10-QPeriod: Q1 FY2024

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2024

Filed April 30, 2024For Securities:MDLZ

Summary

Mondelez International, Inc. reported first-quarter 2024 results showing a 1.4% increase in net revenues to $9.3 billion, driven by higher net pricing and a short-term distributor agreement. Organic Net Revenue, a key non-GAAP metric, grew 4.2%, indicating underlying business growth. However, diluted Earnings Per Share (EPS) saw a significant decline of 31.6% to $1.04, primarily due to a substantial impairment charge on its JDE Peet's investment, along with lapping prior-year gains from marketable securities and equity method transactions. Despite the decrease in reported EPS, Adjusted EPS, which excludes one-time items and accounting adjustments, increased by 10.5% to $0.95 (16.3% on a constant currency basis), reflecting improved operational performance. The company continues to navigate macroeconomic uncertainties, including inflationary pressures and currency volatility, particularly the high cocoa costs, but maintains a positive outlook on driving long-term growth through its strategic priorities, with a continued focus on operational excellence and sustainable snacking.

Financial Highlights

54 data points
Beta

Revenue

$9.29B

51.1% Gross Margin

Net Income

$1.41B

15.2% Net Margin

EPS (Diluted)

$1.04

Total Assets

$77.62B

Cash & Equivalents

$1.46B

Free Cash Flow

$1.02B

Financial Statements
Beta
Revenue$9.29B
Cost of Revenue$4.54B
Gross Profit$4.75B
SG&A Expenses$1.94B
Operating Income$2.73B
Interest Expense$122.00M
Net Income$1.41B
EPS (Basic)$1.05
EPS (Diluted)$1.04
Shares Outstanding (Basic)1.35B
Shares Outstanding (Diluted)1.35B

Key Highlights

  • 1Net revenues increased 1.4% to $9.3 billion, while Organic Net Revenue grew 4.2% due to higher net pricing.
  • 2Diluted EPS decreased 31.6% to $1.04, largely impacted by a $665 million impairment charge on the JDE Peet's investment and the prior year's significant gains from marketable securities.
  • 3Adjusted EPS increased 10.5% to $0.95, demonstrating underlying operational strength, and grew 16.3% on a constant currency basis.
  • 4Operating income significantly increased by 81.2% to $2.7 billion, driven by a favorable year-over-year change in mark-to-market hedging gains and improved Adjusted Operating Income.
  • 5The company is experiencing significant increases in cocoa costs, with market prices 283% higher year-over-year, posing a potential risk to profitability if not fully offset by pricing or hedging.
  • 6Cash provided by operating activities increased to $1.32 billion from $1.12 billion in the prior year, indicating improved cash generation.
  • 7Mondelez continues to execute its share repurchase program, repurchasing approximately $563 million of common stock in the quarter, with approximately $3.9 billion remaining authorization.

Frequently Asked Questions

The primary driver for the substantial decrease in Diluted Earnings Per Share (EPS) was a significant impairment charge of $665 million related to the company's investment in JDE Peet's (JDEP) during the first quarter of 2024. Additionally, the company lapped large gains from marketable securities and equity method investment transactions recorded in the prior year's first quarter, which artificially inflated the previous year's EPS.

Mondelez International is actively managing rising commodity costs, especially cocoa, through a multi-pronged approach. This includes implementing higher net pricing, utilizing hedging strategies to mitigate price volatility, and focusing on manufacturing and overhead cost controls to improve productivity. However, the company acknowledges the significant increase in cocoa prices (up 283% year-over-year) and notes that it may not be able to fully offset these incremental costs through pricing or hedging, which could impact profitability.

In the first quarter of 2024, Latin America saw an 8.9% increase in net revenues, driven by higher net pricing and favorable currency impacts. AMEA's net revenues grew by 0.6% with strong net pricing gains offsetting unfavorable volume/mix and currency. Europe's net revenues increased by 1.8%, supported by higher net pricing and a short-term distributor agreement, though impacted by unfavorable volume/mix and divestitures. North America experienced a 2.1% decrease in net revenues, primarily due to the impact of divestitures and softer consumer demand, despite higher net pricing.

Mondelez International aims to be the global leader in snacking, focusing on four strategic priorities: accelerating consumer-centric growth, driving operational excellence, creating a winning growth culture, and scaling sustainable snacking. The company expects continued net revenue growth, driven by pricing actions, and aims to deliver profitable growth through its Adjusted EPS metric. They are closely monitoring macroeconomic uncertainties, including inflation and geopolitical events, while continuing to invest in their brands and capabilities.