Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mondelez International Inc (MDLZ, Financial) delivered strong top line growth with a 5.4% increase in organic net revenue for the quarter.
- The company reported a significant adjusted EPS growth of 28.6% for the quarter.
- Developed markets showed recovery with solid revenue growth, particularly in North America and Europe.
- Mondelez expanded its presence in the fast-growing cakes and pastries category by acquiring a majority stake in Evirth, a leading player in China.
- The company generated $2.5 billion in free cash flow year-to-date, demonstrating robust financial health.
Negative Points
- Mondelez International Inc (MDLZ) faces challenges due to the anticipated cocoa cost headwinds, which are expected to pressure margins.
- The company anticipates some upticks in elasticity in certain markets, which may require more aggressive revenue growth management and promotions.
- Volume mix in emerging markets declined by 1% due to Western brand boycotts in AMEA and lower volumes in Mexico.
- The company expects it will be difficult to achieve EPS growth in 2025 unless cocoa prices adjust down or elasticities are more benign.
- Latin America showed a deceleration in volume growth, particularly driven by challenges in Mexico.
Q & A Highlights
Q: Andrew Lazar from Barclays asked about the challenges cocoa will present next year and how it shapes Mondelez's strategy in chocolate.
A: Dirk Van De Put, CEO, explained that Mondelez is focused on protecting the health of the chocolate category and gaining market share. They plan to price strategically, protect key price points, and invest in brand health. They are also working on cost efficiencies and maintaining a long-term approach to category development.
Q: Ken Goldman from JPMorgan inquired about Mondelez's North America performance and how their categories are outperforming broader snacking trends.
A: Dirk Van De Put highlighted that Mondelez's categories remain important to consumers, and they have adjusted their pricing strategy to fit consumer shopping baskets, particularly focusing on the $3 to $4 price point. This has helped them gain market share.
Q: John Baumgartner from Mizuho Securities asked about Mondelez's growth plans for cakes and pastries, particularly in relation to their acquisition of Evirth in China.
A: Dirk Van De Put stated that the cakes and pastries category is a significant growth opportunity due to its fragmentation. Mondelez plans to leverage known brands and innovative products, with a focus on China initially, but with potential for global expansion.
Q: David Palmer from Evercore ISI questioned the timing of when Mondelez might have a clearer view of their 2025 EPS outlook, given cocoa price volatility.
A: Luca Zaramella, CFO, indicated that clarity on cocoa prices should emerge by the end of the year or early Q1 2025. Pricing effects, particularly in Europe, will become clearer by the end of Q1 or beginning of Q2.
Q: Peter Galbo from BofA Global Research sought clarification on whether the path to difficult EPS growth in 2025 includes dilution from JDE.
A: Luca Zaramella clarified that the comment on EPS growth challenges was on a like-for-like basis and did not include dilution from JDE.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
