Good day, welcome to the Mondelēz International second quarter 2023 earnings conference call. Today's call is scheduled to last about one hour, including remarks by Mondelēz management and the question and answer session. In order to ask a question, please press the star key, followed by the number one on your touchtone phone at any time during the call. I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelēz. Please go ahead, sir. Good afternoon, and thank you for joining us. With me today are Dirk Van de Put, 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 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. Please refer to the cautionary statements and risk factors contained in our 10-K, 10-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. 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. 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. Thanks, Shep, and thanks to everyone for joining the call today. I will start on slide four. I'm pleased to share that we delivered strong, broad-based top-line growth during the first half of the year. Our strong performance was driven by effective pricing, combined with healthy volume growth in three of our four regions. Europe was the lone exception due to expected disruption driven by retailer negotiation. We continue to execute on our long-term strategy, and we see robust momentum and solid consumer confidence across geographies and categories. We successfully implemented our planned price increases in Europe, closing our customer negotiations in line with expectations. With this behind us, we feel good about the remainder of the years in Europe. We also feel good about continued consumer confidence. We continue to drive robust demand in our core categories across the vast majority of our businesses, resulting in both value and volume growth. Our strong profit dollar growth was driven by cost discipline and pricing to offset cost inflation. We continue to invest in our brands, capabilities, and portfolio reshaping initiatives to accelerate and compound growth, and we remain confident that our proven strategy, delivered by our world-class team, positions us well to deliver another strong year. Based on the strength of our first half performance and our latest view across businesses, we are raising our full-year organic net revenue and adjusted EPS growth outlook to 12%+. Turning to slide five, you can see that the first half of 2023 showed continued momentum across our entire business. We delivered first half organic net revenue growth of $2.7 billion, up nearly 18% versus prior years, and significantly ahead of our already strong 12% in full year 2022. This includes a 15.8% growth for the quarter. We also delivered adjusted gross profit dollar growth of more than $1 billion. Again, we're well ahead of last year's pace with 18.9% growth. We're proud of our team's continued focus and agility, which enable us to continue investing to drive further growth acceleration. Our A&C investment is increasing 18% in the first half of the year. These results translated into strong adjusted OI growth of close to $600 million, up 23%, again, well ahead of last year's pace. On slide six, you can see a few examples of our brand acceleration strategy in action. Our continued investments in creative asset, personalization at scale, and innovation, combined with strong in-store execution, are resulting in continued sales growth and brand loyalty increases in our core categories of chocolate, biscuits, and baked snacks. For example, in China, we launched Oreo Airy Cake in March. Driven by the strength of the Oreo name as the world's favorite cookie, this new packaged cake already has achieved a 3.5% market share and 80% of the velocity of its leading competitor in large stores. China is one of our most important emerging markets. This is just one example of numerous innovations to expand our key brands into adjacent spaces and formats. We are also continuing to renovate our recipes to stay a step ahead of changing consumer and customer tastes. For instance, we recently launched our first under 100 calories Cadbury treat for adults. This is a great example of our commitment to help consumers snack mindfully. We are offering a broader range of portion controlled packs and products, but also our portion control education campaigns, both digitally and on pack. In the baked snacks segment, we continue to accelerate both top and bottom line performance in Clif Bar. We remain focused on improving service levels and supply chain efficiencies, while further advancing productivity and effectiveness in our media spend, and continuing to strengthen brand equity. We're also continuing to introduce new culturally relevant flavors to strengthen consumer loyalty for our local jewel brands. For example, Lacta has been a leader in Brazilian chocolate for over 110 years. Following the successful launch of Lacta tablets filled with Oreo, we recently rolled out two new line extensions filled with additional Lacta products that Brazilians already know and love. The Sonho de Valsa bonbons, made with chocolate and cashew nut filling, as well as Ouro Branco candies, made with wafers, filled with chocolate cream, and covered in white chocolate. These are just a few examples of the innovative ways our teams are driving growth in our iconic chocolate, biscuit, and baked snack franchises, continuously investing in new formats, pack sizes, and flavor combinations that drive incrementality and encourage consumers to experience our brands in new ways. Within the baked snacks segment, we're especially excited about our strong performance in the rapidly growing cakes and pastries space. Let's take a closer look on slide seven. Earlier, I mentioned the Oreo Airy Cake in China as a great example of our brand acceleration efforts in emerging markets. Similarly, in developed markets, we're making solid progress in expanding our successful cookie and chocolate franchises into chocolate bakery, cakes, and pastries. For instance, in the United States, Oreo Cakesters are continuing to perform well. Since the recent launch of this fan favorite, it already has earned a 3.7% share of packaged snacks cakes. Give & Go is another solid success story in our North America baked snacks lineup, where we're continuing to drive distribution and innovation. Share is up 0.5 point year to date, driven by solid pricing execution, expansion into adjacencies, such as mini donuts and strong category demand. Meantime, in Europe, 7Days continues to advance its position as the number 1 packaged croissant, and we have exciting plans to continue to grow its footprint beyond Europe, including recent test and learn trials in a number of emerging markets. Turning to slide eight, we continue to invest in digital commerce and revenue growth management tools and capabilities to support our brands while strengthening our partnerships with leading customers. I'm pleased to share that we have achieved the number one market share position in digital commerce in our top five markets of the United States, China, United Kingdom, France, and Brazil, while over-delivering in up-and-coming emerging markets such as India, Philippines, Brazil, Mexico, and Poland, which are up 40% year to date. We continue accelerating eB2B capabilities to expand distribution and strengthen our partnerships with key customers. Additionally, our increased investments in elevating RGM strategies and actions are driving strong value realization, helping to offset inflationary pressures. We have appointed dedicated RGM leadership and teams in all key markets, supported with new proprietary data and analytics assessments, digital tools, and a comprehensive training program. We are confident that these ongoing investments will deliver sustainable improvement in growth, efficiency, and ultimately, margin. Along with our financial performance, I'm pleased to share that we continue to make significant progress in advancing our environmental, social, and governance strategy. In May, we published our annual Snacking Made Right report, reinforcing our 2025 goals and documenting our latest performance in priority areas. These include sourcing key ingredients more sustainably, reducing carbon emissions, and increasing recyclable packaging. We are also improving performance in social impact and diversity, equity, and inclusion, both internally and in partnership with our suppliers, as well as helping consumers snack more mindfully through improved portion education and increased focus on single-portion packs. We continue to believe that helping to drive positive change at scale across these important areas is an integral part of value creation, with positive returns for all our stakeholders. We encourage you to read our Snacking Made Right report for more details and context on our progress. With that, I'll turn it over to Luca to share additional insights on our financials. Thank you, Dirk. Good afternoon. Q2 marked another strong quarter for our business. Double-digit organic net revenue growth across each region, sound pricing execution, strong profit dollar growth, and significant brand reinvestment enabled us to continue driving sustainable value creation. Revenue grew +15.8%, with strong volume mix growth in North America, Latin America, and EMEA. Overall volume mix was flat for the quarter, despite the expected customer disruption in Europe. Recall, last year's Q2 total company volume mix was +5%, making this performance even more impressive. Emerging markets grew more than 23%, with strong performance and crosses significant numbers of markets. Developed markets grew 11%, with balanced trends from both North America and Europe, despite customer disruption. Turning to portfolio performance on slide 12. Chocolate, biscuits, gum, and candy businesses all posted another quarter of double-digit increases in Q2. Biscuits increased +13.9%. Oreo, Ritz, Chips Ahoy! Give & Go, Tak, and Club Social all deliver double-digit growth. Clif, though not inorganic, also posted strong growth. Chocolate grew +13.7%, with trends in both developed and emerging markets. Cadbury Dairy Milk, Milka, Lacta, Toblerone all delivered double-digit increases. We are very pleased with the performance of our core categories of chocolate and biscuits, which, albeit impacted in the quarter by customer disruption, are on a solid trajectory. For both, we expect good volume momentum as we move forward in the year now that negotiations in Europe are behind us. Gum and candy grew more than 30%, with trends across our business units, especially in emerging markets. Let's review market and share performance on slide 13. We held or gained share in 70% of our revenue base. The U.S. continues to make service level improvements and ended Q2 with good on-shelf availability and inventory levels. Moving to page 14. We delivered more than $540 million in gross profit growth, or 20% in Q2, driven by top line productivity and cost discipline. This also resulted in year-over-year gross margin expansion in all regions except Europe, which was impacted by expected customer disruption. Now that pricing is implemented, we expect improvements in Europe, too. This growth provides significant fuel to invest behind our brands, as well as significant earnings flow through. Moving to regional performance on slide 15. We delivered double-digit revenue growth in all regions, while also delivering volume mix increases in all regions but Europe, that got impacted by pricing-related disruption. This growth translated into operating leverage and high dollar growth across the board. Europe grew +13.1%, with double-digit high growth. Importantly, pricing has now been landing, we expect this will lead to a better second half volume and margin performance. Overall, the consumer remains resilient, with elasticities holding up relatively well in chocolate and biscuit, while we saw some incremental elasticity in parts of our cheese and grocery business. North America grew +12.4%, with a high dollar growth of more than 29%, driven by higher pricing, volume mix of 2%, and strength from both our base biscuit business and our ventures, such as Give & Go, Perfect Snacks, and Tate's. Clif also posted robust growth and delivered another operating margin increase of double digits in percentage points in Q2 versus last year. Profitability is approaching the level of total North America, but we still have to generate material synergies, both on revenue and cost line. Clif is a business that is growing, has now some margins, and still with meaningful synergy potential. EMEA grew 13.2%, with solid volume mix growth of more than 3%, while dollars increased +4.2%. India, China, Southeast Asia all posted strong top-line growth for the quarter. Latin America grew more than 37%, with a high dollar growth of nearly 65%. Mexico, Western Andean countries, and Brazil all turned in robust quarters. Ricolino remains on track in terms of integration, and we expect to begin capturing more benefits toward the end of the year. Next to EPS on slide 16. In the quarter, EPS grew +21.5% in constant currency, or nearly 17% at reported dollars. Turning to slide 17, free cash flow was $1.5 billion in the first half, with $1.7 billion in return of capital to shareholders. We also announced today an increase in our dividends of +10%, marking a double-digit increase in eight of the last nine years of the history of Mondelēz. Turning to our outlook on page 19. Given the strength of our Q2 and first half performance, the successful conclusion of our negotiations in Europe, the strong volume momentum of our brands, we are raising our full year outlook for both revenue growth and adjusted EPS. We now expect top-line growth of 12%+, versus our original outlook of 5%-7%, and most recent outlook of 10%+. EPS growth is also expected to be 12%+ versus our prior outlook of 10%+, and original outlook of high single digits. Note, our free cash flow outlook remains unchanged at $3.3 billion, given $400 million in cash taxes related to the sell-down and exit of our KDP position. In terms of key assumptions, we continue to expect a double-digit inflation increase for 2023, driven by elevated cost in packaging, ingredients, labor, and lapping favorable commodity hedges in 2022. With respect to interest expense, we now expect $380 million for the year, given recent coffee asset monetization and term loan reductions. We also expect to end the year around mid-2s in terms of leverage based on current conditions. As a reminder, given the liquidation of our KDP position in mid-July, there will be no dividend income recorded in F2. We now expect $0.11 of EPS of headwinds related to Forex impact for the year versus $0.09 in our prior outlook. The outlook revision reflects our increased confidence in the year, ongoing resilience of consumer consumptions in our categories, relatively benign elasticities, continued brand reinvestment, and completion of pricing in Europe, as well as health of our emerging markets. This current outlook does not consider a material deterioration of geopolitical environment surrounding some areas of our business. With that, let's open the line for questions. At this time, if you would like to ask a question, please press the star and one on your touchtone phone. You may remove yourself from the queue by pressing star and two. Once again, to ask a question, please press the star and one. We'll take our first question from Andrew Lazar with Barclays. Your line is open. Great. Thanks so much. Appreciate it. First off, Dirk, you know, we've heard so far from a bunch of food companies that have reported earnings of some maybe very recent changes in, in things like consumer behavior, retailer inventory, destocking, competitiveness, and maybe generally greater sluggishness in category volumes as, as pricing has lapped. I was hoping you could talk a bit about the landscape as it relates to Mondelēz specifically, and any changes, sort of one way or the other, that are notable for you. Okay. Thanks, Andrew. Well, based on H1, we obviously feel quite good about how our portfolio is performing. We have brought growth in the different regions, in the different categories across most of our brands. The pricing went through quite, quite well. Strong pricing, I would say, compared to others. We have very good volume mix growth in three out of four regions, and the only region that was disrupted was Europe, but that was due to customer disruption. We foresee for the second half that we will see solid volume growth in Europe. Our share is increasing. North America is finally recovered. We're gaining share in EMEA. Europe, of course, still a bit of a drag on share, but that's again, because of this client disruption. You see that our emerging markets are doing quite well broadly in the top and the bottom line. We, we are generating good gross profit, so we can continue to invest strongly in our brands and in our capabilities. The acquisitions are doing well. I would point to Clif. Yeah, we have double-digit growth in adjusted and real EPS. The whole picture for us looks pretty good. I look a little bit further on the, the environment, at least in our categories, we see strong consumer confidence. We would say that it's improving in the developed and in the emerging markets, and the price sensitivity seems to be plateauing. Particularly the emerging market consumer, I would say, is very, very solid. If I think about the competition, I think the big difference between us and the competition will be that we have a very strong top line combined with some good volume growth. Promo levels, we see some increase in promo levels in biscuit, but it's largely flat and down somewhere else. We even see promo prices going up faster than non-promo prices in percentage. From a pricing perspective, we have done as what was needed, so most of our 2023 pricing is taken. North America was already done in December of last year. Europe was closed in line with expectations in Q2, and emerging markets are exactly on plan. The elasticity, we don't see a change in the elasticity, which has been low, as you know. We do see consumers shopping around more, hoping to find deals. The quantity bought per shopping trip is the same, but they tend to shop a little bit less frequently, but, but nothing really that, that preoccupies us. To close, I would say, the, the volume is strong. Europe will recover in the second half, and this will the, the be the strongest H1, and we believe year that we have delivered as, as Mondelēz. We think we are, we are quite doing quite well there. Maybe a few words on Europe, which is probably the most important thing for us. It's obviously has been, for us, a very dynamic environment. Top, top line demand has been quite good, 13.1% growth. The volume mix was down 4.5 points, but that was due primarily to the client disruption. I want to reemphasize that all 2023 client negotiations have closed successfully, and all the pricing was landed in line with plan. We will see some inflationary costs continuing in cocoa and sugar going into 2024. We are planning to do some strong investments in the second half in Europe. If you think that through and you say, okay, these pricing negotiations are behind us, we are positive on H2. What you could expect for H2 in Europe is that our volumes will grow. We are ready to execute in store. We have planned key promotions because now with this negotiation behind us, we can go full force again. I think as a consequence of that, you will see our share improve. We also start lapping prior year headwinds, and our margins will start to recover as the pricing is now fully implemented. I think three levels of good news, volume, share, and margins. Our categories continue to do well. Consumers seem to prioritize them. Also in Europe, elasticities remain low despite some strong price inflation. If you talk about our cheese or grocery categories, there we see a little bit of an uptick in elasticity, but that's a smaller percentage of our business. HFSS in the U.K. looks pretty manageable at this stage. The consumer is adjusting to the changes that they see in store. We see a bigger impact on seasonals and gifting, but it's the impact on standard chocolate seems to be minor. I, I would say the, the, the main news that we have is that we are expecting a good second half for Europe on top of all the other things. Hope that gives you a picture, Andrew. Yeah, I know, really, really complete, so I appreciate that. One, one very quick one for Luca. The company raised constant currency EPS growth expectations to 12%+ from 10%+. I guess consensus is already relatively close to the 12% mark. I guess I'm just curious how investors should think about the plus in the guide. Thanks so much. Thank you, Andrew. Yeah, before I go to the plus part, maybe briefly to provide some color on what underpins the new outlook. I think there are three important drivers to point to in terms of our new outlook. One, it is clearly the strong first half, and importantly, the quality of the results we are posting. I'm particularly happy with the operating part of the EPS growth. Second, I think it is really the underlying broad-based trend of our business, the resilience of our brands. I'm happy with volume and value growth and the continued investment. Third, as we mentioned a few times, Europe with price fully landing and in line with expectations. Maybe I work briefly by geography. Emerging markets are on a roll. We are quite happy. Some pricing is causing some areas of concern in terms of elasticity, but those are the minority of the market and not really important in the big scheme of things. The U.S. and North America are posting a terrific P&L, and we are very pleased with Clif. Europe has improved profitability already in Q2, but as we said last quarter, at the time, we had 80% of the price implemented. Now that pricing is 100% secure, we expect volume and revenue growth, as well as margin improvement for Europe. Quite frankly, there is a good chance that we exceed the 12% plus guidance. I prefer having another quarter under the belt and then narrow guidance for Q4. If all things play out as we have in mind, as I said, there are good chances we will exceed the guidance. Bear in mind that, we want to start 2024 strong, so if there is upside in terms of profitability and EPS, we might decide to reinvest selectively some of the upside to get really a fast start into 2024 too. Thanks so much. Thank you, Andrew. Our next question comes from Bryan Spillane with Bank of America. Your line is open. Hey, thanks, operator. Good afternoon, guys. Hi, Bryan. Hi, Bryan. Hey, I got two questions, one on, on the net interest guidance and the second one on Clif. Maybe first one for you, Luca. Net interest expense guidance came down again, I think by about $20 million this, you know, versus where we were coming out of 1Q. I just want to make sure. I think you paid off a $750 million term loan with, with the KDP proceeds. Is this just simply a function of, you know, a half a year interest savings on, on the, on paying the term loan off, or is there anything else that, that drove the lower net interest expense? No, that is it. It is that coming down. You're gonna see a good leverage as we end the year. We plan to be at like 2.5x debt, which is quite good. Yeah, no, it is as simple as us paying down the term loan. Okay, thanks. Then, Dirk, in your prepared comments, you talked about Clif, you know, pretty encouragingly, right? In terms of, you know, the margins, approaching, I guess, the segment level, and then there's more synergy, and then it sounds like you're also expanding on revenue. Can you just maybe give us a little bit of a progress report on, you know, kind of where you stand with Clif today relative to where it was when you acquired it? Is, you know, is, is your integration and, and is the, is the, you know, acquisition model kind of running ahead of expectations? Just how we should think about maybe how impactful Clif might be, you know, as we, we look forward? Yeah. We've seen in the first half, very strong double-digit revenue growth, and the margins, the OI margin versus previous year is up more than 1,000 basis points. We've increased prices. Some of the first thing I would say, we've increased prices more aggressively than Clif would have done historically. We increased prices in August, in January, and another one later in Q1. We see low elasticity, I would say, so that's having a big impact. The second big thing that we're doing is the service has improved. We reduced SKUs, and we started to operate the plants a little bit better, that has given to a good increase in the service level. We changed the promotional plan that has successfully kicked off. Fourth thing is that our media buying is more efficient than theirs, so we, we were able to, to also get some benefits from that. Those are some of the things we've done. The, the integration is taking place in, in a number of steps, like a big one is the systems integration later on in the year. So far, where we have streamlined the teams and we've brought more clarity on, on how we want to operate the business, that is all going well. As, as we said in the prepared remarks, the, the real benefit of the cost synergies is still largely to come. We've already seen some benefits, but it's in the second half of this year and beginning of next year that we will get the real benefit from it. I would say, you can probably make the calculation. It's close to a billion-dollar business that improves its margin by the amount that I was quoting, so that will have a reasonable impact on the total company. Thanks, Dirk. Thanks, Luca. Okay. Thank you. Thank you, Brian. Our next question comes from David Palmer with Evercore ISI. Your line is open. Thank you. A question on Europe pricing and the impact on volume. You mentioned the pricing's complete. How are you thinking about the volume for the region in the second half, given that some of that disruption's behind you and you're lapping some disruption in the second half versus 2022? Yeah. As I said, we don't really give volume guidance per region, but we would see some solid volume growth in the second half, driven by exactly the factors that you were saying. We have the pricing negotiations behind us. That pricing will be implemented. The disruption is gone. Last year, in the second half, we increased our prices in Europe, and we had more disruption. We will lap that, so that's gonna have a benefit for us. We have elasticities in Europe that are relatively benign, so despite the newly implemented pricing, we don't think that that's gonna have a major effect on the volume. Without giving you the number, it's gonna be a nice solid volume growth for the second half. I, I couldn't help but notice you, you featured cake and pastries a couple times in your slides, and it seems like a logical extension to have Oreo have a snack cake. I wonder, you know, how, how big could your aspirations be in that category? Doesn't seem as big as some of your other categories, so I'm wondering, do, do you see snack cakes and pastries being an ongoing sizable growth contributor? You know, maybe give us a sense of how you think about the TAM there, the opportunity there, and how you're gonna go about it. Thanks. Yeah. Yeah. First of all, cakes and pastries is not a small category. It's not the size of biscuits, but it's not too far away from it, and so it's a big opportunity around the world. It's a very fragmented category with sometimes relatively commoditized products in there. There is a real opportunity to bring strong brands with high-quality products. That's really the play that we're going for through an Oreo Airy Cake in China or Cakesters here in the U.S. or Give & Go in the fresh section or Chipita in Europe with prepackaged croissants, for instance. We think that there is a whole play for us there. At the moment, we're around the 3-4% market share of the whole category, so plenty of room to go. With that, we are already the number two player, and so that indicates how fragmented it is. The category itself has been growing quite, quite nicely over the past three years. It is a category that exists across all markets. It covers different occasions than, than our typical biscuits and chocolate, so that makes it very interesting for them. So we think with this new quality product in our, our brands, we can really make a significant impact. I, I'm not gonna give an exact number, but we would expect that our cakes and pastry business in the coming years should double or triple, and, and lift us up to, to close to a 10% market share. For us, it's gonna be a significant contribution to the growth of the company. Thank you. Our next question comes from Kenneth with JP Morgan. Your line is open. Hi, thank you. I, I wanted to ask, you know, as, as we look at the futures charts for cocoa and sugar, you know, they might indicate that theoretically, right down the road, some additional pricing might be needed, to offset more inflation. I, I appreciate you're, you know, not in a position today, right, to talk about pricing that hasn't been announced. But just conceptually, you know, is there any reason to think, that you wouldn't be able or willing to, you know, if needed, raise list prices again, especially if European elasticities, I guess, you know, maybe aren't that bad, and you're, you know, given your commentary about some improver or improving consumer confidence? Thanks. Thank you for the question, Ken. Look, the increase in sugar and cocoa, specifically, is material. I mean, we are talking about most likely a 30+% if you look at the last 12 months, or even more, particularly in cocoa. I think when you look at the quality of the brands we sell, the fact that we have invested materially around the world in our brands, the fact that there are strong bonds with consumers, and I believe pricing is will be a necessity in chocolate. I'm not gonna elaborate on the details. Also bear in mind that particularly in emerging markets, we are going to be very mindful about not vacating price points, and so we will use RGM. Then over the last couple of years, I would say we have learned the ins and outs of implementing pricing around the world, and I think it is needed, and we're gonna do it, most likely. Thanks. Then just one quick follow-up. Are there any peculiarities or cadence issues we should think about, you know, that are not necessarily obvious? You know, just as we model 3Q versus 4Q, any timing or headwinds or tailwinds that, you know, might not be apparent at first glance, if I could say it. Thank you. No, look, I don't think there is anything that you're gonna see in terms of outliers that are gonna cause material issues or material opportunities in Q3. You're gonna see a volume rebound in Europe. As a consequence, I think, obviously there is going to be a better situation for the totality of the company. I'm not gonna guide you exactly on gross profit, but you're gonna see, you know, double digit most likely revenue growth and double digit EBIT growth. Below the line, the items can vary, but I think when you really look at Q3, Q4, you're going to see strong operating gains coming through the P&Ls. I didn't talk a lot about cash flow, but very happy with that too. You're gonna see us delivering the cash flow despite the $400 million headwinds related to the coffee KDP sale. Thank you. Thank you, Ken. Our next question comes from Christopher Carey with Wells Fargo Securities. Your line is open. Hey, everyone. Hi, Chris. just 1 follow-up, and then, you know, just a second question around the guidance commentary. you know, Luca, I think you said that you expected leverage, you know, at the end of the year to be in the, in the 2.5x range. You know, that would be a historically low level, you know, for the company. You know, at, at that level, you know, how should we be thinking about, you know, deployment of, of, of capital at that point? You know, do you repurchase more shares? do you have too many deals recently, and, and, and clearly you're doing great work on Clif. You know, is there low-hanging fruit on, on what you've already added? It just, just stood out to me that, you know, you'll be trending toward a, you know, historically low level on leverage, and, you know, at that point, I think there's gonna be probably some observations around what, you know, that, you know, that capacity, you know, could be used for. Then, you know, just, one other quick follow-up on, you know, the EPS upside, you know, comment for the full year. You know, there was also a comment just around spending back, right? Like, how do you think about, you know, as we get through the year, this concept, okay, there, there could be some upside, but you're also quite committed to the spending back. Like, where, where does that, you know, kind of tension, you know, play out, right? If margins get weaker, you're gonna spend back more. If, if not, you know, there's some upside. Just maybe any context on that as well. Thanks for that on the, on the leverage and just the, you know, upside versus investment. Thanks so much. Yeah, no, I, I think the first thing first is the underlying strength of the EBITDA in the business. We are converting cash quite well from net income that is that is coming, and that is the first element of the equation. The second one is the fact that we are gonna get $1.3+ billion of proceeds from the GUM sale, that will further enhance the situation. I'm not gonna tell you that we're gonna run the company forever at this level of of leverage. Reality is, absent M&A, I think this is most likely a little bit of a new norm. What you have also to keep in mind is, both in the case of Clif and Ricolino. We are doing quite a good job in terms of integration, and I think deployment of capital behind M&A, particularly, has been something that the company has done well. Capital allocation behind Clif, we quoted a few numbers. I think this is, this is a great opportunity, and it shows that we can generate quite a bit of value through M&A. We don't control necessarily time of M&A, but on the, the M&A, you know, if something comes along, we're gonna be on it. Also bear in mind that there are parts of the portfolio that we might decide eventually to divest down, down the road. I think from a leverage standpoint, we are really in a good shape. DPS upside, one of the things I believe that is delivering volume growth for us, it is the fact that yes, we price, but we continue to invest in the business, not only in terms of ANC, but also quality and other things. We talked a little bit earlier in the year about the Milka relaunch in Europe and the improved formula as one example. What I meant by DPS upside is, we clearly have in mind the fact that we might have a little bit of headroom in terms of profitability. We want to use a little bit of that headroom selectively in some places to really go after incremental distribution opportunities, to really go after incremental investments, such as we get a good start into 2024. It will be on a case by case, but we consistently ask around the, the business, "Do you have opportunities to accelerate?" We do it on a quarterly basis, stay tuned. You'll, you'll learn more as we post Q3 results. Okay, thanks so much. Thank you. Our next question comes from Jason English with Goldman Sachs. Your line is open. Hey, folks. Thanks for letting me in. Hi, Jason. Hi, Jason. Luke, I wanna pull on that thread you just brought up, the opportunity to drive accelerating growth, invest, find distribution. I believe in the past, you've outlined some of the distribution opportunities you see in front of you in Brazil and Southeast Asia and India, as well as the opportunities coming on the back of the Ricolino acquisition. Can you update us on where those opportunities lie, how much progress you've made, and how much progress is left to be had? Yeah, the, the opportunities typically lie in the emerging markets in the first place, and so the countries that you should be thinking about are India and China, where we have been growing at, at, at the rate of, well over 100,000 to 200,000 new stores every year. That is going to continue, that speed at which we, we continue to grow. We do the same in Southeast Asia, and we're also looking at opportunities to do something similar in Latin America. That's the number one driver of, of what we think, and you should think about it as at the same pace as, as what it has been in the last two, three years. The second one is, we call it, going broader, which means that we can start to increase the range of our products that are available in stores, also, again, largely in emerging markets. That's another big driver of our distribution. China has started to do that in the last two, three years, that's going pretty, pretty well for us. With that, a second sort of front that we are working on around the world. The last one is the acquisitions, where we are starting to do test and learn with these products in different markets around the world. We have a number of test and learns going on in Chipita. We have some Grenade test and learns. We will have some Clif test and learns around the world. We are expecting that, from that, we will learn which countries those would have a big opportunity to start being distributed. That you should see as a third front. In the first two, three years, I wouldn't expect that you would see a major impact on our numbers, but later on, as these things take shape, I think that will start to play a significant role. If I think the order of magnitude that you should think about it, if I think about an India or a China, I would say a third of their growth is driven by distribution expansion. That gives you an order of magnitude. Helpful stuff. I appreciate it. I'll pass it on. Thank you. Thank you, Jason. Our next question comes from John Baumgartner with Mizuho Securities. Your line is open. Good afternoon. Thanks for the question. Hi, John. Hi. Hi. I wanted to stick with, with the emerging markets, but maybe in the context of local brands. You know, it looks as though the market share growth has, you know, stalled out a bit in the last couple of quarters, at least in Europe, and maybe that's a function of the success of global brands sort of crowding out the locals. You know, if you could elaborate there, just on, you know, resource allocation, where you are at this point, what are the expectations for locals across the portfolio going forward, and how you think about the ability for globals and locals to grow share simultaneously. I think historically, you know, the largest opportunities you have to recover lost share in locals is Eastern Europe, Asia, you know, chocolate, biscuits. Curious about your, your thoughts there. Thank you. Yes. Well, first of all, I would say Europe, you have to be a bit careful because you have the whole client disruption going through, through there. If our share is affected, that has to see with the client disruption. If I think about the performance of, of global and local brands, it is true that global brands have started to grow faster, I would say. We, we have a number of brands, particularly an Oreo, a Milka, Cadbury, but also Trident as a gum brand, for example, or Halls, which are recupering, recuperating post-COVID. You have a number of global brands who, the Oreo, Milka, Cadbury, is normal, but then you have get an extra boost from things like Trident and Halls, which were not growing that much. We, for instance, are also working very hard on our Toblerone premiumization. Yes, at this stage, global brands are growing faster. They're well into the twenties, while local jewels are probably more in the mid-teens growth. Still not, not bad. But that's a little bit the effect as I explained to you. Does that mean that we have changed our resource allocation? No, not at all. If anything, we're pushing our local teams to make sure that our local jewels get significant resources allocated to it, because we believe that the opportunity is there. I wouldn't read too much into it. For instance, if you look at the four-year CAGR, our global brands are double digit, while our local jewels are high single digit. Very close to each other, and, and that's really what I, what I would point to. We, we, we don't necessarily see anything there that would preoccupy us. Thank you, Dirk. Okay. Thank you. Our last question comes from Michael Lavery with Piper Sandler. Your line is open. Thank you. Good afternoon. Hi. I just wanted to follow up Dave Palmer's question, about, about the bakery, and maybe specifically just with Give & Go. You mentioned how bringing branded and quality products was sort of the key to, to unlocking you know, share gains and growth there, but fresh seems less branded and maybe sometimes very little branding. Is there an opportunity there? How much can you push that, maybe in at least certain subsegments? Then as far as geographically expanding that, is there an opportunity for that as well? Yes. Well, yes, when I talked about the branded part, I was talking more about the packaged cakes and pastries. So if you think about Give & Go as a fresh business, branded can play a role, and I can explain to you a little bit how, how we think about that. It's largely driven through innovation, I would say, the growth of the Give & Go business and extra distribution. You have to think about Give & Go as a player that makes mini cakes and pastries, so mini cupcakes, mini muffins, mini brownies, mini donuts, and that's a very interesting segment. It's a to-buy segment, and they, they do a great job in offering a quality product. We can make those products with some of our ingredients. You can imagine a cupcake with a Oreo on top of it, the branding can play a role. They've also started to develop their own brands, it can play a role in Give & Go, your observation is, is correct, that it's more in the packaged part of things. The in-store bakery is very interesting for retailers in North America, it's also happening in other parts of the world. We were in Australia, for instance, one of the retailers there, their main interest was to talk to us about in-store bakery and how we could activate it together with them. The reason being that The other big benefit of a Give & Go business is that it saves on labor. You now get a product delivered to your store that is freeze and thaw, and you can avoid all the labor in store, so that drives a big interest from the retailer. On top, the consumer sees it as fresh. There is high interest. It's a section they want to increase. I would certainly confirm that there is a growing interest around the world for fresh bakery. Well, that's great, great color. Thank you. Just a follow-up on emerging markets, too. It sounds like there's strength broadly, even in China, but can you just help us understand the Chinese consumer a little bit? Is your performance there doing well, a function of a relatively low kind of accessible price point? Is it more food at home that's doing well? Can you just maybe unpack a little bit where the Chinese consumer is and, and how that fits with your portfolio? Yes. Yeah. China grew double digits for us in Q2. One of the key effects that you need to think about is that we have a big gum business there. As we are coming out of COVID, kind of strange, nobody talks about COVID anymore in China, but the mobility is coming back, we have growth coming on our gum business. On top of that, we have had a continued strong biscuit growth, which is more home consumption. In both cases, we are increasing our share. Biscuits is up almost one point in Q2 through very strong brand activations, and we're particularly happy with the success that Chips Ahoy! is having now as our second big biscuit brand next to Oreo in China. Then gum share is up 2.5 points, where we started to do some very targeted activations in lower-tier cities. The other thing that's particular about China is that digital commerce is about 20% of sales, and in Q2, digital commerce is, is starting to started to grow quite considerably, at about 23% growth rate. That all points towards, or on-the-go consumption, because in China, digital commerce is, can be sometimes delivered in a very short period of time, but also home consumption of, of sure, of course. The other thing to explain our China growth is that distribution expansion I was talking about in the previous question. In Q2 alone, we've added 60,000 new stores in the super and mini channels as a part of that go deeper route to market strategy. The last one I would point to is innovation. We launched that Oreo Airy Cake, talked about it in the prepared remarks, and that's that expansion into baked snacks and cakes and pastries for us. Those are all the elements that are driving our Chinese growth. I think it's pretty solid for the quarters and years to come. We can work on all these fronts. We can continue to add distribution. We still have huge opportunity. We have some interesting innovations coming up. We're getting better and better on our digital commerce, I think the gum category will really rebound in the coming months, and that will be a boost to our growth there. As it relates to the consumer, the consumer is clearly, the confidence is going up, certainly they are not yet to the bullishness that they had pre-pandemic. They're not cutting back on volumes, they are clearly shopping around more, trying to find better deals, there's also trading up and down as it relates to the pack size. We also see a shift to smaller stores because the quantity that they buy is smaller, and they shop more frequently. I would say we are very encouraged by our China business. We have several fronts that allow us to grow. We've done that in the previous years. Those fronts have not been affected, and, and I believe that, you will see some very good results coming from China in the second half of the year. That's great. Great color. Thanks so much. Okay. Well, thank you. With that, I think we can conclude the call for the second quarter. Thank you so much for assisting, and thank you for the confidence in the company. Thank you, everyone. This does conclude today's program. Thank you for your participation. You may disconnect at any time.