10-QPeriod: Q3 FY2019

Mondelez International, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 30, 2019For Securities:MDLZ

Summary

Mondelez International, Inc. (MDLZ) reported its financial results for the nine months ended September 29, 2019. The company demonstrated solid top-line growth in its organic net revenue, which increased by 4.2% for both the third quarter and the nine-month period, driven by higher net pricing and favorable volume/mix. Diluted Earnings Per Share (EPS) saw a significant increase of 21.0% in Q3 and 25.0% for the nine months, largely influenced by a substantial benefit from Swiss tax reform and operating gains. Adjusted EPS, a non-GAAP measure, also showed positive growth. The company's financial performance was impacted by several factors, including unfavorable currency translation due to a strong U.S. dollar, the divestiture of its cheese business in the Middle East and Africa, and strategic acquisitions such as Perfect Snacks. Despite these headwinds, Mondelēz continues to focus on its "Simplify to Grow" program aimed at reducing operating costs. The company maintained a strong liquidity position and continued its share repurchase program and dividend payments, signaling confidence in its ongoing financial health and future prospects.

Financial Highlights

55 data points
Beta

Revenue

$6.36B

39.6% Gross Margin

Net Income

$1.43B

22.4% Net Margin

EPS (Diluted)

$0.98

Total Assets

$63.90B

Cash & Equivalents

$1.54B

Free Cash Flow

$615.00M

Financial Statements
Beta
Revenue$6.36B
Cost of Revenue$3.84B
Gross Profit$2.52B
SG&A Expenses$1.47B
Operating Income$876.00M
Interest Expense$121.00M
Net Income$1.43B
EPS (Basic)$0.99
EPS (Diluted)$0.98
Shares Outstanding (Basic)1.45B
Shares Outstanding (Diluted)1.46B

Key Highlights

  • 1Organic Net Revenue growth of 4.2% for both Q3 and the nine-month period, driven by pricing and volume/mix.
  • 2Diluted EPS increased by 21.0% in Q3 and 25.0% year-to-date, significantly boosted by a $767 million benefit from Swiss tax reform.
  • 3Adjusted EPS (non-GAAP) grew 3.2% in Q3 and 3.9% year-to-date, demonstrating underlying operational improvement.
  • 4Acquisition of Perfect Snacks in July 2019 contributed positively to net revenues.
  • 5Divestiture of the cheese business in the Middle East and Africa was completed in May 2019.
  • 6Operating income increased by 18.9% in Q3 and 20.3% year-to-date, reflecting improved operational performance.
  • 7The company maintained a strong liquidity position, with net cash provided by operating activities of $1.88 billion for the nine-month period.

Frequently Asked Questions

The substantial increase in net earnings and diluted EPS was primarily driven by a one-time benefit of $767 million recognized in the third quarter due to Swiss tax reform, which allowed for a reduction in deferred tax expense related to intangible assets. Other contributing factors included operating gains and increased earnings from equity method investments.

The strengthening U.S. dollar against several foreign currencies negatively impacted reported net revenues and operating income. Unfavorable currency translation reduced net revenues by $196 million in Q3 and $1,027 million year-to-date. This also led to a decrease in operating income by $49 million in Q3 and $185 million year-to-date.

Mondelez International aims to be the global leader in snacking by focusing on three strategic priorities: accelerating consumer-centric growth, driving operational excellence, and creating a winning growth culture. This involves driving Organic Net Revenue growth through pricing and volume/mix, managing costs through programs like 'Simplify to Grow,' and strategic acquisitions.

Key items affecting comparability include the Simplify to Grow restructuring charges, intangible asset impairment charges, mark-to-market impacts from derivatives, gains/losses from equity method investments, acquisition and divestiture costs, and the significant Swiss tax reform benefit. The company provides detailed reconciliations for these non-GAAP measures in its filings.