Mondelez International, Inc.

Good day and welcome to the Mondelez International Fourth Quarter 2019 Year-End Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question and answer session. In order to ask a question, please press the star key followed by the number one on your touchtone phone at any time during the call. I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations of Mondelez. Please go ahead, sir.

Good afternoon, and thanks for joining us. With me today are Dirk Vandeput, our Chairman and CEO, and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website, MondelezInternational.com forward slash investors. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K and 10-Q filings for more details on our forward-looking statements. As we discuss our results today, unless notes as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. In today's call, Dirk will give you an overview of our results as well as a progress update against our strategic priorities. Then Luca will take you through the financials and our outlook. We'll close with Q&A. And with that, I'll now turn the call over to Dirk.

Thank you, Shep, and good afternoon, everybody. I will start off on slide four called Delivering Long-Term shareholder value creation. 2019 was a great year for Mondelez International. It was the first full year under our new consumer-centric growth strategy, and we delivered strong results on the top and the bottom line while generating significant free cash flow. Our solid execution and targeted investments in both our global and local brands enabled us to meet or exceed all of our financial targets for the year. These results give us increasing conviction that our strategy will create sustained momentum in our business, allowing us to deliver on our long-term financial targets in the years to come. Switching to slide five, recapping the year, here are a few highlights. We delivered organic net revenue growth of 4.1%, which was broad-based across geographies and brands and was driven by both volume and pricing. In terms of geographies, emerging market growth was strong, growing mid-single-digitex Argentina and driven primarily by key geographies like China, Russia, and India, but also by emerging high growth markets in Southeast Asia. Developed markets showed robust growth, with both Europe and North America performing well, delivering share gains and driving category growth. Overall, the results reflect the quality of our brand portfolio, with our unique combination of both global and local brands benefiting from increased and targeted investments throughout the year. Our adjusted EPS growth was more than 8% for the year, and we are pleased with our full year free cash flow generation of about $3 billion, which was well ahead of our outlook. Switching to slide six, our strategy is now well embedded in the business. In the past 12 months, we've made great strides in implementing it across the different business units. The rollout of the new strategy was reinforced by our new way of incentivizing our team's assuring that everybody is clear on what is important. At its core, we are constantly trying to be more consumer-centric, using our new and unique understanding of consumers around the world to develop a more effective and a more consistent approach to marketing. And as a consequence, growth in our global brands has accelerated further, while our local brand growth is now very close to overall category growth. We've also invested in further growth in non-grocery channels like discounters, e-commerce, and convenience, as well as in expanding our distribution in fast-growing developing markets like China, India, and Russia. As it relates to innovation, we are becoming more agile and faster, trying many new ideas, and in fact rolling out fewer initiatives but with bigger success. We are clear, too, that strategy only succeeds with outstanding execution. And while we still have a long way to go, I credit a big part of our results to better execution in our commercial as well as our supply chain operations. North America's supply chain in 2019 definitely showed significant improvement. Our European teams executed against a seasonal opportunity like Easter and Christmas with better than in recent years, and our teams in India and China reached the highest level of execution in store as well as in the plants. However, the opportunity to constantly improve our execution remains significant, as our recent struggles with our supply chain in Brazil would indicate. As it relates to our operating costs, while we are in the first place trying to leverage volume growth to a lower delivered cost per ton, we still see significant opportunity to optimize many other cost areas. While more and better marketing as well as strongly improved execution have driven our 2019 results, a shift in mindset around the company also has had an important impact. The most important part of this shift was driven by our local-first approach, basically empowering local business units to make the right choices for their consumers and their clients. This empowerment has led to clearer accountability and faster decision-making and was reinforced by focused incentives. I am proud of how the teams have embraced this new culture and really believe that this model has great potential for the future. While we are talking about culture, I'd also like to mention a change in the leadership of our Latin American region. We are announcing today that Gustavo Valle will join us as region president Latin America, effective February 1st. Gustavo comes from Danone, where he's held numerous positions around the globe. In his last role, he was leading the global dairy and plant-based division. Earlier in his career, he managed the Argentine and Brazilian business and brings with him significant experience in the volatile economies of Latin America. I look forward to working with Gustavo again. Switching to slide seven, while we are excited about our financial results and prospects, In today's world, any consumer business needs to have as strong a social and environmental agenda as a financial agenda. Our own employees as well as our consumers demand it, and customers, investors, and other stakeholders expect it. So I'm happy to say that in 2019, we have made great progress in embedding our purpose to empower people to snack right. We announced a new sustainable snacking strategy with new goals and stronger commitments. In cocoa, our biggest commodity, we're committing to sourcing the equivalent of 100% of the cocoa we need for our chocolate brands through our Cocoa Life program by 2025. Today, I'm proud to share that we've achieved 63% by the end of 2019, an increase from 43% in 2018, and with a clear roadmap for the remainder. Earlier this year, we joined other major companies in renewing our commitment to the Paris Climate Accord and have set our path towards further reduction in carbon emissions. Looking towards the consumer, we are focused on making the packaging for all our products 100% recyclable by 2025. And by the end of 2019, we are already at 92%. with some interesting trials underway to unlock the remaining 8% of that journey. Finally, as it relates to the mindful enjoyment of our products, we are committed to increasing our mix of portion-controlled packs to 20% of our total revenues. We are well on the way with 15% already sold in such formats. We know that our future growth and success as a company depends on ensuring people and planet thrive, and we are committed to tracking and reporting on our progress and impact transparently along the way. I look forward to sharing more with you in 2020. And with that, I will hand it over to Luca.