Operator: Good day and welcome to the Mondelez International First Quarter 2025 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 would now like to turn the call over to Mr. Shep Dunlap, Senior Vice President, Investor Relations for Mondelez. Please go ahead, sir.

Shep Dunlap: Good afternoon and thank you for joining us. With me today are Dirk Van de Put, our Chairman and CEO; and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we’ll make forward-looking statements about the company’s performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-Q and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we’ll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results.

In addition, we provide our year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. Today, Dirk will provide a business and strategy update, followed by a review of our financial results and outlook by Luca. We will close with Q&A. I’ll now turn the call over to Dirk.

Dirk Van De Put: Thanks, Shep, and thanks to everyone for joining the call today. I will start on Slide 4. I’m pleased to share that we delivered solid results for the first quarter, driven by sound execution despite significant external volatility. Our top line grew 3.1% behind strong pricing execution across our chocolate business due to unprecedented input costs for cocoa. We also delivered strong profit dollar generation and free cash flow. These results, along with solid category growth, reinforce our continued confidence in our full year outlook. We remain committed to delivering against our strategic agenda, focusing on the controllables and staying agile in this challenging macro environment. We are continuing to execute with excellence against our chocolate strategy and our cost savings program.

Both of these initiatives are on track and we’ll provide additional color throughout today’s call. Turning to Slide 5. You can see that organic net revenue grew 3.1%. Volume mix was down 3.5 points due to elasticity, consistent with our expectations. We also implemented plant activities in our chocolate business. And a few onetime factors also affected volume mix, which included Easter phasing and retailer inventory destocking, which Luca will describe in more detail later. Pricing execution related to cocoa inflation was strong. We have now implemented planned pricing across many key markets with minimal disruption. We also saw a successful start to the Easter season. As expected, adjusted gross profit was significantly impacted by record cocoa costs and consequently this also affected our EPS.

We also generated $800 million in free cash flow in the quarter. On Slide 6, you can see that consumers’ enduring preference for our snacking categories remains solid despite continuing economic and political concerns in many markets. In North America, continued frustration with day-to-day pricing and cost of living challenges continues to drive value-seeking behavior. As a result, growth in the biscuit category is soft, but it continues to hold up better than many other snacking categories. Despite overall declining consumer confidence, loyalty to our strong brands like Oreo, Chips Ahoy and Ritz remains solid and our investment in price pack architecture are helping to drive continued share gains. Meanwhile, in Europe, consumer confidence and price elasticities remain stable.

We continue to see solid category value growth in both biscuits and chocolate and our brands continue to resonate with consumers. Elasticity also remained stable in emerging markets. However, consumer confidence is soft in Brazil, Mexico and China from economic uncertainty, while confidence in India remains solid. Overall, we’re seeing solid category growth in both volume and value across our combined emerging markets. And Mondelez share is improving in both biscuits and chocolate. Turning to Slide 7. It is important to reinforce that we are continuing to make progress against our strategic growth agenda, reinvesting in our brands, expanding distribution, strengthening our marketing and sales capabilities and scaling our long-standing commitment to sustainability.

Here are just a few highlights of our strategy in action. Our iconic global brands, including Oreo and Cadbury Dairy Milk, continue to drive creative on-trend activations that resonate strongly with consumers and help strengthen our strategic partnerships with retailers. For example, Oreo’s collaboration with Post Malone marked the first time a pop culture figure was personally involved in building a recipe for Oreo nearly from scratch, resulting in our first ever twisted cream. Meanwhile, in the UK, we rolled out our first of many chocolate collaborations, resulting from the partnership with Lotus Bakeries. The Cadbury Dairy Milk Biscoff bar featuring the signature Biscoff taste and crunch is only the beginning of our innovation platform with our other chocolate brands rolling out similar Biscoff crumbles and flavors across Europe in the coming months.

Along with these creative brand reinvestments, we continue to expand distribution around the world. We added more than 100,000 stores in emerging markets in Q1. We also are making significant progress in strengthening our partnership with retailers around the world. For the first time in our history, we achieved a top tier ranking on the Global Advantage survey. Additionally, we continue to make strong progress towards building a more sustainable snacking company and delivered on all our ’24 sustainability targets. Earlier this month, we published our annual Snacking Made Right report providing stakeholders an in depth view of our sustainability strategy, goals, and performance data. Among other highlights, we expanded Cocoa Life, our signature sustainability program to source 91% of cocoa volume for our chocolate business.

We also made meaningful strides in combating climate change, reducing end-to-end carbon emissions by 12% versus our 2018 baseline. We continue to believe that helping to drive positive change at scale across the communities our business touches is an integral part of value creation. Simply put, we believe that more sustainable businesses and always will be is good business. I encourage you to take a few minutes to review our report in more detail. Before I turn the microphone over to Luca, I’d like to reinforce that our chocolate strategy remains on track and performance to-date is broadly in-line with our expectations. Our teams started planning for the challenges created by record cocoa input cost inflation more than a year ago and we are confident that the robust, clear strategy we built to navigate these conditions is paying off.

We have reconfigured our chocolate portfolio to offer consumers an array of pack sizes appropriate for each snacking occasion from bite-sized treats offering a delicious taste of me time to family sizes designed for sharing with family and friends. At the same time, we continue to maintain entry level pricing to drive consumption. We also have successfully implemented most of our planned pricing in Europe with minimal customer disruption. As a result, elasticity is in line with expectations. We’re also growing share in chocolate across markets up 0.4 points year-to-date. We continue to innovate with new flavors, formats and brand activations. Year-in and year-out, consumers around the world show us that our iconic chocolates are an essential part of their seasonable celebrations like Valentine’s Day and Easter.

We are continuing to stay a step ahead of their changing taste with exciting new products, including the delicious co-branded tablets I mentioned before, featuring the unique caramelized Biscoff flavor and crunch. In short, we remain confident that our strong chocolate franchise is positioned for long-term success. Our robust playbook is working and we remain convinced that it will enable us to not only navigate the current cocoa cost challenge, but more importantly, to drive category health for the long-term. And with that I’ll turn it over to Luca to share additional insights on our financials.

Luca Zaramella: Thank you, Dirk, and good afternoon. Q1 marked another quarter of top line growth for our business despite some external challenges and lower consumer confidence. For Q1, we delivered solid revenue growth, while profit dollar generation was better-than-expected. Free cash flow continued to be strong. Revenue grew 3.1% behind strong pricing execution across our chocolate business. Volume mix was down 3.5% due to elasticity from chocolate pricing, transitory trade destocking with plant consumption in the US, planned outsizing activities in chocolate to protect price points as well as some Easter phasing. Developed markets grew 2.6%, primarily due to strong pricing execution with a volume mix decline of 3.3% on the back of retailer destocking and some chocolate elasticity.

Total revenue for emerging markets grew 3.9% with a volume mix decline of 3.7%. EM results were driven by strength in Brazil, China and the majority of the Middle East and Africa businesses. We experienced some softness in India and Southeast Asia. Moving to portfolio performance on Slide 11. Biscuits & Baked snacks grew 0.3% for the quarter. Brands delivering growth included LU, 7DAYS, Prince, Club Social, Perfect Snacks and Grenade. However, we saw softer than expected results in our US biscuits business, driven by retailer de-stocking, which resulted in approximately 60 basis points volume headwind to the total company and 250 basis points for total North American volumes. Additionally, our US biscuit business experienced lower consumption driven by ongoing consumer confidence declines, resulting in lower frequency and value seeking behavior.

Chocolate grew by 10.1% with significant growth across both developed and emerging markets. Volume mix was down 5.7%, driven by elasticities that were in-line with our expectation, along with RGM and product outsizing activities across the chocolate portfolio that accounted for almost three points of decline. Brand growth was broad based across global and local brands with Cadbury Dairy Milk, Milka, Lacta, Cote d’Or, Freia, Marabou, and HU all posting strong results. Gum & Candy grew 1%, driven by Gum in China and Mexico as well as both Gum & Candy in Western Andean. Volume mix was challenged because of trade destocking in the US as well as some issues in Mexico. Let’s review market share performance on Slide 12. We held or gained share in approximately 7% of our revenue base with strength in both chocolate and biscuits.

Category growth numbers are clearly underestimated because of chocolate Easter phasing versus last year. A more normalized number would put total category growth at around 3%. Category growth is due to accelerate as more pricing for chocolate kicks in. Turning to regional performance on Slide 13. Europe grew 8.9% in Q1. Execution and growth were excellent in the quarter, and several key countries, including the UK, France, and Germany delivered robust growth. Pricing execution related to cocoa inflation was strong, coupled with the successful start to the Easter season and share gains. Volume declines were driven by elasticity levels consistent with our expectation and RGM activities associated with our chocolate strategy. We have successfully landed chocolate pricing for the key alliances in-line with our expectation.

We can now focus on driving demand and expect positive developments in Europe for the remainder of the year. OI dollars were down approximately 26% due to unprecedented levels of cocoa inflation. North America declined 3.6% due primarily to retailer destocking in the US as well as softer consumer demand, most notably within the food and mass channel. This dynamic remains consistent with the overall market and is driven primarily by less frequency from lower income households. Given we gained share, our total consumption was pretty much flat. We are continuing to sharpen our offers, such as recently introduced 5 Star, which have shown good momentum along with improving store execution and increased distribution to drive improved results as we move through the year.

North America OI decreased by 18% due to lower volume and cocoa inflation from our Canadian chocolate business, but also for the US biscuit. AMEA grew 1.8% for the quarter. China delivered another strong quarter with mid-single-digit volume-led growth driven by focused initiatives around Oreo, Chips Ahoy, and Stride. India declined high-single-digits, lapping a strong prior year as overall consumption was challenged by inflationary pressures and wage growth. We do expect to improve the trajectory of the India business beginning in Q2 through targeted activation, distribution gains and an improving macro backdrop resulting from income tax relief and recently enacted interest rate cuts. Australia, New Zealand, and Japan delivered another strong quarter with mid-single-digit top-line growth due to strong Easter execution and pricing.

AMEA OI dollars declined 8.3% due to materially higher cocoa prices that were partially offset by pricing and cost discipline. Latin America grew 3.9% with solid pricing execution and a volume mix decline of 2.5%. Brazil posted mid-single-digit growth with strong chocolate and biscuits. That was partially offset by weaker powder beverage results. Mexico grew low-single-digits with growth in biscuits, chocolate, and gum while candy was down. The Mexican economy is showing signs of slowing, which we are continuing to monitor and factor into our plans. Latin America OI declined 12.4% due largely to increased cocoa inflation. Turning to Page 14 and a few notes on volume mix dynamics in Q1. Although overall volume mix was down 3.5%, it is important to separate what is one-time or planned versus underlying.

US trade destocking and seasonal phasing around Easter account for roughly 1.3 percentage points or roughly 40% of that decline, while package downsizing accounted for another point of lower volume. On the flip side, EU customer disruption was lower than planned and last year, bringing us closer to an underlying decline of approximately 2%. We expect the US destocking dynamic to partially continue into Q2, while Easter phasing will be favorable next quarter. Turning to Page 15. In Q1, we saw a decline of 12% in gross profit dollar terms. Solid top-line growth and cost efficiency partially offset significant cocoa inflation. Our view of cocoa inflation is changed for the remainder of the year and is embedded into our full year outlook. Next to EPS on Slide 16.

Q1 EPS declined 18% in constant currency. Turning to Slide 17 and cash flow and capital return. We delivered $800 million of free cash flow for the quarter. We repurchased $1.5 billion in stock at an average price of $57.91. Before moving to our outlook, let me provide a few thoughts on cocoa. Although cocoa prices remain quite elevated relative to historical averages, both spot rates and future curves have declined since our Q4 call. We continue to expect a small surplus for the year. In addition, we continue to see volume declines from an industry perspective due to elasticities associated with inflation-driven pricing and outsizing activities, while non-chocolate players who traditionally use cocoa as an ingredients continue to reformulate with alternative components at a fraction of the cost.

We believe at these levels, meaningful demand declines are expectable and will accelerate and that eventually will reflect on cocoa prices. Having said that, we remain confident in our pricing and RGM strategy and will continue to stay agile as the situation demands. Turning to our outlook on Slide 20. Our outlook for ’25 remains unchanged for organic revenue, earnings per share and free cash flow. This includes approximately 5% revenue growth, which reflects successful customer negotiation and pricing in Europe as well as a softer demand environment in the US. Most of our key assumptions remain consistent with what we shared with you on our last call. We are reaffirming inflation levels, interest and tax costs as well as share repurchases.

Translation ForEx impacts have changed and we are now expecting no impact to net revenue and EPS from foreign currency for the year. This reflects the dollar weakening against several currencies since our last call, including the euro and sterling. However, given dollar volatility, this could rapidly change. With respect to tariffs, the vast majority of US production is sourced from the US or is USMCA compliant. However, there is some sourcing of finished goods and ingredients that are subject to tariffs as things stand today. Although not particularly large, these are incremental to our last call and have been factored into our current earnings outlook. Before Q&A, a few words on ’26. We remain focused on running a balanced P&L for ’25, while continuing to maintain a sound chocolate business and category for the long-term.

The early results have been positive as it relates to our chocolate strategy. We continue to invest behind our business, while cost saving initiatives remain on target. It is early to provide specifics on 2026, but we still expect EPS growth for next year. Although cocoa prices have come down recently, they remain elevated. It is also important to note that if we do see further improvement in cocoa, we will likely reinvest a portion of that saving back into the business. With that let’s open the line for questions.

Operator: Thank you. [Operator Instructions] We’ll go first to Andrew Lazar with Barclays.

Andrew Lazar: Great. Thanks so much. Appreciate it. Maybe, Dirk, just to start it off, it’d be great to get maybe a bit more detail on sort of trends in some key regions as we think about sort of a year to go from here.

Dirk Van De Put: Yes. Thanks, Andrew. Well, I would say that first of all, despite the changes that we see in the external environment that we feel pretty good about the start of the year and our results. I would note a few positives, which will impact the rest of the year, that happened during Q1. First of all, we had some major negotiations to do in Europe to announce the price increases and get approval for the price increases on our chocolate business. And they passed virtually all of them with minimal disruption this year. Then if you look at how our chocolate business is doing, particularly in Europe, the pricing is on track. As I just said, we have some very good activations. We’ve implemented a number of RGM activities.

Easter came through quite well. So Easter, we will see more in the Q2 results, but and Q1 was affected because of the Easter phasing, which was late this year. But we can already see that Easter will be very good for us, and for instance, know that we had some strong share gains in the UK. Our emerging markets continue to perform well, particularly I would mention here China and Brazil and in times like this where the North American market is probably the most affected market, it’s good to have this geographical diversification. And on top of we’re gaining share in many markets around the world. Having said all that, I think the one thing that you’ve seen probably from many companies is that North America was clearly softer than what we would have expected.

I think many people have thought about the retail destocking, we expect that will be less in Q2. The biscuit category is soft. We see consumers switching to more essentials in grocery and snacking categories are suffering as a consequence of that. But biscuit overall compared to other snacking categories is doing better and on top of gaining share in the category. So we’ve got a number of good puts and takes in the quarter. We feel very good about our full year outlook. If I look a little bit at what’s going on around the world, I would say the consumer sentiment is quite mixed, and that’s driven by overall global macroeconomic uncertainty. Probably where we saw the biggest effect on the consumer was in the US, where the consumer confidence declined sharply in Q1 and it declined another 11% in April.

That’s all driven by inflation fears. People see their income slowing. We see that the pressurizing — or the prioritizing of essentials, which is pressurizing snacking. We see a shift to value club and e-com channels. We’re seeing more promotional pressure and largely lower-income consumers are shifting to smaller packs, while higher-income consumers are shifting to larger packs for value. In the middle of all that, the biscuit category declined 1.5% in value, but it outperformed other snack categories as said. Cookies is doing better than crackers. Private label grew a little bit. We gained about 0.3 points of share. I think that was driven largely by the fact that we launched a number of affordable formats, which we call fresh stacks, which are under $3 and I think we are seeing that offering compelling value to consumers really matters at this stage.

I have to say that I really do not expect to see a significant improvement in the consumer confidence in the near-term in the US that is. In Europe, I would say consumer confidence is, in general, stable. They are aware of the global trade volatility and it’s impacting their purchasing behavior. They’re probably switching to more frugal spending and also prioritizing essentials. We see a bit more shopping frequency going to smaller pack sizes and also a shift in channels in Europe that is more to discounters and e-commerce and we see an increase in promotions. In the middle of all that, with the price increases we’re implementing, chocolate is performing in line to expectations, i.e., the elasticities that we’re seeing are in line around 0.5. There was — Easter was later this year.

So if you include that in Q2, I think we will see a nice Q2. And biscuit is performing well, particularly in France for us. So we feel pretty confident about our European business. We see a resilient consumer. We landed the negotiations. We had a good Easter. Biscuits are doing well. So we expect our European business to continue to do well. And on the emerging market, I would say the consumer is softer because they are suffering from inflation. They see the trade volatility. The Chinese consumer remains quite subdued, 20-year low, I would say, but our business is doing well. The Indian consumer is stable. There is more optimism this year. People see income growth, jobs, and then Brazil and Mexico, clearly in both places, the consumer is softer, more outspoken in Mexico than in Brazil, of course, because of the economic uncertainty and the persistent inflation.

I would say our categories in emerging markets are stable. We have gained shares, but we have to remain agile in all regions of the world. So I would say, so far so good, but it’s still a long year, and we will need to stay very vigilant about shifts that we see at the level of the consumer.

Andrew Lazar: Great. That’s really helpful detail. Thanks so much for that. And maybe Luca, just briefly, just key puts and takes to keep in mind for the year to go particularly around North America and pricing in Europe. Thanks so much.

Luca Zaramella: Yes. Hi, Andrew. So I think as far as ’25 guidance goes, I think for us, it’s a great thing that we are reaffirming our plan. We feel quite good at this point in time. But as you said, there are puts and takes. I think Dirk already mentioned among the positives, the customer negotiation, which I would say is a pure upside versus last year, because last year we had some disruption. This year we don’t. But in general, I would also say that pricing across the board, whether it is chocolate in developed and emerging markets or biscuits in emerging markets specifically, it is absolutely on track and our RGM agenda is clearly improving the situation on elasticity in both chocolate and in biscuits. As we said, elasticities are quite good at this point in time.

And so that’s an assumption that is key for us to be able to deliver on and potentially overdeliver on the top line in the year to go. Importantly, the Easter season was quite strong. Dirk mentioned Europe, but I’m happy to report that we gained meaningful share in Brazil and in Australia. And so we are very happy there. Biscuits is holding up well outside of North America. We have positive volume mix in the category. And clearly there are some cost upside versus our original plan. And as we mentioned, the overall tariffs is causing a small and manageable impact. So those are, I would say, the positives that we see continuing into the second part of the year in Q2 as well. And among the things that didn’t play out as we planned, it is clearly the consumer sentiment in the US impacting our categories.

But biscuits as a category despite being soft is faring better than other snacks and we are winning share. When you put both the market dynamics and the share, actually our consumption in Q1 is slightly down. So I think that given some of the numbers we have seen published by others, I think it is relatively speaking terms, a good thing. Trade destocking is a one-time impact. You saw that it is meaningful. It is 2.5 points, 3 points of volume mix in the US and we assume that is non-recoverable in the year to go. I think particularly as we enter into Q2, you will see an acceleration of top line and volume mix. And I think that’s clearly to the testament of what the teams are doing. All considered, you might not expect anything differently at this point in time, but we are retaining some flexibility within the plan.

So should things worsen in the US, I think we have what it takes to deliver both top and bottom line. But also bear in mind that if we have earnings upside, we will be reinvesting in the business as we are trying to enter ’26 from a stronger position. We remain disciplined on capital allocation. We will continue to buy back stock in a sensible manner. As you might have seen, we were active buyers in Q1 at what I believe are very compelling prices. So very happy on that front too.

Andrew Lazar: Thanks so much. Appreciate it.

Luca Zaramella: Thank you, Andrew.

Operator: We’ll go next to Ken Goldman with JPMorgan.

Kenneth Goldman: Hi. Thank you. I just wanted to ask about your strategy to mitigate cocoa inflation. It’s obviously multifaceted, right, with productivity and RGM and of course, pricing, and you touched on your success in these elements during your prepared remarks. But what I really wanted to dig in a little bit on is the balance between them ahead? And I guess the question in particular is with pricing having gone, I don’t want to say better-than-expected, but it sure seems like an elasticity in line. Is there a possibility you can maybe be a little bit less aggressive on RGM or maybe some other actions than you were planning or is really the message just, hey, our overall mitigation efforts are going quite well and it’s full steam ahead in all areas. Just wanted to get a better sense of all of those.

Dirk Van De Put: Yes. Good question, Ken. So, yes, you phrased it right. So our strategy basically was, of course, first of all, have a great execution of what we designed, but we designed at the core a very aggressive RGM strategy, and that doesn’t necessarily mean all downsizing. It means that we will offer a whole range of pack sizes to the consumers and so the consumer suddenly has many more options as it relates to the price points they would like to buy our products. And then we are trying to get some very strong activation. So Easter was the first step, but there’s a number of others to come during the year. Easter, I would say, was a success. That’s the second leg of our chocolate strategy. And the third leg is to come up with new products, new and unique products that draw the consumer into the category and the launch in this first quarter was the Cadbury Biscoff product.

That is at the moment our number one selling SKU in the UK. More is to come in that front. So we will launch in several more markets in the coming months that Biscoff varietal. And then later in the year, we will have a number of new innovations under that Cadbury Biscoff or Milka Biscoff franchise. The other thing we’re doing as part of that strategy is protect key price points. So if there is a low unit price point in India, for instance, we are maintaining that at INR5 and INR10. We are also very carefully making sure that we don’t break any thresholds in developed markets. So the big question is what’s going to happen once that all hits the market. Pricing has gone well in the sense that we finished the negotiations with our clients. And we have implemented pricing i.e., the consumer is seeing the pricing in a number of markets, but it’s very early days.

We see a little bit more in Scandinavia, for instance, or in the UK, where we went ahead earlier with the pricing, but countries like Germany or France is now hitting the market. Australia did some at the end of last year, but is doing more in May. So it’s still to be seen what the reaction is going to be. What I can say so far from a consumer perspective is that the elasticity is around 0.5, which is exactly in line with what we would have expected. But we want to continue to monitor very closely and we don’t want to start saying, okay, this worked great. We will have to see how the consumer is reacting. The good news of all of this is that we gained share in volume and value share overall. Our tablets are up, of course, double-digit, as you can imagine with some of the pricing and Easter, as I said, is very good.

So the word that I would use is so far so good, but we are not done yet. We have a long road ahead, the macro conditions are very volatile. As I said, the European consumer is stable at the moment, but that could change and we still have to very carefully monitor the consumer reactions, which by the way, are very different from country to country and we need to sort of direct our reactions depending on what we see happening. On the long-term, I think we’re seeing the signs that we had — that we believe in the chocolate market, which is that in the end, consumers love chocolate. They will probably grapple a little bit with the current price increases. But over the long-term, I think the high penetration of chocolate will continue. I think we will continue to see very strong brand loyalty.

We have the Taste of the Nation brands in many markets. I don’t think consumer will walk away from that. And there is very, very low cross substitution happening. If you don’t have your chocolate, there is not really that many other products you can go to that give you the same satisfaction and indulgence, I would say. We also, as Luca mentioned, we want to take a long-term approach here. So if we have any upside, we want to reinvest particularly in our chocolate business. We don’t want to take any shortcuts for short-term gains. We are very focused on the long-term health of the category as well as our business. And it’s all going to depend where cocoa goes in the rest of the year and where cocoa will be next year, but if it stays at the high level it currently is, we might need to implement more RGM in the second half of the year or the beginning of next year.

So agility is going to be key going forward, but so far so good, as I said.

Kenneth Goldman: Thank you so much. I’ll pass it on.

Luca Zaramella: Thank you, Ken.

Operator: We’ll go next to Peter Galbo with Bank of America.

Peter Galbo: Hey, guys. Good afternoon. Luca, thanks for the clarity on tariffs. I think one of the wire services maybe picked up your commentary wrong. So I appreciate the clarifications there. Luca, maybe just to start, I wanted to ask, the slides you gave, I believe it’s 11 and 12 that kind of show the Easter timing shift in chocolate. I guess if we had accounted for that, it would even imply that maybe elasticity was a bit better than you even planned for, just taking into account that shift. So I just wanted to understand if that’s a fair way to think about it, given you had kind of a volume pushout with the pricing you put in, maybe versus first glance, that the elasticity in chocolate might actually be more favorable than you had planned?

Luca Zaramella: I think in Q1, it has been a little bit more favorable. Having said that, pricing that is getting into effect in Europe, Brazil, India is kicking in as of April, May, June. And that is the moment I think we’ll be able to tell you for sure that elasticities are in line with our expectations. So Easter was priced up compared to last year, but there is more pricing coming into effect into the P&L in Q2. And so you will see an acceleration of the revenue growth in Q2. I can tell you that Easter year-on-year is a meaningful driver of growth for us. As I mentioned, we were quite happy despite the price increases that Easter volume held up well in three major countries, namely or in several countries, namely Europe with the UK, a clear standout in terms of share, but also Brazil and Australia.

So far so good, I would say, hopefully, we’ll get positively surprised. It’s important to say that in both big countries like Brazil and India, we are protecting key price points. And so hopefully, the elasticity will be minimal also going forward.

Peter Galbo: Got it. Okay. That’s helpful. And Dirk, maybe just as a follow-up, one question we got on the North America destocking, just given that you do operate a DSD system in the US, it would be, I guess, less common that we would expect that to happen. So just curious if you can give more color either whether it’s by channel, was it club where you’re maybe in more of a warehouse model, where the destocking is happening? Just any additional thoughts on kind of what the real driver is just relative to what we would maybe see historically? Thanks very much.

Dirk Van De Put: Yes. I would say we see it mostly in food and mass. Even if we have DSD there, the retailers still work with some stock in the back of the store and they have an influence on how they — what the level is and they manage that through their orders. So we have a benefit in the execution that we do DSD, but the ordering still is quite directed by the centralized approach. So I would say it’s more pronounced in food and mass and DSD really doesn’t help us because of the reasons that I just gave you.

Peter Galbo: Got it. Thanks very much.

Dirk Van De Put: Thank you.

Operator: We’ll go next to Megan Clapp with Morgan Stanley.

Megan Clapp: Hey, good afternoon. Thanks so much. First question, Luca, I think you mentioned in your prepared remarks, the profit dollar generation in the quarter was a bit better than you expected. So Part A, just wondered if you could expand a bit on what drove that. And Part B, a bit related, last time on your fourth quarter call, I think you mentioned profit would be more pressured in 1Q with sequential improvement. Just wanted to clarify, is that still the case? It does seem like there’s some incremental tariff costs. And while you mentioned not large, just wanted to see if it changes how we should think about the cadence of the rest of the year? Thank you.

Luca Zaramella: Yes. Thank you for your question. The upside came essentially through three lines, I would say, there was a little bit of better pricing, excluding the US where you saw that pricing was slightly negative. We had to reinvest some trade deals. But in general, pricing is a little bit better than what we had planned. So not an impact, I would say, in the quarters to come, but a little bit of an upside in Q1. The second element is productivities. We are delivering on our productivity and we are ahead of schedule. There was a comprehensive pipeline specifically around procurement related productivities. And I think the team has done a very good job in delivering those productivities ahead of schedule. Again, not a material upside in the quarters to come, but certainly a timing upside as we have accelerated the delivery.

And the third element is a little bit on the commodity side. We were able to obtain some commodities at favorable prices, and that has resulted in some margin upside. So in terms of cadence, we are clearly happy where we are at this point in time. I can’t rule out the fact that there will be maybe a little bit more pressure going forward from tariffs. The direct impact to Mondelez is really minimal and manageable. And you can imagine that we are at this point in time not only we should start to most likely go through Q2 and Q3 in terms of those ingredients that are impacted. But importantly, we are sitting down with suppliers and trying to negotiate a more benign impact than we see. That impact is going to get into the P&L in Q4, specifically in North America as a driver.

But in the big scheme of things, I would say, not a major deal, and something that most likely we’ll be able to manage through several things that we are working on. Cadence wise, I remind you that percentage margins in this context is quite misleading. I think you saw that pricing in chocolate is up meaningfully. Total revenue was up 10%. So percentage margins as we price away absolute dollars will get diluted. But importantly, as we mentioned many, many times, we will be looking at chocolate margin per kilo as we exit 2025. And if we have done a good job in managing elasticities, I think we will have a very good situation in terms of profitability at the end of the year in terms of GP dollars and that will put us in a good position to grow earnings into 2026.

Megan Clapp: Great. That’s really helpful. And maybe just a follow-up for you, Dirk, on biscuits in the US. Clearly, probably a theme that we’ve heard and we’ll continue to hear throughout the earnings season as it relates to softness in the US. But you did — you have made a lot of progress over the last couple of quarters on your share. But at the same time, you’re a category leader. So just wondering if you could expand a bit about how you saw the quarter play out in the US. Maybe what you’ve seen as we’ve moved through Easter and whether you think there’s further things you need to do to address just the category softness in particular. Thank you.

Dirk Van De Put: Yes. So I think what’s going on is that the consumer feels very uncertain about the future. And as a consequence, they are trying to prioritize essential items and food. Those are essential food items like meat, vegetables, eggs, and so on. And the more indulgent categories or the less essential categories that would include personal care items, that would include alcohol beverages, that would include snacking categories are generating less interest at the moment. So we saw that certainly play out in the first quarter. And if you look at the snacking categories, I think almost all of them, except for yogurt are down versus last year in volume. Within those, however, biscuits is doing relatively speaking better.

It’s not down as much as we saw. And as Luca explained for us as a company, if you exclude the destocking effect, we were slightly down in consumption, but almost flat in consumption. The way we are thinking about it is that, first of all, we need to hit the right price points. And while two, three years ago, consumers would easily pay above $4 for a pack of biscuits. We’re now seeing that we need to be below $4 and ideally below $3. And so we’ve launched a number of packs that hit that $3 price point, below $3 price point. That certainly is having an effect for us. I think the other one that we see is that if we can run good activations and get extra displays, that also makes a difference. And so going forward, we are planning on things like July 4, Labor Day really drive activation.

We’ve got some interesting Oreo activations coming up. For instance, we will launch a global Selena Gomez promotion in the coming months and we think that will also make a difference. We did Post Malone at the beginning of the year and that worked very well for us. The third thing I would say that we’re trying to do in biscuits is push our multi-packs harder. That is for the consumer that tries to buy bigger packs to get a better value and that is working also quite well for us. The destocking dynamic will subside. So that will help. And I think we have a bit of a chance that in the second half of the year, we will probably see a more positive volume growth environment in the biscuits category and for our business. So focusing on the execution of the factors that I said and make sure we control the controllables and I think we will see a gradually improving trajectory in the US.

Megan Clapp: Great. Thank you so much.

Luca Zaramella: Thank you, Megan.

Operator: We’ll go next to Chris Carey with Wells Fargo.

Christopher Carey: Hi, everyone. Thanks so much. Luca, you made a comments around procuring commodities at a slightly more favorable rates than what you thought. That struck me in the context of the commodity or the input inflation number in the quarter coming in a bit better than I expected per your filings. Do you think you’re tracking better than your going inflation expectations? Are there more opportunities to procure commodity a bit better than what you thought? I wonder if you could just expand a bit more on that.

Luca Zaramella: I think you saw overall the mark-to-market being negative, and there have been adjustments, not only for cocoa but for other commodities. I would say we have been opportunistic, particularly in the way we have been locking in some minor commodities, I would say. At this point in time, though, we are pretty much done with coverage for the year. So the prices are locked in. You might also imagine that given the exposure we have through currencies, given the Europe and the GBP material changes we have been operating even in the ForEx exchange market and have taken advantage, particularly as there is a positive carry into 2026 and beyond with some of these currencies. So we have not only operated for some minor commodities taking advantages, but also extended coverage of some of the ForEx payers into 2026. So I think when there is volatility, we are usually very good at grabbing some of the opportunities.

Christopher Carey: Perfect. And then just one follow-up would be, you did mention that you would look to reinvest perhaps some, back into your chocolate business. I don’t know if that was a comment on pricing or other such investment if cocoa were to come down. Dirk talked about more RGM. I guess this is, cocoa probably stays very volatile, and it’s not sort of the core driver of your underlying business. But as this trends over time, what are kind of the key watch-outs, say, if cocoa were to go down, and that’s going to help your margins a lot, would you give some of that back-in pricing? You mentioned this concept of gross profit per kilo. And if it doesn’t, do you continue to kind of lean in on RGM and perhaps reformulation? So I know this is a topic that gets discussed quite a bit, but I would just love your latest thoughts in the context of kind of where we are in this cycle. Thanks so much.

Luca Zaramella: Thank you, Chris. So I would start by talking a little bit about the cocoa market and maybe on some of the fundamentals. I think we’ll end this year with a total supply increase compared to last year that it is in the tune of 10%. I think on the flip side though, demand, if you look at the total grindings, which is a proxy for consumption, I think Q1 guidance were down 3% to 4%, but I think the market is a little bit underestimating the true impact that is going to happen to the demand side of things. Particularly as the biggest chocolate market, which is the US, is facing higher elasticity. I took a look couple of days ago to the evolution of the market in the States, including Easter, I think there is a little bit of volume pressure.

And importantly, what we are seeing, we travel to a few countries and we see that those categories that utilize chocolate as a secondary ingredient are reformulating and downsizing heavily. I think you saw the impact that RGM had on our top line. So I expect really the demand side to impact positively the future cost of cocoa. Our goal is to exit the year with minimal elasticity or elasticities in line with what we expected and with the GP dollar that makes sense because we truly believe that even if cocoa comes down, that will allow us, A, to expand gross profit dollar in absolute terms, and B, to reinvest materially back in the category. So if cocoa comes down, I think quite frankly, it is Nirvana for us because the level we will be priced to and the ability that cocoa lower prices will give us to reinvest in the business, considering that our share is up and that we are holding the line in terms of price points, particularly in emerging markets, I think will position us well for the years to come.

If cocoa stays high, quite frankly, I would say we don’t expect at this point in time a material headwind into 2026. We talked to you about cocoa prices, but if I look, for instance, at cocoa butter, which is what we buy the most as opposed to cocoa powder, cocoa butter prices are already coming down for 2026. And so I think the market is anticipating some pressure on the volume side. And so a long answer to say that in either case, the plan is non-regrettable actions into 2025 and very well positioned at the end of 2025 to expand top and bottom line into 2026 for the chocolate category.

Christopher Carey: Thanks, Luca.

Dirk Van De Put: Thank you, Chris.

Operator: We’ll take our final question from David Palmer with Evercore ISI.

David Palmer: Thanks for squeezing me in. The underperformance of snacks in the US just even broader than your biscuits business and what you’re involved in, it seems like it’s a pretty large underperformance of the US market versus other markets around the world and even in the US today versus past a choppy economic environment. So do you think there’s anything else ailing the US snacking market today other than consumer confidence in the low income consumer? And I have a quick follow-up.

Dirk Van De Put: No, I don’t necessarily think that. The reason being for, well, yes, the reason being that it’s across all categories in snacking and there’s many categories. There’s ice cream, there is biscuits, there is packaged bakery, there’s salted snacks, nuts and so on, you go on and on. There’s chocolate, there’s about 12, 13 categories in there, except for yogurt, they’re all down. And I think that’s largely driven by the overall consumer uncertainty about the future and the fact that they feel that then you really need to focus on the key things at this moment until we feel better about the future. I think we will see similar moves in less eating out-of-home, less entertainment, less travel. You can see the consumer not only in food, but across the Board, really being very, very frugal and very careful.

As things improve, hopefully, I think we will see that change. Maybe the other thing I would say is that it is true that there is a bit more of a pronounced health and wellness approach. I would say the categories that are health and wellness within snacking, that could be things like yogurt or protein bars, for instance, or within the normal categories, gluten free or less sugar, things like that, those are doing better than the rest of the category. So that would be on top of consumer confidence, the only other trend that I see at the moment that is reflective of the snacking category.

David Palmer: Thanks. And I just want to ask you a follow-up on emerging markets. There was a bit of a slowdown in this quarter to 4%. I’m wondering how you’re thinking about emerging markets broadly for the rest of the year, could we return to high-single-digit growth? And what markets would you highlight that are maybe getting your attention more than others? Thanks.

Dirk Van De Put: Yes. So I would say the — if you look quickly where we are in our four main emerging markets, so China is up high-single-digit in Q1. India is down high-single-digit in Q1, because of a number of reasons, we expect a strong — we had a strong prior year base. We did some pricing in chocolate. We have some elasticity impacts there and we do have a bit of a muted biscuit consumption where we play in the premium segment of the market, and the consumer is switching. We expect India in the remainder of the year to start to grow faster. We expect China, which I mentioned first to remain at high-single-digits for the rest of the year. In both countries, we have a large distribution runway, so we can complement what happens in the same-store sales with extra stores and that makes a difference for us.

Brazil was mid-single-digit growth in Q1, we will be doing more pricing in chocolate. We are doing a number of new activities in our biscuit business and in our Candy & Gum business. So I’m expecting that Brazil will remain there, maybe accelerate a little bit. And then Mexico is gradually getting better. You have to keep in mind that we lap there a bit of difficulty with the integration of Ricolino last year. We were low-single-digit in Q1, but we see a good movement on Oreo, Ricolino and Philadelphia in Mexico. So I think there we will also see an acceleration. I wouldn’t say that our total of emerging markets will get to double-digit, but certainly we will see an acceleration in the second half from where we are today.

David Palmer: Great. That’s helpful. Thank you.

Dirk Van De Put: Okay. That concludes the call for today. Q1 down, so far so good, and we’ll see you for Q2.

Luca Zaramella: Thank you, everyone.

Operator: Thank you. Ladies and gentlemen, that will conclude today’s program. We thank you for your participation. You may disconnect at this time.

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MONDELEZ INTERNATIONAL INC

Q1 2025

Earnings Transcript

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