Q1 2024 Mondelez International Inc Earnings Call

Okay.

Shep Dunlap: Good afternoon, and thank you for joining us. With me today are Dirk Vandeput, 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 four flashing statements about the company's performance. These statements are based on how we see things today. However, actual results may differ materially due to risks and uncertainty. Please refer to the Cautionary Statements and Risk Factors contained in our 10-K, Q, and 8-K filings for more details on our forward-looking statements.

Speaker Change: Good afternoon, and thank you for joining US with me today are Dirk van de put our chairman and CEO and Luke.

Speaker Change: Because their MLR, our CFO earlier today, we sent out our press release and presentation slides, which are available on our website.

Luke: 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.

Luke: Please refer to the cautionary statements and risk factors contained in our 10-K, 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.

Shep Dunlap: 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.

Luke: 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.

Shep Dunlap: 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.

Luke: 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.

Luke: Now I'll turn the call over to Dirk.

Dirk Van de Put: Thank you, Shep, and thanks to everyone for joining the call today. I will start on slide four. I'm pleased to share that 2024 is off to a solid start with strong profit delivery. We posted solid top-line results in the first quarter. Combined with strong earnings and free cash flow generation, we continue to see momentum in emerging markets, where consumer confidence remains strong and our categories remain resilient. There were a number of one-off factors that affected our sales in the quarters, such as the disruption with some of our European clients and the boycott of Western products in the Middle East and Southeast Asia.

Dirk: Thank you Shannon and thanks to everyone for joining the call today I will start on slide four.

Dirk: I'm pleased to share that 'twenty 'twenty four is off to a solid start with strong profit delivery.

Dirk: We posted solid topline results in the first quarter.

Dirk: Coupled with strong earnings and free cash flow generation.

Dirk: We continue to see momentum in emerging markets, where consumer confidence remains strong and our categories remain resilient.

Dirk: There were a number of one off factors that affect our sales in the corner.

Dirk: Is it disruption with some of our European clients and the boycott of western products in the Middle East and Southeast Asia.

Dirk Van de Put: We delivered another quarter of strong gross profit dollar growth through ongoing cost discipline and sound pricing, and we also continued our track record of strong free cash flow generation, More Than One Billion Discord, to accelerate our strategy of global snacking leadership.

Dirk: We delivered another quarter of strong gross profit dollar growth through ongoing cost discipline and sound pricing.

Dirk: And we also continued our track record of strong free cash flow generation of more than 1 billion this quarter.

Dirk: To accelerate our strategy of global Snacking leadership.

Dirk: And drive sustainable long term growth, we are continuing to invest significantly in our brands and capabilities.

Dirk Van de Put: [inaudible] Driving Distribution Gains and Harnessing Synergies from our Recently Acquired Applications. While our operating environment remains challenging and dynamic, our teams are focused and agile in dealing with the short term as well as executing against our long-term growth strategy. While surprising, but temporary.

Dirk: Driving distribution gains and harvesting synergies from our recently acquired assets.

Dirk: While our operating environment remains challenging and dynamic.

Dirk: Our teams are focused and agile in dealing with the short term as well as executing against our long term growth strategy.

Dirk: While surprising but temporary the cocoa inflation does not affect the fact that our categories remains durable and our growth opportunities remains sizable.

Dirk Van de Put: The cocoa inflation does not affect the fact that our categories remain durable, and our growth opportunities remain sizable. Turning to slide 5, you can see that organic net revenue grew 4.2% this quarter, with adjusted gross profit dollar growth of 11.6%, enabling us to continue investing in the We continue to increase our ANC spending year-over-year in the high single-digits, which is driving consumer and customer loyalty for our iconic global brands, as well as our local jewels.

Dirk: Turning to slide five you can see that organic net revenue grew four 2% this quarter with.

Dirk: We had adjusted gross profit dollar growth of 11, 6%.

Dirk: Enabling us to continue investing in the business.

Dirk: We continue to increase our E&C spending year over year in the high single digits, which is driving consumer and customer loyalty for our iconic global brands.

Dirk: As well as our local jewels.

Dirk Van de Put: Adjusted EPS Screw 16.3, and we generated 1 billion in free cash. Many food and beverage companies are showing softness so far this year, and I'm now on a slide. Our core categories of chocolate, biscuits, and baked snacks are still demonstrating relatively more resilience and lower elasticity than the Brawler Food Unit.

Dirk: Adjusted EPS grew 16, 3% and we generated $1 billion in free cash flow.

Dirk: Well, many food and beverage segments.

Dirk: Our showing softness so far this year and I'm now on slide six.

Dirk: Our core categories of chocolate biscuit and baked snacks are still demonstrating relatively more resilience and lower elasticity than the broader food universe.

Dirk Van de Put: Consumer confidence varies by region, with North America and Australia, New Zealand, and me. While Europe is improving, an emerging market remains strong. Shoppers in many markets are becoming increasingly sensitive to absolute price, driving them to choose smaller pack sizes in both biscuits and chocolate. But at the same time, consumers in our snacking categories remain very loyal to the brands they know and love. In North America, we're seeing increased promotional activity combined with a significant shift in sales to non-track channels, including club stores, dollar stores, and emerging e-commerce platforms. Lower income consumers feel pressure. And we see that pressure weighing on their frequency in the cavity, especially among brands that skew more to that.

Dirk: Consumer confidence varies by region.

Dirk: With North America, and Australia, New Zealand mixed while Europe is improving and emerging markets remained strong.

Dirk: Shoppers in many markets are becoming increasingly sensitive to the absolute price points driving them to choose smaller pack sizes in both biscuits and chocolate.

Dirk: And at the same time consumers in our snacking categories remained very loyal to the brands they know and love.

Dirk: In North America, we're seeing increased promotional intensity combined with a significant shifting sales to non track channels, including club stores dollar stores and emerging e-commerce platforms.

Dirk: Lower income consumers feel pressure and we see that pressure weighing on the frequency in the category, especially among brands that skew more to that group.

Dirk Van de Put: In Europe, consumer confidence is stable, although volume growth has slowed. The Chocolate and Biscuit categories are holding better than the broader FMCG lens, and we're hearing increased optimism about the go-forward economic. Emerging markets remain a strong growth driver, with Consumer Confidence Driving Responsive Demand and Low Elasticity. Consumers in emerging markets are particularly interested in premium, enabling us to expand our range with new on-trend formats and packs. Turning to slide 7, it is important to underscore that despite short-term marketplace volatility, we remain focused on advancing our long-term growth strategy by reinvesting in our brands and people, driving strong execution, reshaping our portfolio, and scaling sustainably.

Dirk: In Europe, sorry in Europe consumer confidence is stable.

Dirk: While volume growth has slowed the chocolate and biscuit categories are holding better than the broader F. M C G landscape and.

Dirk: We're hearing increased optimism about the go forward the economic outlook.

Dirk: Emerging markets remain a strong growth driver with consumer confidence driving resilient demand and low elasticity.

Dirk: Consumers in emerging markets are particularly interested in premium offers enabling us to expand our range with new entrants formats and pack sizes.

Dirk: Turning to slide seven it is important to underscore that despite short term marketplace volatility we remain focused on advancing our long term growth strategy by reinvesting in our brands and people driving strong execution and reshaping our portfolio and scaling.

Dirk: Sustainable snacking.

Dirk Van de Put: We continue to increase our focus on our attractive and resilient core categories of chocolate, biscuits, and baked snacks, and we remain on track to deliver 90% of revenue through these core categories by 2030. We're investing significantly to support our Cadbury brand's 200th anniversary in the United Kingdom, with a multi-channel consumer activation promoting the brand promise of generosity. At the same time, we are strengthening store availability, visibility, and execution around the world. During the first quarter alone, we added around 100,000 directly served stores in emerging markets.

Dirk: We continue to increase our focus on our attractive and resilient core categories of chocolate biscuits are baked snacks and we remain on track to deliver 90% of revenue through these core categories by 2030.

Dirk: For example, we are investing significantly to support our Cadbury brands 200 anniversary in the United Kingdom. This year with the multichannel consumer activation promoting the brand promise of generosity.

Dirk: At the same time, we are strengthening store availability visibility and execution around the world. During the first quarter alone. We added around 100000 directly serve stores in emerging markets.

Dirk Van de Put: We are also harnessing the power of recent acquisitions by capturing synergies and driving growth. For example, we successfully completed the significant system integration in our Ricolino business this quarter, which boosts our ability to fully leverage the expanded routes to market. The combined Mondelez and Riccolino system paves the way for significantly expanded distribution in key categories, including: Additionally, we are making continued progress on our environmental and social sustainability. Just a few weeks ago, we earned validation for our net zero by 2050 roadmap, from the science-based targets, demonstrating that we are on the right path towards combating climate change. We also deliver significant improvements in advancing our mindful snacking priority, including Enhancing Nutrient and Ingredient Profiles, promoting active lifestyles, and empowering consumers to make more mindful choices each day.

Dirk: We're also harnessing the power of recent acquisitions by capturing synergies and driving growth.

Dirk: For example, we successfully completed the significant system integration in our recall leaner business this quarter.

Dirk: Which boost our ability to fully leverage the expanded routes to market in Mexico, particularly in the traditional trade.

Dirk: The combined <unk> and Rico Lino system paves, the way for significantly expanded distribution in key categories, including chocolates.

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

Dirk: Just a few weeks ago, we earned validation for a net zero by 2050 roadmap from the science based targets initiative demonstrating that we are on the right path towards.

Dirk: Combating climate change.

Dirk: We also delivered significant improvements in advancing our mindful snacking priorities.

Dirk: Including enhancing nutrients and ingredient profiles promoting active lifestyles and empowering consumers to make more mindful eating choices.

Dirk Van de Put: I do encourage you to read our annual snacking made right, now available on our website, to learn more about our sustainability strategy and to review our full year sustainability performance data. Before I turn the microphone over to Luca on slide eight.

Dirk: I do encourage you to read our annual Snacking made right report now available on our website to learn more about our sustainability strategy and to review our full year sustainability performance data.

Dirk: Before I turn the microphone over to Luka on slide eight I'd like to spend a few minutes, putting the recent headlines about cocoa prices and chocolate into perspective.

Dirk Van de Put: I'd like to spend a few minutes putting the recent headlines about cocoa prices and chocolate into context. We're playing for the long term in chocolate because it is fundamentally a great category, with very high brand loyalty and low private label penetration. And within this great category, our business is strong, and record costs for cocoa ingredients and the resulting current and future price increases for customers and consumers obviously are generating substantial. Despite this near-term headwind, chocolate volume continues to grow. And within this growing category, we remain structurally advanced, with large opportunities still ahead. We are confident in our chocolate business for four main reasons. Our COCOA coverage strategy.

Luka: We are playing for the long term in chocolates because it is fundamentally a great category with.

Luka: With very high brand loyalty and low private label penetration.

Luka: And within these great category, our business is strong and agile.

Luka: Record costs for cocoa ingredients, and the resulting current and future price increases for customers and consumers.

Luka: Obviously are generating substantial discussion.

Luka: Despite this near term headwind chocolate volume continues to grow.

Luka: Within this growing category remains structurally advantaged with large opportunities still ahead.

Luka: We are confident in our chocolate business for four main reasons.

Luka: Our cocoa coverage strategies, our approach to pricing our supply chain and our iconic brands.

Dirk Van de Put: Our Approach to Pricing, Our Supply Chain, and Our Iconic. First, it is important to underscore that our coverage strategies have proven an advantage versus market dynamics over the last few months. We are fully covered for 2024 and well protected heading into 2025.

Luka: First it is important to underscore that our coverage strategies have proven advantage versus market dynamics in the last few months.

Luka: We are fully covered for 2024 and well protected heading into 2025.

Dirk Van de Put: Our teams continue to monitor the market very closely to put ourselves in the best position possible. While poor weather and other factors on the supply and demand side have driven prices to unprecedented levels, we believe there will eventually be a market adjustment. We're confident that our teams are putting in place the right strategy to provide food future flexibility. Luca will provide some additional details in a few minutes.

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

Luka: While poor weather and other factors on the supply and demand side have driven prices to unprecedented levels.

Luka: We believe there will eventually be a market adjustment.

Luka: We are confident that our teams are putting in place the right strategies to provide food future flexibility.

Luka: Luca will provide some additional details in a few minutes.

Luka: Second we continue to implement sound pricing strategies, including both headline pricing and revenue growth management.

Dirk Van de Put: We continue to implement sound pricing strategies, including both headline pricing and revenue growth measures. We remain agile in balancing the need to offset inflation with the need to maintain solid volume dynamics. We are especially focused on protecting critical prices, including low unit prices and other key threshold prices.

Luka: We remain agile in balancing the need to offset the inflation with the need to maintain solid volume dynamics.

Luka: We are especially focused on protecting critical price points, including low unit price and other key threshold prices.

Dirk Van de Put: Third, we remain confident in our supply. Continuity remains our top priority, and we are confident in both our own team and our partners with robust workstreams to minimize disruption. Finally, and perhaps most importantly, we have some of the strongest, most iconic chocolate brands in the world, including Cadbury Dairy Milk, Milka, Codor, Marabu, Freya, and Lakta, to name a few. These brands are already leaders in numerous key markets, and we are well-positioned to accelerate growth in emerging markets. Our research shows that consumers remain extremely loyal to our great brands because chocolate plays an important role in their lives, helping to bring families together, celebrate key milestones, and enjoy some quiet.

Luka: Third we remain confident in our supply chain.

Luka: <unk> remains our top priority and we are confident in both our own team and our partners with robust work streams to minimize the risk.

Luka: Finally, and perhaps most importantly, we have some of the strongest most iconic chocolate brands in the world, including Cadbury dairy milk Milka corridor marabou tray up in lockstep to name a few these brands already are the leaders in numerous key markets.

Luka: And we are well positioned to accelerate growth in emerging markets.

Luka: Our research shows that consumers remain extremely loyal to our great brands because chocolate plays an important role in their lives helping to bring families together celebrate key milestones and to enjoy some quiet meantime.

Dirk Van de Put: In our annual state of snacking survey conducted in partnership with Harris, 72% of consumers across 12 countries said that a world without chocolate would be a world without joy, and said that they would rather give up social media for a month than give up chocolate. Our Economic Portfolio. Sorry, our iconic portfolio, strong Brand Loyalty, and Advantage Geographic Footprint make us particularly well-positioned to take advantage of these constraints. In summary, we're confident that we're well equipped to navigate a relatively short-term and that we are structurally advantaged to accelerate long-term growth in the U.S. With that, I'll turn it over to Luca to share additional insights on our funding.

Luka: In our annual state of Snacking survey conducted in partnership with the Harris poll, 72% of consumers across 12 countries said that a world without chocolate would be a world without joy.

Luka: Nearly 60% said that they would rather give up social media for a month, then give up chocolate.

Luka: Our economic portfolio.

Luka: Sorry, Ari our iconic portfolio strong brand loyalty and advantage geographic footprint.

Luka: <unk> is particularly well positioned to take advantage of these consumer trends.

Luka: In summary, we're confident that we're well equipped to navigate a relatively short term headwinds and that we are structurally advantaged to accelerate long term growth in this category.

Luka: With that I'll turn it over to Luca to share additional insights on our financials.

Dirk Van de Put: Thank you, Dirk, and good afternoon. Q1 market was a solid quarter for us with Organic, my brand new goal, and Crossitch. Strong profit dollar growth, substantial reinvestment into AMC, and great free cash flow generation. Revenue group 4.2% with strong pricing. Volume mix was buried for the chorus, with emerging markets flat despite being impacted by some political unrest in the Middle East and some production slowdowns in Mexico related to Ricolino being integrated into. We expect both issues to subside throughout the year and specifically Ricolino is almost, On the other side, developed market volume mix was down 3.6% for the quarter, impacted mostly by European customer dis- and the U.S. biscuit market.

Luca: Thank you Dirk and good afternoon.

Luca: Q1 market solid quarter for our business with organic net revenue goal across each region.

Luca: Strong profit dollar goal substantial investment need to wait and see and great free cash flow generation.

Luca: Revenue grew four 2% with strong pricing execution.

Luca: Volume mix will stay for the quarter with emerging markets flat, despite being impacted by some political unrest in the middle East and some production slowdowns in Mexico.

Luca: Late two eco he won't be integrated into SAP.

Luca: We expect both issues to subside throughout the year and specifically nickel Hino is almost back on track.

Luca: On the other side developed market volume mix was down three 6% for the quarter be impacted mostly by Europe customer disruption.

Luca: <unk> biscuit market softness.

Luca Zaramella: On the customer front in Europe, we are happy to report that about 90% of the price is now implemented. One relevant customer alliance is the Total Revenue for Emerging Markets grew plus 8.3%, underpinned by trends across a number of key markets. While developed markets grew 1.4% with solid results from Europe, despite customer disruption and strength from our North America growth channels and currency. Moving to portfolio performance or sliding? Biscuits and baked snacks grew 0.6% for the year. A number of brands delivered solid growth, including Oreo, Ritz, Tuck, and Seven Day. On the flip side, we have seen ongoing softness in the US, delivered primarily by brands that have higher penetration among lower income households, such as Jeep Sahai. This dynamic has impacted frequency and contributed to the decline in volume.

Luca: On the customer Salt in Europe, we're happy to report that about 90% of the privacy now implemented one relevant customer alliance is still pending.

Luca: Total revenue for emerging markets grew eight 3% underpinned by strength across a number of key markets. While developed markets grew one 4% with solid results from Europe, despite customer disruption and sign from our North America global channels in Canada.

Luca: Moving to portfolio performance socializing that <unk> baked snacks grew 6% for the quarter.

Luca: A number of brands the solid growth, including Oreo reads pack and seven days.

Luca: On the flip side, we have seen ongoing softness in U S. B skills do you need.

Luca: EBIT, primarily by brands that have high penetration among lower income households, such as chips ahoy.

Luca: This dynamic has impacted frequency and contributing to the declining volume mix.

Luca Zaramella: Chocolate Brute 5.8, with significant growth across both developed and emerging markets. Goldmix was down 1.6%. DRAWN BY CUSTOMER DISRUPTION, Capital Daily Milk posted strong growth while we saw solid increases from milk despite customer disruption. There is an element of Eastertiming in these results, but we believe it to be material.

Luca: Chocolate grew five 8% with significant growth across both developed and emerging markets. Both mix was down one 6%.

Luca: The bypass all the disruption in Europe.

Luca: Capital designated posted strong growth, while we saw solid increases from despite customer disruption.

Luca: There is an element of Easter timing in these results, but we believe it to be material.

Luca Zaramella: We also deliver solid growth with several of our local jewels, including Lacta in Brazil, Freya in Norway, Marabu in Sweden, and Huey in the U.S. Gum and Candy grew 12.9% driven by continued momentum and strength in key markets, including China and Mexico. Let's review market share performance on Slack. We handle gain sharing 40% of our revenue base with strength in chocolate, as well as in gum. However, this trend was offset by softer results in our U.S.

Luca: We also deliver solid growth with certain of our local jewels, including Latam, Brazil, Friday in Norway, Sweden, and the U S.

Luca: Gum and Candy grew 12, 9% driven by continued momentum in key markets, including China, Mexico and Western Caribbean.

Luca: That's the new market share performance on slide 12, we.

Luca: We held or gained share in 40% of our revenue base with strength in chocolate as well as in gum and candy. This strength was offset by softer results in our U S biscuit business.

Luca Zaramella: Turning to regional performance on slide 30. Europe Group 4.4% Execution was strong in the quarter with a number of key countries delivering strong growth through solid pricing and excellent Easter execution, which led to Sheppard. This trend was partially offset by volume declines associated with expected cash, Why dollars were up more than and including significant ASC. We have now landed the last, and the vast majority of pricing in Europe. One customer alliance is still on, which will cause some additional disruption due to, but the business remains in line with our North America grew 1.3% against an exceptionally strong compare of more than 60% in Q1. Both channels, including Club and e-commerce in Canada, delivered strong results. However, overall volume has declined as a result of ongoing softness in food and mass.

Luca: Turning to regional performance on Slide 13, Europe grew 4% in Q1 execution was strong in the quarter with a number of key countries delivered strong growth through solid pricing and that sort of an Easter execution, which led to share gains. This strength was partially offset by volume declines as well.

Luca: With expected customer disruption.

Luca: <unk> dollars were up more than 20% that included significant the ANC investments.

Luca: We have now maintained the last the vast majority of pricing EUR, one customer alliance is still ongoing which will cause some additional disruption due to the business remains in line with our expectations.

Luca: North America grew one 8% against an exceptionally strong comparable more than 60% in Q1 last year.

Luca: Gross channels, including club E Commerce, and Canada delivered strong results. However, overall volume mix declined as a result of ongoing software simply than mass.

Luca Zaramella: This softness has been consistent with Euroma and driven primarily by less frequency from lower income houses. We are working to ensure our offers and activations continue to provide value to this consumer's call, and we'll continue to build that into our plans moving forward. We remain encouraged by our activation plans in key products such as Oreo, DDP expansion, and Go channels as we move through the year. North America, one, please, by 2.1.

Luca: This softness as being consistent with the overall market and driven primarily by less frequency from lower income households.

Luca: We're working to ensure our offers and activations continue to provide value to these consumers cohort.

Luca: And we'll continue to build that into our plans moving forward.

Luca: Encouraged by our commission plans in key products, such as oil Pvp expansion angle channels as we move through the year.

Luca: North America increased by two 1%.

Luca Zaramella: Amelia Group 5.9, China Delivers Another Strong Quarter, We Loan Double-Digit, Fueled by Initiatives to Enhance Brand Equity in Oil Ships Ahoy! India grew highly single-digit driven by continuous trends in chocolate and distribution, while Australia, New Zealand, and Japan also delivered a robust order for gold, couple with Tom. Like black swans, polygons in the Middle East and Southeast Asia impacted Frisat. We believe this dynamic could begin to moderate, and the remainder of the year, Amia increased oil dollars by 20.2%, continuing a strong track record of top and bottom line.

Luca: EMEA grew five 9% for the quarter China.

Luca: China delivered another strong quarter with low double digit growth fueled by initiatives to enhance brand <unk> China.

Luca: India grew high single digits, driven by continued strength in chocolate and distribution gains, while Australia, and you'll see that in Japan also delivered a robust quarter for coal.

Luca: Coupled with strong share gains.

Luca: Lifeblood for bulk calls in the middle East and Southeast Asia impacted results.

Luca: This dynamic would begin to moderate in the second quarter and remainder of the year.

Luca: EMEA increased oi dollars by 22% continuing a strong track record of top and bottom line growth.

Luca Zaramella: Latin America grew 7.1% with strong price execution and a slight volume list decline of minus one. It's important to know that Argentina is now capped at 26%, and this is not reflected in the base year comparison formula. Argentina contributed more than 11 points to Latin America's goal in G1, but only 1.8 points in G120.

Luca: Latin America grew seven 1% with strong price execution, and a slight volume decline of minus 1%.

Luca: It is important to note that Argentina is not passed at 26% and this is not reflected in the base year comparison for Latin America.

Luca: Argentina contributed more than 11 phones to Latin America goal EG 1003, only one date bonds in Q1 24.

Luca Zaramella: So we expect the underlying growth rate in LATAM to appear understated. Having said that, the reported dollar's growth continues to be strong. Volume mix was softer in the quarter, primarily due to some product availability in Mexico associated with the Ricolino as a pig o' light that resulted in some, and Bruce Law.

Luca: So we expect the underlying growth rate in Latham tilapia understated for his year hedging.

Luca: Having said that the both the dollar store continued to be strong for a while.

Luca: Volume diesel soft during the quarter, primarily due to some product availability in Mexico associated with the casino I say <unk> that resulted in some production.

Luca: Very slow downs. These issues are mostly behind us, but we're still working to rebuild inventory consumer confidence and demand in Mexico remain quite robust and we expect to see improved volume as I supply chain patches out as Q2 progresses.

Luca Zaramella: These issues are mostly behind us, but we're still working to rebuild inventions. Consumer confidence and demand in Mexico remain quite robust, and we expect to see improved volumes as the supply chain catches up due to progress. Brazil-Wacom continues to be strong, both in terms of volume mix and revenue, while Argentina is impacted by unprecedented inflation and subsequent pricing and volume.

Luca: <unk> continues to be strong both in terms of volume mix and revenue why does it is impacted by adverse events, the installation and subsequent pricing and volume softness.

Luca Zaramella: Latin America, the leader of a wide group of more than 30, turning to page In G1, we saw a strong double digital eye and gross profit dollar growth of more than $380, driven by top line strength and ongoing cost. It is important to know that the impact of will be a more significant headwind in the remaining four. That walk we saw in Cuba, as a result of our favorable COCOA pipeline compared to the CARMARC, next to EPS, sounds like. You win if you ask for more than 60% of the cost.

Luca: Latin America, the EBIT guidance Oi growth of more than 32% strong pricing and the coordination of gum and candy momentum drove these results.

Luca: Turning to page four teams in Q1, we saw solid double digital items gross profit dollar growth of more than 319, EBIT driven by topline strength and ongoing cost efficiency.

Luca: It is important to note that the impact of cost inflation will be a more significant headwinds in the remaining quarters and what we saw in Q1 as a result of our favorable pipeline compared to the current market prices.

Luca: Next to EPS on Slide 16, Q1, EPS no more than 60% in constant currency. Most of this growth was driven by operating gains and despite some currency headwinds we grew adjusted EPS as reported forged by nine 5%.

Luca Zaramella: Most of this growth was driven by operating gains, and despite some currency headwinds, we grew adjusted EPS as reported forex by 10.5%. Turning to slide 16 and cash flow, we delivered $1 billion of free cash flow for the year. We also repurchased $600 million in stock during the pandemic. We will continue to remain opportunistic for the remainder of the year, as it relates to Shanghai.

Luca: Turning to slide 16, and cash flow, we delivered 1 billion of free cash flow for the quarter.

Luca: We also repurchased $600 million installed during the quarter, we will continue to remain opportunistic for the remainder of the year as it relates to share buybacks.

Luca: Our balance sheet also remains strong as leverage ended at about two and half times.

Luca Zaramella: Our balance sheet also remains, and we have leveraged and did that about two and a half. Before moving to our outlook, let me take a moment to discuss Cocoa on slide First, our corporate strategies have proven advantageous versus market dynamics in the last. We are fully covered for, and also for a portion on F1-25, typically work over for 12 plus, But given recent volatility, we have remained slightly shorter in duration. Our teams continue to monitor the market very closely to put ourselves in the best position. It is obvious that the series of conditions on both the supply and demand sides have driven costs up at unprecedented rates.

Luca: Before moving to our outlook, let me take a moment to discuss cocoa on slide 18, first our Cobra stoppages approval advantageous versus market dynamics in the last few months. We are fully covered for 2004 and also for a portion on half one 2025.

Luca: Typically you work over for 12 plus months, but given the recent volatility we have remained slightly shorter in duration.

Luca: Our teams continue to monitor demand thats very closely to our SaaS in the best position possible.

Luca: It is obvious that the seeds of conditions on both supply and demand side driven costs.

Luca: At unprecedented levels, we believe that will eventually be a market adjust and while we want to protect ourselves. We are putting in place flexible structures that will allow us to participate to potential upsides versus time historically high prices.

Luca Zaramella: We believe there will eventually be a market, and while we want to protect ourselves, we are putting in place flexible structures that will allow us to participate to potential, versus current, historically high. On the other hand, we continue to execute against our pricing strategies to offset input costs, using both the blind price and regular price.

Luca: On the other side, we continued to execute against our pricing strategies to offset input cost inflation using both headline price.

Luca: Revenue growth management.

Luca Zaramella: Chocolate has shown strong growth over the past several years with very durable volume and elasticity, despite significant, particularly as we have some of the strongest [inaudible] However, we will remain agile in our approach to privacy, in order to balance the need to offset inflation with the need to update solid volume dynamics. This means we will protect critical price points such as low unit prices and keep track across our. We also remain confident in our.

Luca: Chocolate that's shown strong growth over the past several years, we value durable volume and velocity.

Luca: Spine significant pricing.

Luca: Particularly as we have some of the strongest brand and brand in the category.

Luca: However, we will remain agile in our approach to pricing in order to balance the need to offset inflation with the need to update solid volume dynamics. This means we will protect the price volume such as low unit price and key thresholds across our footprint.

Luca: We also remain confident in our supply chain soup.

Luca: Our supply chain remains priority, one and we are confident in our supply chain.

Luca Zaramella: Friday on the, and we are confident in our supply chain and that of our partners with ongoing work streams to minimize. Turning to our outlook on slide 19, our outlook for 2024 remains. We continue to expect on-algo delivery for revenue of 15% on cash.

Luca: And that of our partners with ongoing work streams to minimize risks.

Luca: Turning to our outlook on slide 19, our outlook for 2024 remains unchanged. We continue to expect on August deliveries for a variety of earnings per share and cash flow. This includes the upper end of our 3% to 5% range for organic net revenue growth, which continues to factor in ongoing faisel mid <unk>.

Luca Zaramella: This includes the upper end of our 3 to 5% range for net revenue growth, which continues to factor in ongoing customer disruption in Europe and softer growth in parts of the. Most of our key assumptions remain consistent with what we shared with you in our last call. We continue to expect high single-digit inflation in 2020. Although the vast majority of pricing has been landed in Europe, we continue to expect some level of customer disruption associated with our annual price negotiation. Interest expense is now expected to be approximately $300 million for the year.

Luca: <unk> Europe and softer growth in parts of the U S.

Luca: Most of our key assumptions remain consistent with what we shared with you in our last call. We continue to expect a high single digit inflation in 'twenty four.

Luca: Although the vast majority of pricing has been lending to Europe. We continue to expect some level of customer disruption in Q2 associated with our annual price negotiations process.

Luca: Interest expense is now expected to be approximately $300 million for the year, we're expecting 10 cents of EPS headwinds related to Forex impact.

Luca: In terms of tax rate, we continue to expect an adjusted effective tax rate in the meat plant. These share repurchase is expected to be $2 billion.

Speaker Change: With an opportunistic approach with that let's open the line for questions.

Luca Zaramella: We are expecting 10 cents on EPS, headwinds related to forks in. In terms of tax rates, we continue to expect an adjusted effective tax rate in the mid-2020s. Shelley Purchase is expected to be 2 billion with an opportunity. With that, let's open the floor. At this time, if you'd like to ask a question, please press the star and 1 keys on your telephone keypad.

Speaker Change: At this time, if you'd like to ask a question. Please press the star and <unk> on your telephone keypad. Please note you may remove yourself from the question queue at any time by pressing star and two.

Operator: Please note, you may remove yourself from the question queue at any time by pressing star and 2. Again, it is star and one to ask a question today. We'll take our first question from Ken Goldman of J.P. Morgan. Please go ahead.

Speaker Change: Again, it is star and want to ask a question today.

Speaker Change: We'll take our first question from Ken Goldman with J P. Morgan. Please go ahead. Your line is open.

Kenneth B. Goldman: Your line is open. Hi, thank you. You highlighted a few of the challenges in North America at the moment, just as we think about the path ahead. Maybe. How are you considering some of the more important actions that can be taken to protect share? Maybe in light of, you know, some of the challenges for the lower end consumer and also, you know, given your comments about globally sort of protecting some of the price points that are out there. I'm just trying to get a sense for the tactics that might be implemented. Yes, again, hi.

Kenneth B. Goldman: Hi, Thank you.

Kenneth B. Goldman: You highlighted a few of the challenges in North America at the moment.

Kenneth B. Goldman: Just as we think about the path ahead, maybe.

Kenneth B. Goldman: How are you considering some of the more important actions that can be taken to protect share maybe in light of some of the challenges at the lower end consumer and also given your comments about globally sort of protecting some of the price points that are out there I'm just trying to get a sense for the tactics that might be implemented.

Speaker Change: Yes, hi.

Kenneth B. Goldman: <unk>.

Dirk Van de Put: Oh, yes. And I mean, you see that the category is slowing down and that we are losing a little bit of share. I think everybody knows that the consumer is sort of seeing a number of things. There is persistent inflation. There is a high interest rate.

Speaker Change: Well, yes, I mean.

Speaker Change: You'll see that the category is slowing down and that we are losing a little bit of share.

Speaker Change: I think everybody knows that the consumers.

Kenneth B. Goldman: Sort of seeing a number of things persistent inflation.

Dirk Van de Put: There's the loss of the SNAP, and there's also the recent not so great job market. So consumer confidence, which was so and so up until today, I think now we just learned that it took a real dive this month. We see in our categories that elasticity is really going up. Penetration is still pretty good, but people are much more conscious about price points. The frequency is coming down, particularly with lower-income consumers, and particularly the brands that are important for them, like Chips Ahoy, can see that they're losing some market share to private label. There is, as I just said, some trade-down to private label.

Kenneth B. Goldman: There is a high interest rate there is the loss of the snap.

Kenneth B. Goldman: And.

Kenneth B. Goldman: There's also the <unk>.

Kenneth B. Goldman: The recent not.

Kenneth B. Goldman: Not so great job market.

Kenneth B. Goldman: So consumer confidence, which was so and so up to today I think now we just learned that it took a real dive.

Kenneth B. Goldman: Months.

Kenneth B. Goldman: We see in our categories. The elasticity is really growing our penetration is still pretty good but.

Kenneth B. Goldman: People are much more conscious about price points, the frequency is coming down, particularly with the lower income consumers.

Kenneth B. Goldman: And particularly the brands that are important for them like chips ahoy.

Kenneth B. Goldman: Can see that they are losing some market share to private label.

Kenneth B. Goldman: There is as I as I, just said some trade down to private label and then another thing to keep in mind thinks that there is some big channel shifts taking place.

Dirk Van de Put: And then another thing to keep in mind is that there are some big channel shifts taking place, to our club or online or into the value channel. So what are we doing about it? The first thing is that last year we didn't have a great performance in TDP. So going forward, we are increasing our TDPs, which will help our volumes going forward and our market share. For those lower-income consumers who are buying very carefully and evaluating very carefully when, what, and at which price they buy, we will need to become more agile in the promotion mechanisms that we will play out, and we're working hard on finding what works best for us, and that's kind of different brand by brand, and largely talking about what we do on our base packs here.

Kenneth B. Goldman: Two.

Kenneth B. Goldman: Club O.

Kenneth B. Goldman: Or online or into the value channel. So what are we doing about it.

Kenneth B. Goldman: The first thing is as we.

Kenneth B. Goldman: Last year didn't have a great performance in PDP. So going forward, we are increasing our TD beef, which will help our volumes going forward and our market share.

Kenneth B. Goldman: For those lower income consumers, who are buying very carefully in evaluating very carefully when and what the net which price. They buy we will need to become more agile in the promo mechanisms that will play out and have been working hard on finding what works.

Kenneth B. Goldman: Best for Us and this is kind of different.

Kenneth B. Goldman: Brand by brand and that largely talking about what we do on our base back here, we will continue to invest in our brands because we increased prices also in March so we will.

Dirk Van de Put: We will continue to invest in our brand because we increased prices also in March, so we will increase our investment. We are launching a number of special packs, a number of additional multi-packs, but also, for instance, in Cliff, we are reducing the size of our multi-packs from 6 to 5 or from 12 to 10 units in a multi-pack, which will help the price point we are selling at.

Kenneth B. Goldman: Increase our investment.

Kenneth B. Goldman: We are launching a number of special facts, a number of additional multi facts, but also for instance in cliffs, we are reducing the size of our multi effects from 6% to five or from 12 to 10 units in a multi pack, which will help the price points, we are selling in.

Dirk Van de Put: And so that gives you a little bit of an idea of what we're planning to do going forward. We assume that in the second half of the year, the consumer will have better confidence and that we will see gradually the volume and the market share come back. Great, thank you for that.

Kenneth B. Goldman: And so that gives you a little bit of an idea of what we are planning to do going forward.

Kenneth B. Goldman: We assume that in.

Kenneth B. Goldman: In the second half of the year that consumers will.

Kenneth B. Goldman: Have a better confidence and that we will see gradually the volume and the market shares to come back.

Luca Zaramella: And then, Luca, as we look at the remainder of the year, especially just modeling 2Q in particular, are there any unusual puts and takes that maybe aren't fully or properly factored into the street forecast? Anything we should be more considerate of that maybe we're not yet? I don't think that's necessarily the case, Ken.

Speaker Change: Great. Thank you for that and then.

Luca: Luca as we.

Luca: Look at the remainder of the year.

Luca: Especially just modeling <unk> in particular are there any unusual puts and takes.

Luca: That maybe aren't fully are properly factored industry forecast anything we should be more considerate of that maybe we're not yet.

Luca Zaramella: I mean, we feel good about reaffirming at this point our original guidance for 2024. And while it is true that the biscuit category in the U.S. is a little bit softer, we are overall happy with most of the dynamics we see around the world. Importantly for us, Chinese New Year and Easter were quite good, and these are critical consumption events for us. But you should expect categories to continue their trends into Q2 and the latter part of the year. I want to spend a minute talking about pricing. We are at this point total where we should be. We have implemented the price that we targeted everywhere, including in Europe.

Luca: I don't think that's necessarily the case, Ken I mean, we feel good about reaffirming at this point our original guidance for 2024 and now while it is true that the biscuit category in the U S is a little bit soft softer we are overall happy with most of.

Luca: The dynamics, we see around the World importantly for us Chinese new year and Easter we're quite quite good and these are critical consumption event for us, but you should expect categories to continue that trend into Q2.

Luca: The latter part of the year I want to spend a minute talking about pricing. We are at this volume in total what we should be we have implemented the price that we targeted everywhere, including Europe.

Luca Zaramella: We still have one main customer to finalize in Europe, which is leading to some disruption in Q2, so you should expect that. But overall, in terms of pricing, we are where we had anticipated being by now. Inflation is in total line with what we expected, and by now, we have locked in cocoa for the entirety of 2024. So we have quite good visibility on cost. I would have a special callout here because cocoa costs will escalate throughout the year, particularly in the second half.

Luca: We still have one main customer to finalize.

Luca: In Europe, which is leading to some disruption in Q2, so you should expect that but overall in terms of pricing.

Luca: We are where we had anticipated to be by now.

Luca: Inflation is in adult all in line.

Luca: With what we expected.

Luca: And by now we have loft cocoa for the entirety of 2024. So we have quite a good visibility on cost I would have a special call out here, because our cocoa costs will escalate throughout the year, particularly in that in the second half.

Luca Zaramella: The acquisitions, we started a little bit softer than expected, particularly in CLIF, and I called out some temporary issues in Ricolino, but you should see a sequential improvement throughout the year. Maybe another couple of points to bear in mind.

Luca: Acquisitions, we started a little bit softer than than expected, particularly in cliff and I called out some temporary issues in the casino by you should see a sequential improvement throughout the year.

Luca: May be another couple of points to bear in mind.

Luca Zaramella: Elasticities are planned in line with what we have seen in Q1, but we might see a little bit of an uptick, particularly in chocolate. But, as we mentioned a few times, we will continue to support our brands, and we will not abandon critical price points, particularly in emerging markets. And we have plans for the same type of softness that we saw in Q1. As far as the biscuit category goes,

Luca: These are planned in line with what we have seen in Q1, but we might see a.

Luca: A little bit of an uptick, particularly in chocolate, but thats. We mentioned few times, we will continue to support our brands and we will not vacate critical price points, particularly in emerging markets.

Luca: And we have planned for the same type of softness that we have seen in Q1.

Luca: As far as the biscuit category add goals, but we would expect our share to improve over time as we are revisiting some of the promo mechanics, particularly around brands like chips Ahoy I mentioned that the recall is already recovering so we should see good growth in Latin America going forward and finally.

Luca Zaramella: But we would expect our share to improve over time as we are revisiting some of the problem mechanics, particularly around brands like Chips Ahoy. I mentioned that Ricolino is already recovering, so we should see good growth in Latin America going forward. And finally, as far as earnings go, we continue to make progress in removing stranded costs related to the gum business. So I don't expect any particular change in dynamics in Q2 specifically, but we should see, particularly on volume, some sequential improvement as we go through the year as we complete some of the price negotiations, particularly in Europe. Very helpful. Thank you. Thank you, Ken. We'll take our next question from Bryan Spillane with Bank of America. Please go ahead; your line is open. Hey, thanks, operator. Good afternoon, Dirk, Luca. Hi, Bryan.

Luca: As far as earnings call, we continue to make progress removing stranded costs related to the gum business. So I don't expect any particular change in dynamics into Q2.

Luca: Specifically, but we should see particularly on the AUM volumes some sequential improvement as we go through the year as we learned some of the price negotiation, particularly in Europe.

Luca: Yes.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thank you Ken.

Luca: We will take our next question from Bryan Spillane with Bank of America. Please go ahead. Your line is open.

Bryan Douglass Spillane: Hey, so just my first question is, can you give us a little bit more color on emerging markets? I mean, you talk about in the press release, or you talk about in the prepared remarks, how the elasticities have been pretty good considering how much pricing. So I guess as we're thinking about the balance of the year and just contribution to growth in the back half of the year, just give us a little bit more, if you can give us a little bit more color on emerging markets and how we should be thinking about that.

Bryan Douglass Spillane: Thanks, operator, good afternoon Luca.

Bryan Douglass Spillane: Hi, Brian.

Bryan Douglass Spillane: So just my first question is just.

Bryan Douglass Spillane: Can you give us a little bit more color perspective on emerging markets I mean.

Bryan Douglass Spillane: You talked about in the press release, you talked about in the prepared remarks, how the elasticities have been pretty good considering how much pricing.

Bryan Douglass Spillane: So I guess as we're thinking about balance of year and just contribution to growth in the back half of the year just just.

Bryan Douglass Spillane: Give us a little bit more if you can give us a little bit more Colorado emerging markets and how should we we should be thinking about that.

Bryan Douglass Spillane: Yes.

Bryan Douglass Spillane: Well.

Dirk Van de Put: Well, just to situate it, about 40% of our sales growth in emerging markets was about 8% in Q1. We are seeing growth in reported dollars, top and bottom line, so solid, robust performance. If I look at the different markets, China in particular, we had low double-digit growth with strong share gains. You know that China, for us, is a combination of selling more in the stores where we already are but also a big drive in distribution.

Bryan Douglass Spillane: Just to situate. This is about 40% of our sales growth in emerging markets was about 8% in Q1.

Luca: We are seeing growth in reported dollars top and bottom line so solid.

Luca: Robust performance, if I look at the different markets China.

Luca: <unk>.

Luca: Low double digits.

Luca: Growth.

Luca: Strong share gains.

Luca: China for US is a combination of.

Luca: Selling more in the stores, we are already where we already are but also.

Luca: Driving distribution.

Dirk Van de Put: That will continue for the rest of the year, and we expect that China will be strong. India, we had high single digits, same sort of dynamics, continue to increase our share in the market, and increase our distribution.

Luca: To continue for the rest of the year and we expect that China will be strong.

Luca: India, we had high single digits.

Luca: At the same sort of dynamics continue to increase our share in the market and increasing our distribution.

Dirk Van de Put: India probably won't show the same amount of growth that we've seen in previous years. We expect a bit of a slowdown there, but we are still expecting a positive year in India. Then Mexico, Luca already commented, Mexico was a bit, was low single digits, driven by some issues with the system implementation in merging Ricorino with our business, but we are gaining shares. Our offtake is good.

Luca: India, probably won't show the same amount of growth that we've seen in previous year and we expect.

Luca: Bit of a slowdown there, but still expecting a positive year in India and.

Luca: And then Mexico look I already commented, but Mexico was a bit.

Luca: It was low single digits driven by.

Luca: Some issues with the system implementation.

Luca: In the emerging <unk> business, but we are gaining shares our offtake is good we had some issues in supplying the market.

Dirk Van de Put: We had some issues in supplying the market, and now that the system is done, we will really start to work that route to market expansion. So we're expecting, once we get through these short-term issues, that we will see some strong growth in Mexico. And then Brazil was mid-single digits, gaining share, and pretty good gains in distribution.

Luca: And now that the system is done we will really start to work that route to market expansion. So we're expecting once we get through these short term issues that we will see some strong growth in Mexico, and then Brazil was mid single digits.

Luca: Gaining share.

Luca: Pretty good gaining distribution price points are a bit of a discussion there, but we also expect Brazil to look pretty good so.

Dirk Van de Put: Price points are a bit of a discussion point there, but we also expect Brazil to look pretty good. So in the four biggest emerging markets for us, we feel pretty good about where they are and what we expect for the rest of the year. But there are some watchouts.

Luca: And the four biggest emerging markets for us we feel we feel pretty good about where they are and what we expect for the rest of the year there are some.

Luca: Watch outs there is.

Dirk Van de Put: There is inflationary pressure in Nigeria, Pakistan, and Egypt. In the Middle East and Southeast Asia, we have the boycotts of Western products that are affecting us, so not everything is great. But we do believe that emerging markets this year will give us sustainable growth. We will get back to volume. Volume growth. We feel that the low category penetration that we have and the distribution opportunity that we have will drive this.

Luca: Inflationary pressure in Nigeria, Pakistan Egypt.

Luca: In the Middle East and Southeast Asia, we have the boycott of western products that are affecting us. So not everything is great, but we do believe that emerging markets. This year will be giving us sustainable growth, we will get to back to volume volume growth.

Luca: We feel that.

Luca: The low category penetration that we have in the distribution opportunity that we have we will drive this.

Dirk Van de Put: I think we are also gradually getting into the adjacencies, and we are able at this stage to continue our virtuous investment cycle, where we continue to increase our investment every year. We get good growth, we generate more margin, and the year after, we increase our investment. Overall, it's not going to be an incredible year in emerging markets, but it's going to be a very solid year for us in emerging markets. Thanks, Dirk. And Luca, just one quick one on COCO.

Luca: I think we are also gradually getting into the Adjacencies and.

Luca: We are able at this stage to continue our virtuous investment cycle, where we continue to increase our investment every year, we get good growth, we generate more margin in the year. After we increase our investments so overall.

Luca: It's not going to be an incredible year in emerging markets will be going to be a very solid year for us in emerging markets.

Bryan Douglass Spillane: I know here, you know, our trading desk kind of has a view that we might be, you know, closer to $5,000 by the end of the year. So I guess to the extent that, you know, there's an expectation that COCO prices will come down. Does it pay for you to just sort of wait to hedge?

Speaker Change: Thanks, Dirk and Luca just one quick one on cocoa.

Speaker Change: I know here, our trading desk kind of has a view that we might be closer to $5000.

Speaker Change: But by the end of the year, So I guess to the extent that.

Speaker Change: There is an expectation that cocoa prices come down.

Speaker Change: Does it pay for you to just sort of wait to hedge I guess, it's kind of like shorting cocoa, but just I think last year you might have held out until the middle of the year before you started locking in and just just kind of curious how we should be thinking about observing what you may be doing.

Luca Zaramella: You know, I guess it's kind of like shorting COCO, but just, I think last year you might have held out until the middle of the year before you started locking in. I'm just kind of curious what we should be thinking about and observing what you may be doing to start thinking about COCO at 25. That's a very good question.

Speaker Change: To start thinking about Coco in 'twenty five.

Luca Zaramella: So, we truly believe that current cocoa prices are the result of a series of accidental circumstances that, over time, we believe should go away. I think you all know that the main crop last year was problematic, but as you might have read from multiple sources, the mid-crop is already looking much better. But also, on the other side, on the demand side, the industry went a little bit shorter than usual on coverage, and now buying out of necessity to replenish minimum stocks really provides support to the current high prices.

Speaker Change: Yes.

Speaker Change: That's a very good question.

Speaker Change: We truly believe that current copper prices.

Speaker Change: Are the result of a series of accidental circumstances that over time, we believe should go away.

Speaker Change: I think you all know that the main crop last year was.

Speaker Change: Problematic.

Speaker Change: As you might have read from multiple sources. The mid crop is is already looking much better but also the on the other side on the demand side. The industry went a little bit shorter than usual culprits and now buying out of necessity to replenish minimum stocks daily provide support.

Luca Zaramella: In this context, we truly believe that the current market structure does not warrant the current market prices. And so, the question becomes when is a correction going to take place? And most likely, the answer will be in September-October as the data for the new crop becomes available.

Speaker Change: The current high prices I think in this context.

Speaker Change: We truly believe that the current market structure does not warrant the current market prices and so the question becomes when is a correction going to take place and most likely the answer easing September October as the data for the new crop becomes available.

Luca Zaramella: We cannot stay still until then. We will have to protect ourselves, but our implementation strategy for 2025 is around flexibility. And so, we are putting in place very flexible structures, namely pure vanilla coal options. We bought a few where the price of those options was very affordable, I would say, particularly in light of today's prices.

Speaker Change: Available, we cannot stay still and until then we will have to protect ourselves, but our implementation strategy for 2025 is around flexibility and so we're putting in place very flexible structures, namely.

Speaker Change: Fewer vanilla call options.

Speaker Change: A few were price.

Speaker Change: Those options.

Speaker Change: It's very affordable I would say, particularly in light of todays prices, but we are putting in place multiple structures that would allow us to participate in a potential market correction. So youre absolutely right. We believe the market is overreacting that current prices are not sustainable and sugar.

Luca Zaramella: But we are putting in place multiple structures that would allow us to participate in a potential market correction. So, you're absolutely right. We believe the market is overreacting, that current prices are not sustainable, and should the correction happen, which we expect towards the end of Q3, most likely, we will be ready to take advantage of lower prices. Now, I don't want to give you the false impression that we're not going to have inflation in COCO in 2025 because the reality is, in 2024, we will be covered at materially better prices than the current markets.

Speaker Change: Correction happen, which we expect.

Speaker Change: Towards the end of.

Speaker Change: Q3, most likely.

Speaker Change: We will be ready to take advantage of lower prices now I don't want to give you the false impression that we're not going to have inflation in <unk> 25, because reality is in 2024, we are covered at materiel better a materially better prices than current market. So you might want to take a look.

Luca Zaramella: So, you might want to take a look at the total market in the known gap to adjust the gap results. Yeah, thanks, Luca. Appreciate that. Yeah, we were looking at that, actually. Pete Galbo pointed out to me just how big the game was. So, definitely get that piece.

Speaker Change: The total mark to markets.

Speaker Change: No GAAP to adjusted GAAP results. Yeah. Thanks. Thanks look I appreciate that yes, we were looking at that actually Pete Galbo pointed out to me just how big the gain was so definitely that piece alright, I'll, let you I'll. Let you guys go thank you.

Bryan Douglass Spillane: All right, I'll let you guys go. Thank you. Thank you, Bryan. We'll take our next question from Robert Moskow with T.D. Cohen.

Speaker Change: Thank you Brian.

Speaker Change: We'll take our next question from Robert Moskow with TD Cowen. Please go ahead. Your line is open.

Robert Bain Moskow: Please go ahead; your line is open. Hey there, thanks for the question. I guess one of the more pleasant surprises is that European chocolate retail data looks very, very strong. The elasticity looks de minimis.

Robert Bain Moskow: Hey, there thanks for the question.

Robert Bain Moskow: I guess one of the more pleasant surprises is that European chocolate retail data looks very very strong the elasticity look.

Robert Bain Moskow: De Minimis.

Robert Bain Moskow: And I want to know if you think that will help in your negotiations with retailers heading into 2025. Are the retailers happy with how the category is performing, and how the consumer is handling the pricing so far? Does that help at all?

Robert Bain Moskow: And.

Speaker Change: I wonder if.

Speaker Change: If you think that will help in your negotiations with retailers heading into 2025 are the retailers happy with how the category is performing how the consumer is handling the pricing so far.

Robert Bain Moskow: Does that does that help at all.

Dirk Van de Put: Yes, of course, it does help in the sense that, so far, the elasticity has been relatively benign. We've got a good performance. Despite some disruptions, growth has been solid, I would say, and we have increased our market share. We do have to take into account that Easter came earlier. We had a very strong Easter from our side, but it came early.

Speaker Change: Yes, so of course, it does help in the sense that.

Robert Bain Moskow: So far the elasticity is relatively benign.

Robert Bain Moskow: <unk> got a good performance.

Robert Bain Moskow: Despite some disruptions.

Robert Bain Moskow: Growth has been solid so I would say and.

Robert Bain Moskow: We have increased our market share we do actually.

Robert Bain Moskow: Take into account that Easter came earlier, we had a very strong Easter from our side, but it came early so some of the numbers you're seeing are influenced versus last year, we did earlier Easter Easter, but overall I would say that.

Dirk Van de Put: So some of the numbers you're seeing are influenced versus last year because of an earlier Easter. But overall, I would say that this certainly is better than you would have expected. It shouldn't be a surprise, in a way, because we know that the chocolate market can be very resilient. We are also continuing to invest quite heavily. And consumer confidence in Europe, I would say, is stable.

Robert Bain Moskow: This certainly is better than you would've expected so.

Robert Bain Moskow: It shouldnt be a surprise in a way because we know that the chocolate market can be very resilient.

Robert Bain Moskow: We also are continuing to invest quite heavily in consumer confidence in Europe, I would say stable.

Dirk Van de Put: There is some uptick in elasticity, but overall, it's better than you would have expected and maybe even a little bit more positive than what we currently are seeing in the U.S. Going forward, I think it helps to see a strong category that we are performing well in. Of course, retailers see the COCO pricing as well as we do, so it will help the discussions going forward. I wouldn't say that it's going to be simple, but there will be an understanding that if COCO prices remain relatively high, there will need to be more price increases. And I think we're helped by the data that we can provide.

Robert Bain Moskow: There is some uptick in elasticity, but overall.

Robert Bain Moskow: It's better than you would've expected them, maybe even a little bit more positive than what we currently are seeing in U S.

Robert Bain Moskow: Going forward.

Robert Bain Moskow: I think it helps to see a strong category that we are performing well.

Robert Bain Moskow: Of course, the retailers see the cocoa pricing as well as redo.

Robert Bain Moskow: So it will help the discussions going forward I wouldn't say that it's going to be simple but.

Robert Bain Moskow: There will be an understanding that.

Robert Bain Moskow: If cocoa prices remained relatively high that they will need to be more price increases that needs to be implemented.

Robert Bain Moskow: And I think we are helped by the data that we can provide.

Dirk Van de Put: And we also have to see what's going to happen with the elasticity going forward as the new chocolate prices get implemented. Because when you have seasonal chocolate, like Easter, the consumer is not necessarily fully aware of the price difference.

Robert Bain Moskow: And we also have to see what's going to happen with elasticity going forward as the new the new chocolate prices get implemented because when you have season seasonal like Easter is the consumer not necessarily fully aware of the price difference when they start to see the established now in the normal shelf thats when they will fully realize the loss.

Dirk Van de Put: When they start to see their tablets now on the normal shelf, that's when they will fully realize elasticity. So we will need to see where that is heading. But overall, yes, very positive about what is going on with chocolate in Europe. Okay, great, thank you.

Speaker Change: So we will need to see.

Robert Bain Moskow: Where that is heading but but overall, yes very positive on what is going on with chocolate in Europe.

Speaker Change: Okay, great. Thank you.

Speaker Change: Mhm.

Robert Bain Moskow: We'll take our next question from Steve Powers with Deutsche Bank. Great. Thanks. Good evening, guys.

Speaker Change: We'll take our next question from Steve Powers with Deutsche Bank. Please go ahead. Your line is open.

Speaker Change: Okay.

Stephen Robert R. Powers: I want to talk a bit about, let's talk a little bit about gross margin. I thought coming into this year, you actually expected gross margin to start out slower in the first quarter and actually sort of improve year over year as we went into the year. Seems like we're setting up for a different, maybe an opposite dynamic.

Stephen Robert R. Powers: Great. Thanks, Good evening guys.

Stephen Robert R. Powers: I wanted to talk a bit about.

Stephen Robert R. Powers: I think a little bit about the gross margin I thought coming into this year you actually expected.

Stephen Robert R. Powers: Gross margin to start out slower in the first quarter and actually should have improved year over year as we went into the year. It seems like we're setting up for a different maybe an opposite dynamics. So maybe you could just expand on what drove the gross margin.

Luca Zaramella: So if you could just expand on what drove the gross margin higher this quarter, and then how do you expect the cadence of gross margin to evolve over the course of the year? Yeah, so as I said, both in the prepared remarks and in my first answer to Ken's question, we are very happy with the level of pricing we have taken so far. And so we are absolutely on plan.

Stephen Robert R. Powers: Higher this quarter and then how do you expect the cadence of gross margin to evolve over the course of the year.

Luca Zaramella: On the cost side, I commented on the fact that the cocoa price escalation will be more visible in the second half of the year. So I'm not sure you will continue seeing the type of gross profit dollar expansion and gross margin that you saw in Q1 into the second half because cocoa prices will hit a little bit harder, particularly in Q4. So I wouldn't read too much into that.

Speaker Change: Yes, so as I said.

Speaker Change: Both in the prepared remarks.

Speaker Change: In my first answer too.

Speaker Change: To Ken's question.

Speaker Change: We are very happy with the level of pricing, we have taken so far and so we are absolutely on plan.

Speaker Change: On the cost side I commented about the fact that.

Speaker Change: The cocoa price escalation will be more visible.

Speaker Change: The second part of the ESO I am not sure you will continue to see the type of a gross profit dollar expansion in gross margin that you saw in Q1 into.

Speaker Change: Into the second half because the cocoa prices will hit a little bit harder.

Speaker Change: In particularly in Q4, so I wouldn't read too much into that I think the way you have to think about it. These are we happy with <unk>.

Luca Zaramella: I think the way you have to think about it is, are we happy with, you know, expanding gross profit dollars by almost 12%? Absolutely. Are you happy?

Speaker Change: <unk> gross profit dollars almost like percent absolutely are you happy are we happy with the reported.

Speaker Change: $40 gross profit that we see absolutely.

Luca Zaramella: Are we happy with the reported dollar gross profit that we see? Absolutely. We are pricing in a very disciplined manner around the world. We are doing R&D, so that is bearing fruit.

Speaker Change: Our pricing in a very disciplined manner around the world. We are doing our GM sold that is bearing its fruit, but youre going to see some compression, particularly in in Q4. So don't expect like that went.

Speaker Change: <unk> points of gross profit expansion.

Speaker Change: From now through the end of the year for sure.

Speaker Change: Yes, Okay, alright, good thanks.

Luca Zaramella: But you're going to see some compression, particularly in Q4. So don't expect, like, two and a half points of gross profit expansion from now to the end of the year for sure. Okay, very good. Thanks.

Speaker Change: Actually Derek if I could build on your comments just a minute ago on Europe.

Stephen Robert R. Powers: And actually, Dirk, if I could build on your comments just a minute ago on Europe, I'm curious, I mean, understanding that the retail negotiations have gone maybe a little bit better than you had originally assumed, but it seems like demand, as you say, is stable, maybe a little bit better than expected. I guess, is it better than you would have expected? And if so, does that, you know, how does that, you know, influence your plans for the balance of the year? Are you leaning in a bit harder into Europe to take advantage of those better conditions? Yes.

Speaker Change: I'm curious I mean understanding that the retail negotiations have gone maybe a little bit better than you had originally assumed but it seems like demand as you say stable, maybe a little bit better than expected I guess is it is it better than you would've expected and if so.

Speaker Change: Does that.

Speaker Change: How does that.

Speaker Change: Influence your plans for the balance of the year, you're leaning in a bit a bit.

Speaker Change: A bit harder into Europe too.

Speaker Change: Take advantage of that those better conditions.

Dirk Van de Put: I would say, first of all, as it relates to the client negotiations, they are largely going exactly as we would have expected. As we knew that we had increased prices, we foresee that in our forecast for the year. And at the moment, it's playing out as expected. As Luca mentioned, there's still one buying group that we need to finish. Hopefully, we will do that in the coming weeks.

Speaker Change: Yes.

Speaker Change: I would say first of all of them as it relates to the client negotiations.

Speaker Change: Largely are going exactly as we would've expected as we know that we have.

Speaker Change: As we knew that we had increased prices, we foresee that in our.

Speaker Change: Forecast for the year and at the moment, it's playing out as expected as Luca mentioned Theres still one buying groups that we need to finish.

Speaker Change: We will do that in the coming weeks and then we should be done for a while.

Dirk Van de Put: And then we should be done for a while. As it relates to the current situation in Europe, obviously, there will be a recuperation because we have not been delivering for a while to some clients, and as we get agreements, we start to fill the pipeline again, so that will help us. But overall, I would say that we are not expecting to see for the full year a big difference in our European performance; we are not expecting to see an upside.

Speaker Change: As it relates to the current situation in Europe, obviously, there will be a recuperation.

Speaker Change: Because we have not been delivering for a while some clients and as we get agreements we start to fill the pipeline again, so that will help us, but overall I would say that we are not expecting to see for the full year.

Speaker Change: The big difference in our European performance, we are not expecting to see an upside.

Dirk Van de Put: We are convinced that we have more stability, and we feel more assured about delivering what we are expecting to deliver in Europe, but we are not counting yet on an upside for the year. Okay. We'll take our next question from Alexia Howard with Bernstein. Please go ahead.

Speaker Change: We are convinced that we have more stability, we feel more assurance about delivering but we are expecting to deliver in Europe, but we're not counting yet on an upside for the year.

Speaker Change: Okay. Thank you very much.

Speaker Change: Okay.

Alexia Jane Burland Howard: Your line is open. Let's take it, yeah? Alexia, your line may be muted.

Speaker Change: We will take our next question from Alexia Howard with Bernstein. Please go ahead. Your line is open.

Speaker Change: Okay.

Speaker Change: Yes.

Alexia Jane Burland Howard: Thanks Alexia.

Speaker Change: Alexia your line may be muted.

Speaker Change: Okay.

Operator: Let's go to the next question. Our next question comes from Chris Carey with Wells Fargo Security. Hi, everyone.

Speaker Change: Go to the next question.

Speaker Change: Our next question comes from Chris Carey with Wells Fargo Securities.

Christopher Michael Carey: Hi, everyone.

Christopher Michael Carey: Bye. Um, Dirk, the comments that you made about the consumer in North America, elasticity is picking up a little bit, and some expectations into Q2 in the back half of the year. I guess I'm just trying to understand a couple of things.

Christopher Michael Carey: Alright, Chris.

Christopher Michael Carey: Yes.

Christopher Michael Carey: Gerrick.

Christopher Michael Carey: The comments that you made around the consumer in North America, the elasticity picking up a little bit.

Christopher Michael Carey: Some expectations into Q2, and the back half of the year.

Speaker Change: I guess.

Speaker Change: I guess I'm just trying to understand a couple of things first is in Q1.

Christopher Michael Carey: First, in Q1, is there anything within the portfolio that you would deem not elasticity related? You mentioned some competitive activity in CLIF that you're going to be responding to. Say anything, you know, competitively or fundamentally, that you would point to that you would see improving in Q2, where it gives you a little bit of confidence in North America. And then the second thing would just be regarding the consumer in the back half of the year.

Speaker Change: Is there anything within the portfolio that you would deem Knox elasticity related you mentioned, the competitive activity and cliff that youre going to be responding to.

Christopher Michael Carey: Anything.

Christopher Michael Carey: Competitively are fundamentally that you would point to that you would see improving into Q2, where it gives you a little bit of confidence in North America and then the second thing would just be regarding the consumer until the back half of the year did I catch you right that there is an expectation that the consumer in North America gets a little.

Christopher Michael Carey: Did I catch you right that there's an expectation that the consumer in North America gets a little bit better and that your volume trends, as such, should improve sequentially? So perhaps just any help on portfolio dynamics in the quarter and also just, I guess, more of like the macro and the consumer. Yeah. Well, I would say that if you look at the market share evolution, the brand that's most affected is Chips Ahoy, and Chips Ahoy is the most susceptible to private label.

Christopher Michael Carey: Better than that your volume trends as such should improve sequentially. So perhaps just any help on portfolio dynamics in the quarter and also just I guess more like the macro or the consumer.

Christopher Michael Carey: Yes.

Christopher Michael Carey: Well I would say that if you look at the market share evolution.

Christopher Michael Carey: The brand Thats most affected these chips ahoy and chips are always the most susceptible to private label.

Dirk Van de Put: And Ori or Belvita are gaining market share, and so I would say if there's anything that's pointing, I wouldn't call it necessarily not susceptible to elasticity; we see some elasticity on those brands too, but overall, the activations that we have and the interest we're getting from the consumer on those two brands offset the elasticity effect that we're having. As it relates to what we need to do going forward, it's largely now trying to figure out in which way we can get the frequency, particularly from lower-income consumers, that we would like to see.

Christopher Michael Carey: And Oreo or a bell Vita are gaining market share and so I would say if theres anything thats pointing.

Christopher Michael Carey: I wouldn't call it necessarily.

Christopher Michael Carey: Not susceptible through elasticity, we see some elasticity on those brands too, but overall the activations that we have and the interest we're getting from the consumer on those two brands offset the elasticity effects that we're having.

Christopher Michael Carey: As it relates to what we need to do going forward, it's largely now.

Christopher Michael Carey: Trying to figure out in which way can we get the frequency.

Christopher Michael Carey: Particularly from the lower income consumers that we would like to see so price points certainly play a role and we will need to work short term with promotions last longer term probably working on the size of our facts to make sure that we hit those price points, because if we see anything in the elasticity. It is that we have.

Dirk Van de Put: So price points certainly play a role, and we will need to work short-term with promotions, and longer-term, probably working on the size of our packs to make sure that we hit those right price points. Because if we see anything in the elasticity, it is that we have exceeded certain price points and that that is having a big effect. Now I would say that movement is happening already, so that's what we gradually will expect to improve in the coming months.

Christopher Michael Carey: Past certain price points and that is having a big effect now I would say.

Christopher Michael Carey: That movement is happening already so thats, what we gradually really expect to improve in the coming months.

Dirk Van de Put: that our promotional and pricing strategy gets better, that we understand better how to get the frequency and the volume from them. I'm also expecting that overall consumer confidence in the second half of the year will improve. That will have an effect on us. There's a lapping effect.

Christopher Michael Carey: I E. There are promotional and pricing strategy gets better that we understand better how to get the frequency and the volume from the consumers.

Christopher Michael Carey: Also expecting that the overall consumer confidence in the second half of the year will improve that will have an effect for us. These are lapping effect last year, we had 16% growth in North America of course that plays at all the lapping and then later in the year it will be easier.

Dirk Van de Put: Last year we had 16% growth in North America. Of course, that plays a role. The lapping later in the year will be easier.

Dirk Van de Put: Those are the things that I would see that make me believe that the second half of the year will look better for us in North America. Okay, thank you. One quick follow-up on COCO. Luca, you gave a lot of helpful commentary around some of the things that you're going to be doing or are doing now contractually. And you also have expectations for September and October. I guess the question is, what if COCO sustains these really high levels and we don't see the fundamental break expected going into next year?

Christopher Michael Carey: Those are the things that I would see that make me believe that the second half of the year will look better for us in North America.

Dirk Van de Put: Is it still appropriate to think about pricing as the core mechanism to cover inflation, or given the lead time that you have to prepare? Maybe there are other alternatives like accelerated savings, RGM, the sorts of things that you can do when you have many months to prepare for such cycles, if indeed you believe that COCO prices will eventually break? So it's just more game theory, but any context on that would be helpful.

Speaker Change: Okay. Thank you one quick follow up on cocoa.

Christopher Michael Carey: Luca.

Speaker Change: You gave a lot of helpful commentary around some of the things that youre going to be doing or are doing now contractually and you also have an expectation in September and October.

Speaker Change: The question is what is cocoa sustains these really high levels that we don't see the fundamental break expected going into next year is it still appropriate to think about pricing as the core mechanism to cover the inflation or given the lead time that you have to prepare.

Speaker Change: Maybe there are other alternatives like accelerated savings rgs.

Speaker Change: The sorts of things that you can do when you have many months to prepare for such cycles. If indeed, we believe that the cocoa prices at some point will eventually break so it's more game theory, but any context on that would be helpful.

Christopher Michael Carey: Uh, yeah, I believe it's absolutely critical for us. I just want to call out one thing, which is that the forward curve for COCO is heavily inverted.

Speaker Change: I believe.

Speaker Change: It's absolutely critical for us.

Speaker Change: To get tried before.

Speaker Change: Potentially cocoa staying at.

Speaker Change: These levels are.

Speaker Change: Just want to call out one thing which is.

Speaker Change: The forward curve for coal coal.

Speaker Change: Is heavily inverted.

Luca Zaramella: And that means, in general, that even today we could potentially get physical coverage into 25 at cheaper prices than the current spot price that we see today. But rest assured that, as a company, we are looking at all possible scenarios. And, as a matter of fact, we are taking a fresher look at some of the costs we have, making sure that we try to understand the level of flexibility that we have.

Speaker Change: And that means in general that even today, we could potentially get.

Speaker Change: Physical coverage into 'twenty five but.

Speaker Change: Cheaper prices than than the current spot price that we see today.

Speaker Change: But rest assured that as a company we are looking at all possible scenarios and as a matter of fact, we are taking a fresh look at some of the cost we have.

Speaker Change: Making sure that we try to understand the level of flexibility that we have.

Luca Zaramella: We are looking thoroughly into additional RGM. We will stay absolutely true to the concept of protecting price points, particularly in emerging markets. We are not going to move the LUP, the low unit price. Poems in India Free

Speaker Change: We are looking thoroughly into additional or gn.

Speaker Change: We stay absolutely true to the concept of protecting price falling, particularly in emerging markets, we are not going to move.

Speaker Change: <unk> and <unk> low unit price point.

Speaker Change: Boeing's in India for instance.

Luca Zaramella: But we will be looking into potential RGM in terms of promotion, in terms of downsizing, et cetera. So to say that we will have to make sure that elasticity stays in control. In the end, we are going to be managing 25 in light of what we think a more plausible COCOA level is, despite the fact that it might still be very high, because we fundamentally believe that in a couple of years' time, the COCOA price will correct.

Speaker Change: We will be looking into potential our GM in terms of promo in terms of.

Speaker Change: Downsizing.

Speaker Change: There are so to say that we will have to make sure that elasticity stays in control in the end we are going to be managing 25 in light of what we think a more plausible cocoa level ease. Despite the fact that he might still very high because we fundamentally believe that.

Speaker Change: In a couple of Years' time tops, the cocoa price will correct and at that point in time, we will have to have retained our volume our share our competitive advantage both in developed and emerging markets and that's the way we're looking at these but rest assured we are.

Luca Zaramella: And at that point in time, we will have to have retained our volume, our share, our competitive advantage, both in developed and in emerging markets. And that's the way we are looking at this. But rest assured, you know; we are looking at all possible scenarios. And we're going to be sitting down soon with the teams to make sure that we have already put in place all the possible actions that would allow us to go through a potential worst-case scenario in 2025. Next question, please. We'll take our next question from Rob Dickerson with Jeffreys. Please go ahead; your line is open.

Speaker Change: Looking at all possible scenarios, and we're going to be sitting down soon with the teams to make sure that we put in place already all the possible actions that will allow us to go through a potential worst case scenario in 2025.

Speaker Change: Next question please.

Speaker Change: We will take our next question from Rob Dickerson with Jefferies. Please go ahead. Your line is open.

Rob Dickerson: Uh huh.

Speaker Change: Yes.

Rob Dickerson: Robert are you there.

Robert Frederick Dickerson: [inaudible] Transcribed by https://otter.ai, Robbery there. Oh, one moment. Let me return. Yeah, Rob, please check your mute function.

Rob Dickerson: Okay, one moment, let me Richard Roth, Please check your mute function.

Operator: Can you hear me? Yes, we can. Oh, great. Thank you. Sorry about that. So, just one quick one on COCO again, Luca.

Richard Roth: Can you hear me.

Richard Roth: Yes, yes, yes.

Richard Roth: Great. Thank you sorry about that so.

Richard Roth: So just one quick one on on cocoa.

Richard Roth: Just just in terms of your comments around maybe the big crop coming in a little bit better.

Robert Frederick Dickerson: Just in terms of your comments around, you know, maybe the mid-crop coming in a little bit better, your kind of expectation, maybe things could ease and improve a little bit in the almost, you know, pre-main crop period. I mean, kind of what you're saying is just the expectation here is that, you know, supply should be up, right? I mean, we're clearly running a deficit, but then, you know, we should assume that supply should be up in the next main crop. Is that fair?

Richard Roth: They're kind of expectation, maybe things could ease and improve a little bit kind of been the almost pre main crop period.

Richard Roth: Kind of what you're saying is just the expectation here is that.

Richard Roth: Supply should be up right, we're clearly running at a deficit, but then.

Richard Roth: We should assume that supply should be up in the next main crop does that is that fair.

Luca Zaramella: Yes, I think that's fair. I mean, when you look closely at the numbers, Ivory Coast and Ghana, the main crop was down year on year and about 20%. The total cocoa supply was positive, as you are aware. In total, it was down minus 10%. Do I expect the main crop to be down 20% in Africa or 10% in total again? I don't think that's a plausible scenario at this point in time. But, as I said, we will know more as we get closer to the main crop. But fundamentally, nothing has really happened that structurally impairs the production capability of Africa specifically to that level.

Richard Roth: Yes, I think Thats fair I mean, when you look closely at the numbers Ivory Coast and Ghana. The main crop was down year on year and about 20%.

Richard Roth: Cocoa supply.

Richard Roth: Was positive as they were in total it was down minus 10%.

Richard Roth: Do I expect.

Richard Roth: The main crop to be down, 20% in Africa or 10% in total again.

Richard Roth: I don't think Thats, a plausible scenario at this point in time, but as I said, we will know more.

Richard Roth: As we get closer to the main crop are fundamentally nothing has really happened that structurally in past the production capability of.

Luca Zaramella: So yes, I'm hopeful that there will be a better main crop, and I think you will see prices for cocoa adjust. Having said that, we're looking into all possible scenarios, and we're going to be implementing some non-regret opportunities that we see before year end. But we'll have to wait for us to be able to tell you what those are.

Richard Roth: Africa, specifically to that level. So, yes, I'm hopeful that there will be a better main crop and I think you would see prices for cocoa adjusting having said that we are looking into all possible scenarios.

Richard Roth: We're going to be implementing some non regret opportunities that we see.

Richard Roth: Before year end, but we'll have to wait for us to be able to tell you. What those are and I think as we move throughout the year, we'll keep you updated on what we see for cocoa into 2025.

Luca Zaramella: And I think as we move throughout the year, we'll keep you updated on what we see for cocoa into 2025. All right, lovely. And then just quickly on the top line, you know, I think originally Q1, you know, you had said, you know, might be below the algo for the year, just kind of given some of the European disruption. But I think Europe, you know, did better than we all probably saw it. North America is a bit softer.

Robert Frederick Dickerson: So I'm just curious, like, are you still thinking there could be a slightly positive volume mix for the company for the year? And then I think you also said it was likely for each of the segments once we x out some of the European disruptions. And then lastly, I think you also originally said it was probably more on the high end of the three to 5% sales growth. So just curious about the volume piece, and then if you're still at the high end.

Speaker Change: Alright, Lovely and then just quickly on the topline.

Speaker Change: I think originally in Q1.

Speaker Change: You had said might be below the algo for the year, just kind of given some of the European disruption.

Speaker Change: Europe did better than we all probably saw at.

Speaker Change: North America is a bit softer. So I'm. Just curious are you still thinking there could be slightly positive volume mix for <unk>.

Speaker Change: For the company for the year and then I think you've also said likely for each of the segments sports we ex out some of the ERP disruptions.

Speaker Change: And then lastly, I think you had all servers and we said it was probably more high end of the 3% to 5% sales growth. So just curious on the volume piece and then if you are still at the Hyatt.

Luca Zaramella: Look, the volume piece is, we expect volume to be flattish for the year. The reality is, as we gave guidance, we had a little bit of headroom, as you might expect. I think that headroom is still, for the most part, there. We'll have to see how a couple of big ticket items play out for the remainder of the year, particularly the boycott in EMEA as it relates to some of our brands. How will that play out in the quarters to come?

Speaker Change: Look the volume phases, we expect volume to be flattish for the reality is.

Speaker Change: As we gave guidance we had a little bit of headroom as you might expect I think that headroom is still for the most part there.

Speaker Change: We'll have to see how a couple of ticket items play out for the remainder of the year.

Speaker Change: Particularly the boycott in in EMEA as it relates to some of our brands how will that play out in the quarters to come and the other thing is the chassis Colgate, particularly in that in the U S.

Luca Zaramella: And the other thing is the share recovery, particularly in the U.S. I feel confident about the plans that the U.S. government is putting in place. I think we are moving a little bit on the price points of Chips Ahoy, and that would allow us to recuperate share and volume. And Chips Ahoy is the number one driver of the volume declines that you see in the North American segment. But then we will have to see how elasticity plays out as well.

I feel confident about the plans that the U S is putting in place.

I think we are.

Speaker Change: Moving a little bit the price points of chips to Holly and that will allow us to recuperate share and volume and <unk>.

Speaker Change: The number one driver of the volume declines that you've seen the North American segment, but then we will have to see our elasticity plays out.

Luca Zaramella: I feel quite good about the Latin American business. As I called out, I think three out of the four business units, and the only one that is declining in volume in real terms is Argentina, but the other three are doing quite well. We feel good about China. I think India will see some slowdowns, but all in all, it should be fine.

Speaker Change: As well I feel quite good about the Latin American business as I called out I think three.

Speaker Change: Three out of the four business units and the only one that is declining in volume terms.

Speaker Change: These Argentina, but the other three are doing quite well, we feel good about China, I think India, we're going to see some slowdowns, but all in all it should be fine.

Luca Zaramella: And then, you know, I could go around the globe and tell you that the reality is, once we land the final customer in Europe, we should hopefully see some repipelining of the trade stock, and hopefully, the chocolate market will continue displaying acceptable elasticity. So a long answer to say expect flattish volume, but the reality is there are some puts and takes, and we want to keep some flexibility within the process. All right. Great. Thank you so much. I appreciate it.

Speaker Change: And then <unk> go around the globe and tell you that the reality is once we land the final customer in Europe, we hopefully see some re piping of the straight stock and hopefully the chocolate markets will continue to display.

Speaker Change: <unk> elasticity, so a long answer to say expect flattish volume, but reality is there are some puts and takes in that we want to keep some flexibility within within the plan.

Speaker Change: Alright, great. Thank you so much I appreciate it.

Speaker Change: Youre welcome.

Dirk Van de Put: And this does conclude our Q&A segment. I'll return the call to our speakers for any closing comments. Well, thank you for assisting on the call. I would conclude by saying that we had a solid first quarter and we feel confident for the rest of the year that we will have an algorithmic year.

Speaker Change: And this does conclude our Q&A segment or turn the call to our speakers for any closing comments.

Speaker Change: Well, thank you for assisting in the call.

Let's conclude with saying that we had a solid first quarter and we feel confident for the rest of the year that we will have an algorithm here.

Dirk Van de Put: And looking forward. If you have any questions, our IR department will be happy to help you, and we look forward to seeing you next quarter for the results that we have done. Thank you. Thank you, everyone. This does indeed conclude today's program. Thank you for your participation, and you may now disconnect. [inaudible] Shep Dunlap, Robert Moskow, Dirk Put, Luca Zaramella, Shep Dunlap, Mondelez International Inc., Dirk Put, Luca Zaramella, Shep Dunlap, Mondelez International Inc. .. [inaudible] Thanks for watching! [inaudible]

Speaker Change: Looking forward if you have any questions.

Speaker Change: Ah requirements will be happy to help you and looking forward to see you next quarter with the results that we have done thank you.

Speaker Change: Thank you everyone.

Speaker Change: This does conclude today's program. Thank you for your participation and you may now disconnect.

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