Mondelez International 2013 Third Quarter Sales Rise 1.8 Percent

Nov. 7, 2013

Mondelez International reported third quarter 2013 results with third quarter net revenues increasing 1.8 percent. Organic net revenues increased 5.3 percent, driven entirely by volume/mix. Emerging markets grew 10.7 percent. Year-to-date net revenues increased 1.1 percent with organic net revenues growing 4.3. Third quarter diluted earnings per share (EPS) was $0.57 with adjusted EPS increasing to $0.41, up 16.7 percent on a constant currency basis. Year-to-date diluted EPS was $1.23 with adjusted EPS increasing to $1.12, up 15.5 percent on a constant currency basis.

"We delivered solid results in a difficult environment. Both revenue and operating margin improved sequentially, fueled by volume/mix gains of more than 5 percent, double-digit growth in emerging markets and increased global market shares," said Chairman and CEO Irene Rosenfeld, in a prepared statement.  "Weak biscuit performance in China, continued headwinds from coffee pricing and slower global category growth, however, led to revenue growth below our expectations."

Net revenues were $8.5 billion, up 1.8 percent. Organic net revenues increased 5.3 percent, driven entirely by volume/mix, despite challenging macroeconomic conditions and slowing category growth in many key emerging markets. The pass-through of lower coffee commodity costs tempered growth by 0.5 percentage points.   

Power brands continued to grow faster than the company average, up 6.9 percent, led by Tuc, Club Social, belVita and Barni biscuits and Cadbury Dairy Milk, Milka and Lacta chocolate.

Operating income increased to $1.3 billion, up 50.6 percent, and operating income margin was 14.9 percent. This includes a $336 million favorable impact from the reversal of an indemnity accrual related to the 2010 acquisition of Cadbury.

Adjusted operating income increased 0.8 percent on a constant currency basis, including a negative 5.0 percentage point impact from prior year one-time items. Excluding these items, higher gross profit was partially offset by increased investments in advertising, consumer support, sales capabilities and route-to-market expansion.  

Adjusted operating income margin was 12.2 percent, a sequential improvement from the previous quarter, but down 0.8 percentage points versus prior year as last year's margin was unusually high due to the spin-off of Kraft Foods Group. The decline also reflects increased growth investments and a negative 0.6 percentage point impact from prior year one-time items.  

Diluted EPS was $0.57, including a $0.21 benefit from the indemnity accrual reversal. Adjusted EPS was $0.41, including a negative $0.01 impact from currency. On a constant currency basis, adjusted EPS increased 16.7 percent, reflecting a positive impact of $0.07 from lower taxes.

Third quarter North America results included net revenues increasing 1.0 percent. Organic net revenues increased 2.4 percent, with strong biscuits and candy growth partially offset by lower gum revenues. U.S. biscuits grew 5 percent or more for the ninth consecutive quarter. Power brands grew 2.9 percent fueled by strong growth of Oreo, Chips Ahoy! and belVita biscuits and Halls candy.

September year-to-date revenues included net revenues of $25.8 billion, up 1.1 percent. Organic net revenues increased 4.3 percent, driven by strong volume/mix of 3.8 percentage points as well as favorable pricing of 0.5 percentage points. Lower coffee revenues tempered growth by 0.8 percentage points. 

Power brands grew 7.4 percent. Oreo, Chips Ahoy!, Tuc, Club Social, belVita and Barni biscuits, Cadbury Dairy Milk, Milka and Lacta chocolate and Halls candy each posted double-digit increases.  


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