Mondelez International, Inc.

Please stand by, your program is about to begin. If you need assistance during your conference today, please press star zero. Good day and welcome to the Mondelez International third quarter 2024 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 touch tone phone at any time during the call. I would now like to 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 Zarumella, 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 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 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, Shep, and thanks to everyone for joining the call today. I will start on slide four. I'm pleased to share that we delivered strong top-line growth with positive volume mix. Developed markets grew mid-single digits, led by solid progress in North America biscuits, as well as recovery in Europe following successful implementation of our annual pricing. Emerging markets also grew mid-single digits, despite continued boycotts of Western brands in certain markets. Strong profit-dollar growth enabled us to continue our track record of robust free cash flow generating 2.5 billion year to date. We expanded our presence in the fast-growing cakes and pastries category by acquiring a majority stake in Evert, a leading player in cakes and pastries in China. And I'll provide some additional color on this exciting partnership in a few minutes. We remain diligent in driving progress against our long-term growth strategy focused on our core categories of chocolate, biscuits, and baked snacks. These core categories continue to show strong consumption, and on top, consumers remain very favorable to our iconic portfolio, as such generating significant headroom opportunities. These strong fundamentals, combined with our advantaged geographic footprint, keep on giving us confidence that we are well-positioned to compound long-term sustainable growth. Turning to slide five, you can see that organic net revenue grew 5.4% this quarter, with adjusted gross profit dollar growth of 11.2%, enabling us to continue investing in the business. ANC spending is up mid-single digits, helping to drive continuing consumer and customer loyalty to both our iconic global brand and our local jewels. And adjusted EPS grew 28.6% this quarter, and we have generated 2.5 billion in free cash flow through the first nine months of the year. On slide six, we are pleased to see that developed markets are beginning to recover, with solid revenue growth and an increasing healthy volume mix in the third quarter. Unlike many of our peers, we're seeing continued consumer uptake of our core snacking categories. In North America, we are seeing volume growth start to rebound as inflation cools and we continue to expand distribution in areas like club. Similarly, in Europe, revenue grew 8.1% in the third quarter, following significant disruption earlier in the year as our annual pricing took hold. Unlike many of our peers, both volume mix and net revenue are beginning to turn the corner. Consumers are continuing to embrace chocolate and biscuits as everyday indulgences, and our revenue growth management strategies enable us to meet every consumer's needs with a broad array of product formats, pack sizes, and price points to meet their definition of value. Turning to slide seven, you can see a bit more context on how and why our snacking categories remain durable. In North America, consumer confidence remains stable, despite continuing concern with overall grocery prices. Biscuit category volume is improving to flat to slightly up over the last three months. In the United States, private label volume share is declining, demonstrating that consumers remain loyal to their favorite brands, and that our price pack architecture is working. As a result, our two largest US brands, Oreo and Ritz, are gaining shares year-to-date. Meanwhile, in Europe, elasticities are moving slightly higher, but remain modest. We continue to see solid category value growth in both biscuits and chocolate, with private label share declining over the past three months. Some consumers are shifting to smaller packs of chocolate, for everyday snacking, and again, our RGM and price pack architecture enable us to offer an appropriate range of choices. As we head into the year-end festive season, seasonals are also looking solid. In emerging markets, modest elasticities continue. Consumer confidence is stable in India, Brazil, and Mexico. While the overall China economy remains challenged, we're seeing optimism beginning to return as stimulus policies take effect. Overall, our combined emerging markets value and volume share is improving in both biscuits and chocolates. Turning to slide eight, it's important to reinforce that while the external environment remains volatile, we remain focused on accelerating our long-term growth strategy. We're continuing to reinvest in our brands, expand distribution, drive M&A, and scale sustainable snacking. We remain on track to deliver 90% of revenue through our core categories of chocolate, biscuit, and baked snacks by 2030. And our teams continue to deliver strong progress against our strategic agenda. For example, our Oreo brand launched in August, an innovative collaboration with Coca-Cola, our largest global brand activation to date. These two iconic brands joined forces in a 360-degree marketing campaign encompassing digital, social, celebrity, and in-person activation to unite our strong fan bases and build buzz around two high-profile limited editions, a Coke-flavored Oreo cookie and an Oreo-flavored zero-sugar Coke. These types of investments not only enable us to stay top of mind for consumers, but also to strengthen partnerships with key retailers. Along with these marketing activations, we are continuing to strengthen store availability, visibility and execution around the world. For example, in Brazil, the convenience channel is growing high single digit on a year to date basis with plans to further grow coverage in this channel with additional stores. We are also continuing to harness the power of acquisition to capture synergies and drive growth. For example, in China, our acquisition of Evert step changes our growth in the cakes and pastries category. I'll provide additional color in just a minute. Importantly, we remain committed to driving progress toward a more sustainable snacking business. through our continued focus on our environmental and social sustainability agenda. For example, we recently introduced new recyclable paper packaging for our legendary Louis Biscuit brand in France, Belgium, and the United Kingdom. Now let's dig a little deeper into the cakes and pastries category and our recent announcement in China. As you can see on slide nine, The global packaged cakes and pastries category is valued at about 95 billion U.S. dollars. Mondelez currently holds the number three global share position, and because this category is highly fragmented around the world, we see significant opportunities for bolt-on M&A as well as organic growth. We already have delivered strong growth in this category through our 2020 acquisition of Give & Go, the leading manufacturers of frozen to fresh brownies, cookies, cupcakes, and related bakery products in North America. And our 2022 acquisition of Chipita, a leader in croissants, bake rolls, and related snacks, anchored in Central and Eastern Europe. In China, as you can see on the right-hand side of the slide, the packaged cakes and pastries category is valued at about 14 billion U.S. dollars. Within that category, the frozen to chilled segment is growing double digits, currently estimated at $1.5 billion. Chinese consumers increasingly seek fresh premium options with innovative and sophisticated taste profiles to meet a growing range of snacking occasions. On slide 10, you can see that's why we are excited about the expansion of our existing partnership with Evert. the Chinese leaders in the fast-growing frozen-to-chill baked snacks category. We have worked with Evert for several years to develop, manufacture, market, and sell cakes and pastries featuring some of our iconic brands, including Oreo and Philadelphia. Our recent purchase of a majority steak will enable us to further accelerate growth through continuous innovation, leveraging the combination of our high-value brands with Evert's advanced R&D and technical expertise. Chinese consumers increasingly are seeking fresh premium products, with demand growing especially fast among younger generations in mid-tier cities. Evert has a strong presence among key customers, including club stores, and our expanded partnership will enable us to scale distribution broader and faster. Before I turn the microphone over to Luca, I'd like to share some preliminary perspective on our approach to 2025 in light of the widely known cocoa cost headwind. Chocolate remains a great category and continues to generate significant consumer interest. Consumers count on our iconic brands, including Cadbury Dairy Milk, Milka, Toblerone, Cote d'Or, Marabou, Freya, Lacta, to celebrate special occasions, to share with family and friends, and to unwind with a moment of mindful indulgence. As we will continue to invest in our brands, we remain confident that consumer loyalty will not only endure, but continue to grow, even as we execute the necessary short-term pricing steps. Our primary focus is to continue to build the health and the growth of the chocolate category as a whole, and our brands in particular. While we remain relentlessly obsessed with consumer value, we do anticipate some upticks in elasticity in certain markets, and we might need to adapt to more aggressive RGM and promotions. And while the temporary cost increase of cocoa will put pressure on our margins, we will continue to invest in tools that strengthen brand loyalty and accelerate growth, such as Visi Coolers to improve visibility and accessibility, as well as continued strong investments in working media. We expect the majority of our portfolio to grow both top and bottom line, consistent with our algorithm. And we believe we are taking the right steps to position the chocolate business for attractive and long-term sustainable growth. We remain confident that we're well-equipped to appropriately manage input cost headwinds and to emerge stronger. With that, I'll turn it over to Luca to share additional insights on our financials.