Good day and welcome to the Mondelez International First Quarter 2021 Earnings Conference Call. Today's call is scheduled to last about one hour including remarks by Mondelez management and the question-and-answer session. I would now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir.

Good afternoon and thanks 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.

Thank you, Shep and thanks to everyone for joining the call today. We had a strong start to the year despite lapping our highest growth quarter in 2020 and Q1 reconfirmed that we are emerging from COVID even stronger. Our performance demonstrates that our strategy is working and that we have clear growth opportunities in front of us. We are driving a virtuous cycle and producing a consistent track record of growth. As we continue to deliver on our commitments, we are also strengthening our business by accelerating investments, reshaping our portfolio and simplifying the business while maintaining cost discipline. We are well positioned to accelerate long-term revenue and earnings growth. On slide five, let me walk you through the headlines of our financial results. Top line growth was 3.8% underpinned by broad based share gains, and excellent execution across all geographies, categories and brands. Our teams around the world delivered amazing results with events like Chinese New Year and Easter being clear standards. In turn, the strong volume and price driven top line translated into gross profit dollar growth of 5%, also aided by our emerged stronger cost initiatives.

Thank you, Dirk and good afternoon, everyone. Our first quarter performance was strong across all key financial metrics, building off the strength and momentum of 2020. Revenue grew 3.8%, driven by broad based growth and a healthy balance of price and volume. On a two-year average basis, we grew for 5.1%. Emerging market performance was strong with growth of 10% for the quarter and more than 7% on a two-year basis. Quarter-one marks, for emerging market, a solid comeback from the impact of COVID and proves that our geographical footprint is a long-term sustainable competitive advantage. These results include double-digit growth in Brazil, India and China, as well as high-single digit increase in Russia. In developed markets, we continue to see solid consumption and are pleased with our performance given the elevated demand in the previous year quarter. These markets were in positive growth territory for the quarter while the two-year average growth was 4%. Turning to slide 14, and performance by category. Biscuits grew plus 3.4% in Q1 and plus 7.6% on a two-year average. Each of our BRIC countries delivered double-digit growth during the quarter, while our large US business posted low-single digit growth against very elevated growth from the previous year. The Oreo brand once again was a clear winner with nearly double-digit growth. Chocolate grew more than 10% for the quarter, with a two-year average of 6.5%. Our large chocolate countries such as India, the UK, Germany, Brazil and Russia, all turned in strong results. We are particularly pleased with our Easter performance, considering that mobility restrictions are still in place, for instance, in Europe. From a brand perspective, both Cadbury Dairy Milk and Milka grew double digit. Gum and candy continued to see the impact of restricted mobility. This business declined approximately 16% during the quarter and 8% on a two-year basis. Comparisons will become easier as we move into the second quarter, though we are expecting a gradual recovery. Now, I'll cover our market share performance on slide 15. We continue to see good share performance. Given the unique impact of COVID on results, we have switched to a two-year cumulative for percentage of revenue gaining or holding share, as we feel it better depict how we are truly doing. In Q1, we had or gained share in 80% of our revenue. Biscuits and chocolate were the big drivers holding or gaining share in 85% of our revenue base. Gum and candy helped or gain in 35%.

Your first question comes from a lot of Andrew Lazar with Barclays. Please go ahead.

Great. Good afternoon. Thanks for the question.

Hi, Andrew.

Hi, Andrew.

First off, maybe Dirk, can you talk a little bit about how you feel about the durability of the emerging market performance, given the strength that you saw in the quarter, obviously, with all that is going on in so many of those emerging markets currently?

Yes. Well, just to put the numbers back in front of us. So it's about 10% of growth in the quarter and then 7% on average for the last two years. It was broad based with double-digit growth in Brazil, in India, in China and in Russia, or high-single digit in Russia, sorry. And the contribution to the growth was coming from our global brands and from our local brands. So I would say strong across the board. Maybe some of the countries where we have gum and candy business a little bit less, but we are talking about Mexico or some of the Central American countries or Thailand but not the big emerging markets. Obviously, the big question is what's going to happen with COVID in these big markets, and is it going to affect the consumer? So if I go through them one by one, China is operating well. COVID is under control, I would say. There is a return to mobility and if there is a rise in COVID cases, they lockdown quickly an area, contract trace and then - contact trace, sorry, and move on. So I think China, we can be relatively sure that that is going to continue. The next one, India, the performance was very strong in the first quarter. But at the same time, we've seen near the end of the quarter and then into the second quarter big rise in cases driven by religious festivities, state elections and probably some fatigue. At the moment, the restrictions are only about 10%, so 10% of the population is under severe lockdown. And these lower type of restrictions do not materially affect the access to our products. But if the restrictions would be more expanded that could give us some pockets of disruption to…

Thanks so much for that. And just this - oh, yeah.

Maybe, one thing Andrew, because this is maybe the moment to talk about COVID and the India situation, as a side remark. But obviously, our hearts go out with everybody in India and the struggle that the country is going through. The safety of our colleagues is our number one priority and we are giving all the supports we can to a local team. And this week, we are going to donate at least $2 million to the government and to the healthcare workers to provide critical medical infrastructure like oxygenators and other equipment. So I just wanted to make sure that we are aware of what's going on in India and as a company, we are planning to do whatever we can to help.

Yep. Of course, thank you for that. And Luca, just a quick one, given 1Q organic sales growth was obviously very strong and above the full year expectation and it was against the toughest year ago comp, I guess could the 3% plus full year organic sales growth outlook prove potentially conservative, and I guess, potentially also give you more comfort, obviously, in your margin expectations, in a rising sort of inflationary environment?

Yeah. So we are clearly encouraged by the strong start to the year and the quality of our results. It's remarkable to see share gains continuing volume and price, both contributing in a meaningful way to top line and profitability and free cash flow are ahead of last year. As Dirk just said, we are very happy with emerging markets that has truly come back since the peak of the COVID crisis last year in Q2, and the last three quarters over there had been aligned in terms of trends to the pre-COVID levels or even better. And same goes for developed markets that, for which consumption is higher than the 2019 baseline. So we are optimistic about the fundamentals and the ability that we have to execute a 2021 plan. But we know, as Dirk just said in India, there is some volatility and we want to make sure that we don't get ahead of ourselves and so reaffirming our original plan, at this point, we believe is really the right approach. Having said that, you're right, we are going cautiously optimistic about the ability to over-deliver versus the original guidance. But I want to make sure that we don't get ahead of ourselves, it is early in the year. But just to reassure that we have all the investments aligned in the plan. And actually, we have unlocked some additional investments, particularly in places where I think the situation is experiencing great momentum. In terms of inflation, there is more inflation coming. And so profitability is great in Q1, we believe we are going to hit the numbers as we had originally in mind, but the higher inflation will require some additional pricing and some additional productivities to offset the impact, which I believe at this point is absolutely manageable, given that all these positions are pretty much hedged for 2021. And so as I said, profitability should be good, in line with what we told you at the end of last quarter. And we feel like we can price away the inflation and commit again to a high single digit EPS as per the original guidance.

Thanks so much.

Thank you, Andrew.

Your next question is from the line of Ken Goldman with J.P. Morgan. Please go ahead.

Hi, thank you.

Hi, Ken.

Hi.

Hi. You've done a number of bolt-on acquisitions in the last couple of years, you highlighted them today. Nothing on the larger side and I understand, you've been pretty clear, you're not really looking to buy anything sizable. But if a larger asset became available, would you consider it or is it really something that's not on your radar right now? Is it just something where you're still committed to those smaller size targets for now?

No, we remain on our strategy, which is the snacking world basically. And we want to execute any acquisition, small or big, clearly, as it should help us to accelerate our overall growth rate. So we want to stay in snacking and we want to accelerate our growth rate. So we know where that needs to come from. It has to come from the adjacencies, some of the geographical whitespaces, and some of the fast-growing segments that we have in our current market. So if there would be a larger acquisition that would provide us the opportunity to get bigger in snacking or get an accelerated - and/or get an accelerated growth rate, we're certainly open to it. But it's just very difficult to find and we're hesitant. We would probably be open to get into other areas of snacking but we are hesitant to get into other food categories, which are showing less growth. And so that makes it much more difficult to find the right sizable acquisitions. But it's absolutely not the case that we are not open to it, we're totally open to it.

Understood. Thank you for that. And then very quickly, you mentioned that the February storms hurt your operating margin in North America. I don't think you quantified that. I know it's tough to be precise sometimes. But is there any way we can sort of think about how much that affected your margin this quarter? It's important just as we think about what the non-recurring versus recurring impacts were? Thank you for that.

Yeah, it had a disruption in February. Unless you wanted to go Luca?

No, no. Go ahead, Dirk.

Yeah. Yeah. We had the disruption in February from the Texas storm, but we had a good stock rebuilt in March. So I would say that the effect for us has been limited. I mean, at the moment itself in February, we saw it clearly. And so those sales that we lost there will not come back but it's not going to have a major impact on the year, I would say.

Thanks so much.

Your next question is from the line of Robert Moskow with Credit Suisse. Please go ahead.

Hi, thank you. I noticed that Brazil had much better numbers than what we're used to seeing and I remember you put new management in place in Brazil. Can you give a little more color on what you think the team is doing right there? How sustainable those improvements are? And is there any kind of a model for your other LatAm countries to follow here or do you think just the environment in Brazil is just more amenable than the others? Thanks.

Yes. Yes, Brazil has been doing better, like Luca said already, for several quarters now. It grew double digit in Q1 and we are expecting good growth again in Q2, and all that within a situation where COVID cases are increasing dramatically. One thing to keep into account before I talk about all the good things that management has been doing is that the composition of our product range in Brazil is fundamentally different from a Mexico or what we call VACAM , which is Colombia, Peru, Chile and Central America. Those Mexico and VACAM have a very important share of their business is driven by gum and candy. And as a consequence, they suffer more in this crisis. Brazil has a bigger biscuits and chocolate business, and they're doing quite well, increasing market share. We've stepped up investments. We've also improved our customer service. I think the team also has increased or improved their internal process in a big way, made the business much simpler to manage. They've brought in some extra talent. So yes, clearly management is driving a change in the way the business is operating and it's showing in the results. I would say for the other businesses, the problem is different from what we had in Brazil. We were not performing in the Brazilian market in biscuits and chocolate. It's largely in Mexico and VACAM, we need to make sure that the gum and candy business comes back. And so we will see how that goes. We see it come back step by step, but it's going to take a while.

Okay, a follow up on chewing gum. Is there any kind of earnings dilution number in your head that you would find acceptable, if you were to divest your developed market chewing gum business? And also how would you go about splitting it up that by keeping your brands in DMs and also, if you were to divest, exit the brands in DM, in developed markets?

I can let Luca maybe talk about the dilution that. Our developed market business is not that big and he can talk about that. But splitting it up, I don't think is from a brand perspective, a major issue, it exists with many brands that one company owns a brand in one area and then owns it in another area. It's probably a little bit more difficult but doable, as it relates to the supply chain and where the products are being produced. But we think that those factories can stay with the different regions. And then R&D, I think an agreement can always be made that our R&D team continues to provide service and any innovation we do on our brands in one part of the world, we can extend that to the other part of the world, if needed. So I think from an operational standpoint, splitting it up, it's doable. It's not - I mean, it's not a walk in the park, but it's something that I think our teams can manage quite well. Luca?

I think on dilution, quite frankly, it is a little bit premature to talk about what it could be. I mean, we are assessing multiple options and even within certain scenarios, it might be not an outright sale and so we have multiple options ahead of us. And quite candidly, we are assessing all of them. So we haven't decided yet. It is 2% of the business, 5% overall, 2% when you look at only emerging market. And we believe, in general terms, that if we had to go down the path of a sale of the business, the increased focus and the outcomes that we could drive through our existing biscuits and chocolate business will overtime offset and obviously, we're not going to sell anything below the key value. Those are key fundamental principles that we apply all the times and we will apply even this time.

Thank you for the color. Appreciate it.

Thank you.

Your next question is from the line of Dara Mohsenian with Morgan Stanley. Please go ahead.

Hi, guys.

Hi, Dara.

Hi, Dara.

So a couple questions. First, you mentioned your ability to price to offset higher commodity costs. I'm wondering if the pressure continues to build incrementally on those fronts going forward. Can you talk about your ability to take pricing in emerging markets where in theory, there's a weaker consumer post-COVID and just how you think about that on a regional basis in some of the key emerging markets relative the pricing power in developed markets in the US and Europe?

Yeah, maybe I'll start. So I think we are overall starting with a position of strength in our franchises. We have invested quite a bit in the last few years with our consumers and our customers and we are delivering value for both consumers and end customers overall. We have a strong portfolio of brands. We have invested in working media in - that is going double digit, sales execution, route to market and in capital in our facilities. Having said that, there is higher inflation in the marketplace and if you look even at this quarter, the composition of pricing and volume, pricing is a little bit more pronounced than it has been historically. So we are pricing more and we are pricing away inflation. We are not necessarily going all the time with least price increases, we use a lot of revenue growth management techniques within the company. Those provide a better impact for consumers an elasticity. We will protect pre-price points, particularly in emerging markets. And that price-backed architecture is a key element of price increases throughout both emerging markets and developed markets. We are clearly optimizing promo spending. We are optimizing mix, mix is still negative in quarter one because of gum and World Travel Retail. But when you strip that out, and you look at biscuit and chocolate, it is better than it has been in the past. And also, we want to improve trade deals ROI. So to cut it short, we feel confident that we can price away inflation. And we are never going for the big bang, depending on what the current situation is in terms of commodities and ForEx. But it is a gradual implementation of pricing over time. And obviously, given where we stand in terms of overall inflation, as we go into next year, we would have to price.

Okay, that's helpful. And then from a market share standpoint, it looks like the momentum continued in Q1 on a two-year basis. Can you give us a little more of a near term update of what you're seeing in March and April, as you cycle some of the incremental share gains from last year? And are you seeing any competitive response in the marketplace to the share gains you've seen recently? I guess indirectly that ties the first question around pricing but I'd be curious for competitive response and what you're seeing from competitors. Thanks.

Yes. So overall, I would say, for this year, we are expecting modest gains on the back of the very strong gains that we had last year but we do expect to continue to increase our market share. In Q1, on a global basis, we continue to increase our share, not as strong as last year, but still quite good, more than then it has been in the past. Of course, as we get into March and April, and in some countries, we don't have the full results yet. That's where we start to lap some of our largest step up in share gains that we had last year. And so it's a bit too early for us to say how that's going to pan out. But overall, we do expect a good year. And the reason being is that some of the things we're doing, like distribution increase, execution against seasonals, increase in our investments, the ROI you're seeing on some of our marketing is all pointing in the around - sorry, in the right direction. And so we believe that the basis there is to continue gaining shares. Another one that I didn't mention but there is increased penetration of our brands. In the last 12 months, we have about 150 million households globally that are now consuming our products. So I don't think that's going to go away right away and that is going to be the base that is going to help us to continue to gain share. We think it's more helpful since we have a big step-up last year and we will in some markets give back a little bit, I'm assuming in the coming months. So I think the net result of the two years is what is most important. That's why we thought it would be better to start showing the two-year cumulative share. As I said before, we have all the right things in place. We saw in a continuation of that in Q1 and we think that we still will have a good year.

Great, thank you so much. It is helpful.

Yeah.

Your next question is from the line of Bryan Spillane with Bank of America.

So I wanted to just follow back up on the question around - the questions around portfolio and the gum business and I guess two questions there. First one is just the slide where you've, you've talked about a billion dollars of revenue from the acquisitions, are they're contributing a billion of revenue? Can you give us a sense of just what the profit contribution is and where - maybe where that stands relative to what you thought you were when you made the acquisition, just trying to get a better understanding of just how accretive it's been to returns or contribution to profit growth?

Yes, so the - I would say, the group of acquisition is all along strategy, but it's very different of where in the development these different brands are. So the profit contribution is largely depending on how big and where we are in the development. So to give you the two extremes, potentially Give & Go, mature business, strong profitability, growing high single digits in the first quarter, so a big contribution to our profitability. On the other spectrum, I would say, Hu, smaller brands, still investing in getting distribution, in getting the brand build up. Huge potential, biggest or fastest selling chocolate brand in Whole Foods, but we need to build up distribution, so for the time being, we probably going to run a loss on Hu, as we build up the brand. All the other ones, I would say, if I think about Perfect Snacks, Grenade, and Tate's, they all have strong EBITDA, in line or above with the EBITDA of the company. And they are in sort of the 100 million to 150 million mark in sales. And so they all have huge distribution opportunities, which we are continuing to build with them. And so our expectation is that they are profitable, that they will contribute to our overall profitability but that's not the main role, their main role is to grow as fast as we possibly can. So hopefully, that gives you an idea how we think about it.

Yeah, that's helpful. And then, Luca, maybe just the follow up on Rob Moskow's question, as we're thinking about the potential options for gum, just tax leakage or cash, cash tax return or cash returns, because your model has been very effective at existing businesses in a very tax advantaged way over time. And so if you could just kind of maybe give us a little bit color, how we should think about those considerations? Is that - the cost basis in this business goes all the way back to when Cadbury bought Adams, right? So I don't even know what the cost basis is but as we're thinking about exit vehicles, we really think about tax efficiency and maybe those types of structures. And, again, this is a business that could be worth, I guess, a billion and a half or more. So just trying to understand how we should think about cash, the cash inflow potential.

The situation varies upon the structure we're going to use and it will be different between the US and in Europe. I would say, overall, the tax leakage is manageable if we had to go down that path. And I want to reiterate, it's not a foregone conclusion at this point but there will be some tax leakage potentially. Again, in the big scheme of things, I think it is something that we can handle. And it will depend upon the structure we might end up using and how the value is located between Europe and US.

Okay, thank you.

Thank you, Bryan.

Your next question is from the line of David Palmer with Evercore ISI.

Thanks. You cited how you've been gaining share in most of your business but you also cited that the core category growth has been 3% or so. So it's not too far behind where you have been. In other words, global sweet snacks has been extremely resilient during this entire pandemic. Could you speak to that? Do you think that there's parts? You know, obviously, you've talked about gum and World Travel Retail as being headwind areas, but there might be others that are tailwinds, like, Oreos in the US, for example. Roll it up for us. Do you think that this pandemic has been a net headwind to your business, and something you can get back in future quarters as a tailwind and I have a follow-up?

I would say the Beauty of our businesses that despite everything that that happened, we're very balanced. And if you look at it, we grew 3.7% last year. We are growing 3.8% in the first quarter of this year. Last year, we saw big gains in biscuits and in chocolate, but we had gum and candy really going the opposite way. We had emerging markets slowing down but developed markets stepping up. So the balance, the net balance, and I keep on referring to that, the net balance has been that in the end for us, there has not been that big of an effect and that continues into Q1. Now thinking it through what's going to happen going forward. I believe that it could probably be a tailwind. And the reason why and I'm talking, let's call it, two years from now, in emerging markets, things will come back, mobility will come back and we see big growth in snacking. This quarter, as they came back, emerging markets were growing close to 10% for us. So I think there is momentum in emerging markets, emerging markets are growing 7% on average over the last two years. There is momentum there. And as they get through COVID and the consumer gets back in into their normal life, I think we will see a benefit to that. In developed markets, I think consumers will use this as a change in the way they live. And they will not spend as much time in the office and they will spend more time at home. And we clearly know that, as a consumer spends more time at home that benefits are categories, particularly biscuits but also chocolate. So if I think about it, not immediately in the next year, because there will still be a lot of ins and outs, but during the crisis, it was kind of a neutral effect. Getting out of it, I think it's going to have a tailwind for us.

Thanks. That's great. And you have such a multifaceted growth agenda. You've talked about a lot of this stuff during the slides, brand bolt-ons, underpenetrated channel push and global Oreo expansion, adjacencies and like. Is there - it's been a kind of a wild year even already with inflation ramping up and you've heard about supply chain disruptions, whatever, and obviously, the COVID cases in some of your emerging markets. Are your plans at all changing about what you are pushing harder on this year in leaning into? And I'll pass it on.

I mean, overall, we feel that our strategy that we laid out in the second half of '18 still is very valid. We've made some adaptations to it during the crisis. And at the moment we are reviewing it to see if we can build on sort of another level of sophistication and an understanding of what really drives it but the basics are still there. I would say that the areas where we we've been working on, for sure, is simplifying the business more. We have too many SKUs, too many small innovations and so on and that makes life really complicated for our teams and for supply chain, so we've been focused on that. We're also starting to understand our marketing approach better and better. Our brands are really thriving. I think teams have done an incredible job in better understanding purpose of our brands and really then making it come alive. We get great returns on our investments. And so I think we're going to continue that and try to lift that to the next level. As it relates to channels, for sure, we have to adapt our strategy, e-commerce 77% growth in the first quarter after already a big boom last year. So e-commerce, I think in the coming years, will continue to grow very fast. We think discounters is another area that will be important. And we will have to see where the balance between grocery and big stores versus on the go and away from home will pan out, and that might require some adaptations. So I would say, overall, the list of opportunities that we have to grow has not changed and has reconfirmed itself. We might change the sort of the weight or the priority of it, but the ones I went through in the presentation are still very valid. And the enablers of the growth are still very valid and are working for us. So it's more about prioritization than changes to my opinion.

Thank you.

Your next question is from the line of Alexia Howard with Bernstein. Please go ahead.

Hello there.

Hi.

Hi.

Hello there. So, first of all, on the last earnings call, I think to remember, gross margins were down, I think about 80 basis points year-on-year and there was some trepidation expressed about how gross margins would develop this quarter. Clearly, they came through better than expected, flat year-on-year on and adjusted basis. Could I ask just what happened that came through better than you anticipated? Was it just pricing relative to input costs in Latin America or was there something more to it? And then I have a follow up?

Yeah, I mean, as we saw inflation spiking, we have been doing a little bit more pricing and optimizing the overall revenue growth management mix and so that's part of the answer. We have delivered the great quarter in terms of productivity. The colleagues that we have around the world working on supply chain have done a remarkable job. And, the goal for us is really to make sure that while protecting all employees around the world, COVID costs are pretty much absorbed by productivity and happy to report that in the quarter, the COVID costs were only inverted commas, obviously $25 million. And then I think overall, when you look at the composition of profitability, we are very pleased with increasing profitability, you see, not only in Latin America, which I think is quite good and that is on the back of our teams in Brazil, for instance, optimizing returns on Easter, that are this year, at historical lows compared to last year. But also and importantly, all the volume leverage that came through EMEA, which is again proving to us if we didn't know that, while this company has tremendous potential in revenue, that revenue, if it comes to the right mix of price and volume, it delivers tremendous upside to the bottom line. And also, as you saw Alexia, in terms of cash flow. So, it was better than we anticipated. I think it was better because again, we priced a bit more, productivities came in strongly, and importantly, particularly in EMEA, but not only volume was strong and it was also the case obviously in EU and in the US when you look at the two-year stock on profit. I think we can call ourselves happy with the delivery of that.

Great. And just as a quick follow up. You called out unfavorable mix as a negative on the organic sales growth. Was that specifically just gum related or was it also World Travel Retail, just curious about how those - that mix is likely to develop over time.

Overall, when you look at total mix, it is because of gum and it is because of World Travel Retail. Then obviously, North America commands a little bit higher profitability than other places and obviously didn't go as much as other places this quarter. But overall, I would say when you look at the fundamentals of mix management, we feel quite good, both in chocolate and biscuit, and hopefully gum and World Travel Retail will come back certainly, we will start lapping better numbers in the second part of the year.

Great. Thank you very much. I'll pass it on.

Thank you, Alexia.

Your next question is from Jason English with Goldman Sachs.

Hey, good evening, folks. Thank you.

Hi, Jason.

Hi, Jason.

I think - look, I think you partially answered this in the answer to last question, but I want to make sure I got it right. On EMEA, this is the highest margin I think we've ever seen from that business with substantial growth. If it's all volume leverage, is it fair to underwrite like this is a sustainable profit level, maybe not every quarter, but this is not sort of unusual that we have to reset lower. And then on the flip side, it's been a couple of years since we've seen an EBIT margin below 20% in North America. It sounds like in an answer to Ken Goldman's question like this, whether disruption was kind of a net loss, what drove the margin pressure there? Thank you.

So, Jason, the simple answer on EMEA and the remarkable 37% increase that you saw, it is because we have good profitability in India and China that delivered amazing growth in Q1. When we look at the P&L structure of these two companies, it is a sound P&L that allows for reinvestment. And so that came after we invested more in advertising. And again, I want to stress the fact that emerging markets can be profitable, can be cash accretive and EMEA is the point in time. We come from a place where we have invested in supply chain and we have great state of the art facilities in both India and China, as a specific example. And putting volume on top of it is, is just going to yield great results also going forward. So that's really, when we say emerging markets in action, you look at the EMEA P&L and you realize how that can really come to fruition not only in this quarter, but for the years to come and so it is a structural advantage. We just have to keep on being disciplined in pricing and delivering volume. And I think things will take care of themselves if we continue investing in route to market and Dirk gave you the idea of the opportunities that we still have in these places, whether it is biscuits, for instance, in India or whether it is number of stores in China and chocolate, obviously. I think in North America, I wouldn't get overly concerned about the margins. I think North America obviously this quarter is facing some additional pressure in terms of logistics costs. And you will all know that edible oils, sweet, et cetera, they had been going up in terms of cost. But we are taking the necessary measures to optimize profitability and total dollar delivery a little bit more. Again, I don't want to take away the fact that only two-year average, when you look at the net benefit versus '19, it is still a 17% - 16% OI increase versus the 2019 baseline which again, I think is quite good.

For sure. Thank you. I'll leave it there.

Thank you, Jason.

And your final question is from the line of Chris Growe with Stifel. Please go ahead.

Hi, good evening. Thanks for the time here. I know we're getting overtime. I just had two follow on from earlier questions. I want to ask first of all, we think about the organic revenue for the year, it's clear, you're taking a little bit more pricing due to the inflation picking up. As we think about the balance of volume versus pricing, it sounds like price is going to be a larger contributor. Have you given a little more color around how much that could contribute to organic revenue growth for the year?

So we come from a place last year where if you look at the numbers, it was 50:50, I think it will be slightly more. Again, I think we need to look at the fundamentals of how we want to run this company. Volume is integral part of the incentive scheme for the countries and for us obviously at the center and for the regions too. It is clearly a key contributor in places like EMEA where we have tremendous leverage potential. There might be other places where we will have to price a little bit more and there will be some volume consequences. So I think you will see still volume growth, it might be slightly less than what happened last year. And importantly, both volume, market share and gross profit dollars are critical part of the incentive scheme. And so it will be the optimization of the three elements that will eventually determine how much we will deliver in pricing versus volume. Remember, also in the second part of the year, we will start lapping meaningful volume declines in gum and World Travel Retail and the simple year-over-year comparison should have that partially offset potentially by tougher comparisons in developed markets, particularly in North America. So I feel quite good in telling you that the balancing will still be there. Maybe it will be a little bit more tilted to price this year.

Okay, that's helpful. Thank you. Then just one quick follow on. We've talked about high growth segments and adjacencies. Most of your M&A activity has been in the US for those six transactions you outline there. Is there a more heavier focus for you outside the US? You had one recently in the UK, is there - are you looking outside the US for more of that sort of high growth segment or adjacency for the business and that's all I have. Thank you.

Yes, in fact, we did. In this year, we did three and two were outside of the US; one in Australia, one in Europe. I would say the focus that we have is as much internationally as in the US, there's no clear preference. Probably in the past, things have moved faster in North America than in the rest of the world but we see a good pipeline, good conversations going on. So in the end, you can expect a good balance between the two.

I think that's it. Well thank you very much for your attention to our earnings. Thank you very much for your investment in the company and for your interest in the company. We obviously look forward to a great continuation of the year and looking forward to talk to you in the coming weeks. Thank you.

Thank you, everyone.

Ladies and gentlemen, this does conclude today's earnings conference call. You may now disconnect your lines.