MDLZ - Earnings call transcript Q3 2020 | Mondelez International, Inc.

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Operator

Good day, and welcome to the Mondelez International Third 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 turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for 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 mondelezinternational.com/investors. website, release on available sent

our the During factors to Company's These XX-Q this details Please risks XX-K, we things and statements the may contained results to how performance. today. on uncertainties. call, Actual statements. filings forward-looking cautionary based differ X-K about risk for make our see on we'll in statements statements and are materially and refer due 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 provide of presentation. our then business release non-GAAP GAAP find within reconciliations can will earnings slide Luca back and take comparable through the Dirk and a You the call, the GAAP to financials at you our update outlook. will today's measures In our

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

Dirk Van de Put

good Shep, afternoon. and you, Thank

We are by very the performance third in quarter. encouraged our

execution strong. Our was

growth. and We regions in our strategic continue initiatives all were to our accelerate of

as continued the resilient to the for teams and Our during QX, have and of focused we year. prioritize been we will safety remainder

our continue continuing to uncertainty successfully as market and outperforming through we to are categories, manage a gain We COVID-related challenges. consequence And share. significant

are the by most around depending in outperformance world are they our While category is COVID markets affected markets situations, very that category on how dynamics. diverging in

the grew emerging remained elevated in continue to and our channel including in good the business we we markets are developed mobility beverages in improved. mostly due markets saw conditions QX, and In and our as business under as traditional Gum developed is where continue to in well. and such Meals In Candy our is is while also some But America, our where also pressures initially emerging be the still is towards improvement Brazil trade, significant biscuits and and or are categories mainly continue of grocery our Our markets and And sequential and markets, to well. key Gum Russia. sales particularly smaller, vary chocolate portfolio perform powdered habits. largest more do markets. changes the gum China, and in in momentum. where markets consumer majority of in Africa. pressure which markets candy East challenged, under still do to Middle India, Latin skews Demand

this on strategy long-term remains accelerated advantage But stronger Our and emerge initiatives unchanged. order our build during growth certain further crisis in position. we have to

more and simplifying First, we order and streamlining. would reduce be costs. this innovation to growth of our Examples SKU business in deduction are facilitate

to accelerating of are we gains. Second, order in growth our a initiatives momentum on maintain and build number share our

HX We've e-commerce in are instance, commercial our the more investment increasing and in and grocery we momentum in also For channel. focused on brands capabilities.

initiatives. have cost, some or strategic a advanced Third, of to of reduction the order offset number we cost COVID-related in extra advantage

growth We prioritizing was ways capabilities. required CapEx new stronger in out between net and across changes metrics. And X.X%. of slide Switching out rolling organic forth, our to also delivered some strong of more organization We our projects. five. are strengthening while key optimizing all quarter QX structures, working revenue we a

supply brands gains sustained We over phase and of the on revenue that And or pandemic. chain. of good XX% strength of We the beyond the This base. coming have had share share our I'm we in crisis. initial the share are demonstrates gaining holding satisfied momentum our our into

continue last our the versus same up I'm strongly income despite grew to last, period significant operating strongly cash at increase improve billion at grew incremental in we free profit generation date, gross the the to delivering COVID-related $X.X year year. XX.X%, billion investments. An on Our X%, $X.X six. now dollars despite costs. flow And brand slide

As current is do strategy one from the within this light right we crisis stated only this believe is believe Not we and before. were stronger emerge that than environment. even one, certain our of investment other our have we we areas dynamics. current initiatives the To ambition do accelerating that are for growth the to so, we of strategy in continue right the to the strategy

few progress. areas these where a making are of we highlight me strong Let

possible during this not up We all of invest. we when stepping second investments the issues started, investments This the decreased make sense when media is because our just did working of arising quarter our this year. the behind second it to half are crisis brands in because

good is increase note in example, from interesting our seeing QX. An are for skewing more. has on one Tier industry. point, significantly. the spent as are continued our this these proof to share are in that We market Also ROI in investments We digital now results investment, ranked Top in we even our momentum increased

For the on will spending first digital more than on we time this be TV. year

great brand area is increases. progress equity of Another

brand some team the staying reinforcing marketing hygiene on while home at others it communication are focused connections, Our staying and purpose have some others playful of is on practices. or successfully to circumstances, human adapted our about

to reduction with our another our we through their purpose. consumers are area through forging by XX% In exercised consequence track on are connections our year-end. As really be a brands stronger connecting SKU

we like don't this highlight the costs implemented half expect revenue. much offset teams incurred fully inventory reducing space mitigation reduction XX% programs successfully represents to are shelf reiterate efficiency. is The sales, waste cost too our that we SKU the percentage that big increasing line I have ensuring, sounds very fourth the in know do COVID-related we a we year. want to second or and of on number, focused increasing while that incur while Our small a of

deliver next our algorithm. financial to and in this continue again While to this our deliver against year, to brands year our increase helps investment an capabilities supports plans continuing while on-algorithm also to it year,

relates office home from of ways our to to like the it for new future. seven. slide shifting most very them the functioning we working, foreseeable well working optimized our this to is in Switching most digital associates e-commerce,, organization, company new We've of where or people also reality, with RGM. As need our

has the absorbing, While crisis even continuing been we are agenda. COVID all ESG to our progress enhance

This attention. got particular quarter, three areas

of and focused September. a appointment our First Inclusion making and against and with New enhanced progress in we of all, Global pleased made and Chief inclusion we recent am are commitments particularly on diversity I Diversity the in on officer, inclusive an Robert Perkins. Robert take action business, our advise my team and to drive more to will at increase Mondelez. minority further broader representation company culture even me, us how help the

And sustainability, role communities. cocoa for relates our cocoa. solutions, are positive is sustainable just finally, invest in social and continuing mainly for Cocoa sustainability, to it and to unveiled to program supply invest farmers and Center sustainable farming change we in to As futures amplify sustainability Technical more practices, new in areas. a innovative Global cocoa which communities. drive investment creating We we're Indonesia, growing our the will and developing sustainable impact Its in impact in a palm support chain

hand empower to that, even more Luca. our than it I before, to over purpose so actions, these right. snack to people living we With With

Luca Zaramella

Dirk everyone. and good afternoon, you, Thank

profitability Our in flow. third strong gains, was quarter and grow, cash terms performance of revenue share

returned with of affected also had were trying As improvement in market. we grocers. good we develop already heavily markets, trade to been units quarter of our X.X%. plus lock traditional were downs, overall to signs those seeing exited QX but And of business expecting that with consumption closed of a by we emerging combination a QX, and sustained growth We growth

QX. trade. Europe of Russia good large or deliver key more levels, growth plus far including color, Our developed markets, XX% return as and and we in for better than a strong in QX demand To In provide America enabling we at be rates businesses consumption emerging lower pre-COVID increase traditional unit versus access to revenue Brazil, strong we like markets. while of markets plus all see developed markets restriction in market business And in emerging more to North to X.X%. goes, operating saw organic elevated and normal the China, continue saw delivering X.X%, as India, across mobility our as mass levels, retail too, is base,

retail, spikes one North in in trade included European closures and Although trade point majority well below America markets we impacts contributed exited growth. resulted category. emerging situation vast in our to circumstances America economic of markets, challenging is and disproportionately restrictions better candy and impacting of in in quarter continue QX. as Africa, Latin the as as gum normal COVID This levels and emerging we trade the traditional Growth this and East as expect imbalances parts restocking, approximately of some demand of Middle our

was Turning and unfavorable driven to by revenue travel XX, QX solid mix due world was to and retail volume slide growth gum revenues. pricing,

one of includes point pipeline growth As mentioned, refill. approximately

out-of-home of experience In from Overall at of our some points of quarter. gum, terms biscuit EU, strong Western gains categories, good All well headwinds more in at Russia, continued and driven doing a robust by double X%. nearly and not less to headwinds EMEA North has from Australia, This UK, QX Gum particularly and by important lows, facing categories was key demand. activity. returning top are nearly driver and France the as like social travel key markets This grow like oil in driven America, still large we Nordics by and related X% to to we We includes part improved Brazil, share a with overall. gaining And world to declined these very Mexico chocolate such than distancing candy an contributor primarily retail. and and did share. significant in grow returned Chocolate growth, and Germany, also affected which India aided Andean. X.X businesses on markets category. the emerging digit, result but

important. represents QX, the revenue our such the and e-commerce this and we in in to others our spend taken year, in a markets, to while have a digits base. digits more gains we reported X% In share, In in some U.S., E-commerce our triple in triple Biscuit UK grew Yes clearly more e-commerce France. digits share those top We revenue channel of of Turning double and close wanted multiple UK, offline to as Chocolate. I has share see XX, basis grew e-commerce on significant [ph] moment headroom. greater this of is on and on China market, as XX% instances four than slide our

engagement driven opportunities and incrementality on data includes this our business. investments substantial site, making Importantly, our line [Indiscernible] price, to take e-commerce improved existing is offline driving platforms our to This comparable the the to with and to meet additive in more to testing level. digital to media, profitability we is look we This demand. and right are Building also next we bundles investments and believe generate in additional as our trends, the had and and we incremental bottom packs direct-to-consumer. explore packs we online increased right shopping working new ensuring did business

to XX. category page share highlight on Turning and

try share to to more meaningful strong working team's succeeding, execution local in trusted investments as results. effort are sustained continuing global good And Our media and our of is yield gains very plans. as and ROIs competitive

to our XX% We we biscuits and chocolate as basis. when the U.S., XX% and also gained understand of doesn't XX%. revenue gains Biscuits in X%. which include base absolute gained slightly. share the to chocolate of impact well. What is has Gum is drivers the of Russia quarter down China significant to that China, and biscuits again it major compared But Australia Many of and the rounded as of It Yes this our X% last date their Candy does the share growth down gained terms our and biscuit quite share notable business, biscuits, the world XX%, gain has were tick big once we've such have the X.X% an the and Similar retail. to real performing chocolate add our to-date such are had channels in of were quarter, commentary Russia or France, include convenience flat revenue shown year in year on category share based our is not UK, travel important last UK reflect as slide chocolate. and to gains quite size. nearest

leverage profitability let's Now our the our profit Overall, as quarter. was efficiencies. well XX. Operating gross slide volume profitability third increase to in strong review some promotional We on productivity, performance far due this and and about COVID income $XXX totaling cost due overhead costs increase than year dollars helped more million. $XX offset which XX% to of approximately simplification been reductions million. has so COVID-related as efforts,

going of step and our brand. media top position Importantly, to mind the we our strengthen in further ourselves Stay up well continue to of work consumers investment forward.

Nordics. category volume in key leverage quarter. impressive. offsetting COVID-related growth consumption regional to markets X.X% digit income X.X% Gum in meaningful share occasions. gains. cost initiatives and investment. chocolate, Moving more than Russia, working operating in breath sustain are Germany, We DSP strong and on were strong media due share control UK, to due go in performance growth France, slide by America The biscuits by media Europe North more than Benelux us gains. execution solid grew America the saw limited grew on biscuit to driven the investment and costs elevated North to and incremental across our XX% good they and the was results XX, working Ongoing meals. With revenue down consumption double growth helping of and quite increased

of at that In continue a of shine to year XXXX of than circa travel last world more the headwind while headwind, EU. as revenue, XX% retail below terms and X.X

terms gains and with dollars Russia. unfavorable share more solid grow mix. volumes increases France, In notable than OI to COVID-related as share performance, Germany offset UK, return of costs drove we in and

growth of In China have high restrictions digit, of in with addition, media less posted growth. returned the gains driven and high Australia, the a operating the become biscuit. New working double increase posted digit and India single significant execution QX onerous. Japan markets most biscuit low for the to there. chocolate with across grew EMEA excellent digit in growth quarter. grow as in growth and with team single-digit share following quarter increase by Zealand X.X% significant single grow

in near But term. in due quarter digits see conditions, Southeast down Asia and which the where of to the economic persist countries towards expected Philippines, such difficult as some single headwinds did slowed mid to the QX. the we category grew are more end Thailand certain in

more this approximately volume decline business Our inflation pricing. meaningful media. Ex to grew as by in in in in more business, declines. and year. grew and We in the issues economy about nearly of declined do. East significantly In market to the Latin the the out growth than social by distancing. we XX% in Brazil, The due we biscuit dollars double-digit driven candy country. North business in and results growth Underlying Gum But income Mexico is posting digits impacted and to posted that into mitigation Middle cost categories good last digit chocolate increases there remained we while posted continued grew EMEA as X.X% related despite feel driven supply by consideration Argentina COVID, single increases significant lapping double digit digit America was remains pressure. mid supply chain behind taking in Africa better beverages, to Argentina, which when progress Latin have our work that low execution effort a of remained of robust due know double Brazil, working biscuit. the and operating due store of America growth Mexico decline X%. low quarter gum by growth. powder double grew candy, and home impacted chain XX%

and Latin Our as America channels. Western performance offset is in than down and OI a posted as trade grew as measures Gum Candy continues double countries improve COVID-related digit, to containment chain impact pricing, costs. COVID Andean a more cost category decline traditional XX% supply

are We hedges than also rate. price benefited current spot better from that

challenging in America Latin Our part near of expectations term. will the is that remain

place controls. drive as targeted markets. in Investment to execution well the on share remain cost many and gains, economic restrictions the as We Given and in environment focused

of through per and gain. versus the improvement year. in basis day on is our versus slide earnings of $X.X almost of to to a restructuring on focused flow cash years previous taxes our on now EPS by with mostly date management cycle this increase cash capital three X%, free XX. free strong more move result. an deliver working a EPS CapEx, Higher strong turning year have million On I'll gains earnings cash flow up Now them. quarters, and three without driven $XXX We previous drive XX. share billion slide of operating QX first conversion was lower $X.XX setting to breaking

deferred some will impacted addition, result. this tax in reverse QX payments, In which positively of also

today. our on to providing several slide outlook are challenging updated we what Moving based still in view expectations XX. of on know Disability we remains markets. But an our

would stock. X.X% implied full feeling of broadly of year growth QX in expect with We line plus, trade advantage QX revenue excluding when be the

we QX, working to three currency in as America, costs growth up benefit We America setting that around particularly additional in transportation expect the face subside. and expect EBIT overall North media, we but of hedges continue inflation Latin we below good favorable levels, the as some in

expected to plus For should Free year, low ETR be $XXX ForEx. adjusted to mid the be be interest approximately adjusted projected is full approximately grow X% XXs. EPS the expense at is at should million. constant And $X in to cash billion, flow

planning We in the are take fourth buyback share well quarter. to program also our

is given is Given strong a not impact on well, expected this to cash have business It EPS significant is we proximity flow year balance further and strengthen to performing end. sheet. the year, our have

repay. year to be revenue the in For factor does environment, could on by reported not current Middle gum is impact points, parts must East, business. current based trades. of negatively America Headwinds by of predominantly and the demand Southeast Latin Asia This region, material our on continuing in triggered now EPS percentage certain and countries significant not Africa, translation North and in three the and of of our operating on consumption such gross markets markets, and approximately North in is our a level a market emerging in by conditions expectations, following developed expected COVID. also and Europe based the that This home incorporates America degradation elevated as and $X.XX certain

travel world in for let's retail. up open that, With it weakness Continued Q&A.

Operator

[Operator Instructions] go the one from Andrew And question first Barclays. Lazar Please ahead. your is of with

Andrew Lazar

now, remarks, sales And you your currently Dirk, a Good trends you so as whatever lapping on, growth you much. all about and follow Thanks results extrapolate costs, out in, as kind you'll XQ? company regions you regarding incremental at the XQ as through look you prepared pointed can organic obviously have Great. maybe XQ well? and so COVID thoughts key how cost right withdrawn us Thanks as will brand as significant laughing, this enter much. kicking as well because perhaps in feel savings will be comfortable the take as can be you then talking into of afternoon. next stage, investment, in was year XXXX go across maybe into incremental regions,

Dirk Van de Put

Okay. quite can do Maybe regions, I do a maybe QX is can you, tour, are through linked. the and XXXX. then and Andrew. Thank is, because what And two about talk Luca categories little

Andrew Lazar

Right?

Dirk Van de Put

if And so, look by the the affected are at you consumers. the categories, mobility categories of

say coming we categories, increasing is And performing of in our in we are market would share. advantaged strong those XX% that top that from have revenue categories I are well. very our brands So, Mondelez and

despite in yeah, travel seeing because instance, emerging digit of share two the our is at and at demand imagine, still the as gains. back the markets driver world came headwind, retail came world you than of travel in can QX, it growth XX% versus remains of squeezed the QX. QX, that globally. is to retail, what is in high back used off stage growth had single and very of very strong QX which biscuits had was X% chocolate, India. lower moment. like revenue this And of for points strong be. we main accelerated we're some largely It We Chocolates So The growth the

the I think price. we we grow In unit portfolio is skewed chocolate at emerging that advantaged have very we because see do have a to which home markets, low a consumption.

still that remains but a And in and road we affordability with it it's middle to chocolate are that on as or in and We But the if has right of moments our to Europe, the affected, see is everything consumption recessions mobility, unfortunately powder very anticipated. the have go before. knew in We we're anymore, go. is that of with in is And that even probably the gum. XX% not meals gum the the gum bit one have price good recuperating mobile about than or lockdown not quite in consumer back doing slowly, as in recuperate slower beverages well. lockdown would And then challenged the points. to consumer is

the how an keep and less that what regions if you know, the you we're idea in and So you go then mind, of regions, more the through doing. of or you gives mixes

biscuits, So XX% demand biscuit, of very said, North America as remains I elevated.

been consumers quite consumption. strong snacking well are and in pre-COVID has not high above as as But very level, home, at increased execution more gains, Our still March still strong, April. the very share

consumption biscuit America while. get in also with so, are this that but there for number. same mass And to will Europe in And North where is a business European our probably is consolidated the more with away retail we solid. home. at in retail, we travel fact on world In our from is go And elevated the home, expect continue we and stay more COVID to seeing recommendations [ph],

the Russia, like repeat QX stage, expect not the that the had we coming the quite saw mentioned they're call already all At Talking remain digit that. travel as single disrupted, two still And from growth. we mass in we of disruption Brazil, And retail. the improvement back markets, So and strong world of that in can did bounce Europe thirds back expect that apart our then high China, we retail but nicely. emerging European emerging soft. the in channel has I And beginning of lockdown, about crisis. very convenience QX of very we to now remains India, said a some the do in markets, go the was see which that markets before, Europe. an back we But like in this

because in led do the I sort they of countries it effects. economic think to did, same that severe impossible lockdowns to it's those

birth, continue recuperating But one depends it's bumps, I emerging overall, not So nice situation road we see going markets expect those of the what the one-third that in to the our markets situations having are sales. macro those gradually emerging in is top, on of there where effects and would more that bit keep of little local with improving. gum are bit And pronounced. on are high the On does. to government a markets a mix markets candy their to then, unfortunately, be and

And ones so about Middle And are serious they are affected. Mexico, countries few about having talking are severely America, those talking Africa, also the problems, East of Southeast more that in the Asia. parts that Central and also a and

idea are. where So an that gives you we

I about on think and I in continue bit the change Luca, don't stretch talk little huge you on as next will year. Maybe a the QX, XXXX. the out regional and see in QX can even of see situations beginning place a them taking that situation today. we

Luca Zaramella

Andrew. Hi, sure. Yes,

at on that top or that into start November. we QX up just and importantly, as as this revenue sight the And building they've underlying number this to plus trends is X.X so outlook that line just [ph]. said, why probably see terms point So X% we is we of in a unchanged been of Dirk discussed that what line certainly percent. had as we so of fully are all said, it bro far said, And have QX

That that rate. should line EBIT growth with to in quarter, more as strong year last is I another QX goes want far be As reiterate.

as up terms with We benefit pleased that There the putting investment. the initiatives will than will to as working continue cost are well of We'll alluded but we the to the effect higher merit gains be very ROI the we COVID past that, in Dirk in in there positive of share in investing effect, and of the some lower costs, continuous for media. and place. see are testify

we improve of as causing the U.S. And shelf cost. logistics Nevertheless, on the extra demand. emerge stronger. particularly availability to put in have pressures, cost need have We since we in place some is see part some elevated the

we We hearing is and been others also as there are have pressure this that by competitors well. feeling a

of quite the market. as high. is As a spot portion And we said, transportation buy on inflation our I

addition, still out X% say, words, going believe based through we be other America. plan. are the year. in are running growth of that building we can should flavor would XXXX, gross In you we QX versus muted I the profit some for will the ongoing. in so in for next have what and exchanges give of some In far, just plan on But the on more know in of we terms Latin you On XXXX seen be positive blocks QX. I

about in our First of to benefits will next the working emerged stronger we expect times in that talked we have we mind around one media, to year, world as We've only the carry in distribution the emerging costs share all, marketing to sales. not into our continue subsiding into initiatives opportunities market many example, invest XXXX. retain gains despite and COVID in and but and

today the some to what I in say, biscuit. countries. developed chocolate and in But you be We share growth that markets recessionary called as environment. costs, lapping think will would and Biscuits well. do all will business the The should years. elevated some impacted years. gains categories will material for sustain sum lead instance, we to in be in the and But have have be particularly commodities last in and aligned what the few flip should Talking on reinvest we countries, in neighborhood in are to the to XXXX, recovery see of chocolate continue inflation there [ph] upside XXXX we few that most algorithm. seen some to stock we the weather In Brazil, of in of potentially the about side, we and and from see more what seen we should overall, a those ForEx these, an cocoa, the cases, there But inflation. be and high is last for again, in instance, of

to Brexit to the or we say that still change and But someone more like you have will knows, in particular updates lapse stay needless the tax I'll and COVID. the as post the potential QX give flavor in U.S., or We are tuned of there results.

you is I the know. it talk so to what that we'll there And agile about is and more think we we important evolutional stay situation of if

Andrew Lazar

Great, everybody. thanks,

Luca Zaramella

Thank you, Andrew.

Operator

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

Dara Mohsenian

guys. Hey,

Luca Zaramella

Hi, Dara.

Dara Mohsenian

is for what So impart you.

market biscuits COVID, more the chocolate for but momentum some results you have this very And been up it's guys So, pre had ramped COVID. impressive year. even obviously during share and

sustainability particularly play to of wanted just Mondelez share to cycle look the on as COVID out spend that? into XXXX, thoughts you and get the ANC higher have difficult comps So these your how might perhaps you as to market gains

Dirk Van de Put

Yes.

of areas gaining all, about or That's quarter, where at minor. the was we holding It's lower is it previous three share quarter. First this than points XX%. the are

or in Germany size is the gum And is say which terms more held circumstances like U.S., on our I of an overall, it we've quite have would chocolate on. on. or and we so I report seen important saw was the the here, of so well. saw we parts revenue the very world. beginning We in the in we China areas that important, customer geographically the partially good we the us. so shares, some point. don't speaking Because crisis, to our and market Germany some increase service and share total China, DSD in biscuits COVID of more gains level it we our significant. distribution and, the would know And Brazil happened our very of but seems which in What's And If of is, the that chain analyze say, and supply beginning, at what route-to-market helped

to tend know consumers go crisis to brands, to in they feel trusted safe. that this want also We

the would I can And was range better say the of go they very know snacking, nation us. We trust, range for that the big the there as have categories, third around So that brands, equity And messaging taste particularly sort is is, have they to heritage the with of can more the successful We've and all adaptations adapted our see brands increasing. of on very world. products brands. well then in in the the we brands a that then our much seems and play since situation. number And our that done different factor brands our to COVID our are we at media, we home as of we of increased accompanying suited. to

We well the say, are in is consumption home that's tablet biscuits of helping would in really also chocolates. and And in classical very which the I crackers more category us. for suited and

to do of So the same to going the thing. working going We share a actions with same -- our year, forward But those we're media number half. that gains. second next into sustain continuing increase doing in

number so be as we of was Andrew yes, for that mentioning, things a And lap beneficial us. that will

our investment. We pressures, are some again, cost also obviously. increasing also But AMC we have

be that. the us a algorithm And Our to little might think consumer where situation unsure. allows critical in still there a do recession I be a and it's might bit

I think our on keep supporting to need brands. we

we think that will help. So

some start very early. Easter doing a work for are We've We exciting probably activations very got up starting coming stuff. they'll year, early, Christmas next team some big lot of visibility in-store on

are the a of we Germany new countries the the like and these innovation, number keeping And our and number activity in and And brands we've we our are so when two-bites related promotional Milka increase great year. have share next market We're we plan for very years strategy. momentum of launches on the to consumer, that of had a the with we is we expansion we've things, And hard seen that home family brands brand needed of to consumption. our have that of best in can any all spread on. is so of elevated we the feel done connection working value in I next at year, value, year. an we this coming the we're then based top our biscuit for that probably do and like then or up eye whatever level plus further on strategy thing the that certain launch of confident that an of fact on need doing or we And on innovation last the no packs

Dara Mohsenian

Great. Thanks.

Okay.

Luca Zaramella

Thank you, Dara.

Operator

next And Ken is Please JP question ahead. with Goldman the go your from of line Morgan.

Ken Goldman

Hi, good evening.

sort more these you ask us previously of about you other you. trying investments this. see here about for anything? exposure opportunities little do sale just to assets it? than bit as qualified your And plan I strategic I'm the to I a how if partial you you're some going get have this respect to today anything assets. down say little maybe Dirk, does if about year. sale the or taken some to investments out ventures a equity, just bit JVs, to have core these of wanted there? You you've in what's forward of your these maybe guess strategy Can longer joint talk willing your get Thank term

Luca Zaramella

direction. about demand They mean, they key categories these get coffee have Yeah. have that that. brand trends like assets. a Thank of And term a equipped management clear can enhance are strong gaining we have. said I'll are more in advantage categories. many have are reiterate long executing as both a solid share. We They teams you potential. strong even To strategic I optimistic compete fundamentals there times. what quite on the are categories companies both to on only. with, traction clearly They maybe They take remain the as one we that well. companies start are They example and in [Indiscernible]

line So potential. there our ingredients mind long flow for are all top the cash and and in term bottom

all leveraged the continue be for strong far. they and results outcomes quarter between gaining across really EPS, you to so consensus, to continued a flow. and saw JV strong momentum, line top We think metrics, and about are and specifically KBP not talk I to cash really strong penetration, create But share able momentum,

what higher the both And would we consistent So of quite the tactical more than if at you of year. series the balance a the And sheet, showed made look we anything. frankly, in companies CPG than since that other in well beginning well current moves, say as the We top stock not believe with our for quite price is world. have companies. were value the broad

comfortable and So major make are IPO will for And there expect shareholders. shareholders. other an And at current around stocks. and We the retain levels major to JV, But some the that, on circumstances, might be from current And remain both right us avenue on current the further the of the long should we will value quarters KDP We a own trades are we And giving limited the disciplined we company, if optionality. clearly, company. for in XX.X% coordinate said with for is the in of you ownership. presence committed under having try in trades, though, that we us we did term we flow. are we to coming improve the welcome us that KDP. JV success of both want will

was in So seen companies with have price certain believe advantage snaking replace anything. remain recently time, took what of than said committed these to We you you we'll as and tactical to But will potential. stock levels. want more over the assets. did we those I

Ken Goldman

Great. Thanks so much.

Operator

Your is Bank with line ahead. the go of of from next Spillane Please Bryan question America.

Bryan Spillane

everyone. afternoon, good Hey,

flow. interested to in up this the just And on comment question maybe made next you response at Luca, algorithm cash follow more in in year. point a Andrews So related to

and two free be would And maybe to would also you questions conversion via One, that. share be or sort connected flow guess returning cash that algorithm. So would cash cash algorithm shareholders expect dividend of around part free that, then been the to also of of flow annually. repurchases increases on I has

we be XXXX? of that part would again expect the equation that would in So,

Luca Zaramella

EPS. answer remain committed of about yes, straight in part dividends to what question is of to the said last to growing we dividend excess absolutely, we several the the So, times

reflects should in continue I acquisitions point happen think buybacks increase things that. might at this dividend absent the last a Share or that or not.

buybacks. time is point track to should the to free in tax into at as one your cash free think, for just plus [ph] from at I year. this year. But reset say going JV I expect share be no will we there that And purposes down year. plan next three component That's you point. cash the flow feel cash about this not into there I a And of went flow flow, is going tax the with there tax a but Having for I billion that, cash said reason that be thought, might think slow flow, be final a Europe. base free know, you And dollar this can year, think next I unit some so yes, like considering next public is up

Bryan Spillane

Thanks, Luca. terrific. Okay,

Luca Zaramella

Bryan. you, Thank

Operator

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

Chris Growe

Thank had two evening. good I could. if you. Hi, I questions just

to the would rationalization relation The be first one program. just in SKU

Does come that more of to inventories? And better year? inventories retail in like the quarter where there improvement, want that inventory own from quarter you. get I could as be is more go So to in Are quarter start does this here shipping quick coming you of just building to levels, benefit And a up the inventory. of Is curious that that fourth you quarter? guess, there some to Just move in or that the Does the just then had want where year? sort on your sense through? I'm as if fourth with next I innovation, Thank in a ramp mix we next you growth? are that question, of thing? you also back volume you benefits behind see the it

Dirk Van de Put

the can do SKUs I'll inventory. Maybe Luca and do the Okay.

the around trade. the for SKUs, that in largely year. you beginning So the gradual, next is the instance, there in Europe, moment make negotiations on the timeline that these moments of can is driven with world, are changes. certain the And And

But only will preparing we the beginning be next now. for it of So implementation are year.

the look XX% say, you then the would around at world, would be in we I done be And roughly So beginning done it end. XXXX. by year should if of rest the

both top the broader portfolio. innovation part the program that a line You and flow. a line our meant and bottom of initiatives, think SKUs, simplification at this of simplification and also number of about brand as drive the looking It's have to to is cash

get more easily think And a more expect will because less already our on take velocity So In then downtime, SKUs we inventory. represent the it higher SKUs the benefits, go we not is of of the shelf X% impacted. expect that revenue, manufacturing, top do XX% less lot our I will -- They we negative the sales, X% remaining those but to it's line replace changeover. with space. mentioned, as represent inventories down fewer complexity, that we

costs. their costs customer us on a them service. down go their still. And give on be better so then our customer gives benefit to manage easier we shelf, the to for going it and them side, So It's

to does not it's So to help and algorithm. our the algorithm. the deliver and This meant our cash flow of deliver term is long to margin line on transformative Luca? us be perspective. just support top it bottom the a a But from

Luca Zaramella

say, there are got normalized I level On levels, we situation. to takes. we in Overall, end think would I obviously are inventory and the more puts a Yes. a of QX. at decent

to come. inventory where right I replenishment be expect other courses the we we always places we inventory bit little if to done. have way up of we to the with we to a obviously in said wouldn't there more As I level need as do are due might end want pick fine. year And the

Chris Growe

it. for you those Thank appreciate answers. I

Luca Zaramella

you. Thank

Operator

Moskow question from a Credit ahead. next Suisse. Robert lot go with of Please your is And

Robert Moskow

Thank you.

wanted make understood like XQ. sales guide it's seems It sure to implied for Year X%. at the to year below I Just date X.X%.

cost work and so, on they specifics plans that is of plans, be might plans? to date. AMEA. you why most And these So recover? And cost the to quarter can if And understand just they lower capitalize does take Thanks. work like growth difficult efficiency are make it it about It more in as then the where going a that reduction they place? looks more year to than also think in wanted to reduction LatAm

Luca Zaramella

full said X.X% year. the plus is on it We

said an in the is one clearly point So about much is growth of QX. read QX. there too see said, the you in than implied X% wouldn't it number X% I for different also that as I that QX. growth I rate X.X% into in

we again, So think are about as mind so QX. you not

to the Importantly into here And again, allow will look us way. to next write inventory. our want that this level trade right we point the all of with we read initiatives year, as at that on

think that's a to think simple way about I it.

overall, pretty see are like are revenue of initiatives, The terms to would media. or terms stronger media terms effects designing terms in but cost Those In growth of Yes, again, have terms working revenue reduce in cost U.S. are regions the they consistently management, where little America growth, we that regions. the non-working our you across where the the the North most initiatives working of across packages net pushing there more in throughout are and board. say might a I much taken increasing be in of bit board. we of fairly read initiatives, they consistent

Robert Moskow

Thank Okay. you.

Luca Zaramella

you, Thank Robert.

Operator

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

Alexia Howard

Hi, there. Good me? evening. Can you hear

Luca Zaramella

Yes. Hi.

Dirk Van de Put

Hi, Alexia.

Alexia Howard

Two quick questions.

Firstly, on immerging e-commerce.

coming [Indiscernible] follow a You talked [Indiscernible]. about my for now [ph]. And Yes full of the then in around up ton [Indiscernible] presumably

sourcing changing a You're center Or new believe. strategy? I how [Indiscernible] thinking about you. you Are that Thank about is code? about talking

Dirk Van de Put

very was Alexia. up. Thanks, broken It

difficulties exactly what was and difficult. an the there echo line as it I somewhere made So understanding you're on had

know I the asking I e-commerce, I were don't were. think you heard -- was about but what details it

did maybe you again. at try look Somebody the look or

Luca Zaramella

all. question the was Yes. I the e-commerce. of know about I part at the I didn't first mean, understand second part

have I part, second The no clue.

Alexia Howard

try? Can I Can you hear me?

Dirk Van de Put

Yes. There still..

Alexia Howard

again. Let's once now? try it Is clearer

Dirk Van de Put

Yes.

Alexia Howard

right. All Perfect. Yes.

whether just to on are which relative curious and those a you're given your your that where cocoa that Could some you an where there in are in just give regions changing in, sourcing. you your some cocoa thinking opportunities? globally? real Hopefully, the obviously, of where where areas parts question areas could coke of be in then underrepresented changing So think sourcing idea you've I'm might the be -- on you sales going better? you ton you tax Meanwhile, put is about Are headroom. And was overrepresented you approach represented second e-commerce, you are from your under hear got more you $XXX the us mentioned excellence regional and Africa. that cocoa in different regions, e-commerce, area new might to getting you're Indonesia. of motor approach about regional to a there's center cocoa,

Dirk Van de Put

Yes. yes. Yes,

the of side It Alexia. not Now was was you it it things, worked. technical

Alexia Howard

Understood.

Dirk Van de Put

On ecommerce. Yes.

the catching in First remarks. and you But The of growth are is largely as we in have mentioned some and at rest, largely And all, Roughly, the of a give up, with though, the headspace we're started would say very China have very the two we've that. is China, gain most similar. globally enter to Overall, e-commerce, moment. France also gains, in smaller you the prepared of the on we're on I which seeing if in UK And that big the we seen U.S. are the around also. that market Overall e-commerce offline we've take we exception working are in areas in world gap going extra good hard biggest France. shares say I us the countries. our other into countries our could to and share

somewhere are So we have else. some headroom here and but there, then we over represented

a that's bit e-commerce. on little So situation the

consumers assortment Going our impulse forward, developing to It's connections our meet about experience. in the expanding about Its the and e-business-to-business is better with experimenting And there. about it's and to getting e-commerce, for to which that them, more direct recreating data it in then, other relates need. channel with investment that us areas putting are are as to consumer. developing about it's

offline. mention are important margins that similar is to our and online So also

going with one this continue continue in and cocoa, in go We biggest India. We to part we But other the not But that's source in in large in world. Ivory stage, we Indonesia. we are source So I cocoa in America. buyers Latin on Ghana source to to of are to experimenting We Coast. source If e-commerce. the situation from cocoa --we regions. are the at are

so years. quantity real shift takes it, And regions cocoa offer us to shifting, and those developing enough not do sourcing

working need we're to that to amount cocoa that, but with it's we happen on the not buy. not going So next of year,

the the other we or already have our the pricing. hand, living LID On extra started income into reflect to differential

do. we we keep are approach. in are our two And government keep really we we ESG thing going to it do, We farmer -- to good income about through own program absorb so, that And fits and at the same is time, next our is the the because trying sustainable for real on We countries Life we monitor critical. that. Cocoa those And we fully And And feel what's can it's think with we supporting want going Life, in set think to what that cocoa. see which right to sure to on. want a complimentary were Cocoa making future actually year.

So by we cocoa to being are have Cocoa planning Life XXX% our through of volume program. our XXXX sourced

on So cocoa. is I that answer say would the

Alexia Howard

very you on. for much you. I'll Thank pass Thank color. it Perfect. the

Dirk Van de Put

No problem.

Luca Zaramella

Thank you.

Operator

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

David Palmer

Brazil Thanks. you continue had some improvement emerging investments. on EMs, emerging On question Good to Russia, and in you the markets. follow up a on a grocery the to marketing just markets question and markets mentioned other you And evening, improve. nice expect or in that previous

quarters slowing was there of that prepared think outside you remarks some late Asia I said your China. into also in

So this year, have maybe markets a just it some in a like you your clarification advertising. of improve emerging -- where don't then just windfall that continuing of the is helpful. growth terms be to feel across sort about you're would you guys of just in spending momentum reinvestments ton money such in And

said, this plan a So media, said it as up particularly I you or digital. working advertising measured And what somewhat doing. you be will going to be of you're expect about in

where Thanks. do that's where it? -- getting about into spending spending, So gross going this high you you're that XXXX? think and you could you're What's talk continue ROI, to

Dirk Van de Put

and Okay. the I'll part you second Luca. first the part, take will do

Luca Zaramella

Yes.

Dirk Van de Put

would hamper that on I do feel temporary well. emerging in So term long mind we're prospects. executing markets, our not the the say We headwinds

have an network. advantage We

We have deep distribution.

hampered if we ground. where work for anything, during think the are is of candy that's share thinking investment. crisis. from Central see. And and we markets that where the is well confident of America in have because recuperation markets, China, remain we coming America, Mexico, cautious us. are Caribbean, and and some more about the walk good have in obviously, execution, the gains we very positive territory. And Latin that focus That's can Where critical candy strong selective good feel confident management, they're thinking crisis, teams India, only and which the the on local we where as out in little I for Southeast crisis Brazil, fast. pre gum tutors thinking of We're the of we're performing position the And control India, I need were before Colombia, of hard, and on most We down Africa. already I'm which emerging are We of by momentum be cost Brazil the keep improved is situation seeing us us. Asia emerging parts and for we for our Middle We're big we've bit very gum what crisis. back the have they on is to that We They and sorry, growing. and European, we markets very we the r momentum, those will to us, the going about mentioned, Eastern countries. the

for and spending the we to a good that at COVID, promote for consumption. we gum of to contraindicated And on time category. people they're when masks, in momentum see So in lot next we're where on, year sure consumption of wearing home which so that trying make is more gum are doing is, are which work how more time

say So bit more careful. a that Luca? that's I where the we would are part

Luca Zaramella

Yes.

see QX, the given have may these see the we way it circumstances now back. David, you you pulled So putting to in

of this gains second seen we we said, have based. across times, share are in I we broad share they case gum, chocolate. of truly exception, the seeing, countries are part They the in double that we're the And extremely brands, in many so pleased the are would down with multiple say with we the gains year. And multiple as

and so will into we we that to continue want invest those to XXXX. And retain

spending. that fact be cost subside we the will fact between So will QX, energy in lower the lapping between COVID that

year. an that see heading terms in material line terms in next be we same think expansion I will part the impact next that EPS you the into expectations second and of working media in are of year Don't expect should algorithm year. in with the of EBIT for

where a slightly better in lower impacted the context we COVID subside, QX. these able be a lapping will fund B, will we maybe we incremental other more have will A, be be a those share categories to P&L, even labors can By will potential costs the retain recession. by gains, As that into realities, including the And to investments.

David Palmer

Very, very helpful. Thank you.

Luca Zaramella

welcome, You're David. very

Dirk Van de Put

you. Thank

no think I with that's questions. further

Operator

And remarks. are Okay. there like to no turn call questions. to time, this management further I closing back would the At for

Dirk Van de Put

Okay. Angela. Thank you connecting. for you, thank Well,

you feel we XXXX year. close had good, we a about can we will looks like, you for given to third first is And where your feel in good also guidance of happens about. give in know the Chef, anything COVID you As there's the that possible, the you. situations. you more pretty year. you for we interest. information. see, Thank We've for solid And or a Thank these you and the never the what We if can good which fourth And heading how obviously Andrei next quarter. quarter you your thank give because we else, flavor connect feel free what If call, is the questions. will

Operator

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

now may You disconnect.

Mondelez International (MDLZ) 3 Nov 202020 Q3 Earnings call transcript