Emerging markets sweetens Mondelēz’s sales outlook

Its emerging markets segment brought in $2.29bn in the second quarter, nearly 20% higher than last year.

"We delivered another strong quarter of performance across all key metrics, including top-line, profitability and cash generation," said Dirk Van de Put, Chairman and Chief Executive Officer.

"We continue to see strength across the vast majority of our geographies, categories and brands as we remain intensely focused on consistent execution and reinvestment to further strengthen our position. We are confident that our strategy, long runway of clear growth drivers and advantaged enablers will continue to drive consistent and attractive growth and value generation over the long term.”

Along with other confectionery companies, Mondelez’s business suffered in 2020 due to the pandemic and the impact it had on travel and out-of-home channels. With lockdown impacts now waning, the company said it is on track to continue improving its return on capital.

"Mobility is increasing as restrictions ease, but at-home consumption remains elevated, and it appears that higher levels of working from home and shopping online are here to stay," Van de Put said on a call to media and analysts.

Mondelēz said it is concentrating on its emerging markets by increasing capacity and production lines rather than opening new facilities, aiming to save costs.

The company's shares fell approximately 2% after the results announcement on Tuesday, with the company leaving its full-year profit forecast unchanged.

Analysts said Mondelēz has been facing inflationary pressures, though it plans to counter rising raw material costs by increasing product prices and reducing packaging expenses.

Vladimir Dimitrov, writing on seekingalpha.com, said: “Mondelēz is one of the strongest and truly international businesses in the Packaged Food & Beverages category. By owning many of the most iconic snacking brands, the company also has a solid competitive advantage on its side. Due to its low leverage and the opportunity to divest non-core assets, MDLZ could also expand into key adjacent product categories and bring successful local brands into the global scene. This move could lead to higher margins over the coming years which will also translate into higher multiples relative to peers.”