Mondelez International, Inc. reported second quarter and first half 2013 results.
"Faster top-line growth in emerging markets, strong volume/mix gains and increasing market shares globally drove our first-half business performance, which was in line with the expectations we outlined earlier in the year," said Irene Rosenfeld, chairman and CEO, in a prepared statement. "For the second half of 2013, we expect our top-line growth to accelerate from investments in emerging markets and continued momentum on our global snacking platforms and Power Brands, despite indications of slowing category growth in key markets such as China, Brazil and Russia. On the bottom line, we expect margins to expand through overhead leverage as well as continued aggressive focus on cost reduction efforts."
Rosenfeld continued, "As we also announced…our board of directors approved a significant increase in our share repurchase program from $1.2 billion to $6 billion through 2016, and an 8 percent increase in our quarterly dividend to $0.14 per share. We believe the combination of strong top-line growth in emerging markets, double-digit EPS [earning per share] gains, higher dividends and a substantial increase in share buybacks creates a highly attractive mix that will deliver superior shareholder returns."
Net revenues for the second quarter were $8.6 billion, up 0.8 percent. Organic net revenues increased 3.8 percent, driven by strong volume/mix of 3.6 percentage points as well as favorable pricing of 0.2 percentage points. As expected, the pass-through of lower coffee commodity costs tempered growth by 0.8 percentage points. Additionally, while capacity constraints in certain key markets diminished, they still posed a 0.2 percentage point headwind.
Power Brands continued to grow at a rate about double the company average, up 7.9 percent. Oreo, Tuc/Club Social, belVita, Chips Ahoy! and Barni biscuits, Cadbury Dairy Milk, Milka and Lacta chocolate and Stride gum each posted double-digit increases.
Revenues from emerging markets2 accelerated sequentially, up 9.7 percent, led by double-digit gains in each of the BRIC3 markets. In developed markets4, growth in biscuits and chocolate was offset by the impact of lower coffee pricing and soft category trends in gum.
Operating income was $0.9 billion, down 7.7 percent, and operating income margin was 10.1 percent.
Adjusted operating Income1 decreased 9.3 percent on a constant currency basis, including a negative 4.5 percentage point impact from prior year one-time items5. The remaining differential reflected increased investments in sales capabilities and route-to-market expansion in emerging markets, particularly in Asia Pacific and EEMEA, as well as higher advertising and consumer (A&C) support in both emerging markets and Europe. These investments are expected to drive stronger second half and 2014 revenue growth.
Adjusted Operating Income margin was 11.4 percent, a sequential improvement from the previous quarter, but down 1.8 percentage points versus prior year. The decline included a negative 0.6 percentage point impact from prior year one-time items5. Incremental investments in sales capabilities, route-to-market expansion and A&C support as well as the negative impact of the devaluation of the Venezuelan bolivar on operating results, contributed to the margin decline.
Diluted EPS was $0.34. Adjusted EPS (previously referred to as Operating EPS) was $0.37, including a negative $0.01 impact from currency. On a constant currency basis, Adjusted EPS increased 5.6 percent, reflecting positive impacts of $0.04 from lower taxes, primarily from discrete items, and $0.02 from lower interest expense resulting from a statutory interest rate change affecting an accrued non-income tax liability.
