01—Abstract
Summary
Summary of the 10-Q filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Mondelez International, Inc. (MDLZ) reported its financial results for the quarter ended June 30, 2024.
While reported net revenues saw a slight decrease of 1.9% to $8.3 billiona due to unfavorable currency movements and the divestiture of its developed market gum business, the company demonstrated underlying strength with an Organic Net Revenue increase of 2.5% to $8.6 billion, driven by higher net pricing. The company faced challenges with a significant 40.1% decrease in operating income, largely due to mark-to-market losses on derivatives and the lapping of prior-year gains. However, Adjusted Operating Income saw a healthy increase of 17.6% to $1.5 billion, indicating operational resilience.
Diluted Earnings Per Share (EPS) attributable to Mondelēz International declined by 34.8% to $0.45b, impacted by a substantial impairment charge on its JDE Peet’s investment and other one-time items. Conversely, Adjusted EPS, which excludes these extraordinary items, rose by a robust 19.4% to $0.86, reflecting the company's ability to manage core operational profitability. Investors should note the significant impact of currency fluctuations and the ongoing strategic management of the business, including cost control initiatives and pricing strategies, in navigating the current economic landscape.
02—Key points
Key Highlights
- Reported Net Revenues decreased 1.9% to $8.3 billion, but Organic Net Revenue increased 2.5% to $8.6 billion, driven by higher net pricing.
- Operating Income significantly decreased by 40.1% to $854 million, heavily influenced by mark-to-market derivative impacts and prior-year divestiture results.
- Adjusted Operating Income increased by a strong 17.6% to $1.5 billion, indicating improved core operational performance.
- Diluted EPS attributable to Mondelēz International decreased 34.8% to $0.45, largely due to a substantial $665 million impairment charge on the JDE Peet's investment.
- Adjusted EPS increased by a healthy 19.4% to $0.86, demonstrating resilience in underlying earnings power.
- The company repurchased approximately $1.0 billion of common stock in the first six months of 2024, with $3.4 billion remaining share repurchase authorization.
- Mondelez International declared a quarterly cash dividend of $0.470 per share, an increase of 11% from the prior quarter's dividend.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Mondelez International, Inc. kept $0.07.
- Revenue$8.34B100.0%
- Cost of revenue−$5.55B66.5%
- Gross profit$2.80B33.5%
- Operating costs−$1.94B23.3%
- Operating income$854.0M10.2%
- Interest, other & tax−$253.0M3.0%
- Net income$601.0M7.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 30, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $8.34B$8.51B | −1.9% |
| Cost of Revenue | $5.55B$5.15B | +7.6% |
| Gross Profit | $2.80B$3.35B | −16.6% |
| SG&A Expenses | $1.89B$1.87B | +1.2% |
| Operating Income | $854.00M$1.43B | −40.1% |
| Interest Expense | $130.00M$145.00M | −10.3% |
| Net Income | $601.00M$944.00M | −36.3% |
| EPS (Basic) | $0.45$0.69 | −34.8% |
| EPS (Diluted) | $0.45$0.69 | −34.8% |
| Shares Outstanding (Basic) | 1.34B1.36B | −1.5% |
| Shares Outstanding (Diluted) | 1.35B1.37B | −1.7% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in Net Revenues?
The decrease in reported Net Revenues was primarily driven by unfavorable currency-related items (due to a stronger U.S. dollar) and the impact of the 2023 divestiture of the developed market gum business. These factors were partially offset by higher net pricing.
Why did Operating Income decrease significantly, while Adjusted Operating Income increased?
Operating Income was significantly impacted by a large mark-to-market loss on derivatives and the comparison to prior-year operating results from the divested gum business. Adjusted Operating Income, which excludes these and other non-recurring items, increased by 17.6% due to higher net pricing, lower manufacturing costs driven by productivity, and improved operational efficiencies.
What caused the substantial decline in Diluted EPS?
The substantial decline in Diluted EPS was primarily due to a $665 million impairment charge recognized on the company's investment in JDE Peet’s in the first quarter of 2024. Other factors included lapping prior-year gains on marketable securities and equity method investment transactions, and impacts from divestitures and tax law changes.
What is the company's outlook regarding input costs, particularly cocoa?
The company expects to continue facing higher cocoa costs in the near and medium-term due to various external factors including climate, weather, and regulatory issues. Mondelez International plans to manage these costs through hedging, pricing actions, and cost control initiatives, but acknowledges the potential impact on profitability if price increases cannot fully offset the incremental costs.
06—Continue