Mondelēz International has raised its full year outlook when it reported its second quarter 2019 results on Tuesday (July 30).
Brands that posted gains in the quarter included Oreo cookies and its Cadbury Dairy Milk lines along with Nutter Butter cookies, one of its smaller US brands.
Mondelēz's revenue dropped approximately 1% in the quarter from the year-earlier period to $6.06bn due to 'currency fluctuations', the company reported, but still slightly ahead of analysts' expectations. The company also reported gains from e-commerce sales channels and in emerging markets.
Results snapshot
- Net revenues declined 0.8% driven by unfavorable currency impacts; Organic Net Revenue1 grew 4.6%, through a combination of volume/mix and pricing
- Diluted EPS was $0.55, up 162%, lapping prior-year impact from pension participation changes; Adjusted EPS1 was $0.57, up 9% on a constant-currency basis
- Year-to-date cash from operating activities was $1.0 billion; Free Cash Flow1 was $581 million
- Return of capital to shareholders was approximately $700 million
- Raising Organic Net Revenue and Adjusted EPS growth outlook for full year
- Announcing 10% increase to quarterly dividend
During a conference call to analysts and investors, the company said it continued to make good progress against the strategies of accelerating consumer-centric growth, driving operational excellence and what it determined as ‘building a winning growth culture this quarter’.
Mondelēz also reported a profit of $807million (55 cents a share), for the second quarter, up from $318 million, from same period last year. The company’s adjusted profit of 57 cents a share was also in line with expectations from analysts.
Key initiatives
- Expansion of Channels and Key Markets: investing in fast-growing sales channels, including e-commerce, and winning in high-potential emerging markets
- Investment in Global and Local Brands: continuing momentum on two of the company's largest brands, Oreo and Cadbury Dairy Milk, as well as reigniting local jewels like Nutter Butter in the US, which celebrated its 50-year anniversary with double-digit growth in the quarter
- Partnerships and M&A: entering nutrition bars with Perfect Snacks acquisition
- Marketing & Sales Excellence: leveraging the company's leadership in the chocolate category by driving growth and gaining share in key markets with best-in-class Easter execution
- Continuous Cost Improvement: maintaining cost discipline throughout the organization with ongoing initiatives like waste reduction in the U.S. network and embedded ZBB processes
- Local First Culture: delivering efficiencies including a 40% reduction in business planning meetings in Europe as a result of the company's new structure and culture
- Speed, Agility and Simplicity: getting innovation to market faster like new Cadbury Go Nuttier in the U.K., leveraging Agile methodology and a pilot launch
"It was a strong first quarter and start to the year as we built on the progress we saw in the later part of 2018," said Luca Zaramella, Mondelēz's CFO.
Sustainable snacking
Mondelēz said it was advancing the company's sustainability journey this quarter with the publication of the company's Impact 2025 commitments, including its goals to source 100% of cocoa for its chocolate through Cocoa Life and achieve 100% packaging recyclability. In addition, the company said it has reached an agreement with Enel Green Power to source solar power in support of its goal to cut CO2 emissions in manufacturing by 15% by 2020.
"Our strong second quarter performance demonstrates the potential of our strategy to accelerate volume-driven top-line growth in both developed and emerging markets," said Dirk Van de Put, Chairman and CEO. "Our more consumer-centric mindset is driving investments in advertising and promotion of our global and local brands, as well as accelerated innovation and improved distribution capabilities, building a sustainable foundation for long-term growth and value creation for our shareholders."