01—Abstract
Summary
Summary of the 10-Q filed October 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Mondelez International, Inc. reported mixed results for the nine months ended September 30, 2024.
While net revenues saw a slight increase of 0.5% to $26.8 billiona, this was driven primarily by price increases rather than volume growth, with Organic Net Revenue (excluding divestitures and currency impacts) growing a more robust 4.0%. Diluted Earnings Per Share (EPS) experienced a significant decline of 27.4% to $2.12, largely due to several one-time charges including a substantial impairment charge on an equity method investment in JDE Peet's, higher intangible asset impairment charges, and the impact of lapping prior-year gains from marketable securities and equity method investments. Despite the GAAP EPS decline, the company's Adjusted EPS, which excludes these one-time items, showed strong growth, increasing 19.1% to $2.80.
This highlights the underlying operational strength and effective cost management. The company is also navigating significant macroeconomic challenges, including heightened commodity costs (particularly cocoa) and currency volatility. Management is focused on driving operational excellence and maintaining a leading position in the snacking market, with strategic priorities including consumer-centric growth and scaling sustainable snacking.
02—Key points
Key Highlights
- Net revenues increased by 0.5% year-over-year to $26.8 billion for the first nine months of 2024, driven by net pricing.
- Organic Net Revenue, a non-GAAP measure, grew 4.0% year-over-year to $27.3 billion for the first nine months, indicating underlying business growth.
- Diluted EPS attributable to Mondelēz International decreased by 27.4% to $2.12 for the first nine months of 2024, significantly impacted by one-time charges.
- Adjusted EPS, a non-GAAP measure, increased by a strong 19.1% to $2.80 for the first nine months of 2024, demonstrating operational resilience.
- The company incurred significant intangible asset impairment charges of $153 million related to biscuit brands in Europe, AMEA, and Latin America.
- A substantial impairment charge of $665 million was recorded on the JDE Peet's equity method investment in the first quarter of 2024.
- Mondelez is actively managing increased commodity costs, particularly for cocoa, which saw a 79% increase year-over-year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Mondelez International, Inc. kept $0.09.
- Revenue$9.20B100.0%
- Cost of revenue−$6.21B67.4%
- Gross profit$3.00B32.6%
- Operating costs−$1.85B20.1%
- Operating income$1.15B12.5%
- Interest, other & tax−$300.0M3.3%
- Net income$853.0M9.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 29, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $9.20B$9.03B | +1.9% |
| Cost of Revenue | $6.21B$5.54B | +12.1% |
| Gross Profit | $3.00B$3.49B | −14.2% |
| SG&A Expenses | $1.63B$2.02B | −19.3% |
| Operating Income | $1.15B$1.38B | −16.4% |
| Interest Expense | $129.00M$134.00M | −3.7% |
| Net Income | $853.00M$984.00M | −13.3% |
| EPS (Basic) | $0.64$0.72 | −11.1% |
| EPS (Diluted) | $0.63$0.72 | −12.5% |
| Shares Outstanding (Basic) | 1.34B1.36B | −1.8% |
| Shares Outstanding (Diluted) | 1.34B1.37B | −1.9% |
05—Questions
Frequently Asked Questions
Why did Mondelēz's Diluted EPS decrease significantly while Adjusted EPS increased?
The substantial decrease in Diluted EPS is primarily due to significant one-time charges that are excluded from Adjusted EPS. These include a large impairment charge on the JDE Peet's investment ($665 million), higher intangible asset impairment charges ($153 million), and the comparison to strong prior-year gains on marketable securities and equity method investments related to the KDP divestiture. The increase in Adjusted EPS reflects the company's improved operational performance, cost management, and fewer shares outstanding.
What are the main factors impacting Mondelēz's cost of goods sold and margins?
The company is experiencing increased input costs, particularly for raw materials such as cocoa, sugar, and nuts. While higher net pricing and productivity initiatives are helping to offset these costs, the significant increase in cocoa prices (up 79% year-over-year) poses a notable challenge to profitability. The company also incurred intangible asset impairment charges, which negatively impacted operating income and margins.
How is Mondelēz managing its investments and capital structure?
Mondelez is actively managing its investment portfolio, notably announcing the sale of its remaining stake in JDE Peet's, expected to close in Q4 2024, which will provide a significant cash inflow. The company's debt-to-capitalization ratio remains stable, and it continues to prioritize shareholder returns through dividends and share repurchases, with approximately $3.2 billion remaining under its current authorization. The company also announced a new $1.2 billion multi-year systems transformation program (ERP System Implementation).
What is the outlook for Mondelēz given the current economic environment?
Mondelez expects continued market and geopolitical uncertainty, along with inflationary pressures and currency volatility. The company anticipates facing ongoing elevated commodity costs, especially cocoa. Despite these challenges, management remains focused on its strategic priorities of accelerating consumer-centric growth and driving operational excellence, believing these efforts will lead to consistent top- and bottom-line growth and long-term shareholder value creation. The company's Organic Net Revenue growth and strong Adjusted EPS performance indicate resilience.
06—Continue