Deerfield / IL. (mdlz) Mondelez International Inc. reported its first quarter 2015 results, reflecting continued strong Adjusted Operating Income margin expansion and Adjusted EPS growth on a constant currency basis, as well as solid Organic Net Revenue growth.
«We are making good progress executing our transformation agenda. Our solid first quarter positions us well to deliver our full year 2015 outlook and 2016 margin targets», said Irene Rosenfeld, Chairman and CEO. «We remain intently focused on productivity and cost reduction to drive strong margin expansion and earnings growth. This enables continued investment in our Power Brands, supply chain, and sales and distribution capabilities to drive sustainable revenue and earnings growth».
On a reported basis, net revenues were 7.8 billion USD, down 10.2 percent, including a negative 14.5 percentage point impact from currency. Operating income was 811 million USD, down 3.8 percent. Diluted EPS was 0.19 USD, up 0.10 USD.
Organic Net Revenue increased 3.8 percent, as the company raised prices to recover higher input costs, including the impact of currency. A significant portion of the price increases included the carry-over benefit of pricing actions taken in 2014. While in line with the company´s expectations, volume/mix was unfavourable, largely due to price elasticity as well as strategic decisions to exit certain low-margin product lines, especially in Europe. This was partially offset by a benefit from the shift of Easter-related shipments into the first quarter. Power Brands grew 5.9 percent. Organic Net Revenue from emerging markets was up 10.8 percent, while developed markets decreased 0.5 percent.
Operating Income and Diluted EPS
Adjusted Gross Profit increased 5.5 percent on a constant-currency basis. Adjusted Gross Profit margin was 38.0 percent, up 90 basis points, as higher prices, supply chain productivity and improved product mix more than offset input cost inflation. Adjusted Operating Income grew 19.1 percent on a constant-currency basis. Adjusted Operating Income margin expanded 160 basis points to 13.8 percent, driven primarily by strong gains in North America, Europe and Latin America. The company continued to reduce overheads by leveraging zero-based budgeting tools and other cost-management programs. In addition, the company maintained advertising and consumer support, especially behind its Power Brands. Adjusted EPS grew 25.6 percent on a constant-currency basis, driven primarily by operating gains.
Share Repurchases
In the first quarter, the company repurchased 1.5 billion USD of its common stock at an average price of 35.98 USD per share.
Outlook
For 2015, the company continues to expect Organic Net Revenue growth of at least two percent, Adjusted Operating Income margin of approximately 14 percent, Adjusted EPS growth at a double-digit rate on a constant-currency basis and Free Cash Flow excluding items of 1.2 billion USD. The company estimates foreign exchange translation to reduce 2015 net revenue growth by approximately twelve percentage points and Adjusted EPS by approximately 0.336 USD due to the strengthening of the U.S. Dollar versus other currencies.
