10-QPeriod: Q1 FY2017

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 3, 2017For Securities:MDLZ

Summary

Mondelez International, Inc. (MDLZ) reported its first-quarter 2017 results, showing a slight decline in net revenues but an increase in earnings per share. Net revenues decreased by 0.6% to $6.4 billion, largely due to unfavorable currency exchange rates which impacted reported figures. However, the company achieved an organic net revenue growth of 0.6%, indicating underlying business strength driven by higher net pricing across most categories, particularly in Latin America and AMEA, partially offset by unfavorable volume/mix in certain regions. Despite the revenue headwinds, operating income saw a significant increase of 16.3% to $840 million, and diluted EPS attributable to Mondeléz International rose by 17.1% to $0.41. This improvement was driven by strong pricing actions, cost-saving initiatives including lower selling, general, and administrative expenses, and favorable one-time events such as a benefit from a Cadbury tax matter settlement. Management highlighted continued efforts to optimize the cost structure and accelerate core snack businesses, supported by ongoing restructuring programs expected to conclude by year-end 2018.

Financial Highlights

51 data points
Beta

Revenue

$6.41B

39.3% Gross Margin

Net Income

$654.00M

10.2% Net Margin

EPS (Diluted)

$0.42

Total Assets

$62.08B

Free Cash Flow

-$863.00M

Financial Statements
Beta
Revenue$6.41B
Cost of Revenue$3.90B
Gross Profit$2.52B
SG&A Expenses$1.48B
Operating Income$825.00M
Interest Expense$103.00M
Net Income$654.00M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)1.53B
Shares Outstanding (Diluted)1.55B

Key Highlights

  • 1Net revenues declined 0.6% to $6.414 billion, primarily impacted by unfavorable currency translation.
  • 2Organic Net Revenue grew 0.6% to $6.494 billion, driven by higher net pricing, partially offset by unfavorable volume/mix.
  • 3Operating income increased 16.3% to $840 million, reflecting improved pricing and cost management.
  • 4Diluted Earnings Per Share (EPS) attributable to Mondeléz International increased 17.1% to $0.41.
  • 5Adjusted EPS (a non-GAAP measure) increased 3.9% to $0.53, demonstrating underlying operational performance.
  • 6The company continues to execute its 2014-2018 Restructuring Program, which aims to reduce operating costs.
  • 7Short-term borrowings increased significantly to $4.25 billion from $2.53 billion at year-end 2016, partly to finance debt maturities and share repurchases.

Frequently Asked Questions

The primary driver for the decrease in reported net revenues was unfavorable currency translation. The U.S. dollar strengthened against most currencies in which Mondeléz operates compared to the prior year, reducing the value of foreign revenues when translated into U.S. dollars.

Mondeléz International managed cost pressures through several initiatives. These included higher net pricing in most categories, particularly in Latin America and AMEA, and disciplined cost management, notably a reduction in selling, general, and administrative expenses. The company also benefited from its ongoing 2014-2018 Restructuring Program, which aims to optimize its cost structure.

Organic Net Revenue is a non-GAAP financial measure that excludes the impact of currency fluctuations, acquisitions, and divestitures. It provides a clearer view of the underlying business performance and growth trends, showing that despite a reported revenue decline due to currency, the core business generated positive growth.

Mondeléz International believes it has sufficient liquidity from operations, revolving credit facilities, and long-term financing to meet its obligations. The company utilizes its commercial paper program, international credit lines, and long-term debt issuances for funding. Short-term borrowings increased significantly in the quarter, partly to finance debt maturities and share repurchases, but the company remains compliant with its debt covenants and expects adequate funding for its needs.