10-QPeriod: Q3 FY2024

Mondelez International, Inc. Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 29, 2024For Securities:MDLZ

Summary

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 billion, 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.

Financial Highlights

54 data points
Beta

Revenue

$9.20B

32.6% Gross Margin

Net Income

$853.00M

9.3% Net Margin

EPS (Diluted)

$0.63

Total Assets

$72.19B

Cash & Equivalents

$1.57B

Free Cash Flow

$989.00M

Financial Statements
Beta
Revenue$9.20B
Cost of Revenue$6.21B
Gross Profit$3.00B
SG&A Expenses$1.63B
Operating Income$1.15B
Interest Expense$129.00M
Net Income$853.00M
EPS (Basic)$0.64
EPS (Diluted)$0.63
Shares Outstanding (Basic)1.34B
Shares Outstanding (Diluted)1.34B

Key Highlights

  • 1Net revenues increased by 0.5% year-over-year to $26.8 billion for the first nine months of 2024, driven by net pricing.
  • 2Organic 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.
  • 3Diluted 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.
  • 4Adjusted EPS, a non-GAAP measure, increased by a strong 19.1% to $2.80 for the first nine months of 2024, demonstrating operational resilience.
  • 5The company incurred significant intangible asset impairment charges of $153 million related to biscuit brands in Europe, AMEA, and Latin America.
  • 6A substantial impairment charge of $665 million was recorded on the JDE Peet's equity method investment in the first quarter of 2024.
  • 7Mondelez is actively managing increased commodity costs, particularly for cocoa, which saw a 79% increase year-over-year.

Frequently Asked Questions

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.

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.

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).

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.