10-KPeriod: FY2010

Mondelez International, Inc. Annual Report, Year Ended Dec 31, 2010

Filed February 28, 2011For Securities:MDLZ

Summary

Mondelez International, Inc. (formerly Kraft Foods Inc.) reported strong top-line growth in 2010, driven significantly by the acquisition of Cadbury. Net revenues increased by a substantial 27.0% to $49.2 billion. The company also completed the strategic divestiture of its North American frozen pizza business to Nestlé for $3.7 billion, which resulted in a significant gain on discontinued operations. This strategic repositioning, alongside continued brand strength and global reach, positions the company for sustained growth. Financially, the company navigated increased input costs, notably for cocoa, sugar, dairy, and coffee, which were partially offset by lower grain costs. These cost pressures, combined with integration expenses related to the Cadbury acquisition, impacted operating margins. However, the company generated substantial cash flow from operations and continued to manage its debt levels effectively. The outlook for 2011 indicated expectations for continued organic net revenue and Operating EPS growth, demonstrating management's confidence in the company's strategic direction and ability to execute in a dynamic market.

Financial Highlights

53 data points
Beta

Revenue

$31.49B

37.7% Gross Margin

Net Income

$4.11B

13.1% Net Margin

EPS (Diluted)

$2.39

Total Assets

$95.29B

Cash & Equivalents

$2.48B

Free Cash Flow

$2.09B

Financial Statements
Beta
Revenue$31.49B
Cost of Revenue$19.62B
Gross Profit$11.87B
R&D Expenses$404.00M
SG&A Expenses$9.14B
Operating Income$2.50B
Interest Expense$1.54B
Net Income$4.11B
EPS (Basic)$2.40
EPS (Diluted)$2.39
Shares Outstanding (Basic)1.72B
Shares Outstanding (Diluted)1.72B

Key Highlights

  • 1Net revenues surged by 27.0% to $49.2 billion in 2010, largely due to the significant acquisition of Cadbury.
  • 2The company divested its North American frozen pizza business to Nestlé for $3.7 billion, resulting in a $1.596 billion gain on discontinued operations.
  • 3Diluted Earnings Per Share (EPS) attributable to Kraft Foods increased by 17.7% to $2.39 in 2010.
  • 4Operating income increased by 9.3% to $5.666 billion, though operating margin decreased from 13.4% to 11.5% due to higher input costs and integration expenses.
  • 5Commodity costs increased by approximately $1.0 billion in 2010 compared to 2009, primarily due to higher cocoa, sugar, dairy, and coffee prices.
  • 6The company's total debt increased to $28.7 billion, with a debt-to-capitalization ratio of 0.44, primarily reflecting financing for the Cadbury acquisition.
  • 7Kraft Foods continues to invest in research and development, with R&D expenses totaling $583 million in 2010.

Frequently Asked Questions

The primary driver of revenue growth in 2010 was the acquisition of Cadbury, which contributed significantly to net revenues. Organic net revenue growth was also a contributing factor, driven by higher net pricing and favorable volume/mix across various segments.

The Cadbury acquisition significantly boosted net revenues and expanded the company's global snack portfolio. However, it also led to increased acquisition-related costs, integration program costs, and higher debt levels, which impacted operating income and margins.

Rising commodity costs, particularly for cocoa, sugar, dairy, and coffee, increased the cost of sales. While the company implemented higher pricing to offset some of these costs, the net impact contributed to a decrease in operating margin.

The divestiture of the North American frozen pizza business to Nestlé for $3.7 billion allowed the company to focus on its core snack powerhouse strategy. The sale generated a substantial gain on discontinued operations, improving the overall net earnings for the year.

The company financed a significant portion of the Cadbury acquisition through debt issuance. While total debt increased substantially, the company reported a manageable debt-to-capitalization ratio and expected to continue meeting its debt covenants, supported by its strong operating cash flow.