01—Abstract
Summary
Summary of the 10-K filed February 27, 2009. Cited figures are marked; the original filing is the authoritative source.
Mondelez International, Inc. (formerly Kraft Foods Inc.) reported strong net revenue growth of 16.8% in 2008, reaching $42.2 billiona.
This growth was primarily driven by the acquisition of the LU biscuit business, strategic pricing adjustments to offset rising commodity costs, and favorable foreign currency movements. However, operating income saw a slight decline of 3.8% due to significant increases in input costs, higher marketing and administrative expenses, and substantial restructuring charges totaling $989 millionb. Despite the operating income dip, the company achieved a notable increase in diluted EPS, up 18.5% to $1.92, boosted by a significant one-time gain of $937 million from the split-off of its Post cereals business.
The company also completed its five-year, $3.1 billionc restructuring program aimed at cost savings and operational efficiencies. Financially, Kraft strengthened its balance sheet by issuing $7.0 billion in senior unsecured notes and repurchased $777 million of its common stock under its share repurchase program. Looking ahead to 2009, the company provided an updated EPS outlook, anticipating challenges from currency fluctuations and increased pension costs.
02—Key points
Key Highlights
- Net revenues increased by 16.8% to $42.2 billion in 2008, largely due to the LU biscuit acquisition and pricing actions.
- Diluted EPS grew by 18.5% to $1.92, significantly aided by a $937 million gain from the Post cereals business split-off.
- Operating income decreased by 3.8% to $3.8 billion, impacted by higher commodity costs, increased operating expenses, and substantial restructuring charges.
- Completed a $3.1 billion, five-year restructuring program aimed at cost reduction and operational optimization.
- Issued $7.0 billion in senior unsecured notes to strengthen its financial position and repay debt.
- Repurchased $777 million of its common stock under its $5.0 billion share repurchase program.
- The company's largest customer, Wal-Mart, accounted for approximately 16% of net revenues in 2008.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Mondelez International, Inc. kept $0.07.
- Revenue$40.49B100.0%
- Cost of revenue−$27.16B67.1%
- Gross profit$13.33B32.9%
- Operating costs−$9.75B24.1%
- Operating income$3.58B8.8%
- Interest, other & tax−$692.0M1.7%
- Net income$2.88B7.1%
Where FY2008 revenue went
$40.49B- Cost of revenue: $27.16B, 67% of revenue
- SG&A: $8.61B, 21% of revenue
- Net income: $2.88B, 7.1% of revenue
- R&D: $487.0M, 1.2% of revenue
- Other operating costs: $652.0M, 1.6% of revenue
- Interest, other & tax: $692.0M, 1.7% of revenue
Kept 7.1% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 27, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $40.49B$35.86B | +12.9% |
| Cost of Revenue | $27.16B$23.66B | +14.8% |
| Gross Profit | $13.33B$12.20B | +9.2% |
| R&D Expenses | $487.00M— | — |
| SG&A Expenses | $8.61B$7.59B | +13.5% |
| Operating Income | $3.58B$4.18B | −14.4% |
| Interest Expense | $1.27B— | — |
| Net Income | $2.88B$2.72B | +6.0% |
| EPS (Basic) | $1.92$1.71 | +12.3% |
| EPS (Diluted) | $1.90$1.70 | +11.8% |
| Shares Outstanding (Basic) | 1.50B— | — |
| Shares Outstanding (Diluted) | 1.51B— | — |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in 2008?
Revenue growth was primarily driven by the LU biscuit acquisition, strategic pricing increases to offset rising input costs, and favorable foreign currency exchange rates.
What is the financial impact of the Post cereals business split-off?
The split-off of the Post cereals business resulted in a significant gain of $937 million (or $0.62 per diluted share) recognized in 2008. The results of the Post cereals business are now reported as discontinued operations.
How did the company manage rising commodity costs?
The company increased pricing to offset rising commodity costs, which contributed to net revenue growth. Additionally, the company monitors commodity cost trends and utilizes hedging techniques to mitigate price fluctuation impacts, though not all price changes are fully hedged.
What is the company's outlook for 2009?
For 2009, the company updated its diluted EPS forecast to $1.88, reflecting anticipated negative impacts from currency and pension costs, but also improved business performance. Key expected impacts include a $0.16 negative currency impact, $0.08 higher pension costs, and $0.09 from cost savings initiatives spending.
06—Continue