10-QPeriod: Q1 FY2011

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:MDLZ

Summary

Mondelez International, Inc. (formerly Kraft Foods Inc.) reported a significant increase in net revenues for the first quarter of 2011, reaching $12.6 billion, up 11.1% year-over-year. This growth was largely driven by the Cadbury acquisition, which added $697 million in net revenues, and a 4.6% increase in organic net revenues reflecting higher pricing and favorable volume/mix. However, net earnings attributable to Kraft Foods shareholders saw a substantial decrease of 57.6% to $799 million, with diluted EPS falling to $0.45 from $1.16 in the prior year. This decline is primarily attributed to the significant gain from discontinued operations in the prior year ($1.01 per share from the Frozen Pizza divestiture) and increased integration program costs related to the Cadbury acquisition. Despite the GAAP net earnings decline, operating EPS from continuing operations showed growth, increasing by 6.1% to $0.52, indicating underlying operational improvements. The company is actively managing integration costs post-Cadbury acquisition, expecting significant cost savings. However, investors should note the ongoing impact of commodity price volatility and the ongoing arbitration with Starbucks over the coffee business. The company maintains a strong liquidity position with a new $4.5 billion revolving credit facility.

Financial Highlights

49 data points
Beta

Revenue

$8.19B

38.0% Gross Margin

Net Income

$799.00M

9.8% Net Margin

EPS (Diluted)

$0.45

Total Assets

$98.27B

Cash & Equivalents

$2.09B

Free Cash Flow

-$1.22B

Financial Statements
Beta
Revenue$8.19B
Cost of Revenue$7.94B
Gross Profit$3.12B
SG&A Expenses$2.93B
Operating Income$1.65B
Net Income$799.00M
EPS (Basic)$0.46
EPS (Diluted)$0.45
Shares Outstanding (Basic)1.75B
Shares Outstanding (Diluted)1.76B

Key Highlights

  • 1Net revenues increased 11.1% to $12.6 billion, driven by the Cadbury acquisition and organic growth.
  • 2Organic net revenues grew 4.6%, supported by higher net pricing and favorable volume/mix.
  • 3Net earnings attributable to Kraft Foods decreased by 57.6% to $799 million, largely due to the absence of a large gain from discontinued operations in the prior year.
  • 4Diluted EPS decreased significantly to $0.45 from $1.16, impacted by the prior year's divestiture gain.
  • 5Operating EPS from continuing operations increased 6.1% to $0.52, demonstrating underlying operational strength.
  • 6Integration program costs for the Cadbury acquisition were $104 million in the quarter, with total expected charges of $1.5 billion.
  • 7The company entered into a new $4.5 billion senior unsecured revolving credit facility on April 1, 2011.

Frequently Asked Questions

The primary driver of the 11.1% increase in net revenues to $12.6 billion was the acquisition of Cadbury, which contributed $697 million. Additionally, organic net revenues grew by 4.6%, reflecting higher pricing and a favorable volume/mix.

Net earnings attributable to Kraft Foods decreased by 57.6% to $799 million. This significant decline is primarily due to the absence of a large gain from discontinued operations from the sale of the Frozen Pizza business in the first quarter of 2010, which had a significant positive impact in the prior year. Additionally, integration program costs related to the Cadbury acquisition increased.

The company expects to deliver organic net revenue growth of at least 4% and Operating EPS of at least $2.20 for the full year 2011, anticipating strong business momentum, better alignment between pricing and input costs, and steady volume.

Yes, the company is involved in an arbitration with Starbucks regarding the termination of their packaged coffee business agreements. Additionally, the company is incurring integration program costs related to the Cadbury acquisition, aiming for substantial cost savings, and faces continued volatility in commodity prices.