The FINANCIAL — Mondelēz International, Inc. on August 2 reported its second quarter 2017 results.
“We delivered strong margin expansion and double-digit EPS growth in the quarter despite the revenue impact from the malware incident at the end of June,” said Irene Rosenfeld, Chairman and CEO. “We’re seeing improved trends in Europe and across many of our emerging markets, and our North America business is on track for a stronger second half. In addition, as a result of our improving free cash flow outlook, we’re increasing our dividend payout.”
Second Quarter Commentary
Net revenues decreased 5.0 percent, driven by the malware incident and currency headwinds. Organic Net Revenue decreased 2.7 percent primarily driven by the impact of the malware incident, which negatively affected shipments at the end of June.
Gross profit margin was 38.8 percent, a decrease of 110 basis points, driven primarily by the unfavorable impacts from currency and commodity hedging activities. Adjusted Gross Profit margin was 40.0 percent, a decrease of 10 basis points, driven by higher input costs and lower volume/mix partially offset by strong net productivity and improved pricing.
Operating income margin was 10.7 percent, up 60 basis points, reflecting increases in Adjusted Operating Income margin and lower divestiture-related costs, partially offset by unfavorable impacts from currency and commodity hedging activities and higher intangible asset impairment charges. Adjusted Operating Income margin increased 90 basis points to 15.8 percent, due primarily to lower selling, general and administrative costs, according to Mondelēz International.
Diluted EPS was $0.32, up 10 percent, driven primarily by operating gains and lower divestiture-related costs, partially offset by unfavorable impacts from currency and commodity hedging activities and higher intangible asset impairment charges.
Adjusted EPS was $0.48 and grew 19 percent on a constant-currency basis, driven primarily by operating gains.
Capital Return: The company repurchased approximately $600 million of its common stock and paid approximately $300 million in cash dividends. The company’s Board of Directors also declared a quarterly cash dividend of $0.22 per share, an increase of 16 percent.
The company continues to expect 2017 Organic Net Revenue to increase at least 1 percent, Adjusted Operating Income margin in the mid-16 percent range and double-digit Adjusted EPS growth on a constant-currency basis. The company estimates currency translation would not result in a change to net revenue growth3 while it would reduce Adjusted EPS by approximately $0.013. In addition, the company expects 2017 Free Cash Flow1 of approximately $2 billion.