MDLZ - Earnings call transcript Q2 2021 | Mondelez International, Inc.

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Operator

Good day, and welcome to the Mondelez International Second Quarter 2021 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by Mondelez management and the question-and-answer session. [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 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 on otherwise revenue COVID addition, also presenting X-year We're a on basis unless provide In our XXXX a provide we better growth noted. basis year-over-year CAGR to growth comparability results. constant on

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

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

Dirk Van de Put

call thanks Thanks, for Shep, today. to joining and the everyone

not our widely Firstly, through who are customers continue where available. want the markets suppliers to pandemic, acknowledge I yet our around to vaccines colleagues, COVID navigate our and the world particularly in

raise full strong and drivers. our a and to outlook the deliver and continue appreciate accelerate year availability against We our for had us revenue enablers growth our products. advantaged to efforts growth colleagues, our We to half gives strong half sincerely well to to to to strategy executing work the confidence of first hard The everyone's leveraging our vaccines X%-plus. our first maintain supply access

travel last trends was mobility helping & and such in recovery areas improving to as year. seeing that negatively places, many impacted drive retail in world Gum are We Candy

and strategy growth, that channels that a last volume-driven that line returns COVID. for and it this demonstrated driving the as due is see working to again, strong continued well categories Once delivering to our year demand is line bottom experienced our as cycle consistently top have good as a profitable, also We shareholders. demand virtuous is elevated we quarter,

in growth We increase capability important are well And growth leveraging this revenue continued in as generate our this will we is acquire later. our to the environment actions management an first long-term our announced to of brands our particularly and year even fuel snacking more on strategy our have which strong right are QX to right we the To in confident reshape focus strong taking as which we to to that rate. continue Chipita, the investment further capabilities. remain and I years, continued agreement accelerated end, about portfolio previous and After speak growth. to and deliver I inflationary for half more accelerate this

media growth be we cost a We revenue. quarter funded pricing leverage, working actions, faster discipline. sector, factor this through double-digit spend. achieved and the in and by to quarter first grew lapping X.X% which continues half financial the to the headlines for We and in the our XXXX. five of inflation, slide X.X% revenue growth performance. Turning cost of Despite X% grew of gross This our profit in half in increase volume than continued profitable another

aligning our increased across our Adding last can that slide our averaging XX% by of and pivoting better flow where year-to-date. and track are the on simplified our portfolio of this record and a slide the half execution profit share to to to excellent of A&C cash the $X.X $X.X strong to company return, combined holding by being quarterly basis, in and By terms increasing share growth consumer. performance gaining consumer free stimulate which billion we our commercial deliver two-year of on On a an increase we shareholders, dollar and with to seven. X% of of a versus Our strategy closer revenue our growth growth-driving are remaining a culture. half and stepping capabilities in XXXX. versus close focus and brands or accountability brands rate. and investment a margin decisions a launching you We to six to now XXXX, continued our billion percentage million investment, strategy winning capital late And returned focus. Driving growth in I up and and advantaged one made levels are clarity cash of performance. our achieved cost cumulative consumer through $XXX volume-led in the growth informed one generation insights, requires see local-first by by year QX By behaviors incentives to since from capital revenue discuss model we sustained the will

at-home the elevated of working here are of returned rate As been Comfort and and X% for two-year as have sustained second core average category growing uneven, begin to behavior COVID, we as driving yearly is for biscuit that and and important has adoption remain on-the-go half, the continue is chocolate Globally, this are distance mental they away desire appears largely in new the levels they love. some reach is nearly growth and comforting convenience, nutrition ease, the home, gradual in return shaped know trusted are it strong remains Year-to-date, increasing as and categories. is reaching brands still higher shifts our is consumption impulse availability well-being X%. of our brands that time where home we shopping at and factors and growth recovery dependent to stay. More by vaccines. Mobility a snack almost on a around online from from decision snacks. throughout value, have enter behavior drive normal to the and consumer to and world demand countries and and but reopen. consumers for pandemic, Variety, the leading of restrictions as consumption as

Solidly categories and of illustrated brand growth these and core are Slide The by realizing higher have quality our on is strong purpose-led investment, long growing we first X. are leveraging a opportunities such long, increased opportunities runway we that marketing runway of as enablers ability. and pricing the

driving continue impactful Trident. in gains with progress As the like digital commerce, Olympics consequence, presence grew in categories triple-digit channels with and Also this a UK, growth and last Cadbury partnerships the our quarter, XX% Oreo key Premier share our team against after make a AMEA include US in expanding quarter year. growth basis on League These which our we through drivers. to this growth core the key category like to close the with reported

continue in We and are another key and China countries gain quarter. XXX we also XX, XX,XXX distribution expanding where like India stores presence markets to in emerging our with this added

& now in And exposure benefits like where We increasing realizing cakes strong double-digit are finally, premium, dates segments categories example, Give through recently to Go our for where seeing integrated and this US our have are underrepresented, accelerated are pastries, North acquisitions adjacent in like increasing year. we where on are the the and we also America. we foothold potential of DSD our high-growth system are we to growth

Oreo like Muffins. also are launching We innovations

Slide X. to Moving

And net cookies. pastries attractive with and will the France, X doughnuts leveraging in North well the includes is Let attractiveness has the the which XX%. our categories. in and building the than and fragmented waffles finally, It a category share aisles. This number Go brand revenue cake. a few leadership in presence snacks category, pastries by its petit into expanding to cakes which our the core more me see Give have cakes and Europe, X & expansion add per the the be acquisition profitability. number further of our X core in a cakes Chipita, into brand And higher can a and right pastries or That above X for growing LU brands it. America. Oreo, space. in and market the recently, by cupcakes, expanded adjacency Starting category brands, core number about capabilities typically of is players value premiumize cookies a gain $XX beloved is provides also it even incremental the into soft leveraging a It On company our recently category clear minute on a and The have beurre is that package of following speak a now pastries is kilogram examples and reimagined biscuit we from for a our opportunity close billion as platform with of we at and we highly And you our believe we position. cookie below rate a Both to slide. number capabilities, and a biscuit player. the the the can have

have leadership in our is expanded chocolate the the cookie brand. firmly bring you has will category we into cakes Cadbury can initially that brand And with products we in chocobakery which Chipita rate croissants cakes soft to company. the our expand brownies will Our contribute X quality. main Milka, and We expand same growth now and Oreo in like number And position finally, accelerated for an the And acquisitions, core Germany succeed. Milka into and brands the imagine recent to acquisition. will Austria, Cadbury into into believe we pastries do and the can tools the chocolate through the croissants France, our innovation. countries taste aisle our where the took between and soon through soon

XX. give other strong European high expand We're on its is portfolio, prepackaged emerging in a which excited a by us geographies. predominantly breakfast dive or portfolio let's towards the consumption skewed acquiring deeper The single-digit the and is is XDays $XXX presence exposure croissants, on Chipita million business, attractive markets which It Now, pre-lunch many potential to brand. with growing this little about occasion. greater to led slide very

with is and clear attractive other believe innovation including distribution there Chipita have We co-branding, we in and pipeline. revenue the synergies

add also of acquisitions to will combine our realize opportunities. will efficiency seventh This expect revenue to We $X.X be XXXX, since to billion our business. which

Chipita executing I Chipita acquisition. In to our that Luca further sold to a as also financial look from to hand QX consistent We stock profitable for down that, performance. With strong half positioned board, can We be and forward results. fund in our business conclusion, this will continues welcoming see can part the over growth billion I come. first strong well performance, to to on we our details for years are deliver deliver strategy more and growth am on which $X you believe of will a engine. KDP confident

Luca Zaramella

Dirk you, good Thank and afternoon.

more Mexico in have Brazil, Of We the our resiliency note, underlying encouraged with market for emerging with performance what we This Our high the Growth XXXX. continuing. invest flow. was well the XX% average growth consumption saw two-year was market India, for We than dollar by a quarter the was quarter we than second and free continue also half growth despite India, in performance for emerging quarter in was and opportunities during to one. by growth while increased strong, in growth, reinvestment X.X%. Pricing, two-year term. performed and that off for include key growth robust the market being all board. our was regions, on by healthy brands, one. trends already results trends long gross these in X% profit for robust more the the restored In X% improved QX, and growing demand nearly market, and a in of single-digit topline in and growth growth which markets across basis, of quarter favorable coming attractive QX was delivered Russia, beginning cash India lockdowns. strong affected strength the contributor. Developed across grew behind situation volume-led. China. elevated Emerging remain June, X% quarter at line and X.X% allowed based broad COVID-related attractive double-digit The Revenue and more also been than

Brazil, Turning category. Biscuits Germany performance. Russia, posted average. to double-digit digit growth, two-year slide while grew in XX on and high in and single QX X.X% grew and Mexico portfolio this X% a

results albeit Germany, declined business restrictions retail, growth, lapping levels. XX% digits, XX% strong grew average double-digit with all XXXX. travel still quarter mobility in but posted two-year mobility X-year Chocolate double-digit some Toblerone X.X%. Candy in Lacta and more than the resulting despite results business low basis. big North COVID of XX% the in trends & improving Toblerone's lapping from improving Our declined growth restrictions from a Brazil, for India, Russia XXXX XXXX. quarter. all growth the India. around quarter, this reflect during business a Milka This grew Cadbury, during of America significantly single and on is X% world grew trends and only posted at the in Gum over strong

growth Yet, at not category to the we COVID. the about to better half the dynamics, recovery improves. year that pre of XX% expect generally be is cautious second outlook as our And levels. gum mobility We for full year still are still XXXX does full imply a of

I'll cover Now share performance market on our Slide XX.

see to good share performance. continue We

be as performing. it feel cumulative truly they gained chocolate. depicts share US Russia of share on percentage of to this of of June, or results, impact share, our market primarily and China, primary category a combinations. of unique Brazil gainers & Notable COVID XX% Candy cumulative for the Germany, to held US, in we we as gained quarter, the Russia Given Africa on and have quarter, a in the how improving of held include gaining drivers to and XX% a Gum due the or On are holding gained XX% South basis basis and the we last X-year as last since base. Biscuits biscuits X-year chocolate X-year performance. performance and or revenue better or candy revenue switched continue held in we

Overall, XX. that to due strong Now initiatives management profit let's leverage, year-to-date. Slide inflation second faster productivity, to commodities, pricing more Gross offset in on and increasing strong revenue, was the labor. in than profitability and profitability quarter our than review helped logistics revenue line grew growth and X% volume

to pressure are said original anticipated that, XXXX, inflation dollars concerned. that than managed costs profit far to some they we managing and and for but believe are investments in of second might originally holding many we the As continue both. points the And as times, as there stance gross commodity our start higher Having at the are half. year, are are we we be we said

higher a enter with sound In is than that in investment Operating increased goal addition, income to XXXX. level our XXXX also by enable more profitability dollars X%. will

grew a America QX as mid-single-digit. X% Latin at the AMEA the plus is of XX.X% grew due on X-year X.X% X.X%, strong due line COVID on inflation in income recovery to working double-digits. the grew minus to India and quarter India well substantial media a Brazil in in digits. Europe mix X.X% quarter with over dollars quarter by of increases. America Moving significantly in leverage X-year mitigation and grew X% OI declined XX. lockdowns regional another with dynamics, investment cost a growth gum basis as OI of delivered more aided X.X% big slightly results volume of as two-year and efforts average dollar than some on grew growing a operating America of two-year quarter was of top challenging minus in and year in growth, average related the a than volume on brand as QX previous average, by includes start more quarter exceptional region with grew because growth Slide and to Latin on despite as lockdowns, to AMEA double that posted in path. average year. which revenue a cost dollars and plus that the a mix X.X%. others. X% of X.X% XX%. declined North growth last Operating income pronounced X-year in well this

to at year slide turning operating increased EPS benefit XX. constant onetime driven tax EPS offset QX which gains, currency, were X.X% previous partially by a Now, of by mostly lapping on quarter. in the

half constant First due and at increased despite a year. impact currency, operating lapping tax X.X% last gains one-time EPS to primarily

delivered $XXX us free on of return half. for second XX. bringing flow million slide billion flow quarter, the to in $X.X Moving capital and to We the cash cash first

an Dividend today. X.X that growth the of attractive capital another increase part first approximately XX% And announced billion in allocation approach. over at of end, cash half almost XX% of This an represents remains the repurchased also prices. five our we dividend important increase We past to years. shares in to our

XX. Moving to our outlook on slide

X%-plus. As strength, durability net a of category trends both our continued half growth we first in markets, result developed are and healthy plus and increasing to year revenue demand emerging full

the travel such we X%, like first business, which rate whether in the two implied growth world With for an as benefit is the least in relates channels the beginning are to categories at half the improvement retail way plus X%. at remain to plan gum, it mobility. from We half and prudent

still vaccines mindful and global many degree themselves restrictions. countries it We transmission also is a in different rollout, find on volatility there stages a as are that as basis significant of to COVID relates

terms continue high In we expect single-digit of growth for the year. EPS, full to

as have of in additional share the the growth topline our to sustain on upside not we to EBIT continue volume-driven business full the benefit in the performance. reinvest back will We factored

continue our to taxes free some coffee-related now expect cash flow into year, as also $X for additional generation We of the outlook. are factored billion-plus

to impact $X.XX by by based on percentage expected on and the translation rates. reported two points is year ForEx our market current EPS approximately revenue now positively

of based degradation that in on and a As COVID. a the current not factor by in said, triggered be worsening our environment is operating updated could outlook conditions does material significant

the to to of the and that revenue the half second related also costs growth expect and commodities, plans logistics management, order some year. executing in simplification be continue to labor we inflationary in including incrementally We our offset pricing expect against higher to of in

will and To and continued like new investment the closing that, core close, and As investment doubling executing This in adjacencies, down in strategy. our to on on focused strong means up the let's allow consistently brand, opportunities our underserved the for expanding virtuous bars. segments cakes and XXXX Q&A. we channels, already high combination we with level. high-growth enter in remain of that want With margins driving growth, said, against open capturing it pastries cycle

Operator

from [Operator Ken Instructions] Your first line the JPMorgan. question Goldman with of comes

Ken Goldman

Dirk, prudent. that plan your thank you remains Hi, you. mentioned

but Again, volatility. your talked your some what and I'm you see for how about be More of you year. know today ball, of the optimistic? Just global rest you of get have You world I more to of in concerned? trying a might crystal a though, key markets where the emerging don't the the areas is situation there are that? any outlook curious, sense

Dirk Van de Put

Thanks, And a yes, go Ken. Okay. pleasure into to that.

probably a strong X-year growth XX% You a we India. in have but disruption with It in QX had average in now in saw we have and X% market probably the been quarter basis. a emerging on COVID May. higher that performance growth caused would

big And around so look look markets. would the you if at say, I

strong in double BRICS have digit the We growth all countries.

So single-digit China. Brazil the high growth and and Russia in then

of constantly points of So be would look bounced countries, increase. back there's May, April to now looks it. year-to-date. But gradual mobility Gum X top, returning India, was. well. there. the peak I always daily to to a performance. and will we've more that cases in seen mean, category overall, are COVID we at have They India China, except the If strong I operating nothing under and to XX% share what cause those control. particularly like a for June a crisis improving in seems on of the they sometimes some susceptible at are be on gains, I and And of potential a like COVID country a there's say volatility, maybe, of path they seem China,

consumption which, on distribution. new the very look remains there double is team more disruption short-term also But very chocolate I vaccine as the a the rollout we nervousness strong the slow CAGR. while increasing executing are had strategy the Brazil, And doing rollout they double-digit the vaccine and digit there. heavily COVID, further then and the growth, see affected X-year and COVID believe if to very and still to variants. I accelerating So, is And by still at the In now then Gum you an impact. prospects, significant due and is have biscuit Brazil still Candy, range long-term And by growing the strong. know, risk & of driving is very starting more is well, it's negative The reduced net revenue investment, mobility. our

also And we in mobility in so quite see expect we the Brazil. second to gains half share be biscuits in in Brazil strong. some And

in apart would a going that's that say, cannot big and Southeast surprises. at probably. I say, said, I is markets, major just So, would be take from months there this the affected, Asia so to few particularly stage, I what

smaller by still part fully The markets, monitor two-year there of smaller but on very the in a Africa, so America, growth yet, We look fact basis, Candy Vietnam have basis And last is have flat coming don't markets, emerging they growth year now. at that rest world a that I driven not they quite and business was the And general, then I Middle the & below the XXXX apart that's in to from East markets, remain think then also markets. a peaking Russia, the quite a QX two-year the strong. had that have probably they also our XXXX, Gum nicely. in tough of need in year, back we and transmissions They That's levels. remain recovered. and careful, quite If would say slight the are Mexico, Indonesia. on closely. against we Latin to European I those important

and overall, doing are in Africa. potentially, gradual our at markets, that mix say will I time, But Volatility would but the Asia more I see smaller of that on emerging would big moment, overall, there are largely India increase over I and versus a emerging keep the markets think but So, stability Southeast XXXX. remains, well. are affected showing markets the and

Ken Goldman

was just of thinking fourth phasing Luca, the Dirk. from you, third Thank helpful. quarter very the line top about And I a then is perspective. quarter the and quickly, That

quarters, tailwinds mind? like or those consider there of each model you'd we are to any onetime maybe headwinds that us As or keep in

Luca Zaramella

Clearly, might I between half given we X% for at straight QX first appear X%-plus conservative, implies will second and spread, growth the as is the mean the I & least or maybe know answer Candy X% very half no. it about which first Dirk strong finished are in Travel we half. And emerging of and not in still the X%-plus Retail at evenly know and with half, QX markets, happy say, trend. the least volatile is Gum certain talking is the guidance, second parts But situation the would is we just recover. extent And which do the to World world. the

So we and growth the QX. quite between good QX be the about X-plus to Expect spread evenly percent. feel

Ken Goldman

Thank you.

Luca Zaramella

Ken. you, Thank

Operator

Your line next Barclays. the question Andrew with from comes Lazar of

Andrew Lazar

Good evening everybody.

Luca Zaramella

Andrew. Hi

Andrew Lazar

But you on Hi better additional standing off, two start you of growth to maybe could And kind kind some outlook. I you're extent I path combination market for of to in those share, impact points to Is for how break was growth Thank two reinvestment wins those about of to What starting significantly incremental of talked share share and there. Maybe EPS guess a back inform hold X of a the the to reinvestment you year. hold us. year given inflation. And it's the first with, down or your and organic ability Luca, you that to larger the portion are you. hoping, the obviously it's margins expect revenue or these to last helps you lap these share some the up some as of the of market go gains impact of seeing to forward? the half year. unprecedented on from

Luca Zaramella

I'll start maybe last with this one. So

In expanding of across peak And terms the share said many board. the we gains, last year the were consistent times, of in each share as gains QX. were

justice top the give now and the don't both And biscuit middle to tremendous about, Our we're talking XX% size chocolate share absolute posted gains amount were countries XX%, of obviously, in share full that gains. shares. countries

intend fairly that, is lapping year, part I today And share of slightly of the peak growing tell And it year. we gains can so, in happy second the the the over we by is it potentially keep result last the period. as are you and as QX those overall with X-year what to

In terms pretty impossibilitated year in seen first second the A&C a of half. Obviously, going last little you part have of we bit are with line the to the in absolute emerging it, of in of much in so dynamics, that what it when markets. face of on is terms A&C do second far of But we places, line to in the were the part business year run certain the look increment lower. amount the year, you of kind particularly in be in But invest part and QX absolutely for the the cut the with will first is numbers, we rate of because year.

say, higher and some commodities and the I advantageous In impact expect part. of our first part commodities in the ForEx of going of be inflation, of part more ForEx there to the been to in terms the and pipeline we pricing year. be would start relatively To is year, has with in and the second second

A, to some in and some pressure continued overall So, share there the more will disciplined and XXXX; pricing. QX will GP But with specifically. to with that enter us be enable terms of will goal X, strong be for we And investment. some continue level is in cost very momentum;

pressured be point incremental time, line pricing. have at I But than So, of more this think will as said in I QX. sight to QX

to we more RGM, sight We to a of and for incremental continue of goal certainly have to said momentum. what with line line as us sight we I call to ultimate which volume. our of as enter brands is with XXXX have again, And to we the strong critical support

Andrew Lazar

Thank you.

Operator

line Nik the Your with question Modi of Markets. Capital comes next from RBC

Nik Modi

everyone. afternoon Yes. Good

from just gains. I to wanted and on regarding And consumer lot trial seeing Luca penetration? us share was Dirk, share an you Thank a can of follow hoping of on the So ago, Andrew's that And household some provide you. question year help retention. I up you're some and consumers. maybe gains? Maybe around perspective sustainability a were about talking What we update these provide can new the

Dirk Van de Put

Yes.

penetration look if last is about households household to. holding the million I of That on XXX falling are in XX So, back. not the we we have which at months, an globally, increase

The was of think than in this coming slightly chocolate. that back is Gum will other increases. And year of categories in than -- impulse significantly strong to mobility buildup going a gains, & to as but share combination a I than higher channel area or at-home that sort not is as lead the is I in last it and an and to lower giving XXXX. necessarily but biscuits was consumption was is But there's lead from growth then Candy see it it still strong it build-on that well lower

in of over last our we our in that But did I this. be quarter quarter, by market to knew but combination lapping some the our year second are of year that, was, fourth those way. worked gone, brands, significant increase increases fact also so to will on competitors. that working huge factor also influence the be driven chain so we'll kind go increases we And the highest of away. That a third then -- spend top, that half our second of and time in our of expecting, in performance lapping the performance That are And year. think, last would was are saying, we're the course, I effect of supply as was second the brands share going Luca to a we continue had milder. we last year, a share and but the as the chain that than our increases better And media supply

expect to gain. market I So, to that contribute also the share

but at So -- what share year last that little increased the we market a to we retained by is the or of will have that gains this the potentially year, of expect end end bit. happen had

Nik Modi

just helpful. last very And Excellent. That's one then question.

-- you are other what seeing of to start that? we obviously, been they're has to the this retailers won't Are US a up and people around the inventory market surge differently? seeing that be pockets favorable there Any as in able US come early. any in not cases world the stocking behave buying the they As is in if been, so as have start supply context fear

Dirk Van de Put

stage. this at really Not

but was seen significantly, would really bit, I haven't little We not a It say. really anything.

stocking if wear to is as of think after of previous the a masks vaccinated like to situations. increased Day will stay to I consumption not even it will worsen circumstances the longer evident fact home. while. because at continues moment, lead news that the repeat again. CDC to think Now, a start should see saying we Labor people for sort don't home, at in consumers the think, a at continue I today work returning might might massive that I home certain at the is But The

So, at XX% XXXX. instance, the for the at versus food increase still spend consumption moment, home a shows

not the quite our I eating think was out-of-home snacking consumer will well there more, helps the But which potentially, is quarter fourth also still still versus down, in out X% venturing the continue is quarter. in there. category. the spending XXXX. it It's into third that what the And and

retailers I benefit. do So, I think will our and of categories will stocking we sort expect But replenishment. see massive that struggling overall, with not

Nik Modi

so on. Excellent. Thank much. I'll pass it you

Dirk Van de Put

you. Thank

Operator

The with of next from comes Bryan of the question Spillane Bank line America.

Bryan Spillane

Hi. Hey good afternoon everyone.

a question levels. about Just ask to investment wanted

in incremental of as to invest in be you year and in part I -- what's the investment, full place for good 'XX talked the about 'XX is well. the wanting for think to guidance some a contemplated

are So, the investments of or us product are. if what where then those One types around of just second, geographies? I categories a those sense questions making you And -- give which is is just guess that. you X where

get and So marketing? where of Is it what an trying are Just understanding to product packaging? they the of are? investments kind and

Luca Zaramella

we It is of strategy all strategy had the in since of new the a XXXX. combination the launch along

foremost, and also it brands, is but around local global brands. First about

about media the more we are else. working than anything increased It is all so, jewels the benefiting And local have world A&C. around from

we the we our have years, of couple media so, And that of reducing and nonworking in plans are in the numbers. our over consistently last amount

we is We in in overwhelming of also consistently of gum of the we are particularly to some obviously because want increasing, is investment the quality, these It And like envelope investment the working part chocolate, new biscuits but continue some etcetera. of and around and are the Latin towards new places more increased skewed benefit reap investing we But pushing in media. renovation America on packaging, mobility. brands. China

revenue And and of think terms volume think And that's back is all and local it so, I paying certainly terms in in around gains brands. share these all growth. I global of and

Bryan Spillane

you. Thank

Luca Zaramella

Bryan. you, Thank

Operator

from Your Moskow next of question line Suisse. with Robert Credit the comes

Robert Moskow

Hi, questions. two quick

it freight question hear SG&A I in you have is is, And did or XQ? it logistics is if and first up didn't out. that The is, costs, called higher it experienced occur showing in single guidance. to high COGS? by EPS I $X.XX about the in off a the following restatement. digit base, confirm want the was, And other higher It's then of just it about

will there's the are some this -- -- lot of the but Thanks. also I $X.XX? you of line that So, said of it bottom of around to a because drop reinvestment, you some benefit know order saying top line

Luca Zaramella

cost a and pressure already most it freight it North it, It a on and the Ocean and the COGS. really freight time. not that cost QX, is logistics is limited So into in cover are saw part reported but to is pretty a rise point of we only for is it is, period phenomenon much America. everywhere, North for impossible long of to America, in

more is fact on-lease etcetera, in that given have the high. particularly is We are general, we than we us. a are so some logistics called others, system, inflation are There is that the but rising And pressure out definitely which DSD there pressure in insulated with co-pack in costs trucks, and a also because commerce And is it is and point. captive area. than more which system, Obviously, US cost in is that we packaging general somewhat a facing freight.

that the by restated is revenue. the of little But incremental driven EPS, back is been an terms business. is upside the a have the of in of that to high being of reinvested been we and bit there has single-digit, base upside guiding In part the most

we And pricing, that us and our share that reinvest. momentum; A, also You to as brands. are level if world, strong implement B, of retaining, enter continue the we with might high the profitability want with and to might we imagine, support we more share around implement XXXX, obviously, pricing given we more allowing to that Rob, is a need to more

Robert Moskow

Great. Thank you.

Luca Zaramella

you, Thank Rob.

Operator

comes line Alexia Your next of Howard question Bernstein. with from the

Alexia Howard

Good evening everyone.

Dirk Van de Put

Hi Alexia.

Luca Zaramella

Hi.

Alexia Howard

for Two quick questions me.

think leverage you just if you're the getting just whether is cost press I'm there from I benefit release productivity, so, curious those manufacturing that margin. just question some revenues around then operating And that's Thank what's going mentioned on the and if gross my you specific both or the second where on? the what's negative and was really manufacturing seeing if describe that that to quantify you able were in savings are happening? were the world? around is And on mix I commentary the and you. wondering qualitatively

Luca Zaramella

So, commodities in with the we of pretty net net and much. productivity, terms everything else productivity in of costs, exclusion include ForEx

in inflation So, is labor other that inflation of there. type and any

particularly Latin is benefits. productivity productivity. conversion as rate Clearly, costs. of of is and that in said, that fair last EMEA few actions benefit growing as of And evident in the giving put productivity instance, invest say obviously. is fact muting X.X% the initiatives behind providing But are somewhat that fact our US, for also the years is in America from in factories in where, bit have think well, the to to a all inflation, is our a net simplification, that it's we us the that CapEx in logistics the the I volume having place which have quarter, we benefiting and that are portfolio, I is we places is mostly part higher like good We that that in of terms the leverage in continue

In terms you used running XX% World about a World it what billion the XXXX that called as of and rest to $X.XX portfolio. in Retail, to a business still which is it prepared in And the of very premium much is Travel mix, higher is which be is runs less, or during a Retail, think out I remarks XXXX. gross is that little with a at we because of is at sold profit business bit the a Travel this mostly Toblerone it

GP of I the portfolio. again, one, that is is runs is rest other total higher margin of The be it of a that used gum. relatively to we a said to that it business And is It X% XXXX. XX% revenue the in line is that what obviously, of that have. the with

can don't impact if tell business number. want in you I be bottom embark that, the in So the an will and I is restore line. of material impact positive will exact What levels to giving drop to you we mix terms of a that to the it dollars XXXX,

because we the that that or fair at I embedded line benefit is have higher running about It to travel today, last of lot P&L. measures big cost to seen XX% you today is the higher are XX% profitability. this say gum into haven't running As at said, offset and than retail through material a that a think will year, it or year a been impact the to be is able bottom it to world than it

very I in by is And line, are have. fact, what the happy that you double-digit holding the good why reason profit In at overhead XX% despite first the levels when we we're at we it look with and half, think A&C. increasing

Alexia Howard

Thank very Great. pass on. I’ll much. it you

Luca Zaramella

Alexia. you, Thank

Operator

of with question next line the Your comes from Growe Chris Stifel.

Chris Growe

Good Hi. evening.

Dirk Van de Put

Chris. Hi,

Luca Zaramella

Hi, Chris.

Chris Growe

I for just you. Hi, had guys. two questions

up The differs a I'm the seeing of pricing cost and limited it guess related that, bit developed degree pricing Latin if inflation it North America a just little based pick I differs, to the how and trying between year. emerging in one And Asia, be with just on in the first sense but very -- very relation Europe of to America, pricing strong more half that inflation, to of would second to in in see I'm start markets. to get in the

Luca Zaramella

pressure it difficult it's commodity the about is, future statements profitability. for I you as me tell and to market. Look, down boils What we make in to segment would pricing, are pricing seeing

cetera, et markets resins To sugar, costs, pressure oils, ForEx those common some see the like would material, And in markets, to that, are what that packaging world. around edible in commodities I compounding. so, add is all developing we

markets. about we when you is costs, we costs, And in at freight, Certainly, logistics pressure in think some look more oils when clearly labor the these packaging edible ruble, there look material look Russian a impact. and if at US, we of the cost and so, developing there at when is

we what that any operate different developed is continued segment pricing As I America have the trying XXXX at level to I give And want there, because, second, that, can than would most is the I allows we investment. general And start don't likely with in, A, will capabilities any said, I as business that want you tell is growth I that, you great have I enter by to profitability But in all other leave I future North don't comments future not we pack any area. that around terms, pricing. about leading in management, said, tell and to a making of indication revenue of segment. it

Chris Growe

strong going about out Thank I investment, and a reinvestment XXXX. just just a want just going revenue about you're think growth. frankly, heavier it to relation you for next in you’re you're to I trying think Brian's to rate position in color, I you get that's assume, a Is again little course of the continued how calling as year normal a more about quick question Or help you can to of that you're just year? you thinking drive follow-on investment to foresee? be hopefully is be for XXXX. to the year, it said the able to And understand. reinvest earlier reinvest give. in the every I next color I

Dirk Van de Put

that is ideal in And in dollars planning change profit every of -- are let's trying general, course, the that bit every generate in do, to year the what That's reinvested take half year not or down to No. trying little extra we're to year. that we gross we to up we're next business. format, achieve. and is a say, the we're of

more was line. so imagine, we to gross the As little see do will and you pressure with have we might Luca on we as more inflation we deal have explaining, can to our profit pricing, that a have bit will

our the that we But our from year, we better So, have topline perspective, gross next growth the will that mean the then do -- we what increasing to what for year. expecting get do of in start expectation we things, into next it, will investment profit expecting a will reinvest the to we business. we are ideal expecting exactly significant current line. to of we're of position and in are see of remainder at most we year, ourselves of Continue That's year. But explained. the I significantly looking next no way at

a talking Now, on usually to eight, a formula I seven year-over-year basis, double-digit about. our that's was that sometimes increase of investment

Chris Growe

your Thanks sense. much time makes so today. for That

Dirk Van de Put

Chris. you, Thank

Operator

Piper comes question Lavery with from next the Michael Your Sandler.

Michael Lavery

you. Good Thank afternoon.

Dirk Van de Put

Hi.

Luca Zaramella

Hi.

Michael Lavery

try hasn't to wanted and on could maybe of on is were growth. and SKU you cutting progress know it your rationalizations I give bit. organic slowed a to just you them sense innovation SKU big, together up One, a tie follow the rationalizations? the XX% Just clearly little but

learnings what your implications have products. that how might are then -- your And related to process. on curious you launches that if about little changes Just new innovation, a also if as it it's and you gating it from what just at bit think or screening look

Dirk Van de Put

Yes.

think about rationalization. of levels how SKU on really SKU all, of three First rationalization. There's you should

of First stopping there all, is production.

not anymore. so SKUs reducing And certain

having SKUs then inventory those not And then anymore. in SKUs having third, those the Second in anymore. is store not

those could ours, running like XX% that of a to SKUs. kind been So, it's increasing have that of stopped. make renovate, three which XX%, rapidly. of our renovation, And going with business the gain starting think down production net On really we total SKUs to faster of in sort that effect. XX% most that in-store we In-store, rotating not what We of And less it, It's, is first would of XX%, will be is reduction of same we replace on that those or we that existing give should is then shelf innovation, write The and you well that, topline, see moment Where space mind if interesting. to at in show us things. we didn't kind revenue. and and update, trickle yet want cost don't it's it was are go our XX% effect all, keep the sales. that the an by have we're SKUs, in-store. I call up of X% we now it's but effect We're off innovation gradually to a has almost of levels. also even more unnoticed inventory, are inventory. the out Keep manage big that the three X% is

we then core. requires is, the for company. over lead some is where that hard. can our to a bit in time, of little investment, a part. mark. have Second, to that. been growth doing part aiming core but significant that within that do the showing for of it's XX% We're have, core, on. and news more up way is innovation resources type time, believe still new our types which And we beyond call or of activity the to that beyond call been revenue a approach seeing working innovation to net to and the And bigger bigger then we're innovation what renovation innovations. being within amount in sort is from the products. and has so we market benefit there's there is renovations sort can the we've segments growth clearly we that What we Where work the of flavors the we And flavors led or the And what That give longer trying that new around have requires reduce we new core also shift We're That's of composed. that.

to would So, at with given we has what are moment. is the us. contribution very way I innovation an upside reduction happy the say the growth XX% And to panning here also, our out

Michael Lavery

Really great color. so Thank you much.

Luca Zaramella

Thank you.

Operator

Montreal. your Ken of the of last Zaslow And line Okay. with from question comes Bank

Ken Zaslow

good Hey guys. evening

Luca Zaramella

Ken. Hi

Ken Zaslow

price customers. is how And with this what questions. elasticity seen past. you to different is, Just in have than of a the couple One

tack-on much And acquisitions, be, it think acquisitions, how your about how when your add going do you would question all incremental much added? your that's sales bolt-on think will Second forward? -- growth you

Dirk Van de Put

The Luca, do first question, you --

Luca Zaramella

Elasticity.

-- given that raises if we prices numbers see elasticity So,

Dirk Van de Put

Okay. Yes.

Okay.

through are not world. the packs, the important, And there extremely -- a an But food the what bit an question I've categories. it Sorry, perspective, elasticity point other for I didn't average first sold of solid. interrupted the but instance, price a markets was while is I Germany, done more important. which from larger showing categories supermarkets you would from most our the normally I per to depends France, around exact In is probably are can't time, market the where as price pack are what me. And bit and for that they're developed seen are understand is price kilo in where in it little points, in sales say, elasticity in much where

But pricing, picture. when the of direct about about can easily not we it's think I promotions architecture. should we mixed a we and say, trade It's things depth would so, price up at pack or amount then activities talk of price again, deploy. And increase. more It's you just down. move some that and that we call have also the what the we And

number really grouping maintain points need markets, big change. a might price the points. different. There, price immediately In translate to not emerging effect for word sees of slightly which activities, about is is or a pricing those in price a consumer necessarily lasting suddenly a it's who sort of So it's of the and you

our So on Also improving harder making productivities, so improving so sure we in we there distribution work work and and packaging, of we cost do much general, is our what that the pack cost of of on. price hard the on reducing on. ingredients, architecture

to to where shows bit when more in price from elasticity stick So have move your usually, effect a points. to that's the approach, of considerably the And volumes. a you difficult a quite away need price you point,

different game so, And the played slightly there. is

elasticity. thanks two our would the America we're we heard Europe, I approach, massive. would in previous price North in the general, to than bit little and and it, not RGM doing as but But you a bigger say, in say. I that's discussions, manage probably movements explains that year ways that previous hope that I And are So way

this an from able a the comes it are is X%-plus example deal and seen growth volume to in We with quarter. elasticity that we've

it's added probably that that they is line. As the high far we've to and probably it growth. relates can calculate add to acquisitions idea order digits, acquisitions, done top to so of so X.X% single billion you growth. our would grow our top line have The in about $X.X say, they I what

thinking a plan at which In on Our about with counting complement thinking, continue general, is of and we bolt-on It's announced growth strategy, we then rate. were much growth growth to X%-plus when were always growth, from that acquisitions. to acquisitions. that and would organic come to eventually through in would X.X said X.X, do we difficult and acquisition. we we how that say But, when our that

in we less mind. more have what that's So or

sort significant X.X. that's us that and contribution we take to it of a thinking We probably a relates would as that lead acquisitions acquisition. haven't many done it years of still yet, But before that our will to math X.X, few got the

Ken Zaslow

down? really I And a line? I you of there, not I'm leave if quick you Great. to your to reinvest guiding what fall at it but one, it it it. appreciate the And I it just X%? was bottom add would level had I'll growth that would would and anywhere, X.X%? X%, then, sales not it you just Is appreciate time. Is is, drop

Luca Zaramella

the EPS line. half deliver circumstances, X% is should of X%-plus And you on market confidence to digit. sustain ahead look that cycle very can protect. we the at have that as mind it and and growth that the take high share But we of we want under algorithm gains to as is idea to the Clearly, And it additional in is said of X% and dollars. drop in -- we and is what to we to single So bottom the are it top line. want reinvest enter half the we with pricing and It we EBIT. GP we then is still then, this this top are we that we coming it, to normal year, of level on do virtuous XXXX clearly, potentially have

Ken Zaslow

it, appreciate guys. Thank I Great. you.

Dirk Van de Put

Okay. Thank you.

we margin significant business and the gross growth, that, with think I good great gross the solid reinvestment line it to profit can line. and think a We'd conclude quarter, was top I growth, that a call. strong like in reiterate bottom

XXXX. will we as have in X%-plus, a forward, that deliver that bit we the any that pressure. enter And will a inflation would a which us more our that topline Going higher growth, as we is margin great XXXX would Thank you continue additional business business. so can that circle we position, with as interest to share for our see And reinvest we in the allow position margin intent great we to a the in well said. virtuous

questions. Thank thank Looking your of course, QX. results QX for the you it. of And you, and forward that's you. to And all take through

Operator

you disconnect. now call. conference and Thank This concludes today's may you for participating

Mondelez International (MDLZ) 28 Jul 212021 Q2 Earnings call transcript