10-QPeriod: Q2 FY2020

Mondelez International, Inc. Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 29, 2020For Securities:MDLZ

Summary

Mondelez International, Inc. (MDLZ) reported second quarter 2020 results showing a net revenue decrease of 2.5% to $5.9 billion, largely impacted by unfavorable currency translation due to a stronger U.S. dollar and the prior year's divestiture of its cheese business. However, organic net revenue saw a modest increase of 0.7%, driven by higher net pricing, especially in developed markets like North America where increased in-home consumption due to COVID-19 boosted demand. Despite a decrease in reported operating income and net earnings, adjusted EPS saw a 12.5% increase, signaling resilience in core operations. The company continued to navigate the challenges posed by the COVID-19 pandemic, which led to mixed impacts across its business. While developed markets benefited from increased at-home consumption, emerging markets and specific categories like gum and candy faced headwinds from lockdowns and reduced out-of-home consumption. The acquisition of Give & Go in April 2020 contributed positively to net revenues, enhancing the company's position in the in-store bakery channel.

Financial Highlights

54 data points
Beta

Revenue

$5.91B

39.4% Gross Margin

Net Income

$544.00M

9.2% Net Margin

EPS (Diluted)

$0.38

Total Assets

$64.19B

Cash & Equivalents

$1.63B

Free Cash Flow

$1.04B

Financial Statements
Beta
Revenue$5.91B
Cost of Revenue$3.58B
Gross Profit$2.33B
SG&A Expenses$1.45B
Operating Income$713.00M
Interest Expense$108.00M
Net Income$544.00M
EPS (Basic)$0.38
EPS (Diluted)$0.38
Shares Outstanding (Basic)1.43B
Shares Outstanding (Diluted)1.44B

Key Highlights

  • 1Net revenues for Q2 2020 decreased by 2.5% to $5.9 billion, primarily impacted by unfavorable currency and a prior-year divestiture.
  • 2Organic Net Revenue increased by 0.7% to $6.1 billion in Q2 2020, indicating underlying growth, particularly in developed markets.
  • 3Diluted EPS attributable to Mondelēz International decreased by 30.9% to $0.38 in Q2 2020 compared to the prior year.
  • 4Adjusted EPS (a non-GAAP measure) increased by 12.5% to $0.63 in Q2 2020, showing improved operational performance.
  • 5The company incurred $90 million in intangible asset impairment charges in Q2 2020, primarily due to the impact of COVID-19 on certain brands.
  • 6Acquisition of Give & Go on April 1, 2020, added $91 million in incremental net revenues during the quarter.
  • 7The company maintained a strong liquidity position, with $1.6 billion in cash and cash equivalents as of June 30, 2020, and increased its available borrowing capacity.

Frequently Asked Questions

The primary drivers for the net revenue decrease in Q2 2020 were unfavorable currency translation, largely due to a strengthening U.S. dollar against most operating currencies, and the impact of the prior year's divestiture of most of the company's cheese business in the Middle East and Africa.

The COVID-19 pandemic had mixed impacts. Developed markets, particularly North America, saw increased demand and revenue growth due to higher in-home consumption. However, emerging markets with a concentration of traditional trade, as well as the world travel retail and foodservice businesses, experienced negative impacts from lockdowns and reduced out-of-home consumption. The company also incurred higher operating costs for labor, logistics, and safety measures.

Adjusted EPS (Earnings Per Share) is a non-GAAP financial measure that excludes certain items affecting comparability, such as restructuring charges, intangible asset impairments, acquisition/divestiture costs, and specific transaction costs. The increase in Adjusted EPS by 12.5% to $0.63 in Q2 2020 suggests that the company's core operational performance improved year-over-year, despite the decline in reported net earnings.

Yes, Mondelez acquired a majority interest in Give & Go, a North American leader in fully-finished sweet baked goods, on April 1, 2020, for $1,141 million. This acquisition contributed incremental net revenues in the second quarter. The divestiture of most of its cheese business in the Middle East and Africa was completed in May 2019.