10-KPeriod: FY2007

Mondelez International, Inc. Annual Report, Year Ended Dec 31, 2007

Filed February 25, 2008For Securities:MDLZ

Summary

Mondelez International, Inc. (formerly Kraft Foods Inc.) in its 2007 10-K filing, reported robust net revenue growth of 8.4% to $37.2 billion, driven by favorable currency movements, acquisitions, higher volume, and pricing. However, diluted Earnings Per Share (EPS) saw a decline of 12.4% to $1.62. This decrease was influenced by significant restructuring charges, higher commodity costs impacting profitability, and increased marketing, administration, and research expenses. A major strategic move during the year was the acquisition of Danone Biscuit for $7.6 billion, alongside the planned divestiture of the Post cereal business. The company also continued its share repurchase program and increased its quarterly dividend, signaling a focus on shareholder returns despite the EPS dip. Key financial trends indicate rising commodity costs (dairy, coffee, cocoa, grains) impacting margins, a continued strategic shift towards international markets, and ongoing restructuring efforts aimed at cost reduction and efficiency improvements. Investors should note the company's significant debt increase related to the Danone Biscuit acquisition, which will be a key factor in its financial management going forward.

Financial Highlights

49 data points
Beta

Revenue

$35.86B

34.0% Gross Margin

Net Income

$2.72B

7.6% Net Margin

EPS (Diluted)

$1.70

Total Assets

$68.13B

Cash & Equivalents

$567.00M

Free Cash Flow

$2.33B

Financial Statements
Beta
Revenue$35.86B
Cost of Revenue$23.66B
Gross Profit$12.20B
SG&A Expenses$7.59B
Operating Income$4.18B
Net Income$2.72B
EPS (Basic)$1.71
EPS (Diluted)$1.70

Key Highlights

  • 1Net revenues increased by 8.4% to $37.2 billion, driven by favorable currency, acquisitions, volume, and pricing.
  • 2Diluted EPS decreased by 12.4% to $1.62, impacted by restructuring charges, higher commodity costs, and increased operating expenses.
  • 3Acquisition of Danone Biscuit for $7.6 billion, significantly expanding international presence, particularly in snacks.
  • 4Announcement of a definitive agreement to merge the Post cereal business with Ralcorp Holdings, Inc.
  • 5Significant increase in commodity costs, with aggregate commodity costs rising by $1.25 billion in 2007.
  • 6Total debt increased substantially to $21.0 billion, largely due to the Danone Biscuit acquisition financing.
  • 7Company announced an 8.0% increase in its quarterly dividend to $0.27 per share and repurchased $3.6 billion of common stock.

Frequently Asked Questions

Revenue growth was primarily driven by favorable currency movements (3.2 percentage points), the impact of acquisitions (1.0 percentage point), higher volume (1.7%), and higher net pricing (1.6%). Favorable currency was particularly noted due to the weakness of the U.S. dollar against the euro and Canadian dollar.

Diluted EPS decreased due to several factors. These included higher total manufacturing costs, particularly increased commodity costs (dairy, coffee, cocoa, grains) which were partially offset by higher pricing. Additionally, the company incurred higher marketing, administration, and research costs, along with asset impairment charges. Significant restructuring program charges also impacted profitability.

The company outlined a growth strategy focused on 'Rewiring the organization for growth' through organizational and incentive changes, 'Reframing categories' via acquisitions and divestitures (like Danone Biscuit acquisition and Post cereal divestiture), 'Exploiting sales capabilities' with initiatives like the 'Wall-to-Wall' program, and 'Driving down costs' while investing in quality, R&D, and marketing.

The Danone Biscuit acquisition, for approximately $7.6 billion, significantly increased total assets and long-term debt. It is expected to enhance international revenue derived from Kraft International. The planned divestiture of the Post cereal business, expected to close in mid-2008, will streamline the portfolio and generate approximately $960 million in cash, which is intended for debt repayment.