Mondelez International(MDLZ)2025-04-30 02:21Financial Data and Key Metrics Changes - The company reported a 3.1% growth in organic net revenue for Q1 2025, driven by strong pricing execution in the chocolate business despite significant cocoa input cost inflation [6][18] - Adjusted gross profit was significantly impacted by record cocoa costs, leading to an 18% decline in EPS on a constant currency basis [9][32] - Free cash flow for the quarter was 1.5 billion at an average price of $57.91 [9][33] Business Line Data and Key Metrics Changes - The chocolate segment grew by 10.1%, with significant growth across both developed and emerging markets, although volume mix was down 5.7% due to elasticities and trade destocking [22][24] - The biscuits and baked snacks category grew by 0.3%, with notable brands like Loo and Seven Days contributing to growth, but faced challenges in the U.S. due to retailer destocking [20][21] - Gum and candy grew by 1%, driven by performance in China and Mexico, but faced volume mix challenges in the U.S. [22] Market Data and Key Metrics Changes - North America experienced a revenue decline of 3.6%, primarily due to retailer destocking and softer consumer demand, particularly in the food and mass channel [26] - Europe saw an 8.9% growth in Q1, with strong execution in key countries like the UK, France, and Germany, benefiting from successful pricing execution and Easter season performance [24][25] - Emerging markets grew by 3.9%, with strong performance in Brazil and China, although India and Southeast Asia showed some softness [19][28] Company Strategy and Development Direction - The company remains committed to its strategic growth agenda, focusing on brand reinvestment, expanding distribution, and sustainability initiatives [11][14] - The chocolate strategy is on track, with a focus on offering a variety of pack sizes and maintaining entry-level pricing to drive consumption [15][16] - The company aims to navigate cocoa cost challenges while driving long-term category health and share gains [17][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the full-year outlook despite external volatility, highlighting strong pricing execution and category growth [6][7] - Consumer sentiment is mixed, with North America facing significant challenges due to inflation fears, while Europe shows stable consumer confidence [46][49] - The company expects to see an acceleration in top-line growth in Q2, driven by successful Easter activations and improved pricing strategies [60][62] Other Important Information - The company achieved a top-tier ranking in the global advantage survey for retailer partnerships and made significant progress in sustainability targets [13][14] - Cocoa prices remain elevated, but the company anticipates a small surplus for the year, with expectations of potential demand declines impacting future cocoa prices [33][34] Q&A Session Summary Question: Trends in key regions for the year ahead - Management noted strong pricing execution in Europe and share gains in emerging markets, while North America remains softer due to retail destocking [41][44] Question: Key considerations for North America and pricing in Europe - Management reaffirmed guidance for 2025, highlighting successful customer negotiations and strong pricing execution across markets [55][56] Question: Strategy to mitigate cocoa inflation - The company emphasized a balanced approach involving pricing, productivity, and RGM strategies, with ongoing monitoring of consumer reactions [67][68] Question: Insights on North American destocking - Destocking was primarily observed in food and mass channels, with DSD systems not fully mitigating the impact [88][89] Question: Profit dollar generation and future cadence - The company experienced better-than-expected profit dollar generation due to improved pricing and productivity, with manageable tariff impacts anticipated [93][96]