Mondelez International, Inc.

Good day, and welcome to the Mondelez International Fourth Quarter 2020 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 number one on your touchtone phone at any time during the call. I would now like to turn the call over to Mr. Shep Dunlap. Vice President, Investor Relations for 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. 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, 10-Q, and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted 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 gap measures and gap-to-non-gap reconciliations within our earnings release and at the back of the slide presentation. In today's call, Dirk will provide a business update, and then Luca will take you through the financials and our outlook. We'll close with Q&A. With that, I'll now turn the call over to Dirk.

Thank you, Shep, and thank you, everyone, for joining the call today. I am pleased to share our full year and Q4 results with you. 2020 was a successful year for Mondelez International, marked by strong performance, even in a challenging external environment. In response to unprecedented conditions caused by COVID-19, we took decisive and swift actions to position the company for continued success in 2021 and beyond. And we delivered on all of our financial commitments for the year. I am proud of our achievements and particularly grateful for the efforts of our teams, including those on our front lines who helped us to achieve these milestones. First of all, we sustained the top line momentum we have achieved since launching our strategy in 2018, delivering another year of 3% plus organic net revenue growth. This led to record market share gains as consumers chose our products and made us clear winners in our largest categories of biscuits and chocolate. Despite COVID-19, we continued executing against our strategic growth agenda and increased investment across our business, in particular in working media and capabilities like e-commerce. We added two very exciting bolt-on acquisitions. Give and Go and You, which give us more exposure to fast-growing snacking adjacencies. Our continued investments were supported by an effective cost mitigation program that offset many of the COVID-19 related costs and helped simplify our business. In spite of the increased investment in costs, we were able to grow operating income faster than revenue and faster than 2019 through volume leverage and cost discipline. We also delivered on our commitment to generate strong cash flow and return $3.1 billion to shareholders. Not only was 2020 a strong financial year, we also made progress in other areas, like ESG, where we delivered on our 2020 ESG goals and set ambitious new targets. We also enhanced the commitments of our existing D&I agenda, and of course, we prioritized the safety of our colleagues throughout the year. Overall, I believe we are very well positioned to sustain growth now and into the future. We entered 2021 with good momentum, record share gains, and as a more efficient organization as a result of our Emerge Stronger initiatives. As such, for 2021, we expect our results to be in line with our long-term financial targets. On slide five, let me walk you through the headlines of our financial results. I'll focus on the full year figures. Our organic net revenue growth was 3.7%. Not only did we show strong growth, we also beat the competition thanks to the strength of our brands with consumers. Our adjusted gross profit grew 3.6% and adjusted operating income grew 4.6%, leading to an adjusted EPS growth of 6.5%. And, as mentioned, free cash flow generation was strong at 3.1 billion versus 3 billion in 2019. This is a strong set of results, a clear demonstration of the strength of our organization and the success of our growth strategy, even during severe external challenges. Turning to slide six, I would like to highlight several of the strategic actions we took to enable our business to emerge stronger from COVID-19. As the extent of the pandemic became clear, we quickly moved to mitigate incremental COVID-related costs and took the opportunity to significantly increase liquidity. We prioritized our capital expenditure behind projects with the highest return potential. We faced costs relating to lockdowns, supply chain disruptions, adaptations to our ways of working, as well as the need for increased PPE. But we were able to offset the majority of these costs through savings across areas like overheads, trade spends, and non-working media. We also took the opportunity to simplify our operations, reducing the number of low-turn SKUs we have in the portfolio, work that will continue into 2021. And finally, to maintain our top-line momentum and brand strength, we invested more in working media while realizing material media efficiencies. Our swift reaction to COVID-19 was a real point of difference for us in 2020. Our teams were focused and agile in their response. We adjusted plans and accelerated some of our strategic initiatives, all of which set us up for success. Turning to slide seven, we have remained focused on our sustainability commitments and our approach to governance. In May 2020, we held our first Snacking Made Right investor call, coinciding with the release of our Snacking Made Right report. We've also engaged with many investors, shareholders, and stakeholders on ESG topics more than ever before. Looking across our ESG agenda, we focus on critical areas like minimizing our environmental impact, which involves using our resources like water and energy more efficiently, as well as reducing waste and emissions. We also promote sustainable ingredients like wheat and cocoa, where we seek to build a more resilient supply chain. Generating a positive social impact is another priority, where we work to foster more inclusion and opportunity with local communities. Our key sustainability achievements for the year include meeting all of our 2020 CO2 emissions and waste reduction goals. Continued working collaboration on advancing a more sustainable future for plastics. Continued investment in our Cocoa Life program, our 400 million commitment to sustainable cocoa, including efforts to prevent child labor. An increased traceability and forest monitoring commitments with our palm oil suppliers. And in terms of social impact as an organization, I am proud of our work in two areas. We established new multi-year global diversity and inclusion commitments, investing in global D&I leadership, as well as plans and programs for our colleagues and communities in which we operate. We also donated nearly 30 million in COVID relief efforts around the world. This was a year where the potential was evident for a company like ours to make an even more positive impact on the world. And I'm glad that we made our contribution. Finally, slide eight, let me share a little more color on our recently announced acquisition of you. We're excited to freely welcome them on board following our minority investment in 2019. This is a fast-growing, well-being snacking brand with a portfolio of on-trend products. Use vegan, paleo-inspired chocolate will be familiar to many in the United States. They are a leader in specialty and premium retailers already. In addition to chocolate products, they have recently expanded into crackers and have plans to enter other snacking adjacencies. Overall, the business is growing high double digits and there is a clear opportunity to scale the business using our distribution and capabilities. You is a great brand and a great fit in our portfolio, bringing us interesting opportunities in the key well-being slash premium areas. With that, I will hand to Luca for more details on our financial performance.