MDLZ - Earnings call transcript Q3 2019 | Mondelez International, Inc.

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Operator

Good day, and welcome to the Mondelez International Third Quarter 2019 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. ahead, go Please

Shep Dunlap

our thanks de us. CEO; Put, CFO. our sent Zaramella, and which presentation are available are and me Dirk our on out we today, Van our site Earlier release for afternoon, and With slides, mondelezinternational.com/investors. joining Web today Luca press Good Chairman and

risks based refer may make see things we details the we'll call, the differ this statements. and contained how due statements about risk Please for our company's on in and Actual on results and performance. cautionary statements During our forward-looking forward-looking more These to XX-Q materially to statements uncertainties. are factors today. filings XX-K

discuss referencing in items we we included results financial noted, GAAP for otherwise will our results. certain As our be today, measures, our unless non-GAAP which adjust

we unless growth constant on In our year-over-year a otherwise addition, currency provide noted. basis

and the presentation. non-GAAP and the back measures You of earnings can within GAAP release slide GAAP find our at to the comparable reconciliations

In as overview today's Luca you call, Dirk and results, through priorities, close Q&A. the update our will our progress as then, take with financials an strategic our of We'll against outlook. will give you well

the that, With to Dirk. turn over I'll call now

Dirk Van de Put

and everybody. afternoon Thank Shep, you, good

growth, quarter the to continuing pleased top first-half We are the the of year. strong of report another momentum line of

results to As growth. intended excellence, against our operational and you our to proof launched focusing long-term making and create progress know, which this the a growth attractive, sustainable that that working consumer, driving well, building Today's year new accelerate culture. by strategy, are ago goal strategy we we're winning on our is growth a

in quarter at So, let's a look more detail. take the

brands broad-based strength pricing. our that by the fundamentals well around the driven geographically. and was world, in local of confirms mix plays We role reported the quarter, snacking in was snacking. third of growth which revenue It volume and high portfolio and The good also leadership of quality, as a global as balance the our X.X% of growth

Our encouraged as X% are ex-Argentina, and as emerging are markets or such India, markets Russia, as we we well what in Asia. by China, grew X.X% seeing Southeast

grew revenue growth like Our was primarily X.X%. share continued U.K. Germany U.S., saw growth markets developed by reported key biscuits. strong which And and in in and we driven gains, markets Europe the the volume-driven

Our our strategy more invest initiatives resulting in income paying solid to growth. is operating off, growth in

Our we're also with our adjusted the $X.X and cash EPS year-to-date flow growth XX% was quarter, for billion. of pleased

a we evidence creating we also As sustainable it seeing future that our consumer, basis focus is teams. informing which renewed everything is by the the units look across strategy our growth. inspires for business we're on driven motivates and is our and This do,

generates on growth of is culture the while line focused cost can true we ensure dollar attractive remain we growth. driving that OI entire So top to discipline line growth, organization that so our top

is leading growth as This and across channels, to local key focus our in global as well initiatives on business impactful brands. and key markets our

developed like means For winning In club in growth instance, opportunities channels this markets. in U.S., the and outlets. both and capitalizing discount we're developing growth on

quarter, this and this our distribution outlets global continued a reached we our means we in our million While in through products And one with million example, for platforms. another milestones biscuit China gum. achieved partnerships ecommerce, expansion new e-tailers with and X.X outlets online

for Our XX%. reported ecommerce was growth quarter in the

makes gets contributing us approach. for Poland, brand Biskuat also call to new Polo out biscuit Jubilee year and local QX to are what that few playbook are brand this our to in what of area performing jewels, reinvigorate Russia, special. brands marketing we the examples big to A our our highlight Indonesia. stood are renewed All our instance, these focus. and growth. marketing in been well our of in is local that brand iconic investment A Another that thanks are manifestation that for in Prince the One to focus the has root priority

clarity Our brands rolling of out intention and brand and global drive in We've we'll applied is playbook our more this it to positioning brands, the across execution. in be consistency future. to many in

result well. a examples quarter, latest of connection that Cadbury where was Dairy strong renewed campaign campaigns As performing U.K., consumers. enhance brand of Generosity focus, equity some this our our growth the Milk seeing of edition particularly we're our the is instance, really with In good this for

remain While operational very we our excellence. we focused on are driving growth,

seen of improvements. the on waste digitalization improvements return well as focus chain in American here North our reduction in procurement supply of while we the and investment our instance, For continue we've examples in process function our our Good marketing network. productivity in to solid on in be digital, would as

win Around execution. in units, EMEA, Southeast leveraging capability the sales our we world are trying and reach In to different we in key business significant seasonals. to instance, distribution for our best-in-class like and markets India Asia are in

during even or model. the of really we're global locally Southeast more seasonal well Hindu in Kinh example, offerings and year, with our Oreo-branded India, mooncakes performed success example with our the as was season Asia the brands Rakhi successful our an having of Do particularly seasonal of offerings across As selling mooncake or oriented well. adaptations power underscore gifting this culturally Local another celebration Mid-Autumn relevant

doing in Another brand. of gum are we our China work Stride with example is strong this the

it to digital Z is approach personalize Gen with working us our our helping marketing spend. to through consumers win Chinese Here is well, mainly consumers, and

Finally, innovation our our we good initiative. make SnackFutures and with progress approach continue more to agile

products. Our focus and technologies emerging is trends and on wellbeing in premium

discarded. agreement supplier cocoa by the fruit parts introducing that of limited those distribution market a an see of been we've key very using fruit product chain into how it was in put will perform. example, the have to into in thus A food use ingredient and far a with record an to the As the time reached this explore recently developed

people are proud had we I'm and the continuing mindful snacking innovation make who very and after also This the that sort Creating strategies. to looking means consume sustainable different past. contribute on our we very is in products. and approach our also of an our growth durable progress the approach the from planet of

quarter, recognized again Jones is our our we're This the by one life snacking the reporting. Index, which rating is business of our brining This just environmental to strategy, for Dow commitment right grow sustainable how improved were example Sustainability and way. to our we

using us to Another COX example a methodology our are targets end-to-end further we is how on focused science-based help emissions. new reduce

work to the mention to wellbeing of want the I our doing respond to needs we're consumers. Finally,

working calories characteristic. portion different offering products the good indulgence, share are on to proud particular and ingredients options simple point ensure what different XXX in will could mean consumers. snacks can less to commitment which call with U.K. permissible than formats, or better-for-you are to in know are their was things products of We serving. move, made that you are functional The proof we the parents I'm to all A that recent for consumer which to the from smaller quite future. children the have this are more a nutritional offer our to per size right our authentic with made that ranging and

I that, And Luca. over to will with it hand

Dirk Van de Put

good afternoon. and Dirk, you, Thank

performance see you nine, across key can we of strong As a delivered on slide metrics. number

for notable and was quality, quarter as was for as of balance growth well which the broad-based, its both third pricing. Our volume

mid of in a of balance categories, driven of as in was three was local a brands digits, grew accelerate on by overall to growth fronts. with growth high with drove results we volume delivered Global strong quarter, line this it variety growth We brands four regions. pricing. while single continued the and quality, and During

driven. Finally, of we this strong happened the on growth, have back which category

years. increase solid the gross the first investments dollars brands, delivered our excellence approximately growth. go-to-market cleansing three in and for cost Productivity also million for of $XX and We initiatives quarters. provided That through and marketing positions, and our with XX% OI saves EPS along profit business savings was fewer future

flow QX to marked full-year which free continues another generated QX, We of through good Finally, for of and target cash on key outlook billion. a priority. $X.X a $X.X quarter are billion be generation,

are for Turning and in our to markets XX, reach, slide emerging assets our scale, clear company. expertise

X%, grow key Asia, like in of volume-driven India, growth aggregate, and Southeast robust quarter greater approximately countries Mexico, X%. the consecutive Africa. drive to grew China, marking than continue In emerging markets We Russia, fifth

Excluding nearly increases. inflation-driven markets quarter Europe by also Developed North America, and with grew where driven of of emerging a out Argentina, during performed X% the revenue well saw growth and we X%. very markets pricing combination growth strong mix of in volume-driven results volume

quality beverage in let's that Now, In which revenue transition on When by are than business powder cost dollars growth. quarter, across revenues, pricing, our solid capabilities. It with gross dealing go-to-market, savings, supply enabling is our related X%, to sustainable slide OI into important faster higher route-to-market in primarily the consistent note more volume and profit results excluding margin by offsetting XX. category of translated we weakness, dollars review turn year-to-date faster Brazil, gross with investments our leverage, profitability operating growing than and and growing than third is dollar to is chain investments, a growing with our income increased headwinds A&C which goal basis. incremental volume mix and improvement X.X%, and partially profitability performance profit on

A&C. demonstrate posted to rest growth and Europe performance marketing and sales Germany, was X% Consistent strengths Europe of U.K. sales Adjusted partially with excellence our OI XX, in particular targeted in robust by quarter revenue marketing due higher standout continues quarter. very regional volume by Philadelphia growth. and another with results. the and deliver the alongside business strong driven chocolate excellent in Eastern to in top good Moving to dollar revenue slide double-digit growth. on volume franchises, with The also grew delivered a results, investments, brands with revenue great by leverage, Europe Russia, our turn where of X% execution. Europe ongoing investments, sales offset and the and all QX,

of continuous India much strong showing AMEA X.X%, attractive backdrop. trends across an market grew execution, behind grew double-digits and region. the

a driven show gum. team perform biscuit consumer-centric just power new We of by another meaningful speed, a continue could out large that more grew business decision-making. in both agility, our XX%, well-executed China us. of approach well represents for empowers while quarter the that biscuits first building local shy and opportunity to chocolate, commercial and The in

in biscuits investment operating income dollars by leverage continued by Southeast solid with in AMEA potential high offset in increased markets. chocolate. partially increases growth, due results XX% Asia line top growth from grew and mid-single to digits

Latin America candy, a by posted Revenue strong some decline primarily in mid-single excluding and growth due while mostly category beverages X.X% losses. share driven in to grew in by declined Argentina. to powder Mexico X.X%, decline, digits grew driven execution due Argentina. Brazil inflation-driven softness

that Brazil see to due as volume approximately primarily additional Adjusted this losses and in America Latin plant the XX%, powder consolidation issues some the to in in as by expect dollars category volatility in coming caused well OI quarters. in We beverages, waste costs. logistical declined

are QX, on to through and continuing to issues, work progress see expect an somewhat absolute these wins We still in though basis.

supply solid America more strong QX, in alternative due waste North in Oreo, to belVita, effective our share results. American performance chain led channels, biscuits. Finally, share the all marketing in commercial Improved help and X.X% and execution fuel innovation, providing grew another these North committed by in pricing quarter We remain U.S. Ritz, and in by region delivered grew and pricing to biscuits grew gains The investments. and improved as results. with consistency sustaining X% We region. reduction OI volume dye mix for in almost

spend categories me on a highlights. moment Let

by U.K., year-to-date demonstrate and categories basis. growth category over as of a Our Germany they such areas to sustain continue a and health some chocolate, were we total of the long-term. and Russia, U.S. with gum. three fundamentals, our encouraged category and categories, of key can approximately believe geographies, on to This growth. the China many the continue of growth We India, In biscuits, remain includes snacking X% X% China driver

Easter shares for held or improving year. mentioned As second category of the in gain trend share overall halo Overall, resulted almost season from an chocolate benefiting overall is before, and subsequent the one specifically past effect in accounts These XX% quarter consumption. is Mondelez. our over percentage we overall evident which of points consistent This growth. tailwinds with on prolonged for a we of our flat and business,

China, strengths Our our grew and revenue grew biscuits Approximately approximately of share our businesses. XX% business or and the including in grew or XX% gained in grew grew this In revenue in held share, including X.X%, business held held of X.X%. chocolate, and revenue About slightly. category, our Russia. France, or Australia, U.S., revenue Brazil, our this XX% gum. Russia of India business and share, our Gum including candy China, U.K.,

by quarter. equity This tax operating QX quarter. gains and in in the to strong the Now, turning EPS JV driven growth on EPS revenue results grew primarily slide the from benefits the reflected XX% XX. income

and free our We conversion full-year to free through of remain cash move last cash well-positioned delivered the on our results which restructuring, XX. cycle, and $X.X QX improvement to on is slide years feel cost flow financing balance that about I progress now year-to-date matured we target, manage refinance billion, We over cash flow the an over In to I'll to deliver due in continued sheet, on a ability in lower cash CapEx. make and debt debt. of also to years. leverage, thoughtfully wanted mention in October. we approximately raised to our good our billion rates improvements and late continue to September, new $X.X at attractive coming

three quarters. next slide, have returned deployment to shareholders X.X first through our billion we to the Turning the capital on

growth year. X.X% reflects a longer the dynamics not into and QX increasing at do are outlook, we the first Easter These as the extend the not revenue results, expectations season. Moving a strong of to our quarters our which year-to-date to three same as net included full-year This expecting organic we level plus. result, of benefit our QX, are growth

for our X%. adjusted to increasing also are X% outlook growth to We EPS

our $X.XX. tax to As of X% impact Netherlands. an $X.XX, significant that year line rate the QX the to income a X% enacted expected anticipate in apply from Please prior EPS estimating in to to favorability currency, equity we XXXX of which to of be adjust reduction note circa the the for when lap the we adjusted QX investment we to reminder, expect impact in due related then in JDE basis outlook

We in be growth profit where will the and far, comparable be upsides profit partially expect initiatives. with to underlying performance leverage profile so increases volume reinvested gross

geopolitical within events, are anticipated this Brexit disruptions Additional EPS other or including outlook. disruptive not the hard

our billion perfect of managing share to We now shares returning the than little as committed remain for important amount shareholders share we XXX levels. continue repurchase meaningful million leverage our snack repurchases on more program. repurchases to to be a and QX over in approximately We business, year-to-date return component billion, continue capital an $X.X X.X bring to of and current to spend at thoughtfully. repurchased full-year the acquire capital then overall expect to and to We shares

will based shareholders We market a conditions. operate and results approach aims for continuing disciplined to allows for which flexibility continue with to on optimize

unchanged. free cash Finally, our remain flow expectations

let's open With that, the line questions. for

Operator

Barclays. question first line your of Andrew And from Instructions] with [Operator the Lazar comes

Andrew Lazar

Good afternoon.

Dirk Van de Put

Hi.

Luca Zaramella

Andrew. Hi,

Andrew Lazar

there. Two questions if Hi, could. I

of First, you visibility maybe Brazil of got impact challenging like Brazil, on there, deceleration takes mentioned, updated as in global in if sales were know wanted you talk other guidance other things full-year the And of chain Can it, your organic X.X%-plus, quarter. you particularly was Easter, things of into and did explain why on about very your XQ. arms supply in beverages third mentioned you suggests to puts chain and around perhaps some can the of the Feels sequential well? Mondelez the then a playing Could you've think of that XQ. like that, you headwinds the light second, in versus but more accelerated growth, some supply last bit there much. category I out discuss really Thanks and much some in quarter powdered know challenges perhaps you how the the parse a such? as got

Dirk Van de Put

with then maybe Okay. maybe Brazil. top at Luca I'll and Well, the start discuss looking can line,

strategy The working say that like first well. is thing would I to the is

consumer-centric And net year-to-date developed emerging saw and we the quarter brands between on it's in and increasing we goals. this all expected. motion price. execution, working with than in our the global organization mix ago some revenue volume pleased a about it growth quality and and also our we We Everything there. to year faster we business; markets is as or as between markets relates probably speed, good and see above progress. our mix local balance results, momentum out and are delivering are and We in put The

a And pointed since which the our out, be in strong, And that challenges EPS in full-year that, up -- player us Andrew. America, we do or major lower. that that. yes, it's out, we're Latin we many yes, you have cases in have some QX, QX by little revenue as play say call X% but the is keep category In categories. profit would cost Andrew, you as a from growth to to is in that is I year, combined otherwise it is top performance net will did our outlook means working out expect OI having no the and if gross an very net with season the into pointed discipline it we longer healthy X.X%-plus us. effect affect -- We mind overall shows to line revenue X%. we're can have thing equation, driven through first bit the this will growth a the an That and we I lessen Easter say, of like for

lapped which also a year so In we Europe had beneficial had that wave benefit. heat QX, us, the in we last to was

rate so not we the all will between not categories think that reality. And And in to somewhere QX any of see QX. as we that a the we've saw our of go seeing that categories X% back And we time in are we these in to the feel around will benefits. fully growth, X% X% X%-plus normal overall growth been

on share investment capabilities, to but us brands, to way to the to have it would to on but remain little on outlook we our see our say, XXXX our XXXX, for We'll it or give categories improve again a in when you As quarter. will the have the QX yes, that's bit at opportunities we we the year, and our about market we're now. potential in but this continue I keep looking relates full report first right QX driving big earnings, happen Brexit, which didn't a mindful affect an increasing

Luca, may a be So, bit Brazil. on

Luca Zaramella

saying and Yes, let start market. Brazil me just that a for by complex large us maybe is

the that portfolio there spans a Mondelez We much all have categories that globally. clearly across in big pretty competing

We have in of QX we in anticipated impact negative a entirety the LA entering part, impact negative of quarter that this most quite and was year. versus we good brands. set had the you as material that local shortfall And explains a profit global the for frankly the and had say, last

you are said, two-fold. issues As the

addition some ended up in caused faced discussed that startups we plant We than line extra logistics last saw accounts issue delayed We some we to. transition I said. as first we cost. quarter As more this the to in say up of wanted for that, we LA issues. half extra products material I in pretty and much closures the the we cost. gap quarter, And Brazil, had would in were profit and scrapping ended in

which the versus in fact profit some part and us resulted bottom in market trend beverages, bit powdered the category stock quite of are and revenue quarter. declining declining about a what and is our both moment, challenged we category top the first material the a that saw line. compounded The shares had issue a at of is QX the by in declining. we in out and of year. second to the trade share The accelerated in take terms And environment in And is for also itself category shortfalls, that

as very clearly making both some are fronts. we XXXX. in in we get issue we supply will chain. we said QX, materially enter on working QX, we're the as should So still our and have progress But good impacts better but And with

year, margin share my would and that cycle to will we both in QX written that a are couple and the recorded X% the PBs, remarks address last and in take both said some of growing the I dynamics. decline things. to remarks, I us issue more materiality virtuous highest NOI on the our of fact issues your like of time working. a category is bit also sort For accentuated, to year-to-date GP, basis. a in Brazil, are you or as for little gross lapping the with the opportunity provided reiterate the question the is it take Despite,

out I when take both are margins, As gross you said, year-to-date NOI basis. Brazil on margins up a

SG&A leverage planned. delivering we are leverage volume We as the and

We continue discipline. cost with

ambition increase for is savings. see GP more on ZBB frankly a you that confidence gives we in OI of think an we to all than working, will I And and embedded behaviors but the me good number That quarter model the the deliver quite in delivering SG&A. these and number grow long-term have revenue. A&C, that includes are our

the what long-term in algorithm I think when you not we big but safeguarded. the the things is and So, in of working saw strip have in is Brazil ideal quarter, scheme it we mind the in out model

Operator

is And from your Stifel. question from next Chris Growe

Chris Growe

good evening. Hi,

Dirk Van de Put

Hi, Chris.

Chris Growe

first Hi. high I a just question. had kind of level

new lot more how to playing products? a get but strategy about think your business, are to of of you have sense the barring of sequentially, and is made curious to of marketing how playbook executing the not the this the on you occurred trying a your you like, this that's different revenue some quarter? this I'm new just now maybe into types stronger and things As you that's just investments, so make, that growth for initial unique strategy Just investment quarter-by-quarter, to wanted developing moving moving

Dirk Van de Put

first investment program. Yes. multiyear all Maybe it's a of

A&C, less want increase keep route-to-market but than increasing on year year, this flowing and our year-after-year. so probably we on was in our next an are innovation. increase of And We year investments, in into to profit investment investment R&D, and our the gross this focused to investments,

Southeast yet should where they but world are our have was if talking means fourth which are opportunities, continue. local we what on which us third India, change. on that. years to and always brands big to can like or for and keep tier you not not still forward, brands, for do more be investments want right investing, cities. go If to about do areas and these And keep I see look where the we have going to in expect the of Luca So, to several I level at for same cycle, China, the substantially imagine still route-to-market I particularly we in the Africa, places investment we putting on virtuous we We be that doing about think want where need investment. of this have Asia We accelerating, we

we of continue R&D, moving marketing increasing years going to are we in and want in say it's more trying on which next value top, a agency, do speed, to within year. media. quality year, agility to sales which we of also done less will to then push more did would that investment I a drives same bit continue the go consolidations things three invest we and we on to drive are ROI largely gives faster And be into apart quite going forward consistent our the us maybe investment, from the working point and this globally, like We've our are but little than to also hard also investment, and more buckets we are that the we execution of of spend. A&C on And our our working in.

out working for continuing long are us, that's so. do and we still the answer in see continuing, So, a upside that we big maybe feel a just to point to that there's we fact and investing it's where

Luca Zaramella

-- I Yes,

Chris Growe

Luca. ahead, Go

Luca Zaramella

a for comment will I second.

single-digit high Investor of that again this growth we OI you single-digit in gave mid at the gave Investor EPS Day. we is that the and growth Day guidance you All for at contemplated

Chris Growe

you, Thank forward. guys. Going

think the which would one is is the the factor say this that a if of pricing is you look could, to of just that? we on cost And I -- that's way gross question, sort here, coming offsetting about if year, pricing right is inflation? So, other net that Okay. costs, margin at not your through

Luca Zaramella

particularly is it enough I'm pricing. Yes, that the think quarter I volume top the off in is. fact line pleased about our

in it is by higher emerging bit little see bit inflationary where a markets growth a Clearly, in pressure been Europe we than region. mostly pronounced pricing think driven and varies the by in I little North has Europe. America, volume. more

North report see strong growth happy I this with pricing. clearly and think America AMEA returned growth you to volume combined that I'm to has quarter. volume

is and really margins pricing bit So, less emerging which terms, we relative algorithm. we markets, higher, more It more developed are the like little see and again in overall, where we markets, volume volume-driven like. a in

So, the frankly, that see our quite of offsetting it well. quite we things, inflationary covered also in exposure We though, commodity the is because and balanced is and big scheme pressure. ForEx it is quite

don't moment. be I P&L to higher our at we impact but year, to have the hint you mark-to-market, would bit going So commodities want pricing than to see in little ForEx any what next a if into and the

Chris Growe

the Okay. Thank you for helpful. color. was That

Luca Zaramella

Thank you, Chris.

Dirk Van de Put

Thank you.

Chris Growe

Thank you.

Operator

Your next Morgan from question comes Dara Stanley. Mohsenian with

Dara Mohsenian

good afternoon, guys. Hey,

Dirk Van de Put

Hi.

Luca Zaramella

Hi.

Dara Mohsenian

can year So on companies drag first, And Brexit And of quarter, start it strength ultimately noticed second, slowdown bit very a the issue, then Brazil the the uncertainty on QX, expecting this market in to in the next double-digit give share in dissipate? obviously of a it'll see in like growth, Luca, clarification, U.K., that just linger revenue you to a you QX bit similar really QX, when magnitude didn't CPG sounds are this growth? around just relative in to strong and more have it's though a terms what drove detail fruition you even that category come momentum us versus month. some then

Thanks. you impact in far have going forward? expecting QX, any there any seen deceleration so So,

Luca Zaramella

comment I'll in bit here. a on Brazil, U.K., Yes, maybe the and little impacts on the

impact QX, will been, in that an be the still on QX the will substantially impact QX lower. So, Brazil, be in biggest highest both but impact and actual know, you that's

entirely the Importantly, we year, sold. or next be as supply solved enter chain related issues fully almost should

category. still Mondelez will there in of that powder I big is Remember related issues a it see some is and think so we competitiveness to summertime, in beverages and consumption. QX,

powder might in QX. still PB, be related there issues some So, beverage our

chocolate on is cylinders, think back QX the all frankly was hot last summer In a the U.K., of it and hot. up, the we on that I category heating quite are is quite year, fact

Cadbury market gains. to, in alluded with Milk Dairy execution Dirk said So, very actually there and seen campaign Milk that we gaining of have or share. de-cap, material but QX working share is Generosity well, importantly was Dairy clearly Cadbury the we're a and the

So, we I also are is executing say, but around quite category. well other good the biscuits, which chocolate, would around

So, with pleased the that we are very execution market. in

Dirk Van de Put

I slowdown And this to as Brexit the numbers relates talk add testified. it stage would about as that we cannot worries, at any

that see course, up So, up it, of but necessarily as goes for believe the we at preparing we category down. is going big to categories, moment don't -- consumer go the down we're swings not sentiment and snacking also our and

consumer little So, we a hope be big from protected sentiment will bit changes. that we

Dara Mohsenian

Great. Thanks, guys.

Dirk Van de Put

Thank you.

Operator

Goldman question Your JP comes from with next Ken Morgan.

Ken Goldman

Hey, good everybody. afternoon,

Dirk Van de Put

Hi, Ken.

Luca Zaramella

Ken. Hi,

Ken Goldman

wanted I know either about willing of companies but think about how I including can bought there's impact just you potential way from it. wanted your have we and you're quantify said, some to yet, to no ask what, Brexit excluding and you in guidance, times, "You or I any couple not talk specifically have a Brexit XXXX know to --

of guys years, you case." should the maybe that yet? little just sense when our said, even get just think I a out guidance So, we're just on to even about we And consider bit not a are companies if am in risk we to that you going of spectrum, in where into other "No, bake who try." trying

Dirk Van de Put

the Yes, at will say I really would know can say of in scale don't type we quantify part what where really be. we are we it you larger a Brexit cannot first it,

done, borders, we into include book forecast, always we thinking, XXXX and have would we we up have our that to We need packaging, and We need transportation. That so that we which Brexit short-term have inventories. Brexit is we devaluation a and be hard and to you consumer and do our where of stock for is always that disturbance will the continue do, for the to also we but but for that's effect in a the need included if raw at could the our to with increase so, on. included larger our not And included big will a more us. bounds Brexit not materials reaction, of

Ken Goldman

you're Oreo a capitalized I just think use whether I DSD system U.S. in recently, that thought, you so Thank big the to then distribution, I distribution of is always the now, strategy, C-stores. conference of guys necessarily and at sense of lines? to didn't it's better those you enough Lazar's maybe talked to thought, going I improve to always not moves what sort about sense wanted get follow-up And of being and along are C-stores, a not you. and making have what good Andrew opportunity is, get your tactics on but being necessarily forth. you're in some a gain pretty Oreo's

Dirk Van de Put

work of we the our all, Yes, relates to as Oreo can It C-stores. first going a that lot a I there's while, of approach, it takes to on works. say in have if it in background, see test

relates as we're bigger next to strides it that. expecting to So, year, make

that our DSD to system Just it's works Obviously the in supermarket a work clarify, does channel channel. not the us. C-store in for

relationships with the are programs right expecting are stage system progress. the we we next not So, and some show clients, have at significant will but up year we this that, use we're for and route-to-market that the building planning we to do DSD and our right setup,

Luca Zaramella

the are biscuits C-stores we for are and think as C-stores, think not share I sharing well. look having we And yet, if the as I gaining you market in in as opportunities at high but

Ken Goldman

thank Great, you.

Luca Zaramella

Thank you, Ken.

Operator

Your comes next with UBS. Steve from Strycula question

Steve Strycula

afternoon. Hi, good

Luca Zaramella

Hi.

Steve Strycula

excluding it Luca, to how a revenue gross I a the I $XX you out profit question question quick the cleanup to we think have quarter, $XX then million a as specific on So, drag about should called to And context line, million think the margin, Brazil, QX? follow-up? last

Luca Zaramella

is the I about same number, in think ballpark. it the is round it

P&L the coming of fact one is fruition. out you good, QX that category. in you as look that the margin all on into you But at excluding volume on the said, really some model last to PBs, will had is as beverages, virtuous not relation clearly I in highest of and see year-to-date growth spending Brazil, de-stocking in the be the the I gross year, the year, think now and numbers components when we're a predicated it particularly basis, powder we that see on called I that particularly shape

Steve Strycula

you. Dirk, U.S.? bigger then, into medium, China near, entered us big and the What's can has what Thank through about markets? markets, chocolate latest and specifically the years, of but not scaled where few And the both necessarily last pretty opportunity those walk for long-term Great. your some Mondelez thinking you the is

Dirk Van de Put

are now opportunistic against. X%, very markets would a market the a Yes, an that were here We in X%, to U.S. markets would we what I a lead trying up same both between aware carve may the entered and that. from I China somewhere share always We approach, bit niche little That best have would both as us. for so that significant say largely big would say X%, as out of we to as case. be players in be can.

of capture wanted a just So, Oreo largely major a as didn't opportunity we We brand. the using major or have a want sort have, to to that strategy we approach.

captured better we far are we to brands approach. to chocolate what we we a we first -- U.S. the enter world, opportunities us planning both into major two big to have on around feel other increase markets other give China on before a and but return, big biggest, So in and have those want are which chocolate in presence are markets we and which that get, want around our were two world, planning that pushing or not the those chocolate or more We focus

Steve Strycula

Okay. Thank you.

Dirk Van de Put

Thank you, Steve.

Operator

English Your next with from is question Sachs. Jason Goldman

Jason English

Hey, folks. good evening,

Luca Zaramella

Hi, Jason.

Jason English

covered a so ground lot far. Jeez, we've of

they a make with are margins it and second XX quarter, to a different the I history, margin meaningfully us made that your in them by chain question. many And against which bit comparable larger around gross I looking off that time? I'm nature, us gross a help durable between that are little Steve's quarter. Brazil fell a Yet issue. but not this of back but sounds of -- to how prior what just just up are I build here, supply understand aren't quarter So trying the to more step-down? of bips, back like always appreciate I'll bring of you sequentially to guess drivers third can over comp, sequential year-on-year molehill a fairly and question out dissipate but wanted you mountain ones may

Luca Zaramella

Luca. I'm Yes.

percentages, look about under If XX%. year-to-date are think you basis, really I we on a at

I closed we last think at year XX.X%.

few it part chain, to it. really So the extent and Jason, to Brazil. we there powder into there On to don't the to is fixed. points, we besides is beverage is structural should it are decimal certain want supply be points And dissect anything if the we of issue, think, dissect a of going behind. Brazil I decimal is I yes, again, next that part year, persist as

as look think of there. I gross you volume components delivery, at profit is the the all leverage

line into the X%, volume you is at a think both that that I provides good into look that GP the we coming I material think and fruition. line, overhead number, I mix think is the when leverage see and it

gaining pricing, of as of of and that biscuit last we you the up. value terms announced I share. are think specifically, context, and In volume couple ways market, at In going year, in the you pricing we U.S. look a market see

unit, years, pricing, it is a business markets. than lower are there, that clearly And unit It job have a is markets, both emerging gross answered is quite on the front and in and the increases. a have, and business composition it the tools productivity isn't required. little think array in because inflation than frankly, labor pricing and not of it commodity inflation, logistics of the we pricing taken sophisticated I a price we price good discipline architecture, and we optimization, out little productivity, we is ForEx emerging in think going bit we big costs. I before, intensity, the facing more I full the bit including announcing is more bit little at there, past previous if I the did spec promo have that and as leveraging the look And developed by but

embedded So, gross say, myself of leverage?" number the bit issues dissect QX I point it attributable with I number, outlier. for should answer is Brazil was as Brazil, to I "Okay, The a commodities, the see one higher take having in net fact us I think about. don't worry the rest is year, last on us into is to of in of components, the margin I I volume little simple price "No." year, that something Do think an productivity, where it material attributable that the is mostly we and context the a structurally than is the XX% Brazil

with well getting that, on line productivities marketplace. on I think, volume pricing inflation see having continue delivering working said the in we the and we in need to

Jason English

I'll pass thank well, on. the you appreciate I response. it. Very for fair it

Luca Zaramella

Thank you, Jason.

Operator

Evercore question is ISI. with Palmer Your next David from

David Palmer

Good Thanks. evening.

Dirk Van de Put

Hi, David.

Luca Zaramella

Hi.

David Palmer

outcome more Hi, brands management to bit Dirk. about local going, talk that the talked past, about you've powder support, getting little a the one that marketing are that, In approach would could would level and that be you your a and and local country be I brands numbers accelerated on of quick country planned, growth? a be are that helpful. local those managers investment on brand you more return level had terms would follow-up. have on in how's And Any spending that getting as you

Dirk Van de Put

and question on that, local the to we're also, the a we're are return spending brands, and acceleration answer they your short the on is, yes, more of yes, Well, growth. Yes. an getting seeing

have for they're X%, local around in would look So 'XX, 'XX they X.X%, higher grown about were brands, instance, growing in at if and even our they I year-to-date QX.

on we our we we're So a good feel getting that clearly brands return. see effect and the

they're Of grow also connotation. be is health line biscuit it brands, which local Pacific brand, feel course, very flavors, is China, local a and a and would example the in to we to local there still which on has with there, want like more. and the to brands adapted those An is in markets wellness keep opportunity brand about but we investing

So portfolio yes, Belgium full and we very we our and think effect clearly, working we our need revamping France. which consumers. local seen plays clearly well, to on the around of a we're world question, your have And And brands there's answer well. brands again, offer really in it's these that LU number an to to a

David Palmer

that approach, be country and the level like more And you for get Do see more inorganic the them that the would then point that start related a add bigger and wish they beginning to as level, happen relevant now and up they're you more brands? think I more to by there'd those getting that to wish and stuff of seeing thought we be in by becoming around could to be a be that would list bolt-ons that now, acquisitions some of country you'd and list, building bolt-on a story. would have part is that, look of world, growth that as takes at inventory

Luca Zaramella

yes. Yes,

largely I would our evaluating, We say are acquisitions. do bolt-on are us in constantly to the bigger for what opportunities markets,

growing we the our course invest in lay it snacking the out, place, sorting of if recent clear and market and Of to the brands. But first have brands fits gap protein refrigerated based we here landscape nuts. their fast. is largely like in acquisition on differences as local bar we the very Snacks a this with own something see That want don't in in Perfect we U.S.,

disciplined. are we engaging, So, as we we see opportunities to clearly around the world, these be try

of will that us be only and on that. in financial We for a revenue volume us, the we for it net a brand. the yes. when want significant runway we effect not do answer And makes in the so end to large of And difference and would buy but yes, sense significant brands hopefully do it will see becoming be a towards not coming we again top, the to will make quarter, see

David Palmer

Thank you.

Operator

question Nik with Modi Your from RBC. comes next

Nik Modi

evening, everyone. Thanks. Good

Dirk Van de Put

Nik. Hi

Nik Modi

could Dirk, answer how Maybe are ones. you maybe hi, you? just two quick

is next expecting, those you get kind then occasion, big over quarters? second in as initiatives how few Union and latest just we wanted are first DSD, that. areas just the And The and the breakfast any what if latest Thanks. the savory opportunities the your should well have snacking about of is, really thinking talking be as your to on state working on of

Dirk Van de Put

think the some we're like fuller a U.S., us allows It some as strength. test expecting these we as us we're bolt-on about Okay. for system. want Maybe on to in better pleased in seen time not past, that, we've way with share but And DSD and gains we we the is do those service market carefully the if of been have our it do over DSD think DSD the in tests it DSD And some our new overnight, been putting we've bring customer we want highly of to DSD a been successful. testing to our very important brands DSD, a acquire presence, we've the to category. can and said is our I performance on have doing system Obviously, of and them and that system our call very of pushing we've we the been store. onto we brands,

like big And boost on so will test which our as to we things across to U.S., putting go see forward, you DSD campaigns will the us be a start brand. the

of we our some So perform big see we of remain new bring very DSD But a to our system. DSD clear committed brands. expectation onto how a executional to brands opportunity DSD current have will our for we and also

the it to alluding you understand repeating occasion, didn't mind breakfast fully relates were to because it? Nik what do I you As

Nik Modi

trying to for a those growth just obviously sense; company. the opportunities I'm Yes. are get important two of

we initiatives understand looking few at to that businesses big wanted and just those quarter how quarters? be your this next are any should there for So performed the what -

Dirk Van de Put

brand mid-single energy. doing Well, quite a the gives It's a well the positioning a of you is hour brands that's that BelVita we quite digit it's are gives sort moment, growth energy, in performing on breakfast and particularly at you a is occasion slow a biscuit the the that U.S. well belVita. four release of a

forums Our us. the belVita the but going think very bars belVita for potentially That's also only also make cake the more to for only for the not which not of ingredients it be soft in take make that to is also active expand breakfast different gradually mid-morning brand branding I into U.S. from snacking, to a happen. breakfast instance, the offering into into a range going it but potentially and in and could the for world our evolution a interesting, from a perspective, and around occasion credentials focus really fuller has brand offer

Nik Modi

Excellent. Thank you.

Okay.

Operator

from question Moskow Credit is next Your Robert Suisse. with

Robert Moskow

Thank Hi. you.

Dirk Van de Put

Hi.

Robert Moskow

characterized didn't quarter give as as look very was to this as is then again, year I get this reinvestment -- to so SG&A going percentage are wanted a of the you've clear the reinvestment, was a of think sign but reinvestment would and sales at as people that decline just a been business, I that there model the ex-Brazil, working. you normally the one to

in elsewhere Brazil, lower you estimate any can million missteps this about sales So Brazil, secondly, in spending you around in that Brazil confirm result globe my And a profit - powdered spending but kind that was beverage of was bit but cut in elsewhere. is not you in desk on in maybe the weak question knew that coming here Brazil. didn't $XXX in the kind that then of just the a

Dirk Van de Put

first question, So, comp the we of to anywhere. your didn't part

Our basis. up only are more QX year-to-date PB materially expenses than in actually

we the things investment, couple a protected So, times mind there are these A&C to as of said many bear in there.

is more media. The towards we working first skewing one are also

incentive. business is certainly in is So unit a higher media high on be in to sitting And year-to-date that in management working the management that A&C is even face second number sitting on reductions A&C basis. this mind terms -- of past and which terms also the that kept element table, of of is any of terms and in at quarter the the total management getting that four in in but not has

going are the through the profit do quarter delivery. important an under A&C, a in not is a we last year, end from in the going and profit see of I a that is pressure a deliver to copying context think to get terms thing we that and little number going even in if the we're of is at where of we're and past, step forward incentive for copy -- maybe So, count the bit

some but due see clearly it In it did Brazil, that, the was to comp didn't working. fact A&C, we we

Brazil, not I it of we blind what, say, anything let's long-term. categories going north to $XXX do in The regret and So, yes, is will but in spend want medium we PB to whatever, going not and be we're matter million. front, are reassure to no to that the that

the As I challenged. category bit little is said, a

the and brands local is big Clight, have Tang there in brand, Fresh. and namely, called We which

We we and are point, element second the are more taking facing for category, bit, -- category share a capital is propositions consumers. is the element and it low the from is and propositions pressure point and one the from shrinking a so second CSDs getting competitive pressure are price

more are on full hopefully plan a there but we bring be to place both really effect will share is back some for bring in So working in comprehensive positives, plan up our we a up. our will beverages of little it I which have capital the back for and time and think bit and that take

Robert Moskow

Great, Thank you.

Dirk Van de Put

Thank you.

think we here. I the stop can questions

the are the of at top We hour.

to the performance the quarter demonstrates our our results, wrap and up, brand of and strength power it our So, line portfolio. particularly core third our global continued categories local top of unique

drive Our our business results new continuing strategy focused units. engagement on is across and growth, execution culture and to

the that excited equally the the about opportunities strategy. We in are see portfolio, by into next adjacencies, in We the against momentum further particularly our our increase our gains growth for We're our or of ahead our encouraged share expansion market see early reinforcing year, categories. we and of company. that driving existing us, potential for progress form to of

shareholder going to for and long-term our attractive focus value and the on strategy, company is Our forward that creation. ensuring well-positioned remains against continuing sustainable execute growth

and Thank for you in. to for interest you Thank you talk in your quarter. the next dialing company,

Operator

Thank participating. concludes for call. gentlemen, conference you today's and Ladies this

You may disconnect. now

Mondelez International (MDLZ) 30 Oct 192019 Q3 Earnings call transcript