Mondelez International, Inc.

Good day and welcome to the Mondelez International Fourth Quarter 2022 and Full Year 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 conference. I'd now like to turn the call over to Mr. Shep Dunlap. Vice President, Investor Relations for Mondelez. Sir, please go ahead.

Good afternoon, and thank you 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. Today, Dirk will provide a business and strategy update, followed by a review of our financial results and outlook by Luca. We will close with Q&A. I'll now turn the call over to Dirk.

Thanks, Chip, and thanks to everyone for joining the call today. I will start on slide four. I'm pleased to share that we delivered another record year not only in size of the company, but also in profit dollar growth. Our strong top-line performance was driven by excellent pricing execution and continued volume strength, as consumers all over the world remain loyal to our iconic snacking brands. We delivered strong top-line performance in both emerging and developed markets, while continuing to exercise cost discipline. In keeping with our strategy of achieving global snacking leadership, we continue investing in our brands and capabilities, while strengthening our portfolio with important bolt-on acquisitions that increase our exposure to attractive and growing categories and profit pools. We executed well against our long-term algorithm, returning $4 billion in capital to shareholders. Perhaps most importantly, we continue to invest in our people, building a deep and diverse team whose local roots and global insights enable us to stay a step ahead of rapidly changing customer and consumer tastes. We are confident that the strength of our brands, our proven strategy, our continued investments, and especially our great people position us well to achieve our long-term financial targets in 2023 and beyond. Along with our financial performance, I'm pleased to share that we made significant progress towards our environmental, social, and governance agenda. You recall from our investor update last spring that we have elevated sustainability as the fourth pillar of our growth acceleration strategy. That's because we firmly believe that helping to drive positive change at scale is an integral part of our value creation, with positive returns for all our stakeholders. Let me share a few highlights on slide five. First, we continued to advance our leadership in more sustainably sourcing cocoa and wheat, our two most critical ingredients. We launched the next chapter of Cocoa Life, our signature cocoa sourcing program, with another $600 million commitment, bringing our total investment to $1 billion. Cocoa Life is working to lift up the people and restore landscapes where cocoa grows. Similarly, we will launch in the first quarter of 2023 an updated vision for our Harmony Wheat Program, focused on more sustainably sourcing wheat across the European Union. We continue advancing our light and rights packaging strategy. For example, our Cadbury dairy milk chocolate in the United Kingdom, Australia, and New Zealand now are wrapped in packaging with more than 30% recycled content. We also continue to make progress on tackling climate change. We expanded our use of renewable energy to reduce our Scope 1 and 2 greenhouse emissions. And in about 80% of farms in our Cocoa Life program in West Africa, we achieved near to no deforestation, reducing scope three emissions. Since 2018, we have reduced our CO2 emissions by more than 20%. We also remain focused on advancing diversity, equity, and inclusion because we firmly believe that diverse perspectives and viewpoints make our company stronger. while helping us stay closer to our customers and consumers. As an example, we increased the gender and racial diversity of our board of directors with the appointment of industry-leading experts. We are proud of Team Mondelez's continued success in making important impacts on these critical environmental, social, and government issues, while creating value for our shareholders and other key stakeholders. Turning to slide six, you can see that we had a record year despite challenging operating conditions. We view our strong performance in 22 as evidence that our long-term strategy continues to deliver for our stakeholders. Organic volume grew 2.7% for the year, on pace with recent years, demonstrating the continued strength of our resilient brands and categories, even in an inflationary environment. Organic net revenue grew by 12.3%, significantly lapping the prior three years' performance with broad-based growth across all regions. We also delivered record-adjusted gross profit dollar growth of $1.4 billion. We're proud of our team's ability to offset major cost pressures to enable us to continue investing in the business, which will drive further growth acceleration. Accordingly, we increased ANC investment by double digits helping to keep our brands top of mind for both consumers and customers. These pricing, cost management, and investing activities translated into strong operating income growth of more than $580 million. We remain confident that our virtuous cycle of strong gross profit dollar growth, which fuels local first commercial investment and execution, will continue to consistently deliver attractive profit growth. We are especially confident that our unique growth strategy, centered on acceleration and focus, will enable us to continue to successfully navigate the dynamic global operating environment, differentiating us from many other food companies. On slide seven, you can see that despite the volatile environment, we have the right setup and strategy to ensure we deliver against our growth algorithm. Momentum in emerging markets, with particularly China and India showing strong results, combined with the resilience of our categories, as evidenced by strong volume growth, is helping us to offset the challenges that many companies are facing, such as global cost inflation, the energy crisis, recession concerns in Europe, and supply chain volatility. Our consumer continues to hold up well across most geographies, prioritizing snacking and buying more volumes of our products despite significant price increases. Our U.S. supply chain is gradually getting back to normal after a long period of suboptimal customer service triggered by the 2021 strike and the subsequent overall supply chain volatility. We are continuing to implement appropriate incremental price increases across key markets, including Europe. We also continue to take appropriate action to hedge our commodity costs while continuing to advance our ongoing productivity initiatives. All of the above allows us to increase our investment in brands and capabilities every year, which underpin our growth momentum. Our ability to deliver real dollar growth enables us to make sound and choiceful decisions that drive the business forward and position us well for continued future growth. Slide 8 shows that our performance in 2022 gives us confidence that we have not only the right growth plan, but also the right execution to deliver it. Our core categories of chocolate and biscuits remain attractive and durable in both developed and emerging markets. We are accelerating our focus on these core categories because they have attractive growth and profitability characteristics and still a significant headroom in terms of penetration and per capita consumption. Our long-term vision is to generate 90% of revenue through these two core categories. We hit an exciting milestone in the biscuit category this year as Oreo surpassed $4 billion in global net revenue. further solidifying its position as the world's favorite cookie. Our acquisitions of Chipita and Clif Bar helped us expand our footprint in the growing baked snacks segment, while our acquisition of Ricolino helped us fill an important geographic white space, establishing a strong foothold in a priority emerging market of Mexico. We also continue to expand our presence in high-growth channels, segments, and price tiers. For example, silk premium chocolate doubled its prior year penetration in India, while in emerging markets we added more than 400,000 additional outlets, and we have significant runway ahead of us. These are just a few examples of the ways our teams remain relentlessly focused on delivering the growth and acceleration plan we outlined at our investor day last spring. As slide 9 indicates, we continue working hard to reshape our portfolio, which will accelerate our growth, and I'm pleased to share that we made significant progress in 2022. As we continue to drive focus on chocolate, biscuits, and baked snacks, our nine strategic acquisitions since 2018 have enabled us to enter exciting adjacent spaces, such as well-being and premium. They also have strengthened our presence in key geographies, and expanded our trade coverage. Together, these acquisitions add nearly $3 billion in revenues and are all growing high single or double digits. Strong execution against our proven integration playbook enabled us to rapidly realize the value of the three acquisitions we closed in 2022. The Chipita business provides us an important platform to further accelerate growth in the attractive biscuits and baked snacks category. Similarly, Clif Bar expands our global snack bar business to more than 1 billion. Additionally, Ricolino, Mexico's leading confectionery company, doubles the size of our business and more than triples our routes to market in Mexico. Along with successfully integrating these three businesses, we announced in late 2022 the sale of our developed market gum business to Perfetti Van Melle for an implied EBITDA multiple of about 15 times. This divestiture will help fund these recent acquisitions and streamline our portfolio. We continue to have the Halls business, which has been performing well, but still intend to divest it over time in a way that maximizes value. In conclusion, I'm pleased to reiterate that 2022 was a record year. Our focus and portfolio reshaping strategy is working, and we are well positioned to continue driving attractive growth in 2023 and beyond. By continuing to double down on the attractive chocolate, biscuits, and baked snacks categories, investing in our iconic brands, focusing on operational execution and cost discipline, and empowering our great people, I am confident that we can deliver strong performance for years to come. With that, I'll turn it over to Luca to share additional insights on our financials.