On July 30, 2024, Mondelez International Inc (MDLZ, Financial) released its 8-K filing for the second quarter of 2024. The company reported a mixed performance with a notable decline in net revenues but a significant increase in adjusted earnings per share (EPS).
Company Overview
Mondelez International Inc (MDLZ, Financial) has operated as an independent organization since its split from the former Kraft Foods North American grocery business in October 2012. The firm is a leading player in the global snack enclave with a presence in the biscuit (49% of sales), chocolate (30%), gum/candy (12%), beverage (3%), and cheese and grocery (6%) aisles, as of the end of fiscal 2023. Mondelez's portfolio includes well-known brands like Oreo, Chips Ahoy, Halls, and Cadbury, among others. The firm derives around one third of revenue from developing markets, just more than one third from Europe, and the remainder from North America.
Performance and Challenges
Mondelez International Inc (MDLZ, Financial) reported a net revenue decrease of 1.9% year-over-year to $8.34 billion, missing the analyst estimate of $8.45 billion. The decline was primarily attributed to unfavorable currency-related items and the impact of the 2023 divestiture of the developed market gum business. Despite this, the company achieved organic net revenue growth of 2.5%, driven by higher net pricing, although this was partially offset by an unfavorable volume/mix of -2.2%.
Financial Achievements
Despite the revenue decline, Mondelez International Inc (MDLZ, Financial) reported a significant increase in adjusted EPS, which rose by 25.0% on a constant currency basis to $0.86, surpassing the analyst estimate of $0.78. This growth was driven by strong operating gains, lower interest expense, and fewer shares outstanding, partially offset by higher taxes.
Key Financial Metrics
Mondelez International Inc (MDLZ, Financial) reported a gross profit of $2.80 billion, down 16.6% year-over-year, with a gross profit margin of 33.5%, a decrease of 590 basis points. Adjusted gross profit, however, increased by 9.0% to $3.38 billion, with an adjusted gross profit margin of 40.5%, up 330 basis points. Operating income decreased by 40.1% to $854 million, while adjusted operating income increased by 17.6% to $1.49 billion, with an adjusted operating income margin of 17.9%, up 270 basis points.
| Metric | Q2 2024 | % Change vs PY |
|---|---|---|
| Net Revenues | $8.34 billion | -1.9% |
| Organic Net Revenue Growth | 2.5% | - |
| Gross Profit | $2.80 billion | -16.6% |
| Adjusted Gross Profit | $3.38 billion | 9.0% |
| Operating Income | $854 million | -40.1% |
| Adjusted Operating Income | $1.49 billion | 17.6% |
| Diluted EPS | $0.45 | -34.8% |
| Adjusted EPS | $0.86 | 25.0% |
Commentary
"We continued to execute against our strategic growth agenda in the second quarter with strong profitability and attractive cash flow generation. Our performance was fueled by our commitment to reinvesting in our brands, capabilities, ongoing price execution and cost discipline," said Dirk Van de Put, Chair and Chief Executive Officer.
Analysis
Mondelez International Inc (MDLZ, Financial) demonstrated resilience in the face of revenue challenges by achieving significant growth in adjusted EPS and maintaining strong cash flow generation. The company's strategic focus on reinvesting in its brands and capabilities, along with disciplined cost management, has positioned it well for future growth. However, the decline in net revenues and gross profit highlights the ongoing challenges posed by unfavorable currency impacts and divestitures.
Overall, Mondelez International Inc (MDLZ, Financial) has shown strong operational performance and profitability, which are crucial for sustaining its leadership in the global snack industry. The company's ability to navigate currency fluctuations and market dynamics will be key to its continued success.
Explore the complete 8-K earnings release (here) from Mondelez International Inc for further details.
