Mondelez International Reports 2.2 Percent Revenue Drop, 4.4 Organic Net Revenue Increase In 2012

Mondelez International, Inc. reported fourth quarter and full year 2012 results, reflecting solid organic revenue growth, higher gross and operating income margins, and significant investments in innovation, advertising and consumer support, and sales and distribution capabilities to drive Power Brand growth.

Net revenues were $35.0 billion, down 2.2 percent. Organic Net Revenues increased 4.4 percent, including contributions from favorable pricing of 3.3 percentage points and higher volume/mix of 1.1 percentage points. Power Brands grew nearly double the company rate at 8.1 percent, and included double-digit increases in belVita, Barni, Oreo and Tuc/Club Social biscuits, Lacta and Cadbury Dairy Milk chocolate, Cadbury Eclairs candy, and Tassimo and Tang beverages.

Operating income was $3.6 billion, up 4.0 percent. adjusted operating income grew 7.1 percent on a constant currency basis. Effective management of input costs and favorable volume/mix were key drivers of the gain, partially offset by a significant increase in A&C support. In addition, the company recognized a number of significant one-time items during the year, which together tempered growth by approximately 1 percentage point. Adjusted operating income margin was 12.2 percent, up 0.7 percentage points.

Diluted earnings per share (EPS) was $1.69, down 15.1 percent. Operating EPS was $1.39 including a negative impact of $0.06 from currency. On a constant currency basis, Operating EPS increased 5.1 percent, as positive impacts of $0.16 from operations and $0.09 of lower interest expense were partially offset by negative impacts from a higher tax rate of $0.16 and prior-year accounting calendar changes of $0.04.

Fourth Quarter 2012 Highlights

Net revenues were $9.5 billion, down 1.9 percent. organic net revenues increased 3.7 percent, including 2.1 percentage points from higher volume/mix and 1.6 percentage points of favorable pricing. Lower coffee prices negatively impacted growth by approximately 0.6 percentage points. Overall, power brand growth of 7.4 percent and a rebound in Developing Markets' performance fueled the increase in organic net revenues.

Operating income was $1.0 billion, up 16.5 percent. On a constant currency basis, adjusted operating income increased 1.1 percent, driven by effective cost management and higher volume/mix, partially offset by a significant increase in A&C support. Additionally, the company recognized a number of significant one-time items during the quarter, which together moderated growth by approximately 7 percentage points. Adjusted operating income margin was essentially flat at 11.0 percent.

Diluted EPS was $0.30, down 36.2 percent. Operating EPS was $0.36, including a negative $0.01 impact from currency. On a constant currency basis, Operating EPS decreased 5.1 percent as negative impacts of $0.12 from a higher tax rate and $0.02 from prior-year accounting calendar changes were mostly offset by $0.09 of lower interest expense and $0.04 from operating gains.

"This was a transformational year for our company," said Irene Rosenfeld, Chairman and CEO, in a prepared statement. "We successfully completed the spin-off of Kraft Foods Group, resulting in a significant increase in shareholder value, and delivered solid top-line growth and higher adjusted operating income margins across all geographies. We remain relentlessly focused on driving our global snacking platforms and power brands while leveraging our strong routes-to-market to deliver on the exciting promise of our new growth company."

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