Mondelez International Earnings Call Insights: Expectations vs. Performance and Organic Top Line Growth
Expectations vs. Performance
Bryan Spillane – Bank of America Merrill Lynch: You know there has been a heightened amount of focus I guess going into this quarter of just about how you’d perform relative to expectations. So can you just talk a little bit about as the quarter unfolded just what came in line, what was in line or better than expectations and maybe what would have been kind of how things mapped out relative to what your original expectations were?
Irene Rosenfeld – Chairman and CEO: Most importantly we delivered growth that was essentially in line with our mid-single-digits guidance it represented a significant sequential improvement as we had said in Brazil and Russia. We are quite happy with the quality of the results in each region we saw solid contributions and significant step ups in the volume mix contributions. Very strong share performance as Dave mentioned around the world and strong growth in our Power Brands. So net, net we feel quite good about the overall performance of the quarter. Frankly it was the top line was a little lighter than we had expected, we were expecting a growth rate that had in front of it and as we said the shortfall was largely attributed to the transition issues that we experienced in Canada as we separated what was the most integrated business in our company. But we feel very good about the quality of our revenue growth. We continue to make the necessary investments in A&C and sales which will fuel the growth in 2013 and beyond. We feel very good about the overall momentum of the business and so we’re quite confident that we’ll deliver our 2013 guidance on both the top and bottom lines.
Bryan Spillane – Bank of America Merrill Lynch: If I could follow-up, just Dave on SG&A in the quarter, it came in higher than what we were modeling. So I was just trying to get a sense for – did you end up with higher A&C spending than you originally thought in the quarter and then also are there just other sort of moving parts especially related to the transition that affected SG&A?
David Brearton – EVP and CFO: Yeah, we came in pretty much where we expected, probably a bit higher than your model because of a couple of things. Number one, in the fourth quarter, we ended up as the date of spend we have to revalue our pension. So we actually took about a $0.02 hit on pension cost in the fourth quarter. But we were expecting – you probably wouldn’t have anticipated. We also had the synergies kicking-in in the fourth quarter, so that was really when they started it and we had said last year, that we expected the synergies to be about $235 million for 2013 and one quarter of that hit quarter four. So those are probably the two numbers that might not have been in your model.
Organic Top Line Growth
Andrew Lazar – Barclays: Just two things from me, I guess first would be you gave a number of reasons for why the organic top line growth would be somewhat tempered in the first half of ’13. I was hoping you could help us a little bit with maybe the magnitude of that or helping us to quantify – and the reason I’m going down this road is, things are going to have to accelerate as you talked about in the back half to get to five for the year, and I’m trying to get a sense of how much of an acceleration in the back half you’re going to need to get to five, to make it seem that that’s a reasonable expectation for us to have?
David Brearton – EVP and CFO: I think Andrew – it’s Dave. I think the – I don’t want to get in a habit of giving quarterly guidance, but we’ve guided you to the low-end of the five to seven range. Clearly given coffee and some of the capacity constrain you would expect us to be below that in the first half. So we will be below the low-end of five to seven in the first half, which means we’re going to need to be higher than that in the back half. In terms of should you be concerned about the kind of turnaround that requires? No, I don’t think so, because if you actually look at our results this year, we are up around 6% in the first half of the year. So I think we’ve demonstrated we can grow at the kind of levels we’ll have to grow in the back half of the year we just need to get through the coffee pricing headwinds and the capacity constrains in front of us right now.
Andrew Lazar – Barclays: Then in Europe that was one area where, I mean, you had said on the last call organic topline would be up at a low to mid-single-digit pace and it was flattish in the quarter and you talked about how the volume mix piece was something that you are pretty happy about. So was it that coffee pricing was down more severely than you thought or volume didn’t rebound quite as strongly as you had hoped as you lapse some of that pricing. I’m trying to get a sense because that seem to be the one area where the organic topline deferred most clearly from what you had said last quarter.
Irene Rosenfeld – Chairman and CEO: We’ll just give you a perspective on that because the reality is the result in developing markets in Europe were pretty much were we thought. The number that you are quoting, we said it was U.S. – North America and Europe we said would be low-single-digits. If you look at the individual regions our developing markets delivered essentially in line with a high-single-digit guidance we had given as I said they were up 7.6%. Europe delivered essentially in line with our expectation of modest growth. We grew about 0.5, 0.7 in the third quarter and we were essentially flat in this quarter on the top line consistent with the expectations associated with the coffee price decline. The real issue and again the variance versus our expectations was in North America. We had expected that growth to accelerate from Q3 into Q4 given the strength that we were seeing particularly on our biscuit business but impact of the Canadian transition tampered that growth somewhat and that’s what led us to be a little bit below what we had expected.
Andrew Lazar – Barclays: Just one quick thing. When you gave the 5 to 7 organic long term sort of top line growth rate guidance, that is my understand it is obviously inclusive of everything and that would be even the vagaries of coffee prices being up or down depending on what’s going on with green coffee costs. I am trying to make sure should we expect more volatility maybe to that 5 to 7 then maybe I am thinking about the way you think about the algorithm based on coffee or is it just that there are number of other things going on, you just talked about whether it’d be the challenges in broadly in Europe or in gum or what have you. That have just maybe getting to 5 difficult even including these changes in coffee prices.
Irene Rosenfeld – Chairman and CEO: First of all our long term guidance is 5 to 7 inclusive. We feel quite comfortable that over time coffee pricing will not become be a major factor. As you know the volatility over this last year. We want from Arabica at about 2.40 a pound all the way down to about 1.40 to-date. So the volatility that we saw was really quite unusual and really it had a profound impact on the first half versus the second half which is why it leads to the trends that Dave described. But net-net we feel quite comfortable that as we get beyond the spin we get all of the pieces of the enterprise moving properly we are quite confident that we will be able to deliver 5% to 7% growth on a consistent basis over the long-term.
A Closer Look: Mondelez International Earnings Cheat Sheet>>