10-QPeriod: Q3 FY2008

Mondelez International, Inc. Quarterly Report for Q3 Ended Sep 30, 2008

Filed October 31, 2008For Securities:MDLZ

Summary

For the third quarter of 2008, Kraft Foods Inc. (MDLZ) reported a significant increase in net revenues, up 19.4% to $10.5 billion, driven by the acquisition of LU Biscuit, higher pricing, and favorable foreign currency. Diluted Earnings Per Share (EPS) more than doubled to $0.93, largely due to a substantial gain from the split-off of the Post cereals business. The company also continued its restructuring efforts, incurring $90 million in charges. Despite higher input costs, the company's strategic acquisitions and pricing actions demonstrated resilience in a challenging economic environment. The nine-month period showed similar trends, with net revenues growing 20.9% to $31.4 billion and diluted EPS increasing to $1.80. The LU Biscuit acquisition continues to be a major contributor to revenue growth, while the divestiture of Post cereals significantly boosted net earnings. The company's focus on operational efficiency through its restructuring program and strong pricing strategies are key drivers of its performance. Kraft Foods is navigating the economic landscape by leveraging its diverse portfolio and strategic financial management.

Financial Highlights

27 data points
Beta

Revenue

$10.40B

31.8% Gross Margin

Net Income

$1.36B

13.1% Net Margin

EPS (Diluted)

$0.91

Cash & Equivalents

$737.00M

Free Cash Flow

$869.00M

Financial Statements
Beta
Revenue$10.40B
Cost of Revenue$7.10B
Gross Profit$3.31B
SG&A Expenses$2.15B
Operating Income$1.02B
Net Income$1.36B
EPS (Basic)$0.91
EPS (Diluted)$0.91

Key Highlights

  • 1Net revenues for Q3 2008 increased by 19.4% to $10.5 billion, driven by the LU Biscuit acquisition and higher pricing.
  • 2Diluted EPS surged to $0.93 in Q3 2008 (from $0.38 in Q3 2007), boosted by a significant gain from the Post cereals business split-off.
  • 3The company completed the split-off of its Post cereals business on August 4, 2008, which was reflected as discontinued operations.
  • 4Acquisition of LU Biscuit contributed $808 million in net revenues in Q3 2008 and $2.38 billion year-to-date.
  • 5Restructuring Program charges amounted to $90 million in Q3 2008, with year-to-date charges at $309 million.
  • 6Long-term debt increased due to the issuance of €2.85 billion and $2.00 billion in senior unsecured notes to fund acquisitions and general corporate purposes.
  • 7The company expects 2008 diluted EPS to be at least $1.96, an increase from previous expectations, reflecting the Post divestiture and other factors.

Frequently Asked Questions

The acquisition of LU Biscuit, completed in November 2007, significantly contributed to Kraft's revenue growth. In the third quarter of 2008, LU Biscuit generated $808 million in net revenues, and $2.38 billion year-to-date. The acquisition also led to an increase in goodwill and intangible assets on the balance sheet.

The split-off of the Post cereals business on August 4, 2008, resulted in a significant gain from discontinued operations. This gain contributed $852 million to net earnings in the third quarter of 2008, substantially increasing the reported net earnings for the period and boosting diluted EPS.

Kraft Foods raised its full-year 2008 diluted EPS outlook to at least $1.96, an increase of $0.52 from its previous guidance. This revision reflects the positive impact of the Post cereals business exit, partially offset by incremental restructuring costs and impairment charges related to a divestiture.

Kraft Foods issued €2.85 billion and $2.00 billion in senior unsecured notes during the first nine months of 2008 to fund its LU Biscuit acquisition and for general corporate purposes. The company's long-term debt increased, but its debt-to-capitalization ratio remained relatively stable. Kraft also has a $4.5 billion revolving credit facility to support its operations and commercial paper program.