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Mondelez Q4 Earnings Miss Estimates Amid Increased Cocoa Costs
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Mondelez International, Inc. (MDLZ - Free Report) posted fourth-quarter 2024 results, with the top line increasing year over year but missing the Zacks Consensus Estimate. The bottom line decreased from the year-ago quarter’s level and missed the consensus mark amid a challenging operating environment marked by cocoa cost inflation.
Adjusted earnings were 65 cents per share, which decreased 15.9% on a constant-currency (cc) basis. The metric missed the Zacks Consensus Estimate of 66 cents. This decline was mainly caused by decreased operating results and lower equity method investment earnings, somewhat offset by reduced taxes and shares outstanding.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net revenues increased 3.1% year over year to $9,604 million, driven by effective pricing strategies and positive volume/mix growth. However, the metric came below the Zacks Consensus Estimate of $9,691.7 million.
Mondelez International, Inc. Price, Consensus and EPS Surprise
MDLZ’s Q4 Revenue and Margin Breakdown: Key Insights
Organic net revenues grew 5.2% year over year in the fourth quarter. The upside was primarily fueled by a 5.1 percentage point (pp) increase in pricing, alongside a favorable volume/mix impact of 0.1 pp. Our model estimated organic net revenue growth of 5.6%.
Revenues from emerging markets increased 1.7% to $3,640 million and rose 6.7% on an organic basis. The growth was backed by favorable pricing actions (up 6.5 pp) and volume/mix (up 0.2 pp). The company saw growth trends across countries like South Africa, China and Brazil among others.
Revenues from developed markets increased 4% to $5,964 million while increasing 4.3% on an organic basis, reflecting solid growth from Europe and the U.S. Developed markets saw a volume/mix increase of 0.1 pp while pricing was favorable by 4.2 pp.
Region-wise, revenues in Latin America dropped 7.2%, while the metric in Asia, the Middle East & Africa and Europe grew 9.9% and 5.8%, respectively. In the North American regions, revenues inched up 0.1%. On an organic basis, revenues rose 4.9%, 8.6%, 7.4% and 0.4% in Latin America, Asia, the Middle East & Africa, Europe and North America, respectively.
The adjusted gross profit fell by $440 million at cc, and the adjusted gross profit margin contracted by 650 basis points (bps), reaching 31.5%. This decline was mainly due to increased raw material and transportation costs, somewhat offset by favorable pricing and reduced manufacturing costs stemming from improved productivity.
Mondelez’s adjusted operating income declined by $396 million at cc, while the adjusted operating income margin contracted 510 bps to 10%. This decrease was mainly caused by escalated input cost inflation, partially mitigated by favorable net pricing, overhead leverage and lower manufacturing costs resulting from productivity improvements.
Image Source: Zacks Investment Research
Mondelez’s Financial Health Snapshot
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $1,351 million, long-term debt of $15,664 million and total equity of $26,958 million. MDLZ provided $4,910 million of net cash from operating activities for the 12 months ended Dec. 31, 2024. Adjusted free cash flow was $3,523 million for the same period. Management expects a free cash flow of more than $3 billion for 2025.
The company returned $4.7 billion to its shareholders in cash dividends and share repurchases during 2024.
What to Expect From MDLZ in 2025?
Mondelez projects organic net revenue growth of around 5% in 2025. The adjusted earnings per share (EPS) is expected to decline by nearly 10% on a cc basis, thanks to unprecedented cocoa cost inflation. The company anticipates that currency translation will reduce 2025 net revenue growth by roughly 2.5%, with a negative impact of 12 cents on adjusted EPS.
The company anticipates a double-digit increase in inflation for 2025, largely driven by cocoa costs and some labor expenses. Regarding interest expense, the company expects it to be nearly $350 million in the year. In addition, the company projects an adjusted effective tax rate in the mid-20s range.
The company’s shares have slumped 18.7% in the past three months compared to the industry’s 10.3% decline.
Top-Ranked Stocks
We have highlighted some top-ranked stocks from the broader Consumer Staples space, namely United Natural Foods (UNFI - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Helen of Troy (HELE - Free Report) .
United Natural Foods, a key distributor of natural, organic and specialty food and non-food products, presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural Foods’ current financial-year sales and EPS indicates growth of 0.3% and 442.9%, respectively, from the prior-year levels. UNFI has a trailing four-quarter average earnings surprise of 553.1%.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial year’s sales and EPS suggests growth of 8.3% and 13.1%, respectively, from the year-ago reported numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank #2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and earnings suggests declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s reported figures.
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Mondelez Q4 Earnings Miss Estimates Amid Increased Cocoa Costs
Mondelez International, Inc. (MDLZ - Free Report) posted fourth-quarter 2024 results, with the top line increasing year over year but missing the Zacks Consensus Estimate. The bottom line decreased from the year-ago quarter’s level and missed the consensus mark amid a challenging operating environment marked by cocoa cost inflation.
Adjusted earnings were 65 cents per share, which decreased 15.9% on a constant-currency (cc) basis. The metric missed the Zacks Consensus Estimate of 66 cents. This decline was mainly caused by decreased operating results and lower equity method investment earnings, somewhat offset by reduced taxes and shares outstanding.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net revenues increased 3.1% year over year to $9,604 million, driven by effective pricing strategies and positive volume/mix growth. However, the metric came below the Zacks Consensus Estimate of $9,691.7 million.
Mondelez International, Inc. Price, Consensus and EPS Surprise
Mondelez International, Inc. price-consensus-eps-surprise-chart | Mondelez International, Inc. Quote
MDLZ’s Q4 Revenue and Margin Breakdown: Key Insights
Organic net revenues grew 5.2% year over year in the fourth quarter. The upside was primarily fueled by a 5.1 percentage point (pp) increase in pricing, alongside a favorable volume/mix impact of 0.1 pp. Our model estimated organic net revenue growth of 5.6%.
Revenues from emerging markets increased 1.7% to $3,640 million and rose 6.7% on an organic basis. The growth was backed by favorable pricing actions (up 6.5 pp) and volume/mix (up 0.2 pp). The company saw growth trends across countries like South Africa, China and Brazil among others.
Revenues from developed markets increased 4% to $5,964 million while increasing 4.3% on an organic basis, reflecting solid growth from Europe and the U.S. Developed markets saw a volume/mix increase of 0.1 pp while pricing was favorable by 4.2 pp.
Region-wise, revenues in Latin America dropped 7.2%, while the metric in Asia, the Middle East & Africa and Europe grew 9.9% and 5.8%, respectively. In the North American regions, revenues inched up 0.1%. On an organic basis, revenues rose 4.9%, 8.6%, 7.4% and 0.4% in Latin America, Asia, the Middle East & Africa, Europe and North America, respectively.
The adjusted gross profit fell by $440 million at cc, and the adjusted gross profit margin contracted by 650 basis points (bps), reaching 31.5%. This decline was mainly due to increased raw material and transportation costs, somewhat offset by favorable pricing and reduced manufacturing costs stemming from improved productivity.
Mondelez’s adjusted operating income declined by $396 million at cc, while the adjusted operating income margin contracted 510 bps to 10%. This decrease was mainly caused by escalated input cost inflation, partially mitigated by favorable net pricing, overhead leverage and lower manufacturing costs resulting from productivity improvements.
Image Source: Zacks Investment Research
Mondelez’s Financial Health Snapshot
The Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $1,351 million, long-term debt of $15,664 million and total equity of $26,958 million. MDLZ provided $4,910 million of net cash from operating activities for the 12 months ended Dec. 31, 2024. Adjusted free cash flow was $3,523 million for the same period. Management expects a free cash flow of more than $3 billion for 2025.
The company returned $4.7 billion to its shareholders in cash dividends and share repurchases during 2024.
What to Expect From MDLZ in 2025?
Mondelez projects organic net revenue growth of around 5% in 2025. The adjusted earnings per share (EPS) is expected to decline by nearly 10% on a cc basis, thanks to unprecedented cocoa cost inflation. The company anticipates that currency translation will reduce 2025 net revenue growth by roughly 2.5%, with a negative impact of 12 cents on adjusted EPS.
The company anticipates a double-digit increase in inflation for 2025, largely driven by cocoa costs and some labor expenses. Regarding interest expense, the company expects it to be nearly $350 million in the year. In addition, the company projects an adjusted effective tax rate in the mid-20s range.
The company’s shares have slumped 18.7% in the past three months compared to the industry’s 10.3% decline.
Top-Ranked Stocks
We have highlighted some top-ranked stocks from the broader Consumer Staples space, namely United Natural Foods (UNFI - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Helen of Troy (HELE - Free Report) .
United Natural Foods, a key distributor of natural, organic and specialty food and non-food products, presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural Foods’ current financial-year sales and EPS indicates growth of 0.3% and 442.9%, respectively, from the prior-year levels. UNFI has a trailing four-quarter average earnings surprise of 553.1%.
Ollie's is a value retailer of brand-name merchandise at drastically reduced prices. The company currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 5%, on average.
The Zacks Consensus Estimate for Ollie's current financial year’s sales and EPS suggests growth of 8.3% and 13.1%, respectively, from the year-ago reported numbers. The consensus mark for OLLI’s EPS has been unchanged in the past 30 days.
Helen of Troy, a leading consumer products player that operates through a diversified portfolio of renowned brands, currently carries a Zacks Rank #2. HELE has a trailing four-quarter negative earnings surprise of 4.3%, on average.
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales and earnings suggests declines of 5.1% and 18.9%, respectively, from the year-ago quarter’s reported figures.