Quarterly earnings

Mondelēz bounces back in Q3 driven by ‘chocobakery’ business

01-Nov-2017 - Last updated on 01-Nov-2017 at 12:13 GMT

Mondelēz's business in emerging markets grew 4.8% in Q3 2017. Pic: ©GettyImages/Ekaterina79

Mondelēz has recovered from its 2017 Q2 sales decline and posted organic net revenue growth of 2.8% in the third quarter, reaching $6.53bn.

CEO of the company, Irene Rosenfeld (expected to retire in March 2018), said the quarterly sales increase was “fueled marginally by the strength of [Mondelēz’s] power brands improving momentum in emerging markets and strong performance in Europe.

“Our power brands grew 3.8%, significantly outpacing the category, with Milka and Cadbury Dairy Milk in chocolate, and Oreo and belVita (growing mid-single digits globally) in biscuits performing especially well,” she said.

Ritz Crisps & Thins is also “taking share and exceeding expectations,” Rosenfeld added.

In terms of regional performance, Mondelēz’s organic net revenues in Latin America showed the fastest growth (5.4%) during the period, while its European business grew by 3.2%. Emerging markets in general grew 4.8%, generating $2.45bn for the company.

Brian Gladden, EVP and CFO at Mondelēz, said Q3 growth was also driven by the company’s “chocobakery” business in Europe, such as the launches of Milka Brownie and Cadbury Roundies.

North America below expectations

Mondelēz’s organic net revenue from its North American business grew by 1% in Q3, but Rosenfeld said the region is the only one “performing below expectations.”

She said Mondelēz is currently “making progress in addressing the previous challenges… including recovery from the malware incident.”

Additionally, Mondelēz continues to see its direct store delivery (DSD) system as a competitive advantage and the benefits are expected to play out in the near future, said Rosenfeld.

She added the company needs to do more work for its North American market, and looks forward to the arrival of the newly-appointed regional president, Glen Walter, next month.

‘Strong progress’ in e-commerce

Mondelēz made strong progress in e-commerce in Q3.

“Across the globe, we delivered net revenue growth of more than 40% fueled by key markets like China and the US,” said Rosenfeld. “Our US e-commerce net revenues have grown more than 70% year-to-date and our China e-commerce business grew at twice the growth rate of the online market.

“The strong results reinforce our belief in the importance and future potential of e-commerce as the key snacking channel, and we’ve taken the necessary steps to capitalize on that opportunity.”