Mondelez International Reports Q1 Results and Reaffirms 2015 Outlook

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The FINANCIAL — Mondelez International, Inc. on April 29 reported its first quarter 2015 results, reflecting continued strong Adjusted Operating Income margin expansion and Adjusted EPS growth on a constant currency basis, as well as solid Organic Net Revenue growth.

“We’re making good progress executing our transformation agenda.  Our solid first quarter positions us well to deliver our full year 2015 outlook and 2016 margin targets,” said Irene Rosenfeld, Chairman and CEO.  “We remain intently focused on productivity and cost reduction to drive strong margin expansion and earnings growth.  This enables continued investment in our Power Brands2, supply chain, and sales and distribution capabilities to drive sustainable revenue and earnings growth.”

On a reported basis, net revenues were $7.8 billion, down 10.2 percent, including a negative 14.5 percentage point impact from currency.  Operating income was $811 million, down 3.8 percent.  Diluted EPS was $0.19, up $0.10, according to Mondelez International.

Organic Net Revenue increased 3.8 percent, as the company raised prices to recover higher input costs, including the impact of currency.  A significant portion of the price increases included the carryover benefit of pricing actions taken in 2014.  While in line with the company’s expectations, volume/mix was unfavorable, largely due to price elasticity as well as strategic decisions to exit certain low-margin product lines, especially in Europe.  This was partially offset by a benefit from the shift of Easter-related shipments into the first quarter.  Power Brands grew 5.9 percent.  Organic Net Revenue from emerging markets3 was up 10.8 percent, while developed markets4 decreased 0.5 percent.

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 Adjusted Gross Profit1 increased 5.5 percent on a constant-currency basis.  Adjusted Gross Profit margin was 38.0 percent, up 90 basis points, as higher prices, supply chain productivity and improved product mix more than offset input cost inflation.

Adjusted Operating Income grew 19.1 percent on a constant-currency basis.  Adjusted Operating Income margin expanded 160 basis points to 13.8 percent, driven primarily by strong gains in North America, Europe and Latin America.  The company continued to reduce overheads by leveraging zero-based budgeting tools and other cost-management programs.  In addition, the company maintained advertising and consumer support, especially behind its Power Brands.

Adjusted EPS grew 25.6 percent on a constant-currency basis, driven primarily by operating gains.

Share Repurchases

In the first quarter, the company repurchased $1.5 billion of its common stock at an average price of $35.98 per share.

Outlook

For 2015, the company continues to expect Organic Net Revenue growth of at least 2 percent, Adjusted Operating Income margin of approximately 14 percent, Adjusted EPS growth at a double-digit rate on a constant-currency basis and Free Cash Flow excluding items1 of $1.2 billion.

The company estimates foreign exchange translation to reduce 2015 net revenue growth by approximately 12 percentage points6 and Adjusted EPS by approximately $0.336 due to the strengthening of the U.S. dollar versus other currencies.   

 

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