10-QPeriod: Q2 FY2012

Mondelez International, Inc. Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 3, 2012For Securities:MDLZ

Summary

Mondelez International, Inc. (formerly Kraft Foods Inc.) reported its financial results for the quarter and six months ended June 30, 2012. The company experienced a slight decrease in net revenues, down 4.3% for the quarter and 0.3% for the six months, primarily due to unfavorable foreign currency exchange rates and prior-year accounting calendar adjustments. However, on an "organic" basis (excluding these factors, acquisitions, and divestitures), net revenues showed growth of 3.4% for the quarter and 4.9% for the six months, driven by higher net pricing across most segments which helped offset increased input costs. The most significant event for investors in this period is the impending spin-off of the North American grocery business, which is expected to be completed on October 1, 2012. This transaction will create two independent companies: Mondelez International (focused on global snacks) and Kraft Foods Group (the new North American grocery business). The company incurred substantial "Spin-Off Costs" related to this transaction, impacting reported earnings. Despite these costs and ongoing restructuring and integration programs (Cadbury integration), the company reported growth in diluted earnings per share (EPS) of 5.5% for the quarter and 2.0% for the six months, reaching $0.58 and $1.03 respectively. Adjusted operating EPS showed stronger growth, increasing by 9.7% for the quarter and 9.6% for the six months, highlighting the underlying operational performance.

Financial Highlights

49 data points
Beta

Revenue

$8.53B

37.7% Gross Margin

Net Income

$1.03B

12.1% Net Margin

EPS (Diluted)

$0.58

Total Assets

$97.11B

Cash & Equivalents

$4.64B

Free Cash Flow

$1.65B

Financial Statements
Beta
Revenue$8.53B
Cost of Revenue$5.32B
Gross Profit$3.21B
SG&A Expenses$2.19B
Operating Income$937.00M
Net Income$1.03B
EPS (Basic)$0.58
EPS (Diluted)$0.58
Shares Outstanding (Basic)1.78B
Shares Outstanding (Diluted)1.79B

Key Highlights

  • 1Net revenues decreased by 4.3% in Q2 2012 and 0.3% for the six months ended June 30, 2012, largely due to unfavorable foreign currency and prior year accounting calendar changes.
  • 2Organic Net Revenues, a non-GAAP measure excluding currency, divestitures, and other items, increased by 3.4% for the quarter and 4.9% for the six months, driven by higher net pricing across segments.
  • 3Diluted EPS attributable to Kraft Foods increased by 5.5% to $0.58 for Q2 2012 and by 2.0% to $1.03 for the six months, indicating resilience in profitability.
  • 4The company is actively preparing for the spin-off of its North American grocery business, scheduled for October 1, 2012, which will result in the creation of Mondelez International and Kraft Foods Group.
  • 5Significant "Spin-Off Costs," "2012-2014 Restructuring Program" costs, and "Cadbury Integration Program" costs impacted reported operating income and net earnings.
  • 6Operating income increased by 4.0% in Q2 2012 and 3.4% for the six months, showing underlying operational strength despite significant one-time charges.
  • 7The company reaffirmed its 2012 outlook, expecting Organic Net Revenue growth of approximately 5% and Operating EPS growth of at least 9% on a constant currency basis.

Frequently Asked Questions

The company announced its intention to create two independent public companies: a global snacks business, which will retain the name Mondelēz International, Inc., and a North American grocery business, which will be named Kraft Foods Group, Inc. This separation is intended to allow each business to focus on its distinct strategic priorities and unlock shareholder value.

Net revenues saw a slight decrease of 4.3% in the second quarter and 0.3% for the first six months. This was primarily due to unfavorable foreign currency exchange rates and the lapping of prior-year accounting calendar changes. However, on an organic basis, excluding these impacts, net revenues grew by 3.4% in the quarter and 4.9% year-to-date, driven by higher net pricing across segments which helped offset increased input costs.

Spin-Off Costs are one-time expenses related to the planned separation of the company into two entities. These costs include transaction, transition, and financing expenses. They are recognized within operating expenses and interest expense, thereby reducing reported operating income and net earnings. The company also uses 'Adjusted Operating Income' and 'Operating EPS' as non-GAAP measures to present results excluding these and other significant charges, providing a clearer view of underlying operational performance.

The company announced that it expects to complete the spin-off on October 1, 2012. The transaction remains subject to several conditions, including the continued validity of tax rulings from the IRS and Canada Revenue Agency, effectiveness of registration statements, execution of separation agreements, and final Board of Directors approval.