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Mondelez (MDLZ) Q3 Earnings Beat Estimates, Revenues Up
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Mondelez International, Inc. (MDLZ - Free Report) reported impressive third-quarter 2021 numbers, with the top and the bottom line increasing year over year as well as surpassing the respective Zacks Consensus Estimate. The company witnessed broad-based growth across developed and emerging markets during the quarter. Demand for categories and brands continued to remain impressive with solid volume growth. The company undertook various pricing actions to counter higher inflation.
Mondelez is optimistic about delivering growth on the back of brand investments, pricing actions and distribution expansion. Elevated inflation and logistics volatility are headwinds for the company. Management raised its 2021 organic net revenue growth view and reaffirmed its adjusted earnings per share (EPS) and free cash flow outlook.
Quarterly Performance
Adjusted earnings came in at 71 cents per share, which climbed 9.4% year over year on a constant-currency or cc basis. The metric surpassed the Zacks Consensus Estimateby a penny. The upside was backed by operating gains, reduced outstanding shares and lower income taxes.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Net revenues increased 7.8% to $7,182 million and surpassed the Zacks Consensus Estimate of $7,038.3 million. The uptick was driven by strong organic net revenue growth of 5.5% as well as increased sales from the Hu, Grenade and Gourmet Food buyouts. Positive impacts from currency translations also contributed to growth. Favorable volumes and pricing also contributed to organic net revenue growth.
Revenues from emerging markets increased 12.9% to $2,584 million, while the same rose 12.2% on an organic basis. During the quarter, it saw double-digit growth in Brazil, Mexico and India as well as high single-digit increase across China, Russia and Africa. Management remains encouraged by the underlying emerging market strength. Revenues from the developed markets moved up 5.1% to $4,598 million, while the same inched up 2% on an organic basis. Solid demand and consumption trends led to the upside in developed markets.
Region-wise, revenues in Latin America; Asia, Middle East & Africa; Europe; and North America increased 23.1%, 10.8%, 7.4% and 1.4% year over year, respectively. On an organic basis, revenues increased 25.9%, 5.7%, 4.6% and 0.3% in Latin America; Asia, Middle East & Africa, Europe and North America, respectively.
Adjusted gross profit ascended $57 million at cc. Adjusted gross profit margin contracted 160 basis points (bps) to 38.3% on the back of increased raw material and transportation costs as well as unfavorable mix. These were somewhat negated by favorable pricing and manufacturing productivity.
The company’s adjusted operating income rose $52 million at cc. Adjusted operating income margin contracted 30 bps to 17.2% due to increased raw material and transportation costs, unfavorable mix as well as higher advertising and consumer expenses. These were somewhat offset by pricing actions, manufacturing productivity, reduced overheads and lower amortization of intangible assets.
Image Source: Zacks Investment Research
Other Financials
Mondelez, which shares space with The Kraft Heinz Company (KHC - Free Report) , ended the quarter with cash and cash equivalents of $3,401 million, long-term debt of $17,692 million and total equity of $27,754 million. The company generated net cash from operating activities of $2,720 million during the nine months ended Sep 30, 2021.
Adjusted free cash flow was $2,081 million during the same period. Management expects free cash flow to be more than $3 billion in 2021.
During the third quarter, the company distributed $767 million to shareholders through cash dividends and share buybacks.
Outlook
Mondelez expects most of third-quarter trends to continue into the fourth quarter. These trends include solid demand for its categories and brands across both markets along with persistence of transportation and labor inflation as well as supply chain pressure in the North American region. The company is on track with its focus on Revenue Growth Management activities and more investments in people, markets as well as capabilities.
Based on a solid to-date performance, continued categories resilience as well as impressive demand trends, management raised its 2021 revenue growth outlook. Mondelez now projects organic net revenues to increase more than 4.5% in 2021, up from above 4% growth expected earlier. Management still anticipates adjusted EPS to grow in high-single digits at cc. Favorable currency rates are expected to increase net revenues by nearly 2% and adjusted EPS is likely to see a positive impact of 9 cents from the same.
Shares of the Zacks Rank #4 (Sell) company have inched down 0.6% in the past three months against the industry’s growth of 2%.
The Hain Celestial Group, Inc. (HAIN - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 21.2%, on average.
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Mondelez (MDLZ) Q3 Earnings Beat Estimates, Revenues Up
Mondelez International, Inc. (MDLZ - Free Report) reported impressive third-quarter 2021 numbers, with the top and the bottom line increasing year over year as well as surpassing the respective Zacks Consensus Estimate. The company witnessed broad-based growth across developed and emerging markets during the quarter. Demand for categories and brands continued to remain impressive with solid volume growth. The company undertook various pricing actions to counter higher inflation.
Mondelez is optimistic about delivering growth on the back of brand investments, pricing actions and distribution expansion. Elevated inflation and logistics volatility are headwinds for the company. Management raised its 2021 organic net revenue growth view and reaffirmed its adjusted earnings per share (EPS) and free cash flow outlook.
Quarterly Performance
Adjusted earnings came in at 71 cents per share, which climbed 9.4% year over year on a constant-currency or cc basis. The metric surpassed the Zacks Consensus Estimateby a penny. The upside was backed by operating gains, reduced outstanding shares and lower income taxes.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
Net revenues increased 7.8% to $7,182 million and surpassed the Zacks Consensus Estimate of $7,038.3 million. The uptick was driven by strong organic net revenue growth of 5.5% as well as increased sales from the Hu, Grenade and Gourmet Food buyouts. Positive impacts from currency translations also contributed to growth. Favorable volumes and pricing also contributed to organic net revenue growth.
Revenues from emerging markets increased 12.9% to $2,584 million, while the same rose 12.2% on an organic basis. During the quarter, it saw double-digit growth in Brazil, Mexico and India as well as high single-digit increase across China, Russia and Africa. Management remains encouraged by the underlying emerging market strength. Revenues from the developed markets moved up 5.1% to $4,598 million, while the same inched up 2% on an organic basis. Solid demand and consumption trends led to the upside in developed markets.
Region-wise, revenues in Latin America; Asia, Middle East & Africa; Europe; and North America increased 23.1%, 10.8%, 7.4% and 1.4% year over year, respectively. On an organic basis, revenues increased 25.9%, 5.7%, 4.6% and 0.3% in Latin America; Asia, Middle East & Africa, Europe and North America, respectively.
Adjusted gross profit ascended $57 million at cc. Adjusted gross profit margin contracted 160 basis points (bps) to 38.3% on the back of increased raw material and transportation costs as well as unfavorable mix. These were somewhat negated by favorable pricing and manufacturing productivity.
The company’s adjusted operating income rose $52 million at cc. Adjusted operating income margin contracted 30 bps to 17.2% due to increased raw material and transportation costs, unfavorable mix as well as higher advertising and consumer expenses. These were somewhat offset by pricing actions, manufacturing productivity, reduced overheads and lower amortization of intangible assets.
Other Financials
Mondelez, which shares space with The Kraft Heinz Company (KHC - Free Report) , ended the quarter with cash and cash equivalents of $3,401 million, long-term debt of $17,692 million and total equity of $27,754 million. The company generated net cash from operating activities of $2,720 million during the nine months ended Sep 30, 2021.
Adjusted free cash flow was $2,081 million during the same period. Management expects free cash flow to be more than $3 billion in 2021.
During the third quarter, the company distributed $767 million to shareholders through cash dividends and share buybacks.
Outlook
Mondelez expects most of third-quarter trends to continue into the fourth quarter. These trends include solid demand for its categories and brands across both markets along with persistence of transportation and labor inflation as well as supply chain pressure in the North American region. The company is on track with its focus on Revenue Growth Management activities and more investments in people, markets as well as capabilities.
Based on a solid to-date performance, continued categories resilience as well as impressive demand trends, management raised its 2021 revenue growth outlook. Mondelez now projects organic net revenues to increase more than 4.5% in 2021, up from above 4% growth expected earlier. Management still anticipates adjusted EPS to grow in high-single digits at cc. Favorable currency rates are expected to increase net revenues by nearly 2% and adjusted EPS is likely to see a positive impact of 9 cents from the same.
Shares of the Zacks Rank #4 (Sell) company have inched down 0.6% in the past three months against the industry’s growth of 2%.
Some Solid Food Stocks
United Natural Foods, Inc. (UNFI - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 13.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hain Celestial Group, Inc. (HAIN - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 21.2%, on average.