Mondelez International(MDLZ)2021-06-02 19:08Summary of Mondelēz International, Inc. Conference Call Company Overview - Company: Mondelēz International, Inc. (NASDAQ: MDLZ) - Participants: Dirk Van De Put (CEO), Luca Zaramella (CFO) - Conference Date: June 2, 2021 Key Industry Insights Strategic Milestones 1. Shift in Strategy: Transition from margin-centric to consumer-centric and top-line growth-oriented strategy initiated in September 2018, focusing on gross profit dollars rather than just margins [4][5][6] 2. Operational Excellence: Emphasis on consistent execution and operational excellence, particularly in the North American supply chain, which has improved significantly during the pandemic [7][8] 3. Cultural Change: Focus on local ownership and accountability, incentivizing volume growth and market share gains, while promoting speed and agility in decision-making [9][10] Emerging Markets Performance 1. Growth in Emerging Markets: Achieved approximately 10% growth in emerging markets in Q1 2021, with double-digit growth in Brazil, India, and China [12][13] 2. India's Recovery: Strong performance driven by consumer preference for packaged food; however, recent COVID-19 restrictions have raised concerns [13][14] 3. Brazil's Improvement: Chocolate and biscuit consumption is increasing, with modern trade shares showing positive trends [14] Cost Inflation and Pricing Strategy 1. Cost Pressures: Anticipated higher cost inflation due to increased prices in commodities like meat, oils, and packaging, particularly in the U.S. [17][18] 2. Pricing Strategy: Confidence in the ability to implement price increases, supported by 40% of next year's commodity coverage secured at favorable prices [18][19] Marketing Transformation 1. Consumer-Centric Marketing: Shift towards understanding consumer needs and enhancing brand purpose, with 60% of marketing investment now in digital [22][23] 2. Increased A&C Investment: Commitment to increase advertising and consumer promotion (A&C) investment annually to support brand growth [25] Growth Opportunities 1. Core Business Growth: Focus on expanding existing product lines, particularly Oreo, which is expected to grow by 1 billion in the next 2-3 years [30][34] 2. **Channel Expansion**: Emphasis on e-commerce and underdeveloped channels in various regions as significant growth opportunities [31] 3. **Adjacencies**: Exploring opportunities in related segments such as cakes and pastries, with recent acquisitions like Chipita to enhance market presence [33][45] M&A Activity 1. **Strategic Acquisitions**: Seven acquisitions since 2018, adding 1.5 billion in revenue, focusing on adjacencies and capabilities [41][42] 2. Chipita Acquisition: Aimed at entering the cakes and pastries market, expected to provide significant revenue and cost synergies [45][46] Financial Performance 1. Free Cash Flow Improvement: Notable improvement in free cash flow conversion, with $700 million generated in Q1 2021, attributed to better governance and capital management [50][54] Sustainability Goals 1. Environmental Focus: Commitment to sustainable sourcing, particularly in cocoa, with a goal of 100% sustainably sourced cocoa by 2025 [60] 2. Packaging Waste Reduction: Aim for 100% recyclable-ready packaging by 2025, alongside collaboration with stakeholders for effective recycling systems [61] Conclusion - Future Priorities: Focus on strengthening core business, expanding channels, and exploring high-growth segments and adjacencies over the next three to five years [63] - Investor Insights: Emphasis on the competitive advantage in emerging markets and the flexibility of the balance sheet to support strategic initiatives [64][65]