Credit: Shutterstock photoSummary:
Mondelez's third-quarter adjusted earnings of $0.50 per share beat the Zacks Consensus Estimate of $0.39 by 28%. Earnings increased 25% year over year driven by higher margins, increased pricing, lower interest expenses and share count. However, volumes declined due to volume erosion in response to the significant pricing actions and increased competitive pressures. Mondelez's top line remained weak due to category weakness. However, despite the top-line weakness, the company has been consistently improving margins through cost cuts and productivity gains. Moreover, the company raised the full-year profit outlook concurrent with the third-quarter results following three consecutive quarters of double-digit earnings growth. Its strong portfolio of iconic brands, presence in impulsive categories and commanding presence in the fast-growing emerging markets keeps our faith in the stock.
Overview:
Headquartered in Deerfield, IL, Mondelez International, Inc. (MDLZ) is one of the leading global snacks company. Mondelez was previously known as Kraft Foods, Inc. and changed its name to Mondelez following the spin-off of its North American grocery business into a separate independent company, Kraft Foods Group, Inc. in Oct 2012.
Mondelez makes snack foods and beverage products. Its product categories include chocolates, biscuits, gum, candy, cheese & grocery products and coffee and powdered beverages. It has operations in more than 80 countries outside the U.S. and offers its products in 165 countries.
Mondelez's operating segments include Latin America Asia Pacific Eastern Europe, Middle East & Africa (EEMEA) Europe and North America.
Management's long-term growth targets include organic revenue growth at or above the category growth rate, constant currency operating margin growth of high single digits and double-digit earnings growth.
In May 2014, Mondelez announced the proposed spin-off of its coffee business to Netherlands-based coffee company, D.E Master Blenders 1753 for $5 billion in cash. The coffee portfolio of Mondelez will be merged with that of D.E Master Blenders 1753 to form a new Dutch coffee company called Jacobs Douwe Egberts (JDE). The transaction, which excludes Mondelez's coffee business in France, is subject to regulatory and shareholder approvals and is expected to close in 2015. Mondelez will enjoy a 49% stake in the combined company.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
