Why did reported EPS rise 41.9% if underlying earnings declined?

The reported increase was driven mainly by a favorable year-over-year change in mark-to-market impacts from commodity and foreign currency derivatives, which contributed roughly $0.24 per share of relief versus the prior year. Excluding these and other non-GAAP items, Adjusted EPS fell 9.5% as reported and 14.9% at constant currency, so investors should focus on the Adjusted figure to assess operating performance.

What is driving the margin compression?

Adjusted gross profit margin fell 270 basis points to 30.7%, primarily due to higher input cost inflation and unfavorable volume/mix, partially offset by higher pricing and productivity-driven manufacturing savings. Adjusted operating margin fell 310 basis points to 11.7%, also reflecting higher advertising and consumer promotion spending and higher SG&A.

Why did free cash flow decline so sharply?

Operating cash flow fell to $467 million from $1,092 million, mainly due to a $728 million increase in receivables, a $320 million reduction from accounts payable, and a $257 million unrealized derivative loss. Capital expenditures also rose to $312 million, leaving Free Cash Flow at $155 million versus $815 million a year earlier.

Is the full-year 2026 outlook still achievable?

Management reaffirmed its guidance of flat to 2% Organic Net Revenue growth, flat to 5% constant-currency Adjusted EPS growth, and roughly $3 billion of Free Cash Flow. Given the Q1 pace of Adjusted EPS decline and weak cash generation, achieving the guidance would likely require meaningful improvement in later quarters, and the outlook remains subject to trade, tariff, commodity and geopolitical uncertainty.

How did the company's balance sheet and capital returns change?

Net debt increased by $420 million to $19.5 billion as cash declined by $601 million to $1.5 billion, while total debt was roughly flat at $21.0 billion. The company paid $644 million in dividends and made no share repurchases in the quarter, compared with $1.5 billion of buybacks in Q1 2025.

MDLZ 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed April 28, 2026. Cited figures are marked; the original filing is the authoritative source.

Mondelēz International (MDLZ) reported first-quarter 2026 results on April 28, 2026, with headline growth driven largely by currency and mark-to-market accounting rather than underlying operations.

Reported net revenues rose 8.2% to $10.08 billion^a, but Organic Net Revenue grew only 3.0%, with pricing (+3.5 pp) offsetting a 0.5 pp decline in volume/mix. Emerging Markets were the clear bright spot, with Organic growth of 6.3%, while Developed Markets grew just 0.8% organically and Europe's organic revenue declined 0.6%. Reported diluted EPS jumped 41.9% to $0.44, but this was primarily due to a favorable $273 million year-over-year swing in mark-to-market derivative impacts.

Excluding these and other items, Adjusted EPS was $0.67^b, down 14.9% on a constant-currency basis, reflecting weaker operations, higher input costs, unfavorable volume/mix, and higher advertising and SG&A spending. Profitability and cash flow were weaker on an underlying basis. Adjusted gross profit margin fell 270 basis points to 30.7%, and Adjusted operating income declined 19.0% at constant currency, with margin down 310 basis points to 11.7%.

Operating cash flow fell sharply to $467 million^c from $1,092 million, and Free Cash Flow dropped to $155 million from $815 million, driven by higher receivables, lower payables and a $257 million unrealized derivative loss. Net debt rose $420 million to $19.5 billion as cash fell by $601 million, while the company returned about $644 million in dividends and made no share repurchases in the quarter (versus $1.5 billion in Q1 2025). Management reaffirmed its full-year 2026 outlook: Organic Net Revenue growth of flat to 2%, Adjusted EPS growth of flat to 5% at constant currency, and Free Cash Flow of approximately $3 billion, with currency expected to add about 2.0% to reported net revenue growth and $0.063 to Adjusted EPS.

For investors, the key takeaway is that the reported beat-like headline numbers overstate underlying momentum. Adjusted EPS declined, margins compressed meaningfully, and cash generation weakened, so the reaffirmed guidance now requires a notable improvement in the remaining quarters to be achieved. Management's emphasis on increased brand and growth investment, along with ongoing restructuring and ERP spending, adds to near-term earnings pressure that investors will likely scrutinize.

02—Key points

Key Highlights

Reported net revenues rose 8.2% to $10.08 billion, but Organic Net Revenue grew only 3.0%, driven entirely by pricing (+3.5 pp) with volume/mix negative (-0.5 pp).
Reported diluted EPS increased 41.9% to $0.44, primarily from a $273 million favorable swing in mark-to-market derivative impacts; Adjusted EPS fell 14.9% at constant currency to $0.67.
Adjusted operating income declined 19.0% at constant currency, with Adjusted operating margin down 310 basis points to 11.7% on higher input costs, unfavorable volume/mix, and higher advertising and SG&A.
Emerging Markets Organic growth of 6.3% contrasted with Developed Markets at 0.8%, and Europe Organic revenue declined 0.6%, with Europe's Adjusted operating income down 24.7%.
Free Cash Flow fell to $155 million from $815 million, as operating cash flow dropped to $467 million amid higher receivables and lower payables.
Net debt increased $420 million to $19.5 billion, and no share repurchases were made in Q1 2026 versus $1.5 billion in the prior-year quarter; dividends of $644 million were paid.
Full-year 2026 guidance was reaffirmed: Organic Net Revenue growth of flat to 2%, Adjusted EPS growth of flat to 5% at constant currency, and Free Cash Flow of approximately $3 billion.

03—Questions

Frequently Asked Questions

Why did reported EPS rise 41.9% if underlying earnings declined?
The reported increase was driven mainly by a favorable year-over-year change in mark-to-market impacts from commodity and foreign currency derivatives, which contributed roughly $0.24 per share of relief versus the prior year. Excluding these and other non-GAAP items, Adjusted EPS fell 9.5% as reported and 14.9% at constant currency, so investors should focus on the Adjusted figure to assess operating performance.
What is driving the margin compression?
Adjusted gross profit margin fell 270 basis points to 30.7%, primarily due to higher input cost inflation and unfavorable volume/mix, partially offset by higher pricing and productivity-driven manufacturing savings. Adjusted operating margin fell 310 basis points to 11.7%, also reflecting higher advertising and consumer promotion spending and higher SG&A.
Why did free cash flow decline so sharply?
Operating cash flow fell to $467 million from $1,092 million, mainly due to a $728 million increase in receivables, a $320 million reduction from accounts payable, and a $257 million unrealized derivative loss. Capital expenditures also rose to $312 million, leaving Free Cash Flow at $155 million versus $815 million a year earlier.
Is the full-year 2026 outlook still achievable?
Management reaffirmed its guidance of flat to 2% Organic Net Revenue growth, flat to 5% constant-currency Adjusted EPS growth, and roughly $3 billion of Free Cash Flow. Given the Q1 pace of Adjusted EPS decline and weak cash generation, achieving the guidance would likely require meaningful improvement in later quarters, and the outlook remains subject to trade, tariff, commodity and geopolitical uncertainty.
How did the company's balance sheet and capital returns change?
Net debt increased by $420 million to $19.5 billion as cash declined by $601 million to $1.5 billion, while total debt was roughly flat at $21.0 billion. The company paid $644 million in dividends and made no share repurchases in the quarter, compared with $1.5 billion of buybacks in Q1 2025.

04—Continue

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