Mondelez International(MDLZ) - 2025 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reaffirmed its full year 2025 organic sales growth guidance of about 5% despite facing headwinds from U.S. retailer restocking and adverse weather conditions in Europe affecting chocolate demand [9][10] - For 2025, the company anticipates a reasonable top-line growth of 4% to 5% but expects a 10% decline in EPS, which is considered acceptable given the current cocoa circumstances [6][7] Business Line Data and Key Metrics Changes - Organic sales in North America declined approximately 3.5% year over year in the first half, attributed to retailer restocking and softer underlying trends [14][20] - The company is focusing on optimizing shopping trips and maximizing brand presence, particularly for Oreo, which has seen increased penetration but decreased purchase frequency [18][20] Market Data and Key Metrics Changes - In Europe, the company experienced higher elasticities than anticipated, with current levels around 0.6 to 0.7, compared to the expected 0.4 [28][29] - The cocoa supply situation is improving, with a 7% increase in cocoa pot counts in West Africa compared to the last five-year norm, suggesting potential price reductions in the future [31][32] Company Strategy and Development Direction - The long-term strategy established in 2018 remains valid, focusing on building presence in key categories and supporting brand growth [5][6] - The company is exploring collaborations with other brands, such as Coca-Cola and Biscoff, to enhance product offerings and market presence [21][26] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer spending has remained stagnant over the past 24 to 30 months, leading to cautious shopping behavior [15][16] - The outlook for North America is expected to remain challenging for the next 6 to 12 months, with consumers becoming increasingly careful in their spending [20] Other Important Information - The cakes and pastries category is projected to grow from $95 billion to approximately $125 billion by 2030, with the company aiming to enhance its position in this fragmented market [52][54] - The company is maintaining a disciplined approach to M&A, focusing on smaller assets that align with its strategic goals [48][50] Q&A Session Summary Question: What is the outlook for North America in the next 6 to 12 months? - Management expects continued challenges in North America, with consumers remaining cautious and spending levels stagnant [20] Question: How does the company view current cocoa levels and supply dynamics? - The company believes current cocoa prices are unsustainable and anticipates a surplus in the market, leading to potential price reductions [30][32] Question: What is the strategy regarding M&A and share buybacks? - The company remains disciplined in M&A, focusing on smaller strategic assets, while being pragmatic about share buybacks given current stock prices [46][50]