Good morning. And welcome to the Mondelēz International Fourth Quarter 2014 Year End Earnings Conference Call. Today’s call is scheduled to last about one hour including remarks by Mondelēz management and the question-and-answer session. [Operator Instructions] I’d now like to turn the call over to Mr. Dexter Congbalay, Vice President, Investor Relations for Mondelēz International. Please go ahead, sir.

Good morning and thanks for joining us. With me are Irene Rosenfeld, our Chairman and CEO; and Brian Gladden, our CFO. Earlier today, we sent out our earnings release and today’s slides, which are available on our website mondelēzinternational.com. As you know, 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 and 10-Q filings for more details on our forward-looking statements. Some of today's prepared remarks include non-GAAP financial measures. You can find the GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. With that, I'll now turn the call over to Irene.

Thanks, Dexter, and good morning. In 2014 we delivered solid results, even as we faced headwinds in the broader environment. We have made good progress on our transformation agenda, especially in our supply chain and in overheads. Of course, we also announced our coffee joint venture, which we expect to close later this year. As we enter 2015, we will continue to focus on what we can control, reducing costs, pricing to protect profitability and driving Power Brands and innovation platforms in key markets. In addition, we are taking some specific actions to exit lower margin revenues to improve our mix. Overall, I am quite confident in our ability to execute our plans, achieve our strategic objectives and continue to deliver solid returns to our shareholders. Turning to the specifics for 2014, we generated strong earnings growth and margin expansion in a challenging environment by driving record net productivity and aggressively reducing overheads. On the topline, we delivered organic net revenue consistent with our latest outlook, as we raised prices to recover higher input costs and protect profitability, while continuing to invest in our growth platforms. Specifically, for the full year, organic net revenue was up 2.4%, adjusted operating income margin increased 80 basis points to 12.9%. That was in line with our guidance of about 13%, despite absorbing a 50 basis point headwind from the timing of mark-to-market accounting. Adjusted EPS was a $1.76 for the year, up 23% on a constant currency basis and the source of this growth was high quality, driven mostly by operating gains. In light of a still challenging macroeconomic environment, consumer confidence and spending weakened in many of our key markets, while competition among food retailers was intense, especially in Europe. We faced significantly higher prices for key commodities, like cocoa and coffee,…

Thanks, Irene. Good morning, everyone. Over the next few slides, starting with slide 7, I will walk you through our 2014 margin and EPS progress, as well as our outlook for 2015. Adjusted gross margin decreased 60 basis points to 36.8%, with 50 points of the decline attributable to the timing of the mark-to-market accounting for commodity and currency hedges. Over the course of the year, we successfully executed pricing of $1.6 billion. While this high level of pricing was enough to fully offset significant commodity and currency related cost inflation on a dollar basis, it wasn't enough to offset the impact of inflation on our margin percentage. We were able to essentially maintain gross margins, excluding the mark-to-market impact by delivering 2.8% net productivity, totaling more than $600 million. That’s a record for the company and a testament to strong work delivered by our integrated supply-chain team. As Irene noted, our adjusted OI margin increased 80 basis points to 12.9%, in line with our guidance of approximately 13%. Excluding the 50 basis point mark-to-market impact, our underlying margin improvement was actually 130 basis points. Lower overheads drove more than half of this improvement, as we aggressively reduced expenses by leveraging zero-based budgeting and other cost-saving tools. In addition, we expanded margins by driving efficiencies in the non-working elements of our media spend, including significantly consolidating suppliers. We also reduced production costs as we shifted more advertising to digital outlets. To be clear, we maintained our working media support and increased our overall A&C spending on our Power Brands and innovation platforms. As we move to 2015, securing additional cost reductions will be a key focus and an important backstop to our plan. Looking at performance by region, you'll see that developed markets drove much of the margin expansion. In…

[Operator Instructions] Your first question comes from Chris Growe of Stifel.

Hi. Thank you. Good morning.

Hi, Chris.

Hi. Just if I could ask two questions of you, Irene. First off would be, as you’ve seen the softer growth in the developed markets, and particular in North America and Europe, does that have any -- is that having any effect on your margin outlook for those businesses? It looks like you’ve got a pretty strong margin still built in here in '15, but does this slower growth rate have any effect on your future margin projections if I could ask that?

No, I actually think without a doubt, we are making some near-term prioritization in both of those geographies for margin. But I feel quite comfortable that with the guidance that we’re giving to you that we made some reasonable expectations about where we expect the revenue to fall out. There is no question in Europe, in particular. We are experiencing some short-term headwinds as consumers and customers adapt to the new prices. I inspect that that will improve as the year progresses in both Europe and in North America. As I mentioned, we certainly are experiencing some category slowdown. We are taking a number of actions to improve that both in terms of marketing as well as some trade investments and we are starting to see the benefits of those investments. So net-net, I am quite confident that we will deliver the revenue that we need in both of those geographies consistent with the margin expectations that we set.

Okay. And just if I could ask one other question on ZBB and the implementation of that program. I am just curious if you can give us the kind of experience for 2014, and then perhaps the progress you’ve made against overhead in particular with that program in '14?

Yes, Chris, it’s Brian. There was really the start-up this year of ZBB. But as you look at the overhead reductions, 90 basis point improvement year-over-year, it really was a big contributor. So a lot of focus on key categories of cost and indirect spending where we change policies, move to best practices that we learned in that process. And as we built the plans for 2015, we really did use the ZBB base process to build the operating plans. So I would say we are still in the early days. It will be a big contributor as we look at 2015 and into '16 using that tool. But good progress so far.

Okay. Thanks for the update.

Your next question comes from Andrew Lazar of Barclays.

Good morning, everybody. Two questions from me. First off, as we think about the margin cadence as we go through 2015, you said that it will be stronger in the back half. I am trying to get a sense of how the first half you expect it to play out. Do we see year-over-year margin improvement just at a slower pace in the first half? Or are there certain things that challenge margins in the first half that makes the two halves have to be even stronger to get to that about 14% for the full year? I am just trying to get a sense of how realistic that is and what is kind of built in, in terms of visibility?

Yeah. I think the goals that we are providing for the full year, I would tell you as we look at some really critical drivers, supply chain improvements, the overhead reductions, even the pricing frankly, these were dynamics that will cause margins to accelerate through the year. Those benefits are more back-end loaded, just given the execution and as we work through for instance the start-up of the Mexico plant. That will drive benefits significantly higher in the second half than in the first half. So not getting into specifics around quarterly trajectory or margin targets by quarter, but it will be more back-end loaded.

Okay. And then you mentioned -- I think as you mentioned before 2015 is a year of sort of maximum change for the organization. You’ve got the coffee JV implementing ZBB in a bigger way, the category led model in Europe, the ongoing issues around Western Europe and retailers and pricing and such. So I am trying to get a sense, '14 obviously shows a lot progress towards your two-year margin goal. And I am trying to get a sense of, are you giving -- is the organization giving itself enough cover, if you will, for certain things that are inevitably likely to go awry just during the course of the year with all these big changes that you’ve got?

Look I think we as a team spent a lot of time on building the plan as you point out. So, clearly some pieces moving around as you think about the year. But this is a reasonable plan that I think we worked hard to build confidence and backstops around this commitment. So there is clearly some pieces moving around, it’s a relatively volatile environment. But as I said, there is things that we can control and we are working extra hard on those things to make sure we have offsets and backstops to allow us to deliver this commitment.

Thanks very much.

Your next question comes from Bryan Spillane of Bank of America.

Hey, good morning, everyone. I wanted to ask a follow-up I guess to Andrew’s question. And it’s just -- I guess if you go through assuming the 14% margin goal for '15, I guess two questions. One, in terms of FX effect on operating profit, the spread, there has been a bit of spread between the effect on revenues and operating profit. Should we expect that to continue in 2015?

I think similar dynamics will continue to play out. As you think about transactional exposures, clearly we work hard through program -- through hedging programs as well as our efforts on pricing and cost reductions in the regions to drive consistency of execution there. It is a volatile environment. We have a hedge program, that’s designed to provide some cushion to allow us to get prices in place, but we feel like that’s what we have been doing and we will continue to execute that.

Okay. And just assuming that there are some modest spread if you kind of back into a current -- what the 14% margin implies, currency neutral. It’s like a mid-teens currency neutral EBIT growth against a 2% organic sales growth. So I guess the question is just, in that bridge which is I guess roughly about $700 million of currency neutral profit growth, how much of it is hard savings versus things that might be variable depending upon -- I don’t know mix or volume leverage or those types of things? Just trying to get a sense for how much of that margin target is really tied to some fixed savings versus things that might be variable.

Yeah. Not really we are going to parse in detail. I would tell you that this is a supply chain reinvention, ZBB, overhead reduction driven plan. That’s what you saw in 2014. And I think that’s what you will continue to see in '15.

Yeah, I just want to build on that Brian. We are very focused on what we can control in this environment. And so we have high confidence that the commitments we are giving to you are some things that we have a clear line of sight to and we’ve built our revenue. We think in a reasonable fashion given the realities of the market. And we got clear visibility to the programming that will drive the margin expansion. So net-net, it is a challenging environment. But we are very focused on making sure that we got in hand what we can control to drive our commitments.

Is the $500 million of annual COGS productivity that you outlined last year at CAGNY still part of the plan or is that changed?

Well, that productivity in ‘14 was actually closer to 600. It was a record for the company at 2.8%. And I would tell you given all the activities around supply chain that will continue to accelerate. That's a big part of what we’re focused on.

All right. That's very helpful. Thank you.

Your next question comes from David Driscoll of Citi Research.

Great. Thank you and good morning.

Hi David.

Good morning.

Irene, if Mondelēz grew organic revenues 2.4% in 2014, can you just go back over why you would expect 3% net organic growth in ‘15? So I'm just looking at that chart and excluding the one point that you'll take out from things you want to discontinue, the underlying number is 3, and that's an acceleration over the 2.4%. But I think what everyone hears on this call is just how difficult these emerging markets are and even some difficulties in your developed markets, Europe, for instance. Why does it accelerate?

Well, if you think about it, David, we saw an acceleration even in the course of last year. We took pricing early in the year. As we shared with you, we led pricing in all of our categories. So the impact of that pricing plays out differently in each of the regions and differently over the course of time. And so the good news is in many of our emerging markets, we’ve now seen those price gaps start to narrow. As I mentioned Europe remains particularly in chocolate, one of the regions, where those gaps are still bigger than we’d like them to be. But the reason for the acceleration in the underlying growth is simply that as consumers adjust to these higher price points as our customers particularly in Europe reflect these higher price points, we expect that the market will be in -- move into more of a position of equilibrium.

And then, following up on your European chocolate questions, when we get our Nielsen data, the 12-week numbers show double-digit declines in Mondelēz's European chocolate volumes. You mentioned a little bit of this in your prepared script, but can you talk more detail about what's going on right there? Why aren't these competitors following? And it's been going on now for, like, six months. So I'm a little concerned that you might be forced to retract your pricing, even through a list or a promotional event. Can you just talk about some of those issues and what you see happening in ‘15?

Again, it’s a -- there’s no question that our gap in Europe are wider than we’d like them to be. As you believe, it’s a question of timing. And so again we feel quite confident with the programming that we’ve got. We’re trying to see some good recovery to more of a normal state in a number of our key markets and we’re going to stay the course. We’ve got very strong brands and we believe that they have the pricing power. And we just need to take some time for the gaps to narrow a little bit and for the competition to catch up. But we are quite confident that given that their facing the very same cost headwinds that we are, that if the market will get back into more equilibrium in the foreseeable future. But again, it’s one of the reasons that we’re suggesting that our profile will improve as the year progresses.

Thank you for the color. I’ll pass it along.

Thanks David.

Your next question comes from Ken Goldman of JP Morgan.

Hi.

Thanks for the question. So you're guiding to double-digit EPS growth, ex-currency, which is where you usually guide, but still leaves a pretty wide range of possibilities. And when you talk about a 14% approximate EBIT margin, I mean, one of the questions I'm getting is, does that mean it could possibly range between 13.5% and 14.5%? So, if possible, even if just on a qualitative level, could you help narrow those ranges down a little bit, both in terms of, I guess, organic EPS and reported EBIT margin?

Look, I think it’s -- what you’re suggesting is wider than we would expect. The reality is there is a volatile environment and we want to be a little bit careful and give ourselves a little bit of room here. But those are sort of the numbers that I think we meant to say, you can interpret them how you like.

Okay.

But again, we know about what ‘14 looks like and we know what a double-digit growth rate is. So you can trust us that we’re not kidding.

No, I appreciate that. You can understand from our perspective, though, why it's just tougher to model. But I understand where you're coming from. And then, Brian, at last year's CAGNY, Dave said we should model about a 20% tax rate for the next three to five years, then mid-20s after that. I realize you're guiding to a high-teen tax rate for 2015. But just longer term, is that outlook in general still reasonable for us to use, in your view, as we look ahead?

Yeah. Look I think over the mid-term, the next couple of years, 20% is a good number to the extent we’re somewhat below that for ‘15. It’s sort of acknowledging some expected discretes and some things that we know about it in 2015. But 20% is about the right rate for the next two to three years.

And then you would agree that it maybe jumps up by a few percentage points after that?

That’s slightly right. Yeah, I wouldn’t say jump probably creeps up after that.

Okay. Great. Thanks very much.

Your next question comes from Matthew Grainger of Morgan Stanley.

Hi. Good morning everyone.

Hi Matthew.

Hi Matthew.

Thanks. Brian, I guess first, one of the sources of cost savings in 2014 was a focus on ANC efficiency and reductions in non-working media. And just wondering, is this a source of savings that you would think can be a continued tailwind this year? And then in a broader sense, including working advertising, can you give us an idea of how you expect ANC to trend in 2015?

Yeah. Because I think the team has done a really good job in managing the spend. We made some great progress in driving productivity in the spend around non-working, consolidating media accounts, reducing the spending and driving productivity and then moving more to digital. So all of these elements, I think gave us some flexibility to take the spend down a bit but also to continue to get value from the spend. We actually increased our spending on ANC around our Power Brands last year. And we’re able to reduce spending in other parts that allowed us to actually get some good momentum there. So I think you’ll see us continue to focus the spend in the right places. And as we see progress throughout the year, we’d like to see that increase actually. So good progress in terms of getting productivity and allowing us to spend those dollars on real working media.

Okay. Great. Thanks, Brian. And Irene, could you elaborate a little bit on your comments earlier on the sales outlook in North America? You talked about trade programs you have in place and a reacceleration, and we've seen this start to become more visible in scanner data as well. So, is your optimism really a function of improved share trends in an environment that's still highly competitive and challenging or are you seeing a moderation in the competitive intensity within your categories overall?

Actually, our share performance has actually been quite strong and we expect that to continue. What actually is encouraging, we’re starting to see the category recover a little bit. So we’ve had an incredible run in North America, particularly on our biscuit business. We have been growing 4% to 5% well in excess of the category trends over the last couple of years. As we saw in the back half of last year, we started to see a slowdown and we’re just basically going to continue to push the levers that have been so successful for us. We have the strong innovation plant. We’re continuing to leverage our DSC muscle and we believe that that goes together. We started to see some recovery you’re seeing it in the numbers as well. And we believe that that will continue into 2015.

Okay. Great. Thank you both.

Your next question comes from Robert Moskow of Credit Suisse.

Hi. Thank you. I was hoping, like others on the call, to get a little more color on the behavior of your competition in Europe. Is most of your competition and share losses coming at the expense of multinationals who have not raised price yet in chocolate or is it local players who are staying low? And then especially in the U.K., you know, the U.K. numbers were really weak in fourth quarter. I thought some of it was tough comps from a year ago. But that struck me as the market where you really do have the most pricing power. And I want to know if there's anything you can say specifically about the U.K. being the same or different from the other European markets?

Yeah. I won’t say the U.K. was different. We saw one of our competitors, Mars, in particular promoting quite aggressively. And I’m pleased to say that we have responded to those actions and we’re feeling comfortable that we’re going to start to see a trajectory of change there. The reality is that a number of our multinational competitors have just lagged a little bit in their pricing response and that put some pressure on the business. But once again, it’s one of the reasons we have protected our working ANC so carefully. It’s one of the reasons we have really focused very much on looking market-by-market to ensure that we’ve got the right programming and we have great confidence that we will start to see that trajectory improve. But again, it isn’t necessarily going to happen overnight which is why we see the back half. It will build over the course of the year and the back half will be stronger.

Irene, how are you determining which markets you want to respond to competitive activities and which you don't? It sounds like you responded to Mars in the U.K.; you responded to the biscuit competition in the U.S. What goes into that decision-making?

Well, a big focus is really which is the markets that matter most. And as we look at the world, we think about which are our key markets and our focus remains particularly, in a time when we want to make sure that our spending is having the greatest impact. We are focusing it disproportionately on our Power Brands and on those key markets that matter. And you’ll see us do that in each of our core categories.

Okay. Thank you very much.

Your next question comes from Alexia Howard of Bernstein.

Good morning, everyone.

Hey, Alexia.

Hey, Alexia.

Okay. Can we focus in, to begin with, on SG&A cost savings? As I remember when you set out the original 300 basis points of margin improvement goal over three years, most of that was COGS. I thought about 250 basis points was COGS and the remaining 50 was SG&A. It seems as though you've gone a lot further along on the SG&A cost savings in 2014. Are those coming through better than expected? And what's the key driver of that? And then I have a follow-up.

Yeah. I think when you look at cost reduction programs and ZBB as a methodology, overheads are easier to get out. They’re quicker to realize benefits. And we’ve done things like changing policies and tightening down controls on spending in key categories of spend. Those things are not depended on capital projects to improve the plan as you would have in COGS-focused effort. So that’s really the driver. I think as you look at 2014, probably, slightly ahead of expectations from what we were driving on overheads. And I think there is more to do there. It’s clearly going to continue to be a contributor to the margin improvement. And I think you’ll see that in the 2015 results as well.

Very helpful.

But I guess, it’s just under 300 points. It was disproportionately in our developed markets. And I think you’re seeing those -- that strong performance play through in the margin progression in 2014 that you see in North America and in Europe. So we’re very much on track to deliver those targets that we laid out.

Great. And then a quick follow-up. I know that the focus is not particularly on the top line at the moment but on innovation, where are you on new products as a percent of sales? Where do you expect that to get to over time? Has it come down in the last couple of years as your focus has played much more onto the margin front? Thank you. And I'll pass it on

Yeah. And the innovation is still the lifeblood of our business. We remained very focused on that Alexia. And it was about 13% -- it contributed about 13%, it was about 13% of our revenue. And we expect to see that we will continue to perform in that range, which we’re quite comfortable with. It’s one of the reasons that our Power Brands grew about 4% last year. And we’re quite comfortable that we’ve got a pipeline for 2015 that will basically drive the underlying growth that we’ve laid out in our commitments.

Thank you very much. I’ll pass it on.

Your next question comes from Jason English of Goldman Sachs.

Hey, good morning, folks.

Hey, Jason.

Thank you for taking the question. I guess I'll start on a topic that's been vetted a couple of times in the call and that's the European pricing environment, chocolate, price gaps, et cetera. I think I'm missing something here because I think about the cost structure for a European-based chocolate company. And I've got to be looking at cocoa prices that aren't really up very much; dairy prices that are down meaningfully; sweetener prices that are down meaningfully. All-in, from my vantage point, it looks like the COGS basket is actually deflationary. So what am I missing in that cost picture?

Well, Jason, if you look at the most recent cost, your point is correct. But if you look over the course of the year, there is no question these cost are all still up year-over-year and that’s really what we’ve been responding to. So the facts are that the market basket of inputs for our chocolate business are among the highest and they were a key part of our -- key reason for contributor to the $1.6 billion of pricing that we took this past year. So it is still a headwind for us. We are taking the necessary steps to start by protecting profitability and making sure that we are pricing to recover those costs. We’re supporting our Power Brands in particular with the necessary spending to help to mitigate the impact and I’m quite confident that as the market adapts to these new price points, both from an absolute elasticity standpoint, as well as from a price gap standpoint as competitors take pricing actions, I am quite confident that we’ll see the market recover.

All right. So if spot prices hold, you probably don't see competitive price reaction in that environment? But what you lose on topline, you probably more than make up for on the bottomline, if the spot holds, Is that a fair characterization?

Well, I -- no, I would say that even with the recent deflation, there is still a net -- there’s a need to catch up to some of the earlier cost increases and that’s just undeniable.

Okay. Last question and I'll pass it on. Brian for you, I like the free cash flow chart you showed, but obviously it's a bit fictitious to pretend that we don't have the restructuring costs? I think if we look across restructuring this past year with both CapEx and cash from ops it was around $1 billion? So can you just give us the forward on how that cash leakage looks over the next two years and I think, based on the comments in the release, what you said before, most, if not all of that goes away in fiscal ’17 and but can you just walk us through that detail?

Yeah. Look, I think, what I would focus on is the underlying working capital progress is actually really good and we wanted to -- we want to talk about, that I will talk more about at CAGNY. I would say, 2015 will be the high year in terms of cash use for restructuring and CapEx related to the program. So in ’16 it will begin to decline and then as you said, ’17 it will be relatively small. So I think the underlying cash flow performance when you look at operating cash flow and free cash flow for the business, we’re working hard to improve that and as this -- the cost related to the restructuring, as they go away, it’s a pretty powerful cash flow story.

And I'm sorry if I missed this, did you give CapEx guidance for 2015 and if not, can you?

We will talk about…

I think we’ll provide that at CAGNY.

Okay. All right. Thanks.

Your next question comes from John Bumgarner of Wells Fargo.

Good morning. Thanks for the question. Just wanted to ask about the operating margins across your developing markets in totality, I think your initial longer term vision was to hold margins more or less steady overtime, then you had the step down in 2013 with the pressures in China and in Venezuela? You had some recovery this last year, but you're still about 200 basis points below 2012 level? So, I mean, how are you thinking about the ability to get back to that 2012 level, is it practical or is anything more structural changed in terms of reinvestment needs or the categories, just your thoughts there?

We still feel comfortable over the reasonable horizon, John, we will be able to get our emerging market margins up to peer levels. As you saw, we had a very strong year in LA. We’re making progress in Europe. In EMEA, it doesn’t show as well because of this tremendous impact at pricing had on our overall business and AP remains a place a little bit of a construction site for us as we see our China business recovering overtime. So we will see those margins improved, a lot of the focus of our ZBB activities are design to address overhead opportunities in those markets and they will also benefit from some of the supply chain work that we’re doing particularly as we add more efficient lines with our capacity expansion. So we will see those margins come up in the very short-term, because the currency has been so volatile in those emerging markets. It’s been a significant headwind in those geographies.

And then, Irene, just to follow up, in terms of the dislocation in Russia and your plans for the, I guess, the new facility there, has that changed your plan at all or is that still the green light?

Well, as we told you, we are making an investment there. We are still investing in the shell, building in Siberia. And we’ll continue to monitor that situation to make sure that our assets are appropriately protected. As I’ve said on the call, I’m quite pleased with the performance of our team. They have done a very good job even in the face of some of the sanctions. But certainly, as we think about making additional investments, we want to continue to keep our ear to the ground.

Okay. Thank you, Irene.

Your next question comes from Eric Katzman of Deutsche Bank.

Hi. Good morning.

Hey, Eric.

I guess a couple of questions, if I could. Brian, I'm a little confused. So you've got roughly -- included in dollar terms, let's call it flattish earnings per share. Your sales are going to be down, if the forecast is correct, about 9%. Your tax rate is a headwind. So you're obviously implying pretty strong margins. Is the -- operating margin -- is the 14%, does that include or exclude currency?

It includes currency x%.

Yes. But you're including currency, that's like a -- okay. And then kind of more, I guess -- I was just really surprised, like Latin America margins at 20% in the quarter, EU margins at very high levels. I think you mentioned there was a one-time benefit to LatAm. But maybe you could explain a little bit more as to why those margins were just so high, given challenging fundamentals and I assume some currency headwinds even in the quarter.

Yeah. I think specifically for LatAm, we talked about it. About half of the improvements driven by costs, cost actions and the other half is a one-time benefit related to VAT accruals in the region that contributed about 20 basis points in the fourth quarter. But the reality is there is underlying improvement in cost structure, the pricing is working. We are improving margins.

Okay. Any commentary on the European margins being so high?

No. I mean, again, as we’ve said, as we think about our margin opportunity as an enterprise, the two biggest opportunities lay in our developed markets. And I’m very pleased with the progress that we’ve made in Europe on basically all aspects of the P&L. So, I think we are well positioned.

Yes. It’s driven by improvements in lower SG&A and better gross margins, so it’s the right things. Yeah.

Okay. And then -- thank you for that. And then -- just kind of thinking like, at least in the fourth quarter, right, volume mix was down in every segment. And your market share, although this is an annual number, you lost market share in a majority of the business. I'm looking on slide 6. I mean that's in dollar terms. That’s in dollar terms. But I guess I'm not really sure how to judge, Irene, kind of organic topline performance. Price is now such a function of trying to offset the currency devaluations. If I look at vol/mix, it's down. Your share is down and your A&P budget is being cut. So kind of how do I think about that? I thought the goal was to gain share even with the categories struggling.

So, let me take those in a couple of pieces, Eric. There is no question that our long-term algorithm assumes a balanced, a volume, mix and pricing. And in the short-term, there is no question that we’re leaning disproportionately on pricing given the enormous increases that we are seeing in both our commodity increases, as well as in the impact of the currency devaluation. So it was about 4.5 points of our 2.4 points of revenue growth. So it was a significant impact, which says vol/mix was a negative and there is no question. As I’ve talked about couple of times on the call that in the short-term, the $1.6 billion of pricing that we took has had an impact in the marketplace. We are monitoring that very carefully. We are thoughtful about which market and which categories we are monitoring and protecting. And the end in mind is to get our ourselves back on to a trajectory over the long-term where we grow at or above the rates of our category growth. But in the near-term, the single biggest opportunity for us to ensure that we had adequate money to invest in our franchises is to make sure that we’re pricing to protect our margins in the face of escalating cost. So there is nothing about the numbers that’s inconsistent with the approach that we are taking. Over the long-term, we would expect to see our business is growing at or above the rates of our categories. But in the near-term, while costs are as volatile as they are, we want to make sure that we are protecting our profitability and that has a short-term dislocation impact.

Okay. Thanks for that. I'll pass it on.

Hey, Eric. Regarding -- it’s Dexter, sorry. Regarding A&C, you said that we’re cutting A&C. I think Brian mentioned a few minutes ago, we actually increased our spending on our Power Brands. And the reduction in our A&C from a percentage standpoint is largely driven through gaining efficiencies and shifting a little bit more towards digital. So I don’t know what you were listening to earlier, but that’s what Brain said a few minutes ago.

Well, I understand that, but I guess as obviously a very brand-oriented company long-term, advertising and promotion as a percentage of your -- or A&C as a percentage of sales, historically that's been a very good measure of brand equity and brand health. You didn't even mention it anywhere. I mean, there's no comment as to what A&C spending is in the press release…

Eric, it was down a little bit on a percentage of revenue. We increased our spending on our Power Brands. Okay.

Okay. All right. Thank you.

We have time for one more question. Your final question comes from David Palmer of RBC Capital Markets.

Thank you. Good morning. Just a quick one on coffee. You said that's included in your 2% organic growth. Does it feel like coffee will be less of a drag, and perhaps significantly so this year than in 2014?

Simple answer is yes. I think as you just saw in the fourth quarter, it contributed about 2 points to our overall growth. We had a strong fourth quarter. We are well staged for this year as we set up the JV. And as we said, we are confident that the deal will close sometime this year.

And then second, just if you were to summarize the emerging market demand expectations, excluding currency, how do you expect overall revenue and profit trends in the emerging markets to compare to 2014? I asked partly because you've highlighted some cross-currents, like Russia perhaps getting worse and China perhaps getting better. Thanks.

No, I mean emerging markets continue to be an important source of our growth. So we expect to see some recovery, as again as the markets adjust to the pricing levels, as we close our price gaps, and as we continue to invest in the franchises. So we have great hopes for our emerging markets in aggregate. I did call out Russia because I would suggest given the events there we would expect to see a somewhat different trend there next year in 2015 than we had last year. But long-term, we continue to feel quite bullish about Russia and the rest of our emerging markets. But, I mean, if you look at our performance in India and Brazil and China is starting to come back, they will be a critical piece of our performance in 2015.

Thank you.

Thanks, David.

This concludes the question-and-answer session of today’s conference. I would now like to turn the floor back over to management for any additional or closing remarks.

Hi, it’s Dexter. Thanks for everybody for joining the call. Nick and I will be available for the rest of the day and over the course of the next week. We’ll see everybody at CAGNY. Just so everybody knows we’ll be presenting at 12:30 on Tuesday -- 12:30 Eastern Time. And we hope to see everybody there. Thank you.