What were the main drivers of revenue growth in 2005?

Revenue growth was primarily driven by favorable volume/mix (including a 53rd week of operations), favorable currency movements, and higher net pricing, which helped offset increased commodity costs and promotional spending.

What is the status of the company's restructuring program?

The company is actively executing a global restructuring program, initiated in 2004, focused on optimizing costs and capacity. This program involves plant closures and workforce reductions, with significant charges incurred and plans for further expansion announced in January 2006.

How did commodity cost increases impact the company's financial performance?

Rising commodity costs, particularly for coffee, nuts, energy, and packaging, had a significant negative impact, estimated at $800 million pre-tax in 2005 compared to 2004. The company attempted to mitigate these through pricing actions and operational efficiencies.

What was the impact of the divestiture of the sugar confectionery business?

The sale of the sugar confectionery business for approximately $1.4 billion was a significant strategic move to streamline the portfolio. Its results were reflected as discontinued operations for all periods presented, and the sale incurred a loss of $297 million in 2005 primarily due to taxes.

MDLZ 10-K FY2005 Annual Report — Revenue, Net Income, EPS

Summary

Mondelez International, Inc. (formerly Kraft Foods Inc.) reported strong performance for the fiscal year ended December 31, 2005. The company generated consolidated net revenues of $34.1 billion, showing growth driven by favorable volume/mix, currency tailwinds, and strategic pricing actions, partially offset by divestitures. While facing increased commodity costs, particularly for coffee, nuts, energy, and packaging, the company managed these pressures through pricing adjustments and operational efficiencies. Significant strategic initiatives were underway, including a global restructuring program aimed at optimizing cost structures and capacity utilization, which involved plant closures and workforce reductions. The company also completed a major divestiture of its sugar confectionery business in June 2005 for $1.4 billion, contributing to a strategic portfolio shift. Despite ongoing cost pressures and a competitive market, Mondelez demonstrated resilience, supported by strong brand recognition and market positions across its diverse product portfolio. Management expressed confidence in its liquidity and ability to meet financial obligations, supported by robust operating cash flows and credit facilities.

Key Highlights

1Net revenues reached $34.1 billion for the fiscal year ended December 31, 2005, representing a 6.0% increase compared to the prior year.
2The company completed the sale of its sugar confectionery business for approximately $1.4 billion, as part of its ongoing portfolio management.
3A global restructuring program continued, aiming to improve cost structure and capacity utilization, with significant charges incurred and further expansion announced.
4Commodity costs increased significantly, impacting profitability, with an estimated pre-tax impact of $800 million in 2005 compared to 2004.
5Operating income saw an increase of 3.0%, despite higher marketing, administration, and research costs.
6Diluted EPS from continuing operations rose to $1.72, an 11.0% increase, driven by operating income growth and a lower effective tax rate.
7The company's largest customer, Wal-Mart, accounted for 14% of net revenues in 2005, highlighting customer concentration risk.

Mondelez International, Inc. Annual Report, Year Ended Dec 31, 2005

Summary

Key Highlights

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