Good afternoon and welcome to the Mondelez International 2025 4th Quarter and Full Year Earnings Question and Answer Session. Your lines have been placed on listen only until it's your turn to ask a question. In order to ask a question, please press the star key followed by the number 1 on your touchtone phone at any time. To remove yourself from the queue, press star 2. On today's call are Dirk Vandeput, Chairman and CEO, Luca Zaramela, COO and CFO, and Shep Dunlap, SVP of Investor Relations. Earlier this afternoon, the company posted a press release and prepared remarks, both of which are available on its website. During this call, the company will make forward-looking statements about performance. These statements are based on how the company sees things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in the company's 10-K, 10-Q, and 8-K filings for more details on forward-looking statements. As the company discusses results today, unless noted as reported, it will be referencing non-GAAP financial measures which adjust for certain items included in the company's GAAP results. In addition, the company provides year-over-year growth on a constant currency basis unless otherwise noted. You can find the comparable gap measures and gap-to-non-gap reconciliations within the company's earning release and at the back of the slide presentation. We will now move to our first question. Our first question comes from the line of Andrew

Lazar with Barclays. Please go ahead. Great. Thanks very much. Good afternoon, everybody. Hi, Andrew. Hey there. Derek, maybe to start us off, clearly significant interest in, obviously, the chocolate category and how the precipitous fall in cocoa could impact the dynamic. Where is Mondelez currently on its chocolate strategy? How does it play out from here, particularly as it relates to the potential for some price deflation in areas where, obviously, significant pricing has been taken?

Thank you, Andrew. I would start off by saying that if you look at 2025 and the overall chocolate market in the world, seeing the rather important price increases that took place, that the category overall has shown a lot of resilience, despite all the volatility. volatility. In that, we had a playbook for our chocolate strategy, which was largely to price, list price, or do revenue growth management largely through price pack architecture. And we've executed well against that chocolate playbook in 2025. If you then look at the markets around the world, I think places like India, Brazil, Australia, South Africa, some of our bigger chocolate markets, we have done quite well. And also in Europe, in about half of the markets, things played out exactly as expected. However, I would say in the more northern markets in Europe, Germany, the Nordics, the UK, we saw higher than expected elasticity, and so we have to take adjustments in 26. We have learned that certain price points are very important, and so we have adjusted already to put our products at the right price point. Some of the PPA worked, others didn't, so we are adjusting also some of the PPA we have in the market. We are planning to increase our investments behind our brands because in this year, our cocoa coverage is at a better cost than it was in 25. So we are able to increase substantially investment behind our brands. And we do that because we want to get back to the normal frequency and quantity of consumption that we've seen. Penetration hasn't gone down, but the frequency and the quantity of consumption did. we are also investing in price as I mentioned to hit those right price points and as well in new PPA we're going to push hard on innovation we have a collaboration with Biscoff which was very successful in 25 but it really is going to go to the next level in 26 so I think we've got a very strong innovation agenda led by Biscoff with a number of other things in Europe And then we are going to have some important activations in stores. However, as you probably have seen in the last two weeks, suddenly the cocoa price has declined more than anybody would have expected. And this will have some short-term pressures, largely as it relates to probably have an industry, the larger players industry that already are covered for 26 at a higher price than the current market price. And this could maybe give us some unexpected competitive reactions. And so we want to build in some flexibility in our guidance because we don't quite know how that is going to play out in the market in 26. What is good in all of this is that COCO now has returned to a level that is much more in line with the historic price that we've seen, and that bodes very well for 27. As I said, we're already covered for 26. There's not a lot we can do anymore, but 27 certainly will benefit from this. So we see our chocolate business in 27 increase its margin in a considerable way. As it relates to 26, like I said, we're going to remain very agile. We're going to do all the things that we said and then make sure we enter 27 with a lot of strength. We are planning to go through a lot more detail on what our chocolate strategy is during the Cagney conference, so I would certainly invite everybody to come and listen to us there.

Great. Really helpful. Hopefully you can arrange to get some of the Biscoff stuff down there as well. That's just a personal favorite. And then, Luca, maybe shifting gears over to the outlook, but maybe what's your thought process on the guidance range and sort of investment flexibility that Dirk mentioned in light of the fall in cocoa costs and what are your updated thoughts on sort of the cocoa environment, if you will, from here? Thanks so much.

Thank you, Andrew. So before commenting on the 26 guidance, maybe a brief comment about how we ended the year. And I think, as we said, we are quite happy with our emerging markets momentum And quite frankly, also happy because we saw sequential improvement in developed markets, albeit we are not fully there yet. On 26th, the guiding principle of the guidance was to be prudent, particularly as we see some short-term pressure points, like in the U.S. You know that the biscuit category is still subdued, and the plan is that it will continue like that for the first half at least, with some marginal improvements in the second half. In Europe, we have planned for a chocolate category that is stable after the meaningful prices that were taken, but we also plan for some disruption due to the usual customer negotiation process that takes place in the first part of the year. The main reason for the guidance range is that recent and sudden cocoa dynamics might require some adjustments and flexibility depending on how competitions will react to those prices and where cocoa eventually will stabilize. As we said, our pipeline cost for 26 is determined at this point in time, and it is clearly at higher than current cocoa spot. So this is something that we hadn't anticipated before, and as we said, it just happened in the last couple of weeks. Our objectives are clear. We want to win with the consumers. We want to win in the marketplace. And that's one of the reasons why we are investing substantially behind our brands. And hopefully the goal is to have improved volume trajectory, particularly as we move through the year. On the phasing, maybe just one word. I commented already on the customer disruption in Europe in the first part of the year, but on profit, given the way our inventory accounting works, we will face some headwinds, and we mentioned that in the prepared remarks. On cocoa, I said it a few times, and I believe fundamentally nothing has changed. If you look at supply and demand, the dynamics were clear well before the last couple of weeks, and so I believe what the market is recognizing now is maybe a little bit overdue. Obviously, we would have liked a little bit more of a balanced approach to the way down of COCO. It happened all of a sudden. But the reality is that in our minds, COCO as it stands now is a fair representation of supply and demand. And that's why we believe this level is important for us to realize as we look at profitability, particularly going forward into 27 and beyond. Great. Thanks so much. Thank you, Andrew.

Thank you. We'll now move on to Peter Galba with Bank of America. Your line is now open.

Hey, good afternoon, Dirk and Luca. Thanks for the questions. Luca, maybe if I can actually pick up on the comments you just made around some of the phasing more on the cost side. I know that you mentioned, I think the lion's share of it comes in in the first quarter. So maybe you can just talk us through a bit more of the cost phasing on COCO through 26, and then maybe how we would think about the phasing on potential price investments in chocolate over the balance of the year.

Thank you, Peter. So fundamentally, maybe I'll start with the top line, because I think that's a clear component of how we think about the plan in 26. As you might imagine, at this level, we are not going to price COCO further necessarily. But it is also important to know that our profit took quite a material hit in 2025. And so we were not certainly fully priced at the level of cocoa in 2025. And albeit the pipeline cost is coming down in 2026, we need to keep a level of pricing that is pretty much the same as we had in 2025. In terms of costs, the way our inventory accounting works is that we will have to adjust the level of inventory in the first day of the year to the actual pipeline cost that we see in 2026 versus how we exit the year in 2025. And that is a one-time adjustment that takes place on the inventory, and that is causing in the first two quarters, but predominantly in Q1, an impact that is half a billion dollars. And that gives you an idea of the dislocation of costs that we see throughout the two years. So in terms of top line, I would say in chocolate specifically, flat pricing, in terms of volume, some implications as there is customer disruption in Europe, and in terms of cost, higher cost in the first half versus the second half. So as we move through the year, I think you're going to see a sequential improvement of volume and revenue, but most importantly, in terms of EBIT phasing. In all of these, investments in ANC is equally spaced throughout the quarter, so no material changes, I would say, quarter on quarter in absolute terms of our ANC investment.

Great. Thanks for that, Luca. And Dirk, maybe to pivot to North America, I mean, I know it continues to kind of be a difficult operating environment. You know, volume trends are still a bit weak. There's a view maybe that this is more K-shape or cyclical tide versus structural. And maybe in the context of just one of your largest peers announcing price cuts today in the stacking category, would just love to get your perspective on the North American market, where you stand on that debate, and again, on the pricing front, kind of what the go-forward actions might look like there.

Thanks very much. Okay, Peter. Well, first of all, I think the thing in North America is the consumer. The consumer confidence is near a historic low. They're worried about overall affordability. They are fed up with the price increases. They don't feel good about their personal economic outlook. They doubt about job security. So what we are seeing is that the average shopping basket of the consumer in the U.S., whether you're in the higher or in the lower social economic classes, has not increased for the last two, three years. Within that basket, They have spent more money on the basics, milk, meat, bread, and so on. And as a consequence, snacking is being affected. And you can see that in all of the snacking categories. You talked about the K-shaped economy. There is clearly a group of consumers, the more wealthy consumers, that do spend differently in the sense that you can see that things like premium and better for you are growing within the snacking markets, also some on the go. But the bulk of the consumers, they are really into value-seeking. So what they do is they look for lower unit prices, they look for deals. If they have a bit more money, they will look for bulk packs or multi-packs, And they also shift channels from food and mass into value, club and online. As you said, the biscuit category is showing a soft volume. The last three months, it's down 4% in volume, 3% for the year, 25%. So overall, we don't necessarily see an immediate change as it relates to where the consumer is. And as a consequence, we need to adapt to these circumstances. So what do we do? We are going to invest more to drive awareness. We see the same as in chocolate in Europe. Penetration of our brands is not decreasing or sometimes just a little bit. It's largely the frequency and the quantity bought that is being affected. So we're going to invest in improving that frequency and the quantity bought. We're going to use PPA to address some of the affordability. We are expanding in some of these channels that I was mentioning. We are under-indexed, so we are pushing harder, and we are increasing our market share. And we have offerings that are doing well. I'm thinking about a perfect bar, which is a protein offer, or a Tate's premium biscuit, or a Yew premium in chocolate, or a Builder's Bar in the Cliff Range, which is also protein. They are all doing well, growing double digits. So we're going to push harder on those brands. And then lastly, I would say we are activating a supply chain program, which is meant to run over the next three, four years. It's largely to modernize our operations, but it also will improve our efficiency and our costs. It will give us more network flexibility. So overall, I would say we are entering a year in North America. We are stronger in the sense that we will do more investments, that we've understood better what works and what doesn't work, and that we have quite an extensive plan on things we want to do. As it relates to pricing itself, we started off 25, and we're quite aggressive on promotions and on deals, working on price. I have to say it didn't give us a return on our investment. So in the second half of 2025, we changed our strategy. We did a lot less promotion and pricing. As a consequence, our price realization went up. And I would say overall our P&L improved in North America, but we lost some market share because our volume performance wasn't the same. But overall, I would say that probably was better for us. So the way forward for us is better activations, interest the consumer more, make sure that they feel compelled to buy snacks, our snacks, on every shopping trip. But we don't necessarily think that we need to decrease our prices to the magnitude that I heard from another company.

Great. Thanks very much.

Thank you, Peter.

Thank you. We'll now move on to Megan Clapp with Morgan Stanley. Your line is now open.

Hi, good afternoon, Dirk, Luca. Thanks so much. I wanted to just maybe, Luca, follow up on the answer to Pete's first question just to make sure I fully understand kind of the message you're talking about is there are a lot of moving parts with cocoa and pricing. So when you talk about flat chocolate pricing in 26, that's the expectation. Cocoa should be down, I think, significantly. But should we think about the net price-cost relationship embedded in the guide as roughly neutral to the year because of the inventory accounting and the elevated hedges flowing through, or is it still a net positive? I'm just trying to kind of understand the dynamics there. And then, you know, it was the idea that if, you know, pricing can kind of stabilize in 26, cocoa resets lower in 27. So that's really when the real profit recovery starts to show up.

Yeah, thank you, Megan. The idea is to have a neutral to positive balance in chocolate specifically between cost and pricing. And albeit pricing is not going to move much. As I said, there is an element of cost that was locked for 2026. So in general, you should think about pricing net of cost as slightly positive to neutral for chocolate. That's the way we have prepared the plan.

Okay. That's super helpful. Thank you. And then just to come back to the organic sales outlook, 0% to 2%, you've got some nice momentum in emerging markets. I think finished the year around high single digits. So is that the expectation for 2026 that emerging markets can kind of be in that high single-digit range? And if so, I think mathematically would imply kind of developed markets decline in the low to mid-single-digit range. So is that math fair and just any way to kind of think about the U.S. versus Europe in relation to that?

The emerging markets will continue growing, and hopefully they will do even better than what is embedded, quite frankly, in the guidance. We are happy with the momentum we are seeing in both Latin America and EMEA now. In both segments, we have a meaningful presence in chocolate. And if you look at how much we price, that contribution is not going to be there for 2026. But on the flip side, there should be less elasticity. Now, I would say majority of the volume declines that you see, particularly in EMEA, but also in Latin America, are due to PPA. So the volume momentum is really there when you take out the PPA impact. The idea for 2026 is, again, to grow this market pretty much at the same level, but there will be a little bit less contribution from pricing and more contribution from volume mix. Thank you, Megan.

Thank you. We'll now move on to Michael Lavery with Piper Sandler. Your line is now open.

Thank you. You touched on the advertising spend of the tailwind in 4Q, but you've talked about stepping up investments next year. Can you give a sense of order of magnitude and would next would 2026 be basically back to normal is there um you know any any kind of push beyond that how do we just think about what kind of investment level you've got in store for the

year so michael uh if you look at the sgna line uh it was clearly down uh year on year 25 on uh on One of the drivers there is continued over savings, but we had to tap a little bit into ANC2. We said many times that we didn't touch the working media line, but we touched the non-working media predominantly. The idea is to continue with lower non-working media, but to clearly step up in the working part. And if you look over a couple of years, between 24 and 26, we will more than recover what we had to pull back in 25 into the overall line. On the other part of SG&A, ergo the overhead part, we will continue with cost savings, but we will have to step up a little bit the annual incentive plan. So only know the investments in ANC over two years. I think it's going to be substantial. If you take 24 to 26, it's up quite meaningfully.

Okay, that's helpful. And just back to emerging markets, maybe touch on that. specifically maybe LATAM, it's down now a couple of years. What can you do to grow volumes there, and can you give any sense maybe of what kind of assumptions would be baked into the guidance?

Look, I think the simple answer there is that in LATAM, there is Argentina, which went through quite a bit of economic turmoil, and there were material issues in the country. And on top of that, we decided to protect working capital and not to extend payment terms to anybody. And we did quite, I believe, good work in keeping the business in accordance to our operating principles that are protect cash in Argentina and bring the cash home. That's what we did. When you strip out Argentina and you look around, Clearly, Brazil got a little bit impacted by elasticity in chocolate, but Brazil is one of the best-performing markets that we have, top and bottom line. They did an amazing job in terms of PPA and minimizing elasticity. We are growing quite well outside of chocolate. If you look at Mexico, there was a big comeback. The country is now in growth territory and doing fairly well. And so the two major markets in LATAM are doing quite well. It is Argentina masking a little bit the performance of the region.

Okay, that's helpful. Thanks so much.

Thank you. We'll now move on to Chris Carey with Wells Fargo Securities. Your line is now open.

Hi, everyone. Thank you for the question. I wanted to start with this comment on the company's goal to demonstrate the significant volume trajectory change over the course of 2026. Can you help us understand regionally where that change might be occurring? Some of the key drivers, for example, the channel strategies that you have in North America, Are those expected to be material European or comps in Europe get quite a bit easier into the back half of the year? You mentioned the piece with PPA impacting emerging market volumes a touch and elasticities getting better. Just give us a sense of what significant volume trajectory improvement looks like and contextualizing a bit where that's coming from and why.

Yes. I mean, if I go through the regions, we clearly expect AMIA overall, if you look at how we're doing in India, in Australia, China, coming back. So we see EMEA as being a big source of volume growth for us. So that's certainly a region where we will see some good performance. If we then look to Latin America, as Luca was saying there also, we think that it's going to be quite a good year for us. North America, as I was explaining, the consumer confidence isn't there. The biscuit category is soft. We expect that the volume decline that you see in the category of 4% will ease, but we are not exactly counting on volume growth in North America. And then in Europe, what I expect there is that, first of all, in our other categories, we had a pretty good year already in 2025. We expect that to continue. I'm talking about biscuits, cakes, and pastries and meals. And in chocolate, the price increase, as we discussed, is going to ease. In fact, we are readjusting some of our pricing in certain markets. So all that we expect also will have a positive effect of volumes as compared to 25. So hopefully that gives you an idea where the volume growth is going to come from. The phasing during the year is as these different activities come to bear, We expect that gradually to be better, and also the lapping effect will help us over the year.

That's great. And I know it's been broached a bit, but just to confirm, as we get into 2027, and really I'm asking just because it was included in the preparator marks, can you give us a sense of the investments that will have been lapped going into 2027? Should we expect the media investment to be done in 26, the rebasing of media, the rebasing of comp, the investments into channel expansion strategies such that going into 2027, we're really just thinking about an improved complexion of the top line gross margins, getting a bit more life against a lower COCO price and more operating leverage to SG&A? or is there multi-year investments that will be continuing to come into the model as we get into 2027? I realize we may get more information on this at Cagney, but again, it was in the prepared

remarks, so I figured I'd get a bit more context on that. Thanks. Yeah, so as we explained, so in 2026, we are taking a step forward and significantly increase our investments in working media as compared to 25. Taking into account that 25, we took a step down largely in non-working media, but also a little bit in working media. For 27, we expect that we will do another step up in investments. We believe that we have to continue to invest in our brands. The opportunity is big, and we want to drive volume growth because that needs to be the first base of growth for the company, combined with hopefully over time a little bit of pricing. So that's our thinking. As it relates to margins, we feel that overall from a commodity perspective that things will ease, particularly in cocoa. And so we can see a significant uplift in our chocolate margins in 27, which will be divided by reinvesting part of it and part flowing to the bottom line. And so we are aiming for a strong EPS growth in 27. But at the same time, we want to keep on investing in our brand. So we are not planning to flow everything to the bottom line, if that would be the thinking.

Thank you all. Appreciate it.

Thank you.

Thank you. And we'll go next to David Palmer with Evercore ISI. Your line is now open.

Thank you. And sort of a big-picture question on European chocolate in your division there. I wonder, you know, how are you thinking about the path to a profitability recovery there, to sort of a pre-25 levels that we saw for a few years, if you think that is even the norm, you know, where we saw profitability there? And I wonder, with prices having come down, is 27 the beginning of a recovery? And, you know, is there a path back to pre-25 levels of profitability? And how do you think that would play out? And I have a follow-up.

So the idea, David, is to go back to the profit pool as it used to be, and hopefully even a little bit better because remember, we really have growth opportunities even in Europe and quite frankly, we still have to invest quite a bit of ANC and expand both in the developed part of Europe but also in the developing part of Europe. We still have plenty of opportunities in terms of price points, channels, segment within chocolate, and our goal is to grow the chocolate business in Europe after the meaningful price increases we have taken in 25. If cocoa ranges at around 3,000, our goal is to get into 27 with a much improved situation and to really be able to get back to the all-profit pool. And if we have to make some selective price investments, we will make them. I think if you look at the way the 26 plan is structured in Europe, there are more promotions. We are going to offer more value to some of the consumers. And all in all, I think while 26 can be a new base, 27 can really be a step change for our chocolate market overall around the world,

including Europe. Are there any sort of milestones this year that you're going to be really watching for, whether it's perhaps how you see the retailer brand pricing works or your own price elasticity levels remaining better than a certain threshold? I mean, what are some things that you're going to be looking for and that we could even look for in the

data. It is potential competitive reaction, as we said a couple of times already. Thank you.

Thank you. We'll now move on to Scott Marks with Jefferies. Your line is now open.

Hey, good afternoon all. Thanks so much for taking our questions. First one for me, I don't believe I've heard any discussion thus far about GLP-1 and some of the more recent developments in that market, especially with some of the newer oral medications. So just wondering if you can share a bit about how you're thinking about that and what you're expecting, you know, on that front for this year and beyond. Thanks.

Yes. Well, we model it out every quarter, basically, based on the latest information. and we have noted the fact that the price of some of it has come down. We have noted that there is oral being approved. We've taken into account the estimates as it relates to that. And I have to say that up to our opinion, that will not significantly change the estimates that we've had so far. And the estimates we had so far, first of all, we do not see a short-term impact on our business because there is a very modest adoption rate right now, and also the calorie reduction is relatively benign that we see. But if we expand 10 years and we take an adoption rate in the U.S., which would be somewhere between 10% and 20%, and even then we do not see a significant effect on our overall business. We believe that over that period of time it could have a 0.5% to 1.5% effect on our overall volumes, so almost negligible over a period of 10 years. So at this stage, I can't say that we feel that it is having a major impact on our business.

I appreciate the color there. Maybe next question from me, you made some comments in the prepared remarks about continued investments in cocoa-grown regions, maybe outside of West Africa. Just wondering if you can share an update on some of those investments and how you're thinking about those moving forward relative to kind of the traditional cocoa growing regions.

Yes, I think it's just better from an overall long-term risk management perspective that we balance our supply of cocoa into different geographical regions. regions. Those regions are largely Latin America, mainly, and also a little bit in Asia, in places like India and Indonesia. In Latin America, the countries that are stepping up are largely Ecuador and Brazil, different farming models. In Brazil, we see some large farms coming up, and we are having long-term agreements with them to supply us. And then in Ecuador, it's smaller farmers, but who are getting together. And we see those countries significantly increase their output. And so over time, that might not give the best cocoa price, but we think the current price that we see should be sustainable. But it will significantly decrease the risk of events like a bad crop or a disease that affects the crop in a country, that that is going to have a big impact on the overall cocoa market, as we currently see, whereby Ghana and Ivory Coast have close to 60%, 65% of the global cocoa supply. The other one I would say that is worthwhile is that I think over time there will be more and more lab-grown cocoa that will become available, not GMO, but lab-grown, and we think that there will be an interest from the European Commission and the U.S. government to approve that sort of cocoa. Why? Because it has significant beneficial effect in the sense that all the negatives that surround the cocoa supply chain would not be there as it relates to climate and other social effects. So in that sense, that's also a direction that we are investing in and supporting.

Appreciate it. Thanks to pass it on.

Thank you. I think that was the last question for today. I would like to thank you for your attention. I would like to reiterate the fact that we will be going deeper in Cagney into the European chocolate situation and give you the details on how we're planning to tackle it. We'll also go deeper in our North American situation and what our plans are there. And we will cover the emerging markets and, of course, our financial outlook. So we're looking forward to see you there to spend some more time explaining our business to you. Thank you.

Thank you, everyone.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.