During the call, Shep Dunlap introduces Dirk Van De Put, the Chairman and CEO, and Luca Zaramella, the CFO. The company's press release and presentation slides are available on their website. They will be making forward-looking statements based on their current outlook, with potential risks and uncertainties. Non-GAAP financial measures will be referenced and year-over-year growth will be presented on a constant currency basis. Dirk provides a business and strategy update, highlighting strong profit delivery in the first quarter and momentum in emerging markets. One-time factors such as disruptions and boycotts affected sales, but the company still achieved strong gross profit growth through cost discipline and pricing.

In the second paragraph, the company discusses their strong free cash flow generation and investments in their brands and capabilities. They also mention their ability to handle challenges in the short term while focusing on long-term growth. Despite cocoa inflation, their categories remain durable and growth opportunities are still significant. The company saw 4.2% organic net revenue growth and 11.6% adjusted gross profit dollar growth, allowing them to continue investing in the business. They also mention their high single-digit increase in advertising and promotion spending, driving consumer and customer loyalty. While other food and beverage segments are showing softness, the company's core categories of Chocolate, Biscuit, and Baked Snacks remain relatively resilient. Consumer confidence varies by region, but shoppers are becoming more price-sensitive and loyal to the company's brands.

The North American market is experiencing increased promotional intensity and a shift towards non-tracked channels, while Europe has stable consumer confidence. Emerging markets remain a strong growth driver, with a focus on premium offers. The company remains focused on long-term growth strategies, including reinvesting in brands and people, reshaping the portfolio, and scaling sustainable snacking. They are also investing in their core categories and celebrating the 200th anniversary of their Cadbury brand. Recent acquisitions are also being utilized to drive growth.

The company has successfully completed a system integration in their Ricolino business, allowing for expanded distribution in key categories like chocolate. They have also made progress in their sustainability efforts and have earned validation for their net zero by 2050 roadmap. Despite current cocoa price increases, the company remains confident in their chocolate business due to their cocoa coverage strategies, pricing approach, supply chain, and iconic brands.

The company's coverage strategies have been successful in the past few months and they are well-prepared for the next few years. They are closely monitoring market conditions and implementing sound pricing strategies. The company is confident in their supply chain and has strong, iconic chocolate brands that are popular among consumers. According to their research, chocolate plays an important role in people's lives and a majority of consumers would be unhappy without it.

In the sixth paragraph, it is stated that 60% of people would rather give up social media for a month than give up chocolate. The company is confident in their strong brand loyalty, iconic portfolio, and advantageous geographic position to take advantage of consumer trends. The first quarter showed solid results with organic net revenue growth, profit dollar growth, and strong cash flow. Emerging markets were impacted by political unrest and production slowdowns, but these issues are expected to improve. Developed markets had a volume/mix decline, mostly due to customer disruption in Europe and softness in the US biscuit market. Emerging markets saw strong growth, while developed markets had solid results. The Biscuits and Baked Snacks category saw a 0.6% growth, with several brands performing well.

In the first quarter, there was a decline in volume/mix for US Biscuit due to lower-income households purchasing less frequently. However, Chocolate and Gum/Candy saw significant growth in both developed and emerging markets. The company also gained market share in 40% of its revenue base, with strong performance in Europe and North America. There was expected customer disruption in Europe, but the business remains on track with pricing and investments in ESG. North America saw growth in channels such as club and e-commerce.

The overall volume mix for the company declined due to softness in the Food and Mass sector, driven by lower-income households. However, the company remains encouraged by their activation plans for key products and growth channels. North America and AMEA saw growth in the quarter, with China and India performing well. Latin America also saw growth, but was impacted by Argentina's capped growth rate. The volume/mix decline in the quarter was attributed to production slowdowns in Mexico related to the Ricolino SAP go-live.

The company is rebuilding inventory and expects improved volumes in Mexico. Brazil and Latin America had strong growth, but Argentina was impacted by inflation. The company saw strong growth in operating income and gross profit in Q1, but cost inflation will be a significant headwind in the future. EPS grew by 60% in constant currency and free cash flow was EUR1 billion for the quarter. The company has a strong balance sheet and is fully covered for cocoa until 2024. They are closely monitoring the market to position themselves well.

The current market conditions have led to increased costs, but the company is implementing flexible structures and pricing strategies to offset inflation. They are confident in their supply chain and maintain their outlook for 2024, expecting on-algo delivery for revenue, earnings per share, and cash flow. They also anticipate high inflation and potential customer disruption during their annual price negotiation process. Interest expense is expected to be around $300 million for the year.

The company is expecting some challenges in North America due to factors such as inflation and a weak job market. They are losing some market share and are seeing a decrease in consumer confidence. In response, they are focusing on protecting their share by targeting lower-income consumers and addressing issues such as trade down to private label and channel shifts.

The company had a poor performance in TDP last year, so they are increasing their TDPs to improve their market share. They are also working on finding effective promotional mechanisms for their lower income consumers. They plan to invest in their brands and launch special packs and multi-packs. They expect consumer confidence to improve in the second half of the year. There are no major unexpected factors for the remainder of the year. Chinese New Year and Easter were successful for the company.

In the second quarter and later part of the year, categories are expected to continue their trends. Pricing has been implemented as planned, with some disruption in Europe due to finalizing a main customer. Inflation is in line with expectations and cocoa costs are locked in for 2024. Acquisitions have started slower than expected, but there should be a sequential improvement throughout the year. Elasticities are planned to remain consistent, with a potential uptick in Chocolate. The company will continue to support their brands and not vacate critical price points in emerging markets. Softness is expected in the Biscuit category, but the company expects to see improvement in their share over time. The company is also making progress in removing stranded costs related to the Gum business.

Dirk and Luca provide insight on the performance of emerging markets in the first quarter, which saw a 40% sales growth and strong share gains. China had low double-digit growth due to increased distribution and sales in existing stores. India had high single-digit growth, but may experience a slowdown. Mexico's performance was previously commented on. Overall, emerging markets are expected to continue contributing to growth in the back half of the year.

Dirk and Luca discuss the performance of emerging markets, with Mexico facing some issues due to system implementation but expected to see growth, and Brazil gaining share but facing discussions on price points. They also mention inflationary pressure in certain markets and the impact of boycotts on Western products. Despite these challenges, they anticipate sustainable growth in emerging markets and are able to continue their investment cycle. In regards to cocoa prices, there is a view that they may come down, but it is uncertain if it is worth hedging at this time.

The speaker discusses their strategy for cocoa prices in 2025, stating that they believe current high prices are a result of temporary factors and will likely correct in September or October. They plan to protect themselves with flexible structures, such as vanilla call options, in order to take advantage of potential lower prices. They believe the market is overreacting and that current prices are not sustainable.

The speaker clarifies that there will still be inflation in cocoa prices in 2025, but the company is covered at better prices than the current market. The speaker also mentions that the European chocolate retail data is strong and the elasticity is minimal, which could potentially help in negotiations with retailers. The company has seen solid growth and increased market share, despite some disruptions. The speaker also notes that the early Easter may have influenced some of the numbers. Overall, the speaker believes that the chocolate market is resilient and consumer confidence in Europe is stable.

The speaker is optimistic about the current state of the chocolate market in the US, and believes that it will continue to improve. They mention that retailers are aware of the high cocoa prices and that discussions will be needed to implement price increases. They also mention the impact of seasonal changes on consumer awareness of price differences. The speaker then answers a question about gross margin, stating that it has improved and they are happy with the level of pricing they have taken.

Dirk Van De Put, the CEO of the company, assures that they are on track with their plans and are happy with the gross profit dollars and reported dollar gross profit. However, he mentions that there may be some compression in the fourth quarter due to the rise in cocoa prices. When asked about Europe, Van De Put says that demand is stable and negotiations with clients are going as expected. They have already increased prices and are hoping to finish negotiations with one more buying group in the coming weeks.

The speaker, Dirk Van De Put, discusses the current situation in Europe and the expected impact on their performance. He states that there will be a recuperation as agreements are made and the pipeline is filled, but they are not expecting a big difference in their European performance for the full year. He also mentions the consumer in North America and their expectations for elasticity and volume trends in the back half of the year.

Dirk Van De Put, the CEO of a major food company, discusses the performance of their portfolio and the impact of macro and consumer trends. He mentions that their brand Chips Ahoy! has been affected by private label competition, but their other brands, Oreo and belVita, have been gaining market share. While they have seen some elasticity in these brands, their promotional and pricing strategies have helped offset this effect. Looking ahead, they plan to focus on improving frequency and volume from lower income consumers through price points and pack sizes. They also expect consumer confidence to improve in the second half of the year. Overall, Van De Put believes that the second half of the year will look better for their company in North America.

Luca Zaramella discusses the potential impact of sustained high cocoa prices on the company's pricing strategies. He mentions that the forward curve for cocoa is heavily inverted, which means that they could potentially secure coverage at cheaper prices than the current spot price. The company is exploring all possible scenarios and looking at costs and flexibility. They will also focus on protecting price points in emerging markets and may implement additional RGM strategies such as promotions or downsizing to maintain control over elasticity.

The company is preparing for managing 2025 based on a more realistic cocoa level, despite the current high prices. They believe that the cocoa price will eventually correct and they are focused on retaining their volume, share, and competitive advantage. The team is looking at all possible scenarios and will take necessary actions to prepare for a worst-case scenario. In terms of cocoa supply, the main crop in Ivory Coast and Ghana was down 20% and the total supply was down 10%. However, the company expects supply to increase in the next main crop.

The speaker believes that it is unlikely that Africa's cocoa production will be significantly impacted in the near future. They are hopeful for a better main crop and anticipate prices for cocoa to adjust. The company is implementing strategies to mitigate potential risks and will provide updates on the cocoa market throughout the year. In terms of sales, they expect volume to be flat for the year, but there is still some room for growth depending on factors such as brand boycotts and share recovery in the US.

The speaker discusses their plans for Chips Ahoy! and how they hope to regain market share and increase volume. They also mention their confidence in their Latin American and Chinese markets, but anticipate some slowdown in India. They mention the potential for fluctuations in volume and express confidence in their overall plan for the year. The call ends with the speakers thanking the listeners and inviting them to reach out with any further questions.

This summary was generated with AI and may contain some inaccuracies.