01—Abstract
Summary
Summary of the 10-K filed February 9, 2018. Cited figures are marked; the original filing is the authoritative source.
Mondelez International (MDLZ) reported stable net revenues of $25.9 billiona for fiscal year 2017, matching the previous year's figure.
The company's strategic focus on growing its 'Power Brands' and expanding its global reach continues, supported by cost optimization efforts across its supply chain and overhead. A key highlight for investors is the company's 0.9% growth in organic net revenue, indicating underlying business strength despite divestitures and currency impacts. The company also demonstrated a significant improvement in diluted EPS, which rose by 81.9% to $1.91b, driven by lower interest and restructuring costs, as well as benefits from tax resolutions and divestitures.
Management is focused on driving long-term value through brand investment, innovation, and expanding digital channels, while navigating global economic volatilities and competitive pressures. Looking ahead, Mondelez International is investing in well-being products and healthy snacking, aligning with evolving consumer preferences. The company's significant international presence, with 75.8%c of 2017 net revenues generated outside the U.S., exposes it to currency fluctuations and geopolitical risks, which it aims to mitigate through hedging strategies.
The company continues to actively manage its capital structure, including a substantial share repurchase program, underscoring a commitment to returning value to shareholders. Investors should note the ongoing integration of business transformations and the impact of global economic trends on future performance.
02—Key points
Key Highlights
- Net revenues remained stable at $25.9 billion in 2017.
- Organic Net Revenue grew by 0.9% to $25.5 billion, indicating underlying business growth.
- Diluted EPS significantly increased by 81.9% to $1.91, driven by cost management and favorable one-time items.
- Power Brands net revenues grew by 2.9%, with organic growth at 2.1%, demonstrating brand strength.
- Emerging markets net revenues increased by 3.7%, with organic growth at 3.6%, highlighting growth potential in these regions.
- The company continues its restructuring program, aiming for cost optimization and operational efficiency.
- Mondelez has a strong focus on evolving its portfolio towards well-being and healthy snacking products.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Mondelez International, Inc. kept $0.11.
- Revenue$25.90B100.0%
- Cost of revenue−$15.86B61.3%
- Gross profit$10.03B38.7%
- Operating costs−$6.57B25.4%
- Operating income$3.46B13.4%
- Interest, other & tax−$634.0M2.4%
- Net income$2.83B10.9%
Where FY2017 revenue went
$25.90B- Cost of revenue: $15.83B, 61% of revenue
- SG&A: $5.94B, 23% of revenue
- Net income: $2.83B, 11% of revenue
- R&D: $366.0M, 1.4% of revenue
- Other operating costs: $299.0M, 1.2% of revenue
- Interest, other & tax: $634.0M, 2.4% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 9, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $25.90B$25.92B | −0.1% |
| Cost of Revenue | $15.83B$15.79B | +0.2% |
| Gross Profit | $10.03B$10.10B | −0.7% |
| R&D Expenses | $366.00M$376.00M | −2.7% |
| SG&A Expenses | $5.94B$6.55B | −9.3% |
| Operating Income | $3.46B$2.55B | +35.6% |
| Interest Expense | $396.00M$515.00M | −23.1% |
| Net Income | $2.83B$1.64B | +73.0% |
| EPS (Basic) | $1.87$1.05 | +78.1% |
| EPS (Diluted) | $1.85$1.04 | +77.9% |
| Shares Outstanding (Basic) | 1.51B1.56B | −2.8% |
| Shares Outstanding (Diluted) | 1.53B1.57B | −2.7% |
05—Questions
Frequently Asked Questions
What was Mondelez International's financial performance in 2017 compared to 2016?
In 2017, Mondelez International reported net revenues of $25.9 billion, virtually unchanged from 2016. Organic Net Revenue saw a modest increase of 0.9% to $25.5 billion. A significant improvement was seen in diluted EPS, which rose by 81.9% to $1.91, largely due to lower operating costs, restructuring benefits, and positive impacts from tax resolutions and divestitures.
How is Mondelez International addressing evolving consumer trends like well-being and healthy snacking?
Mondelez International is actively evolving its product portfolio to meet consumer demand for well-being and healthy snacking. This includes expanding its well-being brands, enhancing the nutritional profile of its Power Brands, and encouraging mindful snacking by offering more portion-controlled treats. Their research and development efforts are significantly focused on these areas.
What are the main risks and challenges faced by Mondelez International, as highlighted in the 10-K filing?
Key risks and challenges identified include intense competition in the global snack industry, the need to maintain and enhance brand image and reputation, risks associated with global operations (including currency fluctuations and geopolitical instability), the impact of tax matters and changes in tax laws, cybersecurity threats, unanticipated business disruptions (like the 2017 malware incident), volatile commodity and input prices, complex regulatory environments across many countries, challenges in workforce management, consolidation among retail customers, and the need to accurately predict and adapt to changing consumer preferences.
What is the company's strategy for growth and capital allocation?
Mondelez International's growth strategy centers on 'growing our people, growing our business, and growing our impact.' This involves accelerating core snacks, expanding Power Brands globally, innovating in product offerings, and increasing presence in e-commerce and other non-traditional channels. For capital allocation, the company is focused on investing in its brands and capabilities, managing its cost structure, and returning value to shareholders through share repurchases and dividends, with a significant share repurchase program authorized and extended.
06—Continue