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Mondelēz International Reports Q3 Results

  • Net revenues increased 2.1%; Organic Net Revenue1 increased 2.8%

  • Operating income margin was 18.1%, up 710 basis points; Adjusted Operating Income1 margin was 16.9%, up 130 basis points
  • Diluted EPS was $0.65, up 86%; Adjusted EPS1 was $0.57, up 12% on a constant-currency basis

DEERFIELD, Ill., Oct. 30, 2017 (GLOBE NEWSWIRE) — Mondelēz International, Inc. (NASDAQ:MDLZ) today reported its third quarter 2017 results.

“We’re pleased with our improving revenue growth, driven by the strength of our Power Brands, continued momentum in emerging markets and Europe,” said Irene Rosenfeld, Chairman and CEO.  “We posted another quarter of strong expansion in operating income margin and earnings. We’re making good progress on many of our key strategic initiatives and remain confident in our ability to deliver long-term, sustainable growth on both the top and bottom lines.”

Third Quarter Commentary

  • Net revenues increased 2.1 percent, driven by Organic Net Revenue growth and currency tailwinds. Organic Net Revenue increased 2.8 percent, driven by the continued strength of our Power Brands as well as strong performance in Europe and emerging markets. The company also realized an estimated net positive impact of 60 basis points from delayed shipments that moved to the third quarter as the company recovered from the malware incident.
  • Gross profit margin was 39.1 percent, an increase of 20 basis points, driven primarily by lower Restructuring Program implementation costs and favorable mark-to-market comparisons, partially offset by malware-related expenses. Adjusted Gross Profit margin was 39.5 percent, a decrease of 60 basis points, driven by higher input costs and select trade investments in some key markets, partially offset by continued net productivity gains.
  • End Notes
    1. Organic Net Revenue, Adjusted Operating Income (and Adjusted Operating Income margin), Adjusted EPS, Adjusted Gross Profit (and Adjusted Gross Profit margin), Free Cash Flow and presentation of amounts in constant currency are non-GAAP financial measures.  Please see discussion of non-GAAP financial measures at the end of this press release for more information.
    2. Net earnings attributable to Mondelēz International.
    3. Currency estimate is based on published rates from XE.com on October 25, 2017.

    Additional Definitions

    Power Brands include some of the company’s largest global and regional brands, such as Oreo, Chips Ahoy!, Ritz, TUC/Club Social and belVita biscuits; Cadbury Dairy Milk, Milka and Lacta chocolate; Trident gum; Halls candy; and Tang powdered beverages.

    Emerging markets consist of the Latin America region in its entirety; the Asia, Middle East and Africa region excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Russia, Ukraine, Turkey, Kazakhstan, Belarus, Georgia, Poland, Czech Republic, Slovak Republic, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries.

    Developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the Asia, Middle East and Africa region.

    Forward-Looking Statements

    This press release contains a number of forward-looking statements. Words, and variations of words, such as “will,” “expect,” “would,” “could,” “believe,” “estimate,” “deliver,” “guidance,” “outlook” and similar expressions are intended to identify the company’s forward-looking statements, including, but not limited to, statements about: the company’s future performance, including its future revenue growth, earnings per share, margins and cash flow; currency and the effect of foreign exchange translation on the company’s results of operations; remediation efforts related to and the financial and other impacts of the malware incident; the costs of, timing of expenditures under and completion of the company’s restructuring program; the Brazilian indirect tax matter; and the company’s outlook, including 2017 Organic Net Revenue growth, Adjusted Operating Income margin, Adjusted EPS and Free Cash Flow. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the company’s control, which could cause the company’s actual results to differ materially from those indicated in the company’s forward-looking statements. Such factors include, but are not limited to, risks from operating globally including in emerging markets; changes in currency exchange rates, controls and restrictions; continued volatility of commodity and other input costs; weakness in economic conditions; weakness in consumer spending; pricing actions; unanticipated disruptions to the company’s business, such as the malware incident, cyberattacks or other security breaches; competition; the restructuring program and the company’s other transformation initiatives not yielding the anticipated benefits; changes in the assumptions on which the restructuring program is based; and tax law changes. Please also see the company’s risk factors, as they may be amended from time to time, set forth in its filings with the SEC, including the company’s most recently filed Annual Report on Form 10-K. Mondelēz International disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation.

  • Operating income margin was 18.1 percent, up 710 basis points, driven primarily by the gain on divestiture, the benefit from resolution of a Brazilian indirect tax matter and lower Restructuring Program costs.  Adjusted Operating Income margin increased 130 basis points to 16.9 percent, due primarily to lower overhead costs driven by continued cost reduction efforts.
  • Diluted EPS was $0.65, up 86 percent, driven primarily by the gain on divestiture, the benefit from resolution of a Brazilian indirect tax matter, lower Restructuring Program costs and operating gains.
  • Adjusted EPS was $0.57 and grew 12 percent on a constant-currency basis, driven primarily by operating gains.
  • Capital Return: The company repurchased more than $700 million of its common stock and paid approximately $300 million in cash dividends.

2017 Outlook

Mondelēz International provides guidance on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results, including the impact of foreign exchange.  Refer to the Outlook section in the discussion of non-GAAP financial measures below for more details.

For 2017, the company now expects Organic Net Revenue growth to be approximately 1 percent given the larger than expected impact from the malware incident. The company still expects Adjusted Operating Income margin in the mid-16 percent range and double-digit Adjusted EPS growth on a constant-currency basis. The company estimates full year currency translation would not result in a change to net revenue growth or Adjusted EPS3. In addition, the company still expects Free Cash Flow1 of approximately $2 billion.

Conference Call

Mondelēz International will host a conference call for investors with accompanying slides to review its results at 5 p.m. ET today.  A listen-only webcast will be provided at www.mondelezinternational.com. An archive of the webcast will be available on the company’s web site.  The company will be live tweeting the event at www.twitter.com/MDLZ.

About Mondelēz International

Mondelēz International, Inc. (NASDAQ:MDLZ) is building the best snacking company in the world, with 2016 net revenues of approximately $26 billion. Creating more moments of joy in approximately 165 countries, Mondelēz International is a world leader in biscuits, chocolate, gum, candy and powdered beverages, featuring global Power Brands such as Oreo and belVita biscuits; Cadbury Dairy Milk and Milka chocolate; and Trident gum.  Mondelēz International is a proud member of the Standard and Poor’s 500, NASDAQ 100 and Dow Jones Sustainability Index.

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