've done that over the last few years. And to the extent possible, we will continue to do that. So the short answer is, yes, it does include that.

Sorry. I meant associates, not minorities.

Yes, but it's the same.

With that, could I have the last question, please?

And I guess our last question comes from the line of Alyssa Gammoudy of ING.

With regards to the change in the regional structure, can you give some color on how that will change the exposure to the on-trade channel? Because if I heard it correctly, Eastern Europe is now more or less 5%. How would it change in the new situation? Can you give an update on to what extent your credit facilities are drawn or undrawn? And if I may, the third question, can you give an update on the hard-shelter trials that you plan to launch this year?

Good. Thank you very much. With regard to the regional change, frankly, there is no consideration with regard to trade channels there. It's just because of the fact that we have 9 or 10 very big countries in, let's say, rest of Europe, and we have also currently in Western Europe a number of relatively small countries. We thought we will balance it better in terms of attention and focus with -- to bring them together with Eastern Europe. By that, also the balance in net revenue and EBIT will be a bit more equal across the 3 regions. So there's nothing, if you like, in terms of trade channels that triggered this change. With regard to the credit facilities, Heine, over to you.

Yes. Credit facilities, it is, again, a very relevant question. It's something that we have had a lot of focus on during COVID-19 in particular, of course, in the beginning of it, to make absolutely sure, to the extent that is possible these days. But as -- to do whatever we can to ensure that we have sufficient credit facilities available and that's also the reason why we took, as you know, two bonds, two €500 million bonds in the market in March and in June. That is exactly to secure credit facilities. We have sufficient credit facilities available. End of June, the committed credit facilities amount to DKK47 billion in total.

And then, Alyssa, with regards to your question on hard shelters. Indeed, we have done some consumer testing in a number of markets and have a good understanding of the main drivers and liquid composition and the content. And the research results have highlighted some potential for the category, but there are also a number of challenges. One of the test markets we used was Norway, and we launched their Garage hard shelters. It is still a very small category in Norway. It is 5% of the RTDs. The first signs in Norway are, however, encouraging. We have, after a few months of strong market share in the segment is of 30%, but it's a small segment, as we said earlier. And we are tracking better than expected against the 12-months plan. However, it's still early days, and we are evaluating the progress and potential launches in other markets. But in general, we are positive over the opportunity. I hope that answered your question, Alyssa?

Yes, definitely. But going back to the -- sorry, yes.

No, I was trying to close the call, but go ahead, Alyssa.

No, just -- sorry. One more little follow-up question on the regional change because it wasn't necessarily implying big change because of the channel exposure on-trade/off-trade. But because Eastern Europe is now more or less 5%. Will it still be around that 5%, including in the new situation with the new countries, including in Central Eastern Europe? Or is it difficult to answer right now?

I don't know what you refer to in terms of 5% because the -- in terms of total portfolio of -- sorry, Eastern Europe is -- well, Russia, on its own, is 8% of our net revenue. So it will be higher. I think it will be -- the total regional will be slightly around -- well, around 20% in the new situation, if that's what you refer to. And otherwise, you can, of course, pick up that with Peter. He will give you the answer on your question.

With that, I would like to -- thank you. Thank you, Alyssa. With that, I would like to close the call for today. Thank you for listening in, and thank you for your questions. We are looking forward to being in touch with you in the coming days and weeks. For now, have a nice day. Bye.