Mondelez International (MDLZ) 30 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to the Mondelez International Second Quarter 2024 Earnings Conference Call. Today's call is scheduled to last about 1 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 Senior 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

this to company's These the risks we things and statements statements may results how performance. today. on uncertainties. call, Actual we'll based differ During forward-looking see about make are materially due

details X-K on factors to forward-looking contained and in filings the for XX-Q XX-K, refer more Please risk and our statements. cautionary our statements

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

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

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

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

Dirk. over We turn the will call I'll now close with to Q&A.

I Thanks, with Shep, cost on first pricing. dollar to joining and I everyone to Slide a for and driven by call growth thanks profit management pleased year share the delivered that will half X. solid we start strong am to effective today. the

annual well Europe, volume in pricing completed helps position which us growth. We successfully of top also for our half second and the in terms line

track brands our see capabilities continued to emerging continue continuing long-term generating of markets our And $X.X in significantly cash momentum flow we in and We to drive to and strong we invest billion. are growth. free sustainable, record

long-term remains in and growth environment dynamic, focused agile While teams against challenging our and our our remain strategy. executing operating

core very remain backed long to the iconic high strong brand snacks term consumer play because to biscuits continue with We and in our portfolio. loyalty favorites for categories these chocolate,

well great categories, long-term to compound positioned growth. are confidence footprint these we additional our sustainable Within that provides geographic advantaged

Turning Slide X. to

business. A&C continue quarter our X.X% EPS our to the to spending both gross consumer brands helping loyalty of growth high single grew iconic that us You enabling to grew local can revenue up net investing global with digits, XX.X%, Adjusted see XX%. this adjusted drive organic customer jewels. in dollar profit and is and

Turning X. Slide to

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markets, like willing to holidays wouldn't that same accordingly. elasticities are demonstrate without spend the to continue modest chocolate, they Consumers emerging and Easter just continue. be In

causing economic households with some In in and lower Mexico, in healthy commerce. spend India, strong particularly impacting in and Within the confidence. food trading, in middle-income pullback growth driving and Brazil, employment we business uptick down social consumer consumer biscuits. and solid some inflation see a and seeing economy is In remain online China is an resilient. but delivering backdrop the Our elasticities we're

biscuits in emerging to deliver this chocolate. second consumer of action North continuing Slide combined our are Against improving volumes the the confidence, we as America against in to and share year. is focused on can backdrop half and X, you Overall, markets see gradually our value improving in of plan volume improve

Ahoy! seeing Ritz. To improvement and priced share implementing $X the drive loyalty value well convenience continued further new promotions Oreo, brand to are and and in to price food, also stores. right as are to points we a are we targeted $X for already in range, across new, accelerate distribution as We to the pack And OREO Chips meet club and value Ritz. continuing growth, increase points, size

space activations lift. Oreo dunk we Oreo Star to like compelling fans Wars continuing Additionally, driving our to delight and while incremental are launch

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costs to navigating long-term advantaged growth. well are structurally chocolate confident accelerate equipped and remain continue We that input to fluctuating we're that we

remains progress brands, to to snacking. our on XX% growth is remain long-term while volatile, core biscuits reinvest important we teams sustainable strong against and accelerating on by through We agenda. our to deliver reinforce in our of Slide deliver scale snacks X. chocolate, and revenue the remain And categories our focused of track strategic It baked We're to XXXX. to continue expand external M&A that continuing drive Turning strategy. distribution, environment our

film We team versions OREO For collaborated recently unites our States, and consumer that of United deliver with example, which Star Wars the fan incremental OREO Star a strong our strong equally and exciting to with activations the design creative edition community. Wars special launch marketing X to lift. base in drive cookie capitalize Lucas on trends continues fan

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collaborations some is who their We're bring help example This exciting to key cement latest the but we remainder these partners visibility this the OREO are of and our year favorite strengthen XXXX. more execution around strategy with Along collaboration cultural top for to us to secret with life. and the planning world. of availability, of still continuing store relevance into marketing the stories activations,

channel digits, in Here digits. while is channel the growing club instance, mid-single the the value growing U.S., in is our performance for double

are our which cracker Both or offer package rather per overall multi-packs by family driven price prices. size than a great cookie

to continuing power synergies the to harness are of capture acquisitions recent and also We drive growth.

Chipita high a Day convenient our baked X business by broad on helps volume go Europe, consumers that in snacking range led across single-digit example, For occasions. Croissant of is the satisfy growing snacks

progress agenda. continued making our social on are we environmental Additionally, and sustainability

validated and map implementing our to zero we by XXXX. net reach road carbon scientifically structured example, continue For

a tons, plant as East carbon heat XX,XXX As equivalent neutral. China was manufacturing recently implementing electricity. wastewater planting reduced new as certified to Suzhou, has in including as an example, and The residual XXX green solutions, well emissions for our trees biscuit of system by to the an new innovative years. photo carbon voltage plant system Through technology generate X,XXX seller recycle,

bakeries. our about I and main rights turn XX, performance like components. more I'd partnership on encourage briefly Luca, the strategy our exciting This with initiative read you learn X website. available On our our To snacking microphone main over before to strategic highlight announced includes to in detail, annual recently I data review Slide our to report Lotus

we XXXX. First, including iconic products early unique in global taste the brands, and Lotus to develop crispy launch products, to Milka. Biscoff Europe We with caramelized in with chocolate and co-branded Cadbury work our launch combining first will chocolate aim bakeries

manufacture, will grow innovating business simultaneously scale Second, market of consumer interest products the India, in emerging us strong biscuit we India cookie market, the in with of loyalty. European chocolate second to and half Biscoff sell our Lotus enable starting in also while our sweet important XXXX. to LOTUS and with new distribute will the brand Partnering business

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growth, points EU strong volume cash X.X% generation disruption, primarily for number quarter solid across in Thank market softness and boycott minus basis region. organic substantial you, working business. mix execution. Europe marked revenue quarter, the ] region, and [ with plus by pricing headwinds a EMEA impacted in X.X strong of flow that with media capital some down good points customer dollar includes us. net and now of grew reinvestment each free robust growth ongoing customer is This disruption QX behind afternoon. for biscuit Developed XX our U.S. was X.X%, Revenue into with return. business. Dirk, the and profit the

Developed markets grew markets X.X%. Total grew revenue emerging X.X%. plus for plus

like growth weeks with across mentioned. and U.S. clear baked brands plus plus markets. of of grew Tate softness Moving the XDays, improvement snacks Social we to, to Several improve Slide signs developed Chocolate quarter. [ as we've solid in and in plans to Chips portfolio We have brands biscuit Biscuits X.X% Club recent grew overall the early including growth delivered performance XX. the though significant growth, Ahoy! both saw seen OREO, ongoing X.X%, RITZ, over portfolio. emerging enough on parts and biscuit for ]. with

& this and Europe. which Brazil down in customer including and Milka posted by was grew was impacted Cadbury category momentum Lacta in Marabou disruption by nearly by plus mix key driven posted X.X%, strong the the Dairy Western Volume/mix solid in Candy during Brazil growth. strength [ all ] continued all negatively polls in minus Gum Volume U.S. Freia Milk; also markets, the Andean. in and China, quarter. growth driven and Nordics, X.X%, in was

base percentage as with U.S. Let's on as softer in business revenue review in approximately share XX. XX Slide market results & Europe. accounts strength by markets chocolate our gain partially biscuits and was well for offset of revenue key We Candy. of in Gum across in share which points [indiscernible] or XX% held our performance disruption

key volume with and pricing in-store declines regional associated in This of with dollars and share XX. including across compare QX. Growth by America quarter execution, year. North for was Pricing all XX% completely along customers, were Europe us prior through of key is Slide ASC was a in significant nearly up in customer online value, X led the Execution performance channels, expected gains. line the solid on to plus including well strong Canada, up OI delivered which investment. QX strong now with number in than plus with disruption. XX%, and which Moving growth solid partially against a to delivering X.X% year. grew club trend X.X% more grew offset the positions of countries growth.

impacting overall to seek declined price with points, Ahoy!. as continue like some mix Chips brands lower out consumers volume However, absolute products

beginning address family high this range have clear and QX packs although and and adding offerings continue in to to Chips core our And other a the early, party unit within recent promotions more households $X the by new to attractive Ahoy! packs a provide. plan while have reformulation Ritz that price fueled more OREO, by to $X gradual with the led We plus prefer dynamic in OREO, work China clearly initial another equity America by brand signs along the grew gains. enhancement ongoing Ahoy! quarter. Chips North for increased Stride to delivered growth these quarter X.X%, but strong with distribution are Chips There EMEA improvement do, encouraging. is X.X% in Ahoy!. plus single-digit

inflation. intensity growth trading and strong competitive of in overall biscuits result with chocolate down as overall flat by offset more was higher a food India

with and to starting X expect the enough the in month. results, percentage in be to impact which to, share, was this will gains. A&C plans and OI growth within strong Southeast new Japan improve cost a share growth. by with has pack headwind Middle team activate we of increased impact quarter and QX. though worth Oreo to continue overall robust delivered new By India New Zealand Our dollars value coupled of sizes pricing in East will base EMEA growth, The for increases. and Asia Australia, the beginning a next more XX%, than points region meaningful remain

delivered grew base execution coupled this performance. America decline brazil Argentina at to where been XX% drove The related price plus strong households resume growth, XX pricing with capped continue second more Note year growth, mix. with contributed and currency points both flow that growth. delivered country to remains that XX%, volume upsides by Latin America modest. growth due Gross and year growth. Latin in Brazil and OI while last last QX Western a America in solid Nigeria to has to to some X.X%, lapping than Western losses mid-single-digit nearly region Latin our Mexico, unlike supported Andean confidence part the Andean of was lower in subsidies in strong of solid half. plus public expected growth -- Consumer is countries Mexico to pricing. demonstrate the

line double-digit Nevertheless, discipline drove OI pricing which gross these to and half prices, one profit strong top headwind the be XX. a Page growth, our second strong and favorable reflect cocoa In ongoing execution, meaningful the to current saw in half. cost dollar will results. will results market also QX, pipeline reverse strength, clearly we Turning compared partly

cocoa grew QX adjusted currency constant by on XX. headwinds, despite driven favorable was and of in currency. gains strategies. EPS coverage And cost Most Next as well EPS by operating plus growth ForEx EPS XX%. this and grew we Slide pipeline reported more than to XX% as

EPS the these cocoa goal become year our since gains a holding half. the are We for material despite headwind more in second will

see can Slide We our XX. capital to of flow X.X X. continue free half and you in free cash as flow delivered cash EUR on We billion deployment, strong demonstrate

We X.X opportunistic X of remain through stock remainder year. have half in repurchased billion the and will for the

are our consecutive we XX%, We also increase. with a double-digit marking that X by today raising dividend announced dividend years

on our Before Cocoa me few outlook, Slide let relative a XX. make to moving to comments

investors. for As most our mind likely is we the this know, top of

position Our very monitor to possible. to teams market best continue the put ourselves closely in the

high to want we ourselves, in that declines protect historically place market continue to potential enable prices. structures price participate we us to While put current flexible in versus

to addition, near-term In managing through to sustainable we ensure commercial fine continue long-term challenges. growth strategies while tune our

GM the we our points principles, segment while broadly will key utilizing protect and guiding thresholds, in occasions. more elastic and As price and least implementing critical consumer pricing

Our extent cocoa objective volume elasticity adjust dollars possible as will while our we eventually. believe to is the losses limit protecting to and prices gross profit

line It ensure provide we remains We will that also implement cost to the year ability measures invest to in too category. in bottom specifics protect early the our and to around XXXX.

has key However, for will mid-crop get crop likely cost. points much indication consider. around signs we in main as the elements there are and encouraging, in some in time to line clearer good a and trends. act early cocoa are been the historical catalyst should with although The next which September, And

I'll as the with share close our as to expect to range and around XX. we get be more able earnings of we on EPS. Slide XXXX that As well liquidity relative market outlook will QX cycles, to to cost color our

'XX unchanged. Our outlook for remains

plans cash for half, ] include considers of questions. result on costs exception the per enough Note which significantly earnings XXX We and we delivery full net X share let's range which estimated that, Europe million consistent our in revenue, models. for With completing call at open includes which to higher price interest is to per in to to second you year. for our what the of expect and factor earnings impact now X% remain North shared for the the in with line our with organic this This for last into that share America. flow. expenses, revenue, negotiations of continue the our the [ with end is Most of to upper drive assumptions related improvement key to X% Cocoa important algo EUR

from question [Operator Instructions] We'll of take first Barclays. Lazar our Andrew

America of from volumes off, the declines start did value XQ, benefit -- last America to moderated volume in you about the pricing. the to spoke In in think North the better Maybe parts I Dirk, North quarter, as need consumer offer to decline segment.

And see us the volume you the to the needs a end need organic you, more guidance accelerate X% North you year So EPS aggressive a X% year in growth for please. back those upper challenging logic And dynamics, full do for then and range currently? Luca, the how unchanged to half could reset? despite while in situation price America to XQ hit behind of was for through sequentially separately of do still consumer see the on beat And you the implies in a EPS. the sales environment, bring the hoping I some deceleration

Andrew. I'll first, start Okay.

relates it sort key mind. as of to the I in to there's U.S., X keep the say dynamics So in would consumer

remains is of attention increased consumer overall would They of the all, have First soft, food picture. the a less stabilizing. but inflationary because -- And that the experiencing they that category purchasing and power. feeling say is see they the have it I see prices

while being same see time, stabilizing than last same they although the and concern prices prices we grocery see confidence these I thing the period while QX it's also bigger would their 'XX. up up have wages X%, are as as category, elasticities in have to since that the say high starting said, remain the stabilized They're prices the And them. for soft, grocery year, I other X%. about particularly At a

they that The is thing have shop. changed second consumer where they about the

Club back, important So decline. seeing is while consumer of are the the about in value the seeing the years benefited grocery, that share party biscuit family per has a most thing in cookie size Walmart we're were seeing it is you definition people fact, the or changed we category people the growth look per more and and pack, largest that all and like Value price because the chains us. was and in probably price drifting And pack towards X for about unit X, many if

moved size can the buy. will they Now they will price point particularly they not lower like afford. a have right fit in they can And that that income not, any they if at consumers there basket If to biscuit brand biscuits. the buy

days, at these offer much pack. So aware we we be a points to which price more have

on don't we is we sales At income a to and price cash our need do, moment, the our operating strong, OI, what full and our smart So largely where is our going a reset. we generation share our are way. we improving in think focus

distribution an displays. opportunity to more drive We in have

we keep X, driving to need featured so those And also on particularly displays.

new hesitation going that probably bit affected are implementing like brands We Chips by is sort probably are the targeted from promotions price little of more offer to most a Ahoy!, on the offer packs to also an the around range for to will smaller then opportunity consumers. we lower-income a $X $X will pack. whole buy that the And launch new of consumer which

And so make a difference. we that also think will

driving offer, very already So smaller top those OREO quite We're that will share. will more their have increasing Ahoy! that the packs all benefits. activations. seeing are of are we we promotions, market distribution, impactful And are Ritz nicely. some we Chips that, for. planning recuperating on solutions and is

North in All So very big activations we yet on cannot talked the the about second have coming see us half which OREO announced, strong some gives another Star America. we together Luca? will Wars the confidence I second here. There's that good in we half. up, that but a call in one

a are broadly softer, be, to where additional to expected have revenue enough but into strong might will volume first to growth. little some the we honestly, would profitable profit activities allow half, be us deliver bit for selective invest we So quite

drivers. in that to for you line current an X implied pointed The #X growth Christmas. driver that And guidance acceleration. impact in an think ourselves to is on big changes that and will we as top back-to-school are rightly out requires I plans to a main is on remind the up stock activate solid also important have we that return Europe Europe feel will It in that. trade around growth. good in disruption consumers behind opportunity these and shipments we quite proven us, . With that material are like volume and most is July. to which back they about activities consistently the opportunity has The well. very pipeline clearly execute key can trade something had the and team achieving already the to Europe that to seeing pull place piping

those what the The the have element I second giving are pressure of is in price clearly we category to indication volume. the us positive to brands. what that shoots we to category been and happening And the is in has and green an positive in our again, changed. we start truly biscuit going is the U.S. say that overall share around seeing hitting believe points see some And outcomes. diagnostics result

year, discontinued that The while about like second volume talk do we for year, I were material product lines much third not of in to business. give-and-go for last is that element the some the lapping part the

And we I base. clean think now, be a comparing will from to more

think that's I mind. the so And third bear element in to

I line at upper year. of to in we for this our think all revenue guidance sight end point, the all, of the have,

we have in price more will EPS As There as cocoa. be But importantly, major might expecting [indiscernible] light of goes, deviations with in be no line expectations. on our we doing landed the front. selective this far that price

XXX% the almost Our for commodity cost year loss. is

on no either. that So front expected surprises

in just cocoa costs well than that this for are year I quite mind XXXX average. the few times, meaningfully a bought Cocoa we that As year-to-date better mentioned and

So is results EPS line cost being more kept coming in second half. in year-to-date. [indiscernible] strong very guidance the there the despite

cost and media opportunity measures is discussed part start the few times, nonworking working with optimizing, still year, will a will line in productivities. we also media, in an which continue in outlook. to the but We invest will And we continue to of this finally, we first the pursue as

believe the well time. as consumption at for thing said, quite guidance right shaping in again, the U.S. is all work point more is to this obviously, there we And around do. But is all, I particularly us side. do, July in So reaffirming up to

Goldman take of our question next Ken JPMorgan. from We'll

Europe. about a bit little I wanted to clarify

in volume You for helps growth completing of actions pricing well position how half. the second about you talked terms your

elasticities, still Europe you that think also I mentioned moving modest, are slightly though higher.

Just could of curious, slightly confidence some those. just maybe elasticity if higher on elaborate in to volume we little what all bit you I'm growth? mentioned, tougher comparisons that given pricing the seemed a So actions, what that if correct and of I'm drives your be on

stable all, is They first I year seems consumer. would European rising consumer, the about Well, American And particularly employment, their us is yes. which say Yes, doing the better, in confidence optimistic. They see the low the say, cautiously quite place relatively we rise. that be in the The in better their to their would personal economy of see U.K. there, because important in that consumer they Europe. general, incomes and is I feel than feel North for better feel finances. was a broader inflation last is is softening. they

also then we confidence say, and mixed but is views the other year. the Germany, I And last would the France indicators, economic have X above across big countries, some

also is, increase to also thing discounters. in uptick of an intensity. hypers promotions. see affordable remain right going is and bit buying We're an I modest. there and a the is quite then we And would yes, price of is second But So elasticities little also point. more shift there elasticities there in say packs And promo people the at the supers seeing from same these --

similar was about talking North in I So as movement, America.

volume we momentum X.X%. already They're strong in chocolate, value their are positive look Europe. QX, and a see and In seasonal baked growing X.X% with you If shapes. at at biscuits snacks at our

bars pricing and the say, if important. We pralines doing solid. Christmas, disruption the we overall, quite also will in And chocolate exclude is course, I to you saw, of Back-to-school impact. But of would see well. performance that and some continuing very we Europe be watch tablet, are the in

that that, see half. we we to And since solid disruption underlying in implemented that feel is there pricing growth that continue in the going been has the now, second

There's to was We're good a a our already half. second strongly quite quite to prices more But situation. that like chocolate here quite remains I come, planning strong. of bit to seen quite to expecting resilient. very has the solid. seeing Easter invest we're overall, would So continue also volume mention despite been also cocoa

So we have high expectations and Christmas. for back-to-school

that would I is Europe. half for second overall, so half good a be I say not would And if surprised the

from Our Bernstein. Alexia Howard next question . of is

of couple quick a just So ones.

particular the ERP going is to be particular affect going categories at that we impact for rolled worried Or out be that On of transition, is point, something across that's something about should it regions? XXXX? a that's to transition the different

So part of it we is we will reason time a a And frame. and the a couple is problem a why completed that will is approach, staggered One will over use things. the wave in business onto eventually that holding X-year be that implement the of and to rolling able impacted. be be of will and business that first of those the into that out part resources from chances resources next

some modules others. versus We will distinction of also make between SAP big a

region, bank successful XX believe for terms preparation we by execution. will we approach. in last, I the take we well had positions been big not . And months even us that a So of doing say, necessarily the would

by in we believe we through issues SAP. importantly, So by road also [indiscernible] or have Accenture the good have will we've tried ones as given region world And in execute sources the well. potential to going and and minimize opportunity one we the to that internally we secured of have all broadly a

quite been just cash as It's $X in as earnings then recent growth And years. I flow obviously your played a nicely at curious level out even time, guidance. for think, free Great. billion some about the has long-term sitting, follow-up, this I'm

some about road. the billion raised be of guidance Or you're point what year. this at guidance and are when got use could that of the whether What are free criteria takes? obviously You've cash $X.X puts would thinking that down flow the you

The is yes. answer

had in we And We X.X. part I coffee. we August, say. will that onetimers the pay year, off paying will have most the where And But last related what to both likely potential second year is a where really to couple taxes drives the we this some of of would year. in be that have one-timer

cash our those clearly out, If is I plus. you are mean flow $X a billion that strip impact. running at onetime

about be So top we conversion notch. it. quite cash feel to continues cycle good

one improve that days believe is And to opportunities is we in demand be the continue arounding which area it. to planning an We and reasons oX, ERP the which are of beneficial supply to why is platform is around other and we outstanding. has us SAP banker, material going that with this program implementing

strive So than ongoing an is the $X on billion for basis. answer can we certainly, more

our of Piper Michael We'll Sandler. question next take from Lavery

kind -- the time later which roughly is That on give presentation. of come a about a if I for normal, or you differently, September. little more come a at second. was how be out half sense for sounds over really you would a securing wanted rolling prices a for 'XX you covered you trying to wondering it been you you I year? back a you are at at end bit Just it Put a slide little position little put year. of this think us as the expect maybe you in see in laid to to of placing to bit might move that of the cocoa helpful bet have much Or like the could might

gap X,XXX ] mean the year, is even we about which spot take compare which you QX, per and is material. Look, of is to a a price today, there to believe be correction. GBP of there pounds, next clearly round is today, Yes. [ I if going X,XXX ton it

might of And sees the adjustment be a going forward. evolution I mid-crop light clear this. and there the of even more than So the of importantly, crop of prices main in market the think

and certainly cannot the going wait we have we increasing on XXXX. Obviously, not to physical our improving go good. crop been into to coverage And blind into main We be are XXXX. that and

over in might of imagine our do allow you rest in you around have about potential We that futures. this market further have a of discount into get versus today's a series And the out through out a positions is the inverted XXXX there how covered correction. X/X to to big participate The of means year us we you advantage which derivatives covered fault. take curve, go to of

protection market have And or well look also way side, for physical in that not. secured part will as the might the believe we most some time, happen I you forward point So positions the we at other of that price it, to this our whichever cocoa eventual compared into on at positions have provision adjustments XXXX.

and up very a of little but not sounds very JV, on bit maybe interesting obviously, Can works? a could helpful. got moment, you licensing. then sounds a Maybe how partnership. Biscoff. at what there just And potential be a it's be going give Europe little also geographic the it global? to across perhaps it it's Are go any of And That's like that its like kind It following initially reasons it's India, sense structure. It Okay. but the to of limitations? just better

Yes.

X partnership. there's to So main the components

a biggest Biscoff. but to we're one chocolate not North is first co-brand a big of America, quite Biscoff a one quite is quite delicious. of It's consumption in yet there brand the has and filling So in pieces quite it moment. very going Europe. a And products -- with is that, it's or is with bar with unique Biscoff combination it the unique and the biscuits taste chocolate brand brands, Biscoff in And big of also

first the one. that's So

have idea, millions we and sales talking already OREO a line. give uses about similar Europe that several an for as To line, filling, the we're of which hundred you in

And that the of building expectations that brands. And excitement will the the obviously chocolate line. a So that market. this is our we we And -- other Biscoff the world have in in want us into will be will chocolate around to first Europe, the XXXX. with help launch if excitement success extend around product for early same

manufacture, countries to It's easy looking certain to we get in second through, distribution. that is a to of and in the moment, give a interesting OREO as in It's us there's Biscoff for is us or coffee second Biscoff Then big tea where not half very And for global different will and brand, going the very distribute at country. the different secondly, is because from first India biscuit start is with XXXX. this moment, sell India. business going India our OREO, largely will consumption audience, very built different in really around -- very

that is an see on clearly the other to to world. think building And we And strong a be ideal to a going in would countries it's keep biscuits around do complement we India. business test so if

joint brands so other. it's And of not cross a sort our licensing yes, It's each a venture. of to

people really helpful. Delta Okay. fly and I That's them there. go crazy on for

So U.S. the got at ] you've know. probably least you a [ in better may head than start

move next We'll to Instructions] [Operator of Palmer Citi. Tom

question. the Thanks for

the in help the then quarter expectation? being maybe to just volume in volumes at weighed you rate, this And in how third flattish wanted is some could think I might subsidy XXXX. nonrecurring Europe of the timing quarter, Mexico still ago, for the year-over-year to about as entry we kind think quarter. confirm, about disruptions so in of like the talked items more or I any least much an a the run have second on

Yes.

I The points of consumer [indiscernible] another sort percentage it expectation, year. impacted disruption, for of of volume in mix the to the quarter. onetimers, QX. which around And is in X.X points that the the of disruption happened X conflict having think There volume mix the attributable I said, in the on for is whole customer still a as is sorry. terms East that Middle or X flattish -- points there are Europe component, about is

QX about that the we had of was the The & $XXX other around in in to the that you first million X. importantly, last we year, also discontinuation disruption but impact. Give I half need year, half one, and as a revenue had that of into said, of impact mind in bear Go is And carryover Europe last

volume strip And see that revenue clearly mix you the an the second that and that improved all of think these come and in mix you much volume So expectation is when half. in better U.S. second clearly half taking the the the a this you to impacts, when out consumers I have we improved revenue. actions terms packs, linearity and around

talked know side, the you on first I the we A&C just -- And of about some in meaningful the year. half here step-ups

step-ups the terms of about the pressure half the the headwind a look timing if we in maybe, it year, less of of in year the last flow-through least terms think at weighted, of year-over-year of I bit half become, little Does a maybe spend. dollar back think was some terms at in the as of that we of second the to earnings?

an be the relation There expect A&C. I media And will of fact in for part it mentioned, a all we investing our a in look we working we importantly, little deeper don't might be second the part to of at the upside of as nonworking material still to that, are the taking bit year. media. continue

material due terms So impact don't A&C part to I P&L the in in upside of year. the second of a lower expect

America. Peter Galbo We'll Bank take of our next from of question

I bit Luca, Mexico was comments maybe could if wondering, the you unpack just a more.

of think different companies different I related this from we've heard to things kind Mexico. quarter

subsidy Some a seen timing mentioned normalization strong out, a several maybe of more others have you the called of Mexico. have in such after that kind years

subsidy Or you've into think the So piece just a going bolt there's point? a, reacceleration this was on that truly, a already if maybe you blip of and at a seen if July. bit curious, there

healthy. us mean I are the in for market overall, Yes. Mexico conditions

in will years mid-single-digit meals in gum at say that is the employment. instance, the doubled increase if minimum the HX. would last chocolate economy subsidies has flow also in in general, biscuits There because is the of and Mexico. quite of are There start elections both category, to in think value, and lower normalize public performed a good to was For I doing well. household you well. wage But look we the the

positive consumer. overall climate as is to the the very it So relates

which in our low that that And business. particularly there meals. that candy, we chocolate price points think in probably If came at growth our are candy the growth was our single-digit little government had, too you look and high. bit largely QX we from a offset by

Mexico. to meals will need that very work we make the Again, Ricolino doing for quite season mid-single for In those. and well the chocolate, on little digits in have OREO to also growing a well. that which is was partnership sure because the And distribution, the also same. of there. strong. OREO we biscuit We The bit positioned government Christmas growth we're critical And need growing us well was is are

our chocolate. with temporary But gradual good half, would candy issue The for Ricolino course, certainly related because I grow leader also and The U.S. important market positive. market I second is I not Overall, So significant. a their Ricolino think of market. going to these say be there also to candy and overall, that long-term question. route we the of recuperation of it's see U.S. one subject chocolate as the opportunity We effect share, by the of recovery remain for us growth will that well, positions say affected a is subsidies remains and There's in enable would ambition to which, Mexico. Hispanic think integration Ricolino a to driven quite is the I I'm and a biscuits the expecting in business -- the the But it HX. think subsidy quite this will particularly in

had coming out an of was points quick kind year there half, the gross first Great. of that the kind a to questions one. be margins down the maybe expectation as that's I of margin of than year-over-year think inflation More given some helpful. Obviously, and just you'd on That's over-delivery the of at come wanted gross quarter kind if exit this that just We've fourth basis kind Luca, XH. the 'XX. basis a in. And on see of actual basis. expectation we cocoa points still And in

Yes.

are would ahead from terms we profit moved our a in in gross look, I usual year of dollar gross I to algorithm. compared of is that you have percentage. terms away guidance growth margin is, giving tell think, going we delivery to What

would really cohort much of implemented what the think we in year come have next to the is take and are pricing amount of I into how going matter pricing is will end, end whatever of to XXXX. we light in be the going

throughout have that the believe, I gave are under And profitability you. we the in you honest have the headwind part suggested, So call. to to normal a achieved we cocoa that activities There, take A&C. we in of happy. that to we we a of have the But in the level very in material massive reality be It hearing circumstances to of upside selectively It the half away reality with first invest is I might the and of of second terms been have year. is investment. reinvest not some have is guidance the is year. that profitability ability in doesn't

cautious the are prices, I price We But the we them and forward have believe, have than spot XXXX year to of price as around of for because, good first done, clearly be the cocoa cocoa level in current job. would the maybe going prefer secured much lower we part again, a very profit suggest.

a question We'll Smith, Matt from take Stifel.

I to Just the wanted India. ask question in a performance about

expanding continuing flat Elasticity. market relatively approaching see to are of volumes consumer distribution of a how Can in market. you the this good with in bit talk type about progress you're in opportunities mentioned you step-up on this quarter environment? You Are the distribution a in point your

Yes, yes.

in single growth improvement. So Dairy margin in mainly to of continues Cadbury Chocolate good QX, be I flat gross background, continuing where if at in being well, leader mid-single-digit so little implemented digit, it's India the is India, strong biscuits affected. market. a fact the Milk give some despite we're we've looking a that high is growth bit pricing, you of already

XXX,XXX dip there competition biscuit clearly built deployed stores, more call to because In we've added around would stores our new XXX,XXX is premium our we visi-coolers. visi-coolers. visi-coolers. about more If to seen I XXX,XXX XX,XXX I and and added HX 'XX, consumption another a lower we've consumers look are which Indian XXXX, moving market. business price so already points. stores at since So in largely XXX,XXX In a XXXX, coverage and we the the in intense and have OREO, than more biscuit is

take outlets 'XX. million to if there's we and X account into our indirect food $X million compared you performance cover coverage. X.X Still, million strong take directly very over a that's if about So we now just retail

have still huge we headroom. So a

consumers, yes, consumption. particularly is careful after say biscuits, particularly years of more of the slowdown is X a bit inflation, in there their in would I So group of bit a a a

on focus We previous working years, placing in don't to India. slow as in the to see distribution going something our as would work down been we've that expanding that We're continue our that again. will visi-coolers are chocolate our mentioned, on to well. start driving business, I confident we consumer the doing OREO And those gradually very buy distribution very keeps because our as

return our the happy for does de Put to comments. call Dirk to question-and-answer conclude session. I'm closing Van This any

second see the Well, call I it end would quarter, I the looking and call. forward of thank QX. their attendance you again a an solid everybody at for our improved to are to expectations for and

you, Thank everyone .

Thank you. This does conclude today's conference.

day. your now and have disconnect great a may everyone, You lines,