10-QPeriod: Q1 FY2025

Mondelez International, Inc. Quarterly Report for Q1 Ended Mar 31, 2025

Filed April 29, 2025For Securities:MDLZ

Summary

Mondelez International, Inc. (MDLZ) reported its first-quarter 2025 results, with net revenues slightly increasing by 0.2% to $9.3 billion, while Organic Net Revenue (a non-GAAP measure) grew by a more robust 3.1% to $9.6 billion. This growth was primarily driven by higher net pricing, particularly in emerging markets, and the incremental revenue from the Evirth acquisition. However, the company experienced a significant 75.1% decline in operating income to $680 million and a 70.2% drop in diluted EPS to $0.31, largely due to unfavorable year-over-year changes in mark-to-market impacts from derivatives, increased input costs (especially cocoa), and the initiation of a new ERP System Implementation program. Despite the substantial decrease in reported earnings, Adjusted EPS (a non-GAAP measure) saw a less severe decline of 20.4% to $0.74, reflecting ongoing operational challenges and macroeconomic headwinds. The company continues to navigate volatile market conditions, including inflationary pressures and supply chain disruptions, with particular concern around elevated cocoa costs. Management remains focused on strategic priorities, including driving consumer-centric growth and operational excellence, while actively managing costs and supply chain resilience.

Financial Highlights

54 data points
Beta

Revenue

$9.31B

26.1% Gross Margin

Net Income

$402.00M

4.3% Net Margin

EPS (Diluted)

$0.31

Total Assets

$68.93B

Cash & Equivalents

$1.63B

Free Cash Flow

$815.00M

Financial Statements
Beta
Revenue$9.31B
Cost of Revenue$6.88B
Gross Profit$2.43B
SG&A Expenses$1.71B
Operating Income$680.00M
Interest Expense$137.00M
Net Income$402.00M
EPS (Basic)$0.31
EPS (Diluted)$0.31
Shares Outstanding (Basic)1.30B
Shares Outstanding (Diluted)1.30B

Key Highlights

  • 1Net revenues saw a modest increase of 0.2% to $9.3 billion, while Organic Net Revenue grew by 3.1% to $9.6 billion, driven by pricing actions and recent acquisitions.
  • 2Operating income significantly decreased by 75.1% to $680 million, largely impacted by unfavorable derivative mark-to-market movements and higher input costs.
  • 3Diluted EPS attributable to Mondelēz International fell by 70.2% to $0.31, heavily influenced by the same factors impacting operating income.
  • 4Adjusted EPS (non-GAAP) decreased by 20.4% to $0.74, indicating operational pressures despite the significant drop in reported EPS.
  • 5The company is experiencing elevated input costs, with particular concern over rising cocoa prices, expected to persist in the near- to medium-term.
  • 6A new ERP System Implementation program, with significant expected operating expenses over the next four years, began in the first quarter, impacting current results.
  • 7The company repurchased approximately 25.5 million shares of common stock for $1.5 billion during the quarter, demonstrating a commitment to shareholder returns.

Frequently Asked Questions

The significant decline in reported earnings was primarily driven by unfavorable year-over-year changes in mark-to-market impacts from commodity and foreign currency derivatives, which swung from a gain in the prior year to a substantial loss in the current quarter. Additionally, higher input costs, particularly for cocoa, and the initial costs associated with the new ERP System Implementation program contributed to the decrease.

Mondelez International is addressing higher commodity costs through a multi-pronged approach including hedging strategies, implementing higher pricing actions, and focusing on manufacturing and overhead cost control. However, the company notes that it may not always be able to fully hedge against all cost increases and that pricing actions may lag behind cost fluctuations. The significant increase in cocoa prices is a particular concern expected to impact profitability.

The company approved a $1.2 billion ERP System Implementation program expected to be completed by year-end 2028. A majority of this spending is expected to be operating expenses, representing incremental transformational costs. These costs began impacting results in the first quarter of 2025 and are treated as an exclusion from Adjusted Operating Income and Adjusted EPS to provide better comparability of underlying business performance.

The company expects continued volatility in its outlook for future snacks revenue growth. While net revenues saw a slight increase, Organic Net Revenue growth of 3.1% indicates underlying business momentum. The company's strategy focuses on accelerating consumer-centric growth and driving operational excellence to achieve consistent top- and bottom-line growth.