Mondelez (MDLZ) Q4 FY25 earnings call: guidance and Q&A

How is Mondelez's chocolate strategy evolving given the precipitous fall in cocoa prices, especially concerning potential price deflation and adjustments in Europe?

Dirk Van de Put explained that the chocolate market showed resilience in 2025 despite price increases. In 2026, adjustments are being made in Northern Europe due to higher elasticity, including price point adjustments, PPA, and increased brand investment. The sudden cocoa price decline creates short-term competitive uncertainty for 2026 but bodes well for 2027 margins. The company will provide more details at CAGNY.

“However, I would say in the more northern markets in Europe, Germany, the Nordics, the U.K., we saw higher-than-expected elasticity. And so we have to take adjustments in '26.”

asked by Andrew Lazar · answered by Dirk Van de Put

What is the thought process behind the guidance range and investment flexibility given the fall in cocoa costs, and what are the updated thoughts on the cocoa environment?

Luca Zaramella stated the guidance is prudent due to short-term pressures like subdued U.S. biscuit category and European customer negotiations. The guidance range accounts for sudden cocoa dynamics and competitive reactions, as 2026 pipeline costs are higher than current spot prices. He believes current cocoa levels are a fair representation of supply and demand, important for 2027 profitability.

“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.”

asked by Andrew Lazar · answered by Luca Zaramella

Can you elaborate on the cost phasing for cocoa through 2026 and the phasing of potential price investments in chocolate?

Luca Zaramella explained that while Mondelez won't price cocoa further, 2025 profit took a material hit, so 2026 pricing needs to remain similar to 2025. Inventory accounting will cause a $0.5 billion impact, predominantly in Q1, due to adjusting inventory to 2026 pipeline costs. This means higher costs in H1, leading to sequential EBIT improvement through the year, with A&C investments equally spaced.

“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 exited the year in 2025. And that is a onetime adjustment that takes place on the inventory, and that is causing in the first 2 quarters, but predominantly in Q1, an impact that is at $0.5 billion.”

asked by Peter Galbo · answered by Luca Zaramella

What is Mondelez's perspective on the North American market, consumer confidence, and future pricing actions, especially given a peer's recent price cuts?

Dirk Van de Put highlighted low consumer confidence in North America, leading to value-seeking behavior and shifts to value/club/online channels. The biscuit category is soft, down 4% in volume. Mondelez will adapt by investing more in awareness, using PPA for affordability, expanding in under-indexed channels, and focusing on growing premium brands. He stated they don't plan to decrease prices to the magnitude of other companies, having found that less promotion improved P&L in H2 2025 despite some market share loss.

“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.”

asked by Peter Galbo · answered by Dirk Van de Put

Is the net price/cost relationship for chocolate in 2026 expected to be neutral to positive, and is 2027 when real profit recovery starts?

Luca Zaramella confirmed the expectation for a neutral to positive balance between cost and pricing in chocolate for 2026, noting that costs were locked in at higher rates. He agreed that if pricing stabilizes in 2026 and cocoa resets lower, 2027 is indeed when significant profit recovery and margin improvement for chocolate are expected.

“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.”

asked by Megan Christine Alexander · answered by Luca Zaramella

Given the 0-2% organic sales outlook, does this imply high single-digit growth for emerging markets and low to mid-single-digit declines for developed markets, and how does this split between the U.S. and Europe?

Luca Zaramella confirmed that emerging markets are expected to continue growing, potentially exceeding guidance, with strong momentum in Latin America and EMEA. He noted that while pricing contribution might be less, volume/mix contribution will increase. He implied the math for developed markets is fair, with North America's biscuit category remaining subdued, and Europe's other categories performing well, with chocolate volumes expected to improve due to easing price increases and adjustments.

“The emerging markets will continue growing. And hopefully, they will do even better than what is embedded, quite frankly, in the guidance.”

asked by Megan Christine Alexander · answered by Luca Zaramella

Can you provide an order of magnitude for the planned step-up in advertising investments for 2026 and whether it returns to normal or pushes beyond?

Luca Zaramella stated that SG&A was down in 2025 due to overhead savings and some A&C cuts, primarily non-working media. The plan is to continue lower non-working media but significantly step up working media. Over the 2024-2026 period, A&C investments will more than recover what was pulled back in 2025, showing a substantial increase.

“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.”

asked by Michael Lavery · answered by Luca Zaramella

Where will the significant volume trajectory change occur regionally, and what are the key drivers, including channel strategies in North America and easier European comps?

Dirk Van de Put expects EMEA and Latin America to be big sources of volume growth. North America is not expected to see volume growth due to low consumer confidence and soft biscuit category, though the decline should ease. In Europe, other categories performed well in 2025 and are expected to continue, while chocolate volumes should improve due to easing price increases and readjustments. Phasing will show gradual improvement as activities take effect and lapping helps.

“If I go through the regions, we clearly expect EMEA 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.”

asked by Christopher Carey · answered by Dirk Van de Put

What is the path to profitability recovery for European chocolate, aiming for pre-2025 levels, and is 2027 the start of this recovery?

Luca Zaramella affirmed the goal to return to pre-2025 profit levels and potentially exceed them, citing growth opportunities in Europe. If cocoa prices stabilize around $3,000, 2027 is expected to bring a much-improved situation and a step change for the global chocolate market, including Europe. He noted that 2026 will involve more promotions and value offerings to consumers, serving as a new base for 2027's recovery.

“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.”

asked by David Palmer · answered by Luca Zaramella

How is Mondelez thinking about GLP-1 medications, especially with newer oral options, and what is the expected impact for this year and beyond?

Dirk Van de Put stated that Mondelez models GLP-1 impact quarterly and does not foresee a significant change to previous estimates. He expects no short-term impact due to modest adoption rates and benign calorie reduction. Over 10 years, with an estimated 10-20% adoption rate in the U.S., the impact on overall volumes is projected to be a negligible 0.5% to 1.5%.

“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.”

asked by Scott Marks · answered by Dirk Van de Put