Mondelez International, Inc.

Good day, and welcome to the Mondelez International fourth quarter 2023 and 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 now turn the call over to Mr. Shep Dunlap, Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir.

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, Q, and 8-K filings for more details on our four 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 GAAP measures and GAAP to non-GAAP 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, Chef, and thanks to everyone for joining the call today. I will start on slide four. I'm pleased to share that we delivered our best year ever in 2023 with robust top-line growth continued share improvement, record profit-dollar growth, and strong total shareholder return. Our double-digit pop-line performance was driven by strong pricing execution and positive volume mix growth. We also delivered continued share improvement as consumers across the globe remain very engaged with our iconic snacking brands. We set another record for gross profit dollar growth, achieving $2.2 billion, through ongoing cost discipline and sound pricing to offset cost inflation as well as volume leverage. We continued our track record of strong free cash flow, generating $3.6 billion. To accelerate our strategy of global snacking leadership, we continued to invest significantly in our brands and capabilities, driving multi-year growth on both the top and bottom lines. I'm especially proud of our record financial results, as well as returning nearly $4 billion in capital to shareholders. These results deepen our confidence that the strength of our brands, our proven strategy, our continued and increasing investments, and especially our great people, position us well to achieve our long-term financial targets in 2024 and beyond. Turning to slide five, you can see that 2023 was a strong year on both the top and bottom lines with substantial reinvestment to drive continued growth in the year ahead. Organic net revenue grew 14.7% or 4.6 billion versus prior year. Our continuing solid performance in volume mix demonstrates that consumers continue to prioritize our brands and categories. We also delivered record adjusted gross profit dollar growth of $2.2 billion, up 18.8%, significantly lapping the last several years. We're proud of our team's continued focus and commitment, which enables us to continue investing in the business to drive further sustained growth. Accordingly, we increased ANC investments by more than 21%, helping to drive consumer and customer loyalty to both our iconic global brands and our local jewels, which represent the taste of the nation in their markets. These results translated into strong OI growth of nearly $1 billion, up more than 19% versus prior years. Adjusted EPS grew 19%, on top of strong growth in the past several years. All told, we remain confident that our virtuous cycle of strong gross profit dollar growth, fueling local-first commercial execution and increasing investment in our strong brand capabilities and talent, will enable us to continue delivering attractive, sustainable growth. I'm especially proud to share that we continue to outperform our peers in total shareholder return. As you can see on slide six, our five-year TSR is nearly double the average of our peer group. Our one-year return is particularly impressive, with Mondelez delivering double-digit growth, while our peer average return has fallen into negative territory. We view these results as evidence that we have the right strategy the right brands, and the right people to continue delivering long-term value for our stakeholders. Switching to slide seven, our performance in 2023 gives us confidence that we have not only the right growth strategy, but also the right execution to deliver it. Here are just a few highlights of our strategy in action. Our biggest global brands, Oreo, Milka, and Cadbury, achieved more than $10 billion in global net revenues. We continue accelerating our focus on our core categories for chocolate, biscuits, and baked snacks because these categories offer attractive growth and profitability. We remain on track to deliver 90% of our revenue through these core categories. We also continue to make strong progress in executing our growth strategy, Our U.S. supply chain has stabilized, and we have added more than 600,000 stores to our emerging market distribution channels. Additionally, we continue to advance our portfolio reshaping strategy. In 2023, we integrated Clif Bar and Ricolino. Now we are harnessing the power of these recent acquisitions to strengthen our presence in the global snack bar and the Mexican chocolate and candy segments. We also completed the sale of our developer market gum business for 1.4 billion, providing another important source of reinvestment to further advance our brands, talents, and capabilities. On slide eight, along with our financial performance, I'm pleased to share that we made significant progress towards our sustainability goals and targets in 2023. First, we continue to advance our leadership in more sustainably sourced critical ingredients. About 80% of the cocoa volume used in our chocolate brand is sourced through Cocoa Life, our signature cocoa sourcing program that works to lift up the people and restore landscapes where cocoa grows. We also made continued progress in helping to combat climate change. We achieved an important milestone in 2023 by submitting our roadmap to achieve net zero by 2050 through the science-based targets initiative. Additionally, we continued advancing our light and right packaging strategy. More than 97% of our packaging now is designed to be recycled. We also continue investing in ways to empower consumers to make more mindful snacking choices that fit into their healthy, active lifestyles. More than 55% of our snacks revenue comes from mindful portion snacks. That is, snacks that are packaged in individually wrapped mindful portion serving sizes or with clear mindful portion recommendations on pack. These are just a few highlights of our continuing progress towards building a more sustainable snacking company. We continue to believe that helping to drive positive change at scale is an integral part of value creation, with positive returns for our stakeholders. We encourage you to watch our annual Snacking Made Right report, which will be published in April, to view our full year sustainability data. Turning to slide nine, you can see that like many companies, we continue to navigate through a dynamic operating environment. We are closely tracking and planning around the number of near-term teams, including continuing inflation, shifting consumer habits, geopolitical challenges, rising cocoa prices, just to name a few. We are well positioned to address these challenges, and we remain confident that we can deliver a non-algorithm year. Our confidence is rooted in our conviction that we have the right strategy, the right execution, and the right people, as well as very strong, widely loved brands. We continue to see momentum in the majority of our key emerging markets, our categories remain resilient, and our solid volume mix performance demonstrates that consumers continue to prioritize our iconic snacking brands. To continue accelerating this momentum, we are continuing to increase our investment significantly in our brands and capabilities. We are pleased that our U.S. supply chain has substantially improved, and we continue to focus on expanding distribution opportunities in both developed emerging markets we're also making solid progress in our european pricing negotiations we expect to deliver robust eps growth in both constant and real dollars in 2024 and overall we remain confident that we have the right strategy to effectively navigate today's volatile environment while continuing to focus on long-term sustainable growth in conclusion i'm pleased to reiterate that 2023 was another record year. Our focus and portfolio reshaping strategy is working, and we are well positioned to continue driving attractive growth in 2024 and beyond. By continuing to double down on our attractive core categories of chocolate, biscuits, and baked snacks, investing in our widely loved 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.