Mondelēz International Inc. reported its second quarter 2022 results.
- Net revenues increased +9.5% driven by organic net revenue growth of +13.1% with underlying volume/mix of +5.1%.
- Diluted EPS was $0.54, down 28.9%; adjusted EPS was $0.67, up +9.1% on a constant-currency basis.
- Year-to-date cash provided by operating activities was $2.0 billion, an increase of +$0.2 billion versus prior year; Free Cash Flow was $1.6 billion, +$0.2 billion.
- Return of capital to shareholders was $2.5 billion in the first half of the year.
- Announced agreement to acquire Clif Bar, a leader in high growth, well-being snack bars, creating a $1+ billion global snack bar business.
- Announcing +10% increase to quarterly dividend.
- Raising organic net revenue growth outlook for full year to 8%+.
"Our second quarter and first half results were marked by strong top and bottom-line performance across all regions and categories, supporting the raising of our full-year revenue growth outlook," Dirk Van de Put, chairman and chief executive officer, said in the announcement. "Our chocolate and biscuit businesses continue to demonstrate strong volume growth and pricing resilience across both developed and emerging markets. These results combined with ongoing cost discipline, simplification and revenue growth management are delivering robust profit dollar growth and strong cash flow, enabling us to increase our dividend by 10 percent.
We also continue to execute against our strategy of accelerating our core business while reshaping our portfolio, most recently with our agreement to acquire Clif Bar, a leader in high growth, well-being snack bars, creating a $1 billion-plus snack bar business. Clif Bar has the leading position in the U.S. protein and nutrition segments with clear opportunities to expand domestic and international distribution, velocities and profitability to create significant value for our shareholders in the years to come.”
Net revenues increased 9.5% driven by organic net revenue growth of 13.1%, and incremental sales from the company's acquisition of Chipita, partially offset by unfavorable currency. Pricing and volume drove organic net revenue growth.
Gross profit increased $10 million, while gross profit margin decreased 330 basis points to 36.3 percent primarily driven by the decrease in Adjusted Gross Profit margin and lower mark-to-market gains from derivatives. Adjusted Gross Profit increased $257 million at constant currency, while Adjusted Gross Profit margin decreased 210 basis points to 37.9% due to higher raw material and transportation costs and unfavorable mix, partially offset by pricing and volume leverage.
Operating income increased $55 million and operating income margin was 12.7%, down 40 basis points primarily due to lower mark-to-market gains from derivatives, lower Adjusted Operating Income1 margin and higher acquisition integration costs, partially offset by lower restructuring costs and lapping prior-year pension participation changes. Adjusted Operating Income increased $91 million at constant currency while Adjusted Operating Income margin decreased 110 basis points to 15.1%, with input cost inflation and unfavorable mix, mostly offset by pricing and SG&A leverage.
Diluted EPS was $0.54, down 28.9%, primarily due to lapping a prior-year net gain on equity method transactions, an unfavorable year-over-year change in mark-to-market impacts from derivatives and higher acquisition integration costs, partially offset by lower restructuring costs, lower negative impacts from enacted tax law changes, lapping a prior-year intangible asset impairment charge, lapping a prior-year unfavorable impact of pension participation changes and an increase in adjusted EPS.
Adjusted EPS was $0.67, up 9.1% on a constant-currency basis driven by strong operating gains, lower taxes and fewer shares outstanding, partially offset by higher interest expense and lower income from equity method investments.
The company is updating its fiscal 2022 outlook to reflect expectations for continued top-line growth, higher cost of goods sold inflation, the timing effect of additional pricing actions and the impact of the war in Ukraine.
For 2022, the company now expects 8+ percent organic net revenue growth, which reflects the strength of its first half and higher pricing related to increased input costs. The company's expectation of mid-to-high single digit adjusted EPS growth on a constant currency basis remains unchanged.