MDLZ - Mondelez International, Inc.

Operator: Good afternoon, and welcome to the Mondelez International 2025 Third Quarter Earnings question-and-answer session. [Operator Instructions] On today's call are Dirk Van de Put, Chairman and CEO; Luca Zaramella, CFO; and Shep Dunlap, SVP of Investor Relations. Earlier this afternoon, the company posted a press release and prepared remarks, both of which are available on its website. During this call, the company will make forward-looking statements about performance. These statements are based on how the company sees things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in the company's 10-K, 10-Q and 8-K filings for more details on forward-looking statements. As the company discusses results today, unless noted as reported, it will be referencing non-GAAP financial measures, which adjust for certain items included in the company's GAAP results. In addition, the company provides year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within the company's earnings release and at the back of the slide presentation. Operator: We will now move to our first question. Our first question comes from the line of Andrew Lazar with Barclays. Andrew Lazar: Dirk, maybe to start off, I was hoping you could talk a bit more in depth about Europe, how you're seeing things as you sort of close the year and into next, particularly when it comes to pricing that's been landed and movements sort of that you deem that you need to make, as you mentioned, price gap management in certain European markets. Dirk Van de Put: Yes, Andrew. So I would say, if I start with the consumer in Europe, I would say the consumer confidence remains, in general, stable, unchanged versus the last quarter. If I look at our biscuits, cakes and pastries and meals business, they're all performing well, where we have share growth and volume/mix growth. And if I look at it from an overall euro perspective, I would say the category is performing generally in line -- the chocolate categories in general, in line with expectations. We've seen the cocoa situation. As you know, we had to do quite substantial price increases in the order of about 30%. And so broadly speaking, I would say, the chocolate business is fine, but we are clearly seeing a couple of pockets of pressure that we need to address. These are caused sometimes by competitive situations where our competitors did not increase their pricing as much as we did, largely because they are private companies. And the other thing I would say is that in certain markets, the retailers also suddenly took more margin than they have historically done. So we're fixing these problems. I wouldn't say it's a structural issue, but we need to be -- deal with, and that has caused a difference in what we were expecting for this quarter in Europe. I would also mention that as you look at the European situation, there was a heatwave in July, which has affected our volumes, plus we have done some significant downsizing also, which affects our volumes. The two markets where we have these situations are the U.K. and Germany. We are starting to see a reaction to the repositioning of the price points in certain areas of the portfolio that we have done. And so we are seeing the volume and the share improve as a consequence of that. We've also seen that competition has started to price recently. So that also will help the situation going forward. Overall, I would say, as I see how the pricing is landing in Europe, elasticity is around 0.7, 0.8, it's higher than we would have expected where -- our thinking was more like 0.4, 0.5. And so we are taking on top of what I already explained to a number of other actions in the sense that we are innovating with new flavors and new formats. We are investing more in A&C. We're driving the seasonals very hard. We're working on promo effectiveness because that's also not playing out sometimes the way we would have expected. And largely our main focus is on hitting the right price points where in certain cases, like on our 300-gram range in chocolate, we passed 2 key price points, and that was probably a little bit more than the consumer can accept at the moment. We are, of course, accompanying that with a lot of productivity and cost savings. But overall, I would say, seen the fact that this was the heaviest cocoa cost that we would have in the year, from here going forward, we expect a significant improvement. We expect to see a significant improvement in Europe. I hope that helps, Andrew. Andrew Lazar: Yes, really thorough. Really appreciate that. And I guess, lastly, with respect to guidance, maybe you could talk briefly about the implied Q4 guidance change, just as I would assume, cocoa is largely been locked in at this point. And then what's the key reason behind, I guess, the cut? And then as it relates really to '26, you make reference to being an algorithm and EPS. I was hoping you could add a bit more color on your confidence around this. And I guess, more importantly, the sort of the key puts and takes that we should think about when thinking about organic sales growth next year in light of the planned investments that you're making and some of the elasticity concerns? Luca Zaramella: Thank you, Andrew. I will start by saying that on the '25 guidance, we had a series of impacts that clearly we weren't anticipating at the time of us giving guidance for 2025. The three main ones are the tariffs and related uncertainty affecting the overall consumer confidence. The second one is the material destocking that happened in the U.S. due to retailers lowering their working capital. And the third one clearly was the unprecedented heatwave in Europe. Those elements lowered already, when we talked to you for Q2, our flexibility for the year. With incremental softening of the U.S. biscuit market at the end of Q3, and we saw the market declining in volume terms a little bit more than the previous quarters, and the higher chocolate elasticities in Europe. Clearly, that caused a volume/mix impact that at this point in time, we don't want to offset by cutting costs and potential growth into next year. I think importantly, in the prepared remarks, we give you a sense of all the actions we are taking to improve the volume trend that we see specifically in the U.S. and in Europe. And importantly, we have taken additional pricing in the U.S. We have confidence in all the plants that we are putting in place around seasonals. I think we call out clear elements of growth in the U.S. like Tate's, the Ventures and Give & Go. And I think when you really look at what the new guidance means in terms of implied Q4, you see a step-up in the top line. 4% is year-to-date organic net revenue growth, we are guiding you at more than 4%. And importantly, last year, below the line, we had an $0.08 impact in the tax line that is nonrecurring this year. And so the implied EPS growth will translate in an over delivery compared to last year of the EBIT that will be quite good in terms of growth. Obviously, as far as '26 goes, it is a little bit premature to put all the pieces together for you at this point in time. We are literally going through the plans. And you might imagine that the big question we are asking ourselves is, what cocoa level are we going to have into next year? As I mentioned a few times, we are well protected and covered. But reality is we have put in place a series of coverage strategies that would allow us to participate to cocoa further potential declines. And so we need to understand a little bit better, and we will have a better sense of what the real cocoa impact is going to be for next year. It's certainly going to be positive even if cocoa is trading at a level that is quite higher compared to historical norms. We feel quite good about the plans we have been reviewing with all the business units in terms of chocolate. We are clearly optimizing GP dollars into next year, in line with our guidelines and how we want to manage the business. The commercial approach to chocolate is quite good. We are doubling down on things that are working really well for us. And obviously, we want to build share, drive consumer value and protecting penetration. And I don't have to tell you again that we have big opportunities in all emerging markets. I mean, adjacencies like cakes and pastries, snack bar and premium. So cocoa will be deflationary in '26, and we wanted you to hear that our goal is clear in terms of EPS growth for next year. And so we are really targeting a high single-digit EPS growth for 2026, even after the material investments that we're going to put into the business to really protect the long-term growth of our categories. Operator: We'll move next to Peter Galbo with Bank of America. Peter Galbo: Dirk, I was hoping maybe you could give us a similar walk around the U.S. in terms of the path forward maybe to getting back to growth. I know you gave kind of a very detailed answer around Europe, but would appreciate kind of a similar level of detail on the U.S., please. Dirk Van de Put: Yes, yes. Well, so as Luca already said, we saw the category slowing down more in the last quarter versus what we saw in the first half, which is obviously not good. If you look at it, the volume was down 4% versus 2.8% average year-to-date. That is driven obviously by a consumer that is very concerned in general about the economy, frustrated with the pricing they're seeing. And we're seeing the same behavior that we've been seeing before in the sense that they are really seeking for value, that means different things for the lower-income consumers, that means going to smaller packs at the right price points. For the higher income consumer that usually goes for bigger packs and buying when they're on promotion. We see that the basket size of the consumer is really not increasing over the last 3 years. And as you can imagine, as prices have gone up, they're being more squeezed on what they can buy within that basket. And they are tending to focus on what are the essentials. And as a consequence, snacking categories are not that essential for them, and we're seeing that in our volumes. And on top of that, promos are not necessarily delivering the expected ROI. What else are they doing? They're shifting channels and format. So we see a big shift from food and mass to value, club and online. We see more multipacks being sold. There's also some good news in the sense that some of the premium segments are doing well, like cakes for us is doing well and some of the better-for-you offerings, particularly protein related, that is for us a Builder's Bar under the Clif range, or a Perfect bar. They're doing well. We have Hu, which is our vegan chocolate is doing well. So we can see that there are areas that are connecting with the consumer for instance, also a Give & Go is doing quite well. The main concern is the U.S. biscuits category. And of course, the government shop shutdown going forward will not help with the confidence of the consumer. If I look at the OI, the reason why the OI is negative in North America is largely driven also by cocoa. It might not immediately be clear, but Oreo or chips or Tate's also have quite a bit of chocolate in them. And so they are affected by them. At the moment, it's not easy to price in the U.S. So what are we doing about all this is the big question, of course. I would say in the first place, the one thing that's important to realize is that our presence in those channels that are benefiting, Club, Value and E-commerce is good, but we don't have the same market share as we have in food and mass. So we've been working very hard to increase our presence there over the past more than one year. And every quarter, our market share in those channels is increasing, and we will continue to do so. That means we have to adapt our PPA. We have to increase the number of displays we have in these channels, and we need to do some route-to-market investments. The other channel that we are pushing very hard is on the go. And on the go, you can reach the consumer on the go with multipacks. If you think about a big multipack, and mom has to put a snack in the lunch basket, if you buy a multipack, that can cover several days or more than a week. And so we see a big opportunity in multipacks. Of course, we are working very hard on C stores because that's the other big area where on the go is happening. Overall, price points are critical, so we're doing a lot of RGM work on hitting the right price points. And that means really PPA at both ends of the spectrum. On one hand, the lower price. And so we've been talking about in previous calls that we need to get really to that $3 price point with some of our packs and then also the big pack as I was talking about before. The other thing, as I said, better for you, particularly protein is doing well. So we're driving our protein range quite hard. We're seeing 20%-plus growth there in Perfect bar and in Builders. So that is something that we will continue to double down on. And then as it relates to premium, particularly brands like Tate's, belVita and Hu are the other ones that we are going to double down on. As it relates to health and wellness, we also see a little bit of movement in overall health and wellness. We are working on expanding the Zero Oreo range and also the gluten-free Oreo and Tate's range. So maybe the last thing I would mention there on how we are trying to get back to growth is that we are studying very carefully how our promotions are working, and we've seen that we have to shift the way we do certain promotions. We need a lot more activation, not just a price decrease, but activation featuring special events, things like that. So those -- all those activities combined at this stage, make us believe that we can get to positive growth next year in U.S. Peter Galbo: Great. And Luca, maybe just on the prior question, maybe a bit more directly, you seem to have the visibility on, on-algorithm EPS growth for next year. I mean, should we be expecting that on top line, you'd have some visibility to algorithm top line, even if it's at the low end, just I know it's a bit more of a direct question, but would be helpful just from a modeling standpoint. Luca Zaramella: As I said, Peter, we need to put together our thinking at this point in time on what type of cocoa levels we are going to have into 2026. As I mentioned, we are well protected, but should cocoa go even lower, we will take advantage of that. I think the way you have to think about the top line is in three key components. One, it is Europe, where clearly, chocolate pricing might be deflationary. But as a consequence, the elasticity that we saw on the way up, should happen on the way down as well. And importantly, I think we will be seeing volume growth in the chocolate business for 2026 in Europe. The other component is developing markets where I think you're going to see continuous growth, volume and price-driven at this point in time. And the third component is really the U.S. where we are not projecting an improvement of the market situation, but where we will have material benefits coming out of channel expansion, us investing more in our brands and importantly, going after things that are really working well for us and doubling down on those. I think in the prepared remarks, for instance, we mentioned Oreo with Reese's. So it's really impossible for us at this point in time to give you exactly the range of top line growth of 2026. But rest assured that we are driving for volume growth in chocolate in Europe, we are going to restore top line and bottom line in the U.S. And third, emerging markets will continue growing for us. Operator: We'll move next to David Palmer with Evercore ISI. David Palmer: I just want to circle back to Europe. You mentioned the price elasticity up to 0.7 or so. And you also talked about there's some price gap issues and some competitors that have lagged on pricing. I'm curious how you're thinking about the outlook for price elasticity going forward, maybe some of the gives and takes since we don't deal with that market quite as much. One scenario would be that you're making adjustments right now. And that price elasticity could come back down. And then you mentioned the historically high prices, and we've seen categories where there's a little bit of fatigue after a series of prices and that price elasticity can continue to be stubborn and rising. So I wanted to get your sense on that. And I have a quick follow-up. Dirk Van de Put: Yes. Well, the type of price increases we had to implement our kind of unprecedented if you think about it. We are players that are largely in the tablet market. We are also in the other segments of chocolate, which is gifting or count lines. But largely tablet players, which has the biggest content of cocoa. So as a consequence, we had to do, as I said before, about a 30% price increase. And historically, the elasticity has been around 0.4, 0.5. It is higher, as I said, 0.7, 0.8, but that's not yet dramatic in the scheme of things, I would say, that's pretty good as long as you're below 1, I don't think there's many categories that would have such a limited price elasticity. But the main thing is, if you think about a 30% price increase on a 300-gram chocolate bar, for instance, you start to really get into quite high euros per bar. And I think as an example, that one, that's the one where we believe that we need to do something going forward. That doesn't necessarily mean elasticity needs to improve. What we need to do is get that bar to a price point, which is much more acceptable for the consumer. Short term, we can do that by reducing the price. Long term, we have to see if we reduce it to for instance, a 250-gram bar or something like that. So it is really adapting to very specific circumstances where we knew that we were taking a risk by passing certain price points, and in some cases, that worked quite well. In other cases, it didn't turn out so well. So that's one movement we are doing right now. That movement is helped a little bit by some of the more benign cocoa environment. I wouldn't say cocoa is getting extremely cheap, but it's still much higher than it used to be, but at least it's come down from the high that we saw during this year. The other one is probably that we need to adapt certain formats and look at where our competition is placed and make sure that we are in a much more competitive level. That would be the second big movement that we need to make. So these two movements, we believe, will solve some of the issues that we're seeing. And again, I want to emphasize that, yes, things are different than we expected, but it's not that they're often a major way of what we would have expected to happen in Europe, but we do need to make a number of adjustments of which I just gave you two. David Palmer: And when you look at your emerging markets, do you -- I don't want to make a big deal of the type of price elasticities that it looked like in the third quarter, they were still not bad. Your volume was down, the price elasticity would be sub-0.5, even if you take that quarter in isolation. But are you seeing certain markets where you're seeing a little bit of fatigue or maybe price gap issues? Or is that playing out just as you would think there, and I'll pass it on. Dirk Van de Put: Yes. I would say -- in the emerging markets, I would say, it's playing out largely the way that we would expect. The first thing I would say is there is more downsizing that has an effect on our volume. So if you think about it, our emerging markets, volume was down 4.7%. And first of all, Argentina, where everything has been going on. I probably assume that you're aware of that. So there, we saw hyperinflation, very negative macros and so our volumes were significantly affected in the quarter in Argentina. I guess with the recent elections that will start to improve going forward. And then the other big market for us is India, where we decided not to increase our prices that much, but to downsize quite a bit. So if you take out those two, the 4.7% becomes a 3% volume decline. So there's a number of effects in there that are driven by downsizing or the economy in two markets. If I then go a little bit around, I would say, the one market that we are experiencing more pressure is China, where we had low single-digit growth, a negative low single-digit growth in Q3, which is a new thing for us. Year-to-date, we are positive in our growth. We do see some short-term pressure. But overall, we believe that things will be okay going forward. And as you know, we still have a big distribution runway. It's clear that the consumer there is still not in the same confidence and probably still at a low for the last 20 years, and we're starting to see some signs of that. But we do believe gradually the consumer confidence will come back. India, I mentioned, India in fact is doing quite well in the movement that we had to make. So performing better than we expected, mid-single-digit growth in Q3, low single digit year-to-date. And then if I go to Brazil, double-digit growth in Q3, excellent execution in biscuits, chocolate and gum and candy. And then Mexico, also improving. I wouldn't say that the consumer in Mexico is in a good place. Clearly, very concerned about the economy and overall job opportunities, but our business is recuperating from some of the issues that we had before. We're seeing good mid-single-digit growth in Q3. So I would say, overall, we feel pretty good. Maybe looking at the volume, you might say that there is -- or it might look like there's a big elasticity effect, but that's really not the case from our perspective. And on our four big markets, we feel quite good at the moment. Operator: We'll take our next question from Megan Clapp with Morgan Stanley. Megan Christine Alexander: Luca, maybe just a quick follow-up. I think in one of your answers you said the guide does imply a step-up in the fourth quarter from an organic sales perspective. It sounds like that's mostly driven by Europe. I guess, is that fair? And then just the second part of the question. I think you had anticipated some rebound in North America just as the pricing flowed through. So can you just help us understand a little bit more about what you're expecting for North America in the fourth quarter, just given scanner data has been a little bit softer recently. Luca Zaramella: Thank you, Megan. Yes, we expect a bit of a rebound in Europe. Definitely, there is going to be a big activation around Christmas, and so the team is full steam ahead in terms of delivering the season and -- so you will see a little bit of a volume step-up in Europe, and that's one of the drivers. I think you see emerging markets despite the numbers that on the face of it are in terms of volume/mix, maybe a little bit lower than you would have expected. As Dirk mentioned, there is a big impact of Argentina, but the chocolate elasticity in emerging markets is just 0.3x as of Q3. And we expect that not to improve, but not worsen either in Q4. And importantly, in places like Mexico, China, India, Brazil, et cetera, I think the top line will continue to be good. So yes, there will be a better top line going into Q4. In the U.S., we are projecting a market that is in line with the minus 4% volume wise that we have been talking. But as we said, we are fine-tuning our pricing strategies and our promos, and so you will see a little bit of more pricing kicking in, and that will have a positive impact on both the top and the bottom line. And so that's where we are at this point in time. Megan Christine Alexander: Okay. Great. And then maybe just as a follow-up. You talked about in the prepared remarks the new multiyear North America supply chain program. Maybe you can just spend a little bit of time helping us understand what's different about this from prior productivity programs and any early targets you can share today? Luca Zaramella: Yes, it is a plan that we have been reviewing with the team for the last, I would say, 6 to 9 months. It is leveraging the competitive advantages that we have in terms of supply chain already. I think if you look at our profitability in the U.S. in biscuits and compare it to other players, it is obvious that we have quite a few good things to -- that help us delivering good profitability of the business. The new program will be intended to address mostly cost in some of the U.S. bakeries. I think we still have opportunities in terms of putting down lines that are more automated and address, a, some capacity constraints that we have, but importantly, our overall cost structure, and I think it will be a meaningful impact, again, that you will start seeing most likely as of 2027. And the second big element that we are addressing at this point in time is our DSD system. We stand by it, it is a competitive advantage. And so we're not talking about the front-face delivery of our great brands to retailers, but we are rather talking about the logistics system that is in the back of all of that. And having potentially fewer distribution centers and branches and automating those will result, a, in much better cost from a logistics standpoint, but second, in a much better service level and inventory for retailers. And so let's stay tuned. We'll talk a little bit more about it in the next few months. And all of this will be done within the envelope of the cash flow goals that we have. Operator: We'll move next to Tom Palmer with JPMorgan. Thomas Palmer: You noted the planned reinvestment for 2026 just when kind of talking about earnings. SG&A has been running down quite a bit this year. I guess any framing of how much of the reduction we've seen this year is more persistent cost reductions versus items that kind of come back next year? Luca Zaramella: So in terms of SG&A, I would say there are three key components of it. The #1 is clearly the working media, and working media is a little bit in decline compared to last year, but we didn't touch structurally the amount of spending investments we have been making in that P&L line in 2025. Going forward, you will see a big step-up of that line into 2026, and we firmly believe that the virtuous cycle that has delivered great results for us will have to be put back in place in 2026, particularly as there is cocoa coming down and there is a cost favorability due to that. The second element is non-working media that has been managed in a declining mode for 2025 and that will continue into 2026. Obviously, we'll have to make some specific investments, but we expect the non-working media line to be kept in control. And the third element is the overhead. This year, specifically, there is a positive impact due to our incentive plan that is not as high as we had it last year. But importantly, as we go forward, I think the team is working on initiatives that will deliver further SG&A savings. And so we expect that line to be in level to 2025 in 2026, with the exception, obviously, of the incentive that will be planned at 100% for 2026. Thomas Palmer: Okay. And I apologize for asking again on Europe. But I do just want to clarify on elasticity because I think there's kind of two pieces you discussed. This 0.7 to 0.8, that's effectively like non-seasonal products where you're seeing that elasticity and the belief is that will not change for the quarter. But as you shift more to seasonal, you'll effectively see better volume trends because those items will have less elasticity? Dirk Van de Put: Yes. That's basically the correct assumption in the sense that the 0.7, 0.8, unless we start to do major movements, and what I said is we are adapting in certain areas, that means it's not an across the board sort of adjustment of our pricing. It's only in those specific cases where we think we need to bring it back to the right price point. And so the 0.7, 0.8 roughly will be maintained on the normal range. And just historically, we noticed that the seasonal range, the consumer is not that clear on what the right price point is and also is inclined to pay a little bit more. So the seasonal range will have less elasticity. Operator: We will take our next question from Chris Carey with Wells Fargo Securities. Christopher Carey: So I wanted to ask about North America strategy. Some of your competitors in North America or peers maybe better said, have taken the approach of investing into value, into pricing, so as to establish a foundation from which to grow volume longer term and have effectively accepted the consequences over a 12-month time horizon. I think you certainly dabbled with this strategy in the front half of the year, and it impacted your profitability and there's been some shift towards, I suppose, protecting the profit pool. Can you just talk about your -- I suppose, level of confidence is the right way to put this, that a strategy that's a bit more focused on value and protecting the profit pool is the right strategy as we exit this cycle over the next 6 to 12 months. And maybe just if you could highlight a bit more whether you don't see these as mutually exclusive items, you can both protect the profit pool with pricing, but also offer value with some of the innovations and pack changes. So a little bit of detail on the strategy evolution in North America regarding pricing and volume. Dirk Van de Put: Yes. Well, I would start with saying it's a particular year for us in the sense that you have on one hand, the whole chocolate, cocoa movement that we have to deal with. And on top of that, you've got North America, particularly U.S. market that is slower than we've seen in quite a while. And so at a certain stage, we need to, yes, protect our overall profit pool, and we cannot try to solve for all problems at the same time. And so that would be one reflection that we had. The other one, I would say, as we started off the year, and we had a certain promotional strategy, what we noticed in North America is that, that promotional strategy was not giving us the volume effect that we were hoping for. And as a consequence, that started to affect our margins more than what we have thought or our profit pool, if you want. And so the shift that you've seen with now some price increases and some changes in the way we promote are really not driven necessarily by protecting the profit pool but are really driven by seeing how can we optimize our situation. And so going forward, as you look into next year, on one hand, as we explained, we think that the chocolate situation will significantly improve and that will allow us also to invest more into North America. If we would use that extra investment for a value play at the moment, I'm not convinced that, that is the best solution. As I said before, consumers don't seem to necessarily just react to value. They seem to be much more in a situation where they say, "Well, I can buy in my basket today what I can afford. I'm not planning to increase my spending. Within that, I need to cover my essentials. And yes, sometimes I will buy my biscuits, sometimes I won't." But even if the biscuits are a very cheap price, it doesn't necessarily mean that they will buy them. So our experience with the value strategy hasn't been that great. What we do, do is in our PPA strategy, we have launched a range of products that are at lower price points, you get less product for it, but at least it's available at the $3 or the $4 price point where about 1.5 years ago, 70% of our range or so was above the $4 price point. And we've significantly moved that in a way, that is a value strategy, but those products come still at very good margins. So that's the way I see the movements that we are going to do. And I hope this clarifies it a little bit. Christopher Carey: Yes. Helpful. One quick follow-up on the investment a little bit around this SG&A buckets. Is there any pull forward of investment that you had planned for 2026 coming into Q4 as you see some opportunities to lean in to achieve some of those outcomes that you're looking for? And then just as it pertains to this 2026 earnings outlook, does that embed a full spending, a replenishment of spending that you would expect to be sufficient so as not to need to do that again going into 2027? Luca Zaramella: Look, I think the -- at this point in time, the Q4 plans for A&C investments are locked in. So there is -- the guidance we gave you is in line with the level of spending. And clearly, we allocated money in the places where we saw opportunities. And as I said, we pulled back, particularly on nonworking media. But in general, pricing a lot, and they are contemplated in guidance. The virtuous model of this company is continuous investments in our brands, in our franchises and execution at point of sales and activation at point of sales. For instance, if you take some of the plans we have for next year, particularly around our chocolate with Biscoff or the fact that we are launching Biscoff in India. I think that will be meaningful spending and incremental cost due to activation at point of sales. I don't think it's possible to assume in a growth company like the one we want to be that we have done in 2026 with the investment. If you look at the amount of working media we have put into the system in the last few years, it is quite meaningful. But I think that is one of the reasons why we see our categories doing well. We have seen the company delivering good top line, volume-driven and price driven in a balanced way, and we want to continue that algorithm. I think importantly, you will see us in the years to come to go more deliberately after key incremental spaces like snack bars and cakes and pastries. We have just launched 7 Days in Brazil, we want to make sure there is efficiency of spending behind all these incremental initiatives. And so we don't want to play necessarily on a model that is launched, see how it does and then invest A&C, we want to go all in, both in terms of execution at point of sales and support to our brands. Operator: And this does conclude our question-and-answer session. I would now like to hand it back to Dirk Van de Put for any additional or closing remarks. Dirk Van de Put: Well, thank you for attending our Q3 earnings call. Obviously, if you have any further questions, our IR team, Shep and Ron, are available to answer anything else that you would like to discuss. Thank you. Luca Zaramella: Thank you, everybody. Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful evening.

Operator: Good day, and welcome to the Mondelez International 2025 Second Quarter Earnings Question-and-Answer Session. [Operator Instructions] On today's call are Dirk Van de Put, Chairman and CEO; Luca Zaramella, CFO; and Shep Dunlap, SVP of Investor Relations. Earlier this afternoon, the company posted a press release and prepared remarks, both of which are available on its website. During this call, the company will make forward-looking statements about performance. These statements are based on how the company sees things today. Actual results may differ materially due to the risks and uncertainties. Please refer to the cautionary statements and risk factors contained in the company's 10-K, 10-Q and 8-K filings for more details on forward-looking statements. As the company discusses results today, unless noted as reported, it will be referencing non-GAAP financial measures, which adjust for certain items included in the company's GAAP results. In addition, the company provides year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliation within the company's earnings release at the back of the slide presentation. Operator: We will now move to our first question. Our first question comes from Andrew Lazar with Barclays. Andrew Lazar: Thanks very much, and thanks also for putting out the prepared remarks this time around. Very helpful. Dirk, it would be great if maybe you could do a brief walk-through of the key geographies and how you see it all playing out in the second half. And then Luca, given the additional weakness in North America, what incremental actions can the company take, whether they be on the cost side or maybe more importantly, on the demand driving side to accelerate growth there even in the context of a weaker category? Dirk Van de Put: Thanks, Andrew. Yes, yes, maybe quickly, overall, we think the Q2 results are quite good. We had some good pricing. If you discount for the downsizing, we're flattish as it relates to volume/mix, and our bottom line is slightly better than expected. I think what also is clear is that we have a very good global balance in the sense that we see a continued weakness in North America, but we had a strong quarter in the rest of the world. And since our sales are well balanced between the different continents, that really helps us. The other one that's important for us is that chocolate and the significant pricing increases and RGM actions that we've done are playing out in line with expectations. So that's good. Our categories are showing continued strength, and we are maintaining our full year outlook. So overall, we feel good about the quarter. If I go a little bit around the world, maybe starting in Europe, a good quarter in Europe with good numbers, strong share gains. Clearly, the business is very resilient. The consumer is more confident in Europe, still quite fragile and frugal spending, but snacking continues to outpace food. And overall, I would say we feel pretty good about our European business. Consumers are not exactly bullish, but -- and they're focused on essentials, but they keep on buying our category even despite the significant price increases that we have to do in chocolate. If I go to the U.S., a little bit more of a difficult situation there. There's a lot of consumer anxiety. They look at a quite uncertain outlook as it relates to their personal finances, job expectations, inflation. So they tend to focus more on essential items. The size of the basket is getting very important, absolute price points. There's channel shifting going on. There's more promotions and some pack shifting, too. So overall, we see a pretty soft biscuits category, probably performing a little bit better than other snacking categories with holding share, but overall, the volume is declining. Switching to the emerging markets, we feel very good, double-digit growth. We have a sustained volume and value growth. We have very good share gains in Brazil, in India and Mexico. Consumer confidence is softer in these markets. They are worried about their personal finances, job security, inflation. So we see the same channel shifts mainly into bulk and discount in places like China. We also see the pack shift, but emerging markets continue to be an attractive growth engine for us. And if you look at our 4 major markets, we feel good about China, India, Brazil. Mexico has been softer, but overall, I would say clearly a strength this quarter in emerging markets. Luca Zaramella: Okay. Thank you for your question, Andrew. So as far as North America goes, first of all, there is clearly a consumer sentiment that is impacting consumption across the board. We have not planned for a material rebound of the category in the rest of the year. So I want to reassure you that in the guidance we have given, we have reaffirmed there is no material improvement of the U.S. general sentiment. In terms of plussing the plan up, what we have done is, first of all, we have announced incremental pricing that is going to take effect in a few weeks in North America. I won't elaborate much, but we are clearly at a point in time where we see inflation going up. Our cost base is higher, particularly because of cocoa but not only, and I think that will boost revenue and top line. We have done quite a bit of work in terms of being very selective. Instead of picking the items, for instance, that were most impacted by cocoa, we went pretty much across the board with more limited price increases. We had protected certain points where we see consumers going. We also had protected specific formats that consumers favor in -- during their buying habits. We have a plan that aims at boosting productivities in the second part of the year, and the team has done a very good job in terms of ensuring cost control. And I think you're going to see a rebound of the North American profitability, particularly in Q4. The team continues to pursue incremental opportunities, particularly in alternate channels. We mentioned a few times that our share gains in channels like club and dollar and value, they are clearly outstanding. And we have, again, deep opportunity to get to our fair share or closer to our fair share in those alternate channels. So quite a bit of actions that are planned for the second half. But again, we are not putting out wishful thinking in terms of category rebounds, et cetera. I think it is a fair assumption and safe one. Operator: We'll go next to Peter Galbo with Bank of America. Peter Galbo: Dirk and Luca, I wanted maybe to put a finer point on the previous question, particularly around the lack of change in guidance for the second half. Clearly, you had a strong delivery on the first half. So Dirk, maybe you can just put a bit of a finer point on the puts and takes in the second half. It seems like maybe the U.S. is a bit weaker than you thought, but then there's other pieces that are holding it up. Any other considerations that we should really think about as we contemplate that? Dirk Van de Put: Yes. So we're trying to be vigilant and make sure that we can execute against our agenda. I think that we have accounted in our outlook for the tougher areas, as Luca was pointing out. So the ones that we are keeping an eye on, first one would be chocolate. What we've seen in -- with chocolate in Europe is a very good Easter. We executed well in our RGM and pricing strategy that's in the market. Then in June and July, there was quite a heat wave in Europe. And so volumes were lower than expected. In the last 2 weeks, the temperatures have gone down, and we see the volumes come back. So we are quite vigilant on chocolate elasticity for the second half of the year. But it's difficult to read at this stage with the heat wave in Europe. As it relates to the U.S., we really don't see an immediate change. If anything, I think the consumer will see the full effect of the tariffs in the second half. And so we will see where the consumer confidence and the consumer spending will go. And so we have to be careful of that. And I would say those are the 2 big factors that make us keep our current outlook. Like Luca said, we've included, I think, a realistic view on what is going to happen in those 2. And that seems at this stage for me the best stance that we can take. Peter Galbo: Okay. And Luca, maybe just as a follow-up, there's obviously been a lot of discussion around the move in cocoa and cocoa butter in particular, which I think has moved in a pretty favorable direction. So maybe you could just talk about how we should extrapolate that, how you're thinking about it as you begin to contemplate hedging for '26. Luca Zaramella: I think when you look at the cocoa market fundamentals, they are going in the right direction. There has been clearly a pressure point in terms of demand. I think you saw the grinding numbers being down 7%, 8%, and that drove a couple of weeks ago a low level of cocoa price below the GBP 5,000 per tonne mark. Clearly, we took advantage of that. And it is what we said to you many times, which is many adjacent categories are reformulating out of real chocolate and moving into what we call compound. The pod count in West Africa is very promising. The weather has been cooperating. And look, notwithstanding the fact that there is still a long way to go, today, with the 50% confidence level, we can say that the season is going to be good in terms of the crop. And so potentially, there is a material and meaningful upside between supply and demand into the 2026 season. The level of the industry stock is still low. So many are on the watch out still. And so I believe the sentiment, the overall sentiment is that sooner or later, cocoa prices will have to come down. On the cocoa butter, which is the most noble part of cocoa and it is the one we use the most around the world, and that is what allows you to call chocolate, chocolate for instance, in places like Europe, it has come down dramatically, I would say, versus last year. It is usually traded as a ratio to the overall cocoa prices. Last year, it was, most likely at a certain point in time, even higher than 3, and it went almost to 4. And today, I think we can strike a contract with supplier for most likely half of that price and ratio. And so there is a material benefit coming, which obviously is offsetting the cost we have seen as of late. But in general, we feel like cocoa prices will have to come down. Operator: We'll go next to Megan Clapp with Morgan Stanley. Megan Christine Alexander: Maybe another follow-up on the second half outlook. There was a comment in the prepared remarks just about some of these headwinds reducing your flexibility. And I guess if I were to look at what's implied in the second half in terms of organic sales growth, it's roughly similar to what you reported in the second quarter. And just wondered if we could talk a little bit more about the regions and how to bridge from the second quarter to the second half. It does seem like you have good momentum in emerging markets. You'll have more pricing coming through in Europe, understand maybe elasticity is a bit higher. North America is weak, but Luca, if I understood you correctly, maybe North America could get a little bit better. So what are kind of the offsets that I'm missing that reduce the flexibility in your minds as it relates to the second half? Luca Zaramella: Thank you, Megan. So as far as outlook goes, in the prepared remarks, we make a comment about a little bit less flexibility. What we mean by that is really that the unprecedented heat wave that impacted chocolate in Europe is clearly something we couldn't predict as well as the impact we had, particularly in the U.S., because of the trade destocking. So that's what we really mean by a little bit less flexibility. You might imagine we try to keep always a little bit of a buffer, particularly as we did guidance, because things can happen. I think what we see in the last couple of weeks in Europe is the weather being more collaborative with us. And we see chocolate consumption coming up. And you might imagine, it is a little bit hard to distinguish between elasticities and weather consumption. But the latest indication is that the volume impact on chocolate is more benign than we have seen in the last, I would say, couple of months now. That has implications in terms of shipments in Europe in Q3. And so we are a little bit prudent in terms of projecting Europe, particularly in Q3. North America, the pure fact is that the major market category-wise is, at this point, down volume-wise minus 3%. The category started going south in Q4 and even in Q3 last year. So we are lapping, but we are projecting our category volume-wise to be down still 3%. Now there is pricing. So revenue should go up from the -- what you have seen, particularly this quarter on the positive side. And clearly, bottom line should go up as well from what we have seen this quarter. In emerging markets, we have implemented multiple waves of pricing. We are out with a new price both in India and Brazil that are the main markets we have in emerging markets. And so again, we need to stay quite prudent and see what happens to elasticities. We don't have reasons to believe that elasticity is going to be worse than what we planned for at this point in time. But again, we want to be on the cautious side. Our biscuits business continues to do well. Excluding North America, actually, year-to-date, revenue is up a little bit more than 7%. And again, we project a continuation of that. So we really want to be on the prudent side, I would say. I'm not suggesting that the guidance is a slum dunk at this point in time. You know that in the U.S. most likely, there is a wave of inflation coming up. And so we have to be -- we have to stay prudent and execute with excellence as I think we have done in most of the cases in the first half. Megan Christine Alexander: Okay. Great. Super thorough and helpful. And then maybe just a follow-up on cocoa. When we came into the year, you said there's essentially 2 scenarios in terms of '26: one is cocoa comes down and you have higher earnings upside potential; two is it stays elevated and you have to take a bit more pricing. And you mentioned you took advantage of the recent drop in cocoa prices. But how are you thinking about whether or not you might have to do a little bit more pricing, some more RGM? And I guess how are you thinking about that into the back half of this year? Luca Zaramella: So I think, look, this is one of the unknowns of the plan. I think, but I might be proven wrong, I believe that with the new crop data, we will know which direction cocoa is going to take particularly for 2026. And I think there are possibly 2 scenarios: one is this stays elevated; but the other one is it might go down quite rapidly because if there is a surplus between supply and demand, I think there will be material cocoa availability that will drive prices down. In the first case, I think we might need or not additional pricing based on where cocoa is. If it stays where it is, I think all the actions that we are about to take from now to the end of the year in some of the markets, I think, will put us in a good spot. I said many times that when I look at the underlying per kilo of cocoa or the chocolate business gross profit dollars, I see a number that I like as we exit the year. Remember that pricing has a carryover as well into next year. And so if cocoa stays elevated, there might be additional pricing. But I think all in all, we should be in a good spot at the end of the year. If cocoa comes down, the question becomes what do we do to protect demand, what do we do to face potentially some competitive actions, et cetera. But in the end, I think the P&L will thrive because if I apply the elasticity we have seen on the way up to the way down, there is either material price upside or there is a potential volume rebound. Also remember one critical thing, which we said many times, the virtuous model of this company has been in the last few years to protect gross profit dollar growth as opposed to percentages, but it has also been investing, particularly in working media and in route to market, and we will continue to do so. And potentially in 2026, we'll step it up depending on the level of cocoa to the point where we really reestablish a virtual cycle, which is volume growth, share growth, generation of GP dollars and again, good cash for the company. Operator: [Operator Instructions] We will go next to Robert Moskow with TD Cowen. Robert Moskow: And maybe just a couple of things to clarify, Luca. The comment that you need to invest in working media in 2026, a lot of other companies do that when they reduced media in a given year. So it doesn't sound like that's what you're doing. So maybe you could explain whether that's like a catch-up in '26 or not. And then I'll ask a quick follow-up. Dirk Van de Put: Yes, Rob, I'll take that. So the way I would describe it is that we will have a chocolate category whereby the price will have gone up 30% to 50% in the last 2 years. And what we see is consumers are staying in the category, but they're diminishing their frequency and they're diminishing the quantity bought. So we expect that after all the price increases -- and even if cocoa comes down, I'm not expecting that it will come down enough for us to see significant price reductions in chocolate. We will have to support our brands and make sure that the volume in the category remains or it goes back to where it historically has been. I don't know where we will end the year, but you could expect chocolate volumes around the world to be down. So far, we see it down 6%, 7%. That's the latest news on grinding for cocoa. So that's the main reason why we think we will have to reinvest. On top of that, as it relates to biscuits, particularly in the U.S., we see a very anxious and weak consumer situation. I'm not expecting that, that immediately will be better next year. So I'm expecting that we will have to increase our investment in our brands also in North America next year. Those are the 2 main reasons why we believe that it is appropriate to increase our media investment next year. Luca Zaramella: And you're right, we have protected working media. This year, what we have cut is the nonworking part. And so I wouldn't say the baseline is terrible. But this year, unlike other years, we haven't increased working media much. Robert Moskow: Okay. And my follow-up is, I noticed Luca, that you said category volume down about 3% in biscuits in first half. You expect it to be similar in the second half. But then you're also raising prices in the U.S., and you've mentioned that the consumer is under a lot of pressure. Is this one of the flex points that might go the wrong way? And how much pricing do you think you'll raise in the U.S.? Luca Zaramella: Look, I'm not going to comment specifically on the amount of pricing yet. But as I said, the price increase that we are about to take has been quite surgical. We mentioned to you a few times that between $3 and $4 per pack, it is the magic of being there and attracting consumers. And that's what really we are about to not to touch. We will protect those price points. We mentioned to you that there are specific pack sizes that are very relevant to consumers like the multipacks. We are keeping those price points. There are brands that are not our top brands necessarily where we're going to go with higher prices. And that over time has proven to us that elasticity is not material. And then there is a whole host of ideas as to what we have to do to boost consumption in the second half, particularly as it boils down to RGM and promotions. I think the team has a slate of actions that hopefully will lead to much better revenue results. So you're right in saying how do you reconcile the fact that consumers are price sensitive to a price increase. But we have done our homework, and we believe there is not going to be a material volume repercussion on consumption in our case. Operator: We'll go next to Alexia Howard with Bernstein. Alexia Howard: Can I start with a question on uses of cash? It seems as though you are taking on a bit more debt in order to repurchase shares. I think you put a $9 billion share repurchase approval over the next 3 years out at the end of last year. Should we expect that dynamic to continue? How are you thinking about the trade-off between taking on debt and continuing to repurchase shares at this point? Luca Zaramella: Look, the #1 ticket item between the balance of cash flow and share repurchase and dividend is actually the forex impact on our debt. Our debt composition is made up of obviously, a dollarized base, but importantly, of a euro, of a GBP, of -- you call it. We have diversified the currency nature of our debt over time, and we believe that is the right action to take. The second thing which is not capturing that is we have meaningful net investment hedges that hedge the composition of the balance sheet and the variety of currencies that we had functionally around the world. So looking at the debt that is impacted by forex and now looking at the overall balance sheet and the gains, the material gains we are making on the net investment hedges is a little bit misleading. But to your point about share, I stick to what I said in the Q1 call. We have been buying back quite a bit of shares at a very compelling price, which was below $60 per share on average. We are going to be very pragmatic should the stock for any reasons -- and quite frankly, I have to say when I fast-forward and I see cocoa coming down, when I see Mondelez in a context where many companies are challenged printing a number on top line, which is quite good. As I look at the plans around the world, I believe we are setting ourselves up for a decent 2026. I don't believe necessarily the stock price is going to go down much, I hope, from here. But in case it does, we are going to be pragmatic and buy back more stock. And I think in hindsight, as cocoa normalizes and we look at our normalized earnings, this will be one of the best deployment of capital decisions we have made. Alexia Howard: Great. And as a follow-up, the weakness in North American volumes, I know you've attributed it to weakness -- value-seeking behavior on the part of consumers. How are you thinking about the GLP-1 impact on these indulgent snacking categories? Particularly as we think about pill versions coming out next year, is there a danger that North America sees continued pressure? Obviously, your other regions are doing fine, which is great, but I'm just thinking about how you prepare for that eventuality next year. Dirk Van de Put: Yes. Well, I mean, from our perspective, there is currently no real impact on our volumes coming from GLP-1. We did an in-depth analysis in North America, and most of the negative volume that we're seeing and the change in consumer buying is all driven economically, the anxiety about the future, the frustration with the inflation and so on. If we look at the numbers at this stage, the penetration of the drug in the adult population is about 4%. The reduction in calorie intake at this stage is about 11%, and consumers are staying about 9 months on the drug. The penetration is not going up at this stage. And so if you think about it, 4% of the population reducing their calorie intake by 11%, that is a [ 0.4 ] effect on the total population -- of the total calorie intake, sorry. And so that is an almost invisible effect for us. Even if we extrapolate that for '26, we do not see a major increase in the penetration of GLP-1s happening. And so I think even in '26 -- and to be honest, when we even extrapolated for 10 years, we do not think that the effect will be significant. So we don't think that the current weakness that we see in the snacking category is driven by GLP-1s, nor will it be in '26. Operator: We will now move to our final question from Max Gumport with BNP Paribas. Max Andrew Gumport: Just sticking on North America. I wanted to get a better sense for the retailer destocking that you saw. I'm hoping to get more color on what drove it and how you think it plays out or recovers from here. Dirk Van de Put: Yes. I mean it's sometimes difficult for us to put ourselves in the place of the retailers. But we believe that this is driven by a number of things. But in the first place, probably the retailers wanting to manage their cash flow. If you think about it, there's an overall slowdown in consumption. Tariffs were coming. They probably wanted to import more from the countries that were going to be affected. So they increased the imports and increased their inventories in certain items and wanted to offset that by reducing other items. The second reason, I think, is there's an overall slowdown in food consumption and also in snacking. So there's a need for them to have less inventory at this stage. For me, those are the 2 main reasons. As we said, we still have significant opportunity in other channels. So one of our strategies is to shift more of our pressure into channels like the value channels or e-commerce or the discounters. And that is giving us an opportunity to offset some of that destocking that we've seen in the retailers. But overall, I think those were the factors that drove it. We were a bit surprised to still see some of that in Q2, but I think we now have that behind us, and Q3 should be clean as it relates to retailer inventory. Operator: That will conclude the question-and-answer session. I will now turn the program back over to Dirk Van de Put for any additional or closing remarks. Dirk Van de Put: Well, I want to thank everybody for their interest, for their attendance to the call. You can always follow up on more questions with our IR group. And I'll see you for the call a quarter from now. Thank you. Luca Zaramella: Thank you, everyone. Operator Thank you. This does conclude today's call. We thank you for your participation. You may disconnect at any time.

Operator: Good day and welcome to the Mondelez International First Quarter 2025 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. [Operator Instructions] I would now like to turn the call over to Mr. Shep Dunlap, Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update, followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van De Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I'm pleased to share that we delivered solid results for the first quarter, driven by sound execution despite significant external volatility. Our top line grew 3.1% behind strong pricing execution across our chocolate business due to unprecedented input costs for cocoa. We also delivered strong profit dollar generation and free cash flow. These results, along with solid category growth, reinforce our continued confidence in our full year outlook. We remain committed to delivering against our strategic agenda, focusing on the controllables and staying agile in this challenging macro environment. We are continuing to execute with excellence against our chocolate strategy and our cost savings program. Both of these initiatives are on track and we'll provide additional color throughout today's call. Turning to Slide 5. You can see that organic net revenue grew 3.1%. Volume mix was down 3.5 points due to elasticity, consistent with our expectations. We also implemented plant activities in our chocolate business. And a few onetime factors also affected volume mix, which included Easter phasing and retailer inventory destocking, which Luca will describe in more detail later. Pricing execution related to cocoa inflation was strong. We have now implemented planned pricing across many key markets with minimal disruption. We also saw a successful start to the Easter season. As expected, adjusted gross profit was significantly impacted by record cocoa costs and consequently this also affected our EPS. We also generated $800 million in free cash flow in the quarter. On Slide 6, you can see that consumers' enduring preference for our snacking categories remains solid despite continuing economic and political concerns in many markets. In North America, continued frustration with day-to-day pricing and cost of living challenges continues to drive value-seeking behavior. As a result, growth in the biscuit category is soft, but it continues to hold up better than many other snacking categories. Despite overall declining consumer confidence, loyalty to our strong brands like Oreo, Chips Ahoy and Ritz remains solid and our investment in price pack architecture are helping to drive continued share gains. Meanwhile, in Europe, consumer confidence and price elasticities remain stable. We continue to see solid category value growth in both biscuits and chocolate and our brands continue to resonate with consumers. Elasticity also remained stable in emerging markets. However, consumer confidence is soft in Brazil, Mexico and China from economic uncertainty, while confidence in India remains solid. Overall, we're seeing solid category growth in both volume and value across our combined emerging markets. And Mondelez share is improving in both biscuits and chocolate. Turning to Slide 7. It is important to reinforce that we are continuing to make progress against our strategic growth agenda, reinvesting in our brands, expanding distribution, strengthening our marketing and sales capabilities and scaling our long-standing commitment to sustainability. Here are just a few highlights of our strategy in action. Our iconic global brands, including Oreo and Cadbury Dairy Milk, continue to drive creative on-trend activations that resonate strongly with consumers and help strengthen our strategic partnerships with retailers. For example, Oreo's collaboration with Post Malone marked the first time a pop culture figure was personally involved in building a recipe for Oreo nearly from scratch, resulting in our first ever twisted cream. Meanwhile, in the UK, we rolled out our first of many chocolate collaborations, resulting from the partnership with Lotus Bakeries. The Cadbury Dairy Milk Biscoff bar featuring the signature Biscoff taste and crunch is only the beginning of our innovation platform with our other chocolate brands rolling out similar Biscoff crumbles and flavors across Europe in the coming months. Along with these creative brand reinvestments, we continue to expand distribution around the world. We added more than 100,000 stores in emerging markets in Q1. We also are making significant progress in strengthening our partnership with retailers around the world. For the first time in our history, we achieved a top tier ranking on the Global Advantage survey. Additionally, we continue to make strong progress towards building a more sustainable snacking company and delivered on all our '24 sustainability targets. Earlier this month, we published our annual Snacking Made Right report providing stakeholders an in depth view of our sustainability strategy, goals, and performance data. Among other highlights, we expanded Cocoa Life, our signature sustainability program to source 91% of cocoa volume for our chocolate business. We also made meaningful strides in combating climate change, reducing end-to-end carbon emissions by 12% versus our 2018 baseline. We continue to believe that helping to drive positive change at scale across the communities our business touches is an integral part of value creation. Simply put, we believe that more sustainable businesses and always will be is good business. I encourage you to take a few minutes to review our report in more detail. Before I turn the microphone over to Luca, I'd like to reinforce that our chocolate strategy remains on track and performance to-date is broadly in-line with our expectations. Our teams started planning for the challenges created by record cocoa input cost inflation more than a year ago and we are confident that the robust, clear strategy we built to navigate these conditions is paying off. We have reconfigured our chocolate portfolio to offer consumers an array of pack sizes appropriate for each snacking occasion from bite-sized treats offering a delicious taste of me time to family sizes designed for sharing with family and friends. At the same time, we continue to maintain entry level pricing to drive consumption. We also have successfully implemented most of our planned pricing in Europe with minimal customer disruption. As a result, elasticity is in line with expectations. We're also growing share in chocolate across markets up 0.4 points year-to-date. We continue to innovate with new flavors, formats and brand activations. Year-in and year-out, consumers around the world show us that our iconic chocolates are an essential part of their seasonable celebrations like Valentine's Day and Easter. We are continuing to stay a step ahead of their changing taste with exciting new products, including the delicious co-branded tablets I mentioned before, featuring the unique caramelized Biscoff flavor and crunch. In short, we remain confident that our strong chocolate franchise is positioned for long-term success. Our robust playbook is working and we remain convinced that it will enable us to not only navigate the current cocoa cost challenge, but more importantly, to drive category health for the long-term. And with that I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Q1 marked another quarter of top line growth for our business despite some external challenges and lower consumer confidence. For Q1, we delivered solid revenue growth, while profit dollar generation was better-than-expected. Free cash flow continued to be strong. Revenue grew 3.1% behind strong pricing execution across our chocolate business. Volume mix was down 3.5% due to elasticity from chocolate pricing, transitory trade destocking with plant consumption in the US, planned outsizing activities in chocolate to protect price points as well as some Easter phasing. Developed markets grew 2.6%, primarily due to strong pricing execution with a volume mix decline of 3.3% on the back of retailer destocking and some chocolate elasticity. Total revenue for emerging markets grew 3.9% with a volume mix decline of 3.7%. EM results were driven by strength in Brazil, China and the majority of the Middle East and Africa businesses. We experienced some softness in India and Southeast Asia. Moving to portfolio performance on Slide 11. Biscuits & Baked snacks grew 0.3% for the quarter. Brands delivering growth included LU, 7DAYS, Prince, Club Social, Perfect Snacks and Grenade. However, we saw softer than expected results in our US biscuits business, driven by retailer de-stocking, which resulted in approximately 60 basis points volume headwind to the total company and 250 basis points for total North American volumes. Additionally, our US biscuit business experienced lower consumption driven by ongoing consumer confidence declines, resulting in lower frequency and value seeking behavior. Chocolate grew by 10.1% with significant growth across both developed and emerging markets. Volume mix was down 5.7%, driven by elasticities that were in-line with our expectation, along with RGM and product outsizing activities across the chocolate portfolio that accounted for almost three points of decline. Brand growth was broad based across global and local brands with Cadbury Dairy Milk, Milka, Lacta, Cote d'Or, Freia, Marabou, and HU all posting strong results. Gum & Candy grew 1%, driven by Gum in China and Mexico as well as both Gum & Candy in Western Andean. Volume mix was challenged because of trade destocking in the US as well as some issues in Mexico. Let's review market share performance on Slide 12. We held or gained share in approximately 7% of our revenue base with strength in both chocolate and biscuits. Category growth numbers are clearly underestimated because of chocolate Easter phasing versus last year. A more normalized number would put total category growth at around 3%. Category growth is due to accelerate as more pricing for chocolate kicks in. Turning to regional performance on Slide 13. Europe grew 8.9% in Q1. Execution and growth were excellent in the quarter, and several key countries, including the UK, France, and Germany delivered robust growth. Pricing execution related to cocoa inflation was strong, coupled with the successful start to the Easter season and share gains. Volume declines were driven by elasticity levels consistent with our expectation and RGM activities associated with our chocolate strategy. We have successfully landed chocolate pricing for the key alliances in-line with our expectation. We can now focus on driving demand and expect positive developments in Europe for the remainder of the year. OI dollars were down approximately 26% due to unprecedented levels of cocoa inflation. North America declined 3.6% due primarily to retailer destocking in the US as well as softer consumer demand, most notably within the food and mass channel. This dynamic remains consistent with the overall market and is driven primarily by less frequency from lower income households. Given we gained share, our total consumption was pretty much flat. We are continuing to sharpen our offers, such as recently introduced 5 Star, which have shown good momentum along with improving store execution and increased distribution to drive improved results as we move through the year. North America OI decreased by 18% due to lower volume and cocoa inflation from our Canadian chocolate business, but also for the US biscuit. AMEA grew 1.8% for the quarter. China delivered another strong quarter with mid-single-digit volume-led growth driven by focused initiatives around Oreo, Chips Ahoy, and Stride. India declined high-single-digits, lapping a strong prior year as overall consumption was challenged by inflationary pressures and wage growth. We do expect to improve the trajectory of the India business beginning in Q2 through targeted activation, distribution gains and an improving macro backdrop resulting from income tax relief and recently enacted interest rate cuts. Australia, New Zealand, and Japan delivered another strong quarter with mid-single-digit top-line growth due to strong Easter execution and pricing. AMEA OI dollars declined 8.3% due to materially higher cocoa prices that were partially offset by pricing and cost discipline. Latin America grew 3.9% with solid pricing execution and a volume mix decline of 2.5%. Brazil posted mid-single-digit growth with strong chocolate and biscuits. That was partially offset by weaker powder beverage results. Mexico grew low-single-digits with growth in biscuits, chocolate, and gum while candy was down. The Mexican economy is showing signs of slowing, which we are continuing to monitor and factor into our plans. Latin America OI declined 12.4% due largely to increased cocoa inflation. Turning to Page 14 and a few notes on volume mix dynamics in Q1. Although overall volume mix was down 3.5%, it is important to separate what is one-time or planned versus underlying. US trade destocking and seasonal phasing around Easter account for roughly 1.3 percentage points or roughly 40% of that decline, while package downsizing accounted for another point of lower volume. On the flip side, EU customer disruption was lower than planned and last year, bringing us closer to an underlying decline of approximately 2%. We expect the US destocking dynamic to partially continue into Q2, while Easter phasing will be favorable next quarter. Turning to Page 15. In Q1, we saw a decline of 12% in gross profit dollar terms. Solid top-line growth and cost efficiency partially offset significant cocoa inflation. Our view of cocoa inflation is changed for the remainder of the year and is embedded into our full year outlook. Next to EPS on Slide 16. Q1 EPS declined 18% in constant currency. Turning to Slide 17 and cash flow and capital return. We delivered $800 million of free cash flow for the quarter. We repurchased $1.5 billion in stock at an average price of $57.91. Before moving to our outlook, let me provide a few thoughts on cocoa. Although cocoa prices remain quite elevated relative to historical averages, both spot rates and future curves have declined since our Q4 call. We continue to expect a small surplus for the year. In addition, we continue to see volume declines from an industry perspective due to elasticities associated with inflation-driven pricing and outsizing activities, while non-chocolate players who traditionally use cocoa as an ingredients continue to reformulate with alternative components at a fraction of the cost. We believe at these levels, meaningful demand declines are expectable and will accelerate and that eventually will reflect on cocoa prices. Having said that, we remain confident in our pricing and RGM strategy and will continue to stay agile as the situation demands. Turning to our outlook on Slide 20. Our outlook for '25 remains unchanged for organic revenue, earnings per share and free cash flow. This includes approximately 5% revenue growth, which reflects successful customer negotiation and pricing in Europe as well as a softer demand environment in the US. Most of our key assumptions remain consistent with what we shared with you on our last call. We are reaffirming inflation levels, interest and tax costs as well as share repurchases. Translation ForEx impacts have changed and we are now expecting no impact to net revenue and EPS from foreign currency for the year. This reflects the dollar weakening against several currencies since our last call, including the euro and sterling. However, given dollar volatility, this could rapidly change. With respect to tariffs, the vast majority of US production is sourced from the US or is USMCA compliant. However, there is some sourcing of finished goods and ingredients that are subject to tariffs as things stand today. Although not particularly large, these are incremental to our last call and have been factored into our current earnings outlook. Before Q&A, a few words on '26. We remain focused on running a balanced P&L for '25, while continuing to maintain a sound chocolate business and category for the long-term. The early results have been positive as it relates to our chocolate strategy. We continue to invest behind our business, while cost saving initiatives remain on target. It is early to provide specifics on 2026, but we still expect EPS growth for next year. Although cocoa prices have come down recently, they remain elevated. It is also important to note that if we do see further improvement in cocoa, we will likely reinvest a portion of that saving back into the business. With that let's open the line for questions. Operator: Thank you. [Operator Instructions] We'll go first to Andrew Lazar with Barclays. Andrew Lazar: Great. Thanks so much. Appreciate it. Maybe, Dirk, just to start it off, it'd be great to get maybe a bit more detail on sort of trends in some key regions as we think about sort of a year to go from here. Dirk Van De Put: Yes. Thanks, Andrew. Well, I would say that first of all, despite the changes that we see in the external environment that we feel pretty good about the start of the year and our results. I would note a few positives, which will impact the rest of the year, that happened during Q1. First of all, we had some major negotiations to do in Europe to announce the price increases and get approval for the price increases on our chocolate business. And they passed virtually all of them with minimal disruption this year. Then if you look at how our chocolate business is doing, particularly in Europe, the pricing is on track. As I just said, we have some very good activations. We've implemented a number of RGM activities. Easter came through quite well. So Easter, we will see more in the Q2 results, but and Q1 was affected because of the Easter phasing, which was late this year. But we can already see that Easter will be very good for us, and for instance, know that we had some strong share gains in the UK. Our emerging markets continue to perform well, particularly I would mention here China and Brazil and in times like this where the North American market is probably the most affected market, it's good to have this geographical diversification. And on top of we're gaining share in many markets around the world. Having said all that, I think the one thing that you've seen probably from many companies is that North America was clearly softer than what we would have expected. I think many people have thought about the retail destocking, we expect that will be less in Q2. The biscuit category is soft. We see consumers switching to more essentials in grocery and snacking categories are suffering as a consequence of that. But biscuit overall compared to other snacking categories is doing better and on top of gaining share in the category. So we've got a number of good puts and takes in the quarter. We feel very good about our full year outlook. If I look a little bit at what's going on around the world, I would say the consumer sentiment is quite mixed, and that's driven by overall global macroeconomic uncertainty. Probably where we saw the biggest effect on the consumer was in the US, where the consumer confidence declined sharply in Q1 and it declined another 11% in April. That's all driven by inflation fears. People see their income slowing. We see that the pressurizing -- or the prioritizing of essentials, which is pressurizing snacking. We see a shift to value club and e-com channels. We're seeing more promotional pressure and largely lower-income consumers are shifting to smaller packs, while higher-income consumers are shifting to larger packs for value. In the middle of all that, the biscuit category declined 1.5% in value, but it outperformed other snack categories as said. Cookies is doing better than crackers. Private label grew a little bit. We gained about 0.3 points of share. I think that was driven largely by the fact that we launched a number of affordable formats, which we call fresh stacks, which are under $3 and I think we are seeing that offering compelling value to consumers really matters at this stage. I have to say that I really do not expect to see a significant improvement in the consumer confidence in the near-term in the US that is. In Europe, I would say consumer confidence is, in general, stable. They are aware of the global trade volatility and it's impacting their purchasing behavior. They're probably switching to more frugal spending and also prioritizing essentials. We see a bit more shopping frequency going to smaller pack sizes and also a shift in channels in Europe that is more to discounters and e-commerce and we see an increase in promotions. In the middle of all that, with the price increases we're implementing, chocolate is performing in line to expectations, i.e., the elasticities that we're seeing are in line around 0.5. There was -- Easter was later this year. So if you include that in Q2, I think we will see a nice Q2. And biscuit is performing well, particularly in France for us. So we feel pretty confident about our European business. We see a resilient consumer. We landed the negotiations. We had a good Easter. Biscuits are doing well. So we expect our European business to continue to do well. And on the emerging market, I would say the consumer is softer because they are suffering from inflation. They see the trade volatility. The Chinese consumer remains quite subdued, 20-year low, I would say, but our business is doing well. The Indian consumer is stable. There is more optimism this year. People see income growth, jobs, and then Brazil and Mexico, clearly in both places, the consumer is softer, more outspoken in Mexico than in Brazil, of course, because of the economic uncertainty and the persistent inflation. I would say our categories in emerging markets are stable. We have gained shares, but we have to remain agile in all regions of the world. So I would say, so far so good, but it's still a long year, and we will need to stay very vigilant about shifts that we see at the level of the consumer. Andrew Lazar: Great. That's really helpful detail. Thanks so much for that. And maybe Luca, just briefly, just key puts and takes to keep in mind for the year to go particularly around North America and pricing in Europe. Thanks so much. Luca Zaramella: Yes. Hi, Andrew. So I think as far as '25 guidance goes, I think for us, it's a great thing that we are reaffirming our plan. We feel quite good at this point in time. But as you said, there are puts and takes. I think Dirk already mentioned among the positives, the customer negotiation, which I would say is a pure upside versus last year, because last year we had some disruption. This year we don't. But in general, I would also say that pricing across the board, whether it is chocolate in developed and emerging markets or biscuits in emerging markets specifically, it is absolutely on track and our RGM agenda is clearly improving the situation on elasticity in both chocolate and in biscuits. As we said, elasticities are quite good at this point in time. And so that's an assumption that is key for us to be able to deliver on and potentially overdeliver on the top line in the year to go. Importantly, the Easter season was quite strong. Dirk mentioned Europe, but I'm happy to report that we gained meaningful share in Brazil and in Australia. And so we are very happy there. Biscuits is holding up well outside of North America. We have positive volume mix in the category. And clearly there are some cost upside versus our original plan. And as we mentioned, the overall tariffs is causing a small and manageable impact. So those are, I would say, the positives that we see continuing into the second part of the year in Q2 as well. And among the things that didn't play out as we planned, it is clearly the consumer sentiment in the US impacting our categories. But biscuits as a category despite being soft is faring better than other snacks and we are winning share. When you put both the market dynamics and the share, actually our consumption in Q1 is slightly down. So I think that given some of the numbers we have seen published by others, I think it is relatively speaking terms, a good thing. Trade destocking is a one-time impact. You saw that it is meaningful. It is 2.5 points, 3 points of volume mix in the US and we assume that is non-recoverable in the year to go. I think particularly as we enter into Q2, you will see an acceleration of top line and volume mix. And I think that's clearly to the testament of what the teams are doing. All considered, you might not expect anything differently at this point in time, but we are retaining some flexibility within the plan. So should things worsen in the US, I think we have what it takes to deliver both top and bottom line. But also bear in mind that if we have earnings upside, we will be reinvesting in the business as we are trying to enter '26 from a stronger position. We remain disciplined on capital allocation. We will continue to buy back stock in a sensible manner. As you might have seen, we were active buyers in Q1 at what I believe are very compelling prices. So very happy on that front too. Andrew Lazar: Thanks so much. Appreciate it. Luca Zaramella: Thank you, Andrew. Operator: We'll go next to Ken Goldman with JPMorgan. Kenneth Goldman: Hi. Thank you. I just wanted to ask about your strategy to mitigate cocoa inflation. It's obviously multifaceted, right, with productivity and RGM and of course, pricing, and you touched on your success in these elements during your prepared remarks. But what I really wanted to dig in a little bit on is the balance between them ahead? And I guess the question in particular is with pricing having gone, I don't want to say better-than-expected, but it sure seems like an elasticity in line. Is there a possibility you can maybe be a little bit less aggressive on RGM or maybe some other actions than you were planning or is really the message just, hey, our overall mitigation efforts are going quite well and it's full steam ahead in all areas. Just wanted to get a better sense of all of those. Dirk Van De Put: Yes. Good question, Ken. So, yes, you phrased it right. So our strategy basically was, of course, first of all, have a great execution of what we designed, but we designed at the core a very aggressive RGM strategy, and that doesn't necessarily mean all downsizing. It means that we will offer a whole range of pack sizes to the consumers and so the consumer suddenly has many more options as it relates to the price points they would like to buy our products. And then we are trying to get some very strong activation. So Easter was the first step, but there's a number of others to come during the year. Easter, I would say, was a success. That's the second leg of our chocolate strategy. And the third leg is to come up with new products, new and unique products that draw the consumer into the category and the launch in this first quarter was the Cadbury Biscoff product. That is at the moment our number one selling SKU in the UK. More is to come in that front. So we will launch in several more markets in the coming months that Biscoff varietal. And then later in the year, we will have a number of new innovations under that Cadbury Biscoff or Milka Biscoff franchise. The other thing we're doing as part of that strategy is protect key price points. So if there is a low unit price point in India, for instance, we are maintaining that at INR5 and INR10. We are also very carefully making sure that we don't break any thresholds in developed markets. So the big question is what's going to happen once that all hits the market. Pricing has gone well in the sense that we finished the negotiations with our clients. And we have implemented pricing i.e., the consumer is seeing the pricing in a number of markets, but it's very early days. We see a little bit more in Scandinavia, for instance, or in the UK, where we went ahead earlier with the pricing, but countries like Germany or France is now hitting the market. Australia did some at the end of last year, but is doing more in May. So it's still to be seen what the reaction is going to be. What I can say so far from a consumer perspective is that the elasticity is around 0.5, which is exactly in line with what we would have expected. But we want to continue to monitor very closely and we don't want to start saying, okay, this worked great. We will have to see how the consumer is reacting. The good news of all of this is that we gained share in volume and value share overall. Our tablets are up, of course, double-digit, as you can imagine with some of the pricing and Easter, as I said, is very good. So the word that I would use is so far so good, but we are not done yet. We have a long road ahead, the macro conditions are very volatile. As I said, the European consumer is stable at the moment, but that could change and we still have to very carefully monitor the consumer reactions, which by the way, are very different from country to country and we need to sort of direct our reactions depending on what we see happening. On the long-term, I think we're seeing the signs that we had -- that we believe in the chocolate market, which is that in the end, consumers love chocolate. They will probably grapple a little bit with the current price increases. But over the long-term, I think the high penetration of chocolate will continue. I think we will continue to see very strong brand loyalty. We have the Taste of the Nation brands in many markets. I don't think consumer will walk away from that. And there is very, very low cross substitution happening. If you don't have your chocolate, there is not really that many other products you can go to that give you the same satisfaction and indulgence, I would say. We also, as Luca mentioned, we want to take a long-term approach here. So if we have any upside, we want to reinvest particularly in our chocolate business. We don't want to take any shortcuts for short-term gains. We are very focused on the long-term health of the category as well as our business. And it's all going to depend where cocoa goes in the rest of the year and where cocoa will be next year, but if it stays at the high level it currently is, we might need to implement more RGM in the second half of the year or the beginning of next year. So agility is going to be key going forward, but so far so good, as I said. Kenneth Goldman: Thank you so much. I'll pass it on. Luca Zaramella: Thank you, Ken. Operator: We'll go next to Peter Galbo with Bank of America. Peter Galbo: Hey, guys. Good afternoon. Luca, thanks for the clarity on tariffs. I think one of the wire services maybe picked up your commentary wrong. So I appreciate the clarifications there. Luca, maybe just to start, I wanted to ask, the slides you gave, I believe it's 11 and 12 that kind of show the Easter timing shift in chocolate. I guess if we had accounted for that, it would even imply that maybe elasticity was a bit better than you even planned for, just taking into account that shift. So I just wanted to understand if that's a fair way to think about it, given you had kind of a volume pushout with the pricing you put in, maybe versus first glance, that the elasticity in chocolate might actually be more favorable than you had planned? Luca Zaramella: I think in Q1, it has been a little bit more favorable. Having said that, pricing that is getting into effect in Europe, Brazil, India is kicking in as of April, May, June. And that is the moment I think we'll be able to tell you for sure that elasticities are in line with our expectations. So Easter was priced up compared to last year, but there is more pricing coming into effect into the P&L in Q2. And so you will see an acceleration of the revenue growth in Q2. I can tell you that Easter year-on-year is a meaningful driver of growth for us. As I mentioned, we were quite happy despite the price increases that Easter volume held up well in three major countries, namely or in several countries, namely Europe with the UK, a clear standout in terms of share, but also Brazil and Australia. So far so good, I would say, hopefully, we'll get positively surprised. It's important to say that in both big countries like Brazil and India, we are protecting key price points. And so hopefully, the elasticity will be minimal also going forward. Peter Galbo: Got it. Okay. That's helpful. And Dirk, maybe just as a follow-up, one question we got on the North America destocking, just given that you do operate a DSD system in the US, it would be, I guess, less common that we would expect that to happen. So just curious if you can give more color either whether it's by channel, was it club where you're maybe in more of a warehouse model, where the destocking is happening? Just any additional thoughts on kind of what the real driver is just relative to what we would maybe see historically? Thanks very much. Dirk Van De Put: Yes. I would say we see it mostly in food and mass. Even if we have DSD there, the retailers still work with some stock in the back of the store and they have an influence on how they -- what the level is and they manage that through their orders. So we have a benefit in the execution that we do DSD, but the ordering still is quite directed by the centralized approach. So I would say it's more pronounced in food and mass and DSD really doesn't help us because of the reasons that I just gave you. Peter Galbo: Got it. Thanks very much. Dirk Van De Put: Thank you. Operator: We'll go next to Megan Clapp with Morgan Stanley. Megan Clapp: Hey, good afternoon. Thanks so much. First question, Luca, I think you mentioned in your prepared remarks, the profit dollar generation in the quarter was a bit better than you expected. So Part A, just wondered if you could expand a bit on what drove that. And Part B, a bit related, last time on your fourth quarter call, I think you mentioned profit would be more pressured in 1Q with sequential improvement. Just wanted to clarify, is that still the case? It does seem like there's some incremental tariff costs. And while you mentioned not large, just wanted to see if it changes how we should think about the cadence of the rest of the year? Thank you. Luca Zaramella: Yes. Thank you for your question. The upside came essentially through three lines, I would say, there was a little bit of better pricing, excluding the US where you saw that pricing was slightly negative. We had to reinvest some trade deals. But in general, pricing is a little bit better than what we had planned. So not an impact, I would say, in the quarters to come, but a little bit of an upside in Q1. The second element is productivities. We are delivering on our productivity and we are ahead of schedule. There was a comprehensive pipeline specifically around procurement related productivities. And I think the team has done a very good job in delivering those productivities ahead of schedule. Again, not a material upside in the quarters to come, but certainly a timing upside as we have accelerated the delivery. And the third element is a little bit on the commodity side. We were able to obtain some commodities at favorable prices, and that has resulted in some margin upside. So in terms of cadence, we are clearly happy where we are at this point in time. I can't rule out the fact that there will be maybe a little bit more pressure going forward from tariffs. The direct impact to Mondelez is really minimal and manageable. And you can imagine that we are at this point in time not only we should start to most likely go through Q2 and Q3 in terms of those ingredients that are impacted. But importantly, we are sitting down with suppliers and trying to negotiate a more benign impact than we see. That impact is going to get into the P&L in Q4, specifically in North America as a driver. But in the big scheme of things, I would say, not a major deal, and something that most likely we'll be able to manage through several things that we are working on. Cadence wise, I remind you that percentage margins in this context is quite misleading. I think you saw that pricing in chocolate is up meaningfully. Total revenue was up 10%. So percentage margins as we price away absolute dollars will get diluted. But importantly, as we mentioned many, many times, we will be looking at chocolate margin per kilo as we exit 2025. And if we have done a good job in managing elasticities, I think we will have a very good situation in terms of profitability at the end of the year in terms of GP dollars and that will put us in a good position to grow earnings into 2026. Megan Clapp: Great. That's really helpful. And maybe just a follow-up for you, Dirk, on biscuits in the US. Clearly, probably a theme that we've heard and we'll continue to hear throughout the earnings season as it relates to softness in the US. But you did -- you have made a lot of progress over the last couple of quarters on your share. But at the same time, you're a category leader. So just wondering if you could expand a bit about how you saw the quarter play out in the US. Maybe what you've seen as we've moved through Easter and whether you think there's further things you need to do to address just the category softness in particular. Thank you. Dirk Van De Put: Yes. So I think what's going on is that the consumer feels very uncertain about the future. And as a consequence, they are trying to prioritize essential items and food. Those are essential food items like meat, vegetables, eggs, and so on. And the more indulgent categories or the less essential categories that would include personal care items, that would include alcohol beverages, that would include snacking categories are generating less interest at the moment. So we saw that certainly play out in the first quarter. And if you look at the snacking categories, I think almost all of them, except for yogurt are down versus last year in volume. Within those, however, biscuits is doing relatively speaking better. It's not down as much as we saw. And as Luca explained for us as a company, if you exclude the destocking effect, we were slightly down in consumption, but almost flat in consumption. The way we are thinking about it is that, first of all, we need to hit the right price points. And while two, three years ago, consumers would easily pay above $4 for a pack of biscuits. We're now seeing that we need to be below $4 and ideally below $3. And so we've launched a number of packs that hit that $3 price point, below $3 price point. That certainly is having an effect for us. I think the other one that we see is that if we can run good activations and get extra displays, that also makes a difference. And so going forward, we are planning on things like July 4, Labor Day really drive activation. We've got some interesting Oreo activations coming up. For instance, we will launch a global Selena Gomez promotion in the coming months and we think that will also make a difference. We did Post Malone at the beginning of the year and that worked very well for us. The third thing I would say that we're trying to do in biscuits is push our multi-packs harder. That is for the consumer that tries to buy bigger packs to get a better value and that is working also quite well for us. The destocking dynamic will subside. So that will help. And I think we have a bit of a chance that in the second half of the year, we will probably see a more positive volume growth environment in the biscuits category and for our business. So focusing on the execution of the factors that I said and make sure we control the controllables and I think we will see a gradually improving trajectory in the US. Megan Clapp: Great. Thank you so much. Luca Zaramella: Thank you, Megan. Operator: We'll go next to Chris Carey with Wells Fargo. Christopher Carey: Hi, everyone. Thanks so much. Luca, you made a comments around procuring commodities at a slightly more favorable rates than what you thought. That struck me in the context of the commodity or the input inflation number in the quarter coming in a bit better than I expected per your filings. Do you think you're tracking better than your going inflation expectations? Are there more opportunities to procure commodity a bit better than what you thought? I wonder if you could just expand a bit more on that. Luca Zaramella: I think you saw overall the mark-to-market being negative, and there have been adjustments, not only for cocoa but for other commodities. I would say we have been opportunistic, particularly in the way we have been locking in some minor commodities, I would say. At this point in time, though, we are pretty much done with coverage for the year. So the prices are locked in. You might also imagine that given the exposure we have through currencies, given the Europe and the GBP material changes we have been operating even in the ForEx exchange market and have taken advantage, particularly as there is a positive carry into 2026 and beyond with some of these currencies. So we have not only operated for some minor commodities taking advantages, but also extended coverage of some of the ForEx payers into 2026. So I think when there is volatility, we are usually very good at grabbing some of the opportunities. Christopher Carey: Perfect. And then just one follow-up would be, you did mention that you would look to reinvest perhaps some, back into your chocolate business. I don't know if that was a comment on pricing or other such investment if cocoa were to come down. Dirk talked about more RGM. I guess this is, cocoa probably stays very volatile, and it's not sort of the core driver of your underlying business. But as this trends over time, what are kind of the key watch-outs, say, if cocoa were to go down, and that's going to help your margins a lot, would you give some of that back-in pricing? You mentioned this concept of gross profit per kilo. And if it doesn't, do you continue to kind of lean in on RGM and perhaps reformulation? So I know this is a topic that gets discussed quite a bit, but I would just love your latest thoughts in the context of kind of where we are in this cycle. Thanks so much. Luca Zaramella: Thank you, Chris. So I would start by talking a little bit about the cocoa market and maybe on some of the fundamentals. I think we'll end this year with a total supply increase compared to last year that it is in the tune of 10%. I think on the flip side though, demand, if you look at the total grindings, which is a proxy for consumption, I think Q1 guidance were down 3% to 4%, but I think the market is a little bit underestimating the true impact that is going to happen to the demand side of things. Particularly as the biggest chocolate market, which is the US, is facing higher elasticity. I took a look couple of days ago to the evolution of the market in the States, including Easter, I think there is a little bit of volume pressure. And importantly, what we are seeing, we travel to a few countries and we see that those categories that utilize chocolate as a secondary ingredient are reformulating and downsizing heavily. I think you saw the impact that RGM had on our top line. So I expect really the demand side to impact positively the future cost of cocoa. Our goal is to exit the year with minimal elasticity or elasticities in line with what we expected and with the GP dollar that makes sense because we truly believe that even if cocoa comes down, that will allow us, A, to expand gross profit dollar in absolute terms, and B, to reinvest materially back in the category. So if cocoa comes down, I think quite frankly, it is Nirvana for us because the level we will be priced to and the ability that cocoa lower prices will give us to reinvest in the business, considering that our share is up and that we are holding the line in terms of price points, particularly in emerging markets, I think will position us well for the years to come. If cocoa stays high, quite frankly, I would say we don't expect at this point in time a material headwind into 2026. We talked to you about cocoa prices, but if I look, for instance, at cocoa butter, which is what we buy the most as opposed to cocoa powder, cocoa butter prices are already coming down for 2026. And so I think the market is anticipating some pressure on the volume side. And so a long answer to say that in either case, the plan is non-regrettable actions into 2025 and very well positioned at the end of 2025 to expand top and bottom line into 2026 for the chocolate category. Christopher Carey: Thanks, Luca. Dirk Van De Put: Thank you, Chris. Operator: We'll take our final question from David Palmer with Evercore ISI. David Palmer: Thanks for squeezing me in. The underperformance of snacks in the US just even broader than your biscuits business and what you're involved in, it seems like it's a pretty large underperformance of the US market versus other markets around the world and even in the US today versus past a choppy economic environment. So do you think there's anything else ailing the US snacking market today other than consumer confidence in the low income consumer? And I have a quick follow-up. Dirk Van De Put: No, I don't necessarily think that. The reason being for, well, yes, the reason being that it's across all categories in snacking and there's many categories. There's ice cream, there is biscuits, there is packaged bakery, there's salted snacks, nuts and so on, you go on and on. There's chocolate, there's about 12, 13 categories in there, except for yogurt, they're all down. And I think that's largely driven by the overall consumer uncertainty about the future and the fact that they feel that then you really need to focus on the key things at this moment until we feel better about the future. I think we will see similar moves in less eating out-of-home, less entertainment, less travel. You can see the consumer not only in food, but across the Board, really being very, very frugal and very careful. As things improve, hopefully, I think we will see that change. Maybe the other thing I would say is that it is true that there is a bit more of a pronounced health and wellness approach. I would say the categories that are health and wellness within snacking, that could be things like yogurt or protein bars, for instance, or within the normal categories, gluten free or less sugar, things like that, those are doing better than the rest of the category. So that would be on top of consumer confidence, the only other trend that I see at the moment that is reflective of the snacking category. David Palmer: Thanks. And I just want to ask you a follow-up on emerging markets. There was a bit of a slowdown in this quarter to 4%. I'm wondering how you're thinking about emerging markets broadly for the rest of the year, could we return to high-single-digit growth? And what markets would you highlight that are maybe getting your attention more than others? Thanks. Dirk Van De Put: Yes. So I would say the -- if you look quickly where we are in our four main emerging markets, so China is up high-single-digit in Q1. India is down high-single-digit in Q1, because of a number of reasons, we expect a strong -- we had a strong prior year base. We did some pricing in chocolate. We have some elasticity impacts there and we do have a bit of a muted biscuit consumption where we play in the premium segment of the market, and the consumer is switching. We expect India in the remainder of the year to start to grow faster. We expect China, which I mentioned first to remain at high-single-digits for the rest of the year. In both countries, we have a large distribution runway, so we can complement what happens in the same-store sales with extra stores and that makes a difference for us. Brazil was mid-single-digit growth in Q1, we will be doing more pricing in chocolate. We are doing a number of new activities in our biscuit business and in our Candy & Gum business. So I'm expecting that Brazil will remain there, maybe accelerate a little bit. And then Mexico is gradually getting better. You have to keep in mind that we lap there a bit of difficulty with the integration of Ricolino last year. We were low-single-digit in Q1, but we see a good movement on Oreo, Ricolino and Philadelphia in Mexico. So I think there we will also see an acceleration. I wouldn't say that our total of emerging markets will get to double-digit, but certainly we will see an acceleration in the second half from where we are today. David Palmer: Great. That's helpful. Thank you. Dirk Van De Put: Okay. That concludes the call for today. Q1 down, so far so good, and we'll see you for Q2. Luca Zaramella: Thank you, everyone. Operator: Thank you. Ladies and gentlemen, that will conclude today's program. We thank you for your participation. You may disconnect at this time.

Operator: Good day, and welcome to the Mondelez International Fourth Quarter 2024 and Full Year Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business strategy update, followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van De Put: Thank you, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I'm pleased to share that 2024 was another strong year for Mondelez. We delivered balanced top line growth, strong earnings and robust free cash flow generation, while returning significant capital back to shareholders. Our top line grew mid-single digit, with balanced performance across both developed and emerging markets, and we delivered positive volume mix in the second half of the year with improved share performance. Despite continuing input cost inflation, we achieved gross profit dollar growth in the mid-single digits, driven by ongoing cost discipline and sound pricing. This allowed us to continue to increase our investments in brands, distribution and organizational capabilities. We also continued our track record of strong free cash flow, generating $3.5 billion, which includes our settlement with the EU Commission. We also continued to prioritize capital return, delivering $4.7 billion to shareholders through buybacks and dividends. And as we transition into 2025, we remain focused on executing with excellence against our long term growth strategy. We are confident that our chocolate playbook will enable us to successfully navigate unprecedented cocoa cost inflation, and we'll share additional color later in today's call. Perhaps most importantly, I remain convinced that team Mondelez represents the very best people in the consumer packaged goods business, and I'm proud of our team for staying focused and agile in a challenging operating environment. With the right strategy, the right brands, the right geographic footprint and the right people, I'm confident that we continue to be solidly positioned for attractive long term growth. Turning to Slide 5. You can see that 2024 was a strong year on both the top and bottom lines despite the impact of cocoa cost phasing in the fourth quarter. Luca will provide some additional perspectives on our cocoa cost strategy in a few minutes. We delivered organic net revenue growth of 4.3% and adjusted gross profit dollar growth of 5.1% for the year. Our volume mix results demonstrate that consumers continue to prioritize our brands and our categories. It is important to underscore that we continued reinvesting in our brands to drive faster growth. Our high-single digit investment increase in A&C continues to strengthen consumer and customer loyalty to our brands. Adjusted EPS grew 13% on top of strong growth in the past several years, and we delivered free cash flow of $3.5 billion. We remain confident that our commitment to executing with excellence while reinvesting in our strong brands, capabilities and talent will enable us to continue delivering attractive long term value for our stakeholders. On Slide 6, you can see that our continued confidence is grounded in evidence of consumers' enduring preference for snacking. All over the world, snacks remain an important part of people's lives, at home, at work or school, and on the go. We're proud that consumers continue to prioritize our strong brands even in challenging times. In North America, consumer confidence has improved slightly following the U.S. election, despite continuing concern about the economic outlook. While biscuit category volume remained relatively flat over the last three months, private label continues to decline, demonstrating that consumers remain loyal to their favorite brands and that our price pack architecture initiatives are showing promising signs. As a result, Oreo, Chips Ahoy! and Ritz, all are regaining share. Meanwhile, in Europe, consumer confidence and also price elasticities remained stable despite ongoing uncertainty in the economic and political environment. We continue to see solid category value growth in both biscuits and chocolate, and our brands are steadily gaining share following disruption during the first half of the year. Elasticities also remained stable in emerging markets, with solid consumer confidence in India, Brazil and Mexico amidst continued softness in China. Overall, we're seeing solid category growth in both volume and value across our combined emerging markets, and Mondelez share is improving in both biscuits and chocolate. Turning to Slide 7. We are continuing to make progress against our strategic growth agenda, reinvesting in our brands, expanding distribution, strengthening our capabilities and continuing to transform our portfolio. Here are just a few highlights of our strategy in action. Our iconic global brands, including Oreo and Cadbury Dairy Milk, executed award winning activations that resonated strongly with consumers, driving incremental lift. For example, Oreo's Space Dunk campaign and our innovative global collaboration with Coca Cola helped strengthen partnerships with key retailers around the world. Similarly, Cadbury's year-long celebration of its 200th anniversary delivered ground breaking creative and strong return on investment. Looking ahead, we are excited about the potential of our just announced Oreo partnership with Post Malone, which will hit U.S. store shelves later this week. Capturing the current cultural vibe, this limited edition features our first ever Twisted Cream. Along with these creative brand reinvestments, we continue to expand distribution around the world, which includes a special focus on accelerating digital channels. Our e-commerce business grew double-digits in 2024, and we continue investing in new capabilities to accelerate our leadership in digital snacking. In fact, our next tier markets grew approximately 35% in 2024, as a result of our continued investments. We are also making significant progress on growing our revenue growth management capabilities. We launched new fresh stacks (ph) during Q4 across our largest U.S. brands, including Oreo, Ritz and Chips Ahoy. These new offerings provide products our consumers love in smaller hold fresh packs at an attractive everyday price. And in chocolate, we are launching an array of pack sizes at several new price points around the world. Additionally, we continue to advance our portfolio reshaping strategy. In 2024, we purchased a majority stake in Evirth, the leader in China's fast growing frozen-to-chilled baked snacks category. We have worked with Evirth for several years to develop, manufacture, market and sell cakes and pastries, featuring some of our iconic brands, including Oreo and Philadelphia. Our expanded partnership enables us to further accelerate growth through continuous innovation, leveraging the combination of our high value brands with Evirth's advanced R&D and technical expertise. We also liquidated our investment in JDE Peet's, providing another important source of funding for reinvestment that can be used to buy our stock as well as further advancing our brands, talent and capabilities. On Slide 8, along with our financial performance and strategic growth priorities, I'm pleased to share that we made significant progress towards our sustainability objectives in 2024. First, we continued to advance our leadership in more sustainably sourcing critical ingredients. About 90% of the cocoa volume used in our chocolate brands now is sourced through Cocoa Life, our signature cocoa sourcing program, which works to lift up the people and restore landscapes where cocoa is grown. We also made continued progress in helping to combat climate change. We reduced carbon emissions across our manufacturing operations by about 38% versus our baseline in 2018. Additionally, we continued advancing our Light and Right packaging strategy. Approximately 96% of our packaging is recyclable. We also continue investing in ways to empower consumers to make more mindful snacking choices that fit into their healthy active lifestyles. Approximately 80% of our snacks revenue comes from mindful portion snacks, that is snacks that are packaged in individually wrapped mindful portion serving sizes or with clear mindful portion recommendations on the pack. These are just a few preliminary highlights of our continuing progress towards building a more sustainable snacking company. We continue to believe that helping to drive positive change at scale is an integral part of value creation, with positive returns for our stakeholders. We encourage you to watch our Annual Snacking Made Right report, which will be published in April to view our full year sustainability data. Turning to Slide 9. I'd like to reinforce our conviction that Mondelez remains well positioned to navigate through a very dynamic operating environment. Like many other companies, we are closely tracking and planning around several near term themes, including variations in consumer confidence, foreign exchange volatility, potential changes in trade policy and pricing negotiations, all against the backdrop of record cocoa prices. By focusing on our strengths and controlling our controllables, we are confident that we have the right strategy, the right execution and the right people to effectively navigate these headwinds. Our teams have undertaken extensive planning since last spring for the challenges created by record cocoa input costs. We have a clear and sound strategy to navigate these conditions, which Luca will describe in more detail in a few minutes. At the same time, our categories remain resilient and consumers continue to prioritize our iconic snacking brands. We remain committed to reinvesting in our brands and capabilities to continue accelerating this momentum. We also continue to focus on expanding distribution opportunities in both developed and emerging markets. And our disciplined approach to capital allocation gives us confidence that we will continue to generate strong free cash flow. In conclusion, I'm pleased to reiterate that 2024 was another strong year and that we are well positioned to continue driving attractive growth. While the road ahead will not be without challenges, our team is at its best when we are united and clear about what we need to do. By continuing to double down our attractive core categories of chocolate, biscuits and baked snacks, investing in our widely loved brands, focusing on operational execution and cost discipline, and empowering our great people, I am confident that we can deliver strong performance for years to come. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. In 2024, we delivered strong results from top to bottom. We posted balanced growth across developed and emerging markets. We grew gross profit dollars by mid-single digits, adjusted EPS growth was double-digit and free cash flow was once again quite good. This was a continuation of our virtuous cycle, which enables us to maintain strong growth, important reinvestments and strong return of capital back to shareholders. Revenue growth was 4.3% in the year, with volume mix down 1 point. For the quarter, growth was more than 5%, with a slight increase in volume mix. Emerging markets grew by 6.2% for the year and 6.7% for the quarter, with trends coming from a substantial number of key countries, including China, Brazil, South Africa, the Western Andean, and Central and Eastern Europe. Developed markets grew 3.2% for the year and 4.3% for the quarter, including strong growth from Europe and solid results from the U.S. Moving to portfolio performance on Slide 12. Our chocolate and biscuit businesses both delivered good growth for the year. Also, gum and candy continued to perform well. Biscuits grew 1.7% for the year and 2.1% for the quarter. Several brands delivered attractive growth for 2024, including Oreo, Ritz, belVita, Tate's, 7DAYS, Club Social and Perfect Snacks. Chocolate grew 7.4% for the year and 8.9% for the quarter, with significant growth across both developed and emerging markets. Volume mix declined 2% for the year and 2.3% in the quarter. Our two flagship global brands, Cadbury Dairy Milk and Milka, delivered outstanding growth, while we also delivered strong growth with our local jewels portfolio, including Lacta, Cote D'Or, Freia and Marabou. Gum and candy grew more than 7% for the year and nearly 9% for the quarter. Key markets, including China, Brazil and Western Andean, all performed well. Let's review market share performance on Slide 13. We held or gained share in 50% of our revenue base, with strong results in both chocolate and biscuits. Although there is more work to do, we made strong progress in the back half of the year, including the last three months as approximately 17% of revenue had or gained share due to improvements in North America biscuits. Strong brand reinvestment, revenue growth management initiatives and solid execution helped drive recent improvements. Moving to regional performance on Slide 14. Europe grew 5.7% for the year and 7.4% for the quarter. Strong execution, including pricing, led to attractive growth despite significant customer disruption in half one. OI dollars in '24 were up 8.8% for the year and down more than 40% in Q4. The sharp decline in European Q4 profit was driven by the dramatic ramp in our cocoa cost pipeline without the benefit of additional pricing and cost measures that are expected in 2025. North America grew 1.5% for the full year, while Q4 grew 0.4%. Full year growth was driven by solid performance across a number of brands and growth channels. In Q4, volume mix grew 1.3 percentage points, driven by growth in our new fresh stacks price packs as well as trends from Tate's and Perfect Snacks. Overall, we saw a good start with the rollout of the new price packs in Oreo, Chips Ahoy! and Ritz. We entered '25 encouraged by our new price packs, expectations for category growth and initiatives around growth channel, trade programs and new distribution growth. North America OI increased 0.4% for the year. For the quarter, OI decreased 11.5%. This decline was a result of higher trade spend, some cost pressure, particularly as we ramp up production of the newly launched price point SKU and a settlement of a legal case. AMEA grew 6.2% for the year and 8.6% for the quarter, with solid volume mix growth to finish the year. China grew high-single digits for the year and quarter. Australia posted strong growth for both the year and quarter, as well as Southeast Asia returned to growth in Q4. India delivered low-single digit growth for the year and quarter, as strength in chocolate was offset by soft biscuit results. We are encouraged by work being done in India and in the biscuits business specifically around smaller packs and lower price points as we head into 2025. AMEA increased OI dollars by 13.4% for the year, while OI declined 28% in Q4, resulting from unfavorable cocoa phasing. Latin America grew 4.6% for the year and 4.9% for the quarter behind solid performance from Brazil and the Western Andean group of countries. Latin America delivered another strong year of profitability. OI grew 10.7% for the year, while declining 5.7% for Q4. Profitability was lower in the quarter, driven by cocoa. Turning to Page 15. For the year, we delivered strong high-single digit OI dollar growth. This growth enables significant level of reinvestments in our brands and capabilities for '25 and beyond. In Q4, we saw a notable decline in OI dollars growth. This decline was primarily a result of unfavorable cocoa pipeline that we noted in our Q3 call. These cost headwinds came without additional offsets in pricing or overheads reduction, which we expect to initiate in 2025. Next to EPS on Slide 16. Full year EPS grew 13% in constant currency. The significant majority of this growth was driven by operating gains. And despite currency headwinds, we grew adjusted EPS at reported ForEx by more than 9%. Q4 EPS growth declined due to previously mentioned spike in the cocoa cost pipeline. Turning to Slide 17. We delivered $3.5 billion of free cash flow for the full year, including the settlement of the EU Commission matter of nearly $400 million. We returned $4.7 billion in cash to shareholders through dividends and share repurchase, with nearly half of our share repurchase coming in Q4. Consistent with our capital allocation priorities, we announced a new $9 billion share repurchase authorization in December, which runs from '25 through '27. We continue to be opportunistic buyers of our stock at depressed levels, given our view of the intrinsic value. Before we get into the details of our outlook, let me provide additional thoughts on cocoa. The market continues to show signs of volatility and has reverted to elevated levels during much of the past three months. Despite a good main crop, several factors have contributed to this situation, including concerns about the mid-crop in the Ivory Coast, ongoing low liquidity and low industry coverage. This backdrop has created more pressure on our P&L for '25 as it relates to the portion that was still unhedged or protected through flexible structures at the time we spoke to you back in the Q3 call. Although, we cannot predict specific timing, we continue to believe that the inverted nature of the market, combined with lower demand levels due to higher pricing and elasticity, will eventually bring cocoa to a more sustainable price level. As Dirk mentioned, we have been planning our '25 business for some time now in advance on -- of elevated levels of cocoa, and we have developed a clear and comprehensive chocolate strategy. This includes leveraging a robust RGM playbook, strong marketing and sales execution, remaining agile with the right incentives and targeted cost savings. A few words on 2025 and key planning assumptions on Slide 20. For the current year, we expect to deliver on our long term algorithm for revenue. We currently expect top line to be approximately 5%. We have planned for higher levels of elasticity in chocolate, but we need to remain agile and assess the situation as new prices get implemented. We expect an adjusted EPS decline this year, given the unprecedented levels of cocoa cost in our chocolate canal. This decline is expected to be approximately 10% versus the base of $3.36 in 2024, that excludes JDE Peet's from the equity income. This outlook does not include the impact of the potentially significant new executive orders imposing 25% tariffs on U.S. imports from Mexico and Canada. This would create an additional headwind to the business, but given the fluid and rapidly changing nature of timing, it is difficult to provide a reliable estimate of impact for the full year at this time. Overall, we believe this outlook is a prudent planning stance based on our visibility to cocoa costs in 2025, which is substantially protected and hedged at this point. This assumption is based on the principles I just discussed. Based on our view of earnings, we are planning for free cash flow of $3 billion plus. In terms of other key assumptions, for inflation, we expect a double-digit increase for 2025 versus 2024, driven almost entirely by cocoa as well as some labor costs. In terms of interest expense, we expect approximately $350 million. We expect an adjusted effective tax rate in the mid-20s. Note that our cash tax rate is expected to run approximately 2 points lower than this rate. And for share repurchase, we are expecting at least $3 billion, with the flexibility to go higher depending on stock price. We are expecting approximately $0.12 of EPS headwind related to ForEx for the year. Before opening up for Q&A, a few comments on 2026. In 2025, we are trying to strike the right balance by running a reasonable P&L, while taking a responsible and thoughtful approach to maintaining the health of the chocolate category. In that context, we continue to scrutinize every dollar we spend, including A&C, where we'll continue to prioritize brand investments and properly support brands as long as we believe the return is sufficient. We do expect EPS growth in 2026 based on cocoa levels staying elevated, but stable. Cocoa futures might come down, but we're not there yet. So, we will continue to plan various scenarios, with the base case for a continuation of elevated levels. If cocoa stays high, we would expect to gradually price more. If cocoa starts to come down, then we would expect earnings delivery to be higher. Regardless, we expect EPS growth in 2026. With that, let's open the line for questions. Operator: Thank you. [Operator Instructions] We'll take our first question from Andrew Lazar with Barclays. Andrew Lazar: Great. Thanks so much. Appreciate it. Dirk, maybe to start, given where cocoa has gone in the past few months, maybe you can talk about how that, if at all, sort of, changes your approach and chocolate strategy, and with that, the state of the European business, given that's your largest chocolate market, and it seems like even more price will likely be necessary even into '26? Dirk Van De Put: Yes. Well, hello, Andrew, and thanks for the question. Well, as it relates to cocoa and chocolate, the first thing I would say is that, in our eyes, chocolate remains a great snacking category, which so far has been remarkably durable. It's been quite robust in '24 already with some significant pricing, but still healthy volumes. That's driven by the fact that there is iconic brands, iconic brands that we have and others have, that are taste of the nation, high brand loyalty, there's very little private label. Consumers quote, chocolate as one of their indulgences that they cannot live without. So, we continue to feel that this is a great snacking category. Our view is that despite the short-term volatility that our approach needs to be to protect the category health, to protect our share in the category and to protect our brand investments. We are seeing some structural change to the cocoa pricing in the cocoa market, but we don't think that will continue to the current magnitude. For sure, cocoa prices will remain high than they've been in the past, but they will come down eventually from the current high to our opinion. The other thing I would say is that, from our view, we need to protect key price points and thresholds, so that consumers can continue to enjoy their chocolate. So, that means, in emerging markets, we continue to hold the price points of our low unit pricing. And in the developed markets, we try to make sure that we have the right entry level. We accompany that in '25 with very strong revenue growth management plans and PPA plans to make sure that the consumers can have consumption at all different price points. We are going to continue to invest in the category. We are optimizing that investment, but we will continue to support our brands strongly. Of course, we will do some additional cost measures to protect the bottom line. So, as I said, we're trying to optimize our A&C investment. We're looking at zero overhead or negative overhead growth, and we have the highest supply chain productivity program in the history of the company for 2025. And we will continue to hedge our chocolate. We don't see a reason to change our strategy there. So, for '25, we have a very strong agenda. We have an enormous revenue growth management program. We have changed the price pack architecture on more than $5 billion of our net revenue. We have to do significant line pricing, which we are implementing as we speak. If cocoa prices remain elevated where they are today, that might require more pricing in the second half of this year and in '26. But as I said, we think eventually, cocoa prices will start to come down. There already has been some significant pricing around the world in chocolate. And I'm happy to report that the elasticities have held up well. So, we're looking at a 0.4 elasticity. And so far, what we've seen even in the places where we've had 10%, 15% price increase, that holds. We are also, of course, looking at optimizing our promotions. We're doing active portfolio management. Elasticities, we have estimated around 0.4, I was mentioning. We will need to remain agile and adapt to the circumstances. But overall, we do believe that we have the right strategy. We have very strong activations and innovations also planned. We are launching new flavors, new experiences. We have the biggest seasonal agenda in chocolate. We are starting and launching products in our Biscoff partnership. So, that also we think will drive consumer interest. We are monitoring consumers very closely and that gives us reason for optimism. So far, we don't see any major shifts. And if you then look at the P&L of chocolate for '25, our main objective is to protect the category, protect our share. And we think we can do that with a reasonable P&L, and I'm sure that Luca will talk a little bit more about that, which includes significant investments and robust activations. And we are not taking any short cuts for short term gains. So, that's a little bit the way we look at chocolate. If I translate that to Europe, at this stage, consumer confidence in Europe is pretty stable. It's subdued, but it's stable. The purchasing power is soft. There is ongoing economic and political uncertainty, of course. But overall, we feel that the consumer is in a good place, probably in a better place as the consumer is in the U.S. The category consumption in chocolate is pretty good. We have very solid value growth. We have good volume growth. We're seeing a little bit of deceleration in the last three months, but that's because pricing is starting to come. And as I said, the elasticities are as expected. For instance, in the U.K., we're looking at a 0.37 elasticity so far and we've already increased prices by about 15%. So, I think after we had client disruption in the beginning of the year, we saw a very good business continuation in Europe. We had broad based growth across the region. Chocolate was growing 8% in value over the last three months for us. We had the highest Christmas net revenue in chocolate, a double-digit growth. We're seeing very nice growth across channels from discounters to world travel retail, and we had a great share performance. So, everything so far in Europe is good. And as you can see from the numbers, so the quarter and the year looks pretty good, except, of course, for the cocoa effect, but that over time will start to go down as our pricing takes hold. So, for '25, we have this big RGM agenda. We have the activations of promotions. We do assume in our estimates at the moment client disruption. The chocolate P&L will gradually improve as pricing takes hold, and we still have some significant pricing and PPA to do, but we do believe that we have the right estimates in our forecast. So, pretty optimistic about the chocolate category and we do feel that our European business is well prepared to deal with this. Andrew Lazar: That's awesome. Thanks so much for that very fulsome answer. And then, Luca, just quickly, can you walk us through some of the puts and takes for the '25 outlook in terms of, like, phasing around EPS and margins? And although early, just how do we think about the key considerations for '26 that you kind of got into briefly in the prepared remarks? Thanks so much. Luca Zaramella: Yeah. Thank you, Andrew. As far as the 2025 guidance goes, I think we have to start by saying that we feel good about how we ended the year in terms of revenue and growth momentum. As we just said, we feel quite good with the benign elasticities in chocolate. Total growth of the categories where we compete was good. And importantly, I think we were happy to see share momentum picking up. So, this is good news given that 70% of the business is non-chocolate, and we expect a normal year in terms of biscuit, bakeries and other categories. Chocolate profitability is clearly the main concern of the plan. And as I said, in the prepared remarks, the chocolate spikes in the last few months have given us a little bit of a headwind compared to what we told you and we anticipated back in October. So, we have beefed up the plan in terms of pricing actions and RGM. And as we just said, we need to continue to strike a good balance, especially in emerging markets between price and volume. To offset some of the profit pressure, we have unprecedented cost measures, I would say, particularly in the productivity area of our manufacturing network, but we also have reduced overheads and the non-working media spending. So, our goal is to deliver a plan that is executing well in all non-chocolate category. And for chocolate, I think, the key will be to minimize the volume implications, together with ensuring that we exit 2025 with a reasonable profit per kilo as a key measure for us to monitor. The profit gating throughout 2025 will be more pressured in Q1, given the fact that we are in the midst of negotiations with customer and we haven't implemented the price yet, but we feel quite good at this point given the progress we have made. And I think you will start seeing profit improvement in terms of sequential improvement versus Q1 and Q4 as we progress throughout the year. And again, the clear goal for us is to end 2025 in a place where we are well positioned to deliver EPS growth in 2026. Clearly, it is quite premature to talk about 2026, but we wanted you to hear very clearly that our goal is to grow EPS for 2026. At this point in time, we see a bifurcation of scenarios into 2026. I believe the most likely scenario is that cocoa prices will come down, in which case, we will have higher earnings upside potential. But if cocoa stays elevated, we will have to take a little bit more pricing. And our approach over the last few years and in '24 as well is to take multiple pricing actions and to allow consumers to get accustomed to higher levels of pricing. And so, we believe that in either case, whether cocoa comes down or stays high, we have a path to delivering EPS growth into 2026. Andrew Lazar: Thanks so much. Luca Zaramella: Thank you, Andrew. Operator: We'll move next to Ken Goldman with J.P. Morgan. Kenneth Goldman: Hi. Thank you, Dirk. In North America, both price and volume mix came in below the Street in the fourth quarter. I'm curious, can you maybe expand on how you view the general health of the biscuit category here in the U.S., and also your expectations roughly for both volume and price in 2025 in North America in light of how you think about that category and your share within? Dirk Van De Put: Yes. Hi, Ken. Well, the consumer in U.S. is still quite concerned, the economy, the political situation and, of course, inflation. And as we've talked in the past, the value definition has clearly changed in most categories, I would say, but also in the biscuit category. Basically, higher income consumers are trying to buy bigger packs, while lower income consumers are focused on lower unit prices. And also, the channel shopping behavior has significantly changed. I would say at this stage, the U.S. biscuit category is softer. The elasticities are increasing to a certain degree. The category growth in the last three months was 0.6%. We did improve our shares during that period, but overall, I would call that soft. The good news is that the penetration and the volume per trip is holding up. There's a number of reasons for that. First of all, prices have stopped rising. In fact, prices have probably come down, and that's part of what you see in Q4, because we launched a number of packs at lower price points, and the promo intensity is also increasing. I would say, within the category, cookies are performing in line with broiler (ph) snacking, while crackers are softer. Q4, while maybe below the market estimates, was, to our opinion, solid quarter. We had a net revenue growth of 0.4%, volume mix was 1.3%. OI was lower, but the reasons for that was first of all, we were lapping a lower trade spend last year and we were also lapping some SG&A one-timers, but the good news for us was that we grew biscuit share with more than 30 basis points in Q4. We did a number of innovations, as I mentioned, fresh tax and launched, for instance, the Chips Ahoy! Chewy Cookie and we had very good channel results also. The one that was a bit of a decliner was give and go, that had to see with the fact that our kids business declined to pre-COVID levels. If I look at '25 for the category, I would say -- sorry, the pricing possibilities are limited, will have a little bit. We will continue to do PPA for lower price points. We will have some very strong activations. You'll see the first one with Post Malone on Oreo as is currently going on. I do think that we will have a good volume growth next year because of those lower price points and the fact that we have under developed channels, plus we can drive more penetration of some of our brands. So, I think we will combine a good volume growth with lower pricing. So, maybe our percentage gross profit will come down, but we do think that the dollars that we will generate will be quite strong. So, I'm expecting a solid P&L in North America in '25. Kenneth Goldman: That's helpful. And then, quickly, Luca, just on cocoa, I think you and Dirk have been using the word eventually more than usual today. It may be fair, maybe not, but it seems like you're incrementally less confident today that cocoa is bound to fall in the near-term. So, I'm curious, has anything structurally changed in your view of supply and demand or is this just a situation where you have to sort of at least partially just kind of accept the current reality, whether it's justified or not? Luca Zaramella: Look, I think it is tougher for us, quite frankly, to make sense of the current elevated prices. Yes, it is through the mid-crop, which, I remind you, account for 30% of the total year production of cocoa is subdued and there was a little bit of a drier weather than was anticipated. The reality is, as of today, the port arrivals are up almost 25%. And I believe even in the worst case scenario of the mid-crop being sub-par, we foresee most likely a supply increase compared to last year, that is around about 10%. The latest grinding numbers have been quite good. And so, demand doesn't factor yet, major changes, but we start seeing signs, particularly in parts of the world like North America, where cocoa consumption is coming down. And so, that should provide, I believe, on a longer term perspective, a little bit of a relief in terms of also demand. I think the market is very thin. If you look at the industry, it is covered very shortly. If you look at volume that gets traded daily, it is very, very small. And obviously, in this environment, we see particularly speculators to drive cost prices that are elevated. So, look, I think I was really hoping that by now, with the main crop behind us and the good numbers, cocoa will be more benign, but it isn't. And so, we have assumed a cocoa price that stays elevated for '25. And in our plans, it is elevated for 2026 as well in the sense that we prefer planning that way, rather than assuming and having an assumption that drives EPS growth simply because of cocoa coming down. We are committing to you that EPS in 2026 will grow either way and we want to be ready for the worst. But quite frankly, given that I believe there will be a surplus between supply and demand in 2025, I believe eventually cocoa will have to come down. Kenneth Goldman: Thank you very much. Luca Zaramella: Thank you, Ken. Operator: We'll move next to David Palmer with Evercore ISI. David Palmer: Yeah. Thanks. Just a theoretical follow-up on that. You mentioned that you believe that cocoa prices would return to a more sustainable price level. And I'm wondering whatever that level is, it might not be the $3,000 where we were not that long ago and it might not be the $10,000 we're at now. But let's say, $5,000, $6,000, whatever it is, and we get to that place in the next one or two years, is it your belief that you will have the ability and that you will ultimately get to a point where you're pricing away the dollar input inflation and that essentially over a multi-year period, your algorithm will normalize? Is that still your belief? Luca Zaramella: Yes. I think what you have to assume is that just picking the numbers that you have quoted, $3,000 and I don't know if you are talking about dollars or GBP, but call it GBP. We will be priced at the level that is higher than that. And so, I think the question becomes that, that level of cocoa, how quickly are we going to adjust, if any adjustment is made, prices down. And I think as much as the restriction going up and as much as we are never priced throughout, I would say, the next couple of quarters at the right level of cocoa, it is fine to assume that as cocoa starts coming down, our price too will be better than the $3,000 you quoted. And so, in that context, our profitability will be quite good and would allow us to have a P&L that makes more than sense. And so, I think if cocoa comes down, earnings power is there. If cocoa stays high, which again we don't control, we will have to price a little bit more in 2026. And as I said, in a previous question, this approach of multiple pricing waves is the best in terms of getting consumers accustomed to new price levels and minimizing elasticity and volume losses. David Palmer: And then -- thank you for that. And then, just as you're sort of reviewing cocoa prices and the -- I would imagine that the visibility on the pass crop is behind us. I'm wondering what are you going to be watching and when will you make up your mind about the need for additional pricing? Like, what sort of time frames are you kind of under -- are we under review here? Is this something that you're going to make a decision to pivot by the time we get to the second half of this year? How will that work? Luca Zaramella: Yeah. So, I think for '25, we are pretty much done in terms of coverage. And now what we have assumed at this point is that we will have to take multiple price waves and there are situations where we have two other situations where we're going to take three price increases. As Dirk said, we have an unprecedented amount of RGM, which has come to fruition throughout the year. And so, we are planning, for the current levels of cocoa, a series of actions that we will take throughout 2025. Now, if we realize that the main crop numbers with which we're going to start getting a sense towards September, October, if we realize that demand of cocoa in general is coming down and the number of -- will be coming out throughout the year, but the first half will give us an indication of how much global demand is subdued and in -- and we will try to understand the price implication on cocoa. We will decide as we go what is best to do for the second part of the year in light of a plausible cocoa level for 2026. And so, quite frankly, we have to remain quite open to understanding what cocoa is going to do in 2026. And as a consequence, we will act accordingly, particularly in the second part of the year. The first pricing waves according to the level of cocoa that we have today had been taken between October and December in few cases. We are under European negotiations literally as we speak. There might be other pricing waves that we'll take in the second part of the year depending on our view on 2026 cocoa levels. David Palmer: Thank you. Operator: We'll move next to Tom Palmer with Citi. Thomas Palmer: Hi. Thanks for the question. I wanted to ask a little more on the expected cadence of both earnings and COGS inflation. And specifically on COGS inflation, it looks like 4Q24, we saw a bigger step-up. Will we then, I guess, thinking through 1Q to 3Q see a more normal rate and then inflation starts to ease based on current futures? And then, just given kind of the outsized earnings pressure in 1Q, might you then the main offset be 4Q? I just want to make sure we're kind of thinking through those moving pieces between cost and pricing over the course of the year. Luca Zaramella: Yeah. So, the pressure that you saw on profitability in Q4, it is the fact that cocoa was fairly high into our P&L in Q4. Your assumption should be that, that level of cocoa keeps until for the full 2025 at this level -- at this point in time, that's our assumption. So, I think you should assume that, that level of cocoa is equally spread throughout the remaining quarters of 2025. Now, the differential in terms of gating for profitability of 2025 is that we will have more pricing coming into the P&L. So, the elevated inflation is going to keep on hitting Q1, Q2, Q3. Obviously, Q4 will be different, because there is already elevated level of cocoa in the baseline. The difference is you're going to see sequential price improvement throughout the year, particularly as of Q2, Q3 and Q4, and that will provide benefits to the profitability of the company. Thomas Palmer: All right. Thanks for that. And just on the elasticity, you mentioned so far, that elasticity was 0.4. Just any color on what's embedded in guidance at this point? Thanks. Luca Zaramella: That is the guidance number. We have seen elasticities that are a little bit lower than that. We monitor elasticities very closely. I can tell you that in Q3 and Q4, the elasticities for chocolate that we saw was a little bit lower. The current planning assumption for 2025 is that elasticity on average is 0.4, 0.5 times. And that number is higher than what we have seen in 2024. Thomas Palmer: Okay. Thank you. Operator: We'll move next to Max Gumport with BNP Paribas. Max Gumport: Hey. Thanks for the question. You mentioned a number of times in this call that you have one of the highest supply chain productivity programs in your history coming up in '25. I was hoping you could just put a bit of a finer point on just how big that program might be? Thanks very much. Dirk Van De Put: Yeah. The typical targets that we have is about a 4% gross productivity on our supply chain. And then, depending on inflation rates and some other investments we might do, we try to translate that into a net productivity. In the past three, four years, it has been very difficult to reach that 4%, but we are planning to reach that in '25. So, that gives you an idea. Max Gumport: Great. Thanks very much. And then, turning back to North America and what you're seeing within your biscuit and cracker categories, and I understand your share performance is improving. Consumers still feeling some financial pressure in the U.S. I didn't hear you speak much to whether or not you think there is a shift away from snacking that's going on due to a consumer that's more focused on health and wellness or a consumer that's more and more likely to be on a GLP-1 drug. So, just curious on your view on the broader snacking category in the U.S. and whether or not there is some headwind to you to consider because of the shift to health and wellness? Thanks very much. Dirk Van De Put: Yes. Thank you. I would say, to our view at the moment, no, we do not necessarily see snacking diminishing because there is a shift to health and wellness, or there is a decreased consumption in snacking because of GLP-1s. We've monitored that very carefully, and so far, there is really no effect that we can tell. Within snacking, there might be a shift to more healthier products, but that has been going on for years. And I wouldn't say that in recent years, there has been a shift there. In fact, since COVID, the indulgent part in snacking is growing just as fast as the healthy part. So, that was different before COVID. So, if anything, the indulgent part remains as it was before. Max Gumport: Thanks very much. Operator: We'll now move to our final question from Peter Galbo with Bank of America. Peter Galbo: Hi. Good afternoon, Dirk and Luca. Thanks for the question. I'll keep it relatively short or to one question, but maybe with two parts. So, Luca, if I could just kind of hone in on the earnings per share, the actual guidance, roughly $2.90 for 2025. And with the clean numbers without JDE, you were $3.08 in '23 and $3.36 in '24. I guess the question, A, is 2023 probably the right high watermark to use from an earnings per share perspective just given this past year, you had some cost favorability at least through the first nine months relative to price relative to cocoa. And so, as we're thinking about growing off that $2.90 base over whatever timeframe, right, '23 is maybe a better high watermark. And then, the second part of that is just, like, what is the path back to that? Do you -- can you get to that high watermark with cocoa where it is currently? Does that need to come down, obviously to hit the number? I'm not looking to put a timeframe around it, but just if you can kind of unpack what the path back to that is would be helpful. Thanks very much. Luca Zaramella: So, just to be clear, it is not that cocoa in '24 is lower than 2023. It is that cocoa was higher and we priced somewhat to replacement cost in the first part of the year, and we have been taking advantage of the favorable pipeline compared to market, not compared to 2023. So, arguably the base EPS might be what you saw in the first three quarters of the year, provided that cocoa comes down to the levels of the first three years and that we hold on to the pricing that we have implemented. So, if you're trying to understand by when we can be back on track with the reasonable level of EPS, I think the question really becomes at what level of pricing are we going to be priced, particularly in 2026, and what level of cocoa are we going to have into the base P&L of 2026. What I wanted to say, particularly in the previous answers and in the prepared remarks is that, either way, we are committing to an EPS growth in 2026. If cocoa comes down in 2027 or in 2026, the earning upside potential that we have will put us back to levels that most likely you saw in the first few quarters of 2024. Again, I don't know if cocoa will come down at all, and that's where our commitment to you is that EPS will grow in 2026 and that's where we are telling you that regardless of the level of cocoa, there are two options here. Either we price more and we will get there, or if cocoa retrenches and comes down, the earnings power is within our P&L. Peter Galbo: Great. Thanks very much. Operator: I will now turn the conference back to Mr. Dirk Van De Put for any additional or closing remarks. Dirk Van De Put: Yes. Well, thank you very much. Thank you for attending this call. Looking forward to update you at the end of the first quarter when I assume that we will have a much clearer look already at how cocoa is evolving and how the pricing is landing in the markets. And until then, obviously, we are always available to answer any of your questions. Thank you. Luca Zaramella: Thank you, everyone. Operator: Thank you. Ladies and gentlemen, this does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: Good day, and welcome to the Mondelez International Third Quarter 2024 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez Management and the question-and-answer session. [Operator Instructions] I would now like to turn the call over to Mr. Shep Dunlap, Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we will make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide year-over-year growth on a constant-currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business strategy update followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I'm pleased to share that we delivered strong top line growth with positive volume mix. Developed markets grew mid-single-digits, led by solid progress in North America biscuits as well as recovery in Europe following successful implementation of our annual pricing. Emerging markets also grew mid-single-digits, despite continued boycotts of Western brands in certain markets. Strong profit dollar growth enabled us to continue our track record of robust free cash flow generating $2.5 billion year-to-date. We expanded our presence in the fast growing cakes and pastries category by acquiring a majority stake in Evirth, a leading player in cakes and pastries in China. And I'll provide some additional color on this exciting partnership in a few minutes. We remain diligent in driving progress against our long-term growth strategy, focused on our core categories of chocolate, biscuits and baked snacks. These core categories continue to show strong consumption, and on top, consumers remain very favorable to our iconic portfolio, as such generating significant headroom opportunities. These strong fundamentals, combined with our advantaged geographic footprint, keep on giving us confidence that we are well positioned to compound long-term sustainable growth. Turning to Slide 5, you can see that organic net revenue grew 5.4% this quarter, with adjusted gross profit dollar growth of 11.2%, enabling us to continue investing in the business. A&C spending is up mid-single-digits, helping to drive continuing consumer and customer loyalty to both our iconic global brands and our local jewels. And adjusted EPS grew 28.6% this quarter, and we have generated $2.5 billion in free cash flow through the first nine months of the year. On Slide 6, we are pleased to see that developed markets are beginning to recover with solid revenue growth and an increasing healthy volume mix in the third quarter. Unlike many of our peers, we are seeing continued consumer uptake of our core snacking categories. In North America, we are seeing volume growth start to rebound as inflation cools and we continue to expand distribution in areas like club. Similarly, in Europe, revenue grew 8.1% in the third quarter, following significant disruption earlier in the year, as our annual pricing took hold. Unlike many of our peers, both volume mix and net revenue are beginning to turn the corner. Consumers are continuing to embrace chocolate and biscuits as everyday indulgences, And our revenue growth management strategies enable us to meet every consumer's needs, with a broad array of product formats, pack sizes and price points to meet their definition of value. Turning to Slide 7, you can see a bit more context on how and why our snacking categories remain durable. In North America, consumer confidence remains stable, despite continuing concern with overall grocery prices. Biscuit category volume is improving to flat to slightly up over the last three months. In the United States, private label volume share is declining, demonstrating that consumers remain loyal to their favorite brands and that our price pack architecture is working. As a result, our two largest US brands, Oreo and Ritz, are gaining share year-to-date. Meanwhile, in Europe, elasticities are moving slightly higher, but remain modest. We continue to see solid category value growth in both biscuits and chocolate, with private label share declining over the past three months. Some consumers are shifting to smaller packs of chocolate for everyday snacking, and again, our RGM and price pack architecture enable us to offer an appropriate range of choices. As we head into the year-end festive season, seasonals are also looking solid. In emerging markets, modest elasticities continue. Consumer confidence is stable in India, Brazil and Mexico. While the overall China economy remains challenged, we're seeing optimism beginning to return as stimulus policies take effect. Overall, our combined emerging markets value and volume share is improving in both biscuits and chocolates. Turning to Slide 8, it's important to reinforce that while the external environment remains volatile, we remain focused on accelerating our long term growth strategy. We're continuing to reinvest in our brands, expand distribution, drive M&A and scale sustainable snacking. We remain on track to deliver 90% of revenue through our core categories of chocolate, biscuit and baked snacks by 2030. And our teams continue to deliver strong progress against our strategic agenda. For example, our Oreo brand launched in August an innovative collaboration with Coca-Cola, our largest global brand activation to date. These two iconic brands joined forces in a 360 degree marketing campaign, encompassing digital, social, celebrity and in-person activation to unite our strong fan bases and build buzz around two high profile limited editions, a Coke flavored Oreo cookie and an Oreo flavored Zero Sugar Coke. These types of investments not only enable us to stay top of mind for consumers, but also to strengthen partnerships with key retailers. Along with these marketing activations, we are continuing to strengthen store availability, visibility and execution around the world. For example, in Brazil, the convenience channel is growing high single-digit on a year-to-date basis, with plans to further grow coverage in this channel with additional stores. We are also continuing to harness the power of acquisition to capture synergies and drive growth. For example, in China, our acquisition of Evirth step changes our growth in the cakes and pastries category. I'll provide additional color in just a minute. Importantly, we remain committed to driving progress towards a more sustainable snacking business through our continued focus on our environmental and social sustainability agenda. For example, we recently introduced new recyclable paper packaging for our legendary LU biscuit brand in France, Belgium and the United Kingdom. Now let's dig a little deeper into the cakes and pastries category and our recent announcement in China. As you can see on Slide 9, the global packaged cakes and pastries category is valued at about $95 billion. Mondelez currently holds the number three global share position. And because this category is highly fragmented around the world, we see significant opportunities for bolt-on M&A as well as organic growth. We already have delivered strong growth in this category through our 2020 acquisition of Give & Go, the leading manufacturer of frozen to fresh brownies, cookies, cupcakes and related bakery products in North America. And our 2022 acquisition of Chipita, a leader in croissants, baked rolls and related snacks, anchored in Central and Eastern Europe. In China, as you can see on the right hand side of the slide, the packaged cakes and pastries category is valued at about $14 billion. Within that category, the frozen-to-chilled segment is growing double digits, currently estimated at $1.5 billion. Chinese consumers increasingly seek fresh premium options with innovative and sophisticated taste profiles to meet a growing range of snacking occasions. On Slide 10, you can see that's why we are excited about the expansion of our existing partnership with Evirth, the Chinese leader in the fast growing frozen-to-chilled baked snacks category. We have worked with Evirth for several years to develop, manufacture, market and sell cakes Several years to develop, manufacture, market and sell cakes and pastries, featuring some of our iconic brands, including Oreo and Philadelphia. Our recent purchase of a majority stake will enable us to further accelerate growth through continuous innovation, leveraging the combination of our high value brand with Evirth’s advanced R&D and technical expertise. Chinese consumers increasingly are seeking fresh premium products, with demand growing especially fast among younger generations in mid-tier cities. Evirth has a strong presence among key customers, including club stores, and our expanded partnership will enable us to scale distribution broader and faster. Before I turn the microphone over to Luca, I'd like to share some preliminary perspective on our approach to 2025, in light of the widely known cocoa cost headwind. Chocolate remains a great category and continues to generate significant consumer interest. Consumers count on our iconic brands, including Cadbury Dairy Milk, Milka, Toblerone, Cote D'or, Marabou, Freia, Lacta to celebrate special occasions, to share with family and friends and to unwind with the moment of mindful indulgence. As we will continue to invest in our brands, we remain confident that consumer loyalty will not only endure, but continue to grow, even as we execute the necessary short-term pricing steps. Our primary focus is to continue to build the health and the growth of the chocolate category as a whole and our brands in particular. While we remain relentlessly obsessed with consumer value, we do anticipate some upticks in elasticity in certain markets, and we might need to adapt to more aggressive RGM and promotions. And while the temporary cost increase of Cocoa will put pressure on our margins, we will continue to invest in tools that strengthen brand loyalty and accelerate growth, such as visi coolers to improve visibility and accessibility, as well as continued strong investments in working media. We expect the majority of our portfolio to grow both top and bottom line, consistent with our algorithm, and we believe we are taking the right steps to position the chocolate business for attractive and long-term sustainable growth. We remain confident that we are well equipped to appropriately manage input cost headwinds and to emerge stronger. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon everyone. Q3 was a strong quarter across our key financial metrics, including top line, gross profit dollar, A&C investments, earnings growth and free cash flow. Revenue grew 5.4% with strong pricing execution and positive volume/mix growth. Developed markets grew 5.6% with a volume/mix increase of 1% driven by both North America and Europe. Total revenue for emerging markets grew 4.9% with a volume/mix decline of 1%, driven by Western brand boycotts in EMEA and the lower volumes mostly in Mexico. Moving to portfolio performance on Slide 14. Biscuits and baked snacks grew 3.3% for the quarter. Several brands delivered robust growth including Oreo, Ritz, belVita, LU, 7 Days and Club Social. US biscuits delivered solid growth in the quarter with a good balance from both pricing and volume/mix. Chocolate grew plus 9.2% with strength in both developed and emerging markets. Volume/mix was down minus 1.2%, driven mostly by challenges in Latin America whereas most of Europe came back strongly after customer disruption. Cadbury Dairy Milk, Milka, Toblerone and Freia Marabou all delivered strong growth for the quarter. Gum and candy grew 5.6%, driven by continued momentum and strength in key markets, including Brazil and US candy. Volume/mix in this category was slightly positive. Let's review market and share performance on slide 15. We held or gained share in 35% of our revenue base with solid results in chocolate as well as in gum and candy. This strength was partially offset by our US biscuits business, which accounts for approximately 25 percentage points of revenue. We expect total share metric to improve moving forward as Europe gained share in Q3 following customer disruption in F1. The US still has work to do, but we have seen shareholding in the last three months and believe new price packs in Q4 should help drive further improvements. Moving to regional performance on Slide 16. Europe grew 8.1% in Q3. Execution was strong in key markets such as the UK, Germany and France, all delivering significant growth. We saw a slight uptick in elasticity resulting from pricing, but consumer sentiment remains relatively stable. OI dollars were up more than 46%, including significant A&C investments and due in part to pricing versus favorable cocoa phasing. North America grew 3.7% against a strong compare of nearly 10% in the prior year. Solid performance in growth channels, distribution gains and impactful brand activations like the Oreo Coca-Cola partnership drove Q3 growth. New price pack for Oreo, Ritz and Chips Ahoy! that will provide better representation in the $3 to $4 range are just beginning to hit retail shelves now. North America OI increased 6.5%. AMEA grew 5.8%. China posted strong results with high single-digit growth fueled by continued investments in brand building across Oreo, Chips Ahoy!, and Stride, coupled with ongoing distribution gains, adding approximately 80,000 new outlets on a year-to-date basis. India was down slightly in Q3, driven by a decline in biscuits, where inflation has led to a more competitive promotional environment. On the flip side, chocolate continues to perform well, especially within the low unit price segment, which grew mid-single-digits. Australia, New Zealand and Japan delivered another strong quarter of growth driven by RGM, strong activations and innovation. Boycotts in the Middle East and Southeast Asia remain a headwind to results. We expect this dynamic to persist for the foreseeable future. However, it is largely embedded in the base beginning Q4. The overall impact to the region was approximately 2 percentage points worth of growth. AMEA increased OI dollars by more than 15% with meaningful A&C increases. Latin America grew 2% in the quarter. Brazil and Western Andean posted growth, while Mexico was down modestly. Note that Argentina pricing has been capped at 26% unlike Q3 last year, where the country contributed more than 18 points to LA growth. Latin America OI declined 4.8%, due primarily to lower volumes in Argentina and Mexico. Turning to Page 17. In Q3, we saw strong double-digit gross profit dollar NOI dollar growth. Top line growth, pricing execution and ongoing cost discipline helped fuel these results. In addition, cocoa is still relatively benign in Q3, thanks to our effective coverage strategies. In Q4, this dynamic will reverse with meaningful pressure to profit as Cocoa catches up to market levels. Next to EPS on Slide 18. Q3 EPS grew more than 28% in constant currency on the same drivers as OI. We continue to generate strong free cash flow as you can see on Slide 19. We delivered $2.5 billion to date, which includes a payment of nearly $400 million in the quarter related to the EU Commission matter. We have repurchased $1.2 billion in stock year-to-date and will continue to be opportunistic for the remainder of the year and into 2025. Before moving to our outlook, I'll provide some additional context on cocoa. Cocoa costs have decreased since all-time highs, and futures signal eventual normalization, albeit the market is still showing signs of nervousness due to tight physical availability ahead of the new crop. At this stage, the new crop outlook remains positive with significant recovery compared to last year. Both consensus and our internal outlook forecast a surplus and increased stocks into 2025. With still a few weeks to go before pods are harvested, we believe this is good news. We also continue to employ a flexible hedging structure that would allow us to risk manage next year. Moving to Slide 22 and our approach to pricing and cost as we move into 2025. In terms of pricing, we will continue to utilize all the tools in our RGM playbook to minimize volume declines and limit elasticities, thus protecting penetration and frequency of consumption. We will keep price points especially for entry level and low unit items. We will also improve our participation at multiple price levels, offering consumers more choices. Additionally, we will continue to reinvest in our brands, primarily through working media. Cost management is another area of focus. We plan to take a targeted approach to managing costs by focusing on non-working media, overheads and productivity. We will not take shortcuts or make temporary moves that disturb the business, but rather focus on areas where we can make lasting changes. We will also not sacrifice key investments or product quality. Net, we are confident that we have a strong plan to navigate the headwinds presented by cocoa next year. We will focus on what we can control and will remain agile as needed to ensure the long term health of this category while positioning ourselves to emerge stronger when cocoa prices settle at more sustainable levels. Turning to our outlook. Our outlook for 2024 remains unchanged. We continue to expect on algo delivery for revenue, earnings per share, growth and cash flow. Just a word on EPS. We continue to expect high single-digit growth off a 2023 base that includes developed market gum. When you look at year-to-date margins, two things are clear aside from strong operating performance. First, we procure cocoa at much better prices than the market. And second, we priced a replacement cost. Thus, profit growth has been quite good. On the other side, Q4 is a bit of an anomaly as we booked your cocoa for Q4 close to peak, if not at peak prices, while at the same time, we will not yet have the benefits of either additional pricing or planned cocoa savings initiatives in Q4. While next year cocoa will be significantly higher than the average of 2024, it is projected to be lower than Q4 2024. Most of our other key assumptions remain consistent with what we shared with you on our last call, with the exception of interest expenses, which is now estimated at $250 million for the year. Although it is premature to get into specifics around our ‘25 outlook, I would note a couple of items. The majority of our business, which is not chocolate, will be on algorithm. We expect peak cocoa pricing to be reflected in the first half of 2025 while chocolate margins should improve sequentially versus Q4 2024. Our plans around pricing, RGM and cost management are expected to be significant and help provide room for reinvestment. However, where we sit today, it is tough to see a path to earning growth in 2025 unless cocoa is just down from the current future curve and/or elasticities are much more benign than our current planning assumptions, [ergo] (ph) there will be additional pricing. But as we said a few times, we believe cocoa in 2026 is going to normalize and we would have a meaningful rebound of our chocolate profit to allow for us to get back on track with our algorithm. Clearly, we do not control cocoa prices. But in the unlikely event that they would not normalize by 2026, our gradual approach to pricing seems still to be the best approach to take. Overall, we feel good about the fundamentals of the business, our growth opportunities, the investments we are continuing to make in the business and our plans to navigate this short term cocoa dynamic. We expect to emerge from this period of elevated cocoa prices even stronger and better positioned for attractive sustainable earnings growth. We will provide more details related to 2025 at our year-end call. Finally, a word on our sales of the JDE Peet's shares. We are happy overall with the return we realized on our coffee financial investments. Some of the proceeds will be deployed immediately towards lowering our CPE balance, but eventually will be deployed towards buyback and to support M&A. There will be a modest dilution in Q4 with a full year $0.08 headwind. We will issue an 8-K with more details over the coming weeks. With that, let's open the line for questions. Operator: [Operator Instructions] We'll go to our first question from Andrew Lazar with Barclays. Andrew Lazar: Thanks so much. Good evening. Maybe, Dirk, first, I was hoping you could discuss the puts and takes in 3Q and maybe specifically how that shapes sort of your strategy in chocolate going forward in light of the challenges that cocoa is going to present next year? Dirk Van de Put: Yes. Hello, Andrew. Well, overall, I would say we feel good about Q3, the results, and also the dynamics that we see in there. So as you could see, we have a strong top line growth. We have positive volume mix. And the consumer, I would say, in most places is holding up well. Developed markets came back with solid balanced growth in North America and also Europe strengthening again. And the emerging markets remain solid. There's a few pockets of softness there, but we have clear plans to address that. We continue to invest in working media and our brands. We -- and our bottom line was very strong with good free cash flow results. So we can't complain, I would say, about our quarter. And I think the feeling that the top line will continue to be robust into next year is certainly there, because we feel that overall the business is quite healthy and we have very good activities planned for next year. Yeah, chocolate is a challenge, but we are quite clear on which principles we have and what vision we have to deal with the cocoa challenge. Our first focus is to protect the health of the chocolate category, which is a great category. Our second one is, of course, within that category to hold or gain market share and taking an overall long term approach to how the category will develop and how our business will develop. We have to price next year, but we are very conscious of making sure that we protect key price points and certain thresholds. So we're doing a lot of work on our low unit pricing in emerging markets or entry level pricing in developed markets. And we're launching a bunch of new sizes in our chocolate business. I think our RGM plans are well thought through. We just went through everything with all the different business units that we have, and I think the work that has been done is very strong. And we've really thought through how we think the category will evolve in the coming months. We are planning to continue to invest in our brands, but we did look at all the non-working media and are aiming for some significant efficiencies there. And then, of course, we will also work on our other costs, particularly overhead costs next year, so that we can deliver what I would call a reasonable financial result overall. The rest of our business is business as usual. Maybe a few more things in the sense that we are not taking any shortcuts for short-term gains next year. We do realize that there is additional pricing and we will have some extra pressure. But overall, as I said before, we think chocolate is an outstanding category and we are fully committed to it. And the other maybe thing is, things can go different as it relates to reaction to pricing. We have assumed normal elasticity, but that could be more or less or cocoa pricing is still very volatile. It could be more or less than we planned. So being agile next year in how we deal with those situations will be another critical thing for us, I believe. I hope that helps. Andrew Lazar: Thank you. Yeah, very helpful. I appreciate that. Thank you. And then just a quick follow-up, Luca, I realize obviously you're not prepared to provide detailed 25% guidance yet. But fourth quarter, as you mentioned, it's the first one where you'll see the impact of significantly higher cocoa costs. So I guess how does this 4Q implied guidance, which looks for EPS, I think, down some 20% or so year-over-year inform the way we should think about next year? Whatever else you can share along those lines knowing you're not going to provide the full thing yet? Thank you. Luca Zaramella: Thank you, Andrew. I mean, I will start by saying that we are clearly very happy with EPS on a year-to-date basis and that I think will help us understanding a little bit better Q4 next year. We have landed today all pricing in line with our expectations and we are in general priced to a level that is higher than our actual cost of cocoa for the first three quarters as our cocoa buying strategies have been clearly quite advantageous compared to in-market costs. As you rightly point out, the implied EPS for Q4 based on us reaffirming guidance is down year-on-year. But I said in the prepared remarks that I see that as a sort of anomaly. First of all, because cocoa costs for Q4 were locked in when cocoa was at peak value. And second, clearly in the numbers in Q4, there is no effect of additional pricing or for that matter of the cost measures that we will put in place as of the beginning of 2025. Bear in mind that in 2025, pricing will not flow through as of day one. And so it will take a little bit of time for profit to improve and quite frankly profit improvement is more towards the second half of the year. Please also consider as we talk about 2025 that cocoa costs are lower in the second half versus half one. On ‘25, I can tell you that we have done a lot of work in scrutinizing all our costs and we will be removing sizable costs, particularly in the area of overhead and non-productive media expenses. We have increased the amount of productivities that we'll be delivering to our supply chain and we've had clearly a full slate of initiatives in our GM that should limit elasticities. As I said, it is hard to see a path to EPS growth into 2025 unless cocoa adjusts now materially and that is still a possibility and/or elasticities are more benign, allowing us to price more. We have seen as of late following the price increases we put in place in Europe, for instance, that elasticities have been fairly benign. So if we realize that volume is there, we might push price a little bit more forward to in an attempt to offset the cocoa impact that we will have inevitably next year. Operator: We'll move next to Ken Goldman with JPMorgan. Ken Goldman: Hi, thank you. Good afternoon. I had one question on North America and then a follow-up. On North America, the comment was made that your categories are sort of bucking the, what seems to be a larger, more challenged trend across snacking. And you did mention RGM as being part of it. I appreciate that. Just trying to get a sense what you're seeing as the other factors that is allowing or that are allowing your categories to do better than what we're seeing kind of elsewhere across that broader snacking continuum as someone once said? Dirk Van de Put: Yeah. Ken, the -- I would say the category is growing modestly and is improving slightly. And I would say that, overall, we see the consumer also getting more confident. But high prices remain certainly a big concern, high food prices, I would say. And consumers clearly feel that their purchasing power is deteriorating, particularly, I would say, in the lower income consumers. They're the ones that feel most of the pressure. I would say that as it relates to our categories, first of all, we have recognized that the perception of value of the consumer has changed. If you go two years back, consumers were really shopping for the price per pack or the unit price and so family sizes and party sizes became very important. Going forward or since a few months now, two quarters, I would say, many consumers that are below a certain income level have to shop by the total size of their basket. I would say that biscuits remain important for them. It is part of most shopping baskets. And as a consequence, we needed to fit our products within that shopping basket. And that meant that particularly the $3 to $4 price point has become very important. And so in Q3, we have worked with promotions to bring our products there. And going forward, we have launched a range of new packs on Chips Ahoy!, on Oreo, that will be sold at $2.99 And so we think that's the way we are bucking the trend really. So on one hand, category that the consumer really doesn't want to do without, and so the overall category is pretty stable. And on top of that, we're starting to gain some market share because we are hitting the right price points right now. Ken Goldman: Thank you for that. And then for my follow-up, I wanted to make sure I understood the comment about next year, the majority of the portfolio, being -- growing within algo on the top line. Is the implication that part of the portfolio, the minority will not be within algo? And just trying to get a real sense of what the messaging was there about the top line next year, just given all the puts and takes about elasticity and pricing and so forth? Dirk Van de Put: Yeah. It's basically related to our mix of different categories that we have. We have 70% of our business that is non-chocolate, and that is the part that we are expecting to be in line with our normal algo. And then the chocolate part will not be in line with our algo. That's what we were referring to. Luca Zaramella: On the bottom-line specifically. Ken Goldman: On the bottom line. So that was a bottom line comment just to make sure? Luca Zaramella: Yes. I said that 70% of the portfolio is on algo. The remaining part which is chocolate is not going to be on algo on the bottom line. Ken Goldman: Great. Thank you. Dirk Van de Put: We see pretty strong top line for next year. Ken Goldman: Yeah, that's why I wasn't -- no, that's helpful. Thank you. I appreciate it guys. Dirk Van de Put: Yeah. Luca Zaramella: Thank you, Ken. Operator: We'll go next to John Baumgartner with Mizuho Securities. John Baumgartner: Good afternoon. Thanks for the question. Dirk Van de Put: Hi. Luca Zaramella: Hi. John Baumgartner: Dirk, I'd like to ask about the growth plans for cakes and pastries. And if you could speak to your vision there, to what extent do you view the company as sort of a disruptor in the space where there's unique capabilities in biscuits and confection that you can sort of leverage in baked goods? And in light of Evirth and that frozen cake technology, the capabilities from that, to what extent is that a China-specific opportunity relative to one that could be expanded to Europe, North America, some other markets? Just maybe your thoughts on where you see your advantages competing in the baked goods space? Thank you. Dirk Van de Put: Yes. Well, cakes and pastries -- packaged cakes and pastries is a $95 billion category. It's much bigger if you include the non-packets, but that's not the area that we consider as where we want to play. It is a category that's already growing 7% CAGR over the last five years, and in fact, low double-digit over the last two years. Per kilogram, it's higher value than the biscuits category. And the category is quite strong in some of the key markets where we play, the US, Europe, China. The opportunity is that it's a highly fragmented category. We are number three globally, but we only have a 3.5% share. So there is an opportunity to bring in known brands that come with a certain quality aspect and a certain positioning, but also by offering soft cakes or pastries that are in line with that brand from the biscuits category. So, an Oreo to play in that category, for instance, or some of our other brands. That is really the way we are thinking about it. Now, there's different techniques in producing these products. Evirth particularly, we already have a company that goes from frozen to fresh in the store, which is Give & Go in Canada, which is a company that's been growing very fast. And Evirth is similar, but to the sense that they are much more into the cake segment. In China, this category is really booming. These are quite sophisticated products. And I have to say that the quality that they can produce thanks to their proprietary way of producing is quite exceptional. And so we think that, first of all, in China, this is a big opportunity. The business has been growing serious double-digit for the last years, and we can see a long runway of possibilities. But we have started to think about, okay, how can we expand this to the rest of the world because the quality is so high. But for the time being, our first priority is to make sure that we get the strong growth that we would like to see in China. John Baumgartner: Thanks, Dirk. Dirk Van de Put: Okay. Operator: We'll go next to David Palmer with Evercore ISI. David Palmer: Thanks. Your comments on 25% were pretty clear in saying that you see -- hard to see a path to EPS growth in ‘25 that would likely require a breakdown in cocoa or sustained benign price elasticity that could enable perhaps earlier price offsets to what you're seeing. I wonder right now obviously you don't have that visibility into that and I wonder what the reality would be, when that reality would be that you could essentially feel like you could give a pretty narrow range of EPS outcomes for ’25. Is it something that like by the first quarter earnings you would have that sort of a timeframe where you have pricing in place, you're seeing a reaction from that, perhaps you're a little further into your cocoa price setting for the year, I'm just wondering about the timing. Dirk Van de Put: Look, I think here, as I said there are two elements that will come into play. One is cocoa prices. There has been some nervousness in the market as of late, but we believe that it is the result of the fact that the industry is still quite short and that the Ivory Coast has hardly sold any ‘24, ‘25 crop in the last month since they're waiting for the new crop to materialize. On the fundamentals of cocoa, the latest spot count is likely below the five year average in Ivory Coast, same in Ghana, but it is well up versus last year. And the level of confidence that we have at this point in time is round about 85%, but it will be soon in the next couple of weeks, three weeks, 90%. Importantly, the Ivory Coast port arrivals are up 25% already versus prior year and that's really points in the direction of good supply coming our way. So I expect to have clarity on cocoa prices, call it, in the next month or couple of months. I think the situation will be much, much clear -- much more clear. Importantly, what will drive cocoa prices is the arrival in Europe, which will be most likely in January, February and I think by then we should really have a sense of cocoa cost. That is important because in our case, we haven't locked in cocoa prices yet. We want to take advantage of the potential decline of cocoa costs, albeit we want also to be protected on the upper side of cost. On the other side, on the level of elasticity, look, I think you know that it takes a little bit of time to implement price in Europe. And I think we're going to see in places like the UK where we don't have buying alliances, we are going to see the effect of elasticities much earlier and quite honestly from what we see today, they are already quite good in terms of not having a big impact. For the rest of Europe, we will have to wait towards the end of Q1 beginning of Q2. In emerging markets, as I said, we're going to price quite rapidly, but there we will protect price points in the entry level. So a long way to say cocoa cost should be clear by the end of this year beginning of Q1 and prices particularly in Europe will be much clearer towards the end of Q1 beginning of Q2. David Palmer: That's very helpful. And I guess I want to just pick your brain on just the US snacking, Ken asked you about why cookies, perhaps is doing towards the high end of the snacking category, which is historically weak right now. Obviously, you're a global snacking player, and you participate in confectionery outside the US in a bigger way, but confectionery in the US is particularly weak. I'm wondering why you think confectionery in the US is so weak right now, and if there's any sort of interesting juxtapositions you could create between those two, what you see for example in developed market Europe and with chocolate and the price receptivity for example and the consumer versus what we see in the US which seems to be pretty rough right now? Thanks. Luca Zaramella: Look, it's really tough for us to comment about the chocolate market in the USA because as you know we have a small participation in that market and because there are other companies that might have a much better point of view. What we can tell you is, in Europe and in emerging markets, our brands have been built consistently over the years. In terms of distribution, support, price point, we have never pulled back a dollar since [Dirk arrived] (ph) in terms of advertising. We have been increasing consistently. Our marketing capabilities with our Chief Marketing Officer have improved dramatically. The execution is there. So I think in our case at least, we have been consistent in executing and investing and increasing distribution of our brands throughout. And look, we're lucky to have our brands maybe, but those are being built by people at Mondelez and we're very proud of that. Operator: We'll move next to Peter Galbo with Bank of America. Peter Galbo: Hey, guys. Good afternoon. Thanks for taking the question. Luca, I just wanted to actually circle back on your comment on ‘25 EPS, the path to difficult growth. Just for real clarity, does that also include the dilution from JDE or is that on a like-for-like basis just so we're crystal clear? Luca Zaramella: No, I was quoting like-for-like. We will issue in due time an 8-K. You might imagine by looking at the multiple of JV, Pete, even when we got 30% premium to the unaffected stock price, you might imagine that multiple is lower compared to ours. So even if we had to buy back our stock, there will be some sort of dilution, which is not something that I meant to comment upon when I was telling you that we don't see a path to EPS growth into next year. Peter Galbo: Got it. Okay. No, that's helpful. Thank you. And just to go back to Europe, I think you were expecting a bit of pipeline fill in the quarter post the customer disruption. Just curious if you can unpack that a bit more, just did it come in where you kind of thought it would, is there an expectation of more of that just in the Q4? Any additional color would be helpful. Thanks very much. Luca Zaramella: Look, there was no much, I mean there was pipeline building particularly at the beginning of the quarter, but that was pipeline for back-to-school activities. I can tell you for instance that impact is not really material at all. Again, quite frankly in the case of the UK, we had planned to ship some Christmas already in Q3 that didn't happen, it's going to happen in Q4. So all in all, I wouldn't call the pipelining effect in Europe as material. Operator: We'll go next to Chris Carey with Wells Fargo Securities. Chris Carey: Hi, good evening. So, Luca, this is a follow-up question, then I'll just ask one quick other one. But on the confidence around cocoa in the coming three, four weeks, say, relative to just your expectations for next year, can you just talk about how much flexibility you might have to respond from a productivity standpoint, say, if those expectations get worse over the next month or obviously we know if they get better, that's obviously helpful. But just as you think about the ability to manage through different variability and maybe hold to the expectations that you have for next year as you sit here today, just how much flexibility do you have to respond within your early budgets if, say, things get worse from the overhead or the productivity or the other things that you mentioned? Luca Zaramella: So, we have clear coverage strategies. I think at this point in time, we have a good part of our 2025 cocoa needs covered and/or protected. And the way you have to think about it is, we put in place futures for around about half of the needs that we have and when we put that in place, I was very clear that we covered mostly the second part of the year as the structure is inverted and so you have a benefit by going further out. The rest is covered through mostly colors and which allow us -- would allow us to really participate if the market had to adjust down, but at the same time protecting the upside exposure. So we have quite a bit of flexibility, I would say, on the -- should the market adjust. The pricing plans and there is a big part of RGM I would say, I think one-third of the pricing next year is going to be done through RGM that is maybe a little bit less flexible, but the rest provide us with some flexibility. So if we see elasticity is being more benign, we could hump up the pricing there or if for that matter we see more severe volume reaction we could lower prices a little bit more. So we have built that flexibility into the plan. Chris Carey: Okay, thanks. And then just one quick follow-up on a couple of regions. Latin America volume has decelerated a bit here through the year. We've been hearing that from another -- a number of your global peers just around hitting kind of tougher comps relative to last year. Can you just comment on the underlying of the business right now? And then on the China piece, you mentioned you're seeing some optimism there. Is that something you're seeing? Or is it just optimism at this point? So that's it for me. Thanks. Dirk Van de Put: Yes. Well, on Latin America, I would say, overall, we still feel pretty good about Latin America. It is true that volume has started to go into negative territory, but that is driven largely by Mexico in our case. Brazil, we still see a very strong performance and also in what we call WACAM, which is largely everything else except Argentina. So it is really concentrated in one country. And there, it's largely because we have some pricing adjustments that we need to do, particularly in the candy and the chocolate categories. But for instance, gum meals and Oreo are doing quite well in Mexico. So I wouldn't feel that Latin America is particularly a major problem area for us, but it certainly has slowed down versus what it was in the previous quarters. Operator: We will take our final question from Tom Palmer… Dirk Van de Put: Sorry, I still needed to talk about China and why we see optimism. So overall, we have a very good performance in China. Businesses are doing quite well. We have mid-single-digit volume mix growth. We have high single-digit net revenue growth. So despite the economic slowdown, we feel pretty good. And I wasn't talking about our optimism. I think there is some consumer optimism because the government has released some economic boosting policy, which we are monitoring, and we think that is going to affect overall consumer thinking and consumer buying. We think our category biscuits will be stable with some big shifts in channels towards snack chains and club warehouses, which are, for instance, out of the Nielsen scope. So that is something that is on top of what you can see in the data. So we think overall driven by a strong category and the distribution gains that we have, we're probably more optimistic about China than most other companies, but we do feel an underlying trend that the consumer is getting in more positive territory. Operator: We'll move to our final question from Tom Palmer with Citi. Tom Palmer: Good evening and thank you. I wanted to ask first on organic sales growth. The guidance would seem to imply an acceleration in the fourth, perhaps even versus what we saw in 3Q. Could you help frame the regions in which this improvement might be most apparent? And then just to confirm, this would be volume driven? Or are there some pricing actions to consider in the fourth quarter with then more coming in 2025? Luca Zaramella: As far as pricing is concerned, at this point in time we are done and so there is no sequential additional pricing coming into effect in Q4. I think you're going to see strong performance in North America. You're going to see strong performance in AMEA, which by the way we start lapping the boycotts that started last year in Q4. And then I think in Europe, you are going to see strong results as well. Latin America, we have been a little bit more conservative, but I think there should be a little bit of an improvement there too. Look, in the end, if you do the implied growth rate for Q4 in light of us the affirming guidance on top line, which is as we said at the high end of the 3 to 5 algo, you should get to a Q4 that is a little bit higher than what Q3 has been. Tom Palmer: Okay. Thanks for that. Dirk Van de Put: Okay. I think that was the last question, Shep. Well, thank you for attending the call. Strong quarter, and we hope that we will do well in 2025 also. And I hope you got convinced that our plans are in place to make that happen. Talk to you next time. Thank you. Luca Zaramella: Thank you, everyone. Operator: Thank you. Ladies and gentlemen, this does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: Good day and welcome to the Mondelez International Second Quarter 2024 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Vice -- Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q, and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business strategy update, followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I am pleased to share that we delivered a solid first half to the year with strong profit dollar growth driven by effective cost management and pricing. We also successfully completed our annual pricing in Europe, which helps position us well for the second half in terms of top line and volume growth. We continue to see momentum in emerging markets, and we're continuing to invest significantly in our brands and capabilities to drive sustainable long-term growth. And we continued our track record of strong free cash flow, generating $1.5 billion. While our operating environment remains challenging and dynamic, our teams remain focused and agile in executing against our long-term growth strategy. We continue to play for the long term in chocolate, biscuits and baked snacks because these core categories remain strong consumer favorites with very high loyalty to our iconic brand portfolio. Within these great categories, our advantaged geographic footprint provides additional confidence that we are well positioned to compound long-term sustainable growth. Turning to Slide 5, you can see that organic net revenue grew 2.5% this quarter, with adjusted gross profit dollar growth of 11.3%, enabling us to continue investing in the business. A&C spending is up high single-digits, helping to drive consumer and customer loyalty to both our iconic global brands and our local jewels. And adjusted EPS grew 25%. Turning to Slide 6. While many food and beverage segments are continuing to experience softness, snacking remains relatively durable. Consumer trends vary by region, but overall we are seeing volume growth start to rebound as inflation cools. Consumer incomes are rising, which helps to reduce the inflation-driven financial strain on many households. As a result, private label growth in our categories is decelerating, while branded share growth is improving. In North America, some consumers are seeking snacking options at specific price points to fit within a specific overall ticket size. Other consumers, who are more focused on convenience, look for multipacks, which offer value, as well as variety and versatility. Our proven playbook for price pack architecture allows us to offer a broad range of options to meet each of these consumers' differing definitions of value. As a result, our two largest US brands, Oreo and Ritz, are gaining share year to date. Meanwhile, in Europe, elasticities are moving slightly higher but remain modest. Consumer confidence is cautiously optimistic and is rising in the second quarter versus the same period last year, as inflation softens and incomes rise behind stable employment. We continue to see positive value growth in biscuits and chocolates. Volume in seasonal chocolate also is growing well, up 0.6% year-to-date, driven by the performance of seasonal shapes, novelties and bite-sized products. Consumers continue to demonstrate that holidays like Easter just wouldn't be the same without chocolate and they are willing to spend accordingly. In emerging markets, modest elasticities continue. Our China business is delivering strong growth in online and social commerce. In Brazil, we're seeing an uptick in elasticities, but the consumer and economy remain resilient. In Mexico, the economic backdrop is healthy with solid employment and consumer confidence. And within India we see some food inflation impacting lower and middle income households driving a pullback in spend and causing some down trading, particularly in biscuits. Overall our combined emerging markets value and volume share is improving in biscuits and chocolate. Against this backdrop of gradually improving consumer confidence, as you can see on Slide 7, we are continuing to deliver against our focused action plan to improve volumes in North America in the second half of the year. We are already seeing value share improvement in Oreo and Ritz. To further accelerate growth, we are continuing to increase distribution points across food, club and convenience stores. And to meet the right price points, we are also implementing new targeted promotions, as well as a new pack size priced in the $3 to $4 range to drive continued brand loyalty and value for Oreo, Chips Ahoy!, and Ritz. Additionally, we're continuing to launch compelling activations, like Star Wars OREO and Oreo Space Dunk, to delight our fans while driving incremental lift. Turning to Slide 8, along with improving biscuit volumes in the second half, we are well positioned to deliver sustainable long-term growth in chocolate. Recent spikes in the cost of cocoa ingredients have been widely discussed, but we soon expect a market correction to a more sustainable price, as the mid-crop is emerging in line with historical trends, and early signs on the main crop are encouraging. Chocolate remains a great category. It is continuing to grow with volume resiliency and despite increasing prices. And within this great category, we offer some of the world's strongest, most iconic chocolate brands, which include Cadbury Dairy Milk, Milka, Toblerone, Côte d'Or, Marabou, Freia, and Lacta. These brands are already the leaders in numerous key markets and we are continuing to invest in A&C to further accelerate loyalty and growth. At the same time, our proven RGM playbook provides our teams with the necessary agility in offsetting inflation while maintaining solid volume dynamics and protecting shares. We remain confident that we are well equipped to continue navigating fluctuating input costs and that we're structurally advantaged to accelerate long term chocolate growth. Turning to Slide 9, it is important to reinforce that while the external environment remains volatile, we remain focused on accelerating our long-term growth strategy. We're continuing to reinvest in our brands, expand distribution, drive M&A, and scale sustainable snacking. We remain on track to deliver 90% of revenue through our core categories of chocolate, biscuits and baked snacks by 2030. And our teams continue to deliver strong progress against our strategic agenda. For example, our Oreo marketing team continues to design and deliver exciting, creative activations that capitalize on consumer trends and drive incremental lift. We recently collaborated with Lucasfilm to launch two versions of a special edition Star Wars cookie in the United States, which unites our strong Oreo fan base with the equally strong Star Wars fan community. While both versions are wrapped in identical exterior packaging, consumers don't know which side they're on until they open the pack. This creative and fun approach is driving strong sales, making this collaboration our strongest limited edition yet. This collaboration is the latest example of our strategy to cement the cultural relevance of Oreo with key partners who help us bring their favorite stories to life. We're planning some more exciting, but still top secret, collaborations for the remainder of this year and into 2025. Along with these marketing activations, we are continuing to strengthen store availability, visibility and execution around the world. Here in the US, for instance, our performance in the club channel is growing mid-single-digits while the value channel is growing double digits. Both are driven by our family-sized multipacks which offer a great price per cookie or cracker rather than overall package prices. We also are continuing to harness the power of recent acquisitions to capture synergies and drive growth. For example our Chipita baked snacks business is growing high single-digit volume in Europe, led by convenient 7Days croissants that help satisfy consumers on the go across a broad range of snacking occasions. Additionally, we are making continued progress on our environmental and social sustainability agenda. For example, we continue implementing our structured and scientifically validated roadmap to reach net zero carbon by 2050. As an example, our biscuit manufacturing plant in East Suzhou, China was recently certified as carbon neutral. The plant has reduced carbon emissions by 16,000 tons, the equivalent of planting 7,000 trees for 100 years. Through implementing new technology solutions, including an innovative system to recycle residual heat and wastewater, as well as a new solar photovoltaic system to generate green electricity. To learn more about our strategy and review our annual performance data in detail, I encourage you to read our Snacking Made Right report available on our website. On Slide 10, before I turn the microphone over to Luca, I'd like to briefly highlight our recently announced strategic partnership with Lotus Bakeries. This exciting initiative includes two main components. First, we will work with Lotus Bakeries to develop and launch co-branded chocolate products combining unique caramelized crispy Biscoff taste with our iconic global chocolate brands, including Cadbury and Milka. We aim to launch the first products in Europe in early 2025. Second, we will manufacture, market, distribute and sell the Lotus Biscoff cookie brand in India starting in the second half of 2025. Partnering with Lotus will enable us to simultaneously scale our sweet biscuit business in the important emerging market of India while also innovating our strong European chocolate business with new products to grow consumer interest and loyalty. As we strive to lead the future of snacking by winning in chocolate biscuits and baked snacks, M&A and ventures remain an important part of our growth strategy. This innovative partnership is a great example of our approach and we continue to explore additional opportunities. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Q2 marked a solid quarter for the business, with organic net revenue growth across each region, strong profit dollar growth, substantial reinvestment into working media, and robust free cash flow generation and capital return. Revenue grew plus 2.5% with strong pricing execution. This number includes 1.3 points of EU customer disruption that is now behind us and 40 basis points of boycott headwinds in our AMIA region. Developed market volume mix was down minus 2.2% for the quarter, primarily impacted by Europe customer disruption with some ongoing softness in the US Biscuit business. Total revenue for emerging markets grew plus 4.5%. Developed markets grew plus 1.2%. Moving to portfolio performance on Slide 13. Biscuits and baked snacks grew plus 0.8% for the quarter. Several brands delivered solid growth, including Oreo, Ritz, 7Days, Club Social, and TUC. We saw ongoing softness in parts of the US biscuit portfolio, though we have seen early signs of improvement in brands like Chips Ahoy! over recent weeks with clear plans to improve the overall biscuit growth enough to, as Dick mentioned. Chocolate grew plus 5.6% with significant growth across both developed and emerging markets. Volume mix was down minus 2.6%, which was nearly all driven by customer disruption in Europe. Cadbury Dairy Milk, Lacta in Brazil, and Freia and Marabou in the Nordics all posted strong growth during the quarter. Milka also posted solid growth. Gum and candy grew plus 2.9%, driven by continued momentum and strength in key markets including China, Brazil, and Western India. Volume mix in this category was negatively impacted by [calls] (ph) in the US. Let's review market share performance on Slide 14. We had or gained share in 40% of our revenue base with strength in chocolate as well as gum and candy. This strength was partially offset by softer results in our US biscuit business, which accounts for approximately 25 percentage points of revenue and disruption in key markets across Europe. Moving to regional performance on Slide 15, Europe grew plus 2.7% in Q2. Execution was strong in the quarter, with a number of key countries delivering growth through solid pricing and in-store execution, which led to share gains. This trend was partially offset by volume declines associated with expected customer disruption. Pricing is now completely in line with across all key customers, which positions as well for Q3 and half two of the year. OI dollars were up nearly 25%, including significant A&C investment. North America grew plus 0.3% against a strong compare of more than 12% in the prior year. Growth channels, including cloud, online and value, along with Canada, delivered solid growth. However, overall volume mix declined, as some consumers continue to seek out products with lower absolute price points, impacting brands like Chips Ahoy!. We have a clear plan to address this dynamic by adding more core packs in the Oreo, Chips Ahoy! and Ritz within the $3 to $4 range beginning in Q4, while other households continue to prepare the attractive unit price offerings that our family and party packs provide. And although early, a recent reformulation and new promotions have led to gradual sales improvement in Chips Ahoy!. There is clearly more work to do, but these initial signs are encouraging. North America OI increased by plus 3.4%. AMIA grew plus 4.2% for the quarter. China delivered another strong quarter with high single-digit growth fueled by ongoing brand equity enhancements in Oreo, Chips Ahoy!, and Stride, along with distribution gains. India was flat overall, with strong chocolate growth offset by more competitive intensity and down-trading in biscuit as a result of higher overall food inflation. Our India team has plans to activate new pack sizes and new value pricing within Oreo to improve growth and share starting next month. Australia, New Zealand and Japan delivered a robust quarter of growth coupled with strong share gains. Boycotting the Middle East and Southeast Asia remain a headwind to results, which we expect will continue in half two, though this impact will be in the base beginning in Q4. The overall impact for the region was 2 percentage points worth of growth. AMIA increased OI dollars by more than 46% with meaningful ANC increases. Gross base growth coupled with some upsides related to Latin Nigeria currency losses last year drove this performance. Latin America grew plus 4.5% with solid price execution and a decline in volume mix. Note that Argentina pricing has been capped at 26% unlike Q2 last year where the country contributed more than 15 points to Latin American growth. Brazil and our Western Andean region both delivered mid-single-digit growth. Mexico growth was modest, in part due to lower flow of public subsidies to households that is expected to resume in the second half. Consumer confidence remains strong in Mexico, while Brazil and the Western India countries continue to demonstrate solid growth. Latin America delivered OI growth of nearly plus 24% supported by strong pricing. Turning to Page 16, In Q2, we saw strong double digit OI and gross profit dollar growth. Top line strength, pricing execution, ongoing cost discipline partly drove these results. Nevertheless, the strong half-one results also reflect our favorable cocoa pipeline compared to current market prices, which will clearly reverse and will be a meaningful headwind in the second half. Next to EPS on Slide 17. Q2 EPS grew plus 25% in constant currency. Most of this growth was driven by operating gains, as well as favorable cocoa cost pipeline and coverage strategies. And despite currency headwinds, we grew adjusted EPS at reported Forex by more than 19%. We are holding our EPS call for the year despite these gains, since Cocoa will become a more material headwind in the second half. We continue to demonstrate strong free cash flow and capital deployment, as you can see on our Slide 18. We delivered $1.5 billion of free cash flow in half one. We have repurchased $1.1 billion in stock through half one and will remain opportunistic for the remainder of the year. We also announced today that we are raising our dividend by 11%, marking nine consecutive years with a double-digit dividend increase. Before moving to our outlook, let me make a few comments relative to cocoa on Slide 20. As we know, this is a most likely top of mind for our investors. Our teams continue to monitor the market very closely to put ourselves in the best position possible. While we want to protect ourselves, we continue to put flexible structures in place that enable us to participate in potential market price declines versus current historically high prices. In addition, we continue to fine tune our commercial strategies to ensure long-term sustainable growth while managing through near-term challenges. As guiding principles, we will protect critical price points and key thresholds while broadly utilizing RGM and implementing more pricing in the least elastic segments and consumer occasions. Our objective is to limit elasticity and volume losses while protecting our gross profit dollars to the extent possible, as we believe cocoa prices will adjust eventually. We will also implement cost measures to ensure that we protect our bottom line and ability to invest in the category. It remains too early in the year to provide specifics around 2025. However, there are some key elements and points in time to consider. The mid-crop has been good and in line with historical trends. And although early signs around the main crop are encouraging, we should get a much clearer indication in September, which will likely act as the next catalyst for cocoa costs. As we get to our Q3 earning cycles, we expect to be able to share more color around demand, market liquidity, and the range of cost [at wheels] (ph) relative to 2025, as well as EPS. I'll close with our outlook on Slide 21. Our outlook for ‘24 remains unchanged. We continue to expect on-algo delivery for revenue, earnings per share and cash flow. Note that these earnings per share include significantly higher costs related to cocoa for the second half, which is important to factor into half two models. This includes the upper end of our 3% to 5% range for organic net revenue, which considers the impact of completing price negotiations in Europe and plans to drive improvement enough to result in North America. Most of our key assumptions remain consistent with what we shared with you in our last call, with the exception of interest expenses, which is now estimated at $275 million for the full year. With that, let's open the line for questions. Operator: [Operator Instructions] We'll take our first question from Andrew Lazar of Barclays. Andrew Lazar: Great. Thanks so much. Good afternoon, everybody. Dirk Van de Put: Hi, Andrew. Andrew Lazar: Hi, there. Maybe to start off, Dirk, last quarter I think you spoke about the need to offer better value to the consumer in parts of the North America segment. In 2Q, volume declines moderated in North America, as did the benefit from pricing. So how do you see the consumer situation in North America currently and do you see the need for a more aggressive price reset? And separately for you, Luca, volume and organic sales growth needs to accelerate sequentially to hit the upper end of the 3% to 5% range for the year in a still challenging environment while unchanged full year EPS guidance despite the 2Q beat implies a deceleration in the back half on EPS. And I was hoping you could bring us through some of the logic behind those dynamics, please. Dirk Van de Put: Okay, I'll start first, Andrew. So as it relates to the consumer in the US, I would say there's sort of three key dynamics to keep in mind. First of all, the category remains soft but it is stabilizing. And I would say that the consumer is experiencing a tension because they see the overall inflationary picture. They see the food prices that have increased, and they have a feeling of less purchasing power. At the same time, particularly as they see grocery prices stabilizing and their wages being up about 4% while grocery prices are up 1%, they're starting to have bigger confidence than the same period last year, although these high prices remain a concern for them. And I would also say the other thing that we see in the category, while it's soft, as I said, the elasticities have stabilized since Q4 ‘23. The second thing about the consumer is that they have changed where they shop. So the biscuit category is seeing the largest growth in chains like Value Club at Walmart, while in grocery we are seeing a share decline. And probably the most important thing we're seeing about the consumer is that the definition of value has changed for many people. Because if you look two, three years back, it was all about the price per pack, or in fact the unit price per cookie, and people were drifting more towards family and party sized pack and that benefited us. Now, particularly lower income consumers, they have moved to a basket size that they can afford and if the biscuit brand that they like can fit in there at the right price point, they will buy it. If not, they will not buy any biscuits. So these days we have to be much more aware at which price point we offer a pack. So what are we going to do? We don't think we need a full price reset. At the moment, our OI, our operating income, and our cash generation is strong. Our focus is largely on improving our sales and our share in a smart way. We have an opportunity to drive more distribution and displays. And so we need to keep on driving those two, particularly also featured displays. We are implementing new targeted promotions that are probably going to offer a little bit more price on brands like Chips Ahoy!, which is probably most affected by the -- sort of the hesitation from the lower income consumers. And then we will also launch a whole range of new smaller packs that will offer the consumer an opportunity to buy around $3 to $4 for the pack. And so we think that also will make a difference. So more promotions, smaller packs that we will offer, driving distribution, those are the solutions that we are planning for. We're already seeing benefits. Chips Ahoy! is recuperating quite nicely. Oreo and Ritz are increasing their market share. And on top of all that, we will have some very impactful activations. So we talked about Star Wars in the call here. There's another big one coming up, which I cannot yet announce, but we have some very strong activations on Oreo in the second half. All that together gives us the confidence that we will see a good second half in North America. Luca? Luca Zaramella: So, for the first half, we are broadly where we would have expected to be, quite honestly. Revenue might be a little bit softer, but strong profit will allow us to reinvest into some selective additional activities in half two to deliver profitable volume growth. I think you rightly pointed out the implied top line growth for half two which current guidance requires an acceleration. And that hinges on three main drivers. The number one driver that will impact the most is Europe that will have to return to volume growth. With disruption behind us, we feel quite good about achieving that. The team in Europe has proven consistently that they can execute very well and plans are in place to activate around big key consumers' activities like back to school and Christmas. It is also important to remind ourselves that the trade stock pipeline is an opportunity in Europe as we had to pull back on shipments and so the piping the trade is a material opportunity and something that we are clearly already seeing in July. The second element is the US biscuit positive volume. I have to say the diagnostics around what is happening to the overall category and the share pressure that we see are clearly giving us an indication of what has to change. And we truly believe that hitting those price points is going to result in positive outcomes. And again, we start seeing some green shots in the category and in our brands. The third element is that while I do not like to talk much about lapping, last year for the second part of the year, we discontinued some product lines that were material in volume for the give and go business. And I think from now we will be comparing more to a clean base. And so I think that's the third element to bear in mind. I think all in all we have at this point, line of sight to the upper end of our revenue guidance for the year. As far as EPS goes, importantly, we have landed the price in line with our expectations. There might be more selective price that we will be doing in light of height and cocoa, but no major deviations are expected on this front. Our commodity cost for the year is almost 100% locked, so no surprises expected on that front either. As I mentioned a few times, just bear in mind that we bought cocoa quite well for this year and that year-to-date cocoa costs are meaningfully better than the 2024 average. So there is more cost coming in the second half [although] (ph) the EPS guidance being kept in line despite the very strong results here today. We will continue to invest in working media in line with the first part of the year, but we will also start optimizing as we discussed a few times the non-working media which is still an opportunity in this outlook. And finally, we will continue to pursue cost measures and productivity. So all in all, we believe reaffirming guidance is the right thing to do. And again, July is shaping up quite well for us at this point in time. But obviously, as I said, there is more work to do, particularly around the US consumption side. Andrew Lazar: Thanks so much. Luca Zaramella: Thank you, Andrew. Operator: We'll take our next question from Ken Goldman of JPMorgan. Ken Goldman: Hi, thank you. Dirk, I wanted to… Dirk Van de Put: Hi, Ken. Ken Goldman: Hi guys. I wanted to clarify a little bit about Europe. You talked about how completing your pricing actions helps position you well in terms of volume growth for the second half. I think you also mentioned that Europe elasticities, those still modest, are moving slightly higher. Excuse me. So I'm just curious if maybe we can elaborate a little bit on what drives your confidence in volume growth just given some of the pricing actions, what seemed to be tougher comparisons and that slightly higher elasticity that you mentioned, if I'm correct on all of those? Dirk Van de Put: Yes, yes. Well, first of all, the consumer, I would say, is cautiously optimistic. I would say in general we feel that the European consumer seems to be in a better place than the North American consumer. They see their incomes rise, the inflation is softening, they see quite stable employment, particularly in the UK is important for us in Europe and there the confidence which was relatively low last year is rising because they feel that their broader economy is doing better and they feel better about their personal finances. And then I would say France and Germany, the other two big countries, we have some mixed views across the economic indicators, but the confidence is also above last year. So, second thing is, yes, there is an uptick in elasticities and there is also more promotions, but I would say the elasticities remain quite modest. And there is a little bit of an increase in promo intensity. We are also seeing the same shift of people buying -- going from hypers and supers to discounters and then we see also these affordable packs at the right price point. So, similar movement as I was talking about in North America. If you look at Q2, our biscuits and baked snacks are already positive in Europe. They're growing their value at 2.8% and volume at 0.8%. In chocolate, we see a strong momentum with seasonal shapes. We also see tablets, bars, and pralines doing well. Back to school and Christmas, of course, in chocolate will be very important. We are continuing to watch the pricing impact. Overall, I would say if you exclude some of the disruption that we saw, the performance in Europe is quite solid. And since that disruption, the pricing has been implemented now, we feel that that solid underlying growth that we see there is going to continue in the second half. So we're expecting quite a good second half. I would also like to mention here that chocolate, despite already seeing quite a bit of prices, remains quite resilient. There's more to come. I've seen the cocoa situation. But overall, volume has been quite solid. We're also planning to continue to invest strongly. Our Easter was very strong, so we have high expectations for back to school and Christmas. And so overall, I would say that I would be surprised if the second half is not a good half for Europe. Ken Goldman: Very helpful. Thank you. Operator: Our next question is from Alexia Howard of Bernstein. Alexia Howard: Good evening, everyone. Dirk Van de Put: Hi, Alexia. Luca Zaramella: Hi. Alexia Howard: Hi there, So just a couple of quick ones. On the ERP transition, is that something that's going to be rolled out across different regions or is it something that's going to affect particular categories at a particular point? Should we be worried about the impact of that transition for 2025? Luca Zaramella: So it is a program that will be completed over a four-year time frame. And the reason why that is, is a couple of things. One is we will use a staggered approach and we will be able to implement it in part of the business first and rolling off resources eventually from that part of the business and rolling on those resources into the next wave of countries that will be impacted. We will also make a big distinction between some modules of SAP versus others, so we will not necessarily take even by region a big bank approach. And we believe that the preparation we have been doing for the last, I would say, 18 months positions as well in terms of successful execution. So we have tried to minimize all potential issues by going broad in one region or by going broad in the world of SAP. And we believe, given also the resources we have internally, and importantly, the ones we have secure through SAP and Accenture, that we will have a good opportunity to execute as well. Alexia Howard: Great. And then as a follow-up, I'm just curious about the long-term free cash flow guidance. It's been sitting, I think, at this $3 billion level for some time, even as your earnings growth has obviously played out quite nicely in recent years. You've obviously got guidance of $3.5 billion this year. What are the puts and takes or what are the criteria that you would use when you're thinking about whether that guidance of free cash flow could be raised at some point down the road? Luca Zaramella: The answer is yes. We will have a couple of one-timers in the second part of the year and that is really what drives the $3.5 billion. But both last year where we had to pay some taxes related to coffee, and this year where we have a potential one-timer that we will be paying most likely off in August, I would say, if you strip those out that are clearly one-time impacts, I mean, our cash flow is running at $4 billion plus. So we feel quite good about it. Cash conversion cycle continues to be top notch. We continue to improve days outstanding and one of the reasons why we believe SAP and o9, which is the other platform around supply and demand planning that we are implementing with this ERP program is going to be beneficial to us is around inventory, which is an area that has material opportunities in it. So the answer is certainly we can strive for more than $4 billion on an ongoing basis. Alexia Howard: Great. Thank you very much. I'll pass it on. Luca Zaramella: Thank you, Alexia. Operator: We'll take our next question from Michael Lavery of Piper Sandler. Michael Lavery: Thank you. Good evening. I just wanted to come back to cocoa for a second. That slide you laid out is really helpful at the end of the presentation. I was wondering if you could give us a sense of how much you might be placing a bet on prices rolling over in September. Put a little differently, have you been securing for ‘25 kind of as normal, which I would roughly maybe put you at about half or a little bit more covered at this time of year? Or are you trying to position for a move that you see it sounds like you might expect to come a little bit later in the year? Luca Zaramella: Yes, look, we believe there is going to be a correction. I mean even today if you take the stock price of today which is around about GBP6,500 per ton, and compare it to next year Q4, there is a gap of GBP2,200, which is clearly material. So the market, in light of the mid-crop, and importantly of the evolution of the main crop sees a clear adjustment of prices going forward. And I think there might be even more than this. Obviously, we are not going to go blind into 2025. We cannot wait and bet on the main crop to be good. And we have been certainly improving and increasing our physical coverage into 2025. We have around about one quarter of our positions into 2025 covered to futures. And you might imagine we have covered outer in the year to take advantage of this inverted curve, which means how big of a discount you get, the further you go out versus today's fault. The rest is covered through a series of derivatives that allow us to participate in a potential market correction. So at this point in time, whichever way you look at it, we have protection for the most part of our positions into 2025. And on the other side, we have secured also some physical forward positions that I believe will position as well compared to the market eventual cocoa price adjustments that might happen or not. Michael Lavery: Okay, that's very helpful. And just following up on BISCOFF, it sounds like a very interesting partnership. Can you give a little better sense of maybe the structure? It sounds like it's not a JV, perhaps it's cross-licensing, maybe a little bit of just how it works, and then also kind of what its potential could be. Obviously at the moment it's initially going to be Europe and India, but could it go global? Are there reasons that it's got any geographic limitations? Dirk Van de Put: Yes. So there's three main components to the partnership. The first one is that we're going to co-brand chocolate products with BISCOFF. And BISCOFF is not yet a very big brand in North America, but it's quite a big brand in Europe. It's one of the biggest biscuits brands, and it has a quite unique taste and also quite unique consumption moment. And the combination of a chocolate bar with BISCOFF filling or with pieces of BISCOFF in there is quite delicious. So that's the first one. To give you an idea, we already have a similar line which uses Oreo as the filling and we are talking about several hundred millions of sales in Europe for that line. So we have the same expectations for the BISCOFF line. And if that is a success in Europe, we will obviously want to extend that around the world into our other chocolate brands. And the first launch of this product will be in early 2025. And that will help us with excitement, building excitement around the chocolate market. Then secondly, BISCOFF is looking for global distribution, and there's certain countries where that is not easy to get. So we will manufacture, distribute and sell BISCOFF in India as a first country. It's going to start in the second half of 2025. It's very interesting for us because at the moment our biscuit business in India is really built around Oreo and this is going to give us a second big brand, very different from Oreo, very different audience, very different consumption moment, largely with coffee or tea in India. And so we think it's going to be an ideal complement to keep on building a strong biscuits business in India. And that clearly is a test to see if we would do other countries around the world. And so yeah, it's not a joint venture, it's a cross sort of licensing of our brands to each other. Michael Lavery: Okay, that's really helpful. [indiscernible] Delta and people go crazy for them on there. So you've probably got at least a better head start in the US than you may know. But, I’ll pass it on. Dirk Van de Put: Thank you, Okay. Operator: [Operator Instructions] We'll move next to Tom Palmer of Citi. Your line is open. Tom Palmer: Hi, thanks for the question. Dirk Van de Put: Hi. Tom Palmer: I think a quarter ago, you talked about volume being a flattish year-over-year in 2024. I just wanted to confirm, is this still the expectation? And then any help as to how much maybe some of the more non-recurring items like the disruptions in Europe or the subsidy timing in Mexico might have weighed on volumes in the second quarter because so we could think about kind of an entry run rate at least for the third quarter? Luca Zaramella: Yes. I think the expectation it is still around having a sort of flattish volume mix for the year and in terms of one-timers as I said, there is 1.3 points of expected -- of disruption that happened in Q2. The whole 4 points of volume mix in Europe are attributable to the consumer -- or the customer disruption, sorry. There is another component which is about the Middle East conflict that impacted on about 3 percentage points for the quarter. The other one, as I said, that you need to bear in mind, is the impact of give and go and this continuation that we had in Q4 last year. But also importantly, last year we had a carryover of the first half disruption in Europe into half two. And that was around about $100 million of revenue impact. So when you strip out all these impacts, you clearly see a much better linearity of the volume mix and revenue. And when you come to terms that the actions that the US is taking around consumers and packs, I think we have clearly an expectation that these improve volume mix in the second half and improve revenue in the second half. Tom Palmer: Okay, thanks for that detail. And just on the A&C side, I know you talked about some meaningful step-ups here in the first half of the year. I think if we look at the timing of some of the step-ups last year, it was maybe a little bit second half weighted at least in terms of the dollar spend. Does that become maybe less of a headwind in terms of the year-over-year pressure as we think about the back half of the year in terms of the flow through to earnings? Luca Zaramella: There might be a little bit of an upside in relation to the fact that, as we mentioned, we are taking a deeper look at all the non-working media part of A&C. I don't expect it to be material for the second part of the year. And importantly, we will continue still investing in our working media. So I don't expect a material upside in terms of P&L impact due to lower A&C in the second part of the year. Tom Palmer: All right. Thank you. Luca Zaramella: You're welcome. Operator: We'll take our next question from Peter Galbo of Bank of America. Peter Galbo: Hey, Dirk, Luca. Good afternoon, guys. Thanks for taking my question. Luca Zaramella: Hi, Peter. Peter Galbo: Hi. Luca, I was just wondering if you could maybe unpack the Mexico comments a bit more. I think we've heard kind of different things from different companies this quarter related to Mexico. Some have mentioned the subsidy timing that you called out. Others have seen maybe more of a normalization after such a strong kind of several years in Mexico. So just curious, A, if maybe there's a bit of both going on there at this point, or if truly you think that the subsidy piece was a blip and you've already seen a re-acceleration into July? Thanks very much. Dirk Van de Put: Yes, I mean, overall the market conditions in Mexico for us are healthy. For instance, the biscuits and the chocolate category both saw mid-single-digit increase in value. Gum and meals also performed quite well. I would say the economy is doing well. There is good employment. There was a lower flow because of the elections of public subsidies to the households that we think will start to normalize in H2. But in general, if you look at minimum wage has doubled in the last years in Mexico. So the overall climate is very positive as it relates to the consumer. If you look at the low single-digit Q2 growth that we had, that largely came from our candy and our chocolate business, which was offset by growth in gum and meals. And particularly in candy, we think that there probably our price points are a little bit too high. We will need to work on those. In chocolate, a little bit the same. And we need to make sure that we're well positioned for the Christmas season there. Again, gum and meals are doing very well, and also the biscuit growth for us was quite strong. The Oreo distribution, which is critical because of the Ricolino partnership that we have, is growing well, and Oreo is growing also in single digits in Mexico. So I would say the, I think that this effect of the subsidy certainly affected candy and chocolate. Overall, we remain quite positive. We think there will be a gradual recovery in H2. The long-term opportunity for growth remains quite significant. The integration with Ricolino is going well, and their route to market will enable us our ambition to grow market share, particularly for biscuits and chocolates. There's also a US business related to Ricolino, which of course is not the subject of the question, but that one also is important because it positions Ricolino as the leader of the Hispanic US candy market. But overall I would say I think it's a temporary issue driven by these subsidies. And in the second half I'm expecting to see a good recuperation in Mexico. Peter Galbo: Great. Thanks, Dirk. That's helpful. And Luca, just maybe a quick one. We've had some questions come in. Obviously the kind of over-delivery on gross margin in the first half and I think that there was an expectation kind of coming out of the fourth quarter of this year that you'd be down -- gross margins kind of basis or more than basis points, actual points on a year-over-year basis as we exit ‘24 and just wanted to see if that's kind of still the expectation given the cocoa inflation in 2H. Thanks very much. Luca Zaramella: Yes, I think, look, we moved away from giving guidance in terms of gross margin percentage. What I will tell you is we are going to have a year that is ahead in terms of gross profit dollar growth delivery compared to our usual algorithm. I think in the end, what will really matter is the amount of pricing we would have implemented and how much pricing we're going to take into next year in light of whatever cocoa is going to be come the end of 2024. So we are very happy. I have to be honest with the level of profitability we have achieved in the first part of the year. There, would have suggested, I believe, under normal circumstances that we have upside to the guidance we gave you. But reality is cocoa is a material headwind in the second part of the year. And the reality is we might have to selectively invest in some of the activities that you have been hearing throughout the call. It is not a massive investment. It doesn't take away that in terms of profitability and ability to reinvest in A&C, we have done, I believe, a very good job but we prefer maybe to be cautious around the level of profit going forward because again cocoa prices as we have secured them in the first part of the year are clearly much lower than the current spot price and 2025 price for cocoa would suggest. Peter Galbo: Great. Thanks, guys. Luca Zaramella: Thank you. Operator: We'll take a question from Matt Smith, Stifel. Matt Smith: Hi. Good afternoon. Just a quick... Dirk Van de Put: Hi. Matt Smith: I wanted to ask a question about the performance in India. You mentioned volumes are relatively flat in the market this quarter with a bit of a step-up in elasticity. Can you talk about how you're approaching distribution point opportunities in this type of consumer environment? You continue to see good progress on expanding your distribution in the market. Dirk Van de Put: Yes, yes. So in India, if I give you a little bit of a background, so we're looking at flat growth in Q2, mid-single-digit in H1. Chocolate growth is continuing well, a high single-digit, good gross margin improvement. Cadbury Dairy Milk continues to be a strong leader of the market despite the fact that we've already implemented some pricing. It's mainly in biscuits where India is being affected. So we have seen a consumption dip because there is more intense competition and consumers are clearly moving to lower price points. And our biscuit business is largely built around Oreo, which I would call a more premium biscuit in the Indian market. If I look at the stores, so since 2019, we've deployed more than 700,000 visi coolers. In 2023, we added 180,000 stores to our coverage and about 100,000 new visi coolers. In H1 in ‘24, we've already added another 140,000 stores and 90,000 visi coolers. So that's a very strong performance compared to ‘23. Still, if you take into account, there's 9 million food retail outlets. We now cover about 2.3 million directly and just over 3 million if we take our indirect coverage. So we still have a huge headroom. So I would say, yes, there is a bit of a slowdown after three years of inflation. A group of the consumers, particularly in biscuits, is a bit more careful in their consumption, but we don't see that as something that would slow down our focus on expanding our distribution. In India, we're going to continue to work as we've been working in the previous years, placing those visi coolers, driving our distribution, because we are very confident that gradually the consumer will start to buy Oreo again. And our chocolate business, as I mentioned, keeps on doing very well. Matt Smith: Thank you, Dirk. I'll leave it there and pass it on. Operator: This does conclude our question-and-answer session. I'm happy to return the call to Dirk Van de Put for any closing comments. Dirk Van de Put: Well, I thank everybody for their attendance to the call. I would call it again a solid second quarter, and our expectations are for an improved H2 and looking forward to see you at the end of Q3. Luca Zaramella: Thank you, everyone. Operator: Thank you. This does conclude today's conference. You may now disconnect your lines. And everyone, have a great day.

Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update, followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thank you, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I'm pleased to share that 2024 is off to a solid start with strong profit delivery. We posted solid top line results in the first quarter, coupled with strong earnings and free cash flow generation. We continue to see momentum in emerging markets where consumer confidence remains strong and our categories remain resilient. There were a number of one-off factors that affected our sales in the quarter such as the disruption with some of our European clients and the boycott of Western products in the Middle East and Southeast Asia. We delivered another quarter of strong gross profit dollar growth through ongoing cost discipline and sound pricing. And we also continued our track record of strong free cash flow generation of more than $1 billion this quarter. To accelerate our strategy of global snacking leadership and drive sustainable long-term growth, we are continuing to invest significantly in our brands and capabilities, driving distribution gains and harnessing synergies from our recently acquired assets. While our operating environment remains challenging and dynamic, our teams are focused and agile in dealing with the short term as well as executing against our long-term growth strategy. While surprising, but temporary, the cocoa inflation does not affect the fact that our categories remain durable and our growth opportunities remain sizable. Turning to Slide 5. You can see that organic net revenue grew 4.2% this quarter with adjusted gross profit dollar growth of 11.6%, enabling us to continue investing in the business. We continue to increase our A&C spending year-over-year in the high single digits, which is driving consumer and customer loyalty for our iconic global brands as well as our local jewels. Adjusted EPS grew 16.3%, and we generated $1 billion in free cash flow. While many food and beverage segments are showing softness so far this year, and I'm now on Slide 6, our core categories of chocolate, biscuit and baked snacks are still demonstrating relatively more resilience and lower elasticity than the broader food universe. Consumer confidence varies by region with North America and Australia, New Zealand mixed, while Europe is improving and emerging markets remains strong. Shoppers in many markets are becoming increasingly sensitive to the absolute price point, driving them to choose smaller pack sizes in both biscuits and chocolate. And at the same time, consumers in our snacking categories remain very loyal to the brands they know and love. In North America, we're seeing increased promotional intensity combined with a significant shift in sales to non-tracked channels, including club stores, dollar stores and emerging e-commerce platforms. Lower income consumers feel pressured, and we see that pressure weighing on their frequency in the category, especially among brands that skew more to that group. In Europe, consumer confidence is stable. While volume growth has slowed, the chocolate and biscuit categories are holding better than the broader FMCG landscape, and we're hearing increased optimism about the go-forward economic outlook. Emerging markets remain a strong growth driver, with consumer confidence driving resilient demand and low elasticity. Consumers in emerging markets are particularly interested in premium offers, enabling us to expand our range with new on-trend formats and pack sizes. Turning to Slide 7. It is important to underscore that despite short-term marketplace volatility, we remain focused on advancing our long-term growth strategy by reinvesting in our brands and people, driving strong execution, reshaping our portfolio and scaling sustainable snacking. We continue to increase our focus on our attractive and resilient core categories of chocolate, biscuits and baked snacks, and we remain on track to deliver 90% of revenue through these core categories by 2030. For example, we're investing significantly to support our Cadbury brand's 200th anniversary in the United Kingdom this year, with a multichannel consumer activation promoting the brand promise of generosity. At the same time, we're strengthening store availability, visibility and execution around the world. During the first quarter alone, we added around 100,000 directly served stores in emerging markets. We are also harnessing the power of recent acquisitions by capturing synergies and driving growth. For example, we successfully completed a significant system integration in our Ricolino business this quarter, which boosts our ability to fully leverage the expanded routes to market in Mexico, particularly in the traditional trade. The combined Mondelez and Ricolino system paves the way for significantly expanded distribution in key categories, including chocolate. Additionally, we are making continued progress on our environmental and social sustainability agenda. Just a few weeks ago, we earned validation for our net zero by 2050 road map from the Science-Based Targets initiative, demonstrating that we are on the right path towards combating climate change. We also delivered significant improvements in advancing our mindful snacking priorities, including enhancing nutrient and ingredient profiles, promoting active lifestyles, and empowering consumers to make more mindful eating choices. I do encourage you to read our annual Snacking Made Right report, now available on our website, to learn more about our sustainability strategy and to review our full year sustainability performance data. Before I turn the microphone over to Luca, on Slide 8, I'd like to spend a few minutes putting the recent headlines about cocoa prices and chocolates into perspective. We're playing for the long term in chocolate because it is fundamentally a great category, with very high brand loyalty and low private label penetration. And within this great category, our business is strong and agile. Record costs for cocoa ingredients and the resulting current and future price increases for customers and consumers obviously are generating substantial discussion. Despite this near-term headwind, chocolate volume continues to grow. And within this growing category, we remain structurally advantaged with large opportunities still ahead. We are confident in our chocolate business for 4 main reasons: our cocoa coverage strategies, our approach to pricing, our supply chain, and our iconic brands. First, it is important to underscore that our coverage strategies have proven advantage versus market dynamics in the last few months. We are fully covered for 2024 and well protected heading into 2025. Our teams continue to monitor the market very closely to put ourselves in the best position possible. While poor weather and other factors on the supply and demand side have driven prices to unprecedented levels, we believe there will eventually be a market adjustment. We are confident that our teams are putting in place the right strategies to provide future flexibility. Luca will provide some additional details in a few minutes. Second, we continue to implement sound pricing strategies, including both headline pricing and revenue growth management. We remain agile in balancing the need to offset inflation with the need to maintain solid volume dynamics. We are especially focused on protecting critical price points, including low unit price and other key threshold prices. Third, we remain confident in our supply chain. Continuity remains our top priority, and we are confident in both our own team and our partners with robust work streams to minimize the risk. Finally, and perhaps most importantly, we have some of the strongest, most iconic chocolate brands in the world, including Cadbury Dairy Milk, Milka, Côte d'Or, Marabou, Freia and Lacta, to name a few. These brands already are the leaders in numerous key markets, and we are well positioned to accelerate growth in emerging markets. Our research shows that consumers remain extremely loyal to our great brands because chocolate plays an important role in their lives, helping to bring families together, celebrate key milestones and to enjoy some quiet me-time. In our annual State of Snacking survey conducted in partnership with The Harris Poll, 72% of consumers across 12 countries said that a world without chocolate would be a world without joy. Nearly 60% said that they would rather give up social media for a month than give up chocolate. Our iconic portfolio, strong brand loyalty and advantaged geographic footprint make us particularly well positioned to take advantage of these consumer trends. In summary, we're confident that we are well equipped to navigate a relatively short-term headwind and that we're structurally advantaged to accelerate long-term growth in this category. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Q1 marked a solid quarter for our business, with organic revenue growth across each region, strong profit dollar growth, substantial investment into A&C and great free cash flow generation. Revenue grew 4.2% with strong pricing execution. Volume/mix was varied for the quarter, with emerging markets flat despite being impacted by some political unrest in the Middle East and some production slowdowns in Mexico related to Ricolino being integrated into SAP. We expect both issues to subside throughout the year, and specifically Ricolino is almost back on track. On the other side, developed market volume/mix was down 3.6% for the quarter, being impacted mostly by Europe customer disruption and the U.S. biscuit market softness. On the customer front in Europe, we are happy to report that about 90% of the pricing is now implemented. One relevant customer alliance is still pending. Total revenue for emerging markets grew plus 8.3%, underpinned by strength across a number of key markets. While developed markets grew 1.4%, with solid results from Europe despite customer disruption and strength from our North America growth channels and Canada. Moving to portfolio performance on Slide 11. Biscuits and baked snacks grew 0.6% for the quarter. A number of brands delivered solid growth, including OREO, Ritz, Perk and 7Days. On the flip side, we have seen ongoing softness in U.S. biscuits driven primarily by brands that had higher penetration among lower-income households such as Chips Ahoy! This dynamic has impacted frequency and contributed to the decline in volume/mix. Chocolate grew 5.8% with significant growth across both developed and emerging markets. Vol/mix was down 1.6% driven by customer disruption in Europe. Cadbury Dairy Milk posted strong growth, while we saw solid increases from Milka despite customer disruption. There is an element of Easter timing in these results, but we believe it to be immaterial. We also delivered solid growth with several of our local jewels, including Lacta in Brazil, Freia in Norway, Marabou in Sweden, and Hu in the U.S. Gum and candy grew 12.9% driven by continued momentum and strength in key markets, including China, Mexico and Western Andean. Let's review market share performance on Slide 12. We held or gained share in 40% of our revenue base with strength in chocolate as well as in gum and candy. This trend was offset by softer results in our U.S. biscuits business. Turning to regional performance on Slide 13. Europe grew 4.4% in Q1. Execution was strong in the quarter, with a number of key countries delivering strong growth through solid pricing and excellent Easter execution, which led to share gains. This trend was partially offset by volume declines associated with expected customer disruption, while dollars were up more than 20% and including significant A&C investments. We have now landed the vast majority of pricing in Europe. One customer alliance is still ongoing, which will cause some additional disruption in Q2, but the business remains in line with our expectations. North America grew 1.3% against an exceptionally strong compare of more than 16% in Q1 last year. Growth channels, including club and e-commerce and Canada, delivered strong results. However, overall volume/mix declined as a result of ongoing softness in food and mass. This softness has been consistent with the overall market and driven primarily by less frequency from lower income households. We are working to ensure our offers and activations continue to provide value to this consumer's cohort. And we continue to build that into our plans moving forward. We remain encouraged by our activation plans in key products such as OREO, TDP expansion and growth channels as we move through the year. North America OI increased by 2.1%. AMEA grew 5.9% for the quarter. China delivered another strong quarter with low double-digit growth fueled by initiatives to enhance brand equity in OREO, Chips Ahoy! and Stride. India grew high single digits driven by continued strength in chocolate and distribution gains. While Australia, New Zealand and Japan also delivered a robust quarter for growth, coupled with strong share gains. Like last quarter, volume cost in the Middle East and Southeast Asia impacted results. We believe this dynamic will begin to moderate in the second quarter and the remainder of the year. AMEA increased OI dollars by 20.2%, continuing a strong track record of top and bottom line growth. Latin America grew 7.1% with strong price execution and a slight volume/mix decline of minus 1.2%. It's important to note that Argentina is now capped at 26%. And this is not reflected in the base year comparison for Latin America. Argentina contributed more than 11 points to Latin America growth in Q1 '23 but only 1.8 points in Q1 '24. So we expect the underlying growth rate in Lat Am to appear understated for this year. Having said that, reported dollars growth continue to be strong for this segment. Volume/mix was softer in the quarter primarily due to some product availability in Mexico associated with the Ricolino that resulted in some production temporary slowdowns. These issues are mostly behind us, but we're still working to rebuild inventory. Consumer confidence and demand in Mexico remains quite robust, and we expect to see improved volumes as supply chain catches up as Q2 progresses. Brazil, WACOM continued to be strong, both in terms of volume/mix and revenue, while Argentina is impacted by unprecedented inflation and subsequent pricing and volume softness. Latin America delivered OI growth of more than 33%. Strong pricing and the continuation of gum and candy momentum drove these results. Turning to Page 14. In Q1, we saw strong double-digit OI and gross profit dollar growth of more than $380 million driven by top line strength and ongoing cost efficiency. It is important to note that the impact of cost inflation will be a more significant headwind in the remaining quarters than what we saw in Q1 as a result of our favorable cocoa pipeline compared to the current market prices. Next, to EPS on Slide 15. Q1 EPS grew more than 16% in constant currency. Most of this growth was driven by operating gains. And despite some currency headwinds, we grew adjusted EPS as reported ForEx by 10.5%. Turning to Slide 16 and cash flow. We delivered $1 billion of free cash flow for the quarter. We also repurchased $600 million in stock during the quarter. We will continue to remain opportunistic for the remainder of the year as it relates to share buybacks. Our balance sheet also remains strong as leverage ended at about 2.5x. Before moving to our outlook, let me take a moment to discuss cocoa on Slide 18. First, our coverage strategies have proven advantageous versus market dynamics in the last few months. We are fully covered for '24 and also for a portion of half 1 2025. Typically, we are covered for 12-plus months, but given recent volatility, we have remained slightly shorter in duration. Our teams continue to monitor the market very closely to put ourselves in the best position possible. It is obvious that the series of conditions of both supply and demand side have driven costs up at unprecedented levels. We believe there will eventually be a market adjustment. And while we want to protect ourselves, we are putting in place flexible structures that will allow us to participate to potential upside versus current historically high prices. On the other side, we continue to execute against our pricing strategies to offset input cost inflation using both the landed price and revenue growth management. Chocolate has shown strong growth over the past several years with very durable volume and elasticity despite significant pricing, particularly as we have some of the strongest brands in the category. However, we will remain agile in our approach to pricing in order to balance the need to offset inflation with the need to maintain solid volume dynamics. This means we will protect critical price points such as low unit price and key thresholds across our footprint. We also remain confident in our supply chain. Supply chain remains priority 1. And we are confident in our supply chain and that of our partners with ongoing work streams to minimize risks. Turning to our outlook on Slide 19. Our outlook for 2024 remains unchanged. We continue to expect on-algo delivery for revenue, earnings per share and cash flow. This includes the upper end of our 3% to 5% range for organic net revenue growth, which continues to factor in ongoing customer disruption in Europe and softer growth in parts of the U.S. Most of our key assumptions remain consistent with what we shared with you in our last call. We continue to expect a high single-digit inflation in '24. Although the vast majority of pricing has been landed in Europe, we continue to expect some level of customer disruption in Q2 associated with our annual price negotiation process. Interest expense is now expected to be approximately $300 million for the year. We are expecting $0.10 of EPS headwinds related to ForEx impact. In terms of tax rate, we continue to expect an adjusted effective tax rate in the mid-20s. Share repurchase is expected to be $2 billion with an opportunistic approach. With that, let's open the line for questions. Operator: [Operator Instructions] We'll take our first question from Ken Goldman with JPMorgan. Kenneth Goldman: You highlighted a few of the challenges in North America at the moment. Just as we think about the path ahead maybe, how are you considering some of the more important actions that can be taken to protect share, maybe in light of some of the challenges at the lower end consumer and also given your comments about globally sort of protecting some of the price points that are out there? I'm just trying to get a sense for the tactics that might be implemented. Dirk Van de Put: Yes, Ken. I mean you see that the category is slowing down and that we are losing a little bit of share. I think everybody knows that the consumer is sort of seeing a number of things: the persistent inflation, there is the high interest rate, there is the loss of the SNAP, and there's also the recent not-so-great job market. So consumer confidence, which was so and so up to today, I think now we just learned that it took a real dive this month. We see in our categories, the elasticity is really going up. Penetration is still pretty good, but people are much more cautious about price points. The frequency is coming down, particularly with the lower income consumers and particularly the brands that are important for them. Like Chips Ahoy!, we can see that they're losing some market share to private label. There is, as I just said, some trade-down to private label. And then another thing to keep in mind is that there's some big channel shifts taking place to club or online or into the value channel. So what are we doing about it? The first thing is that we, last year, didn't have a great performance in TDP. So going forward, we are increasing our TDPs, which will help our volumes going forward and our market share. For those lower income consumers who are buying very carefully and evaluating very carefully when and what and at which price they buy, we will need to become more agile in the promo mechanisms that we will play out, and we're working hard on finding what works best for us. And this is kind of different, brand by brand and largely talking about what we do on our base packs here. We will continue to invest in our brands because we increased prices also in March, so we will increase our investment. We are launching a number of special packs, a number of additional multipacks. But also, for instance, in CLIF, we are reducing the size of our multipacks from 6 to 5 or from 12 to 10 units in a multipack, which will help the price points we're selling it. And so that gives you a little bit of an idea of what we are planning to do going forward. We assume that in the second half of the year, the consumers will have a better confidence and that we will see gradually the volume and the market shares to come back. Kenneth Goldman: Great. And then, Luca, as we look at the remainder of the year, especially just modeling 2Q in particular, are there any unusual puts and takes that maybe aren't fully or properly factored into Street forecast? Anything we should be more considerate of that maybe we're not yet? Luca Zaramella: I don't think that's necessarily the case, Ken. I mean we feel good about reaffirming at this point our original guidance for 2024. And while it is true that the biscuit category in the U.S. is a little bit softer, we are overall happy with most of the dynamics we see around the world. Importantly, for us, Chinese New Year and Easter were quite good. And these are critical consumption events for us, but you should expect categories to continue their trends into Q2 and the latter part of the year. I want to spend a minute talking about pricing. We are at this point, in total, where we should be. We have implemented the price that we targeted everywhere, including Europe. We still have one main customer to finalize in Europe, which is leading to some disruption in Q2. So you should expect that. But overall, in terms of pricing, we are where we had anticipated to be by now. Inflation is, in total, in line with what we expected. And by now, we have locked cocoa for the entirety of 2024. So we have quite a good visibility on cost. I would have a special call-out here because cocoa costs will escalate throughout the year, particularly in the second half. The acquisitions, we started a little bit softer than expected, particularly in CLIF, and I called out some temporary issues in Ricolino, but you should see a sequential improvement throughout the year. Maybe another couple of points to bear in mind. Elasticities are planned in line with what we have seen in Q1, but we might see a little bit of an uptick, particularly in chocolate. But as we mentioned a few times, we will continue to support our brands. And we will not vacate critical price points, particularly in emerging markets. And we have planned for the same type of softness that we have seen in Q1 as far as the biscuit category goes. But we would expect our share to improve over time as we are revisiting some of the promo mechanics, particularly around brands like Chips Ahoy!. I mentioned that Ricolino is already recovering. So we should see good growth in Latin America going forward. And finally, as far as earnings call, we continue to make progress in removing stranded costs related to the gum business. So I don't expect any particular change in dynamics into Q2 specifically, but we should see, particularly on volume, some sequential improvement as we go through the year, as we land some of the price negotiations, particularly in Europe. Operator: We'll take our next question from Bryan Spillane with Bank of America. Bryan Spillane: So my first question is just can you give us a little bit more color or perspective on emerging markets? I mean you talked about in the prepared remarks how the elasticities have been pretty good, considering how much pricing. So I guess, as we're thinking about balance of the year and just contribution to growth in the back half of the year, just if you can give us a little bit more color on emerging markets and how we should be thinking about that. Dirk Van de Put: Yes. Well, just to situate, about 40% of our sales growth in emerging markets was about 8% in Q1. We are seeing growth in reported dollars, top and bottom line, so solid, robust performance. If I look at the different markets, China, we had low double-digit growth with strong share gains. You know that China for us is a combination of selling more in the stores where we already are but also a big drive in distribution. That will continue for the rest of the year. And we expect that China will be strong. India, we had high single digits. Same sort of dynamics, continue to increase our share in the market and increasing our distribution. India probably won't show the same amount of growth that we've seen in previous years, we expect a bit of a slowdown there, but still expecting a positive year in India. Then Mexico, Luca already commented, Mexico was low single digits driven by some issues with the system implementation in merging Ricolino with our business, but we are gaining shares. Our offtake is good. We had some issues in supplying the market. And now that the system is done, we will really start to work that route to market expansion. So we're expecting, once we get through these short-term issues, that we will see some strong growth in Mexico. And then Brazil was mid-single digits, gaining share, a pretty good gain in distribution, price points are a bit of a discussion there. But we also expect Brazil to look pretty good. So in the 4 biggest emerging markets for us, we feel pretty good about where they are and what we expect for the rest of the year. There are some watch-outs. There is inflationary pressure in Nigeria, Pakistan, Egypt. In the Middle East and Southeast Asia, we have the boycotts of Western products that are affecting us. So not everything is great. But we do believe that emerging markets this year will be giving us sustainable growth. We will get back to volume growth. We feel that the low category penetration that we have and the distribution opportunity that we have will drive this. I think we are also gradually getting into the adjacencies. And we are able at this stage to continue our virtuous investment cycle where we continue to increase our investment every year. We get good growth. We generate more margin and the year after, we increase our investment. So overall, it's not going to be an incredible year in emerging markets, but it's going to be a very solid year for us in emerging markets. Bryan Spillane: And Luca, just one quick one on cocoa. I know here, our trading desk kind of has a view that we might be closer to $5,000 by the end of the year. So I guess, to the extent that there's an expectation that cocoa prices come down, does it pay for you to just sort of wait to hedge? I guess it's kind of like shorting cocoa. But just I think last year, you might have held out until the middle of the year before you started locking in. Just kind of curious how we should be thinking about and observing what you may be doing to start thinking about cocoa in '25? Luca Zaramella: That's a very good question. So we truly believe that current cocoa prices are the results of a series of accidental circumstances that over time, we believe, should go away. I think you all know that the main crop last year was problematic. But as you might have read from multiple sources, the mid-crop is already looking much better. But also on the other side, on the demand side, the industry went a little bit shorter than usual on coverage and now, by out of necessity to replenish minimum stocks, really provide support to the current high prices. I think in this context, we truly believe that the current market structure does not warrant the current market prices. And so the question becomes when is the correction going to take place. And most likely, the answer is in September, October as the data for the new crop becomes available. We cannot stay still until then. We will have to protect ourselves. But our implementation strategy for 2025 is around flexibility. And so we are putting in place very flexible structures, namely pure vanilla call options. We bought a few where price of those options was very affordable, I would say, particularly in light of today's prices. But we are putting in place multiple structures that would allow us to participate in a potential market correction. So you're absolutely right. We believe the market is overreacting. The current prices are not sustainable. And should the correction happen, which we expect towards the end of Q3, most likely, we will be ready to take advantage of lower prices. Now I don't want to give you the false impression that we are not going to have inflation in cocoa in '25 because reality is, in 2024, we are covered at materially better prices than current market. So you might want to take a look at the total mark-to-market in the noncash to adjusted GAAP results. Bryan Spillane: Yes. Appreciate that. Yes, we were looking at that. Actually, Pete Galbo pointed out to me just how big the gain was, so definitely, I get that piece. Operator: We'll take our next question from Robert Moskow with TD Cowen. Robert Moskow: I guess one of the more pleasant surprises is that European chocolate retail data looks very, very strong. The elasticity looks de minimis. And I want to know if you think that will help in your negotiations with retailers heading into 2025. Are the retailers happy with how the category is performing, how the consumer is handling the pricing so far? Does that help at all? Dirk Van de Put: Yes. So of course, it does help in the sense that so far, the elasticity is relatively benign. We've got a good performance. Despite some disruptions, growth has been solid, I would say, and we have increased our market share. We do have to take into account that Easter came earlier. We had a very strong Easter from our side, but it came early. So some of the numbers you're seeing are influenced versus last year, we didn't have an earlier Easter. But overall, I would say that this certainly is better than you would have expected. It shouldn't be a surprise in a way because we know that the chocolate market can be very resilient. We also are continuing to invest quite heavily. And consumer confidence in Europe, I would say, is stable. There is some uptick in elasticity. But overall, it's is better than you would have expected and maybe even a little bit more positive than what we currently are seeing in U.S. Going forward, I think it helps to see a strong category that we are performing well. Of course, the retailers see the cocoa pricing as well as we do. So it will help the discussions going forward. I wouldn't say that it's going to be simple, but there will be an understanding that if cocoa prices remain relatively high, that there will need to be more price increases that need to be implemented. And I think we're helped by the data that we can provide. And we also have to see what's going to happen with elasticity going forward as the new chocolate prices get implemented because when you have seasonal like Easter, the consumer not necessarily is fully aware of the price difference. When they start to see their tablet now in the normal shelf, that's when they will fully realize elasticity. So we will need to see where that is heading. But overall, yes, very positive on what is going on with chocolate in Europe. Operator: We'll take our next question from Steve Powers with Deutsche Bank. Stephen Robert Powers: Great. I want to talk a bit of about the gross margin. I thought coming into this year, you actually expected the gross margin to start out slower in the first quarter and actually sort of improved year-over-year as we went into the year. It seems like we're setting up for a different, maybe an opposite, dynamic. So maybe you could just expand on what drove the gross margin higher this quarter and then how you expect the cadence of gross margin to evolve over the course of the year. Luca Zaramella: Yes. So as I said, both in the prepared remarks and in my first answer to Ken's question, we are very happy with the level of pricing we have taken so far. And so we are absolutely on plan. On the cost side, I commented about the fact that the cocoa price escalation will be more visible in the second part of the year. So I'm not sure you will continue seeing the type of gross profit dollar expansion and gross margin that you saw in Q1 into the second half because the cocoa prices will hit a little bit harder particularly in Q4. So I wouldn't read too much into that. I think the way you have to think about it is, are we happy with expanding gross profit dollars almost 12%? Absolutely. Are we happy with the reported dollar gross profit that we see? Absolutely. We are pricing in a very disciplined manner around the world. We are doing RGMs. So that is bearing its fruit. But you're going to see some compression, particularly in Q4. So don't expect like 2.5 points of gross profit expansion from now to the end of the year for sure. Stephen Robert Powers: Yes. Okay. Very good. And actually, Dirk, if I could build on your comments just a minute ago on Europe. I'm curious, I mean, understanding that the retail negotiations have gone maybe a little bit better than you had originally assumed, but it seems like demand, as you say, is stable, maybe a little bit better than expected, I guess is it better than you would have expected? And if so, how does that influence your plans for the balance of the year? Are you leaning in a bit harder into Europe to take advantage of those better conditions? Dirk Van de Put: Yes. I would say, first of all, as it relates to the client negotiations, they largely are going exactly as we would have expected. As we knew that we had increased prices, we foresee that in our forecast for the year. And at the moment, it's playing out as expected. As Luca mentioned, there's still one buying group that we need to finish. Hopefully, we will do that in the coming weeks. And then we should be done for a while. As it relates to the current situation in Europe, obviously, there will be a recuperation because we have not been delivering for a while with some clients. And as we get agreements, we start to fill the pipeline again. So that will help us. But overall, I would say that we are not expecting to see for the full year a big difference in our European performance. We're not expecting to see an upside. We are convinced that we have more stability, we feel more assured about delivering what we are expecting to deliver in Europe, but we're not counting yet on an upside for the year. Operator: We'll take our next question from Alexia Howard with Bernstein. Our next question comes from Chris Carey with Wells Fargo Securities. Christopher Carey: Dirk, in the comments that you made around the consumer in North America, elasticity is picking up a little bit and some expectations into Q2 and the back half of the year. I guess I'm just trying to understand a couple of things. First, in Q1, is there anything within the portfolio that you would deem not elasticity related? You mentioned some competitive activity in CLIF that you're going to be responding to. Say, anything competitively or fundamentally that you would point to that you would see improving into Q2 where it gives you a little bit of confidence in North America? And then the second thing would just be regarding the consumer into the back half of the year. Did I catch you right that there's an expectation that the consumer in North America gets a little bit better and that your volume trends as such should improve sequentially? So perhaps just any help on portfolio dynamics in the quarter and also just, I guess, more like the macro and the consumer. Dirk Van de Put: Yes. Well, I would say that if you look at the market share evolution, the brand that's most affected is Chips Ahoy!, and Chips Ahoy! is the most susceptible to private label. And OREO or a belVita are gaining market share. And so I would say if there's anything that's pointing -- I wouldn't call it necessarily not susceptible to elasticity. We see some elasticity on those brands, too. But overall, the activations that we have and the interest we're getting from the consumer on those 2 brands offset the elasticity effect that we're having. As it relates to what we need to do going forward, it's largely now trying to figure out in which way can we get the frequency, particularly from the lower income consumer that we would like to see. So price points certainly play a role, and we will need to work short term with promotions; longer term, probably working on the size of our packs to make sure that we hit those right price points. Because if we see anything in the elasticity, it is that we have surpassed certain price points and that is having a big effect. Now I would say that movement is happening already. So that's what we gradually will expect to improve in the coming months, i.e., that our promotional and pricing strategy gets better, that we understand better how to get the frequency and the volume from the consumer. I'm also expecting that the overall consumer confidence in the second half of the year will improve. That will have an effect for us. There is a lapping effect. Last year, we had 16% growth in North America. Of course, that plays a role. The lapping later in the year will be easier. Those are the things that I would see that make me believe that the second half of the year will look better for us in North America. Christopher Carey: Okay. One quick follow-up on cocoa. Luca, you gave a lot of helpful commentary around some of the things that you're going to be doing or are doing now contractually and you also have an expectation in September and October. I guess the question is, what if cocoa sustains these really high levels and we don't see the fundamental break expected going into next year, is it still appropriate to think about pricing as the core mechanism to cover the inflation? Or given the lead time that you have to prepare, maybe there are other alternatives like accelerated savings, RGM, the sorts of things that you can do when you have many months to prepare for such cycles, if indeed, you believe that the cocoa prices at some point will eventually break. So it's just more game theory, but any context on that would be helpful. Luca Zaramella: Yes, I believe it's absolutely critical for us to get ready for potentially cocoa staying at these levels. I just want, though, to call out one thing, which is the forward curve for cocoa is heavily inverted. And that means in general that even today, we could potentially get physical coverage into '25 but at cheaper prices than the current spot price that we see today. But rest assured that as a company, we are looking at all possible scenarios. And as a matter of fact, we are taking a fresher look at some of the costs we have, making sure that we try to understand the level of flexibility that we have. We are looking thoroughly into additional RGM. We will stay absolutely true to the concept of protecting price point, particularly in emerging markets. We are not going to move the LUP, low unit price, points in India, for instance. But we will be looking into potential RGM in terms of promo, in terms of downsizing, et cetera, so to say that we will have to make sure that elasticity stays in control. In the end, we are going to be managing '25 in light of what we think a more plausible cocoa level is, despite the fact that it might still be very high because we fundamentally believe that in a couple of years' time, tops, the cocoa price will correct. And at that point in time, we will have to have retained our volume, our share, our competitive advantage both in developed and in emerging markets. And that's the way we are looking at these. But rest assured, we are looking at all possible scenarios, and we're going to be sitting down soon with the teams to make sure that we put in place already all the possible actions that would allow us to go through a potential worst-case scenario in 2025. Operator: We'll take our next question from Rob Dickerson with Jefferies. Robert Dickerson: Can you hear me? Luca Zaramella: Yes. Dirk Van de Put: Yes. Robert Dickerson: Sorry about that. So just one quick one on cocoa again, Luca. Just in terms of your comments around maybe the mid-crop coming in a little bit better, your kind of expectation, maybe things could ease and improve a little bit kind of in the almost pre-main crop period. I mean kind of what you're saying is just the expectation here is that supply should be up, right? I mean we're clearly running at a deficit, but then we should assume that supply should be up in the next main crop. Is that fair? Luca Zaramella: Yes, I think that's fair. I mean when you look closely at the numbers, Ivory Coast and Ghana, the main crop was down year-on-year about 20%. The total cocoa supply was positive as it were. In total, it was down minus 10%. Do I expect the main crop to be down 20% in Africa or 10% in total again? I don't think that's a plausible scenario at this point in time. But as I said, we will know more as we get closer to the main crop. But fundamentally, nothing has really happened that structurally impairs the production capability of Africa specifically to that level. So yes, I'm hopeful that there will be a better main crop, and I think you will see prices for cocoa adjusting. Having said that, we are looking into all possible scenarios, and we're going to be implementing some opportunities that we see before year-end. But we'll have to wait for us to be able to tell you what those are. And I think as we move throughout the year, we'll keep you updated on what we see for cocoa into 2025. Robert Dickerson: All right, lovely. And then just quickly on the top line, I think originally, Q1, you had said, might be below the algo for the year just kind of given some of the European disruption. But I think Europe did better than we all probably saw it. North America is a bit softer. So I'm just curious, are you still thinking there could be slightly positive volume/mix for the company for the year and then I think you also said likely for each of the segments once we x out some of the European disruptions? And then lastly, I think you had also originally said it was probably more high end than the 3% to 5% sales growth, so just curious on the volume piece and then if you're still at the high end. Luca Zaramella: Look, the volume piece is we expect volume to be flattish for the year. Reality is, as we gave guidance, we had a little bit of headroom, as you might expect. I think that headroom is still, for the most part, there. We'll have to see how a couple of ticket items play out for the remainder of the year, particularly the boycott in AMEA as it relates to some of our brands, how will that play out in the quarters to come. And the other thing is the share recovery, particularly in the U.S. I feel confident about the plans that the U.S. is putting in place. I think we are moving a little bit the price point of Chips Ahoy!, and that would allow us to recuperate share and volume. And Chips Ahoy! is the #1 driver of the volume declines that you see in the North American segment. But then we will have to see how elasticity plays out as well. I feel quite good about the Latin American business. As I called out, I think 3 out of the 4 business units, and the only one that is declining in volume in real terms, is Argentina. But the other 3 are doing quite well. We feel good about China. I think India, we're going to see some slowdowns. But all in all, it should be fine. And then I could go around the globe and tell you that reality is once we land the final customer in Europe, we hopefully see some reviving of the trade stock. And hopefully, the chocolate market will continue displaying acceptable elasticity. So a long answer to say expect flattish volume, but in reality, there are some puts and takes and we want to keep some flexibility within the plan. Operator: And this does conclude our Q&A segment. I will turn the call to our speakers for any closing comments. Dirk Van de Put: Well, thank you for assisting in the call. I will conclude with saying that we had a solid first quarter, and we feel confident for the rest of the year that we will have an on-algorithm year. And looking forward, if you have any questions, our IR department will be happy to help you. And looking forward to see you next quarter for the results that we have then. Thank you. Luca Zaramella: Thank you, everyone. Operator: This does conclude today's program. Thank you for your participation, and you may now disconnect.

Operator: Good day, and welcome to the Mondelez International Fourth Quarter 2023 and Year-End Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van De Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van De Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on slide four. I'm pleased to share that we delivered our best year ever in 2023, with robust top-line growth, continued share improvements, record profit dollar growth and strong total shareholder return. Our double-digit top-line performance was driven by strong pricing execution and positive volume mix growth. We also delivered continued share improvements as consumers across the globe remain very engaged with our iconic snacking brands. We set another record for gross profit dollar growth achieving $2.2 billion through ongoing cost discipline and sound pricing to offset cost inflation, as well as volume leverage. We continued our track record of strong free cash flow, generating $3.6 billion. To accelerate our strategy of global snacking leadership, we continue to invest significantly in our brands and capabilities, driving multi-year growth on both the top and bottom lines. I'm especially proud of our record financial results, as well as returning nearly $4 billion in capital to shareholders. These results deepen our confidence that the strength of our brands, our proven strategy, our continued and increasing investments, and especially our great people, position us well to achieve our long-term financial targets in 2024 and beyond. Turning to slide five, you can see that 2023 was a strong year on both the top and bottom lines with substantial reinvestment to drive continued growth in the year ahead. Organic net revenue grew 14.7% or $4.6 billion versus prior year. Our continuing solid performance in volume mix demonstrates that consumers continue to prioritize our brands and categories. We also delivered record adjusted gross profit dollar growth of $2.2 billion, up 18.8%, significantly lapping the last several years. We are proud of our team's continued focus and commitment, which enables us to continue investing in the business to drive further sustained growth. Accordingly, we increased A&C investments by more than 21%, helping to drive consumer and customer loyalty to both our iconic global brands and our local jewels, which represent the taste of the nation in their markets. These results translated into strong OI growth of nearly $1 billion, up more than 19% versus prior years. Adjusted EPS grew 19% on top of strong growth in the past several years. All told, we remain confident that our virtuous cycle of strong gross profit dollar growth, fueling local first commercial execution, and increasing investments in our strong brands, capabilities and talent will enable us to continue delivering attractive, sustainable growth. I'm especially proud to share that we continue to outperform our peers in total shareholder return. As you can see on slide six, our five-year TSR is nearly double the average of our peer group. Our one-year return is particularly impressive with Mondelez delivering double-digit growth, while our peer average return has fallen into negative territory. We view these results as evidence that we have the right strategy, the right brands, and the right people to continue delivering long-term value for our stakeholders. Switching to slide seven. Our performance in 2023 gives us confidence that we have not only the right growth strategy, but also the right execution to deliver it. Here are just a few highlights of our strategy in action. Our biggest global brands, Oreo, Milka, and Cadbury achieved more than $10 billion in global net revenues. We continue accelerating our focus on our core categories for chocolate, biscuits and baked snacks, because these categories offer attractive growth and profitability. We remain on track to deliver 90% of our revenue through these core categories. We also continue to make strong progress in executing our growth strategy. Our U.S. supply chain has stabilized and we have added more than 600,000 stores to our emerging market distribution channels. Additionally, we continue to advance our portfolio reshaping strategy. In 2023, we integrated Clif Bar and Ricolino, now we are harnessing the power of these recent acquisitions to strengthen our presence in the global snack bar and the Mexican chocolate and candy segments. We also completed the sale of our developed market gum business for $1.4 billion, providing another important source of reinvestment to further advance our brands, talents and capabilities. On slide eight, along with our financial performance, I'm pleased to share that we made significant progress toward our sustainability goals and targets in 2023. First, we continue to advance our leadership in more sustainably sourced critical ingredients. About 80% of the cocoa volume used in our chocolate brands is sourced through Cocoa Life, our signature cocoa sourcing program. There works just to lift up the people and restore landscapes where cocoa grows. We also made continued progress in helping to combat climate change. We achieved an important milestone in 2023 by submitting our roadmap to achieve net zero by 2050 through the Science Based Targets Initiative. Additionally, we continued advancing our light and right packaging strategy. More than 97% of our packaging now is designed to be recycled. We also continue investing in ways to empower consumers to make more mindful snacking choices that fit into their healthy active lifestyles. More than 55% of our snacks revenue comes from Mindful Portion Snacks, that is, snacks that are packaged in individually wrapped Mindful Portion serving sizes or with clear Mindful Portion recommendations unpack. These are just a few highlights of our continuing progress towards building a more sustainable snacking company. We continue to believe that helping to drive positive change at scale is an integral part of value creation, with positive returns for our stakeholders. We encourage you to watch our annual Snacking Made Right report, which will be published in April to view our full-year sustainability data. Turning to slide nine. You can see that like many companies, we continued to navigate through a dynamic operating environment. We are closely tracking and planning around a number of near-term themes, including continuing inflation, shifting consumer habits, geopolitical challenges, rising cocoa prices, just to name a few. We are well-positioned to address these challenges and we remain confident that we can deliver an on-algorithm year. Our confidence is rooted in our conviction that we have the right strategy, the right execution, and the right people, as well as very strong widely loved brands. We continue to see momentum in the majority of our key emerging markets. Our categories remained resilient and our solid volume mix performance demonstrates that consumers continue to prioritize our iconic snacking brands. To continue accelerating this momentum, we are continuing to increase our investment significantly in our brands and capabilities. We are pleased that our U.S. supply chain has substantially improved and we continue to focus on expanding distribution opportunities in both developed and emerging markets. We are also making solid progress in our European pricing negotiations. We expect to deliver robust EPS growth in both constant and real dollars in 2024. And overall, we remain confident that we have the right strategy to effectively navigate today's volatile environment while continuing to focus on long-term sustainable growth. In conclusion, I'm pleased to reiterate that 2023 was another record year. Our focus and portfolio reshaping strategy is working and we are well-positioned to continue driving attractive growth in 2024 and beyond. By continuing to double down on our attractive core categories of chocolate, biscuits and baked snacks, investing in our widely loved brands, focusing on operational execution and cost discipline and empowering our great people, I am confident that we can deliver strong performance for years to come. With that. I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon, everyone. Before I get into our financial results and the 2024 outlook, it is important to provide some context related to the developed market gum divestiture and its impact on our results. On slide 11, you can see that impact of the divestiture on revenue was roundabout $500 million, while our growth, 0.3 percentage points negative. EPS was impacted by minus $0.11. I'll give you more color as this relates to the outlook later in the call, and how we plan to fully offset impact on income. Moving to slide 12. In 2023, we delivered exceptional results, starting with double-digit revenue growth, with both volume and value contributing. As we keep saying, gross profit dollars is the most important P&L variable as it allows reinvestment protect on our virtual cycle. Last year, GP dollars grew by $2.2 billion, allowing substantial reinvestments, strong earnings and robust cash flow generation. The strengths of these results can be seen across all regions and categories. Revenue growth was plus 14.7% in the year with 1.3 points of growth coming from volume mix. For the quarter, growth was about 10%, with a slight decline in volume mix. Emerging markets grew by 20.4% for the year and 14.9% for the quarter with strength coming from a substantial number of key countries, including Brazil, China, India, Mexico, and the Western Andean. Developed markets grew plus 11.1% for the year and plus 6.6% for the quarter, including robust growth from both U.S. and Europe. Moving to portfolio performance on slide 13. Our chocolate and biscuit businesses, both delivered double-digit growth for the year. Also gum and candy continued to perform well with superior growth in emerging markets. Biscuits grew plus 11.9% for the year and plus 5.5% for the quarter. A large number of brands delivered strong growth for 2023, including Oreo, Ritz, Chips Ahoy!, [Indiscernible] Tate's Bake, Give & Go, 7Days, TUC, and Club Social. Chocolate grew plus 14.5% for the year and plus 11.2% for the quarter with significant growth across both developed and emerging markets. Volume mix was up by 2.5% for the year and 2.4% for the quarter. Global brands like Cadbury Dairy Milk, Milka, and Toblerone all delivered extraordinary growth while we also delivered strong growth with many of our local jewels including Lacta, Ricolino and Kinh Do. Gum and candy grew more than 28% for the year and 20% for the quarter. Key markets including Brazil, Mexico, China and the Western Andean area, all performed well. Let's review market-share performance on Slide 14. We held or gained share in 65% of our revenue base with strong results in both chocolate and biscuits. Given the amount of pricing we took in the last couple of years, we see this as a strong accomplishment and our brand investments, both from a quantity and quality standpoint, clearly played the role. Turning to region performance on slide 15. Europe grew plus 14.5% for the year and plus 11.6% for the quarter. Strong execution led to positive volumes mix for the year, despite significant customer disruption in Q2. Profit in '23 was up plus 12.8% for the year and plus 1.6% for the quarter. Underlying profit in Europe continues to improve, but Q4 was negatively impacted by ForEx fluctuations on some cash deposit held in dollars, that function as a protection against currency volatility. Excluding these headwinds, EBIT in Q4 was up nicely, despite a significant increase in A&C. North America grew plus 9.5% for the full-year, while Q4 grew plus 1.9% against an exceptionally strong compare of almost 20% in 2022. Full year growth was driven by higher pricing, broad-based strength across brands and channels and solid volume mix. In Q4, volumes declined as a result of softening US biscuit category, tight inventory management in advance of Q1 pricing and declines in Give & Go and Clif. Give & Go was impacted by our decision to release some of the holidays gingerbread kit given low profit. We continue to be very happy with Give & Go overall. Clif results were driven by lower bar consumption and inventory depletion connected to retailers building inventory in Q3 to minimize potential disruption ahead of a system transition in early October. As a result, we made adjustments to inventory driving a year-over-year shipment decline. We feel comfortable with current inventory levels along with our programming and investments to drive '24 growth. Overall we are confident regarding our prospects in '24 for North America, given our strong activation plans, TDPs expansion, growth channels and substantial investments in A&C. We are going to give you a better sense of these opportunities at CAGNY. North America OI increased plus 22.7% for the year due to strong pricing and solid volume. For the quarter, OI increased by 9.5%. AMEA grew 11.7% for the year and 7.9% for the quarter. India grew strong double digits for the year and quarter, driven by both chocolate and biscuits. China grew high single digits for the year and quarter as well. Southeast Asia grew mid-single-digits for the year and Australia delivered strong results for both the year and the quarter. As it relates to volume mix performance in the region for Q4, there has been some pressure on Western consumer brands in the Middle East since the war began and we have not been immune from that, with an impact of sales in the Middle East and part of Southeast Asia. We are supporting colleagues who have been impacted in different ways around the world as well as working with NGOs partners to aid in humanitarian efforts in the regions. While volatile and difficult to predict on a go forward basis, we are tracking the situation and working with stakeholders and planning for these dynamics in our 2024 outlook. AMEA increased OI by 14.5% for the year and 18.5% for the quarter, continuing a strong track record of annual top and bottom line growth. Latin America grew 34.8% for the year and 28.6% for the quarter, with strong volume mix growth and strong price execution. Ex-Argentina, growth for LA was plus 18.1% for the year and 9.2% for the quarter, justifying the good work done by our teams beyond price management in Argentina, Latin America delivered another strong year of profitability. OI grew plus 48.5% for the year and more than 49% for the quarter. Strong volume mix pricing and continuation of gum and candy momentum drove these results. Turning to page 16. For the year, we delivered strong double digit OI dollar growth, driven by a record high increase in gross profit of nearly $2.2 billion. This growth has enabled strong levels of reinvestment behind brands and capabilities for 2024 and beyond. In Q4, we also saw strong double digit OI and gross profit dollar growth of more than $500 million, driven by top line strength and ongoing cost discipline. Other was impacted by the Forex dynamics and fund protection in US dollar that I discussed about Europe. Next to EPS on slide 17. Full-year EPS grew plus 19% in constant currency. The vast majority of this growth was driven by operating gains and despite currency headwind, we grew adjusted EPS at reported Forex by 14.3%. Adjusted EPS would be $3.30 per share, including $0.11 of contribution from DM Gum. I'll talk more about our plans for '24, but we will aim at removing as much standard cost as possible. Turning to slide 18. We delivered $3.6 billion of free cash flow for the full year, including the impact of more than $380 million related to cash taxes from the liquidation of our KDP stake. Our balance sheet remains quite strong as full year leverage ended at 2.6 times. Let me take a moment to discuss our outlook and some of our key planning assumptions on Slide 20. For the current year, we expect to deliver on our long term algorithm for revenue, earnings and cash flow. We expect to be at the upper end of our 3% to 5% algo range for organic net revenue growth as pricing in certain markets with significant chocolate portfolios such as Europe is expected to be higher than historical levels. We expect free cash flow of $3.5 billion-plus. In terms of the assumptions, for inflation, we expect a high single digit increase for '24. This inflation is driven by significant increases in both cocoa and sugar, as well as another update in labor costs. As Europe faces more inflation than any other market, we expect customer disruption during Q1 and potentially into Q2, associated with our annual price negotiation process. This process is happening earlier in some cases than last year, so intact might be more pronounced in Q1 for top and margin lines. We also remain committed to substantial brand support in this region and all the others, similar to our stance over the last past several years. In terms of interest expenses, we expect approximately $325 million. We are expecting $0.03 of EPS of headwinds related to forex impact for the year. In terms of taxes, we expect an ETR in the mid-20s. Share repurchase expectations are around $2 billion. Turning to our EPS outlook on page 21. With respect to adjusted EPS, we expect high single digit growth of our reported base '23 of $3.30 per share, which includes the $0.11 of contribution from our divested developed gum business. We expect to eliminate nearly all of these $0.11 impact by removing stranded costs. In fact, we made good progress by already realizing this sense of stranded cost savings in late 2023. With that, let's open the line for questions. Operator: [Operator Instructions] Our first question comes from Andrew Lazar, Barclays. Andrew Lazar: Hey, everybody. Dirk, I was hoping we could get a bit of a state of the union on how you see the performance in key markets at this stage, as we saw a bit more volume weakness in North America in the fourth quarter. And conversely, it still seems like there's strength in many of the other key markets. Trying to get a sense of how you see this playing out in '24 and whether similar cadence across your markets might be the same or where it might be a bit different. And then I've just got a follow-up. Dirk Van De Put: Okay, thank you, Andrew. Yes, I mean, we see there's a very strong full year performance. We feel that there is portfolio strength, which is broad-based across our regions, across the categories, across the brands. The volume mix growth is solid for the year. We expect that to continue into next year. Our price execution has been very good this year across the business. Share performance is good. North America, we recovered. AMEA, we've been gaining share. Europe, we had some disruption effect during the year, but we started to recuperate strongly at the end of the year. The strength in emerging markets continues broadly and can comment a little bit on where there are some short term issues. And then we've very got -- got some very strong gross profit growth and $2.2 billion for the year, which has allowed us to reinvest quite significantly in the business. And so the acquisitions are doing well. EPS growth adjusted 19%, real 14%, strong cash flow. So we feel good as we enter 2024. We have some more pricing coming in, but in North America, that's already agreed. In Europe, we're in line with where we were last year and the majority is already agreed. We are planning to continue with strong investments in our brands, with strong activations. The acquisitions, we expect to continue to play a big role for us. And so overall -- and maybe another point to mention is that we have this distribution runway of adding distribution for our brands around the world. So we feel it was a very strong '23 and we feel good entering '24. Now, that doesn't mean that there are no particular issues that are on our mind. So the first one would certainly be the cocoa prices and our need to price as needed. We are well covered for the year, but we need to, mainly in Europe, get those prices agreed. Consumer, while the consumer is feeling better and more positive short term, we see that elasticity is still at or below historical norms, but there is some uptick in consumer elasticity in some spots around the world. It is to be expected that we will have customer disruption in the beginning of the year in Europe. The annual negotiations are in progress. Like I said, we are in line where we were last year and majority is agreed, but we still have some to go. And then maybe a few words on some of the effects on the volume in Q4, which we don't think will continue in Q1 in certain instances. So there is some tensions in the Middle East, and that has some effect on Western brands and we have some of those Western brands. We expect that to continue in Q1 and Q2, but gradually over the year, that will fade away. And that is the main reason why our AMEA is not as strong in volume mix as you would expect. And then North America. Luca said it in the comments, in particular in the US, because of very one-off -- specific one-off reasons, stopping part of the range of Give & Go, the systems change in Clif, we expect to return to good volume mix growth in North America in the beginning of next year. All these items that I'm talking about are included in our full year outlook. And so we believe at this stage, particularly since we have to see how the negotiations go in Europe, that we should guide towards our own algo result for '24, probably more towards the higher side, but we are going to continue with all the things I said and we'll see how the negotiations go in Europe. That's probably the main question mark that we have at this stage. Andrew Lazar: Okay. Great, thank you. And a quick follow-up for Luca and some of this you covered a little bit, Dirk, but I think there was a street expectation for organic sales growth for '24 to maybe be a little bit above the 3% to 5% long term algorithm, just given the pricing that you're taking. So maybe, Luca, you could walk us briefly through some of the just key puts and takes to keep in mind as we think about the sales growth guidance for the year and maybe the phasing aspect of it. Thanks so much. Luca Zaramella: Thank you, Andrew. I would start by saying that guidance for '24 in our mind, is solid, particularly as we look at what drove '23 and the continuation of that momentum into '24. And so we can, I believe, count on resiliencies of our categories. We're happy, as I said, in the prepared remarks on our share performance. I think you will see momentum in our share, particularly in the first half, and that is related to the unprecedented A&C investment we put forward. There are still material distribution opportunities that will help us model through some of the challenges that we discussed in the prepared remarks. And finally, the acquisitions, I think will continue to be accretive for us both in terms of top line and bottom line. Decomposing the revenue guidance, pricing is clearly a key component of this plan. Its contribution will be a little bit less than we have seen in '23, but it is higher than an average year. And particularly as we price away cocoa, chocolate will contribute to most of the pricing in '24. Pricing, as we mentioned, presents a couple of challenges. One is potential customer disruption in Europe. We have planned for it. Part of it is also in the base of '23. But while I feel positive and Dirk said more than half of the price is secured at this point, we cannot really say what is going to happen and particularly as we look into Europe, clearly we don't control customer disruption. Having said that, I think it is important to realize that our brands are strong and that they drive significant traffic for retailers. So couple that with the fact that prices is common to market and many competitors will have to price, I think we feel quite positive at this point in time, quite frankly. The second one is elasticity, for which I feel better because competitors, as I said, will have to price too, but also because our brands are unique and we have been investing quite a bit. We expect for the year volume to be mildly positive with a good contribution actually when we excluding the customer disruption. So at this point in time, given we don't control the level to which customer disruption will affect the plan, we wanted to be a little bit on the cautious side. And look, reality is if we push this through and we are successful, most likely there will be revenue upside. And so as I said, we feel good. Importantly, I want to say North America, we have very good plans as we go into 2024. And I think the lineup of all these plans plus the continuation of the momentum in the acquired platforms is good. I want to say Latin America in our case continues to be good. AMEA, despite some of the challenges, has a lot of momentum in India and China that will continue. And finally, I think if you look at Europe, excluding customer disruption, the underlying business and the categories are doing well. So I believe the year will play out well for us, depending obviously on the extent of customer disruption. Andrew Lazar: Thanks so much. Luca Zaramella: Thank you, Andrew. Operator: Our next question comes from Ken Goldman, J.P. Morgan. Ken Goldman: Hi, good afternoon. Dirk Van De Put: Hi, Ken. Luca Zaramella: Hi, Ken. Ken Goldman: Hi. I just wanted to clarify a little bit about the EPS guidance. So it's on algo of a $3.30 base, but it's actually above algo, if we think about it on a like-for-like basis versus the $3.19, right? If you exclude gum from both 2023 and 2024. And please correct me if that's not accurate. I'm just curious, what necessarily -- what gives you the confidence it'll be a little bit above algo just on that like-for-like basis and maybe how much of that underlying is sort of the elimination of some stranded costs as you think about it, that might just give a little bit more of a boost to the year than we might typically have. Luca Zaramella: Yes, thank you for the question, Ken. We wanted to make sure it was clear that we are trying to eliminate all the stranded costs and so we really wanted to guide high single digit of the higher base. The confidence comes from the fact that, as I said, we are going to have, excluding the customer disruption, good volume momentum into the business and that provides leverage. We will continue pricing in a very disciplined manner and that will offset the material inflation that we see. Clearly, we will continue with cost, discipline and productivity. And the fact that we will eliminate 70%, 80% of the stranded cost into '24 allows us to guide to a high single digit of a higher base. In all this algo, we are not going to have, I have to say, 20% A&C increase another year, but it will be most likely high single digit or double digits. So we will continue investing across all the regions, across all the brands. And so we feel good about that. Remember finally that through the integration of Ricolino, there will be synergies coming to fruition. We are literally going live with SAP in few days and hopefully that will unlock both revenue and cost synergies for 2024. Ken Goldman: Thank you. And then quick follow up. You mentioned disruption a little bit more in 1Q this year, with the understanding it's quite early, is there any way we can get a little bit more of a quantitative sense just to how to think about some of the impact potentially on the top and bottom line in the quarter? I realize, like I said, it's impossible to kind of completely forecast it at the time, but just any kind of magnitude at this point would be helpful as we think about our models, perhaps. Luca Zaramella: Look, I think as you look at the Q1 revenue pacing, we are going to have a revenue maybe number that is a little bit below the full year algo. I think you're going to be hopefully happy with the numbers you see across three regions out of the four. Europe is going to be more impacted in relative terms versus the impact that we have already in the base in '23 in Q2, and most likely volume mix, excluding the customer disruption is going to be a nice number and positive. I believe total volume mix might be tilted to slightly negative because of the disruption, but I can't go any further than that. We are in the middle of negotiations and conversations with retailers, and we have planned, we have a sense of what might happen, but time will tell exactly how we will land pricing in Europe. Ken Goldman: Understood. Thank you. Luca Zaramella: Thank you, Ken. Operator: Our next question comes from Bryan Spillane, Bank of America. Bryan Spillane: Hey, thanks, operator. Good afternoon, Dirk, Luca. Dirk Van De Put: Hey, Bryan. Bryan Spillane: It looks just... Luca Zaramella: Hi, Bryan. Bryan Spillane: Hey, just a -- I have a couple of questions, actually, and one is just getting back to the guidance, and I just want to tie in. It's $2 billion a share repurchase this year, but you also repurchased quite a bit of shares in the fourth quarter. So if we think about the impact that share repurchases or a lower share count would have on fiscal '24, it should be more than the roughly 2% that a %2 billion repo would suggest. Right? Just simply because the timing of your '23 share repurchases were so late, it should drive the share count down a little bit more than we would normally see. I just want to make sure I'm thinking about that correctly. Luca Zaramella: I think you're thinking about that correctly. Yes. Bryan Spillane: Okay, all right, Because that's going to square to just how much we need to burden operating profit growth, and I think it's not going to be quite as high as I think, as it would have sort of looked. Okay, thanks for that. And then the second question, just. Luca, if you could talk a little bit about Argentina? You know it's been topical over this earnings season for companies operating there. We've seen a range of outcomes, I guess, or actions companies have taken. So if you just kind of walk us through Argentina, does the devaluation at all have any effect on local operations? What's incorporated into the guidance, and also, maybe if you can just touch on, is that what's driving the FX guidance to be so moderate? Because we fielded that question a bunch over the last few minutes. Thanks. Luca Zaramella: So, Argentina for us, is round about a $600 million business. We are very happy the way the business has been managed over the years. We have a clear playbook. What matters in Argentina for us is not necessarily top line growth. It's not share. It is about protecting the cash that we have there. And Argentina has been consistently generating cash for us, and we have been able also to take some cash out of the country. Some of the companies have talked about exposure on net monetary position. Our net monetary position is in control. It will go down over the course of '24 as we have a clear playbook and by the way, we incent Argentina, not like all the other business units, but we incent Argentina on net monetary position and free cash flow generation. There was a little bit of a spike in net monetary exposure in Q4, and that was, as the old government put in place some price control mechanism. But as those have been released, the net monetary position in Q4 is going to be very manageable and I don't expect any major impact due to that. It's also fair to say that we have full control of the operation. We are free to price at this point in time, and the team is fully committed to protecting as much as they can the size and the scale of Argentina. So I [Technical Difficulty] any issues or whatsoever in terms of impairment. Clearly, there has been material devaluation. The parallel market runs at rates that are even higher than the official one reported, that are obviously already much higher than last year. And so we will have to cap most likely growth for Argentina going forward into 2024. Having said that, it becomes a moot point as we guide you to organic net revenue growth and forex impact. And so the two offset each other. And if you take the guidance we gave in terms of organic net revenue growth and the impact on revenue, which is around about half a point of growth, that should do the trick in terms of you forecasting Mondelez in total. Bryan Spillane: Thanks, Luca. Luca Zaramella: Thank you, Bryan. Operator: Our next question comes from David Palmer with Evercore. David Palmer: Thanks. A couple of questions. On Europe and pricing, so often we talk about the retailer, customer, and the dynamic of getting through pricing there. I wonder, as are you taking pricing this year? Are you -- is your pricing strategy to offset the dollar impact that you're going to see from cocoa? Or -- it would seem like that would be a pretty reasonable expectation for the players there, given what's happening with cocoa. But maybe there's some timing issues for 2024 there to think about. And then how -- from what you've seen about -- from the consumer there, is the pricing -- price elasticity, they are much different than what you would see from what you see in your biscuits business in the U.S., for example? Dirk Van De Put: Yes. Yes, your first assumption is correct in the sense that we are trying to offset the dollar impact of the inflation that we're seeing on our input costs, and we're not pricing for percentage margin, but offsetting that dollar impact, which yes, we believe is a reasonable position. I think this year, seeing the situation in Europe and the fact that the retailers are seeing probably some deflation in other areas of their business, it is a little bit of an explanation to explain that not only cocoa, but also sugar or hazelnut are showing significant inflation, which is not the expectation. I think by now they understand that it has to happen in chocolate, so we have high hopes that we will be able to land that in a good way. As it relates to elasticity, I would say the elasticity in Europe has been very reasonable. We might maybe expect a little bit of an uptick as prices keep on going up for a third year in a row, particularly in chocolate. But there is very little or low down-trending within the category, because everybody will have to price. So it's a joint movement of all the brands. So we don't expect that there will be huge differences between different brands and no shifting of consumers. What we've seen in the past year is a strong price increase of 12% to 15% in Europe in chocolate, with a very limited 0% to 0.5% effect on volume. And so that shows that elasticity is very low. We think that is driven because of strong brand loyalty. The fact that chocolate has a very distinct taste profile and consumers tend to stick with their chocolate brand because they like taste and people recognize the taste of their brand. So private label is very small and people do not tend to switch brands very easy. We call it the taste of the nation. Every country has their favorite chocolate. And then on top of that, we will do significant investments, very strong activations. We've been driving seasonals very hard. The next year, we will celebrate 200 years of Cadbury, which will be a major activation in the U.K. So all that combined make us believe, and we have proved in the past, that the elasticity will be limited to our opinion in chocolates in Europe. David Palmer: And a quick follow-up. Distribution growth seems to be a key driver, a growth driver for the company. I don't think I've ever heard you say how much of your organic sales growth will come from distribution expansion. But if you had to guess how many percentage points of that organic sales targets would come from that, what would you say? Dirk Van De Put: Well, roughly, you can assume, for the markets where we can drive significant numerical distribution, I'm talking about China and India, but we are now also starting to drive very hard in places like Brazil. We -- probably in those markets, you can expect that about 50% of our organic growth is driven through distribution expansion. On a global basis, we're probably talking about 2% of our extra growth coming from this. The runway of this is still quite big, to give you a few numbers. So, since 2019, we've added 1.7 million stores in China, India and Brazil. But, for instance, our biscuits are now in about 3 million of the potential 6 million stores in China, or our gum business is only in 2 million of the 6 million potential stores. In India, we've added 180,000 stores in '23. We deployed 100,000 new VISI coolers, but there is over 900 -- sorry, 9 million retail outlets. We cover directly 2 million and we have about 3 million that are indirect coverage. So we're in 5 million of the 9 million stores in India. And I can go on, on different countries. So I gave you the percentages, what it means for us. And the other message here is that the runway, the years that we can keep on doing this are quite significant going forward. David Palmer: Thank you very much. That's great. Dirk Van De Put: Thank you. Luca Zaramella: Thank you, David. Operator: Our next question comes from Robert Moskow with TD Cowen. Robert Moskow: Hi. Thanks. I actually had a follow-up on the distribution question. Are you taking extra steps to monitor distribution levels at distributors or even the retailers in light of volatility of consumption? There's been multinationals who have fallen into inventory de-loading situations in LaTAM. You're expanding distribution so well. I'm just wondering if you're also taking extra steps to monitor it at the same time. Dirk Van De Put: Yes, yes, we are aware that the distribution expansion needs to be very well monitored. So what we're putting in place is a direct connection because we use mainly distributors to make this happen, is a direct connection to their system. So we can read what they sell per store and what the sell-in is, how much the replenishment is. So we monitor that very carefully. We go slow in some of the cities where we're doing the expansion so that we make sure that we can see that setting up the whole distribution system is profitable and that it can be maintained. So we've had no surprises so far. I've done this many times in my career and I've had surprises, but so far things have gone quite smoothly. I think our teams around the world know what to do. They're on top of it. We usually accompany these distribution expansions with very heavy activation in the cities that we are doing this. So we feel pretty good that we have a very controlled way of doing it. And like I said, so far we've had no surprises whatsoever with this. Robert Moskow: And a follow-up on that. In some of these markets, you've introduced more digitized tools to enable small retailers or distributors to order or reorder and also monitor their performance on promotions, I think. Has that improved your ability to keep track of distribution and monitor sales because the tools are better than they were ten years ago to monitor all this? Dirk Van De Put: Yes, we are still in a relatively experimental phase with that. We are, for instance, mainly experimenting with this in Latin America, largely in channels that we don't have immediate big coverage. So as an example, I would say bars in Brazil would be typically something that we don't cover directly or indirectly at the moment. But we have started to have a presence and we are monitoring how that is going. I would say those tools help you -- help the retailer order directly and get our products in there. It helps us to understand how much the store sells. And yes, we can monitor promotions. As a tool to monitor how our distribution is evolving, it's probably complementary to the other system I was talking about, but we prefer at this stage to monitor that through our distributors, because the way it works is they will order through this new app and then we, through our normal distribution system, will deliver, or we will use a third party to do it. So that's usually the source of the monitoring of distribution, not necessarily the new app for us. Robert Moskow: I got it, thank you. Dirk Van De Put: Thanks. Operator: Our next question comes from Steve Powers with Deutsche Bank. Steve Powers: Yes, thanks for the question. Luca, I think based on the EPS guidance combined with the $3.5 billion-plus free cash flow guidance. At -- towards the $3.5 billion kind of ignoring the plus, if I focus on the $3.5 billion, I think it implies a 75% or lower free cash flow conversion. I just wanted to kind of throw that past you and see if that's the message you intended to convey. If so, what might be some of the drags on that free cash flow conversion, or if there's a -- it is a higher level of free cash flow conversion we should anchor to as a target? Maybe you could talk about that. Luca Zaramella: Thank you for the question, Steve. As we think about the free cash flow and net income conversion into free cash flow, important to realize that the dividend payout of the joint ventures that we have is not 100%. And so that is a little bit of a factor as you consider the conversion. The other one, I would tell you is we're going to have a slight uptick in CapEx, particularly as we need to invest in places like India. I mean, you look at the volume over the last five years in India, it has been stellar, and we are very happy, but we are at a point where we need to put down a little bit more capacity. Same goes for Latin America and Oreo, and obviously, we integrate platforms like Ricolino, et cetera. The other one that will come into play in terms of capital expenses for '24 is SAP HANA. And so I think that's another element you have to consider. I think, look, the number I would like you to focus on is what we deliver in '23, which, net of the taxes we paid for coffee, is around about $4 billion. And so there might be some one-time payment coming our way. And so we need to make sure that we have enough headroom. But I want to reassure you that in terms of free cash flow, we are very happy. We have best in class, I believe, cash conversion cycle. We continue to be very disciplined in terms of lowering overdue across the board, and inventories are coming down. And so we feel good about the cash flow generation of the company. Steve Powers: Very good. Very good. Thank you for that. And it sounds like you're going to talk a little bit more about this at CAGNY. But to the extent you can talk about it now, just the prospects for volume recovery and organic growth acceleration in North America. I guess, how quickly do you think that is likely to manifest in '24? Is that going to be a slower build, or do you think we should expect some results sooner as you leverage some of the commercial investments, it sounds like you made in the fourth quarter. Dirk Van De Put: Yes, I think you said it right at the end there. In the fourth quarter, if you think about it, on one hand, we had a good year, and we were coming with a price increase, which, by the way, has been agreed in the U.S. in the beginning of the year, so no need to push in volumes from our side. Then we had the Clif system integration changeover, and so we needed to bring our inventory down and manage it very tightly. And then we talked about the Give & Go holiday kits that we stopped selling because the margins were not interesting for us. So if I exclude those and look at the rest of the business, the volume mix performance in Q4 was, in fact, quite good. So we're expecting a good volume mix performance right away in Q1 of next year. It is really a one-off situation in Q4. So we don't really necessarily feel like there is a slowdown in North America. It's not going to be massive volume growth, but it's going to be positive volume growth in the beginning of the year. So that's where we are. It's not going to be a slow build-up. We will continue where we are without the exceptionals that we had in Q4. Steve Powers: Okay. Very good. Thanks, Dirk. I'll pass it on. Dirk Van De Put: Thanks. Luca Zaramella: Thank you. Operator: Our last question comes from Alexia Howard, Bernstein. Alexia Howard: Good evening, everyone. Dirk Van De Put: Hi, Alexia. Luca Zaramella: Hi. Alexia Howard: Hi. So, two questions. First of all, on innovation. I'm just wondering if you can give us a quick status update on whether the pace of innovation is likely to pick up going forward. It feels like with the pandemic and the supply chain disruption, it's been very hard to do innovation over the last several years. Do you anticipate a pickup going forward? And then I have a follow-up. Dirk Van De Put: Yes, we are going through a bit of a change in the way we look at innovation. If you think about our business around the world, we have quite a rhythm of small innovation, new flavors, new sizes of packs, as we do PPA and RCM. But that leads to hundreds of small projects which do drive our business. But we are gradually eliminating probably close to half of those small projects because, in fact, over time, they don't have that much of an impact on the business. Since overall, our business is doing well, we can afford to do so. And we are shifting our focus to bigger innovation projects. So the ones that I would mention is, first of all, making healthier versions of our mainstream products. So I'm referring to, for instance, what you've seen so far, an Oreo gluten-free or Oreo zero sugar in China, gluten-free in the U.S., doing quite well. And you can expect that we will continue expand those efforts across other brands. Then we are entering quite significantly in cakes and pastries. And there you can expect us to push quite hard. And so you could see the OREO Cakesters or the Oreo Airy Cake in China. And these are all significant innovations that have the potential or tens of millions of dollars of net revenue per country. We're pushing hard on premium chocolate, so we launched, for instance, the [Toblerone pralines] (ph), or we have done some big innovations on our core chocolate tablet. So these are bigger innovations that require more work, higher potential, but we are reshifting our efforts towards those. So I don't know if I would call that what you were asking, Alexia. Do we see picked up the pace of innovation? I think the impact of innovation on our growth will increase in the coming years, but it's not driven by more innovation, it's driven by better innovation, I would say. Alexia Howard: Very helpful. And then could I just follow up finally? Do you have any observations about the state of the American consumer? I think we've heard from other companies that there's been down trading. There's vulnerability. There's channel shifting. I'm just wondering if any of -- whether some of the challenges that you're seeing in North America are being driven by this consumer dynamic. Dirk Van De Put: Yes, everything you're saying is true. Let me explain it a little bit. I would say the consumer, as it relates from a behavior standpoint, as in the fourth quarter show the biggest shifts, and I can explain a little bit the shifts that we've seen. But from a mindset perspective, from a confidence perspective in North America, probably the best in the last 2.5 years. So what they're doing is still reflecting sort of the tension they're under, but they are expecting the economy to improve and that better times are ahead for them. So what are they doing? We see a little bit more of an elasticity effect. And the way they react to that is they're waiting more. We see particularly light buyers waiting for promotion. So not buying with the same frequency, but buying more when it's on promotion. We see them downsizing, going to smaller formats and buying more of those. We see shift in channels. They go to club channels, e-commerce channels, that's the one we see winning. And then we have a number of sort of mechanical effects that we're seeing, particularly the snap reduction in the U.S. And so we see less disposable income for a certain group of consumers. But overall, I would say we expect that that gradually will improve because of that mindset change that I was saying. So the overall volume expectations as the year goes by in the US, we're expecting to accelerate and to get better. That's a little bit our view on the US consumer at the moment. Alexia Howard: Great. Thank you very much. I'll hand it back to you. Dirk Van De Put: All right, thank you. Well, thank you. I think that was the last question. As we said, we feel very good about '23. It was a great year for us. We are entering '24 with good momentum. I think we're prepared for everything that we are seeing ahead of it. And as I said, there is some issues that we have to look at. But despite all that and including those effects into our forecast for the year, we think that we're going to have a strong year. We'll see how the client disruption goes in Europe. So we have to wait a little bit to see how the first quarter goes by. But overall, we think we will have an on to the higher side of our algorithm year at this stage that we can forecast. Again, thank you, and happy to answer any other questions that you would have through our IR department. Luca Zaramella: Thank you, everyone. Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: Good day and welcome to the Mondelez International Third Quarter 2023 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on slide four. Our strong third quarter results and our prospects for the future confirm that we are positioned for high-quality, sustainable growth. We remain confident in the durability of our categories, the strength of our iconic brands and the consistency of our execution. We delivered strong profitable volume growth with a healthy share performance. All our geographic regions grew double-digits in both revenue and profitability. To manage cost inflation and enable robust reinvestments, we continue to leverage our RGM capabilities. RGM is an area where we believe there is significant room to do more over the next several years. We continue to reshape our portfolio to focus on our core categories of chocolate, biscuits and baked snacks with the successful divestiture of our developed market gum business, generating additional reinvestment opportunities. Our strong year-to-date performance, the continued strength of our categories and our ongoing focus on strong commercial plans and execution provide the confidence to again raise both our organic net revenue outlook to 14% to 15% and adjusted EPS growth outlook to approximately 16%. Turning to slide five. You can see that in the third quarter, we delivered both top and bottom line strength, enabling us to continue substantial reinvestment in our brands. We delivered organic net revenue growth of 15.7% for the quarter. Year-to-date revenue is up 17%, nearly $4 billion ahead of last year. We also delivered adjusted gross profit dollar growth of 22.3% for the quarter. Again, we are ahead of last year's pace with 20% growth year-to-date, up $1.7 billion. The strong performance enables us to reinvest in our brands and capabilities to drive attractive growth in future periods. Our A&C investment is up 28.5% for the quarter and 21.5% for the year, which demonstrates our commitment to continue to build the strength of our brands. These results translated into strong adjusted OI growth, up 24.5% for the quarter and close to $900 million for the year. As you can see on slide six, our third quarter growth was driven by strong volume/mix, up nearly four points. We are especially pleased that our European pricing actions, which were implemented earlier this year are successfully behind us. We view this quarter strong volume/mix performance as evidence that we are taking the right actions to continue delivering sustainable growth and share gains. Consumers continue to choose our trusted and beloved brands, despite significant pricing due to ongoing inflation. More broadly, we view our strong performance in the third quarter as evidence that our long-term strategy continues to pay off. Since the launch of our growth plan in 2018, we have consistently delivered gross profit dollar growth, which allowed for a virtuous cycle of yearly increasing high-return investments. We remain confident that this strategy will continue to consistently deliver attractive growth. Turning to slide seven. We continue to see evidence that consumer demand for our snacking categories remains resilient and that consumers continue to prefer our widely loved brands over private label alternatives. In North America, the biscuit category is experiencing some softness in scanner data, most notably among lower-income families. However, I would note that these families are increasing their purchases in the non-measured club store channel. Our total US biscuits volume was up more than 3% in Q3, showcasing the continued strength of our brands and investments in both measured and non-measured channels. We are seeing particularly strong growth in unmeasured channels like club stores, e-commerce and food service. Meanwhile, in Europe, consumer confidence is improving with a significant step-up versus 2022 and remains broadly stable throughout Q3. We're seeing positive volume growth in biscuits and chocolates, which has accelerated over the last three months and is outpacing broader food driven by solid elasticities and lapping of 2022 disruptions. In Q3, our European chocolate and biscuit business delivered solid volume growth of 2.6%, which again shows the resilience of our categories and the strength of our brands. In emerging markets, consumer confidence remains strong. We continue to see resilient underlying demand and lower price sensitivity than in developed markets. During Q3, we delivered strong growth in terms of both volume and value at 4% and 24%, respectively. And we are confident that we have strong opportunities to continue to drive expanded distribution and creating new snacking occasions. On slide eight, you can see a few examples of our growth acceleration strategy in action. We continue to invest in our brands and connect closely with consumers to stay in line with changing consumer tastes and snacking occasions. We are also driving growth in a broader range of channels while accelerating our focus on premium segments and harnessing the power of recent acquisitions to advance geographic expansion. For example, Oreo continues to grow its strong position as the world's favourite cookie, and its share performance here in North America has grown nicely. Our recent partnership with Super Mario Brothers executed both online and in-store is just one example of the many creative campaigns that leverage personalization and local relevance to reinforce the brand's playful persona. Along with continuous reinvestment in our brands, we are also investing in growth channels. For example, our belVita business is up nearly a full share point in the US club channel, driven by growing shopper interest in convenience, tasty and better-for-you options for morning snacking on-the-go. Sold in individual portion packs and delivering more than 14 grams of whole grains per serving. belVita offers a great solution for consumers who are too busy to eat a traditional breakfast. We're continuing to grow this business with a new customized and digitally targeted social and digital media campaign celebrating the ritual of belVita and coffee in the morning. Another important element of our growth strategy is investing in the fast-growing premium chocolate space. We have re-launched Toblerone with a robust campaign inspired by luxury fashion brand, positioning it as a jewel. We're supporting this launch with a strengthened brand persona, Never Square and substantial investments in A&C. Bringing this dual concept to life, our new pralines called Toblerone Truffles recently debuted in the United Kingdom, Switzerland and Australia as well as airport duty-free stores in key markets. They will expand to additional markets next year. Finally, we continue driving geographic expansion of our recently acquired brands. For example, Ricolino headquartered in Mexico is now the number one hispanic confectionery brand in the United States, growing well and in line with our expectations. Turning to slide nine. Let's zoom in closer on the snack bar business to highlight the strong progress. We're excited about the opportunities in this space, and we believe there is significant runway ahead led by the strong and growing brands of Clif Bar, Grenade and Perfect Snacks. We expect our snack bar business to exceed $1.2 billion net revenue this year. Let's start with Clif, where we are excited about our current results and the long-term opportunity to broaden distribution, expand into new formats and increase our geographical reach. Year-to-date, Clif is up double-digit in top line growth. And within that, the Clif Kid Zbar has been a particular standout. Zbar is a delicious organic non-GMO soft-baked, whole grain energy snack for kids with zero transfat or artificial flavors. Zbar is growing at twice the rate of the total bars category with consumption dollar growth up 19% versus last year. Grenade also continues to exceed our expectations. Grenade is performing very well in the sports nutrition space with signature bars that are high in protein and low in sugar. Since our acquisition a bit more than two years ago, we have doubled the business, thanks to strong core growth in the UK and distribution expansion in Ireland, Nordics and the Benelux. Perfect Snacks also is experiencing continued double-digit value growth, strengthening its position as the number one refrigerated protein bar in the United States. We have a great portfolio and strong conviction in the growth potential of our snack bar business and we will continue investing to drive leadership in the segment. Turning to slide 10. I'd like to take a moment to share progress on an important element of our sustainability strategy. Just two years after joining the science-based target initiative, net zero carbon emission, we have submitted a time-bound plan laying out how we aim to achieve our target of net zero greenhouse gas emissions across our full value chain by 2050. To reach this critical milestone, we have completed a detailed process of re-baselining providing documentation of our carbon accounting and aligning to new standards. Putting this plan into action in the near term, we are making solid progress towards our 2025 goal of reducing end-to-end carbon emissions by 10%. We are working hard to transform our business operations and supply chains. Over the past two years, we have scaled regenerative agriculture practices across our signature sourcing programs for coco and wheat, achieved renewable energy at manufacturing sites across every region and reduced CO2 emissions through plant and logistical efficiencies. We continue to believe that helping to drive positive change at scale, including through reducing our climate impact, is an integral part of value creation with positive returns for our stakeholders. We encourage you to read our Snacking Made Right report for additional details and context on our broader sustainability goals and progress. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Q3 was strong all across our business, with high-quality top and bottom line growth, healthy volume mix, record profit dollar increases and substantial brand reinvestment. We delivered double-digit organic net revenue of 15.7% with growth across each region, underpinned by volume mix of almost 4% as well as by some pricing of around 12%. Our business is proving to be resilient, both in emerging markets, which grew 19%, with strong performance virtually everywhere, and in developed markets, which grew more than 13% with balanced trends from both North America and in Europe. Turning to portfolio performance on slide 13. Our chocolate, biscuits, gum and candy businesses, all posted double-digit increases in Q3. Biscuit increased plus 12.4%. Oreo, LU, Biscuit, TUC, 7Days and Clif delivered double-digit growth and robust volumes. Chocolate grew plus 14.9%, with double-digit growth in both developed and emerging markets. Cadbury Dairy Milk, Milka, Toblerone and Lacta all posted double-digit increases. Gum and candy grew more than 30%, with particular strength coming from emerging markets. Now let's review market and share performance on slide 14. We held or gained share in 65% of our revenue base, driven by brand building investments as well as solid North America supply chain performance and strong sales execution, particularly in emerging markets. Moving to regional performance on slide 15. As far as Q3 goals, we delivered double-digit revenue growth in every single region, with a significant contribution from healthy volume/mix growth, including Europe, which has rebounded after lending pricing this summer and is now in a much stronger position. This robust growth and volume performance translated into operating leverage across the business. Notwithstanding material marketing investment, profit growth delivery has been very strong in all regions. Europe grew plus 15.4%, with nearly 30% OI growth that was driven by pricing and volume/mix. Top line strength was broad-based with the UK, Germany and France, among those posted strong results. Cadbury Dairy Milk, Milka, Oreo, 7Days and Grenade were among brands with double-digit growth. European elasticities remained stable in both chocolate and biscuits. North America grew plus 11.4%, with OI dollar growth of more than 24%, driven by higher pricing and volume/mix growth of 4.6%. Oreo, Clif, Tate's and Sour Patch, all grew double-digits, while Ritz and belVita posted high single-digit increases in the quarter. Profitability in the base business remained strong, while acquired businesses, such as Clif and Tate's, posted strong double-digit profit dollar growth. This is an important proof point showing how accretive our M&A agenda can be. Clif profitability continues to improve. And as I said last quarter, we still have some synergies opportunities as we have now integrated the platform into SAP. AMEA grew plus 11.9%, with volume/mix growth of more than 3%. OI dollars increased plus 18.1%. India and Australia grew double-digits, while China increased high single-digits in the quarter. Latin America grew more than 35% with OI dollar growth of nearly plus 37%. LA top line grew more than 16%, ex Argentina. Mexico to Western Andean countries and Brazil, once again delivered great results. Ricolino grew high single-digits and remains on track in terms of integration work. Moving to page 16. We delivered nearly $650 million in gross profit dollar growth or more than 22%, driven by top line growth, volume leverage and productivity. Year-to-date, GP dollar growth is now more than $1.7 billion. This provides ample funding to reinvest for future growth and flow to the net earnings line. OI dollar growth was more than $300 million for the quarter or up more than 24% versus last year, driven by solid cost discipline, effective pricing and volume leverage. Year-to-date, OI dollars have grown $880 million or almost 24%. EPS on slide 17. Year-to-date, EPS grew more than 18% in constant currency or more than 13% reported dollars, driven primarily by strong operating gains. Turning to slide 18. Free cash flow is $2.4 billion year-to-date, which represents an increase of $0.5 billion year-over-year. Year-to-date, capital return is $2.2 billion. Moving to our outlook on page 20. Given the strength of our Q3 and year-to-date performance, strong volume/mix momentum across our brands and overall demand resilience, we are now raising our full year outlook for both revenue and EPS. We now expect top line growth of 14% to 15% versus our original outlook of 5% to 7% and most recent outlook of 12% plus. EPS growth is also expected to be approximately 16% versus our prior outlook of 12% plus and original outlook of high single-digit. In terms of the assumptions, no change to our double-digit inflation. We also expect interest expenses of approximately $325 million for the year. Leverage is expected to be in the mid to upper 2s range by year-end. With respect to currency, we now expect $0.15 of EPS headwinds related to ForEx impact for the year versus $0.11 in our prior outlook, of which $0.12 have been materialized already in the year-to-date. On the gum divestiture that became effective as of the beginning of October, this current outlook reflects the loss of the business for the entirety of Q4. We are not providing yet restated financials as teams are working through the definition of the impact and importantly, the removal of stranded costs. While we will provide a full update in the next earnings cycle, we do not expect any material EPS dilution as we will remove majority of stranded costs in '24. The outlook revision reflects our increased confidence in the year, ongoing resilience of consumer consumption in our categories, relatively benign elasticities, continued brand reinvestments and completion of pricing in Europe and the health of our emerging markets. There is a lot of volatility around the world, and it is important to note that this current outlook does not reflect a material deterioration of the geopolitical environment and ForEx rounding some areas of the business. Finally, a word on share repurchases. Now that we have received the proceeds of our sales outcome, our balance sheet is the strongest it has ever been, with long tenure debt at very compelling interest rates relative to the current cost environment. We decided to post buybacks in Q3 and were in our traditional blackout periods late in the quarter and the month leading up to earnings. However, we expect to consider buybacks for the remainder of the year and into next, given the current stock price versus our view of intrinsic value and long-term potential of our company. We realize we have underspent versus our original outlook of $2 billion for the year and that provides the opportunity to take advantage of current low stock price levels. Additionally, we could pull forward from our '24 share repurchases if an appropriate opportunity presented itself. We will be flexible and opportunistic in our timing, depending on the various useful factors. We believe this is the right thing to do, given the current context. Importantly, this does not represent a change in our ability to pursue our well-defined capital allocation strategies as our priorities remain the same in terms of reinvesting in the business and in selected strategically and financially attractive bolt-on M&As as well as strong dividend growth. With that, let's open the line for questions. Operator: [Operator Instructions] Our first question comes from Andrew Lazar of Barclays. Andrew Lazar: Thanks so much. Good afternoon. Dirk, clearly, pricing, as you went through was very strong in the quarter. But despite this volume came in better than our forecast in every region as well. And we know price sort of comes and goes. So I'd really like your thoughts more on how you feel about the sustainability of volume growth going forward, particularly in the context of sort of the state of the consumer as you see it? Dirk Van de Put: Yes. Thank you, Andrew, and hello. First of all, yes, maybe restating quickly what is driving the volume growth in the different regions to give a clarification around that. And yes, we are constructive as it relates to volume for the remainder of this year and next year and then talk a little bit about the consumer. So we have a strong volume/mix across all our regions. And overall, we're up almost 4%. If I start with North America, there we are up 4.6% in year-to-date, 3% in volume/mix. The categories are experiencing a little bit of softness there. But our biscuit business is performing significantly better and delivering some significant volume share gains, about 1.2 points in the last 3 months. We also have that from unmeasured channels, which are performing well, the club channels, online because consumers are shifting there because that gives them better pricing opportunities. Switching to Europe. There, we see a 3.3% volume/mix increase. Year-to-date, that is flat seen the disruption that we had in the beginning of the year. We see biscuits and chocolate volumes being quite resilient. And in Q3, we saw the volume/mix growth accelerating, outpacing the rest of food. The reason there is that the elasticities are quite solid. And we also take into account that we are lapping 2022 disruptions in Europe. And then emerging markets is up 3.4% in volume/mix. Year-to-date, also 3.4%, but we have certain markets like India and Mexico, where we have double-digit volume growth. It's quite remarkable because these markets have quite significant pricing, all the emerging markets. And the reason being is that the consumer confidence is quite good. The demand is resilient. We see the consumer in places like India, China, Mexico are in a four-year high, and that is clearly having an effect on demand. We also are gaining in these markets by expanding our distribution. That's always an extra benefit that we have. And we've been doing smart downsizing. One of the things we do in these markets is our LUPs or lower unit price. We try to keep that price constant that we have the entry into the category not being affected. Going forward, we expect the recovery in Europe to continue because pricing has landed and we are back on the shelf, and we are running full force in our commercial activities. Our inventory levels around the world are very healthy, including in North America, so we don't see any effect there. The elasticities remain relatively benign. But here and there, some modest upticks, but all the dynamics are included in our outlook. We think that the expansion of volume in emerging markets is going to continue. And in fact, it's a good problem to have. But in India and Mexico, the key challenge is to how to keep up with the heavy volume increase that we're seeing. And then we believe that everything we're doing for our long-term strategy is the things we are focused on and different activities that we have planned confirmation that is working for us, particularly also, for instance, the reinvestments we're doing. Maybe quickly on the consumer because that is probably the biggest factors to keep in mind as you think about volumes going forward. We find that consumer demand remains very resilient in our key markets. Consumers continue to prioritize spending on grocery and branded products. And we see the consumer confidence outlook for '24 stable for developed markets in North America and Europe, but very positive for emerging markets. So if I quickly think this through, modest improvement probably in consumer confidence in Europe and Australia. Why? Because the inflation is clearly easing there. They see the real disposable income go up. There is some shifting to smaller packs in places like France and the UK and to discounters because they're looking still for value for money. But overall, we feel pretty good about the consumer in Europe and Australia. In the US and Canada, we think the consumer confidence will be holding, but we have to monitor the trends quite closely because we see shifts to non-measured channels, as I said, such as e-commerce and club, we see buying of more multipacks. We see lower income families pull back on the amount of the frequency of their trips to the store. And we also have the delayed unwinding of the pantry loading from -- due to the phasing out of the SNAP benefits. And then emerging markets, we continue to see steady improvements with those four-year highs that I was talking about. Consumer is very optimistic about the future. Even in China, consumer confidence is improving, but slower, but we still have like 60% of our Chinese families expect their income to improve. Private label, maybe private label is losing share in the US and Canada. There is a bit of a watch out in Europe because brands have been taking pricing. But overall, I would say, we feel very good about the outlook for the rest of the year and for next year. Andrew Lazar: Great. Thank you for all the color. Really helpful. And a very quick follow-up just for Luca, I think. Just regarding what the implications are for 4Q based on your updated full year guidance? And maybe more importantly, any high-level thoughts to consider for '24 at this point? Thanks again. Luca Zaramella: Thank you, Andrew. So our revised top line estimate of 14% to 15% implies a revenue growth for Q4, which is around about 7% to 10% which, considering we are lapping a 15.5% top line growth last year, makes really the two-year stack comparable to year-to-date numbers. And so I think that should give you a sense of where we're going to land the Q4. Keep in mind that we also want to keep a tight control on retailer inventory as we enter next year because, obviously, there is potentially some pricing, and we won't really to enter with a strong momentum into Q1. On EPS, the expected growth of around about 16% for the year implies a moderate increase in constant currency in Q4. Reason for that is, again, the heightened investment in A&C. And in addition, as I said in the prepared remarks, there is some ForEx volatility, particularly around certain markets like Argentina, Nigeria, Pakistan and Egypt. And it is quite difficult to predict what exchange rates will be in the course of the quarter. So quite, frankly, I have been a little bit cautious with our assumption. And as I don't want to surprise anyone. Also remember, gum is completely removed from this number. So this is not really a like-for-like. And I think you're going to like you realize the EPS and continued profit expansion in Q4. I also want to reassure you that the emerging markets are doing very, very, very well. And we don't necessarily disclose numbers, but EBIT is up more than 20% in emerging markets on a year-to-date basis in real dollar terms. So these are, again, a market that can be volatile. But in the end, they deliver a good profit for us. On '24, we are clearly in the process of finalizing our plan, but I can give you a little bit of the soundbites around '24. First of all, I think it is undeniable that the business is having good momentum, and that momentum from where we sit today will continue as we enter into -- as we go into '24, both in terms of top and bottom line. Pricing contribution will be clearly less important than this year, but we still see pricing contributing more than an average year, particularly as we need to price for cocoa, sugar and other commodities. A good portion as we went through the plans with the majority of the business units, a good portion of growth in both in developed and emerging markets will be coming through distribution expansion. And that will help preserve volume momentum into '24. And I think you know that our categories in emerging markets are underpenetrated, and we have made investment to really continue to grow. Platforms that we have acquired in recent months like Clif and Ricolino are progressing very well. And they will deliver more synergies as we go into '24. And while I don't have a number on the gum divestiture to disclose to you, the idea that we have is really to get rid of all the stranded costs associated with the divestiture of gum in developed markets. So I can't be more precise, but so far, so good in terms of '24 expected financials I would say. Operator: Our next question comes from Ken Goldman, JPMorgan. Kenneth Goldman: Hey, thank you. I just wanted to get a clearer sense of the messaging around share repo. You paused in 3Q. You reduced your outlook for the year. But at the same time, you're saying, hey, if there's an opportunity, maybe you can pull forward some of your planned repo for '24, if I heard that right. So I just wanted to maybe sure I heard that right that I can reconcile these comments. And maybe it's just as simple as you pivoted a bit toward debt paydown earlier this year, you weren't 100% sure when gum would close. Now these factors are somewhat behind you, so you can forge ahead on buybacks. I just want to ensure it's a little bit of a whipsaw effect there in terms of how we're seeing or I'm seeing the commentary? I just wanted to make sure I can clarify that. Luca Zaramella: Thank you, Ken. No, you're absolutely correct and right in your analysis. We continue to see share repurchases as a key driver of total shareholder return. I do analysis regularly on the buybacks that we do historically, and we present them to our Board as well. I mean it's fair to say that all the repurchases we have done since the creation of Mondelez have yielded good -- very good returns, while in excess of our cost of capital. Our ability to buy back stock at this point in time is meaningful considering what we have bought so far this year. And look, we will remain flexible and disciplined. The reality is, I also believe that our stock is a bit undervalued at this point in time. And so we will be tactical in the way we approach this. But I don't have really much to add versus what you correctly said in your question. I also want to make sure that it is clear that this doesn't imply anything in terms of changes from our capital allocation framework. I mentioned Clif and Ricolino in the prepared remarks. I'm very pleased with the numbers that I see coming to. I think those were great opportunity for us to deploy capital. Dirk mentioned that we have some capacity constraints. There is nothing better in my mind that investing in brands that are proven like Oreo, Milka, Cadbury Dairy Milk. Proven proposition, distribution gains et cetera are really making the return on those investments quite good. And finally, dividends, we are committed, and we will continue to raise dividends in the foreseeable future. So strong cash flow, I think, you might have seen $0.5 billion up versus last year. Everything is going fine in terms of capital allocation, I would say. Kenneth Goldman: And then quickly, just at the risk of, I guess, eliciting some grown maybe by dredging up last month's topic, just curious where you are in your research about GLP-1s? Even on a broad level, if you don't have specifics, is there a reason to think that your snacking categories won't be affected, just assuming there's any impact at all? Just wanted to kind of pick around for your initial thoughts there. Dirk Van de Put: Yes. Thanks, Ken. Well, first of all, I think the whole topic has been overblown. And I think it's important to put it in perspective and look at the data. At this stage, we see absolutely no short-term impact on our results. We don't see it in our business. We are, of course, monitoring and we have a special work stream to stay close to the topic. We do estimates, we do projections, we talk to pharmaceutical companies, we talk to consumers and so on. So we're staying close to the subject. But long-term, even using the most optimistic forecast, we believe the impact will be very modest to our volumes in our categories. We're talking about 0.5% to 1% volume effect 10 years down the road. That's based on what we know today and projections that are not ours, but that are being used by several different sources, and that assumes quite significant adoption rates of the drug. Even if the impact would be bigger than that, I think over a 10-year period, it will be manageable, and we will have adequate lead time to adjust and prepare for any changes that we see. Having said all that, if you think about it, obesity rates around the world are very different. And we have one of the lowest exposures since 75% of our sales come from outside of the US, 40% of our sales are in emerging markets. And so the average BMIs in all those countries are much lower than in the US So our exposure is significantly lower than some of the other food companies. On top of that, I believe that our portfolio is really well positioned. We constantly innovate and adapt our products. We do that all the time to adapt to changing consumers' tastes and behaviour's. Portion control is a big part of our strategy. So 20% of our sales are already in snacks that are less than 200 calories. We have a large part of our portfolio that is chocolate, which is not hunger satisfaction, but it's a small indulgence. And we have healthier alternatives like for the breakfast occasion, belVita, which is a replacement snack or some of our snack bars, which are meal replacement, and that fit perfectly into the diet of GLP-1 patients. So if I go through all that and if I'm honest, at this stage, this is really into our top areas that we are focused on and that we are trying to manage. We monitor it, but it's really not a big concern for us at this stage. Operator: Our next question comes from Bryan Spillane, Bank of America. Bryan Spillane: Hey, thanks, operator. Good evening guy. So I guess I had one follow-up to Ken's question and another question. In terms of the follow-up to Ken, in terms of capital allocation, Luca, you had -- you were opportunistic, right, in terms of paying down commercial paper. You paid off the term loan this year, kind of attacking some of those either variable rate or avoiding sort of swapping out of low interest to high interest . So as you're looking over the next year or two, like are there even many opportunities to where you would opportunistically pay down debt? Or again, not changing your capital allocation sort of philosophy, but just it doesn't seem -- it doesn't appear that paying down debt would necessarily be at the top of the list just given what you've done over the past year? And then I have a follow-up. Luca Zaramella: No, I think, that's absolutely correct. We are very happy with the loan tenure debt that we have. The average cost of debt is very compelling. It was a series of decisions that we took over the last few months, including the sell-down of KDP to really go and strengthen the balance sheet and making sure that we were not facing material pressure in the interest cost line. I think in hindsight that has proven to be quite a good decision. The reality is, I still see our stock as undervalued. And so when you look at the cash flow this year, and you adjust for the coffee taxes that are really one-time in nature, I mean, you start talking about $3.7 billion, $3.8 billion of cash flow generation. And I think if you take that and continuous growth of dividend, we have what it takes really to manage the business very well. And so I don't feel really compelled at this point in time to go and pay down more debt. We have some debt coming due next year. It is absolutely manageable. And when that comes due, hopefully, interest costs will be lower than today, but again, not really a major concern for me at this point. Bryan Spillane: Okay. Great. And then just two follow-ups on some of the commentary you've made about '24, and I might have missed this, but I think you had said previously mid-single-digit cost of goods inflation for '24. So just is that still something we should work with? And then as we're thinking about organic sales growth, I think, you've been in this quarter, if you take Argentina and gum, collectively, they contributed about 500 basis points to the organic sales comp. So just -- I don't know, as we're thinking about not extrapolating too much, right? Just how we should think about some of the other puts and takes on organic sales growth and understanding you gave some comments about volume and price, but just want to get your perspective on that, those two items? Luca Zaramella: Yes. Maybe look, transparently and it is noted both on the pages of the prepared remarks and in my script. Argentina, I think, in total for the company accounted for a little bit more than two points, not much more than that. If you strip out gum completely from the year-to-date numbers and for the -- both volume and revenue, I would say there is no material change to either volume or net revenue. So in terms of growth rates, I would say Argentina is clear, but it has always been in that range, I would say, a little bit higher in Q3. In terms of gum, no material impact to the top line dynamics on both volume and revenue. I think as you go into next year, or as we go into next year, the inflation that you're going to see is higher than mid-single-digit. I think it is going to be towards the higher end of 5% to 10% at this point in time. Coco lately has had a material spike. The reason being the pulp count coming out of [indiscernible] and Africa has been materially different than what people expected, I would say. So there is pressure on coco. The good news is we are covered for a good portion of the first half next year, and we are protected as well for the remainder of the year. So I'm not going to give you a lot of details here, but you would expect inflation in general to go up. And lately, I think you know, energy costs have been going up a little bit more crude oil, particularly. So I would say we are not done, I believe, in terms of inflation at this point in time. There's still could be variability exchange rates is the other one that comes into play. But it might be a little bit higher than the mid-single digits we told you, but we are going to be flexible for sure. As we go through the plans, we have a sensitivity analysis, and we make sure that we are never going to be called by surprise here. Our coverage is favorable, but we will be pricing at replacement cost into '24. Operator: Our next question comes from David Palmer, Evercore ISI. David Palmer: Thanks. Just, first, a follow-up on Andrew's 2024 question. It seems like we should be thinking at least in an year for profit, but maybe a little bit higher than normal on revenue, largely because of the pricing side. Correct me if I'm wrong on that thinking. But digging deeper, I just wanted to ask you, you mentioned some things that were giving you confidence about next year, such as the distribution gains in emerging markets. What are some of the hurdles or watchouts that you're really thinking about specifically for your business? This earlier this year, it was about getting through pricing in Europe. What are some things you're really watching out for as you go into this next year? Luca Zaramella: Thank you, David. I don't want to spoil the '24 guidance too much. I know you really want to get a sense of where '24 is going to be look at this point. We have made material investments in the business this year. We believe our categories are very sound across the world. I think we -- you saw the share numbers we have been posting. We are happy with overall business momentum. I don't want to say exactly how next year is going to play out at this point. I think your assertion on top line and bottom line is more or less correct. I said we are working through the implications of gum and the EPS impact of it and stranded costs. I'll give you a little bit more color in the next quarter. As far as distribution goes, look, particularly in emerging markets, there is a reason as to why we are telling you, China for us is okay or India is okay or Mexico is okay. And the reason is that our categories in general are underpenetrated. And the second reason I would say is there is a meaningful amount of growth, both in developed and emerging markets that is coming out of distribution gains. I think in the US, for a series of reasons you know, supply chain-related, we lost some PDPs along the way. We are reinstating those PDPs. We are going into alternate channels where our share is a little bit lower. So at this point in time, I feel good that you're going to see a good policy top line into '24. Hopefully, that helps, but I can't spoil it much more than that. David Palmer: No, that's helpful. Just a quick question on the US. There was another player out there that we're seeing some reduced merchandising activity and shelf presence because of clean store initiative and a major retailer. You guys are pretty good at getting merchandising. Is that going to affect your business in the near term in the US? Dirk Van de Put: No, no. We are in good shape as it relates to shelf availability and stock levels. The shelf availability is higher than it was last year. The stock levels are where they should be. They're not high. Our sales are higher, our units are higher. We have more displays, we have more items carried with that retailer. So we see no effect. I want to point out that we do have a DSD system that covers the stores. And that is always very helpful in driving in-store execution and finding the necessary extra space and presence. And so we're also making sure that we have the right level of staffing at store level. But no, I cannot confirm that we see the same effect. We feel very good about how things are playing out at the moment. Operator: Our next question comes from Michael Lavery, Piper Sandler. Michael Lavery: Thank you and good afternoon. Just wanted to check on Ricolino. You've said that the integration is progressing well. That's a case where you have a revenue synergy opportunity just given their distribution footprint. How quickly is that ramping up? Is it -- can you give an update on just how that's progressing and if that's coming along with your expectations? I think the expectation was it would give a lift to some of your legacy brands as well. How is that coming along? Dirk Van de Put: Yes. So talking about the top line synergies, first, what -- how we're going to get those is that we are integrating the two distribution systems. And that will, for our side of the equation, triple the amount of distribution points that we will have. So pretty important top line synergies there. But the first step is to get that integration going. We're in the middle of testing. We had to carve out the distribution system out of Bimbo and for Ricolino and set up a new system, which is bigger than what we currently have in the company. So we have to open about 100 distribution centers. In Mexico, we're three quarters along the way with that, and that is going very well on time and as planned. And we have started the testing of the combined routes in several of those distribution centers. So the effect will start to take place from now going forward for the next 18 months, I would say, that we get the benefits to sort of work out for us. So far, everything is working out exactly as planned. And so we have high hopes that you will see the significant benefit from that next year. Michael Lavery: Okay, great. Thanks so much. Dirk Van de Put: Thank you. Luca Zaramella: Thank you. Operator: Our next question comes from Matt Smith, Stifel. Matthew Smith: Hi. Thank you. Just wanted to follow up on the commentary about the channel shift in the US with club and e-commerce growing much faster than measured channels in the biscuit business. Can you talk about how that's impacting your share performance and if there's a margin difference for you between the channels? And maybe just as a follow-up, are you seeing or hearing from retailers in the measured channels that they're adjusting for the consumer behavior shift? Dirk Van de Put: Yes. So, yes, the shift is noticeable largely because those channels offer larger packs, both online and in the club channels and that's what consumers are looking for. We see our volume share going up overall due to the share that we are gaining, although those channels are not always measured, but we know that our shares are going up there. So we feel pretty good about what's going on there. The margin for us is about the same. So we don't see a significant margin effect. And as it relates to some of the consumer benefits we see, for instance, a brand like belVita is benefiting from that shift because it has a bigger presence in those channels. So overall, I would say, clearly a volume effect -- a volume and a share effect for us. No effect on the margins and no real necessary adaptation from our side. Matthew Smith: Thank you for that. I'll pass it on. Operator: Our final question comes from John Baumgartner, Mizuho Securities. John Baumgartner: Good afternoon. Thanks for fitting me in. Dirk Van de Put: Hi, John. Luca Zaramella: Hi, John. John Baumgartner: Hi, there. Luca I'd like to ask about reinvestment. Overhead expenses were up double-digits in Q3. They're also up double digits year-to-date as well, I think. Can you just update us on the progress there, where you've made the biggest improvements in capabilities for this year's spending? What capabilities you plan to build next with future investments into through 2024? And then maybe how you're thinking about generating operating leverage on that spending as we move forward? Luca Zaramella: Yes. So the numbers are somewhat impacted by the acquisitions as well. So the acquisitions are clearly incremental year-on-year and they make their way into overhead cost and particularly. So the way you have to think about our overhead cost is the following. We have been managing inflation quite effectively as a company. Inflation, though, particularly labor-related inflation, has been a little bit higher. In these numbers, there is a cost associated with our management incentive plan and long-term incentive plan. The company has done very well, and that has resulted in some incremental costs. All the rest in terms of corporate costs and other functions, we have been investing in three areas selectively. One, it is digital capabilities, and it is the biggest bump you see in corporate costs. We have been investing in sales, and we have been investing in marketing. All the other functions has managed inflation that is below of the revenue growth in their respective market. And functions like finance, particularly has been pretty much, I would say, a little bit higher than flat in terms of cost. So we have been selectively investing in three areas digital services, sales and marketing, and that will continue into next year. All their assets being kept absolutely in control. And then there is a cost associated with the acquisitions and management incentive plans. That's a simple way you have to think about it. Where do we spend in terms of investments? We will continue investing in sales capabilities, particularly in emerging markets. We will continue to invest in marketing, both people and A&C, as we call it. And in terms of digital, there is going to be an acceleration. We are looking into as a major investment that is coming our way and that is both capital and running costs, but it's too early to talk about that. So hopefully, that provides you with some color around our total overhead costs. John Baumgartner: Yes. That's great. And then, Dirk, just coming back to the adjacent categories, the packaged croissant the snack bars, I think you referred to it as being in a test and learn phase. And I'm curious, there's a lot going on right now with innovation, synergies and the assets. What sort of stands out to you thus far in terms of surprises or having a greater appreciation for these assets? What are you -- I guess, what are you learning from test and learn at this point? Dirk Van de Put: Yes, I wouldn't say it's all test and learn. So it's a mixture of just reinforcing the businesses that we have, more launches from our own range, doing some geographical expansion, doing some distribution expansion. So it's a lot more than test and learn. If I start with snack bars, I think we are discovering the power of snack bars. That's why we highlighted it in the prepared remarks. We're doing particularly well with Clif and also with a brand like Grenade in the UK and in Europe, which is really growing very fast. So first conclusion would be snack bars are going to be a real strength for us. There's a big opportunity in the rest of the world. If you look at the development of the snack bar market in the US, it's far ahead of the rest of the world. So we see a huge opportunity there in the years to come. And particularly in the Anglo-Saxon countries, we think that's going to happen first. As it relates to cakes and pastries, there is this segment, which is in-store bakery. Give & Go, that's not a test and learn anymore. That's now a $900 million business, but that has been very incremental to us. We've seen some very significant growth. It's a segment that is growing very fast, and we're taking share. So our expectation is that going forward, Give & Go will continue to see big growth because clients like Target or Walmart are moving from made in-stores towards freeze and thaw, which is what Give & Go is offering there. So second conclusion, the in-store bakery segment is going to be very interesting for us going forward. And then the third one that is important for us is the expansion of our current brands into the cakes and pastries market. So we've launched Cakesters in the US or we have launched Airy Cake in China under Oreo, both very big successes. Things that are clearly an indication that our brands have the potential to play in this cakes and pastries space, and it's a very nice addition and really extends the footprint and the consumers that we have. And then lastly, there is Chipita, which is the packaged croissant. We're doing test and learns in three markets at the moment around the world. Not all the results are in, but we've seen, for instance, in a country like Brazil that there is a real interest. The segment is really not that established, but our test and learn was very positive, and we are now gearing up for a launch in the country. I'm expecting in the other countries that we are doing some tests that we will get similar results because if you think about it, Give & Go was already very successful in places like Mexico or in the Middle East. So it's a real sort of emerging market proposition, meal replacement at a very affordable price, reasonable quantity of product. So I think there's going to be a real opportunity to make that a worldwide business for us. So those would be the four big ones at the moment from the adjacencies. So far, so very good, I would say. We'll keep on informing you. But everything is going in line or in fact well above plan in this area. Dirk Van de Put: I think with that we -- Okay. Thank you. And with that, we've come to the end of our call. We feel good about the quarter. We feel good about the next quarter and about next year. Thank you for your interest and see you next quarter. Luca Zaramella: Thank you, everyone. Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: Good day and welcome to the Mondelez International Second Quarter 2023 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update, followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on slide four. I'm pleased to share that we delivered strong broad-based top-line growth during the first half of the year. Our strong performance was driven by effective pricing combined with healthy volume growth in three of our four regions. Europe was the lone exception due to expected disruption driven by retailer negotiations. We continue to execute on our long-term strategy and we see robust momentum and solid consumer confidence across geographies and categories. We successfully implemented our planned price increases in Europe, closing our customer negotiations in line with expectations. With this behind us, we feel good about the remainder of the year in Europe. We also feel good about continued consumer confidence. We continue to drive robust demand in our core categories across the vast majority of our businesses, resulting in both value and volume growth. Our strong profit dollar growth was driven by cost discipline and pricing to offset cost inflation. We continue to invest in our brands, capabilities and portfolio reshaping initiatives to accelerate and compound growth and we remain confident that our proven strategy delivered by our world-class team positions us well to deliver another strong year. Based on the strength of our first half performance and our latest view across businesses, we are raising our full year organic net revenue and adjusted EPS growth outlook to 12% plus. Turning to slide five. You can see that the first half of 2023 showed continued momentum across our entire business. We delivered the first half organic net revenue growth of $2.7 billion, up nearly 18% versus prior year and significantly ahead of our already strong 12% in full year 2022. This includes a 15.8% growth for the quarter. We also delivered adjusted gross profit dollar growth of more than $1 billion. Again, we are well ahead of last year's pace with 18.9% growth. We are proud of our team's continued focus and agility, which enable us to continue investing to drive further growth acceleration. Our A&C investment is increasing 18% in the first half of the year. These results translated into strong adjusted OI growth of close to $600 million, up 23% and again well ahead of last year's pace. On slide six, you can see a few examples of our brand acceleration strategy in action. Our continued investments in creative assets, personalization at scale and innovation combined with strong in-store execution are resulting in continued sales growth and brand loyalty increases in our core categories of Chocolates, Biscuits and Baked Snacks. For example, in China we launched Oreo Airy Cake in March driven by the strength of the Oreo name as the world's favourite cookie this new packaged cake already has achieved a 3.5% market share and 80% of the velocity of its leading competitor in large stores. And China is one of our most important emerging markets. This is just one example of numerous innovations to expand our key brands into adjacent spaces and formats. We are also continuing to renovate our recipes to stay a step ahead of changing consumer and customer tastes. For instance, we recently launched our first under 100 calories Cadbury treat for adults. This is a great example of our commitment to help consumers snack mindfully. We are offering a broader range of portion-controlled packs and products, but also our portion-controlled education campaigns both digitally and on pack. In the Baked Snacks segment, we continue to accelerate both top and bottom-line performance in Clif Bar. We remain focused on improving service levels and supply-chain efficiencies, while further advancing productivity and effectiveness in our media spend and continuing to strengthen brand equity. We are also continuing to introduce new culturally relevant flavors to strengthen consumer loyalty for our local jewel brands. For example, Lacta has been a leader in Brazilian chocolate for over 110 years. Following the successful launch of Lacta tablets filled with Oreo we recently rolled out two new line extensions filled with additional Lacta products that Brazilians already know and love. There's Sonho de Valsa bonbons made with chocolate and cashew nut filling as well as Ouro Branco candies made with wafers filled with chocolate cream and covered in white chocolate. These are just a few examples of the innovative ways our teams are driving growth in our iconic chocolate, biscuits and baked snacks franchises continuously investing in new formats pack sizes and flavor combinations that drive incrementality and encourage consumers to experience our brands in new ways. Within the baked snacks segment we are especially excited about our strong performance in the rapidly growing cakes and pastry space. Let's take a closer look on slide seven. Earlier, I mentioned the Oreo Airy Cake in China as a great example of our brand acceleration efforts in emerging markets. Similarly, in developed markets, we are making solid progress in expanding our successful cookie and chocolate franchises into choco-bakery, cakes and pastries. For instance, in the United States, Oreo Cakesters are continuing to perform well. Since the recent launch of this fan favorite, it already has earned a 3.7 share of packaged snacks cakes Give & Go is another solid success story in our North American baked snacks lineup where we are continuing to drive distribution and innovation. Share is up 0.5 year-to-date, driven by solid pricing execution, expansion into adjacencies such as mini donuts, and strong category demand. Meantime, in Europe, 7Days continues to advance its position as the number one package croissant, and we have exciting plans to continue to grow with footprint beyond Europe, including recent test and learn trials in a number of emerging markets. Turning to slide eight. We continue to invest in digital commerce and revenue growth management tools and capabilities to support our brands while strengthening our partnerships with leading customers. I'm pleased to share that we have achieved the number one market share position in digital commerce in our top five markets of the United States, China, United Kingdom, France, and Brazil, while over-delivering in up-and-coming emerging markets such as India, Philippines, Brazil, Mexico, and Poland, which are up 40% year-to-date. We continue accelerating eB2B capabilities to expand distribution and strengthen our partnerships with key customers. Additionally, our increased investments in elevating RGM strategies and actions are driving strong value realization, helping to offset inflationary pressures. We have appointed dedicated RGM leadership and teams in all key markets supported with new proprietary data and analytics assessments, digital tools and a comprehensive training program. We are confident that these ongoing investments will deliver sustainable improvements in growth, efficiency, and ultimately margin. Along with our financial performance, I am pleased to share that we continue to make significant progress in advancing our environmental, social, and governance strategy. In May, we published our annual Snacking Made Right report reinforcing our 2025 goals and documenting our latest performance in priority areas. These include sourcing key ingredients more sustainably, reducing carbon emissions and increasing recyclable packaging. We are also improving performance in social impact and diversity, equity, and inclusion, both internally and in partnership with our suppliers as well as helping consumers snack more mindfully through improved portion education and increased focus on single portion packs. We continue to believe that helping to drive positive change at scale across these important areas is an integral part of value creation with positive returns for all our stakeholders. We encourage you to read our Snacking Made Right report for more details and context on our progress. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Q2 marked another strong quarter for our business. Double-digit organic net revenue growth across each region, sound pricing execution, strong profit dollar growth and significant brand reinvestment enable us to continue driving sustainable value creation. Revenue grew plus 15.8% with strong volume mix growth in North America, Latin America, and EMEA. Overall volume mix was flat for the quarter, despite the expected customer disruption in Europe. Recall last year's Q2 total company volume mix was plus 5%, making this performance even more impressive. Emerging markets grew more than 23%, with strong performance across significant numbers of markets. While developed markets grew 11% with balanced strength from both North America and Europe and despite customer disruption. Turning to portfolio performance on slide 12. Chocolates, Biscuits, Gum and Candy businesses all posted another quarter of double-digit increases in Q2. Biscuits increased plus 13.9%. Oreo, Ritz, Chips Ahoy!, Give & Go, TUC and Club Social all deliver double-digit growth. Clif though not inorganic also posted strong growth. Chocolate grew plus 13.7% with strength in both developed and emerging markets. Cadbury Dairy Milk, Milka, Lacta, Toblerone all delivered double-digit increases. We are very pleased with the performance of our core categories of chocolate and biscuits which albeit impacted in the quarter by customer disruption are on a solid trajectory. For both we expect good volume momentum as we move forward in the year now that negotiations in Europe are behind us. Gum and Candy grew more than 30% with trends across our business units especially in emerging markets. Now let's review market and share performance on slide 13. We held or gained share in 70% of our revenue base. The US continues to make service-level improvements and ended Q2 with good on-shelf availability and inventory levels. Moving to page 14. We deliver more than $540 million in gross profit growth or 20% in Q2 driven by top-line productivity and cost discipline. This also resulted in year-over-year gross margin expansion in all regions except Europe, which was impacted by expected customer disruption. Now that pricing is implemented, we expect improvements in Europe too. This growth provides significant fuel to invest behind our brands as well as significant earnings flow through. Moving to regional performance on slide 15. We delivered double-digit revenue growth in all regions, while also delivering volume mix increases in all regions, but Europe that got impacted by pricing-related disruption. This growth translated into operating leverage, NOI dollar growth across the board. Europe grew plus 13.1% with double-digit OI growth. Importantly, pricing has now been lending and we expect that this will lead to a better second half volume and margin performance. Overall, the consumer remains resilient with elasticity is holding up relatively well in chocolate and biscuit, while we saw some incremental elasticity in part of our cheese and grocery business. North America grew plus 12.4% with OI dollar growth of more than 29%, driven by higher pricing, volume mix of 2% and strength from both our base Biscuits business and our ventures, such as Give & Go, Perfect Snacks and Clif. Clif also posted robust growth and deliver another operating margin increase of double-digit percentage points in Q2 versus last year. Now profitability is approaching the level of total North America, but we still have to generate material synergies both on revenue and cost line. So Clif is a business that is growing as now some margins and still with meaningful synergy potential. AMEA grew 13.2% with solid volume mix growth of more than 3%, while dollars increased plus 4.2%. India, China, Southeast Asia, all posted strong top-line growth for the quarter. Latin America grew more than 37% with OI dollar growth of nearly 65%. Mexico, Western Andean countries and Brazil, all turned in robust quarters. Ricolino remains on track in terms of integration, and we expect to begin capturing more benefits towards the end of the year. Next to EPS on slide 16. In the quarter, EPS grew plus 21.5% in constant currency or nearly 17% at reported dollars. Turning to slide 17. Free cash flow was $1.5 billion in the first half with $1.7 billion in return of capital to shareholders. We also announced today an increase in our dividends of plus 10%, marking a double-digit increase in eight of the last nine years of the history of Mondelez. Turning to our outlook on page 19. Given the strength of our Q2 and first half performance the successful conclusion of our negotiations in Europe, the strong volume momentum of our brands, we are raising our full year outlook for both revenue growth and adjusted EPS. We now expect top-line growth of 12% plus versus our original outlook of 5% to 7% and most recent outlook of 10% plus. EPS growth is also expected to be 12% plus versus our prior outlook of 10% plus and the original outlook of high single-digits. Note, our free cash flow outlook remains unchanged at $3.3 billion, given $400 million in cash taxes related to the sell-down and exit of our KDP position. In terms of key assumptions we continue to expect a double-digit inflation increase for '23, driven by elevated cost in packaging ingredients, labor and lapping favorable commodity hedges in 2022. With respect to interest expense, we now expect $380 million for the year, given recent coffee asset monetization and term-loan reductions. We also expect to end the year around mid-twos in terms of leverage, based on current conditions. As a reminder, given the liquidation of our KDP position in mid-July there will be no dividend income recorded enough to. We now expect $0.11 of EPS of headwinds related to ForEx impact for the year versus $0.09 in our prior outlook. The outlook revision reflects our increased confidence in the year. Ongoing resilience of consumer consumption in our categories, relatively benign elasticities, continued brand reinvestments, and completion of pricing in Europe as well as health of our emerging markets. This current outlook does not consider a material deterioration of geopolitical environment surrounding some areas of our business. With that, let's open the line for questions. Operator: [Operator Instructions] And we'll take our first question from Andrew Lazar with Barclays. Your line is open. Andrew Lazar: Great. Thanks so much. Appreciate it. First off, Dirk, we've heard so far from a bunch of food companies that have reported earnings of some, maybe very recent changes in things like consumer behavior, retailer inventory destocking, competitiveness, and maybe generally greater sluggishness in category volumes as pricing has lapped. I was hoping you could talk a bit about the landscape as it relates to Mondelez specifically. And any changes sort of one way or the other that are notable for you? Dirk Van de Put: Okay. Thanks, Andrew. Well, and based on H1, we obviously feel quite good about how our portfolio is performing. We have brought growth in the different regions, in the different categories across most of our brands. The pricing went through quite well, strong pricing, I would say compared to others. We have very good volume mix growth in three out of four regions. And the only region that was disrupted was Europe, but that was due to customer disruption, and we foresee for the second half that we will see solid volume growth in Europe. Our share is increasing, North America is finally recovered. We are gaining share in AMEA. Europe, of course, still a bit of a drag on share, but that's again because of this client disruption. You'll see that our emerging markets are doing quite well, broadly in the top and the bottom-line. So we are generating good gross profit. So we can continue to invest strongly in our brands and in our capabilities. The acquisitions are doing well, I would point to Clif. And yeah we have double-digit growth in adjusted and really PSO. The whole picture for us, looks pretty good. If I look a little bit further on the environment at least in our categories, we see strong consumer confidence. We would say that it's improving in the developed and in the emerging markets and the price sensitivity seems to be plateauing, particularly the emerging market consumer, I would say, is very, very solid. If I think about the competition, I think the big difference between us and the competition will be that we have a very strong top-line combined with some good volume growth and promo levels, we see some increase in promo levels in Biscuit, but it's largely flat and down somewhere else. We even see promo prices going up faster than non-promo prices in percentage. From a pricing perspective, we have done as what was needed. So most of our '23 pricing is taken. North America was already done in December of last year. Europe was closed, in line with expectations in Q2 and emerging markets are exactly on plan. And then the elasticity, we don't see a change in the elasticity, which has been low, as you know. We do see consumers shopping around more, hoping to find deals. The quantity bag per shopping trip is the same, but they tend to shop a little bit less frequently, but nothing really that preoccupies us. And so to close, I would say, the volume is strong. Europe will recover in the second half, and this will be the strongest H1. And we believe here that we have delivered as Mondelez. So we think we are quite -- doing quite well there. Maybe a few words on Europe, which is probably the most important thing for us. It obviously has been, for us, a very dynamic environment. Top line demand has been quite good, 13.1% growth, but the volume/mix was down 4.5 points, but that was due primarily through that client disruption. I want to reemphasize that all 2023 clients negotiations have closed successfully and all the pricing was landed in line with plan. We will see some inflationary costs continuing in cocoa and sugar going into 2024. And we are planning to do some strong investments in the second half in Europe. So if you think that through and you say, okay, these pricing negotiations are behind us, we are positive on H2. And so what you could expect for H2 in Europe is that our volumes will grow. We are ready to execute in store. We have planned key promotions because now with this negotiation behind us, we can go full force again. I think as a consequence of that, you will see our share improve. We also start lapping prior year headwinds. And our margins will start to recover as the pricing is now fully implemented. So I think three levels of good news, volume, share and margins. Our categories continue to do well. Consumers seem to prioritize them. Also in Europe, elasticities remain low despite some strong price inflation. Yes, if you talk about our cheese or grocery categories, there we see a little bit of an uptick in elasticity, but that's a smaller percentage of our business. HFS in the UK looks pretty manageable at this stage. The consumer is adjusting to the changes that they see in store. We see a bigger impact on seasonal and gifting, but the impact on standard chocolate seems to be minor. So I would say the main news that we have is that we are expecting a good second half for Europe on top of all the other things. Hope that gives you a picture, Andrew. Andrew Lazar: Yes. No, really, really complete. So I appreciate that. One very quick one for Luca. The company raised constant currency EPS growth expectations to 12% plus from 10 plus. I guess consensus is already relatively close to the 12% mark. So I guess I'm just curious how investors should think about the plus in the guide. Thanks so much. Luca Zaramella: Thank you, Andrew. Yes. Before I go to the plus part, maybe briefly to provide some color on what underpins the new outlook. I think there are three important drivers to point to in terms of our new outlook. One, it is clearly the strong first half. And importantly, the quality of the results we are posting. I'm particularly happy with the operating part of the EPS growth. Second, I think it is really the underlying broad-based trends of our business, the resilience of our brands. I'm happy with volume and value growth and the continued investment. And third, as we mentioned a few times, Europe with price fully lending and in line with expectations. So maybe a word briefly by geography. Emerging markets are on a roll. We are quite happy. Some pricing is causing some areas of concern in terms of elasticity, but those are the minority of the market and not really important in the big scheme of things. The US and North America are posting a terrific P&L, and we are very pleased with Clif. And Europe has improved profitability already in Q2. But as we said last quarter, at that time, we had 80% of the price implemented. Now that pricing is 100% secured, we expect volume and revenue growth as well as margin improvement for Europe. So quite frankly, there is a good chance that we exceed the 12% plus guidance, but I prefer having another quarter under the belt and then narrow guidance for Q4. If all things play out as we have in mind, as I said, there are good chances we will exceed the guidance. Bear in mind that we want to start 2024 strong. And so if there is upside in terms of profitability and EPS, we might decide to reinvest selectively some of the upside to get really a fast start into 2024, too. Andrew Lazar: Thanks so much. Luca Zaramella: Thank you, Andrew. Operator: Our next question comes from Bryan Spillane with Bank of America. Your line is open. Bryan Spillane: Hey, thanks, operator. Good afternoon, guys. Dirk Van de Put: Hi, Brian. Luca Zaramella: Hi, Brian. Bryan Spillane: Hey, I got two questions, one on the net interest guidance and the second one on Clif. So maybe first one for you, Luca. Net interest expense guidance came down again I think by about $20 million versus where we were coming out of 1Q. And I just want to make sure, I think you paid off a $750 million term loan with the KDP proceeds. So is this just simply a function of half a year interest savings on paying the term loan off? Or is there anything else that drove the lower net interest expense? Luca Zaramella: No, that is it. It is debt coming down. You're going to see a good leverage as we end the year. We plan to be at like 2.5 times debt, which is quite good. And yes, it is as simple as us paying down the term loan. Bryan Spillane: Okay. Thanks. And then, Dirk, in your prepared comments, you talked about Clif pretty encouragingly, right, in terms of the margins approaching, I guess, the segment level and then there's more synergy. And then it sounds like you're also expanding on revenue. So can you just maybe give us a little bit of a progress report on kind of where you stand with Clif today relative to where it was when you acquired it? Is your integration and is the acquisition model kind of running ahead of expectations? And just how we should think about maybe how impactful Clif might be as we look forward? Dirk Van de Put: Yes. So we've seen in the first half, very strong double-digit revenue growth. And the margins, the OI margin versus previous year is up more than 1,000 basis points. So we've increased prices, some of the first thing I would say. We've increased prices more aggressively than Clif would have done historically. We increased prices in August, in January and another one later in Q1. And so we see low elasticity, I would say. So that's having a big impact. The second big thing that we are doing is the service has improved. We reduced SKUs. And we started to operate the plants a little bit better. And so that has given to a good increase in the service level. Then we changed the promotional plan. That has successfully kicked off. Fourth thing is that our media buying is more efficient than theirs. So we were able to also get some benefits from that. So those are some of the things we've done. The integration is taking place in a number of steps, like a big one is the systems integration later on in the year. But so far, where we have streamlined the teams and we've brought more clarity on how we want to operate the business that is all going well. But as we said in the prepared remarks that the real benefit of the cost synergies is still largely to come. We've already seen some benefits, but it's in the second half of this year and beginning of next year that we will get the real benefit from it. So I would say you can probably make the calculation. It's close to a $1 billion business. That improves its margin by the amount that I was closing. So that will have a reasonable impact on the total company. Bryan Spillane: Thanks, Dirk. Thanks, Luca. Luca Zaramella: Thank you. Thank you, Bryan. Operator: Our next question comes from David Palmer with Evercore ISI. Your line is open. David Palmer: Thank you. A question on Europe pricing and the impact on volume. You mentioned the pricing is complete. How are you thinking about the volume for that region in the second half given that some of that disruption is behind you and you're lapping some disruption in the second half versus '22? Dirk Van de Put: Yes. So as I said, we don't really give volume guidance per region, but we would see some solid volume growth in the second half driven by exactly the factors that you were saying. So we have the pricing negotiations behind us, that pricing will be implemented. The disruption is gone. Last year, in the second half, we increased our prices in Europe, and we had more disruption. We will lap that. So that's going to have a benefit for us. We have elasticities in Europe that are relatively benign. So despite the newly implemented pricing, we don't think that, that's going to have a major effect on the volume. So we're not giving you the number, it's going to be a nice solid volume growth for the second half. David Palmer: And then I couldn't help but notice you featured cake and pastries a couple of times in your slides. And it seems like a logical extension to have Oreo have a snack cake. But I wonder how big could your aspirations be in that category. It doesn't seem as big as some of your other categories. So I'm wondering, do you see snack cakes and pastries being an ongoing sizable growth contributor? And maybe give us a sense of how you think about the TAM there, the opportunity there and how you're going to go about it. Thanks. Dirk Van de Put: Yes. So well, first of all, cakes and pastries is not a small category. It's not the size of biscuits, but it's not too far away from it. And so it's a big opportunity around the world. It's a very fragmented category with sometimes relatively commoditized products in there. But there is a real opportunity to bring strong brands with high-quality products. And so that's really the play that we're going forward through an Oreo Airy Cake in China or Cakesters here in the US or Give & Go in the fresh section or a Chipita in Europe with pre-packaged croissants for instance. So we think that there is a whole play for us there. At the moment, we're around the 3%, 4% market share of the whole category. So plenty of room to go. With that, we are already the number two player. And so that indicates how fragmented it is. The category itself has been growing quite nicely over the past three years. It is a category that exists across all markets. It covers different occasions than our typical biscuits and chocolate, so that makes it very interesting for them. And so we think with these new quality products and our brands, we can really make a significant impact. And I'm not going to give an exact number, but we would expect that our cake and pastry business in the coming year should double or triple and lift us up to close to a 10% market share. So for us, it's going to be a significant contribution to the growth of the company. David Palmer: Thank you. Operator: Our next question comes from Ken Goldman with JPMorgan. Your line is open. Kenneth Goldman: Hi. Thank you. I wanted to ask, as we look at the future charts for cocoa and sugar, you might indicate that theoretically, right, down the road, some additional pricing might be needed to offset more inflation. I appreciate you're not in a position today, right, to talk about pricing that hasn't been announced. But just conceptually, is there any reason to think that you wouldn't be able or willing to if needed, raise list prices again, especially if European elasticities, I guess, maybe aren't that bad and you're -- given your commentary about some improve or improving consumer confidence. Thanks. Luca Zaramella: Thank you for the question, Ken. Look, the increase in sugar and cocoa specifically is material. I mean, we are talking about most likely a 30-plus percent if you look at the last 12 months or even more, particularly in cocoa. I think when you look at the quality of the brands, we said the fact that we had invested materially around the world in our brands, the fact that there are strong bonds with consumers and I believe pricing is -- will be a necessity in chocolate. I'm not going to elaborate on the details. Also, bear in mind that particularly in emerging markets, we are going to be very mindful about not vacating price point. And so we will use RGM. And then over the last couple of years, I would say we have learned the ins and outs of implementing pricing around the world. And I think it is needed, and we're going to do it most likely. Kenneth Goldman: Thanks. And then just one quick follow-up. Are there any peculiarities or cadence issues we should think about that are not necessarily obvious? Just as we model 3Q versus 4Q, any timing or headwinds or tailwinds that might not be apparent at first glance, if I could say. Thank you. Luca Zaramella: No. Look, I don't think there is anything that you're going to see in terms of outliers that are going to cause material issues or material opportunities in Q3. You're going to see a volume rebound in Europe. As a consequence, I think, obviously, there is going to be a better situation for the totality of the company. I'm not going to guide you exactly on gross profit. But you're going to see double-digit, most likely revenue growth and double-digit EBIT growth. Below the line, the items can vary. But I think when you really look at Q3, Q4, you're going to see strong operating gains coming through the P&L. And I didn't talk a lot about cash flow, but very happy with that, too. And you're going to see us delivering the cash flow despite the $400 million headwind related to the coffee KDP sales. Kenneth Goldman: Thank you. Luca Zaramella: Thank you, Ken. Operator: Our next question comes from Chris Carey with Wells Fargo Securities. Your line is open. Christopher Carey: Hey, everyone. Dirk Van de Put: Hi, Chris. Christopher Carey: So just one follow-up and then just a second question around the guidance commentary. But Luca, I think you said that you expected leverage at the end of the year to be in the 2.5 times range. That would be a historically low level for the company. At that level, how should we be thinking about deployment of capital at that point? You repurchase more shares. You have too many deals recently. And clearly, you're doing great work on Clif. So is there low-hanging fruit on what you've already added? It just stood out to me that you'll be trending toward a historically low level of leverage. And at that point, I think there's going to be probably some observations around what that capacity could be used for. And then just one other quick follow-up on the EPS upside comment for the full year. There was also a comment just around spending back, right? So like how do you think about, as we get through the year, this concept, okay, there could be some upside, but you're also quite committed to the spending back. Like where does that kind of tension play out, right? Volumes get weaker, you're going to spend back more. If not, there's some upside, just maybe any context on that as well. So thanks for that on the leverage and just upside versus investment. Thanks so much. Luca Zaramella: Yes. No, I think the first thing first is the underlying strength of the EBITDA in the business. So we are converting cash quite well from net income that is coming. And that is the first element of the equation. The second one is the fact that we are going to get $1.3 plus billion of proceeds from the gum sale, and that will further enhance the situation. I'm not going to tell you that we are going to run the company forever at this level of leverage. But reality is, absent M&A I think this is most likely a little bit of a new norm. What you have also to keep in mind is both in the case of Clif and Ricolino, we are doing quite a good job in terms of integration. And I think deployment of capital behind M&A, particularly, has been something that the company has done well. Capital allocation behind fleet, we quoted a few numbers. I think this is a great opportunity, and it shows that we can generate quite a bit of value through M&A. We don't control necessarily time of M&A. But on the M&A, if something comes along, we're going to be on it. Also, bear in mind that there are parts of the portfolio that we might decide eventually to divest down the road. So I think from a leverage standpoint, we are really in a good shape. The EPS upside, the -- one of the things I believe that is delivering volume growth for us, it is the fact that, yes, we price, but we continue to invest in the business, not only in terms of A&C, but also quality and other things. We talked a little bit earlier in the year about the mill carry launch in Europe and the improved formula as one example. And what I meant by EPS upside is we clearly have in mind the fact that we might have a little bit of headroom in terms of profitability. And we want to use a little bit of that headroom selectively in some places to really go after incremental distribution opportunities, to really go after incremental investments such as we get a good start into 2024. It will be on a case by case, but we consistently ask around the business, do you have opportunities to accelerate. And we do it on a quarterly basis, and so stay tuned. You'll learn more as we post Q3 results. Christopher Carey: Okay. Thanks so much. Luca Zaramella: Thank you. Operator: Our next question comes from Jason English with Goldman Sachs. Your line is open. Jason English: Hey, folks. Thanks for calling me in. Dirk Van de Put: Hi, Jason. Jason English: Look, I want to pull on that thread you just brought up, the opportunity to drive accelerating growth, invest, find distribution. I believe in the past, you've outlined some of the distribution opportunities you see in front of you in Brazil and Southeast Asia and India as well as the opportunity that's coming on the back of the Ricolino acquisition. Can you update us something on where those opportunities lie, how much progress you've made and how much progress is supposed to be had? Dirk Van de Put: Yes. The opportunities typically lie in the emerging markets in the first place. And so the countries that you should be thinking about are India and China where we have been going at the rate of well over 100,000 to 200,000 new stores every year. That is going to continue, that speed at which we continue to grow. We do the same in Southeast Asia, and we're also looking at opportunities to do something similar in Latin America. So that's the number 1 driver of what we think. And you should think about it at the same pace as what it has been in the last two, three years. The second one is, we call it going broader, which means that we can start to increase the range of our products that are available in stores, also, again, largely in emerging markets. That's another big driver of our distribution. China has started to do that in the last two, three years. And that's going pretty well for us. And so that's a second sort of front that we are working on around the world. And then the last one is the acquisitions where we are starting to do test and learn with these products in different markets around the world. So we have a number of tests and learns going on in Chipita. We have some Grenade test and learn. We will have some Clif test and learns around the world. And we are expecting that from that, we will learn which countries those would have a big opportunity to start being distributed. So that you should see as a third front. In the first two, three years, I wouldn't expect that you would see a major impact on our numbers. But later on, as these things take shape, I think that will start to play a significant role. If I think order of magnitude that you should think about it, if I think about in India or in China, I would say 1/3 of the growth is driven by distribution expansion. So that gives you an order of magnitude. Jason English: Powerful stuff. I appreciate it. I'll pass it on. Dirk Van de Put: Thank you. Luca Zaramella: Thank you, Jason Operator: Our next question comes from John Baumgartner with Mizuho Securities. Your line is open. John Baumgartner : Good afternoon. Thanks for the questions. Dirk Van de Put: Hi, John. John Baumgartner: Hi, I wanted to stick with the emerging markets, but maybe in the context of local brands. It looks as though the market share growth has stalled out a bit in the last couple of quarters, at least in Europe. And maybe that's a function of the success of global brands sort of crowding out the locals. But if you could elaborate there, just on your resource allocation, where you are at this point, what are the expectations for locals across the portfolio going forward? And how you think about the ability for global and local to grow share simultaneously? Because I think historically, the largest opportunities you have to recover lost share in locals is Eastern Europe, Asia, chocolate biscuits. So curious about your thoughts there. Thank you. Dirk Van de Put: Yes. So well, first of all, I would say Europe, you have to be a bit careful because you have the whole client disruption going through there. So if our share is affected, that has to see with the client disruption. But if I think about the performance of global and local brands, it is true that global brands have started to grow faster, I would say. We have a number of brands, particularly an Oreo, Milka, Cadbury, but also Dryden as a gum brand for example, or Halls, which are recuperating post COVID. So you have a number of global brands who -- the Oreo and Milka category is normal, but then you get an extra boost from things like Trident and Halls, which were not growing that much. We, for instance, are also working very hard on our Toblerone premiumization. So yes, at this stage, global brands are growing faster. They're well into the 20s. While local jewels are probably more in the mid-teens growth, still not bad. But that's a little bit the effect, as I explained to you. Does that mean that we have changed our resource allocation? No, not at all. And if anything, we're pushing our local teams to make sure that our local jewels get significant resources allocated to it because we believe that the opportunity is there. And so I wouldn't read too much into it. For instance, if you look at the 4-year CAGR, our global brands are double digits while our local jewels are high single digits. So very close to each other. And that's really what I point to. So we don't necessarily see anything there that would preoccupy us. John Baumgartner: Thank you, Dirk. Dirk Van de Put: Okay. Luca Zaramella: Thank you. Operator: Our last question comes from Michael Lavery with Piper Sandler. Your line is open. Michael Lavery: Thank you. Good afternoon . I just wanted to follow up Dave Palmer's question about bakery. And maybe specifically, just with Give & Go, you mentioned how bringing branded and quality products was sort of the key to unlocking share gains and growth there. But fresh seems less branded and maybe sometimes very little branding. Is it opportunity there? How much can you push that maybe in certain sub-segments? And then as far as geographically explaining that, is there an opportunity for that as well? Dirk Van de Put: Yes. Well, yes, when I talked about the branded part, I was talking more about the packaged cakes and pastries. And so if you think about Give & Go as a fresh business, branded can play a role, and I can explain you a little bit how we think about that. But it's largely driven through innovation, I would say, the growth of the Give & Go business and extra distribution. So you have to think about Give & Go as a player that makes mini cakes and pastries, so mini cupcakes, mini muffins, mini brownies, mini doughnuts. And that's a very interesting segment. It's a to-buy segment, and they do a great job in offering a quality product. We can make those products with some of our ingredients. So you can imagine a cupcake with Oreo on top of it. And so the branding can play a role. They've also started to develop their own brands. So it can play a role in Give & Go, but your observation is correct that it's more in the packaged part of things. Now the in-store bakery is very interesting for retailers in North America, but it's also happening in other parts of the world. We were in Australia, for instance, and one of the retailers there, their main interest was to talk to us about in-store bakery and how we could activate it together with them. The reason being that the other big benefit of Give & Go business is that it saves on labor. So you now get a product delivered to your store that is freeze and thaw, and you can avoid all the labor in store, and so that drives a big interest from the retailer on top. The consumer sees it as fresh. There is high interest. It's a section they want to increase. So I would certainly confirm that there is a growing interest around the world for fresh bakery. Michael Lavery: That's great color. And just a follow-up on emerging markets, too. It sounds like there's strength broadly even in China. But can you just help us understand the Chinese consumer a little bit? Is your performance there doing well a function of a relatively low kind of accessible price point? Is it more food at home that's doing well? Can you just maybe unpack a little bit where the Chinese consumer is and how that fits with your portfolio? Dirk Van de Put: Yes, yes. So China grew double digit for us in Q2. One of the key effects that you need to think about is that we have a big gum business there. And as we are coming out of COVID, kind of strange. Nobody talks about COVID anymore in China, but the mobility is coming back, and so we have growth coming on our gum business. And on top of that, we have had a continued strong biscuit growth, which is more home consumption. In both cases, we are increasing our share. Biscuit is up almost 1 point in Q2 through very strong brand activations, and we're particularly happy with the success that Chips Ahoy! is having now as our second big biscuit brand next to Oreo in China. And then gum share is up 2.5 points, where we started to do some very targeted activations in lower-tier cities. The other thing that's particular about Chinese that digital commerce is about 20% of sales. And in Q2, digital commerce is starting to -- started to grow quite considerably at a 23% growth rate. So that all points towards on-the-go consumption because in China, digital commerce can be sometimes delivered in a very short period of time, but also home consumption offshore -- of course. The other thing to explain our China growth is that distribution expansion I was talking about in the previous question. So in Q2 alone, we've added 60,000 new stores in the super and mini channels as a part of that go deeper route-to-market strategy. And the last one I would point to is innovation. We launched that Oreo Airy Cake. I talked about it in the prepared remarks. And that's that expansion into baked snacks and cakes and pastries for us. So those are all the elements that are driving our Chinese growth. I think it's pretty solid for the quarters and years to come. We can work on all these fronts. We can continue to add distribution. We still have a huge opportunity. We have some interesting innovations coming up. We're getting better and better on our digital commerce. And I think the gum category will really rebound in the coming months, and that will be a boost to our growth there. As it relates to the consumer, the consumer is clearly -- the confidence is going up. But certainly, they are not yet to the bullishness that they had pre-pandemic. They're not cutting back on volumes, but they are clearly shopping around more, trying to find better deals, and they're also trading up and down as it relates to the pack size. We also see a shift to smaller stores because the quantity that they buy is smaller and they shop with more frequency. So I would say we are very encouraged by our China business. We have several fronts that allow us to grow. We've done that in the previous years. Those fronts have not been affected. And I believe that you will see some very good results coming from China in the second half of the year. Michael Lavery: That's great color. Thanks so much. Michael Lavery: Okay. Well, thank you. With that, I think we can conclude the call for the second quarter. Thank you so much for assisting and thank you for the confidence in the company. Luca Zaramella : Thank you, everyone. Operator: This does conclude today's program. Thank you for your participation, and you may disconnect at any time.

Operator: Good day, and welcome to the Mondelez International First Quarter 2023 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our Q1 2023 earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update followed by review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on slide four. And I'm pleased to share that we are off to a record start in 2023 with very strong double-digit top line growth in the first quarter, driven by effective pricing and ongoing volume growth. We continue to execute on our long-term strategy and we see robust momentum across geographies and categories. We delivered strong performance in both emerging and developed markets and we successfully implemented circa-80% of our price increases in Europe. Our robust profit dollar growth was driven by volume leverage, cost discipline and pricing to offset cost inflation. Our strategic decision to focus our portfolio on the attractive categories of chocolate, biscuits and baked snacks continues to bear fruit, with consumers gravitating to those categories. We continue to invest in our brands, in our capabilities and our portfolio reshaping initiatives to accelerate and compound growth on both the top and bottom lines. We are confident that the strength of our brands, our proven strategy, our continued investments, and especially our talented people, position us well to deliver another strong year. Based on the strength of these Q1 results and our latest view across businesses, we are raising our revenue and adjusted earnings outlook to 10% plus for the year. Turning to slide five, you can see that the first quarter showed continued momentum across our entire business. Volume mix for the quarter was more than 3 percentage points, on pace with recent performance, demonstrating the continued strength and resiliency of our beloved brands and categories, even in an inflationary environment. We delivered organic net revenue growth of $1.5 billion versus prior year. At 19.4% growth, we delivered our best quarter ever, significantly ahead of our already strong 12% in full-year 2022. We also delivered adjusted gross profit dollar growth of $0.5 billion. Again, we are well ahead of last year's pace with 18.2% growth. We are proud of our team's continued focus and agility, which enable us to continue investing to drive further growth acceleration with an A&C increase of 19% for the quarter. These results translated into strong adjusted OI growth of close to $300 million, up nearly 21% and again well ahead of last year's base. We remain confident that our virtuous cycle of strong gross profit dollar growth, fueling local first commercial execution, increasing investments in our iconic brands empowered by winning culture, will continue to consistently deliver attractive growth. On slide six, a few examples of our brand strategy in action. We continue to invest in our core categories of chocolate, biscuits and baked snacks with strong creative assets, digital personalization at scale, new product launches and great in-store execution. All this continues to strengthen our already strong brand loyalty. It is clear that we are playing in the right categories with attractive growth in volume and dollars combined with solid profitability characteristics. There is also significant headroom in both penetration and per capita consumption in developed and developing markets. We continue to expand the breadth and reach of our chocolate leadership in the attractive and growing Latin America region. For example, we recently launched our chocolate brand, Milka into Colombia. Additionally, we launched two Milka ice cream products in Argentina in association with Froneri. We are excited about these opportunities to explore a new segment and reach more consumers, while expanding one of our most iconic brands into a new consumption occasion. We hit another milestone in the biscuit category, as Chips Ahoy! a $1 billion brand celebrates its 60th birthday. Our fifth largest brand globally Chips Ahoy! Has delivered almost double-digit revenue growth annually since 2018, yielding positive results from our increased A&C spend during that time period. The brand's current key markets are the United States and China, where the business is on a $200 million run rate. But Chips Ahoy! also has a sizable presence in Canada, Latin America and Southeast Asia. We have exciting plans to further expand this franchise, as we grow our leadership in both core biscuits and new shopper bakery innovations around the world. Oreo continues to grow -- to show sorry strong momentum across markets, as consumers continue to demonstrate that this iconic brand is truly the world's favorite cookie. Give & Go is a success story in our baked snacks line. It grew strong double-digits in Q1, driven by solid pricing execution, expansion into adjacencies such as mini donuts and strong category demand. These are just a few examples of our team's ongoing focus on delivering our growth and acceleration strategy as we continue to reinvest in, and drive our very powerful brands. Now let's take a look at our chocolate strategy on slide seven. Tablets remain the centerpiece of our chocolate franchise. Mondelez accounts for more than one-third of this segment's more than 3 times the size of the number two player. We continue to lead the segment year-after year. 2023 is off to a very strong start, aided by the recent launch of our renovated Milka formulation, the creamiest most tender Milka ever combined with some strong local [jewels] (ph). Our tablets business is up nearly half a point in market share, with particularly strong growth in Australia, Canada, Germany and Brazil. We are also performing well in the incremental segments of seasonal and gifting chocolate products. We delivered a record selling for the Easter season across markets, with Milka celebrating its first ever Easter in Chile. Our Cadbury team executed another successful virtual Easter egg hunt reaching more than 300,000 people in the United Kingdom, Ireland and South Africa, making our seasonal products even more iconic. We also are growing in the premium chocolate space. For example Toblerone volume is up more than 15% in Q1, fueled by its relaunch with updated on trend positioning. We are further strengthening the Toblerone portfolio with additional offerings including per lean, and personalized gifting. Switching to slide eight, solid execution against our integration playbook is delivering a strong start to the year for our recently acquired businesses. We are pleased that Clif in Q1 posted double-digit revenue growth and grew profitability by more than 1,000 basis points. We are making strong operational improvements, focusing on enhancing service levels and improving supply chain efficiencies, and we successfully implemented two rounds of pricing. Additionally, we recently announced the consolidation of creative and advertising agencies under a single partner, which will accelerate productivity in our media spend, while continuing to strengthen brand equity and loyalty. Similarly, our Ricolino business continues to demonstrate strong momentum in the fast growing and strategically important Mexican markets and we are making solid progress on integration. Along with our financial performance, I am pleased to share that we continue to make significant progress in our sustainability strategy. We firmly believe that helping to drive positive change at scale is an integral part of value creation with positive returns for all of our stakeholders. As you can see on slide nine, this quarter, we announced the next chapter of Harmony, our European wheat sustainability program. With regenerative agriculture at its heart, this next chapter aims to mitigate climate change and reverse biodiversity losses, while investing in research, seeking to demonstrate that more sustainable wheat is also better quality meal. Created as the first program of its kind in 2008 with just a handful of farmers, the Harmony program now collaborates with more than 1,300 farmers across seven European countries. Our enhanced program will support these farmers in implementing a strongest charter of more sustainable farming practices such as further diversifying crop rotation, protecting pollinators and other wildlife and reducing pesticide use. Our goal is to grow 100% of the wheat volume needed for our European biscuit production under our expanded Harmony regenerative charter by 2030. This is just one example of the way that we are fully integrating our sustainability agenda within our day-to-day business operations and growth strategy. I am proud of team Mondelez continued progress in helping to make positive impact on critical environmental and social issues while creating value for shareholders and other stakeholders. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk and good afternoon. Q1 was a great start to the year, broad-based volume, pricing, profit dollar growth, brand investment, earnings and free cash flow, all indicate that our strategy is sound, and our focus on execution is paying off. Our model is working well, while meaningful opportunities still exist to further drive our long-term ambitions. For the quarter, revenue growth was plus 19.4% with more than 3 points from volume mix. Emerging markets grew more than 25%, with strong performance across the overwhelming majority of countries. 4.5 points of this growth were attributable to volume mix. Developed markets grew 15.8% in Q1 with across the board strength, and more than 2 points of growth coming from volume mix. To note the customer disruption in Europe was more benign than we anticipated. Turning to portfolio performance on slide 12, chocolate biscuits, gum and candy all posted robust double-digit increases in Q1. Biscuits grew plus 16.9% with positive volume mix, despite substantial price increases. Oreo, Ritz, Chips Ahoy!, Give & Go and Club Social were among brands that delivered double-digit growth. Albeit not contributing to organic growth Clif posted good growth versus last year too. Chocolate grew more than 18% with significant growth across both developed and emerging markets. Volume was positive, despite some customer disruptions in Europe, albeit lower-than-anticipated. Cadbury Dairy Milk, Milka, Lacta and Toblerone all delivered robust growth. And we had a record Easter selling, that based on preliminary data also resulted in record high sellout. Gum and candy grew 35% with robust growth across all of our key markets. Now let's review market share performance on slide 13. We held or gained share in 60% of our revenue base, which includes 10 points of headwinds coming from EU customer disruption. The U.S. continues to make service level improvements and in Q1 with good on-shelf availability and case fill rates, resulting in share being flat to last year. Given stabilization of the supply chain, we feel confident that share will continue to improve during the year in the U.S. Turning to page 14, we delivered strong double-digit to OI dollar growth driven by a gross profit increase of more than $540 million. These results enable us to continue to significantly fund our business for future growth, while also providing strong earnings and cash flow. Moving to regional results on slide 15, we delivered double-digit revenue growth and posted volume mix increases in all regions. This growth, fueled by pricing and volume leverage drove robust OI dollar growth across all regions. Europe grew plus 18.9% with high-single-digital OI growth. We have made progress in lending expected pricing increases with circa 80% of our customers and with lower disruption than we anticipated. We are still planning for some disruption in Q2, which has been factored into our revised outlook as the remaining 20% of our customer base is not done yet. Consumer's confidence has stabilized in much of the region, with many key countries trending back to spring 2022 levels. Elasticities of biscuits and chocolate are overall less negative than we anticipated, including in the U.K., where the impact of HFSS is less material than what we had forecasted. Overall, rather than cutting back significantly on size of their basket, consumers are shopping around, to find attractive deals and trading up and down in terms of pack sizes based on their specific needs and consumer occasions. They remain loyal to branded products, particularly in chocolate. Having said that, our focus is now on landing the remaining part of the price increases. North America grew plus 17.3% with OI dollar growth of more than 40%, driven by higher pricing, solid volume mix and strength from our ventures, particularly pleased. We are reassured by the quality of the P&L in the region and by the fact that volume is holding up well, while we still have opportunity of returning market share to steady growth. AMEA grew plus 13.8% with strong volume mix of nearly 6%. OI dollars increased plus 15.6%. India continues to be a key driver of success in the region and we also have ambitious plans in China that will benefit from a broader reopening after COVID. Latin America grew plus 39%, with OI dollar growth of more than 47%. We are very pleased with the performance in the region with clear progress made over the last couple of years in terms of execution and ability to drive key brands like Oreo to new heights. Ricolino is off to a strong start, but we have not yet realized the benefit of the full integration that will happen towards the end of the year. Next to EPS on slide 16. EPS grew plus 17.3% in constant currency or nearly plus 10% at reported dollars, driven primarily by strong operating gains. Turning to slide 17, we generated free cash flow of $900 million in Q1, returning $900 million to shareholders through dividends and share repurchases. A few words on our recent KDP sell down on page 19. This investments has been highly successful demonstrating our disciplined and flexible approach to managing our investments and assets over time. Including dividends received and the market value of our remaining stake, this investments has generated a return of approximately 3.3 times our initial investment over a seven year period. We received approximately $1 billion in net proceeds from the most recent sale and now remaining stake is now 3.2%. From an accounting perspective, we will no longer account for these under the equity method, but rather recognizing dividends as the only income as of the dividend record day. We will adjust out mark-to-market quarterly re-measurement of the stake, in line with the gains that we have been obtained after each sell-down. These adjustments will be recorded in a new P&L line item, which will be below interest expenses. In terms of net EPS impact for 2023, purely on the basis of the different accounting treatment, we expect a headwind of approximately $0.03. I want to reiterate that this is merely accounting driven and not changing the essence of the investment itself. The gain on this sale, which is approximately $0.5 billion will run through the same account that we have used for past share sales. Finally, albeit a subsequent event to the quarter you might have noticed that we sold down also some stock for JDE Peet's. The transaction was equivalent to approximately EUR400 million through an equal combination of an outright sale and options at an only net discount of 2% to 3% versus the JDE stock price at the time of the transaction. Options had maturity, which is about six months. Both transactions, put us in a good spot in terms of our leverage and debt profile, and together with the expected proceeds of developed market gum, pretty much balanced the outflows related to the acquisition of Clif and Ricolino. Turning to our outlook on page 20, given the strength of our Q1 results and the overall operating environment across our business we are raising our full-year outlook for revenue growth and EPS. We now expect top line growth of 10% plus, versus our original outlook of 5% to 7%. EPS growth is expected to be 10% plus versus our previous outlook of high-single-digit growth. In terms of key assumptions, inflation is still expected to increase double-digit for 2023, driven by elevated cost in packaging energy ingredients and labor while lapping favorable hedges in 2022. In terms of interest expenses, we now expect $400 million for the year, given recent coffee transactions. We now expect $0.09 of EPS of headwinds related to ForEx impact for the year versus $0.04 in our previous outlook. The outlook revision reflect our increased confidence in another exceptionally strong year given the resilience of consumer consumption in our categories, more benign elasticities than we planned and share dynamics in enough to, as well as lower actual disruption and better environment in Europe. Having said that, we might have some more disruption for the remaining pricing, which will potentially affect Q2. Finally, continued strength in our emerging markets is what supports our improved guidance. This current outlook does not consider a material deterioration of geopolitical environment surrounding some areas of our business. With that, let's open the line for questions. Operator: Thank you. [Operator Instructions] And we'll take our first question from Andrew Lazar with Barclays. Andrew Lazar: Thanks. Good afternoon, everybody. Dirk Van de Put: Hi, Andrew. Luca Zaramella: Hi, Andrew. Andrew Lazar: I guess first-off, Dirk. I was hoping you could double click a little bit on the emerging markets performance, which was obviously dramatically better than I think most certainly modeled and were expecting. Organic sales were up 25% and I guess I'm just looking for some color on some key drivers and maybe more importantly, sort of on the sustainability of the performance and how we should think about that as the year progresses? Dirk Van de Put: Okay. Yes, so definitely a very strong performance this quarter, but I would say already for several quarters that we have strength in our emerging markets. Our emerging markets for us are about 40% of our business, and as you said 25% growth in Q1. I think it's important also to see that there has been very strong or solid volume growth around 4%, 4.5% 5%. So it's not just the pricing. If I go a little bit through the markets, India keeps on growing at a very accelerated pace, strong double-digit, no real signs of a slowdown. Our outlook for '23 remains optimistic, and we have to invest in capacity increases, which we are doing. But as you know, it's a combination of the strength of our Cadbury and Oreo franchises who are receiving heavy support with strong innovations and as well a distribution expansion, where we still have a runway for several years to go. In China, we also have strong momentum. There we also see good share gains. We have in the past quarters been establishing Chips Ahoy! as a second biscuits brands after Oreo business as you noticed, mainly Biscuits and gum. And I think with the post-COVID period now in China, we see the confidence of the consumer going up and we're expecting a strong year in China also. Same thing as in India, heavy support in our brands, good innovations, building extra capacity and still big upside on increasing our distribution. In Mexico, we now with the acquisition of Ricolino have significantly increased our distribution power. So there we will see the distribution of Mondelez brands increasing significantly in the coming months. We also have double-digit growth in the quarters, and the whole acquisition and integration of Ricolino is on track. Then maybe adding Brazil. Brazil is also double-digit growth. We continue to see strong demand and we are expanding our distribution also in Brazil. So I would say, overall, the key markets in our emerging markets group are doing well and particularly in Latin America, I would add to that the whole economic environment is pretty strong. Important to note is that they have delivered and are delivering reported dollar growth in top and bottom line. And that the cash flow that we're generating is also very strong. So the return on our investments in emerging markets is very good. And I would say that we believe that we have a sustainable growth engine that will continue for the foreseeable future. The reasons for that we have stepped up in execution in a major way, we now for several years in a row have continued heavy reinvestment in our business. We have these distribution opportunities, and I've been mentioning and we keep on going deeper and deeper into distribution, setting up routes and presence, which are having a very good return, and we keep on doing that year-after-year. And as I've said macroeconomics in Latin America helping, and then also the gum business which during the pandemic suffered is one of the drivers of our growth in Latin America. At this stage consumer confidence is relatively strong. We have high loyalty in our brands and private label in emerging markets remains a relatively small challenge. So we continue to be very optimistic for ‘23 and beyond. We feel that we have plenty of opportunity. We have a lot of headroom for accelerated growth, I would say. The penetration of our categories is very low. The distribution runway in places like China, India, but even in places like Brazil and Mexico are high. And our brands like Oreo. Oreo, for instance is really exploding in Latin-America, but Cadbury in India, Milka that we are now launching throughout Latin America. So we see all this combined gives us the confidence that we will keep on doing well in our emerging markets. Andrew Lazar: Really helpful. Appreciate that rundown. And then just super briefly, Luca, just from a guidance standpoint, it does not seem as though your expectations for the remainder of the year have necessarily changed that much and the upward guidance revisions primarily is based on the better than forecast 1Q results. So, I guess my question is, maybe how should investors think about the sort of the plus and the revised 10% plus constant currency EPS growth outlook, like the sort of the puts and takes are things to consider there. Thank you. Luca Zaramella: Yes, thank you, Andrew, you. Clearly, as we move through the year, we will be lapping materially higher quarter than Q1 last year, which is the only one quarter we had with high single digit. I think we moved obviously sequentially to higher revenue growth throughout the year. Reality is there might be a scenario there where we exceed the 10% floor that we had guided you to in terms of both revenue and EPS, but I think while I feel quite good on the underlying trends of the business, particularly in emerging markets, the strong momentum is there and obviously, we still have headroom to accelerate to a certain extent. I think I'm very pleased obviously with the U.S. and North America, which is on an upward trend. Excellent pricing execution supply chain improving. I think the watch out is a little bit on the European side. Happy with the improved profit in Q1, which is the result of the 80% of the pricing kicking in, but profitability in Europe is still not where it should be. So the remaining 20% of the pricing that is being implemented is important. Unknowns are in relation to this further pricing that is needed, a potentially related disruption and some macro volatility. But obviously as anywhere else in the business, we continue to invest and that coupled with additional pricing that will kick in should result in top about the line. So look. I think it is very early for us to guide you to something that is materially better than what we are saying at this point, but if everything plays out we might have further opportunities. I think the other one I want to hit briefly on which is the assumptions that we're making around commodities. We still see double-digit inflation rate in 2023, with obviously energy sugar ingredient posing most of the pressure. A good part of these inflationary pressures as I reminded these audience a few times, it is due to the favorable coverage we had in 2022. But in general, overall cost are not coming down materially. The most recent spikes in terms of cocoa and sugar prices are offsetting some of the other benefits that we see. I think you might have in the back of your mind percentage margins too. I said it a few times, we continued to be obsessed with dollar growth in cash and there might be some pressure in percentage terms, particularly in the next couple of quarters, but sequentially we will be much better throughout the year and we plan to end, clearly on the gross margin percentage positivity. But reality is we've driving a strategy that has being proven to be compelling for everyone. I said this about dollar growth. Andrew Lazar: Great, thank you so much for that. Dirk Van de Put: Thank you, Andrew. Operator: And we'll take our next question from Ken Goldman with JPMorgan. Ken Goldman: Hey, thank you. I wanted to ask you, most companies that we cover or at least that I cover now, pricing is exceeding their COGS inflation. For you it's still not a full offset. I think you mentioned that it was only a partial offset to the inflation. So I'm just curious, is there point this year when you do get pricing ahead of inflation? Is there any way to kind of forecast that? I just wanted to kind of get a sense of how we think about some of those potential tailwinds ahead, from that perspective. Luca Zaramella: I think all-in all, we are quite pleased with the level of pricing that we have at this point in time. If you look at the three major pricing actions, we have taken in places like the U.S., I mean that is something that you see in the P&L with the segment profit growth that we have displayed here, which is 40%. Obviously that number there is synergies coming out of the ventures. But in general, we are happy with the level of pricing. The same in emerging markets overall. You look at Latin America, you realize how disciplined we have been with pricing. The model in AMEA is slightly different in the sense that volume leverage is absolutely critical in some of these places, and so maybe we have been a little bit less aggressive on pricing than we could have been, but all in all the P&L is working very well. And I think they quoted that A&C year on year is up almost 20%. And that gives you the understanding of how much we are investing in the business and also thinking ahead out of a potential inflationary period. Where pricing is not necessarily where it should be at this point in time, it is Europe. We told you 80% is being -- has been implemented already with a little disruption compared to what we had anticipated. There is still 20% to go. But I think once you get that 20% the picture will look quite a bit different than, in fact, Europe is the biggest segment we have. And I don't want to give the impression that we were shy on pricing, quite the opposite. We have done what was necessary. But obviously in our case we want to keep volume leverage. I think looking at the 3% plus volume mix is something that is remarkable in Q1 and that leverage into the P&L and the profit dollar growth that we have shown, I think it is a winning formula, at least for us. Ken Goldman: Great, I'll pass it on, Thank you. Dirk Van de Put: Thank you. Operator: And we'll take our next question from Bryan Spillane with Bank of America. Bryan Spillane: All right. Thanks, operator. Good afternoon, everyone. Luca, two quick ones for you. One the clarification, just with the KDP accounting change, is the earnings base that we're using for ‘22 to calculate the EPS growth for ‘23, is that 289, so $0.06 below previous, or is it $0.03 because I think on one of the slides it said, the net effect was $0.03. So just want to make sure we're using the right 2022 base as a starting point. Then, I have a follow-up. Luca Zaramella: Look, the simple answer to that question is we have to take out all the income that was related to KDP last year. And it was roundabout, I think post tax was $90 million give or take. We are replacing that with dividend. And the net effect between a dividend payout, which is roundabout 48% or 50% depending on the base. And the fact that we stripped out earnings last year in the tune of the $90 million, I told you is causing the headwind of $0.03. As we stated the base impact was $0.06 but year-on-year impact is due to accounting is really $0.03. Bryan Spillane: Okay, okay. Yes so, I guess it's clear the base is 289, but as we're adding back you're capturing $0.03 of that $0.06 headwind back in ‘23, right. So but we're still starting -- our starting point is 289 to start the calculations off of for the forward guide? Luca Zaramella: That's correct. Bryan Spillane: Okay, okay. And then. I just had a follow-up and I think it's a follow-up to Ken's question just now. And just thinking about pricing and percentage margins, in the quarter. I think it was an $81 million hit to operating income from currencies, which it was like $0.06 of the $0.09 for the year. I'm assuming it's a little bit of a bigger hit at the gross profit line. We were thinking somewhere between 90 to a 100 basis points, maybe a gross margin. So I guess as we're thinking about margin progression, percentage margins and gross profit dollars. It seems like this is the worst of it, right, unless things change in this quarter in terms of the FX piece and like one tailwind we should see, assuming other things hold is it just that drag from foreign exchange should become a lot less severe as we move through especially the second half. Just want make sure I'm thinking about that correctly. Luca Zaramella: I can tell you that sequentially the gross margin percentage albeit, I don't like talking about it, should improve throughout the year. Obviously today, if I look at gross margin and gross profit dollar growth throughout North America, Latin America, and as I said a good portion of AMEA, I'm very happy with the numbers I'm seeing. Europe is still impacted by the fact that there is 20% of pricing to go. And as we implement that the situation should sequentially improve. Bryan Spillane: Okay, but the FX drag should -- again assuming things don't change from here, the FX drag should become less of a -- much less of an impact that it has been? Luca Zaramella: Absolutely, it should. Bryan Spillane: Okay, all right. Cool, thanks. Dirk Van de Put: You’re welcome. Luca Zaramella: Thank you. Operator: And we'll take our next question from David Palmer with Evercore ISI. David Palmer: Thank you. Strong results in so many areas, but I'd be interested to hear if you had to choose two or three that really drove your increase versus guidance or upside versus your internal expectations, whether those are current trends or maybe just sources of visibility. I would imagine, what's going on in Europe with retailer and consumer response to pricing is high on the list, but I'd be interested to hear what also makes that sort of top three. Dirk Van de Put: Yeah, the top three from me would be, yes, for sure Europe, where we were expecting a bigger client disruption, and that did not occur in Q1. As Luca said, we are only 80% done with the price increases, and we still have some negotiations going on. We could still see part of that client disruption in Q2, but that has been included in our outlook for the year. But that's certainly significantly better than we had anticipated. The second one that I would mention is the US, whereby you see a very solid top line, but the bottom line is probably the strongest increase driven by first of all, an improvement in our supply chain, but then also very strong recovery of Clif bars profitability since the acquisition, and we expect that positive trends for North-America will continue. And the third one is probably the ongoing strength in emerging markets. I already went there, but if I compare our emerging markets sort of growth of 25%, that stands for me well above any of our colleagues. And that has been going on for several quarters now. So those would be my top three, I would say, of what's carrying the quarter for us and probably is going to carry the year for us. David Palmer: Thank you. That's helpful. I'm wondering to what degree this year, and what you're seeing going on, maybe internally, not just some of the macros informs how you view your company in the long term growth rate, of your company and to some degree we've had COVID obscure what might have been happening in terms of all the changes that have happened and of course you've made plenty of acquisitions that are adding to your long term growth rate. So does this make you feel more optimistic that the long term growth rate is heading in the right direction and higher? Dirk Van de Put: Well. I think the recipe that we have is a strong recipe. We -- I went a little bit for instance in emerging markets through the different growth vectors that we have. But the fundamental principle is to make sure that we are well-positioned from a pricing perspective, that we continue to invest heavily in our brands, that we drive distribution, in-store presence, we work RGM. So we seem to have a recipe and a way of working that is really starting to click. So it certainly gives us confidence that we've got something going here that is very strong. What that exactly means going-forward because we are in a very particular period where last year and this year, we had to implement significant price increases. And I guess to our delight the consumer has not reacted by buying less product. They keep on buying the same or more product. But as we get through those price increases, growth will come down. We will have to see what happens with input costs going forward. So it's difficult to say, but I can certainly say that we are in durable categories that are doing particularly well in the circumstances that we are performing well, within those categories. So we feel very good about our long term algorithm. I think we have to wait a little bit to see where things will pan-out as we get through these price increases and that will be the moment to restate our long term growth algorithm. But so far. I would say very strong and we feel that we are in-line or above our long-term growth outlook algorithm for sure. David Palmer: Fair enough. Thank you. Operator: And we'll take our next question from Alexia Howard with Bernstein. Alexia Howard: Good evening, everyone. Dirk Van de Put: Hi, Alexia. Alexia Howard: Hi, there. So I've two quick questions. And first of all, where are we on the cost synergy recouping for the recent deals that you've done. It seems as though that was quite a strong benefit to profit growth recently, but I'm just wondering how much more there is. Luca Zaramella: So let's start with Clif. We have announced a re-organization, Clif started from a relatively high level of SG&A We have protected and increased A&C and adding which we have been able to obtain Round about $10 million of synergy a year, given better rates that we have. There is already cost opportunities coming into the P&L in the area of selling and administration. The new organization is already in-place. The next step is really to go and get synergies in the area of COGS. So there is still quite a bit of -- a lot of opportunity, just for a reference point, as we acquired this business, the EBIT margin was not great. I think today, in Q1, particularly given the pricing, we have taken which is the other area where we brought quite a bit of discipline, the margin is just shy of 20%. So, it's quite a good outcome at this point in time. There is still more to come. We are thinking potentially about leveraging DSD and doing other things and obviously the biggest opportunity we see is establishing this brand internationally. So that hasn't started yet as a work stream. On Ricolino we just got the business. We have CSA's in-place still with Bimbo. As we implement SAP. And as we move towards the end-of-the year, that’s the moment where we will start getting SG&A costs and COGS synergies, but reality is the biggest opportunity here is to set Oreo through the system and revenue synergy can be very, very material. So there is still more to come on both platforms. And I would say in general in the other ventures, there is still work to be done. And so potential synergies coming out there too. Alexia Howard: Great. And then just as a quick follow-up, can you just quantify how much the retailer inventory rebuild benefited North America this quarter. And is there any more to come on that you will pass it on? Dirk Van de Put: I think there was a slight positivity due to that. But reality is, we had been promoting less-than-optimal. And now that inventory is available, there is opportunity for us to do selective promotions and boost our brands, now that pricing is implemented. So pattern been material, I would say, and obviously in a context where you see this growth rate it is minimal, but we still have opportunities to really replenish stock more and now that we have potentially a little bit of more promotions coming, I think we are in a good position. Alexia Howard: Great, thank you. I'll pass it on. Operator: And we'll take our next question from Jason English with Goldman Sachs. Jason English: Hey, good afternoon, folks. Thanks for slotting me in. Dirk Van de Put: Hi, Jason. Jason English: Couple of thoughts -- hey there. Couple of quick questions. Both also sticking on North-America for a moment. Great news on the margin progression and congrats on that. That's impressive in such a short-duration. We had been assuming that it was going to be a margin mix drag to both gross margins overall in this segment. With a 1,000 basis-points improvement that you've seen so far. Is it still margin dilutive? Are you now closer to parity with this sector? Luca Zaramella: It is still margin dilutive on the overall segment. But again, as we think about potential opportunities in the years to come. This is another platform that we're going to integrate into SAP in the second part of the year. I'm sure the margins will get better. Pricing has been announced for the last round, but it hasn't kicked in yet. And there is now that we have stopped more opportunities to really activate that point of sales must stop leased as we called them, i.e. the right assortment by store is an area of opportunity that we have. So I'm confident that the margins will look quite close to the U.S. business going forward. Jason English: That's good to hear and sticking on North America, it seems like supply chain has been this overhang that we've been talking about in North America for year upon, year upon year and maybe I'm exaggerating, just because it feels that long. But it's great that you're over the hump and you are seeing improvement. Nice to see the sales side of that. How about on the margin side? Clearly this has been costly to the business. How much of a margin drag the supply chain issues been and how much of a tailwind could that be, as you look to sort of rebuild that? Luca Zaramella: I mean, well. I would say that is the whole -- this is a mix going on with the price increases that we have implemented together with some of the extra costs we're seeing incurred during the pandemic to get the right service and so on. You see in the recuperation face we also promoted less than we were planning because our inventories were low. So it's quite a complex picture to exactly pinpoint how much was due to the disruption, since we have to go through all these additional effect, but certainly is the case that the headwinds have moderated quite significantly. You know about the labor markets, the logistic situation. Our external manufacturers' network has improved significantly. So a lot of the cost headwinds that we were facing have now eased. That still doesn't mean that the cost have come back. There's been significant inflation. But I would say the resulting effects from our supply chain, improve, means that our inventory levels are back to the expected level. Service-level are reaching 90%. Our own sales availability is 96%. We still have some issues in our confectionery brands where the demand is higher than anticipated, and also Clif bar the service levels have fully recuperated. So at this stage I would say that the cost effects and the top line effects have largely eased. And we can now start to function normally with higher promotional levels and cost levels that are better. But it's very difficult for us to estimate exactly what it was. But going forward, things we're doing is we are increasing our capacity. We have changed our way of working and our relationship with our external manufacturers. The Inventories are rebuilt. We have simplified our portfolio. We've increased our -- sorry our warehousing capacity on top of our manufacturing capacity and we have implemented labor strategies for attention, and an improvement in temporary labor. So I think, apart from easing the cost, we've also put in place long-term solutions for our supply chain situation. Difficult to give you the exact number, but hopefully you can feel that we're in a much better spot as it relates to our supply chain in North America. Jason English: Yes, for sure. Thank you very much. I'll pass it on. Dirk Van de Put: Yes, thank you. Operator: And we'll take our next question from John Baumgartner with Mizuho. John Baumgartner: Good afternoon. Thanks for the question. I wanted to ask… Dirk Van de Put: Hi, good afternoon. John Baumgartner: Yes, good afternoon. I wanted to ask, Luca. I wanted to ask about profitability in AMEA. You're heavy into reinvestment mode there. You also mentioned the pricing disparities in earlier question. So I'm curious at this point how you're thinking about the point at which volume mix growth relative to reinvestment. And I guess what I also think is pretty strong potential for accretive product mix over time. When that begin to yield leverage and sets you back to margin expansion? Or is a mid-teens margin just structural ceiling for AMEA? Thank you. Luca Zaramella: I don't think there is a structural ceiling in AMEA. AMEA is Quite good in terms of profitability overall. I think when you look very closely to AMEA there are a set of countries that are -- I call them cash machines. The India or the China of the regions run on profit margins that are north of the average of the company. We invest in both businesses, roundabout 15% probably and see as a percentage of revenue, which is materially higher than the average of the company and we have cash conversion cycles whereby by growing these companies, not only we get the volume leverage that runs through a very sizable and bold machine both from a manufacturing standpoint, supply chain and sales, but also on negative cash conversion cycle, the cash throughput is impressive. There are countries where we have a little bit less material scale, the likes of Southeast Asia. There are certain countries in Southeast Asia, where the business is still developing, where categories like chocolates are not well established yet. And we are investing to make these categories much bigger for us. And there I think it is a matter of time, because the scale and the volume. We are adding will get to a point where the P&L will make perfect sense. As you might imagine that in these countries, we are investing both in terms of price points and support ahead of material expansion that I think it will come. And then obviously you have countries like Australia that are again, more mature markets where volume grows and we are happy with Australia overall. But it doesn't grow high-single-digit or double-digits as in other places, and there the evolution of profitability is fair. So as you think about AMEA, very happy with the sizable markets that are doing very well. In that emerging markets, like happy with Australia, the rest is the untapped opportunity. We are looking at and we have the obligation to invest for future growth and margins. I think it will come. John Baumgartner: Thanks, Luca. Very helpful. Luca Zaramella: Thank you, John. Operator: And we'll take our last question from Michael Lavery with Piper Sandler. Michael Lavery: Thank you. Good afternoon. Dirk Van de Put: Hi Michael. Michael Lavery: Just wanted to understand, I love like on slide five how clear it is that your A&C spending is almost identical to your sales growth. So clearly, the percentage of your spending as a percent of sales is holding about constant. But you get really some operating leverage there just given the amount of pricing that's driving the top line growth. And so, on a per unit basis you're really coming out ahead. How do you think about managing that going forward? Is it sort of a luxury, you want to maintain. Some of that may be get adjusted to fall to the bottom-line or just help us understand how spending might evolve given how that dynamic sets it up. Luca Zaramella: Clearly the 20% might be something that is on the high side. Now I can tell you one thing. One of the biggest differentiators of this company over the last three years, it has been level of investment. It has been quality of marketing, it has been brand support. We in the end sell brands and it is important that we keep line of sight to that. And I don't think you're going to see a consistently at 20% A&C increase, but at this point in time, where we are moving price points, where we are trying to retain and increase our consumer pools, it is important that we use these as an important accelerator of growth for years to come. And that's what it is at this point in time. When this inflationary cycle is done and good things will get more normal. I think what is a big differentiator is the level of volume and the scale, businesses are still going to have or not have. In our case, if you look consistently over the last few quarters, we have been growing volume. And there is a correlation between the level of investments we are making, both in terms of marketing and distribution. And so I don't think you're going to see consistent in 20% but realities that is still a big opportunity for us to get our brands where they belong, which is higher sales hop3rully quarter-after-quarter. Michael Lavery: That's great color. Thank you so much. Luca Zaramella: Thank you. Luca Zaramella: Thank you. With that we've come through the end of the goal obviously a strong quarter. We're looking-forward at this stage to a strong year. Thank you for your attendance and. Any other questions. Please refer to Shep in the IR team which we can follow-up with. Thank you. Dirk Van de Put: Thank you, everyone. Operator: That concludes today's teleconference. Thank you for your participation. You may now disconnect.

Operator: Good day, and welcome to the Mondelez International Fourth Quarter 2022 and Full-Year Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Sir, please go ahead. Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the Company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update, followed by review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I am pleased to share that we delivered another record year, not only in size of the company, but also in profit dollar growth. Our strong topline performance was driven by excellent pricing execution and continued volume strength as consumers all over the world remain loyal to our iconic snacking brands. We delivered strong topline performance in both emerging and developed markets while continuing to exercise cost discipline. In keeping with our strategy of achieving global snacking leadership, we continue investing in our brands and capabilities while strengthening our portfolio with important bolt-on acquisitions that increase our exposure to attractive and growing categories and profit pools. We executed well against our long-term algorithm, returning $4 billion in capital to shareholders. Perhaps most importantly, we continue to invest in our people, building a deep and diverse team whose local routes and global insights enable us to stay a step ahead of rapidly changing customer and consumer tastes. We are confident that the strength of our brands, our proven strategy, our continued investments, and especially our great people position us well to achieve our long-term financial targets in 2023 and beyond. Along with our financial performance, I'm pleased to share that we made significant progress towards our environmental, social and governance agenda. You recall from our investor update last spring that we have elevated sustainability as the fourth pillar of our growth acceleration strategy. That's because we firmly believe that helping to drive positive change at scale is an integral part of our value creation with positive returns for all our stakeholders. Let me share a few highlights on Slide 5. First, we continued to advance our leadership in more sustainably sourcing cocoa and wheat, our two most critical ingredients. We launched the next chapter of Cocoa Life, our signature cocoa sourcing program with another $600 million commitment, bringing our total investment to $1 billion. Cocoa Life is working to lift up the people and restore landscapes where cocoa grows. Similarly, we will launch in the first quarter of 2023, an updated vision for our Harmony Wheat program focused on more sustainably sourcing wheat across the European Union. We continued advancing our Light and Right packaging strategy. For example, our Cadbury Dairy Milk chocolate in the United Kingdom, Australia and New Zealand now are wrapped in packaging with more than 30% recycled content. We also continue to make progress on tackling climate change. We expanded our use of renewable energy to reduce our Scope 1 and 2 greenhouse emissions, and in about 80% of farms in our Cocoa Life program in West Africa, we achieved near to no deforestation, reducing Scope 3 emissions. Since 2018, we have reduced our CO2 emissions by more than 20%. We also remain focused on advancing diversity, equity, and inclusion because we firmly believe that diverse perspectives and viewpoints make our company stronger while helping us stay closer to our customers and consumers. As an example, we increase the gender and racial diversity of our Board of Directors with the appointment of industry leading experts. We are proud of team Mondelez continued success in making important impacts on these critical environmental, social and [governments] issues, while creating value for our shareholders and other key stakeholders. Turning to Slide 6, you can see that we had a record year despite challenging operating conditions. We view our strong performance in 2022 as evidence that our long-term strategy continues to deliver for our stakeholders. Organic volume grew 2.7% for the year on pace with recent years, demonstrating the continued strength of our resilient brands and categories even in an inflationary environment. Organic net revenue grew by 12.3%, significantly lapping the prior three years performance with broad-based growth across all regions. We also delivered record adjusted gross profit dollar growth of $1.4 billion. We are proud of our team's ability to offset major cost pressures to enable us to continue investing in the business, which will drive further growth acceleration. Accordingly, we increased A&C investment by double-digit, helping to keep our brand top of mind for both consumers and customers. These pricing cost management an investing activities translated into strong operating income growth of more than $580 million. We remain confident that our virtuous cycle of strong gross profit dollar growth, which fuels local first commercial investment and execution, will continue to consistently deliver attractive profit growth. We are especially confident that our unique growth strategy centered on acceleration and focus will enable us to continue to successfully navigate the dynamic global operating environment, differentiating us from many other food companies. On Slide 7, you can see that despite the volatile environment, we have the right setup and strategy to ensure we deliver against our growth algorithm. Momentum in emerging markets, with particularly China and India showing strong results combined with the resilience of our categories as evidenced by strong volume growth is helping us to offset the challenges that many companies are facing, such as global cost inflation, the energy crisis, recession concerns in Europe and supply chain volatility. Our consumer continues to hold up well across most geographies, prioritizing snacking and buying more volumes of our products despite significant price increases. Our U.S. supply chain is gradually getting back to normal after a long period of sub-optimal customer service triggered by the 2021 strike and the subsequent overall supply chain volatility. We are continuing to implement appropriate incremental price increases across key markets, including Europe. We also continue to take appropriate action to hedge our commodity costs while continuing to advance our ongoing productivity initiatives. All of the above allows us to increase our investment in brands and capabilities every year, which underpin our growth momentum. Our ability to deliver real dollar growth enables us to make sound and choiceful decisions that drive the business forward and position us well for continued future growth. Slide 8 shows that our performance in 2022 gives us confidence that we have not only the right growth plan, but also the right execution to deliver it. Our core categories of chocolate and biscuits remain attractive and durable in both developed and emerging markets. We are accelerating our focus on these core categories because they have attractive growth and profitability characteristics and still a significant headroom in terms of penetration and per capita consumption. Our long-term vision is to generate 90% of revenue through these two core categories. We hit an exciting milestone in the biscuit category this year as Oreo surpassed $4 billion in global net revenue, further solidifying its position as the world's favorite cookie. Our acquisitions of Chipita and Clif Bar helped us expand our footprint in the growing Baked Snacks segment. While our acquisition of Ricolino helped us fill an important geographic white space, establishing a strong foothold in a priority emerging market of Mexico. We also continue to expand our presence in high growth channels, segments and price tiers. For example, silk premium chocolate doubled its prior year penetration in India, while in emerging markets, we added more than 400,000 additional outlets, and we have significant runway ahead of us. These are just a few examples of the ways our teams remain relentlessly focused on delivering the growth and acceleration plan we outlined at our Investor Day last spring. As Slide 9 indicates, we continue working hard to reshape our portfolio, which will accelerate our growth, and I'm pleased to share that we made significant progress in 2022. As we continue to drive focus on chocolate, biscuits and baked snacks, our nine strategic acquisitions since 2018 have enabled us to enter exciting adjacent spaces such as wellbeing and premium. They also have strengthened our presence in key geographies and expanded our trade coverage. Together, these acquisitions add nearly $3 billion in revenues and are all growing high single- or double-digit. Strong execution against our proven integration playbook enabled us to rapidly realize the value of the three acquisitions we closed in 2022. The Chipita business provides us an important platform to further accelerate growth in the attractive biscuits and baked snacks category. Similarly, Clif Bar expands our global snack bar business to more than $1 billion. Additionally, Ricolino Mexico's leading confectionary company doubles the size of our business and more than triples our routes to market in Mexico. Along with successfully integrating these three businesses, we announced in late 2022 the sale of our developed market gum business to Perfetti Van Melle for an implied EBITDA multiple of about 15x. This divesture will help fund these recent acquisitions and streamline our portfolio. We continue to have the Halls business, which has been performing well, but still intend to divest it over time in a way that maximizes value. In conclusion, I'm pleased to reiterate that 2022 was a record year. Our focus and portfolio reshaping strategy is working and we are well positioned to continue driving attractive growth in 2023 and beyond. By continuing to double down on the attractive chocolate, biscuits and baked snacks categories, investing in our iconic brands, focusing on operational execution and cost discipline, and empowering our great people, I am confident that we can deliver strong performance for years to come. With that, I'll turn it over to Luca to share additional insights on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon, everyone. In 2022, we delivered unprecedentedly strong results, starting with double-digit topline growth through both volume and value, which in turn translated into gross profit dollar growth, allowing the investment in the business, solid earnings and cash flow. Growth was also broad-based in terms of regions, categories and brands. Revenue growth was 12.3% and 15.4% for the year and the quarter, respectively. Importantly, nearly 3 points of full-year growth and 1.6 point of Q4 came from volume mix. Emerging markets increased 22% for the year and 24.7% for the quarter with strong performance across a significant majority of countries, including Brazil, China, India, Russia, Mexico, the Western Andean countries, and Southeast Asia. More than 7 points of full-year growth in emerging market was driven by volume mix, confirming the great momentum of these geographies. Developed markets grew 7% for the year, and 10.5% for the quarter. Volume mix in developed markets was flat in Q4 as there were still some ongoing negotiations at the beginning of the quarter in the EU, that resulted in customer disruption, which in turn offset some good momentum in countries like the U.S, Canada, Australia, and others. Those negotiations are now fully closed, but we have just announced another pricing round in Europe. Turning to portfolio performance on Slide 12. Our chocolate and biscuit businesses both delivered double-digit growth, while gum and candy continue to recover with improved mobility. Biscuits grew 11.7% for the year and 18% for the quarter, supported by significant volume growth. Oreo, Ritz, Chips Ahoy!, Tate's, Give & Go and Club Social were among the brands that performed very well. Chocolate grew more than 10% for both the year and quarter with significant growth across both developed and emerging markets. Volume mix was virtually flat in Q4 due to customer disruption in Europe. Emerging market posted exceptional double-digit growth for the year and the quarter. Cadbury Dairy Milk, Milka, Lacta and Toblerone, all delivered robust growth. Gum and candy grew 25% for the year and the quarter. Brazil, Mexico, and the Western Andean area all performed well. Now let's review market share performance on Slide 13. We held or gained share in 40% of our revenue base, which includes 15 points of headwinds coming from the U.S. supply chain, that while improving, still weighs on the full-year share performance. Chocolate held or gained share in 50% of our revenue base. This number include a strong Christmas season, which gains in several key countries, but also reflect customer disruption in Europe. Retailer and consumer activities are now vastly restored in the region, but the price that we just announced might have a negative impact in the first two quarters of 2023 as far as share goes. Our biscuit business held or gained share in 25% of our revenue base. This includes 30 points of headwind from the U.S. supply constraint and customer disruption in Europe. The U.S. made significant service level improvements in the back half of 2022 narrowing share losses and we expect this trajectory to continue to improve in 2023. Turning to Page 14. For the year, we delivered strong double-digit OI dollar growth, driven by a record high increasing gross profit of nearly $1.4 billion. In Q4, we also saw strong double-digit OI and gross profit dollar growth. Moving to regional performance on Slide 15. Europe grew 7.4% for the year and 8.7% for the quarter. Thanks to strong execution, volume mix was flat for the year despite customer disruption in Q3 and Q4. Brand support remains a priority in the region and we have continued to increase our A&C. OI dollars for the year were up 4.3% and 12.4% for the quarter and the year, respectively. Q4 profitability saw a return to growth due to an additional price increase and the emerging market performance within the segment. To close on Europe, we continue to see more pronounced inflation in this region based on energy and other input costs. We also expect to see challenge margins in Q1 given our expectations of customer disruption. Although we saw a small uptick in elasticity for Q4, European consumer has continued to hold up well and the preference for snacking and trusted brands remains strong with elasticity levels below normal. North America grew 12.3% for the full-year and 19.5% for the quarter, higher pricing, robust volume mix and strength from our ventures such as Tate's and Give & Go fueled those increases. Volume mix was 0.8% for the year and 4.2% for the quarter. North America profit increased 18.7% for the year and 37.3% for the quarter due to strong pricing and healthy volume results. Besides the benefits of our pricing execution, the consumer remains resilient and elasticity continues to be well below normal levels. AMEA grew 12.5% for the year and 13.6% for the quarter with strong volume growth for both periods. India grew strong double-digit for the year and quarter, driven by both chocolate and biscuit. China increased high-single digits for the year despite COVID restrictions in certain cities and posted double-digit growth for the quarter. Finally, Southeast Asia also delivered strong double-digit growth for both periods. AMEA increased OI dollars by 9.8% for the year and 8.8% for the quarter continuing their virtual cycle. Latin America grew 31.9% for the year and 37.1% for the quarter with robust volume mix growth coupled with strong price contributions. All key markets posted double-digit increases for the quarter. Latin America has had its strongest year ever in terms of OI delivery. In fact, OI dollars in Latin America grew 48.5% for the year and more than 45% for the quarter. Broad-based volume growth, pricing and ongoing improvements from the gum and candy categories drove these results. Next to EPS on Slide 16. Full-year EPS grew 11.9% in constant currency. This growth was primarily driven by operating gains. And despite very significant currency headwinds, we grew adjusted EPS as reported ForEx by 3.5%. Turning to Slide 17. We delivered $3 billion of free cash flow for the full-year, including a one-time expense of $300 million related to the Clif acquisition and buyout of its employee stock ownership plan. Turning to outlook on Page 19. For the current year, we expect to deliver on or in excess of our long-term algorithm for all variables. There might still be meaningful variability for the year, so we expect plus 5% to plus 7% organic net revenue growth, which stands from the higher pricing. We also expect on our growth to adjusted EPS of high single-digit. Somewhat like 2022, we expect a slightly different shape related to the P&L with higher topline, strong profit dollar growth and lower than historical margin rate given elevated inflation and related pricing away in dollar terms. As far as assumptions grow, we are planning for another year of double-digit inflation with dollars higher than in 2022. This inflation is driven by the continued elevated cost in packaging, energy, ingredients and labor. This input costs are also more pronounced in Europe and some select emerging markets. We also had favorable coverage versus the market in 2022. And although spot rates have been easing in many cases, new hedges are coming at higher levels than what was incorporated in March of last year. We are taking action with a flexible hedging program by using options to minimize risk and volatility, whether commodity rise or fall significantly from current rate. That is to reassure you that in case of commodity price dislocations, we will still be in a position to hit our profit commitment while still investing for growth. In terms of interest expenses, we expect an incremental $90 million for the line associated with the financing of recent acquisitions that we plan to repay later in the year with the developed gum divestiture proceed. We are planning for a net increase in total pension cost of around $25 million as above the line service cost will be lower and below the line element will be worse due to the rising interest rate. Important to note that due to our strong funding levels, we do not have to make additional contributions to our plan. We will also benefit from the higher OI dollar contribution from the acquisitions of Clif and Ricolino and their related synergies. In terms of phasing, we expect Q1 to be lower from a margin rate perspective due to lower volumes in Europe associated with the expected customer disruptions and Chinese New Year phasing. Disruption in Europe might also continue into Q2. We are expecting $0.04 of EPS headwinds related to ForEx. With respect to free cash flow, we expect another strong year with $3.3 billion plus absent any significant one-time non-operating item. In this outlook, we also expect an adjusted effective tax rate in the low to mid-20s based on what we know today and a share repurchase of around $2 billion. With that, let's open the line for questions. Operator: Thank you, sir. [Operator Instructions] And our first question will come from Andrew Lazar with Barclays. Your line is open. Andrew Lazar: Great. Thanks so much. Two questions for me, if I could. First, Dirk, maybe you could provide a bit of a state of the union in key markets, especially in Europe in terms of just what you're seeing with the consumer in response to recent pricing and if there's any sort of early update on what you're hearing from the most recently announced pricing in Europe? And then, Luca, you talked a little bit about a different shape to the year than would be typical. And it sounds like that's mostly incremental inflation and sort of the mechanics of pricing impacting margin. But just wanted to make sure that's kind of what you see it as as opposed to anything that could be deemed more structural that we should be concerned about when it comes to sort of the margin percentage compression that could still be the case, I guess, for the full-year a bit. Thanks so much. Dirk Van de Put: Okay. Thank you, Andrew. Yes. I would say we feel good if I look at the total business about the strength of our portfolio and the diversification that we have within that portfolio. So when there are some areas that are bit of a more difficult situation, we always have other areas that compensate for that. And so we can keep on delivering very good results. And it goes across brands, regions and categories for us. I also feel good about the strong topline performance with good execution of our pricing, but also for the year, almost 3 points of volume growth, which is in line with the previous years of volume growth. And I think that is a testimony to the strength of our brands and the categories. Share is obviously below expectations, but there is very good explanations for that because we had disruptions in our U.S. supply chain. And then also in Q3 and Q4, disruption with our European customers because of the price increases. I think also something that we feel particularly good about is our broad-based strength in emerging markets from a top, but also very importantly, from a bottom line perspective. And as you know, we're very focused on growing dollars in the gross profit line and the $1.4 billion is a very strong result, which enables us to offset some of the extra costs we're seeing, but also to significantly continuing to invest in our brands and increase our bottom line. Our margins, of course, are impacted by elevated inflation. It's something that it has a denominated effect as we price against that, but we do expect that over time, margins will come back. And then despite currency headwinds, we are having in constant – or in adjusted EPS, we have double-digit, but we still grew real EPS by 3.5%. So overall, I would say we feel very good about the results. If I look at the consumer – the volume growth rates, which is what we are looking for to see really how strong the categories are holding up really well. We see very good in-home consumption in the U.S. In Europe, there are some signs of a bit of a category slowdown. That's the only region where our categories are slowing in negative volume growth. But I would counter that with very strong volume growth in all our other regions, particularly in places like Brazil, India, China. I think from a competition perspective, we will start to see the differentiation between companies that can continue to invest in their brands and keep a very positive algorithm, while others will have to focus more on costs, and cutting back in this cycle. As it relates to pricing, so the pricing for 2023 in the U.S. has passed and is implemented. So we did that in December. In Europe, we have started discussion with our clients. I would say we are 60% done of what we need to do. So far, so good, but there is obviously still a few weeks and months to go, and we will know more by the end of March, beginning of April, where we stand. But so far, so good, I would say. The other thing I would mention as it relates to the consumer is that the elasticity is still very low. This is a slight uptick in Europe, but still well below the expectations. We are planning for more elasticity in our 2023 outlook, but we still have to see that materialize. The other one, I think is important to mention is that we will have double-digit cost inflation. There's a lot of talk about diminishing inflation. We don't see that at the moment, and that is driven largely by energy, ingredients and labor. Nevertheless, if you take all that together, I think we are positioned well for 2023. Luca will talk a little bit about the different shape of our P&L, but we will be on algorithm with a higher topline, but that is driven to the whole inflationary situation. So maybe Luca, I hand it over to you. Luca Zaramella: Yes. Thank you for the question, Andrew. And as it relates to the shape of the P&L, particularly on gross margin, you will see some pressure, particularly in the first part of the year, a result of a couple of things. One, it is elevated inflation and us having particularly good coverage in 2022 and lapping the favorable pipeline that we had in commodity terms in 2022, and the fact that clearly, pricing, particularly for Europe, is not fully implemented yet. The new pricing wave I mean. And that is also compounded by the expectation that we will have some customer disruption kicking in towards the end of Q1 and potentially also into Q2. Having said that, I think when you look at the fundamentals of the business, I feel quite good about emerging markets. You saw the stunning number that we printed for Q4 and for the year. The momentum of those emerging markets is continuing into Q1. We started the year quite strongly. I'm quite happy with the U.S. and North America in general. I think there was an excellent pricing execution. And obviously, as the last pricing wave comes into effect into the P&L, that allows for reinvestment in the business. And I think also you will be positively surprised by share throughout the year. Clearly, EU is a little bit of a watch out. Happy to say that the profitability, as you saw in Q4 improved quite a bit compared to Q3 and that is the testament to the team of the pricing that was implemented. But clearly, there are some unknowns in relation to further pricing and potential disruption, and we have commented on consumers in general. So look, the key assumption here is double-digit inflation. Part of it is driven by the favorable coverage we have. And we will stay disciplined in pricing it away. And as I said in the prepared remarks, if commodities take a more benign impact, we will be able to take advantage of it because we have flexible coverage implemented. Andrew Lazar: Thanks so much. Dirk Van de Put: Thank you, Andrew. Operator: Thank you. Our next question will come from Ken Goldman with JPMorgan. Your line is open. Kenneth Goldman: Hi. Thank you. Dirk Van de Put: Hi, Ken. Kenneth Goldman: I may have missed this, but did you guys by any chance to talk about your expectation of price versus volume mix this year? I recognize it's not something you typically give in guidance, but I'm just trying to get a sense for how to model that a little bit cleaner just given some of the puts and takes? Dirk Van de Put: So I'll give you a little bit of a high-level answer. And the answer is, we have planned for modest volume contribution into 2023, and quite frankly, that is the direct outcome of us planning for historical elasticities rather than what we have seen as of recent. So there might be a little bit of an upside versus that assumption. As you dissect the business a little bit more, I believe you're going to see good volume growth in emerging markets, particularly in countries like China, India, Brazil and so on and so forth. You are going to see volume growth in North America. Clearly, there is an element of us replenish in stock with the trade that has a positive impact. But importantly, I think U.S. biscuit is really on solid ground and all the ventures, namely – Give & Go and paid particularly are really delivering volume growth versus last year. And finally, where I think you're going to see volume pressure is in Europe, and that is the direct outcome of potential customer negotiation disruption and relatively higher elasticity than in other places in the world. So volume leverage, I think, will be one important component of the 2023 P&L shape. Three regions, I believe, will be on positive ground in Europe due to disruption, there might be some volume pressure. Overall, I think you're going to see modest volume growth for the year. Kenneth Goldman: Very helpful. If I can just ask a quick follow-up. You talked about partly the reason for losing share in 2022 was because of your European customer disruptions, are your competitors not being disrupted as much? I'm just curious, are they not pricing up as much as you? Is it more of a timing issue? It just feels like if everyone's pricing up, maybe there shouldn't be share loss, but I'm missing part of that perhaps? Luca Zaramella: Yes. Well, we have to take into account that our main competitors in Europe are private companies. And what we've seen is that they have not priced as aggressively as we have. We assume that, that eventually will have to come, but that is the main difference between us and competition. And so that is the explanation of the share loss. Some of the – the other competitors have had some events that they lapped of the year before, and that has helped them also to gain some share this year. So those are the two big reasons. Operator: Thank you. Our next question will come from Chris Growe with Stifel. Your line is open. Christopher Growe: Hi, good evening. Thank you. Dirk Van de Put: Hi, Chris. Christopher Growe: I just had a question for you – hi – on – just a follow-up on Europe. If you look at 2022 fiscal 2022, were you able to get pricing up in line with inflation in Europe? And I guess I'm trying to understand if you look at 2023, is there any sort of catch up in pricing you expect in Europe, if that's possible, which may sort of compound some of these issues with share there? Luca Zaramella: Chris, I think as you look at the quarterly gating in 2022, you saw the most pressure in terms of profit delivery in Europe in Q3. And in there, there was the fact that we were running out of hedges for the first part of the year and pricing was not fully implemented. As you saw in Q4, profit is up soundly. And in that context, we also increased investments. So as we close the year, the absolute inflation that you would expect annualized compared to the pricing annualized was a wash. The point here is, as we walk into 2023, there are a couple of events that came into play. One, it is the material energy pressure and the fact that in 2022, we had positive coverage in that area. And the second one is the fact, clearly that we have to price again. So all considered the 2022 inflation that was embedded in the base and the pricing wasn't at worse by the end of the year in terms of annual impact. Now going into 2023, there is more pressure coming and subsequent price required. You are going to see some subpar numbers in terms of profit for Europe, most likely in Q1 and Q2 as a result of pricing not fully implemented yet and customer negotiations. But then by Q3 and Q4, there will be a recovery of margins and profitability in Europe. And again, in this context, the last thing we want to do is to cut on investment, and we will continue to invest A&C regardless of pricing negotiations going on. Christopher Growe: Okay. Thank you for all that color. That was a good answer there. Then the other question I have was just in relation to China. You had a strong performance there this quarter and through the year. Is that a tough comp for 2023? Or if we see some improvement in mobility and travel, should that help China grow at even faster rate in 2023? Dirk Van de Put: I wouldn't say that we are immediately planning for a faster rate in China. But certainly, if you look at the country coming out of the COVID situation and the restrictions starting to ease and the travel restrictions being lifted, on top of that, our plants are open and operational, which was not always the case during the past year. So I think that we will be having a good supply situation, we do have some increased costs, and we will have to deal with that through price increase. But overall, I would expect China to continue with a high single-digit to double-digit growth for next year. The gum business, we expect to come back and we would continue on momentum with the biscuit growth that we've seen. We continue to increase our market share. I see no reason why that would not continue next year also. And so apart from the pricing, all the other indicators for China are pretty positive for us. Not quite sure if that really immediately translates in acceleration, but high-single digits to low double-digit is doable for China for next year. Luca Zaramella: Maybe just one little add. There is a little bit of phasing as it relates to Chinese New Year. So in Q1, you're not going to see double-digit revenue growth. But as Dirk said, the fundamentals of the business are very strong, and the team is executing extremely well in the country. Operator: Thank you. Our next question will come from Jason English with Goldman Sachs. Your line is open. Jason English: Hey, good morning folks. A couple of questions… Dirk Van de Put: Hi, Jason. Jason English: Hey, there. Congrats on the strong finish to the year, by the way. First, on the China New Year, can you help me understand that a little bit more? Is it that you shift, you pulled more into the fourth quarter, so we don't get the benefit in Q1? And also on timing, the North America volume was very robust, certainly more robust than we expected. Is there anything unique or one-time in nature that's helped the health volume in that region this quarter? Luca Zaramella: So let's tackle maybe this last one first. As you think about volume in the U.S., clearly, the share situation is improving. The category despite double-digit pricing is posting volume growth, particularly in Q4. So we saw value and volume growing within the category, as I said, shall improve, but importantly, we are also recuperating service level, and that clearly helps a bit. So I believe all in all, there is a strong foundation in the biscuit business in the U.S. And the second element that has to be taken into account is the fact that what we call ventures, namely Give & Go, Hu and also Tate's are delivering volume and value growth. And we are clearly taking advantage of synergies, particularly in the case of Tate's, we are very pleased with the fact that, that platform going into DSD has delivered material revenue and bottom line growth. And clearly, in the case of Give & Go, we are seeing after price increases, the category thriving and that drives really the volume. In terms of Chinese New Year, China was north of 10% in Q4. And there was, I would say, 3, 4 points of contribution coming out of that 10-plus percent due to Chinese New Year. Clearly, that is a reversal in Q1. But again, fundamentally, the business remains very sound. I think you're going to see continued share gains. And we're not talking about small share gains in the category of biscuits. And again, as the country reopens, one of the things that we missed throughout 2022 was gum growing. And Gum is going to come most likely positive in 2023, and that will help also the bottom line because margins in gum are higher than in biscuits. So hopefully, that addresses your question. Jason English: Yes. Very helpful. And a good segue into my second question is you brought up gum in margin mix. As we bridge out your margins for the fourth quarter, we've got a very big hole in our margin bridge, suggesting that we're meaningfully underestimating the amount of inflation, or there's some unusual cost or perhaps some much larger mix headwinds than you've contested with for the rest of the year. Can you unpack it for us and give us a little more color because with the price you got and the acceleration, it was just surprising to see margins move so much further south? Luca Zaramella: Yes, I don't think – I mean, mix was positive. So I don't think mix in general is a problem. I think you saw gum and candy growing 25%, that's margin-accretive. I think what was underestimated in general in the modeling that I saw around it is the impact of inflation and the subsequent price that was coming out of it. As we price away dollar for dollar and not for percentage margins, I think the – there was an underestimation of both pricing and the inflation despite the fact that we said very clearly, inflation was double-digit. I think the way you have to think about it is you wouldn't have expected for the year a 3% volume growth, you wouldn't have expected a 1.6% volume mix in Q4, which, by the way, when adjusted for the customer disruption due to Europe in Q4 is again down about 3%. So I think versus what you had in mind, there is much better volume. There is higher inflation, there is higher pricing and the fact that we price dollar for dollar creates a little bit of pressure on the percentage margin. I think in terms of OI margin, you see a good number because obviously, also cost below the line have been kept in control or below GP, I mean. And so that's really all the put and takes that you have within the shape of the P&L. Operator: Thank you. Our next question will come from Alexia Howard with Bernstein. Your line is open. Alexia Howard: Good morning, everyone. Dirk Van de Put: Hi, Alexia. Alexia Howard: Hi, there. Can I stick with Europe with two questions? The first one, I think you mentioned the category slowdown. And I can't remember whether that was biscuits or chocolate. But is that to do with the high-fat sugar and salt initiative in the U.K.? Or is it just weakness in the consumer in general? And then I have a follow-up? Dirk Van de Put: Maybe we'll do first the categories and then I didn't quite understand the question on the weakness of the consumer in the U.K. Luca Zaramella: Yes. She says it is HFSS or something else. Dirk Van de Put: Okay. So from a category perspective, in Europe, our category performance is obviously different from what we see the overall categories to do. I would say both biscuits and chocolate are showing slightly negative, minus 2%, minus 3%, the overall category in Q4, and that is probably a consequence of the consumer feeling some recession. We're a little bit worse than that driven by customer disruption. But I think that as we go through the first quarter of next year, I think that will gradually come back. I'm talking about the category here. So it's probably understandable seeing the economical situation in Europe that we see a little bit of a slowdown there. As it relates to the U.K., what we see with HFSS is, first of all, there's two limitations that come from HFSS. One is the limit on the location where HFSS products can be sold in the store. And the other one is a promotion and advertising limitation. The second one is not yet being implemented, that will be in October 2024. But so far, we have the change in store. And so it means that you don't find them in checkouts in the queuing area, no more at the store entrants, no more [indiscernible] and so on. If you look at our business there, which is mainly a chocolate business, it is about 60% plant purchase and about 40% is impulse. And obviously, the impulse is affected by this because you have less interruption locations in the store. But the 60% of plant, of course, continues. We have been partnering with the stores to offset this by finding new secondary promotional locations, making our brands stan6d out in the aisle, moving the singles category, which was the checkouts to the food-to-go areas and so on. So overall, I would say that the initial signs, while showing an effect on sales in the category and for our business, it is less or less bad than we would have expected. So in-store execution seems to be helping and it's helping to mitigate the less off-shelf display that we have. Smaller stores are sort of suffering a little bit more because they have less space to make up for what was lost. So if I look at the category volumes they're down 1.1%, which is not that bad in December for the last 12 weeks, down about 4.5%. But if you take into account that the off-shelf distribution is down by about 30% because of those locations. I would say that the category is holding up quite well as it relates to the changes we're seeing in-store. And so I would say, yes, there is an effect, but it's far from the magnitude that we could have taken, and I'm expecting that the consumer gets used to this new setup of the stores that the volume growth will come back. Alexia Howard: Great. And there’s a super quick follow-up. I'm curious about these customer disruptions in Europe continuing into, I think you said the first quarter and 2Q, I thought all the pricing had to be done in the first couple of months of the year. So I thought all those customer disruptions were kind of in the fourth quarter rather than bleeding into the first half of the year. What's happening there? And I'll pass it on. Luca Zaramella: Yes, there are some specific laws in France where, for instance, you have to be done with pricing negotiations by the end of February, reality is particularly on promotions and promotional calendars, there might still be negotiations underway and besides France, other countries can obviously, in terms of negotiations go a little bit longer. So we have announced pricing, we are clearly in active talks with most of the customers, by the way, successful implementation of pricing in places like the U.K., in the Nordics, in Southern Europe, namely Italy and Spain, predominantly. But clearly, places like France and Germany, there is still some ongoing negotiations. And we expect some of the disruption happening in March and potentially spinning over into Q2. That was a little bit the pattern we saw between Q3 and Q4 this year in 2022, sorry. And we expect the equivalent of that in 2023. Operator: Thank you. Our next question will come from Cody Ross with UBS. Your line is open. Cody Ross: Good evening. Thanks for taking our questions. I just want to go back to Jason's question earlier on the consumption or at least your shipments trend stronger than consumption in the developed markets. What is driving that? Was there any pull forward ahead of your price increases that you have going into the market in December and then again in 1Q? And then I have a follow-up? Thank you. Luca Zaramella: The simple straight answer is no. When you look at the European segment, I think you saw a volume decline of – volume mix decline of 4%. So the last thing we did was to preempt the trade before future price increases. So no question, particularly in that segment. As you look at North America, when you dissect the performance of volume growth of North America, as I said, the category has positive volume dynamics. In that context, we are delivering better share. And the third element is, we are improving customer service level and increasing to sound levels that are not sound yet. The retailer-related stock. So the last thing we did was to increase trade stock ahead of price increases. This is all stock that is being sold and consumed by consumers. Cody Ross: Thank you. That's helpful. And then there were recently headlines in the news about a grocer asking food companies to lower prices on the back of moderating inflation historically on the back of inflationary cycles, would you consider rolling back price increases? Or do you expect to lean more heavily into promotions? And if it is promotions, can you just update us on what you're seeing from the promotional environment? Thank you. Dirk Van de Put: Yes. So the request was in the U.S. And as we explained before, we are certainly not seeing for 2023, our costs coming down. We still are seeing double-digit inflation in our cost. We just implemented a price increase in the U.S. We're implementing price increases in Europe. So we are not in a situation where we can say that costs are coming down, if anything, they're up versus last year. From a promotional perspective, since we are rebuilding our customer service and our inventories in clients, there is no need for us to promote more. In fact, what we've done in last month is promote less to get our customer service back up. As long as volume continues to be this strong, we are not planning to increase our promotional pressure at all. Operator: Thank you. Our last question will come from Steve Powers with Deutsche Bank. Your line is open. Stephen Powers: Great, thank you. Shifting gears a bit. On Slide 9, you talk about the accelerating benefits to total company organic growth from recent acquisitions. And I guess I was hoping you could talk a little bit more about plans and expected contributions from Clif and Chipita and Ricolino in 2023, but I was also hoping you could talk about the profitability of growth from those newly acquired businesses and how that compares at this point to base portfolio profitability, whether you describe the relative bottom line contributions as fairly comparable and proportional or whether there’s still remains upfront investment on the newer additions that will dampen profit margins for a time? Thank you. Dirk Van de Put: Yes. So I can maybe take you through the way we're thinking about the contribution to growth from businesses like Clif and Ricolino, and then Luca can talk a little bit about the margins. So as it relates to Clif Bar, we've taken over in August. We have strong results driven by good demand and good pricing, we had strong double-digit revenue growth, and we had high double-digit EBIT growth in the fourth quarter. We started to implement pricing, which was not normal for them. So we've done two pricing actions last year, and we've seen minimal volume elasticity. We've also started to prioritize the SKUs in their portfolio and working on their supply chain. So we are seeing good supply recovery through Q3, and now we're starting with the integration of the businesses and find the cost and the revenue synergies. So we have a full integration team in place, we have a wide variety of opportunities already identified. As it relates to future growth, I think we have a strong position in the U.S. in the protein and the energy bar space. It's a $16 billion market, which is growing very fast. We have an opportunity to expand through Clif, but also to a business like Grenade in Europe in this space and its well being oriented. It's ESG-focused. So it's right on the money as it relates to consumer interest. But even in the North America, we think that Clif has a huge opportunity for expansion, better distribution, and we are going to complement that with the international opportunity. So I would say that explains a little bit the Clif thinking. As it relates to Ricolino it's a very different type of setup that closed in November so far, well above expectations, top and bottom line. There's a very high strategic fit to in a category perspective that is very complementary to our categories. It allows us to enter chocolate and reinforce our biscuit business in Mexico. One of the biggest benefits is that we can triple our route to markets, which is going to add a significant amount of stores. We will be present in 440,000 plus stores. And they also have a good growth U.S. business, which we are planning to give a boost through our U.S. organization, particularly, of course, in the U.S. Hispanic market. It's a full integration Ricolino Clif is a partial integration. Ricolino will be a full integration and merger of our business with theirs. So there is a significant opportunity for top and cost synergies, and so that will have a big effect on margins. Maybe I'll leave it at that on what those two will do for us. So Luca talk a little bit about the financials. Luca Zaramella: Yes. So I guess you were asking a little bit in terms of relative profitability of these platforms compared to the rest of Mondelez. I would say that Clif, which is almost a $1 billion platform projected into 2023 has sound gross margins at this point in time, given the fact that as we've said, we are about to implement another wave of pricing same dynamics that we saw in our U.S. business, little elasticity so far. So I think the P&L is going to shape up quite well. In terms of gross margin, the North American segment has the highest gross margin of Mondelez, particularly because of the DSD system that is quite effective from that standpoint. But Clif has gross margin that, albeit a little bit below the average of North America they are above the average of the company. So that is really a sound platform in terms of potential and profitability. Importantly, there are material synergies we are after – we just announced a new organization in place. And clearly, there will be some testing going on the platform through DSD and I think if you see what happened with Tate's this is quite promising potentially. In terms of Ricolino it is a $600 million, $700 million platform. It is growing double-digit at the moment. And in terms of margins, I think it's more important to say that the combination of both platforms between our existing business and Ricolino will step change materially the profitability of Mexico. And I think particularly in route to market and cost synergies, there is a big benefit to come now. We are in the process of combining the two companies. So the fruition into the P&L will come towards the second part of the year. Dirk Van de Put: I think that brings us to the end. Thank you very much for your presence and for your interest in the company. Obviously, if there's any other questions, Shep, and Philippe will be ready to answer them and looking forward to a good first quarter of the year. Thank you. Luca Zaramella: Thank you, everyone. Operator: Thank you, ladies and gentlemen. This does conclude today's Mondelez International Fourth Quarter 2022 and Full Earning Year Conference Call. You may disconnect at any time, and we appreciate your participation.

Operator: Good day, and welcome to the Mondelēz International Third Quarter 2022 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelēz management and the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelēz. Sir, please go ahead. Shep Dunlap: Good afternoon, and thanks for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our Q3 2022 earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update, then Luca will review our financial results and outlook. We will close with Q&A. I'll now turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I am pleased to share that we delivered another robust quarter with high quality top line growth continued strength in both developed and emerging markets and strong profit dollar growth. This execution, combined with continued acceleration of our strategic initiatives, supports raising our full year revenue growth and adjusted EPS outlook. Reinvesting in our business is one of the best ways we can deploy capital. And I'm happy to say that we continue to increase investments in our brands and capabilities that should reinforce and build upon our strong foundation. We also continue to make great progress in reshaping our portfolio with the full integration of our Chipita business as well as the closing of our acquisitions of Clif Bar and Ricolino. We remain confident that the strength of our brands and our proven strategy position us well to deliver attractive, sustainable growth for the remainder of 2022 and beyond. Above all, we remain extremely confident in our people who remain relentlessly focused on delivering the right snacks for the right moment made the right way to consumers around the world. Turning to Slide 5. You can see that our strategy is continuing to drive a virtuous cycle. We are well positioned to deliver a strong full year '22 performance and long-term revenue growth. This quarter, our revenue growth was 12.1%, which means 11.2% growth year-to-date. The revenue was generated through continued volume growth as well as strong pricing necessary because of ongoing cost inflation, and it demonstrates the resilient demand for our brands. That revenue growth is fueling our gross profit, which is growing 12.8% for the quarter and 10.8% year-to-date. This very strong gross profit growth is allowing us to increase our A&C investments high single digit, which in turn will help us to continue to drive sustainable top line and repeating the virtuous cycle. The strong gross profit growth also generated, after investments, operating income growth of 9.6% for the quarter and 10.6% year-to-date while delivering great free cash flow results. As you can see on Slide 6, we delivered 12.1% organic net revenue growth in Q3. Volume remained solid relative to much of the sectors as consumers continue to choose our trusted and beloved brands even as we implement necessary pricing. We view our performance in the third quarter and year-to-date as further evidence that our long-term strategy continues to pay off. Since the launch of our new growth plan in 2018, we have consistently over-delivered on net revenue growth through a virtuous cycle of increasing investment, strong local execution and targeted incentives. We remain confident that this strategy will continue to deliver attractive growth in the quarters and years to come. Like many companies, as shown on Slide 7, we continue to navigate through a dynamic operating environment, driven by cost inflation, the energy crisis in Europe and supply chain volatility. Let's take a closer look at each of these dynamics and the steps we are taking to address them. First, we continue to face elevated input cost inflation, especially in the areas of energy, transportation, packaging, wheat, dairy and edible oils. To offset these challenges, we have implemented appropriate price increases across key markets, including Europe. Additionally, we have announced further pricing actions across numerous markets across the globe, including the United States, which takes effect in December '22, and we are preparing for '23 negotiations in other markets. We also continue to take appropriate action to hedge our commodity costs with greater flexibility while continuing to advance our ongoing productivity initiatives. Second, in terms of energy inflation and continuity, we remain focused on risk management tools and alternative sources to help mitigate the impact. And third, we continue to manage through volatility in the supply chain, especially in the U.S. due to labor shortages at third party as well as a continuing shortage of trucking capacity and containers. We are prioritizing key SKUs to protect share and continue to make progress in improving manufacturing and warehouse capacity. Turning to our categories and the consumer on Page 8. Our latest research shows that snacking continues to play a central role in consumers' lives. And as a result, our core categories of chocolate and biscuits remain resilient. Consumers in developed markets continue to prioritize groceries over other forms of spending, and they continue to view our brands as affordable indulgences. Meanwhile, in emerging markets, consumer confidence remains strong with growing demand for our categories and continued loyalty to our iconic brands. Because of this enduring brand loyalty, private label share is either flat or down in the vast majority of our markets. Shoppers continue to say they are much less likely to switch to private label in chocolate and biscuits compared to other categories. With the return to school, we are seeing growth in products popular for school lunches like biscuit multipacks here in the U.S. We're also seeing continued growth in chocolate bars, treat sizes, gifting and seasonal shapes in Europe. Looking forward to the Christmas season, the majority of European consumers say they plan to spend the same amount over the holidays, if not more, as in 2021. They also say they plan to spend more money at home and on gifting with less money spent on dining out and entertainment. These category dynamics combined with the enduring strength of our trusted and beloved brands give us confidence that we will continue to successfully navigate inflationary periods like today. Moving to our efforts around portfolio reshaping on Slide 9. I'm pleased to share that we are continuing to advance our strategy of strengthening our leadership in core categories through our acquisition and divestment approach complemented by strong integration playbook. Over the summer, we completed the integration of Chipita, a high-growth European leader in packaged croissants and baked snacks. Chipita provides us an important platform to further accelerate growth in the attractive biscuits and baked snacks category. More recently, we closed our acquisition of Clif Bar & Company, expanding our global snack bar business to more than $1 billion, anchored by the marquee brand widely loved for taste and sustainability. This business is up low double digits on a year-to-date basis and we are excited to take this great brand to the next level. And just today, we closed our acquisition of Ricolino, Mexico's leading confectionary company, doubling the size of our business and more than tripling our routes to market in the high-priority Mexican market. These are just the latest steps in our ongoing commitment to accelerate focus on our core categories, filling geographical white spaces, expanding our presence in high-growth channels and growing our presence in key segments and price tiers. We're confident that this focus will allow us to drive sustained growth accretive to our algorithm across the portfolio. As we continue to accelerate our focus on growth, we remain committed to doing our part to drive positive change at scale. At our investor update earlier this year, we announced that we have elevated sustainability to become the fourth pillar of our company's long-term growth strategy. Within this framework, you can see on Slide 10 that we recently launched the next chapter of Cocoa Life, our signature cocoa sourcing program. Cocoa Life already has delivered strong results. Over the past decade, farmer net incomes have increased about 15% in Ghana and about 33% in Côte d'Ivoire. Children are better protected with more robust monitoring and remediation system, and we're helping to prevent deforestation by educating farmers about optimal farming practices. But cocoa farmers and their communities still face big systemic challenges. That's why we're investing another $600 million, bringing our total investments to $1 billion with an aim to source 100% of our cocoa volume through Cocoa Life farmers by 2030. While we are excited about the promise of these investments, we continue to call for more collaborative efforts and collective actions to drive greater impact, including new private-public collaborations. We are proud of our leadership in helping to make cocoa right, and we'll keep you updated on our progress. Finally, before I hand over to Luca for more details on our financials, I would like to make -- sorry, to take a moment to share some updates to our leadership team. First, I would like to congratulate Sandra MacQuillan, our Chief Supply Chain Officer, on her well-deserved retirement. Since joining Mondelēz in 2019, Sandra has brought focus and clarity to our supply chain organization, with a people-first leadership style and an unrelenting commitment to doing it right from shelf to field. We thank her for her tremendous contributions. Frank Cervi has assumed the role of Chief Supply Chain Operations Officer, reporting directly to me. Frank is a proven leader, bringing more than 30 years of global supply chain experience to the table. He has a strong drive for executional excellence, tackling big challenges and pursuing continuous improvement. His recent roles within Mondelēz, including, most recently, leading supply chain strategy, position him well for continued success. Additionally, after a successful 34-year career in research and development, Rob Hargrove, our Chief R&D Officer, will be retiring January 2023. During his tenure with Mondelēz, Rob successfully transformed the R&D function from a complex blend of category and geographic activities to a well-connected, technically rigorous global community. We thank him for his many years of dedication and accomplishments. With Rob's retirement, we welcome Daniel Ramos as our new Chief Research and Development Officer, reporting directly to me effective November 8. Daniel is a seasoned global executive with more than 25 years of R&D and consumer-centric innovation expertise. He joins us from The Estée Lauder Companies where he had a strong focus on advancing sustainable packaging initiatives. One final piece of leadership news, Javier Polit, our Chief Digital and Information Officer, is now serving on our Mondelēz leadership team, providing enhanced strategic oversight as we advance our commitment to becoming the digital snacks leaders. Since joining the company almost three years ago, Javier has elevated our technology initiatives and infrastructure at both the global and business unit levels. Javier will continue to report to Luca. With that, I will hand over to Luca for more details on our financials. Luca Zaramella : Thank you, Dirk, and good afternoon, everyone. Our third quarter results were strong from volume, revenue, profit dollar growth to cash flow generation. In addition, growth was broad-based across categories and brands. We delivered revenue growth of more than 12% with 1 point of growth driven by volume/mix. Emerging markets were a clear highlight for the quarter with broad-based trends on both top and bottom lines. Emerging markets net revenue grew more than 24% in the quarter, with 8 points of that growth coming from volume/mix. Developed markets grew 5.2%. Volume/mix was down 3 points, entirely as a result of customer disruptions in Europe related to pricing negotiation, nearly all of which has since been resolved. Turning to portfolio performance on Slide 13. Our chocolate and biscuit franchises continue to demonstrate their resilience and deliver strong results while ongoing improvements in mobility helped fuel robust gum and candy performance. Biscuits grew 11.5% for the quarter, with nearly 1 point coming from volume, albeit mix was negative as we suffered from customer disruption in Europe. Emerging markets again grew strong double digit, while developed markets increased high single digit. Oreo, Chips Ahoy!, Ritz, Triscuit and Club Social were among brands that deliver outstanding growth. Chocolate grew more than 9%, of which 1.3 points were driven by volume/mix, with increases in both emerging and developed markets. Emerging markets posted exceptional growth of strong double digit. Cadbury Dairy Milk, Toblerone, Lacta and Bis all grew double digits. Gum & Candy grew more than 22%. Brazil, Mexico, Western India and Middle East, North Africa, all performed very well. Now let's review our market share performance on Slide 14. We held or gained share in 45% of our revenue base, which includes 20 points of headwind coming from U.S. supply chain constraints. We are seeing gradual improvements in share and service levels as we closed the quarter and early into the fourth quarter. And in fact, share in the U.S. should turn positive for the last few readings of the year, and we should enter next year with a favorable trajectory. Chocolate performed well with 65% of our revenue base holding or gaining share. This number is still reflective of our good execution in the category and our ongoing investment, but some headwinds are expected, given the customer disruption in Europe. Our biscuit business held or gained share in 35% of our revenue base. This includes 35 points of headwinds from the U.S. supply chain. Now turning to Page 15. In Q3, we posted gross profit dollar growth of plus 13% and plus 10% for EBIT. Year-to-date, we have delivered nearly $900 million in absolute gross profit dollar growth, a record high for our business. This dollar growth enables us to continue investing in brand-building to drive our virtuous cycle of growth. Although organic top line and profit dollar growth are key focus areas, cost excellence remains an important part of our DNA and an enabler in this environment. To that end, we continue to make good progress around digitizing the enterprise and realizing efficiencies, reducing nonessential overhead spend and driving simplification. Turning to regional performance on Slide 16. Europe grew 5.2% during the quarter. This includes nearly 5 points of volume/mix decline entirely linked to customer disruptions from a round of pricing negotiations during Q3. Importantly, as I already said, we have successfully implemented virtually all of the price planned. We continue to support our brands with meaningful investments in the region to ensure consumers stay loyal to our categories and franchises. OI dollar for the quarter declined by 7.4%, driven by customer volume disruption and ongoing commodity pressure. Now that pricing has been implemented, we expect margin recovery for Europe in Q4. North America grew 12% in Q3, driven by higher pricing in biscuits, strong candy growth and robust increases from our ventures businesses, particularly Tate's and Give & Go. Volume/mix was roughly flat. North America OI increased by more than 20% during the quarter due to higher pricing that was implemented in Q2 as well as some benefits related to the factory closings last year and the addition of Clif. AMEA grew 14.6% for the quarter with strong volume/mix growth of 8.5 points and broad-based growth across all of our business units in the region. India grew strong double digit for the quarter, driven by both chocolate and biscuits. China increased high single digits despite COVID restrictions in certain cities, while Southeast Asia delivered robust double-digit growth across all snacking categories and Australia grew mid-single digit. AMEA increased OI dollars by 17.2% for the quarter as volume leverage and pricing were partially offset by commodity and transportation inflation. Latin America grew 31.6% with mid-single-digit volume/mix growth. Similar to Q2, this trend was extensive with double-digit increases across every single category. Brazil, Mexico, Western India business unit all posted double-digit increases for the quarter. OI dollars in Latin America grew nearly 50% for the quarter. This increase was driven by broad-based volume growth, pricing and ongoing improvements from the Gum & Candy categories. Next to EPS on Slide 17. Q3 EPS grew 15.7% at constant currency. This growth was primarily driven by operating gains. And despite significant currency headwinds, we grew reported dollars by nearly 6% in the quarter and 4% on a year-to-date basis. Turning to Slide 18. We remain focused on generating strong free cash flow. Year-to-date, we have generated $1.9 billion, including a onetime expense of $300 million related to the Clif acquisition and buyout of the non-vested employee stock ownership plan. This was part of the originally disclosed purchase price, but as it relates to the ease for employees and deemed compensation, it is reflected in cash flow. This strong free cash flow performance has enabled us to return $3.3 billion to shareholders year-to-date through share repurchases and dividends. Turning to our outlook on Page 20. We continue to see positive momentum in the business as a result of our strong position within attractive categories, significant brand support and consistent execution. For the time being, our categories are resilient and continue to see lower elasticities than historical levels. Given the strength of our performance through the first 3 quarters, the successful implementation of pricing in Europe and the overall health of demand trends in our business, we now expect, for the full year: organic net revenue to grow 10%-plus versus our prior outlook of 8%-plus; adjusted EPS to increase 10%-plus versus our previous outlook of mid- to high single digit; and free cash flow of $3 billion-plus, which includes the $300 million of expenses related to the Clif ease-up, which would indicate stronger underlying results. We continue to expect broad-based growth in our core categories and markets. We also expect a significant contribution from pricing, and we continue to plan for double-digit cost inflation. We have just announced another round of pricing in the U.S. to reflect continued inflation and positive impact of our commodities coverage in 2022 seizing current spot levels in 2023. While we successfully concluded our European pricing with disruption below our anticipated levels, inflation continues to be a concern in Europe, particularly with energy, that despite some EU-driven measures is still a significant headwind. Energies has broad repercussions, both on pack cost and other raw materials. We expect another round of pricing in Europe as we enter next year. Our EPS outlook also now factors in $0.26 of headwinds related to ForEx impact. $0.19 of this amount have already been included in our first three quarters. At current ForEx levels and outlook, EPS in reported dollars would be positive year-on-year, which shows the resilience of our business. With that, let's open it up for questions. Shep Dunlap: Operator, we're ready for the first question. Luca Zaramella: Operator? Operator: Our first question comes from Bryan Spillane of Bank of America. Bryan Spillane : All right. Great. Maybe just to start off, Dirk, we've -- obviously, there's been a lot of questions in our world around just current events, current affairs. So could you just give us maybe a little bit of a -- as-you-see-it-now kind of the state of the union in some of your key markets and just how the consumer is holding up and just how all these macro pressures may or may not be affecting the markets as you see it now? Dirk Van de Put : Yes, yes. Thank you, Bryan. Well, first, on the results, I would say we have a very strong top line performance, which I think is a testimony to the resilience of our categories, which is important to take into account. We see signs that consumers really want to continue to consume chocolate and biscuits. I think our pricing execution is now really coming through. And on top of all that, we have volume growth, which is quite unique in today's world. Obviously, you've seen that the emerging markets are a highlight in Q3 but also year-to-date with a broad-based strength from China to India to Brazil. We're doing well in all of our emerging markets. Our margins are a little bit impacted by customer disruptions in Europe. Sales in Europe overall were good, but there was some customer disruption so sales could have been better, and that also has affected our margins a little bit. And then our profit, our bottom line is ahead of algorithm and could have been better without that European impact. So we're increasing our view on what the year will look like from a top line and a bottom line perspective. Now particularly that our pricing in Europe is complete and behind us. And so yes, FX is impacting our EPS but we are still showing real growth in -- or growth in real dollars. So overall, I would say the results are good. So if you look a little bit beyond that, what does that mean? From a consumer perspective in the first place, we see in emerging markets consumer sentiment being very solid, very positive. I'm talking about Southeast Asia, India, China even. And so there is a certain optimism. And the degree of strength in the consumer confidence in emerging markets for us is almost to pre-COVID level. Of course, developed markets, we see a very mixed picture, challenged in Europe, as we all know, relatively optimistic in the U.S. In the middle of all that, as I already said, our categories, we expect to continue a strong buy. We see more and more signs that consumers continue to see or increasingly see our categories as an affordable indulgence. We see consumers saying that chocolate is really something they cannot live without. And so we believe that the spending decrease that we will see from consumers eventually, as inflation keeps hitting them, is going to be probably more in the big ticket items. Grocery seems to be doing overall pretty well, I would say. I think we also are benefiting from the fact that we have strong brands in which we continue to invest quite significantly. That's part of our thinking, and I think that is helping us in our results. Pricing, of course, played a role. On pricing, where we stand is that we've just gone through our second round of pricing this year in Europe. We've announced a third round of pricing in the U.S., which will take effect in December. And we are starting our negotiations in Europe for the typical beginning of the year 2023 pricing round. As it relates to Latin America and AMEA, the pricing that we implement is more fragmented, but in most cases, we're also in our third pricing round. And so far, it looks like that will go well, this new pricing round. Of course, we have to see what happens in Europe, where we expect more customer disruption in the beginning of the year as we announce the pricing. From an elasticity perspective, maybe I would say that, that remains below expectations. It is lower than it was last year even, certainly lower than it was pre COVID. In our forecast, we are foreseeing higher elasticity effects because we believe that eventually, there will be a bigger effect, but so far, we're not quite seeing that. And then from a cost perspective, we've seen some commodities showing signs of pulling back but we still expect significant inflation in '23 and hence, the pricing rounds we have to go through. I think we're very well positioned for '23. We have to continue to price in light of the inflation. We will increase our focus on RGM, revenue growth management. And we continue to invest to drive volume growth and, of course, net revenue growth. And I think as I said before, we will see some volatility in Q1 in Europe as we implement pricing. I can go maybe a little bit deeper because I know that it's on everybody's mind as it relates to the European consumer and what are we seeing there, might be useful to do so. What we see is that they continue to prioritize grocery spending. They seem to be choosing that instead of spending on other discretionary items. So we see a clear decrease in entertainment and leisure, in travel, in restaurants, in eating out, in clothing, personal care, household goods. That's where we see the decreases in Europe but not in food and not in our categories. So the consumer is also relatively positive, we see, in Europe. They're very aware of the current situation. 80% express is concerned with the current situation and they all understand that things are going to be rough. But 60%, for instance, of consumers in the UK or Germany believe that six months down the road, their situation will be better. And in France, that sentiment is even higher, which is understandable because there the energy price effect is lower for them. Chocolate is highly desired. We see more and more signs that consumers are saying it's the snack they cannot live without. And so I would say, concern, short term from consumers, relatively optimistic and they keep on buying our categories, which is reflected in the numbers that you saw, which includes, as I said before, some client disruption. I hope this gives you an idea, Bryan. Operator: [Operator Instructions] And next, we move to the line of Andrew Lazar with Barclays. My apologies, Andrew. If you could resignal, we'll move next to Ken with JPMorgan. Ken Goldman : I recognize it's too early to discuss next year in full and I wouldn't anticipate any specific numbers. But I think a lot of people are looking at maybe some tailwinds and headwinds in a broad sense. And I was hoping to kind of review some of these and see if I'm missing anything big. So on the tailwind side, you'll have wraparound pricing plus new pricing. You should have good organic volumes still on underlying demand. You'll have strong advertising again. Maybe the same dollar inflation but it will be less on a percent basis. And then you'll have the top line benefits from acquisitions, right? And then in terms of headwinds, maybe a little bit less pricing than '22, still some macro uncertainty in Europe and Asia, still some new regulations in the UK. you have to wade through. And then, of course, you'll have FX, higher interest expense and lower pension income. So I know I'm running through all these pretty quickly. I don't mean to put you on the spot, but does anything kind of stand out that's major that I'm missing or getting incorrect in that kind of quick list there? Luca Zaramella : Yes. Maybe I think the only 1 thing I would add to that equation, Ken, is the synergy that will come to fruition through the acquisitions of Chipita, Ricolino and Clif. And those are not only revenue synergies, as you mentioned, they are also cost synergies and better bottom line. I think in general, the way we think at this point about 2023, it is that consumer demand fundamentals are still strong, and we believe we are in a good place in terms of revenue and demand for next year. As we've just said, we compete in resilient categories. And we have created strong loyalty through the investments we have been making in our brands. I think importantly, as you dissect the regions, emerging markets are doing very well. I think looking at the revenue number, 34%-plus, 8% volume growth in the quarter, it is simply amazing. And it is important to say here that particularly on this, we still have quite a bit of headroom in terms of distribution penetration of our categories and not to mention the value of categories like cakes and pastries and et cetera. I think in terms of the U.S., it is on a good trajectory. I mentioned a little bit the share trajectory that we see going into next year. And as we said, we are about to implement another round of pricing. I think the question mark is a little bit Europe but pricing there is inevitable. We'll see what happens with customers in Q1. But importantly, we have been investing in brands there as well. We have been creating bonds with consumers. And as we said, I think we believe our categories are still a necessity these tough times. So all in all, I think we are going to have an algorithm year, but let's stay tuned because quite frankly, it is a little bit premature at this point in time to give you guidance for 2023. Operator: Next, we can go to the line of Andrew Lazar with Barclays. Andrew Lazar : Maybe to start off, just picking up on the emerging market commentary. Obviously, the results there remain really standout and probably better than many had surmised or forecast, given how volatile some of these markets can be. Maybe you can just get into a little bit more detail on just a couple of the key largest emerging markets and kind of how you're thinking about how those look as you go forward and what you're sort of building into the forecast? And then I've just got a quick follow-up. Luca Zaramella : Yes, maybe I'll take that and Dirk can also chime in here. Look, reality is we are very pleased with emerging market performance. And I think it has been quite strong all around. When we look a little bit beyond the last three quarters, I would say that all emerging markets pretty much bounced back very well from pre COVID and -- or for COVID. And I think the performance versus pre-2020 has accelerated in those markets. We have been consistently investing and that is paying off. We are not privy to all the P&Ls for emerging markets, but what I can tell you is that they are delivering reported dollar top line growth. They are delivering top and bottom line dollar growth, and importantly, generating quite a bit of cash flow for us. So I think from a return of capital is really something that is remarkable. We still have huge headrooms, I believe, with brands like Oreo, Milka, Cadbury, et cetera. And I believe we will be -- we will continue to be positively surprised by this market also going forward. Look, beyond the usual suspects like India, China, et cetera, and those are markets that continue to do very, very well, we are particularly pleased with markets like Southeast Asia at this point in time. We are particularly pleased with markets like Brazil. We continue to do very, very well and generate solid top and bottom line in those markets. I think WACAM, which is Western Andean region bouncing back from pre COVID, particularly through Gum & Candy. But importantly, the light motive of all these markets is the performance of Oreo, which is just amazing. So I think all in all, I would say I can't call out one specific market here. It is pretty much all of them doing quite well. Andrew Lazar : And then you've talked about a lot of the -- some of the incremental pricing moves, right, that you've made or are in the process of making to try and better position yourself for what's coming next year. Would we anticipate at this point being in a point to enter the year where you would have all of what you need in place such that there wouldn't be as much of, let's say, a lag to start the new year? Or should we brace ourselves maybe for the sort of consistent lag of getting incremental pricing in before you really fully catch up again to the type of cost inflation that you're looking for next year? Luca Zaramella : Look, reality is pricing for more than half -- more than 50%, has already been taken or announced. And so as a matter of pricing for next year, you have to think about carryover of announced pricing being for more than 50% done. Obviously, as we said, there is the U.S. coming as of December, and that will add to the 50%. I think in general, your assumption is absolutely correct. The only 1 distinction I would make is Europe. And Europe, I think, will have a little bit of a lag compared to the necessity of pricing because particularly, energy costs are a reality right now. And so you're going to see some margin pressure potentially in Europe in Q1 and potential customer disruption will compound on that. I think for the rest, you are correct. Operator: Next, we go to the line of Robert Moskow with Credit Suisse. Robert Moskow : I was hoping you could give a little more color into the logics for this third round of price increase in the U.S. Are you taking it because you have commodity hedges that are rolling over and can no longer protect your costs? Are you taking it because packaging costs are rising higher? Could you be more specific as to that? And then also, are you also trying to price through some of the knock-on elements of inflation, like labor or energy? Or does the logic still just focus on the kind of components of the product? Dirk Van de Put : Your assumption is right. It's a combination of everything you said. So our approach to pricing is that the additional costs we see every year, which could be from a commodity perspective, packaging, labor, transportation, we are trying to price away. So we do have a number of hedges that are coming off. We are careful on the hedging for next year because it could, to our opinion, go both ways. Prices could -- or cost could still go up. We want to hedge the right way against that, but we also need to be careful that commodity costs don't come down and that we can benefit from that. And so the short answer to what you said, it's all of the above. The good news about the third round of pricing in the U.S. is that it's been announced and it's been accepted by the clients. We will see how the consumer reacts, but so far, the two previous price increases, we have not seen a major impact on consumer offtake and penetration and frequency, volume growth and so on is all still very strong. So we have good confidence that this price increase will go through. And then we should be okay unless something happens in our cost picture. Operator: Next, we go to Chris Growe with Stifel. Chris Growe : I just had a couple of questions for you. The first one would just be that you've given some commentary around, obviously, some more pricing in North America. It sounds like a little better volume performance in Europe. I just wanted to understand around those factors and perhaps as others to consider. Would you... Dirk Van de Put : Hello? Operator: Mr. Dickerson. My apologies. Next, we move to Mr. Dickerson with Jefferies. Robert Dickerson : Maybe just kind of a broader question for you, Dirk, around A&C. Obviously, we keep hearing a lot of people think promotional activities going need to increase because you see still increase, but I've heard a lot of C-level managers from food companies, CPG companies say actually now price as well as elasticity stays benign, don't need to increase promotional side while at the same time on a low basis as we saw in Q3. You obviously continue to really invest behind your brands. So I guess kind of quick, almost two-part question. One is just kind of what's the current perspective on kind of go-forward promotional needs with the competitive backdrop? And then two, should we be thinking as we go forward, let's say, even two years or three years that of that rate of that year-over-year A&C spend could kind of mimic the rate of the year-over-year revenue growth spend as you may have some needs, especially with some of the recent acquisitions? Or is there operational leverage that could come out of that? That's it. Dirk Van de Put : Yes. Well, I would say that in the current environment where we have to increase our prices quite substantially, it is important for us to keep on increasing our A&C spending because we need to make sure that the consumer has trust in our brands and really want to consume them. And we can clearly see the effects of this year after year increasing in our spending. We can now see -- although overall, there's not that much movement into private label, in the market where there is a little bit of movement in private label, it's not so much coming from our brand. And I think that is a reflection from the spending that we've had. Going forward, particularly since we're seeing an acceleration in our top line, particularly since we're seeing our volume working for us, I would say we don't really anticipate that we're going to change that formula. You know the way we think about this. We grow our gross profit at an X percentage. But this quarter is quite strong, I would say. And we then want to flow half of that back into investing in the business and half of that in the bottom line. I don't think that will necessarily change. It's working for us and the business is accelerating. As it relates to the acquisitions, obviously, we have foreseen, in some of the acquisitions, a significant investment because we do have cost synergies, which as Luca said, will start to show up next year in our results. But we also have top line synergies. And we feel that some of the brands have quite good potential, but they might need some investments. So we're going to use the same formula as it relates to acquisitions as we are using on the rest of the business. Will, over time, we do a constant measurement, which is about advertising sufficiency? That still shows that increasing our advertising will lead to increased volume, will lead to increased net revenue growth. And so as long as we can confirm that picture, we feel that this is the right track for us. As soon as we would see that, that is not the case anymore. Obviously, we would not keep on increasing our A&C. But at this stage, I think it's working. We don't see a reason to change it. Operator: We return to the line of Chris Growe with Stifel. Chris Growe : Okay. You got me now. Yes, if you didn't like that question, you didn't have to cut me off. I'm only kidding. So I was just going to ask about the gross margin and just to understand with more price -- with pricing -- more pricing coming in North America, it sounds like a little better volume performance in Europe. Should we expect a better balance of pricing and cost inflation in the fourth quarter and therefore, some sequential gross margin improvement? Luca Zaramella : Look, I think as a matter of fact, we don't give much guidance around gross margin. But the way you have to think about it is there is gross profit growth in terms of dollars that we commit to and that we are going to deliver. As you think about gross margin percentage, I think particularly, the U.S., Latin America and AMEA are on, I believe, a solid ground. Obviously, in Europe, you're going to see the benefit of pricing but do not necessarily neglect the fact that particularly around energy, there is more costs coming our way. Now for the year, we are 100% covered in terms of commodities and ForEx, so we have visibility. I think you're still going to see a little bit of margin pressure in Q4. But importantly, you're going to see strong dollar growth, and you're going to see that flowing partly to the bottom line. We will continue to invest. And as I said, as you think about particularly Chipita and if you think about Clif, there will be some synergies coming our way. Chris Growe : Okay. And just one other question on -- there was a comment about mix being a bit of a drag. I just want to understand, is that geographic mix? Or is that something you're seeing in terms of your product assortment, your SKUs? Any kind of trade down or smaller pack sizes, that kind of thing? Luca Zaramella : No, I don't think that it is anything concerning. What I said as it relates to biscuits is that volume was up but volume/mix was partially down. And the reason for that is that mix in Europe because of customer disruption caused a little bit of the problem. So there were product lines, particularly in France and other places, that are more profitable than others around the world, and those were mostly impacted by customer disruption. We have also to realize that customer disruption in terms of margins is a little bit higher because obviously, we still have fixed costs. And so the marginal contribution of those lines is a little bit higher. But mix is not a concern. And as we will start seeing biscuit growing volume more consistently most likely in the U.S., I think you're going to see the benefit of mix coming through. But there is nothing really to worry about down-trading or anything else. Operator: Next, we go to the line of Pamela Kaufman with Morgan Stanley. Pamela Kaufman : So your full year guidance for at least 10% organic sales growth implies that Q4 slows to high single-digit growth compared to over 11% organic sales growth year-to-date. So how should we think about the degree of conservatism in your outlook? And have you seen any changes in the operating backdrop that make you more cautious about the near-term trends? Luca Zaramella : I mean, your math is right, obviously. The implied Q4 growth is 7%-plus, but importantly, there is a plus in there. So we might have more than 7%, which is something that obviously we might have. Reality is we are about to implement pricing actions and what we want is to end the year, particularly on the trade stock side, on a good position. We don't want the trade of retailers to be impacted by more stock. And so you might call us conservative and we will see. Reality is into the current guidance, which is 10%-plus on both revenue and EPS, I think we feel quite comfortable that there might be a little bit of upside. But we will try to make sure that we end the year in the right place in light of 2023. Pamela Kaufman : Great. And then can you talk about the drivers of your market share improvement and earlier expectations for market share improvement in the U.S.? Where are you in rebuilding capacity on inventory levels on some of the brands where you saw capacity constraints shortages? Dirk Van de Put : Yes. So as we said in the last month, we've already seen market share gains. We expect that to continue and we expect a good tailwind market share-wise into 2023. The overall industry headwinds are moderating. That is helping. So logistic challenges have improved. Still a little bit of issues on cross-border transportation from Mexico. But within the U.S., we're doing quite well. The labor market is easing, so our third-party manufacturers are having an easier time with that. And so I would say turnover is still high but we are continuing to be at a good staffing in the plant. As a consequence of all that and us sort of focusing on the key SKUs, doing a number of changes in our factories, making sure that we have longer runs of SKUs and so on, our service levels have consistently improved now every single month in the quarter. So we're now back in the high 70s, nothing here to brag about but clearly improving. The consequence of that is that trade inventory levels are continuing to recover, so we have less out of stocks, and that starts to show in consumer offtake. Most of our biscuits brands are already in positive share territory. In September, our biscuit share was up, as I said, and we expect that share growth to accelerate in Q4 because the on-shelf availability recovery is going quite well now. On top, we will increase our A&C investment in the fourth quarter in the U.S. We, so far, had held back a little bit because of those supply chain issues. But now to accompany the price increase, we're going to significantly step up our investments. So we expect that we will enter '23 with a good momentum in the U.S. Operator: Our final question for today comes from the line of John Baumgartner with Mizuho. John Baumgartner : I just wanted to come back to emerging markets and specifically the vol/mix component of growth there. Can you just speak a bit more to the breakdown between the contributions from underlying consumption? I guess just from the COVID recovery but then also specific to your investments, whether it's distribution growth, innovation, the local jewels, regaining share. How would you rank order the contributors to vol/mix? And then should we expect any change to the balance of those drivers going forward? Dirk Van de Put : Yes. So I think it's a mixture of the two in the sense that we have very strong investment in our brands. We have a confident consumer in emerging markets, and that is leading to robust volume growth. They are also more used to an inflationary environment. And I'm talking about the consumer but also about our teams to constantly, year after year, deal with this pricing and RGM. So that is leading to very robust volume growth, I would say. Our volume in Q3 is up 7%, which is quite extraordinary. The other thing I would say is that we are also increasing our distribution, which is an added benefit. If you think about China or India, we're literally adding tens of thousands of stores every year through our distribution and that obviously helps. The third thing that I would mention is the strength of Oreo and the fact that we are investing now across the board a little bit more in Oreo, and we're seeing good results from that, so Oreo's becoming very strong for us in these markets. And we -- for instance, in Mexico, we expect to see some big effects from Ricolino where we are tripling our route to market. So that will start to play a role also. So I would say it's a combination of very good investment, confident consumer, careful management of RGM. We are not doing across-the-board price increases but playing it very careful in the different countries, combining with good distribution gains. That is what's leading to that strength in emerging markets for us. Operator: This does conclude today's program. We thank you for your participation. You may disconnect your lines at any time.

Operator: Good day, and welcome to the Mondelez International Second Quarter 2022 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by Mondelez management and the question-and-answer session. . I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thanks for joining us. With me today are: Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website, mondelezinternational.com/investors. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the presentation. Today's call, Dirk will provide a business and strategy update, then Luca will take you through our financial results and our outlook. We will close with Q&A. With that, I'll turn the call over to Dirk. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I'm pleased to share that we have delivered a strong first half of the year with robust volume growth and solid pricing execution that supports raising our full year growth outlook to 8% plus. Our core chocolate and biscuit businesses continue to demonstrate volume and pricing resilience. As consumers around the world continue to seek out our trusted and iconic brands to meet their snacking needs. And although we may see a more mixed consumer sentiment in the near term, given the macro environment, we expect the consumers to consume more at home and be more selective in the brands they buy, which we believe to be a net positive for. We also continue to effectively navigate a dynamic operating environment. Input cost inflation remains challenging. And although we may see commodity inflation beginning to ease, we expect other costs like wages to show significant inflation. Our strong track record in having cost efficiency and simplification positions us well to mitigate the impact of these inflationary factors. At the same time, our consistent results enable us to maintain our course in driving a virtuous cycle where strong net revenue and gross profit or to continuous investment in our brands, distribution capabilities and acquisitions. We also continue to make great progress in reshaping our portfolio. A great example of that is our agreement to acquire Clif Bar, which will improve our position in the attractive and fast-growing snack bar category. I'll share some additional context on the exciting in a few minutes. Along with the Clif acquisition, we announced plans to divest our developed market Gum & Halls businesses, allowing us to focus our portfolio and further invest in our faster-growing businesses of chocolate and biscuits. We remain confident that the strength of our brands, our proven strategy and our increasing investments position us well to deliver attractive sustainable growth for the remainder of 2022 and beyond. Above all, I'm extremely confident in our people, who continue to demonstrate exceptional passion and dedication to serving our consumers despite ongoing challenges with inflation, supply and periodic in COVID conditions. Day in and day out are 80,000-plus makers and bakers strive to help people snack right. We respect and honor our colleagues around the world, and we truly believe that team Mondelez is a very theme in the consumer packaged goods industry. Turning to Slide 5. You can see that our strategy is continuing to drive a virtuous cycle. The strength of our brands, increasing investments, volume growth and significant pricing actions are sustaining top line momentum and solid profitability despite substantial inflation. We grew revenue this quarter by 13.1% and 10.7% for the first half of the year. We delivered gross profit growth of 9.7% due to healthy volume growth and pricing actions. Our A&C investments have increased double digits as to gain or hold share across more than half our revenue base and positioning us well for future periods. An example of our commitment to brand investment is the renovation of Milka to make this leading chocolate brand, most tenders and creamy ever. This program includes an upgraded taste profile, premier and bent and distinctive packaging, celebrating the brand's Alpine soul. This initiative represents our largest chocolate brand renovation in 25 years. Illustration of the campaign is featured on our earnings presentation coverage page. We are supporting the launch with a fully-integrated 18-month marketing and advertising support program starting in H2 '22. And last, we increased operating income by 8.5% for the quarter and 11.2% in the first half while delivering great free cash flow results. As you can see on Slide 6, we delivered 10 points growth during the first half of the year. We view this strong performance as evidence that our long-term strategy continues to pay off. In late 2018, we launched a new growth plan focused on gross profit dollar growth, local first commercial execution, a virtuous cycle of increasing investment and a new approach to incentives. We are confident that this approach will continue to consistently deliver attractive growth. Importantly, we are also delivering strong volume, which is important to Mondelez. It is a proof that consumers are eating more of our products every day and an indication of sustainable long-term growth. Like many companies, as shown on Slide 7, we are experiencing a dynamic operating environment driven by global cost inflation, supply chain volatility and currency headwinds. Let's take a closer look at each of these dynamics and the steps we are taking to address them. First, we continue to elevated input cost inflation especially in the areas of energy, transportation, packaging, wheat, dairy and edible oils. To offset these challenges, we recently announced further pricing actions across key markets, and continue to do appropriate action to hedge our commodity costs along with ongoing productivity and cost reduction initiatives. Second, we continue to manage through volatility in the supply chain, especially in the United States due to labor shortages at third parties as well as the continuing gap in demand and supply of trucking capacity containers. Although we do have more work to do, we are making progress against our plans to unlock manufacturing warehouse capacity, improve service levels and implement new measures to support employee retention. Third, we are working through the impact of the strengthening U.S. dollar particularly against the euro and the British pound by focusing on what we can control. This includes mitigating our translation exposure through currency hedges and net investment hedges. Delivering a real dollar earnings is an ongoing focus. And though we may see some significant currency trends in the short term, we have delivered robust real dollar earnings growth over the past several years. Turning to our categories and the consumer on Page 8. Our annual state of snacking survey shows that consumers increasingly prefer snacking over traditional meals. And because snacking plays such an important role in consumers' lives, our core categories of chocolate and biscuits historically have resilience to economic downturns and pricing actions. This trend continues to play out around the world despite an overall drop in consumer confidence. While developed consumers express growing frustration with rising prices for a broad range of goods and services, they continue to perceive chocolate and biscuits as affordable indulgences and an important pick-me-up. In fact, almost 40% of U.K. shoppers said that chocolate is a necessity and remains one of the best valued snack products. Due to enduring consumer loyalty, category volume growth and penetration is holding up well in most of our key developments. Elasticity have notched up slightly but remained low compared to historical benchmarks. Private label is either flat or down in the vast majority of our markets, and shoppers say they are much less likely to switch to private label in chocolate and biscuits compared to other categories. Meantime, in emerging markets, consumer confidence remains relatively strong, recovering to almost pre-COVID levels. And our core category shows solid volume and penetration growth despite price increases. Compared to developed markets, emerging market consumers are less likely to reduce overall consumption of our categories or switch when faced with price increases. Instead, they are more likely to switch stores to find deals on their favorite brands or look for different sizes. Overall, we remain confident that the strength of our beloved and trusted brands will continue to help us navigate inflationary periods like the one we have today. Moving to our efforts around portfolio reshape on Slide 9. I'd like to share a bit more color on our recently announced agreement to acquire Clif Bar. Clif is a leader in growth, well-being snackbars. The company's own-trend brands including Clif, Luna and Clif Kids, a greater to our global snacking portfolio, and they are differentiated this page. Each of these brands is strong and healthy. pretty high advocacy and loyalty. Clif also enjoys high brand loyalty among the 18 to 24 age group. The brand also performs well on key tastes a critical differentiation across age groups in a category where many products does so well. Clif is also widely recognized as a leader in well-being and sustainable snacking. The company's purpose and culture are well aligned with our purpose of empowering people to snack right. We look forward to working with the passionate, dedicated Clif team to advance our shares. On Slide 10, you can see that we have moved from a small bar business in 2018 to about $300 million last year with the addition of perfect Snacks in Grenade and to a $1 billion-plus global snack bar platform factoring Clif. This gives us an attractive position in a $16 billion market with revenues roughly split between U.S. and international. As a significant 700 million-plus presence in the U.S., protein and energy space, which is expected to continue to grow well over the coming years as a diverse range of consumers increasingly count snack bars as meal replacements, energy or a better way of snacking. Slide 11 shows that the Clif Bar acquisition offers an opportunity for us to do business to our marketing expertise, operational excellence and financial discipline to create significant value. There are clear and substantial cost synergies, which include leveraging our experience with logistics and warehousing, reducing waste in existing and ties in marketing and advertising to optimize A&C spend. In terms of growth, we see substantial opportunities to increase household penetration and distribution in alternative and e-commerce as well as existing outlets. There is also an opportunity to unlock growth through revenue growth management and enhanced in-store excellence. And beyond the U.S., there are clear opportunities to drive international growth. We are excited about the announcement to acquire the Clif business and the top and bottom line growth opportunities that lie ahead. We also see material upside to the returns versus our low cost of capital. Moving to Slide 12. Clif is just the latest example of our continuing efforts to reshape our portfolio through strategic M&A that increases our exposure to incremental fast-growing snacking segment. Since we announced our growth strategy in 2018, we have completed or announced 9 acquisitions that strengthen and complement our portfolio and fill key gaps adding more than $2.8 billion in annual revenues and averaging growth in the high single digits. So 2022, in addition to announcing the Clif transaction, we have closed and integrated our acquisition of Chipita, a high-growth European leader in croissants and baked goods. And announced an agreement via Ricolino, Mexico's leading company for Bimbo. These strategic acquisitions will complement and build on our substantial M&A progress in 2021, which brought us a leading U.K. performance nutrition company, Gourmet Fola leading Australian premium biscuit and cracker company and Hu, a well-being snacking company in -- These acquisitions have been regional in nature, we can largely be managed by local teams. This includes the recent Chipita acquisition, which we successfully and rapidly traded at the end of Q2. We are confident that executing our strong patient playbook will allow us to drive sustained growth, accretive to our algorithm across the portfolio. With that, I will hand over to Luca for more details on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Our second quarter performance was once again strong with above expectations, outcomes across all P&L line cash. We delivered revenue growth of plus 19% with 5 points coming from volume mix, showing the term approach to supporting our brands and investing in capabilities exploit our long runway of opportunities is paying off. Emerging market to show significant strength, posting an increase of more than 22% with great momentum across all our major business units. Importantly, volume mix drove more than 10 points of this. Developed market grew plus 8.1% for the second quarter with trends in both and North America as demand trends well throughout the. Volume mix was also positive in developed market, with approximately 4 points of volume in Europe. While U.S are the most likely negative given supply chain constraints. You can see our portfolio performance on Slide 15. Chocolate and biscuits continue to exhibit strong and durability as making CapEx. Additionally, Gum & Candy continue to improve as global mobility increases coming out of the pandemic. Biscuits grew 10.4% for the quarter, with nearly 2 points coming from volume mix. Emerging markets grew strong double digits, while developed markets increased high single digits. -- delivered strong increases include Oreo, Chips Ahoy, redBus. Chocolate grew more than 30%, with increases in both developed and emerging markets including digit growth in Europe. Chocolate was driven by robust volume growth of plus 9% as consumers continue to our brands as an affordable indulgence, both global and local product well, including Cadbury Dairy Milk, overall lands. -- entendre nearly 26% and Mexico East North Africa all delivered strong growth. Now let's review our market share performance in 16. We had or in 55% revenue base during the first half with 20 points of headwind due to the service challenges in the U.S. We expect to see gradual improvement in the second half of the year. Our chocolate category performed well with 75% of our revenue base holding or gaining share. Our biscuits category had a gain share in 40% of our revenue, close 40 points of headwinds from supply chain constraints in North America. We are already seeing some improvements in service and share, but we expect this improvement visible as the year progresses. Now on Page 17, we delivered high single-digit growth, both in terms of gross and operating profits. Importantly, the overall gross profit dollars delivery allowed us to reinvest in A&C by double digits in the quarter and obtained EBIT gains versus last year. Turning to regional performance on Slide 18. Europe grew 10.8% during the quarter, supported by great execution and strong growth across mass grocery as well as convenience away from home and travel detailed channels. Results were driven by nearly 6% volume mix. While dollar for the quarter planned a little over 1% by significant commodity pressure as well as the impact of the Ukraine war. The implementation of pricing will allow us to return to profit growth. Importantly, we continue to invest in A&C. North America grew 9.2% in Q2, driven by higher pricing in biscuits as well as double-digit Gum & Candy growth. Volume mix was down 1% as a result of continued supply chain constraints. North America OI increased by 6.3% during the quarter due to higher in that was announced in early. AMEA grew 13.2% for the quarter, with strong volume mix growth of 8.7 points showing continued momentum in the period. India grew almost 30% in the quarter, driven by chocolate and biscuit. China increased high single digits despite restrictions in certain and Southeast Asia delivered single-digit growth with double-digit growth in its and chocolate. AMEA increased oil dollars by 7.9% for the quarter as volume-driven profit was partially offset by commodities, transportation inflation and reinvestment in A&C. Latin America grew 33%, with double-digit volume mix growth. Category strength was broad-based, small digit increases across the board. Brazil, Mexico and our Western Andean business unit all posted very strong double-digit increases similar to last quarter. A dollars in Latin America increased more than 70% for the quarter. These increases were driven by broad-based volume-driven effective pricing to our GMO actions and higher and candy sales. Now on Slide 19. Q2 EPS grew 9.1% at constant currency. This growth was high quality as it was primarily driven by top line related operating gains. On Page 20. We remain focused on driving attractive top and bottom line performance, including real dollar earnings growth. Clearly, this is a challenging year in terms of exceptional currency headwinds for us and for our industry. By executing against our strategy and focusing on what we can control, our performance over the past 3 years has been quite strong, both on an absolute and relative basis. These results are even more impressive if you consider we invested materially in our brands and capabilities. Going forward, we will continue to take actions to drive strong profit dollar growth in constant and real dollars. Turning to free cash flow and capital return on Slide 21. We delivered first half free cash flow of $1.6 billion during the first half as a result of our strong growth and profitability. We also returned $2.5 billion to shareholders in the form of dividends and share repurchases over the same period. Our ongoing confidence in the business and cash generation enabled us to also announce a 10% increase to our cash dividend. Over the past 3 years, we have increased our dividend by more than 35%. Before I cover our outlook, I wanted to make a comment on our focus now and going forward as it relates to the current environment. We have and will continue to take action to navigate some of the near-term dynamics around the inflation and supply chain constraints. How we remain true to our strategy and making the right decisions to drive attractive, profitable and sustainable growth for the long term. That means we remain committed to significantly investing behind our brands, driving volumes, generating healthy profit dollar growth and improving our market share. We believe this disciplined approach will create lasting and differentiated value for our consumers, customers and shareholders. We also had a clear focus on strong earnings growth in constant real terms dollars. We have done this over the past 3 years despite a strong dollar. Although this year is shaping up to be more challenging, we believe we are well positioned to attract real dollar earnings in the years to come. Now let me provide some color on our revised 2022 outlook on Slide 24. Given our strong first half results, we now expect 8% plus top line growth. This revised top line outlook factors in a number of considerations, including the negative full year impact anticipated from the Ukraine war including revenue losses related to products that previously were manufactured in the country and exported into Europe. This can be quantified in approximately 1 percentage point of equivalent revenue growth. Second, some elements of customer disruption in Europe as a result of the second wave of price increases. While we have already been able to agree on most of the planned price increases in Europe, there are still some customers and countries where negotiations are underway. The size of customer disruption is difficult to predict, but we have factored into our guidance a certain impact, which is expected to be more pronounced in the third quarter. Finally, although elasticities have been at low levels to have, we are planning for them to return closer to historical levels in the second half as consumers continue to navigate inflationary trends and increased pricing across most markets. Our EPS outlook of mid- to high single digits is unchanged. And risk adjusted for additional inflation resulting from the Ukraine war, some customer disruption with respect to pricing and higher levels of elasticity. However, driven the strength of our first half results and depending on the outcome of our pricing negotiations in Europe, we might finish in the upper part of this range. As far as cost inflation goes, our expectations for low double-digit cost inflation for full year 2022 are confirmed. This earnings outlook also reflects $0.04 of EPS headwind from our stopped Ukraine operations. Additionally, this outlook reflects our ongoing commitment investing in our brands. in media, not only during this period of elevated pricing, but importantly, to drive long-term growth. Our EPS outlook also now factors in $0.22 of related to ForEx impact. $0.12 of this amount has already been included in our first results. With respect to free cash flow, our view is unchanged. We continue to expect $3 billion. With that, let's open the line for questions. Operator: . And our first question comes from Bryan Spillane with Bank of America. Bryan Spillane: Two questions for me. The first one is just maybe, Dirk, if you could step back and just give us sort of the current state of things in the marketplace? And I guess in the context of having such a strong first half and maybe contemplating maybe some deceleration in the second half. Just where do things stand currently as you kind of look across your various markets? Dirk Van de Put: Yes, Bryan. Well, I would say, overall, we feel good about how '22 is panning out for us. As you can see from the presentation, the demand is strong. We have very good volume growth. Chocolate and biscuits are showing good growth. The categories are holding up. The emerging markets are a real growth engine for us and developed markets are solid with good volume in Europe. And so overall, year-to-date, our profit dollar growth is good, double-digit. And free cash flow is also strong. So I think the numbers of the first half are really good. If I then look to the second half, we feel good about the second half. If I go a little bit about what's going to happen here, I think we will see some softening of consumer confidence, particularly in developed markets, I would say. But I do expect our categories to remain solid, probably flat to small growth in volume. And then, of course, the effect of pricing. And I think within that, our brands are very strong and have a good connection to the consumer. We will have ongoing conversations with our customers about price increases, and we will try to drive a value equation there. I think together, we can probably find a way to keep our categories going at a very good rate and create the necessary value. I think competition will be about the same, maybe a difference between those that will invest and those that won't. And then from a pricing perspective, I can, of course, not comment on the specifics, but more pricing has to happen, and it's -- we execute very carefully by market. But it is something that still is in the pipeline. Most of it has been announced, and we're now in the discussions and implementation of it. Elasticity, as you saw, is slow, but we expect an uptick, and we've planned, in fact, for the second half of the year, normal elasticity that might pan out that way or not. At this moment, it would look, it wouldn't but we thought it would be a more careful planning stance. And then from a cost perspective, yes, some commodities are pulling back, but we do expect the near-term inflation to remain high. So I would say that our stance for the second half is positive but careful because we might see a more pronounced consumer reaction. We might have more difficulties getting pricing implemented. But overall, I think what's unique about us is that we are clearly in a virtuous cycle here. We are investing quite strongly, as you could see. That is leading to strong volume growth with some good pricing on top. Our gross profit growth is good, which allows us to make those investments. And then that is then leading to a good bottom line. We think that virtuous cycle will continue, but there might be here and there more difficulties than we've had in the first half. But overall, I think we feel very good about '22. Bryan Spillane: And if I could follow up on just specifically in Europe. In the prepared remarks you made, there were some comments about some caution around trying to push some price increases through. We know that there's -- we still have the conflict in the Ukraine and the impact on Russia. So maybe if you could talk a little bit about just -- is Europe kind of more of a concern area for you? And Luca, if you could add, the margins were pretty soft in Europe in the quarter. Is that something we expect over the back half of the year? Dirk Van de Put: Yes. Again, Europe, I'll comment first on what we see with our business in the consumer in Europe and then Luca can talk about the margins. I mean Europe was strong from a top line perspective. I'll hand it over to Luca for the margins afterwards. The business continues to perform well. Our core categories, our robust penetration is flat. We don't necessarily see consumers walking away from our categories or down trading so far. What we see is that consumers continue to prioritize grocery spending. They're spending less on other categories, but not on grocery. Private label is not particularly increasing. There is really little evidence that, that is happening. What we do see is that consumers are switching more to discounters. So that's a little bit the overall situation. So, so far, so good, I would say, nothing major happening from a consumer perspective. Going forward, yes, we are probably a little bit more concerned about Europe because we still have some pricing to implement of the second pricing round in Europe, about 65% is now agreed, still 35% under discussion. I think we will get there. But then the consumer will be confronted with that extra pricing, and we will see what the reaction is going to be there. So I would say we are feeling good so far, but we are -- of all the regions around the world, probably more concerned about what's going to happen in the second half in Europe. Luca? Luca Zaramella: Yes. So Bryan, a couple of things just to give you a little color. When actually I look at the GP dollar line for Europe, it goes up year-over-year even if marginally. But clearly, the material revenue and volume did translate proportionately into the appropriate gross margin. And that is because quite honestly, we have been a little bit delayed in terms of implementing pricing as compared to when commodity costs kicked in. So I want to reassure you that as we implement these pricing actions and you might still see margins under pressure in Q3 because of potential customer disruption. But as of -- as we look back and as these things will be behind us, margins in Europe will be restored. The other one that is important for us to notice is that A&C was up meaningfully in the quarter in Europe because obviously I have about price increases we want to keep consumer engaged. So the simple straight answer is yes, margin was pressured. As we implement pricing, the situation should get back to normal. And importantly, we continue investing, and that is one of the reasons why actually despite gross profit dollar being up year-on-year, OI margin -- OI dollars was down in the quarter. Operator: Our next question will come from Andrew Lazar with Barclays. Andrew Lazar: You raised your full year organic outlook -- growth outlook meaningfully but kept obviously the mid- to high single-digit constant currency EPS growth guidance. What would be preventing the top line strength from flowing through to profitability more significantly? Or is there perhaps an element of conservatism built in the model? It certainly seems that way from some of your previous comments, but I just want to make sure there's nothing else or discrete that's preventing that flow through that I'm not aware of. Luca Zaramella: Yes. No, I think it's a very good question. Thank you, Andrew. I'll give you a little bit of color around how the P&L came together in our mind in terms of giving you guidance. We continue and I personally continue to feel very confident about 2022 being a very strong year, and that is not only in terms of top line, but also in terms of bottom line and particularly cash flow. You might have noticed $1.6 billion in the first half. It is one of the strongest numbers we have ever posted, the strongest number. Chocolate and biscuits, we are very happy. They are doing very well. I'm impressed with the volume mix that we saw in the first half. And as I said, while we kept on investing in the business, you see that our bottom line and cash flow continue to be strong. The 8% plus top line guidance reflects that confidence. And when you consider that it includes 1 point for the Ukraine prices, a potential and quite frankly as I said, difficult to estimate impact from customer reaction and as well as a more normal level of elasticities. You understand really that the business has an underlying momentum that is quite good, and we are confident in the combination of those trends. On the profit side, look, I said it the last time we talked, I said we might be cautious and we continue to be cautious. But quite frankly, we are now in a much better position than we were in the last quarter to really see line of sight to high single-digit EPS at this point. I just wanted to be a little bit conservative because clearly, customer disruption is difficult to predict and then elasticities that are above what we see today can play a role as well. So I would like to say that in case of elasticities that are more benign and more benign customer reaction than the one we have planned certainly, we're going to be within the high single-digit limit. I also would like to make a point, which might be overlooking all these numbers is, and it is the fact that we continue to observe very good cost discipline in the company. You might be sidetracked by looking at the SG&A line being up year-on-year. But realities, overheads are held under control and the line that is increasing by more than 13% is our A&C support to the business. Andrew Lazar: Great. And then just briefly, Dirk, thanks for the details on Clif. Some investors certainly still question the greater foray into the bar category, and as recently announced with Clif is it's perceived as a fairly crowded space and one maybe where it can be tougher to sort of differentiate. I guess what underpins your confidence in being able to drive the profitability of that Clif business meaningfully over the next several years such that there is a compelling ROI on the transaction? Dirk Van de Put: Thanks, Andrew. Well, we believe that the category is interesting. And it had a slowdown as it relates to the COVID because it's very heavily linked to mobility, but clearly, the category is coming back in the recent months. And Clif, within that category is a very strong position. It's -- it has been for several years the fastest growing in that bar market. We would say that the brand is very strong from our perspective across all age groups. It has organic ingredients. It has a great taste. When we look at the details, we believe that there is a big opportunity to expand distribution in existing and alternative channels, but also improve the quality of the distribution of where Clif is present. We also think we can optimize A&C as well as their cost of goods and their SG&A. We also think that working with them, we can work on RGM and PPA and also make a difference there. We think the transaction price was a fair premium for a very scarce high-growth quality asset in North America. So we feel good about the value that we're getting there. I would say that the profitability of last year for Clif is not representative. As I said, we have a significant opportunity to optimize overheads, implement an RGM strategy, they've been experiencing supply chain disruption. And we're already seeing in the first 2 quarters of this year, a much improved profitability for the business. So we feel that the business is completely coming back to normal, and then we can add on the many synergies that we see from our side. So the earn-out is another factor probably that's important. We did see the possibility to add a significant earnout if we would go with a substantial top line acceleration and margin expansion. So we believe that as we would enter into that acceleration, our returns would even go up. And so we hope that we will see that sort of growth that we have been planning for. Operator: Our next question will come from Chris Growe with Stifel. Christopher Growe: I just had a question for you, if I could, on -- around this quarter with this accelerating rate of volume growth in relation to accelerating pricing, which is obviously very encouraging. I wonder if you could discuss that broadly and what you think drove that incremental volume as the pricing went higher. But then also with that stronger volume growth should come better fixed cost leverage and with the gross margin being down a little bit sequentially, I realize that pricing did not quite keep up with inflation. But just to understand how that fixed cost leveraging might have helped the gross margin in the quarter or may help it going forward? Luca Zaramella: Look, we are very happy with the volume growth and the revenue progression. There is an element of clearly some of the businesses that were impacted during COVID coming back. The reality is the underlying performance of both biscuits and chocolate is just great. I can't find another word really to qualify it. As you look at the profit, the volume leverage is in there. The point is, particularly in the case of Europe, as you look at the profitability number, there is a lag between commodities hitting the P&L and pricing being implemented. And you realize that maybe Europe, it is more challenging than in other places. In the rest of the world, we have been much more proactive in terms of pricing. But it is Europe really impacting the overall profitability of the company. Having said that, I still would like to get a couple of points out there. We clearly identified the watermark for our algorithm to work in terms of gross profit dollars to be 4% plus versus last year. I mean, this quarter, we are almost 10%. You look at the profit dollar growth, I think on a year-to-date, we are 11%. You look at the amount of A&C we have put into the P&L. As I said, it is double digit year-on-year. So when you step back, I think the question would be if we had priced earlier in Europe, how good of a P&L group we have, and it would be clearly much, much better. And that, I think, is what is going to happen going forward if we continue to invest in the business and execute pricing well because I think there is still, obviously, as we've said, a few situations where lies pricing needs to be implemented, particularly in Europe. Volume leverage is a critical component of the algorithm, and we will protect it as much as possible. And the benefit is going into the P&L. The point, as I said, if there is a lag between pricing and commodity going into the P&L of Europe. Christopher Growe: Okay. And just a quick follow-on. If I think about the second half outlook and a little more cautious view on margins, at least at this point as you've taken revenue up and kept EPS in place. Is the main item to watch here the consumers' reaction to the pricing? Is it elasticity we should be watching? Or is the volume performance? Or anything else that you would just note that we should watch as indicator for success for the second half of the year? Luca Zaramella: Look, the underlying margins is quite good. The inflationary pressure, I would say, is going a little bit up because obviously, in Q1, we had a more favorable pipeline of commodities. But besides elasticities, as I said, there is this element of what is the impact of customer disruption. And so that's where we wanted to give you the mid-single digit to high single-digit range as far as EPS goes. But look, as I said, even in presence of may be a customer disruption but with more benign elasticities than those that we have planned that are in line with historical norms, I think we still have a shot at getting to high single-digit EPS. Operator: Our next question comes from Alexia Howard with Bernstein. Alexia Howard: Can we ask to begin with, there wasn't much commentary in the prepared remarks about market share trends, which I know were very strong a couple of years ago and probably down year-on-year against some tough comps. But I wondered whether you could just make some commentary on that, particularly given what we're seeing in North America, where I think it's down, but maybe because of supply chain constraints. But I'd also be curious about market share trends in other parts of the world as well. And I have a quick follow-up after that. Dirk Van de Put: Yes, the answer is relatively straightforward apart from some nits here and there. The only area where our market share is down is in the U.S. And that is driven by the supply chain gradual recovery that we're having. If I look around the world in AMEA, we have very solid gains in China, in India, multi biscuits. We see also gum in China doing extremely well. Chocolate in South Africa is doing well. In Europe, we are gaining share, mainly driven by France biscuits and U.K. biscuits. Latin America is flat yesterday, but they had a major increase last year, but also their biscuits are gaining share. And the Easter period has been particularly strong for us. So we have gained significant share there. Was our strongest Easter ever. We will have some negative impact in Europe because we were exporting to the European market from our Ukraine factories. And so that will have an effect. We're working on alternative sourcing, but until the end of the year, we will have some disruption from that. Now if I look to the U.S. So the share that we're losing there is purely because of supply chain constraints and it's on 4 local brands: Nilla, Nutter Butter, Premium and belVita. Our supply chain service levels and the performance of our lines are gradually improving. And so we are expecting to see some share improvement in North America in the second half of the year. And overall, I would say, longer term, we feel very good about continued share gains because of the amount of brand investments we're doing, the ROI we're getting on those. We are also driving share because of distribution gains in places like China, India, Southeast Asia, and we also have good gains coming from our innovation. So if you would be able to discard the U.S. situation, I think you would be able to see a very good situation in the rest of the world. Alexia Howard: Great. And just a quick follow-up. Have you just closed how you're planning to finance the Clif Bar acquisition, whether that's out of debt, cash on hand or any other measures? Luca Zaramella: Yes. We have released, I think, a couple of weeks back an 8-K where we have secured a little bit of additional term loan. And clearly, that has to function as a bridge to the divestiture of gumin developed market and holds worldwide to be able to deploy those funds for the acquisition of Clif. So that's the idea, and it applies the same to Ricolino. Now there are still other things that might be in play. As you know, we have multiple levels of flexibility within the balance sheet with coffee, with divestitures, et cetera. I think at this point in time, though, I still believe that the $2 billion of share buybacks is secured for the year. So I'm not sure we will go there to fund the acquisitions. Operator: Our next question comes from David Palmer with Evercore ISI. David Palmer: On Europe, you mentioned that organic sales and volume trends are remaining strong, and you showed that pretty lousy consumer confidence numbers over there, though. And so it does seem to be maybe even more than the U.S. a period of some data looking worse than others. But are you seeing any countries or categories where price elasticity is picking up and you're seeing some trade down? And is that in any part some of the resistance you're picking up from retailer customers on the latest round of price increases? Dirk Van de Put: Well, first, I would say that our categories, biscuits and chocolates are normally quite resilient in these circumstances. We've seen it during COVID, but we have also seen it in 2008 and in previous recessions because it's a small indulgence that consumers find difficult to forget or to leave behind. And then the presence of private label is relatively limited in our categories. So that might be -- at the start of it, that might be one of the reasons why our categories and our performance continues to look fairly strong. If you then look at consumer confidence, I think we do see a softening and consumers clearly talk about the inflation, the interest rates, the threat of recession. We don't see that in emerging markets, but the question, of course, was about developed. There is no drag on volumes yet. But if you go around the markets in Europe, things are different sometimes. So you, for instance, see a very strong French biscuit market, but you see chocolate in Germany and U.K. affected. And sometimes it has to see with seasonality and things like that and COVID with last year. But overall, I would say, from the consumer consumption perspective, it's a mixed bag. But overall, it remains relatively mitigated the effect. The elasticities are slightly up versus Q1, but they are still below the historical benchmark. We do expect higher levels, as I explained in years ago, but it's still nothing that is as high as it used to be before. So for instance, if I look at U.K. chocolate, that's probably where we see the highest elasticity so far. But it's declining the elasticity, and we are now about 10% below the '20 or '21 levels as it relates to elasticity. Now again, we have to see higher price increases in Europe for the second half. So we will see what happens there. But so far, there is really nothing from a penetration standpoint, from switching to private label, getting out of the category. We don't see anything that is of a major concern, but that doesn't mean it's going to remain like that. David Palmer: And you mentioned A&C increasing double digits so far this year. Where are you most leaning in with that spend? Dirk Van de Put: Well, the one region where we are not spending more than last year is in North America so far because of our supply chain disruption, and it didn't make sense. We first have to improve our customer service. But then in the rest of the world, I would say it's about equally split. There are some markets where we particularly want to focus on the growth that we see ahead of us. So there's a slight disruption here and there for higher investment. But overall, I would say it's across the board that we are investing in biscuits and chocolates, mainly. Operator: Our last question will come from Jason English with Goldman Sachs. Jason English: Dirk, I believe it was you in prepared comments or maybe it was a response to question, I forget. But you referenced an outlook for your categories to kind of maintain maybe flat, modest volume growth and then price on top of it through the back half of the year. Your guidance implies that you expect your own volume to be down sort of low to mid-single digits in the back half. And I was hoping you could unpack that for us. Like are there specific things that you're aware of or that we should be aware of that will be headwinds or is gas to pile on the notion of conservatism, are you just sort of prudently assuming that things get worse because the environment is really choppy? Luca Zaramella: Jason, maybe Dirk will comment on the category themselves. In terms of the guidance, as I said, when you strip out the impact of the Ukrainian war, which is 1 point that it is more pronounced in the second half. When you strip out the higher elasticities, we are planning or which arguably might be on the cautious side. And third, when you strip out the impact of the customer disruption pretty much the underlying trends of the first half are the same as of the second half. So I want to reassure you that in terms of slowdown, as you look at some of the numbers for chocolate and biscuits, as you look at emerging markets growing in the quarter, 22%, we are not assuming a material slowdown into the second part of the year. It is these 3 elements that I spend out in the prepared remarks and also in some of the answers I gave that impact the rest of the year. Look, the 8 plus, the plus is there for one reason, which is I would might end up doing better than that. And I believe it's there. Dirk Van de Put: Yes. From the category perspective, it was correct, what you was saying we thought that -- what we expect to see is relatively high pricing for probably in the 8% to 10% range, maybe even double-digit pricing. And that would be accompanied by flat to maybe a 1% volume growth. Now you have to keep into account that in previous years, the category growth was around -- in volume, was around 2%. And then and on top another 2% of pricing in the past. So we would not be that far away from the volume growth that we've been seeing in the past, maybe slightly down. So that's our estimate for the time being for the second half. Operator: I would now like to turn the call back over to our speakers for any additional or closing remarks. Dirk Van de Put: Well, thank you. Happy to have been able to inform you about a great first half of the year. Obviously, more to come, but thank you for your interest in the company and looking forward to talk to you in the coming weeks. Luca Zaramella: Thank you, everyone. Operator: Thank you, ladies and gentlemen, this does conclude today's call, and we appreciate your participation. You may disconnect at any time.

Operator: Good day, and welcome to the Mondelez International First Quarter 2022 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by the Mondelez management and the question-and-answer session. I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thanks for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. In today's call, Dirk will provide a business and strategy update, then Luca will take you through our financial results and outlook. We will close with Q&A. Before turning it over to Dirk, a reminder that we have an investor update on May 10 and that will begin 9 Eastern, 8 Central where Dirk, Luca and other senior leaders will talk more about the evolution of our strategy. More details will be on our IR website soon. With that, I’ll turn the call over to Dirk. Dirk Van de Put: Thank you Shep, and thanks to everyone for joining the call today. I will start on slide 4. I am pleased to share that we have delivered an excellent start to the year with robust volume growth, solid pricing, strong growth profit dollar growth and high cash delivery. Strong demand for snacks fueled broad-based growth all around the world, with the chocolate and biscuit categories continuing to demonstrate resilience and price elasticity remaining below historical levels. We also continue to effectively navigate a dynamic environment characterized by global input cost inflation, as well as lingering disruptions in the supply chain, labor and transportation. Throughout the quarter, we succeeded in mitigating these challenges through ongoing cost discipline and strategic pricing actions. At the same time, we continue to invest to support our brands, our distribution, our capabilities and acquisitions. We remain confident that the strength of our brands, our proven strategy and our continued investments position us well to deliver attractive, sustainable growth for the remainder of 2022 and beyond. It is especially important to note that we remain extremely confident in our people, the very best in the CPG industry. Each and every day, our makers and bakers around the world remain focused on delivering high-quality, great tasting snacks to enrich the lives of consumers. No matter how the external environment shifts from one quarter to the next, our diverse and dedicated teams continue to deliver the brands our consumers love. Turning to slide 5. You can see that our strategy is continuing to drive a virtuous cycle. The strength of our brands are continuously increasing investments and significant pricing actions, our sustaining top line momentum and solid profitability and position us well for another strong year in 2022. Our first quarter results show that we are off to a strong start. We grew revenue this quarter by 8.6%. We delivered gross profit growth of 9.9% due to higher pricing and robust volume. Our A&C investments have increased high single digits, and we gained our health share across half of our revenue base. We increased operating income by 13.5% and delivered $1 billion in free cash flow. We view these results as a healthy indicator of our ability to continue to deliver on our long-term growth algorithm. As you can see on slide 6, we are now averaging a 4.7% quarterly revenue growth rate since 2019. We feel good about this strong and consistent track record. In the second half of 2018, we shifted our paradigm on how to generate elevated growth by focusing on gross profit dollar growth, local first commercial execution, a virtuous cycle of always increasing investments and a new approach to incentives. We are confident that this approach will continue to consistently deliver attractive growth. We also believe this performance demonstrates not only the strength of our execution, but the attractiveness and durability of our core categories of chocolate and biscuit. Against that backdrop, I'm now on slide 7. We are excited to provide some additional details on our recently announced acquisition of Ricolino, the number one sugar confectionery and number four chocolate player in our priority markets of Mexico. This strategic acquisition will enable us to double our size in Mexico, a key priority market for us and Latin America's second largest market after Brazil. Ricolino has a broad portfolio of iconic widely loved chocolate and candy brands include Ricolino, Vero, La Corona and Coronado. In addition to the taste of the nation brands, the organization's robust route-to-market infrastructure, which has more than 2,100 DSD routes that serve more than 440,000 traditional trade outlets will enable us to rapidly expand our share in biscuits and chocolate. We also will benefit from four new manufacturing facilities with strong production capabilities. We expect this acquisition to rapidly drive value. Ricolino has been growing at an 8% CAGR with solid profitability over the past five years and currently delivers more than $500 million in net revenue. Its high strategic fit transforms our business with now 75% of revenues coming from core snacking categories and great opportunities for both revenue and cost synergies. Like other companies, as shown on slide 8, we are experiencing a dynamic operating environment driven by global cost inflation and supply chain volatility. We condemn the war in Ukraine, which is not only causing great human suffering, but adds to an already very difficult cost and supply chain environment. Let's take a closer look at each of these dynamics and the steps we are taking to address them. First, we continue to face elevated input cost inflation, especially in the areas of energy, transportation, packaging, wheat, dairy and edible oils. To offset these challenges, we recently announced further pricing actions across key markets. Additionally, our commodity costs are about 85% hedged for the year and near fully hedged in key areas. We are also continuing to accelerate productivity and throughput initiatives. Second, we continue to manage through volatility in the supply chain, especially in the US, due to labor shortages at third parties, as well as a continuing gap between demand and supply of trucking capacity and containers. To offset these challenges, we are continuing to improve our manufacturing and warehouse capacity, prioritizing key SKUs and implementing new measures to support employee retention. And third, we are working through numerous challenges related to the ongoing war in Ukraine. I would now like to spend a few minutes addressing our actions to care for and protect our people, as well as our operations in the region. First and foremost, our thoughts are with the people of Ukraine and all those around the world with family, friends and loved ones who have been impacted. The current situation is devastating, and we condemn this senseless violence. We have taken a number of important steps to protect our colleagues, including strong financial support, border crossing assistance and help with finding housing. As part of these steps, we are continuing to pay our employees in Ukraine. Additionally, we are stepping up our commitment to relief efforts, dedicating so far 10 million to humanitarian support and food security. This includes donations to international and local aid organization focused on supporting all people in Ukraine, but also with a specific focus on the communities where we have plans. On top of financial donations, our teams are providing on-the-ground help. For instance, we have helped transfer more than 100 children from Ukraine to Turkey, secured diesel generators to help provide power to critical public facilities and we are making food available in Ukraine, including product donations and working with distributors. Our two manufacturing operations in Ukraine have been shut down since the war began. Unfortunately, our site in Trostyanets has suffered significant damage due to the substantial military action in the area. Our site in also remains closed. Thankfully, none of our employees were injured at either facilities. It is too early to provide you with potential next steps for the facilities, but we will work to make these facilities operational when the local situation allows. In terms of our business in Russia, as a food company, we have scaled back all nonessential activities, including stopping all new capital investments, any planned product launches and line extensions, commercial sponsorships and advertising. We are focused on local production of shelf-stable packaged snacks that are staples in people's daily lives. We also continue to provide support to our colleagues. With that, I will hand over to Luca for more details on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Our first quarter performance was strong from top to bottom to cash flow. We delivered revenue growth of 8.6%, with nearly four points of that growth coming from volume mix. Emerging markets continue to show great strength, posting an increase of more than 16%, with strengths across all our major business units. Importantly, volume mix dropped nearly 10 points of this growth, with notable performances from Brazil India, China and Mexico. Developed markets grew 4.2% for the first quarter, with strength in both Europe and North America as demand remains strong. As for emerging markets, also, our developed market volume mix was positive, but pricing drove a good portion of that growth. Turning to our portfolio performance on slide 11. Chocolate and biscuits continue to demonstrate strong growth and drive our business. Gum and candy also increased significantly as many areas are at/or above pre-pandemic levels. Biscuits grew 6.7% for the quarter, with more than two points coming from volume mix. Similarly to Q4, emerging markets were a significant engine of growth in this category. Brazil, Mexico, India, Southeast Asia all grew double digit, while China posted high single-digit growth. Oreo, Chips Ahoy!, HU and Tae are among those brands that deliver double-digit increases. Chocolate grew more than 8% for the quarter, with increases in both developed and emerging markets. Both global and local brands grew well, including Cadbury, Dairy Milk, Milka, Tobleron, Lacta and Riz . Gum and candy continued to show improvement with growth of 27% related to mobility increases. China, Brazil and Mexico were among some of the larger gum businesses posting strong performances. Now let's review our market share performance on slide 12. We held or gained share in approximately 50% of our revenue base during the quarter, with approximately 25 points of high win due to the inventory situation in the US and related out of stock. Our chocolate category continued to do well, with 70% of our revenue base holding or gaining share. While our biscuit category held or gained share in 40% of our revenue base, the impact driven by lower inventory levels in North America following the Q3 strike and continued labor shortages at third-party manufacturers is worth 40 points of headwind. We expect these dynamics to improve as we move into the second half of the year. A few of the more notable areas of share gains in Q1 include China, India, Brazil, Mexico, UK and France Biscuit; UK, Brazil and South Africa chocolate; and China gum. As we move into Q2, we expect our chocolate share to improve in several key markets in Europe and EMEA due to Easter timing where our portfolio is especially strong. Now turning to page 13. For the quarter, profitability was strong due to higher pricing, strong volume leverage and the benefit of hedges related to currency and commodities. Turning to regional performance on slide 14. Europe grew 4.9% during the quarter, supported by great execution, a strong Easter performance and continued recovery in the convenience away-from-home and travel retail channels. Our results were driven by 3.4 points of volume growth with strong increases in many markets, including the UK, as well as Central and Eastern Europe. In chocolate, we delivered our best Easter ever with strong sell-in and sellout for the UK and Germany. Biscuits also delivered strong mid-single-digit growth. OI dollar growth for the quarter was more than 10%, driven by continued volume leverage, pricing and strong cost control as well as favorable commodity ForEx hedges. North America grew 7.7% in Q1, driven by higher pricing in biscuits as well as double-digit gum and candy growth. Volume mix was slightly positive, despite lower service levels related to third-party labor constraints. North America OI increased by 13.6% during the quarter due to higher pricing. We announced an additional mid-single-digit pricing increase in the US that will become effective early May. EMEA grew 8.9% for the quarter with strong volume growth of 6.4%, showing continued strength across much of the region. India grew double digits for the quarter and continues to execute well and reinvest for the future. We continue to extend our leadership position in chocolate, while the growth of our biscuit business continues to outpace larger competitors in the region. China grew high single digits for the quarter, driven by continued share and gains in both biscuits and gum, despite several challenges due to COVID restrictions. Southeast Asia delivered high single-digit growth, with strength in biscuit, chocolate and beverages. EMEA increased OI dollars by 5.8% for the quarter, volume-driven profit was partially offset by commodities and transportation inflation. Latin America grew more than 25% for the quarter, with strong growth across all categories, driven by both strong pricing and volume mix gains. Brazil, Mexico and our Western Andean business unit all posted double-digit increases this quarter. Adjusted OI dollars for Latin America increased more than 30% for the quarter. These increases were driven by broad-based volume growth across core snacking categories, effective pricing through RGM actions and the mix impact of higher gum and candy sales. Moving to EPS. Q1 EPS grew 13.9% at constant currency. This growth was primarily driven by top line-driven operating gains. Turning to free cash flow and capital return on slide 16. We delivered Q1 free cash flow of €1 billion, driven by strong operating results and further improvements in our cash conversion cycle. We also returned $1.3 billion to shareholders in the form of dividends and share repurchases. Let me make a few comments with respect to the Ukraine. We stopped all business in Ukraine as the war began, including our two plants in the country that produce products for both Ukraine and broader Europe. In total, this represents about $320 million in revenues on a yearly basis. As a result of this business stoppage, we expect asset write-offs and one-time costs of approximately $143 million, which will be excluded from our adjusted results. For the remainder of 2022, we expect about $200 million in revenue headwinds from the loss of revenue in Ukraine as well as losses related to finished goods that our Ukraine plant produce for other countries within Europe, where we do not have supply alternative yet. The lost revenue is expected to translate into $0.03 lower EPS. Now let me provide some color on our revised 2022 outlook on slide 19. We now expect 4% plus top line growth. This factors in the $200 million or roughly one point of negative impact currently anticipated from the Ukraine war in addition to our expectations that we will return to more historical levels of elasticity later this year. We continue to expect pricing to be a larger driver of top line growth, given its impact in Q1 and we are also announcing price increases across a number of markets for the rest of the year tied to inflation. We now expect input cost inflation in the low double-digit range for 2022 versus our prior view of approximately 8%, despite our coverage is approaching 90% for the year. The revise view of inflation reflects the war in the Ukraine and the related step-up in cost pressure to our commodity basket, including energy, wheat, oil and packaging. As I said, we also expect additional pricing in a number of markets connected to this inflation, and these actions could cause an increase in elasticity versus what we are seeing today. As a result, we have planned accordingly. As we gave you guidance for 2022, we had some headroom. So we still feel we have an opportunity to hit high single-digit EPS. But the situation is very volatile. And given these dynamics, we believe it is prudent to call a range of EPS growth between mid-single to high single digit. This also factors in ongoing investment to support our brands and work in media increases that, in some cases, might be increased, given good business momentum to protect versus elasticity driven by incremental price increases. Our outlook also now factors in $0.17 of headwind related to ForEx impact. $0.06 of this amount was included in our first quarter results. With respect to free cash flow, our view is unchanged as we continue to expect another year of €3 billion plus. With that, let's open the line for questions. Operator: We'll take our first question from John Baumgartner of Mizuho Securities. John Baumgartner: Good afternoon. Thanks for the question. Dirk Van de Put: Hi. Luca Zaramella: Hi John. John Baumgartner: Maybe, Dirk, just first starting off, just given the volatility we're seeing globally, wondering if you can offer a bit of the state of the union in terms of any notable call-outs across your geographies and categories? Dirk Van de Put: Yes. Well, I would say if I would phrase in one -- phrase, it's a fast-changing and complex environment that our demand is strong, and our momentum is sustained. If I think about the complex environment, we all know about the geopolitical conflict. There's still some pockets of COVID, particularly in China at the moment, but also Southeast Asia. We are seeing absolutely record inflation. And the supply chain disruption is still there. So probably one of the more difficult periods that I have known in my career from an operational perspective. At the same time, the demand for our product is very strong. And if you look at the quarter, for instance, in chocolate, we grew our revenues by 8.1%, and that was accompanied also by very strong volume growth, which was 5.8%. And then in biscuits, our biggest category, we grew revenue by 6.7% and volume was 2.2%. All regions performed well. They're all growing 5% or more. We continue to invest in our brands. We did not pull back on our investments. So we are going to continue to do that this year because we are in a high pricing environment and we believe we need to keep our supporting our brands. And despite all that, we are delivering very good dollar profit growth. We have double digit -- strong double-digit OI growth, and that was driven by pricing RGM and the volume growth. If I look to emerging markets and developed markets, emerging markets continue to be a very strong growth engine for us, double-digit revenue growth, strong double-digit revenue growth in Q1 and also last year, accompanied by 10% volume growth. We have strength in China, India, Brazil. And as you know, we believe we still have plenty of opportunity in these markets as it relates to distribution and white space. Developed markets are solid, although we still have constraints in our US supply chain, but we see it gradually improving. There was a significant step up in North America. So we had strong growth, a step-up in pricing. We are already going to implement at the beginning of May another round of mid-single digit pricing. And as I said, we're making good progress on supply chain and inventory, but there's still a lot of work to do there. Europe for us was also very good, volume-led growth of 5%. We had record Easter results, which you cannot yet see in our market share result because Easter is later this year, but we know it's a very strong Easter. The consumer in Europe, there's a lot of questions about it, is still solid, fully aware about inflationary pressures and so on, the underlying data show that the consumer is still buying our products very strongly. And then if I summarize it all, I would say, it is a complex environment, but we feel very confident about our future. I think we're in the right categories. We have the right strategy. Our brands are strong. We increased our investment in them every year. We have great people. Our execution is good and we have the right mindset. We will have to work through this near-term inflation, which got worse due to the Ukraine situation and the supply chain headwinds we still have to go through. So we remain focused on what we can control, our pricing, in-store execution and very strong cost discipline. I hope that gives you an idea. John Baumgartner: Yeah. That's great. Thank you. And just as a follow-up, in terms of the Ricolino acquisition, you touched on it in your remarks a bit, but could you elaborate on the synergy opportunities. And any other elements that attract you to the business that may be less apparent to outsiders? I know Mexico is not a market that's seen a lot of discussion traditionally. Dirk Van de Put: Yes. Well, for us, we consider it as a very high strategic fit for us to become a full snacking player. Mexico is a priority market for us. And our business there is largely in gum and in our meals business. And we are interested in becoming a bigger snacking player in Mexico plus the per capita consumption that we have. Roughly comparing to our other emerging markets, Mexico has potential for us, and we are very interested into the chocolate market also. Our biscuit business is developing, but could use some acceleration. So Ricolino offers us a strong route to market, combined with an already very strong presence in the market, particularly in confectionery and in chocolate. And that helps us to get to our ambition of about 15% to 20% market share in the biscuits and the chocolate market. And starting from their already strong position and combining that with our existing business, the two businesses are about the same size. This will mean for us that we are now 75% a snacking player, which is also very important for us. And what you might not have picked up, but which you can probably expect is that there will be a full integration. So there's a significant opportunity because of that full integration, for revenue and cost synergies, which would be accretive to our growth and margin in Mexico and Latin America. So maybe quickly a bit of the numbers on Ricolino, so about $500 million in net revenue. In the sugar confectionery and chocolate categories, they have about a 15% share in the combined categories, the number one in confection, number four in chocolate. The two categories together are about $3 billion in Mexico, and the growth of those categories are expected to be 7% for the next five years. And Ricolino, we expect because of their iconic local brands, we expect them to be above that, about 8%. You probably will not know any of the brands, but they're very known locally. What -- so we're interested in the categories there's in the brands. But then second, as I already mentioned, the route to market, 2,100 plus DSD routes reaching 440,000 mom-and-pop stores. That triples almost quadruples our route to market in Mexico. And, of course, we have a very strong modern trade presence ourselves where we can help Ricolino become stronger. What we also have to keep in mind is that they have a high-growth US business. They're the leader in confectionary in Hispanic markets in the US. And so we believe that there is an opportunity there to significantly increase that business. 10% of their sales are coming from the US Hispanic market. And as you know, the population in the US, the Hispanic population in the US is growing fast. We're also getting four excellent manufacturing facilities, which will help us produce the necessary products for the growth. So I think that gives you an idea, hopefully. John Baumgartner: Yeah, that's great. Thanks Luca -- sorry Dirk. And just last one for Luca, if I could. Looking at the guide for 2022, stronger top line despite Ukraine, wider range for EPS. It sounds as though you've embedded a fair amount of uncertainty in the model. I know forecast announced was really tough. But how do we think about the puts and takes and maybe where might the outlook prove conservative in terms of modeling potential downside? Thank you. Luca Zaramella: Thank you, John. As I said in the prepared remarks, I think it is fair to say that we feel quite confident about 2022 being another good year, both in terms of top and bottom lines, despite the numerous challenges that are thrown at us. I think we've mentioned how vibrant chocolate and biscuit businesses are. And I think when you look at volume mix and the pricing that is kicking in, that is the testament really of the big investments we have been making over the last few years and the fact that our franchises are very strong. It is undeniable that the geopolitical environment is driving additional costs. And just to give you a reference, inflation is now expected to be double digit versus the high single digits we had originally estimated. And that will result in additional and multiple pricing waves across the board, across all our categories, quite frankly, since energy particularly has repercussions around a vast number of commodity classes. As we price away unprecedented inflation, clearly, the watch out is elasticity. And I want to make sure that you realize that we have planned for historical elasticity’s for the remainder part of the year. And so I wanted to be a little bit cautious in our forecast since at this point in time, we are not seeing that level elasticity. And I also want to make sure that we'll realize that by having invested materially in the last three years, our brands are as strong as they have ever been. So we certainly have an opportunity to do better on our revenue guidance. But again, quite frankly, if you slip out the Ukrainian impact, you realize that we are two points ahead of the original guidance on net revenue that we gave you at the beginning of the year. On the profit side, as we guided to high single-digit EPS, we had built into some cushion in our forecast. So we still have an opportunity to meet high single-digit EPS growth. But this situation is tighter than before because of the inflation and the Ukrainian related business losses, and those accounts for around about $0.13 of EPS. This is why we are now giving you a range to accommodate for further headwinds that might come our way. But in case of elasticity’s being more benign and more aligned to what we see today. And in the case of cost not worsening materially versus the double-digit inflation that I mentioned, high single-digit EPS is within reach. Obviously, we want to get to high single-digit EPS. And that's why, for instance, we are doubling down on cost initiatives. And there are streams within the company to ensure that on the productivity and cost control side, we do even better than we have been doing in the last few years. And so hopefully, if the situation doesn't worse and the elasticity’s are better high single digit would be within reach. John Baumgartner: Thanks Luca. Thanks Dirk. Very helpful. Dirk Van de Put: Thank you John. Operator: Our next question is from Ken Goldman of JPMorgan. Ken Goldman: Hi, thank you. And I hope that your employees and their families in Ukraine are safe and doing as well as they can under the circumstances. And I would back up what John was getting at, it does feel very low, 4% seems almost punitively low given 1Q strength. And I'm just -- my question, again, just to back up -- or my question would be just to back up what he was suggesting, if your pricing is going to accelerate, and it was almost 5% in the first quarter, and you're guiding to volumes being positive for the year, just mathematically, how do we get to 4%? It just feels like that's almost too low if pricing is going to be above 5% and volume is going to be positive. I just don't quite get how 4% is even in the cards if those two elements of guidance are there. I hope that makes sense. Luca Zaramella: I mean, from your logic, it really -- it makes sense. The point here though is; A, we have one point of headwind related to the Ukrainian business stoppage. You might imagine that in places like Russian, for instance, there are restrictions, both in terms of importing. And as we mentioned a few times, we have scaled back operations. So volume there is going to be negative as well. And on top of that, as we have multiple pricing waves, as I said, we have planned for higher elasticity than what we are seeing at the moment. If we get better elasticity’s and we implement pricing policy as we have done in the last few rounds, there is obviously an opportunity to go higher in terms of revenue. But I wanted to be cautious because, clearly, the situation is quite fluid. You might imagine that in some places, we are getting to price increases that are more than double digit, I would say -- not double digit, but in the 15-plus percent, that's the number we are talking about. And so elasticity remains to be seen at these levels, and I wanted to be cautious. Ken Goldman: And just to clarify, though, that when you say that elasticity is being baked in at a higher level than today and back-to-normal levels, and you talk about Ukraine and Russia, and I understand there's some uncertainty in there, too. That is all baked into your estimate of volume hopefully being positive for the year, nonetheless, correct? Luca Zaramella: Yes. Yes, it is. Ken Goldman: Okay. And then just one last quick one for me. As we think about the remaining quarters, are there any considerations we should have, Luca, in mind when modeling each quarter, whether in terms of top line comparisons that may not be obvious, whether hard or easy with the pace of inflation? Luca Zaramella: Look, the only one thing you have to bear in mind is that last year, in Q3, we had the strike impact in the US, which obviously affected some of the revenue phasing in the US. But besides that, the only one thing that you had to think is about sequential pricing being higher throughout the quarters. Ken Goldman: Okay. Thanks so much. Luca Zaramella: Thank you Ken. Operator: We'll take our next question from Andrew Lazar of Barclays. Andrew Lazar: Great. Thanks very much. I wanted to dig in a little bit on North America. Organic there was close to 8% in the quarter. And I think consumption or takeaway has been closer to maybe 4% or so. So I guess, given some of the supply chain issues that you're still dealing with, how have you been shipping so far ahead of consumption, and I guess, and also still losing market share in that market? I'm just trying to get a better handle on that. Dirk Van de Put: Yes. Well, Andrew, we do have a number of businesses in North America, our ventures, which are not followed by Nielsen. So if we think about Give & Go, for instance, or even Perfect Bar. They don't have the same coverage as the rest of our business. You will also imagine that, we came out of the strike, and we had subsequent high demand that our inventory levels in the trade were not as high as we would like them to be. So the combination of those two factors give that difference between the 4% and the 8% that you were talking about. Andrew Lazar: Thanks for that. And then, Luca, maybe if we look at the difference between, let's say, high single-digit constant currency EPS growth in mid to high single digit, if that's how it turns out. Maybe could you just break out the -- I guess, there were three key buckets there. I think you said, $0.03 was due to Russia-Ukraine. It sounded like another maybe dime, if I'm hearing you right, on supply chain. And then what would the cost inflation piece be? Again, just trying to bridge from high single digit to whatever turns out to be potentially somewhere below that? Thank you very much. Luca Zaramella: It is another $0.10 of cost headwind as we -- as I said in -- to the reply to John, between the Ukrainian business laws and the revenue that came out of the plant last year in the Ukraine and the additional cost pressure driven by the Ukraine war I see another $0.10. And so between the two, it is $0.13 of EPS. Now, as I said, the high single digits, quite frankly, at this point, is predicated on elasticity. The elasticity’s are better than what we have baked into the forecast, it will be high single-digit EPS, if elasticity’s are more in line with historical levels of one plus, then I think we will have a little bit lower than high single-digit EPS growth. Andrew Lazar: And the supply chain piece, I didn't know if that was included in the $0.13 because you have those three buckets on that slide? Luca Zaramella: Yeah, it is all included in there. Andrew Lazar: Okay. Thanks very much. Luca Zaramella: Welcome. Operator: We'll take our next question from Bryan Spillane of Bank of America. Bryan Spillane: Thanks operator, and good afternoon Dirk and Luca. Luca Zaramella: Hi Bryan. Bryan Spillane: So a couple of questions, quick ones, I hope. First is just maybe a follow-up to Ken Goldman's question about like phasing through the year. I think on slide 19, there's a comment in there that says you're expecting year-over-year profit dollar growth throughout 2022. So was that meant to be like each quarter? Is there any kind of variability in terms of, I guess, margin or profit growth per quarter? Just trying to understand if there's anything more behind that bullet? Luca Zaramella: No, don't read too much into that. Obviously, we are expecting OI dollar growth throughout the quarters. We have to see how cost evolves throughout the quarters because as I said, we have baked into the forecast, the current cost levels. We are pretty much well covered for commodities for the remainder of the year. So at this point, I would say, yes, that's the idea, depending, as I said a few times, on elasticity there might be some bumps in the road, but that's the plan at the moment. Bryan Spillane: Okay. And then the second one is just, Luca, how do we think about -- or how are you preparing for the potential for maybe like the inavailability of maybe some input costs or other resource -- inputs ingredients or other inputs. I guess, given there's going to be certainly scarcity of wheat, it looks like -- and maybe some other raw materials. Just is that a factor that has that been factored into your forecast? And just is there any risk associated with that as we go through the balance of the year? Luca Zaramella: The -- that is factored into the plan. I have to say, at this exact moment in time. Clearly, we are facing some shortages, but they have no been a material impact yet to the business. So the plan in terms we have is extra cost will get us the commodities we need. You might have heard about the palm oil issue in Indonesia. That one for us is not a material issue at this point in time. We are clearly monitoring the situation very closely. In terms of wheat, the wheat coming out of the Ukraine is mostly going into the Middle East and North Africa for us. As I said in the last call, the total wheat we procure for the company is $600 million, $700 million. So in the big scheme of things, we believe that in total, wheat is not going to be a material problem in terms of supply. It hasn't been yet, but we have to see how the crop evolves and what can still be sourced out of the Ukraine, particularly for our Middle East and North African business. Bryan Spillane: And just if I could follow up on that. If we're looking at maybe some of the petrochemical related, like, packaging, especially in Europe, given just all of the disruption in energy there. Is there any risk around just availability of packaging, especially in Europe? Luca Zaramella: We are facing some issues on specific items, but the issues are not broad-based. Paper and -- particularly in places like Asia, it is under a lot of pressure at this point. But again, in terms of supply, we have some issues here and there, but nothing that racks up to a material number for the company yet. And I hope it stays that that way. Bryan Spillane: Yeah. So do I. All right. Thanks Luca. Thanks Dirk. Luca Zaramella: Thank you. Dirk Van de Put: Thanks. Operator: Our next question is from Chris Growe of Stifel. Chris Growe: Hi. Good evening. Dirk Van de Put: Hi Chris. Chris Growe: Hi. I just had two questions for you, if I could, please. So the first one, I'm just curious about just to dig a little bit more into the pricing, Europe was an area where I think you've talked before about some pricing coming into place after Easter, like in April. I just want to get a sense of that we should see that pick up in the second quarter. And that has historically been a very difficult area to get pricing. Is that an area where you think your pricing can offset inflation in -- broadly in Europe? Dirk Van de Put: Yeah. So we've talked about the higher inflationary impact. We took pricing across all our markets in Q1, including Europe. So far, the demand for the category is pretty robust. But it's very likely that we will have to take another price increase in Europe. And in fact, we are going out to the clients right now. That probably is reflected on our forecast, and we're trying to be prudent there because that is not happening a lot in Europe that you have to do a second pricing. And so we will have to see what the reaction is, and we've taken a cautious approach on any potential effects that we could have from that. We do expect that we will be able in Europe and in most of our markets to already be pricing away most of the inflation of this year and then be ready at the beginning of next year to whatever gap exists with the cost picture for 2023 that we will also be able to do that pricing. So, that leads to what Luca was saying, a very significant pricing increases around the world. As we also were saying so far so good, elasticity has been quite low. But we -- the second area where we're trying to be very careful is planning for historical levels. For instance, I believe that at the end -- sorry, at the beginning of 2023, the basket for the US consumer will be up compared to the beginning of 2021 more than 20%. And so we forecast that the elasticity will go back to historical levels. Our categories have historically been very resilient. So, despite this high inflation, despite the high pricing, we know that our categories are pretty good. One of the things we're seeing, for instance, is that this -- the fact that everything is going up, not just food, consumers continue to prioritize grocery spending. It's more on personal items, floating, eating out, travel. Those are the items where they're trying to save. So, that also gives us confidence implement the pricing and continue with the volumes. But again, we're trying to be careful and cautious, and we will have to see how it goes. It's a very volatile environment at the moment. Chris Growe: Okay. Thank you for that. And I had just one quick follow-on. Did you give a level of inflation for the first quarter? I think we're looking at double-digit inflation now for the year. Does that pick up then as we go through the remaining quarters, or was the first quarter at that level? I'm just trying to get a sense of the gross margin. Does that get a little more challenging before it gets better before the pricing comes in place, or is that a function of inflation picking up here? Luca Zaramella: The level of inflation, it is higher in Q1 for obvious reasons because you know that last year, the inflation picked up materially towards the second part of the year. And it caught us a little bit by surprise, the level that we saw in the second part of the year. And obviously, the level of gross margin in Q1 is reflective of three key elements. One, it is the additional pricing. When you look, for instance, at the US business, you clearly see a level of revenue that is 8% with a modest volume mix impact, which means there is 8% pricing kicking in, in there. The second element is the fact that there is good volume growth in Q1 that provides leverage. And the third level is the protection in terms of hedges that we put in place in terms of commodities and ForEx. So, as you think about inflation going down in the remainder part of the year, it will go down year-on-year, but the level is still going to be higher in terms of absolute dollars, and we will have to price accordingly. The volume might not be as high as the 4% that you saw in Q1. And so that will have a play into the gross margin evolution over the quarter. So I think assuming that you're going to see an 80 basis point decline given all the pricing we are about to take might not be necessarily realistic. The goal that we have though is that we want to enter 2023 with the level of pricing at current commodity and ForEx cost that allows us to have a level of -- is more aligned to historical levels. Chris Growe: Okay. That’s very helpful. Thank you for your time. Dirk Van de Put: Thank you Chris. Operator: Our next question is from Jason English of Goldman Sachs. Jason English: Good evening folks. Thanks for slotting me in. Dirk Van de Put: Hi Jason. Luca Zaramella: Hi Jason. Jason English: Hi. I guess a couple of quick questions. First, to follow-up on the next wave of pricing in Europe. Have you approached the trade yet? How is it going? Because I believe this is close to sort of on-charter territory to be pushing through multiple rounds, at least in Continental Europe in the course of one year. Dirk Van de Put: Yeah, it's just brand new, so I cannot give you any feeling yet of where that stands. I think it's important to realize that within an extraordinary situation and that we will have all the necessary conversations with our trade partners and making sure that it's a win-win for everybody involved. But it's too early to give you an idea of where the negotiations will lead. Jason English: Got it. Okay. And the DSD route to Mexico that you're acquiring sound really interesting. Can you give us a little more color on what your current route to market is? And whether or not, I assume these are all company-owned, can you confirm that? And how long or should be -- I imagine we should expect, but how long do you think it will take for you to reroute the entire network to be able to get one route to market that you can efficiently maximize the loads of these trucks with? Luca Zaramella: Okay. So the DSD is an own system. The -- there are some contact points between the current beam of network and the Ricolino. So one of the things we will have to do is to carve out and create a little bit of additional infrastructure on our side, but nothing at this point, I would say that is worrisome. I feel quite good about the reach that Ricolino is going to have with 2,100 DSD route achieving 440,000 moms-and-pops, which is really where when you look at our biscuit business in Mexico, being at 5% share of total market, the opportunity lies. And on the other side, our Mexico sales complement, the strong model trade presence with our some modern trade presence what Ricolino has. And we feel like between revenue and cost synergies, this is going to be a material enhancement to the value of Mondelez. And so we are very, very excited. On top of that, the brands are very strong. And as Dirk said, particularly in the US, we see tremendous opportunities in pushing this brand through what is a cohort that is growing and has tremendous potential. Jason English: Yeah. Sounds compelling. Thank you. I’ll pass it on. Dirk Van de Put: Thank you, Jason. Operator: Our next question comes from Michael Lavery of Piper Sandler. Michael Lavery: Thank you. Good evening. Dirk Van de Put: Hi. Luca Zaramella: Hi. Michael Lavery: Just was curious if you could dissect the volume mix a little bit and maybe help us understand if there's any notable mix shifts to keep in mind as we think about the volumes. Are you seeing down trading? Obviously, the elasticities have held up really well so far. But when you lump those together, we don't get as much a sense of the split. Can you give an idea a little bit of how that breaks out? Luca Zaramella: Look, in total for the company, the mix component is very, very neutral. It hasn't been a problem. It hasn't been an upside either. And the simple way you have to think about it is North America is one of the most profitable operations that we have. And as we address the question of Andrew Lazar, Dirk said that the new businesses that we acquired are up, while our biscuit business in terms of volume is still below last year. And one of the reasons why that this is, A, we are lapping, clearly, tremendous growth last year in terms of volume. But also, as I look closely to the numbers, the supply-related issues that we have are causing still quite a bit of volume track compared to what it could be otherwise. On the flip side, as you saw, gum is growing very, very healthily as a category gum can be, I think, 27%, and that number obviously is mix accretive. The other one that is mix accretive, it is about world travel retail, which is picking up nicely quarter-after-quarter, albeit it is not still at the level it is not yet at the level before the pandemic. So, these are the three key mix components, North America volume being down because of supply chain issues, gum being up and world travel retail being up all the rest in terms of mix, I would say, fairly neutral in its totality, and these three elements offset each other. Michael Lavery: Okay, that's great. That's really helpful. And can I just follow-up on the buybacks. You still have a pretty elevated cash balance relative to historical levels. But even with the Ricolino deal, you're still expecting about $2 billion for this year. You've said you'll finance that deal with debt and cash. Is it a good portion of debt, or I guess just with $750 million of buybacks already in Q1, could there potentially be upside to that $2 billion number over the course of the year? Luca Zaramella: Look, let's stay tuned. The -- at this point, I feel that we have what it takes to be able to fund the $2 billion of buybacks. I'll provide a little bit more color around this at our Investor Day. Michael Lavery: Okay, great. Thanks so much. Luca Zaramella: Thank you. Operator: Our final question comes from Alexia Howard of Bernstein. Alexia Howard: Good evening everyone. Luca Zaramella: Hey Alexia. Dirk Van de Put: Hi Alexia. Alexia Howard: I got a couple of questions. Firstly, on the emerging markets, the biggest pushbacks that I get at the moment is people concerned that as food prices escalate around the world, and the cost of basic food becomes a higher proportion of people's income in a lot of these low-income countries, that could choke off sales of more discretionary items like packaged snack food. How do you respond to that in terms of your confidence of sustained growth in the emerging markets in the face of that dynamic over the next year or so? And then I have a quick follow-up. Dirk Van de Put : Yes. I think as I was saying before, what we're seeing at the moment, we see that in developed and in emerging markets, the shift that the consumer is making as they are being confronted with inflationary pressure are more into their discretionary spending into eating out, travel and so on. And we see that also in emerging markets where at this moment, there is food inflation, of course, but that we don't see a reduction in the basket of what they're buying. The second thing I would say is that the discretionary part of snacking is, I would argue, that, it's not so discretionary anymore with the modern consumers. Snacking is a big part of what they do. And for instance, in China, as people are going into lockdowns, we see an increase in salt biscuits happening because they considered it as a staple of their diet. And so I wouldn't just assume that snacks are discretionary. There are whole parts of snacking that are part of how consumers eat these days. And then three, I would say we also work very carefully and particularly in places like India or in Brazil, our RGM approach is very developed. They have a whole plan the – year-after-year are absorbing the different inflations that they see. And so the price increase might not be as direct as you would assume for the consumer. So because of those three elements, I think you continue to see very strong performance in our emerging markets. We – at this stage, we see no effect whatsoever of the price increases. And in fact, as I was saying, the volume increase has been 10%. So obviously, you can never say never, but so far so good. Alexia Howard: Great. Thank you very much. And then just finally, any quick preview comments about the Investor Day next month. I know, you've just mentioned that there might be something around the share buybacks, but is there anything else that we should be expecting? And thank you very much for the question. I look forward to seeing you next month. Shep Dunlap: Sure. Alexia, this is Shep. A few things, I mean, look, I think this is more evolutionary in terms of the strategy and what you're going to hear, certainly going to get a deep dive especially with respect to biscuit and chocolate. And then you're going to hit a little bit more about capital allocation just in general in terms of how we're thinking about that. As well, I would expect to hear from some other folks on the team just in terms of our efforts around marketing, what we're doing with the sales organization and supply chain. So hopefully, we'll cover all bases. But to give you an idea, just in terms of where our heads are at as we look to accelerate going forward and give you some proof points to leverage off. Alexia Howard: Great. Thank you very much. See you in a few weeks time. Dirk Van de Put: Well, thank you, everybody. Thanks for your presence here. Obviously, looking forward to see all of you during our Investor Day on 10th of May, and see you then. Luca Zaramella: Thank you, everyone. Operator: This does conclude today's Mondelez Corporation Q1 2022 Earnings Call. You may now disconnect, and everyone, have a great day.

Operator: Good day, and welcome to the Mondelez International Fourth Quarter 2021 Year-End Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by the Mondelez management and the question-and-answer session. . I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thanks for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. We're also presenting revenue growth on a 2-year CAGR basis to provide better comparability given the impact of COVID on 2020 results. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. In today's call, Dirk will provide a business and strategy update, then Luca will take you through our financial results and outlook. We will close with Q&A. Before turning it over to Dirk, I would like to remind you of 2 upcoming investor events. First, we will present virtually on February 22 at CAGNY, focusing on our AMEA region; and second, please save the date for a Mondelez Investor Day on May 10. With that, I'll turn the call over to Dirk. Dirk Van de Put: Thank you, Shep, and thank you, everyone, for joining the call today. I am starting off at Slide 4. 2021 marked another year of strong top and bottom line results. Growth was driven equally by volume and pricing as we leverage the strength of our brands and execution capabilities. We continued to deliver on our long-term growth algorithm, returning nearly $4 billion in capital to shareholders while investing in our growth initiatives, positioning us well to deliver strong performance in 2022 and beyond. The COVID-19 pandemic continues to impact both consumer behavior and the broader operating environment. Against this backdrop, over the past 2 years, consumers continue to choose our trusted and beloved brands for both comfort and sustenance at home and on the go. We have delivered on this strong underlying demand across our brands and geographies with continued strength in execution, activation and innovation. As a result, our cumulative market share remains higher than pre-COVID levels. At the same time, we are continuing to operate in a dynamic environment characterized by global input cost inflation alongside supply chain, labor and transportation disruption. We are effectively mitigating these challenges through ongoing cost discipline and strategic pricing actions. We also continue to execute well against our strategic growth priorities, investing in our brands, capabilities and sustainability initiatives while expanding our portfolio with the addition of several growth accretive acquisitions, Hu, Grenade, Gourmet Food and Chipita, which closed earlier this month. These additions increased our exposure to broader snacking categories and growing profit pools. Along with our financial performance, we made progress in other areas. We continue to advance our ESG goals, setting ambitious new targets for achieving net zero by 2050, and we continue to accelerate our DEI agenda. And none of this would be possible without our people, the best in the CPG industry. We're proud of the way our teams continue to focus on delivering great products to our consumers as pandemic conditions continue to impact both our work lives and our personal lives. I am especially grateful to our frontline teams whose hard work and dedication delights families all over the world. We are confident that the strength of our brands, our proven strategy and our continued investments position us well to achieve our long-term financial targets in 2022 and beyond. Let's take a closer look at the market and macro trends on Slide 5. With the recent rise of the Omicron variant, the rebound in mobility that we saw earlier in 2021 has slowed down in both developed and emerging markets and is expected to remain 10% to 15% below pre-COVID levels in many markets. Time at home and eating at home look likely to remain elevated. In the U.S., for example, 60% of adults are not expecting to eat out more in 2022 than they did in 2021. This positions our core biscuits and chocolate portfolios well as they are skewed towards in-home consumption. The pandemic continues to fuel the desire for comfort and indulgence, benefiting our categories and trusted brands. And overall, as we found in our state of snacking survey released last week, the tendency for daily snacking is up for a third consecutive year. And although 70% of global consumers report concerns about inflation, it has done little to date to change their grocery shopping behavior. This is consistent with the observed price elasticity, which has been much lower than historical levels as well as a continued share weakness for private label. Let me spend a moment on the current operating environment on Slide 6. Like other companies, we are experiencing cost inflation globally, particularly on transportation costs, dairy, edible oils and packaging. We have implemented material price increases, ensures we are significantly hedged across key commodities and we are continuing to drive productivity measures. We also continue to manage through significant volatility in the supply chain due to labor shortages at third-parties as well as a continuing gap between demand and supply of trucking capacity in containers in places like U.S. and the U.K. In addition, the U.S. strike in Q3, although resolved, impacted our production output and inventory levels in the quarter. Additionally, COVID-19 continues to cause disruption in consumer mobility in certain geographies, impacting our gum business and on-the-go products. This currently affects a small portion of emerging markets. Additionally, the rise of the Omicron variant is driving high levels of absenteeism in certain markets while limiting recovery mobility. We are focused on reactivating part of our COVID playbook from the early pandemic days and also looking to further simplify our operations to offset this pressure. And although challenging, we are managing effectively through each of these dynamics. We implement our revenue growth management levers and continue to invest in our brands while taking extensive measures to lighten the supply chain disruption. By applying the lessons learned from earlier waves of the pandemic and maintaining our focus on execution, we are confident that we remain well positioned to deliver our growth targets. Turning to Slide 7, you can see that our strategy is continuing to drive a virtuous cycle. Strong volume momentum, combined with brand investments and strategic pricing options, position us well to consistently deliver profitable top and bottom line growth as well as strong return of capital to our shareholders. We grew revenue by 5.2% in 2021, lapping 3.7% growth in 2020. Volume was once again a big contributor to this growth, which demonstrates the fundamental strength and health of our business. Despite the ongoing impact of cost inflation and supply chain volatility, we delivered gross profit growth of 3.6%. Our working media investments have increased double digit versus last year on the back of a double-digit increase in 2020. Combined with our advantaged portfolio of brands and our execution activation capabilities, we gained or held share across 75% of our revenue on a 2-year cumulative basis. We increased operating income by 5.8% and delivered $3.2 billion in free cash flow. We view these results as a healthy indicator of our ability to continue to deliver on our long-term growth algorithm. As you can see on Slide 8, we are now averaging a 4.2% quarterly growth rate since the launch of our strategy in September 2018. We're proud of our strong and consistent track record over this time. As we continue to focus on profit dollar growth, local first commercial execution, high return investments and aligned incentives, we are confident that we can continue to consistently deliver attractive growth. On Slide 9, you can see some highlights of our successful execution against our long-term growth drivers. These include delivering our strongest Christmas sales on record in Europe, growing double digit versus 2020 and 2019, led by Cadbury in U.K. and Milka in Germany. It also includes continuing to expand distribution in emerging markets, adding 300,000 stores in China and more than 200,000 stores in India. It includes investing to sustain growth in digital commerce, which grew 29% on a reported basis, lapping 75% growth in 2020. Digital commerce now accounts for approximately 6% of revenue, up from 3% in 2019. And it also includes expanding our presence in high-growth segments where we are underrepresented, including well-being where we launched breakthrough innovations on key brands like Oreo Zero Sugar in China as well as Cadbury Plant Bar and plant-based Philadelphia in the U.K. As consumer demand for well-being options rises, each of these innovations has a clear potential to expand to additional geographies. We also grew our presence in the premium biscuit space with double-digit growth led by Tate's, which we successfully transitioned to direct store delivery. Additionally, we expanded our presence in close-in adjacencies, such as baked snacks with the successful integration of Give & Go. By realizing revenue and cost synergies, we grew that business double digit in 2021. We also expanded our presence in snack bars with the acquisition of Grenade in the U.K. Switching to Slide 10. We continue to further enhance and strengthen our portfolio in 2021, expanding our exposure to the growing profit pools in chocolate and biscuits as well as adjacent categories and the well-being and premium segments. We acquired 4 high-growth strategic assets: Chipita baked snacks in Europe, which just closed in January; Grenade well-being snack bars in the U.K.; Gourmet Food premium crackers in Australia; and Hu premium well-being snacks in the U.S. These acquisitions are worth $800 million in annual revenue, and they are well positioned to collectively deliver high single-digit growth for years to come. This takes our total number of acquisitions to 7 since 2018 and contributing over $1.5 billion of revenue. We also earned $1.5 billion in net proceeds from selling down on our beverage assets in 2021, enabling further investment in our brands and growth drivers. Additionally, we are in the process of completing a strategic review of our developed market gum business. We expect to complete that review and have more information to share with you at our May 10 Investor Day. 2021 was a strong year, and we are well positioned for another year of strong shareholder returns in 2022 and beyond. By staying close to our consumers, executing our proven strategy and taking the appropriate actions to navigate input cost inflation and supply chain volatility, I am confident that we can deliver strong performance for years to come. With that, I will hand over to Luca for more details on our financials. Luca Zaramella: Thank you, Dirk, and good afternoon. Our full year and fourth quarter performance was strong in terms of revenue growth, volume, earnings and free cash flow. We delivered revenue growth for the year and quarter of 5.2% and 5.4%, respectively. Importantly, half of this performance was underpinned by volume. Emerging markets increased 12% for the year and 11% for the quarter with strong performance across significant majority of countries, especially the BRICS. Despite a small group of countries, specifically in Southeast Asia continuing to face COVID-related challenges, overall, we are encouraged about the outlook for our EMs in the near and long term. Developed markets grew 1.6% for the year, coming off an exceptional 2020 and 2.5% for the quarter off a strong comparison. As with our emerging markets, we are encouraged by the sustained performance, particularly in our key core snacks categories. On Slide 13, you can see our portfolio performance. Chocolate and biscuits remain attractive and durable categories with very strong results both pre-pandemic, during the pandemic and, importantly, as we enter 2022. In addition, improved mobility has yielded growth in Gum & Candy versus 2020, approaching a return to pre-pandemic levels in many markets and back to growth versus 2019 in China. Biscuits grew 3% for the year and 3.2% for the quarter. EMs were the big driver of performance, with majority of our AMEA and LA business delivering double-digit or high single-digit growth. This underscores the large long-term opportunity for our EM biscuit businesses as we continue to make investments in A&C portfolio growth and distribution expansion. Both global and local jewels brand, including Oreo, Chips Ahoy!, Barni and Club Social delivered strong growth. Chocolate grew more than 10% for the year and 8% for the quarter, with significant growth across both developed and emerging markets through both our global and local brands. Chocolate is a great category to be and, as in biscuits, we continue to make investments in our brands and capabilities to continue to drive its performance for the years to come. Gum & Candy posted 7% growth for the year and more than 11% growth for the quarter as increased mobility resulted in a return to growth in several key markets, especially within Latin America. Now let's review our market share performance on Slide 14. We continue to see good share performance on a 2-year cumulative basis as we prioritize A&C investments and execute well in most markets. We held or gained share in approximately 75% of our revenue base on a 2-year stack. Our biscuits and chocolate categories continue to do well, with 80% of our revenue base holding or gaining share. Overall, share gains versus 2019 were broad-based, with all regions growing share over a 2-year period. A few of the more notable areas of share gains over this time include China, Russia, India, Brazil and Mexico biscuit; U.K., Russia and Australian chocolate; and China gum. As we move into Q1, we expect softer share performance driven by our North American segment as the combination of supply chain constraints from third-parties and labor shortages will pressure stocks and service levels. While the immediate effect of the strike is behind us, we have entered 2022 with low stocks, and we are working to rebuild inventory levels, which takes time in this environment, particularly as demand continues to be strong. We expect a gradual improvement of the situation as the year progresses. Now turning to Page 15. For the year, we delivered strong OI dollar growth of almost 6% driven by solid gross profit dollar increases and reduced overheads. For the quarter, profitability was pressured primarily due to the lag between commodities and ForEx-related inflation and implementation of pricing actions, specifically in North America where price increases became effective at the beginning of January. Turning to regional performance on Slide 16. Europe grew 5% for the year and 6.5% for the quarter supported by strong execution and activation and continued recovery in the convenience away from home and travel retail channels. Our Q4 results were driven by some growth across major markets, including the U.K., Germany and Russia, underpinned by solid share gains. In chocolate, we delivered record results for the Christmas season, growing double digit against both 2020 and 2019. Biscuits and meals categories also delivered good results, while dollar growth for the year was high single digits driven by continued volume leverage, cost control and strong overhead management. Looking ahead in this region, we expect muted profitability in Q1, with improvement beginning in the second quarter as price increases in a number of countries take effect. North America declined by 0.6% for the year and 0.3% for Q4, lapping very strong high single-digit growth in the previous year. This performance includes healthy growth from our ventures portfolio. Softening in the quarter and second half were also driven by supply chain constraints and low inventory levels due to the strike and third-party labor constraints. North America OI declined minus 10.4% for the year and minus 20% for the quarter due to inflationary pressure and supply chain constraints. As mentioned earlier, we expect sequential improvement as pricing actions go into effect in Q1. AMEA grew 7.3% for the year and 5.8% for the quarter, showing continued strength across most of the region. India grew double digits for the year and continues to execute well as we invest for the future. We continue to extend our leadership position in chocolate, while the growth of our biscuit business continues to outpace larger competitors in the region. China grew low double digit for the year and high single digits for the quarter driven by continued share gains in both biscuits and gum. Australia and New Zealand also did well with solid performances in the year and in the quarter in chocolate and biscuits. AMEA increased OI dollars by more than 13% for the year due to strong volume leverage, productivity and overhead management while also increasing Working Media by double digits. Q4 growth was more muted due to commodity inflation. As in other regions, pricing actions to RGM are being implemented as of Q1. Latin America turned in strong growth for the year of 20.4% and 19.7% for the quarter with overall share gains for 2021. Brazil delivered strong double-digit growth for the year and quarter. Mexico grew high single digits for both the year and the quarter and our Western Andean business grew high single digits for the year and mid-teens for the quarter. Adjusted OI dollars in Latin America increased high double digits for the year and more than 40% for the quarter. These increases were driven by broad-based growth across core snacking categories, effective pricing and the volume and mix impact of higher Gum & Candy. Inflationary pressure remains challenging, but we believe both RGM and volume growth will enable us to largely offset this dynamic in 2022. Moving to EPS. Full year EPS grew 9% at constant currency. This growth was primarily driven by top line-driven operating gains. Turning to free cash flow and capital return on Slide 18. We delivered full year free cash flow of $3.2 billion, which included $300 million higher tax payments year-over-year, some related to our coffee JVs, IPOs and sell-downs. We continue to feel confident about our free cash flow trajectory as we move forward. And for the year, we returned $3.9 billion to shareholders in the form of dividends and share repurchases. Now let me provide some color on our 2022 outlook on Slide 20. We expect to deliver against our long-term growth algorithm that we see as a performance floor, particularly as revenue grows. As you are hearing across all sectors, we anticipate another year of material cost inflation which, in percentage terms, is expected to increase high single digits versus 2021. As such, pricing will be a larger top line contributor than in the previous years, but we do expect volume growth to also be a positive factor. In this regard, a few more points. Our superior portfolio of brands and the consistent investments we have made and will continue to make in Working Media, marketing and sales, route-to-market and RGM capabilities position us well for sustained growth and profitability in this higher inflation environment. We believe we can continue being an effective driver of category value and volume growth, specifically in biscuits and chocolate. Our focus is not changing as we aim at growing profit dollars and dollar growth underpins our sustainable algorithm, cash flow and capital return. We had a history of cost excellence, which we expect to remain the case for 2022 and going forward. Our algorithm continues to be predicated on brand building and capabilities in sales and marketing also in 2022. All included, for the year, we expect mid-single-digit to high dollar growth and high single-digit EPS growth. Earnings phasing will reflect the current inflationary environment and the sequential introduction of pricing. We expect improved year-over-year gross profit dollar growth as pricing is fully realized and as we implement additional RGM strategies. But we do still expect some pressure in Q1 and partially in Q2. For Q1 specifically, we still expect to face larger supply chain headwinds in North America related to third-party partners and low inventory from last year's strike that should improve as the year progresses. With respect to free cash flow, we expect another year of $3 billion plus. In this outlook, we also expect an ETR in the low to mid-20s based on what we know today, interest expense of approximately $325 million and share repurchases of approximately $2 billion. With that, let's open the line for questions. Operator: . And we will take our first question from Ken Goldman with JPMorgan. Kenneth Goldman: There's been some discussion lately in the media about emerging markets potentially slowing down a bit as 2022 progresses. I think no one really knows for sure what will happen. But I'm just curious, it seems like things are fine for you now. But as you look ahead to your major regions or major countries, is there anything that you are particularly worried about, anything that you look at and say, "Oh, this could get a little worse as we go?" Or is it just sort of, "Hey, we're planning on steady as she goes?" And I'm just curious what's baked into your guidance potentially for a little bit of not demand destruction but a little bit of a worse sort of consumer around the world, perhaps? Dirk Van de Put: Yes. Well, thanks, Ken. First of all, I would say that around the world, but also in emerging markets, today and for the last 3 years, our core categories have been doing quite well. Chocolate and biscuits have been growing very strongly and, in fact, better than they were before the pandemic. There's a number of factors at work with the consumers that are boosting the consumption and higher snacking. So we see very robust demand. And if I go to our key emerging markets, the BRIC countries, we see that in those 4 countries also very, very clearly. As it relates to investments and support for our brands, we are also continuing to do that in emerging markets. If anything, that's where we increased the most. And I think that from a pricing perspective, we have been dealing with pricing in emerging markets over the years, and we know that we have to hit certain price points, and we're very careful with that. Having said that, we have already started to increase prices. In fact, the effects that you see in Q4, any price effects there, are largely coming from our emerging markets. We've increased prices in most emerging markets around the world. And as you can see, results have been very good. So we also have that very low elasticity that we are also seeing in the rest of the world. So everything is sort of aiming in the right direction. We feel that at this stage, there is no signs that it's slowing down in emerging markets. Obviously, in our projections of our algorithm, we have not taken the same height of performance that we've seen this year in our emerging markets. We've taken that a little bit more conservatively. So based on those two, seeing what we're seeing and the experience that we have and, I believe, us doing all the right things as it relates to pricing, investments, gaining distribution, which is another big driver in emerging markets for us, and the fact that we feel that we have been relatively realistic in what we forecast for emerging markets, we feel pretty good. We think that emerging markets will deliver for us in 2022. Kenneth Goldman: Great. That's clear. And then a quick follow-up, if I can. Luca, you touched on this a bit. But is it reasonable, just given your comments about the phasing of pricing and maybe the timing of inflation too, to think about the flow of your years maybe being a little bit more back-half loaded and perhaps a little bit more challenged in the front half? And if that's true, are there any specific timing issues we should consider other than pricing and inflation just as we model ahead? Luca Zaramella: Thank you, Ken. It is mostly pricing and inflation phasing that will drive the gross profit, specifically as a line in the P&L progression throughout the year. Obviously, you saw the number being pressured in Q4. But as you look closely on the segment profitability data that we disclosed, you see that the Q4 GP pressure came mostly from North America where we have just announced pricing. And so you will see a sequential progression that is positive in the gross profit line as of Q1, but the most of the benefit to hit our guidance is going to come in the second part of the year. And as I said, there are 2 elements there. One is pricing implementation, and there might be multiple pricing waves. The second one is the fact that, particularly in Europe, pricing will come into effect as of Q2 and in other places as well. And third, it is the fact that inflation, given the favorable commodity pipeline that we had in 2021 in Q1, commodity pressure is most acute in the first half of the year. But you will see a better trend in GP dollar as of Q1 and sequentially, it will improve over the quarters. Operator: We'll take our next question from Bryan Spillane with Bank of America. Bryan Spillane: Luca, maybe just following up on Ken's questioning, just a couple of sort of bridging from '21 to '22 questions, if you will. If we look, first, have we quantified or can you quantify just how much the acquisitions contribute to earnings growth in '22 versus '21, adjusted EPS growth? Luca Zaramella: Look, the Chipita acquisition is a material acquisition, obviously, in terms of size but also the number of countries it spans across. And it will be fully integrated, but it will take a little bit of time. I will say that, without giving you specific numbers, there is a moderate positive impact on EPS next year, but you will see the full benefit of the revenue and cost synergies as of Q4 and, potentially and obviously, in 2023. So it will be a modest contribution all in all considered. Bryan Spillane: Okay. And just more of a contribution in '23 versus '22. Luca Zaramella: Absolutely. I think you're going to see the full benefit, and I think you will be pleased in 2023. Bryan Spillane: Okay. And then if we look at below the operating profit line, in 2021, in the bridge that you laid out in Slide 17, including share repurchases, the below the operating profit line items contributed about $0.09 of earnings in '21. And I guess just looking at the guidance, it just seems like interest expense, the tax rate could both be a bit of a headwind. So can you just sort of give us -- should we expect that there would be some earnings contribution below the operating profit line? And if so, I guess, would it be mainly share repurchases? Just trying to square how much benefit we get below the operating profit line. Luca Zaramella: Interest costs will be up around about $20 million, $25 million. So it is $0.01 of EPS headwind. Tax rates will be a little bit higher, but not much, and so I would say a slight headwind. Obviously, I can't comment very much on the joint ventures as those are publicly traded vehicle. But the biggest benefit is going to be most likely around share repurchases. In terms of the JVs, I will refer back to what was said about KDP profit guidance for 2022. And I think that's the stance we have taken for that. Operator: We'll take our next question from Andrew Lazar with Barclays. Andrew Lazar: Perhaps Luca, could you just comment first on what your outlook or expectation would be in terms of gross margin change year-over-year for the full year? And I guess, to the extent you see some full year gross margin compression, more would need then to come from SG&A leverage to get to your sort of mid-single-digit constant currency EBIT target. So in that case, what would be those SG&A drivers that you would have to lean more heavily on this year potentially, given what your answer on the gross margin is? Luca Zaramella: Sure. I think you know that we try to move away from gross margin percentages. And I think that has served us well. So talking about gross profit dollars, 2022 is no exception to what we have said consistently throughout the years. We aim at getting at 4-plus percent on that specific line of the P&L. And as I said, I think you're going to see year-over-year GP dollar growth as of Q1 but will be most pronounced in the second part of the year. I think, again, as you dissect the numbers, you clearly see that the pressure in Q4 on the GP line, which was slightly positive, comes mostly from North America. And what you have to believe for the GP line to improve, as the biggest change that has to happen, it is pricing going into effect in North America. The first indication is that, a, price was accepted by the retailers; and b, we see our prices going up in the marketplace. So I feel cautiously positive about that, which is clearly the biggest driver of GP progression over the quarters. In terms of SG&A, we will continue investing in advertising. Obviously, we will be very sensible because there are situations, specifically in North America, where we don't have enough stock. And so we are calibrating exactly where we want to spend. But as Dirk said, in emerging markets, we will continue pushing and we will continue pushing in the other regions too. The point here is the last thing we want to do as we implement pricing is cutting back on A&C investment. As far as overheads and productivities, we will continue the great job that we have done over the last few years and particularly in the last couple of years. Excluding the acquisitions, our overlying pure cost SG&A is down both in 2020 and in 2021, and my goal is to keep that line down year-over-year. Productivity obviously is going to be good for the year as we look at it, but I'll be commenting more as we publish Q1 about all these specific lines. Andrew Lazar: And then Mondelez is guiding to positive volume growth for the full year despite some supply chain challenges and limited shipments in Q1 maybe in the U.S. and Europe and, obviously, the higher pricing. So I guess what sort of elasticity relationship is Mondelez underwriting for the year? Luca Zaramella: Look, we have been a little bit conservative on elasticity. As Dirk said, elasticity is low at this point in time based on what we see across the board, but we are planning for historical levels. So that's the type of elasticity we have planned. And I think you know the number in general, it is onetime elasticity, give or take, but I expect to do better than that. Operator: And we'll take our next question from Robert Moskow with Credit Suisse. Robert Moskow: I guess one of the surprises in the results is that North America shipments were weak. And all of us look at Nielsen retail data, and it looks really, really strong. So what's happening at retail? Is that just strong consumer takeaway and the inventories are getting depleted? Should we expect that retail consumption to then weaken in the first quarter as a result of running out of inventory? Maybe help us bridge why it looks so good from a consumption data? And then I had a quick follow-up. Dirk Van de Put: Yes. Demand remains very robust. But the growth that you see is -- or of our growth that you see is impacted by supply chain constraints and phasing of some of the price actions. And so in between those is our inventory, of course. And if you look at North America, we grew or we were flat for the year, let's say. But for a 2-year CAGR, we're at 4%, which is still quite strong. If you look at the last quarters, we had the strike in Q3, which left us with low inventory levels. And although improving, it's going slower than you would normally expect because of all the supply chain disruption that everybody is experiencing. And so we think that we will still continue to see on shelf effects from the strike throughout Q1. We also work more with external manufacturing than our colleagues. And those external manufacturers are facing labor challenges. And we expect also that we will continue to see some pressures in that area, at least for Q1. And then the biggest difference probably is that we announced price increases for January 1, so they were not yet reflected in Q4, but you will start to see that as we report Q1. And we continue to work on our broader RGM capabilities. So as you look at Nielsen, you start to see at the moment the effect of those price increases, that's why our Nielsen starts to look better. But if you look at the Nielsen that we saw from last year, that's where you could see the effect of our supply issues. So as we look at Q1, we expect the top line in North America to improve. The margins will also improve, but it's going to be sequentially. As I said, pricing has been executed across U.S., Canada and our ventures. We are continuing to simplify our portfolio, and we are also taking actions to increase capacity, work, more temporary labor and so on, so that we sort of ease the pressure on our supply chain. We are continuing to invest in our brands. As Luca said, we will be careful to invest in those brands where we have good supply. But with the price increases, we are determined that we will have to continue to support our brands. And as you will see as these initiatives take effect in '22, the top and the bottom line growth will start to come back for North America. Maybe a last remark, the bottom line will be sequential because, if you look at it year-over-year, Q1 was a very good year last year. So you will still see some year-over-year pressure. And we have that lower inventory issue that I was referring to. But overall, you will see a very good improvement over the coming quarters. Robert Moskow: Okay. Well, my follow-up, you've been providing us with market share trends on a 2-year basis. But are you going to continue that in 2022? Because I think people will start to judge you more on a year-over-year basis. How will you represent your market share trends? Dirk Van de Put: Yes. No, we are going to go back to year-over-year. We thought it was useful with the pandemic because there was a number of effects, last year and also this year, exceptional effects that influenced the market share. And so we thought it was better to keep on comparing market share compared to pre-pandemic. Now that the pandemic is not behind us but improving, we feel that we can go back to normal market share. For instance, if you look at 2021, you have the U.S. strike in there, which affects, of course, our market share. But I think it's important to look at how the U.S. has been performing versus what it was before the pandemic and then excluding the strike. In Canada, this year, we were out of a listing with one of the most important customers there for quite a while, which also, of course, affected our market share. But we are back into that client, so the market share is going to come back. And then we had also exceptional effects in the U.K. chocolate last year where one of our competitors had a major supply chain effect, which then benefited us this year that supply chain is back up and running. So as a consequence, we'll give back some of that market share. And then we had one of our plants in France, which was affected last year, and we were not able to supply the market, so that had an effect for us too. So there's all these -- and last year, I'm not going into the details about our competitors, but last year, we had big wins because our supply chain performed better than our competitors, I would say. So the main thing for us was to show the accumulated over the 2 years. And over the 2 years, we see a very solid increase versus what it was before the pandemic. And going forward, we will start to compare year-over-year, unless there is exceptional effects, which we can then inform you about. Operator: We'll take our next question from Chris Growe with Stifel. Christopher Growe: I just had a question for you. First, I think, a question for Luca. In relation to your hedging, there was a comment that you're about 70% hedged for the year. I do want to get a sense if that would be considered normal or above or below where you normally would be at this time of the year. And then just to understand, because you're quite hedged in 2021 as well, the degree to which some of these unhedged costs, freight or packaging, things that you can't hedge, are those like a lingering risk to 2022? Or do you have a better read on those costs for the coming year? Luca Zaramella: Thank you for the question. It's a very good one. 70% is pretty much in line with what we had in last year. It is higher than what it has been historically. And over time, what we have done is we have moved the needle up in terms of going longer because, obviously, that gives us the opportunity at the low levels to buy more. And so we have the opportunity to sit back and wait until the situation evolves. And mostly, of these hedges, are 2 options, and they are not straightforward covered. So we still have flexibility, should one of these commodities go over. And I think that's a great advantage. So I don't feel particularly worried about the remaining 30% at this point. But there are parts where there might still be pressure. What we see these days is a little bit more pressure coming out of dairy. And potentially, we will have to consider additional pricing for that in some places where we sell dairy-based products. And we also see some pressure in packaging and some ingredients. Now the assumption we have, at this point in time for the second part of the year, is inflation for those that is in line to what we have seen and what we are seeing these days. There could be potentially more. I don't expect a material number at this point in time, but we got a little bit surprised on these unhedgeable commodities and exposures in the second part of last year. So we are very vigilant. And if in case they go up, we will have to price and we will do so. Christopher Growe: Okay. Just one other question in relation to what have been some really strong market share trends, and that's the culmination of a lot of work and marketing and new products and your categories doing so well also. I guess I'm just curious, as you think about your pricing strategy for the coming years, it's but one example, just the degree to which you think there's maybe a little risk to your market share. Are you taking pricing that largely reflects what your competitors are doing and inflation in that market and, therefore, there shouldn't be a whole lot of movement in share? Just trying to get a sense given how strong it's been, if that could be a bit of a watch point. Dirk Van de Put: Yes. Well, our pricing is largely driven by what we think is acceptable to the consumer. We don't know what our competitors are planning until they do it. And so we try to price in line with what we think our consumers are prepared to pay for our brands. And that is different between emerging markets and developed markets. So in developed markets where you're largely talking about supermarkets and there's a whole bunch of pricing effects, you have a little bit more liberty. In emerging markets, we need to hit certain price points. So we do a lot of work on RGM price pack architecture and so on. So we expect that we will be very sensible. We're working very hard on RGM and better understanding what is possible for pricing for our brands, what is acceptable to the consumer. As you know, many years ago, we've had a few episodes where we probably went a little bit overboard on pricing. So we will step a little bit more careful as it relates to pricing. As I was explaining, in Q4, we've been pricing in emerging markets. And so far, that is working really well for us. And so it seems to be that our methodology is working. We'll see what happens in the U.S. and in Europe. But at this stage, it feels pretty solid, and we don't expect that there will be any major issues. Going forward, second half and into '23, we will see what the inflationary pressure is going to be, but I can assure you that we will step very carefully and make sure that we continue to see volume growth for our brands. Operator: We'll take our next question from David Palmer with Evercore ISI. David Palmer: Great. A question on pricing, we can see some clear pricing that you're taking in developed markets here into '22. With the positive volume guidance, I don't want to get too carried away about the incremental pricing, are you thinking that there might be some moderation in pricing from emerging markets in '22 versus '21? Or should that be very similar? Luca Zaramella: Very similar is the straight answer, David. There are pockets where we don't see the level of inflation that we have for the totality of the company. But in general terms, particularly around ForEx, there are places where there is a little bit more inflation. And so given all the puts and takes, pricing-wise, you're going to see a level of pricing in emerging markets that is in the same ballpark of 2021, a little bit higher. As a reminder, we implemented, I believe, 2 price waves in places like Russia in 2021. We implemented, I believe, 3 price waves in Brazil. And I can go on and on and talk about Mexico, Southeast Asia, Manaf in South Africa, where we have implemented multiple rounds in 2021 as well. David Palmer: Great. And just thinking about your contribution to growth in '22 versus '21, you mentioned how, in the last couple of years, perhaps you've gotten some points of distribution gains, particularly in developed markets from smaller brands that may not have had access or might have had more issues with supply chain, even though you gave some of that back in '21. I wonder if you suspect you'll have some tough comparisons in developed markets against smaller brands this year. But then I think about the ability for you to have new product news this year and then the acquired businesses that you've had, they could possibly get into greater distribution. So I'm trying to think about how you're thinking about the puts and takes of what seems to be some headwinds and some tailwinds going into this year. Dirk Van de Put: Yes. So I would say, first of all, on the smaller brands, that effect is certainly continuing in Q4, and they continue to do well. To the extent that if we have some supply issues, it is sometimes in those smaller brands, because they keep on selling at the higher levels we had during the pandemic, that sometimes give us some capacity pressure. So we are trying to do whatever we can to deal with those capacity issues, of course. But we are, at the moment, assuming that gradually they will give back a little bit, but we do still think that those brands will keep some of that momentum that we started to see during the pandemic. And you are right, our global brands have performed really well this year. This was a year where our global brands outgrew our local brands. Last year, in '20, it was the local brands who outgrew the global brands. The reason is because Oreo, Milka and Cadbury, our top 3 brands, continued to be high single digit to double digit. And then you have the recovery of a brand like Toblerone, which is largely sold in world travel retail; or Trident, the gum, which is, of course, sold on the go. And they were heavily disrupted in 2020. The local brands, as I was saying, still are doing quite well. They are in the mid-single-digit growth range. And we don't necessarily see that slowing down going into next year. And then there is the additional effect from the acquisitions. Of course, Chipita, you will not see that in our top line until the acquisition is done for 12 months. So you won't see an effect from that one. But you will see a good year for Give & Go this coming year. We are expecting. And also a brand like Perfect Snacks, which is a snack bar, which is also largely consumed on the go, that was affected by the pandemic, we're also expecting that to see a good growth. Tate's, we have moved on to DSD, saw very solid, very strong high double-digit growth there this year, which we think will continue into next year. So yes, there is an additional effect. Also important to mention is that the price increase has covered all the brands in the U.S., the global brands, the local brands and the venture brands. Operator: We'll take our next question from Jason English with Goldman Sachs. Jason English: A couple of questions. It looks from everything we see like inflation, well, particularly owners in the U.S., is maybe kind of close to peaking. But it sounds like it's still building in markets like Europe and elsewhere. Can you walk us around the world real quick and tell us what you're seeing in terms of cadence, the level of pace, magnitude of inflation? Luca Zaramella: Yes. Sure. I'll take a stab at it. I will start by saying that the inflation is really the highest in the U.S. And look, it might be at the highest point in the U.S. right now, I don't necessarily see it going down in the second part of the year. So I want to make that point first. In terms of inflation, look, majority of the commodities we procure, they are global commodities. And so the inflationary pressure is pretty much the same around the world. Logistics costs is on the rise everywhere around the world, not to the level that we see in the U.S. And then there are packaging-related costs and ingredients that are pretty much consistent across the world. In terms of inflation, where it is mostly acute these days, it is in places where we have seen currencies weakening versus the dollar. It is in places like Russia. It is in places like Brazil. But overall, if you look around the world, in terms of inflationary pressure, I would say there are, yes, somewhere some peaks. But overall, it is fairly even, I would say. There are certain commodities that are more impacted than others. Cocoa, for instance, is a little bit more benign in 2022 than it has been in 2021. And so places where we have a material chocolate business, like in Europe, are going to see, in terms of inflation, a little bit less. But I just mentioned Dairy in one of the previous questions, and there might be further pressures coming up. So hopefully, I gave you a little bit of color on how we see costs evolving by region and by countries a bit. Jason English: Yes. No, that's super helpful. And just to come back to North America, obviously, it's unfortunate the persistent problems you're seeing in North America. I guess my question is -- they seem to be surprising you. If we look at the Nielsen data, kind of back to Rob Moskow's question, demand is there. And it looks like you're actually inducing demand because the promotional levels remain elevated. They're growing year-on-year. So it looks like you got a sales force, on one side of your organization, pushing demand and you've got a supply chain on the other side saying, "Wait, we can't fill demand," and there seems to be this disconnect between the 2 organizations. So 2 questions. One, is it fair? And two, what's wrong to cause that disconnect, if so? Dirk Van de Put: I would say that, for sure, in the beginning of the inflation or the supply chain disruption, which we started to see in August, September of '21, there was clearly a disconnect because our sales teams saw high demand and the supply chain suddenly started to realize that transportation was difficult and that there was a number of other issues that were going on, a little bit of capacity and so on, labor shortages in our third-parties. And so yes, it took us probably a few months before we realized we need to reset here. Since then, the teams have been working quite closely, trying to link up whatever demand generation that we have with the supply capacity that we have. And so I'm expecting that in the coming months, we see that starting to work a lot better for us. So I would say it's fair, but we've gotten under that now, and we've solved the problem. And so going forward, we should be okay. Not sure if there was a second part to the question. That was it, I believe? Jason English: Well, yes, no, that's good. We've covered it all. We're connecting again later. So I'll follow up later, too. Operator: And we'll take our next question from Rob Dickerson with Jefferies. Robert Dickerson: Great. Just have one question, just with respect to the top line, kind of circling back to all the commentary so far through Q&A. I know previously, it sounds like you were looking for, let's call it, maybe 6% to 7% pricing this year. That's implemented early part of January, North America. And then to David Palmer's question, it sounds like pricing in most EMs would kind of remain at a similar level relative to 2021 while, at the same time, there should be some improved pricing, it sounds like, coming through in Europe. So if I square all that, is it fair to say that maybe pricing for the year would -- it sounds like it's at least 3%. Maybe it could be a little bit higher. Because I'm obviously just trying to get to some gauge as to what's a rational, kind of organic growth forecast for the year, just kind of outside of just your traditional 3%-plus kind of long-term guidance. That's all. Luca Zaramella: Thank you for the question. We are usually not giving the breakdown of pricing and volume, and we try to move away to keep some sort of flexibility. But what I would tell you is that, as I said in the prepared remarks, I see the 3%-plus has a plus in it as a floor. And at this point in time, we really want to see how Q1 plays out with some price increases and Omicron before we commit to a higher number. But hopefully, we see Q1 coming in, in line with our internal expectations, and we will be in a position to raise the guidance on top line potentially after we see Q1 and we have Q1 under the belt. Hopefully, that's answering some of your questions. Robert Dickerson: Yes, fair enough. I guess I'll try another one. Just in terms of the cash balance, you're kind of ending '21 with a decent amount of cash. Leverage looks to be now a bit sub-3x, and it sounds like gum business is still under a strategic review. So kind of outside of the $2 billion potential in share repo, how are you thinking about just kind of general capital allocation in terms of M&A? Like, do you feel as if, as you get through '21, it's about stabilizing and tucking in Chipita and working on distribution opportunities with acquisitions already done? Or are you still pushing forward in terms of health and wellness premium, et cetera? That's all. Luca Zaramella: Look, the cash position at the end and the net debt position at the end of 2021 is obviously fairly good because we have done quite a bit of work all around. And I'm very happy with leverage being at 2.7x. Having said that, in January, we have just got a $2 billion check almost for Chipita. So bear that in mind. In terms of capital structure, we will continue generating cash flow, and I was very happy with the quality of the cash that came in into 2021. So I feel the first element, which is foundation of our capital structure, is there. And then clearly, at this point in time, if we had an acquisition that is similar to Give & Go or Chipita, et cetera, we will still be able to fund it. We obviously have our coffee stakes. And we have all it takes, including potentially switching off share buybacks to be able to phase an acquisition of the level that Give & Go and Chipita had been. Operator: And in the interest of time, I will now turn the program back to Dirk Van de Put for any closing remarks. Dirk Van de Put: Thank you. Well, in closing, we feel good about our 2021 performance across our key metrics, of course, including the top line growth. We see good volume, profitability was good and the cash generation was excellent. I want to reiterate that we are especially proud of our people, I believe the very best in the CPG industry. And by continuing to stay close to our consumers, we are confident that we have a bright future ahead. We remain focused on our consumer-centric growth strategy, that will not change. We will continue to improve our execution, and we will continue to invest and increasing our investment in our brands, in our talent and our capabilities. As I look ahead towards '22, we expect continued pockets of volatility related to COVID or the inflation or the supply chain challenges. We continue to risk-adjust our plans to ensure that we can successfully navigate these periodic disruptions and deliver on our targets. So we enter 2022 with a good momentum in our categories and the vast majority of our geographies. Our global and local brands, as I explained, are on solid footing with strong levels of investment. We continue to augment the portfolio with growth accretive snacking assets, and we are excited about the opportunities to advance multi-category strength in our key markets. We are going to continue to expand distribution in emerging markets, and we're going to further accelerate close-in adjacencies and our high-growth segments. So I thank you for your time and for your investment and see you at the end of Q1. Luca Zaramella: Thank you, everyone. Operator: And this does conclude today's program. Thank you for your participation, and you may now disconnect.

Operator: Good day and welcome to the Mondelez International Third Quarter 2021 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session. I'd now like to turn the call over to Mr. Shep Dunlap, Vice President Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon and thanks for joining us. With me today, are Dirk Van de Put, our Chairman and CEO, and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we will make forward-looking statements about the Company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements of risk factors contained in our 10-K, 10-Q, and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjusts for certain items included in our GAAP result. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. We're also presenting revenue growth on a two-year CAGR basis to provide better comparability, given the impact of COVID on 2020 results. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. In today's call, Dirk will provide a business and strategy update, then Luca will take you through our financial results and outlook. We will close with Q&A. With that, I'll turn the call over to Dirk. Dirk Van De Put : Thanks, Jeff. And thanks to everyone for joining the call today. Q3 marked another quarter of high quality top-line growth for our business. These result was marked by a continuation of the solid volume growth that we are used to, as well as higher contribution from pricing as we successfully executed pricing actions in multiple markets in light of the inflationary environments. Demand for our categories remains very strong across both developed and emerging markets, and within those categories, our market share remains higher than pre COVID as a result of strength in execution, activation, and innovation. As you know, like the rest of the industry, we are currently operating in a very dynamic environment that poses multiple challenges. These include input cost inflation globally, as well as labor and truck shortages in markets like U.S. and the UK. We are taking the appropriate actions to navigate these, including further rounds of pricing and cost control. You will hear more on this in a moment from both myself and Luca later in the call. Despite the current operating environment, we remain focused on and confident in our long-term strategy of delivering accelerated growth through a virtuous, top-line driven cycle, which requires continuous investment in our brands and our capabilities. Let me turn to Slide 5 and the consumer. During Q3, consumer confidence stabilized in general with a notable call-out of improved confidence in Western Europe, India, and much of Latin America as consumers are now more optimistic about job prospects and personal finances in those geographies. Mobility continues to rise, which provides a boost to gum and candy, as well as the travel retail channel, but both are expected to remain below pre-COVID levels at least through 2022. Ongoing uncertainty is fueling the desire for comfort and indulgence, which has been a consistent trend throughout COVID, and of course this is benefiting trusted brand like ours. All of this means that our core categories are growing faster than they were pre-COVID, and that our portfolio, which skews towards in-home consumption is benefiting. Demand is strong in developed markets, but especially so in emerging markets. Not withstanding a few smaller markets like Vietnam, which are suffering from continued COVID lockdowns. On top of all this, we have gained share during the COVID period. The elevated demand for our categories is contributing to price elasticity below historical levels. Consumers are willing to pay more for essentials or affordable treats as they spent less on eating and drinking outside the home. Let me spend a moment on the current operating environment on Slide 6. Like other companies, we are experiencing cost inflation globally, particularly on transportation cost and packaging, which are most pronounced in U.S. Costs have moved higher in the second half of the year relative to the first half, and we expect inflation to persist in 2022. There is also an element of volatility in the supply chain due to labor shortages at third-parties, combined with a significant gap between demand and supply of trucking capacity and containers in places like U.S. and the UK. In addition, there are energy shortages in China as demand has outstripped the supply of electricity in many areas. And as you might be aware, we also had a strike at 3 of our plants and 3 distribution centers in the U.S. The strike is now resolved, but impacted our production output in the quarter. The good news is that the new contracts give us flexibility and unlock additional capacity to support our growth ambition. COVID-19 continues to cause disruption in certain geographies. This was felt most acutely in Q3 in Southeast Asia and resulted in a temporary closure of our factory in Vietnam, for example. Although challenging, we are managing through all these dynamics. We believe we are well equipped to continue to deliver against our objectives, given the strength of our brands, our continued investments, pricing as necessary, and our focus on execution. Turning to slide 7, you can see that our strategy is continuing to drive a virtuous cycle. And the results support our ability to consistently deliver profitable, volume driven growth, pricing as needed and return of capital to our shareholders. We grew revenue by 5.5% in the quarter and 5%, sorry, 5.1% year-to-date, a lapping 3.9% growth in the first 3 quarters of 2020. Gross profit growth was impacted by cost inflation and supply chain volatility in Q3, but continues to be well over 4% year-to-date, which we consider to be a very healthy indicator of our ability to deliver the high single-digit adjusted EPS growth that is part of our 2021 outlook and our long-term financial algorithm. Our year-to -- year-to-date working media investments have increased double-digit versus last year. And combined with our advantage portfolio of brands and our execution and activation capabilities, mean that on a 2-year cumulative basis, we are gaining or holding share across 75% of our revenue year-to-date. And in terms of cash generation and capital return, we increased our year-to-date free cash flow by approximately $400 million versus last year. And we returned $3.1 billion of capital to shareholders. Adding the Q3 revenue growth to our track record of performance since launching our strategy in late 2018, you can see on slide 8 that we are now averaging a 4.1% quarterly growth rate. And we believe we can consistently grow in line or in excess of our long-term algorithm of 3% plus based on the long runway of growth opportunities we show on Slide 9. And the advantage to enablers, we have to realize them. These enablers include, for instance, increased brand investment, higher quality and purpose-led marketing, and pricing when necessary. This quarter, we continued to make progress against our key growth drivers. These include continuing on our journey to grow Oreo by $1 billion by the end of 2023, with activations like Oreo Pokemon, which became our fastest selling addition of all-time in the U.S., surpassing the previous records set by Game of Thrones and Lady Gaga Oreos. This also includes expanding our presence in key channels like digital commerce, which grew 25% this quarter on a reported basis, lapping 80% of growth in the previous year. And also emerging markets where we continue to gain distribution in places like China and India with another 120,000 and 80,000 stores added this quarters. And finally, this includes increasing our exposures to high growth segments, where we are underrepresented. For example, well being, where we announced breakthrough innovation this quarter on our largest brands with the Cadbury Plant Bar in the UK, which is suitable for vegans, and our Oreo Zero sugar in China, which has the clear potential to expand to other geographies. Turning to Slide 10, let me update you on our sustainability journey. Climate change is a critical issue facing our planet and we must do our part to help. We also know that if we want to deliver consistent long-term growth and shareholder returns, we must be a sustainable snacking Company. For those reasons, we recently announced that we will take the necessary actions that we believe will allow us to achieve net-zero emissions by 2050. This is a major target that applies to all greenhouse gas emissions across scopes 1, 2, and 3. This target also sees us join the United Nation's race to 0 campaign, as well as the science-based targets initiative business ambition for 1.5 degrees where we are strengthening our position from our previous commitment of well below 2 degrees. We plan to deliver net 0 by focusing on the highest contributors to our carbon footprint. In our case, that our raw materials which contribute 71% of our emissions. We will amplify our existing programs like Tolko life and harmony wheat in Support of this. And we will focus on leveraging emerging low carbon technology at our owned operations. Alongside working towards net-zero emissions, we will continue to advance all other pillars of our ESG agenda, including sustainable ingredient sourcing, diversity, equity, and inclusion, and net-zero packaging. We are excited to continue our journey to build a sustainable snacking Company. With our proven strategy, our preferred brands, our executional excellence, our compounding investments, and our enhanced ESG agenda, I'm confident that we are well-positioned to deliver strong performance for years to come. With that, I will hand over to Luca for more details on our financials. Luca Zaramella : Thank you, Dirk, and good afternoon. Our third quarter performance was strong across the board. We delivered top-line trends, good operating profit dollar goal, including significant branding investment and excellent free cash flow. Revenue grew 5.5% underpinned by solid volume growth and pricing that we have been implementing to counter unprecedented cost inflation. Emerging markets continued with accelerated growth, displaying the resilience of our categories and strong execution. They grew more than 12% for the quarter, and nearly 9% on a 2-year basis. Our emerging markets results include double-digit growth in Brazil, Mexico, and India, as well as high single-digit growth in China, Russia, and Africa. These markets are attractive growth engines for us. As consumer purchasing power continues to grow, as we feel, white spaces, as we pursue distribution expansion and that's consumers trade up. We continue to invest behind them in a big way. For the quarter developed markets growth remains solid at 2% with a 2 year average growth of 3%. Demand and consumption trends are robust in these markets. Albeit, supply chain restrictions limited our growth, specifically North America. Turning to Slide 13 and portfolio performance. Biscuits grew 2.7% and more than 5% on a two-year average. Brazil, Russia, and Mexico posted double-digit growth, while India and China grew mid-single-digits. Oreo continues to be a standout performer. Chocolate grew more than 11% with a two year average of more than 8%. India, Brazil, and France grew double-digits. The UK grew high single-digits, and Russia grew mid-single-digits. Cadbury, Milka and Lacta all delivered robust volume-led growth for the quarter. Gum and candy posted double-digit growth, resulting from a continued improvement in mobility. Moving to market share performance on slide 14. We continue to see good share performance. On a 2 year community basis we have held or gained share in 75% of the business. These skits and chocolate heads or gain in 80% of our revenue base. Notable share gainers on a 2-year basis include the U.S., China, Russia, and Brazil B scaled, and U.K., Australia, Russia, and South Africa Chocolate. Gum and candy has shown gaining in 30% of our revenue base, primarily due to gum performance in China, Russia, and France. Although still below pre-COVID level, this category continues to improve with mobility trends. Moving to page 15, Gross profit dollars grew 2% for the quarter, reflecting the acute impact of elevated inflation in commodities, as well as transportation and labor costs in North America. While all other regions still face some inflation, they all display GP dollars growth in line with our expectations. In the short-term, we have adopted our promo and trade deal spending to the elevated cost environment. But as we expect these dynamics to persist into 2022, we have also taken and announced price increases across a significant number of markets. Of note, we announced a new round of pricing last month in the U.S., which will go into effect at the start of next year. Although cost pressures are not as high as in the U.S. we also have a robust pricing agenda for other markets too. We have implemented pricing in Brazil, Mexico, Russia, and Southeast Asia, in addition to other business units. Our goal remains to enter 2022 with improved dollar profitability levels from these actions to support the virtuous cycle which funds continues investment. Operating income dollars increased 4.5% due to strong overhead management and simplification initiatives. We continue to invest in A&C, which was up almost double-digit in the quarter. On a year-to-date basis, gross margin has increased nearly 5% while operating income dollars that's grown by more than 8%. A&C has increased double-digits. Moving to regional results on Slide 16. Europe revenue grew 4.6% in the quarter and 4% on a two-year basis, while dollars grew 5 -- 4.5% versus last year, reflecting a strong virtual cycle. North America grew 0.3% on top of 6.3% growth last year, resulting in a 2-year average growth of 3.3%. Operating income declined 9.7% in the quarter. Overall, North America results were negatively impacted by service level constraints in the U.S. as transportations and labor shortages have impacted both cost and . These constraints are primarily impacting our external manufacturing and third-party logistics partners. We expect profit dollar growth to improve in conjunction with recently announced price increases across much of our U.S. portfolio that go into effect as of January 1st next year. For the quarter, the impact of the six-week U.S. strike was mitigated by a business continuity plan, which included increasing inventory levels ahead of it. Nevertheless, there will be an impact in Q4, which I will discuss in our outlook. AMEA posted growth of 5.72% and a 2-year average of 4.9% with broad-based strength apart from Southeast Asia where COVID -related restrictions did impact our Q3. India delivered double-digit growth in the quarter and China delivered high single-digit growth. AMEA operating income dollars grew nearly 8% while continuing to make sizable working media and route to market investments. Latin America grew 26% in Q3 and 14% on a 2-year average. Brazil and Mexico both grew double-digits while dollars in Latin America grew double-digits over prior year due to pricing and volume growth. Now, turning to EPS on Slide 17. Q3 EPS increased 9.4% at constant currency, driven primarily by operating gains, with year-to-date EPS increase of nearly 9%. Moving to cash flow and capital return on Slide 18. We delivered free cash flow of $700 million in the third quarter, bringing us to $2.1 billion on a year-to-date basis. We also repurchased approximately $1.8 billion in shares in the first three quarters at attractive prices. I wanted to spend a quick moment on some of the significant improvements in our best facture financing costs and pension costs on Slide 19. Since 2014, interest expense has been reduced by approximately 60% despite an increase in total borrowings with a current average rate of 1.7%. At the same time, we have extended our maturity from 7.7 years to 9.6 years. Similarly pension funding has improved significantly in the recent years to 99% driving material reductions in pension contribution requirements and costs. And in September, we issued our first , which was the largest to-date in the GPG sector, enabling us to cost effectively fund our sustainability initiatives around focal packaging and now our net 0 carbon target. Let me spend a moment on slide 21 regarding the current and supply chain environment and our actions. The supply chain environment remains a challenge for us, like many others with higher cost inflation, as well as labor shortages at the 3rd-parties and train transportation capacity. We have a well-established to mitigate the impact of inflation rate and supply chain pressures over time. These include successful implementation of price increases as part of our RGM strategy, supported by the strength of our brand. We're also continuing in our journey of portfolio simplification to identify additional SKU reduction opportunities and to improve service levels and overall efficiency. In terms of our manufacturing network, we are taking actions to free up capacity with more flexibility in some of our plants and logistics networks. We also continue to execute our hedging programs of key commodities, which we believe have been effective, as you can tell by looking at our realized and unrealized mark-to-market gains this year. Overall, we are confident that these initiatives will allow us to offset the majority of the pressures we are currently seeing and will drive long-term profit dollar growth, albeit with some lumpiness given the cadence of pricing and input cost increase. Moving to our outlook on Slide 22. We expect most of the trends that we have experienced in Q3 to extend into Q4, including robust demand for our categories and brands in both developed and emerging markets, continued transportation and labor inflation and supply chain pressure in our North American region, increased focus on Revenue Growth Management activities across a wider span of businesses, high level of investment in our people, friends, markets and capabilities. Based on our strong results year-to-date, continued categories resilience, and solid demand trends, we are raising our full-year revenue growth outlook to approximately 4.5%. This implies Q4 growth of 3% or nearly 4.5% on a two-year taker and assumes approximately a 1 point of top-line headwind from the impact of the continued transportation and logistic constraints and the recent strikes in the U.S. As the market conditions remain fluid, this outlook does not reflect a material worsening from current environment. In terms of EPS, we continue to expect high single-digit growth for the full year despite the initial pressure from commodities and transportation and labor dynamics in North America. We also expect free cash flow generation of $3 billion plus. Forex translation is now expected to positively impact our reported revenue by 2% points, and EPS by $0.09 from the year based on current market rates. One note related to our simplified to grow restructuring plan. We have extended the program by 1 year as we're still left with about $100 million of available funds that we plan to spend on high return supply chain and overheads related projects. The overall amount of the restructuring program is unchanged. So this does not change anything else in our outlook for this next year. Our updated outlook is based on current conditions and does not factor on material degradation in the operating environment that would be triggered by a significant worsening of COVID or supply chain restrictions. To wrap up, we are encouraged by the trajectory of demand for our brands and categories across our geographies. We are confident in our growth strategy and our ability to continue to execute against it going forward. This means balance and consistent top and bottom line growth, continued reinvestment in our business, disciplined cost management, and strong free cash flow generation. With that, let's open it up for Q&A. Operator: We'll take a question from Andrew Lazar of Barclays. Your line is open. Andrew Lazar: Great, thanks very much. 2 for me. First, Dirk, if you could talk a little bit more about key trends you're seeing in both emerging and developed markets, and really the key consumer dynamics there, and then Luca maybe if you could give us a bit more rationale behind the implied deceleration in 4Q organic sales growth and then touch on preliminary expectations for 2022, the top and bottom line. Thanks so much. Dirk Van De Put : Thank you, Andrew. I'll start and then I can hand it over to Luca. Well, if I look first at emerging markets, they continue to be a major growth engine for us. In Q3, they grew double-digit. Year-to-date, they're growing double-digit, they're high single-digit on a 2-year CAGR, so very strong volume growth, good pricing. And linking that to the consumer, I think what we're seeing is that the consumer confidence is improving in markets like India, big parts of Latin America, they are seeing the vaccine roll out, they're seeing life going back to normal. They feel better about their personal finances and that is reflected in their consumption. At the same time, they still spent more time at home, which benefits our categories. Particularly the bric k countries are very strong with a very strong double-digit growth in India and Brazil, and high single-digit growth in China and Russia. The execution there in those 4 countries as we've entered this quarter. But at the same time looking at Africa, Poland, Pakistan, Mexico, they're all growing well. The only places in the emerging markets where we see some disruption is in some smaller markets, particularly Southeast Asia, where the COVID cases were quiet severe and there was serious restrictions. We talked about our plant in Vietnam being closed for 3 weeks, and so that has had an effect on Q3 but hopefully that will be temporary. From developed markets, what I would say, demand is strong but it's a challenging operating environment, particularly in the U.S. So we had big consumption spikes in 2020, particularly in the U.S. But so far we are up 2% in revenue in Q3 and just over 1% year-to-date lapping a very strong last year. But if you look at a two-year CAGR, it's over 3%. That is well above where we were in 2019, where we were growing about 2% in developed markets. And we see the consumer behavior where the consumer on average is spending 15% more time at home than before the pandemic; that is clearly benefiting our categories and our portfolio. Looking particularly or specifically at North America, it's growing well on a two-year CAGR -- almost 4%, but declining slightly year-to-date versus last year. But again, 2020 was a extremely strong year for North America. The demand remains very robust in biscuits, but the servil -- service challenges in the second half, due to pressures on the logistic capacity, third-party labor and the strike, which is now resolved, had an impact in Q3 and will continue to have an impact in Q4. Europe, we're seeing a very solid quarter, very solid year-to-date, the demand for our core categories is robust. We've got a very strong year-to-date revenue growth for the UK, for Germany, the Nordics. and mass retail, which is lapping strong growth last year is still very good. And then of course we're benefiting from the recovery in convenience and travel retail as the consumer is regaining mobility. Maybe the other thing that I would say that we are in an inflationary environment. We've been increasing prices and we plan to increase the prices more than we've done, at least in the time that I'm here and probably for quite a while as a Company. For what is good is that the elasticity levels are below historic levels and almost nothing to speak of. So that is helping the overall performance. Maybe over to you, Luca. Luca Zaramella : Thank you, Dirk and hi Andrew. I'll start with revenue guidance. And as far as revenue goals, I would simply say the business is fundamentally in a good place. You might have seen in the pages that we presented that Chocolate and Biscuit categories are vibrant. On a two-year stock, our share gains are very good. And you might also have noticed that pricing contribution is increasing as you would expect given the cost pressures we are facing. But also that volume is holding up quite well. We can also say that virtually all international businesses are positioned very well for both Q4 and 2022. However, in North America, obviously the 6-week strike predominantly, but also the volatility that Dirk mentioned, is putting some pressure on our supply chain, and that will impact the Q4 performance, in a context where the market is steadily positive and demand is quite good. So we estimate that mostly because of the strike impact in Q4, that there will be a 1 point of revenue pressure for the whole of Mondelez. So to sum it up, Q4 is still going to be a good quarter, I believe in terms of revenue when considering that there is the one-time strike impact. And at this point, we feel quite good about top line and its momentum into 2022. From a profitability standpoint, we also feel good about the full-year profit outlook. In the end I think you know, that year-to-date GP dollar is up by 5%, EBIT by 8% and all in a context where we are increasing A&C double-digits with over at flat. And I feel comfortable with our EPS high-single-digit guidance for 2021. Having said that, I have to recognize that there is some GP pressure in Q3 and that will persist into Q4 and partly into 2022. The pressure is due to commodity transportation costs and compounded, quite frankly, by some industry-wide supply chain constraints. North America is driving most of the pressure in the GP line in the quarter, and it is, in fact, the only region that declined GP dollars versus last year with the other regions all above or close to our goal of 4% GP growth year-on-year. We are taking the appropriate actions to counter those cost spikes. We have recently announced a 6% to 7% price list increase in the U.S, which will take effect in 2022, January. We have also announced pricing in Q4 in Brazil, Mexico, Russia, Southeast Asia, Africa, and across Western Europe. We are leveraging RGM as we said many times, also going after productivity and general cost measures. So we expect sequential improvement versus previous years in the following quarters as more pricing kicks in. So at this point, we believe that our 2022 EBITDA growth will be solid through volume mix pricing, obviously productivity, and we're still contemplating meaningful A&C increases at this point. So 2022 from an EBITDA standpoint should be on algorithm based on what we know today. because obviously Q1 will be a little bit more pressure and we will provide more clear and comprehensive guidance in the next earnings cycle for 2022. Andrew Lazar: Thank you. Luca Zaramella : Thank you, Andrew. Operator: Our next question is from Nick Modi of RBC Capital Markets. Filippo Falorni: Hey, good afternoon, guys. This is Filippo Falorni on for Nick. Luca Zaramella : Hi Filippo. Filippo Falorni: Hi, I just want to go back to your long-term guidance on organic sales growth of 3% plus, you've shown a slide that since the implementation of your new strategy, you've clearly delivered a 4% organic range pretty consistently and on average, for several quarters now, and you just raised guidance for this year. So I was just wondering in your confidence of delivering a 4% consistently going forward and potentially raising your long-term organic sales growth outlook going forward? Luca Zaramella : Yes. Maybe I'll start and obviously the here. Looking the end, we see the long-term algorithm as a baseline. Our categories -- if you look at historical levels, they have been growing at 3 plus percent, and that clearly is a good place to start from. We plan to gain share. So we should be always above the 3% mark and that's really what drives this baseline. In the end, we are more focused on actuals than long-term algorithms. And by executing well, obviously, we aim at being closer to a number that is with 4 than with 3. And so that's really the rationale behind the long-term algorithm. If there are some catalyst, namely some portfolio changes and more acquisitions, I think that will be the good opportunity for us to revisit the algorithm and declare formally that we aim at something higher than 3% plus. But I think you're right, in the end, the track record we have speaks for itself. We have been steadily delivering higher growth and we plan to do so also going forward. Filippo Falorni: Got it. Thank you very much, that's helpful. And then a quick follow-up. Your market share performance has been very strong in recent quarters and over the last couple of years, some of your global brands like Oreo have done extremely well. Can you just talk a bit about your local brands and how they've been doing recently and over the last year or so? Dirk Van De Put : Yes. So historically, our global brands have been growing faster than local jewels, but we have been accelerating the growth of our local jewels and largely through renovations and activations. 2020 was different. There our local jewels grew faster than our global brands because a number of our global brands were impact ed by COVID -related changes in consumer behavior. So Toblerone, for instance, because of travel retail decline, Hall's because it was very limited cough and cold season. And then Trident because the gum category was impacted by reduced mobility. If you then look at 2021 -- year-to-date 2021, global brands are now growing faster again than local . But both are growing very strongly. Both are in the mid single-digit group. And w'are very happy with where our local brands are at this moment, from flat to declining a few years ago, they're now, as I said, mid-single-digit. We continued to step up brand investments year-over-year and we're going to continue to activate more local jewels over time. So we think we've found the ideal balance, and we continue to continue -- to keep on going as we are. Filippo Falorni: Great. Thanks, guys. I'll pass it on. Dirk Van De Put : Okay. Operator: Thank you. We'll take our next question from Ken Goldman of JPMorgan. Your line is open. And Mr. Goldman, you may want to check your mute switch, your line is open. We'll move next to the site of Brian Spillane. Your line is open. Of Bank of America. Bryan Spillane : Hi, thank you, Operator. Good afternoon, everyone. Luca Zaramella : Hi, Brian. Bryan Spillane : So just two quick ones for me. 1. Just a follow-up on the commentary for 4Q, Luca. Just kind of listening to some of the puts and takes on the gross profit line. Are gross margins in the fourth quarter going to be somewhat similar to what we saw in 3Q or do you expect a further deterioration? Luca Zaramella : Versus last year, they should be a little bit better. We should have a little bit less pressure. Remember, we are in some emerging markets specifically implementing additional pricing, which went into effect in July, August. And so it should be sequentially better when compared to last year. Bryan Spillane : Year-over-year, but what about just sequentially? I think it was 38.3% in the third quarter. So is fourth quarter going to be in that neighborhood? Luca Zaramella : Yes, it would be around that neighborhood a little bit lower, most likely on a pure number. Bryan Spillane : Okay. And then Dirk, just your perspective on the incremental rounds of pricing that you're taking to offset inflation. And I guess how it'll be different this time. I think if we go back prior to your coming to Mondelez, one of the issues was that there was quite a bit of pricing taken over time to protect or build margins. And it definitely had an impact on volume on demand, it's a big part of what you came in to --to address and change and time you've been at Mondelez so maybe you could just kind of talk about how you've thought about that dynamic this time around and how it will be different, maybe the way your approaching pricing or just what's different about the ability to have some pricing power this time versus the last time Mondelez really tried to lean into pricing to protect or build margin? Dirk Van De Put : Yes. I mean, as a principal, what we're trying to do is the mixture between volume growth, pricing, and mix, needs to offset the inflation, that's how we think about it. And then on top of that, we have a whole productivity program, which we use to increase our margins. It's different from the past in the sense that we are not as aggressive on pricing, we're not trying to build extra margin because of pricing, we're trying through the mixture of those three things, maintain it as it is. And then the extra comes from the productivity programs. The other big difference versus the past is that we continue to increase year-over-year our investment in our brands. First of all, our overall A&C pot, but then also how much we are shifting within A&C into working media. So the worst you can do, I think is increase prices and not increase your support for your brands. So we've been supporting our brands now every year more and more. Our media pressure has significantly increased versus 3, 4 years ago. We can see that the brand health is increasing. So I think our brands are now more susceptible to pricing and the consumer should accept it better. Those are the two big differences, Bryan, versus what it was a few years ago. Bryan Spillane : All right. Thanks. Thanks, Dirk. Thanks, Luca. Luca Zaramella : Thank you, Bryan. Operator: We'll take our next question from Chris Growe of Stifel. Chris Growe: Hi. Good afternoon. Thank you. Luca Zaramella : Hi, Chris. Dirk Van De Put : Hi, Chris. Chris Growe: Hi. I just had a question. First, as we think about a planning assumption for next year as you have some strong pricing going into place, especially in the U.S., do you model as such that the elasticities remain very favorable or do you expect elasticities to be more like their historical average, and then, if you -- it's better than that, that represents upside to your outlook, because that -- I'm just curious how you think about that with what you're seeing with the consumer today? Dirk Van De Put : Yes. At the moment, what we are modeling is the historical elasticity. We have to take into account also that -- and we know that the current elasticity we're seeing is better. so that would potentially be an upside for us. We also are using what we call RGM, Revenue Growth Management, which is a mixture of different techniques if I can call it like that, and it's not always a straightforward price increase. If I look at the consumer, I think the main thing that's at work here, is that consumer confidence is stabilizing, mobility is on the rise. They have an ongoing desire for comfort, so they want to snack and they're spending more time at home. All that gives a very strong demand for our categories. Our categories are growing more like 4% around the world versus a 3% that we usually plan for. And so the -- I think that is leading to consumers to almost have no elasticity at the moment. And we hope, or we think that that will remain quite a while. And so I think we don't want to do that in our planning for next year, but we do believe that there might be better elasticity than what we planning for at the moment. Chris Growe: Okay.And I have one other question in relation to North America, just understand if you had any more detail on and if you gave this forgive me if I missed it, but around costs around the strike. I know you talked about maybe some hit to revenue in the fourth quarter, and then I would contend that you shipped a little below consumption this quarter. Just to understand the effect on the business that we saw this quarter in Q3 from the strike overall, and that's all I had. Thank you. Luca Zaramella : Yes. Maybe -- Dirk Van De Put : Yep. Luca Zaramella : May -- Dirk Van De Put : Go ahead. Okay. Luca Zaramella : Maybe I'll take that. So on the strike from a top-line standpoint, as we said in Q3, the impact is fairly new. There was virtually no impact as we enter the quarter with actively high trade stock, given the elevated consumption, we have depleted that stop. And so there is an impact in Q4, but we quantify together with some other supply chain related issues at one point of revenue for Q4. From a cost standpoint, we have mitigated the cost impact, obviously all the puts and takes are slightly negative, but they are not meaningful on the top P&L profile for Q4. Clearly, some demand pressure -- some supply pressure will put a little bit of a cost strain on the value chain, and we will have a little bit of under-absorption kicking - in in the P&L in Q4, but that's as far as it goes, no material I would say, overall at this point. Chris Growe: Okay. Great. Thank you. Operator: We'll take our next question from Alexia Howard of Bernstein. Alexia Howard: Good evening, everyone. Luca Zaramella : Hi Alexia. Dirk Van De Put : Hi Alexia. Alexia Howard: Hi there. So I have 2 questions. The first one is on pricing. It sounded as though you're getting the pricing in North America in early January and yet you've been able to take pricing in a number of other regions earlier than that. I'm just wondering if there's something structural or procedural in North America that makes it harder, or lengthier, longer to take pricing here and just what -- if you have observations on that. And then my follow-up question is really around the net zero commitments. I remember a few months ago, I think that was a lesser than to make that commitment that some of the other companies I have made. Did something changed? Did you get better visibility into how you might achieve that goal or is it more about things are changing out in the world after and therefore, you've got to make that commitment and see where it takes you.Thank you. Luca Zaramella : Dirk Van De Put : You think pricing out taking at 0 Luca? Luca Zaramella : Yes, let's partner here, Dirk. So I -- the simple answer is we had a lot being particularly on promotional activities. Also giving obviously some internal dynamics to our Company which we discussed. We had luck being at promotional windows and promotional activities well before Q2 and that bound us with our customers to certain promo windows and certain promo activities. And we thought that rather than disrupting even further the supply chain, our preference was really to go for a full 100% price increase as of January 1st. So there might be a couple of quarters of -- at these location. But I think, all-in-all considering all the effects that we had internal and external, it was better for us to go in effect with pricing as of Q1 next year. Obviously, we will be extremely nimble here. We still don't know to what extent logistics costs will spike during the Christmas season and the holiday season in the U.S. So if we see continuous cost pressure, at this point, we cannot rule out additional pricing waves, and at that point, it will be more simultaneous to what we see than it has been this last time. Dirk Van De Put : Okay. On this zero, the --the thinking was that we wanted to make sure that we have worked as much detail as we potentially could. And so we were a little bit represent in the past few years to declare anything until the team has done their homework. And so they've been working quite hard, we've gone quite deep. I'm being told that it's probably one of the deepest exercises in trying to understand how do you really get there. And so we were really wondering. Hey, will we get there? Can we make a plan that began realistically believe in that it's doable. And then we wanted to know the different details step-by-step, but it means. So if I summarize it a little bit, it's obviously a very significant announcement for us. It's really an acceleration and an extension of our existing initiative. Applies to all our greenhouse grasses and the full supply chain, so scope 1, 2, and 3. And with this, we are joining the UN race to 0 and the SVTI business ambition for 1.5 degree Celsius. If you look at our footprint, 71% of our footprint is coming from ingredients. And so the 3 big areas to work on is those ingredients, it's our own operations and it's our logistics. And if you think about it, in ingredients, that means that we need to continue and increase our investment in cocoa life. That's one of the big factors. We have a wheat program related to regenerative agriculture. We need to extend that. We need to make sure that our whole packaging approach is clear on recyclable, but also working on the recyclability and the use of virgin plastic over the years. We needed to get into our operations, understand renewable electricity. We need to reduce food waste which we've done quite significantly, but we need to do more. 50% in our own operations, 50% in our distribution, for instance. We need to change all our ovens. We need to change all our boilers, and so on and so on. And then in logistics, we need to switch to electric vehicles, hydrogen trucks, work on our warehouse emissions, and change the efficiency of our networks. Just to name a few things of what this means. So the team has worked through all these details and they've come up with a plan that is credible. It's not easy. We've also made a 10-year plan for the Company, Vision 2030, which, during 2022, we're planning and Investor Day around that. And all the costs of net-zero have been built into that plan, which is another thing that we wanted to make sure of that we had the cost clear. So that's why you felt in the past month we were a little bit hesitant because we were working through this exercise and I really didn't know is this all add up and if this is the plan that we really believe in. But I think we've come up with something strong that the Company feels that we can deliver. It's not going to be easy, but that's why we can make the announcements right now. Alexia Howard: Thank you very much for all the color.I'll pass it on. Dirk Van De Put : Okay. Luca Zaramella : Thank you. Operator: We'll take our next question from Jason English of Goldman Sachs. Jason English: Hey, good afternoon, folks. Thanks to spot me in and congrats on a good result. Luca Zaramella : Thank you, Jason. Dirk Van De Put: All right, Jason. Jason English: A couple of questions for me. First, the 6 to 7% price increase in the U.S. that weighted average? Is that what we should actually expect to see flowing? Or is it on partial portfolio, dampening effects? Anything we should be considering as we look to put pen to paper on our models. Luca Zaramella : It is an overall net average price increase in the U.S. portfolio. So we have announced that for Biscuit, and on average that's the number, we are going with gum and candy as well. Hall's will be a little bit later in the cycle. But all in all it is going to be very close to the 6%, 7%. Jason English: Got it. Okay. And then sticking in North America, quickly, simplify the growth charges that are being backed out there -- they're pretty substantial, I think roughly $330 million year-to-date. So really chunky numbers. Could you elaborate on what is all this expense that we're backing? And what is the expected return on all this investment? Luca Zaramella : We announced earlier in the year the closure of the plants. And with all the activities we have been having around the reset of some of the U.S. network, that's really the biggest part of the cost in restructuring. So that's, that's really what it is at this point. Jason English: And the anticipated return or savings that you expect to be generated from that? Luca Zaramella : Obviously, we have an internal rate of return expectation that is well in excess of cost of capita. You might imagine that particularly as it relates to the 2 plans, we're going to avoid fixed cost as we go into next year. And so the return is going to be on the high side. On top of that, the strike resolution did gets us additional flexibility. It was a win-win for us and our employees to whom we gave good benefits I believe. But together with the avoidance of fixed cost, the additional flexibility, this program itself is going to yield good returns. Jason English: Excellent. Great stuff. Pass it on. Thank you. Operator: We'll take our next question from David Palmer of Evercore ISI. David Palmer: Thank you. Good afternoon. Wondering if you could talk about the Third Quarter gross margin declined. Your pricing was 3%. How much you think was the impact of input inflation versus other factors like the supply chain inefficiencies in the U.S. and UK? And I have a quick follow-up. Luca Zaramella : Yes. As I said,in the end when I look at really GP growth across the board for our regions, I feel quite good about what was accomplished across the European business, the EMEA business, and the Latin America business. The pressure can release from North America and it is, quite frankly, mostly attributable to the logistics and transportation cost constraints that we have seen. We also had to acknowledge though, that particularly around some commodities like edible oils, etc. There has been some pressure. So I would say that the GP line pressure comes in Q4 mostly because of the commodity and logistics cost. And it is mostly attributable to the North America business. And so a s you think going forward, pricing should really improve margins because I believe the cost severity in Q3 is quite high in my goal a little bit further in Q4 and into next year. But it can not fiscally, proportionately the same amount as we have seen in Q2 and Q3, in Q4, and into 2022. So that's a little bit of color around the GP line. David Palmer: And just a quick follow up to Jason's question about price increases in the U.S., it sounds like those alone -- are those announced price increases might add upwards of a point to your global price number heading into the first half of '22. Is that right? And then I'm just curious for the entirety of '21 for common world travel retail, you mentioned in your prepared remarks that you wouldn't get back to 2019 levels, perhaps even into the end of '22, but that doesn't mean you can't get some of that back in '22. So how far below in '21 were those businesses versus '19? Thanks. Luca Zaramella : Yeah. Maybe I'll go with the first part and answer the gum and candy questions. I think you know how big North America is in total for the Company and you have a sense of what a 6%, 7% price increase would do. So I think your math is in the ballpark. Obviously the question is, how is volume going to react? And what we're seeing at the moment it is that elasticities are more benign than they have been historically, but we need to see protracted price increases into next year, and we need to see what moving away from some price anchors will do to our consumers. And that's a little bit the question mark at this point. As I said though, for the totality of the Company at this time, I see good revenue momentum going into '22, and I see revenue being on algorithm for next year as well. Dirk Van De Put : So on on gum and candy can be maybe first on gum. I think it was coming in world travel retail. But on gum roughly, I would say gum drops to about 65% to 70% last year, of what it is in 2019 because of mobility. I think for the total of '21, it's going to be roughly around 85, maybe 90% of where it was in 2019. And then we expect that it will close that gap in 2022. Now, in the beginning of the year, the recuperation was slower. Recently, we have seen an acceleration of the recuperation of gum. So we're talking about double-digit revenue year-to-date, growth of gum, and strong double-digit revenue growth in Q3. So year-to-date on a 2-year CAGR, were still negative high-single-digit, but as I said, the recovery is going faster. And then we starting to see some markets, particularly China and Russia, where we now have a positive 2-year CAGR on gum. The emerging markets remain attractive for us and the question is really on the developed markets, which is only 2% of our 2020 net revenue. And so that's -- that's really where we expected recovery to be slowest. As it relates to world travel retail, that dropped almost to 0, I would say, It was probably at 5% of what it was before the pandemic. This year, we will probably get back to depending a little bit what happens at the end of the year we traveled, but maybe 65% 70% and then depending on what consumers decide to do as it relates to travel, that's the big unknown. We will for sure go up significantly next year, but I'm not quite sure that we will see the same amount of travel. And as a consequence, buying on travel as we saw in 2019. So that's still a little bit up in the the air. But we will get close to I think gum will be all the way back. But remember, gum wasn't growing a lot in 2019, so back but no significant growth and world travel retail close, but not completely we think. David Palmer: Thank you. Operator: And we'll take our final question from Pamela Kaufman of Morgan Stanley. Pamela Kaufman: Hi, good evening. Luca Zaramella : Hi. Dirk Van De Put : Hi, Pamela. Pamela Kaufman: How are you thinking about the level of investment needed to support the strong top-line momentum that you've seen? And do you expect to increase brand investment further to support higher pricing? And if so, can you talk about which categories and geographies there might be greater investment behind? Dirk Van De Put : Yes. I can talk a little bit about the principles and then maybe look or you can go into more detail if, if needed. But in general, we believe that we want out grow our categories, and to outgrow our categories, our brands need to have more visibility, more support, more innovation than others. We believe that i can be achieved with roughly, I would say a 7% to 8% increase year-over-year of our A&C investment. And that's fits into our long-term algorithm, where our expectation is that 1/2 of the growth of 4%+ growth that we want in gross profit year-after-year, that 1/2 of that gets reinvested. Not all of that goes into A&C, some goes into overheads, part goes into R&D. But overall that's the thinking, and that allows for that roughly 7% to 8% increase, so it's 15 through the long-term algorithm. As it relates to pricing and increasing our investments, we trying to maintain our algorithm. If we see we can get a better top-line, we might do more flowing -- continuously flowing at 50% back into investment. This year, as an example, we have a double-digit increase in our A&C year-to-date, while we are doing the price increases that Luca talked about. Then, the other movement that we're doing is within the A&C investments, we are moving more of the investment in working media. We have done that now for multiple years. So the investments are really compounding. There is the increase in overall A&C and then the increase in working media within A&C. And then we have also made big strides on the quality, the effectiveness, and the ROI of our marketing. If you talk about where do you want to do more, we have our Local Jewels, which we have given significantly more investment in the last three years. But we want to continue to do that more on the brands that we're already supporting and activate more brands. And then as it relates to markets where we would do that, probably the -- some of the markets where we are underrepresented, largely emerging markets, that's where we think we should do the biggest increases of our A&C because we still have to the category to support and really build the category for the longer term. That's how I was thinking about it. I'm not sure, Luca, if you want to add something? Luca Zaramella : No, I think it has been a consistent theme, the one that we have been implementing in the Company in terms of A&C investment. If I look back, I think since 2019, even despite fine tuning the A&C line. in 2020, given obviously COVID, we have been able to increase A&C, I think versus 2018 by 25% f you look between again, 2018 and where we are today. Particularly on the working media, we have been improving quite a bit the situation about what we spend in that P&L line. And I would also say the quality of advertising and the mix of advertising it has been got improving the ROI quite a bit. And so I think that's one of the things that has made the mobile more sustainable for us. And I think when you look at volume growth, share gains, there is a strong linkage with these investments we have been making in global and local brands. Pamela Kaufman: Thank you. Can you just give an update on the white space opportunities that you're targeting and how you're leveraging the recent acquisitions to to address these opportunities. Dirk Van De Put : Sorry. Yes, the wide space opportunities for us are -- I mean, if you look at our building blocks for growth, the first 2 are pretty straightforward. It make sure our categories keep on growing. We are big players in our category, our category growth depends pulsely of us. Second, continue to increase our market share and that gives us a bigger growth. Third, there is the channel expansion that we can do. We are not having the same market share in all channels. Thinking about, for instance, online or digital commerce in the more developed markets. But we're also talking about numerical distribution in emerging markets. As I was saying in the prepared remarks, we are increasing China by 120,000 stores and India by 80,000 stores our presence this quarter alone. So then on top of that, there's high growth segments within our categories, and so I'm thinking about well-being, thinking about premium, and those are some of the areas that we are underrepresented and that we should be really launching new products in there and using some of the acquisitions that we've been seeing to getting there, for instance, out grenade or would fit in this category. Then we have geographic wide spaces around the world, countries where we are not yet that present. And so we haven't done that many yet, although an acquisition like Chipita, which largely plays in East and Central Europe and some of the other emerging markets. Obviously, we'll reinforce our presence, but they're largely in the same countries as we are or where we already have a smaller presence but it certainly will give us more critical mass. And then the last one is the closing adjacencies, which are the bakery and the bar segment. And so Chipita fits or Give & Go fully fall into that sort of growth opportunity that we have. And so that's the last wide space. So it's between channel, high-growth segments, geographical wide spaces, and closing adjacencies. Those are the 4 big wide spaces that we have. Pamela Kaufman: Thank you. Operator: And this does conclude our -- Dirk Van De Put : I think we've come to the end. Yeah? Operator: Sorry. Go ahead. This does conclude our Q&A session. I'd like to return the call to you for any concluding remarks. Dirk Van De Put : No. I think we've come clearly through the end. Thank you for your interest in the Company. Happy to reply to more questions. Please contact the Shep and Andrei and we will do whatever we can to help you out. And looking forward to talk to you at the end of the year to give you a full update of where we've ended 21 and give you our guidance for 22. Operator: Thank you. Luca Zaramella : Thank you. Operator: This does conclude today's Mondelez Corporation Q3, 2021 earnings call. You may now disconnect. Everyone, have a good day.

Operator: Good day, and welcome to the Mondelez International Second Quarter 2021 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by Mondelez management and the question-and-answer session. I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon, and thanks for joining us. With me today are; Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. Dirk Van de Put: Thanks, Shep, and thanks to everyone for joining the call today. Firstly, I want to acknowledge our colleagues, our suppliers and our customers around the world who continue to navigate through the pandemic, particularly in markets where COVID vaccines are not yet widely available. We continue to work hard to accelerate access to vaccines for our colleagues, and sincerely appreciate everyone's efforts to maintain the supply and availability of our products. We had a strong first half executing our strategy well and leveraging our advantaged enablers to deliver against our growth drivers. The strong first half gives us the confidence to raise our full year revenue growth outlook to 4%-plus. We are seeing improving mobility trends in many places, helping to drive recovery in areas such as world travel retail and Gum & Candy that was negatively impacted last year. We also see continued strong demand for the categories and channels that experienced elevated demand last year due to COVID. Once again, this quarter, we have demonstrated that our strategy is working as it is driving a virtuous cycle that is consistently delivering a profitable, volume-driven top line and bottom line growth, as well as good returns to our shareholders. We are leveraging our revenue growth management capability which is particularly important in this inflationary environment to generate fuel for continued investment in our brands and capabilities. And we continue to reshape our portfolio to further increase our focus on snacking as well as to accelerate our long-term growth rate. To this end, we announced in Q2 an agreement to acquire Chipita, which I will speak more about later. After this strong first half of the year and strong previous years, I remain even more confident that we have the right strategy and are taking the right actions to deliver continued and accelerated growth. Luca Zaramella: Thank you, Dirk and good afternoon. Our second quarter performance was strong across the board. We delivered robust topline growth, healthy gross profit dollar growth that allowed reinvestment in our brands, and attractive free cash flow. Revenue for the quarter increased by 6.2%. Growth was broad based and volume-led. Pricing, which was favorable across all regions, was also a key contributor. Operator: Your first question comes from the line of Ken Goldman with JPMorgan. Ken Goldman: Hi, thank you. Dirk, you mentioned that your plan remains prudent. You talked about global volatility. I'm curious, though, how you see the situation today in some of your key emerging markets and what your outlook is for the rest of the year. Again, I know you don't have a crystal ball, but are there any areas of the world where you might be more optimistic? More concerned? Just trying to get a sense of that? Dirk Van de Put: Okay. Thanks, Ken. And yes, a pleasure to go into that. You probably saw that we had a strong emerging market performance in Q2 with 16% growth in the quarter and now a 5% growth on a 2-year average basis. It would have been probably higher but we have disruption in India. COVID caused in May. And so if you look around I would say, look at the big markets. We have strong double digit growth in all the BRICS countries. So Brazil and Russia and then the high single-digit growth in China. So there's nothing there. I would say of those countries, there's always a potential maybe, except for China, that COVID will cause some volatility, particularly a country like India looks more susceptible to it. But overall, they seem to be on a path of a gradual increase. China, I mean, operating well. COVID seems to be under control. They are returning to mobility and we've seen a constantly improving category performance. And on top, we have strong share gains, sometimes like in Gum 3 points year-to-date. If I look at India, they bounced back in June of the crisis of April and May, and the daily cases are now at 10% of what the peak was. So, the short-term risk of further disruption remains significant due to the slow vaccine rollout and new variants. But if I look at the long-term prospects, I believe they still are very strong. And our team there is executing the strategy very well, doing more investment, increasing the range and driving more distribution. And then Brazil had very strong growth, double-digit net revenue and now also double digit on a 2-year CAGR. The COVID nervousness is still there. And then the chocolate and biscuit consumption is growing while the Gum & Candy, which, as you know, is very heavily affected by COVID, is still negative by the reduced mobility. In Brazil, we see the vaccine rollout accelerating and it's starting to have an impact. And so we expect mobility in Brazil in the second half to be quite strong. And we also see some share gains in biscuits in Brazil. So, in the big markets, I cannot say, apart from what I just said, that there would be major surprises. I would say, at this stage, Southeast Asia is particularly affected, and so that's going to take a few months probably. We have transmissions peaking in Vietnam and Indonesia. Q2 was flat against 2019, so we have to monitor that very closely. And then the Middle East and Africa, in general, they are in growth on a two-year basis, but that's also a part of the world that I would say we need to remain careful, and I don't think they have fully recovered. If I look at Latin America, the smaller markets, Mexico, slight growth on a two-year basis now. They had a tough year last year, coming back quite nicely. The rest of the smaller markets, probably not quite there yet, still below the 2019 levels. That's also driven by the fact that our Gum & Candy business is quite important in those markets. And then the European emerging markets, apart from Russia, they remain strong. So, I would say overall, there are smaller markets that are affected at the moment, but the big emerging markets are doing well. Volatility remains, but I would largely see that in India and Southeast Asia and potentially, Africa. But overall, I think the mix of our emerging markets, over time, will keep on showing more stability and a gradual increase versus 2019. Ken Goldman: That is very helpful. Thank you, Dirk. And then quickly, Luca, I was just thinking about the phasing of the third quarter and the fourth quarter from a top line perspective. As we model each of those quarters, are there any onetime maybe headwinds or tailwinds that you'd like us to consider or keep in mind? Luca Zaramella: I mean the straight answer is no. Clearly, we are very happy with the strong first half. And the 4%-plus guidance, which implies at least 3% growth for the second half, is evenly spread, I would say, between Q3 and Q4 the 3%-plus or at least 3% in the second half might appear conservative, and maybe it is given the first half trend. But as Dirk just finished talking about emerging markets, we know the situation is still volatile in certain parts of the world. And we do not know to which extent Gum & Candy and World Travel Retail will recover. So we feel quite good about the 4-plus percent. Expect the growth to be evenly spread between Q3 and Q4. Ken Goldman: Thank you. Luca Zaramella: Thank you, Ken. Operator: Your next question comes from the line of Andrew Lazar with Barclays. Andrew Lazar: Good evening everybody. Luca Zaramella: Hi Andrew. Andrew Lazar: Hi there. Maybe to start with, you talked about how you obviously expect better organic revenue growth for the year and or kind of standing path on the EPS growth outlook. And I guess it's a combination of reinvestment and some additional inflation. But first off, I was hoping, Luca, you could break down those two for us. Is 1 of those two maybe a significantly larger portion of the impact to the incremental impact to margins in the back half of the year. And to the extent it's reinvestment to kind of hold up market share, given you're starting to lap some of the unprecedented market share gains from last year. What are you seeing that helps inform your ability to hold on to some of these share points or these share wins as you go forward? Thank you. Luca Zaramella: So maybe I'll start with this last one. In terms of share gains, the peak of the share gains were last year in Q2. And as we said many times, each were expanding consistent across the board. Our top countries now were middle size countries in both chocolate and biscuit posted tremendous share gains. And obviously, the 75%, 80% share gains that we're talking about, don't give full justice to the absolute amount of shares. And so, by lapping the peak last year, what I can tell you today is that, we are fairly happy with the overall result over the 2-year period. And we intend to keep it as it is as of Q2 and potentially slightly growing those share gains in the second part of the year. In terms of dynamics, the amount of A&C that we are going to invest for the second part of the year is pretty much in line with what you have seen so far in the first half. Obviously, Q2 last year, we kind of cut a little bit A&C because we were impossibilitated to do business in certain places, particularly in emerging markets. But when you look on the face of it, the increment in the second part of the year will be lower. But in terms of run rate and absolute numbers, it is absolutely in line with the first part of the year. In terms of pricing and inflation, I would say, there is going to be more in the second part of the year. To start with our pipeline of commodities and ForEx has been advantageous in the first part of the year, and we expect some commodities and ForEx impact to be relatively higher in the second part. So, there will be some more pressure in Q3 specifically. But we will continue to be very disciplined in terms of cost and pricing. And the overall goal for us is to enter 2022; A, with some strong share momentum; and 2, with some GP level that will enable continued investment. So, as I said Q3 will be more pressured than Q4. But I think at this point in time, have line of sight to incremental pricing. We have line of sight to incremental volume. And we have line of sight certainly to more of what we call RGM, which is critical for us as we continue to support our brands and with the ultimate goal to again, as I said to enter 2022 with a strong momentum. Andrew Lazar: Thank you. Operator: Your next question comes from the line of Nik Modi with RBC Capital Markets. Nik Modi: Yes. Good afternoon everyone. So I just wanted to follow up on Andrew's question regarding share gains. And a year ago, we were talking a lot about consumer trial and household penetration? And Luca and Dirk, I was hoping you can maybe provide an update on the retention. What you're seeing from some of these new consumers. Maybe that can help us provide some perspective around the sustainability of share gains? Thank you. Dirk Van de Put: Yes. So, if I look at the household penetration in the last 12 months, globally, we have an increase of about 150 million households which we are holding on to. That is not falling back. The other area that I see is not necessarily going to lead to share gains, but I think it will lead to strong categories is this combination of an at-home consumption that is lower than it was -- slightly lower than it was last year but still significantly higher than it was in 2019. But that is then sort of buildup or there's a build-on from mobility increases. And the impulse channel coming back and giving a strong growth in Gum & Candy as well as in biscuits and chocolate. And so that, I think, would be a second factor that will influence this. And then I -- as Luca was saying, we are lapping the highest share increases that we had last year. That was, of course, a combination of our brands and the performance of our brands, but also the fact that our supply chain last year kind of worked better than some of our competitors. That effect we knew over time was going to go away. But in the second half of the year, those huge increases driven by our supply chain performance last year are gone, so we'll be lapping market share increases that are milder. And on top, we're expecting, as we did in the second quarter, but also in the third and the fourth quarter to continue to increase our working media spend in a significant way. So, I expect that also to contribute to the market share gain. So -- but what we expect to happen is that by the end of this year, the market share gains that we had at the end of last year will have retained or potentially increased a little bit. Nik Modi: Excellent. That's very helpful. And then just one last question. As we start seeing a surge in cases in the US and obviously, other pockets of the world have been not as favorable as what the US has been, are you seeing retailers behave any differently? Are they -- is there this fear that supply won't be able to come to the market if people start stocking up so they're buying inventory in early. Any context around that? Dirk Van de Put: Not really at this stage. We haven't really seen anything. It was a little bit, but not really significantly, I would say. Now, if the news continues to worsen like the CDC is saying today that even vaccinated people in certain circumstances should start to wear masks again. The fact that consumers might stay at home longer because the returning to work is not as evident after Labor Day at the moment, I think we might see a sort of a repeat of previous situations. I don't think it will lead to massive stocking at home. But the increased consumption at home, I think, will continue for a while. So, at the moment, for instance, the food consumption at home still shows a 15% spend increase versus 2019. I think that will continue well into the third quarter and potentially, in the fourth quarter. And the out-of-home eating is still not quite there. It's still 5% down, the spending there versus what it was in 2019. But the consumer is venturing out more, which also helps our snacking category. So, I think overall, our categories will benefit. But I do not expect that we will see massive sort of stocking and retailers struggling with replenishment. Nik Modi: Excellent. Thank you so much. I'll pass it on. Dirk Van de Put: Thank you. Operator: The next question comes from the line of Bryan Spillane with Bank of America. Bryan Spillane: Hey good afternoon everyone. Hi. Just wanted to ask a question about investment levels. I think you talked about part of the -- what's contemplated in the guidance for the full year in '21 is some incremental investment, and wanting to be in a good place to invest for '22 as well. So, I guess 2 questions around that. One is just where is the -- where are you making those product categories or which geographies? And then second, just if you give us a sense of what types of investments those are. So are they product and packaging? Is it marketing? Just trying to get an understanding of kind of where and what the investments are? Luca Zaramella: It is a combination of the strategy we had all along since the launch of the new strategy in 2018. First and foremost, it is around global brands, but also about local brands. And so, the local jewels we have around the world are all benefiting from increased A&C. It is about more working media than anything else. And so, we are reducing consistently over the last couple of years, the amount of nonworking media that we have in our plans and in our numbers. We are consistently pushing the envelope on renovation of some of these brands. And we continue investing in new packaging, in new quality, etcetera. But the overwhelming part of the investment is around working media. It is more skewed towards biscuits and chocolate, but we are also increasing, particularly in some places like China and Latin America gum investment because we want obviously to reap the benefit of increased mobility. And so, I think it is all around all these global and local brands. And that's I think paying back in terms of share gains and certainly in terms of volume and revenue growth. Bryan Spillane: Thank you. Luca Zaramella: Thank you, Bryan. Operator: Your next question comes from the line of Robert Moskow with Credit Suisse. Robert Moskow: Hi, two quick questions. The first is, have you experienced higher freight and logistics costs, did that occur in 2Q? I didn't hear it called out. And if it is, is it showing up in SG&A or is it in COGS? And then the other question was, I just want to confirm about the guidance. It's high single digit off of a higher EPS base, by about $0.03 following the restatement. So, I know you said there's a lot of reinvestment, but are you also saying that some of it -- some of this top line benefit will drop to the bottom line because -- around the order of $0.03? Thanks. Luca Zaramella: So logistics cost and freight cost is a pressure point already in Q2, and it is reported into COGS. It is, for the most part of it, a phenomenon that we saw in North America, but it is not only limited to North America. Ocean freight are really on the rise everywhere, and it is impossible pretty much to cover for a long period of time. And so we are facing pressure particularly in that area. Obviously, given the fact that we have in the US a DSD system, which is a captive system, which is on-lease trucks, etcetera, we are somewhat more insulated than others, but it is definitely a pressure point. We called out in general inflation because there is more than logistics and freight. There is also some packaging costs that is high. And in general, commerce and co-pack are rising cost with us. In terms of EPS, we have been guiding to high single-digit, that is of the base that has been restated and there is a little bit of an upside driven by the incremental revenue. But the most part of the upside is being reinvested back in the business. You might imagine, Rob, that as we might implement more pricing around the world, and given also the high share that we are retaining, we want to enter 2022, A, with strong share momentum; and B, with a level of profitability that is allowing us to continue to reinvest. And if we implement more pricing, obviously, we need more support to our brands. Robert Moskow: Great. Thank you. Luca Zaramella: Thank you, Rob. Operator: Your next question comes from the line of Alexia Howard with Bernstein. Alexia Howard: Good evening everyone. Dirk Van de Put: Hi Alexia. Luca Zaramella: Hi. Alexia Howard: Two quick questions for me. I think you mentioned in the press release that you were getting some benefit from manufacturing productivity, I'm curious if that's just operating leverage or whether there is specific manufacturing cost savings that you're seeing around the world? And if so, where those are and what's going on? And then my second question is really around just the commentary on the negative mix on both the revenues and the gross margin. I was just wondering if you were able to quantify that and qualitatively describe what's happening? Thank you. Luca Zaramella: So, in terms of net productivity, with the exclusion of commodities and ForEx costs, we include everything else in net productivity pretty much. So, labor inflation and any other type of inflation that is in there. We are benefiting from the fact that volume is growing 4.4% in the quarter, and that is providing leverage in our factories as well, obviously. But I think it's fair to say also that all the actions that we have put in place in the last few years in terms of simplification, for instance, of the portfolio, the fact that we continue to invest our CapEx mostly behind productivity initiatives is giving us benefits. And that is particularly evident in places like Latin America and EMEA that have a good rate of net productivity. Clearly, in the US, where, as I said, logistics inflation, which is part of productivity is higher is somewhat muting a bit the benefit that we are having in conversion costs. In terms of mix, I called out during the prepared remarks that as you think about World Travel Retail, which is a $0.25 billion business in 2019 or a little bit less, it is still running at 40% of what we used to be in 2019. And this is a business that runs with a much higher gross profit because it is mostly World Travel Retail, which is Toblerone and it is sold at a very premium to the rest of the portfolio. The other one, obviously, is gum. I said that it is 80% of what it used to be in 2019. It is 5% of the total revenue that we have. And again, that is a line of business that runs with a GP margin that is relatively higher to the rest of the portfolio. So I don't want to embark in giving you an exact mix number. What I can tell you is that, if we restore the business to the levels of 2019, it will be a material impact and positive impact in terms of dollars that will drop to the bottom line. As I said, think about gum running at 20% higher than it is today or world travel retail running at 60% higher than it is today, that will be a material benefit to the bottom line and to the profitability. It is fair to say that you haven't seen a big impact last year or this year, because we have been able to offset it through a lot of cost measures that are embedded into the P&L. In fact, when you look at the overhead line, we are very happy with what we have. And I think that is the reason why we're holding profit at good levels and increasing it by 10% in the first half, despite double-digit A&C. Alexia Howard: Great. Thank you very much. I’ll pass it on. Luca Zaramella: Thank you, Alexia. Operator: Your next question comes from the line of Chris Growe with Stifel. Chris Growe: Hi. Good evening. Dirk Van de Put: Hi, Chris. Luca Zaramella: Hi, Chris. Chris Growe: Hi, guys. I just had two questions for you. The first one would just be with -- in relation to the degree of cost inflation, I'm just trying to get a sense of how it differs, if it differs between developed and emerging markets. And I guess related to that, I'm seeing very strong pricing in Latin America, a little bit more in Asia, but very limited pricing in Europe and North America to start to see that pricing pick up based on the inflation in the second half of the year. Luca Zaramella: Look, it's difficult for me to make statements about future pricing, as it boils down to segment pricing and profitability. What I would tell you is, we are seeing pressure in the commodity market. And so, what we see in commodities like sugar, edible oils, packaging material, resins costs, et cetera, those are common to all markets around the world. To that, I would add that in some developing markets, ForEx pressure is compounding. And so, if you think about the Russian ruble, there is more cost pressure in some of these developing markets. Certainly, in the US, when we look at labor costs, when we look at packaging costs, when we look at edible oils and logistics and freight, there is clearly a material impact. As I said, I don't want to start making comments about future pricing. But what I can tell you is that, in general terms, A, we have developed great capabilities around revenue growth management, and North America is most likely leading the pack in that area. And second, I will tell you that, not any different than any other segment we operate in, all the business that we have is trying to enter 2022 with a level of profitability that allows continued investment. And I would leave it at there, because, as I said, I don't want to give any indication of future pricing by segment. Chris Growe: I understand. Thank you for the color you can give. And just a quick follow-on in relation to Brian's question earlier about the investment, I think you just said about how you're trying to be in a position to be able to reinvest again next year in 2022. I assume, you're going to reinvest every year, frankly, and I think that's hopefully going to help drive the strong revenue growth. I just want to get a little more color, as you’re thinking about 2022. Is it a heavier rate of reinvestment you foresee? Or is it just the normal course of continued investment that you're calling out for next year? Dirk Van de Put: No. we are -- in general, what we're trying to do, of course, is a little bit up or down every year is to take half of the extra gross profit that we generate in dollars every year and reinvested in the business. That's the ideal format, let's say, that we're trying to achieve. And we're not planning to change that next year. As you can imagine, we will have to deal with the inflation that we see as Luca was explaining, so we will have to do more pricing, and we might have a little bit more pressure on our gross profit line. So, we -- for the remainder of the year, we are expecting that we will do better from a topline perspective, we will see significant growth in our gross profit line. But we are expecting that most of it, we will have to reinvest in the business. That's what we mean to get ourselves into the ideal position at the start of next year. But then next year, we're expecting to do exactly what I explained. Continue our current way of looking at things, and no expectation of increasing investment significantly next year. Now, on a year-over-year basis, that's usually a seven to eight, sometimes double-digit increase of our investment that formula I was talking about. Chris Growe: That makes sense. Thanks so much for your time today. Dirk Van de Put: Thank you, Chris. Operator: Your next question comes from the Michael Lavery with Piper Sandler. Michael Lavery: Good afternoon. Thank you. Dirk Van de Put: Hi. Luca Zaramella: Hi. Michael Lavery: Just wanted to follow up on innovation and SKU rationalizations and maybe try to tie them together a little bit. One, just could you give a sense of your progress on SKU rationalizations? I know the 25% you were cutting is big, but it clearly hasn't slowed the organic growth. Just then also curious a little bit related to that on innovation, if it's -- what your learnings are from that process. And if it changes how you think about screening or gating your launches and just what implications it might have as you look at new products. Dirk Van de Put: Yes. First of all, on SKU rationalization. There's really three levels of how you should think about SKU rationalization. First of all, there is stopping production. And so not reducing certain SKUs anymore. Second is then having those SKUs not in inventory anymore. And then third, having those SKUs not in the store anymore. So, those are the three levels. Where we are at the moment is that of that 25%, most of it, the production has been stopped. We're gradually running out of inventory. We didn't want to write off the inventory, which would give us a big cost effect. And then it's now starting to show up in-store. In-store, we're not yet down 25%, but it's increasing rapidly. The effect of that sort of trickle reduction is going to be that I don't think you will see an effect on our topline, and that is really should go by almost unnoticed that we have 25% less SKUs. Keep in mind also that, that 25% was kind of 2% or 3% of our total net revenue. And if we manage it well in-store and keep the same shelf space and replace those 25% with faster rotating SKUs, we could even gain sales. On innovation, in a business like ours, innovation is kind of three things. It's, first of all, what we call renovation, it's existing SKUs that we have to renovate, update, make more interesting. Second, there is then innovation within the core news flavors and so on. And then there's what we call innovation beyond the core, which is new to market type of segments or new types of products. What we have been aiming for in our innovation approach is that renovation part and that sort of new flavors part. That's where we believe we can reduce a little bit the amount of activity that we have, and we've been doing that also around the 25% mark. And that has led to bigger renovations or bigger sort of within the core innovations. And we're seeing the benefit from that. And it's clearly showing up in the way our net revenue growth is being composed. Where we still have work to do is, what we call beyond the core. We're working that hard. We're trying to shift some resources to that. That requires a longer lead time, requires more investment, but over time, can give a significant growth for the company. So, what I would say here also, the 25% reduction has given an upside to us. And we are very happy with the way our innovation contribution to growth is panning out at the moment. Michael Lavery: Really great color. Thank you so much. Luca Zaramella: Thank you. Operator: Okay. And your last question comes from the line of Ken Zaslow with Bank of Montreal. Ken Zaslow: Hey good evening guys. Luca Zaramella: Hi Ken. Ken Zaslow: Just a couple of questions. One is, what have you seen with price elasticity to customers. And how is this different than in the past. Second question would be, when you think about your acquisitions, all your tack-on -- your bolt-on acquisitions, how much incremental sales growth do you think that's added? And how much will it add going forward? Dirk Van de Put: The first question, Luca, do you -- Luca Zaramella: Elasticity. So, if we see elasticity numbers that given prices raises -- Dirk Van de Put: Okay. Yes. Okay. Sorry, I can't -- I didn't understand the question the first time, it was a bit interrupted for me. But from an elasticity perspective, our categories are showing what I would say, an average elasticity from what I've seen to other food categories. And it depends a little bit where you are in which market around the world. In developed markets where most of the sales are through supermarkets and done in larger packs, there are price points, but they're probably not as solid. And for instance, in Germany, the price per kilo is extremely important, while in France, the exact price point where that pack normally is sold is much more important. And so, it's a mixed picture. But I would say, we can more easily move things up or down. And then again, when we talk about pricing, you should not just think about direct price increase. It's also what we call price pack architecture. It's the amount and the depth of promotions that we have and at some of the trade activities that we deploy. So pricing is a big word or is sort of a grouping of a number of activities, which might not necessarily immediately translate in a lasting effect for the consumer who suddenly sees the price change. In emerging markets, it's slightly different. There, it's really about price points and you need to maintain those price points. So in general, what we do there is we work much harder on productivities, reducing of packaging, improving the cost of our ingredients, improving the cost of our distribution and so on. Also making sure that we work hard on price pack architecture and so on. So that's a bit more of a difficult approach, where you need to stick to the price points. And usually, when you have to move away from a price point, the elasticity effect shows quite considerably in your volumes. And so, the game is played slightly different there. So I hope that explains a little bit the two ways that we manage elasticity. But I would say, in North America and Europe, in general, the way we're doing it, and as you probably heard in previous discussions, our price movements are bigger than previous year but not massive. And that's thanks to that RGM approach, I would say. We are able to deal with the elasticity that comes from it and an example is a 4%-plus volume growth we've seen in this quarter. As it relates to acquisitions, acquisitions that we've done so far have added about $1.5 billion to our top line. The idea is that they grow high single digits, and so you can probably calculate what they add to our top line growth. I would say, it's probably in the order of 0.3% growth. Our plan is to continue to do bolt-on acquisitions. It's difficult to say how much and when and at which growth rate. But, in general, when we announced our strategy, we always said that we were counting on a 3%-plus organic growth, and then we would complement that with growth through acquisition. In that thinking, we were thinking that about 0.5, 0.6 of growth would come eventually from acquisitions. So that's more or less what we have in mind. We haven't done that many acquisitions yet, and it will probably still take us a few years before we got a significant math that would lead to that 0.5, 0.6. But that's sort of our thinking as it relates to the contribution of acquisition. Ken Zaslow: Great. I appreciate it. I just had a quick one, just to add is, at what level of sales growth would you not reinvest that would fall to the bottom line? And I'm not guiding you anywhere, but if it was 5%, would you drop it down? Is it 6%? Is it 4.5%? And then, I'll leave it there, and I really appreciate your time. Luca Zaramella: So the idea is to -- the algorithm we have in mind is 3%-plus on the top line. It is under normal circumstances, 4% to 5% GP dollars. And then we take half of it, we reinvest it and half of it we drop it to EBIT. And then, that should deliver the EPS growth of high single digit. Clearly, as you look at this year, we are ahead on top and bottom line. But as we said very clearly, what we want to do is to sustain the market share gains and potentially additional pricing that is coming and enter 2022 with the level of confidence that we can still have this virtuous cycle we are in and that we want to protect. Ken Zaslow: Great. I appreciate it, guys. Thank you. Dirk Van de Put: Okay. Thank you. I think with that, we can conclude the call. We'd like to reiterate that it was a great quarter, solid top line growth, good gross margin and gross profit growth, significant reinvestment in the business and I think a strong bottom line. Going forward, we will see a bit more inflation pressure. And our intent is that we will deliver a higher topline growth, 4%-plus, as we said. And that any additional margin that we have that we would reinvest in the business so that we can enter to 2022 with a great share position as well as a great margin position, which would allow us to continue our virtuous circle in 2022. Thank you for the interest in the business. Looking forward to take you through the results of Q3 and Q4. And thank you, of course, for all your questions. And that's it. Thank you. Operator: This concludes today's conference call. Thank you for participating and you may now disconnect.

Operator: Good day and welcome to the Mondelez International First Quarter 2021 Earnings Conference Call. Today's call is scheduled to last about one hour including remarks by Mondelez management and the question-and-answer session. I would now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir. Shep Dunlap: Good afternoon and thanks for joining us. With me today are Dirk Van De Put, our Chairman and CEO and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides which are available on our website. Dirk Van De Put: Thank you, Shep and thanks to everyone for joining the call today. We had a strong start to the year despite lapping our highest growth quarter in 2020 and Q1 reconfirmed that we are emerging from COVID even stronger. Our performance demonstrates that our strategy is working and that we have clear growth opportunities in front of us. We are driving a virtuous cycle and producing a consistent track record of growth. As we continue to deliver on our commitments, we are also strengthening our business by accelerating investments, reshaping our portfolio and simplifying the business while maintaining cost discipline. We are well positioned to accelerate long-term revenue and earnings growth. On slide five, let me walk you through the headlines of our financial results. Top line growth was 3.8% underpinned by broad based share gains, and excellent execution across all geographies, categories and brands. Our teams around the world delivered amazing results with events like Chinese New Year and Easter being clear standards. In turn, the strong volume and price driven top line translated into gross profit dollar growth of 5%, also aided by our emerged stronger cost initiatives. Luca Zaramella: Thank you, Dirk and good afternoon, everyone. Our first quarter performance was strong across all key financial metrics, building off the strength and momentum of 2020. Revenue grew 3.8%, driven by broad based growth and a healthy balance of price and volume. On a two-year average basis, we grew for 5.1%. Emerging market performance was strong with growth of 10% for the quarter and more than 7% on a two-year basis. Quarter-one marks, for emerging market, a solid comeback from the impact of COVID and proves that our geographical footprint is a long-term sustainable competitive advantage. These results include double-digit growth in Brazil, India and China, as well as high-single digit increase in Russia. In developed markets, we continue to see solid consumption and are pleased with our performance given the elevated demand in the previous year quarter. These markets were in positive growth territory for the quarter while the two-year average growth was 4%. Turning to slide 14, and performance by category. Biscuits grew plus 3.4% in Q1 and plus 7.6% on a two-year average. Each of our BRIC countries delivered double-digit growth during the quarter, while our large US business posted low-single digit growth against very elevated growth from the previous year. The Oreo brand once again was a clear winner with nearly double-digit growth. Chocolate grew more than 10% for the quarter, with a two-year average of 6.5%. Our large chocolate countries such as India, the UK, Germany, Brazil and Russia, all turned in strong results. We are particularly pleased with our Easter performance, considering that mobility restrictions are still in place, for instance, in Europe. From a brand perspective, both Cadbury Dairy Milk and Milka grew double digit. Gum and candy continued to see the impact of restricted mobility. This business declined approximately 16% during the quarter and 8% on a two-year basis. Comparisons will become easier as we move into the second quarter, though we are expecting a gradual recovery. Now, I'll cover our market share performance on slide 15. We continue to see good share performance. Given the unique impact of COVID on results, we have switched to a two-year cumulative for percentage of revenue gaining or holding share, as we feel it better depict how we are truly doing. In Q1, we had or gained share in 80% of our revenue. Biscuits and chocolate were the big drivers holding or gaining share in 85% of our revenue base. Gum and candy helped or gain in 35%. Operator: Your first question comes from a lot of Andrew Lazar with Barclays. Please go ahead. Andrew Lazar: Great. Good afternoon. Thanks for the question. Luca Zaramella: Hi, Andrew. Dirk Van De Put: Hi, Andrew. Andrew Lazar: First off, maybe Dirk, can you talk a little bit about how you feel about the durability of the emerging market performance, given the strength that you saw in the quarter, obviously, with all that is going on in so many of those emerging markets currently? Dirk Van De Put: Yes. Well, just to put the numbers back in front of us. So it's about 10% of growth in the quarter and then 7% on average for the last two years. It was broad based with double-digit growth in Brazil, in India, in China and in Russia, or high-single digit in Russia, sorry. And the contribution to the growth was coming from our global brands and from our local brands. So I would say strong across the board. Maybe some of the countries where we have gum and candy business a little bit less, but we are talking about Mexico or some of the Central American countries or Thailand but not the big emerging markets. Obviously, the big question is what's going to happen with COVID in these big markets, and is it going to affect the consumer? So if I go through them one by one, China is operating well. COVID is under control, I would say. There is a return to mobility and if there is a rise in COVID cases, they lockdown quickly an area, contract trace and then - contact trace, sorry, and move on. So I think China, we can be relatively sure that that is going to continue. The next one, India, the performance was very strong in the first quarter. But at the same time, we've seen near the end of the quarter and then into the second quarter big rise in cases driven by religious festivities, state elections and probably some fatigue. At the moment, the restrictions are only about 10%, so 10% of the population is under severe lockdown. And these lower type of restrictions do not materially affect the access to our products. But if the restrictions would be more expanded that could give us some pockets of disruption to our opinion, but overall, I think life continues. People clearly have migrated to our brands, which are trusted brands and they offer a lot of food safety also. So we're expecting a strong quarter in India, even in the current circumstances for Q2. And then Brazil, as you know, Q1 was heavily affected by COVID. We still have a serious impact. But we see chocolate and biscuit consumption clearly growing. But of course, the gum and candy is still impacted by the lockdowns. In Brazil, just like in the other countries, we're seeing very positive trends in our market shares also. And then Russia, I would say is also in a relatively difficult COVID situation, but it does not affect consumption. So I feel confident that in these four biggest BUs and then some of the other ones, we will be able to sustain growth and there's a number of underlying factors that will drive that. One would be, for instance, distribution expansion in China, we've added 500,000 stores over the last two years. In India, we've done about 360,000 stores. We have huge opportunity in getting to more stores, as I was talking about in the call before. And then India is entering to the choco of bakery space to where we think there's a big opportunity and our biscuit business is growing very fast. So I think also based on those factors that we feel we feel strong about the emerging markets. Andrew Lazar: Thanks so much for that. And just this - oh, yeah. Dirk Van De Put: Maybe, one thing Andrew, because this is maybe the moment to talk about COVID and the India situation, as a side remark. But obviously, our hearts go out with everybody in India and the struggle that the country is going through. The safety of our colleagues is our number one priority and we are giving all the supports we can to a local team. And this week, we are going to donate at least $2 million to the government and to the healthcare workers to provide critical medical infrastructure like oxygenators and other equipment. So I just wanted to make sure that we are aware of what's going on in India and as a company, we are planning to do whatever we can to help. Andrew Lazar: Yep. Of course, thank you for that. And Luca, just a quick one, given 1Q organic sales growth was obviously very strong and above the full year expectation and it was against the toughest year ago comp, I guess could the 3% plus full year organic sales growth outlook prove potentially conservative, and I guess, potentially also give you more comfort, obviously, in your margin expectations, in a rising sort of inflationary environment? Luca Zaramella: Yeah. So we are clearly encouraged by the strong start to the year and the quality of our results. It's remarkable to see share gains continuing volume and price, both contributing in a meaningful way to top line and profitability and free cash flow are ahead of last year. As Dirk just said, we are very happy with emerging markets that has truly come back since the peak of the COVID crisis last year in Q2, and the last three quarters over there had been aligned in terms of trends to the pre-COVID levels or even better. And same goes for developed markets that, for which consumption is higher than the 2019 baseline. So we are optimistic about the fundamentals and the ability that we have to execute a 2021 plan. But we know, as Dirk just said in India, there is some volatility and we want to make sure that we don't get ahead of ourselves and so reaffirming our original plan, at this point, we believe is really the right approach. Having said that, you're right, we are going cautiously optimistic about the ability to over-deliver versus the original guidance. But I want to make sure that we don't get ahead of ourselves, it is early in the year. But just to reassure that we have all the investments aligned in the plan. And actually, we have unlocked some additional investments, particularly in places where I think the situation is experiencing great momentum. In terms of inflation, there is more inflation coming. And so profitability is great in Q1, we believe we are going to hit the numbers as we had originally in mind, but the higher inflation will require some additional pricing and some additional productivities to offset the impact, which I believe at this point is absolutely manageable, given that all these positions are pretty much hedged for 2021. And so as I said, profitability should be good, in line with what we told you at the end of last quarter. And we feel like we can price away the inflation and commit again to a high single digit EPS as per the original guidance. Andrew Lazar: Thanks so much. Luca Zaramella: Thank you, Andrew. Operator: Your next question is from the line of Ken Goldman with J.P. Morgan. Please go ahead. Ken Goldman: Hi, thank you. Luca Zaramella: Hi, Ken. Dirk Van De Put: Hi. Ken Goldman: Hi. You've done a number of bolt-on acquisitions in the last couple of years, you highlighted them today. Nothing on the larger side and I understand, you've been pretty clear, you're not really looking to buy anything sizable. But if a larger asset became available, would you consider it or is it really something that's not on your radar right now? Is it just something where you're still committed to those smaller size targets for now? Dirk Van De Put: No, we remain on our strategy, which is the snacking world basically. And we want to execute any acquisition, small or big, clearly, as it should help us to accelerate our overall growth rate. So we want to stay in snacking and we want to accelerate our growth rate. So we know where that needs to come from. It has to come from the adjacencies, some of the geographical whitespaces, and some of the fast-growing segments that we have in our current market. So if there would be a larger acquisition that would provide us the opportunity to get bigger in snacking or get an accelerated - and/or get an accelerated growth rate, we're certainly open to it. But it's just very difficult to find and we're hesitant. We would probably be open to get into other areas of snacking but we are hesitant to get into other food categories, which are showing less growth. And so that makes it much more difficult to find the right sizable acquisitions. But it's absolutely not the case that we are not open to it, we're totally open to it. Ken Goldman: Understood. Thank you for that. And then very quickly, you mentioned that the February storms hurt your operating margin in North America. I don't think you quantified that. I know it's tough to be precise sometimes. But is there any way we can sort of think about how much that affected your margin this quarter? It's important just as we think about what the non-recurring versus recurring impacts were? Thank you for that. Dirk Van De Put: Yeah, it had a disruption in February. Unless you wanted to go Luca? Luca Zaramella: No, no. Go ahead, Dirk. Dirk Van De Put: Yeah. Yeah. We had the disruption in February from the Texas storm, but we had a good stock rebuilt in March. So I would say that the effect for us has been limited. I mean, at the moment itself in February, we saw it clearly. And so those sales that we lost there will not come back but it's not going to have a major impact on the year, I would say. Ken Goldman: Thanks so much. Operator: Your next question is from the line of Robert Moskow with Credit Suisse. Please go ahead. Robert Moskow: Hi, thank you. I noticed that Brazil had much better numbers than what we're used to seeing and I remember you put new management in place in Brazil. Can you give a little more color on what you think the team is doing right there? How sustainable those improvements are? And is there any kind of a model for your other LatAm countries to follow here or do you think just the environment in Brazil is just more amenable than the others? Thanks. Dirk Van De Put: Yes. Yes, Brazil has been doing better, like Luca said already, for several quarters now. It grew double digit in Q1 and we are expecting good growth again in Q2, and all that within a situation where COVID cases are increasing dramatically. One thing to keep into account before I talk about all the good things that management has been doing is that the composition of our product range in Brazil is fundamentally different from a Mexico or what we call VACAM , which is Colombia, Peru, Chile and Central America. Those Mexico and VACAM have a very important share of their business is driven by gum and candy. And as a consequence, they suffer more in this crisis. Brazil has a bigger biscuits and chocolate business, and they're doing quite well, increasing market share. We've stepped up investments. We've also improved our customer service. I think the team also has increased or improved their internal process in a big way, made the business much simpler to manage. They've brought in some extra talent. So yes, clearly management is driving a change in the way the business is operating and it's showing in the results. I would say for the other businesses, the problem is different from what we had in Brazil. We were not performing in the Brazilian market in biscuits and chocolate. It's largely in Mexico and VACAM, we need to make sure that the gum and candy business comes back. And so we will see how that goes. We see it come back step by step, but it's going to take a while. Robert Moskow: Okay, a follow up on chewing gum. Is there any kind of earnings dilution number in your head that you would find acceptable, if you were to divest your developed market chewing gum business? And also how would you go about splitting it up that by keeping your brands in DMs and also, if you were to divest, exit the brands in DM, in developed markets? Dirk Van De Put: I can let Luca maybe talk about the dilution that. Our developed market business is not that big and he can talk about that. But splitting it up, I don't think is from a brand perspective, a major issue, it exists with many brands that one company owns a brand in one area and then owns it in another area. It's probably a little bit more difficult but doable, as it relates to the supply chain and where the products are being produced. But we think that those factories can stay with the different regions. And then R&D, I think an agreement can always be made that our R&D team continues to provide service and any innovation we do on our brands in one part of the world, we can extend that to the other part of the world, if needed. So I think from an operational standpoint, splitting it up, it's doable. It's not - I mean, it's not a walk in the park, but it's something that I think our teams can manage quite well. Luca? Luca Zaramella: I think on dilution, quite frankly, it is a little bit premature to talk about what it could be. I mean, we are assessing multiple options and even within certain scenarios, it might be not an outright sale and so we have multiple options ahead of us. And quite candidly, we are assessing all of them. So we haven't decided yet. It is 2% of the business, 5% overall, 2% when you look at only emerging market. And we believe, in general terms, that if we had to go down the path of a sale of the business, the increased focus and the outcomes that we could drive through our existing biscuits and chocolate business will overtime offset and obviously, we're not going to sell anything below the key value. Those are key fundamental principles that we apply all the times and we will apply even this time. Robert Moskow: Thank you for the color. Appreciate it. Luca Zaramella: Thank you. Operator: Your next question is from the line of Dara Mohsenian with Morgan Stanley. Please go ahead. Dara Mohsenian: Hi, guys. Dirk Van De Put: Hi, Dara. Luca Zaramella: Hi, Dara. Dara Mohsenian: So a couple questions. First, you mentioned your ability to price to offset higher commodity costs. I'm wondering if the pressure continues to build incrementally on those fronts going forward. Can you talk about your ability to take pricing in emerging markets where in theory, there's a weaker consumer post-COVID and just how you think about that on a regional basis in some of the key emerging markets relative the pricing power in developed markets in the US and Europe? Luca Zaramella: Yeah, maybe I'll start. So I think we are overall starting with a position of strength in our franchises. We have invested quite a bit in the last few years with our consumers and our customers and we are delivering value for both consumers and end customers overall. We have a strong portfolio of brands. We have invested in working media in - that is going double digit, sales execution, route to market and in capital in our facilities. Having said that, there is higher inflation in the marketplace and if you look even at this quarter, the composition of pricing and volume, pricing is a little bit more pronounced than it has been historically. So we are pricing more and we are pricing away inflation. We are not necessarily going all the time with least price increases, we use a lot of revenue growth management techniques within the company. Those provide a better impact for consumers an elasticity. We will protect pre-price points, particularly in emerging markets. And that price-backed architecture is a key element of price increases throughout both emerging markets and developed markets. We are clearly optimizing promo spending. We are optimizing mix, mix is still negative in quarter one because of gum and World Travel Retail. But when you strip that out, and you look at biscuit and chocolate, it is better than it has been in the past. And also, we want to improve trade deals ROI. So to cut it short, we feel confident that we can price away inflation. And we are never going for the big bang, depending on what the current situation is in terms of commodities and ForEx. But it is a gradual implementation of pricing over time. And obviously, given where we stand in terms of overall inflation, as we go into next year, we would have to price. Dara Mohsenian: Okay, that's helpful. And then from a market share standpoint, it looks like the momentum continued in Q1 on a two-year basis. Can you give us a little more of a near term update of what you're seeing in March and April, as you cycle some of the incremental share gains from last year? And are you seeing any competitive response in the marketplace to the share gains you've seen recently? I guess indirectly that ties the first question around pricing but I'd be curious for competitive response and what you're seeing from competitors. Thanks. Dirk Van De Put: Yes. So overall, I would say, for this year, we are expecting modest gains on the back of the very strong gains that we had last year but we do expect to continue to increase our market share. In Q1, on a global basis, we continue to increase our share, not as strong as last year, but still quite good, more than then it has been in the past. Of course, as we get into March and April, and in some countries, we don't have the full results yet. That's where we start to lap some of our largest step up in share gains that we had last year. And so it's a bit too early for us to say how that's going to pan out. But overall, we do expect a good year. And the reason being is that some of the things we're doing, like distribution increase, execution against seasonals, increase in our investments, the ROI you're seeing on some of our marketing is all pointing in the around - sorry, in the right direction. And so we believe that the basis there is to continue gaining shares. Another one that I didn't mention but there is increased penetration of our brands. In the last 12 months, we have about 150 million households globally that are now consuming our products. So I don't think that's going to go away right away and that is going to be the base that is going to help us to continue to gain share. We think it's more helpful since we have a big step-up last year and we will in some markets give back a little bit, I'm assuming in the coming months. So I think the net result of the two years is what is most important. That's why we thought it would be better to start showing the two-year cumulative share. As I said before, we have all the right things in place. We saw in a continuation of that in Q1 and we think that we still will have a good year. Dara Mohsenian: Great, thank you so much. It is helpful. Dirk Van De Put: Yeah. Operator: Your next question is from the line of Bryan Spillane with Bank of America. Bryan Spillane: So I wanted to just follow back up on the question around - the questions around portfolio and the gum business and I guess two questions there. First one is just the slide where you've, you've talked about a billion dollars of revenue from the acquisitions, are they're contributing a billion of revenue? Can you give us a sense of just what the profit contribution is and where - maybe where that stands relative to what you thought you were when you made the acquisition, just trying to get a better understanding of just how accretive it's been to returns or contribution to profit growth? Dirk Van De Put: Yes, so the - I would say, the group of acquisition is all along strategy, but it's very different of where in the development these different brands are. So the profit contribution is largely depending on how big and where we are in the development. So to give you the two extremes, potentially Give & Go, mature business, strong profitability, growing high single digits in the first quarter, so a big contribution to our profitability. On the other spectrum, I would say, Hu, smaller brands, still investing in getting distribution, in getting the brand build up. Huge potential, biggest or fastest selling chocolate brand in Whole Foods, but we need to build up distribution, so for the time being, we probably going to run a loss on Hu, as we build up the brand. All the other ones, I would say, if I think about Perfect Snacks, Grenade, and Tate's, they all have strong EBITDA, in line or above with the EBITDA of the company. And they are in sort of the 100 million to 150 million mark in sales. And so they all have huge distribution opportunities, which we are continuing to build with them. And so our expectation is that they are profitable, that they will contribute to our overall profitability but that's not the main role, their main role is to grow as fast as we possibly can. So hopefully, that gives you an idea how we think about it. Bryan Spillane: Yeah, that's helpful. And then, Luca, maybe just the follow up on Rob Moskow's question, as we're thinking about the potential options for gum, just tax leakage or cash, cash tax return or cash returns, because your model has been very effective at existing businesses in a very tax advantaged way over time. And so if you could just kind of maybe give us a little bit color, how we should think about those considerations? Is that - the cost basis in this business goes all the way back to when Cadbury bought Adams, right? So I don't even know what the cost basis is but as we're thinking about exit vehicles, we really think about tax efficiency and maybe those types of structures. And, again, this is a business that could be worth, I guess, a billion and a half or more. So just trying to understand how we should think about cash, the cash inflow potential. Luca Zaramella: The situation varies upon the structure we're going to use and it will be different between the US and in Europe. I would say, overall, the tax leakage is manageable if we had to go down that path. And I want to reiterate, it's not a foregone conclusion at this point but there will be some tax leakage potentially. Again, in the big scheme of things, I think it is something that we can handle. And it will depend upon the structure we might end up using and how the value is located between Europe and US. Bryan Spillane: Okay, thank you. Luca Zaramella: Thank you, Bryan. Operator: Your next question is from the line of David Palmer with Evercore ISI. David Palmer: Thanks. You cited how you've been gaining share in most of your business but you also cited that the core category growth has been 3% or so. So it's not too far behind where you have been. In other words, global sweet snacks has been extremely resilient during this entire pandemic. Could you speak to that? Do you think that there's parts? You know, obviously, you've talked about gum and World Travel Retail as being headwind areas, but there might be others that are tailwinds, like, Oreos in the US, for example. Roll it up for us. Do you think that this pandemic has been a net headwind to your business, and something you can get back in future quarters as a tailwind and I have a follow-up? Dirk Van De Put: I would say the Beauty of our businesses that despite everything that that happened, we're very balanced. And if you look at it, we grew 3.7% last year. We are growing 3.8% in the first quarter of this year. Last year, we saw big gains in biscuits and in chocolate, but we had gum and candy really going the opposite way. We had emerging markets slowing down but developed markets stepping up. So the balance, the net balance, and I keep on referring to that, the net balance has been that in the end for us, there has not been that big of an effect and that continues into Q1. Now thinking it through what's going to happen going forward. I believe that it could probably be a tailwind. And the reason why and I'm talking, let's call it, two years from now, in emerging markets, things will come back, mobility will come back and we see big growth in snacking. This quarter, as they came back, emerging markets were growing close to 10% for us. So I think there is momentum in emerging markets, emerging markets are growing 7% on average over the last two years. There is momentum there. And as they get through COVID and the consumer gets back in into their normal life, I think we will see a benefit to that. In developed markets, I think consumers will use this as a change in the way they live. And they will not spend as much time in the office and they will spend more time at home. And we clearly know that, as a consumer spends more time at home that benefits are categories, particularly biscuits but also chocolate. So if I think about it, not immediately in the next year, because there will still be a lot of ins and outs, but during the crisis, it was kind of a neutral effect. Getting out of it, I think it's going to have a tailwind for us. David Palmer: Thanks. That's great. And you have such a multifaceted growth agenda. You've talked about a lot of this stuff during the slides, brand bolt-ons, underpenetrated channel push and global Oreo expansion, adjacencies and like. Is there - it's been a kind of a wild year even already with inflation ramping up and you've heard about supply chain disruptions, whatever, and obviously, the COVID cases in some of your emerging markets. Are your plans at all changing about what you are pushing harder on this year in leaning into? And I'll pass it on. Dirk Van De Put: I mean, overall, we feel that our strategy that we laid out in the second half of '18 still is very valid. We've made some adaptations to it during the crisis. And at the moment we are reviewing it to see if we can build on sort of another level of sophistication and an understanding of what really drives it but the basics are still there. I would say that the areas where we we've been working on, for sure, is simplifying the business more. We have too many SKUs, too many small innovations and so on and that makes life really complicated for our teams and for supply chain, so we've been focused on that. We're also starting to understand our marketing approach better and better. Our brands are really thriving. I think teams have done an incredible job in better understanding purpose of our brands and really then making it come alive. We get great returns on our investments. And so I think we're going to continue that and try to lift that to the next level. As it relates to channels, for sure, we have to adapt our strategy, e-commerce 77% growth in the first quarter after already a big boom last year. So e-commerce, I think in the coming years, will continue to grow very fast. We think discounters is another area that will be important. And we will have to see where the balance between grocery and big stores versus on the go and away from home will pan out, and that might require some adaptations. So I would say, overall, the list of opportunities that we have to grow has not changed and has reconfirmed itself. We might change the sort of the weight or the priority of it, but the ones I went through in the presentation are still very valid. And the enablers of the growth are still very valid and are working for us. So it's more about prioritization than changes to my opinion. David Palmer: Thank you. Operator: Your next question is from the line of Alexia Howard with Bernstein. Please go ahead. Alexia Howard: Hello there. Luca Zaramella: Hi. Dirk Van De Put: Hi. Alexia Howard: Hello there. So, first of all, on the last earnings call, I think to remember, gross margins were down, I think about 80 basis points year-on-year and there was some trepidation expressed about how gross margins would develop this quarter. Clearly, they came through better than expected, flat year-on-year on and adjusted basis. Could I ask just what happened that came through better than you anticipated? Was it just pricing relative to input costs in Latin America or was there something more to it? And then I have a follow up? Luca Zaramella: Yeah, I mean, as we saw inflation spiking, we have been doing a little bit more pricing and optimizing the overall revenue growth management mix and so that's part of the answer. We have delivered the great quarter in terms of productivity. The colleagues that we have around the world working on supply chain have done a remarkable job. And, the goal for us is really to make sure that while protecting all employees around the world, COVID costs are pretty much absorbed by productivity and happy to report that in the quarter, the COVID costs were only inverted commas, obviously $25 million. And then I think overall, when you look at the composition of profitability, we are very pleased with increasing profitability, you see, not only in Latin America, which I think is quite good and that is on the back of our teams in Brazil, for instance, optimizing returns on Easter, that are this year, at historical lows compared to last year. But also and importantly, all the volume leverage that came through EMEA, which is again proving to us if we didn't know that, while this company has tremendous potential in revenue, that revenue, if it comes to the right mix of price and volume, it delivers tremendous upside to the bottom line. And also, as you saw Alexia, in terms of cash flow. So, it was better than we anticipated. I think it was better because again, we priced a bit more, productivities came in strongly, and importantly, particularly in EMEA, but not only volume was strong and it was also the case obviously in EU and in the US when you look at the two-year stock on profit. I think we can call ourselves happy with the delivery of that. Alexia Howard: Great. And just as a quick follow up. You called out unfavorable mix as a negative on the organic sales growth. Was that specifically just gum related or was it also World Travel Retail, just curious about how those - that mix is likely to develop over time. Luca Zaramella: Overall, when you look at total mix, it is because of gum and it is because of World Travel Retail. Then obviously, North America commands a little bit higher profitability than other places and obviously didn't go as much as other places this quarter. But overall, I would say when you look at the fundamentals of mix management, we feel quite good, both in chocolate and biscuit, and hopefully gum and World Travel Retail will come back certainly, we will start lapping better numbers in the second part of the year. Alexia Howard: Great. Thank you very much. I'll pass it on. Luca Zaramella: Thank you, Alexia. Operator: Your next question is from Jason English with Goldman Sachs. Jason English: Hey, good evening, folks. Thank you. Luca Zaramella: Hi, Jason. Dirk Van De Put: Hi, Jason. Jason English: I think - look, I think you partially answered this in the answer to last question, but I want to make sure I got it right. On EMEA, this is the highest margin I think we've ever seen from that business with substantial growth. If it's all volume leverage, is it fair to underwrite like this is a sustainable profit level, maybe not every quarter, but this is not sort of unusual that we have to reset lower. And then on the flip side, it's been a couple of years since we've seen an EBIT margin below 20% in North America. It sounds like in an answer to Ken Goldman's question like this, whether disruption was kind of a net loss, what drove the margin pressure there? Thank you. Luca Zaramella: So, Jason, the simple answer on EMEA and the remarkable 37% increase that you saw, it is because we have good profitability in India and China that delivered amazing growth in Q1. When we look at the P&L structure of these two companies, it is a sound P&L that allows for reinvestment. And so that came after we invested more in advertising. And again, I want to stress the fact that emerging markets can be profitable, can be cash accretive and EMEA is the point in time. We come from a place where we have invested in supply chain and we have great state of the art facilities in both India and China, as a specific example. And putting volume on top of it is, is just going to yield great results also going forward. So that's really, when we say emerging markets in action, you look at the EMEA P&L and you realize how that can really come to fruition not only in this quarter, but for the years to come and so it is a structural advantage. We just have to keep on being disciplined in pricing and delivering volume. And I think things will take care of themselves if we continue investing in route to market and Dirk gave you the idea of the opportunities that we still have in these places, whether it is biscuits, for instance, in India or whether it is number of stores in China and chocolate, obviously. I think in North America, I wouldn't get overly concerned about the margins. I think North America obviously this quarter is facing some additional pressure in terms of logistics costs. And you will all know that edible oils, sweet, et cetera, they had been going up in terms of cost. But we are taking the necessary measures to optimize profitability and total dollar delivery a little bit more. Again, I don't want to take away the fact that only two-year average, when you look at the net benefit versus '19, it is still a 17% - 16% OI increase versus the 2019 baseline which again, I think is quite good. Jason English: For sure. Thank you. I'll leave it there. Luca Zaramella: Thank you, Jason. Operator: And your final question is from the line of Chris Growe with Stifel. Please go ahead. Chris Growe: Hi, good evening. Thanks for the time here. I know we're getting overtime. I just had two follow on from earlier questions. I want to ask first of all, we think about the organic revenue for the year, it's clear, you're taking a little bit more pricing due to the inflation picking up. As we think about the balance of volume versus pricing, it sounds like price is going to be a larger contributor. Have you given a little more color around how much that could contribute to organic revenue growth for the year? Luca Zaramella: So we come from a place last year where if you look at the numbers, it was 50:50, I think it will be slightly more. Again, I think we need to look at the fundamentals of how we want to run this company. Volume is integral part of the incentive scheme for the countries and for us obviously at the center and for the regions too. It is clearly a key contributor in places like EMEA where we have tremendous leverage potential. There might be other places where we will have to price a little bit more and there will be some volume consequences. So I think you will see still volume growth, it might be slightly less than what happened last year. And importantly, both volume, market share and gross profit dollars are critical part of the incentive scheme. And so it will be the optimization of the three elements that will eventually determine how much we will deliver in pricing versus volume. Remember, also in the second part of the year, we will start lapping meaningful volume declines in gum and World Travel Retail and the simple year-over-year comparison should have that partially offset potentially by tougher comparisons in developed markets, particularly in North America. So I feel quite good in telling you that the balancing will still be there. Maybe it will be a little bit more tilted to price this year. Chris Growe: Okay, that's helpful. Thank you. Then just one quick follow on. We've talked about high growth segments and adjacencies. Most of your M&A activity has been in the US for those six transactions you outline there. Is there a more heavier focus for you outside the US? You had one recently in the UK, is there - are you looking outside the US for more of that sort of high growth segment or adjacency for the business and that's all I have. Thank you. Dirk Van De Put: Yes, in fact, we did. In this year, we did three and two were outside of the US; one in Australia, one in Europe. I would say the focus that we have is as much internationally as in the US, there's no clear preference. Probably in the past, things have moved faster in North America than in the rest of the world but we see a good pipeline, good conversations going on. So in the end, you can expect a good balance between the two. Dirk Van De Put: I think that's it. Well thank you very much for your attention to our earnings. Thank you very much for your investment in the company and for your interest in the company. We obviously look forward to a great continuation of the year and looking forward to talk to you in the coming weeks. Thank you. Luca Zaramella: Thank you, everyone. Operator: Ladies and gentlemen, this does conclude today's earnings conference call. You may now disconnect your lines.