- 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 FY2022 results, with net revenue for the period up 9.7% y/y to $31.5 billion primarily driven by strong organic net revenue growth of 12.3% y/y. Impressively despite a 9.6% increase in pricing, volumes still grew 2.7% highlighting the desirability of Mondelez’s products, despite extremely elevated inflationary pressures.
- The gross profit margin decreased by 120 basis points to 37.5%, with higher input costs proving a headwind.
- Adjusted EPS was $2.95, up 11.9% on a constant currency basis. EPS was also 2cps above estimates.
- Looking ahead to 2023, Mondelez guided organic net revenue to rise between 5 and7% versus analysts’ estimates of 8%. The company’s expectation for adjusted EPS growth on a constant currency basis is high single digits with analysts forecasting a 7% increase to EPS.
- Geographically, emerging markets proved to be the strongest performers for the year. Emerging markets organic net revenue grew by a staggering 22%, with 8 points of that growth coming from volume. Developed markets grew 7%, although volumes were down marginally. Latin America was the star performer during the year with revenue up 31.9% on 23.7% pricing and 8.2% volumes.
- 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 3.7% 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. Over the last 5 years Mondelez have grown dividends at an average annual rate of 10% which, if sustained, justifies the relatively high valuation. Mondelez is a holding in Cratos Global portfolios.
By Desmond Esakov
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