10-QPeriod: Q1 FY2023

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 27, 2023For Securities:MDLZ

Summary

Mondelēz International, Inc. reported a strong first quarter for 2023, with net revenues increasing by 18.1% to $9.2 billion, driven by robust organic net revenue growth of 19.4%. This growth was primarily attributed to higher net pricing across all regions and favorable volume/mix, reflecting continued consumer demand for snack products. The company also benefited from the recent acquisitions of Clif Bar and Ricolino, which contributed incremental revenues. Profitability saw a significant boost, with Net Earnings Attributable to Mondelēz International more than doubling to $2.1 billion, leading to a substantial increase in Diluted EPS to $1.52. This improvement was significantly influenced by a large mark-to-market gain on marketable securities and gains on equity method investments, alongside improved operational performance and lapping prior-year charges. The company maintained a solid liquidity position and remains focused on its strategic priorities for long-term value creation.

Financial Highlights

54 data points
Beta

Revenue

$9.17B

37.6% Gross Margin

Net Income

$2.08B

22.7% Net Margin

EPS (Diluted)

$1.52

Total Assets

$72.79B

Cash & Equivalents

$1.94B

Free Cash Flow

$900.00M

Financial Statements
Beta
Revenue$9.17B
Cost of Revenue$5.72B
Gross Profit$3.45B
SG&A Expenses$1.85B
Operating Income$1.50B
Interest Expense$153.00M
Net Income$2.08B
EPS (Basic)$1.52
EPS (Diluted)$1.52
Shares Outstanding (Basic)1.37B
Shares Outstanding (Diluted)1.37B

Key Highlights

  • 1Net revenues grew 18.1% to $9.2 billion, with Organic Net Revenue up 19.4%, driven by strong net pricing and favorable volume/mix.
  • 2Net earnings attributable to Mondelēz International surged 143.4% to $2.1 billion.
  • 3Diluted EPS increased significantly by 149.2% to $1.52 per share.
  • 4The acquisitions of Clif Bar and Ricolino are contributing positively, adding $374 million in incremental net revenues in the quarter.
  • 5A substantial pre-tax gain of $493 million was recognized from the sale of Keurig Dr Pepper (KDP) shares, leading to a change in accounting treatment for the remaining investment.
  • 6The company reported $1.123 billion in cash from operating activities, indicating strong cash generation.
  • 7Operating income increased by 37.6% to $1.5 billion, with strong performance across all geographic segments.

Frequently Asked Questions

The substantial increase in Net Earnings attributable to Mondelēz International was driven by a combination of factors. Key among these were a significant mark-to-market gain on marketable securities ($787 million pre-tax) related to the sale of KDP shares, and a gain on equity method investment transactions. Additionally, the company benefited from lapping prior-year charges such as loss on debt extinguishment and intangible asset impairment charges, as well as lower incremental costs related to the war in Ukraine. Improved operational performance, reflected in higher net pricing and favorable volume/mix, also contributed.

The acquisitions of Clif Bar and Ricolino are contributing positively to the company's top line. Together, they added incremental net revenues of $374 million on a constant currency basis during the first quarter of 2023. The Ricolino acquisition added $156 million in revenues, primarily in Latin America, while Clif Bar contributed $218 million, mainly in North America. Integration costs associated with these acquisitions were noted, but the revenue contribution is significant.

Currency fluctuations had an unfavorable impact on Mondelēz's results in the first quarter of 2023. Unfavorable currency translation decreased net revenues by $465 million, primarily due to the strength of the U.S. dollar against various currencies. This also impacted operating income negatively by $81 million. The company also reports "Organic Net Revenue" and "Adjusted EPS" on a constant currency basis to provide a clearer view of underlying business performance, which showed strong growth irrespective of currency headwinds.

Mondelēz expects price volatility and a higher aggregate cost environment to continue due to international supply chain, transportation, and labor market disruptions. The company experienced higher dairy, energy, edible oils, sugar, grains, packaging, nuts, cocoa, and other ingredient costs, exacerbated by unfavorable currency exchange rates on imported materials. To mitigate these impacts, the company plans to continue utilizing hedging, implementing pricing actions, and pursuing productivity and cost-saving measures. The strong pricing actions taken in Q1 2023 are expected to continue to offset some of these cost pressures.