01—Abstract
Summary
Summary of the 10-K filed February 27, 2012. Cited figures are marked; the original filing is the authoritative source.
Mondelez International, Inc. (formerly Kraft Foods Inc.) reported strong revenue growth in fiscal year 2011, with net revenues reaching $54.4 billiona, a 10.5% increase from the previous year, driven by both organic growth and strategic acquisitions.
The company highlighted a significant focus on its portfolio transformation, aiming to build a global snacks powerhouse. This strategic shift is underscored by the announced intention to spin off its North American grocery business into a separate entity, creating two independent, publicly traded companies focused on distinct growth strategies. Key financial indicators show increased operating income and earnings per share from continuing operations, though net earnings attributable to Kraft Foods decreased due to specific integration costs and other factors.
The company managed commodity cost increases through pricing actions and continued to invest in brand marketing and product innovation. Investors should note the significant integration charges related to the Cadbury acquisition and the ongoing preparations for the business separation, which could impact future financial reporting and operational focus.
02—Key points
Key Highlights
- Net revenues increased by 10.5% to $54.4 billion in 2011, with organic net revenues growing by 6.6%.
- Diluted EPS from continuing operations increased by 38.2% to $1.99 in 2011.
- The company announced plans to spin off its North American grocery business to create two independent companies: a global snacks business and a North American grocery business.
- Integration charges related to the Cadbury acquisition amounted to $521 million in 2011, with total expected integration costs of $1.5 billion.
- Commodity costs increased by approximately $2.6 billion in 2011, primarily due to higher costs for coffee, dairy, and grains.
- Total debt stood at $26.9 billion at year-end 2011, with a debt-to-capitalization ratio of 0.43.
- The company maintained effective internal control over financial reporting as of December 31, 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Mondelez International, Inc. kept $0.10.
- Revenue$35.81B100.0%
- Cost of revenue−$22.71B63.4%
- Gross profit$13.10B36.6%
- Operating costs−$9.60B26.8%
- Operating income$3.50B9.8%
- Interest, other & tax$56.0M0.2%
- Net income$3.55B9.9%
Where FY2011 revenue went
$35.81B- Cost of revenue: $22.71B, 63% of revenue
- SG&A: $9.38B, 26% of revenue
- Operating income: $3.50B, 9.8% of revenue
- R&D: $511.0M, 1.4% of revenue
Kept 9.8% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 27, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $35.81B$31.49B | +13.7% |
| Cost of Revenue | $22.71B$19.62B | +15.8% |
| Gross Profit | $13.10B$11.87B | +10.3% |
| R&D Expenses | $511.00M$404.00M | +26.5% |
| SG&A Expenses | $9.38B$9.14B | +2.6% |
| Operating Income | $3.50B$2.50B | +40.1% |
| Interest Expense | -$1.38B$1.54B | −189.8% |
| Net Income | $3.55B$4.11B | −13.6% |
| EPS (Basic) | $2.01$2.40 | −16.3% |
| EPS (Diluted) | $2.01$2.39 | −15.9% |
| Shares Outstanding (Basic) | 1.76B1.72B | +2.9% |
| Shares Outstanding (Diluted) | 1.77B1.72B | +3.0% |
05—Questions
Frequently Asked Questions
What is the company's overall financial performance for 2011?
In fiscal year 2011, Mondelez International (then Kraft Foods Inc.) reported strong net revenue growth of 10.5% to $54.4 billion, driven by organic growth and the Cadbury acquisition. Operating income increased by 17.5%, and earnings per share from continuing operations saw a substantial rise of 38.2% to $1.99. However, net earnings attributable to Kraft Foods decreased by 14.3% to $3.5 billion, impacted by integration costs and other factors.
What is the significance of the announced spin-off?
The company announced its intention to separate into two independent, publicly traded companies: a 'Global Snacks Business' and a 'North American Grocery Business.' This strategic move is intended to allow each business to pursue distinct strategic priorities, growth profiles, and operational focus, which management believes will enhance shareholder value.
What are the main challenges or risks highlighted in the report?
Key risks include intense competition in the food industry, the need to maintain brand image, the impact of retailer brand competition, consolidation of retail customers, volatile commodity and input prices, and risks associated with operating globally, especially in developing markets. The report also highlights risks related to the proposed spin-off transaction itself, including potential delays or changes in terms, and the potential that the intended results may not be achieved.
How did the Cadbury acquisition impact the company's financials?
The acquisition of Cadbury, completed in 2010, significantly boosted net revenues, contributing $9.1 billion in 2010 from February 2nd through year-end. It also led to substantial integration charges, with $1.5 billion expected in total over three years, of which $521 million was incurred in 2011 and $657 million in 2010. The acquisition also increased the company's goodwill and intangible assets and influenced its global financial exposure.
06—Continue