Mondelez International, Inc. Q3 FY2024 earnings call

Business Strategy Update: Focus on core categories (chocolate, biscuits, baked snacks) to reach 90% of revenue by 2030. Reinvest in brands, expand distribution, drive M&A, and scale sustainable snacking. Financial Results: Organic net revenue grew 5.4% in Q3. Adjusted gross profit dollar grew 11.2%. Adjusted EPS grew 28.6%. Generated $2.5 billion in free cash flow YTD. Market Performance: Developed markets grew mid-single-digits with North America biscuits and Europe recovery. Emerging markets grew mid-single-digits despite Western brand boycotts in some areas. Snack categories durable with private label share declining in biscuits and chocolate. Acquisition: Acquired majority stake in Evirth, a leading cakes and pastries player in China, to expand presence in the fast-growing category. Sustainability: Introduced recyclable paper packaging for LU biscuit brand in Europe.

Biscuits and baked snacks: Grew 3.3% in Q3. Brands like Oreo, Ritz, belVita, LU, 7 Days, and Club Social delivered robust growth. US biscuits saw solid growth with a good balance of pricing and volume/mix. Chocolate: Grew 9.2% in Q3. Strong in both developed and emerging markets. Cadbury Dairy Milk, Milka, Toblerone, and Freia Marabou delivered strong growth. Volume/mix was down in Latin America but Europe recovered. Gum and candy: Grew 5.6% in Q3. Driven by momentum in key markets like Brazil and US candy. Volume/mix slightly positive.

2024 outlook unchanged. Expect algo delivery for revenue, earnings per share, growth, and cash flow. 2025: Cocoa cost headwind to impact margins, but focus on building chocolate category, managing input costs, and reinvesting in brands. Uncertainty around EPS growth in 2025 unless cocoa prices normalize or elasticities are benign. Sales of JDE Peet's shares: Proceeds to be used for buyback and M&A, with modest dilution in Q4.

Cocoa Costs: Temporary increase in cocoa prices puts pressure on margins. Need to adapt RGM and promotions. Market Volatility: External environment remains volatile, affecting emerging markets and certain regions like the Middle East and Southeast Asia. Elasticity: Potential upticks in elasticity in certain markets, requiring adjustments in pricing and promotions.

Q: Discuss puts and takes in 3Q and chocolate strategy going forward.

A: Dirk mentions strong top line, positive volume mix, consumer holding up, focus on protecting chocolate category, investing in brands, RGM plans.

Q: 4Q impact of higher cocoa costs and 2025 guidance.

A: Luca says Q4 EPS down due to locked-in high cocoa prices, 2025 needs cocoa normalization or benign elasticities for EPS growth.

Q: North America categories bucking trend.

A: Dirk talks about consumers shopping by basket size, focusing on $3-$4 price point, launching new packs.

Q: Growth plans for cakes and pastries.

A: Dirk discusses opportunity in packaged cakes and pastries, leveraging Evirth's technology in China, potential expansion globally.

Q: EPS growth in 2025 and cocoa visibility.

A: Dirk and Luca talk about cocoa price clarity in next month/quarter, flexibility in pricing and costs to manage elasticity.

Q: Latin America volume and China optimism.

A: Dirk says Latin America has slowdown in Mexico but Brazil strong; China sees optimism due to stimulus policies.

Q: Organic sales growth and regions.

A: Luca mentions strong performance in North America, AMEA, Europe; Latin America expected to improve.