10-QPeriod: Q1 FY2014

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 8, 2014For Securities:MDLZ

Summary

Mondelez International, Inc. reported a decrease in net revenues of 1.2% to $8.64 billion for the first quarter of 2014 compared to the same period in 2013. However, organic net revenue saw a positive increase of 2.8%, indicating growth in underlying business operations. Diluted Earnings Per Share (EPS) significantly decreased by 70.0% to $0.09, largely impacted by a substantial $494 million loss on debt extinguishment and related expenses, as well as a $142 million currency remeasurement loss in Venezuela. Despite the headline drop in EPS, Adjusted EPS, which excludes these one-time or non-recurring items, increased by 11.4% to $0.39. The company highlighted strong pricing power across several segments and a focus on cost management. Key financial activities during the quarter included issuing $3 billion in new debt and repurchasing $1.6 billion of existing debt, alongside a $492 million share repurchase. Looking ahead, Mondelez reiterated its commitment to organic net revenue growth, adjusted operating income growth, and double-digit adjusted EPS growth on a constant currency basis.

Financial Highlights

50 data points
Beta

Revenue

$8.64B

37.1% Gross Margin

Net Income

$163.00M

1.9% Net Margin

EPS (Diluted)

$0.09

Total Assets

$72.96B

Free Cash Flow

-$903.00M

Financial Statements
Beta
Revenue$8.64B
Cost of Revenue$5.44B
Gross Profit$3.20B
SG&A Expenses$2.27B
Operating Income$843.00M
Interest Expense$202.00M
Net Income$163.00M
EPS (Basic)$0.10
EPS (Diluted)$0.09
Shares Outstanding (Basic)1.70B
Shares Outstanding (Diluted)1.72B

Key Highlights

  • 1Net revenues decreased by 1.2% to $8.64 billion, but organic net revenue grew by 2.8%, indicating underlying business strength.
  • 2Diluted EPS saw a significant decline of 70.0% to $0.09, primarily due to a large $494 million loss on debt extinguishment and a $142 million currency remeasurement loss in Venezuela.
  • 3Adjusted EPS, excluding these significant items, increased by 11.4% to $0.39, demonstrating resilient operational performance.
  • 4The company actively managed its debt structure by issuing $3.0 billion in new notes and retiring $1.6 billion of higher-coupon debt.
  • 5Share repurchases continued, with $492 million spent in the quarter, demonstrating a commitment to returning capital to shareholders.
  • 6Significant currency headwinds were noted, particularly from the Venezuelan bolivar devaluation and the strengthening U.S. dollar against several emerging market currencies.
  • 7Mondelez announced plans for a significant $3.5 billion restructuring program aimed at reducing operating costs by $1.5 billion annually by 2018.

Frequently Asked Questions

The substantial decrease in Diluted EPS was primarily driven by a $494 million loss on debt extinguishment and related expenses incurred from a debt tender offer, as well as a $142 million currency remeasurement loss due to currency exchange developments in Venezuela. These items are considered non-recurring or exceptional.

Excluding the impact of debt extinguishment, Venezuela currency remeasurement, and other one-time items, the company's Adjusted EPS increased by 11.4% to $0.39. Organic net revenue also grew by 2.8%, suggesting that the core business operations are performing well.

Mondelez expects Organic Net Revenue growth to be in line with global category growth of approximately 3%. They also anticipate low double-digit growth in Adjusted Operating Income at constant currency, leading to an Adjusted EPS range of $1.73 to $1.78, representing double-digit growth on a constant currency basis.

Yes, the company announced a new $3.5 billion restructuring program approved in May 2014, aimed at reducing operating costs and generating at least $1.5 billion in annualized savings by 2018. Additionally, they announced an agreement to combine their coffee business with D.E Master Blenders 1753 B.V., which is expected to result in approximately $5 billion in after-tax cash proceeds and a 49% equity interest in the new combined company.