- Mondelez International is a US-based multinational confectionary company that owns brands such as Cadbury’s, Oreo, Côte d’Or, Toblerone, Tuc, Chips Ahoy! and Halls.
- The company reported Q2 2023 results, with net revenue for the period up 17.1% to $8.51 billion primarily driven by strong organic net revenue growth of 15.8%. The reported figure was $300 million above expectations.
- The gross profit margin increased by 300 basis points to 39.4% on robust price increases. Adjusted EPS was $0.76, up 21.5% on a constant currency basis driven by strong operating gains. EPS was also 7cps above estimates. On the back of these healthy results, Mondelez announced a 10% increase to the quarterly dividend.
- Looking ahead for the full-year, Mondelez guided organic net revenue to rise 12% versus the prior outlook of 10%, which reflects the strength of its year-to-date performance. The company’s expectation for adjusted EPS growth on a constant currency basis is now 12% versus the prior outlook of 10%.
- On a geographical basis, emerging markets again proved to be the strongest performer for the quarter. Emerging markets organic net revenue grew by 23.3% in Q2, with an astounding 21.2 percentage points (pps) coming from price increases and 2.1 pps from volume. Developed markets grew 11.2% with pricing up 12.4pps. Volumes however contracted by 1.2pps. North America rose 12.4% during the quarter to $2.7 billion, with growth in the region driven by higher pricing (10.4pps) and volumes (2pps). Latin America was however the star performer, with revenue up 38% to $1.2bn on the back of mind boggling 35.1pps increase in pricing and 2.6pps increase in volume.
- Mondelez is a high-quality business with an outstanding array of brands. The company is projecting more than $3.3 billion in free cash flow for the full year, which places the company on 3.3% free cash flow yield at the current share price. Although this is on the rich side, the company does have significant investment opportunities and earnings are expected to grow at high single digit rates over the medium term, which in turn will likely see a low double digit growth rate in dividends. Mondelez is a holding in Cratos Global portfolios.
By Desmond Esakov
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