Mondelez International (MDLZ) 27 Apr 232023 Q1 Earnings call transcript

Good day, and welcome to the Mondelez International First Quarter 2023 Earnings Conference Call. Today's call is scheduled to last about one hour, including remarks by Mondelez management and the question-and-answer session [Operator Instructions]

I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir.

you us. thank and afternoon, for joining Good With Chairman our and are Dirk CFO. Put, our Van de CEO; me today and Luca Zaramella, slides, Earlier release our out sent which presentation website. today, on are our available we and press

our the this factors to company's These XX-Q the details Please risks XX-K, we things and statements statements may contained results to how performance. today. on uncertainties. call, Actual statements. filings we'll cautionary based differ X-K During risk for forward-looking our see on about in statements make and are materially and refer due more forward-looking

As unless which be adjust we'll our our we measures, items referencing certain discuss in included results noted as for financial GAAP today, our non-GAAP results. reported,

currency otherwise addition, basis, unless In our a provide we noted. year-over-year growth constant on

and the the back XXXX non-GAAP GAAP find within reconciliations can QX of at comparable the earnings You and GAAP to release presentation. measures slide our

update financial Today, and provide review strategy business Luca. by by outlook our Dirk a and followed of will results

with close will Q&A. We

I'll to now Dirk. turn the call over

Thanks, to double-digit Shep, on the I'm with start strong joining XXXX And the growth slide line by are four. thanks volume will pleased for today. in I first ongoing call that to a quarter, growth. start we very off record pricing to in driven effective top share and everyone and

categories. to We and our see geographies long-term execute across on robust continue strategy and momentum we

circa-XX% of increases in strong performance price both emerging successfully and our delivered implemented and Europe. We markets developed in we

offset volume inflation. cost Our dollar robust discipline and driven profit cost pricing to was leverage, growth by

to baked fruit, and on decision categories to chocolate, attractive with those snacks biscuits to strategic our continues portfolio bear categories. the Our focus consumers gravitating of

compound reshaping accelerate brands, the invest capabilities in to bottom and lines. and our in initiatives portfolio on our and top We both our to growth continue

our QX and earnings the position for year. view proven talented outlook to our of We these year. across businesses, deliver plus brands, are our well and raising investments, our results our us strength that strong XX% Based adjusted strength strategy, on and people, especially we are continued our to of the confident another the latest revenue

slide more pace our beloved brands of even growth to continued inflationary our prior the was in organic percentage continued $X.X Turning year. entire ever, revenue of ahead an momentum XX% for and At than points, quarter quarter billion you five, versus categories, we see of growth, quarter We recent business. first strength environment. already in XX.X% our X showed Volume performance, the demonstrating on across that resiliency strong XXXX. net best with mix and significantly the our full-year delivered delivered can

well profit pace We also we of $X.X with billion. are year's Again, delivered adjusted XX.X% gross growth. ahead of growth dollar last

our further with continued continue A&C for focus of We acceleration are quarter. XX% the team's proud increase and growth to which us enable of investing drive to agility, an

investments of These remain results local nearly translated well virtuous $XXX empowered winning culture, our dollar our OI by commercial will again cycle into that We close base. confident increasing profit adjusted iconic ahead to up million, growth. first XX% in consistently last strong year's growth of strong deliver fueling to execution, growth, attractive of gross continue and brands

in few a strategy six, of our action. brand examples slide On

attractive baked All It growth loyalty. product launches snacks core this new volume great invest scale, already biscuits categories digital brand We with strong combined continue solid is dollars to creative we clear playing that execution. in our of categories the strengthen in continues chocolate, profitability in and assets, at to our and with strong right personalization and characteristics. are with in-store

developing consumption capita markets. significant penetration also both is in headroom in and There per and developed

reach and region. and leadership the Latin America growing to We our in the chocolate breadth expand continue of attractive

we brand, Milka chocolate our example, recently Colombia. into launched For

Argentina in products cream ice Milka two launched association Froneri. we Additionally, in with

to explore occasion. and while opportunities these into reach one more consumption brands our are a about a expanding most new We consumers, new iconic of segment excited

biscuit Chips another celebrates the category, hit as $X milestone Ahoy! a in billion birthday. We brand XXth its

the fifth growth since spend results increased are The and positive Latin almost Asia. during in is where yielding revenue a globally China, the million $XXX that markets time annually business Our States Ahoy! from our Chips and double-digit run XXXX, has current Has sizable largest delivered Chips period. Ahoy! presence brand's Southeast key on A&C brand rate. But United Canada, a also America

grow expand leadership shopper further new both we in We biscuits innovations this franchise, have bakery around exciting and core our plans world. to as the

continue continue cookie. sorry Give the story consumers to very continues markets, by our team's driven solid is momentum & demonstrate double-digits and just strong pricing strong QX, show iconic strategy in, mini across in focus grow snacks into expansion Oreo and is such few line. are of in category our ongoing adjacencies as this a baked drive It to Go delivering These powerful our examples -- that reinvest we execution, as strong donuts brand a truly our acceleration growth grew demand. to to favorite as world's brands. and on success

the take two at centerpiece of this chocolate of more the Tablets one-third strategy Mondelez our than a player. size chocolate look the franchise. let's segment's our accounts for of remain Now seven. number on X than more slide times

the the to formulation, aided the Milka by renovated segment lead recent with a most of to Milka XXXX local year-after off strong our year. very (ph). some is combined ever [jewels] strong launch creamiest start, continue We tender

particularly nearly in business with half Germany tablets point Brazil. Canada, growth share, a Australia, Our in market up and is strong

first delivered across selling gifting with chocolate in We are We Milka Easter markets, celebrating the Chile. incremental ever in also performing season seasonal its Easter well record for the of segments a and products.

XXX,XXX South virtual seasonal people another egg hunt reaching iconic. United Ireland Cadbury in our than more successful more Our Easter even executed products making team and the Kingdom, Africa,

are the also growing chocolate space. We in premium

XX% fueled by Toblerone trend example more its than up updated is relaunch on QX, For volume in positioning. with

lean, including and additional personalized gifting. We are offerings Toblerone per portfolio strengthening the further with

to our recently integration for eight, delivering strong Switching acquired execution to against start year businesses. slide our solid a the playbook is

We Clif profitability growth X,XXX posted pleased QX that are double-digit than basis grew more and in revenue by points.

chain enhancing implemented on two operational levels efficiencies, strong making pricing. supply successfully improving service and focusing of rounds we are improvements, and We

announced recently to single agencies brand media strong demonstrate of and in we on fast progress which accelerate creative integration. continuing our partner, in strategically the we making under and spend, will Mexican while continues the and and our are important loyalty. a solid to Additionally, equity productivity strengthen business consolidation markets advertising Ricolino Similarly, momentum growing

I an believe value integral We creation scale with that share of make to to we significant with helping pleased our in our financial returns Along part our all positive performance, of strategy. firmly drive that am at is to sustainability change for continue progress stakeholders. positive

seeking also XXXX sustainable countries. wheat more handful our just can European to losses, collaborates sustainability of demonstrate farmers, program quarter, nine, the investing that at than on see a in you program. of reverse now heart, European better chapter more its change program while Created kind Harmony research, meal. this As its next and quality across regenerative in farmers this is first the agriculture climate chapter biodiversity as seven announced wheat with of the slide next aims mitigate we X,XXX With with to Harmony,

pesticide support farming rotation, such of these and will more in diversifying crop further practices strongest as use. and farmers sustainable pollinators Our other enhanced implementing protecting reducing program a charter wildlife

expanded for strategy. European our day-to-day is regenerative wheat XXXX. volume are example biscuit operations the our and agenda one charter to needed just way This business XXX% our grow goal growth Harmony integrating our under of that Our production sustainability of the we by is fully within

creating progress value continued other Mondelez environmental team of make impact in proud shareholders am for positive and critical on I issues helping social stakeholders. while to and

that, our turn share to With insights additional over financials. Luca I'll it to on

great and Dirk execution and the growth, broad-based and profit focus free brand investment, you, off. flow, sound, indicate our QX start year, strategy pricing, dollar was volume, our Thank good on cash all is to paying is afternoon. that a earnings

while well, still exist to opportunities ambitions. working is further model our long-term drive Our meaningful

the volume growth countries. revenue XX%, were across Emerging grew note in than customer in across more Europe markets X board and anticipated. points than we XX.X% strong benign more coming of more was markets of was overwhelming more For with grew from the majority growth QX growth XX.X% X.X the than to than mix. points X quarter, attributable disruption the plus from performance of To this volume points mix. with Developed mix. with strength, volume

and versus and volume Turning contributing XX, organic gum chocolate last to QX. growth. Go candy Club robust portfolio were increases. good Ahoy!, delivered posted double-digit growth & brands growth Social to double-digit despite not Chips among Clif Ritz, mix, Biscuits biscuits, posted positive increases too. in all price with Oreo, on performance slide Albeit plus Give XX.X% year that substantial grew

robust delivered record in disruptions high both based we more Volume and Milka, developed Toblerone Dairy of some Lacta with markets. growth than Easter customer in Cadbury Europe, selling, despite XX% on sellout. data Chocolate across was a all robust and resulted had markets. albeit growth XX% and our Gum growth. across all candy with grew And grew Milk, key record positive, emerging lower-than-anticipated. that significant also preliminary

U.S. held good market EU being to review disruption. XX on fill rates, revenue coming year. flat improvements in gained of let's case in make slide availability points Now share QX from share headwinds and The performance resulting or continues with XX% our We base, customer of XX. includes level and service on-shelf to in which share last

during improve we year chain, feel stabilization the the confident U.S. that Given share in supply continue to of will the

Turning more also double-digit delivered flow. profit by continue strong business significantly strong million. to of XX, to future us providing growth, OI results earnings our a while to growth than driven gross and $XXX for cash increase fund page enable we dollar These to

Moving on and robust with in volume Europe plus This growth. OI leverage pricing double-digit increases all regions. growth, dollar volume posted across regions. growth slide drove and revenue by grew XX.X% delivered fueled to XX, growth high-single-digital regional OI mix all results we

with our made of in increases than circa we expected and pricing We XX% have disruption anticipated. progress lower with lending customers

not revised in some for as our many XXXX outlook levels. factored countries customer of has has Consumer's confidence our remaining planning stabilized still yet. in to are back much of is QX, been XX% the spring the trending into base which disruption key with done region, We

we biscuits than down and on the shopping particularly occasions. HFSS consumer based chocolate including chocolate. They than cutting where up the on and back loyal in basket, find their rather than U.K., deals less Overall, significantly needs what and anticipated, branded terms are Elasticities in around, of consumers are trading of forecasted. had of in overall negative and to less specific size sizes is their material remain we pack of attractive products, to impact

landing Having higher ventures, solid pricing, focus remaining volume of said of grew is price increases. more our from dollar now plus driven and OI North mix XX.X% part that, by pleased. America growth the with on XX%, our the than particularly strength

the in we returning that and P&L We the holding still up opportunity by have the is region steady well, fact growth. are to the share while reassured by quality of volume of market

grew be reopening China we America volume from plans COVID. XX.X%. nearly plus the increased a plus continues more that dollars dollar grew than key region have broader driver in strong X%. plus of benefit XX%, AMEA a of XX.X% growth of mix India and success OI with to XX%. in ambitious will with Latin also after OI

the clear strong We with made will in realized of region a drive not are full key and ability very year. off pleased of terms towards years couple heights. the Oreo benefit that Ricolino to with the like of the integration but execution have the brands happen of the to over last yet new we performance to the end in start, is progress

constant plus operating to dollars, or XX% EPS driven XX. at primarily Next on in plus currency grew strong reported XX.X% gains. EPS by slide nearly

million and flow dividends slide $XXX shareholders cash Turning free to $XXX returning generated share through of to in we million repurchases. XX, QX,

is on time. been over times net approximately A now generated remaining and X.X%. in This proceeds recent seven the KDP received and sell approximately the return remaining initial investments Including of $X received few has now highly managing words stake, successful period. our on recent approach our investments this and our sale from dividends demonstrating investments and has flexible down investment of year We market a stake to value most disciplined page our XX. our billion a X.X assets over

recognizing perspective, From the will dividends only rather but as income an no of under these we record account as longer day. for the dividend the accounting equity method,

line after the the a obtained line adjustments will quarterly adjust will that out P&L be have be item, re-measurement gains expenses. mark-to-market interest in These recorded been of stake, will we with each which sell-down. in new We below

accounting and will to the account driven the of approximately reiterate terms for past this merely for treatment, that through The expect the sale, changing basis on want used net billion In EPS of is that XXXX, impact we purely sales. share not which essence the a approximately different run the of I on gain accounting have same this $X.XX. headwind we is itself. investment $X.X of

the of to an approximately Finally, stock equal albeit might down that for a subsequent Peet's. The X% which quarter the sale the and we only time options the have JDE six was event equivalent transaction. to an an Options about is sold also JDE at noticed EURXXX net had you of stock outright of at combination versus transaction to million maturity, X% through some discount months. price

outflows a proceeds spot profile, leverage of the market developed our of to good and Clif balanced in pretty terms us the put related expected and in of transactions, with debt acquisition much gum, Ricolino. the Both and together

growth our environment of business raising outlook for EPS. QX across expect operating to strength the growth outlook line given XX% growth. revenue and versus outlook to XX, our overall plus growth page X%. on versus outlook previous We our the expected are our our of our results XX% is full-year of we original plus, now to X% of and top be Turning EPS high-single-digit

by is assumptions, in XXXX, terms expected increase for and ingredients labor in driven packaging inflation while lapping energy to cost still hedges elevated In key favorable of XXXX. double-digit

In expect given versus headwinds previous We year, $X.XX expect terms coffee we now the recent million year impact of related for in transactions. expenses, $XXX ForEx EPS the of $X.XX to of interest our outlook. for now

strong categories, and confidence benign resilience consumer share in disruption in elasticities The we exceptionally year more revision of our as than reflect dynamics outlook to, lower environment enough our and as in in actual the well consumption planned given increased another Europe. better

which remaining that, affect QX. might potentially pricing, the said we Having more have for some disruption will

of in Finally, consider guidance. areas does what strength deterioration is surrounding some outlook of geopolitical business. a This our material current environment continued emerging not supports markets our our improved

the let's for questions. that, open line With

Instructions] Barclays. with Thank And our question first you. [Operator take we'll Lazar Andrew from

everybody. afternoon, Good Thanks.

Hi, Andrew.

Andrew. Hi,

was I I sort the I obviously I think than on the importantly, XX% how and maybe double looking was I'm key emerging more guess some certainly of bit first-off, and expecting. just drivers of think some that the little click the on and year as Dirk. and up for we were Organic were color performance about on hoping better which sales could a guess should sustainability progresses? markets performance, most you dramatically modeled

this quarters definitely that I quarter, so Yes, Okay. strength in would have a say very our several already strong markets. for we performance but emerging

Our are and emerging you QX. growth markets for us business, about as said XX% of our in XX%

it's there been growth X%. think also that I solid to important strong has or around X%, very X.X% see volume

just not pricing. it's the So

a through If real no growing India a very go I accelerated a bit the on double-digit, slowdown. markets, strong keeps at of signs little pace,

with strength you are innovations several well we a runway strong expansion, capacity and Our have are in of outlook distribution support to combination Cadbury for 'XX a we we still invest as heavy optimistic, years remains franchises go. a to the But increases, doing. as have which for who Oreo where receiving of it's and know, our and

momentum. In good see China, we There have also we share strong gains. also

we're as We the business Chips period expecting the mainly with going been have in and gum. quarters consumer year see brands establishing Biscuits we after also. up a strong second and as China, you Oreo China the post-COVID confidence past noticed, And biscuits in now in I the of think Ahoy! a

Ricolino support on acquisition heavy increased our our still have our in capacity distribution the Mexico, In building power. India, and now in with as distribution. thing Same we significantly innovations, big good increasing brands, extra upside of

in see the increasing will distribution months. coming brands significantly So of we there the Mondelez

Ricolino integration and double-digit have growth the is and also quarters, of the in on track. whole We acquisition

Then double-digit Brazil also is growth. maybe Brazil. adding

Brazil. strong continue distribution are to We our we see also and expanding demand in

Latin top So markets add I reported would whole environment are markets say, economic growth dollar I strong. note group emerging the to overall, is doing generating Important the flow well is in and we're key our and in particularly have delivered And also are to that would and that America, line. pretty is delivering that bottom the in very strong. that cash they

is our return investments So emerging in good. on the markets very

And we in I reasons in a for that say the row our that that would a The engine continue we will that for major now stepped up have continued way, believe a we foreseeable growth have sustainable several execution in have for we future. in heavy reinvestment years business.

a up have deeper having We return, distribution very and good routes that which mentioning are keep opportunities, I've these we into distribution, presence, and setting been on going deeper doing and year-after-year. and we keep on and

America of and the Latin I've strong. said one helping, during At drivers confidence of in consumer pandemic gum And is growth America. which as suffered also business is then in stage the this Latin macroeconomics our relatively the

brands a challenge. in label high have relatively emerging remains markets We and loyalty our small private in

and to optimistic of be that plenty continue We we we for So feel beyond. very ‘XX have opportunity.

accelerated in We for have The I our Brazil India, categories are low. places like in like very headroom growth, of a would places distribution lot China, of say. Mexico and runway even The but is high. penetration

And our Latin-America, in Cadbury launching in India, brands really we that Oreo, for are Latin Milka throughout Oreo. exploding instance America. like is but now

all we in confidence keep this will the we gives well combined our emerging on doing see us that markets. So

Really for it the revisions from guidance the seem results. changed just super have a standpoint, that the than briefly, on the then Appreciate year your Luca, does that upward is rundown. and guidance better helpful. expectations just XQ remainder as forecast primarily not much necessarily And of based though

are Thank takes how my puts EPS plus and like should the currency XX% things there. to outlook, the revised sort the sort guess the the investors plus question you. of growth constant maybe I of and is, consider So, about think

we is will year, QX the with lapping digit. single higher we quarter be we Andrew, had Clearly, year, as only last you, the move which thank one materially you. quarter Yes, than high through

I on emerging particularly we exceed there in think in feel XX% have a that we still obviously headroom revenue Reality certain is we higher floor trends sequentially we extent. to the there to to of markets, accelerate year. obviously, scenario and moved and while business, good is growth the EPS, might revenue the quite a terms I but strong to underlying I you the throughout of think where momentum be the there guided had both

execution upward I'm think the North America, I on pleased an is pricing very with and obviously chain U.S. Excellent improving. trend. which supply

think Happy profit in European little XX% bit is I profitability the which still improved QX, is result pricing side. should with a in the be. watch on is in, Europe where it the of out the but the the of kicking not

implemented So being XX% the of the that is is remaining pricing important.

in should volatility. and we pricing as But the a kick that to else macro pricing disruption in to anywhere are this top line. the Unknowns is about business, coupled result continue will further and in needed, in additional some invest relation that related potentially obviously with that

look. So

materially at if we us I guide everything point, what think opportunities. very plays but this have for early might we than is something to are to you out further it better saying that is

of are that materially. down these XXXX. spikes are the see. most good But the a briefly one pressures sugar in favorable offsetting hit other inflation which few in prices want some making is the times, cost still due posing the we and cocoa think sugar overall I I A in not energy on rate I around that commodities. it benefits obviously coverage general, to see with of The inflationary audience in the most coming had terms these double-digit reminded of assumptions we other ingredient as of pressure. XXXX, part is we're to We recent

be and it But in driving back but some obsessed strategy end, to we said the percentage reality your be we this quarters, too. of will you we've be that margins we throughout I year about few gross continued and in in compelling I with in couple dollar clearly a be to positivity. is think I sequentially of next much said the mind percentage being times, growth growth. particularly a pressure better for on cash margin has proven might everyone. plan percentage dollar might terms, the there to the have

so Great, thank you that. much for

Thank you, Andrew.

our question we'll And Goldman Ken next take with from JPMorgan.

least inflation. you. wanted we cover cover pricing I I now, or their COGS you, thank Hey, companies to is that at that ask exceeding most

For you a full still offset. it's not

mentioned you that it only I to the think partial offset was a inflation.

year how those that? just there of way you Is when there of to I'm think I tailwinds of of inflation? of we some do ahead from So ahead, about curious, pricing forecast perspective. get to that is a get point kind any potential kind just this wanted sense

pricing all-in we in pleased time. level have at all, with are quite I the we that this of point think

growth ventures. places you you the coming Obviously I have in which at we If U.S., actions, XX%. there mean that we out number the P&L taken major look is something the that is like in that pricing of is with three the that displayed segment here, have the synergies see profit

But happy are in same general, with pricing. overall. we markets The in emerging the level of

in very the at we in well. have you is have the is so than in places, all leverage volume but these working some and bit been, different is of absolutely on realize aggressive Latin how P&L in maybe pricing less America, that critical look disciplined model we little could we The have sense been with You slightly all been a AMEA pricing.

not the much are once where period. biggest think don't opposite. pricing, a shy -- Europe. should is A&C Europe year And year a little give quite the in to already being get segment been XX% in And were investing quite look that compared XX% implemented disruption also gives necessarily picture on we the told on go. still is up time, to There will the have. the I understanding We But different bit we I of to in XX% you has want you than, that it had that it this what with ahead I that anticipated. you impression is fact, of Where quoted the we point is out at how think be pricing thinking XX%. is business they is potential and almost And inflationary we a

obviously in case what But We have was leverage. done want to keep volume our we necessary.

the think that looking winning a and is that at into mix I formula, that profit at P&L think us. the have volume leverage in is for and the something we I least QX dollar shown, plus growth it X% is remarkable

I'll Great, it on, pass Thank you.

Thank you.

question of And Bryan Spillane America. from Bank with we'll next our take

calculate Luca, operator. the XXX, Thanks, clarification, previous, afternoon, Good right. One change, the EPS to we're $X.XX. growth is for everyone. for two ones it slides so ‘XX that just you. $X.XX KDP the below quick is of All for because $X.XX ‘XX, the the earnings base is accounting was using or it that net I think effect one on the said, with

follow-up. just want point. as sure right So make to a base I a using the starting Then, have we're XXXX

Look, that think to take. related the And we was to million year. all is post was tax give simple KDP answer the $XX was it last income take out have I to roundabout, question that or

stripped the XX% of dividend are causing is the last depending earnings the And is which year the $XX roundabout the headwind you of dividend. or that We a on tune we replacing net million, the I told XX% effect that between And $X.XX. payout, base. out fact with in

the As is was is really year-on-year base accounting to impact $X.XX. $X.XX we stated impact due but

right. it's back $X.XX we're I $X.XX XXX, guess back okay. headwind that clear Okay, ‘XX, in adding the but Yes you're is base so, capturing as of

So point but we're for calculations start starting our is starting the the XXX guide? to off still -- forward of

correct. That's

and had pricing a follow-up margins, just just about to percentage now. and a in I And just the follow-up question I thinking Okay, it's quarter. Ken's okay. think then. And

an a $XX XX hit at the I million hit maybe from margin. were We somewhere of points, think like a $X.XX was gross basis which a I'm the between a currencies, operating little bit line. bigger it to to thinking income profit year. of for XXX $X.XX assuming was the it's it gross

it drag like we things second foreign It thinking in I exchange unless severe is especially things percentage guess from gross margins less of the of see, become and the So is move a this progression, dollars. hold margin change in FX tailwind as assuming profit piece worst and terms should should seems quarter we that lot other just it, like as the this about half. we're through one right,

want correctly. about that I'm sure thinking Just make

that portion can throughout the it, of fact I'm AMEA, percentage if about like improve. good that the and you I and margin that the a to is we throughout said year. tell North the profit dollar look improve I'm Obviously as gross today, sequentially of I impacted gross happy with America, Europe should albeit, go. should sequentially talking by Latin very seeing. numbers growth implement I still at the is gross don't And I there America, XX% margin situation as pricing

it Okay, but change become drag that should an FX less here, of drag been? has assuming the -- should less FX again from impact the -- things a don't of much

Absolutely, it should.

Okay, all right. Cool, thanks.

welcome. You’re

you. Thank

David we'll And take our next question from Palmer with Evercore ISI.

retailer top had versus that guidance areas, to would your interested going many you. to to interested to three I'd just imagine, what's really on that what visibility. those maybe makes or choose with increase but versus of trends on your upside you internal list, if or two results so be sources also three. hear current of sort whether are be in is Strong Thank I'd expectations, high pricing and I or consumer Europe but response hear the in drove

Yeah, for a occur not bigger were the three in top QX. yes, me from we did where sure Europe, that disruption, and be, client would expecting

QX, of included Luca anticipated. we that said, XX% see has in part price could disruption better been client As had on. significantly but increases, we negotiations going the and our have only the we still year. still certainly than with outlook for some in We that done are that's But

solid bottom of see of top strongest strong one very the recovery you also chain, is The by would we I bars in second driven a profitability then trends since expect line US, increase but that supply the an will all, and but is very improvement positive mention North-America whereby probably continue. acquisition, the our the line, Clif first for that

growth of any the on went but already third that I XX%, for one markets. above compare emerging of that is several for now. if ongoing been strength And me the quarters in I our colleagues. well stands our has there, going of sort And emerging probably markets

So say, top would to quarter those what's carrying would three, probably us for going and is be my the of I year the for us. carry

you're the That's view and going made company how that and you. long maybe of acquisitions of macros I'm that degree not of have your wondering obscure term what growth changes are this terms your COVID to the have just to adding Thank had you some in rate, to internally, some your in year, happening company informs on, what term helpful. what rate. the seeing might all of long plenty course happened of you've we've growth degree been and

So make optimistic direction you the feel that heading in this growth right rate and the higher? term does more is long

Well.

the RGM. in is think a bit I growth that a fundamental drive well-positioned that we we principle we invest have. But in for is -- make strong presence, instance pricing vectors to that We different I we brands, continue little from our are work a through we emerging we heavily went recipe. in-store that recipe have the sure markets perspective, the distribution, that to

really is and to a that starting to a way seem So of have recipe working click. we

increases. very strong. something very is and to a us this What that had means significant where because in we So price it here going certainly we exactly got year implement period are gives we've going-forward that year, confidence that particular last

keep buying product. will increases, buying we more growth on our reacted delight not as price those They And less product. get through has come the to I consumer same But the guess down. or by

see with to what costs We will going forward. happens input have

within performing are are but in So we that those I that to say categories. well well, particularly the that are circumstances certainly it's difficult doing can in we categories say, durable

we So very good our term algorithm. about long feel

I as pan-out long-term to will outlook increases algorithm. little wait I bit where But we get for to think long a these and things restate strong we in-line price see will far. growth to have we that would we or our growth that are the and sure. feel term so algorithm very say through be moment our above

Fair enough. Thank you.

Alexia with Bernstein. question we'll take next from our And Howard

Good evening, everyone.

Hi, Alexia.

there. Hi,

the growth the strong deals recent more is. quite we done. how as are synergy benefit profit I've that questions. a first just So quick It for you've but cost two seems much recently, all, I'm to was that of wondering And though recouping where on there

with Clif. start let's So

in that step area a we have. adding of able we and relatively about to obtain next the really coming We go rates synergies from the The protected The increased organization have opportunities have is and is of is re-organization, a the level area P&L of There already new million SG&A and been and in $XX announced of already synergy started better cost in-place. a get high have Round Clif which A&C given to We COGS. year, selling administration. into

So still this there is for was great. -- acquired the just margin lot opportunity, of business, point, EBIT quite we as a a a reference bit of not

taken I pricing, just area is margin the brought bit is particularly given which we discipline, think shy QX, the XX%. other quite a today, have in of where we the of

to So, There come. it's outcome point still at quite a in is good more time. this

doing other biggest we and potentially thinking see internationally. leveraging about opportunity this DSD establishing things obviously are and We is brand the

So started yet work a that stream. as hasn't

the we Ricolino just On business. got

Bimbo. still We CSA's have in-place with

opportunity end-of-the the we the And reality biggest and COGS synergy SAP. but the material. getting will is we implement system as towards that’s can the moment and we set Oreo to year, through very, synergies, costs move be where here start very is As revenue SG&A

done. on still still in platforms. I would And say other the is in to come more there both general is work to there ventures, So be

too. And coming out so potential synergies there

quantify you Great. will rebuild as this is And quarter. inventory pass quick more it that retailer come on much can on? to the you any And how just benefited a just then there America North follow-up,

had inventory available, selective there that think us for that positivity to is to less-than-optimal. now there is, pricing is promoting And was do our promotions But been opportunity a now implemented. we boost I reality due that. slight is brands, and

potentially say, a bit material, it good a now would little pattern this I really and but obviously growth still we have So to where see position. of more is promotions that a in I more you minimal, context are we stock opportunities rate we coming, have been think in and replenish

you. I'll pass thank on. Great, it

Jason next from take we'll with And Goldman our question English Sachs.

for afternoon, good Hey, folks. me in. slotting Thanks

Jason. Hi,

Great on had on progression margin We of that it Couple Both on moment. a Couple such quick the impressive of short-duration. and that. questions. been also for there. news North-America -- a hey That's congrats thoughts assuming in sticking With in basis-points it closer both this Are seen was going segment. now this overall drag margin gross you've to mix you be Is margins dilutive? far. sector? X,XXX a that a margin so improvement with to parity still to

the it have going called to is platform year. sure that This opportunity And we another right SAP Pricing that think But an is is that is point that the announced hasn't but must potential the the we're second to better. yet. to store of about by i.e. the there as the integrate activate has leased sales round, in of assortment come. segment. will overall we margins of in have. really into It stopped on kicked still last for them, get opportunities the stop I'm been margin as more we now dilutive area part years opportunities again, we in

So confident I'm the close forward. that U.S. to going quite look the business will margins

the seeing chain costly How of that. margin improvement. tailwind business. that? sort a margin great look supply much sticking it like much on you the a But the the sales of to North rebuild been see Clearly feels year good it's been as to upon, has exaggerating, in been that we've drag been upon side? hump and long. it Nice how chain hear are of on this you're North that be, That's just side to I'm that maybe and that America about and overhang America, could the seems year and this over for about talking you has because issues to of year supply How

whole -- well. pandemic right with price get incurred and to mix the we the mean, of together costs is the say implemented that some on. this going with would seeing service is so increases I have on a I we're the that the extra during

our than we low. also You the promoted face were planning less inventories see in because we were recuperation

that how certainly a quite but to headwinds pinpoint case effect, to moderated it's go quite to was due is exactly much picture complex all So the the have have significantly. these disruption, the additional through we since

labor You know situation. logistic about markets, the the

improved significantly. network Our external has manufacturers'

would our lot were There's from expected level. say eased. that cost mean headwinds supply the That doesn't still of facing means Service-level I cost levels significant now we have come inventory that improve, been to a our chain, that the the XX%. effects So are resulting back. inflation. have the But reaching back are

Our availability own is sales XX%.

still some levels service and anticipated, demand recuperated. bar We the confectionery the fully higher our is have than also in where brands have Clif issues

that stage to cost effects line would that doing was. say our this capacity. levels it at the forward, is cost largely difficult estimate levels have and we're can better. we But with the we So top I are to what very it's for things us eased. But function start normally And effects now higher and are exactly increasing promotional going

our of our manufacturers. changed and have way our We with external working relationship

The Inventories are rebuilt.

We simplified our increased labor sorry capacity on -- improvement attention, an for labor. our we in have have of manufacturing and our our warehousing and portfolio. top temporary We've implemented strategies capacity

we're exact chain that America. situation. relates long-term also hopefully apart as better cost, you from North a solutions much supply place for in to we've think, but easing the feel Difficult put the our number, spot to can give you it supply in in our So chain I

sure. Thank you much. very on. pass for Yes, I'll it

you. thank Yes,

take And next question Baumgartner John from Mizuho. with our we'll

for Good wanted question. to the ask… afternoon. I Thanks

Hi, afternoon. good

wanted Yes, good afternoon. in profitability I wanted to about ask, Luca. ask AMEA. to I

there. mode reinvestment into heavy You're

in You earlier mentioned also question. disparities pricing the

you're guess just the I at AMEA? think So back thinking pretty to potential is I'm I is you. sets and reinvestment. expansion? curious which growth margin at this leverage structural point for Thank yield mid-teens margin that what time. accretive relative to And about When for product volume a strong mix you also to over mix begin Or point how ceiling

there think of terms AMEA in profitability good Quite is in ceiling structural a overall. don't is AMEA. I

a companies, which growing whereby cycle, by of you we very and countries the manufacturing are sales, conversion a these and in XX% of cash get the cash look are of profit we leverage on percentage to see average machine are there but AMEA sizable China probably when both is negative the cash that that regions invest -- India of volume through cash company. standpoint, very materially higher runs cycles bold I the as a average chain supply both is machines. margins of the roundabout from than only conversion on throughput them and the and also a not We company the think revenue, The businesses, call I closely have that the set north of impressive. or run

is scale little categories countries have less we where where certain yet. not is I still business the material a Asia, make volume. There established bit the countries scale, bigger much we like these are where there to investing Southeast Southeast and a And for likes Asia. are of the are are in because matter And us. well of developing, think it categories time, There chocolates the

We point are a where make P&L adding sense. will perfect will to the get

will come. are in of in think ahead that I support price it both expansion countries, might material you imagine and that As terms investing of we points these

obviously grows in double-digits evolution fair. are of Australia volume profitability then doesn't places, happy grow it where mature But are high-single-digit and as And overall. the have more and you countries other we like Australia or with markets that again, is there

very happy doing AMEA, markets think are with very you that as So sizable about the well.

like In the the with that untapped is rest emerging markets, opportunity. Australia, happy

growth We are we at and margins. and invest the obligation looking have to future for

will it come. think I

Thanks, Luca. helpful. Very

John. Thank you,

And question we'll Michael take our with from Sandler. Piper last Lavery

afternoon. Good you. Thank

Hi Michael.

how A&C Just wanted is like growth. on I your love to five slide your identical almost spending it is understand, to that sales clear

the just line the amount that's your a clearly, really So as But of growth. sales is you the some there leverage operating percentage of given pricing percent get top driving constant. of spending about holding

maintain. coming a forward? basis Is per that think ahead. a on to it out And so, about How managing sort you're want really you you going do unit luxury, of

us to evolve how get may of how understand sets to it spending that given bottom-line or Some up. might fall just adjusted be help that the dynamic

something XX% the is might on that side. be high the Clearly

you tell can I one Now thing.

line is we to we of We these years, keep consistently is it biggest important you're retain end we come. One that. the are has level to we the as been moving increase to of a quality growth sight in it where A&C increase, that last are points, has over And marketing, this of it it and sell has accelerator brands company this the our been I important years been in don't trying of that XX% of differentiators for of investment. think point It see brand where use three at but pools, important going at price and consumer an time, to support.

this time. When And will done what that's normal. things get point in inflationary this is and cycle it more at good is

differentiator is volume. a if the is last what the I look level or growing correlation marketing in there not our to both distribution. you of have the still consistently investments making, have. over quarters, And we think few is been have a we and and level terms case, going scale, of big between are of businesses In volume the are

higher in sales And so hopXrully see opportunity where they consistent that you're to going but which to is still big quarter-after-quarter. brands XX% for think don't our a get I is realities belong, us

That's great color. much. Thank you so

Thank you.

and. the attendance refer you. strong team we've come can we We're IR Thank that for in follow-up Thank to other Shep With at goal a a questions. the of Please obviously to you with. Thank quarter. end which year. your you. Any the through strong this stage looking-forward

Thank you, everyone.

teleconference. That you concludes participation. your today's for Thank

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