MDLZ - Earnings call transcript Q2 2020 | Mondelez International, Inc.

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Operator

Good day, and welcome to the Mondelez International Second Quarter 2020 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 hand the call over to Mr. Shep Dunlap, Vice President, Investor Relations from Mondelez. Please go ahead, sir.

Shep Dunlap

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

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

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

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

and a of In our Luca update release non-GAAP GAAP find within reconciliations can provide earnings presentation. will back our you comparable the the will and business You the Dirk financials GAAP to and at through outlook. then take call, measures today's our

We I'll over now Q&A. turn With that, will Dirk. call to the with then close

Dirk Van de Put

Thank Shep. you,

by execution start pleased our sharing with has results, overview and QX performance of off strong. on we Slide our me Let business resilient, been are has our been X. our Overall, an

remainder we the our some wellbeing is at it situation preparing remains priority opened COVID-XX. the risk, the the areas the that our the first have navigate Our our around volatile reopening already of safety of are will as are for world. and high clear year. of we and or least communities colleagues Because offices still remain And of there

colleagues and well. very keep doing also proud are priority remains I our second business operations of what am our have Our running to continuity.

continues to Here exist growing because to of remain around disruption business number of also, the world. the cases, the risk we with need vigilant

has that markets Our good. different the impacted for COVID overall QX are ways. fact Despite quite various results in

weather supply as to been a as reassuring that excellent the commercial solid. in have as our our very us us as execution are portfolio business have environment. chain helped trusted well well brands in challenging execution fundamentals high of superior Our operations volatility our Particularly

For plants line our performance. of in approximately instance, are historical above or today, XX% running

momentum this the had our execution crisis, already have share combination and market to gains. the of our we brands strength good going into helped of drive unprecedented Although superior

accelerate has While environment be to a strategy we the opportunities circumstances, very in to we but and see changes, our strength need these proven areas. business volatile, see don't do remains certain globally so a difficult make down double to

our market stone anchor our of cost momentum, to instance, cycle are in and of HX. brands virtuous strategy. investment our overall due some savings we That our brand is increasing in current in For share investments momentum, our an

are continuing, we well in of at see we for the to snacking to very reasons. recession, expect half, volatility are but Overall we Looking positioned categories. in category, the tends even times generally right meaning a several be second resilient

categories, brands are brands global. the of both our local most in Our some preferred and

and of made agility the doing caused well strategy in the confidence the better. environment and might diversified, finally, in improvement in course confidence for Despite board, on this to consumers, across where people needs while by culture delivered us COVID serious years challenges half others as be giving mind. Switching fast results announced very And Slide to almost the two channels maintain we responding one footprint meaning is geographical advantage solid decision-making effects well ago. we X. second trade as sequential COVID an location, consumers and be Our local-first our might is the with that to are our impact local and resilience, with

stage markets were world the improvement or time, At that The more well slowed Our emerging given and grocery first in two for combination gum an in half. we good in channels The retail, same that down pretty given good have such consider significantly, the declined of country X% away-from-home give at the developed as of business than I many normal the category, above every the circumstances. most trend. world business average, There were the these which key during sequential good quarter, X.X% the and QX. lockdown. they in feel travel they with is markets. some of are another, our traditional showed this almost growth. exited and news the during markets that one and as revenue and extremes parts X.X% is was Emerging the growth affected an the in trade trade is channel about QX quarter quarter, growth a

maintaining revenues key reasons. of are year-to-date in or of markets, We driven representing around gaining by in XX% share is This XXXX. a number our

consumers seeing are We products trust. turning and to they brands

category, We around a the are for segments better that consumption. there many is these brands shift also at-home our have of to world. Within fit trusted

has So pralines stronger providing we our quite lockdowns in with competitive a us chocolate. segments a like supply are And labor functioning well versus bars or advantage. kept chain in throughout tablets these or shortage of

In adjusted to $X.X Our the cost-containment but was first cash X. QX only extra flow flow. Slide very we fell free costs, and first quarterly income the or offsetting Thanks our billion, EPS cash marginally. for half, activities. XX.X% XX%. some by dividend strong half. details, will to X% despite Luca Transitioning raised We provide operating generated our in grew the COVID-related the

initiatives allow crisis. this As does change. emerge from accelerating to will momentum, mentioned, stronger current even strategy our long-term our But not us some seeing are we which

strength in our the built demand second behind to strategies, increase capitalizing and half, on planning our a we are working significant As brands the investments media increased it and for share. growth in market relates on

our and as to our core making portfolio pipeline more core. the some is the to offerings, more fact make consumer adjustment as it on is context. ideal to simplify well to We current value-driving our to of innovation in focus copy are them the our our relevant an also advertising campaigns driven Seeing that moment

cost reduce customer our inventories our So SKUs we service. our of will our increase chain, and are XX% which and removing and supply sales simplify

also With increase on a capitalize the and taking efforts revenue we number value, there conscious, we've invest decided opportunities, of always are cost we of CapEx Out accelerating our potential this reducing levels. efficiency. at online. and were in to number but a the in only their look of believe travel of more In smaller on on focusing e-commerce, areas costs. particularly office well significant growth our management, the timers are amplifying consumer an many at we abundance execution, groceries accelerating which probably aimed in like very to year cost projects. caution, And as supply inventory fresh chain from initiatives and reduction we benefits Costs as is improving and initiatives buying essential our a key we're projects are with first of

of Finally, all changes are of continued enabled these our and culture. the by evolution underpinned

is decision-making in approach market. agile local-first adaptation and Our enabling

see we better work, balance them people can also our the way evolve of We helping life-work. with a

home. going more forward, time from we For see people more working instance,

COVID of Some due to changes will be permanent. the

critical resources redeploying post opportunities return areas to are be areas we highest will that and So example, with e-commerce. COVID, the as an the

progress ESG so, and unpredictable to volatile Despite in the not important Slide remain current believe Now moving we committed X. we environment, this making more and as is as to space. if ever,

items. now also and essential teams we $XX made PPE donations related other through of but donate and by product In have terms impact, cash and of social support as in-kind to million to actions than COVID-XX, more donations, cash brands

justice time in show Our equality communities company or to injustices other redress society. we, that the some and three there of colleagues, on ingredients. ourselves we've build listening our the organized business. and responsibility, a the supply actions of that We've culture we so is are in want our communities. supply movement. employee I by and advance on sustainable, along My action to have leadership in question, a Without society, also important colleagues and impactful helping to has spent We continue in our the critical measurable colleagues groups critically want generally and on area, resource heard our work for this and we difference. it's our no in In exist that place across racial been in creating that colleagues operate our make highlighted historical racism efforts to recent sustainable with and attention across chain, companies, the pillars: our

space resulting One or of this biggest COX. in impact result is the deforestation, challenges impact and the on the

continuing been ESG Positive the this am of hand are with XXX% goal Goods critical more Consumer quarter, launched track Forest that, of to encouraging the companies that on with the Forum, these meet to grow over recyclable-ready as finally, And our be work our This ingredients. our the other to Coalition topics land proud And fact used suppliers transparent we've Luca. CPG part I on to have packaging. it we of long-term on throughout crisis. I XXXX to we

Luca Zaramella

you, good afternoon. Thank and Dirk,

was We resilient revenue and despite of Second crisis. execution circumstances. delivered a disruptions categories given restrictions solid through operating positive share the performance gains, superior from cash in of flow the earnings terms and quarter facing combination growth, growth and significant

a and snacks than Prior gaining relative a Once due strength developed by consumption. share. continued operate divergence to more markets, both strong well, May. were despite our of number. during in the QX. quarter, challenges, indicative peers and March would are we momentum we developed Emerging pure markets, like into that elevated and Our broad okay. momentum to our in COVID, perform we cadence the that confirming were still to ended move especially and we doing late be saw some significant dynamic, basis how topline significantly month seeing and emerging. North gains. seen with I lockdowns, we was ability market both emerging developed to categories, mass you as and was might impacted this in momentum to we for retail, to the markets spike as America we are on in unpack between April, QX compared saw some context give of In developed and share well into April Europe as Despite to And

of and enforced On emerging in side, we April the double-digit consumers lockdowns declines percentage to were markets were restrictions. high as inaccessible flip These impacted to most significant operating curfews in We markets. us. and topline outlets with encountered

low-single As total digits April. in declined result, revenue a

we positive posted to emerging low in into began And growth. As improve. June, single-digit market our moved things May, and turned

July of to this expect as improving better footing. We into markets the trend continue these of majority growth on are

Europe also in retail, July strong not but We elevated America than as better North trending total company in albeit expect HX, in mass is and QX. demand as in

Slide XX. Turning to

world from and headwinds Biscuits travel retail was significant revenue mix from that positive includes three growth led despite Chocolate presented but at and travel comes lower by can retail. driven some declined QX demand slightly, see You elevated of volume growth world revenue points gum. headwinds seeing and more X%. pricing. is this by This than

In Gum channel growth in double worth has was candy by also mostly nearly by reduced in addition, noting digit, toward crisis. posted flat it traffic seen chocolate and in positive primarily gum emerging is away-from-home lockdowns May was that during India It impacted consumption skews driven and India. This markets, declined the as significantly June. and convenience.

as Year-to-date, chocolate overall preferred revenue Turning is Biscuits of France held investments category share share our beverage Page on we outcome. India Europe, gained XX% markets America, or in has the our highlights Australia, drove EMEA, high continue results. strong share biscuits, but share China U.S. have Vietnam we in out; to U.K. base, specifically, Zealand XX. of biscuits, month standing also chocolate; biggest three chocolate and and overall powder capabilities with Latin brands drive and as and latest in Mexico. some brands to ever period share, and improvement and with Brazil been. execution, More in our Consistent number a gained in along in share and it and our including and we saw the Russia New across and

held well with relatively of categories exception Our the gum. up

X.X% such the of lag reflect as some to retail it or that emerging growth effect convenience doesn't important and travel is unmeasured year-to-date of However, world market readings. note channels, category

review profitability let's on Slide Now performance XX. our

growth more in cost and were gross shown markets. equipment, As including profit expected, solid second time, over logistics absorption would line cost, bonuses, rate. $XXX incremental with protective our estimated COVID-related costs million, growth year's quarter costs during Ex emerging in lower the this have frontline last than

declined versus In declined us as America on as A&C both income the by to offset million fact, the it other $XX higher Operating X.X% overhead as decline much containment efforts across as year. gross some COVID as line in North basis profit which well in margin, for volume than and less QX lower cost to business a leverage previous gross accruals. partially Europe well due due the and to of by legal was offset enabled this impacted

expect will as more however, we to in we in still the half. improved than the efforts cost second continue believe QX mitigation costs somewhat these leverage We COVID-related through dynamics progress half, and with second QX, impacted. offset Especially

XX. driven Moving strong to grew Slide consumption. XX% gains on and America North performance regional share elevated by biscuit

X.X% retail, a saw X.X we the throughout declined DSD Our demonstrate several instant gains. drove the America than this increased to retail gains in which as drag of in America including value to operating U.K., North than will key Europe Russia network Gum channels, we as in keeping revenue but world chocolate, year. grow points digits, Benelux. enabling in move continue markets, gum in and the Headwinds and good grew where double-digits. income and share lower expect the percentage by stock posted in dynamic. We high-single in quarter. France, from rates, we share and was was significant the and its mass continued well down consumption XX%. travel shelf growth QX execution more significant historical North above as strength which

improved AMEA headwind half. in we retail, the expect of there July. QX, exit COVID is progress unless second market. EU expected second results travel by challenges Although the Adjusted are significant state greatly China in to year. COVID recover, of that and which as We the growing half we be dollars costs traditional to convenience unfavorable mix. to growth rate conditions with expect of and a improve in trade, saw relapse. of declined X.X% as material These into good continued more we on the a to OI and growth through return June continued much a should are less Overall, result constructive in world declined vary we double-digits.

digits. in mid-single mid it declined to grew India and and single-digit due closures Asia turning June. store before April Southeast to double-digit significant in May lockdowns growth

America due and additional the volume expecting markets, AMEA declined traditional XX%. the actions. and key income on to dynamics decreased lower-than-typical due are As are in by XX% second declined approximately gum digits we Latin In disruptions decline a in digits due the into unless see half, inflation-driven to and due disruptions to well growth traditional improvement significant trade. declined low-double shutdowns move America markets. in trade Mexico Latin to in containment high-single to Ex there on additional based dollars of we most this today, key Brazil, while executed Argentina candy. significant continue, operating we expenses. X%, primarily we cost by declined Argentina, AMEA to posted due leverage COVID-related pricing.

share declined markets. matter associated under did Adjusted due OI primarily a of an for that trends also Our in previous decline improving for see America were Western one impacted third by several We the by and headwinds to in XX%, Latin mix, the Andean dollars COVID, with accrual negative countries, year. most which accounted among versus absorption declined. legal-related notable

on expect the Latin to impact that We restrictions economic executing control, markets our in most can in remain and focused are better place and having we in performance. is We half share challenging given those environment the what second the plans in on the driving restrictions remain which America growth.

on move gains were which impact. Now which costs, $XXX grew north per on on of QX flow I'll cash half. by cash delivered impacted flow by free cycle in $X.X now earnings in more million XX. was our working Strong XX%. turning cash EPS billion Slide improved capital quarter of than discipline were We XX. eight our the $X.XX we means first as share free Operating a days. the driver to conversion to Slide COVID big

million, which CapEx as for payment half than more lower the mostly deferred restructuring. in had and well cash reverse as tax also $XXX We second will

to clear, thoughts to successful to JDE some JDE for a per our investments specifically as Peet's. at Prior more at and it our remainder I went in continue This JDE flexibility public places trades of now our then stock in be end our participation The provide exchanged joint a public Peet's JV wanted IPO stake the $X on around May. bar for year per this share the approximately priorities €XX.XX transaction, Our at disciplined. result of investment. will financial share, which value great of an Peet's. for and was the the stay for investment of we billion. provides we €XX ventures, the

XX. Slide to Moving

previously As number at limited to of this the key pandemic, visibility remains time a disclosed, in COVID due markets.

a we financial not are outlook. result, a As full-year providing

However, million; impact the $X.XX adjusted rate in rate. to by of expect we interest An continue and EPS revenue the X% and reported XXXX. negatively on exchange for now following market our low- based effective to tax expense current mid-XXs; to expect by translation $XXX approximately we

we're providing wanted will to the time, Although half thoughts share out. second guidance play full-year how not at I this regarding some

continue improving levels, America. expect that expected closures In-home And in is North be conditions many is to as on experienced developed markets our a and markets critical we basis. to QX. helpful investments in such late significant consumption expect behind We store drive make QX elevated which at to momentum brands in to relative

revenue continue how World side, some no to the know that, based evolve, exactly will negative one positive through is flip quarter to open there improvement America. expect a month up see its is be for although Q&A. QX. shutdowns. in aggregate, the travel expect With let's retail And in a to way on of it mostly we second what always in emerging pandemic potential third we of the and for trend. impact we the In will the markets, negative continue wave On expected Latin there sequential

Operator

Instructions] of go with the JPMorgan. ahead. Please And question [Operator Goldman Ken from your is first line

Kenneth Goldman

Hi. if touch you, for I your Thank everybody. and Two to gains. share me, good first on can. I afternoon, wanted

I these think, globally. brand America highlight perhaps advantaged factors of chain, Some which prepared struggles in positive some some due supply remarks. to you North other did But competitor your due gains, is your to your quite strength, obviously are and

some through So is walk what a spend marketing of just drivers in market share could year, as can half. back higher you I'm what think think one first expectations your are. half us the And off of versus the for you guessing the them. more about the you back sustainable drivers of little bit maybe

Dirk Van de Put

Ken. go Yes, happen. then Hi, are will and sure, then the gains pleasure. share I with a maybe into the what If where little we bit and happening think explain drivers in

across of said we've in biscuits. say, our in market chocolate. revenue First all, the so It's as of significant It share presentation, broad-based. single around certainly market gained is geographies, increase. in every XX% share not see the We I it's markets. in world important base, the we very almost in would It's and

biscuits France, in instance, UK, India. chocolate And we smaller Australia, also the biscuits but U.S., For biscuits chocolate categories. chocolate also China, it in see across

very the of that So good those on we increasing And factors our overall, see we some of is very It's brand. new it's that our interesting users. it, and it's brand brands. and global see also not just one our of It's our one brand. local widespread. of that top penetration repeat And our across

COVID there there, during So are the the I three. think fundamentally, reason? crisis is what

of as all, supply around had to market. performing have to, very you First chain good we alluded a

other was we the service competition. because U.S., not of in Not our better customer availability our say our of we much but sort points. that distribution, in increased share could the our You distribution level than markets, and on-shelf but increased only so

for other around or is instance, the a And in in so the advantage. markets world, DSD key U.S.

of The and brands to been other sort consumers know one our is the that back they trust. the And we the going world. categories in usually have strongest brands around have

all at an so it have, in we of category, segments that's or share we are we brands example, sort from their within of within trust. we that see snacking, Milka the by increasing then other Oreo, benefiting clear the also. And that are category you or them why And a an consumer if categories as some And look have local of at-home those consumption. see

difficult a chocolate assume than three away? I would in your more consumer that to. tablets segment Supply instance, the chain. will to say bars these catching everybody they going chain, are on do I the it's supply their better where pralines. traditional than is is go that or biscuits, big And drivers. better up say. For it's in When biscuits is Well,

stay the world, that might the seeing Although and as U.S. consumption, perform known for for do And simple other to more bigger not go to think your with going a what are in-home places trend while. here the having mix a to brands and that's while, is brands it I then I think some with as we supply to too. in sound. last the chain around is this

out clearly our about like that the before were market before momentum our already share point increasing crisis. this now change would this talking have We are to I started. XXXX. lives we well We to continuing also into

I to there a everything, year, all the also the fewer in underlying, us think in the notice. what half increases is then that to fundamental we're place. more business, then repeat of so brand. second share give working with should increase media our good innovations, eliminating doing users, pull think the talked in increase SKUs, And our was on that which going of taking brands will of simplifying about I important strength a that's that I significant give And rates with even our new also execution. And

pretty So optimistic. overall, I'm

stick. big this share I think that a market of part will

Kenneth Goldman

sure on follow-up, but quickly talked a bit then poke about you higher what know quarter And speaking of to marketing it you. talking little wanted giving you understood. I guidance I into third I to my were the the in today, make not spending, Thank helpful. about That's you're

the talked and simplification spending, of You business. marketing you've I ramping also revenue into you've up talked about the better talked But said. about like third your some quarter, about

as the all factors trying get a operating third revenue? to Is improved in among quarter sense to missing. it just I'm what maybe say? expect The some really it an you right reasonable is that year-on-year I'm in Is know well to asking too quarter third just better reason the this now? to increase is addition early in And EBIT. So your modeling and reasonable these income given Street's Or

Luca Zaramella

I I’ll… maybe can

Dirk Van de Put

Maybe to Luca, this Yes. want one? you take

Luca Zaramella

Yes, back you to on… I'll. Welcome Ken. have Nice again

Kenneth Goldman

good It's to Thank back. be you.

Luca Zaramella

little in you high as gave I saw said, of Yes. retail. bit percent see expect, profitability it are despite simply topline OI. Look, overall leverage. QX. not to XX% remarks we number growth was to expected fairly for a precise and is travel you return better to America XX-plus a believe a world is premature And Having exceptional I Europe to to for would QX going as a North better sure, give Certainly, increased few enough and number the with we we here, continue prepared but in indications we momentum. expect to

year-on-year COVID well AMEA a outcomes. expected positive going QX OI subside. Some QX, profit. expected to return see should again, are And meaningfully and improve, we in there is, of will better the particularly lower line on costs to quite COVID be, necessarily in as America growth volume Latin into QX. the cost frankly, but to is to not

I would expected be is Mondelez overall better for say to topline in than So QX QX. that

at is in market a coming here, in one. absent a biggest the numbers disclosure time. make which point we or of have one that is in see relapse But As good more material we I or obviously, to this issue than July, in look at

a see Whether the I to actually As far all still line in be am all are will cost QX. we I sure where putting not there bright, think in improvement the will from will place actions will COVID-related we into it come be QX bottom in as full concerned, today. is as fruition way sequential be there and some

see So today. improvements QX, see you even QX you we but see from will more will what in some in

Kenneth Goldman

much. Thanks so helpful. That's

Luca Zaramella

Ken. you, Thank

Operator

of the Lazar from your sir. Andrew And Please question line Barclays. next with ahead, is go

Andrew Lazar

these year-to-date can terms key down Great. Dirk, very in reason the recession up Mondelez around gaining stage organic even XX% Thanks some manage emerging in realistically let's hold is of, category ask of if global of growth say, least events X.X% some concern you X% over us through much. from and recession? with markets, due categories. global delivering such. what year, growth this economic to growth or guess, I at I at share to with for macro and pricing of from remind And would Mondelez guess, ability slows Mondelez unit bit the trading, holding category I in sorts here, back a some

Dirk Van de Put

can all, I explain Yes, Andrew. – first hear of bit can certainly And I you, yes, little better. good to a that

measured travel channels foodservice some on. growth measured First not in that retail it X.X% and included in are world as categories, to of the as of the all, those relates explained the and categories. And we, so is instance, for

overall, is that affected X.X% growth think that not So are seen we the by category COVID. are more channels the the severely those that

recession, switch to markets. And Chocolate recession in bit fact, because, more of is during downturn categories history quite a look in to has in developed in more emerging this picture. to biscuits, and recession, which the consumption not is and a relates there sometimes in-home mixed our accelerated from. benefit and that little are it biscuits biscuits of again, affected actually a we but also and all, say the general, at by the over chocolate in be tend that, the As first I in our history, back strategy shown markets, durable would

went markets, Some it down.

have little and as lot very recession up. recession we is Some that But recession driven there's went a gum away. overall, case, that very consumption, but fast a a currently of are with in-home been an markets, recovery that that's by closed. gum channels also in it was Candy on-the-go resilient suffers. fact as product solid, the these But in again, the more seeing, starts I also and quite our it's to it's gum since, in more would a say suffers fade change,

price and up our overall, points, I good I'm we job segments of think or see. to are products the the or to As now really it the quite points. think done that Brazil you affordable thinking all set Mexico India I around world. will And making relates different the price in a we've play covering

that's Another relates particularly is it limited categories. in recession, to our a that other thing, very think, categories private food markets, emerging as to in penetration, I label compared is important

that gains have I as pre-crisis. to we to slowed grow about. the I the are our But were they were about opportunities and stronger. think X% should be as let's it get that maybe we talking say we slightly. So internally, we expecting market relates to to together down share that think also our adjacencies that categories level It you categories, able with to

have more our invested in We brands.

brands are years stronger think two, than I our three they were ago. today

We our are portfolio. modernizing

have Execution execution good. not was maybe as great. that sometimes We more effective. communications the is are In past, our

Now supplies America an North in for example us. is

see us a the And not so as company to I able recession. don't being deal with

relates a present. execution strength enter and it we think I it with to position being of can as

get so have believe And wrong. me to don't we overall, work that I do,

different momentum to price units against why squared a we growth share, are with call we can away. happen instance, are if prepare see management we working so don't set For going we will But I you. architecture, that that. A do our what price of sure pack the the revenue work quite for I think reason keep understanding And the business all right to lot our what up on well. agree points that I in to algorithm. get completely long-term do hard at hard make on the would deliver we are channels, we cannot market

Andrew Lazar

much. so you Thank

Operator

from line the Stanley. Please next of your Morgan go Dara question ahead. with is Mohsenian And

Dara Mohsenian

guys. Hey. Good afternoon,

Luca Zaramella

Hi, Dara.

Dirk Van de Put

Hi.

Dara Mohsenian

slowed how the just quarter, organic in was trend retail build? there the would end growth was at clearly bit So be U.S. of it can strong underlying this Was inventory like sales quarter in that helpful. the of growth in of U.S. look of given more sales going a forward the true the sales Or data that strong scattered sustainability And growth? the sequentially towards retailer you unpack retail? sort much any demand

Luca Zaramella

I'll… Maybe Yes.

Dirk Van de Put

Okay.

Luca Zaramella

Dirk. on go No,

Dirk Van de Put

I at-home reason Biscuit segment we the the the heavily our by long Okay. Biscuit consumer And is think increase U.S. would and more in-home previous be is segment, will see the say as sales consumption. versus I the in sales will more in consuming by Well, increased the influenced as an year. and of driven U.S. the that at-home, in

the now. in pantry loading, course, of out the Of crisis, the was equation start that beginning, of but of a some is at bit the – little there

consumption So consumption, foreseeable I sort future, And we is continued say. that change expect in-home now I in seeing what of would a not phenomenon. are that would

consumption. gum clear, It's a contrary impacted negatively skews be out-of-home, to of on-the-go by that that. It Now in-home consumption. very is it's

so And the lower that's to during crisis. going be

at would the the say if keep to it As because our demand. just good it that have anything, a relates difficult been to has I inventories up trade SKUs with low customer moment significantly to provide reduced service. trade, the are assortment We of

give line us a bit, trade And in little the so they should that our be. if where to would will say bring as an opportunity anything, demand with stocks back slowdown would I

QX my U.S., feel about go So high my we’re opinion, the bit, in and perspective, than growth really to is in which little slowdown might was don't rates, but strong, I ahead. QX it single-digit from expect, in better much it pretty past. a I still Luca, certainly

Luca Zaramella

you're point, points data was we have of the where the not U.S. some still we used for us Dirk is is it usually as numbers July, to to there I to made. opportunities as we a be slowdown be in transparent it can where you at little right, consumption, of – No. another And that just as stock. second for are, is in lower trade we bit feels you lower it by only be. single-digit stock place to but like absolutely we trade all the a than in high – have the And territory. look there the says give grow And

what see. So we feel good we about

the bit a little a a bit at out, the as would is particularly well. Sour make quite of Patch, improving. I'd say at seeing gum on we I pointed Dirk Fish that downtrend is, like in to and As that last growth it like the moment, is sequentially is it Swedish true moment are candies point And also but

might be lower. all pointing albeit a that of So in saw not the it QX, is continued little might momentum, be bit you the direction XX% in

Dara Mohsenian

very It's Thanks guys. Great. helpful.

Operator

the from ahead. go Fargo. John question And with is of Please line next Baumgartner the Wells

John Baumgartner

Good afternoon. Thanks for the question.

Luca Zaramella

John. Hi,

Dirk Van de Put

Hi, John.

John Baumgartner

impactful. white are I still Luca Dirk doing? – your emerging rates still opportunity guess, of I you revenue growth how or penetration be can low that are guess fairly what markets aspect space and time story over the is across

in delays of the what that is year creating enter of context or COVID, the So causing distribution from reprioritize the your new drivers kind of fallout to extent to plan over to points so? against or growth you the next

Dirk Van de Put

We in a in distribution that's than India see the double-digit slowdown months? we the down growth distributors Will growth, higher be were And on coming X%, were for will consumers our At us going you've feel X% really as year If markets last in or We India feel not, we had back. We India, this April during operate fact we that in growing. for in to right COVID and we a June, thousand to has take it we started in and stage to I open hundred to up or this growth planning the were but lot that stage, great. channels, low – gone the versus slow see directly and which little pick was probably in on would At that as May the off countries. is that that show July, keep India COVID already we crisis, a single-digit down reprioritize. other couldn't are on they that expand back planning bit the a to our to that. what mean we course, to emerging it us India and it year, example India seen plan. keep more an stores if an levels through closed. X%, back to of locked to need more. I not topline related the delivers the last of to stores versus year. but or up Maybe will for go enough crisis, go left In doesn't us flat was example, than where

to at this change our me stage, we in much strategy. as we quarter this set. up for keep certainly for So have, the to direction delay, there no that We had maybe might will can. but at XXXX, stage, of planning a on as are reason we we is going try catch And to

John Baumgartner

your time. Thanks, Dirk. for Thanks

Dirk Van de Put

Okay.

Operator

from And Growe Please the question is of with your Stifel. line ahead. next Chris go

Christopher Growe

Hi, good afternoon.

Luca Zaramella

Chris. Hi,

Dirk Van de Put

Chris. Hi,

Christopher Growe

kind Thank – at costs, quarter? detractor of much And the if a guys. COVID and Hi, guess you sort on your also but the have costs gum quick indicated quarter, come you that. control I'm if was overcome expense questions net revenue you retail travel had significant you know just dragging were we to curious and you in Where I COVID some look just two the those been that how benefits realized the of you. from off I category away-from-home. of to against were the some in quarter, you I think Can savings leverage then, defined there's pretty world say curious, related, related, would the of the of I'm somewhat the put that own quarter? from

Luca Zaramella

start and I'll Yes. then…

Dirk Van de Put

sounds you, think Luca. I for that one

Luca Zaramella

these. I'll take Yes.

all mask certain share, And but told really to we as is XX% the decline our is depending is market XX% was in it shutdowns. So of by Chris, to I driven QX. the a XX%, The about the do with It of, is it you somewhat places. are in would in say, market, know frankly. total, I around due in difficult revenue market. and being on think that there impacted of X% by these that It tune material quite was gum very is well

billion So we said tell also one other as out we but I coming issue called market. challenge is or bit Having us take, markets. a it business $X.XX see is America July, the notable China. Then in still world I see you and a saw Mexico we look a it was we bit in U.S., it in In QX. one an give though, for at retail, and is, year that, particularly of little zero Latin that in continued nearly in travel it for is can better. the of it Andean.

points X% plus. it both impact We remarks, called to QX, on a drag improve in a Europe material and and is We the Europe, was but declined chocolate, particularly on expect it X of drag. out it towards both X.X, the which prepared

same it the retail. can much but better. been would that on grew, So flat, do how much was math excluding the world And you of chocolate have Europe travel almost

in So a QX. one we as well. about was Europe said, quite as another impacted I QX good little we look forward, and bit that feel as by in Europe was trade stock

growth going India India in July June I territory. in across quarter and The in chocolate differential the solid board, that as And we be specifically, is India as QX. in biggest importantly back. So look solid. point quite this well. we to category quite little good chocolate, see growth share coming coming back the is in a said, bit at And at closed as a And we see

in QX. expect in would a we India So good be to growth territory

and us. sense they for you So the little gives headwinds how a these bit that quarter of a impacted

Christopher Growe

great. was That

Luca Zaramella

COVID… the On

Christopher Growe

Yes. Thank you.

Luca Zaramella

So the the $XXX more COVID and in had overhead in million we line, million we costs, than look another line. the have $XX GP $XX million,

million would QX. actions impact would They upside but had call spending that in media, in cost travel, year upside we our actions is for come around an and for about the I in plus lack that $XXX be the specifically switching of terms of containment to million impact. these of all taking media big an We So cut promotional guess non-working other a of biggest both it going QX. to factories. in second $XX I some it if number, are The to part had did working better in the items, from clearly,

is being outlook. see because better you in come will matter. total in current I today this than materially Both because QX being COVID-related think savings subside cost will this meaningful to in profit or it QX will fruition our in that also cost the QX for and

the that's how see at but exactly, are costs – the those what see we things moment. will we So

Christopher Growe

very Thank That color. that. for Okay. good was you

Luca Zaramella

you, Thank Chris.

Operator

America. You Spillane, next of again with from question have the Bryan Bank

Bryan Spillane

everyone. Good Hey. afternoon,

Luca Zaramella

Bryan. Hi,

Dirk Van de Put

Hi, Bryan.

Bryan Spillane

Hi.

I in – a it Dirk, reduction new of prepared I I to – talked to think slowing the also, introduction. related the some to John you guess Baumgartner's back be So just remarks, SKU go you wanted of product question. But might and about

how adjacent is at wanted drag that of that CAGNY, part you square just about presentation as in revenues? the But more Would to talked all does made of of any then on at more response? expansion, where longer kind agenda. channel kind know categories term, the reduction the a) So growth create a the SKU near-term of near-term with you

reduction to trying how just kind that SKU new introductions product growth fewer back a to of the with CAGNY. So at you've sort and – square of relates presented

Dirk Van de Put

short-term goods my nutshell, explain of Yes. at in experience it's to Well, simplify I would you has in benefit. new the stage, it the all is part the many thinking. general, you gives you But happened that way that that chasing And certain opportunity years keep launching if over on other a to look clean that to what as we a and up. that try at is consumer is people an same products. our growth. need in And business our they The have business, consequence, are companies a

your look need at SKUs. You to

be always your at also say, innovation at look a feel the because But and a take to it. simpler. discussion need these uncomfortable your and pipeline, teams big doing brands can You sometimes it's

my if is Although space. selling the I've maintain what you not sales do the same you times done best space, your see get now will and increase in because several more items shelf career, only it that

longer down of a benefit it inventory, cash. on also big your supply go waste, less less and changeover, costs because chain less Your has runs,

good a exercise to it's So do.

serve great customers. to we to and there the chain The do now, for a we – reason reason shelf. of it Just a a to to to customer SKUs, be innovation they lined looking would projects, few believe year, that, clients do this cleaner want it a ones, want their and sure stars service. up. reaccelerate of to every I do say, small the thousands having why frank want better of They is it's us were make have think The way we we is And this. have They break thousands about a because want much same we that lot initiative. now to can want

get already were SKUs And Our we some looks in the are we obliged smaller what key crisis set in So to on benefits work to much shelf the make cleaner, we better, sure do order and shelf. this of the SKUs from a with are that sales it. see?

moment So we Those we're XX% SKUs this our I kind of say, from taking think do will effect opportunity using represent the is pushing we it. And the through of sales. see out. less them to no than X%

one adjacency. in beginning That XX% revenue we also is will at management we And launch the a next focused that And in and architecture somewhere new that not we doesn't we net. This of launch because to while. The channel and XX% probably – it's items, over expansion months. in we sizes means those on specific mean It price of points channels, Now go. a we not are those number year. of hit of we number specific items growth needed need applying. price that out that SKUs, will a or pack for particularly adjacencies. will channels takes a going of the do It's of few to run

So net of that. the XX% is all

at much strategy, SKU we really lean be as a brands, a hopefully, clean portfolio, because of I end innovation company cleaner at will much the portfolio, up we also So other as this few of and cleaner it same forward part looking a to can so have and a the I the this. of I'm we're see that end think

Bryan Spillane

Thanks That's It clarity, the really for again. Thanks it great. together. ties Dirk.

Dirk Van de Put

Thank Okay. you.

Operator

line ahead. the of And Alexia go Bernstein. your next question Please is from with Howard

Alexia Howard

Good afternoon, everyone.

Luca Zaramella

Hi.

Dirk Van de Put

Alexia. Hi,

Alexia Howard

Dirk. Hi,

So a questions couple of for me.

expected and dynamics. negative was us time. that whether into the think, question out X.X% e-commerce headwind Could called understand what the is half? I then impact my of, minus you And that second second around is to continue the help you driving Firstly, this mix just

breaking those pass you e-commerce do U.S., areas? And As of it and how about is that out continue? the I'll And we you. think expect to each Europe fast on. China, in Thank

Dirk Van de Put

Luca, the do on mix I'll the you and first Maybe one e-commerce. do

Luca Zaramella

Absolutely.

Let's that. do

Let's team up here.

world that, that I the it on expect gum business. I XX%, with improvement, about called is margin, which was is for other the almost We material solid category as which gum, expect is travel of a will sure would XX%. before, in to two and equally quarter, that So predominantly as categories, retail, it business it as in starts a stabilizes the markets, margins. I QX trade an particularly a But to out be the improve emerging And one exit say, the one year. not impact, is dramatically that and sell declined travel I'm good great brand mix quite number there, retail negative quite it so gross I open driver. said that's in certainly, attributable situation trade. I particularly world mean has QX. And the the I zero XXX% we in particularly traditional improvement, around Toblerone

declines We improvement expect in a to current to compared the gum. gradual see

a are situation travel say, year. we at And would the in Obviously, as have bit it in little it happy well. developed keeping lower of fairly driver the of mix number this retail And quite some markets. margins improve were the and was little than markets a for I I always should us, world emerging gum bit some control has time. been So point a throughout neutral of a

Dirk Van de Put

with to in then And link e-commerce.

QX, X%. last The on year, net a in QX, the of X% it in it's revenue. e-commerce So about was so of our biggest growth this and year In e-commerce are XX% number was we of QX increase saw shopped that that more to timers of that driven bought groceries already online. was online in amount U.S., people XXX% but also increase. buy was the by the first fact And significant online, their to started close that a X.X%,

year e-commerce went penetration the of last X%. so of from And X% to

and will So our instance, are all market market points four in gained, share share and platforms, about business click of expect e-commerce biscuits the crisis. of we for we that collect online. delivery. also large rates do across a part And after U.S. The high remain growth our

And so before down. had already we good a and crisis, momentum the we've doubled

products course a we helped of since the out in our our and the of strong store had collect, performance and click that since has picked operation performance. DSD very they Of

And the Europe, and As also which XX%, which a very, had XX%, already we the where of about in we're growth e-commerce of with world. is we so markets penetration respectively, go saw France, strong is compared there XXX% to growth consistent very China, in growth UK to sales, and already The talking was that our we our other growth. is very around high XX% XXXX.

if fact, reflect e-commerce, good In think on momentum. got I we've I

our increasing shares. are We market

PPA sizes the yet at want. have always We We that gaps. some the offer cannot the prices consumer they

investing also in which click specific So we will infrastructure. people and collect. is packs, to in e-commerce little and a we difficult launch continue more bit And are further in

So overall, strong momentum we see in very e-commerce.

Alexia Howard

on. it pass will I much. very you Thank Wonderful.

Dirk Van de Put

you. Thank

Operator

the from with Sachs. next line English is question Jason go of your ahead. And Goldman Please

Jason English

Hello evening and good folks.

Luca Zaramella

Jason. Hi,

Dirk Van de Put

Hi, Jason.

Jason English

to impacts on of Thank be you Obviously and so the very much back under and a I initiatives it wanted the supply lot XX% way. of for to in. much you SKUs have cutting chain I appreciated. robust. squeezing like comments, can productivity your quite sounds come

or I two. fourth quarter, hit the fourth the about think to of into you b) to X%, think productivity the that the A) fall And Is run where your we fell figure's of do as been last productivity quarter. net right? south sort COGS that X% the year by of up rate tracking think has going time we

Luca Zaramella

in. I'll on can comment Maybe chip then Yes. this, Dirk and

in number bit number bigger And chain lower. other been And leverage has past. volume quarters I the others. it up. the where been that that We higher, right. we bit number and improvement. think continuous has is supply have changes call the of on you a a all we're little a on get on been this quarters and where little to count due the impact productivities reinvention places we one got in to going small been the is has about some stepping what concept on remember, We make than count bit above There our little count to lower

haven't To through a have chain, she a when quite at it to of you And wasn't of board, we great talk a you We because overall have can has think including that realize to additional productivities of as had America incur your productivity productivities, leader and Latin we declines. numbers strategy. developed in across what COVID And obviously, about been I you QX costs, productivity. volume continue the the to in this some clear quarter if bit profit cost. takes new point, in supply deliver look great

implemented to we also maximum the but belt, You will QX. you for and in have, coming come should in in supply about so implement, will savings in see And overhead see side, full cost COVID in to you an tightening in not of of this of the flip see a that part area, the And QX. only terms effect the down already will chain, a costs bit. also QX, fruition some quite improvement are we all material on

Jason English

productivity angling large that's the these XQ, a in XXXX. Because spillover. you year in some And modest I sounds Okay. hit to was guess was you're going initiatives. really like I if sounds very rate it have it of at a like what run

going have even you not into bleed impacted next until early the fully year. to You're

look that to what one at in legacy more So I'm X%, of might That sort initiatives? back all these context it year come you do time next of try going like to number. think

Luca Zaramella

year costs of of into spillover out, about the all correctly, That by some are Look, exactly Yes, said that, play pointed But how should the know and a COVID fact Do expectation, we we savings. do these obviously. extra the we QX that, XXXX. honestly, absolutely. it imagine we these you that impact than lapping don't and quite will is Having better cost next expect than be out as number. expect QX benefit? having

counter is, next straight of cases, At simple areas. I more we certain bit some inflation to the point, think so. would But the in a cost little answer this I say productivities the do overall, around year? is, that that expect

Jason English

much. very Thank you Yes.

Luca Zaramella

Jason. You're welcome,

Operator

And the David Please Evercore from is with your of go ahead ISI. Palmer line question sir. final

David Palmer

travel for channel trade Thanks. each shipment your sounds And the comments the earlier organic second quarter the Europe. on revenue. thanks and like hurt timing It

a You comment. made also

that would in is giving growth that in into there other confidence in answer I the question third or think it you inventory? channel you half Or was quarter. that get to of to a consumer second an are Is trends the back Europe? retail the because shift

Dirk Van de Put

say we've historical Yes. for that I numbers. added you into European our in would if Europe, because always exclude travel reasons, world retail

you've includes number the so travel retail. always world And seen

is shops Now retail zero were world virtually was the quarter travel there in closed. duty this free because

already particularly higher single-digit America. If to seeing consumer which being travel than better are in is that not that low foodservice, out you affected and normal, they low than number back not they growing of the about convenience, retail XX% take other why The have together it we're going with Europe out, a single-digit but world reason channels, were what lockdowns and was it impulse, sales, was is Europe their growing. by North was so about. the of and

seeing even in sales expecting a QX. gradually are back. start to retail coming We're travel two we bit showing So those world little channels of

the effect world about talking really forward. that's and So feel travel Europe we're numbers, positive we why that including retail show will going

David Palmer

just – go on ahead. line products And then

Sorry, Luca.

Luca Zaramella

And if maybe may I add thing. one

expanding and the the our in now other region. that is gains share share in latest more thing predominant gains are is think I Europe

coming we see we chocolate be is QX So and as out quite at benefit consumption share to going of a look good.

underlying of to But say improvement is of I also all in in from created mostly would channels improving headwind today. there due bit in that the said, business, a where in bit trade consumption little importantly, an is there stock solid a and little we category Dirk share, is the as these of So QX. a the sit rest repiping, QX

David Palmer

And the it just profit organic bit. I'm I a little touched wondering think revenue. leverage you or just on about line to the this

much segment? away are lead bottom do to half You well? said you this how line XX or growth that into leading negative to those will COVID topline the a expect headwinds for costs that second mix growth headwinds Or going as that and

Luca Zaramella

in In has relative by chain impacted COVID supply terms, costs. the Europe the been most extra

see in still impact will You QX. an

the Again, QX. won't profit be it in will And be to all way so better bright.

where see this at You will QX. QX see today a we much better number point we into from in sit profit what again and

So there a is material cost.

that have We serve Europe. multiple plants multiple countries in

in is difficult some into borders. plant for And little extent. certain there it a Europe, an in the as places, it one cases was to a some see have the of bit as than higher QX. a will difficult more so that the come, other And people logistically, more impact reason So been protect for across and you we they people our that we to is importantly, to absenteeism still the in see all little still get cost or of saw higher bit some

David Palmer

Got it. you Thank very much.

Luca Zaramella

you, David. Thank

Operator

for are no back our at in remarks. time. queue turn call to to there closing further questions And this I the would speakers like

Dirk Van de Put

confirmation for the thank up it exited circumstances good QX, faced solid by our the we momentum, that can seeing see in think that very was momentum I July. saying, And perspective, Well, a it we around you of We a world. from quarter the and particularly with wrap I connecting.

the have will heading are also. with and in within invest very for strength our some feel for the a so second exit half, our we XXXX fuel P&L and We growth we great confident to XXXX that

thank quarters. to you and looking you to coming the talk forward again, So in

Luca Zaramella

you. Thank

Operator

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

now may You disconnect.

Mondelez International (MDLZ) 29 Jul 202020 Q2 Earnings call transcript