Mondelez International, Inc. (NASDAQ:MDLZ) Q4 2022 Earnings Call Transcript

So I think versus what you had in mind, there is much better volume. There is higher inflation, there is higher pricing and the fact that we price dollar for dollar creates a little bit of pressure on the percentage margin. I think in terms of OI margin, you see a good number because obviously, also cost below the line have been kept in control or below GP, I mean. And so that’s really all the put and takes that you have within the shape of the P&L.

Operator: Thank you. Our next question will come from Alexia Howard with Bernstein. Your line is open.

Alexia Howard: Good morning, everyone.

Dirk Van de Put: Hi, Alexia.

Alexia Howard: Hi, there. Can I stick with Europe with two questions? The first one, I think you mentioned the category slowdown. And I can’t remember whether that was biscuits or chocolate. But is that to do with the high-fat sugar and salt initiative in the U.K.? Or is it just weakness in the consumer in general? And then I have a follow-up?

Dirk Van de Put: Maybe we’ll do first the categories and then I didn’t quite understand the question on the weakness of the consumer in the U.K.

Luca Zaramella: Yes. She says it is HFSS or something else.

Dirk Van de Put: Okay. So from a category perspective, in Europe, our category performance is obviously different from what we see the overall categories to do. I would say both biscuits and chocolate are showing slightly negative, minus 2%, minus 3%, the overall category in Q4, and that is probably a consequence of the consumer feeling some recession. We’re a little bit worse than that driven by customer disruption. But I think that as we go through the first quarter of next year, I think that will gradually come back. I’m talking about the category here. So it’s probably understandable seeing the economical situation in Europe that we see a little bit of a slowdown there. As it relates to the U.K., what we see with HFSS is, first of all, there’s two limitations that come from HFSS.

One is the limit on the location where HFSS products can be sold in the store. And the other one is a promotion and advertising limitation. The second one is not yet being implemented, that will be in October 2024. But so far, we have the change in store. And so it means that you don’t find them in checkouts in the queuing area, no more at the store entrants, no more and so on. If you look at our business there, which is mainly a chocolate business, it is about 60% plant purchase and about 40% is impulse. And obviously, the impulse is affected by this because you have less interruption locations in the store. But the 60% of plant, of course, continues. We have been partnering with the stores to offset this by finding new secondary promotional locations, making our brands stan6d out in the aisle, moving the singles category, which was the checkouts to the food-to-go areas and so on.