Mondelez International, Inc.

Stand by, your program is about to begin. If you require assistance throughout the event today, please press star zero. Good afternoon and welcome to the Mondelez International 2025 Third Quarter Earnings Question and Answer Session. Your lines have been placed on listen only until it's your turn to ask a question. In order to ask a question, please press the star key followed by the number 1 on your touchtone phone at any time. To remove yourself from the queue, press star 2. On today's call are Dirk van de Putt, Chairman and CEO, Luca Zaramella, CFO, and Shep Dunlap, SVP of Investor Relations. Earlier this afternoon, the company posted a press release and prepared remarks both of which are available on its website. During this call, the company will make forward-looking statements about performance. These statements are based on how the company sees things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in the company's 10K, 10Q, and 8K filings for more details on forward-looking statements. As the company discusses results today, unless noted as reported, it will be referencing non-GAAP financial measures which adjust for certain items included in the company's GAAP results. In addition, the company provides 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 the company's earnings released and at the back of the slide presentation. We will now move to our first question. Our first question comes from the line of Andrew Lazar with Barclays. Your line is open.

Great. Thanks so much. Good afternoon, everybody. Dirk, maybe to start off, I was hoping can talk a bit more in depth about Europe you know how you're seeing things as you sort of close the year and into next particularly when it comes to pricing that's been landed and movements sort of you know that you deem that you need to make as you mentioned price cap management in certain European markets yep yep hello Andrew so I would say if I started with the consumer in Europe I would say the consumer confidence remains in general

stable unchanged versus the last quarter. If I look at our biscuits, cakes and pastries and meals business, they're all performing well where we have share growth and volume mix growth. And if I look at it from an overall Euro perspective, I would say the category is performing generally in line, the chocolate categories in general in line with expectations. We see in the cocoa situation, as you know, we had to do quite substantial price increases in the order of about 30%. So broadly speaking, I would say the chocolate business is fine, but we are clearly seeing a couple of pockets of pressure that we need to address. These are caused sometimes by competitive situations where our competitors did not increase their pricing as much as we did, largely because they are private companies. And the other thing I would say is that in certain markets, the retailers also suddenly took more margin than they have historically done. So we're fixing these problems. I wouldn't say it's a structural issue. But we need to be dealt with, and that has caused a difference in what we were expecting for this quarter in Europe. I would also mention that as you look at the European situation, there was a heat wave in July, which has affected our volumes, plus we have done some significant downsizing also, which affects our volumes. The two markets where we have these situations are the UK and Germany. we are starting to see a reaction to the repositioning of the price point in certain areas of the portfolio that we have done. And so we are seeing the volume and the share improve as a consequence of that. We've also seen that competition has started to price recently. So that also will help the situation going forward. Overall, I would say, as I see how the pricing is landing in Europe, elasticity is around the 0.7, 0.8. It's higher than we would have expected. Our thinking was more like a 0.4, 0.5. And so we are taking, on top of what I already explained, a number of other actions in the sense that we are innovating with new flavors and new formats. We are investing more in A&C. We're driving the seasonals very hard. We're working on promo effectiveness because that's also not playing out sometimes the way we would have expected and largely our main focus is on hitting the right price points where in certain cases, like on our 300 gram range in chocolate, we passed two key price points and that was probably a little bit more than the consumer can accept at the moment. We are, of course, accompanying that with a lot of productivity and cost savings. But overall, I would say, seeing the fact that this was the heaviest COCO cost that we would have in the year, from here going forward, we expect a significant improvement. We expect to see a significant improvement in Europe. I hope that helps, Andrew.