Mondelez International: Reports Q1-2023 Results

Chicago / IL. (mdlz) Mondelez International reported its first quarter 2023 results. «We delivered a strong start to the year, with double-digit net revenue and profit dollar growth in our first quarter, as we continued to execute against our long-term strategy. These results were driven by ongoing pricing execution to offset cost inflation and solid volume growth,» said Dirk Van de Put, Chairman and Chief Executive Officer. «We saw broad-based demand across both developed and emerging markets, as consumers around the world continue to prioritize our chocolate, biscuits, and baked snacks categories and brands. We also continued to make significant progress against our portfolio reshaping initiatives, reducing our coffee equity stakes, while driving strong top- and bottom-line synergies from recently acquired assets, including Clif Bar. Our dedicated people remain focused on accelerating and compounding growth through significant investments in our brands, talent and capabilities, while advancing our sustainability initiatives. Given our strong Q1 performance, we are raising our net revenue and earnings outlook for the year.»

First Quarter Commentary

  • Net revenues increased 18.1 percent driven by Organic Net Revenue growth of 19.4 percent, and incremental sales from the company’s 2022 acquisitions of Clif Bar and Ricolino, partially offset by unfavorable currency. Pricing and volume drove Organic Net Revenue growth.
  • Gross profit increased USD 463 million, and gross profit margin decreased 80 basis points to 37.6 percent primarily driven by a decrease in Adjusted Gross Profit1 margin, partially offset by lapping prior-year incremental costs due to the war in Ukraine and favorable year-over-year change in mark-to-market impacts from derivatives. Adjusted Gross Profit increased USD 547 million at constant currency, while Adjusted Gross Profit margin decreased 170 basis points to 37.1 percent due to higher raw material and transportation costs, partially offset by pricing.
  • Operating income increased USD 411 million and operating income margin was 16.4 percent, up 230 basis points primarily due to lapping prior-year incremental costs due to the war in Ukraine, lapping prior-year intangible asset impairment charges, lapping prior-year acquisition-related costs and favorable year-over-year change in mark-to-market gains/(losses) from currency and commodity hedging activities, partially offset by a decrease in Adjusted Operating Income margin, higher divestiture-related costs, higher acquisition integration costs and contingent consideration adjustments and higher remeasurement loss of net monetary position. Adjusted Operating Income increased USD 285 million at constant currency while Adjusted Operating Income margin decreased 60 basis points to 17.2 percent, with input cost inflation, partially offset by pricing and SG+A leverage.
  • Diluted EPS was USD 1.52, up 149.2 percent, primarily due to mark-to-market gain on marketable securities, gain on equity method investment transactions, lower incremental costs due to the war in Ukraine, an increase in Adjusted EPS and lapping a prior-year loss on debt extinguishment.
  • Adjusted EPS was USD 0.89, up 17.3 percent on a constant currency basis primarily driven by strong operating gains, fewer shares outstanding and lower taxes, partially offset by higher interest expense.
  • Capital Return and Renewal of Share Repurchase Program: The company returned USD 0.9 billion to shareholders in cash dividends and share repurchases.

2023 Outlook

Mondelēz International provides its outlook on a non-GAAP basis, as the company cannot predict some elements that are included in reported GAAP results, including the impact of foreign exchange. For 2023, the company is updating its 2023 fiscal outlook and now expects 10+ percent Organic Net Revenue growth versus the prior outlook of 5 to 7 percent, which reflects the strength of its year-to-date performance. The company’s expectation for Adjusted EPS growth on a constant currency basis is now 10+ percent versus the prior outlook of high single digits. The company’s Free Cash Flow outlook remains at USD 3.3+ billion. The company estimates currency translation would decrease 2023 net revenue growth by approximately 2 percent4 with a negative USD 0.09 impact to Adjusted EPS. Outlook is provided in the context of greater than usual volatility as a result of Covid-19 and geopolitical uncertainty.