Luca Zaramella
Chief Financial Officer at Mondelez International
Thank you, Dirk and good afternoon. Our third quarter performance was strong across the board. We delivered top-line trends, good operating profit dollar goal, including significant branding investment and excellent free cash flow. Revenue grew 5.5% underpinned by solid volume growth and pricing that we have been implementing to counter unprecedented cost inflation. Emerging markets continued with accelerated growth, displaying the resilience of our categories and strong execution. They grew more than 12% for the quarter and nearly 9% on a two year basis. Our emerging markets results include double-digit growth in Brazil, Mexico and India, as well as high single-digit growth in China, Russia and Africa. These markets are attractive growth engines for us. As consumer purchasing power continues to grow, as we feel, white spaces, as we pursue distribution expansion and that's consumers trade up.
We continue to invest behind them in a big way. For the quarter developed markets growth remains solid at 2% with a two year average growth of 3%. Demand and consumption trends are robust in these markets. Albeit, supply chain restrictions limited our growth, specifically North America.
Turning to Slide 13 and portfolio performance. Biscuits grew 2.7% and more than 5% on a two year average. Brazil, Russia and Mexico posted double-digit growth, while India and China grew mid-single-digits. Oreo continues to be a standout performer. Chocolate grew more than 11% with a two year average of more than 8%. India, Brazil and France grew double-digits. The UK grew high single-digits and Russia grew mid-single-digits. Cadbury, Milka and Lacta all delivered robust volume-led growth for the quarter. Gum and candy posted double-digit growth, resulting from a continued improvement in mobility.
Moving to market share performance on Slide 14; we continue to see good share performance. On a two year community basis we have held or gained share in 75% of the business; these skits and chocolate heads or gain in 80% of our revenue base. Notable share gainers on a two year basis include the U.S., China, Russia and Brazil scaled and U.K., Australia, Russia and South Africa Chocolate. Gum and candy has shown gaining in 30% of our revenue base, primarily due to gum performance in China, Russia and France. Although still below pre-COVID level, this category continues to improve with mobility trends. Moving to page 15, Gross profit dollars grew 2% for the quarter, reflecting the acute impact of elevated inflation in commodities, as well as transportation and labor costs in North America. While all other regions still face some inflation, they all display GP dollars growth in line with our expectations.
In the short-term, we have adopted our promo and trade deal spending to the elevated cost environment. But as we expect these dynamics to persist into 2022, we have also taken and announced price increases across a significant number of markets. Of note, we announced a new round of pricing last month in the U.S. which will go into effect at the start of next year. Although cost pressures are not as high as in the U.S. we also have a robust pricing agenda for other markets too. We have implemented pricing in Brazil, Mexico, Russia and Southeast Asia, in addition to other business units. Our goal remains to enter 2022 with improved dollar profitability levels from these actions to support the virtuous cycle which funds continues investment. Operating income dollars increased 4.5% due to strong overhead management and simplification initiatives. We continue to invest in A&C which was up almost double-digit in the quarter. On a year-to-date basis, gross margin has increased nearly 5% while operating income dollars that's grown by more than 8%. A&C has increased double-digits.
Moving to regional results on Slide 16. Europe revenue grew 4.6% in the quarter and 4% on a two year basis, while dollars grew 5% -- 4.5% versus last year, reflecting a strong virtual cycle. North America grew 0.3% on top of 6.3% growth last year, resulting in a two year average growth of 3.3%. Operating income declined 9.7% in the quarter. Overall, North America results were negatively impacted by service level constraints in the U.S. as transportations and labor shortages have impacted both cost and [indecipherable]. These constraints are primarily impacting our external manufacturing and third-party logistics partners. We expect profit dollar growth to improve in conjunction with recently announced price increases across much of our U.S. portfolio that go into effect as of January 1 next year.
For the quarter, the impact of the six weeks U.S. strike was mitigated by a business continuity plan which included increasing inventory levels ahead of it. Nevertheless, there will be an impact in Q4 which I will discuss in our outlook. AMEA posted growth of 5.72% and a two year average of 4.9% with broad-based strength apart from Southeast Asia where COVID -related restrictions did impact our Q3. India delivered double-digit growth in the quarter and China delivered high single-digit growth. AMEA operating income dollars grew nearly 8% while continuing to make sizable working media and route to market investments. Latin America grew 26% in Q3 and 14% on a two year average. Brazil and Mexico both grew double-digits while dollars in Latin America grew double-digits over prior year due to pricing and volume growth.
Now, turning to EPS on Slide 17. Q3 EPS increased 9.4% at constant currency, driven primarily by operating gains, with year-to-date EPS increase of nearly 9%.
Moving to cash flow and capital return on Slide 18. We delivered free cash flow of $700 million in the third quarter, bringing us to $2.1 billion on a year-to-date basis.
We also repurchased approximately $1.8 billion in shares in the first three quarters at attractive prices. I wanted to spend a quick moment on some of the significant improvements in our best facture financing costs and pension costs on Slide 19. Since 2014, interest expense has been reduced by approximately 60% despite an increase in total borrowings with a current average rate of 1.7%. At the same time, we have extended our maturity from 7.7 years to 9.6 years. Similarly pension funding has improved significantly in the recent years to 99% driving material reductions in pension contribution requirements and costs. And in September, we issued our first which was the largest to-date in the GPG sector, enabling us to cost effectively fund our sustainability initiatives around focal packaging and now our net zero carbon target.
Let me spend a moment on Slide 21 regarding the current [indecipherable] and supply chain environment and our actions. The supply chain environment remains a challenge for us, like many others with higher cost inflation, as well as labor shortages at the third-parties and train transportation capacity. We have a well-established [Phonetic] to mitigate the impact of inflation rate and supply chain pressures over time. These include successful implementation of price increases as part of our RGM strategy, supported by the strength of our brand. We're also continuing in our journey of portfolio simplification to identify additional SKU reduction opportunities and to improve service levels and overall efficiency.
In terms of our manufacturing network, we are taking actions to free up capacity with more flexibility in some of our plants and logistics networks. We also continue to execute our hedging programs of key commodities which we believe have been effective, as you can tell by looking at our realized and unrealized mark-to-market gains this year. Overall, we are confident that these initiatives will allow us to offset the majority of the pressures we are currently seeing and will drive long-term profit dollar growth, albeit with some lumpiness given the cadence of pricing and input cost increase.
Moving to our outlook on Slide 22. We expect most of the trends that we have experienced in Q3 to extend into Q4, including robust demand for our categories and brands in both developed and emerging markets, continued transportation and labor inflation and supply chain pressure in our North American region, increased focus on Revenue Growth Management activities across a wider span of businesses, high level of investment in our people, friends, markets and capabilities. Based on our strong results year-to-date, continued categories resilience and solid demand trends, we are raising our full year revenue growth outlook to approximately 4.5%; this implies Q4 growth of 3% or nearly 4.5% on a two year taker and assumes approximately a one point of top-line headwind from the impact of the continued transportation and logistics constraints and the recent strikes in the U.S. As the market conditions remain fluid, this outlook does not reflect a material worsening from current environment.
In terms of EPS, we continue to expect high single-digit growth for the full year despite the initial pressure from commodities and transportation and labor dynamics in North America. We also expect free cash flow generation of $3 billion plus. Forex translation is now expected to positively impact our reported revenue by 2% points and EPS by $0.09 from the year based on current market rates. One note related to our simplified to grow restructuring plan. We have extended the program by one year as we're still left with about $100 million of available funds that we plan to spend on high return supply chain and overheads related projects. The overall amount of the restructuring program is unchanged. So this does not change anything else in our outlook for this next year.
Our updated outlook is based on current conditions and does not factor on material degradation in the operating environment that would be triggered by a significant worsening of COVID or supply chain restrictions. To wrap up, we are encouraged by the trajectory of demand for our brands and categories across our geographies. We are confident in our growth strategy and our ability to continue to execute against it going forward. This means balance and consistent top and bottom line growth, continued reinvestment in our business, disciplined cost management and strong free cash flow generation.
With that, let's open it up for Q&A.