01—Abstract
Summary
Summary of the 10-K/A filed February 26, 2008. Cited figures are marked; the original filing is the authoritative source.
Mondelez International, Inc. (MDLZ), formerly Kraft Foods Inc., filed an amendment to its 2007 annual report on Form 10-K.
The company reported strong net revenue growth of 8.4% to $37.2 billiona in 2007. However, diluted Earnings Per Share (EPS) saw a decline of 12.4% to $1.62, impacted by significant restructuring charges and other one-time expenses. A major event during the year was the acquisition of Groupe Danone S.A.'s global biscuit business for approximately $7.6 billion, which is expected to enhance its international presence.
Concurrently, the company announced an agreement to merge its Post cereals business with Ralcorp Holdings, Inc., a transaction anticipated to close in mid-2008. The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders. Investors should note the significant increase in commodity costs, particularly for dairy, coffee, and grains, which impacted operating income despite higher pricing actions.
The company's strategy focuses on organizational restructuring, category reframing, sales capability enhancement, and cost reduction, with a plan to realize substantial savings from ongoing restructuring programs. Overall, the company navigated a complex year with strategic acquisitions and divestitures, while facing input cost pressures.
02—Key points
Key Highlights
- Net revenues increased by 8.4% to $37.2 billion in 2007.
- Diluted Earnings Per Share (EPS) decreased by 12.4% to $1.62 in 2007.
- Completed the acquisition of Groupe Danone S.A.'s global biscuit business for approximately $7.6 billion.
- Announced definitive agreement to merge the Post cereals business with Ralcorp Holdings, Inc., expected to close in mid-2008.
- Repurchased $3.6 billion of its Common Stock under its share repurchase programs.
- Announced an 8.0% increase in the quarterly dividend rate to $0.27 per share.
- Experienced a significant increase in aggregate commodity costs, rising approximately $1.25 billion in 2007.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2007, Mondelez International, Inc. kept $0.08.
- Revenue$35.86B100.0%
- Cost of revenue−$23.66B66.0%
- Gross profit$12.20B34.0%
- Operating costs−$8.03B22.4%
- Operating income$4.18B11.6%
- Interest, other & tax−$1.46B4.1%
- Net income$2.72B7.6%
Where FY2007 revenue went
$35.86B- Cost of revenue: $23.66B, 66% of revenue
- SG&A: $7.59B, 21% of revenue
- Net income: $2.72B, 7.6% of revenue
- Other operating costs: $439.0M, 1.2% of revenue
- Interest, other & tax: $1.46B, 4.1% of revenue
Kept 7.6% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2007filed February 26, 2008Financial Statements
FY2007 against FY2006
| Line item | FY2007FY2006 | Change |
|---|---|---|
| Revenue | $35.86B$33.02B | +8.6% |
| Cost of Revenue | $23.66B$21.19B | +11.6% |
| Gross Profit | $12.20B$11.83B | +3.2% |
| SG&A Expenses | $7.59B$7.03B | +7.9% |
| Operating Income | $4.18B$4.16B | +0.4% |
| Net Income | $2.72B$3.06B | −11.1% |
| EPS (Basic) | $1.71$1.84 | −7.1% |
| EPS (Diluted) | $1.70$1.84 | −7.6% |
05—Questions
Frequently Asked Questions
What were the key financial performance indicators for Mondelez International in 2007?
In 2007, Mondelez International reported a significant increase in net revenues, growing 8.4% to $37.2 billion. However, diluted Earnings Per Share (EPS) declined by 12.4% to $1.62, largely due to restructuring charges and increased commodity costs.
What significant strategic moves did Mondelez International make in 2007?
The company made two major strategic moves: it acquired the global biscuit business of Groupe Danone S.A. for approximately $7.6 billion to strengthen its international portfolio, and it announced the planned merger of its Post cereals business with Ralcorp Holdings, Inc., which was expected to be completed in mid-2008.
How did rising commodity costs affect the company's financial performance?
Rising commodity costs, particularly for dairy, coffee, cocoa, wheat, and soybean oil, significantly impacted the company's profitability. Aggregate commodity costs rose by approximately $1.25 billion in 2007 compared to 2006. While the company implemented higher pricing, it was not fully enough to offset these increased input costs, leading to a decline in operating income.
What is the company's outlook for 2008?
For 2008, Mondelez International projected diluted EPS of at least $1.56, reflecting anticipated costs related to its restructuring program and an estimated effective tax rate of 34.0%. The outlook included the full-year impact of the Danone Biscuit acquisition but did not include the Post cereals business merger.
06—Continue